SBJ/June 9 - 15, 2003/Opinion

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  • Cable’s new offering: A boost from the feds

    We shouldn't be surprised that the CEOs of many U.S. cable companies are pleading with Congress to protect them from big, bad ESPN. Their livelihoods historically have depended on a cozy relationship with their partners in government, so it was a safe bet they would turn to Congress for protection from the evil sports-broadcasting empire.

    Still, it's galling to see captains of industry crying for federal relief from contracts they freely signed.

    Many cable companies, appalled that ESPN is actually following through on its contractual right to raise its rates by 20 percent a year, want Congress to force them to do what they don't have the guts to do themselves: put ESPN and other high-priced sports channels on pay tiers where they would be bought only by the people who actually want to watch them.

    Powerhouse ESPN doesn't want that to happen, and its current contracts forbid such a move, but the cable companies are being squeezed on the other side by customers balking at rising cable rates.

    This is exactly the sort of tension that the marketplace will resolve when a willing buyer and a willing seller come together. At the retail level, the cable company charges what it thinks the market will bear, and the customer pays what he judges the product is worth. The transaction between cable channels like ESPN and cable companies like Cablevision and Cox Communications works the same way. Highly desired channels seek to raise their rates, and cable companies try to hold down their costs. Somewhere the lines of supply and demand intersect, and the price is set.

    The cable companies, though, have developed an unhealthy reliance on governmental protectionism. Traditionally, local cable firms have functioned as legalized monopolies, operating under city-granted charters that both allowed them to impose regular rate increases and sheltered them from competition. Now these same cable firms, with newfound concern for their retail customers, want Congress to carve out new protections that would cushion them from marketplace forces at wholesale.

    That's not the way it works. If cable companies believe ESPN (or any other channel) is charging more than it's worth, they've got the opportunity to make their point the next time they meet for contract negotiations. Or they can drop the channel and explain it to their subscribers.

    While it's telling that television has such a high level of importance in our society that legislators debate the availability and pricing of certain channels, the solution to this dilemma should be found in the marketplace, not in the halls of Congress. Government oversight is needed in many areas of society. Deciding who gets which cable channels isn't one of them.

    Print | Tags: Cablevision Systems Corp., Cox Communications Inc., ESPN, Opinion
  • If a team flops, let’s fire the owner

    The recent firing of Michael Jordan by the Washington Wizards ends yet another chapter in the dysfunctional history of the National Basketball Association franchise. Under the stewardship of owner Abe Pollin, the Wizards have managed only two winning seasons over the last two decades.

    In any other industry, Pollin would have been forced out of business if he had offered such a terrible product for so long. But the NBA, like the other pro sports leagues, is a monopoly. Washington-area fans have no recourse. Pollin isn't going anywhere.

    That needs to change. Incompetent sports owners should be forced to sell their franchises.

    There are hapless teams like this in every league. The Cincinnati Bengals are the Wizards of the National Football League. Last season's 2-14 record was the worst in franchise history. And that's saying something, because the Bengals have not had a winning season since 1990. Cincinnati fans have tried to force owner Mike Brown to sell the team. They even organized a recall petition. But that effort seemed as hopeless as the Bengals themselves. League officials have never considered the idea of owner expulsion.

    It may sound preposterous to force someone to relinquish private property for any conduct short of criminal activity. However, the team sports industry is unique. It is a monopoly public good that is provided special government subsidies and legal exemptions. There is no normal free market competition. Inept CEOs can remain in place forever without any oversight, ruining the sports experience of the entire community.

    Each league commissioner has the power to discipline owners who act against the best interests of the game. And, what is more detrimental to those interests than the continued inability to field a good team? Yet no owner is ever threatened with removal for incompetence.

    Ironically, the Milwaukee Brewers, the baseball franchise with one of the worst on-field performances, are actually owned by league Commissioner Bud Selig. The Brewers have not been in the playoffs since 1982. This season, it's still early June and already they have settled comfortably into last place. The owners of the hapless Detroit Tigers, who have had one winning season in the past decade, and Chicago Cubs, who haven't won a World Series since 1908, would also be nominees for replacement.

    Inept CEOs can remain in place forever, ruining the sports experience for all fans. That needs to change.

    If the leagues themselves aren't willing to replace incompetent owners, maybe the government should consider stepping in. Regulation of the cable television industry, another monopoly, may provide a model. Why not require sports team owners to be relicensed every decade as cable operators are?

    In practice, cities almost never take a franchise away from a cable company unless there is gross malfeasance. But the credible threat would at least act as a check and make it less likely that teams would be allowed to languish in mediocrity.

    There are only 121 sports franchises in the four major sports leagues. So, it is difficult to believe that there would not be enough bidders to step in and replace any of these non-performing owners, particularly in major markets.

    Fans know that in sports you can't win 'em all. But they should be able to expect that their team's owner can win at least some of 'em.

    John D. Solomon, a New York journalist, writes frequently about sports policy.

