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SBJ/June 12 - 18, 2006/This Weeks NewsPrint All
Nestlé’s Baby Ruth brand has signed a three-year deal making it the official candy bar of Major League Baseball.
Nestlé will support with media buys on MLB’s TV rights holders Fox and ESPN that should begin as soon as next month. The contract also includes a club spending requirement. An incremental bit of offshore rights allows for rights in Puerto Rico.
Nestlé will put MLB logos on millions of Baby Ruth wrappers and activate with sweepstakes and other promotions. It also plans sampling at MLB’s jewel events.
A Nestlé spokeswoman said the company had no plans to use players in its marketing, although former White Sox player Harold Baines was signing autographs on behalf of Nestlé last week at The National Confectioners Association All Candy Expo in Chicago, where the company announced the deal.
MLB sponsorship chief John Brody said data from Simmons Market Research revealed that two-thirds of MLB fans buy five or more candy bars a month, and the fact that Baby Ruth buyers were 22 percent more likely to be MLB fans made the selling job relatively easy. Also in MLB’s favor was the brand name, long connected to the most famous slugger of all time, though without an official licensee. “The connection was already there, and with all the data in our favor, it just made sense to take advantage of it,” Brody said.
MLB’s last confection deal was in the late 1990s with Hershey’s for its Twizzlers and Bubble Yum brands.
GMR and the Radiate Sports Group assisted Baby Ruth on the deal with MLB.
Sports properties/teams and their partners in the chocolate and confectionery category.
PROPERTY/TEAM COMPANY CATEGORY NBA Nestlé (Crunch) Chocolate and confections NFL Mars (Snickers) Chocolate and non-chocolate confectionery Wal-Mart FLW Tour
Mars (Snickers) Chocolate and non-chocolate confectionery Little League Mars (Snickers) Candy bar NASCAR Mars (M&M's) Chocolate Robert Yates Racing Mars (M&M's) Primary sponsor of Elliott Sadler's No. 38 car Andretti Green Racing Hershey's Associate sponsor
Source: SportsBusiness Journal research
Carolina Hurricanes fans stormed merchandise stands at Game 1 of the Stanley Cup Finals, despite the team’s trip to the finals only four years ago.
“The second time around [in the NHL championship] is always a little better because you experience more revenue from those people who weren’t involved the first time,” said Davin Olsen, vice president and general manager at the Hurricanes’ home arena, RBC Center. “It got to the point during Game 1 that we were selling stuff straight out of boxes.”
One employee stood outside a jersey store a half-hour after the arena doors opened, clutching $25 Stanley Cup shoulder patches in one hand and a fistful of cash in the other.
The initial onslaught to buy anything featuring the Hurricanes’ red “eye” logo slowed a bit when the game started, but there were still lines seven deep at the cash registers late in the second period.
The Hurricanes generated merchandise per caps surpassing $3 for the first 10 playoff games at RBC Center, a figure that could increase during the Stanley Cup Finals based on demand during Game 1. Olsen did not have food per caps to report but said those numbers also have increased over 2002, when the Hurricanes lost to Detroit in the finals.
“We encourage people to come tailgate, and when you do that, technically, you’re losing revenue, but our numbers have been significantly strong,” Olsen said. “Plus, our game nights have not been the best. We’ve played a lot of Monday-Wednesday games, not a lot of weekends.”
Electronic line calling for the first time will be used at this summer’s U.S. Open Series tennis tournaments, and in a twist, broadcaster ESPN will help pay for the roughly $800,000 cost.
The line-calling technology will be used at
U.S. Open Series tennis tournaments.
“I am not aware off the top of my head where ESPN is involved in any official initiatives like this in tennis,” said Mike Ryan, the network’s vice president of programming and acquisitions.
ESPN’s money reflects the relative success of branding these tournaments under the U.S. Open Series banner. Average TV ratings have roughly doubled in the two years since the USTA organized the effort, which provides consistent programming times, a themed look and marketing dollars.
ESPN already televises about 600 hours of tennis throughout the year, and had used the line-calling technology, Hawkeye, on its telecasts. But now the technology will be used in-venue.
In addition, nine of the 10 U.S. Open Series tournaments will lease video boards from IDS, so fans in the stands can see the animated replay of close line calls. The San Diego WTA stop is not leasing a board.
