Countdown of 10 Top Sports & Entertainment Biz Issues

 

December 17-30, 2007

 

1.  John Kerry NFL-Cable Summit - The Outcome is...More Letters

 

Although the meeting didn't come to pass, on December 18, Massachusetts Senator John Kerry invited NFL and cable industry executives including Commissioner Roger Goodell and President and CEO of National Cable & Telecommunications Association Kyle McSlarrow to Washington to discuss alternatives that would allow more fans access to the December 29 New England Patriots-New York Giants game at Giants Stadium.  Both parties declined, stating that they were working toward "creative solutions" to the problem.

As a result, on Tuesday Kerry sent a letter to Goodell and cable executives from Time Warner and Comcast regarding their reluctance to come to Washington and reach an agreement that would broaden access to the December 29th game. Here's an excerpt:

"It will be a dark day for professional sports if the powers that be fail to make this game available to football fans across the country, let alone the local fan base which extends beyond the teams' home cities," said Kerry. "The Patriots have the potential to make history later this month, but today only 40 percent of homes will be able to watch it happen. Today, money threatens to keep fans in the dark, and that's a damn shame for a league that built an empire and a fan base on free access to games."

The contest, currently scheduled to be carried by the NFL Network and local network affiliates in the two teams' markets, could end with the Patriots becoming the first NFL team to go undefeated during the regular season since the famed 1972 Miami Dolphins squad.  The NFL Network currently has limited agreements with cable and satellite operators, and is projected to be available in only 44 million or so homes.

 

 

This isn't the first time Kerry has intervened on sports fans' behalf.  In late March, Kerry convened a session of the Senate Commerce Committee to discuss the antitrust implications of Major League Baseball's planned deal with DirecTV to exclusively carry its Extra Innings package.  At the time, Kerry said he was concerned about "exclusive carriage deals in the sports industry" and that he hoped the Senate could do something about them. 

 

 

MLB ultimately negotiated an Extra Innings deal with cable operators as well as DirecTV, and it will be interesting to see if Kerry's summit will have the same effect.  (The safe bet?  If you don't have a satellite dish or live in the New York or Boston metro areas, I'd stake out a stool at your neighborhood sports bar.)

 

 

2.  Waxman-ing Poetic - Selig, Fehr, Others Ordered to Capitol Hill

Joining Kerry and Co. on Capitol Hill next month are MLB Commissioner Bud Selig and MLBPA chief Donald Fehr.  The House Oversight and Government Reform Committee, chaired by Representative Henry Waxman, had ordered a hearing on the Mitchell Report on Tuesday, but postponed the event until January 15 in order to give baseball and the Players Association more time to review the 409-page document that called out Roger Clemens, Andy Pettitte, Eric Gagne, and dozens of other players as doping cheats.

The committee, you may recall, is the same panel that held the March, 2005 hearings that featured Mark McGwire, Sammy Sosa and others, and essentially was the death knell of McGwire's post- baseball career and likelihood of entering baseball's Hall of Fame.

Waxman, who could demand that Selig commit to implementing the first reliable Human Growth Hormone test available, has indicated that he would consider federal funding to help develop such a test.  Both MLB and the NFL players' union have contributed $450,000 in HGH test seed money, and baseball owners have said they'll kick in more.  No research funds have come forth from the MLBPA.

 

 

 

3.  The Mitchell Report - Economic Aftermath

 

 

While much mea culpa-ing and wring of baseball gloved hands has been done since the Mitchell Report was released on Thursday, it's worth noting that the multimillion-dollar contracts of some players named in the report are still alive.  Andy Pettite was already re-signed by the Yankees in 2008 for $16 million, and so far remains in pinstripes.  Eric Gagne received a $10 million contract from the Milwaukee Brewers mere days before the report was released, and the Royals agreed to pay $36 million over three years to Jose Guillen even though they knew he was named in the report.

 

 

Additionally, sports marketing experts agree that the long term league revenue implications may not be too severe.  General Motors, for example, continues to negotiate a long term sponsorship deal with the league to extend the contract they established 2005-2007.  And a club spokesperson for the Dodgers, whose players were heavily implicated in the report, on Friday said that not a single fan had called to cancel season tickets. 

