Law School Buys Naming Rights to Minor League Stadium

We've discussed all kinds of naming rights deal on this blog, but I think this one is unique.  Sure, the University of Phoenix put its name on the Cardinals dome in Glendale, but UoP advertises so much, it would be impossible to spend more than ten minutes online and not be hit with a UoP popup ad.  Now, comes the illustrious Thomas M. Cooley Law School who goes and buys the naming rights to the home stadium of the Lansing Lugnuts, a stadium that is currently known as Oldsmobile Park.  That's right, it's named after a defunct automobile brand.  You might expect the University of Phoenix to advertise or even purchase naming since it is a for profit enterprise, whose parent corporation Apollo Group, Inc., is publicly traded.  However, Cooley is a nonprofit law school, with supposedly the best interest of its students as it primary focus.

Just what is Cooley Law School, for those of you who are not familiar with the legal education landscape.  Cooley is a fourth tier school, with a student population of just under 3,900 students.  For comparison sake, my law school class started with 140 students and was closer to 100 by graduation.  I think the answer to the question of why a law school would seek to put its name on a minor league baseball stadium is easily found in that statistic alone. 

Instead of using the tuition dollars from that vast pool of students to improve the faculty and the placement office, which in this desperate job market for lawyers needs all the help it can get, it decides a far better use of such funds is to name a minor league baseball stadium?  I don't know what the naming rights cost Cooley, but GM was paying $1.5 million for the rights.  Cooley got a deal since it is only paying $1,485,000 over the 11 year life of the naming rights agreement.  Nevertheless, I guess it's more important to get all the tuition dollars you possibly can, then it is to educate the students once you have their money.  That could be why Cooley has the level of respect within the profession that it does.

Agreement Reached to Sell Rams to Local Businessman

Looks like the Rams won't be heading back to Los Angeles any time soon.  The Rosenbloom children have reached an agreement to sell their 60% of the team to a St. Louis area businessman, Shahid Khan.  He is a self-made multi-millionaire who emigrated to the US as a teenager to attend the University of Illinois to study engineering.  He went on to develop an new auto bumper and buy an auto parts company that became a global business.  And, yes, he is a football fan - an ardent supporter of Illini football and a regular attendee of Rams games, which means above all, the man is a masochist.  The sales price, and the depth of his masochism, has not been disclosed.

So, what's next.  There are two scenarios.  Stan Kroenke, owner of the Colorado Avalanche, the Denver Nuggets and a minority interest in Arsenal of the English Premier League, and the remaining 40% of the Rams, has an option to match the sales price of the deal with Khan and purchase that 60% interest.  Were he to do so, he would have to divest himself of his other teams to comply with NFL cross-ownership rules.

The sale must be approved by the NFL, which will conduct an extensive investigation of Mr. Khan and his finances.  Assuming his finances are in order, I would expect the NFL would be fairly quick to approve this sale as it accomplishes several objectives: it keeps the Rams in St. Louis, leaving Los  Angeles open for the Jaguars and Vikings, who need the threat for their stadium negotiations, and it adds diversity to the ownership ranks, something to which Roger Goodell is very committed.

Olympics Proving to Be Huge TV Draw

The Olympics is one of the most consistent TV properties in the world.  It has always been something that draws a large viewership in the US, which is why NBC paid a whopping $820 million for the Vancouver Games, part of a $2 billion package of US rights it won in 2003.  No matter how high the viewership turns out to be however, NBC is projecting that it will lose upwards of $250 million on this year's Games.  Part of that is due to production costs, as this is the first Olympics to be televised entirely in High Definition and part of that is due to the costs associated with producing 835 hours of mostly live (in itself an unusual departure for NBC) across the NBC family of networks.  However, by far the predominant reason is that NBC assumed an ever rising market for sports sponsorship and never counted on the having to deal with the impact of the Great Recession.  As a result of the economy's crash, the market for sports advertising crashed along with it, and instead of the rising rates NBC expected from 2003, and factored into its bid, it now faces a market yielding lower rates than it probably got for the 2004 Summer Games.

The viewership figures have been very impressive.  The opening ceremonies was the most watched ever for a non-US Winter Games up 48% from Torino, and the first two days is running 13% ahead of Torino.  

Those numbers pale in comparison to television sets in Canada however.  The opening ceremonies were watched by more than two-thirds of all Canadians, smashing the previous Canadian television record.  About 23 million Canadians watched at least some part of the show, and about 13.3 watched all of it.  About 32.6 million Americans watched the opening ceremonies, and for comparison sake, the population of  Canada is roughly ten percent of the US population.  The Games are being broadcast in Canada by a partnership between CTV and Rogers Cable, and in English, French and native languages.