Tournament officials did not respond to calls seeking comment.
As at the already completed Nasdaq-100 Open, players will have two challenges per set, which they keep if they are correct and a line call was mistaken.
The three other broadcasters of the U.S. Open Series (NBC, CBS and The Tennis Channel) are not investing in the effort. The Indianapolis tournament on NBC will pay for what would have been ESPN’s share of the cost for that event.
Because ESPN covers some of the Pilot Pen, which CBS covers, too, those costs are assumed. And The Tennis Channel would have to pay ESPN a licensing fee for using the Hawkeye technology other than when calls are challenged.
HOK Sport, Ellerbe Becket and Rossetti have each teamed with research consultants to bid for the job of determining whether Las Vegas’ Thomas and Mack Center and Sam Boyd Stadium should be renovated or replaced.
Vegas is weighing the future of Sam Boyd
Stadium (above), Thomas and Mack Center.
The task force expects to select a consultant consortium by June 19, according to the RFP. The task force will spend about $200,000 on the study, said Pat Christenson, the group’s chairman, president of Las Vegas Events and former director for Thomas and Mack and Sam Boyd, which are UNLV sports facilities.
HOK teamed with Stafford Sports, Rossetti linked with Economic Research Associates and Ellerbe Becket formed multiple teams with consultants to compete for the opportunity to study the next generation of sports venues in the city that bills itself as the entertainment capital of the world.
Toyota Center in Houston and SBC Center in San Antonio, two NBA arenas designed by HOK and Ellerbe Becket, respectively, could serve as the model for a new sports facility in Las Vegas, Christenson said.
Both arenas have roughly the same number of suites that Christenson said is appropriate for a neutral-site arena in Las Vegas. Toyota Center, which was built for $212 million and opened in 2003, has 80 traditional skyboxes; SBC Center, priced at $190 million when it opened in 2002, has 40 standard units, 16 bunkers and four party suites.
“They’re both great venues and were not that costly to build in this day and age,” Christenson said.
The RFP stipulates that consultants should examine public vs. private financing for the project. Dallas-based Dreamscape Development wants to build a privately owned and operated arena and stadium near the Las Vegas Strip. It has discussed its $2.1 billion proposed project with local officials.
Miami Heat president of business operations Eric Woolworth is blunt when asked about the financial gains of playing in the NBA Finals.
Playoff revenue for Edmonton and Carolina
takes a hit after the league’s share.
How can a Tuesday night against Atlanta mean a more immediate financial gain than a coveted spot in the NBA Finals? The reason is a combination of forces: The Heat’s surging business the past two seasons means little inventory is available, but the NBA’s rigid postseason regulations also mean shared gates, league control of prime in-arena signage, and the lack of local advertising sales from television broadcasts, all of which affects a team’s bottom line.
A similar formula holds true in the NHL for the Edmonton Oilers and Carolina Hurricanes as they compete for the Stanley Cup. Both league finals being played this month demonstrate how the championship series are league-run and league-operated events, with the participating teams’ best chance for cashing in coming the following season with aggressive ticket, sponsorship and media sales.
Dividing up the inventory
Teams in both league finals keep their normal concession and parking revenue, and sponsorship sales offer an ability to increase revenue. Other inventory is at the mercy of the leagues, though, and it’s the share of the gate that cuts deepest into each team’s revenue stream during a championship series.
During the Stanley Cup Finals, the league takes two of the four available on-ice placements and a chunk of the lucrative dasherboard inventory for league branding use. NHL teams give up to 50 percent of a regular-season sellout gate to the league for each home game during the finals depending on market size, or roughly half of the $1 million that is a typical median market team sellout. In this year’s Finals, the teams will give between 30 percent and 40 percent of a regular-season sellout.
Each NHL Finals team also contributes about $250,000 that goes into the player-award pool and helps pay for officiating and other series expenses.
Meanwhile, the NBA takes away its teams’ highly coveted rotational courtside signage and hands it over to ABC as part of the league’s television deal, costing each team hundreds of thousands of dollars in revenue for the series. In addition, each NBA home team forks over 45 percent of their gate to the league. Teams set their own ticket prices for the Finals, with the gate roughly $2 million.