 

 

One group that may end up being severely affected:  foreign athletes playing in the U.S. on work visas.  As reported by the New York Times, Washington immigration lawyer Robert Hill sent a letter to clients stating "Depending on the facts alleged in the report in any given case, a named player may find himself denied a visa at a U.S. Consular office abroad, detained, and denied admission at a U.S. port of entry upon returning to the U.S. to report for Spring Training."  And if a player, is caught misrepresenting his illegal substance use, he may never be able to enter the U.S. again.

 

 

4.  Bowling for Dollars:  Payouts and Payola

 

 

Unbelievably, the first NCAA holiday bowl game is upon us.  The Poinsettia Bowl airs from San Diego on December 20, pitting Utah vs. Navy and ushering in a fortnight's worth of 31 other match-ups.

 

 

Outside of the BCS, the college football landscape is dotted with 32 total bowls, as last year the NCAA just approved the New Mexico Bowl, the Papajohns.com Bowl in Birmingham, and the International Bowl in Toronto (the first bowl game to be played outside of the United States since the 1937 Bacardi Bowl in Havana). 

 

 

With 360,000 student-athletes in 23 sports, the NCAA oversees 88 championships each year (with 935 million viewers watching them annually on television).  Absolutely none, however, generates the annual hype and controversy as the $5 billion business that is college football. 

 

 

Among the guaranteed winners of the 32 college football bowl events are the 19 "nonprofit" bowl organizations.  According to a recent study by the San Diego Union-Tribune, these organizations increased net assets from 2001-2005; average net assets increased from $3.4 million to $6.3 million. 

 

 

What's more, the chief executives of these organizations often take home better compensation than some players in the NFL.  The highest-paid executive in the study is the Outback Bowl's Jim McVay, whose $490,000 paycheck is more than double the salary of Rose Bowl chief Mitch Dorger (at $239,807).  Chick-fil-A Bowl head Gary Stokan's salary was up 192 percent from 2001, to $265,905, while Emerald Bowl CEO Gary Cavalli was not exactly paid peanuts - he made $362,019 in 2005, a 302 percent jump.

 

 

So far, the biggest guaranteed winner in the 2007 Bowl Championship Series Bowl-a-Palooza is...Fox.  Their $83 million annual payment for BCS games through 2010 generates substantial exposure for the network.  Last year, a 9.4 rating for the BCS selection show exceeded that of some of the BCS games themselves. 

 

 

 

5. "Gridiron Guardian Sunday"

 

 

 

Just call it holiday humanity.  (Or better yet, attention long overdue.)

 

 

After they receive their paychecks for the NFL games they'll play on December 23, dozens of NFL players will give them away.  But not to kids or families in need of a holiday boost - these players are donating all or part of their checks to the nonprofit Gridiron Greats Assistance Fund, to help retired NFL players cope with medical and financial hardships.  More than $150,000 has been contributed by active NFL players to date.  Additionally, retired player and Coach Mike Ditka is transferring the $600,000 remaining in a separate retired players trust to the organization, and John McEnroe and Charles Barkley have also said they'd donate.

 

 

Among the players who have pledged to take part are San Diego running back LaDanian Tomlinson, Kansas City running back Larry Johnson, Chiefs linesman Kyle Turley (who came up with the idea in November), Houston offensive tackle Ephraim Salaam, and New York Giants linebacker Kawika Mitchell.  A half-dozen Vikings players have joined the effort, including Pro Bowl center Matt Birk, who held a news conference to announce theirparticipation last week.  "When I came into the league," Birk said, "I was told that the NFL is a brotherhood, and that we would always be part of that brotherhood, so it's only right for us to help our brothers."

 

 

Likely, the holiday spirit will infect more athletes and other donors, possibly pushing the Sunday plate over the $1 million mark.  Happy Holidays to all!

 

Countdown of 10 Top Sports & Entertainment Biz Issues December 3-9, 2007

1.  Slamming the Back Door to the BCS - Our Only Option

Until 25 years ago, the national collegiate football championship was decided "mythically," as journalists and coaches conducted separate polls to determine the national champion.  Nearly 20 years ago, federal courts determined that the NCAA had no power to define and implement television contracts.  Rather, the TV leverage vested with the individual conferences -- making an ultimate college football playoff extremely difficult (if not impossible).

