Bailing Out the Coyotes

The financial problems of the Phoenix Coyotes are well known and have been the focus of efforts by the NHL to salvage the franchise for the better part of the season. It now appears that the City of Glendale, owner of the arena in which the Coyotes play, has been bailing out the team for some time by foregoing rent payments. In 2007, the last full year for which payments were made, the Coyotes paid Glendale lease payments totaling $4.3 million, so we're not talking about pocket change here. The last date through which payment has been made is July, 2008.

Arena rent is one of the two major sources from which Glendale receives the funds needed to pay back the $200 million in bonds it floated to cover the construction costs of the arena. Foregoing rent for any significant length of time would obviously cause a problem with bond repayment and the bondholders would start to get very nervous, if they haven't already. There are unconfirmed reports that the NHL is covering all or a portion of the Coyotes rent payments during this period. Glendale's mayor would not comment on those reports, saying only:
"I know who is going to pay the Coyotes' rent. The taxpayers will not lose any money."

There are investor group(s) looking at the franchise and restructuring the arena lease is a significant factor in the viability of any deal. Without a restructured lease, the Coyotes simply can not operate successfully.

A's Bid Fremont Adieu

The Oakland A's canceled plans for Cisco Field in Fremont in the face of intense opposition from local residents, retailers and employers. A's owner Lew Wolff was surprised at the opposition his plans encountered and finally decided that it was just too much to overcome. He has not announced a Plan B other than to say that he plans to keep the team in Northern California. Wolf has spent $80 million on the Fremont project so far, of which at least $24 million is non-refundable. That's moneyball all right.

WTA Fines Dubai $300,000 For Pe'er Ban

The WTA levied a $300,000 fine on the organizers of the Dubai Tennis Championships, more than twice as much as the previous record fine, after Shahar Pe'er was denied a visa from Dubai. The WTA also took steps to compensate Pe'er and her doubles partner for lost income and tour points as a result of being banned from the tournament. Pe'er will receive $44,250 from the fine and 130 ranking points, equivalent to what she earned in the same week last year. Anna-Lena Groenefeld of Germany, her doubles partner, will receive $7,950, roughly equal to her average weekly doubles earnings last year. The balance of the fine will go to a charity selected by the WTA and Pe'er.

The WTA felt justified in fining the tournament organizers in part due to their association with Dubai Duty Free, a company owned by the Dubai government. In addition, the tournament is: "Under the patronage of H.H. Sheikh Mohammed bin Rashid al Maktoum, Vice President and Prime Minister of the UAE and ruler of Dubai."

In announcing the fine, WTA CEO Larry Scott told the AP: "I think what we hope with this decision is that we're sending a very clear message that we're not going to tolerate discrimination of any kind. We wanted to send a clear signal that this is the most egregious action the world of tennis has seen in recent history. And we felt that it should be at least double what the previous highest penalty was."

The WTA is taking all the right steps so far. With the granting of a visa to Andy Ram for next week's ATP tournament, it is clear that Dubai is getting the message. Hopefully, there will not be a repeat of this affair next year and there will be no need to remove this tournament from Dubai permanently. However, it cannot stop with tennis. Israel is systematically excluded from competition in Arab states. It is forced to compete in European competitions instead of Asian because Arab states refused to allow it to compete in their groups. These boycotts must end. The Olympic movement must end its tacit acceptance of this discrimination and stand up for what is right and fair and just. It's long past time to end anti-Semitism in world sport.

IMG Allegedly Steered Stars Money to Stanford for Kickbacks

According to the New York Post, disgraced financier R. Allen Stanford's scam could ensnare star athletes represented by Ted Forstman's management firm IMG. Allegedly, IMG and Stanford Financial quietly entered into a quid pro quo agreement whereby IMG would advise its clients, including golfers Tiger Woods, Arnold Palmer, Sergio Garcia and others to have their money managed by Stanford in return for for a payment in the low to mid seven figures.

