1. MLB Opening Week We’re only 2-3 days into Major League Baseball’s opening week, and the league is already smashing attendance records. In Los Angeles, that is, where a record 115,300 people – the most ever to assemble to watch a baseball game – squeezed into the Coliseum on Saturday for the much-anticipated throwback match-up between the Dodgers and the Boston Red Sox. With a left field fence so close in that USC football coach Pete Carroll was able to hit dingers over it earlier in the week, the game was more community celebration than true to the sport – quite appropriate for the kickoff of a season ushering in the Dodgers 50th year in Los Angeles, the 100th anniversary of “Take Me Out to the Ball Game,” and at more than $6.1 billion in revenue, baseball’s best year ever.
Not only are the financials good for the league – fans appear eager to put the Steroids Era and Mitchell Report fallout behind them once and for all. While 2008 will undoubtedly produce more courtroom baseball drama and controversy in the form of a blood test for HGH, for now, fans just want to sit back and enjoy the games.
Since they’re often doing that sitting back in front of their computers these days, MLB Advanced Media has in turn stepped up to the plate and delivered an extensive set of content additions to MLB.TV. New to the site this year are redesigns of all 30 team pages, enhanced graphic capabilities that create a near high-def feed for online video, an increase in the top prize for MLB’s “Beat the Streak” fantasy game (sponsored by Mitchum) to $1 million, and MLB.com “Whiparound,” a live daily news show that will air before each evening’s games. MLB Advanced Media recorded 400,000 subscribers for MLB.TV last year, and projects another 20 percent increase in 2008.
Speaking of sponsors, the 2008 season will likely see a $5 million per year naming-rights deal done for the new Minnesota Twins ballpark, scheduled to open next season. It may also see a presenting or other sponsorship deal done at Wrigley Field – naming that icon would likely be closer to the $20 million, 20 year deal Citigroup signed with the Mets. For now, however, it’s put the pens down and play ball!
2. MLB Facilities – Anatomy of a New Ballpark While it seems like we’re in an era in which a new MLB ballpark is opening every season, the last park to open before Nationals Park in Washington, D.C. debuted on Sunday was the $346 million Busch Stadium in St. Louis…which opened a whole two years ago.
This season, the $611 million, 41,222-seat Nationals Park has the baseball stadium stage all to itself, and on Sunday, it certainly lived up to the spotlight. The state-of-the-art venue is future-oriented, boasting a sleek stone and glass modern design by HOK, the league’s largest high def video board, computerized kiosk ticket sales, and a remodeled subway stop nearby. The building is also rife with political references, including an oval [Office]-shaped clubhouse and a “President’s Club” gallery featuring portraits of past presidents throwing out first pitches dating back to William Howard Taft in 1910. (We assume the current President Bush, who threw out Sunday’s first pitch, a high ball, will find his place there as well.)
But “Washington’s Newest Monument” is not without controversy. The lack of available parking nearby remains a logistical concern, and the team drew only 1.94 million fans at RFK Stadium last year. The loudest dissents, however, come from local politicians and taxpayers who say that the District’s 97 percent share of stadium construction costs (which some claim are truly at $674 million and growing) is far too high for a city with a high school graduation rate of only 59 percent, only 9 percent of public high school students who graduate from college, and four recently closed public library branches – including the one closest to the new stadium.
3. Butts in Seats and Buckets -- March Madness Heads to San Antonio Even though the Final Four is headed to the Alamodome in San Antonio this year – the cavernous building is not exactly prime basketball viewing – surprisingly enough, the trend toward playing hoops in a football megadome has not overtaken the entire tournament. Ten of the 13 regional sites are traditional basketball venues. Attendance at the Final Four, however, will continue to climb – the NCAA has decreed that beginning in 2009, the men’s semifinals and championship game will only be played in domed stadiums that hold 60,000+ people. San Antonio officials are expecting 40,000+ for both nights of this year’s Final Four, and are expanding the Alamodome’s capacity for basketball to 70,000 to remain eligible for future Final Four events. To assist other venues in reaching the 60,000 minimum, the NCAA is also building a portable 13,000-seat configuration that can be moved to the Final Four location each year. The 2009 event will be held in Detroit, followed by Lucas Oil Stadium in Indianapolis in 2010 and Houston’s Reliant Stadium in 2011. Ten cities have thrown their names in the basket for the 2012 Final Four and beyond.
The NCAA’s 13,000 seat booster is far from a philanthropic gesture. While its March Madness deal with CBS guarantees the association $3.8 billion over the next five years, the NCAA has also struck a deal with online ticket resellers in an attempt to share the wealth when Final Four tickets change hands on the secondary market. The push into the ticket resale market makes sense for student athletes and fans, according to Greg Shaheen, the NCAA’s SVP for basketball and business strategies. About 94 percent of the NCAA’s revenue flows through to member institutions, Shaheen says. To put that in perspective, experts guesstimate that 300,000 fans seek Final Four tickets via an annual lottery. For these, the NCAA could collect $1.5 million in $5 ticket service fees. The NCAA has issued 44,500 Final Four ticket strips, which guarantee access to all three games, at a face value of $140-$220. On the secondary market this week, tickets for the Alamodome event are ranging from $813 to $6,471, with and average price of $813. Even a student athlete with only one year of college under his belt can do that math and realize the NCAA can’t afford to stay out of that market!
4. March Madness – The Women’s Bracket
North Carolina has been dominating hoops headlines in the women’s bracket much as the school has done in the men’s. While the women’s tournament doesn’t have the same huge following that the men’s does, the tournament and its teams have come a long way since its creation in 1982. That year, 9,500 people viewed the women’s Final Four, paying $5-$7 for a ticket. This year, every single game of the women’s tournament is being broadcast on ESPN, ESPN2, or ESPNU. And at the 21,000-seat St. Pete Times Forum in Tampa, Florida, officials are expecting capacity crowds of more than 20,000, and the top ticket price is $160. Moreover, the tournament is expected to bring more than $20 million in economic impact to the Tampa, St. Petersburg, and Clearwater Florida region.
Texas A&M, which beat Duke on Sunday to advance to the women’s Elite Eight and has won 16 of its last 17 games, views the rise of women’s basketball as a prime example of a “profound cultural shift” at that university. The women’s basketball budget at the previously all-men’s school was $2.8 million this year out of a $25.2 million budget for 11 women’s sports and a $70 million total athletic department budget. To increase the basketball profile at the admittedly football-centric school, the university is building $26 million, 68,000 square-foot practice facility with equal amenities for men and women alike. A trip to Tampa will likely boost regular attendance as well.
5. Sports and Politics, Ads and Otherwise The blending of sports and politics, obviously, is not limited to the Nationals’ new ballpark. According to a reporter from the Baltimore Sun on the scene in Latrobe, Pennsylvania last Friday, presidential hopeful Barack Obama’s NCAA bracket has taken as much of a beating as any of ours. Obama, it was revealed, had picked UCLA, North Carolina, and Kansas as part of his Elite Eight, but gotten wiped out on Tennessee, Georgetown, Stanford, Duke…and Pittsburgh, where he was politicking hard.
Obama certainly isn’t the only politician to be engaged in bracketeering this March Madness season – the picks of John McCain and Senator Hillary Clinton, courtesy of husband Bill, have been widely analyzed. Media experts are mining the blend of sports and politics as well – a new XM Radio ad campaign revolves around a XM Baseball presidential mock election, complete with a bobblehead Derek Jeter intoning, “Ask not what the team can do for you but what you can do for the team.”
Regardless of whom is elected president in November, it’s unlikely that Obama, McCain, or Clinton will prove to be the sports-friendly president that George W. Bush has turned out to be. In 2007, the “fan in chief” invited more than 1,000 college athletes, coaches, and officials to the White House, including female bowlers from Vanderbilt, champion shooters from the University of Alaska, and UC Santa Barbara soccer players among the more expected mix of BCS and March Madness champions. The latest athletes to visit the Oval Office? The winners of the 2008 Bassmaster Classic and the Women’s Bassmaster Tour.
6. MLS Opens Season, Premier League Beckons (or, Beckhams, as the case may be)
On Saturday, Major League Soccer began its 13th season. The league now fields 14 teams, an all-time high, and a record average player salary of $115,000. In contrast, the UK Premier League fields 20 teams, with an average player salary of $1.35 million – and that in 2006, the last full league salary survey.
While it’s arguably the most popular pro sports league across the globe, the Premier League is the fourth-rated pro sports league in the world in terms of financial success, behind the American NFL, MLB, and NBA. The global depth of talent, however, is the factor that MLS executives are most bent on emulating. Quality of play is MLS’ top focus this year.
