ESPN Pays $2.25 Billion for SEC Rights

Remember all the talk about a new SEC Network that was in all the papers during the SEC meetings back in the summer? Well, you can forget about that now. ESPN just agreed to pay the SEC a whopping $2.25 billion, yes with a "B" over the next 15 years for the conference's TV rights to football, basketball and baseball for all events not already taken by CBS. Combined with the 15 year, $55 million deal just announced with CBS, this brings the total to about $205 million per year or a little over $17 million per school, per year.

This deal effectively kills not only any discussion of a SEC network (that would now be ESPN) but eliminates the syndicated package previously held by Raycom. ESPN Regional will handle the regional syndication package previously handled by Raycom.

This deal is very similar to previously announced deals by ESPN and CBS with the Big East, which provide that all Big East football and men's and women's basketball games will be televised by one of the ESPN outlets, including ESPN Regional, or CBS. That deal could be considered the model for the SEC deal and it will be interesting to see how ESPN juggles the two for programming slots.

Carnival of the NBA

The 59th edition of the Carnival of the Edition is now up at A Stern Warning. Get over there and check it out, Jokers.

How Much Does Roger Goodell Make?

Nonprofit organizations in the US are required to disclose the salaries of their top executives on a form filed annually with the Internal Revenue Service known as the Form 990. The Form 990 is an informational return that applies to both qualified charities recognized under IRS section 501(c)(3), which are the organizations you commonly think of as charities, and trade associations and other nonprofits to which section 501(c)(6) applies, which are member organizations not operated as charities. Under old guidelines, a 501(c)(3) organization was required to list on its Form 990 its five most highly compensated employees who earned more than $50,000.

The IRS has issued a new Form 990 (here and here) which will substantially expand the scope of salary information required to be disclosed by trade associations and other 501(c)(6) organizations. These trade associations and member organizations, like the NFL, will now be required to report salaries for key executives who earn more $150,000 a year and are responsible for more than 10% of an organization's activties. The thresholds applies equally to charities and trade associations; what has caused the NFL and the others to be so concerned is that this reporting obligation has not been applied to them before now.. Consequently, the NFL has joined with the national trade association of nonprofit executives to start a lobbying effort to convince the IRS and/or Congress to rescind the regulations and exempt 501(c)(6) associations from reporting salary information on Form 990.

While, from a curiosity standpoint, I'm interested in what Goodell makes, there is no particular public policy reason why I or any other person who is not an executive of one of the member clubs of the NFL has a good reason to know his salary. Unlike charities which actively seek out donations from the public and therefore should disclose to the public who benefits from the money, the NFL and most trade associations, are private businesses for which salary information should remain private. There is, I suppose, one caveat to this position and that is almost every member club of the NFL has significant public investment in the stadium in which it plays and so an argument can be made, that such investment transforms the club, and by extension the league itself, into a public asset for which transparency is necessary. Depending on the lease arrangement between the local government and the club, I could see this argument having merit on the club, but I don't believe it carries much weight when applied to the league.

Just for the record, according to this post by my friend Darren Rovell at CNBC, Goodell is making about $11 million per year.

Some Winners and Losers from Beijing

There have been many winners and losers during the Beijing Olympics, some obvious and others less so. I'm not really talking about the medal winners here, although some have won medals, but about the business winners - who will take home the gold bars, so to speak, and who has lost that chance. Ok, so here goes:

Winners.

1. Michael Phelps, Talk about leading with the obvious, right. Phelps and his eight gold medals has the chance to be the first Olympic star to cross over into mainstream advertising and endorsements in the same manner that Tiger Woods and Michael Jordan have. He will not necessarily make the same kind of money that they have, swimming still doesn't have the same audience and demographics that golf and basketball have, but the possibility of $100 million in his future is certainly there.

2. Misty May-Treanor and Kerri Walsh. The Golden Girls will certainly benefit form NBC's singular focus on their successful defense of their gold medal from Athens. Their endorsements are bound to increase substantially but the upside may be limited by two significant factors: sponsors seem to like to link the pair together, which reduces their overall earnings, and they have expressed the desire to take time off to have babies and who knows what effect that may have.

3. Speedo. The effect of the new swimsuit is undeniable as the raft of world records in the Water Cube will attest. The uptick in interest in swimming from Michael Phelps will help too.

