Recession, What Recession? Ohio State Sells Media and Marketing Rights for $110 Million

If there is a recession going on, you would be hard pressed to know that by looking at the athletic programs at the nation's largest universities. Bundling marketing and media rights has led to guaranteed contracts in the multiple millions for terms of up to twelve years in some cases.

The most recent contract, and the largest so far, was just signed between Ohio State and IMG, where IMG has guaranteed Ohio State $110 million over 10 years in return for all of the Buckeyes marketing rights and its media rights. Essentially, that means its radio rights and coaches shows, as the television rights to all sports are held by the Big Ten conference. IMG has been particularly active in this marketplace since acquiring Host Communications about 17 months ago.

Most of the other recent deals done by IMG have included some television rights, however, I would anticipate that more of the deals in the future will exclude television as more conferences assert control over all television. The Big East for example controls all television rights of its member institutions and last year negotiated a deal with ESPN to put all of its member institutions' college basketball games on one of the four letter's networks (or CBS). If a conference is considering starting a network similar to the Big Ten Network than it must control all television rights of its members. As can be seen from the Ohio State deal, that does not necessarily diminish the ability of individual schools to negotiate substantial marketing rights deals.

There are new players in the market which helps drive the price up. Also bidding on the Ohio State contract were CBS Collegiate Sports Properties, Fenway Sports Group and Front Row Marketing. However, only IMG came partnered with a radio broadcasting company, in this case, RadiOhio, the company which has run the Buckeyes radio network since 1984. The message in the Ohio State contract is clear. It will be expensive to obtain marketing contracts and they will be moving towards marketing and media contracts rolled up together, at least for the major colleges with significant media contracts.

He's Baaaack!

Any questions about Tiger's fitness or the return of his golf swing were answered yesterday with his comeback win at the Arnold Palmer Invitational at Bay Hill Classic. Was anyone who was watching the 18th hole in person or on television ever in doubt as to the outcome of Tiger's putt? While you may want to feel sorry for Sean O'hair, golf is better off when Tiger is playing and on his game. More people are interested and more people tune in.

NBC couldn't be happier that Tiger is back. This past weekend's tournament drew the highest television ratings of any golf tournament since last year's US Open, not coincidentally the last tournament one Mr. Woods played before putting himself on the shelf for a year to recover from surgery and play with his beautiful wife and kids. The overnight ratings were 4.9 with a 10 share, up 23% from last year, peaking at a 7.8, 13 share in the 7:30 -8:00 half hour which included Tiger's 18th hole. No one, and I do mean no one, in golf puts people in front of the sets like Tiger. Now it's on to the Masters for Tiger and I would not be willing to bet against him.

Innovative Naming Rights

Now this is a case of naming rights that not only goes to a worthy cause but actually is desperately needed, as I can attest to firsthand. In what I believe is a first of a kind, KFC is tackling the pothole in Louisville, which is a major problem in a cash strapped city. KFC is financing the filling of the city's potholes in return for a stencil stamped "refreshed by KFC" on top of the filled--in pothole. The campaign is tied to KFC's new "fresh" campaign, which focuses on food quality. KFC is headquartered in Louisville, as is its parent Yum! Brands, Inc. I'm not much of a fast food eater, and I don't eat meat, but I might have to go to KFC for a biscuit and a drink just to thank them for filling in the potholes - the city was never going to get around to it.

Weekend Reading

A few Friday links:

The Florida Panthers have totally integrated TV, radio, digital and arena marketing which may become the wave of the future (Ad Age)

Impact of the economic crisis on Vancouver 2010 and London 2012 (Denver Post)

Do investors biased belief in upcoming event affect the stock market's unexpected reactions, a study using publicly traded soccer clubs (SSRN, HT:Abnormal Returns)

FIFA upset that English Premier League is too focused on "making a lot of money", like that's a bad thing? (Bloomberg)

Elgin Baylor sues the Clippers for age and race discrimination following his firing after 22 years of employment and 22 years of losing (N Y Times)

Minority Interest in Texas Rangers and Dallas Stars for Sale

Dallas based venture capitalist and sports magnate Tom Hick is trimming his holdings a bit. The owner of the Dallas Stars, 95% of the Texas Rangers, 50% of Liverpool FC and 50% of the American Airlines Center, which is the Stars home, is marketing up to 49% of the Rangers and a similar interest in the Stars. Reportedly, he has retained Merrill Lynch to assist in marketing the interests.

The Rangers interest will now be the only baseball team publicly on the market. The Tribune Company is in the process of completing a sale of the Cubs to Tom Ricketts and former Diamondbacks general partner Jeff Moorad has just completed the initial phase of his stepped purchase of the Padres. No asking price for the Rangers has been publicly disclosed, although the team was valued by Forbes at $412 million a year ago. Hicks bought the Rangers in 1998 from a group including a certain recent former President for $250 million. He spent lavishly in what turned out to be vain attempts at building a winner, most notably that $125 million contract to a certain steroid using infielder. The Rangers are notorious for having, during the early period of Hicks ownership, what may well have been the most 'roid infested clubhouse in the majors. Of course, baseball didn't seem to care at the time, and seems to care little now.