For new talent, MLS looks more often to Latin America, however, than across the pond to the Premier League. Out of the 21 foreign-born players added to MLS teams this year, 18 are from Latin America. Many industry experts argued last year that the arrival of such players as Luciano Emilio from Brazil and Cuauhtemoc Blanco from Mexico had more of an impact on the league overall than the much-ballyhooed acquisition of David Beckham by the MLS Galaxy.
While a much healthier Beckham will continue to serve as a soccer ambassador this year, the league’s focus will be spread more evenly to other players – including established and developing American players, who, after all, have already been able to qualify for the Olympic Games in Beijing.
7. Economy Takes Bite out of NASCAR Core Fan Base In mid-March, Speedway Motorsports Inc., operator of six NASCAR tracks including Lowe’s Motor Speedway, reported much lower than expected fourth quarter results. The publicly-traded company also warned investors that the declining economy will almost certainly cause a parallel decline in NASCAR ticket sales, particularly among NASCAR’s core working-class fan base. Ticket sales comprised 32 percent of SMI revenues last year.
According to NASCAR-provided data, fans who attend races have annual incomes $2,300 below the national median income of $46,300. Sky-high gasoline and grocery prices diminish this group’s disposable income for such things as sporting event tickets – even for NASCAR’s most devoted fans. What’s more, escalating ticket prices, such as those priced from $39-$100 at the 167,000 seat Concord track, have already priced out many working-class fans, even before the economic downturn.
As the U.S. government considers bailing out subprime mortgage afflicted homeowners, so is SMI President Humpy Wheeler considering helping out NASCAR fans. Last week, Wheeler proposed lowering ticket prices in areas where the recession has hit hardest to the $25-$80 range, and working with local hotels to reduce the minimum number of nights required to book a room. To compensate for the lower revenue, Wheeler suggested, track operators could reduce the purses awarded to drivers – a prospect, as the Charlotte Business Journal put it, “as likely as a Toyota Prius winning the Daytona 500.”
8. “Leatherheads” Premier Lines Up across from NFL Meetings ”Leatherheads,” a slapstick look at the fledgling days of the National Football League in the roaring 20’s starring George Clooney and Renee Zellweger is the latest on-screen merger of sports and entertainment. The movie, which premiers this Friday, was shot in the Carolinas and will open not in Hollywood but in Greenville.
“Leatherheads” centers on early NFL star John “Blood” McNally, who played for the Duluth Eskimos. Played by Clooney, McNally, a future Hall of Famer, was celebrated for his rough-and-tumble off-the-field exploits as much as for his standout play.
A few hours down the coast from Greenville, NFL owners, team officials, and coaches are in conclave this week at the Breakers in Palm Beach, NFL player exploits and image issues will once again be on the meeting agenda, but not nearly to the degree they were a year ago. As reported last week, player off-field conduct issues were down 20 percent in 2007-2008. These issues have been replaced by two broader ones – the NFL’s overall image as a league as the Spygate scandal continues to percolate, and more critical, economic issues surrounding a possible labor stoppage at the end of next season. Central to the concerns is what will happen if the owners decide to opt out of their current collective bargaining agreement with the NFLPA when it expires in November. If the owners decide to opt out, the stage could be set for a strike.
In the meantime, the people of Greenville, many of whom served as extras, will enjoy the celebration after the “Leatherheads” sets were struck, far from the glare of Hollywood and from the media cameras on the owners.
9. Another NFL Owner’s Economic Concern: Subprime Market Ripples Rock New Cowboys Stadium Now that the subprime housing loan bubble has burst, wavelets are rocking commercial building projects all over America – including the Dallas Cowboys’ $1-plus billion new stadium in Arlington.
According to a report in the Dallas Business Journal, financial aftershocks have already cost the city of Arlington an additional $80,000 in construction costs since February. The municipality ($297 million underwritten) and the Cowboys ($475 million underwritten) had hired MBIA Inc. and Ambac Financial Group respectively to insure their stadium-related debt, apparently unaware that the two companies were “heavily exposed to subprime debt.” Now, Ambac has been downgraded from an AAA rating to an AA by a respected New York-based independent rating company, which in turn affects the stadium’s debt rating in the marketplace.
As of March 25, the Cowboys had sold $125 million in auction-rate securities to fund their stadium construction, according to the report, while Arlington’s adjustable-rate loan (offset by variable-rate bonds) went from 1.5 percent to seven percent in February.
Other sports entities are also watching Ambac closely, if not nervously – the company has also insured $613 million in financing for the New York Mets' new ballpark, and stadiums for the New England Patriots, Philadelphia Eagles, St. Louis Cardinals, and Premier League club Arsenal.
10. Aussie Sport to Suffer if Alcohol Advertising Stops Sporting groups claim the cost of participating in grassroots sport will rise if proposed laws to limit alcohol advertising on television and radio are passed in Australia. But in response to a recent Senate inquiry into liquor marketing, welfare groups have called for an outright ban on alcohol advertising. The Northern Territory Police called for prohibiting the use of sports stars to promote alcohol brands, and for proposed restrictions for television and radio to be extended to other media, including magazines and the internet. The welfare lobby, including the Association of Children’s Welfare Agencies, also calls for health labels to be put on alcohol products and ban tv and radio alcohol advertising between 5:00 a.m. and 9:00 p.m.
Australia’s sporting bodies, broadcasters and advertisers argued strongly against the proposed laws. The Coalition of Major Professional Sports, which represents seven key sporting bodies, predicted the bill could drive up the cost of grassroots sports by reducing the advertising revenue broadcasters could attract and therefore the broadcast rights fees that sports could demand. COMPS, which represents all four football codes as well as golf, tennis and cricket, estimates that five to 23 percent of sports’ revenue comes directly from alcohol sponsorship, thereby severely compromising the primary commercial driver in pro sports business models. In all, 65 submissions to the Senate inquiry on alcohol advertising sparked by Stephen Fielding’s Alcohol Toll Reduction Bill were published. The Senate is due to report back by June 18.
Countdown of 12 Top Super Bowl Business Issues, March 3-9, 2008
1. The Government, Steroids, and You
If you thought that Roger Clemens’ and Brian McNamee’s recent appearance on Capitol Hill was the last you’d see of sports figures parked in front of a congressional microphone, think again. That hearing three weeks ago was only prelude to last week’s appearance by all four commissioners of America’s major sports leagues (and their players’ union chiefs). And if the U.S. House Subcommittee on Commerce, Trade and Consumer Protection has anything to say about it, we’ll be seeing the quartet of Bettman, Goodell, Selig and Stern on more Washington tour dates throughout the year. With, perhaps, a racehorse or two.
According to Committee Chair Robert Rush, the purpose of the hearings was “to restart and perhaps finish the legislative process that we started in the 109th Congress. The use of performance-enhancing drugs in sports is not a trivial matter. This is a serious public health problem that is worthy of Congressional scrutiny.” For several hours, Rush and colleagues took the Commissioners Four through the performance-enhancing drug recommendations by the Mitchell Report, and how the leagues should (or should not) under government watch implement those recommendations and/or the provisions of the World Anti-Doping Agency Code. Added Vice Chair Jan Schakowsky, “Frankly, I wish we didn’t have to hold this hearing at all but after years of stories of professional athletes testing positive for performance-enhancing drugs, I’m afraid that this committee and this Congress is left with little choice.” And, added U.S. Representative Cliff Stearns, “Congress may need to create a federal standard to compel their compliances,” if the sports leagues refused to adopt stronger drug-testing standards.
Where does this leave the leagues? While NBA Commissioner David Stern was the most vocal in the group in expressing his outrage at the government intervention, all of the commissioners and union representatives made it clear that they think no federal legislation is needed. Rush said after the hearing, as quoted by the Associated Press, that it "might take months for the legislation to move through Congress -- perhaps until a new presidential administration takes over in January.”
2. MLB, PED and Image
Clearly, Major League Baseball has taken the hardest hit to its brand from the Congressional hearings and performance-enhancing drug issues. For the fourth consecutive year, talk surrounding spring training games in Florida and Arizona has focused on flying accusations rather than fly balls.
Even though the steroid issue has been front-page news off and on since March 2005, when Mark McGwire, Sammy Sosa and Rafael Palmiero were the names behind the microphones, it doesn’t appear that baseball has made any progress overcoming and moving past the steroid issue. While the game has not taken much of a financial hit thus far – only a handful of fans nationwide have dropped their season tickets due to player drug use – it’s only a matter of time before sponsors begin to seriously question their association with the sport.
Commissioner Selig and MLBPA chief Donald Fehr need only to look at the wreckage of professional cycling – its evaporated endorsement deals and television contracts and stripped titles – to see what their worst nightmare might look like. But they also can learn from cycling’s slow rise from the PED ashes to see what path they might want to follow. Two weeks ago, at the cycling-season opening Tour de California, riders submitted to the most stringent anti-doping program ever seen in the sport. The fan goodwill, overwhelmingly positive media coverage, and new sponsor response showed that sport that fans and Corporate America are willing to forgive…if real progress, steps to recovery and total commitment to the brand are evident.