4 Usain Bolt. The name, the world records, the personality and the ease with which the 21 year old decimated the sprint fields combine to make the upside for Bolt to be almost limitless.

5. Puma. The Jamaican track team wears them and sweeping the men's and women's sprints sure gives them credibility and visibility as they try and crack the Chinese market, not to mention having Bolt parading around the Bird's Nest holding his golden Pumas aloft.

6. Nastia Lukin and Shawn Johnson. The upside for the gymnasts is high but may be somewhat limited by the difficulty in the public's eye of separating the two. With Lukin winning the all-around but Johnson also winning a gold and having won the all-around at last year's world championship, it may be hard to activate significant separate endorsements, especially given the proposed 36 stop tour coming up after they return home. Still, America loves them and the endorsements should continue to flow.

7. USA Basketball/NBA/WNBA. The dominating performance of the USA basketball teams and the generally agreeable demeanor of the team members, especially the Redeem Team, has done much to erase the memories of the men's team performance in Athens. Both teams have popped at venues all over Beijing and have given interviews expressing how great the experience has been. They have been tremendous ambassadors for America and the NBA/WNBA and David Stern could not hoped for any more.

8. USA baseball and softball. USA softball lost the gold medal game and USA baseball lost to Cuba in the semi-final, left to play Japan for the bronze medal. As a result, the aura of invincibility is gone and that, coupled with working out an arrangement with Major League Baseball to allow major league players to compete, may be enough to get baseball restored to the Games in time for, hopefully, Chicago in 2016.
Losers.

1. Nike. The remarkable performance of the Jamaican sprinters and the disappointing performance of the American track team, coupled with swim team's dominating performance in the Speedo suit Nike agreed to let its endorsing swimmers wear has combined to diminish any real exposure time for Nike to the USA basketball team.

2. USA Track. The performance of the sprinters has been abysmal, especially the members of the men's and women's 4x100 relay teams. USA Track needs to take a long, hard look at what its training methods are and why its relay performances have been so poor for the last several Olympics.

3. Li Ning. The Chinese sporting goods company started by and named for the Chinese gymnast, achieved great exposure from the gold medal winning Chinese teams as expected but, the injury to hurdler Liu Xiang leaving him unable to compete, decimated the company's track and field plans in its hopes to battle Nike, Adidas and Puma in the great sportswear and sneaker wars.

4. Tyson Gay. The defending world champion in the 100 meters not only could not defeat Usain Bolt but due to an injury suffered at the US Olympic Trials which had not fully healed, he didn't even qualify for the finals and then was the at the end of the ill-fated baton pass in the 4x100 relay.

ESPN Looks to Bid on 2014 and 2016 Olympics

NBC is experiencing some of the largest audiences of any Olympics since the Games were held in Atlanta in 1996. Thanks to Michael Phelps and the Golden Girls (beach volleyball's Misty May-Treanor and Kerri Walsh and Nastia Lukin and Shawn Johnson, depending on your sporting preference) these Olympics are on course to be the most watched Summer Olympics in history. NBC's gamble of using its cable networks and online to blanket live coverage combined with taped and live coverage in prime time on the parent network, seems to be paying off in a big way.

The current contract between NBC and the International Olympic Committee expires at the conclusion of the 2012 Summer Games in London, It's a given that NBC will want to renew the contract, especially considering the amount of profit these Games will generate. ESPN is expected to bid and compete aggressively for the contract. I don't know about you, but the thought of the Games being broadcast by ESPN is not very comforting.

I'm not a huge fan of NBC's coverage, although this year has been better than most. I would prefer to see events live no matter what time they occur and NBC had done a better job at that than in the past up until the last couple of days. ESPN would likely broadcast everything live, but if the last World Cup is any indication of how the WWWL would treat the Olympics, we should all pray that NBC gets the contract. The thought of Chris Berman and Stuart Scott anchoring the broadcast is well, not something I care to contemplate before breakfast. While not all of NBC"s announcers have been the greatest, at least most of them are familiar with the sport they are announcing or if not, have studied sufficiently hard to fake it. It was clear for ESPN's World Cup coverage that the WWWL doesn't place too high a premium on its announcers having any basic knowledge of the sport being covered or else the suits would not have inflicted Dave O'Brien on us.

