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Perhaps no one had more at risk in the outcome of the Texas Rangers bankruptcy auction earlier this month than sports investment banker and lender Sal Galatioto. Not the victorious bidders, led by Chuck Greenberg; not Mark Cuban, who shepherded the losing bid; not even the other banks nor MLB, who fought it out over more than seven months.
Galatioto on the evening of Aug. 3 blocked a last-minute deal to sell the team pre-auction to Greenberg and partner Nolan Ryan, prompting the top banks to warn they would sue him, something that could have doomed his five-year-old firm, Galatioto Sports Partners.
“They had the right to litigate and they threatened me with it,” said Galatioto, whose nine-person firm may be small but is a powerhouse adviser to sports teams and would-be owners. It brokered the pending $450 million sale of the Golden State Warriors and previously worked deals for the Chicago Cubs and Charlotte Bobcats.
The top lenders were alleging that Galatioto, as head of the second-lien lenders, did not have the right to block the sale. The bankruptcy judge allowed the auction to proceed, but not before noting that the lead lenders, if their contention were found true, could sue Galatioto and his firm. In addition, Greenberg, who before winning the bid blamed Galatioto for blocking the deal, could have sued for tortious interference.
From the time he blocked the deal to when the court the next day announced Cuban’s first bid, Galatioto received a steady stream of e-mails from his employees and from his family, wishing him well. It would not be until nearly midnight that the bidding exceeded the value of the deal he had single-handedly scuttled the day before, making for an agonizing day.
“I love taking huge risks to enrich them [and] now I understand some of them are taking credit for forcing an auction,” Galatioto said of the other lenders. “I am glad they are taking a victory lap and taking credit.”
Monarch, the first-lien lender holding the most debt, with more than $100 million, said in a statement to SportsBusiness Journal, “GSP’s actions in blocking the sale jeopardized more than $70 million in additional value. … This divergent course of action reflected a simple fact: GSP’s significant Second Lien exposure compelled them to advocate for a highly risky and decidedly singular approach to resolving this case. Although it was not our choice to proceed with the auction in light of the deal the lenders struck the night before to remove risk, once the Court concluded that the auction would go forward no party worked harder than Monarch to ensure that it would succeed. ... We are obviously pleased with the outcome.”
The day before the auction, Greenberg increased his offer to $315 million of proceeds to the lenders, up from $235 million at the start of the bankruptcy process on May 24 and higher than a revised roughly $290 million offer just days earlier. Monarch’s mantra had been since the controversy erupted in January over the selection of Greenberg as the buyer that the lenders would not take less than $300 million, so at long last it appeared the hedge fund had achieved that goal.
Galatioto believed the auction would bring in more, and he says he gave his word to Cuban there would be a contested sale.
“We gave our word to the other bidders that we would fight for an auction,” Galatioto said. “Relying on our word, they spent millions of dollars on legal and advisory fees. To cut a back-room deal to stop the auction literally minutes before it was set to begin did not meet my ethical and moral standards.”
In the early morning hours after Galatioto blocked the proposed deal, Galatioto’s counsel at Clifford Chance received a letter from JPMorgan Chase’s counsel stating, sources said, that Galatioto was in violation of the inter-creditor agreement that subordinated second-lien-holders’ rights and that the lead lenders reserved all rights to seek damages against GSP if the final sale proceeds were less than the amount Greenberg had offered to settle.
Galatioto still is likely to lose millions of dollars on the loan. Proceeds from the sale of the Rangers and the NHL Stars, which were owned by the same parent company, will almost surely not be enough to pay off all the creditors, and second-lien lenders fall last in line. Galatioto is the investment banker selling the Stars, and in court testimony he said he hoped to get around $140 million for the banks from that sale. Added to the $340 million the lenders were due to receive from the Rangers, that total comes to $480 million. The banks may sue former Rangers owner Tom Hicks and perhaps win some more, but even if they were to top out at an optimistically projected $500 million, that would be less than the $525 million owed, which with interest is an amount that now exceeds $600 million.
Still, the creditors received an extra $25 million after Galatioto’s block of the proposed deal, and Cuban was able to see an auction proceed to completion. In addition, by ensuring the auction, Galatioto said he helped resuscitate what had become a flagging belief for the finance world in baseball lending. MLB had moved aggressively to put Greenberg in as owner even when doing so angered the lenders.
“In the final analysis, despite what happened, we did have an auction, the courts worked, they worked right,” Galatioto said. “It will give people more confidence in asset values in baseball.”
The architect of two of the most successful sports channel launches is advising MLS on what to do with its media rights.
Brian Bedol was introduced to the league’s board of governors in late July as MLS’s new media and content consultant. The job will see Bedol, who made his reputation launching and flipping Classic Sports to ESPN and CSTV to CBS, work with MLS to develop a media strategy across broadcast, digital and mobile platforms.
