The NFL has opted to transition away from its tax-exempt status, which NFL Commissioner Roger Goodell called a distraction to the league. Goodell said the move would not change the function or operation of the league office, but the Commissioner will no longer have to publicly disclose his salary. Most of the profit from league-related operations are taken through the individual teams anyway, and their owners are taxed for those profits. As a practical matter, the tax exempt status caused significant confusion and perception issues, and obviously NFL is concerned about perception on this issue.
GoDaddy announced it is leaving NASCAR at the end of the 2015 season and will not renew its primary sponsorship of driver Danica Patrick’s No. 10 Chevy car with Stewart-Haas Racing. GoDaddy has sponsored Patrick since the 2007 IndyCar season, and the company remained her primary sponsor as she transitioned into NASCAR. Patrick’s steady but victory-less performance, coupled with GoDaddy’s desire to explore other global initiatives, led to this change. Truthfully, the relationship benefited both parties significantly as they emerged into their respective roles. Good example of corporate/athlete partnerships working well.
NFL Draft in Chicago was an astounding success on a number of levels — over $100 million of economic impact, nearly 100,000 folks assembled in Grant Park every day. Sports and entertainment agency Lagardere Unlimited had a strong showing in the NFL Draft. The Oakland Raiders with the 4th overall pick selected wide receiver Amari Cooper out of Alabama. Cooper was a 2014 Heisman trophy finalist and a consensus All-American. Another Lagardere client, cornerback Kevin Johnson, went 16th overall to the Houston Texans, and defensive end Arik Armstead of Oregon was chosen 17th overall by the San Francisco 49ers. Most importantly, the NFL has a new “mega-event” to move around to cities with significant support from ownership.
The Baltimore Orioles took a financial hit in having to move its weekend series against the Tampa Bay Rays to Tropicana Field. As a result of the Freddie Gray riots in downtown Baltimore, the Orioles will lose revenue from three home games as well as incur additional travel expenses. While Mayor Rawlings Blake is to be commended for her constant vigilance during the turbulence, the “spectator-less” game at Camden Yards and the “home series” in Tampa causes significant revenue issues for the Orioles.
An amazing Spring for Sin City. Over $300 million of economic impact from Pacquiao-Mayweather; NHL looking at possible 2016-2017 expansion at $500 million entry fee; and gambling makes more revenue than ever. A record $263 million was gambled in Las Vegas during the NCAA men’s basketball tournament. In total, $375 million was gambled in March on professional and college basketball games, up from the previous record of $344 million last year. As March Madness continues to become more accessible on all mobile platforms, look for more interest, more revenue, and more gambled dollars.
As originally reported by The Oklahoman, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, Oklahoma City Thunder signed former Florida Gators head coach Billy Donovan to a five-year, $30 million deal. The contract makes Donovan one of the highest-paid coaches in the NBA, trailing only Clippers coach Doc Rivers at $10 million a year and Pistons coach Stan Van Gundy at $7 million annually. College and pro coaches should be viewed as COO’s of mid-sized corporations. From that perspective, a $6 million annual salary is understandable for a $100-plus million operation.
Whether in sports, business, or politics, mega-international events require similar solutions. Globecast is fully committed in assisting UK and overseas broadcasters for the upcoming UK General Elections. More than 70 SNG trucks have been booked on behalf of all major news agencies in the UK. Coverage will include both the extensive build up, as well as Election Day and night itself, running from Thursday, May 7th, all the way through to Friday, May 8th. As television, Internet, and social media converge, a “one stop shop” approach is an absolute necessity to adequately service major mega-events.
Not a great year for defending NHL and NBA champions. Los Angeles Kings failed to make the playoffs and the San Antonio Spurs were ousted in the first round by the Los Angeles Clippers. Heading into NHL conference semifinals and finals, franchise values continue to rise and television ratings continue to improve. NBA franchise values continue to increase by virtue of the $750-$800 million value set by the Atlanta Hawks sale. Steve Balmer’s $2 billion investment may be paying off emotionally, given his excitement on the sidelines after the Clippers victory over the Spurs.