The Stars may be the second team on the market as rumors have it that Hicks' partner in Liverpool, George Gillett, Jr., may be selling the Montreal Canadiens. The Stars were valued by Forbes in October, 2008 at $273 million, making the club the sixth most valuable franchise in the NHL. Hicks bought the club in 1998 for $84 million and has spent liberally to develop a winning franchise. It's difficult to determine his total investment in the team, but I would imagine a sale valued at anywhere near the $273 million, and Forbes values are traditionally lower than actual sale prices, would net him a fair profit.

One reason Hicks may be raising cash is to buy Gillett out of the Liverpool interest and end what has become a bitter ownership dispute. Full control over the storied club would give him much greater freedom of action both in negotiating any further sale and in refinancing any debt that is currently being carried by the club. Of course, he may just be raising cash because in this environment, cash is king.

DirecTV Extends NFL Sunday Ticket Through 2014

In a contract extension that was vital to DirecTV's marketing strategy, the satellite TV operator has extended its Sunday Ticket package exclusive of out of market NFL games through the 2014 season. The extension did not come cheap however, as sources have pegged the price to be a staggering $1 billion, yes that's with a "B", starting in 2011. That represents a 43% increase over the current $700 million being paid. The NFL package is DirecTV's most popular sports package and its exclusivity is a major selling point for the satellite service every summer and fall.

An addition to the package insisted upon by the NFL will be an extension of the games to broadband beginning in 2012 to fans who can't receive satellite TV. How that will interfere with DirecTV's sale of satellite service will be interesting to watch.

UPDATE: According to Peter King of SI.com, perhaps the most valuable item the NFL got from this contract extension is not the $1 billion rights fee but the fact that it is payable in 2011 even if no games are played. The league's collective bargaining agreement with the players association expires after the 2010 season and with a $1 billion fee in its pocket, the owners are far more empowered to lockout the players in the event of an impasse than they might otherwise be, giving them far more freedom to take a hard line in the upcoming negotiations. Those negotiations were going to be complicated by the economic crisis and the fact that the 2010 season will be played without a salary cap unless a new deal is reached before then. There will be powerful incentives for the players to make a deal between now and fall, 2010.

Villareal's Millionaires Taking Care of Unemployed Fans

Unemployment in the Castellon region of eastern Spain where the Villareal soccer team is located is running at a rate of 14.7%, the highest in the European Union, as Spain endures its deepest economic crisis since Franco was in power (and alive). The Yellow Submarine have a Champions League match with Arsenal coming up for a place in the semifinals and the Villareal management has asked its wealthy players, along with team officials and sponsors to donate to a fund to purchase tickets for unemployed fans. The players intend to step up according to striker Joseba Liorente.

As the economic crisis deepens and unemployment rises both in Europe and North America, expect similar funds to spring up in Europe and promotions in North America. It's a culture difference in operations: North American sports franchises are more likely to have a promotion where unemployed fans get in for free or reduced prices than they are to set up funds to use for subsidizing tickets. Players, however, do use their foundations to subsidize or buy up tickets for donation primarily to children. Expect to see much more of that this year too.

Marlins Clear Last Political Hurdle to New Stadium

In a process that has seemingly taken decades, if not centuries, the Florida Marlins have won the last votes of public bodies needed to begin construction of a new baseball stadium on the site of the former Orange Bowl. Both the Miami City Commission and the Dade County Commission have approved the Marlins' financing plan for the construction of a $515 million baseball only, 37,000 seat, retractable roof stadium and $94 in adjacent parking lots.

The financing arrangement is typically complex. Both the city and county will be supplying funds through a bed tax on the hotel industry. The Marlins' contribution will be $155 million, including $35 million in rent and the team will cover all cost overruns. Interestingly, last year during earlier permutations of the never-ending negotiations over this stadium, Marlins owner Jeffrey Loria offered to pay $212 million towards construction of the stadium. In addition, the team has agreed to change its name to Miami Marlins.

The location of the stadium is not without considerable controversy. The Orange Bowl site is close to Little Havana which would place it near the heart of Miami's Latino community, presumably a solid base of support for the team. However, many of the club's current season ticket holders in Broward and Palm Beach Counties have indicated, loudly, that they have no intention of going to games in a stadium located at the Orange Bowl, mostly for travel and traffic reasons.

Will the stadium be a boost to the Marlins? It will be a significant boost to the bottom line if the Marlins can spend just enough on its pitiful payroll to put people in the seats. However, if the team doesn't use the new revenues generated by the stadium to dramatically boost payroll and change the pattern of dumping young players just as they begin to hit their prime earning and performing years, the fans will desert the team and stadium in droves.

Want to Buy a Pair of Legends? Canadiens and Liverpool on the Block

The latest victim of the global financial financial crisis happens to have financial interests in two of professional sports most legendary professional franchises, neither of which are located in his home country. Colorado businessman George Gillet, Jr., owner of the Montreal Canadiens and 50% of Liverpool F.C. has retained a Canadian investment bank to advise him on the restructuring or sale of his interests in the franchises. Effectively, that means the Canadiens are for sale as is likely his interest in Liverpool.