The NBA and NHL also will take over a few suites for league sponsors and other guests and reimburse the participating teams for the lost revenue.
And that’s not all: Teams in both leagues lose out on local ad dollars, a significant source of revenue, with the finals being a national broadcast sold by ABC for the NBA and by OLN and NBC for the NHL.
New sponsorship upside
An appearance in the NBA or NHL finals can be more than an exercise in socialism, however. Sponsorship sales can result in the biggest financial impact, with teams getting incremental revenue from each of their sponsors for each round of the playoffs.
Teams in the NBA Finals miss out on rotational
signage revenue, which is sold by ABC.
“Those deals have a set fee per round, and the longer you go, the more exposure they get and the more revenue the team gets,” said Scott O’Neil, NBA senior vice president of marketing and team operations.
Neither the Hurricanes nor the Oilers has a playoff presenting sponsor, but the Hurricanes have taken a different approach to their Stanley Cup sales strategy. The Oilers locked up playoff components as part of their regular-season deals, but the Hurricanes made playoff participation optional with an eye on driving additional revenue. As a result, the team is able to resell limited sponsorship inventory through the playoffs and around the Stanley Cup.
“Most of our existing sponsors had the option to renew for the playoffs and finals and did so, but some did not, and it gave us some high-profile inventory,” said Michael Hurley, director of corporate sales for the Hurricanes, who refused to disclose the price increase for playoff sponsorship deals. For example, Rex Healthcare opted out of their on-ice placement but kept their dasherboard deals. The team then sold the on-ice Rex spot to Ford.
During the Cup Finals, there are 36 dasherboards available to each team, with the NHL taking four for network use for OLN and up to 12 for NBC games.
The Hurricanes had 12 dasherboards to sell during the finals and sold them in pairs to six new sponsors, none that created any conflicts with existing partners. The six new partners are Misys Healthcare, Nortel, The Raleigh News & Observer, Quintiles Transnational, Time Warner, and SAS Institute.
The on-ice inventory was up for grabs as well, with the NHL taking two spots of the available four on-ice positions, displacing Ford, who signed on for the conference finals but not for the Stanley Cup Finals.
During the regular season, the cost of dasherboard and on-ice advertising runs about $200,000 per season. For the finals, the dasherboards run about $50,000 per pair for the series, according to one NHL team official, which means the Hurricanes could have earned roughly $300,000 in new sponsorship revenue in selling the six pairs.
The Hurricanes’ other local on-ice deals are with Advance Auto and Lenovo, both signed for the regular season.
“It’s been nice from a revenue perspective,” Hurley said, adding that he expects up to a 20 percent increase in overall playoff revenue sales.
For the Oilers, a return trip to the Cup Finals means another layer of revenue from what has already been a financially successful season in the league’s smallest market.
The Oilers had three open dasherboards available for the finals, selling one of the three to Sanjel, a local oil field service company. The team is forsaking additional short-term revenue and using the remaining boards as part of a re-branding campaign called “Oil Country” that the team unveiled at the start of the playoff season.
- Home team gives to the league 45 percent of the gate.
- No local broadcasts; ABC controls courtside rotational signage.
- The league reimburses the teams for any suites used.
NHL Stanley Cup Finals
- Home team gives to the league up to 50 percent of a regular-season sellout gate for each home game, depending on market size of teams. This year, the Hurricanes and Oilers will contribute between 30 percent and 40 percent.
- Each team pays up to $250,000 to the league for expenses and player awards. The league reimburses teams for any suites used.
- The league takes between four and 12 of the 40 dasherboards and two of the team’s on-ice placements.
- No local broadcasts, with OLN broadcasting Game 1 and Game 2 and NBC broadcasting the remaining games.
Sources: NBA, NHL
Four months after its successful production of nbcolympics.com, NBC is making another charge into the world of multimedia.
A revenue-sharing deal with the USGA has the network working to enhance the golf organization’s Web site for this week’s 106th U.S. Open. USOpen.com will offer original content along with repurposed pieces from NBC’s television broadcast from Winged Foot Country Club in Mamaroneck, N.Y. NBC Sports has brought on Charles Schwab and Lincoln Financial as charter sponsors for the site, with each paying an additional fee on top of its regular U.S. Open media buy.