3. Sports and Super Tuesday II
While the most significant sports issue on nationwide ballots this week is the $121 million sales tax extension in Oklahoma City designed to seal the SuperSonics deal, as the New York Times’ George Vecsey pointed out on Sunday, the political primary season is embracing sports images in a big way. In Oklahoma City, the proposed 15-month extension of a one-cent sales tax would raise $97 million to upgrade that city’s Ford Center to NBA specifications, as well as provide $24.6 million to build a NBA-caliber practice facility. While the upgrades don’t guarantee the Sonics’ relocation, they’ll certainly make a “yes” vote easier for NBA relocation committee members set to visit the city later this month. Back in Seattle, a group of investors are mounting a last-ditch effort to buy the Sonics, or another NBA team, to play in a refurbished KeyArena, according to the Seattle Post-Intelligencer. The investment group would reportedly contribute $150 million toward a $300 million total overhaul of the facility, as well as renovate Memorial Stadium at Seattle Center. Sources site the rest of the needed funding as coming from existing stadium taxes, which would raise $75 million, and city bonds, which would contribute the final $75 million. Since the Washington state legislature is scheduled to adjourn in two weeks, however, it would take a near miracle for these measures to pass this year. On the national political stage, Vecsey speculates that white male voter familiarity with African-American sports stars, and Senator Barack Obama’s basketball background, have contributed to Obama’s support among white male voters growing to 61 percent last week from 23 percent in early January. Vecsey sites political scientists who see Obama in much the same vein as Tiger Woods and Michael Jordan, superstars who have unshakeable self-images and whose abilities have helped them transcend race. That theory, clearly, will be tested this week.
4. Tiffany Takes on Tito Ortiz
No, it’s not a remake of “Buffy the Vampire Slayer.” In a bold move to move its core demographic from “geezer central” to highly desirable 18-34 year-old males, CBS, otherwise known as the Tiffany Network, will over the next year air on Saturday night prime time four two-hour Mixed Martial Arts fight cards to be produced by Elite Xtreme Combat, currently producing MMA programs for CBS property Showtime. While Elite XC doesn’t in fact promote Tito Ortiz, who, along with superstar Chuck Liddell, fights under the Ultimate Fighting Championship banner, MMA in general has grown quickly from pay-per-view to cable now to network television. Ultimate Fighting generated more than $200 million in 2006 from 10 pay-per-view fight cards, and its “Ultimate Fighter” show on Spike TV drew more viewers than four ESPN “Monday Night Football” games last season. Fox, heavily boosted by its sports programming, including its record-breaking Super Bowl broadcast, college BCS games, the World Series, and NASCAR, is now tv’s ratings king for the first time in its 30 year history. Sports and “American Idol” have helped it cement the 18-49 demo. If you eliminate all sports from the ratings, however, CBS on average would come out on top, beating runner-up ABC 10.6 million viewers to 9.7 million, according to industry projections. Through MMA, CBS, which relies heavily on scripted programming and was hard-hit by the Hollywood writer’s strike, is looking to balance out their programming with more non-scripted alternatives. But…gee whiz…what will 90-year old Andy Rooney say?
5. NFL Comcast
In less welcome television news (at least to the NFL), last Tuesday, a New York appeals court reversed the May 2007 ruling that allowed Comcast to move the NFL Network to a sports tier with roughly 750,000 viewers from its broader digital cable platform and seven million-plus subscribers. The Appellate Division’s unanimous 4-0 decision said the contractual terms that led to the 2007 ruling were too ambiguous, and will require a jury trial to identify how Comcast will distribute the NFL Network. For now, Comcast will continue to carry the NFL Net on its sports tier. The May 2007 ruling has likely cost the NFL tens of millions per month in lost income. The league, accustomed to battling cable operators, also filed suit last week in New York State Supreme Court to prevent Dish Network from downgrading the NFL Network from a 12 million subscriber general tier to an eight million subscriber sports tier. Stay tuned – unless you don’t subscribe to a sports tier.
6. Red Sox Nation Set to Invade Coliseum
With or without its newest member Hank Steinbrenner, it looks like Red Sox Nation is set to invade the Los Angeles Memorial Coliseum in an even bigger wave than anticipated on March 29. Faced with unprecedented demand for tickets to the Dodgers-Red Sox exhibition game to be played in the Coliseum on that date, the Dodgers have put an additional 25,000 tickets on sale, increasing the stadium’s capacity for the game to 115,000 (from the originally-planned 90,000) and, if the game sells out, breaking a 49- year-old record for baseball game attendance. West Coast Red Sox fans always seem to come out in droves, so there’s a good chance Boston crimson will equal Dodger blue in the stands. In May 1959, 93,103 turned out to watch the Dodgers play the New York Yankees in a benefit game for Dodgers catcher Roy Campanella, who had been paralyzed in a car accident the year before. This year, proceeds from the Dodgers-Red Sox game will benefit ThinkCure, the Dodgers cancer research foundation established in conjunction with Childrens Hospital Los Angeles and City of Hope. Foundation officials are hopeful that over $1 million will be raised from the game – the latest batch of tickets have been scaled from $25 to $15, with standing room only spaces under the Coliseum’s landmark peristyle arches going for $10.
7. Is a Candlestick a Candlestick by Any Other Name?
While naming rights to the Coliseum, under the new deal between the Coliseum Commission and USC, are expected to bring in $5 million or more per year, upstate from LA, the San Francisco 49ers and SF city officials have announced that the aging stadium formerly known as Candlestick Park would once again carry that memorable moniker. Recent naming rights deals for the close to 50-year-old stadium have been highly criticized by fans, most of whom have refused to acknowledge the titles of 3Com Park, first bestowed in 1996, and later (and scarier) Monster Park, so named after Monster Cable bought naming rights in 2004 for an estimated $1.5 million annually. In 2005, San Francisco voters passed a proposition forbidding the city and the team from reselling the naming rights when the Monster Cable deal expired. Since the 49ers are doing their best to move down the Bay to Santa Clara, the name on the SF stadium may soon be Moot Point Park. Which, when you think about it, is better than some of the possible names that Silicon Valley might slap on the new building: Yahoo Yard, Nvidia Endzone, or Google Gate.
8. Winging It Without Cash in Wichita
If you’re planning on catching a Wichita Wingnuts game this baseball season, don’t bother taking your wallet to 74- year-old, 6,100-seat Lawrence-Dumont Stadium. They don’t want your money.
In an effort to speed concession and merchandise lines and reduce employee theft, the Wingnuts, a first-year independent American Association baseball team, will this season become the first U.S. sports team ever to operate a cashless facility. Fans will be able to buy food, drink and merchandise, and access kiddie zone attractions with credit cards or team stored-value cards in $5-$100 increments they can buy at the ballpark. Cold hard cash will never pass through the hands of Game Time Food and Beverage, the team's Chicago-based concessionaire.
Wichita Pro Sports, the group that owns the team, has signed a five-year contract with smart-card marketer Total Venue Control (TVC) to activate the new point-of-sale system. At no cost to the team, TVC is investing about $50,000 upfront to install the equipment. In its deal with the Wingnuts, TVC makes its money by signing up card sponsors, taking a percentage of per capita spending, and collecting "breakage," or unspent card balances, according to company executives. Labor savings are projected to be $18,000 this season, which begins May 7 for the first of 48 home games. No doubt MLB will be watching closely – the White Sox attempted using smart-cards in the last decade, but abandoned them due to a lack of fan interest (the NFL Panthers and Jaguars did the same).
9. Puma, Umbro and Hombre
Largely thanks to its central presence at the recently-completed Africa Cup of Nations and its marketing and branded-store push in the Middle East and Europe, Puma AG has announced a 17 percent rise in fourth-quarter profits. Now owned by French luxury-goods company PPR SA, Puma earned €38.3 million, or $57.3 million US, up from €32.8 million a year earlier.
Not faring so well was Umbro – before Nike just completed its acquisition of the soccer equipment maker, that is. Nike’s $566 million buyout of Umbro is critical to the Beaverton, Oregon company’s efforts to become the worldwide top soccer brand by the next World Cup, in two years.
Closer to home, boxer Oscar De La Hoya and his Golden Boy Promotions partner Gabriel Brener are set to purchase a 50 percent stake in the MLS Houston Dynamo from AEG for a reported $20 million. “I want to be part of what is the No.1 sport with Latinos and with the world, and that’s soccer,” De La Hoya said last week. The deal will leave AEG, which owned and operated six MLS franchises only five years ago, with the Los Angeles Galaxy as its only fully owned franchise. The company has sold the Colorado Rapids, the New York Red Bulls (formerly MetroStars), the Chicago Fire, and D.C. United to other investors, a diversifying move industry analysts claim will help soccer to expand well beyond its current demographics.