The task force working on a new St. Louis football stadium expressed confidence that they will have a plan in place for NFL approval this fall. The group is hoping to get $400 million in public money, plus $450 million from the team and league and $150 million from PSL sales. NFL deferral of the voting on franchise relocation at their May meeting is based on the desire to give St. Louis, Carson, San Diego, Oakland, Inglewood, City of Industry, and other projects an opportunity to be finalized (or not) by late Fall. Look for the three-team “musical chairs” to be resolved by the end of the NFL season.
MLB’s new pace-of-play initiatives have been so effective that the league and players’ union will not implement a series of fines that were to go into effect last week. Average games this season are being completed nearly 8 ½ minutes quicker than last year. Part of it is cold weather, part of it is good pitching, and part of it is Commissioner Manfred’s edict to quicken the games. While more subtle than other edicts, this may have a more profound consequence for years to come.
Big 12 Commissioner Bob Bowlsby acknowledged that his conference is at disadvantage in being selected for the CFP by not having a conference championship football game. Bowlsby recently spoke with CFP officials about the significance of the extra game in their deliberations. Whether adding additional teams, committing to a conference championship, or a combination, the Big 12 will adapt its business and economics to the momentum created by the other Power Five conferences.
NASCAR is in advanced talks with daily fantasy sports operator Draft Kings about the possibility of launching a new game. A deal with Draft Kings would add to NASCAR’s existing user base of about 250,000 for its traditional fantasy game, which is available on NASCAR.com. What an evolution: from fantasy being perceived as a lower form of gambling, to regular fantasy being accepted by each league, to “daily fantasy” emerging as a large revenue source — now nearly all teams and leagues have some form of relationship with one of the major “daily fantasy” providers.
Allstate’s Esurance brand has signed on as MLB’s new auto insurance partner. The online insurance company will title sponsor fan balloting for July’s All-Star Game in Cincinnati, whose balloting this season is being conducted entirely online for the first time. Financial terms of the deal were not disclosed. Baseball’s stability and progress means more sponsorship dollars for everyone, new sponsor partners committed to the game, and more activation around them.
An anonymous group of donors to the University of California-S.F. has come out against the Golden State Warriors’ plan to build a new arena in San Francisco’s Mission Bay. The emergence of the opposition group comes just a month before an environmental impact report about the arena will be released. Warriors ownership understands that an arena process does not happen overnight, notwithstanding the significant economic impact, benefits, and image enhancement for the region. Hopefully the Warriors on-course performance will hasten this process.
The golf industry moves to the Players Championship, ostensibly the “Fifth Major” within walking distance of the PGA Tour headquarters at Ponte Vedra. On the golf course, LU clients led by world No. 2 Jordan Spieth entered in the World Golf Championship-Cadillac Match Play Championship in San Francisco. Also in the tournament based on their world rankings were Chris Kirk (25), Keegan Bradley (33), and Brandt Snedeker (35). Golf business surviving and thriving without the need for “Tigerization of the Tour.” While Tiger remains a critical component of the Tour, MVP Index and other measurements demonstrate that Jordan Spieth, Rory McIlroy, Phil Mickelson, and some of the “young guns” are clearly taking the pressure off.
Sports Business ’15 to Watch’: Bettman suggests Vegas franchise fee
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1. Comcast has dropped its plans to acquire Time Warner Cable due to pressure from regulators. The failed merger has implications in the sports world, as Los Angeles Dodgers executives previously said that the TV impasse with SportsNet LA would be resolved once the Comcast-TWC deal went through. Seismic ripple through the entire industry with the multiple implications becoming clearer this week; cable, Internet, broadband, mega-events, team rights, league negotiations, technological advancement – all altered by this decision!