Since then, we have seen the Bowl Alliance, Bowl Coalition and now the BCS -- Bowl Championship Series.  Overall, television networks have poured nearly $1.5 billion into rights fees for the current system, which is contractually committed through 2010. 

The outcry for the playoff system is coupled with the emphasis on parity this year -- 25 annual and 85 total scholarships per school have leveled the playing field, producing 68 bowl eligible teams (with six wins or more) -- 10 of 11 in the Big Ten and 10 of 12 in the SEC are bowl eligible.  Seventeen is another symbol of parity - the number of top-five teams that fell to unranked opponents throughout the year.  Only two of the top 10 schools in total sports revenue will play in BCS games:  Ohio State (No. 1 at more than $105 million in revenue); and Georgia (at No. 6 with nearly $80 million in total revenue). 

Controversy abounds.  Supporters made a compelling and legitimate case for at least eight teams to be eligible for the Allstate BCS Championship Game on January 7 in New Orleans.  Yet, the current system allowed Ohio State and West Virginia to back in to BCS match-ups (in Ohio State's case, the championship came) without the test of a conference championship game.

Why should two-loss SEC champion LSU advance, while two-loss conference champions Oklahoma, Southern California and Virginia Tech not?  Why should Kansas with one loss or undefeated Hawaii go to other BCS bowls?  Look for a follow-up to the hearings introduced by the House Energy and Commerce Subcommittee two years ago - asking for a "comprehensive review" of the BCS.  Remember that Texas Republican Chairman Joe Barton noted that the "current system of determining who is No. 1 appears deeply flawed."  Ironically, his Texas Longhorns emerged as the 2005 national champion; maybe politicians from the six states whose teams did not make it to the final game want to pick up the baton. 

Given their long-standing contract with the Big Ten, Pac Ten, and Rose Bowl, ABC may be the only entity with the leverage needed to fix that.  If they want to, ABC and the other networks can pressure the conferences to play a championship game in order to be eligible for the BCS system -- though this change likely could not be implemented until after the existing contracts expire in 2010.  A mandated conference championship process is the only short-term opportunity for major change.

2.  The 27 Other Bowls:  a Business Snapshot

On December 20, the San Diego Credit Union Poinsettia Bowl pits Utah against Navy, ushering in 32 bowl games over a 19-day period.

Bowl-game business metrics have remained stable over the five years.  This year continues a period of relative corporate sponsor stability.  Twenty-five of the 32 games have a corporate name attached; in 2003-04 it was 21. 

PetroSun has taken on the Independence Bowl for a long-term sponsorship.  The bowl has been the ugly stepchild of the college bowl naming-rights derby, played in the mid-'90's as the Poulan Weedeater Independence Bowl.  Sanford and MainStay sponsored the game through 2003, and the Louisiana Economic Development Fund provided an annual $375,000 grant (with a supplemental $100,000 commitment from the city of Shreveport) that bridged post-Katrina Louisiana until PetroSun came to the rescue.

Not to be outdone, Meineke Care Care took over from Continental Tire last year to name the game in Charlotte.  Brut extended its deal with the Sun Bowl, including a new four-year deal with Helen of Troy. Going on its 74th year, the Sun, the second-oldest bowl game in college football, seems secure via CBS, the Pac-10 and the Big 12 at least through 2009. 

This year, 10 sponsors have completely shanghaied the brand of their respective bowls.  Outback, GMAC, Motor City, Insight, Meineke Car Care, Champs Sports, Chick-fil-A and Capital One have previously committed.  They were joined last season by eponymous Emerald Nuts, and Papa John's.  Only the Rose Bowl refuses to play by any other name, remaining the largest bowl without a corporate sponsor.

Overall, the total record of the 64 bowl participants this year is 530-244 (the most losses ever).  Last year:  546-232.  The year before:  438-190.  The year before that:  421-182.  And the year before that:  482-200.  This year includes teams with more losses than any year in history.  Clearly, schools are participating more than ever before:  10 of the 12 Big 12 teams, nine of the 11 Big Ten teams, and 10 of the 12 SEC teams got in.  Losers and "out" at 6-6:  Northwestern, Louisville, South Carolina, and Louisiana-Monroe.  Biggest loser:  Troy at 8-4; out of the bowl picture even though their record is better than 21 of the teams that are "in."  There have been three teams who have gone to bowls with losing records - 4-6 SMU in 1963; 5-6 William and Mary in 1970; and 5-6 Troy in 2001 (maybe the "Troy karma" actually comes around).  So much for "reward for job well done."