10. British Bull?
Not likely to show up at a New York Red Bulls match any time soon: retired English soccer star Paul Gascoigne. Gascoigne was recently detained under the British Mental Health Act following a series of insane-esque incidents at a London hotel. According to the London Daily Mirror, Gascoigne was “almost permanently drunk, set off a fire alarm, spend hours gambling with staff, and wandered around clutching plastic battery-operated parrots.” The newspaper also reported that “he would order raw liver from room service – and answer his door stark naked.” The identified cause of this bizarre behavior? An addiction to Red Bull. Gascoigne had reportedly been drinking 50 cans of the highly caffeinated concoction every day. No word on whether, following his incarceration, he’ll be offered a spokesman job by the New York team.
Countdown of 12 Top Super Bowl Business Issues February 25-March 2, 2008
1. Ballpark Bytes While we’re sitting around waiting to see whether the Illinois Sports Facility Authority will take the baseball bait and buy Wrigley Field from Tribune honcho Sam Zell, other ballparks around the country are going up – and greening up – as Spring Training intensifies.
In Florida, Miami city and Dade Country commissioners have all somewhat reluctantly voted to approve a preliminary plan for a $515 million, retractable-roof stadium for the Marlins that would be ready in time for the 2010 season. Still open to debate is the name of the team that will inhabit the place – while county officials plan to stick with the Florida Marlins, Miami officials, of course, are backing the Miami Marlins moniker, arguing of course that since the site of the new ballpark is within city limits, the team should be eponymous. (As opposed to the way it’s played the last few seasons – anonymous.)
In Washington, Nationals Park is seeking the first Leadership in Energy and Environmental Design (LEED) certification from the U.S. Green Building Council ever to be bestowed on a pro sports venue. From underground water filters that sift out peanut shells and other post-game waste to restroom fixtures that save 3.6 million gallons of water per year to 20 percent of the building’s framework being built from recycled materials, the $611 million ballpark, as the Washington Business Journal notes, “is giving a whole new meaning to greenfield.”
2. Havana Have Nots? One thing you could say about Fidel Castro – the 50-plus year Cuban leader was good for baseball. The Cuban national baseball team won 10 consecutive Pan American Game titles, 18 World Cup championships, and three of the four baseball Olympic gold medals.
Fidel’s brother Raul, however, seems to have more fairways than diamonds in mind. As part of his public pledge to gradually open Cuba’s economy to the world, the younger Castro’s economic ministers are reportedly in discussions with international golf course designers and resort concerns about developing no fewer than 10 new high-end golf resorts in that country.
Major League Baseball executives, meanwhile, remain hopeful that despite While Sox shortstop Alexei Ramirez’ defection last September – the latest of eight Cuban-born players to join MLB – the new administration will be eventually more open to allowing Cuban talent to play in the U.S. For the moment, baseball continues to respect the mandates of the U.S. State Department, which has forbidden most Cuban business relations since Castro came into power.
3. Off-Road Merge Safe Move for Open Wheel Racers Baseball isn’t the only sport altered by high-profile defections. On Friday, the Indy Racing League and the Champ Car World Series ended a 12-year standoff and agreed to merge the two completely separate operations of open wheel racing. Both leagues had of late struggled to maintain attendance, sponsors, and television ratings in the face of NASCAR’s surging popularity – and the defection of such popular open-wheel drivers as Sam Hornish, Jr., Juan Pablo Montoya and Dario Franchitti to the stock car circuit.
Practically, the IRL will allegedly absorb several Champ Car teams and a handful of its 14 scheduled races. Teams moving to the IRL will likely receive free engine and chassis upgrades to IRL standards, and the $1.2 million annual incentive programs offered to IRL teams each year.
4. F1 Eastern Expansion Set to Continue Apace Outside of American open-wheel racing, Formula One will continue to target new events in new markets, particularly in the Middle and Far East, following reports that its advertising and hospitality division took a hit over the last 12 months.
CVC, the private equity company which assumed control of the sport’s commercial side in 2006, reported an after tax loss amounting to $3 million from the advertising and hospitality division based on figures for eleven of eighteen races staged after the May 31 takeover date. With countries such as China, Bahrain, Singapore, and Abu Dhabi securing spots on the grand prix calendar, demand for Formula One racing in the Middle and Far East remains high, providing a serious boost for both trackside exposure and hospitality. CVC took control of Formula One’s commercial rights through its Alpha Prema UK offshoot in March 2006 and added the sport’s sponsorship agency and hospitality groups in a $1.7 billion second acquisition last April.
Lest we feel sorry for F1 figures, here’s some perspective: two-time F1 champion Fernando Alonso signed a two-year contract with Renault last fall. For $51.3 million. Per season.
5. Sonics Sale – Taxing in Seattle, Tax in OKC Next Tuesday, Seattle SuperSonics owner Clay Bennett and his Professional Basketball Club owners group will be closely following a potentially game-changing measure in Oklahoma City, as local voters decide on a one penny sales tax increase to fund $150 million worth of NBA-caliber renovations to that city’s downtown Ford Center. The renovations, which comprise more luxury suites, premium seating, and a state-of-the-art adjacent practice facility, won’t guarantee that Seattle will let loose of its longtime franchise. They will, however, likely go a long way toward the NBA Board of Governors approving the franchise relocation to Oklahoma City at their next meeting in March.
Meanwhile, Seattle has rejected an allegedly David Stern-prompted $26.5 million buyout offer from Bennett’s group, which would cover the final two years of KeyArena rent as well as close to $19.3 million in compensation for the current bond due for prior KeyArena repairs. If the Oklahoma sales tax passes, watch for that buyout offer to inflate – and watch for further fireworks in Seattle between politicians and basketball backers to ignite.
6. Goalies on Thin Ice? Hockey goalies are used to being in the cross-hairs of a slapshot. Last week, they were targets of a different sort, as NHL executives and the NHLPA considered whether to consider a group of goalies’ proposal to place corporate logos on their jerseys, and whether or not to alter overgrown goalie equipment in order to increase scoring in NHL games.
If the proposal of the so-called “Goaltender’s Club,” a group including Dallas goalie Marty Turco and the Red Wings’ Dominik Hasek, came to pass, the advertising revenue it generates could reach upwards of $30 million per season, according to marketing consultants working with the group. The funds would go to support goalies’ charities and other team and league causes; the goalies note that the uniforms of their European peers are rife with ads. NHL Commissioner Gary Bettman has yet to endorse the idea.
What Bettman does endorse are any viable steps toward ending hockey’s goal drought, and he’s unanimously backed in that position by all of the NHL’s general managers. Last week, the GMs voted to press for the downsizing of Transformer-like goalie equipment, which often comes with protruding leg pad flaps, enormous gloves, and shoulder pads that would make Alexis Carrington green with envy. Alongside this increase in the crease is a bloating of the average save percentage, which rose from .881 in 1990 to about .908 today. And only a very modest 5.2 goals per game are scored in regulation. (Interesting that over time, baseball inflated to increase scoring and keep fans engaged, now hockey is deflating to do the same.)
7. Collusions of Grandeur In Hollywood, the writers union just settled its strike. In Ball-ywood, the earliest rumblings of a labor dispute are beginning to be heard, as the NFLPA last week filed the first charge of collusion against NFL owners it has brought in the 15-year span of the current collective bargaining agreement.
It’s all about the debt cap. Last fall, NFL owners voted to lower each of the 32 team’s debt ceiling from $150 million to $120 million, and to lower team/league debt by $1 billion over the next three fiscal years – moves the NFLPA claims is designed to cut off the cash needed to fund players’ salaries. Last week, the NFLPA initiated arbitration proceedings, charging that the fall league decision violated anti-circumvention and anti-collusion provisions of the CBA.
The NFL responded quickly, claiming that measure was necessary to protect the league’s good credit rating in light of the worsening economy, and that the reductions would have no impact on the NFL’s financial obligations to players. The most likely next step by owners, after going through necessary arbitration motions? Opting out of the current CBA, which is set to expire at the end of the 2012 season. Stay tuned.