While the bulk of Bedol’s experience involves developing TV channels, MLS Commissioner Don Garber says MLS hasn’t committed to pursuing its own network.
“Brian has a lot of experience in startup sports cable businesses, which may or may not be part of our future plans,” Garber said “His experience in the cable business, his recent experience in the digital [space] — he’s obviously very well-connected and has relationships with many of the key players in the business. He has a real belief in soccer and believes he can help us chart through these changing [media] waters.”
MLS has reached a critical juncture in its media planning. Though four years remain on its rights agreements with Univision and ESPN, it’s in the final year of an 11-year agreement with Fox Soccer Channel. It also at the start of this season brought its digital assets in-house, after a six-year partnership with MLB Advanced Media.
“The league is beyond its [media] infancy but still early in its game,” Bedol said. “We’d love to be a league in a few years that’s looked at as a leader in its quality of partners with broadcast and cable and as a pioneer in new media.”
Though Bedol sat in on an MLS meeting with Fox Soccer Channel officials in late July, Garber said, “This is less about any current negotiations and more about ensuring that we have the best possible advice to ensure that we’re making the right decisions … in the short, medium and long term as it relates to capturing as much value from a marketing, brand-building and financial perspective from our content.”
Bedol launched Classic Sports Network in 1995 and sold it to ESPN for $175 million in 1997. He launched CSTV in 2003 before selling to CBS for $325 million in 2005. Since then, he’s been working on a startup company at MIT Media Lab as well as working with Plum TV and other early-stage investments. He has no formal consulting practice, and MLS is the only league he is advising.
He is a close friend of Garber. The two live in the same town and have known each other for more than 15 years. They also fly fish together occasionally in New Jersey. This will be the first time they have worked together.
Staff writer John Ourand contributed to this report.
The Big Ten Conference is preparing to auction the TV rights to its new football championship game, a move that industry insiders say could fetch $15 million to $20 million a year.
The conference also plans to reopen its current deal with ESPN to account for the addition of Nebraska, and Big Ten Commissioner Jim Delany said an increase in its rights fee from the network is expected.
The championship game, which will debut in 2011, is not part of the conference’s current media contract with ESPN and will be treated as a separate property.
“It’s going to be a full-fledged jump ball on the championship game,” Delany said. “This will be a stand-alone entity, in terms of the media negotiations.”
Delany already has had preliminary talks with ESPN, Fox and CBS for the game, while NBC and Turner also are expected to show interest, industry sources said. ESPN and Fox are considered the clear front-runners for picking up the rights. While ESPN has its existing media deal, Fox has partnered with the conference on the Big Ten Network.
Bidding is expected to start in October, after the conference settles on its two new six-school divisions.
In addition to the championship game talks, the Big Ten early this fall plans to seek a raise over its current broadcast deal with ESPN. With Nebraska officially joining the Big Ten next year, as of July 1, Delany said he expects the conference to be paid more than the $100 million-per-year average that ESPN agreed to in 2007-08 as part of a 10-year deal.
The inaugural Big Ten championship game will be held in December 2011 in Indianapolis’ Lucas Oil Stadium. The game is expected to be played in prime time, following the SEC’s championship game, which is carried by CBS and in recent years has had a late-afternoon Saturday kickoff. The Big Ten game would fill a slot that has been occupied by the Big 12’s championship game, which typically has had an 8 p.m. ET kickoff.
With the Big 12 losing two schools in this summer’s conference realignment wave, the Big 12 as a 10-school conference won’t have enough members to stage a championship game under current NCAA rules.
Industry sources believe the Big Ten championship game could command $15 million to $20 million a year for a number of reasons. First, it has at least two serious bidders in ESPN and Fox. In the past few years, ESPN has made a big bet on college sports, picking up as many rights as it can. Fox has made no secret of its desire to pick up college football rights and made a surprisingly bold run for the ACC earlier this year.
Second, ratings for similar games have been high. Last year’s SEC championship game pulled an 11.1 rating and 17.969 million viewers, the highest-ever viewership for the SEC’s title matchup. The game featured Florida and Alabama, the nation’s top two teams at the time.
The Big Ten’s marquee regular-season matchup — Ohio State and Michigan — pulled a 4.2 rating and 6.773 million viewers on ABC last year even though the game kicked off at noon, a traditionally weak time slot for ratings, and featured a subpar Michigan team with a 5-6 record.
The SEC, Big 12 and ACC previously have not broken out their championship games as separate entities from their overall broadcast agreements.
The SEC’s championship game was valued at $10 million to CBS in 2008 when the conference and network struck their 15-year deal for an average of $55 million a year, according to sources familiar with the talks. But a more current valuation of the title game is closer to $15 million.
