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The AFL this week expects to announce a new four-year collective-bargaining agreement with its players union as the league works to resurface in 2010.
At press time, the AFL was close to a deal with the AFL Players Association that will substantially cut the salary cap from $2.2 million per team, a figure that also includes player health benefits. The new deal will also cut team rosters from the current 24-player limit. In addition, the hard salary cap will not increase unless the league reaches specific revenue benchmarks, according to acting AFL Commissioner Ed Policy, who refused to disclose specific salary cap and player roster levels.
While Policy said he expected to sign the deal this week, the revised CBA must be ratified by AFL players and the league’s ownership group. “The goal is to have final approval by the end of March,” Policy said. “This is an enormous and critical step for the league’s restructuring.”
While a new union deal is a major step, an agreement does not guarantee that the league will play in 2010.
When the AFL announced in December that it would cancel its 2009 season, league officials said they hoped to finalize a new plan by March 1. Now, the new CBA likely won’t be formally approved until April 1 and Policy would not say when the restructuring plan needed to be completed in order for play to resume next year.
“There is no magic date,” he said. “We still have a lot of heavy lifting to do before we relaunch. We are in a matter of weeks, not months, in making that decision and until we have a comprehensive plan in place, it won’t be certain. But a new deal with the union is a significant cornerstone of the plan.”
Policy and Columbus Destroyers owner Jim Renacci are leading the AFL’s reorganization into a single-entity structure in which services such as sponsorship sales and marketing could be centralized to save money. Policy confirmed that the league has issued requests for proposals to outsource the league’s marketing, sponsorship and merchandising efforts. However, no final decision has been made about what league services would be outsourced.
“We have submitted some RFPs to centralize overall business functions of the teams, but no decisions have been made,” Policy said. “We may do it bit by bit or in one fell swoop, but none of the RFPs are binding.”
Citizen Sports Network has developed a centralized hub application for Facebook users that collates scores, news, fantasy gaming, trivia and a wide range of social-networking features in one spot.
The San Francisco-based fantasy gaming outfit last year expanded its business model from being strictly the operator of the stock market-inspired ProTrade and moving into sports-related social-networking applications. The latest, dashboard-like product — a free, downloadable application on Facebook — seeks to build on that move by aiming to organize Facebook into a more personalized and manageable experience.
The Citizen Sports Facebook application pulls information from more than 4,000 news sources and operates online fan communities for more than 900 sports teams.
“We want to make it so this is the central, primary place a fan wants and needs to go online,” said Mike Kerns, Citizen Sports founder and chief executive. “We see this as eliminating the need to go get news from one spot, fantasy from a second, social networking from a third, and so on. ”
AT&T purchased presenting sponsor rights to the new application, with the sales efforts led by Citizen Sports’ business partner SI Digital. SI’s sales efforts on behalf of Citizen Sports have additionally extended to a deal with Marriott’s Courtyard brand for an enhanced game-day product for college basketball dubbed a “virtual arena,” and deals with both Miller Lite and Finish Line for a bracket challenge game that is expected to garner an audience well into six figures in size.
Citizen Sports is seeking to develop similar hub applications for sports content on Facebook rival social networks MySpace and Bebo, as well as for the iPhone through its mobile outfit, Sportacular.
FC Barcelona is exploring an investment in MLS’s Philadelphia expansion franchise, which has been seeking new capital for months in an effort to further strengthen an ownership group fronted by iStar Financial CEO Jay Sugarman.
Joan LaPorta, president of FC Barcelona, visited Philadelphia on Feb. 28 and toured the site of the franchise’s future stadium being constructed in Chester, Pa. The tour took place days before FC Barcelona announced it wouldn’t pursue an expansion franchise in Miami.
MLS Commissioner Don Garber declined to comment on the visit but said, “FC Barcelona has expressed for some time an interest in Major League Soccer financially and strategically. They spent a great deal of time with us looking at Miami and are continuing to look at opportunities around the league.”
MLS Philadelphia CEO Nick Sakiewicz said he didn’t discuss investing in the franchise with LaPorta but acknowledged that the Philadelphia franchise is still looking for strategic partners.
“That’s always been part of our plan and it hasn’t changed,” Sakiewicz said.
FC Barcelona is just the latest in a string of potential investors to look at the team over the last few months. Comcast-Spectacor is also in discussions with the club to provide it with $7 million in debt as part of an agreement that would see the facility operator manage the stadium upon completion, according to sources who requested anonymity because of the sensitivity of the discussions.
A spokesman with Comcast-Spectacor said all discussions are private. Sakiewicz said that while the group has had discussions with Comcast-Spectacor, “No (money) has been discussed or formal agreement reached.”
Sugarman, the franchise’s majority owner-operator, has suffered substantial declines in the value of his stake in iStar Financial over the last year. Shares in the company were valued at $20.19 on the day Philadelphia was awarded an MLS franchise in February 2008, but the stock closed at $1.78 last Thursday. He has pulled more than $20 million out of the market since November 2006 and acquired 600,000 shares of iStar in the last six months, but the precipitous decline in stock price has cost him more than $38 million since February 2008.
Sakiewicz said that Sugarman’s net worth extends far beyond his shares in iStar, and the team’s effort to raise additional capital is part of an effort to find someone who brings sports, entertainment or soccer expertise to the table.
The $115 million stadium project in Philadelphia is fully funded and pilings began being driven into the ground last week, Sakiewicz said. Delaware County and the state of Pennsylvania contributed $77 million to the project, leaving $38 million in costs to Sugarman, Sakiewicz and fellow investors — Swarthmore Group Chairman James Nevels, Philadelphia attorney William Doran and Christopher and Robert Buccini, founding partners of the Buccini/Pollin Group.