Steve and Barry's May Survive

In what is a previously thought to be an unlikely event, it appears that a buyer for most of the assets of Steve and Barry's has been found. According to the Wall Street Journal, Bay Harbor Management LLC, a private investment firm is the leading candidate to purchase the assets out of bankruptcy. Bay Harbor has a plan to keep anywhere from 125 to 200 stores open out of the 276 stores that the company had on the day it filed for bankruptcy. The exact number of stores Bay Harbor keeps open and which ones they turn out to be will be determined in great part by the outcome of negotiations between Bay Harbor and the various landlords and the lease concessions it is able to extract.

In the event that Bay Harbor is able to successfully conclude a transaction, then Steve and Barry's will remain open, albeit in fewer locations and with less growth in its future. Nevertheless, that is good news for the stores many fans, especially for those fans of its many clothes and shoes endorsed and/or designed by celebrities and sports figures such as Stephon Marbury, Ben Wallace, Venus Williams, Sarah Jessica Parker and Amanda Bynes will continue. Those clothing and shoe lines are an integral part of the Steve and Barry's business model and the bid by Bay Harbor for the Steve and Barry's assets includes those licenses.

NBA Considers Local Streaming of Games

The NBA is considering taking live video streaming of games where no league has gone before. It is currently negotiating a plan to allow live streaming of local games within a local market, so you could watch, say, a Celtics game on Celtics.com or on nesn.com. It is a plan sure to anger the satellite broadcasters and cable companies.

Because of the unusual and complex nature of the negotiations, and the ramifications with the satellite and cable companies, the teams have authorized the league to conduct all of the negotiations to put this plan for the 2008-09 season. It is a monumental task to get it done that quickly, especially since not all teams control their own local digital rights. The local regional sports networks control the digital rights in some markets. Of course, in some markets, the RSN is controlled by, or at least partially owned by, the NBA team, making that part of the negotiation a bit easier. The hard part remains mollifying the cable and satellite companies who are going to be naturally afraid of losing market share to the new technology. Direct TV is likely the biggest loser, as the cable companies are the most likely broadband operators benefiting from the online offering. Direct TV does not yet have a broadband offering of its own.

Local streaming wold take the NBA a step farther in digital offerings then either MLB or the NFL has gone. MLB streams all out of market games and has been making a good deal of money doing so. The NFL has just recently announced its first offering, which will be streaming the Sunday night NBC game. The NBA has not yet decided whether to charge for streaming and will probably leave that decision to each individual club.

If the NBA is able to pull this off, it will be good news for those of us stuck in the office or class and without access to a TV. However, it won't help those folks on the road and wanting to watch the ol' home team, since it will be using software restricting the signal to each club's home territory. I know a lot of road warrior baseball fans who swear by MLB's online version of Extra Innings but, so far, the NBA is not planning that. If you're on the road, you will still need a slingbox.

Wanna Own a Piece of May-Treanor and Walsh?

Well, not exactly Misty and Kerri, more like the AVP tour itself. You see, almost alone among professional sports in this country the company that owns and operates the pro beach volleyball tour is a publicly traded company, AVP Inc. The company is not the however the financial powerhouse that May-Treanor and Walsh are on the beach. It just recorded a $4 million loss in 2007, its sixth consecutive unprofitable year.

So, what's the problem and is the Olympics the solution? The folks who run AVP and the suits at NBC, which is the tour's broadcast partner through a time buy by AVP, certainly hope so. Beach volleyball, with its beach party ethos and players in skimpy bikinis, would seem a natural for popularity with a certain demographic of Americans, namely the young beer drinking males so
sought after by television and advertisers. Yet, sponsors are mostly paying barely enough to cover tournament prize money and the cost of mounting the tournaments is causing the tour to run deficits.

Beach volleyball has not yet caught on as a spectator sport either, although NBC is giving it a huge boost this Olympics by featuring it in prime time before Michael Phelps swims and the gymnasts take the floor, practically guaranteeing it the widest exposure possible. If that is not enough for the tour to build on for next year's outdoor season, then the only rational conclusion to draw is beach volleyball is destined for little more than a niche sport that will not support more than a few elite players on a full-time basis. All but those elite players will be forced to take other jobs to support themselves while they play volleyball on the side. May-Treanor and Walsh won't have to but how many other women beach volleyball players can you name?