Each broadcast deal includes a “conference composition” clause that allows a contract to be renegotiated if the member schools in a conference change. ESPN elected not to exercise the clause with the Big 12 after it lost Colorado and Nebraska in June. But with the Big Ten’s addition of Nebraska — and the Cornhuskers’ reputation as a college football powerhouse — Delany said ESPN should pay more.
With the Big Ten entering the fourth year of a 10-year deal, it remains to be seen whether these talks will produce an extension as well. The composition clause will not lead to an increase in the number of Big Ten games on ESPN or ABC.
Georgia Tech’s athletic department faces several challenges trying to fill Bobby Dodd Stadium for football games. The downtown Atlanta school fights for discretionary dollars in a crowded big-city sports market. It has an undergraduate base of 16,000 students, not big by BCS standards, and many graduates leave town for engineering jobs around the world.
“We don’t look like a lot of Southern schools,” said Wayne Hogan, Georgia Tech’s associate director of athletics. “We will sell out when we play Georgia or Clemson or Florida State, but week in and week out, we had empty seats. … It didn’t take long to figure out we were leaving a lot of money on the table.”
Tech was averaging fewer than 50,000 people in its 55,000-seat stadium when it decided last year to break with college tradition and to not face its challenges alone. Rather than handle ticket sales itself, it brought in an outside sales group, signing a three-year deal with The Aspire Group to sell football and basketball tickets.
Only one year in, the results are undeniable. Since July 2009, Aspire’s 15-person staff, spearheaded by former Charlotte Bobcats inside sales manager Bill Fagan, has produced $1.2 million in new ticket revenue, split evenly among last year’s college football and basketball campaigns and the 2010 football season.
As word spreads of Georgia Tech’s results, and athletic departments battle an economy that has cut into ticket sales and donations and pinched off state funding for public schools, more colleges are considering the merits of establishing an inside, commissionable sales team, the same model used by professional sports.
They can bring in an outside company or hire sales executives with pro experience, but both options are designed to shake up a sales culture that has relied heavily on waiting for the phone to ring.
As of mid-August, The Aspire Group also had a deal with Colorado and two others pending with Texas schools to sell their football and men’s and women’s basketball season tickets.
“In the next six months you’re going to see more of these deals,” said Bernie Mullin, an Aspire principal.
Last year, as Georgia Tech athletic officials were struggling with their sales questions, Hogan read a local newspaper story about veteran pro sports marketer Mullin and Aspire’s deal with the Los Angeles Dodgers. He met with Mullin to see whether Aspire could steer Tech’s ticketing in the proper direction.
“It was like going back to college all over again for me and [Athletic Director Dan Radakovich],” Hogan said. “To put a face on it, Bernie said everything we were doing was all wrong.”
It wasn’t for lack of effort that Tech’s ticket sales were going nowhere, but its typical two-for-one and family-pack promotions got lost competing against the city’s four big league teams.
“There are 6 million people in Atlanta, and we were throwing darts out there,” Hogan said.
With Aspire, the marketing focus shifted to contacting people with an affinity for the school, and it worked wonders in finding new customers. Tech provided Aspire with a database of 100,000 contacts including incoming freshmen, parents, regional alumni, more than 1,000 campus vendors and fans that occasionally attended games.
“We began to look at all these databases and it made perfect sense,” Hogan said. “Why would you try to capture a guy [in Atlanta] that may have gone to school at Texas or Michigan? But someone who has a reason to be a Tech fan … that’s a far better way to spend your resources and personnel.”
Georgia Tech pays Aspire a management fee tied to a percentage of sales, plus commissions, with Aspire responsible for paying its workers. All told, the school shared 33 percent of net revenue with Aspire, a total of $396,000, Mullin confirmed.
The school covered the $10,000 cost to set up Aspire’s work space in a spare media room at Alexander Memorial Coliseum with computers, Bluetooth headsets and other office equipment.
The Aspire Group does not handle season-ticket renewals, “cherry pick” inbound calls or sell premium seats, “which can put those numbers on steroids in a heartbeat,” Mullin said. “Everything you see from that number of $1.2 million per year is all newly initiated sales.”
Schools that want to boost their sales efforts but stay in-house are looking at an investment of $175,000 to $250,000 to install the proper infrastructure and hire four to six full-time ticket sellers, said ticketing consultant Matt DiFebo.
By hiring 10 full-timers tied to football ticket sales, as Northwestern University is doing this summer in a cluttered Chicago sports market, those costs jump to about $400,000, DiFebo said.
DiFebo, former inside sales manager for the old Seattle SuperSonics, formed his own company, the DiFebo Group, in mid-2009. In May, the DiFebo Group signed a three-year deal with Temple to handle ticket sales for football and men’s and women’s basketball.