In addition to construction costs, Sugarman and the group also owe an outstanding balance on the franchise’s expansion fee of $35 million, which is part of a standard contract due to be paid over several years. The club was able to secure a $25 million loan from Sovereign Bank last year.
Looking ahead, though, there’s concern in MLS ownership circles about operating expenses and losses once the franchise begins play. FC Barcelona or other minor investors could alleviate some of that concern. Details about the size of any future investment remain unknown.
When asked to respond to those concerns, Garber said, “The fact that the team has secured more than 6,000 season-ticket deposits and two sponsors a year before kicking off indicates the strength of the market and the organization Jay has put together in Philly. I have absolutely no concern about their ability to be successful.”
FC Barcelona has been seeking entry into MLS since last fall when it partnered with cell-phone magnate Marcelo Claure to bid on an expansion team in Miami. The club and MLS pulled the plug on the bid in early March because of “adverse market conditions” in Miami. But investing in Philadelphia would offer the Spanish club an easier, more affordable entry.
The Philadelphia franchise already has been approved by the board, secured a stadium and established a small staff headed by an experienced MLS veteran in Sakiewicz, who said that the continued interest from investors spoke to the strength of the club’s ownership group and deal with county and state.
Staff writer John Ourand contributed to this report.
When Matt Kenseth put his Ford in victory lane for NASCAR’s first two Sprint Cup races of the season, he had a few more fans pulling for him than usual.
About 120,000 of them, in fact. That’s how many consumers have registered so far in the first year of Ford’s “We race. You win” sweepstakes, which offers a trip to Homestead-Miami Speedway for the season finale and a 2010 Ford Fusion.
Consumers register at www.weraceyouwin.com and Ford has been driving traffic during Fox’s Sprint Cup broadcasts with in-race mentions from the broadcasters. The automaker also has integrated the sweepstakes into its regional and national auto shows.
The promotion, the cornerstone of Ford’s NASCAR marketing this year, is spreading to other parts of the company that haven’t leaned on NASCAR quite as much in the past.
“We’re trying to leverage everything we can,” said Greg Scott, brand manager for the Ford Fusion. “It goes directly to the austerity of the situation we’re in. We don’t have a lot of money, so we have to do things creatively.”
The promotion launched in January and runs through the end of the NASCAR season in November. It started as a means to promote its racing program, which runs the Fusion in NASCAR’s top two series.
Each time a Ford driver wins, the sweepstakes awards a trip to Miami. Of those winners in Miami, one will drive away in a Fusion.
But as Scott and his marketing team began to explore angles, they found other potential uses for the program. Pretty soon, “We race. You win” promotional material began popping up at national and regional auto shows.
At the monstrous Chicago Auto Show in February, a huge banner hung the length of the wall behind the Fusion to promote the sweepstakes. The Chicago show is considered the nation’s largest, in terms of floor space and attendance.
“We’re walking down the hall, talking to a lot more people in the organization as we look for ways to use all of our assets,” Scott said. “The message from upper management is to find ways to expand what we’re doing beyond the race.”
The results for the sweepstakes have doubled what Scott expected with 120,000 registrants. More than half — 54 percent — have requested more information about the 2010 Fusion and an additional 16 percent have inquired about the Fusion Hybrid.
PCG Campbell is working the public relations for Ford.
The New York Mets and Nathan’s Famous have signed a 10-year deal to extend the hot dog chain’s presence to the team’s new Citi Field.
Westbury, N.Y.-based Nathan’s is a prior Mets sponsor and was an official hot dog vendor at Shea Stadium through concessionaire Aramark. Nathan’s now gains hot dog exclusivity at Citi Field by supplanting rival Hebrew National, which had supplied kosher dogs at Shea.
Nathan’s, in addition to selling a full range of hot dog products, will retain the official french fry designation for the club and new ballpark. It also gains a battery of promotional rights, including use of club marks, rotational and scoreboard signage, in-store offerings, product installation on every level of Citi Field, and a special Nathan’s Day at the ballpark.
That Nathan’s Day at Citi Field will act as one of 20 preliminary hot dog eating contests that serve as a run-up to the brand’s annual Fourth of July event at Coney Island.
“This is a quintessentially New York product and a natural to be at the new ballpark,” said Dave Howard, Mets executive vice president of business operations. Howard’s first job as a teenager was at a Nathan’s stand on Long Island. “We’re thrilled to be able to extend and expand our deal with them.”
Financial terms were not disclosed. Nathan’s sold more than 1 million hot dogs in the final season at Shea Stadium last year. The company expects to exceed that number at Citi Field, which opens next month.
“Having the [hot dog] exclusive was certainly helpful but not necessarily do-or-die,” said Wayne Norbitz, Nathan’s president. “This company was certainly born in Brooklyn, but in a lot of ways grew up in Long Island and Queens, and this a very important place for us to be.”
Ginn Development Co. filed a motion to compel mediation in a dispute with the PGA Tour, which sued Ginn in January after the Georgia-based real estate developer announced it would no longer serve as tournament organizer and title sponsor of events on the PGA and Champions tours.
The tour sued Ginn on Jan. 30 for damages of more than $15,000, two days after the company issued a press release announcing the “end of its sponsorships of professional golf,” which included an event on both the PGA and Champions tours from 2007 to 2011.
The PGA Tour’s contracts for title sponsorships call for “dispute resolution procedures.” If the two sides can’t resolve a dispute in the normal course of business, they must enter formal negotiations or nonbinding mediation and, ultimately, seek a legal resolution.
The dispute lies in whether those procedures were followed and exhausted.