8. Golf: Fewer Ams, More Pro-Ams It’s official – we’re far too busy to play much golf. The total number of people who play golf has declined or remained flat each year since 2000, dropping from 30 million active players to about 26 million, according to the National Golf Foundation. Even more alarming to golf industry executives is the number of people who play 25 times a year or more – the bread and butter of the industry – which fell to 4.6 million in 2005 from 6.9 million in 2000. Two primary factors are likely the cause. One, although golf has long remained economy-neutral, populated by individuals who are largely immune to economic downturns, the latest batch of corporate cutbacks has eliminated such perks as country club memberships, substantial wage increases, and generous pensions that fund weekly rounds. Two, changing family dynamics have vastly changed the sport. While golf remains a male-dominated pursuit, many dads who used to get in a couple of rounds a weekend are too busy with soccer games and Indian Guides to play. Courses aren’t keeping apace with changing family needs and changing demographics – one highly-publicized story last week pointed an unflattering spotlight on a Cape Cod public course that still, in 2008, bars scratch female golfers from men’s only events. The course is getting sued. One response tactic by the golf industry is the rise of charity events, such as the second Pro-Am added to this week’s PGA Tour Honda Classic. Next Monday, the Honda Classic Celebrity Shootout at PGA National Resort, Presented by Horrow Sports Ventures, will benefit the RDK Melanoma Foundation. While I am personally invested in the fight to prevent melanoma, such efforts by the golf industry overall don’t just help to preserve a great and timeless sport, they are a terrific vehicle for busy people to invest time in aiding worthy causes – and have fun doing so.
9. Football Money League: ManU Rises but Real Madrid Stays on Top Manchester United climbed two places to second in the latest “Football Money League” from business advisory firm Deloitte, which ranks the 20 biggest football clubs in the world based on revenue, but Real Madrid remains the world’s largest revenue-generating club. ManU is joined in the top five by fellow Premier League clubs Chelsea and Arsenal.
Analysis in the Football Money League is based on the latest financial information for the 2006-07 season. Chelsea climbed two places to fourth, while Arsenal rose four places to fifth this year. This is the first time that any country has had three clubs in the Money League top five.
The stadium is a club’s biggest asset. Arsenal’s move to Emirates Stadium has transformed its revenue, while Chelsea’s revenue increase sees them return to the top five. Real Madrid and ManU became the first football clubs to generate more than €300 million in a season. Real enjoyed an impressive 20 percent increase to take their total revenue to €351 million (£236 million), while United’s revenue grew even more quickly to reach €315 million (£212 million). The top 20 clubs’ collective revenues grew by 11 percent to €3.7 billion (£2.5 billion) in 2006-2007, the highest rate of growth since 2002-2003. The top 20 clubs now generate more than three times the combined revenues of the clubs in the first Money League in 1996-1997.
10. Ye Olde Sod? March is supposed to be the month of Irish leprechauns and four-leaf clovers. In Arizona, apparently, the blade’s the lucky thing.
The grass field at the University of Phoenix Stadium upon which the New York Giants delivered the New England Patriots their stunning Super Bowl defeat is being donated by the Arizona Cardinals to a local high school. Next month, Phoenix’ Moon Valley High will install approximately 75,000 square feet of the Super Bowl turf at its Rocket Stadium. The Rockets have already absorbed some of the Giant’s red glare – their uniforms are scarlet, royal blue, and white. Now, they’re hoping to absorb some of the New York upstart’s luck as well.
Countdown of 10 Top Sports & Entertainment Biz Issues February 11-17, 2008
1. Congressional Hearings on Steroids – the Super Bowl of Politics
On Wednesday, Major League Baseball’s pitchers and catchers prepare to report to spring training. But they’ll take a backseat to one of game’s most famous pitchers who will be reporting not to Florida or Arizona but to Capitol Hill.
Roger Clemens, Brian McNamee and their legions of lawyers are finally ready for their much-anticipated day of testimony before the U.S. House Committee on Oversight and Government Reform. The latest chapter in the post-Mitchell Report round of hearings promises to be a contest of “he said – he said” like none before.
After meeting with attorneys from the Oversight committee on Thursday, McNamee’s attorneys, in a preview of the Technicolor circus to come, "presented color photos of needles, vials of testosterone, gauze and other evidence” that allegedly links Clemens to illegal performance-enhancing drug use, according to multiple national news sources. Clemens went door-to-door visiting 19 congressmen and women on the committee, meetings his attorney Rusty Hardin “get-acquainted session(s).”
Whether Clemens’ goodwill tour will prove successful remains to be seen – what is successful beyond any doubt is the league itself. MLB posted a record $6 billion in revenues last season, and has seen record-advance season ticket sales for 2008 despite an economy headed toward a recession. Thousands of fans will follow Wednesday’s congressional hearings online from their desks; familiar behavior, for MLB Advanced Media generated more than an estimated $450 million in revenue last year.
Regardless of what happens Wednesday, fans will still flock to Opening Day. And politicians will still seek to raise their own profiles from the proceedings. Interestingly, 24 pro baseball teams are represented by Oversight and Government Reform Committee members. And it’s an election year.
2. The Yao of Baseball
Two weeks ago, 200 million viewers in China tuned in to watch the Houston Rockets’ Yao Ming face countryman Yi Jianlian of the Milwaukee Bucks – hardly a marquee match-up by American standards. Yi’s arrival in Milwaukee has even led a group of Chinese leaders in that community to start Wisconsin’s first-ever Chinese-language newspaper. Ah, that China’s 1.3 billion citizens embraced baseball the way they do the NBA, Yao, and Yi. But that’s not for a lack of effort on Major League Baseball’s part.
This week, as pitchers and catchers report to their assigned Spring Training locales, some of MLB’s focus is already leapfrogging the cactus and grapefruit leagues and zooming instead on March 12 and 13, when the San Diego Padres will play the Los Angeles Dodgers in the first-ever major league games in China. Besides scheduling the preseason games, baseball opened an office in Beijing last summer, and also launched a program to train Chinese coaches in the art of “#### qiu,” (baseball translated as “stick ball”), who in turn will teach the game to an estimated 100,000 Chinese youths.
The Chinese Baseball League, which began in 2003 with a large nudge from MLB plays mostly to empty ballparks, and the jury is out on whether MLB’s latest efforts will stick any more than its attempts to popularize the game in the past. The March games will be a major #### qiu barometer.
3. Daytona – The Super Bowl of NASCAR – Another Windfall for Fox
Just when the executives at FOX Sports thought TV life couldn’t get any better after the advertising and ratings bonanza that was Super Bowl XLII, here comes NASCAR’s opening weekend in Daytona, complete with that sport’s 75 million fan base and close to $380 million in revenue.
Just like Super Bowl XLII, FOX’s ad inventory for race week at Daytona is sold out. The network reportedly averaged $550,000 per 30-second unit for this year’s race, a healthy 15 percent increase from last year’s $475,000. The first half of the NASCAR season on Fox is more than ¾ sold – advertising revenue that ignores lower NASCAR ratings the last two seasons.
Meanwhile, the latest Scarborough Sports Marketing data on NASCAR fans reveals that race circuit fans are “top spenders in big-ticket retail categories, avid tech consumers, and influencers when it comes to making business purchase decisions.” Among Scarborough’s latest findings are that the league’s fans are 15 percent more likely to buy a new vehicle during the next year than the average consumer, 19 percent more likely to have spent $500 or more on jewelry, 24 percent more likely to purchase a video game system, and 39 percent more likely to buy a satellite radio subscription. Top local markets for NASCAR fans with household incomes of $100,000 or more include Washington D.C., San Francisco, Atlanta, and of course, Charlotte.
4. NBA All-Star Game – the Somewhat Super Bowl of Basketball
Even without Kevin “Big Ticket” Garnett, the NBA All-Star game in New Orleans is just that. With no fewer than nine official NBA events – each with a presenting sponsor – lined up for All-Star weekend, the midseason break promises to be yet another step in the sports industry’s work to help rejuvenate New Orleans. Last year’s event in Las Vegas was estimated by city officials there to deliver more than $90 million in non-gaming economic impact – a sum that could vastly energize NOLA.
The sports industry was on record giving more than $9 million within the first 48 hours of Hurricane Katrina’s aftermath, and the generosity has not stopped. From volunteering time to donating a portion of the proceeds, NBA players and the league are helping to ensure that the industry continues to do what it can to help the city recover. Sponsors are stepping up as well.
Sprite, Foot Locker, T-Mobile, Sony, Haier, McDonalds, adidas, Lenovo, AutoZone and Spalding, along with the league itself, are serving as corporate host for events ranging from the annual “NBA Cares” day of service to the ever-popular Slam Dunk contest, the celebrity All-Star game and the D-League All-Star Game showcasing future stars.
The big if, of course, in the Big Easy is the future of the NBA Hornets there. The team generated only $105 million for the New Orleans region in the season before the hurricane struck, and has been playing to a two-thirds empty New Orleans Arena for most of its games since returning from Oklahoma City last year. Owner George Shinn is reportedly set to pull the plug on his deal in Louisiana – Sacramento, Kansas City, or even Las Vegas, site of last year’s All-Star extravaganza, could be the future home court of the team.
In reality, New Orleans needs the NBA All-Star Game more than it needs the Hornets. The city needs tourism – and it will get tourists in droves this weekend.