2. As originally reported by the Atlanta Journal Constitution, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, a group led by Tony Ressler has agreed to purchase the Atlanta Hawks and Philips Arena for $750 million. The sale price is the second highest in NBA history behind Steve Ballmer’s $2 billion purchase of the Los Angeles Clippers last year. Deal might even be higher after the “dust settles”; significant franchise appreciation reflects stability, television revenue, relative labor peace, and (by the way) good Atlanta Hawks basketball.
3. NHL Commissioner Gary Bettman suggested that the expansion fee for a new Las Vegas franchise could be around $500 million. That would mark a significant increase from the $80 million price tag Nashville, Atlanta, Columbus, and Minnesota paid when the NHL last expanded in the 1990s. Last-minute maneuvering might push the franchise price even higher as the expansion process changes from a multiple city “beauty contest” to a hand-picked Las Vegas public/private partnership.
4. Through their global reach and local presence on each continent, Globecast’s “one stop shopping” allows broadcasters to get mobile and fixed satellite uplink/downlink, multicast distribution on any screen, including an IP feed broadcast who can be embedded into any web portal during the event. Another example of media international efficiencies causing transmission capabilities that maximize revenue, profit, and long-term growth.
5. The NBA will test for HGH under the league’s anti-drug program beginning next season, with stiff penalties for positive results. Players will receive a 20-game suspension for the first positive test, 45 games for a second positive test, and dismissal from the NBA after the third. Another example of league stability, player relations, and labor peace providing the appropriate “framework” to deal with issues that are also important to the game (performance enhancing drugs).
6. NBA regular-season viewership fell on cable TV during the 2014-15 NBA season, with TNT’s games down 12 percent from last year and ESPN’s down 10 percent. The drop in national viewership was attributed to the struggles of big-market teams and star players suffering season-ending injuries. Exciting playoff matchups, new deals with Nike and Pepsi, and long-term growth and development fuel NBA profits – obviously have to improve the “other” teams in the New York and Los Angeles markets.
7. The decline in value of the Canadian dollar against the U.S. dollar has hurt the value of the NHL’s TV rights contract with Rogers Media. The deal is paid in Canadian dollars, and Commissioner Gary Bettman declined to say if any hedging was done to minimize losses. Interesting dynamic with cyclical economics – Atlanta moves to Winnipeg at a time of “favorable exchange rates” – now the “economic shoe may be on the other foot.” Players and agents can earn a “makeup” through negotiations, but owners have nowhere to turn.
8. YouTube is seeking a $10 million commitment from advertisers interested in the company’s new NFL channel. YouTube is asking for $5.2 million for a full football season’s worth of ads, as well as an equal spend on non-football content. The NFL and Google in January reached a multiyear deal to launch the YouTube channel. The deal includes in-game highlights and NFL promotions on Google search pages. NFL enjoys creating value for their partners, which will inevitably generate more revenue for them in years to come. During the next television rights bidding cycle, look for players like YouTube to be instrumental in increasing the value of traditional rights negotiations.
9. The University of Cincinnati signed a lucrative new apparel deal with Under Armour. The 10-year agreement includes more than $11 million in cash and more than $36 million in equipment. The school’s expiring deal with Adidas is worth about $2.7 million annually. Under Armour validates its claim as the “second retailer” in the North American market. It has surely come a long way since the outlandish Kevin Plank Maryland uniforms.
10. DirecTV on signed Colts QB Andrew Luck and Cowboys QB Tony Romo to multiyear deals to endorse its NFL Sunday Ticket package. The pair will join Broncos QB Peyton Manning and Giants QB Eli Manning in a variety of PR, advertising, and marketing activations to promote the satellite TV provider’s exclusive subscription service. Four “high character” quarterbacks, four substantial paydays, one huge conglomerate intending to increase its value through NFL endorsers – with contracts that are no doubt shorter, smaller, and easier to terminate.