If true, such an arrangement would be highly unethical and most likely illegal. It is trading on its clients names for its own benefit and a gross conflict of interest. To the extent that the clients suffer losses as a result of Stanford's scams, I think they have excellent cases for recovery of the losses and damages against IMG. A decent case for punitive damages could also be made as IMG was a party to defrauding its clients. Since its unlikely the clients will be able to recover anything lost to Stanford from Stanford Financial or Stanford himself, the prospects of another source for recovery should take a little of the sting out of the loss. Of course, these golfers and other athletes should all be in the market for new agents too.

Dubai Will Grant Israeli Men's Tennis Player a Visa

In the continuing saga of Dubai's blatant discriminatory treatment of Jewish athletes, comes word that the emirate is going to grant a visa to Israeli Andy Ram allowing him to play in next week's ATP Barclays Dubai Tennis Championships. Apparently, following US pressure and a realization that perhaps they made a public relations blunder, Dubai officials have changed their mind. It may also be an attempt to salvage both tennis tournaments, as there are serious moves afoot to remove the WTA event from the next year's calendar.

In related news, the Sweden-Israel Davis Cup match to be played March6-8, in Malmo, Sweden, will be played before an empty stadium. The Malmo recreational committee, citing security concerns, decided to ban spectators from the stadium. The International Tennis Federation, in a typically feckless statement, reacted to the ban: "“very unfortunate” and “not in the long-term interests of the Davis Cup," but took no action. The ITF deferred to the local authhority. Again, imagine the outcry, if this had been done in Israel.

Tennis Channel Won't Televise Dubai Open

The Tennis Channel is refusing to televise the Barclays Duabi Tennis Championships this weekend to protest the emirate's refusal to grant a visa to Israeli tennis star Shahar Pe'er to allow her to play in the tournament. According to Ken Solomon, chairman and CEO of the network:

"This is an easy decision to come by, based on what is right and wrong. Sports are about merit, absent of background, class, race, creed, color or religion. They are simply about talent. This is a classic case, not about what country did what to another country. If the state of Israel were barring a citizen of an Arab nation, we would have made the same."

It's good to see the Tennis Channel stand up for Pe'er. You can bet that had the roles been reversed and it was Israel that had refused a visa to an Arab tennis player for participation in a tournament in Israel, it would have been front page news around the world. There would have been denunciations coming from world capitals around the world and calls for immediate sessions of the UN Security Council to enforce an economic boycott on Israel for the injustice against humanity. The outcries would have been led by America's staunchest European allies, well, maybe not the UK. What is most interesting here is the deafening silence which with this affair has been greeted outside the sporting world.

Are Pacers Positioning to Move?

The Pacers are just one of several (many? most?) NBA losing money this season and over the last several seasons. The reported figure is $7 million the last two seasons, although co-owner Herb Simon says it's more.

The Pacers lease of the iconic Conseco Fieldhouse is not particularly favorable. The team is responsible for the operating costs of the arena estimated at $15 million. In contrast, the arena owner, the Capital Improvements Board, which also owns the colts new home, Lucas Oil Field, pays the operating costs there, $27.2 million in 2008. The Pacers lease allows for renegotiation at the end of the season and the Simons intend to do just that.

David Stern, speaking at All Star Weekend, buttressed the Pacers' case, saying:

"I don't want to make Herb Simon's time too easy here, but I will say I understand what they're trying to get is a small fraction of what was done for the Colts," Stern said Saturday night during his annual address of the NBA at All-Star weekend.

"I don't want to threaten something," Stern said. "I think that to say there's a rich basketball tradition in Indiana -- talk about self-evident -- and the Pacers have been a good booster of the state, played some pretty good ball and hopefully they'll be able to work it out. I sure hope they can."

While Stern struck an appropriate tone and was likely posturing about the potential for movement of the franchise, there is a beautiful new arena designed with basketball in mind opening next year in a town just 110 miles down I-65, and it doesn't have a professional sports franchise tenant. Well, that is if you don't count the University of Louisville basketball team. It will have 22,000 seats, 72 suites and 2,000 club seats. In all, the projected cost of the arena is $238 million. It will stand willing and ready to welcome the Pacers to their new home south of the Ohio River should negotiations breakdown or the Simons decide that the pasture is greener in the Bluegrass.