According to documents, Ginn met with tour officials last summer and informed them in an August letter that “economic and other factors have caused Ginn to re-evaluate its ability to sponsor” any remaining tournaments after the Champions Tour event in the spring of 2009.
The tour claims that by announcing its withdrawal, Ginn waived the right to dispute resolution. Ginn is claiming that the tour prematurely filed a lawsuit without following the procedures laid out in the contract.
A hearing is scheduled for May 11 in Flagler County, Fla., where Ginn has offices.
Ginn also had a contract to title sponsor an LPGA tournament in Orlando, but the LPGA has not decided on a course of action. “We’re keeping our options open,” said LPGA spokesman David Higdon.
MLS picked up a third key renewal ahead of the start of its season, signing a four-year deal with Volkswagen that will see the German automotive company return as the official vehicle of the league.
The deal with Volkswagen gives MLS an automotive partner at a time when many companies in that industry are making severe cutbacks in sports spending. The four-year deal expands considerably on the one-year partnership the German company signed with MLS last year as part of its agreement to be the jersey sponsor of the D.C. United.
Terms of the deal were not available. Kathy Carter, executive vice president off Soccer United Marketing, characterized it as an extension of last year’s deal with a “slight increase” and a commitment to media buys with MLS broadcasters ESPN, Univision and Fox Soccer Channel. Volkswagen receives rights to MLS marks, signage during national broadcasts, and grassroots promotion at SUM's four-on-four Futbolito tournament.
“For us, this sponsorship goes deep in terms of our positioning and marketing efforts to reach family and Hispanic audiences,” said Ben Freidson, Volkswagen’s manager of sports marketing. “We have a lot of vehicles that match up with those audiences, and we saw the need for a sponsorship with MLS because it’s a really good strategic fit for us.”
Volkswagen waited to make a decision about renewing with MLS until it had completely analyzed its marketing and promotion around the 2008 MLS Cup. The company put out a series of six webisodes ahead of the event, called the “VW Road to the Cup,” that featured a soccer mom driving MLS players and the MLS Cup trophy across country in a Routan minivan. The series generated hundreds of thousands of dollars of general market and Hispanic public relations exposure, according to company estimates.
“We had really good PR coverage both in print and television, and definitely saw it resonate in the L.A., Houston and Chicago market,” Freidson said. “We were able to get a lot of ancillary media coverage out of it with ESPN, Univision and Fox Soccer.”
The NBA is rolling out a new postseason advertising campaign that will feature between 25 and 30 spots showcasing playoff highlights from current and past players with the tag line “Where Will Amazing Happen This Year?”
The campaign, which was expected to debut during Sunday’s NBA coverage on ABC, features black-and-white footage of players’ individual memorable playoff moments, including spots for LeBron James, Kobe Bryant and Dwyane Wade. Also included are ads showing past playoff highlights featuring Larry Bird, Julius Erving and Magic Johnson, with a fourth spot also in the works.
The NBA playoffs begin April 18.
This year’s postseason campaign follows last year’s successful “There Can Only Be One” effort, which featured a split screen showing half of two players’ faces, their voices synchronized to create a dramatic visual of a single player talking about the playoffs. The campaign was such a cultural hit that it resulted in knockoff spots on “Saturday Night Live” and on the cover of Time magazine with Barack Obama and Hillary Clinton.
But this year, the NBA decided on a new effort that folds the postseason campaign under its “Where Amazing Happens” regular-season campaign.
“The ‘Where Amazing Happens’ campaign has been very successful for us all season, and now we are rolling it into the playoffs,” said Danny Meiseles, senior vice president and executive producer for the NBA. “We saw how successful last year’s campaign was, but we felt that from a brand perspective, it was more of how we can talk about our players and how we can keep the moments of the ‘Where Amazing Happens’ campaign.”
Notable this year is that for the first time, all three of the NBA’s network partners — ABC, Turner and ESPN — will use the same campaign. The networks typically develop their own campaigns. Turner, for example, used actor Terence Howard to promote its playoff coverage last year.
Turner this year will still use its “Forty Days. Forty Nights” playoff messaging theme but will use the NBA’s spots to broaden the campaign’s reach.
“You can’t argue with the reach when Turner, ESPN, and the NBA are all committed to using the campaign,” said Jennifer Storms, senior vice president of marketing and programming for Turner.
The 30-second spots touting the postseason were created by San Francisco-based Goodby, Silverstein & Partners, the NBA’s agency of record, which also produced last year’s playoff campaign.
The league will also have a print buy, though league executives have not completed their media plan.
The NFL has decided to keep Westwood One as its radio partner, agreeing to a two-year deal worth more than $30 million in guaranteed money, according to several sources. Westwood One, which has held the NFL’s rights for 29 of the last 31 years, also agreed to give the NFL more than $10 million a year in promotional inventory.
In sticking with Westwood One, the NFL rejected bids from ESPN Radio and Sporting News Radio. (Sporting News Radio is owned by American City Business Journals, parent company to SportsBusiness Journal.)
Westwood One was the only bidder to offer guaranteed money, sources said.
Last week, Westwood One shored up its financial position, restructuring its $241 million outstanding debt and ceding control to The Gores Group, which now holds a 72.5 percent stake in the radio company. Westwood One officials met with the NFL shortly thereafter to negotiate their deal. The league had dragged its feet in choosing a radio partner, scared off by Westwood One’s tenuous financial situation, which led to its delisting from the New York Stock Exchange in November.
The delay could hurt ad sales next year in what is already a tough sales market. The NFL’s upfront selling period for next season’s radio broadcasts should have started in October and traditionally runs through March.