5. Full Bowl of Women’s Sports
As the NBA descends upon New Orleans, the WNBA celebrates its latest expansion franchise in Atlanta. Last Wednesday’s expansion draft for the newly-minted Atlanta Dream, the league’s 14th team, produced a capable team of veterans looking forward to their season opener May 17 in Connecticut. The league’s maximum salary for the 2008 season is $95,000.
As LPGA players prepare for their season opener this week, the SBS Open on Oahu’s North Shore, all eyes are on Mexican phenom Lorena Ochoa. Ochoa, along with Cristie Kerr, Suzann Pettersen and Morgan Pressel, all winners of the LPGA’s 2007 majors, all have endorsement deals "well in excess of seven figures annually, many from multinational companies outside golf,” according to Golf World. Female golfers are increasingly popular with Corporate America; Ochoa, the magazine reports, has deals with Audi, Lacoste and Rolex, while Pressel represents Polo Ralph Lauren and Stanford Financial.
Meanwhile, the not-yet-launched Women’s Professional Soccer league has just gotten a major assist from the Phoenix Sun’s Steve Nash, who has come on board along with former Yahoo executive Jeff Mallett in investing in the eight-team league. Nash, who could have gone pro as a soccer player had he not chosen basketball, is also the father of three-year-old twin girls. The league plans to debut in Spring 2009, with teams planned in Boston, Chicago, Dallas, Los Angeles, New Jersey/New York, the San Francisco Bay Area, St. Louis and Washington.
As Northern Trust Bank prepares for its inaugural stint in sponsoring the PGA’s next tour stop at glitzy, storied Riviera, A####mp;T is making golf headlines for its 10-year naming rights deal in San Antonio. Rather than the standard plan of purchasing the title sponsorship of a tournament, the telecomm giant has opted to name two courses being developed at TPC San Antonio. Similar to a naming rights deal for a stadium or arena, the A####mp;T Oaks Course and A####mp;T Canyons Course are scheduled to open in 2010. “This is the first time that a destination golf course, that I know of, has been named after a consumer brand,” says PGA Tour Course President Dave Pillsbury in the Sports Business Journal. A####mp;T will provide course phone, internet and video services.
In tandem with the San Antonio news, A####mp;T announced that it has extended its title sponsorship of the just-completed A####mp;T Pro-Am in Pebble Beach. The new deal, which will run through 2014, is estimated by industry sources at around $8 million per year. The company is also ending its title sponsorship of the Atlanta PGA Tour event after this season.
7. The Road to the Final Four: the NCAA Gives Back
It’s time to start thinking brackets – March Madness is only a few weeks away. While tournament time is an annual goldmine for the NCAA and CBS alike, this year the windfall will extend a little more to athletes. As part of a federal antitrust lawsuit settlement, last month the NCAA agreed to “make available $10 million that will provide supplemental money above the standard athletic grant-in-aid to athletes who have competed in Division I-A football and Division I men’s basketball conferences” from February 17, 2002 until now, according to USA Today. The $10 million is the amount in the funds through the end of CBS’ $6 billion contract for the rights to televise the NCAA tournament, which runs through 2013. The antitrust suit stated that the NCAA’s restrictions on scholarships to the cost of “tuition, books, housing, and meals” was an “unlawful restraint of trade” due to the billions of dollars the NCAA earns through its tv and licensing deals.
The $10 million will be made available to the estimated 12,000 student-athletes who qualify over a three-year period. In a small way, the over-commercialization of March Madness stars will begin to pay off for them – even before they skip out of school to sign lucrative NBA deals.
8. Pro Bowl – Is it time to say aloha?
Seventy-two total points, a sellout crowd of 50,044 at Aloha Stadium, and a $40,000 winning team player bonus were wrapped up in the NFL season-ending goody bag otherwise known as the Pro Bowl. As he relaxed in the Hawaii sunshine, however, NFL Commissioner Roger Goodell was adamant that although the 2009 game will be played as usual in Honolulu, honoring the league’s five-year, $20.75 million contract with the state of Hawaii, changes are likely in store for the NFL’s All-Star game.
The NFL is reportedly exploring the possibility of moving the Pro Bowl to the host site of the Super Bowl, to an international site, or cancelling it entirely. As Goodell noted, 17 players nominated to play in the game declined to do so. (This year, only one member of the Super Bowl champion New York Giants played, defensive end Osi Umenyiora.)
The Pro Bowl's economic impact on Hawaii fell this year for the second year in a row, according to a survey conducted by Market Trends Pacific Research. The game generated $2.72 million in state taxes versus $3.23 million the year before. In 2005, visitors spent $39.45 million and accounted for $3.83 million in state taxes. The survey said more than half of the spectators at the game were visitors. And of the 27,265 visitors, 20,608 came to Hawaii specifically to attend the game.
The Nielsen national rating for the 2007 Pro Bowl was 4.6 -- up 21 percent over 2006 -- with a total household viewing audience of 5.2 million. Last year’s game, however, was played on Saturday, with little competition from pro sports it faced this year, including two huge NBA match-ups – San Antonio at Boston and Denver at Cleveland – and the final round of the A####mp;T Pro Am in Pebble Beach.
9. Soccer: More Hola than Aloha
Also headed to Hawaii later this month – David Beckham and the Los Angeles Galaxy. The team will participate in the inaugural Pan-Pacific Championship, a four-team tournament matching two MLS squads against a team from Australia’s A League and Japan’s league cup champion. The exhibition tournament takes place a month before the start of the MLS 2008 regular season.
The Galaxy, however, heads to Hawaii knowing that even with a healthy Beckham in place for at least another year, they are far from the biggest soccer draw in the U.S. That would be…the Mexican national team. Close to 70,000 fans attended last week’s Houston friendly between the Mexican and U.S. national teams, and MLS execs are hoping that Mexican squads are the catalyst that helps soccer thrive in America. Last year, Mexico played a dozen games in nine U.S. cities and averaged 53,207 people per game. The U.S. national team drew an average 32,724 fans for their games.
Hispanics represent 35 percent of the MLS fan base, higher than any other major pro sport in the U.S. Last week’s game produced a reported gate of more than $3 million on ticket sales alone – some basic multiplication shows the enormous potential revenue if MLS and other American soccer organizations are more effectively able to harness this “sleeping giant” fan base.
10. Fake Out: Fans Spent Thousands on Counterfeit Autographs
Euro sports fans have been conned into spending thousands of pounds on fake autographs of their heroes. Signatures of England rugby player Jonny Wilkinson and football players David Beckham, Steven Gerrard, Michael Owen, and Manchester United manager Sir Alex Ferguson were “systematically” forged and sold by businessmen Graeme Walker and Faisal Madani, according to British sources.
Prosecutors have relied on evidence from a handwriting expert and some stars themselves, including Wilkinson, Gerrard, Owen and Jamie Carragher, who have denied signing the items. The bulk of the fraud took place in 2005, when England lifted the Rugby World Cup thanks to Wilkinson’s drop-kick, and when Liverpool FC recorded their historic fifth Champions League victory. Fans paid premium prices, hundreds or even thousands of pounds, in the belief that they were buying genuine goods. In 2002, Madani paid Premier League star George Best compensation of £10,000 after Madani was caught selling fake autographs supposedly by the football legend. The investigation took place over eight months in 2005, a good year for English sport. The national side won the Rugby World Cup and Liverpool, a popular local team, won the European Cup. Sporting Icons took advantage of the lucrative market for sporting merchandise by systematically trading in fake goods.
Rather than highlight the obvious Super Bowl winners – the Giants, Eli Manning, the Fox network, Phoenix/Glendale, and losers – the Patriots, Bill Belichick, Tom Brady, I thought I’d call out the more subtle victors and vanquished after Super Bowl XLII. Among the winners are:
Local Fox affiliates. Fox 25 in Boston was charging $250,000 for a 30-second spot, reportedly the largest single-price per ad in the local market. In comparison, the cost of running an ad during a regular-season game is about $42,000. Thirty-second regional packages including New York and smaller markets were running $350,000, according to industry media buyers.
Fourth quarter advertisers. Since the Super Bowl is often a blowout, the fourth quarter generally means fewer viewers and slightly lower ad rates. Among those advertisers getting their 4Q money’s worth on Sunday were Amp Energy, Victoria’s Secret, Hyundai and Coke, which aired two of the best ads of the day in the form of a Charlie Brown hot air balloon and the normally over-inflated Bill Frist and James Carville.
The FBR Open. The Scottsdale PGA event set an all-time PGA attendance record of 538,356 visitors. Revenue from the 154 skyboxes on the infamous 16th hole alone was $6.9 million (they averaged $45,000), meaning millions of additional dollars for local charities.
The Jets. The “other” New York team, along with stadium-mate Giants, is now positioned to see naming rights and PSL revenues for their under-construction stadium jump up a few notches. Seat licenses at the new Cowboys’ stadium are going for $16,000-$150,000 – look for Jets/Giants to up that.