11. The University of Texas athletic department sent representatives to Dubai to explore ways to grow the brand internationally. Texas officials also are looking at hosting a future football game in Mexico and will open its basketball season with a game in China. Kudos to entrepreneurial Athletic Director Steve Patterson for “pushing the envelope” globally. Maybe the Longhorns will learn how to play defense during their visits to the desert.
12. The NHL and NHLPA have opened negotiations with at least four apparel companies interested in supplying jerseys for the World Cup of Hockey. Reebok, Nike, Bauer, and Under Armour are all interested in winning the contract, which could be worth $6 million for the league and union. New revenue streams abound as the World Cup looks toward its initial tournament; television, apparel, tickets, sponsorships, etc. all will be treated as “newfound revenue” for the NHL and NHLPA.
13. BET has partnered with Roc Nation Sports to air up to nine live, two-hour telecasts of boxing events in the next 18 months. In addition to the actual boxing matches, telecasts will be supplemented with a live musical performance as well as a DJ. A positive unintended consequence of Pacquiao-Mayweather is the validation of the recovery of the boxing business. Look for more opportunities to promote boxing in different corners of the globe.
14. As originally reported by the Dallas Morning News, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the NFLPA could sue the NFL over the suspension the league levied against new Dallas Cowboys DE Greg Hardy. At issue for the union is that the league did not mention domestic violence in its announcement, which would have triggered a six-game suspension. Instead, Hardy got 10 games for conduct detrimental to the league. First series of cases post new NFL domestic abuse policy will trigger the most careful scrutiny ever; while everyone argues about the length of the hardy suspension, all seemingly agree that the new policy provides a more appropriate framework for future discipline.
15. The Rose Bowl has decided not to bid on hosting the 2020 College Football Playoff title game. The Rose Bowl, which currently is one of six bowls that can serve as a semifinal in the College Football Playoff, spent months studying the feasibility of hosting. Economics of hosting the mega-events always looks better for the host venue than it might actually be; economic impact around the community, television, exposure are key – not always so for the venue itself.
In the first round of the Stanley Cup playoffs alone, we’ve seen everything from a series sweep, to hat tricks, to backup goaltenders getting their chance to shine.
All of that has resulted in more revenue for the league — although not as much as we’ve seen in some previous years. Now as the postseason continues, the money will continue to roll in through merchandise, television deals and much, much more
Sports Business Insider Rick Horrow discusses the latest on economics regarding the NHL, especially during playoff time.
“The NHL continues to rely on rivalries as it gets out of the first round and into the second round,” Horrow said. “NBC’s ratings for television are down about six or seven percent, but still this year was the third-highest of NHL viewership since NBC took over nearly 10 years ago.”
Sports Business Minute: NBA generating new revenue 4-23-15
Attendance has been a major source of revenue in the NBA this season with a 17,800 per game average, up around 400 from last year’s average of 17,400.
But attendance isn’t the only reason NBA will see a major economic boom in the near future.
Sports Business Insider Rick Horrow detailed in the latest Sports Business Minute how the NBA’s new partnership with Pepsi, ending a 28-year deal between Coca-Cola and the NBA, will be a major source of revenue next season.
And the revenue won’t stop there for the NBA as its apparel deal with Nike will provide a boost beginning in the 2017-18 season
See what else he had to say in the video above. You can follow Sports Business Insider Rick Horrow on Twitter @RickHorrow.
Sports Business ’15 to Watch’: Manfred makes his mark
CSN Business Insider Rick Horrow gives his Top 5 sports business news of the week of April 20 –
MLB’s new pace of play rule changes have proved successful thus far, with the average game this season being completed nearly ten minutes faster than last year. Among the changes that were implemented are a between-innings clock and making hitters keep a foot in the batters’ box. Rob Manfred makes his mark yet again – 48 percent asset appreciation, nearly $10 billion in revenue, international expansion and a quicker game as a consequence of relatively modest rules changes. America’s pastime continues to get stronger on a regular basis.