The NHL and Madison Square Garden are close to completing a settlement in their contentious, two-year-old legal battle over new media rights, a letter filed with U.S. District Court shows.
Terms of the settlement aren’t disclosed in the letter, but it does say that the settlement is expected to be completed by the end of March, at which time documentation of it will be submitted to the court and the lawsuit will be dismissed.
Sources familiar with the pending settlement say that it will see MSG cover all of the league’s legal fees, which are more than $15 million. Additionally, MSG will receive a seat on the NHL’s digital committee, NHL governors will be given the right to motion for anonymous votes on issues put before the board, and ownership groups will be able to propose a 30-day waiting period before the board votes on an issue brought forward by the NHL.
In separate statements, both the NHL and MSG said that the settlement requires board approval and declined to provide further comment.
The pending settlement will bring to an end a court case that began in September 2007 when MSG filed a lawsuit against the league, accusing the NHL of operating as an illegal cartel and violating antitrust provisions. MSG moved for a preliminary injunction to prevent the league from fining it $100,000 for its refusal to migrate nyrangers.com to a common league platform.
Despite a series of rulings against MSG in the lawsuit, the New York Rangers’ owners continued to battle the NHL in court. By last summer, the matter had become so controversial that the NHL proposed disciplinary proceedings against MSG that could have resulted in the suspension or termination of its ownership of the Rangers.
Throughout the lawsuit, relations between MSG and the NHL were strained. MSG Chairman James Dolan even banned NHL Commissioner Gary Bettman and Deputy Commissioner Bill Daly from suite 200, a private club inside the Garden where politicians, celebrities and New York power brokers often gather before, during and after games.
Representatives from MSG first approached the NHL’s executive committee about a settlement in December during a board of governors gathering at The Breakers in Palm Beach, Fla. Initially, MSG wanted the league to pay its legal fees, but executive committee members said that was not negotiable, sources familiar with the discussion said.
The two parties worked around that issue, and by the all-star break in Montreal in late January, it became clear to several board of governors how much headway had been made when MSG executives Scott O’Neil and Glen Sather remained in a board meeting while NHL executives offered an update on the lawsuit. The two parties subsequently continued to work toward a settlement during the month of February.
At the time of its filing and through much of its preliminary phases, the lawsuit had been eyed as a likely bellwether case in the future of league-owned and controlled digital media. More broadly, the dispute also appeared to act as an important litmus test on the centralization of many business functions in American sports leagues that the NHL argued leads to improved revenue, but which Dolan believes hurt his ability to market locally.
In the end, both overarching questions will not gain a clear, definitive answer in the form of a legal verdict. But with MSG ceasing its fight, the status quo appears to gain a sizable boost.
“If this is true, it looks like a victory for the league,” said a New York-based attorney who declined to be identified because his firm represents several pro teams. “The league has sent the message that if you’re going to make a challenge like this, it’s going to be costly.”
NHL players have never marched in the opening ceremonies of an Olympic Games, but the NHL Players’ Association is pushing the NHL to change that next year in Vancouver.
Inspired by the images of NBA players Yao Ming, Kobe Bryant and Dirk Nowitzki marching into the Bird’s Nest at the Beijing Olympics, the NHLPA has proposed to the league that at least some of the biggest stars in the NHL walk with their home countries in Vancouver, believing the players’ participation will increase the awareness of the NHL brand worldwide.
“Yao Ming walking into the stadium in Beijing is equivalent to Sidney Crosby walking into the GM Place in Vancouver for the Winter Olympics,” said NHLPA Executive Director Paul Kelly.
NHL players have not historically participated in the opening ceremonies because NHL games have been played the first weekend of the Olympics. But Kelly visited the league offices three weeks ago and proposed that the 2009-10 schedule be drawn up so that 20 or so of the NHL’s most recognizable players can participate in the opening ceremonies in Vancouver on Friday, Feb. 12, 2010. He presented the same proposal to general managers last week during their meetings in Naples, Fla.
“Ideally, we would like to arrange the schedule and I would love for them to break the schedule Thursday night the 11th and all fly to Vancouver, so they could all participate,” Kelly said of the 175 NHL players expected to compete in the 2010 Olympics. “But that is a nonstarter with the league.”
Kelly added that the NHL would lose significant revenue if it were to give up that weekend’s worth of games.
NHL Deputy Commissioner Bill Daly said the league is not opposed to allowing players to participate in the opening ceremonies, but said it would be subject to scheduling and each club’s “individual judgment as to whether they can accommodate a player’s absence.”
“We are already committing two weeks of our season to the Olympics,” Daly said. “We don’t intend to commit any more.”
At the very least, Kelly wants a change in the schedule so that NHL teams with the biggest stars, such as the Pittsburgh Penguins with Sidney Crosby and Washington Capitals with Alexander Ovechkin, could play games in the northwest part of the U.S. late in the week before the opening ceremonies. That would enable those players to fly into Vancouver on Thursday night and walk in the opening ceremonies.
Having NHL players walk in the opening ceremonies would offer considerable broadcast exposure to the league and its stars. NBC’s coverage of the 2006 Olympic Winter Games opening ceremony in Turin, Italy, attracted 50 million total viewers, while the 2002 Olympics in Salt Lake City drew more than 72 million viewers. By comparison, the biggest audience for an NHL game during the 2008 Stanley Cup Finals on NBC was 6.7 million people.
“We are trying to get more exposure,” Kelly said. “We are trying to expand the reach of our game. There is no better place than the Winter Olympics, especially when these Olympics are being held in Canada.”
If membership really does have its privileges, Richard Petty Driving Experience customers will find a reason to return for another loop around the track in an authentic NASCAR car.
