A Countdown of 10 Top Sports and Entertainment Business Issues, February 26-March 4, 2007

1) Ball-ywood:  the merger of sports and entertainment.  Dubbed "The Super Bowl for Women," the 79th Annual Academy Awards was watched by more than 40 million viewers (compared to approximately 90 million domestic viewers for Super Bowl XLI).  Ads sold for over $1.7 million per 30-second spot (compared to $2.6 million for the Super Bowl) -- companies like General Motors, JCPenney, and MasterCard were big spenders.  The "Academy Awards industry" (preparing for the event, including parties, hype, swag, and the pre-award shows) exceeds $700 million in economic impact -- compared to about $400 million for the Super Bowl.  Clearly, the merger of sports and entertainment is on the rise.  For example, there have been more than 2,000 sports movies made since the advent of motion pictures in the late 19th century -- and a new recently released book titled Sports Cinema:  the Best of Hollywood's Athletic Heroes, Losers, Myths, and Misfits chronicles them all.  The recent purchase of Johnny Rockets by Washington Redskins owner Daniel Synder for over $500 million is another example in this ongoing trend -- as is NASCAR's entry into the movie, IMAX, and entertainment business as well.


2) Bad actors, image problems, and league responses.  Hollywood recovers from its scandals -- the juicier the better (Anna Nicole Smith).  At the same time, sports deals with this as well.  At the player combine, NFL Commissioner Roger Goodell held an "image meeting" with about a dozen NFL players, NFLPA Executive Director Gene Upshaw, and assorted owners.  At the same time, the Tom Brady paternity disclosure caused a stir, though the Pacman Jones embarrassment in Las Vegas still resonates in Nashville.  Michael Vick and Jonathan Babineaux with the Atlanta Falcons, and Jamaal Tinsley and Marquis Daniels with the Indiana Pacers caused more concern.  On the other hand, NFL Charities awarded more than $1 million in grants to community service organizations in recent months, and Sports Management Worldwide has expanded its curriculum entitled "Ethics in Sport Management" in order to attempt to deal with the negative image and perception of the overpaid and coddled athlete superstar.  By the way, an overall 403 arrests were made in Las Vegas around the All-Star Game.  Notwithstanding that, over 136,000 fans attended the All-Star Jam Session at Mandalay Bay, and sales of All-Star merchandise increased by 54 percent.  The dollars rule!


3) Celebrity endorsers:  the good, the bad, and the young.  Notre Dame quarterback Brady Quinn signs a deal this week with EAS nutritional supplements before he works out for the NFL Draft.  Anna Kournikova signs an endorsement deal with K Swiss the same day -- at least she is referred to as a "former tennis player."  Overall, corporations spend over $12 billion in athlete endorsements.  The top five are predictable:  Woods, Mickelson, James, Agassi, and Manning.  Reggie Bush signs deals with Gold Toe socks, and a "fragrance" company.  Even former basketball Hall of Famer Bill Russell does a deal with Wheaties, appearing on a cereal box in celebration of Black History Month. 

On the "bad" side, Barry Bonds still leads the world as the "worst athlete to endorse a product," according to TNS Sport -- even with his new $15.8 million contract and chasing 755.  Most critically, the Josephson Institute study of 5,275 high school athletes found that over 72 percent of high school football players acknowledged cheating on an exam at least once a year, and 65 percent of general athletes admitted such -- many citing Barry Bonds as their "role model." 

Finally, the newest trend is the superstar endorse kid.  Autistic basketball superstar Jason McElwain stands to reap millions -- selling his story to movie studios.  Thirteen year-old golfer Dakoda Dowd entered the LPGA tournament last year, fulfilling the dream of her terminally ill mother.  Kyle Carter, 12, became the first pitcher to win four games in a Little League World Series on behalf of Columbus, Georgia last year in Williamsport.  Unbelievably, Dylan Oliver, a Kentucky skateboarder, signed a major deal with Nice Skateboards, though he was five years old at the time. Nike invests about $15 million a year in amateur youth basketball, and adidas spends about $10 million.  Clearly, the business trend is here to stay.


4) How to succeed in a "niche" sport without really trying:  Arena Football League kicks off its 2007 season this week.  The Big Four plus NASCAR dominate the headlines, but the AFL begins its 21st year of operation with an ESPN contract and a Collective Bargaining Agreement that will probably extend through 2015.  Expansion fees are expected to reach $20 million, and the league brings back the New Orleans VooDoo -- growing to 19 teams this season.  In case you want to become even more "extreme" in the business of sports, Major League Eating recently signed a deal with Spike TV -- airing after the Ultimate Fighting Championship.  One TV executive was quoted as saying "If you see a guy eating a beef tongue, you are going to stop and watch." 


