SportsBiz - The Business of Sports Illuminated: August 2010

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Tuesday, August 31, 2010

 

MLS Gets Adidas to Up Investment, Continues Hot Streak

When you're on a roll, the rule is to ride the hot dice and MLS is certainly doing that.  Coming on the heels of a very successful men's World Cup with never before seen fan interest in the US, a successful expansion franchise launch in Philadelphia this year and the opening of new stadia in New York and Philadelphia, MLS could rightly consider itself as well on the way to firmly establishing itself in the nation's sporting firmament. Expect the roll to continue as the league will be expanding by three more in 2011 and 2012 with franchises in Portland, Vancouver and Montreal coming on board.


Adidas has recognized the new reality voluntarily opening its ten year sponsorship agreement with the league and extending it until 2018, from its original expiration date of 2014.  In addition, the agreement is now worth more than $200 million, according to Sports Business Journal, making it one of Adidas largest investment in the sport.  That's a raise from the $150 million, 10 year deal, which the parties signed in 2004.  Of course, the league is certainly different than it was then, as I only highlighted above. There are seven new soccer specific stadiums, one football stadium filled with soccer crazed fans (Seattle, where no soccer specific stadium is necessary) and new deals with both ESPN and Univision.   Another soccer specific stadium is on the way in Kansas City.  Attendance is up, sponsorship is up, viewership is up and the league is clearly headed in the right direction.


All is not completely rosy, however.  There is still competition issues, most evident in CONCACAF Champions League games, even if nobody really cares about the results. MLS teams still have trouble competing with Mexican league teams, not to mention teams from South America.  It would be great if MLS could work with the South Americans to figure out a way to integrate MLS into the Copa Libertadores competition.  It would be great for the level of play in MLS and it would help the US Men's team.  Until then, I guess the CCL is all we have, so we'll have to make the best of it.

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Thursday, August 26, 2010

 

Wednesday Links


How bad is the economy? Bad enough for even NFL teams to go down in value (Forbes)

Financial Statements of five major league teams were leaked last week:  Pittsburgh Pirates,
Tampa Bay Rays, Florida Marlins, Los Angeles Angels of Anaheim, Seattle Mariners,
Texas Rangers (Deadspin)

It takes cojones; Sosa fumes because Cubs haven't retired his number (Hardball Times)

Here's a first, NBC adjust ad breaks to Notre Dame's no-huddle offense (USA Today)

Is live streaming the wave of the future in youth recreational leagues? (NYT)

Will there be NHL players in the 2014 Olympics: players want it but as usual the owners
led by Bettman are reluctant at best. (NYT)

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What is a Big XII Network Worth Without Texas?

Eight of the schools that will be remaining in the Big XII next year recently held a meeting with Learfield Sports, a multimedia rights management company which holds contracts with about 50 university athletic departments.  They met to discuss the viability of a Big XII network.  The results of the meeting are unknown although all involved have characterized it as just preliminary.


There are many hurdles to forming a conference network, one of the most significant is ensuring that the network will have an attractive inventory of football and men's and women's basketball games  In Big XII country I would add baseball to that list.  The problem faced by the remaining members of the conference is only partly the negotiations that will take place in 2011, about the existing contracts with Fox and ESPN which are expiring.  The biggest problem will be with Texas, which wants to form its own network and will want to keep as many of its games off the Big XII network and reserved for the Longhorn Network as possible.  The removal of Texas games significantly decreases the worth of the package to any prospective partner and national advertiser.  How the conference handles its Texas problem will be the key to whether it is able to proceed with a network of it own and deliver on the $20 million in television revenue it promised to the six schools which it induced to stay rather than jump to the Pac-10(12). Good luck with that network Mr. Beebe and lots of luck dealing with the Longhorn Monster you helped create.

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Wednesday, August 25, 2010

 

It Pays to be Fast; Usain Bolt Reups With Puma for a Record Contract



Loyalty is often a strange thing in professional sports. It's often dictated by what have you done for me in the last five minutes especially when you're talking about the relationship between an athlete and a company whose product that athlete endorses.

Usain Bolt just re-upped with Puma, a company he has been with since he first started running. The contract, whose terms were not disclosed, is believed to be in the neighborhood of $15 million a year and runs until 2013. That covers the 2012 London Olympics and two world championships. A Puma representative indicated that "by far the largest ever given to a track and field athlete, positioning Bolt as a top earner in the world of sport.”

Clearly, money had something to do with the renewal of the relationship, but it was Bolt's comments that interested me the most. He said: “Puma’s been by my side since the beginning, before anyone knew what I was capable of achieving. They saw potential in me and they took a chance, supporting me all the way, especially when things weren’t easy for me due to injuries I suffered in my teens.” It's a refreshing attitude that all professional sports need more of not just track and field, but then Bolt is a special character as well as the world's fastest human.