There should be no shortage of potential buyers for the legendary NHL franchise now celebrating its centennial season. While the number of potential buyers may be large, and the Toronto Globe and Mail has identified a few of the most likely contenders, including Cirque de Soleil founder Guy Laliberte, Celine Dion and the ever interested Jim Balsillie, the probable price tag could prove problematic. Forbes estimates the Canadiens to be worth $334 million, but that was last fall and I would think that values have decreased since then.

No franchises have changed hands since Forbes put out their latest value estimates but several franchises are for sale and have been on the block for some time with no deals being struck. The environment is not very conducive to making a deal, unless the seller is extremely motivated, and given Gillett's past history of highly leveraged business transactions, he very well may be an extraordinarily motivated buyer. In other words, if his creditors have called his loans and he is looking at bankruptcy again, the Canadiens may be available for a song.

Liverpool presents a somewhat different situation. His co-owner, Tom Hicks, the owner of the Dallas Stars, with whom he has been feuding almost since the purchase agreement was signed, is the logical buyer, but Hicks may not be in a position to buy the interest or may not want to incur the additional debt necessary to make the deal. He will, however, be very interested in who does and would likely be the most effective investment banker Gillett could ever hope to have.

March Madness Good to CBS

Early returns from March Madness has shown the tournament still has its hold on America. Ticket sales have been down slightly from last year, slightly to significantly to not at all depending on the site. for a total of being off perhaps 5% to 10%. Much of that can be attributable to the economy. For most fans, attendance at the first two rounds involves travel and several days worth of hotels and restaurants not to mention that the NCAA only sells tournament tickets in full weekend packages - there are no single game or single session tickets to be had without dealing with a scalper, legal (StubHub) or illegal (street vendor).

Television ratings tell a different story. Early ratings have CBS execs smiling as the tournament is registering a 9% increase in viewers. Its online viewership is showing monumental increases, with CBS claiming that March Madness On Demand registered a 56% increases in unique visitors to the site and a 65% increase in total video and audio streaming consumed at the site. In addition, on the first day alone, there were 1.5 million clicks on the "Boss" button that changes the screen from the streaming game to an image resembling an Excel spreadsheet. All in all, good news for CBS and its advertisers in a season when they certainly could use some.

Illinois House Backs Chocago Olympic Bid With $250 Million

The International Olympic Committee will be sending its bid evaluation team to Chicago next month to evaluate that city's bid for the 2016 Summer Games. the Illinois House gave a boost to the city's bid last week, passing a bill to establish a $250 million insurance fund to cover any losses that the city may incur. The bill goes to the State Senate for expected passage this week.

There is little opposition to the measure as it is considered to be of very low risk to the state. the last three Olympics held in the US have averaged over a surplus of over$700 million. As structured, the City of Chicago will bear the risk for loses up to $250 million with the state picking up losses from $250 million to $500 million.

The insurance fund is vital to Chicago's bid as the competing bids from Madrid, Tokyo and Rio de Janeiro all have government backing.

Twitter and the NBA

The Times is full of stories today. Interesting piece on the popularity of Twitter in the NBA, including the now infamous tweet from Charlie Villanueva during halftime of a Bucks game. Coach Scott Skiles was not amused. Shaq has also sent out a halftime tweet, which he announced in advance. Suns Coach Alvin Gentry doesn't care as long as Shaq delivers "25 and 11". Some other noted NBA Twitterers include Steve Nash, Chris Bosh, and Baron Davis. (For some reason the Times story is not online so the link is to an AP story).

Impact of the Recession/Depression Cont'd

We have been discussion the impact of the Great Recession or the Not So Great Depression (your choice) in this space for so time. It's impact has been felt by every major professional sport and, to a lesser extent so far, by collegiate football and basketball. From the once invincible NFL, which has laid off over 150 people and seen its Commissioner cut his salary by 20% to golf and tennis which are losing corporate sponsors and consequently cutting back on tour stops. The New York Times today has a must-read on the impact of the economic crisis on practically each professional sport in North America. It's an excellent short look at where we stand today.

Coach K to Obama: Get to Work

As most of you have probably heard by now, Andy Katz of ESPN famously scored an hour or less with President Obama who filled out an NCAA bracket much as he has done every year, I'm quite sure. Now, far be it from me to tell the Leader of the Free World what to do with his time and I wouldn't even be bringing this up if he hadn't had second thoughts about his bracket choices, but really, shouldn't he be worried about something more important than the NCAA tournament, like, oh I don't know, maybe the economy.

Apparently, I'm not the only who feels this way. When asked about the President's choice of North Carolina to win it all (a blatant attempt to win North Carolina in 2012 if you ask me), Duke coach Mike Krzyzewski said: "Somebody said that we're not in President Obama's Final Four, and as much as I respect what he's doing, really, the economy is something that he should focus on, probably more than the brackets."