Jon Miller, NBC Sports senior vice president of programming, said it’s likely this could be the start of a long-term online arrangement between NBC and the USGA, especially considering the network has rights to broadcast the U.S. Open through 2014. Gary Zenkel, president of NBC Olympics, said the network is also in talks with the PGA of America about managing its Web site for the 2006 Ryder Cup, an event NBC will broadcast along with the USA Network later this year.
“Golf is a perfect Internet sport,” Zenkel said. “The U.S. Open is not two hours — it’s probably eight or 10 hours, especially on Thursday and Friday. So for those who aren’t going to be able to watch all eight or 10 hours, it gives them a chance to stay up and see the shots and highlights they might not have been able to see when it was broadcast.”
NBC creative director Mark Levy will oversee the project along with the USGA’s online team. Zenkel said a high percentage of the site’s content will be original and have contributions from some of NBC’s on-air talent, including a spot or series of spots recounting Winged Foot’s U.S. Open history. Footage of players during practice rounds and other scene-setters in the days leading up to the first round are also planned.
Updated highlights will be provided at least five times a day beginning with Thursday’s opening round, with the length of each package running from one to four minutes. Other parts of the television broadcast will be repurposed for the Web, such as player interviews, shot packages of individual players and hole-by-hole flyovers. Marty Parkes, the USGA’s senior director of communications, said 90 million page views — an increase of more than 10 percent from last year’s totals — is a realistic expectation with the new enhancements.
ESPN, which will televise 14 hours of play during the first two rounds, will provide live video streaming from two holes on USOpen.com. Action from Winged Foot’s par-4 sixth and par-3 10th holes at Winged Foot will be shown from 9 a.m. to 5 p.m., two hours longer than what was on the site in past years.
The National Lacrosse League will get a televised game of the week on Saturday nights next season under a new contract between the indoor lacrosse circuit and OLN, marking the league’s most comprehensive TV package ever.
The indoor league will take a whack at regular
national prime-time telecasts.
The NLL’s only national U.S. broadcast this season was its championship game on ESPN2 on May 13, and Jennings said the OLN deal marks the first time any lacrosse league will have regular prime-time national broadcasts. The telecasts, which will start in January, will have a 10 p.m. ET time slot.
“We’ll make money and our fans will know when and where to see us,” Jennings said.
“NLL is a nice fit with the sports we have like hockey and PBR,” said Marc Fein, OLN’s senior vice president of programming and production.
The deal comes as the indoor NLL could be ready to challenge outdoor rival Major League Lacrosse in the marketplace.
One of the sport’s worst-kept secrets is the NLL’s desire to launch an outdoor rival to MLL, which would offer potential sponsors and TV networks one-stop shopping for year-round pro lacrosse. Reebok, the NLL’s largest sponsor, needs to make an additional commitment to an outdoor league before NLL ownership will bless the line extension. Officially, Reebok has not yet sanctioned the move, but sources at the company say they have OK’d it and are awaiting the go-ahead from new corporate parent Adidas.
Even with additional sponsorship money from Reebok, the pertinent question is whether two outdoor leagues can co-exist.
“There’s definitely not enough business to support two outdoor leagues,” said MLL founder Jake Steinfeld, “but I guess it’s flattering that they’re coming after us.”
If it does go outdoors, NLL could have many players on its side, since it will offer the ability to play pro lacrosse full time.
“The sport is so hot right now, there may be enough sponsorship dollars for two competing leagues,” said Bill Schoonmaker, vice president at 361 Marketing, which represents U.S. Lacrosse, “but players will decide which league survives, and every one of them dreams about being a full-time pro.”
Russ Cline, owner of the NLL Philadelphia franchise and chairman of the NLL executive committee, said, “There’s a lot of leveraging we could do with players and marketing assets, but our intent is not to get in a war with the other league — we do not want to create chaos, and if and when we do this, it will be more to gain players than to gain markets.”
The NLL board will meet this week, and the outdoor expansion is on the agenda — but it has been for some time.
“If they want to hang on to sponsors and build TV, there will have to be a merger,” said Bruce Lucker, a former owner and executive vice president in the defunct Major Indoor Lacrosse League.
Steinfeld said he has not been approached about a merger. Not yet anyway.