Separately, DiFebo has consulted with a dozen schools in the ACC, Big East, Big Ten, Conference USA, SEC and Sun Belt conferences to improve in-house ticket sales, he said. LSU and Ohio State consulted with DiFebo to sell more season tickets in men’s basketball and hockey, respectively.
At Temple, DiFebo hired former AEG and Los Angeles Kings account executive Chris Bain as on-site general manager on the Philly campus, a few years after the two worked together at Central Florida.
Bain will employ 10 to 12 full-timers, compared with past years, when three people waited for the phone to ring and were not dedicated to making outbound calls, said Eric Roedl, Temple’s senior associate athletic director. The deal is a revenue share, although Roedl would not identify the terms.
Timing played a key role for Temple’s decision to outsource ticket sales. The Owls won nine football games in 2009 and advanced to their first bowl game in 30 years, and the athletic department wants to keep the momentum going after experiencing a huge uptick in 2010 season ticket sales.
“We are 50 percent ahead of last year, taking a more proactive approach with earlier renewals than in the past,” Roedl said.
Four years before Aspire did its deal with Georgia Tech, DiFebo had his own vision for adopting the pro model of selling tickets to the college ranks. In April 2005, he took a huge risk, leaving the Sonics for a job as Central Florida’s associate athletic director of external affairs.
“I saw this as an opportunity when no one else was willing to take a chance,” DiFebo said. “What we were doing in the pros did not exist in college sports.”
After DiFebo hired and trained four full-time sales people to make outbound calls, UCF increased annual football ticket revenue by more than $4.5 million and generated more than $3 million in donations from 2005 to 2009.
Northwestern hired DiFebo as a consultant and kept ticket sales in-house to maintain 100 percent of revenue, said Athletic Director Jim Phillips. Phillips would not disclose the investment to add 10 new hires at the private school but he said those salaries are competitive in the college marketplace.
The sales team members, anchored by Mike Polisky, a former executive with the American Hockey League’s Chicago Wolves and Arena Football League’s Chicago Rush who is now the school’s senior associate athletic director for external affairs, also earn bonuses depending on how many season tickets they sell, an important part of the business model, DiFebo said.
“We have nearly 30 pro teams and colleges within an hour of campus,” Phillips said. “We have to start looking at ourselves as a professional organization.”
At Cincinnati, where DiFebo has been kept on retainer through 2011, the school brought him in to refine its in-house staff’s techniques for upselling and closing entry-level donors.
Before DiFebo came to town, Cincinnati had already expanded its operation, hiring four full-time ticket sales personnel and eight to 10 part-timers, including sports management students from Xavier and Northern Kentucky University, two area schools without football programs.
Cincinnati has seen its football season-ticket base spike from 6,000 to 23,000 after Mike Thomas took over as AD in December 2005 and set a goal for stepping up ticket revenue in all sports.
“Matt pushed us over the top,” said Mike Waddell, Cincinnati’s senior associate athletic director. “We wanted to make sure we were doing everything right.”
The moves have paid off handsomely. Football ticket revenue has jumped from $1.4 million in 2006 to $4.2 million this summer, and the number could ultimately top $6 million for the season in 35,000-seat Nippert Stadium, one of the smallest BCS facilities, Waddell said.
Cincinnati’s recent success on the field played a key role for the dramatic increase, and nine of the top 10 football crowds in school history have come in the past four seasons. But only one of those games sold out during the week of the event, indicating there are always calls to be made.
“There is no sales season. It’s a 12-month-a-year process,” Waddell said.
LSU, another school with which DiFebo consulted, did not have the money available to hire a full-time ticket manager. As a public institution, it faces the additional pressure of budget cuts at the state level.
Instead, it hired four students to work part time to sell season tickets and mini-plans, said Craig Pintens, assistant athletic director for marketing. They are paid 8 percent commission for every season ticket sold.
DiFebo firmly believes a core group of full-timers must be focused on selling year-round to gain the biggest return on investment, but officials in Baton Rouge did the next best thing to fill seats for LSU men’s basketball, which averaged 8,935 last season at 14,164-seat Pete Maravich Assembly Center, Pintens said.
“In an ideal world, we would love to have a full-time ticketing person but the hardest thing to do at any university right now is to add a position,” he said.
Editor's note: This story is revised from the print edition.
Nearly five years after arriving in Houston from San Jose, the Dynamo is close to having a home stadium of its own.
If all goes as planned, the club will break ground in November on a new stadium near Minute Maid Park in downtown Houston and play its first game at the new venue in 2012. The city and county have approved the project. The club simply needs to complete a lease with the Harris County-Houston Sports Authority and finalize private financing for the $80 million stadium development.
“It’s a terrific plan right smack downtown in walking distance from the urban core,” MLS Commissioner Don Garber said. “I’m a big believer in the Houston market and am anxiously awaiting breaking ground and their eventual opening.”