3.  Heisman Hopefuls Head to NYC

According to the NFL, out of the 100,000 high school seniors who play football each year, only 215 -- that's 0.2 percent -- will ever land on an NFL roster.  Moreover, if and when they get there, the average career of an NFL player is a mere 3.5 years.

 

That daunting statistic likely won't deter this year's Heisman Trophy finalists as they prepare to head to New York City for the December 8th 2007 Heisman Trophy presentation.  Expected to be among the New York invitees are Florida quarterback Tim Tebow and Arkansas tailback Darren McFadden; the final vote, by more than 900 voters, is due Wednesday.

 

An examination of Heisman winners over the last 20 years reveals some startling facts.  Only nine out of 20 were Top 10 NFL draft picks; only four out of 20 made it to Super Bowls.  Moreover, only seven of the winners went on to become Pro Bowl selections, another key measure of success.

Most notably, 15 of these 20 athletes hailed from perennial college football powerhouses with the money and clout to market Heisman hopefuls.  In the Heisman's case, politics and sports clearly make for cozy bedfellows.

Year           Heisman Winner             School                   Position        Draft Pick             Team________

2006           Troy Smith                        Ohio State             QB          174 (rnd 5)            Baltimore

2005           Reggie Bush                     USC                       RB           2                              New Orleans

2004           Matt Leinart                        USC                       QB          10                           Arizona

2003           Jason White                      Oklahoma             QB          Not selected         N/A

2002           Carson Palmer               USC                       QB          1                              Cincinnati

2001           Eric Crouch                       Nebraska              QB          95 (rnd 3)              St. Louis

2000           Chris Weinke                    Florida State         QB          106 (rnd 4)            Carolina               

1999           Ron Dayne                        Wisconsin             RB           11                           NY Giants

1998           Ricky Williams                  Texas                     RB           5                              New Orleans

1997           Charles Woodson           Michigan               CB          4                              Oakland

1996           Danny Wuerffel                               Florida                   QB          99 (rnd 4)              New Orleans

1995           Eddie George                   Ohio State             RB           14                           Houston Oilers

1994           Rashaan Salaam            Colorado               RB           21                           Chicago

1993           Charlie Ward                    Florida State         QB          Not selected         NY Knicks

1992           Gino Torretta                    Miami (FL)            QB          192 (rnd 7)            Minnesota

1991           Desmond Howard           Michigan               WR          4                              Washington

1990           Ty Detmer                         BYU                        QB          230 (rnd 9)            Green Bay

1989           Andre Ware                      Houston                 QB          7                              Detroit

1988           Barry Sanders                  Okla. State            RB           3                              Detroit

1987           Tim Brown                        Notre Dame          WR          6                              LA Raiders

4.  Charity Begins at Home Games

The Baltimore Ravens have developed a reputation for giving.  The team is first in terms of charitable contributions among the 32 NFL teams, according to a study by Game Day Communications.  Fifteen Ravens players have their own foundations in addition to the team foundation, and host a variety of annual fundraising events, including a celebrity paintball tournament against the Washington Redskins last summer.

 

The Kansas City Chiefs are the second in charitable giving, followed by the Tampa Bay Buccaneers.  The Scrooges of the league?  The Oakland Raiders, led, of course, by Ebenezer himself, Al Davis.

5.  Star Catcher?

Thanks to the relentless efforts of Mike Ditka and co., the NFL's health benefits for retired players are getting better.  But do they cover medical issues caused by re-entry into the Earth's atmosphere? We're about to find out.  When the Space Shuttle Atlantis launches from Cape Canaveral, Florida on Thursday on its next mission to the International Space Station, Astronaut/Engineer Leland Melvin will be aboard.  Melvin, 39, is the first NFL player to make the long road trip to space.  In 1986, he was drafted by the Detroit Lions as a wide receiver after attending the University of Richmond on a football scholarship.  He also played for the Dallas Cowboys and the CFL Toronto Argonauts.