HT: Indy Cornrows

Dubai Tarnishes Golden Sports Hopes; Denies Israeli Tennis Star Visa

The WTA has been gambling since 2001 when it decided to stage a tournament in the United Arab Emirates. This year it came up snake eyes when Dubai barred Israeli tennis star Shahar Pe'er from competing in this week's Barclay's Dubai Tennis Championships. In the months leading up to the tournament, Pe'er had received assurances that she would be allowed to play. Last year, she became the first Israeli athlete to play in a Gulf state when she played in a WTA event in Qatar. She was informed on Saturday that she would not be granted a visa to enter Dubai to participate in the tournament.

The WTA was apparently taken by surprise as well, since it had included Pe'er in the draw. To its credit, WTA Chairman and CEO Larry Scott released a statement that was strongly supportive of Pe'er and called into question the future of the Dubai tournament:

"We are deeply disappointed by the decision of the UAE denying Shahar Pe'er a visa that would permit her to enter the country to play in the Dubai Tennis Championships. Ms. Pe'er has earned the right to play in the tournament and it is regrettable that the UAE is denying her this right.

The Sony Ericsson WTA Tour believes very strongly, and has a clear rule and policy, that no host country should deny a player the right to compete at a tournament for which she has qualified by ranking,

The Tour is reviewing appropriate remedies for Ms. Pe'er and also will review appropriate future actions with regard to the future of the Dubai tournament."

“All the players support Shahar,” American tennis champion Venus Williams told the New York Times. “We are all athletes, and we stand for tennis.”

It's likely now that Dubai has limited not only its ability to host WTA events but future events in other sports as well. While Israel does not have nearly as many friends in other international governing bodies, perhaps the precedent has been set, and no barring of athletes merely on the ground of their Israeli passport will be permitted if events are awarded to Dubai in the future. It is also likely that in the continuing contest between rivals Qatar and Dubai, Qatar has just won a major international sporting victory.

Curllin's Former Owners Retrial Starts Tomorrow

The retrial of the two lawyers Shirley Cunningham Jr. and William Gallion, who are the former owners of Horse of the Year Curlin begins tomorrow in US District Court in Frankfort, Kentucky. The two disbarred lawyers are charged with conspiracy to commit wire fraud and eight counts of aiding and abetting wire fraud in charges arising out of their alleged taking of $94.6 million from clients in the fen-phen diet drug cases. Their allegations in the new trial are largely the same as those of their first trial which ended in a hung jury last July. However, the government has added eight new counts in an attempt to make it easier for the jury to reach a conviction.

This time there is a new judge and the defendants are out of jail, free on bond. In the meantime, the two have been disbarred. The prosecutors would like to use the testimony in the disbarment proceedings in this trial and are looking into its admissibility. Those proceedings are usually confidential but I would think that they would be admissible in court.

While I found it hard to believe that a jury had difficult getting to a conviction last time, I did not watch the trial so I couldn't really comment. Supposedly, the presentation of the prosecution case was not the best and the jury had little room to compromise. The judge was overtly favorable to the prosecutors and that too may have influenced the jury. With the addition of eight new counts, the jury may be able to pick a few to convict on while acquitting on others. It's not supposed to happen that way, but we all know that sometimes it does as the natural order of things. With the opportunity to have seen the defense's case and thus being better prepared, I expect the prosecutors to have a better time this trial and I expect a conviction on at least some counts, with serious jail time ahead.

Ralph Kaplowitz, Played in NBA's First Game, Dies

My condolences to the family of Ralph Kaplowitz, of blessed memory, who passed away on February 2 at his home in Queens. He was 89. Mr. Kaplowitz, a 6'2" guard out of NYU, when NYU was a college powerhouse, played for the New York Knicks and the Philadelphia Warriors. Mr. Kaplowitz took the court for the Knicks against the Toronto Huskies on November 1, 1946, at Maple Leaf Gardens in what is now recognized as the first NBA game ever played. At the time, the league was known as the Basketball Association of America. Kaplowitz was traded that season to the Warriors, who went on to win the championship, so he has the unique distinction of playing in the first game and winning the first championship.

In an interesting sidelight, that first Knick team was broken up - not because of huge salaries and lousy performance like the Knicks teams of recent vintage but because of anti-Semitism. As Kaplowitz's daughter recalls: "“My father often told us that the first Knicks team, which had other Jewish players on it, was broken up because fans, especially on the road, would often chant nasty things,” Barbara Kaplowitz said. “But my father was too self-confident a man to ever let stuff like that bother him."