I'll close this post with a comment from my Congressman, the Honorable John Yarmuth who, when told of the President's bracket respoonded with this statement:

"President Obama’s excellent instincts told him Louisville would win it all, and I’m disappointed he second guessed himself. I’m sorry Mr. President, but that is change we cannot believe in. Go Cards!”

March madness Productivity Loss

Tuesday marked the official opening of March Madness with the debut game between Morehead State and Alabama State. It also saw the opening games in the NIT as well as two other tournaments beginning with the letter "C" that I don't know what the initials stand for nor do I particularly care. One runner-up tournament is enough for me.

Today is the real opening of the tournament with games starting at noon. How many of you are planning to take extended lunch breaks to watch all or most the noon games or maybe even the entire afternoon slate. I know that when I was still working in an office, I never had as many fellow workers come to visit as I did on the first two days of the tournament since I had a TV in my office.

There are ridiculous numbers thrown around that purport to measure the productivity loss attributable to the NCAA tournament. One of the most fanciful is $3.8 billion contained in a press release by John A. Challenger, CEO of Challenger, Gray & Christmas. As noted by Jack Shafer in Slate, this figure was reported by a long list of newspapers, many of whom won't be publishing print editions by the time that the next edition of March Madness rolls around, but that is a story for a different post. Shafer goes on to so an excellent job of skewering Challenger's numbers and I commend the article to you.

Reason to Watch the LPGA

Do you really need a reason to watch the LPGA? Is the level of golf played by these athletes not up to your standards, you with the 18 handicap? Well, here you are, all the reasons you will ever need. Meet Paula Creamer(who mysteriously is not in pink) and Natalie Gulbis off the course at the HSBC Open.

Naming Rights Gone Bad

We've seen numerous examples over the years of stadium and arena naming rights deals sold to corporations that for one reason or another a team wishes had never happened. Who can forget Enron Park (now, the memorable? Minute Maid Park) or the three names that the Baltimore Ravens stadium has had, only to wind up the eminently forgettable M&T Bank Stadium. There is the TD Banknorth Garden, which has had 34 names since construction was announced in 1993. Two other examples of the effect of corporate bankruptcies on naming rights can be found in Washington DC and Nashville. In Washington, the home of the Wizards and Capitals was originally known as the MCI Center, however that name was changed to the Verizon Center, when Verizon acquired the assets of MCI Worldcom in the wake of the Worldcom scandal. In Nashville, the Titans home stadium was originally known as Adelphia Coliseum. When the bankrupt Adelphia Communications missed a payment, the Titans terminated the contract and later sold naming rights to Louisiana-Pacific and it is now known as LP Field.

The latest example of problems with naming rights demonstrates the danger of naming a stadium after a living person. A minor league baseball stadium in Troy, New York, the home of the Tri-City ValleyCats of the New York-Penn League has been named the Joseph L. Bruno Stadium. Who is Mr. Bruno? He is the former majority leader of the New York State Senate and was instrumental in obtaining the $14 million needed to finance the stadium, which is owned by the local community college. That is all well and good and seems like a nice way to recognize a politician who has been good to the region and who is a fan of the team. The problem? Bruno is under indictment for allegedly pocketing $3.2 million for influencing peddling. He faces 20 years in jail if convicted on all counts.

The folks at the ValleyCats should have known the axiom about naming stadiums after people still living. There are several examples of those going bad, the most prominent of which is the University of Missouri's new basketball arena which opened in 2004. Benefactors Bill and Nancy Laurie (she is a daughter of Wal-Mart co-founder Bud Walton) wanted the arena named after their daughter Paige. However, almost immediately after it opened, Paige Sports Arena had to be renamed following allegations of academic fraud surfaced against Paige Laurie.

The moral of this story is two fold: 1) There is more than money at stake in any naming rights deal; it is a branding transaction and it is important to treat it as such since the public will associate that brand with you and you need to be doubly sure you wish to be associated with it, financially and with its image, and 2) never, I repeat, never name a building after a living individual regardless of the price that individual is willing to pay.

Will NCAA Opt Out of March Madness Contract with CBS?

Richard Sandomir reported today that the multi billion dollar contract between CBS and the NCAA that has been at the heart of CBS Sports winter programming for years and is the foundation of the NCAA's financial success, contains an option clause allowing the NCAA to opt out of the contract following the 2o10 tournament. Will the NCAA run the risk of opting out in an economy that is far different than the one that existed at the time the contract was signed in 1999? Can the NCAA afford to run the risk that it might not receive the $545 million it has come to count on to smooth over any major dispute among its members?

The answer to these and other questions prompted by the opt out clause are not easy ones. The specter of the possibility of a bid for the tournament by ESPN no doubt hands heavy over both the NCAA and CBS. The NCAA probably is not enamored of the idea of moving its centerpiece off three weeks of prime time national network exposure, even for the WWLS billions. CBS, of course, is rightfully afraid of those billions and concerned about what the loss of the tournament would do to CBS Sports. Not only is March Madness a big moneymaker, even at the current inflated price, but it anchors winter programming by giving CBS the hook for its season long coverage of college basketball. No doubt that coverage would be significantly scaled back should CBS lose the tournament. In addition, March Madness is a major boost to CBS' coverage of The Masters, as the network fills the tournament with promos for "the tradition", "the Masters" to a point that is just shy of turning everyone off.