“If we do this [an outdoor league], then we’ll talk about a merger,” Jennings said. “I think we can work it out.”
“I don’t have a crystal ball,” said OLN’s Fein, “but no one wants a repeat of CART and IRL.”
Rolex has signed Roger Federer to what is thought to be the most lucrative watch deal ever for an athlete, a tennis source said.
The deal could pay Federer up to $15 million.
“Roger wanted to change,” said Claudia Staber, a spokeswoman for Maurice Lacroix, a Zurich, Switzerland-based watchmaker. Asked whether Federer had to pay to get out of the deal, she replied, “Of course. It was a good deal for us.” She declined to disclose the fee.
Such developments are quite rare for athletes, though they reflect Federer’s surge to the top of his sport and his switch to IMG as his agent. IMG wants to make Federer a global presence, and Rolex fits that bill better than Lacroix.
Nonetheless, an athlete buying his way out of an endorsement had some in the business surprised.
“I have never heard about it, especially coming to somebody you are signed with to join a competitor,” said Nova Lanktree, who matches companies with athlete endorsers at CSMG International. “It is a very atypical way of dealing with an existing contract.”
Federer's endorsementsCompanyCategoryNikeSneakers and apparelWilsonTennis racketsSwissair GroupAirlineRolexWatchesEmmiFood productsSource: Rogerfederer.com
The Switzerland-based Rolex did not return calls or e-mails seeking comment, though the company has already begun featuring Federer on its Web page along with a testimonial to his play. Federer’s official Web site, rogerfederer.com, now lists Rolex as his sponsor.
Rolex also sponsors Wimbledon, which Federer has won three straight years, so it would hardly be a stretch to expect advertising around that event, which begins in two weeks, featuring the Swiss player.
Federer previously endorsed Rolex, but he joined Maurice Lacroix in 2004 when he was managed by his family and girlfriend. Last year he signed with IMG and is now represented by Tony Godsick, who declined to comment for this story.
This is the second deal Godsick has struck for Federer, following a new contract with Wilson tennis rackets that pays Federer more than any other tennis player.
Rolex has a host of musical and athletic endorsers and sponsors numerous events, including Wimbledon, 24 hours of Le Mans, the U.S. Open Golf Championship and the Sydney Hobart Yacht Race.
The deal with Federer does not require him to wear the watch during play, only during trophy presentations.
A private athletic trainer has recanted a sworn statement he made last year claiming that NFL player agent Gary Wichard paid him to train a student athlete at Florida State University.
Joseph Masiello of Malibu, Calif., states in his new sworn statement that his original statement “contains a number of errors,” and that he “did not have adequate time to review the declaration before executing it.”
Masiello swore under penalty of perjury that both his original Aug. 10, 2005, declaration and his second, May 25, 2006, declaration were true and correct.
Masiello said in his first statement in August 2005 that Wichard paid him to train defensive tackle Travis Johnson, who now plays for the Houston Texans. Masiello did not return messages left on his cell or business phones.
Both of his declarations are part of a lawsuit filed against Wichard’s company, Pro Tect Management, by Joshua Luchs, an NFL player agent and former employee of Wichard who claims he is owed money.
In the original declaration, Masiello stated, “From April [to] May of 2004, I provided training services to Travis Johnson, a student athlete, at the specific request of Gary Wichard.” Johnson, a first-round 2005 NFL draft pick who is represented by Wichard, was a Florida State student athlete in the spring of 2004. Attached to his original declaration, Masiello included an invoice for $1,200 to Pro Tect Management. That invoice included the notation, “Travis.”
In his new declaration, Masiello states “that the invoice attached to my previous declaration was created in error, and that the invoice was never paid by Gary Wichard or Pro Tect Management.”
Neither Wichard nor Luchs returned phone calls for this story.
Eileen Darroll, Luchs’ attorney, said, “In August of 2005, Mr. Masiello signed a declaration under penalty of perjury. In January, that declaration was filed with the court and served on Mr. Wichard’s attorney. No one objected to it and no one took any action to challenge the declaration. This only became an issue after the SportsBusiness Journal printed that article.” SportsBusiness Journal on May 29 published an article based on the original declaration. Masiello’s second signed declaration is dated May 25. The Los Angeles Superior Court stamped its filing date as June 6.