Tom Condon. Eli Manning’s contract agent never had it so good. On to the NFL combine and the draft.
Wembley Stadium management. If the San Diego Chargers win Super Bowl XLIII, it will be certain that Wembley is the NFL’s new lucky charm. Regardless, the fact that the Wembley game in October ’07 produced the eventual Super Bowl winner should compound Euro interest in the October ’08 Chargers-Saints contest.
Super Bowl XLII – The Hidden Losers
And then there’s the losers:
Las Vegas. February 3 may topple January 21, 1979, otherwise known as “Black Sunday” to Las Vegas sports books. On that day, the underdog Pittsburgh Steelers defeated the defending champion Dallas Cowboys in Super Bowl XIII and cost the casinos millions in payouts. Early reports from Nevada have Super Bowl XLII showing the worst Super Bowl losses by sports books ever, in terms of money-line bets on the Giants, the Patriots’ failing to beat the point spread, and first quarter over/under bets.
Wall Street. According to early reports, trading volume was 15-20 percent below the daily average on the New York Stock Exchange Monday morning, and at 10:00 a.m. (and $81.1 billion), was even as low as 34 percent below the 20-day average of $123.7 billion. Look for this to continue on Tuesday, as New York traders skip out for the Giants’ victory parade.
Vin Gupta. The Salesgenie.com CEO reportedly writes all of the company’s Super Bowl ads himself. This year’s three 30-second spots cost the company probably $2.5 million each and $150,000 to produce. What Mr. Gupta got for his $7,650,000 was a dead-last rating in USA Today’s Ad Meter, and internationally-televised snippets of racism and bigotry in his tasteless cartoons.
Advertisers in general. It’s not often that the game on the field overshadows much-anticipated Super Bowl ads, but that’s what happened on Sunday. While there were a handful of winners (my favorite was FedEx’s giant pigeons), in general this year’s offerings fell flat. With lower ad ratings among fans and with the U.S. economy headed into a recession, “flat” is likely where advertising rates will remain for Super Bowl XLIII in 2009.
Gisele Bundchen. Move over, Jessica. The curse is now on Gisele. Who can kiss those modeling contracts for NFL apparel good-bye.
The New York Yankees. Sorry, Bronx Bombers. You’re no longer the most popular kids on the block. Better get used to it – at least until your new stadium opens in 2009.
Countdown of 10 Top Sports & Entertainment Biz Issues January 21-27, 2008
1. NFL Road to Super Bowl XLII – Conference Championship Aftermath
NFL fans in cities from coast to coast are reeling after a thrilling Sunday of conference championship football – and the excitement, culminating in Super Bowl XLII in Glendale, Arizona, is only beginning to build.
A sampling of 653 NFL fans, as canvassed by the TNS Sports Poll, reported 92 percent total interest in the NFL Playoffs. 55.9 percent considered themselves “very interested,” while 25.8 percent said they were “somewhat interested,” and 10.3 percent described themselves as “a little bit interested.” Overall fan interest in the NFL also hit 75.1 percent in November well above the 70.9 percent 12-month average, and close to the 77.7 percent all-time high.
With the New England Patriots now set to play the New York Giants on February 3, and with the Pats gunning for a record 19-0 season, fan and corporate interest in the game is likely to also reach an all-time high. While Fox and NFL execs had clearly been hoping for a crowd-pleasing Tom Brady-Brett Favre match-up, a contest between the NFL’s hottest team, the Patriots, and the flagship team of the nation’s biggest media market, the Giants (which also happens to have a broad national following among New York transplants everywhere), isn’t a bad alternative.
2. NFL Road to Super Bowl XLII – Impact on the Valley of the Sun
In the metro Phoenix area, local leaders and business owners are bracing for not one but two premier events during Super Bowl week, as the PGA TOUR’s fifth event of the year, the rowdy FBR Open, holds court in Scottsdale. Golfers are reportedly already hoping to avoid a playoff – even without one, the FBR Open winner won’t be crowned until close to 4:00 p.m. local time, less than half an hour before the Super Bowl kicks off.
After four years of construction, University of Phoenix Stadium, the first NFL venue to give naming rights to a school, is the league’s showplace facility. Its moveable playing field, natural grass grown in a 18.9 million pound tray that’s pulled into the stadium on game days via motorized tracks, is an attraction in its own right. The Arizona Super Bowl Host Committee is closing in on its goals of raising $17 million and recruiting 10,000 volunteers. The game day and event packages it’s offering range from $5,000-$150,000; most have already been snapped up by Arizona businesses. The Host Committee’s own Big Ticket Gala on January 30 at the Scottsdale Phoenician Resort will set a fan back $1,200, and features “Tonight Show” host Jay Leno.
3. NFL Road to Super Bowl XLII – Advertising and Marketing
Another factor helping to make some Super Bowl numbers higher than ever before – the Hollywood writers strike. In the absence of fresh primetime television, sporting events have seen increased interest from companies desiring to promote themselves during shows that will be watched live, as opposed to DVRed, sans commercials. Even before the writers strike, Super Bowl ad slots for the 2008 event went especially fast, according to Neil Mulcahy, EVP of ad sales for Fox. At the beginning of November, the network had only eight spots available, and as of January 14, that inventory was down to one. Mulcahy speculates that the writers strike helped spur advertisers to buy early. The strike has also helped push up prices, too – the most-expensive 30-second spots sold for $3 million, up 15 percent from $2.6 million last year.
Overall, spending on televised sports advertising was up 26 percent in 2006 from 2005, and 44 percent from 2003 (the most recent years available), according to TNS Media Intelligence.
Return advertisers to Super Bowl XLII include General Motors, Go Daddy Group, and Anheuser-Busch, returning with 10 spots for Budweiser, Bud Light, and its other brands. Also back are Victoria’s Secret, set to run its first Super Bowl ad, a Valentine’s Day take, since 1999, and Hyundai. As usual, celebrities are well-represented, with Brad Pitt set to star in a Dell Inc. spot, and Derek Jeter set to promote PepsiCo’s Gatorade.
User-generated content largely made its debut at Super Bowl XLI and has picked up steam ever since. One high profile user generated marketing initiative this year is Coors “video playoff” for Super Bowl tickets – fans submit video clips explaining why they deserve tickets to the Super Bowl, and in turn, the clips are used in online marketing campaigns on the brewer’s Web site.
Next week we’ll take a look at this year’s crop of rookie Super Bowl advertisers, utilizing both professional and fan-generated creative concepts, more NFL and mega-event numbers, and Phoenix-area happenings.
4. Peachtree Puck: NHL All-Star Game Heads to Atlanta
While the NFL, the Patriots, and the Giants begin their two week countdown to Super Bowl XLII, the National Hockey League is preparing for four days of festivities leading up to the NHL All-Star Game at Atlanta’s Philips Arena on January 27. The game, and its surrounding activities, is projected to create a $20-25 million economic impact in metro Atlanta, according to estimates by the Atlanta Sports Council. What’s more, hosting the NHL All-Star Game caps an amazing run of major sporting events in the area from 2000-2008. All told, an estimated $1.5 billion economic impact has been driven through sports during that span.
Lou DePaoli, chief marketing officer for Atlanta Spirit LLC, owner of the Atlanta Hawks and Thrashers, reports that nearly 90 percent of Thrashers season-ticket holders have bought tickets for the event. He also said the team has sold 89 of its 92 suites, nearing the point where it will turn a profit on the game. In all, the NHL is planning 18-20 events for the four-day All-Star weekend, starting on January 24. On January 26, the league will hold its All-Star Saturday Night Party for media and sponsors at the Georgia World Congress Center. Earlier that day, the Eastern and Western Conference teams will hold open practices at Philips Arena, as well as the NHL All-Star SuperSkills competition. NHL executives project league revenue will jump 10-11 percent to $2.53 billion during the 2007-2008 season, according to a presentation to the league’s board of governors on November 29. (The league's revenue increased more than six percent in the 2006-2007 season to $2.3 billion.) The strength of the Canadian dollar, as well as average paid attendance up 1.9 percent, average ticket prices up 10.6 percent, and a new sponsorship deal with Scotia Bank, valued at $6 million annually, helped bolster revenues.
If the projections are accurate, the bottom 15 clubs, which qualify for a full revenue-sharing cut, could see their share increase by as much as $1 million each. Players also will benefit. Their share of revenue will rise from 55 to 56 percent in 2008-09 in accordance with the NHL’s collective bargaining agreement.
5. Merger of Sports and Entertainment…in Doping?
We thought Hollywood mogul Steve Tisch, co-owner of the Super Bowl-bound New York Giants, was going to be the sports-entertainment story of the week. But apparently not. Amid near-constant doping allegations – baseball players, track star Marion Jones, Italian cyclists, New York boxers, and Russian hammer throwers have made recent headlines – comes an investigation by the Albany County District Attorney’s into steroid trafficking by rap stars. Rappers 50 Cent and Timbaland, Wyclef Jean, and R&B standout Mary J. Blige have been accused of receiving performance-enhancing drugs, according to the Albany Times-Union. Blige has denied taking steroids; the other artists have yet to make public comment.