The Dynamo, which is co-owned by AEG, Golden Boy Productions and Gabriel Brener, has hired Icon Venue Group to manage the stadium project and Populous to design the stadium. It recently closed a request-for-proposal process for the general contracting job.
The stadium will have upper and lower bowls that seat 21,000 spectators. It will feature 30 to 35 suites, which will be situated 14 rows above the field. It is expected to be similar in design and feel to Dick’s Sporting Goods Park near Denver, a stadium also designed by Populous.
Wrapping up those details has allowed the club’s front office and AEG Global Partnerships to forge ahead with naming rights and founding partnership sales. The club hasn’t finalized how many founding partnerships it will sell, but it expects to sign eight to 12 partners.
“We’re working with the architect to get out ahead of the development so that the naming and founding partner opportunities are incorporated into the stadium design,” said Shervin Mirhashemi, COO of AEG Global Partnerships. “We’re going to take a lot of what [sales inventory] we have in other stadiums that we know works and mix it with the flavor of the Houston market to create a hybrid opportunity down there.”
The stadium is expected to be a major boost to the Dynamo’s sponsorship revenue. The club has 60 partners and ranks among the top five MLS clubs in sponsorship revenue, but because the team has no stadium assets at its current home, the University of Houston’s Robertson Stadium, most of its sponsorships are small deals that include only club assets. By packaging stadium and team assets together, it hopes to sign fewer partners to larger deals, Dynamo COO Chris Canetti said.
The naming rights and founding partner sales will be handled exclusively by the Dynamo and AEG.
The club is in the marketplace looking for a new jersey partner. Amigo Energy is in the last year of a 2 1/2-year jersey deal worth $1.9 million annually.
New York-based On Demand Real Time will have an application ready for the fall that will stream college football highlights to cell phones and hopes the offering will be used by at least one of the TV networks that carries college action.
ESPN is the most logical fit, since during the World Cup it successfully tested the service, which provides highlights as soon as eight seconds after a play happens. But neither ESPN nor On Demand Real Time would say if they will expand that relationship. “We … don’t have definitive plans to utilize the technology,” an ESPN spokesperson said.
Using a technology called PlayItOver, ESPN tested the highlights application to about 100 cell phone users during the World Cup. Computers tagged 17,000 pieces of action, including about 2,000 shots on goal and about 100 goals.
All parties involved were pleased with the test, with highlights becoming available eight to 15 seconds after the plays occurred. Highlights cut by others took as much as 15 minutes to become available, according to On Demand Real Time’s co-founder and CEO Douglas Vunic.
Vunic says he has computers cut the highlights, using a form of facial-recognition technology. “Basically, this is face recognition on steroids,” he said.
The service lets users pick highlights they want, from touchdowns to tackles made by individual players. Highlights can either be pushed to a mobile device or accessed through an app.
Broadcasters are responsible for developing the subscriber model. The World Cup, for example, was a flat fee of $7.99 for the entire tournament.
Vunic and his advisers are in the market talking to broadcasters about the service. Univision tested it during a Spain-Mexico soccer friendly last week.
Advisers include former CBS Sports President Neal Pilson, former Omnicom executive Arnie Semsky and media consultant Lee Berke. Vunic approached Pilson about a year ago to use the longtime media executive’s contacts to try to get networks to buy into the technology.
“We expect this technology to emerge in the next two to three years,” Pilson said. “I’m convinced that this will be a significant new revenue opportunity.”
Cleveland-based Home Team Marketing has struck an agreement with the California Interscholastic Federation, giving it multimedia rights throughout the state.
More than 800,000 student athletes participate in CIF-sanctioned public high school sports in California.
“This is a massive, massive property,” said Pete Fitzpatrick, president of Home Team Marketing. “There’s really not much out there that compares to this, in terms of its consumer reach across the athletes, their families and all of those who are loyal to their high school.”
With California, Home Team Marketing now has the rights to 16 high school athletic associations, including the New York State Public High School Athletic Association and the Texas private schools.
Fitzpatrick’s agency has been aggregating the rights to these associations as a way to present a national high school platform to potential advertisers. The deals enable the company to sell signs, media advertising and promotional rights to the state championship events that are sanctioned by the associations.
Fitzpatrick thinks that the marketing profile of high school sports will continue to grow. He added that he’s prepared for competition from IMG College, which last week acquired the marketing rights to the Florida High School Athletic Association. IMG also has rights to the public University Interscholastic League in Texas.
— Michael Smith
When boxing promoter Gary Shaw desperately needed a premium cable date to make the finances work on a fight deal he was negotiating, he often would call his friend, Jay Larkin, senior vice president of sports and events at Showtime.
“I really need a date in September, Jay,” Shaw would stress.
“OK, you got it,” Larkin would say.