MLS Expansion Fees League's Biggest Profit Center

At the time of the MLS All Star Game in Toronto back in July, Commissioner Don Garber announced the intention of the league to expand into two cities by 2009 and announced eight candidates for those two slots. Those eight markets are: Atlanta, Las Vegas, Montreal, a second team in the New York area, Ottawa, Portland, St. Louis and Vancouver.

The owners did not come to a final resolution of the issues surrounding expansion and so no conclusions were reached. There is sentiment for expanding the number of markets from two to four, allowing the league to take in two Canadian cities and still expand into two more American markets. In addition, no conclusion was reached on the expansion fee which the new teams would be expected to pay. The Seattle Sounders and the new franchise in Philadelphia, who begin play in 2009 paid an expansion fee of $30 million this past year, triple the $10 million paid by Toronto FC in 2006. Initially, the fee was set at $40 million but there was significant sentiment in the room to raise it to $50 million. Clearly, expansion fees are the one true profit center in MLS.

Olympics Drawing Viewers but Where Are The Spectators?

The suits at NBC and parent company General Electric must be dancing in the aisle in offices in Connecticut and at 30 Rock. The ratings for the first couple of days of the Olympics telecast are higher than they could have possibly hoped to see. Opening ceremonies, benefiting from NBC's controversial decision to tape it and show it 12 hours later in prime time, averaged 34.2 million viewers. Coverage of the first two days averaged over 29 million viewers, the highest rated non-US Summer Olympics since 1976.

In addition, NBC's digital gamble is paying off big as well. On the first day of competition, NBCOlympics.com, the NBC site which is streaming over 2,200 hours of live competition as well as highlights and video of competition drew over 4 million unique users, far higher than officials expected and up from the 2,7 million users who had logged in the previous day, which included the opening ceremonies.

The more interesting question is what happened to all the spectators. Chinese Olympic officials have said repeatedly that all tickets for all venues and events have been sold, but a look at almost any competition shows numerous empty seats and many seats filled with people in yellow shirts. Those yellow shirts represent Olympic volunteers recruited by venue officials to fill the stands to make it look more crowded.

Officials have offered various explanations or rationalizations for the lack of spectators, none of which sound terribly convincing. It may just be that the tickets were never sold in the first place, something that the Olympic officials were not willing to admit. The problem is compounded by the restrictions on the Olympic Green admittance imposed by Chinese officials. Tickets are required for admittance meaning the attendance has been sparse, angering corporate sponsors who have spent millions setting up elaborate pavilions which are now not being seen.

Self Joins $3 Mil Club

What is the price of a missed three pointer? For Kansas a missed three pointer by Jason Richardson meant a successful shot a the national championship and ultimately Bill Self staying home in Lawrence and signing a ten year, $3 million per year contract. In doing so, Self joins a very select group of college basketball coaches consisting of Florida's Billy Donovan, who is getting about $3.5 million, probably Kentucky's Billy Gillespie who is getting around $3 million and has yet to sign his contract, perhaps UCLA's Ben Howland, probably Louisville's Rick Pitino and most likely Duke's Mike Krzyzewski, Michigan State's Tom Izzo, UNC's Roy Williams and Memphis' John Calipari. I've included a number of coaches on this list that I'm just guessing at because the available public data includes bonuses and limited information about the effect of shoe and clothing contracts that are more and more now paid through the universities rather than directly to the coaches. In any event, Self is in exceptional company and undoubtedly has a longer term contract than almost any coach on this list.

In signing this contract and agreeing to stay at Kansas, Self declined an offer from T. Boone Pickens University, better known perhaps as Oklahoma State which made a run at him following the Final Four. With a department swimming in money, the offer would probably have been significantly higher than the one he took to stay at Kansas, but as both he and athletic director Lew Perkins said about the discussions on the new contract, there were no negotiations. Self told Perkins what he wanted and that's what he got. Must be nice to have a boss that will be that pliable. Of course, he is the major asset of the athletic department and the face of KU athletics - not someone Perkins could really afford to let slip away.

Should the NCAA Ban Beer Advertising?

The NCAA is going to be faced with an interesting decision at its next meeting. Letters requesting that the NCAA place beer on its list of products that cannot be advertised during college games has been sent to Myles Brand signed by 60 Division I presidents, 240 athletic directors and 101 football and basketball coaches. The current list of banned products includes cigarettes, guns, nightclubs and gambling. The petition was sponsored by the Center for Science in the Public Interest and copies of the letters can be found here.