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Monday, August 23, 2010

 

Utah State Asking for Do Over; Talking to Mountain West About Joining

Utah State found itself in a terrible position last week after it made what it considered to be a principled stand in turning down a bid from the Mountain West Conference to honor an agreement among all of the then current WAC members to stay in the WAC.  It was promptly stabbed in the back when Fresno State and Nevada leaped over each over in their hurry to accept MWC bids when offered, conveniently forgetting that solidarity pledge they had made only days before.  Shades of the Big East/ACC battles of several years ago, although the stakes involved are much smaller.

So, now, Utah State finds itself in a much diminished WAC, which still has no guarantee that BYU will join for sports other than football because, as of this writing, BYU remains a member of the MWC.  (Notice how the phrasing about BYU is beginning to resemble sentences written every summer about Brett Favre?) So, USU has done the only logical thing it could do and has re-opened discussions with the MWC with an eye towards joining in time for the 2012 season.  The MWC appears receptive and the talks are ongoing.  Take a seat; the soap opera that is college athletics these days is spinning another chapter.

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Sunday, August 22, 2010

 

Weekend Reading

It's a slow Sunday here in the Bluegrass as not even yesterday's storms have been any help in relieving the oppressive 90+ temps and corresponding 85+ humidity, which has been with us seemingly every day this summer, as my latest electric bill shows.

Good recap of the twists and turns (and necessity of insiders) to bring Sprint Cup to Kentucky (C-J)

Arsenal plans to offer shares to its fans, blunting takeover prospects of Stan Kroenke (Guardian)

A pro agent's case for playing college players (WaPo)

Profile of Frank McCourt, whose divorce may put the Dodgers on the auction block (LA Weekly via TBL)

From Chad Ochocinco, word of a major flaw in the NFL's drug testing policy (NYT)

Latest from the Mountain West/WAC soap opera, which makes the ACC raid on the Big East look like a family reunion, Utah State turned down MWC thinking WAC had stabilized (Utah State Aggies)

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Thursday, August 19, 2010

 

BYU Does Its ND Imitation; Goes Independent in Football

Brigham Young has not been a very happy member of the Mountain West Conference for a number of years now.  It has complained bitterly since the conference left ESPN and formed its own money losing network with its small reach and the resulting movement of the conference's football games to Versus and the CBS College Network, not exactly America's first, second or third choices to get its college football fix.
Once archrival Utah jumped ship to the Pac-10 (12) and upped its TV payout from $1.5 million to $12 million, the die was cast.  BYU knew it was time to leave.  But where o where could it go?

BYU decided it needed to become an independent in football because there was no logical landing spot for its programs that would be a significant upgrade from the MWC.  The WAC would certainly not qualify.  The Pac-10 had already said no and the Big XII showed no interest, besides who knew how long it would be around.  BYU also knew it had one thing that no other college football program west of Notre Dame had: its very own network.  BYU Network is in existence and carried by both satellite companies and most major cable companies.  It has state of the art mobile HD equipment that would make ESPN proud and a HD studio just ready to go for those Saturday afternoon studio shows.  The WAC was only too happy to welcome back BYU in all other sports since it was still smarting over the departure of Boise State.  (Once BYU told the MWC it was leaving, the MWC invited Fresno State and Nevada to join; Fresno accepted and last I checked, Nevada was considering it) It all seemed almost too good to be true.

Well, we all know that when something is almost too good to be true, it's not.  There are two major flaws to the Cougs' plan.  One, there is no plan to get the Cougars national exposure on a network that football fans who are not Mormon are used to watching.  They will need to cut a deal with ESPN or Fox to get some kind of backup exposure.  Almost as important, if not more so, Notre Dame has two things, besides NBC, that make independence work for it that at least at first report don't appear to be available to BYU.  ND has direct access to the BCS bowls through its special arrangement and it has other bowl access through its deal with the Big East.  Scheduling will also become a chore, particularly late in the season.  After all, once you get past ND, Army and Navy the ranks of the independents is depleted and everyone else is in the meat of their conference schedule.  Still, it's worth a try and outside of Texas, BYU is probably one of the few schools with a built-in national appeal to at least have a reasonable shot to pull this off.

UPDATE:  As of this writing, Nevada has accepted the invitation from the Mountain West and BYU is still a member, although rumored to be waiting only on approval from LDS Church officials.  How the now weakened WAC will play into any decision is unknown but the WCC, which is composed of religiously affiliated (albeit not the same religion but the sensitivity is the same) schools that do not play football. The addition of BYU to Gonzaga and St. Mary's could make the conference more attractive to ESPN and increase the conference's profile resulting in better visibility on the WWLS, perhaps rising to the late game on Big Monday in at least a couple of weeks a month.