RPDE, which offers the NASCAR driving experience to the common fan, will launch a membership program this week called Experience Rewards, which will give returning customers the chance to drive again for lower prices.
The program is the result of an exhaustive survey of 20,000 RPDE customers by PricewaterhouseCoopers. It revealed high satisfaction rates and a willingness to return soon, but most of them don’t.
While a third said that they’d come back for another drive in the next 12 months, only 11 percent did return and it took them an average of 32 months.
“The RPDE business has grown 10 times over the past 10 years with very nominal marketing and in spite of the fact that we’re churning 90 percent of our customers each year,” said Mike Bartelli, chief marketing officer of Petty Holdings, RPDE’s parent company.
For years, RPDE and Petty Enterprises were flagship companies in the Richard Petty empire. Petty Enterprises housed the NASCAR race team, while RPDE was a separate business that gave fans the chance to drive a NASCAR car around a race track, just like the pros do.
Both companies were bought last year by Boston Ventures, which eventually sold off the race team but retains controlling interest of the profitable RPDE. The Experience last year entertained 40,000 customers who drove a race car (packages start at $399) and an additional 55,000 who went for a ride-along (prices start at $99).
Bartelli, who built Millsport’s racing division and joined Petty Holdings last year as part of the Boston Ventures regime, commissioned a deeper study of RPDE business in 2008. In trying to counter the customer turnover, he looked at the entry point of $399 for driving and wondered how prohibitive it might be.
The membership program will grant previous customers automatic entry into “Experience Rewards” and give them the chance to drive for $199 instead of $399. Of the 20-plus tracks nationally where RPDE is offered, Indianapolis and Daytona are the only exclusions from this program. Tracks at Charlotte, Las Vegas and Orlando (Disney) are considered RPDE’s main bases.
A member is allowed to bring up to three guests, each of whom is eligible for a $50 discount from a drive or ride-along package. In turn, that guest becomes a member of the program.
“We’re trying to take price off the table as a barrier to customers who love the product,” Bartelli said. “We need to make ourselves more accessible to everyone.”
Bartelli said that while business has been solid, most RPDE sites reach only 70 percent to 80 percent of their capacity. RPDE’s two primary costs are personnel and track rental, and neither of those expenses change much if the bookings increase.
“We can get considerably busier,” he said. “Like everyone else, the economy is not our friend and we’ve got to get more aggressive and innovative.”
The Portland City Council passed a $114 million proposal last week to lure Major League Soccer to town.
Commissioners agreed to remove $15 million in urban renewal funding from the deal, which was originally valued at $129 million. It’s unclear how the city will fund the $15 million shortfall should MLS give Portland one of two expansion teams that it will award this week. Portland is considered a front-runner for one of the teams.
More than 40 commissioners testified on the deal, including Portland Timbers owner Merritt Paulson. Paulson has agreed to pay $40 million to buy an MLS franchise if Portland gets one.
He reached a deal with city officials that would include more than $60 million in loans to renovate PGE Park to make it a soccer specific stadium. The money would also be used to build a new home for the Portland Beavers minor league baseball team, which Paulson also owns.
Paulson has agreed to spend $12.5 million of his family’s money on stadium construction. He’s also agreed to protect the city from cost overruns.
Paulson’s father is former U.S. Treasury Secretary Henry Paulson.
— Portland Business Journal
The University of Kentucky has given developers more time to submit bids on a package of privately financed athletic facilities projects that would include a new basketball arena.
The school issued a request for proposals in late January to gauge interest among developer-led teams in funding a downtown Lexington basketball arena that would replace 33-year-old Rupp Arena. The document also calls for building a new baseball stadium and renovating Commonwealth Stadium, where the Wildcats play football.
The university has asked bidders to include a model for private financing. Officials from HOK Sport, Hunt Construction and Spanish developer Acciona, who would be partners in a bid if they decide to submit a proposal, requested an extension to further study how to generate a return on their investment, said John LaRue, Acciona’s technical director.
The deadline has been pushed back from March 27 to May 5.
The private finance model was originally proposed by sports marketer IMG College and its business partner, International Stadia Group. Last summer they approached the school and Lexington Center, which owns and operates Rupp Arena, to propose a feasibility study on a privately financed basketball arena.
But after the three parties reached an agreement, the university found that state law required it to issue a public proposal. The university then expanded the scope to include the two other venues. The RFP says that IMG College and ISG are a likely bidder for the projects.
IMG College’s idea is to generate enough incremental revenue from selling naming rights, increased signage, and suites and club seats in the new and expanded facilities to pay building costs, said Tom Stultz, IMG College’s senior vice president and managing director.
Rupp Arena has no suites or clubs, and there is demand for new high-end inventory and more football premium seating, said Rob Mullens, Kentucky’s deputy director of athletics. Stultz said, “We wouldn’t have taken the offer to them in the first place if we didn’t think it would work.”
But other developers question whether the model can support the debt and generate a profit for investors. One published report estimated project costs of $300 million to $400 million, but there has been no budget established for the project, Mullens said,
The school and its landlord remain open to all ideas for how to privately finance the project, said Mullens and Bill Owen, Lexington Center’s president and CEO.
“Our goal is to allow interested parties to be creative and offer solutions,” Mullens said. “We will then evaluate the proposals.”
LaRue is spending the additional time analyzing how Acciona could best use its expertise in developing major infrastructure projects to finance the deal. “At this stage, we know just enough that we can’t figure it out,” said LaRue, who works in Irving, Texas.
Acciona, a newcomer to sports development, is based in Madrid and is one of the world’s largest contractors. One of its divisions builds college structures on an international level, including student housing. Other potential bidders include Hammes Co., a developer with experience helping NFL teams plan stadiums, and HNTB, officials at those firms said.