So, what is likely to happen next year? While I think that the NCAA will shop the tournament aggressively, and they would be foolish not to, ultimately they would like to stay at CBS. Expect an aggressive bid from ESPN, a less aggressive bid from NBC and CBS will have to try to figure out a way to keep the property while not losing their shirt. I think a new deal will be cut at a higher number that is probably lower than that proposed by the WWLS but keeps all of the games on the broadcast network in prime time, insuring the widest possible audience. CBS' excellent digital efforts will continue and the NCAA will share in what should be a rapidly growing revenue stream. Don't expect March Madness On Demand to remain free forever.

Barca Looking at Investing in Philly MLS Franchise

Having walked away from pursuing an expansion franchise in Miami, it appeared that                  FC Barcelona's interest in Major League Soccer was going to remain that of an interested observer for a while.  However, one doesn't become one of the richest and most powerful clubs in world soccer by just standing on the sidelines.  Barca officials have been to Philadelphia to inspect the new stadium construction site and review the expansion franchise's business plan all as part of a potential investment in the franchise which is to begin play in MLS in the 2010 season.

Philadelphia has a solid stadium plan in place and the new field is under construction.  The $115 stadium will receive government funding for $75 million, leaving the franchise investors to come up with the balance.  The franchise founders has been seeking additional investors for some time, but the search has taken on a new urgency with the global economic collapse.  In addition, Jay Sugarman, who is the majority owner of the franchise, has suffered steep losses in the market collapse.  He founded and is CEO of iStar Financial, a commercial real estate finance company whose stock price has fallen from $20.19 on the day the franchise was awarded to $1.70 as of today's market close.

Clearly, it would be good for both the Philadelphia franchise (which needs a nickname already) and MLS for Barca to not only take a financial stake in the club but to take on a significant role in how the club is operated.  While Barca needs to learn the ins and outs of the unique way MLS is structured and the American way of soccer, it brings world class expertise and a brand name that is unmatched to a league that can use all the infusion of sparkle it can get.  If Barca elevated MLS on the world stage or merely improves the operations of a new franchise, while hunting North America for young talent to scoop up for its development pipeline, there is nothing but upside to getting the club as deeply involved in MLS as possible.

Nets Confirm Move to Brooklyn

The global economic crisis has sent shockwaves through the sports world as sponsorships have dried up and ticket sales have slowed. Nowhere has this impact been felt more keenly than metropolitan New York, which this month debuts two new baseball stadiums and where a new football stadium and basketball arena are being constructed. That's a lot of building for any area, much less for the highest price real estate and construction market in the country. The credit crunch has spawned rumors that the move of the New Jersey Nets to their new home in Brooklyn will be aborted as the new Barclay's Center will be a victim of lack of financing.

Nets CEO Brett Yormack reiterated in a recent interview with Bloomberg that the Nets are still committed to the move to Brooklyn and that it will occur in the 2011-2012 season. The Nets have sold 20% of the sponsorships and eight of fourteen founding partnerships, with a ninth to be announced soon.

There is a final piece of legislation to clear concerning the environmental impact of the proposed development and once that is cleared the project is ready to be built. “The table has been set,” Yormark said. “We feel very confident about the financing. We feel very confident about just the project in general, and once we get through this final piece of litigation, we’ll be in the accelerated mode to break ground and get ready to open.”

The entire interview with Yormack is below in case you're interested. It runs about 25 minutes and covers the whole spectrum of operating a NBA franchise. The move to Brooklyn is about 16 minutes in.

Friday Quick Links

Delaware Governor ready to legalize sports parley gambling to boost state budget (ESPN)

Is the English Premier League's dominance of the Champions League strictly a monetary issue (IHT)

Hornets reach attendance mark, won't need state money (nola.com)

The only female Orthodox Jewish basketball player in NCAA is a Toledo Rocket (Jerusalem Post) (cross-posted to SportsYids with expanded commentary)

Economy hits NCAA; attendance down at conference tourneys (USA Today)

Top Ten dirtiest athletes; I especially like #10 (National Lampoon)

Since your weekend isn't all for reading, the sexiest women over 40 (MSN)

Portland Gets Serious About MLS Expansion

Now that Miami is out of the MLS expansion race, it is probably a good time to take another look at the remaining US candidates. One of the cities that is making a big push for a new franchise is Portland. The man behind the bid is currently the owner of the Portland Beavers AAA baseball franchise and the Portland Timbers USL soccer team. His name is Merritt Paulson. Yes, that Paulson. There is little question about his financial ability to operate a MLS franchise. His father, the former Treasury secretary, Goldman Sachs boss and bailout masetermind could probably buy all of MLS himself and surely could finance the Portland effort.