Becks to Return to LA

With the Galaxy turning down AC Milan's initial offer, the expectation was that Milan would likely up the ante a bit and MLS and the AEG, the owner of the Galaxy, would come to a deal that would allow David Beckham to stay in Milan as he wished. After all, who wants the centerpiece of your marketing campaign to be vocally wanting to be somewhere else. Just ask the Red Sox - you saw how long it took to get rid of Manny.

However, it appears that the Galaxy overplayed their hand. Yesterday's deadline came and went with no new offer from Milan and now Becks will be back in LA next month as originally scheduled. He won't be happy and he has a clause in his contract that allows him to leave at the end of the season. He wants to be on the England 2010 World Cup team and does not believe the Galaxy are good enough to get him there. They have this season to convince him or they will lose at the end of the season and get nothing in return. They probably would have been better served sitting down with Milan and working out a deal. It's better to have cash in hand than an unhappy star.

Ohio Judge Strikes Down NCAA Ban on Lawyers

The NCAA bans student athletes from having lawyers present when contracts are discussed with potential professional teams if the athletes wish to retain their eligibility to compete in NCAA competition in the event the negotiations do not result in a contract and the athletes stay in school. This rule is particularly applicable to baseball players and it was in that context that Oklahoma State pitcher Andrew Oliver was declared ineligible by the school last spring. Oliver sued the school and the NCAA in Ohio state court and an Erie County Judge ruled in his favor, finding the NCAA's ban on lawyers was contrary to the public policy of Ohio.

Judge Tygh Tone ruled that the ban deprived Oliver of his right to legal representation, was "arbitrary and capricious" and was "against the public policy of the State of Ohio as well as all states within this Union."

In addition, Tone struck down the NCAA's amazingly arrogant rule which would penalize a university or student for complying with a court order or injunction which was later overturned on appeal. Tone wrote that "“Student-athletes must have their opportunity to access the court system without fear of punitive actions being garnered against themselves or their institutions and teams of which they belong."

If this decision stands up, the effects will be far reaching. Not only will it completely change the relative fairness and balance of negotiations with draft picks in baseball, but it will probably require changes in the eligibility rules for football and basketball as well. Merely signing with an agent, at least one who is an attorney, should not then cause one to lose eligibility as it does now. More kids will get an opportunity to get a fairer look at their worth in the job market before having to commit to leave school. It should result in fewer kids making bad decisions, but it could just result in more kids being lured away by the siren sound of money that may not be there after all. If this ruling stands, the NCAA should revise its draft rules to allow signing with attorneys and going through the draft but the ability to return to school if the kid doesn't sign with a team or is not drafted. That way, there will be fewer cases of bad decisions and more chance of kids getting a fair shot at making a good living from their talent. It's the fair and right thing to do. It's in the best interest of the student-athlete. That means there is no chance the NCAA will do it.

New Football League Launches in Fall

Defying all logic, the United Football League will actually launch this fall, according to league founders, but with fewer teams than originally planned and without a certain celebrity owner who needs to be spending his time battling the SEC rather than selling football tickets.

The UFL was originally conceived as a six team league but will launch with only four teams. A group led by Paul Pelosi, yes that Pelosi - he's her husband - paid $30 million for the privilege of launching a new sports enterprise in the midst of the worst economy since the Great Depression. If you think that is not exactly the smartest move they could make, you would not be alone. The teams will play a 12 game roundrobin type schedule on a barnstorming basis with no fixed home field. That may come in 2010, should the league survive. No television contract is yet in place.

One factor in their favor, and perhaps the only one at this point, is the cooperation of the NFL. The UFL is receiving assistance from the NFL, especially in technical areas and officiating. With the demise of NFL Europe, the NFL may be looking at the UFL as an eventual replacement. Formalizing that relationship may be the key to the UFL's ultimate survival.