    Print | Tags: Baseball, Basketball, Chicago Cubs, Cincinnati Bengals, Detroit Tigers, Football, Milwaukee Brewers, NBA, NFL, Opinion, Washington Wizards
  • Sweet dreams come true for Nike, James

    Michael Jordan stepped off his throne as the player at the end of this past NBA regular season. Nike had to identify a correct "someone" to step into the line of succession and assume MJ's royal perch.

    So, was anyone truly surprised at the sum of the ransom for LeBron "King" James' likeness and more?

    The $90 million contract was the apparent result of a bidding war between Nike and Reebok. Adidas recognized how discretion was the better part of corporate survival and kept its powder dry for another battle.

    This was a battle that Nike could not afford to lose. The acknowledged leader in the $8 billion sneaker, apparel and sports lifestyle market, Nike stood to lose lots of luster if it did not dig deep into its pockets for the most recognized and most intriguing young athlete in sports today. It couldn't lose James because he epitomized the Nike modus operandi in setting trends and creating mystique.

    Ninety million dollars over seven years to any athlete endorser is monumental. With similar and more money invested, respectively, in Michael Jordan and Tiger Woods, Nike had some tangible sense that it will get a significant return on its investment and then some.

    But $90 million to an unproven, albeit engaging, teenager attempting to dominate a league of mostly adult and largely proven basketball quantities is a huge leap of faith. Nike apparently believed that the risk posed by Adidas making King James its savior or Reebok proclaiming LeBron as the correct "answer" was worth the money it paid.

    Since Jordan is history, the sneaker sales game is about who is hot, whose buzz is on adolescent lips, creating the need to be like Mike or, now, to be like someone else. Blocking access to James would prevent Nike's competitors from reaping rewards from his star — if, in fact, he is a star.

    The NBA and Nike might seem like strange bedfellows in the courtship and signing of LeBron James for their respective organizations. Prior to James' signing by Nike, the NBA may not have cared who won the sweepstakes, although the league respects tremendously the Nike marketing machine.

    Nike had its prayers somewhat answered when Cleveland, a reasonably large market near James' hometown of Akron, Ohio, received the first lottery pick in the upcoming draft.

    King James is wearing the Nike crown.

    Now that the deal between Nike and James is done, however, both the NBA and Nike, without exercising caution, have become potential obstacles to their respective success with James.

    Nike made a $90 million bet that James becomes part of the personality parade that celebrates the lifestyle images Nike purveys. For Nike to cash that bet, James has to be more than an electrifying player. He has to assume and polish a persona that beckons us all to come with him on this magical run he calls a career.

    The extraordinary care and pressure James will experience will yield either a diamond or something less. If it's something less, Nike can't be too disappointed, just maybe a bit thinner in the wallet. After all, in Jordan's void, James' current brand of less may be more than whatever else Nike has now in basketball.

    While there is plenty of conjecture regarding LeBron James' impact on Nike, what about James' impact on the NBA — and I'm not talking points per game?

    With a Nike deal in hand that equals most free-agent maximum contracts under the NBA salary cap, what will motivate James in his most dire of NBA experiences? Namely, those times when nothing he does seems right or when his game has, like that of most rookies at some point or another, hit a plateau.

    The NBA's risks in this deal have to do with team chemistry, player discipline, player development and how cooperative James will remain. How does any coach or GM command his attention when James' desire to get his numbers outweighs the need to win or even to set a good example? If his defense proves unbearably leaky, does James sit, thus limiting visibility of his personal line of "kicks" to a glimpse on the bench?

    Young players often test authority, just as most teens test their parents. Will James be any different?

    Should any of the preceding possibilities occur, we'll hear either anguished screams or desperate demands coming from James' team in Beaverton, Ore.

    And why not? Nike money is heavy. When it is thrown around in such massive quantities, even the pro teams feel it.

    In regard to LeBron James, Nike has to feel that its has more than paid the cost to be the boss.

    Perhaps the greatest risk for the Nike branding machine and to the prevailing fan perception of NBA superstardom is that James doesn't choose the path already chosen for him by his shoe company and his advisers.

    Maybe he becomes aware that he has young fans and even successors, like 3-year-old Mark Walker Jr., Reebok's million-dollar symbol for "basketball of the future" and its pathetically chosen answer to LeBron-mania.

    Social activist Ralph Nader recently wrote to James asking him to "use [your] cultural status to help make the world a better place" and to speak out against global evils. Suppose James heeds Nader's plea to take the millions, rise to icon status and then stand for humanity?

    What if James determines that he won't be like Mike and will never be Tiger Woods? Suppose he (and not some impersonal "personal" foundation making mere cash donations) truly understands that instead of representing a pair of shoes, a tiresome signature dunk or an artificial, corporate-induced lifestyle, he has the leverage to be a leader, a symbol for positive action and change?

    Maybe, in response, little Mark Walker Jr. and hundreds of thousands — even millions — of boys and girls just like him, standing in line for their turn, decide to be like LeBron and make the right choices rather than try to copy a move to the hoop.

    Like being in the right place at the right time for $90 million, dreams do come true every once in a while.

    Len Elmore is an analyst for ESPN and CEO of online educational services firm Test University.

    Print | Tags: Adidas, Basketball, NBA, Opinion, Reebok
  • This Week's Cartoon

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