A week or two later, while haggling deal terms with another promoter, he’d find that Larkin had ceded the same calendar slot to the both of them. This happened more than once.
“Sometimes he’d promise the same date to three different people,” Shaw said last week, chuckling at the recollection. “Jay had trouble saying no. Then when you found out, he’d say, ‘OK, I’ll get you a different date.’
“He was just such a gentle, nice guy. He could laugh it off and you’d laugh with him.”
Jay Larkin died at West Nyack Hospital in Nyack, N.Y., on Aug. 9, succumbing after a lengthy bout with brain cancer. He was 59. He left a wife, Lisa, and two sons, Ryan and Gabriel. Friends who visited the week before he died reported that he remained cognizant, trading stories and laughs.
Larkin started as a publicist at Showtime, where he worked for 22 years before exiting during a round of staff cuts by parent company Viacom in 2005. He later served as COO and then CEO of an ill-fated MMA property, the International Fight League.
While at Showtime, Larkin built a boxing division that carved out a strong identity, even while working with a budget dwarfed by that of HBO. It was Larkin who negotiated doggedly to bring together what was then the most lucrative fight in history, Mike Tyson vs. Lennox Lewis, when Lewis was exclusive to HBO and Tyson was married to Showtime.
“One of the most enjoyable relationships I had in business, I had with a competitor,” said fight promoter Lou DiBella, who headed boxing for HBO when Larkin was at Showtime. “We became friends. He was an interesting cat who loved the arts. I like that stuff, too. We’d chat a lot of times about stuff that had nothing to do with boxing.”
A theater major at C.W. Post University who also studied at UCLA’s School of Theater, Film and Television, Larkin often spoke of the unlikely way in which he came to boxing. He was at the first fight Showtime aired, Marvin Hagler vs. John Mugabi in 1986, when the network’s head of programming asked whether he recognized an old fighter standing nearby. Larkin correctly identified Billy Conn. From that moment forward, he was in charge of boxing. Larkin recognized Conn only because someone had pointed him out earlier in the day.
“He was a good friend, a good mentor, somebody I really looked up to and learned so much from,” said Ken Hershman, executive vice president and general manager of Showtime Sports, who worked closely with Larkin and eventually succeeded him. “I’m sad for his family and for everybody else, but mostly I’m sad for him. He had so much to look forward to. His boys growing and going off to college. He’s never going to get to see that.
“He was a very committed father. To me that’s the most devastating part of this. But it’s life. I can’t say he didn’t live a full and amazingly rich life. He did.”
Hershman laughed when reminded of Larkin’s habit of offering dates to multiple promoters. When Larkin left Showtime, many called Hershman trying to lock in slots they said were promised.
“If you added it all up, about four years of programming was committed,” Hershman said. “He always found a way to work people in. He was a man of his word and tried to do right by the company and by the people. He was not a schemer. Not a manipulator. Wasn’t Machiavellian in his approach. You saw all that permeate the relationships he had.”
Nearly two decades later, Larkin still jabbed Shaw about the angst spawned during negotiations for the Tyson-Lewis fight, recalling tensions that he often defused with a quip. A few days after the fight, Larkin invited Shaw to his office for a wrap-up meeting. When he got there, Larkin queued a tape that showed Shaw getting knocked off his feet three times during the post-fight chaos, put to music from Tchaikovsky’s “Nutcracker.”
“Jay was probably one of the few that will leave boxing with most people talking nicely about him,” Shaw said. “I think that’s his legacy. When I look back I don’t think Showtime or great fights or what musical acts he did. I think his legacy, and what his children should remember, is that he was in a sport of pariahs and left with everybody talking kindly of him and having fond memories that are heartfelt.
“If I were to do his tombstone, it would just say a gentle, funny, nice guy.”
Learfield Sports and Levy Restaurants have formed a joint venture to pursue food contracts at college sports facilities and have recently signed deals at Iowa State, Missouri and Purdue that start this football season.
Learfield has multimedia rights deals at all three schools. For Levy, a major league concessionaire and a division of Compass Group, the world’s largest food vendor, the partnership gets its foot in the door in a new market where it did not previously operate.
The move represents the first true partnership between a multimedia rights holder and concessionaire that focuses on signing food deals in the college ranks. The plan is for Learfield to sign deals with sponsors and advertise their brands at arenas, stadiums and other sports venues on campus, while Levy commits to serving their food and drink products at those facilities.
Learfield has multimedia rights deals at 51 schools and will compete for their food business when those concessions contracts are set to expire, said Roger Gardner, Learfield’s vice chairman.
“We had been looking at the college business to find other areas where we can use our expertise and combine with other entities to produce a higher level of service and opportunities for our sponsors,” Gardner said. “Each of us stays in our own area of the sandbox, but we will work together.”