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Saturday, August 14, 2010

 

Starbury Alive and Well and Living in China

The rumors of the death of the career of Stephon Marbury and with it the demise of his Starbury shoes have proven to be just a bit premature.  Last season found Marbury a free agent searching in vain for a NBA team willing to sign him to even a one year contract at anything approaching what he thought he was worth, or as the season went on, to what the teams thought he might be worth.  As a result, last January he packed his bags and headed off to China to play for to join Shanxi Zhongyu of the Chinese Basketball Association.  A rather surprising move since salaries for foreign players in the CBA are capped at $60,000 per month.

Marbury was sold on the opportunity to sell his Starbury line of shoes and clothing in China.  Initially, that didn't really take off but it now appears that the resurrection of the Starbury line will be greater than he probably imagined before he moved to China.  According to the Wall Street Journal, Marbury is finalizing a deal with the owner of the basketball team which employs Marbury - and for which Marbury just agreed to play for an additional two years - to form a joint venture to manufacture, distribute and promote Starburys in China.  Initial funding will allow for the set-up of manufacturing operations and the opening of at least the first three stores of which Marbury is predicting will be hundreds.  If, the results of a signing appearance reported in the Journal, where $30,000 in shoes (at least than $50.00 per pair, many as low as $14.98) were sold in just two hours, Marbury's prediction may be low.

This may also represent the new model for American basketball players to be lured to China.  It is certainly one way around the salary cap, at least for those stars with name recognition in China who are willing to do the promotional work and personal appearances necessary to promote shoes or other personally branded products for which endorsement income can offset the salary, but structured in a way that more closely resembles Starbury or Michael Jordan and Nike than just your typical endorsement contract.

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Wednesday, August 11, 2010

 

Knicks With Amnesia, Hire Isiah Thomas as Consultant; Thomas Stays FIU Coach

There are many reasons that the New York Knicks have been as bad as they were before Mike D'Antoni showed up last season, but surely Isiah Thomas was one of the main reasons, so that makes the recent announcement that Thomas is being hired by the Knicks as a consultant all the more curious.  Adding to the intrigue, it appears that D'Antoni was not consulted on the decision.  Moreover, Knicks vice president and general manager Donnie Walsh opposed the hiring and was said to be livid that Knicks Chairman James Dolan went ahead and hired Thomas over Walsh's objections.


Aside from the questions that the hiring raises for the Knicks, the fact that Thomas will keep his day job as head coach at Florida International raises conflict of interest issues for both the NCAA and the NBA.  The NBA has not yet approved the contract and there is a chance that David Stern may reject it.  Several owners are said to be very upset and very much opposed to the hiring of Thomas, which must clearly be a stand they are taking on the potential conflict of interest issue and not on the effect Thomas will have on the immediate on court prospects of the Knicks. 


The NCAA should step in and put a stop to this arrangement and if there is no current rule that prohibits a coach from moonlighting for a professional team (hard to believe that one doesn't exist in that 500 page rule book, but who knows) then the NCAA Executive Committee ought to quickly pass one.  The opportunities for recruiting abuse that this example may afford are too numerous to mention and just because Thomas happens to be at FIU and not Florida or Kentucky doesn't make it any less of a conflict of interest or make the potential for abuse any less a real. 

The coaches who regularly put kids in the NBA are now selling their ability to get kids ready to be drafted, and academics and education be damned.  Imagine how much more powerful that message is if those same coaches are now employed as consultants to individual NBA teams.  Think Calipari at Kentucky would ever lose out on a top 5 recruit if he was also a consultant to the Nets?  How about Coach K and the Bulls?  Think this situation would be a good one for the other teams in their conference whose coaches don't have consulting agreements?  Think the gulf between the high majors and mid-majors would widen much in that scenario?

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Sunday, August 08, 2010

 

Catch A Fishing Scholarship to College

We all know how tough it's become to finance a college education and getting an athletic scholarship is harder than ever, what with the economy and, at the major college level, the out of control football and basketball arms race, forcing athletic directors to cut programs left and right.  Well, here is one scholarship I bet you never thought of: a bass fishing scholarship.  Bethel University, an NAIA member school in McKenzie Tennessee, offers bass fishing scholarships just the same way they do in all of the 19 intercollegiate sports in which the Wildcats compete.  One bass fishing scholarship was awarded in a rather unique way, to the winner of the high school fishing world finals, held at Lake Dardanelle, Russellville, Arkansas:

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Friday, August 06, 2010

 

Kroenke's Bid for Rams Coming to a Vote August 25

The tortuous path to full ownership of the St. Louis Rams by Stan Kroenke should come to a conclusion by August 25.  A special meeting of the NFL owners has been called for that date to vote on his proposed purchase of the team pursuant to the exercise of his option to purchase the sixty percent of the club he didn't own once that was put up for sale.  Chances are good that he will be approved at that meeting since it was called especially for the vote.  "Everybody wants him as an owner, I can tell you," New Orleans owner Tom Benson said.  Benson is chairman of the finance committee which first must approve his application.

