World Congress Of Sports II: Sports At Home And Abroad

Cove Addresses Potential For U.S. Policy Changes Around Beijing Olympics

SGMA President Tom Cove during an Octagon/Street & Smith’s World Congress of Sports panel titled “What’s Happening in Washington, DC? Sports Lobbying Efforts That Will Impact the Industry the Most,” said the ’08 Beijing Olympics will put China at the forefront of the world’s consciousness. But he noted Congressional representatives may try to capitalize on that focus to introduce policy change that could negatively impact sponsors and sporting goods manufacturers. Cove said, “It’s basically the perfect storm for a lot of issues in sports and politics.” He predicted that politicians could use it as a time to change the country’s currency regulations or fight its one-child policy, dragging everyone from sporting goods manufacturers with plants there to sponsors like Visa and McDonald's into the fray. “I’m not saying that’s going to happen, but there are so many people who are frustrated with not being able to influence public policy in the People’s Republic of China that this unique opportunity of 2008 suggests that people will probably look at it as an avenue to get that done.”

A LA CARTE CABLE: A la carte cable programming, which has been trumpeted by U.S. Sen. John McCain (R-AZ), is building steam on Capitol Hill. Lucy Calautti, a senior adviser with Baker Law, which works with MLB, said, “Don’t only watch Congress. Watch the FCC. ... The leadership there has changed, and the FCC has gone from being opposed to being very much in favor of a la carte.” That could be bad news for sports, said Phil Hochberg, an attorney who has represented sports leagues like the NFL and NHL. A la carte poses a major threat to league revenue because it could trigger a decline in TV viewership. “If viewership goes down,” he said, “ad revenue goes down. If ad revenue goes down, rights and payments go down.”

EMINENT DOMAIN: Congressional lobbyist Stan Brand cited eminent domain as the biggest potential threat to team revenue. Limits could be set on economic development for public use after a U.S. Supreme Court decision last year ruled in favor of eminent domain. Since then, property owners nationwide have pushed states to protect their property from being taken and redeveloped for private use. But such private development is crucial to a franchise’s ability to fund new stadiums, Brand said. “If Congress comes in and changes that and we don’t get an exemption that creates a cocoon for the development of these projects,” he added, “that’s going to be a serious problem. It’s going to make things much more costly and much less likely to be built. We’re optimistic we’ll get some type of legislation like that.”

Hochberg Believes Effects Of Abramoff Scandal Spilling Over Into Sports

INTERNET GAMBLING: Hochberg added that the Jack Abramoff scandal has led to the rejuvenation of legislature that addresses Internet gambling. Abramoff had previously fought such legislation, Hochberg said, but now it may move forward. “It’s a direct reaction to the scandal,” Hochberg said, adding that that’s not the only thing to change following the scandal. More and more Congressional representatives and aides are also refusing tickets to sporting events, he said. “It is changing the business. It is making people skittish.”

MORE ON CHINA: Anheuser-Busch VP/Global Media & Sports Marketing Tony Ponturo, during a panel titled “Sports as a Global Language,” said from a profit standpoint, China “is clearly the land of opportunity. As you assimilate the country, as you work with the government, as you do the right things to the consumers, it should pay off in the next 15 or 20, or 25 years.” Octagon President & CEO Rick Dudley: “1.3 billion people and an economy that’s growing faster than any other in the world, in my view it is the story of this century. You cannot overestimate it in the short term — that’s the danger. But underestimating it in the long term is also a danger.” F1 Special Advisor Michael Payne added, “Within a decade, China will really be setting the agenda on global sports for two reasons: one, the importance of the Chinese market; but also the number of Chinese companies that will be using sport to create a global brand. They’re looking at how companies like Samsung have used sport as the key driver to create a global brand. Within a decade, you will have a dozen household names from the Chinese government that use sport to create that identity on a worldwide basis.”

BREAD AND BUTTER: MLS Commissioner Don Garber said, “I think we’re going to see a lot more activities among Mexican companies. We just had Bimbo bread, which is one of the largest baked goods manufacturers in the world, spend time looking at opportunities here in the United States, looking at possibly buying the naming rights to one of our stadiums here in Los Angeles. There are lots of opportunities going on in Latin America and Mexico.”

INT’L MARKETING: When asked about future marketing trends, Payne said, “I think you will see a permanent change in the management of media rights. Internationally, the traditional basis of rights has been on territorial footprints. I think within five years that’s going to change as we adopt a language footprint. In Europe, you’ve probably got more Turkish [soccer] fans outside of Turkey than in Turkey. And the ability in each of the communities to be able to access their sport back home is going to become a key issue and trend across the world. Rights and everything are going to get put on a language and a cultural footprint, rather than a traditional footprint.”