Masiello’s new declaration does not elaborate on what errors are contained in his first statement, other than to say that the invoice was inaccurate and was not paid.
Howard Silber, attorney for Wichard, said he knows what the errors are, but that he would not reveal them. He wouldn’t comment further, as a trial date for the lawsuit is pending.
An attempt to reach Johnson through the Houston Texans was unsuccessful.
The NCAA does not allow student athletes to receive any benefit from an agent without jeopardizing their eligibility.
The NHL Players’ Association has notified IMG that it may have run afoul of the union’s conflict of interest policy, a move that could force IMG to choose between keeping its hockey agent practice and keeping Dave Checketts on its board of directors.
Dave Checketts’ group agreed to
buy the St. Louis Blues in March.
All of the four major team sport players associations have policies prohibiting conflicts of interest, but the NHLPA’s policy is especially strict. The NHLPA forbids agents to represent or provide services, either directly or indirectly, to any official of an NHL team or other professional hockey team. Agents also are barred from “engaging in any other activity which creates an actual or potential conflict of interest with the effective representation of players,” other than representing more than one player on an NHL team.
NHLPA and IMG spokespersons would not comment. Checketts, Brisson and IMG Hockey co-director and agent J.P. Barry did not return phone calls seeking comment.
A source said that IMG is “working through the issues” and expects to soon come to “an appropriate resolution.”
IMG Hockey, run by Brisson and Barry, represents more than 60 NHL players, including stars Sidney Crosby and Sergei Fedorov, and advises Johnson and Jonathan Toews, another top NHL draft prospect.
In addition to being a member of IMG’s board of directors, Checketts has been acting as interim chairman of IMG Media, formerly known as TWI, since former TWI CEO Bill Sinrich resigned in February. There has been growing speculation in industry circles that Checketts, who also owns the MLS Real Salt Lake team, will be named as the permanent replacement for Sinrich, but the source said that was not true.
Checketts’ group agreed to buy the Blues in March, and the NHL board of governors is scheduled to vote June 21 on whether to approve the deal. “If we are approved, we will close thereafter,” said Ken Munoz, a partner in Checketts’ company, Sports Capital Partners. Munoz wouldn’t answer questions about the NHLPA inquiry into the matter.
NHL Deputy Commissioner Bill Daly would not say whether the league has a conflict of interest policy that could affect whether Checketts is approved as an owner. But in an e-mail statement, he wrote, “The totality of circumstances (including potential, actual and perceived conflicts of interest) are taken into account, considered and dealt with as appropriate by the Board in the ownership approval process.”
The situation with IMG is not unique. In 2002, SFX Sports divested its hockey player agent practice in order to quell NHLPA concerns that it was violating the conflict of interest policy.
The NHLPA objected after SFX was sold to Clear Channel Communications. At that time, Tom Hicks, owner of the Dallas Stars, was the vice chairman of Clear Channel and a major shareholder at the company. The situation was resolved when SFX hockey agent Jay Grossman bought his practice back from SFX.
IMG has gone through a lot of changes since January, when Peter Johnson, former IMG CEO of sports and entertainment, resigned. That resignation triggered clauses in the employment contracts of former IMG Football agent Tom Condon and former IMG Baseball agent Casey Close, allowing them to leave the company under favorable terms. Those two agents sold their practices to Creative Artists Agency.
Those defections left IMG with hockey and coaches as the only practices left in its once dominant team sport athlete representation business. George Pyne, IMG’s new president of sports and entertainment, told SportsBusiness Journal in April that the company would hire an agent to replace Condon, and that the company is “committed to the hockey athlete representation business.”
Staff writer Daniel Kaplan contributed to this story.
Charlotte Bobcats chief operating officer Peter Smul and chief marketing officer Chris Weiller have left the franchise in another front-office shake-up.
“I can confirm that they [Smul and Weiller] are no longer with the organization,” said Bobcats spokesman Scott Leightman.
No replacements have been named.
Their departures follow the resignation of former team president Ed Tapscott, who left the franchise last month.
Both Weiller and Smul came from the NBA league offices and joined the Bobcats in 2003, a year before the team began play. Neither Weiller nor Smul were available for comment.