Kroenke's purchase has run afoul of the league's cross-ownership rules which forbid an owner to have controlling interest in another major league franchise in North America.  Kroenke owns the Denver Nuggets, Colorado Avalanche and 93% of the Pepsi Center.

Kroenke has apparently asked the NFL to approve a plan to purchase the Rams' interest in two chunks, although it may be a tough fight to win approval for that.  Several owners are known to be opposed as they believe they are already stretching the cross-ownership rules enough with his plan to dispose of his interest in the Nuggets and Avalanche.  Originally, Kroenke planned to give his interest to his children but ran into opposition to that plan as he was going to have to guaranty any operating losses.  His current plan is believed to involve a sale of the Nuggets and Avalanche to his wife, Ann Walton Kroenke.   That should please the NFL; after all, she can certainly (note her maiden name) afford it, she is number 297 on the Forbes 400, he is merely number 342.

Should he end up with the Rams, Kroenke could also be the latest American with ownership of the both NFL and the English Premier League. He is the largest single shareholder of Arsenal and a fifty percent shareholder of Arsenal Broadband.  He has indicated a willingness to purchase any shares in Arsenal that come on the market, believing, correctly, that Arsenal is a brand that has just begun to be exploited in a way that befits its global recognition.

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Thursday, August 05, 2010

 

Kentucky Speedway to Finally Get Sprint Cup Race

Ending a decade long quest, it appears that Kentucky Speedway will finally get a Sprint Cup race beginning in 2011.  Formal announcement of the award of the race to the track is likely to be made at a press conference scheduled for Tuesday by the track's owner, Speedway Motorsports, Inc.'s (TRK) Chairman O. Bruton Smith.

The race is likely to be moved from one of SMI's existing tracks, with the most likely tracks being Atlanta or New Hampshire, both of which currently have two races on the Sprint Cup calendar.  The kentucky Speedway was built with the idea of landing a Sprint Cup race but the original owners were never able to achieve their goal.  In fact, that ownership group filed a federal antitrust suit against NASCAR for its refusal to consider granting the Speedway a race.  SMI bought the track in December, 2008, when it became increasingly apparent that NASCAR was not going to deal with the existing ownership group and that the litigation was not going in its favor.  SMI, which owns seven tracks hosting one or more Sprint Cup races (not including Kentucky) clearly had a much better relationship with the France family than did Kentucky Speedway's original ownership group, but even so, SMI was forced to wait until the antitrust case was resolved.



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Tuesday, August 03, 2010

 

Tuesday Tidbits

A few inks to get Tuesday off to a good start:

One aspect of the LeBron economic effect: Heat fire entire 30 person season ticket sales staff as all season tickets have been sold (Sun-Sentinel)

PGA Tour is relatively healthy, it's a good time to make a deal on golf course membership but it's a lousy time to be in the golf course business (USA Today)

Fox Sports is attempting to get in on bidding for Dallas Stars and Texas Rangers; apparently losing money on the Dodgers wasn't enough for Murdoch (Star-Telegram)

The return of the Cosmos (NYT)

Two teams in the NBDL have signed jersey sponsorship deals, can the NBA be far behind? (sportspromedia.com)






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Monday, August 02, 2010

 

Chinese Businessman Seeks Takeover of Liverpool

A Chinese businessman, Kenneth Huang Chairman of Hong Kong based QSL Sports Group and backed by an investment fund said to be one of the largest in the Far East, has reportedly made a bid for Liverpool in the range of  237 million pounds.  He has been talking to the club's bankers and would purchase the club's debt from them as his vehicle to buy the club.  That avenue would leave the club's two North American owners, George Gillett and Tom Hicks with no profit from their purchase of the club in February, 2007.

Gillett has countered by telling the banks he is negotitating with Syrian businessman Yahya Kirdi, a former international soccer player.  By the terms of their loan agreement, Gillett and Hicks have the first right to sell the club and the banks have to consider any plan and prospective owners they present prior to any others, i.e. Huang.  With Huang reportedly having already held talks with most of the team's on field executives, and Fernando Torres, its start striker, Gillett and Hicks better hope that this Syrian businessman is the real thing because otherwise they should wake up next week with no European assets.







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