Paulson the younger asked Portland to pony up $60 million to renovate PGE Park, the home of the Beavers, and to build a new stadium for the Timbers/MLS franchise (presumably also to be called the Timbers after the USL team is folded into the MLS team, much the same way as happened in Seattle). After a contentious City Council meeting last night, the City agreed to do just that. However, the Council vote also left the project about $15 million short of the needed funds. Paulson vowed to press forward but indicated he wasn't putting up the extra money. He said that he had already committed more money than most owners in the country.
"I'm on the table above and beyond," he said. "I challenge people to find a better deal in any city."

Solid backing from the city will certainly strengthen Portland's bid. The league has expressed some concerns about the ownership of the group attempting to land a franchise for St. Louis the other remaining American bid. St.Lous has a stadium deal in place and just yesterday Anheuser InBev offered a location for a new stadium.

The other two remaining bids are Canadian and the Toronto Globe and Mail is reporting that a franchise will be awarded to Vancouver. That franchise will be granted to Greg Kerfoot, the owner of the Vancouver Whitecaps of the USL, along with the Phoenix Suns' Steve Nash. Like Seattle, the Whitecaps will be folded into the MLS team, which will be called the Whitecaps. The team would play in a renovated BC Place, the home of the BC Lions of the CFL, a stadium with a retractable roof.

The remaining bid comes from Ottawa and is backed by Eugene Melnyk, owner of the NHL's Ottawa Senators. The Ottawa City Council has to pick between two competing stadium proposals for that bid to move forward and that decision is likely to take several months.

It would seem that with Vancouver selected, the Portland bid is likely to be selected soon. A Portland, Seattle Vancouver corridor establishes instant Pacific Northwest rivalries that league and TV officials would love to see. It would be great for fans who would have easy travels among the cities. The bids are by far the strongest and bring financially strong owners to MLS with some background in and affinity for soccer.

10 Most Endangered Newspapers in America

Not exactly a sports business topic, but indirectly it is and to my mind a very important one. Doug McIntyre of the excellent stock and investing block 24/7 Wall Street recently posted his best guess as to the 10 most endangered newspapers in America. Doug has been following the newspaper industry closely for several years and been blogging about its difficulties regularly. His list is both interesting and deeply troubling. This country is paying little attention to the demise of print journalism and is not considering at all the public policy implications of the silencing of so many independent, professional journalistic voices. Sure, there are hundreds of thousands of bloggers, but we should not deceive ourselves that bloggers can or will ever replace professional journalists.

A free society is dependent on a free and independent press. The closing of so many newspaper and magazines will inevitably lead to fewer and fewer voices and greater consolidation of those that remain. As media becomes concentrated in fewer hands (yes Rupert that means you) the independence that a free society depends on becomes significantly threatened. I don't think anyone wants government intervention to change the game or to subsidize one outlet over another but we, as a people, need to begin a conversation soon over how to save our media outlets. One alternative may be moving them online to a subscription base, which seems to be the direction that a few newspaper outlets are trying. An ad based online publication doesn't seem to be working, at least at this stage. The New York Times online is bleeding money and if the Times can't make advertising work online, it's doubtful many others can.

This post was not intended to be a rant on the changing media landscape. I really just meant to link to Doug's post so that you could see which newspapers might be leaving us. I guess I got carried away and I'm just going to leave it like that and let y'all go at it and me in the comments. Here is Doug's post and the list.

Becks Wants to Play in Milan But Own MLS

Italy's long national nightmare is finally over. The Los Angeles Galaxy, AC Milan and David Beckham have reached an agreement that will keep Becks in Milan until the end of the Italian season, when he will head to the City of Angels to join the Galaxy. Everyone came out a winner in this agreement, as AC Milan got Becks for a full season as they wanted, Beckham got to stay in Europe and match fit for an England call up and the Galaxy did not have to pay to make sure Beckham shows up. Beckham paid Milan to make this deal happen. What the Galaxy ultimately received in return for allowing Beckham to remain with Milan has not been revealed but they were asking for between $10-12 million, while Milan was offering $2-3 million. Presumably, Beckham helped to fund the gap.

The most interesting nugget that came out of the whole affair is the revelation by Beckham that he has an option on the ownership of a MLS franchise upon his retirement from his playing career.

"I have an option to own an MLS franchise as soon as I finish playing and I will start that immediately," he told Reuters. "It is something that I'm really excited about and so hopefully that proves to a lot of people that I am committed to making the game bigger and better in the U.S."

So, MLS fans, it looks like we're doomed to put up with Posh for years to come and here I thought they were headed back to Europe on his free transfer at the end of the Galaxy's season.

Mazel Tove to the Israeli Davis Cup Team

The Israeli Men's Tennis Davis Cup team advanced to the quarterfinals for the first time since 1987, ousting seven time champion Sweden 3-2, in a stirring five game match. Sweden may have been done in by its craven surrender to political blackmail in its decision to hold the match before a handpicked crowd of only 300 spectators, claiming that closing the arena to spectators was necessary due to threat of violence from anti-Israel groups.