 

 

Instead of extending his arms to catch passes, Melvin will use the shuttle's robotic arm to support three space walks, and will also help install a permanent laboratory on the International Space Station. 

6.  Broadway Bo

Another former NFL player who's now playing among the stars, albeit the Broadway variety - retired Houston Oiler cornerback Bo Eason.  Eason's solo show, "Runt of the Litter," is returning to The Great White Way on Dec. 9 for a second stint after a successful off-Broadway run and national tour in 2002.  "Runt of the Litter" is a fictionalized account of life in the NFL, in all of its gruesome glory.  It's also an examination of sibling rivalry - Eason's quarterback brother Tony played in Super Bowl XX with the Patriots.

 

 

7.  Sales at Bat and Ball

Despite the asterisks, home run chases by Barry Bonds and others have had a positive impact on amateur involvement in the sport.  Sales of baseball and softball equipment continued to grow in 2006, up 6 percent from the year before and 51 percent over the last decade, according to a recent report by the Sporting Goods Manufacturers Association.  Bats were the biggest contributor, bringing in close to $213 million last year (up 18 percent from 2005), while protective gear saw the biggest jump, up 35 percent to $72 million.  Likewise MLB's worldwide licensed merchandise sales reached $4.7 billion last year (well ahead of the NFL's $3.5 billion.)

 

Soccer equipment sales also increased by more than 11 percent in 2006, to $300 million, while basketball sales fell by 8.6 percent and volleyball sales plummeted by 29 percent, down 40 percent for the decade. The NBA did $3 billion in worldwide licensed merchandise in 2006, MLS, a mere $145 million.

 

8.  Cold Air, Hot Stove:  Baseball Winter Meetings Convene

Starting today through December 6, obsessive baseball fans everywhere will be focused on the Gaylord Opryland in Nashville, site of Major League Baseball's annual winter meetings.  The naming game has even taken over in Nashville - Bank of America is the official corporate sponsor of this year's winter meet and greet.  That's appropriate, given baseball's record $6.075 billion of revenue this year.

The meeting's marquee event - besides a concert by country music darling Pam Tillis - is the December 6 "Rule 5" draft, which allows teams to select among players with more then three years' experience who are not on any team's 40-man roster.  This year's Rule 5 will be broadcast live on MLB.com.  At the heart of it are two superstar players being dangled by their teams: two-time Cy Young winner Johan Santana of the Twins and 24-year-old third baseman Miguel Cabrera of the Marlins.  "The resources are there," said one baseball official. "It's kind of ready to burst."

9.  UEFA and EU to Fight Fan Violence

The European Union and UEFA agreed to a joint effort against soccer violence last Thursday after confronting too many unruly and deadly incidents involving fans and police. The joint effort was announced at a conference on violence in sport, which drew 150 police and sport experts, and came just weeks after a Lazio fan was shot to death by police in Italy, sparking riots in Rome and other Italian cities.

 

The EU's top justice official, UEFA President Franco Frattini, said he would push the launch of new police teams to help curb fan violence at soccer events before next summer's European Championship in Switzerland and Austria.  Frattini and Portuguese Interior Minister Rui Pereira also presented plans to set up common EU-wide standards on safety and security for sporting events.  An initial $14.8 million US was set aside from the EU budget next year for the training plan; Platini added that the $51.6 million spent on security during Euro 2004 in Portugal could be better spent on education and skills programs for children and developing players.

10.  Bonds, Vick Have More Days in Court

 Ready the media frenzy.  This weekend will be a closely-watched one in sports, not for championships or record-breakers, but for justice. On December 7, Barry Bonds will make his initial appearance before U.S. Magistrate Judge James for his indictment on four counts of perjury and one of obstruction of justice, while Michael Vick is scheduled to be sentenced on December 10 for his animal cruelty and dog fighting charges.  If Bonds' case moves forward to a trial date, it might be in March - if so, a vastly different spring training experience awaits the slugger.  Bonds could face up to 30 years in prison if he's convicted; Vick is likely facing at least 18 months in prison if the recent sentences of his co-defendants are an indicator.

 

With all of the controversies surrounding professional sports in 2007, it's a relief to soon be turning the page toward a fresh start in 2008.  A trial date for Bonds, and a sentence for Vick, are important stepping stones toward turning this year's controversies around.