Ellerbe Becket had a financing partner in place but could not find a construction firm to commit and disbanded the group, said design principal Jon Niemuth. He thinks it makes greater sense for Kentucky to focus solely on the arena piece, or maybe include new premium amenities for Commonwealth Stadium.
“Baseball is a loss-leader; that college sport is not a revenue producer,” Niemuth said. “They’re basically asking you to donate a new stadium for free.”
Maria Sharapova will serve as executive producer of a drama series for MTV that is loosely based on her life on the pro tennis tour, a well-placed source said.
MTV has agreed to the concept, but Sharapova, who is working on the project with her agent and screenwriters, must first produce a pilot that MTV agrees to, the source said. Sharapova in 2007 had an agreement with the CW network, but that deal fell apart with last year’s writers strike.
MTV did not reply for comment. Sharapova’s agent, Max Eisenbud of IMG, declined to comment.
The proposed series would be mainly about the off-court life of a WTA Tour star, based on Sharapova, with very little tennis shown. Each episode would be one hour.
The women’s pro tour long has been seen as ripe for development of a drama or gossip-type show. The far-flung global circuit is littered with sponsor parties and tales of player romance with male counterparts on the ATP World Tour.
The Williams sisters in 2005 collaborated on a short-lived reality series that aired on ABC Family, and the 2004 movie “Wimbledon” explored off-court romance between two players during the tournament.
The Sharapova series would start with her character at age 16, which is a year before Sharapova won Wimbledon, so the series would not examine her early years. Sharapova arrived in Florida from Russia at age 7, was taken in at age 9 by the Bollettieri Tennis Academy and, with the Wimbledon win, became a star.
Sports and media investment banker Joe Ravitch is leaving Goldman Sachs in the next few months.
Ravitch most recently handled the pending sale of the San Diego Padres. He has had a hand in many of the biggest sports transactions of the last several years, including the Pittsburgh Steelers’ equity sale, the funding of the YES Network and the creation of NBA China.
In an e-mail, Ravitch said he has no formal plans, an indication that as Wall Street contracts, sports and media specialists may find it difficult to hold on.
Goldman, though, will still have a strong sports presence. The bank already has an executive who handles stadium financing, Greg Carey, and Ravitch is not the only one with a tight relationship with the New York Yankees, one of Goldman’s top sports clients.
“Joe is a great friend of ours. He was one of the guys, with Jerry Cardinale, who was there in the beginning when we created the YES Network,” said Yankees President Randy Levine.
Cardinale, like Ravitch, is a Goldman managing director. Cardinale also advised on the creation of the Yankees’ concession partnership with the Dallas Cowboys, Legends Hospitality.
— Daniel Kaplan
Ten-year anniversaries typically call for a celebration, but students, faculty and staff at Arizona State University’s MBA Sports Business program have little to cheer about.
Talk of the program’s demise has circulated for months. Ray Artigue, the program’s executive director, was informed shortly after the new year that his program was on the chopping block. In mid-February, ASU made the information public, effectively closing down one of the most marketable programs at the W.P. Carey School of Business.
On July 1, Artigue no longer will have a job. The last class will graduate in May 2010, when the two-year graduate degree officially is dismantled.
“These things can never be planned for,” said Artigue, who’s run the department the past three years. “It’s a result of these unprecedented times that we’re living in.”
He said the program brought a fair amount of attention to the W.P. Carey School, but the niche offering only enrolled 24 students, making it a hard sell in today’s cost-cutting climate.
The MBA sports business specialization involves a small number of students, but requires faculty and staff resources similar to larger programs for teaching, advising and career placement, said W.P. Carey Dean Robert Mittelstaedt. “We had to make an economically sound decision when faced with major state budget cuts, and this decision affected fewer students,” he said.
The specialization, which has produced more than 100 alumni around the world, was among 48 programs cut by the university. The W.P. Carey School enrolls more than 750 MBA students in its evening, weekend, online and full-time day programs.
Prior to joining ASU, Artigue led marketing efforts for the Phoenix Suns. He said it’s too early to talk about his next career move, but he didn’t rule out a return to the private sector or being his own boss.
“The idea of starting another business and growing it excites me,” he said.
Chris Casacchia writes for the Phoenix Business Journal, an affiliated publication.
The WNBA has added Starwood Hotels and Resorts to its roster of marketing partners as the league prepares to enter its 13th season.
Financial terms of the one-year deal were not disclosed, but Starwood will activate with national promotions of its hotels and its preferred guest program. In addition, all WNBA teams and league personnel will stay at Starwood properties for games and league travel.
No media buy is included in the deal. It is the first time that the WNBA has had a leaguewide hotel sponsorship deal.
“There will be additional joint marketing programs that we are … developing along with some community activation,” said WNBA President Donna Orender.
The WNBA opens it season on June 6, three weeks later than last season to better accommodate players competing in European leagues as well as giving the league more time to sell during the grim economy.
In the first year of a new eight-year TV deal with ESPN, which includes a rights fee, the WNBA also has been cutting costs to lessen the impact of the recession. This year it cut team rosters to 11 from 13 players.
In December, the Houston Comets, one of the league’s original eight franchises, was folded by the league after it took over operation of the franchise. The Comets, which won the league’s first four championships under Rockets owner Leslie Alexander, were sold in January 2007 to local businessman Hilton Koch for a reported $10 million.
Orender would not say what the league’s overall season-ticket renewal rate is and would not disclose the status of any marketing partners that are up for renewal.
“We have tales of success in some markets and we are lagging in others, but it is still early,” Orender said. “In sponsorships, we are having lots of conversations, but you have to work harder. It is quieter without a doubt.”