Israel entered yesterday down 2-1. Dudi Sela leveled the series in Sunday's first match by wearing out Thomas Johansson 3-6, 6-1, 4-6, 6-4, 6-2. That set the stage for Harel Levy's dramatic five set 6-4, 4-6, 6-4, 3-6, 8-6 victory over Andreas Vinciguerra. Vinciguerra saved two match points but botched a forehand to lose his serve and a chance to play Russia in the quarterfinals.


Levy suggested the decision to close the match to the public backfired on the Swedes because it deprived them of the raucous backing that home teams normally enjoy.
"Maybe they lost this tie from the lack of support from the spectators," he said. "After all it affected them more than it affected us. Hopefully it won't happen again."

Israel moves on to take on Russia in the quarterfinals. Russia defeated Romania 4-1.

Andy Ram, a member of the Israeli Davis Cup team and the player who was given a visa to play in Dubai just one week after Shahar Pe'er was denied one, wrote this column for Ynet.com on his experience in Sweden and what playing before an empty stadium meant. It's worth a look.

Friday Quick Links

Here are a few quick links to get you started on the weekend:

It's getting rough in the NFL; Jets furlough non-football positions. Are there non-football positions at a professional football team? (Bloomberg)

FC Barcelona and Miami pull out of MLS expansion leaving just four cities from which two will be chosen; cites recession, price tag. Doesn't say Miami is the death of all professional sports teams (mlsnet.com)

New top class Diamond League of international track meets to launch next year; with 12 meets; will include two meets in the US and one in China (Guardian)

That pesky "C" is cropping up again in baseball chatter (Daily News)

Republicans looking for ways to convince Hall of Famer Jim Bunning, Senator from Kentucky, to retire gracefully or be replaced (New York Times)

Watchmen debuts tonight to somewhat mixed but mostly negative reviews (NY Times,
LA Times)

It's almost spring and your mind is probably heading towards thoughts of spring break. Here to keep you occupied until then, your comprehensive bikini guide (Coed magazine)

Pimlico, Santa Anita Tracks Owner Files Chapter 11

The thoroughbred business has been facing more than its share of problems for several years, long before The Recession/Depression hit North America and the rest of the globe. Around North America, racetracks have looked to casinos or slot machines and video poker machines as a method of supplementing income sufficiently to keep their tracks operating. Magna Entertainment, the largest owner of race tracks in North America, has been deploying this strategy in as many of its race tracks as it could to make up for dwindling crowds and diminishing revenue at almost all of its venues.

Faced with a $40 million loan payment due yesterday, Magna filed for bankruptcy protection. Magna incurred a staggering net loss of $294.1 million last year and $638 million since 2002. Not large by money center bank standards, but unfathomable by racetracks standards.

Magna's efforts to legalize slots in Maryland appeared to bear fruit as the Maryland General Assembly passed legislation approving slots at both Pimlico and Laurel in an effort to keep Pimlico open and the Preakness in Maryland. However, Laurel's bid for a license was denied last year because Magna had not paid a mandatory licensing fee. Magna has appealed but in the meantime it still had no slots revenue. It is believed that Magna has quietly had both Pimlico and Laurel up for sale for quite some time now. Any sale of Pimlico will be complicated by a Maryland law that gives the state the right to purchase the track upon matching any offer Magna receives.

All of Magna's tracks, including both Santa Anita, which will host this year's Breeders Cup, and Pimlico, are now on the auction block. Any sale must be approved by the bankruptcy court. The filing should not affect current operations as Magna is asking for approval of a $62.5 million loan from its controlling shareholder MI Developments. That loan will be collateralized by all of Magna's tracks other than Pimlico, Laurel and Santa Anita. It will include Magna's interests in joint ventures with Churchill Downs the cable racing channel HRTV and TrackNet Media Group, which buys and sells signals for off-track betting. All of the collateral will be put up for auction. For the right price, even Santa Anita, Pimlico or Laurel could be had.

This is yet another cautionary tale of the dangers of debt and the excesses of the last few years. Frank Stronach, the Canadian auto parts magnate who controls Magna, decided to become the largest race track owner in North America and wasn't going to let anything stop him. He believed blindly in an opportunity that proved to elusive. He thought that casinos or slots would bail out every casino he bought, so it wouldn't really matter what price he paid. He got into bidding wars with Churchill Downs or in some cases made premptorily high bids to eliminate Churchill Downs before a bidding war could break out. In either case, the result was the same. He overpaid for tracks and either casinos or slots were not approved, or as in Maryland, licensing was delayed or denied, or the revenue generated from the casinos and slots simply proved not to be enough to service that enormous debt. As of yesterday and as listed on the bankruptcy petition, Magna Entertainment's assets were $1.05 billion and its liabilites were $959 million.

CBS & March Madness: Recession, What Recession?

CBS and the NCAA appears to be weathering the economic downturn in fine shape. With a little over a week to go before March Madness begins- that would be Tuesday, March 19 in Dayton in case you forgot - the old gray lady network has sold at least 90% of available ad time throughout the tournament at rates that are roughly comparable to last year's.