5) The business of the Boys of Summer -- intensifying.  Major League Baseball begins its "official" Spring Training games this week.  At the same time, U.S. Senator John Kerry is investigating the proposed $700 million new deal between MLB and
DirectTV -- claiming it may "reduce consumer choice and competition."  The $5.2 billion industry is in the middle of an unprecedented 16 years of labor peace with a "level playing field."  Last year, the club that ranked 13th in the major leagues won the World Series (St. Louis) over a team that lost 91 games the previous season (Detroit).  Only one team with a top 10 payroll won a post-season series (the Mets, at #5).  Though spending increased, the business has never been healthier. At Spring Training, the competition between Florida and Arizona continues to be intense -- with the Cactus League stealing teams from the Grapefruit League.  In 1997, the Grapefruit League had 20 teams training in Florida, the Cactus League eight.  By 2009, the Cactus League will have 14 of the teams training in Arizona.  Most visibly, the Los Angeles Dodgers will move to Glendale, Arizona (sharing a new facility with the Chicago White Sox), in a gleaming $76.8 million, 15,000-seat facility -- leaving Vero Beach, Florida after 60 years of training.  For years, there was no home run fence at Holman Field in Vero, but the chain link fence was added in 1971 after #### Allen injured himself colliding with a palm tree.  Baseball has undergone significant economic changes.  Internationally, the Red Sox continue to welcome Daisuke Matsuzaka, and the economic impact he attracts from Japan.  Red Sox owner John Henry has teamed with NASCAR owner Jack Roush -- who ironically has resisted Toyota's arrival on the NASCAR circuit.  Henry has distanced himself from any Japanese bashing (for obvious reasons).  At the same time, former major leaguers Ken Holtzman, Ron Blomberg, and others have christened the Israel Baseball League, continuing to expand baseball's international presence.


6) The latest Olympic news, and the "business and economics" of the 2008 China Olympic effort.  This weekend, the Southern California Committee for the Olympic Games unveiled plans for a $112 million temporary renovation of the L.A. Coliseum that will add 204 luxury seats, a restored track, and other amenities (in hopes that they win the 2016 Olympic bid).  For 2012, the London operational budget is fixed at $3.9 billion, but overruns may plague the venues as well.  However, the major focus remains on China and its Olympic readiness for 2008.  As was mentioned earlier, ad spending rose 22 percent last year up to $50 billion -- with the biggest spenders in Chinese advertising including pharmaceuticals and toiletries.  The NBA boasts 500 million Chinese fans who purchased 400 million "branded pieces" of NBA merchandise last year.  The NFL preseason game between the Seahawks and Patriots in China this August will be moved a day to accommodate the massive Olympic countdown ceremony -- one year to the day before the Opening Ceremonies in Beijing.  From a golf perspective, TaylorMade is implementing its three-year deal with the China Golf Association to expand from the 300,000 golfers in China (which make up only 0.0002 percent of the country's population).  Even a five percent bump in new golfers revolutionizes the international golf industry.


7) More business across the pond.  Deloitte and its annual Football Money Study notes that Real Madrid generates more revenue than any major league professional sports franchise -- $381 million.  Its six percent revenue increase easily outstrips FC Barcelona, Juventus, and Manchester United.  The other side may be Chelsea.  Russian oil magnate and owner Roman Abramovich claims he has lost over $600.7 million since he took control of the club, spending over $975.2 million to operate the franchise.  We also mentioned the popularity of football in Germany -- the German Medical Association continues to ask for more hospital beds because of a shortage in their maternity wards -- nine months after the World Cup was held in that country.  Another example of "sports across the pond":  the 15th quadrennial Asian Games attracted 10,500 athletes from 45 countries, 5,700 journalists, more than 400 events in 39 sports at 36 venues.  The country of Qatar spent nearly $3 billion generating the event -- with more than 2,000 hours of television programming to be broadcast to 1.5 billion viewers worldwide.  Clearly, Americans do not dominate the sporting landscape, regardless of what we think.


8) Inside the growing international entertainment and sports industry:  amazing numbers.  Inside information from the Sports Management Worldwide Sports Careers Conference in Indianapolis this week:  PricewaterhouseCoopers recently published its Entertainment, Media, and Sports Industry Study -- the industry now exceeds $553 billion, expanding to $726 billion by 2012.   The international athlete endorsement and advertising business exceeds $350 billion; specific sports spending will increase to $61.6 billion by 2010.  There are $15 billion worth of sports tickets purchased annually, and the International Licensing Industry Merchandise Association notes the sale of licensed goods and merchandise exceeds $5.8 billion.  Total Internet viewers of the World Cup soccer matches in 54 global markets:  5.9 billion.  Corporate sports naming and sports sponsorships:  $12 billion.  The future belongs to those who can master evolving technology -- and high-tech video games, Internet advances, and stadium "smart seats" are three of the key revenue generators in the years ahead.


9) Inside the golf business -- the Honda Classic Pro-Am signals the beginning of the "Florida swing" this month.  I will be able to report on the business development opportunities -- playing in Monday's Pro-Am.  Over 11,000 square foot Fan Zone, and many opportunities for corporate business to be conducted -- the estimate is over $150 million.  Tiger's streak stopped at seven with his loss to O'Hearn at the Match Play -- his effect on the Tour is still formidable (a 50-80 percent bump in revenues where Tiger plays compared to the "have-nots").  As March 21 draws closer, plans to promote the Tiger Woods participation in the Doral CA Championship, cross-marketed with Roger Federer playing across town in Miami at the Ericsson Tennis Championship, should be analyzed. 


10) Equal prize money and women's sports:  finally at Wimbledon.  The renewed focus on the business of women's sports from two perspectives.  First, the beginning of the ACC Women's Basketball Tournament -- leading to the lucrative Women's Final Four in Cleveland (an $800 million business).  Second, the commitment by Wimbledon to equalize prize money for the men's and women's champions after 123 years of inequality.  Last year, champion Amelie Mauresmo earned $1.117 million, while men's champion Roger Federer received $1.17 million.  No more.  The overall state of the women's sports industry should be reviewed, from corporate commitments to league startups, to Title IX, and the like.