The Ups and Downs of Citi and the Baseball

I could talk about A-Rod and steroids but frankly I'm done with steroids. I'm bored with it and suspect that most of you are too. I'll only say this about A-Rod since this is a sports business blog, the revelations about a positive test probably ruined his sponsor relationships forever. I don't know how long it will take them to break their contracts or if they will just not renew, but no company wants a known steroid user as a company pitchman and his endorsement days are over. He doesn't need the money so it won't be that big a deal I suppose, but there you are.

The more interesting to me story of the current baseball preseason is the machinations surrounding Citi's naming rights deal with the Mets. It is the largest naming rights deal in baseball at $400 million for 20 years and the political firestorm of a company receiving TARP funds spending that kind of money on a stadium deal may force Citi to attempt to change the terms of the deal. I don't believe that Citi will terminate the contract. For one thing, I doubt seriously there are grounds for termination and if Citi tried, the Mets would probably go to court to hold it to it. No, I think it far more likely that the public relations aspect of this will mean that both parties will come to some agreement modifying the deal in some way that allows Citi to keep its name on the stadium and the Mets to keep the bulk of the money, while allowing Citi executives to claim that they renegotiated the deal and saved the company a lot of money.

This is not the only baseball stadium that carries Citi's name. The Long Island Ducks, of the independent Atlantic League, play in Citibank Park in Central Islip. The naming rights deal was a ten year pact that expires following the upcoming season and netted Suffolk County, which owns the stadium $2.5 million. While I think it is unlikely Citibank will renew the agreement, the bank released a statement saying: "Citibank is pleased with our relationship with the Long Island Ducks and Suffolk County. We have not yet begun to evaluate and/or renegotiate renewal terms of the contract but look forward to begin those conversations." I guess you never know, but Suffolk is drafting a request for proposal just to be safe.

Condi Rice Rejects Pac-10

The Pac-10 search for a new commissioner continues. Former Secretary of State Condolezza Rice told the conference that she was not interested in the job and wanted to return to Stanford and teaching. The Pac-10 approached the avid football fan, who once said her dream job was to be Commissioner of the NFL, about their soon to be vacant commissioner's post but now must continue looking.

Phelps Suspended

The first ramifications for pot smoking are starting to roll in for gold medal wonder boy Michael Phelps. Yesterday, USA Swimming suspended him for three months, meaning he will not be allowed to participate in any sanctioned meets during that time. He had planned to return to competition in a March Grand Prix meet in Austin but that will have to wait until a May meet in Charlotte. There's a Grand Prix meet in Santa Clara, California in June followed by the US Nationals in early July where the US team for the World Championships in Rome in late July will be chosen.

USA Swimming also suspended its financial support of Phelps for the three month period. I don't think Michael will miss it much as almost all of his sponsors are standing by him and he is making millions of dollars a year in endorsement income. Nevertheless, it is a symbolic gesture amounting to a $1,750 monthly stipend for training expenses.

Phelps lost one sponsor yesterday as Kellogg's announced that it would not renew its contract when it expires later this year. The company said that Phelps' behavior was "not consistent with the image of Kellogg." So far, Kellogg is the only sponsor breaking ties to Phelps. If that is the only fallout, and I suspect that it will be, then the monetary loss and, frankly, the image loss, will not be too great. This will be a tempest in a teacup that will blow over and be forgotten following a good showing in Rome. However, if Michael doesn't swim well in Rome for whatever reason, the dope smoking and DUI will be brought up as an explanation for his failure and he will face more questions about his behavior, placing sponsors in a more difficult position. What was going to be a World Championships that was just an easy pressure less swim has now become something in which his performance is very important to his financial future.

I'm Back

Sorry for the scarcity of posts recently. We suffered a terrible ice storm here in the Bluegrass a little over a week ago and I've been without power for a bit over a week. With thanks to the good folks from Georgia Power who did yeoman's work in sub-freezing weather to get our lines back up, I was finally able to return home on Tuesday night for the first since power was lost last Monday. We lost several large trees, a fence, some roof damage and we're still assessing the rest, but we're home, healthy and luckier than many and for that we're very grateful. More regular posting will resume in the next few days.

In the meantime, there is an excellent account of the troubles of the NFL Network in Sports Business Journal, here, and an analysis of why the upcoming NBA free agent class may not be as mobile as we might think here.