The list of signatories is interesting in a number of respects. You will see presidents of some well known and elite academic institutions (Stanford, Georgetown) and some notorious party schools (Florida State, Tulane) and the school with the largest athletic budget in all of college athletics, Ohio State. It is a broad-based and movement that hopefully will find a receptive audience among the NCAA Executive Committee.

It has already found a receptive audience in one conference. The Mountain West Conference does not carry beer commercials on its network, the mtn. It also doesn't carry commercials for Viagra and similar products, which is a blessing for those few people who actually can receive the mtn. Declining Viagra and Cialis commercials would be a public service that I recommend that the Big Ten Network and the WWLS adopt immediately. Football and basketball fans would be forever grateful.

HT to Fanblogs.com

Clubs Can Keep Players from Olympics

In a potentially far reaching decision, the Court of Arbitration for Sport handed down a ruling in favor of the clubs in the seemingly never ending battle between clubs and FIFA. This time, it was a battle over the services of Argentinian wunderkind Lionel Messi, whom Barcelona did not want to release to play in the Olympics. FIFA maintains that any under 23 year old player must be released by his club, since the Olympics is a FIFA approved and sanctioned tournament.

The Court's ruling found that FIFA had failed to put the Olympics on the official match calendar, giving the clubs (the case also involved German clubs Schalke and Werder Bremen and the Brazilians Rafinha and Diego) the right to withold their players. FIFA complained that it would ruin the Olympics but both German clubs said that they would not recall their players from the Games. Barca allowed Messi to play and this morning he scored a goal for Argentina in its 2-1 win over the Cote d' Ivoire. See Messi and Argentina in action from this morning here

The ramifications of this decision can be far reaching however. The tension between club and country does not exist solely at the highest level of world soccer. The battles exist between the NBA and national teams all over the world, including Team USA, which, incidentally is essentially run by the NBA. The biggest concern most clubs have is the potential for injury to their star players while the player is off performing for his country. That injury may devastate the club and the club will receive no compensation for it. Imagine if you will that, God forbid, Lebron James is injured in the gold medal game and is put on the shelf for the season. The Cleveland Cavaliers have no recourse for the millions and millions of dollars lost because LeBron will not be in the building in uniform and on the court. Sure, his salary may be, and I emphasize, may be covered by insurance but that insurance will not cover the club's lost profits due to his absence. It's no wonder Mark Cuban is so reluctant to see Nowitzki suit up for Germany or Ginobili for Argentina. This decision will only cause him to lose more sleep on the few nights that worrying over his bid for the Cubs doesn't keep him up.

Watching the Olympics

The run-up to Beijing has begun and if you haven't been in a cave for the last month, you know that Opening Ceremonies take place on Friday, 08/08/08. Eight being obviously a lucky number in Chinese. For the first time in this Olympiad, there will be several ways to see almost every Olympic event live, despite the sixteen hour time difference from the eastern US.

NBC is utilizing its full range of cable outlets to broadcast the Games. Live broadcasts will be spread among NBC, MSNBC, CNBC, USA, Telemundo, Universal HD and Oxygen. Each channel will specialize in different sports, with Universal HD offering 24 hour HD replays of MSNBC and CNBC coverage of multiple sports. What will be new this year is NBC's dedication to online streaming.

NBC will stream live online 2200 hours of competition in 25 sports on NBCOlympics.com and will also webcast an additional 3000 hours of on demand events and highlights. It is an unprecedented use of video streaming made possible only by recent advance allowing NBC to control the streaming so that it is only available in the US, where NBC has the rights. With so much television coverage and so many of the events occurring live in the early morning hours in much of the US, it will be very interesting to see what NBC's numbers look like and how they compare to CBS's streaming numbers from the NCAA basketball tournament, the last event of any even near comparable magnitude.

An additional resource for Olympic coverage was announced today. Sports Business Journal and its sister publication Sports Business Daily announced a free site, the Beijing Olympics, (catchy name) to run the month of August from Beijing. It is essentially a blog, although they insist on calling it a website. It features stories, photos, blogs and is otherwise set up like most blogs you see these days. It will be an excellent on the ground resource covering all the business aspects of the Games as they unfold. Check it out.

And for a reminder of why we want to watch: