15 TO WATCH: RICK HORROW’S TOP SPORTS/BUSINESS/
MARKETING/ENDORSEMENT ISSUES FOR THE WEEK OF MARCH 27
With Jamie Swimmer
It looks all but certain that within days the city of Las Vegas will have not one but two pro sports franchises – the NHL Las Vegas Golden Knights and the NFL Las Vegas Raiders. Late Friday, Oakland Mayor Libby Schaaf disclosed the city’s last-ditch offer to keep the Raiders in town, but the NFL quickly rejected the latest proposal for a $1.3 billion stadium (involving a $600 million contribution from New York hedge fund Fortress Management Group), all but assuring owners at this week’s annual NFL meeting in Phoenix will approve the Raider’s relocation to Las Vegas. The stadium proposal is the same one Oakland presented to NFL owner committees in early March, to lukewarm reviews. One NFL source said, “The foundation elements – rapid access to the land at nominal cost and free of major contingencies are not present.” More incentive for NFL owners to put this to rest – revelations that the projected cost is $200 million less than the $1.9 billion estimate, and that an additional $200 million public subsidy for capital improvements is available. The odds of winning in Vegas just improved significantly for the league.
In another interesting Phoenix-Vegas story arc, unanticipated Final Four matchups for the NCAA’s men’s basketball finale in Phoenix have captured Vegas oddsmakers’ and March Madness fans’ attention. In the two East vs. West matchups, Vegas has the Gonzaga Bulldogs a 6.5 point favorite over newfound upset expert South Carolina, reaching the school’s first Final Four ever and having the distinction winning twice as many NCAA tournament games in the last ten days than they had in the school’s entire history. While South Carolina last won an NCAA game in 1973, the University of Oregon, battling North Carolina on the other side of the bracket as a 4.5 point underdog, hasn’t been to the Final Four since 1937, the tournament’s maiden year (although they made the Elite Eight last year). Even bigger numbers: the Greater Phoenix region is hoping to pull in more than the estimated $300 million in economic impact Houston pocketed from hosting the Final Four last year.
With the NBA regular season winding down, teams start resting players more often to preserve them for the playoffs. Commissioner Adam Silver is not a fan of that tactic. According to ESPN.com, Silver sent a memo to teams saying that resting key players is an “extremely significant issue” for the league that needs to be addressed immediately. Teams could receive “significant penalties” if they do not abide by standing league rules. The NBA has already warned front office executives about potential repercussions; Cavaliers General Manager David Griffin said the league office “called him shortly after the team announced its decision” to sit star players out of a nationally televised game against the Clippers on ABC. Griffin responded to the league office by stating that it “isn’t his job to appease the league and its television partners.” Hard to decide how to deal with this one: a solution might be collectively bargained way down the road, but it’s difficult to see how the league could mandate some standards unilaterally.
StubHub’s MLB Pre-Season Wins: With MLB Opening Weekend upon us, fans will flock to ballparks across the country, and there’s a good chance they used StubHub to purchase a ticket. Now partners with 29 of MLB’s 30 clubs, StubHub services all but one team in MLB as the secondary ticket partner. Most recently, the world’s largest ticket marketplace welcomed the L.A. Angels back into the StubHub portfolio, and with the partnership, is supporting the club’s move to mobile entry this season, following suit of two other StubHub-MLB partners, the NY Yankees and the Chicago Cubs. StubHub’s technology chops and leadership in mobile ticketing provide partners with the tools they need to move the sport into today’s anytime-anywhere experience economy, making it easier than ever for MLB fans to get a ticket and into the game. Also with the start of a new season, StubHub has officially rolled out its virtual view, 360-degree virtual reality seat viewer to every MLB ballpark, which adds an additional layer of personalization and efficiency in the ticket buying experience. This is good news not only for baseball fans but for the clubs as well – when the world’s largest ticket marketplace, with its industry-leading tech and tools, works hand-in-hand with partners to offer a superior product and experience, it’s a win for everyone involved.
Marking another significant step towards gender equality in sports, the University of Pittsburgh has introduced Heather Lyke as its new athletic director. According to SportsBusiness Journal, Lyke’s appointment at Pitt now makes her the fourth female athletic director out of the 65 universities that constitute the Power Five conferences. “The others are N.C. State’s Debbie Yow, Penn State’s Sandy Barbour and Washington’s Jennifer Cohen.” When looking at the larger context of Division I schools, there are significantly more women in power positions; 33 women currently serve as athletic directors out of the 351 Division I schools, “not counting outgoing UNLV athletic director Tina Kunzer-Murphy.” Lyke had served as the AD at Eastern Michigan since 2013 before coming to Pitt, and had had a tremendous amount of success at the small-market school. “Eastern Michigan had the worst football program and nobody donated. Heather Lyke comes in, they go to a bowl and donations went up 40%.” The sports industry is focused on gender equity, given the number of national conferences and executive leadership seminars devoted to the issue; among them is the Women’s Leadership Conference I moderated last week at the Kia LPGA Classic in San Diego.