The UFC will host the first fan expo in its 15-year history this summer in Las Vegas. The two-day event starts July 10 and will lead into UFC’s 100th fight card, scheduled for the night of July 11 at the Mandalay Bay Hotel.
The UFC and Reed Exhibitions, which is organizing the event, expect more than 100 companies to display on the floor of Mandalay Bay’s 200,000-square-foot convention center. The exhibitors will primarily represent MMA endemics such as fight gear and apparel, fitness equipment, health supplements and other lifestyle products.
Admission costs $50 for a two-day pass, or $30 for Friday and $35 for Saturday.
Bud Light and Harley-Davidson, two UFC sponsors, are expected to be involved, but their plans are not complete. THQ, maker of the new UFC video game, will likely have an interactive gaming area.
Organizers also plan to put the UFC’s octagon-shaped ring in the center of the convention floor to hold demonstrations, and to build a stage to conduct interviews with fighters and UFC executives such as President Dana White.
Because of the UFC’s pop culture cachet, Greg Topalian, senior vice president for Reed Exhibitions, expects the atmosphere to be more like a comics convention than a traditional sports fan fest. Depending upon the results, he said, the UFC festival could become an annual event.
The fight card for UFC 100 has not been announced but is expected to feature the anticipated rematch of heavyweight champion Brock Lesnar and Frank Mir. Plans are being finalized on other ancillary events, such as concerts with big-name musicians.
A proposal to alter NFL regulations to allow liquor and lottery sponsorships is expected to be on the agenda for the NFL owners meeting that starts Sunday in Dana Point, Calif.
The plan to permit liquor and lottery marketing was approved by the NFL business ventures committee in an early March meeting. It has been in committee before, said an NFL team source. That the proposal made it out of committee and will be in front of all of ownership should indicate that it has some momentum.
A recession that has made new sponsorship revenue scarce for the NFL and its clubs and the relaxation of similar rules by other large U.S. sports properties are among the factors leading the NFL to consider legitimizing marketing around the gambling and hard liquor categories.
The NBA was the most recent league to allow its clubs to mix team marks with spirits brands (see SportsBusiness Journal, March 9-15, 2009) at retail, in ads and on camera-visible signage. If the NFL allows co-branded spirits marketing, it is expected to take the same course as other leagues and not allow direct designations, like the “official Scotch whisky of the Green Bay Packers,” along with requiring a heavy social responsibility message.
“There’s definitely opportunity,” said Kevin Rochlitz, vice president of national sales and partnerships for the Baltimore Ravens, who already have Jack Daniel’s, Stolichnaya and Bacardi-branded taverns at their home M&T Bank Stadium. “Using [team] marks at retail to drive sales would be a whole different piece of real estate for us, if we can get it.”
Not lost on observers is the fact that Mark Waller, the NFL senior vice president of sales and marketing, was a Diageo marketer for 17 years. Waller was executive vice president of marketing when the spirits company broke NASCAR’s ban on liquor advertising with Crown Royal and other spirits brands in 2005.
“The NFL is the beast in American sports, so of course there’s a huge opportunity for spirits to attach themselves to their popularity,” said Zak Brown, founder and CEO of Just Marketing International, which helped bring Diageo into NASCAR.
If spirits are an opportunity, NFL-branded lotteries would be an outright windfall for the league at a time when it and other sports properties are struggling to generate new revenue.
The other four big U.S. sports now all permit lotteries in which tickets and marketing employ league and team marks. The NBA has allowed them since 2001, the NHL since 2003 and NASCAR since 2004. MLB has allowed licensed lotteries since 2006 and most of the league’s teams will have their logos on lottery tickets during the coming season.
One source said MLB and its teams have realized more than $12 million in the first three years of their deal with MDI/Scientific Games, the Atlanta-based company that had done lotteries using NASCAR driver images on tickets since 1997, and signed deals with the NBA, NHL and NASCAR, along with some golfers. Two years ago, a Scientific Games executive said an NFL license could double his company’s sales. Since lotteries are among the biggest advertising spenders inside their state lines, adding an NFL club lottery or even a nationwide Super Bowl lottery administered by the league could generate millions in incremental revenue for the NFL and its rights holders.
Politically, the league is stepping into a minefield, said one marketer involved in the process. On the liquor side, the NFL and its clubs risk offending breweries, which are traditionally among their biggest sponsors. Beer marketers have long argued that opening sports to liquor marketers could lead to an outright ban of beer and liquor associations with sports leagues by Congress. And would the same league that won’t allow Las Vegas to advertise on the Super Bowl and successfully lobbied for a bill that banned online gambling appear hypocritical if it allowed its marks to be used in state lotteries? NFL ownership must sort through those issues and decide starting this week.
The New York Yankees earlier this month borrowed $105 million from a group of banks led by Goldman Sachs to cover final cost overruns at the new Yankee Stadium, sources said.
The loan brings the total debt on the stadium, which opens next month, to more than $1.3 billion. Despite concerns about the economy’s effect on sales at the new stadium, the Yankees, in the loan document, project healthy revenue, sources said.
The collateral for the loan is limited to sponsorships, premium seating and ticket sales, categories that are expected to total $330 million this season, said a finance source who’s read the loan prospectus, which cited the figure. Concessions revenue is housed in the team’s new Legends Hospitality partnership with the Dallas Cowboys.
The Yankees have been aggressively marketing their premium seating, about 70 percent of which is sold, the finance source added.
Another source said that when adding in the Yankees’ fees from the YES Network and other media, and calculating in concessions revenue, total dollars generated by the team should exceed $450 million. That would make the club one of the highest-revenue clubs in pro sports, if not the highest.