A new study from the National Bureau of Economic Research found that just 16% of NFL players go bankrupt within 12 years of retiring. While the number is troublesome, it’s far less than a 2009 Sports Illustrated report that said 78% of players are bankrupt or in financial trouble within two years of retiring. There’s a need for all involved to take significant responsibility in improving these numbers: the player and his family, coaches and management, the Players Association and the league itself. As the economics get bigger and the stakes get higher, these issues will be more significant in the years ahead.
Lagardère Unlimited Golf solidified its PGA Tour dominance with an impressive 1-2 finish at Augusta at the 2015 Masters Tournament. Twenty-one-year-old phenom Jordan Spieth won his first Masters green jacket, while legend Phil Mickelson finished second at the tournament. The company has done a stellar job in restructuring the Under Armour relationship for Jordan Spieth while not overexposing him. Phil Mickelson provides significant “business experience.” The two clients (in addition to the rest of the athletic stable) provide significant diversity, experience and corporate reach over time.
National and international television distribution is a major component of the economics of teams, leagues and television networks. Globecast is expanding significantly throughout North America, complementing its worldwide presence. Part of the Orange international conglomerate, Globecast manages and transports over 10 million of hours of video and rich media each year, across five continents. Some examples of their major sports events include the ESPN Cricket World Cup, Roland Garros and the Tour de France. More efficient and lucrative international distribution means more revenue for teams, leagues, players and the industry as a whole.
The NBA and Coca-Cola have ended their partnership after 29 years. Coke used its NBA league sponsorship to help revive its Sprite brand in the 1990s. The NBA has already reached a five-year deal with Pepsi to take over rights to the sponsorship category. The NBA always leverages one large sponsorship/partnership deal into a larger one.
As originally reported by the L.A. Times, but in an article found and accessed from the SportsManias app, the site that provides fans with real-time information on their favorite teams, the MLBPA is preparing for a fight with the Los Angeles Angels should the team try to recoup money from Josh Hamilton. Hamilton is set to make $23 million this season, but he may not play for at least another month while he recovers from substance abuse issues. Another example of the risks involved in “superstar athlete brand management.” Hamilton seems to be approaching this issue with great respect and care, but the corporate sponsors and team owner will continue to monitor the impact on their respective brands.
Nike is close to reaching a deal with the NBA to become the league’s new apparel partner. While the framework of an agreement reportedly has been reached, there are still several details that need to be finalized before signing a deal. Nike’s new on-court rights will take effect before the 2017-18 season. Nike and Under Armour continue to fight it out on and off the court, with adidas still involved. As the NBA apparel issue is resolved, next up: jersey sponsorships and the revenues that follow.
Lagardère’s North American expansion continues at a rapid pace, and the award nominations continue to stream in. LU received two nominations at the prestigious Sports Business Awards, as a finalist in the categories of “Best in Talent Representation and Management” and “Best in Corporate Consulting, Marketing and Client Services.” Major North American expansion of a worldwide conglomerate means more opportunities for athletes, event promoters, teams, leagues and the industry as a whole. High quality competition is good for everyone.
The NBA averaged a league record 17,826 fans per game this season, as almost 22 million fans attended games. NBA teams also had 700 sellouts, passing the previous record of 676 sellouts from 20 seasons ago. The Chicago Bulls led all teams with 21,866 fans per game. Another successful NBA season at the gate, coupled with $9 billion in revenue, the $2 billion Ballmer sale raising all values and other substantial NBA benefits leading into the playoffs.
Taking advantage of MLB’s shift on liquor sponsorships, the Kansas City Royals signed a multiyear deal with McCormick Distilling to produce limited-edition Royals-branded bottles of its 360 Vodka. The Royals join the Cubs as the only two teams licensing its logo for liquor packaging. Look for this as the “tip of the alcohol iceberg”; teams should actively pursue liquor sponsorship deals (as long as they are tastefully done and coupled with the admonition against excess). This should very easily expand into all other sports at a rapid rate – more money for everybody.