The top tier sponsors are GM, Coke and AT&T, all of which are returning from last year. I should note that before Geithner and the boys in DC get all upset, GM has a multi-year contract with CBS to sponsor the tournament, so buying ad time is likely significantly cheaper than litigating a breach of contract. The rates for 30 second spots in the Final Four are roughly the same as last year's, clocking in at between $1.3 to $1.4 million. Spots in earlier rounds can go for as "low" as $350,000.

One area showing significant growth in both viewers and revenue is the digital presentation of March Madness On Demand. Internet delivery of the entire tournament will be available for free to anyone with a computer and will come equipped with a "boss button" sponsored by Comcast. AT&T, Coke and GM, through Pontiac will extend their Tier One sponsorships to March Madness On Demand by becoming the presenting sponsors. With almost all of MMOD sold, CBS expects to receive "well north" of the $23 million received last year with viewership to significantly exceed last year's 4.7 million unique viewers.

This year, it will not only continue to be free, but CBS has decided to do away with registration which a number of its targeted demographic found offensive. If it can continue delivering online numbers similar to these, the sting of stagnant TV viewership can be partially overcome. However, while growth is certainly welcome, let' not lose sight of the overwhelming disparity in numbers that will continue to exist for the foreseeable future.

It's Good to Be a Celtic Again

By winning the NBA championship last year, the Boston Celtics did more than just restore the franchise to its former glory on the court. According to a recent study compiled by Bizjournals, the Celtics are the most successful organization in the North American professional sports. The study looked at all 122 franchises in the NBA, NFL, NHL and Major League Baseball. Points were assigned for onfield, court or ice success and points were assigned for financial successful. Each category counted as half the total score.

Interestingly enough, only one NFL franchise, the New York/New Jersey Giants coming in at number 2, reached the top 10. Not too surprisingly, the woebegone Detroit Lions came in last. However, I find the methodology somewhat suspect when the most successful professional league in the world has only one representative in a study that attempts to classify the "best" franchises. That said, here are the top 10:

These were the 10 best sports organizations of 2008:

1. Boston Celtics (NBA)
2. New York Giants (NFL)
3. Los Angeles Lakers (NBA)
4. Montreal Canadiens (NHL)
5. Boston Red Sox (MLB)
6. Detroit Pistons (NBA)
7. Detroit Red Wings (NHL)
8. Chicago Cubs (MLB)
9. Philadelphia Phillies (MLB)
10. Pittsburgh Penguins (NHL)

And these were the 10 worst:

122. Detroit Lions (NFL)
121. New York Islanders (NHL)
120. Memphis Grizzlies (NBA)
119. Atlanta Thrashers (NHL)
118. Pittsburgh Pirates (MLB)
117. Minnesota Timberwolves (NBA)
116. St. Louis Rams (NFL)
115. Baltimore Orioles (MLB)
114. Columbus Blue Jackets (NHL)
113. Washington Nationals (MLB)

The complete study and profile of each team in each league can be found here.

Will 2009 Bring Legalized Online Gaming to the US?

One of the midnight actions of the Bush administration and the Republican Congress in 2006 was the passage of the Unlawful Internet Gambling Enforcement Act (UIEGA) which attempted to shut down online gaming in the United States by not only outlawing the gaming itself but attempting to criminalize any support activities, including payment processing or related activities. While it has had its moments, the rise in online gaming has only been slowed, not stopped.

Now that Congress has passed the stimulus package and has received the President's budget with its enormous prospective deficits, it is very likely that Congress will soon turn its attention to the repeal of UIEGA. House Financial Services Committee Chairman Barney Frank is readying a bill which he intends to introduce within a month to repeal UIEGA and establish a regulatory framework within which online gaming could legally operate and be regulated by the federal government. Chairman Frank believes that the timing is right to unlock the restarints that are "impinging" on American' freedoms. He believes that public opinion is demanding the right to gamble online, including sports betting and playing poker.

Strengthening the case for passage of UIEGA's repeal is a recent study conducted by the international accounting firm PricewaterhouseCoopers, which estimated that the United States could likely receive up to $52 billion in tax revenue over a ten year period by legalizing and regulating online gaming. Given the current state of the federal government's finances, that extra revenue may be hard to pass up.

The US is also be facing the threat of a trade challenge from the European Union. The Remote Gambling Association accuses the U.S. Justice Department of singling out European online gambling companies like PartyGaming and 888.com for prosecution while allowing U.S. companies to operate freely. The European Commission, acting on a RGA petition, began a formal investigation into that issue last year and is expected to release a report next month saying it has grounds to take action at the World Trade Organization.

Longtime blog readers may recall that the US has already lost one case at the WTO regarding online gaming brought by Antigua and I don't really think the Obama administration will relish having to take another one there. I suspect that the administration will look favorably on Chairman Frank's efforts, despite the likely opposition of the professional sports leagues, the NCAA and the conservative family values crowd. If you enjoy online gaming or poker, be sure and let your Congressman and Senator know. You can be sure that they will hear from the other side.

And if you do enjoy a little recreational sports betting, or want to play a little poker, then head over to BetUS.com and check out what they have to offer. You won't be disappointed.