15 to Watch: Horrow’s Top Sports News/Marketing/Deal-Making/Business/Corporate/Endorsement Issues for the Week of March 29
1. Thanks to a strong performance in the NCAA tournament, the ACC will receive at least $28 million over the next six years to distribute to its member schools. Depending on how the tournament shakes out, the conference could be the first in NCAA history to make more than $30 million off one tournament. March Madness and Final Four generate substantial economic impact for all cities, especially Indianapolis with its Final Four history. Next event is geared for 2021 (notwithstanding the controversy over some of the latest Indiana legislation).
2. The NFL is considering moving an owners’ vote on Los Angeles expansion to the fall in order to give relocating teams more time to properly transition to the market. The league wants to have at least one team in L.A. by 2016. The current frontrunner is the St. Louis Rams, whose owner, Stan Kroenke, has unveiled plans for a $1.86 billion stadium in Inglewood. A fall deadline will add more certainty at the back end, and more frenzy in the next four months. The St. Louis referendum/legislative funding attempt is the most pressing deadline, with others following. Three absolutely mobile teams with up to seven different scenarios is unprecedented leverage for any major league.
3. Major League Baseball’s 30 teams are worth a total of $36 billion, according to the most recent valuations study conducted by Forbes. The average team is worth $1.2 billion, up 48% from last year, marking the biggest year-over-year increase since Forbes began tracking team values in 1998. Bud Selig’s ultimate success is measured by this stat. A 48 percent yearly return on ANY asset is incredible, compounded by the fact that a $1.2 billion asset is worth purchasing no matter what the debt.
4. Time Warner Cable is expected to write down the value of SportsNet LA by up to $1 billion as it continues to struggle increasing the channel’s distribution. TWC paid $8.3 billion over 25 years for Los Angeles Dodgers media rights, but the channel’s high subscriber fee has left 70% of the market without games. The giant game of “cable subscription chicken” is coming home to roost. Prediction: overall value reduction is a dramatic effort aimed at an early and definitive settlement.
5. MLS Commissioner Don Garber formally announced that Minnesota has been awarded an expansion team that is scheduled to begin play in 2018. When it enters the league, Minnesota United will be the 23rd MLS franchise. The club is aiming to play at a new soccer-specific stadium in downtown Minneapolis. MLS in an “environment of riches” as franchises are awarded quickly. However, stadium deals still in question in Minneapolis, New York, Miami, and (for the funding mechanism) Orlando. Much of the leverage has been removed in each case.
6. Fidelity National Financial Chair William Foley is confident he will be granted an expansion NHL franchise in Las Vegas, with an official announcement expected within a month. Foley last month launched a ticket campaign to gauge interest in the market, and a $375 million arena currently is under construction on the Las Vegas Strip. NHL in Vegas looks more real than ever, as Gary Bettman identifies the advantages of a monopoly market in a demographically interesting area. The question appears not to be “if” but “when.”
7. Barclays will not renew its title sponsorship of the English Premier League when its current deal expires at the end of the 2016 season. The bank signed a three-year extension of its original deal in 2012 for a total of $178 million, a nearly 50% increase from its previous agreement. This may be the highest level of league uncertainty since Sprint decided not to renew its NASCAR sponsorship. Similar to NASCAR, the English Premier League is so well situated (demographically, economically, television wise, etc.) that the replacement should be fairly easy to identify.
8. NFL owners voted down a proposed rule change that would have put fixed cameras on sidelines, end lines, and goal lines. The league reportedly does not want to add the cameras because of the costs associated with having them at all NFL stadiums. It may be that the change may have been less likely because of who proposed it (Bill Belichick). If the studies prove that additional cameras actually enhance the integrity of the game, it is impossible to believe that the NFL would not pull the trigger because of cost reasons.
9. President Obama said that universities need to be doing more for their student-athletes and that the NCAA should require schools to guarantee athletic scholarships. At the same time, Obama stopped short of saying that college athletes deserve to be paid. The President is saying what everyone else is saying now that it is easy to say it! That more revenues are generated and that athletes should be able to assume the full cost of scholarship. The competitive market should take care of this as the big five power conferences struggle to gain recruiting advantages.
10. The NFL is looking into Germany as a possible site for future regular season games. Frankfurt and Dusseldorf are the likeliest sites, with Berlin and Munich also under consideration. Germany is one of the NFL’s next two frontier markets, along with Brazil. Look for NFL International to increase its visibility and exposure in countries like Germany – not necessarily franchises or even a series of games. Rather, grassroots initiatives, marketing and merchandising processes, and the like. The Roger Goodell challenge of $25 billion of revenue by the end of this labor cycle is a solid motivation.
11. NBC Sports plans to air some of this year’s Stanley Cup playoff games on USA Network in an effort to boost the network’s TV ratings. NBC puts all hockey playoff games on national channels and has used networks including CNBC for overflow games in the past. USA’s last major sporting event was U.S. Open tennis in 2008. Another example of NBC being “all in” with the NHL – as well as using vertically integrated platforms to “rehearse” for Rio and other mega-Olympic events. The beneficiary: NHL, its teams, and its players.
12. Duck Commander has dropped its title sponsorship of the Independence Bowl after just one year because the return on investment failed to meet the company’s expectations. Unlike most sponsors, Duck Commander operated under a letter or intent, having never made a lump-sum payment for the rights. Impossible to believe that Duck Commander is no longer affiliated with the Independence Bowl. What sponsor is left to make fun of during the next bowl cycle? We may have to be resort to NASCAR race names – like the SpongeBob SquarePants 400 in Kansas City.
13. A federal judge denied a motion from the NHL to dismiss a lawsuit brought by retired players accusing the league of concealing the risks of concussions. The ruling puts increased pressure on the league to reach a financial settlement or risk going to trial. Concussion issues continue to dominate the legal landscape in sports. As every piece of litigation moves closer to jury trials, the stakes get higher, the insurance carriers become more unsettled, and pressure increases to end the litigation and create solid and consistent processes.
14. David Beckham’s quest to bring an MLS team to Miami is heating back up. The soccer star recently held several meetings in the city with the hopes of landing a stadium deal. Beckham reportedly is considering building a stadium near Marlins Park just west of downtown Miami. As MLS awards franchises to Minneapolis and as New York struggles to identify its stadium location, Miami is on the hot seat for a quick response to a complex stadium issue.
15. The Cincinnati Reds have installed multiple self-ordering kiosks for food and drinks at Great American Ballpark. The ballpark has undergone several renovations this offseason in advance of the Reds hosting this year’s MLB All-Star Game. MLB again uses the All-Star Game to generate interesting experiments for fan convenience, stadium modernization, Internet access, and other major issues that will benefit this year’s game in Cincinnati, and future games in Miami and otherwise.