As originally reported by the Cleveland Plain-Dealer, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the Browns unveiled new Nike-designed uniforms with the word “Cleveland” displayed prominently on the front, making them the only team in the NFL with just the city name on front of the jersey. Besides the city name, the Browns will be the only NFL team with its nickname on the pant leg. The team will couple the nondescript helmet orange with a “busier” jersey and pant leg. More money for the team, more money for Nike and more merchandise sales for the NFL. Now a note to the Browns player personnel department: couple the logo excitement with positive team performance.
Army has rebranded its athletic department and will now be known as “Army West Point.” The school collaborated with Nike for 18 months on the rebranding, but also consulted the U.S. Army and Academy leadership, current and former cadet-athletes, coaches, historians and West Point graduates. Another example of reaching the secondary logo and merchandise market through another method. Not just changing logos and colors, but actually rebranding the athletic department – change of image, merchandise, logos, etc.
Through Globecasts’s global reach and local presence on each continent, Globecast secures contribution, international distribution and broadcasts production for every type of sporting, news and festive events. Globecast broadcasters get mobile and fixed satellite uplink/downlink, multicast distribution on any screen, including an IP feed broadcast who can be embedded into any web portal during the event. Key in the television industry is to provide international reach, diverse services and an opportunity to more efficiently enhance revenues. Look for Globecast to continue to be a major player in all aspects of media transmission and distribution.
Georgia Tech is hosting a Rolling Stones concert at Bobby Dodd Stadium as a way to generate additional revenue to help cover the full cost of attendance. Georgia Tech AD Mike Bobinski estimates that holding the concert could add an extra $500,000 to the school’s athletic department budget. More schools will create more concerts for more additional revenue as well. As the pressure on schools to provide more revenue for student-athletes grows, look for diverse merchandise, possible alcohol sales, corporate stadium names and additional stadium events like the Rolling Stones, across America.
The NFL and Harris County are at odds over NRG Stadium improvements in advance of Super Bowl LI. The NFL wants the luxury boxes and club seats at NRG Stadium to undergo a $50 million upgrade at the county’s expense, but county commissioners say the use of public money is a non-starter. As new stadiums complete their initial financing/lease period, teams are renegotiating improvements based on latest technological and architectural advances. In most cases, public/private partnerships remain critical in the base lease, subsequent renewals and refinancings for the overall facility as well.
Every year countless people from around the world arrive in Boston to either run or support those running in the Boston Marathon.
And an event that size means a nice economic boost for the city. From money raised through both the attendance and television deals, the Boston Marathon provides both a holiday-like atmosphere while driving a handsome profit.
Sports Business Insider Rick Horrow discusses the economic impact of the race and whether the marathon could help Boston land an Olympic bid in the upcoming years.
“Nearly a million people lining the race route, the Red Sox start at 11 a.m., it is a holiday like none other and the economic impact quite significant,” Horrow said as he described the attendance. “Charity dollars there as well. John Hancock saved the race 20 years ago and now generates millions of dollars in charity as a consequence.”
Sports Business Minute: Economic factors of The Masters
The Masters is without a doubt what fires the economic engine in Augusta, Ga.
In hotels alone, a 30 percent increase, plus a required three-day minimum stay and average of $400 per night make up for 51 weeks of relative inactivity the rest of the year.
But those aren’t the only numbers that are driving the economic force during the major tournament.
Sports Business Insider Rick Horrow breaks it all down.
“Two-hundred: That’s the number of countries that televises this event,” Horrow said. “This year; the most ever. Two-hunderd also a big number: In 1956 when telecasts first started, Bobby Jones had imposed a 200-mile blackout. He wanted to sell tickets, and boy sell tickets he did.”
Find out what other numbers are driven by the major tournament in the video above.