At least Britney isn’t involved in this story.
6. Winter Sports: This year, the X Spot is Aspen
Athletes will compete for shares of the biggest X Games purse in history — $1 million — when the annual Winter X Games convenes this week in Aspen. More than 250 athletes from around the world will compete in multiple skiing, snowboarding and snowmobiling events. Winter X Games medalists will earn 50 percent more than they did last year, X Games sponsor/broadcaster ESPN announced Thursday.
Signaling an X-ponential interest in action sports, Olympic halfpipe gold medalist Shaun White appears on an unprecedented double cover of the February issue of Men’s Journal. An image of White is featured on both the front and back covers. In a related move, snowboarder Gretchen Bleiler, competing in the Aspen contest, currently graces the cover of ESPN the Magazine. Bleiler is only the fourth woman to appear on the cover, following in the footsteps of Maria Sharapova, Serena Williams, and Marion Jones.
Ski slopes are also popular target for marketers this season. At Stratton, in Vermont, Toyota is covering two gondolas “with a springtime Vermont mountain scene and it’s hybrid [car] ‘engines of change’ logo,” according to USA Today. Odwalla is placing ads at lift lines and on ski racks, and cold medicine manufacturer Zicam is handing out “nearly 500,000 samples at ski area hotels and mountains.” Marketers estimate ski slope ads cost about “$2.50 per thousand customers vs. $25 per thousand they would pay for television commercials.”
7. Golf Economic Impact Study Released in Conjunction with PGA Show
Last Thursday, the PGA of America, in conjunction with the PGA TOUR and other golf organizations, announced the results of a new golf economic-impact study at the PGA Merchandise Show in Orlando. Unlike previous studies, the latest version calculates both the direct and indirect impact of golf, including not only direct expenditures such as clubs, balls, fees, mowers, and golf travel, but also indirect monies and jobs required to support the industry.
The numbers were impressive: the total economic value of golf in the U.S. economy in 2005 (the study’s test case year) was $195 billion, while the game generates about 2 million jobs. Golf is also a stable enterprise, with overall economic growth of 4.1 percent between 2000-2005.
The really good news? While other industries are bracing for the possible looming recession, it will likely have only a minor effect on golf, as more baby boomers are retiring and entering their prime golf-playing years.
8. 2016 = $2.5 Billion for Chicago?
The 2016 Summer Olympic Games could generate a $2.5 billion domestic revenue stream for the Windy City, according to estimates produced by the Chicago Olympic bid team. As reported last week by the Chicago Tribune, using London 2012 as its financial model, the Chicago bid committee projects that it will spend around $900 million on temporary and permanent venue construction, not including $1.1 billion allotted for the Olympic Village. Five different permanent venues will be needed in addition to the 11 already existing, the article stated, “to make the city's plan ‘fiscally responsible and one that will leave a positive legacy for the city and the Olympic movement.’” Construction costs for those venues will be almost entirely privately financed, including $107 million for an aquatics center in Douglas Park.
Meanwhile in London, British Prime Minister Gordon Brown yesterday announced a new $18 million U.S. international development project geared toward delivering on promises made when the city won the right to host the 2012 Games. London Olympic organizers have banded with the Brown’s administration, UK Sport, the Premier League, UNICEF, and the British Council to develop “International Inspiration,” a five-part plan to “spread the Olympic message to some of the world's poorest countries,” according to the London Telegraph. The pilot programs, targeting Azerbaijan, Brazil, India, Palau, and Zambia, will help developing nations better learn how to maximize sport, and will run until 2010.
9. MLS African Nations Cup Commences
Also in Africa, the African Nations Cup kicked off Sunday in Ghana. The three-week event, with Samsung serving as presenting sponsor, is expected to draw a million visitors and earn $1 billion U.S. for the host country. As player transfer fees are a constant issue on the international soccer front, and as many European clubs try and hold on to their African stars for as long as possible, 16 teams focus their chance at a place in the 2009 Confederations Cup. Besides host Ghana, Cameroon, the Ivory Coast, Nigeria, Senegal, and Egypt are among the favorites to win.
Major League Soccer fans in the U.S. will be able to track the progress of Colorado Rapids goalkeeper Bouna Coundoul, who has been in the U.S. for 11 years and been playing in MLS since 2005. Coundoul was recently named to Senegal’s national team; his trademark “It’s Bouna Time!” is a favorite catchphrase among Rapids fans. Didier Drogba, now a star player for Chelsea in the Premier League, will also start for Ivory Coast.
10. Cricket TV
Also just announced by Sony Entertainment Television: a partnership with Singapore-based World Sports Group to pay more than $1 billion U.S. for television rights to Indian Premier League cricket matches. The companies agreed to pay $918 million over 10 years for broadcast rights, as well as $100 million more to promote the new league. Sony, the World Sports Group, ESPN-Star Sports, and NDTV in India were reportedly the four finalists for the rights deal; each had to pony up a nonrefundable $100,000 deposit just to bid.
The IPL will specialize in the “Twenty20” form of cricket, a faster-paced version of the traditional game. And in a sport “’normally dominated by countries, states or counties, the IPL plays out more like a commercial league’ in which large corporations bid to own teams featuring ‘top international players from different countries,’” according to Daily Variety. Bids for the league's eight franchises will be announced on Thursday: Variety reports that a minimum bid for a team is reportedly $50 million.
Countdown of 10 Top Sports & Entertainment Biz Issues January 14-20, 2008
1. Mitchell Report and MLB Congressional Hearings Part I -- Impact on Viewing America While the Mitchell Report and the last couple of years' worth of steroid accusations have damaged the hero-worshipping psyche of the American fan, they've also had a profound impact on Corporate America. On the eve of the January 15 baseball hearings on Capitol Hill, consider the following implications:
a. Where do the Mitchell Report/congressional hearings on performance-enhancing drugs fall in terms of capturing the attention of the American worker during business hours, resulting in lost productivity – and costing taxpayers money?
1. O.J. Simpson murder trial, 1995. 134 days of televised testimony on Court TV in this very public criminal trial held America’s attention beginning January 25, 1995. On October 3, 1995, an estimated 150 million American viewers watched the jury return a verdict of not guilty.
2. Watergate, 1973. Television cameras covered the Watergate hearings gavel-to-gavel, from May 17 – August 7. The hearings comprised 319 hours of television, a record covering a single event.
3. Army-Joseph McCarthy Hearings, 1954. Broadcast "gavel to gavel" on two networks from April 22 -June 17, 1954, the Army-McCarthy hearings were the first nationally televised congressional inquiry.
4. Clinton Impeachment Senate Trial, 1999. Following the December 19, 1998 House of Representatives impeachment resolution, the Senate tried President Bill Clinton January 7 – February 12, 1999. The Senate did not convict Clinton after charges arising from the Monica Lewinsky scandal and the Paula Jones lawsuit.
5. Congressional steroids hearings, 2005. On March 17, Former St. Louis Cardinals slugger Mark McGwire refused to answer questions about steroid use during his playing career. Sammy Sosa and Rafael Palmeiro also denied using steroids during this hearing.
2. Mitchell Report and MLB Congressional Hearings Part II -- Impact on Corporate America
b. What endorsement deals do Roger Clemens and others stand to lose if they are found to have used steroids and/or HGH? Clemens has over $25 million in lifetime endorsement deals with such companies as Cingular, Coca-Cola, H-E-B, AutoNation, Modell’s Sporting Goods, Under Armor, and J&J Snacks. He also owns the Rocket Sports Grill in Houston. His 2006-2007 endorsement deals totaled about $3.5 million; Andy Pettite’s were in the neighborhood of $500,000, as were those of Jason Giambi.
c. How have businesses involved with baseball and sports sponsorships in general reacted to the Mitchell Report and its fallout? Corporations continue to renew deals with Major League Baseball and its teams – no sponsors have pulled out specifically due to steroids in the game. Now and in the future, however, corporations are deciding to align with leagues, teams, and other entities more often than with specific athlete pitchmen and women. When they do execute deals with individuals, the contracts are trending toward being smaller, shorter, and easier to terminate.
d. Have baseball fans turned on MLB via their wallets?
As of the end of December 2007, not a single fan had cancelled a season ticket package citing performance-enhancing drug use by players as the reason. Despite widespread fan cynicism about the issue, baseball logged record attendance numbers last season, and anticipates the same in 2008.
An agreement signed last week will help – MLB and the NFL agreed to contribute $3 million each as they joined the U.S. Olympic Committee to fund anti-doping research.