The amount, however, is offset by interest and amortization, a player payroll topping $200 million, steep luxury and revenue-sharing payments, along with the club’s organizational costs, like stadium operations and minor leagues.
Private debt transactions such as the Goldman loan are scarce in sports, as in the rest of corporate America, since the credit markets imploded last fall. Nevertheless, the Yankees’ deal underscores a central tenet of the new order: Only the biggest brands are getting deals done.
The Cowboys, the NBA and the Legends Hospitality concessions partnership have executed debt transactions since the fall.
The Yankees and Goldman Sachs declined to comment.
“All the deals we have been looking at making we are assuming we are not going to get any financing,” said Robert Caporale, an investment banker who is advising Sports Properties Acquisition Corp., a company looking to buy pro sports assets, but not the top brands. “At best, we would assume debt on an existing company.”
The Yankees already had borrowed more than $1.2 billion through the tax-exempt and taxable bond market, nearly all of which was funded through a public bond conduit. The team had planned to borrow another $111 million in taxable bonds but decided rates were too high and went instead with the short-term loan, a source said. This source described the $105 million as a bridge loan that the team would refinance once taxable bonds become more attractive.
The Goldman-led loan charges a rate of 450 interest points over the London Interbank Offered Rate, a floating rate index that traded at 1.33 percent last week. That would put the Yankees’ rate at 5.83 percent.
The YES Network this week plans to relaunch its Web site, with the enhanced online presence influenced significantly by a new three-year agreement with MLB Advanced Media.
While there is no leaguewide agreement yet on live in-market streaming of games — an issue that has been actively debated within baseball for several years — YES’s moves are emblematic of regional sports networks seeking to maximize their online profiles within the current framework.
The new-look yesnetwork.com will feature three video highlights per game, up from two in the prior accord with MLBAM; a new design that resembles MLB.com and the Yankees.com team site; an extensive series of text and video blogs from both network personnel and outside sources such as the River Ave. Blues blog; and greatly expanded social-networking capabilities.
“We want this to be a complement to
Yankees.com,” said Michael Spirito, YES vice president of business development and digital media. “We certainly don’t want to duplicate what they’re doing and think we can bring forth a lot more content and value to the fans.”
Despite the anemic advertising market, YES sold several title-sponsor deals for the updated site, including Chevrolet returning for a player-of-the-game segment, and Papa John’s and Avis buying into text-messaging functions supported by YES and MLBAM.
Financial terms of the YES-MLBAM pact were not disclosed, but the deal includes revenue-sharing provisions.
Other new content initiatives for the YES site include a weekly video feature that explores the intersection of sports and entertainment culture, and in-game chats with former YES announcer Jim Kaat.
“The idea is to go way beyond just that [Derek] Jeter went two-for-three last night, and have a full range of experiences,” said Kevin Sullivan, yesnetwork.com managing editor.
YES Network is not alone in retooling its Web site. Other RSNs have been similarly active over the winter, ramping up for the 2009 baseball season. A look at several:
Comcast SportsNet Philadelphia: The net last fall hired Rich Libero, former NHL vice president of editorial and production, to be its new vice president of digital media. He has led efforts for a redesigned network site that is expected to debut shortly and feature additional video content, a deepened focus on fantasy material and improved navigation. A deal with online developer Jacked provides a significant second-screen component to complement CSN’s TV coverage.
Also high on the priority list has been bulking up the RSN’s editorial presence to position CSN as a viable news source.
“There’s no shortage of local competition in our market, but we want to be a pre-eminent destination for breaking news and analysis,” Libero said.
CSN Philadelphia additionally will have a daily staff-produced blog on the Phillies’ farm system, which has three of its affiliates within a 90-minute drive of Citizens Bank Park.
The network does not have a deal with MLBAM for video highlights, but like other RSNs is watching the NBA’s emerging efforts with in-market game streaming as a potential forerunner for what may happen in baseball.
A potential test of in-market baseball streaming last year in Chicago with Comcast was shelved, and the broader issue remains unresolved over a variety of issues, including revenue sharing provisions and who would host the games online.
SportsNet New York: New interactive elements for the RSN, home to the New York Mets, include an online, postgame radio call-in show; several Twitter feeds designed to exploit the exponential rise of that real-time social-networking platform; and expanded analytical coverage both in video and text form. SNY also holds a deal with MLBAM that grants it use of two online video highlights per game, and a video-sharing deal for non-game material with the New York Daily News extends the network’s reach to the newspaper Web site.
SNY, seeking to take on a more universally New York tone than some of its local competitors, also last fall added a second prominent Yankees-related blog, Bronx Banter, to its emerging blog network. The blog joins Yankees-themed WasWatching.com on the site.
“We’ve always endeavored to be the home of New York sports and never simply a Mets network,” said Fred Harner, SNY general manager of digital media. “You’ll see us as the season begins and evolves continue to expand our coverage of the Yankees and the other teams in town.”
NESN, MASN: Each of these two team-controlled RSNs, whose owners have been among the more active and vocal on the online streaming issue, will broaden and deepen their pre- and postgame content, with on-air and studio personalities such as Dennis Eckersley, Jim Rice and Buck Martinez contributing regular segments, and behind-the-scenes and feature material also targeted for significant expansion. Neither NESN, serving New England, nor MASN in the mid-Atlantic corridor, holds game highlights deals with MLBAM, but each will trade heavily on its extensive access to players, managers and coaches.
Fox Sports Net: The Fox regionals, which carry 14 MLB clubs, are developing a plan to roll out locally focused Web sites later this season that will utilize nonlicensed MLB footage and original FSN programming, said FSN spokesman Chris Bellitti.