Sunday Links

With Louisville playing the 'Cuse in the early afternoon ESPN game and Northwestern in a must win game against the Golden Gophers in a late afternoon Big Ten Network game, and the Olympics - especially moguls - tonight, I'll have limited time to post.  As a result, here are some links to peruse while you watch Vancouver pray for the snow that is headed for the 'Ville and then on to DC where they are just beginning to dig out  in time for about 8 more inches if the forecasters in the Bluegrass can be believed:

When can an own goal be beneficial, a must read tale of challenging orthodox thinking (Business Game Time)

Pitchers throw too many fastballs; football coaches call too many running plays (The Frontal Cortex)

Not surprising, hot on the heels of the Big Ten expansion talk, comes the Pac-10; who gets Texas (Lawrence Journal-World, CBS, Oregonian)

What does it say about your sport when it's considered news that your players read in their free time? (WSJ)

Labor Woes Plague Major Sports Leagues

In the midst of a somber and subdued opening ceremonies of the Winter Olympics, it is probably not the best time to take a look at the business side of the National Basketball Association, the National Football League or Major League Soccer.  However, they all happen to share one thing in common:  all three leagues are currently negotiating new collective bargaining agreements with their respective players associations and, at this point, negotiations are not going all that well.

The current NBA agreement expires on July 1, 2011, leaving the prospect of a lockout in 2011 very real.  The owners tore up a proposal it had made to the players following a "contentious" negotiating session yesterday at All Star Weekend.  The proposal had been rejected by the players association, so the owners took the whole proposal off the table, rather than negotiate it piecemeal.  The owners are seeking substantial concessions, including a hard salary cap that would eliminate the so-called "mid-level exception" that has been responsible for raising the average salary in the NBA from about $1 million before the 1998-99 CBA was signed (when the mid-level exception was first obtained) to $5 million today.

The NFL owners have opted out of the current collective bargaining agreement which means that unless there is a new agreement in place before the free agent signing period begins, the upcoming season will be an uncapped season.  What exactly that will mean for the league's valued parity is the great unknown, since, as of this point, the number of unrestricted free agents eligible for uncapped salaries is unknown.  Nevertheless, it's not a good sign, nor is the lack of progress on a new CBA, progress which is hampered by the failure of the owners to agree on a revenue sharing model, which needs to take place before serious negotiations on the CBA can be concluded.  Roger Goodell just got a five year contract extension so at least the commissioner won't be locked out in 2011.

The MLS collective bargaining agreement has expired and the league and its players are negotiating a new one.  The deadline for conclusion of negotiations had been extended twice to give the parties an opportunity to successfully conclude negotiations but Snowmaggedon on the East Coast interfered, so the deadline has been extended again until later this week.   If talks break down, expect the  players to walk.  The salary scale in MLS is almost criminally low and the league really needs to raise minimum salaries and total team caps significantly if it expects to be taken seriously both in the US and internationally.

If all of these negotiations are not successfully concluded soon, 2011 will see the return of baseball as the  national pastime as all we will be left with is baseball, college sports and ESPN Classic.

Latest Tiger Wood Effect: Higher Insurance Premiums

I suppose it was inevitable.  After all, when companies are spending millions of dollars on athletes' endorsements and subjected multiple millions more to the risk of those same athletes doing something that would then tarnish the image of the companies, insurance would enter the picture.


Many companies take out death and disability insurance, insuring their companies against loss in the event an athlete endorser dies or becomes injured while under contract.  More recently, companies have been insuring against loos to their brand's reputation or the company's actual or potential loss sales due to an athlete endorser's, uh, shall we say less than salutary behavior while under contract.


“Companies are saying if it could happen to Tiger Woods, it could happen to anyone,” said Brian Socolow,  a lawyer who runs the sports practice at Loeb & Loeb, which represents athletes and companies in sponsorship deals. “For some companies, it’s a tremendous investment, and when it goes bad, it is not only the loss of investment, it’s a black eye for the company.”

The loss of revenue to a company can, however, be significant and should not be dismissed as just a black eye.

Indeed, the stock prices of the seven publicly held companies that have or had sponsorship deals with Woods lost $12 billion in market value in the month after Woods’s statement in December that he was taking a leave from golf, according to a study by Chris Knittel, a professor of economics at the University of California at Davis.

It may turn out to be that Tiger Woods lasting legacy to the world of sports business is to completely overhaul the relationship between athlete endorsers and the companies for whom they endorse, and not in the way he thought.  Contracts from here on out will contain significantly tougher morals clauses, permitting the company to terminate the contract for actions that bring the comapny brand into disrepute, rather than the conviction of a felony that has been the standard for so long.  As the cost of insurance goes up, that cost will be reflected in the value of the endorsement contract.  As the risk goes up, the value of the contract, as in the amount paid to the athlete, will come down. We just may have witnessed the glory days of athletes endorsements - Tiger Woods may have been the zenith.  It may be all downhill from here.