Despite doing an “excellent job” hosting the FIS Audi World Cup Finals, Aspen might not be awarded the event anytime in the near future. According to the Aspen Times, FIS Secretary General Sarah Lewis was quick to praise the Colorado resort for pulling off the event, though she also warned that it must “meet conditions before the ski races will return.” The FIS is calling for multiple significant mountain improvements before making Aspen host again, including replacing Lift 1A with a faster chair and making upgrades throughout the mountain and at the base. The five-day event reportedly drew over 30,000 spectators for the men’s and women’s speed and technical races. Aspen Skiing Vice President/Sales & Special Events John Rigney said that Aspen is “ready to host World Cup events as soon as next season,” and it is “up to the U.S. Ski Team and FIS if that happens.” As in all sports, upgraded and modernized facilities are the key to hosting mega-events. In many cases, the public sector contributes significant resources to generate the long-term commitments necessary to deliver the appropriate economic and tourist impact. This may be another example.
While it remains one of the two remaining cities contesting to host the 2024 Summer Olympics, the Parisian Olympic committee made it clear that it has no interest in hosting the 2028 Games instead. According to Reuters, Paris is competing with Los Angeles to land the 2024 Olympics, and the 2028 Olympics will be handed out at the same time as its predecessor. Paris 2024 Olympic bid committee co-Chair Tony Estanguet noted that he was “not against the awarding of the 2024 and 2028 Olympics in the same session later this year, but ruled the French capital out of the latter Games.” The leader of Paris’ bid also guaranteed that none of his team will “accept or offer bribes for votes” in September’s election. It looks like the Paris vs. Los Angeles drama will go down to the wire. The idea of a two-city/two-Olympics selection was floated last week. At least on the surface, parties seem to reject that idea.
Major League Baseball has identified its next “arms race:” sports science. According to SportsNet.ca, the Toronto Blue Jays “may be leading the pack.” The franchise is investing heavily on this front with their new High Performance department, which will serve as an “interdisciplinary collection of specialists covering everything from strength and conditioning to psychology.” Blue Jays players who have worked out at the facility thus far have been amazed. “In my experience, it’s completely unique to baseball,” said Left Fielder Steve Pearce. “I feel like a fish out of water just trying to learn all the stuff that they do because it’s completely different.” The team has already made multiple full-time hires for the facility, trying to bring some of the best talent in sports science to help the team succeed on the field. All new competitive information follows the same trend: acceptance among a small number of enlightened teams, and then a frenzy to copy or include all of the others. Sports science seems to be the next phase.
Despite not making much progress on improving the event’s venue, WME-IMG is planning on keeping the ATP/WTA Miami Open in Key Biscayne. According to SportsBusiness Journal, Miami Open executives have been unable to allocate the $50 million voter-approved money for enhancements, which is why WME-IMG, owners of the event, were thinking of relocating the tournament. The Miami Open is currently played at Crandon Park, where concessions and hospitality are “housed in temporary venues, there is one stadium with no overhead protection from the piercing Florida sun, and many of the outer courts could be found at lower-level events on the tours.” Back in the early 2000s the event was often compared to the Grand Slam tournaments, but those comparisons have since stopped with the lack of capital coming in. After the positives surrounding the BNP Paribas Open at Indian Wells Tennis Garden, the two-week Miami Open seems to require significant political and business momentum to keep pace.
The NFL has set the Oakland Raiders’ relocation fee to between $325-$375 million. According to The MMQB, even if the Raiders are forced to pay up to $375 million upon moving to Las Vegas, this range comes as “relatively affordable” when pinned against the steep $650 million the Rams and Chargers each had to pay to move to Los Angeles. The NFL’s stadium finance committee met last week, and clearly the NFL is “bullish on a funding plan that is now being backed by Bank of America,” and has its foundation in a record $750 million in public money. A final vote from the NFL owners on the Raiders’ relocation plans is expected to come soon, which would end all of the drama surrounding the team and its inability to find a new home in the Bay Area. Sources close to the owners noted that it is “likely but not definite that the relocation will be ratified.” The Raiders drama seems to be moving toward a rapid conclusion – little conversation about Oakland and more comfort surrounding the public/private partnership in Vegas.