At Mizzou, Learfield Levy Foodservice signed a five-year deal and is investing more than $300,000 to install new equipment and upgrade concession stands and signs, said Tim Hickman, senior associate athletic director for operations.
Learfield first presented the concept to Missouri officials in Columbia, 30 miles from Learfield’s home office in Jefferson City, Mo., about a year ago, Hickman said. Missouri ran its food in-house for many years before issuing a request for proposal and selecting Learfield Levy Foodservice.
“It’s a little bit of a test and a different model,” Hickman said. “By marrying our marketing inventory with the food service operation, you help both ends of the business.”
For concessionaires and sports marketers, the relationship between the two parties has traditionally been more of a separation than a marriage, and that is why some industry insiders question whether this partnership will work, keeping in mind it has to ultimately benefit the school as the client.
“A food provider has a set of national contracts with Vendor A and the school does a deal with Vendor B,” said Purdue Athletic Director Morgan Burke. “It’s like Coke and Pepsi; there is not much incentive for the concessionaire. But with this deal, we think there will be incentives for both.”
Purdue signed a seven-year deal with Learfield Levy to replace V/Gladieux, a regional food provider, and the partnership will be known as Purdue Experience Network. A key part of the new deal is to upgrade food service for Mackey Arena’s new club seat program opening in 2011, Burke said.
At Iowa State, Learfield Levy Foodservice replaces Centerplate after signing a five-year deal, said Chris Jorgensen, assistant athletic director.
Missouri and Purdue hired food consultant Chris Bigelow to help select a concessionaire for their sports venues, and regardless of how the partnership is structured, those deals have to make fiscal sense for concessions operations, he said.
“It’s not like Learfield is getting a free ride just because they have the media rights,” Bigelow said. “In theory, the products [tied to sponsors] will be advertised and promoted more in stadiums, but will it increase sales? Part of it is Learfield’s deals at colleges are different depending on the school.”
Levy officials did not return e-mails for comment.
MLS is focused on adding a 20th team, in New York, but its expansion ambitions extend beyond that and could make it the first top-flight soccer league worldwide to add a 21st team.
MLS Commissioner Don Garber said last week the league won’t cap expansion at 20 teams.
“Our league includes two countries, massive landmass across four time zones, and I have no doubt our league will be larger than 20 teams when we’re fully expanded,” Garber said. “But at this point we don’t have a specific vision as to how many teams would be in the league at a fully expanded point, and it makes no sense for us to be thinking about that at this time.”
Dave Checketts, co-owner of Real Salt Lake and a member of MLS’s expansion committee, added, “We have perfectly defined models with the NBA, NHL and NFL. These are 30- and 32-team leagues and they work. I wouldn’t be a bit surprised if we were hosting the World Cup in 2022 and had a 30-team league.”
Expanding beyond 20 teams would be precedent-setting in the world of soccer. FIFA guidelines recommend that top-flight leagues limit their size to 20 teams to protect players from playing too many games. As a result, most MLS observers expected the league to replicate the 20-team structure established by elite international leagues like Spain’s La Liga, Italy’s Serie A and England’s Barclays Premier League. Instead, MLS executives appear intent on following an American sports league model and charting a course similar to the NBA, NHL and NFL.
FIFA Executive Committee member Chuck Blazer said MLS could expand beyond 20 teams while still upholding the goal of FIFA’s guidelines.
“It’s about how many games a player plays in the year, so if you can construct a scenario where the same number of games are played in divisional play and then everyone funnels up into a national championship, that could work,” Blazer said. “That’s already contemplated in the structure of the league. They have different divisions.”
MLS has an Eastern Conference and Western Conference structure. Blazer said the league could keep that structure in place and have teams play home-and-home games within the conference before starting the playoffs, thus honoring the goals of FIFA’s 20-team guideline.
“There’s no reason MLS can’t [expand beyond 20] as long as it is creative,” Blazer said.
MLS has been one of the fastest-growing properties in the North America over the last decade as it expanded from 10 to 19 clubs by adding teams in Los Angeles, Salt Lake, Toronto, San Jose, Seattle and Philadelphia. Vancouver and Portland will join the league next year and Montreal in 2012.
Dan Hunt, vice president at Hunt Sports Group, said he and his father, Lamar, who helped found the league, often debated whether the league could support more than 20 teams.
“The point he made to me was that the U.S. is an enormous country with a very large population,” Hunt said. “You factor Canada in and the landmass, the general interest in soccer and those things lend themselves to the league growing beyond 20 teams when it’s right and proper.”
Garber said the league’s immediate priority is to add a 20th team, which he hopes will be in New York. The league remains in discussions with the Wilpons, owners of the Mets, about bringing a team to Queens. If the effort to place a team there fails, it will explore expansion in other markets such as Atlanta, Detroit, San Diego, Miami or Ottawa.