The Olympics are widely considered the most prestigious sporting event in the world that an athlete could participate in, but the NHL still may not let its players make the trip to PyeongChang, South Korea in 2018. According to Reuters, NHL Commissioner Gary Bettman said that with negotiations on Olympic participation “at a standstill,” people should “assume the league will not be sending its players” to the 2018 PyeongChang Games. The NHL has let its players participate in the last five Winter Olympic Games, but Bettman said that there has been “no quantitative benefit” for the league to send its players away for those weeks. “We don’t get content for the NHL Network, we don’t get content for our social media platforms and NHL.com,” said Bettman. “Why did we do it five times? Well, it seemed like a good idea at the time but we have been unable to quantify any benefit from it.” The NHL always faces a difficult choice relative to Olympic participation, especially compared to the NBA (whose season always falls outside of the Olympic schedule). It is clearly important to protect the integrity of the NHL season and its players.
Becoming the first foreign club to open an office in mainland China, German club Bayern Munich has opened an office in Shanghai. According to Bloomberg, Bayern Munich has been making a push as of late to expand its international presence, opening its first overseas office in New York recently. The club currently has over 136 million followers in China, so Bayern thought it made sense to focus more energy and time on the Chinese soccer market. Soccer is becoming a “national priority” in mainland China, with major clubs now trying more than ever to win over some of the 1.3 billion residents. Spurred by China President Xi Jinping’s wish for the nation to become a soccer “super power, leading companies and some of China’s wealthiest individuals are plowing billions into the sport, paying record fees to lure top talent to clubs, building training complexes and buying foreign teams.” Look for a trend that includes more mega soccer clubs to open offices in China: marketing synergies, player development, and brand building all factor into the decision.
Twitch now faces a new challenger for dominance in the e-sports realm: YouTube. According to Mashable, YouTube has started to “double down” on live e-sports video, becoming e-sports’ “secondary video home” to Twitch. YouTube “doesn’t want to take second place to Twitch, so it’s forcing fans to switch over” by continuing to buy exclusive streaming rights. YouTube recently announced a partnership with the Esports Championship Series, which comes on the heels of the deal it signed with ESL. Twitch, which was launched in 2011, is responsible for helping to popularize live streaming in the video game world, but YouTube seems poised to take over as the leading streaming service. YouTube, which is backed by Google, has a significant amount of power and capital behind it. Other streaming services and social media sites like Twitter and Facebook have “started to double down on live video” as well. It was inevitable that YouTube invaded this space. Esports continues to become a major player in the “team sports” landscape – especially with the younger demographic.
With Tom Crean getting ousted from his job at Indiana University, coaches around the country speculated that UCLA Head Coach Steve Alford would return to his alma mater to fill the vacancy – with a little help from adidas. Although Dayton’s Archie Miller actually got the job, according to SportsBusiness Journal, college basketball coaches around the country expected adidas” to pay Alford’s $7.8 million buyout at UCLA to get the coach to Bloomington. Back when Alford took the UCLA job in 2013, the school was sponsored by adidas, but it signed a 15-year, $280 million deal with Under Armour last year. Adidas has slowly been slipping in college athletics over the years due to Nike’s dominance and Under Armour’s willingness to spend big to sign top universities. Another example of “retail wars” influencing the ultimate decision. As we head toward the Final Four in Phoenix, the influence of the retail companies over college athletic programs becomes even more obvious.
Longtime Chicago Bulls General Manager Jerry Krause has passed away. At the age of 77, Krause, the “architect of six NBA Championships” who “turned the Bulls into a world-wide brand,” passed away after losing a battle to numerous health-related issues. According to the Chicago Sun-Times, Krause was “responsible for surrounding” Michael Jordan with the likes of Scottie Pippen, Horace Grant, Toni Kukoc, and Dennis Rodman, “as well as the hiring” of coach Phil Jackson. Krause originally got his start in baseball, helping the crosstown Chicago White Sox acquire Ozzie Guillen before making the switch to basketball. The two-time NBA Executive of the Year received a lot of criticism while with the team, despite the team’s tremendous on-court success, because of his tense relationship with Jackson and Jordan. “Jerry was one of the hardest working guys I have ever been around, and he was one of the best talent evaluators ever,” said Bulls Chair Jerry Reinsdorf. Krause was in many ways the dean of the “old-time general managers.” He had fewer day-to-day “salary cap” issues, but more successes related to chemistry, team unity, and the “supporting cast” than Michael Jordan.