“This is a work in progress,” Garber said. “We’re still going about expansion one team at a time.”
The Arena Football League has signed NAPA Auto Parts as title sponsor for its ArenaBowl championship game on Friday.
The low six-figure deal gives NAPA six 30-second commercial spots during the game’s NFL Network broadcast along with full in-arena integration, including dasherboard and turf-square markings. The game will be titled NAPA ArenaBowl XXIII and will be played at the venue of the participating team with the best record.
While this is the 23rd ArenaBowl championship, it’s the first for the new AFL that was relaunched this year after the league shut down in 2009 and was bought out of bankruptcy.
“We had a high level of interest from a healthy list of companies that saw value in the AFL,” said Brian Corcoran, president of Shamrock Sports Group, which represented the AFL on the deal. “It has also been a good lightning rod to get people in the [AFL sponsorship] pipeline for the 2011 season.”
AFL Commissioner Jerry Kurz said more partners may be added to the ArenaBowl.
“Signing one will help move on some of the others who have been interested,” Kurz said. “Things have not moved as rapidly as we would have liked, but given our hiatus, we had to show people that we are back.”
The 15-team AFL will add at least three teams next season, with additions in Kansas City, Philadelphia, and San Jose. A fourth new market is likely to be added, as well, Kurz said.
NAPA officials did not return calls for comment. Spark Communications was NAPA’s agency of record.
Software firm and dynamic-pricing specialist Qcue has signed deals with three NBA teams for the coming season.
The Atlanta Hawks, Houston Rockets and Utah Jazz are the first pro basketball clients for Qcue, an Austin, Texas, company that already is working with the San Francisco Giants and Dallas Stars.
The agreement with Hawks parent Atlanta Spirit also includes that company’s other team: the NHL’s Atlanta Thrashers.
Dynamic pricing adjusts single-game ticket prices as late as the day of the game through computer analysis of team performance, opponent, weather conditions, day of the week and gate giveaways. For the three NBA teams and the Thrashers, Qcue plans to use its technology to reset single-game ticket prices throughout their arenas, said Barry Kahn, Qcue’s CEO.
That differs from last season’s programs for the Giants and Stars, who restricted dynamic pricing to 1,000 to 2,000 seats in the upper deck that often went unsold.
For 2010, the Giants expanded their program to cover all areas of AT&T Park where single-game tickets are available. The Stars are adding dynamic pricing to the club level at American Airlines Center for the 2010-11 season, said Geoff Moore, executive vice president of sales and marketing for the team.
Kahn said Qcue has a close relationship with the NBA’s team marketing and business operations division and that the three deals fall in line with the league’s push to get teams to more accurately price tickets to fill their buildings.
“Teams are listening to their fans and how they value games, and are adjusting prices accordingly,” said Chris Granger, the NBA’s senior vice president of team marketing and business operations.
The Rockets and the Jazz sent officials to the Bay Area to see dynamic pricing in action during Giants games, giving them a feel for how the system worked in a real-time setting, said Russ Stanley, San Francisco’s managing vice president of ticket services and client relations.
To protect their season-ticket holders, Rockets and Jazz officials said they will not allow the cost of dynamic-priced tickets to fall below season-ticket prices. The Hawks last week were not ready to talk about their deal, team officials said, because they had not notified their season-ticket holders of the move.
Staff writer John Lombardo contributed to this report.
NBC Sports is using the success of ProFootballTalk.com as a template for its fast-growing digital business, with a redesign for NBCSports.com set to launch around Labor Day and PFT editor Mike Florio expanding his profile in other NBC ventures.
The redesign will expand on already active plans for the NBC site in which the PFT model — featuring a blog-based effort as an entry point for the site’s coverage of a league — has been replicated for other major sports, with HardballTalk.com, ProBasketballTalk.com and ProHockeyTalk.com all showing strong growth of their own.
NBCSports.com generated 7.845 million unique visitors in July, according to comScore, ranking the site No. 10 among U.S. sports destinations and more than twice the 3.783 million visitors seen in the same month last year. June’s count (9.343 million) was similarly strong for NBCSports.com, up more than fourfold compared with June 2009, fueled by the FIFA World Cup and a partnership for the site with Goal.com.
Meanwhile, the expanded presence for Florio calls for him to have regular on-air TV role this fall during the network’s coverage of Notre Dame football. A first-ever PFT NFL season preview print magazine was recently published, and Florio has performed several guest-hosting stints on Dan Patrick’s syndicated radio show. Patrick is a co-host of NBC’s “Football Night in America.”
“Our online brand hasn’t really caught up to our traffic yet,” said Rick Cordella, NBC Sports Digital general manager. “But we’re trying to get a structure together that really communicates that we are different, absolutely different, than our competition, and what’s occurred with PFT is certainly a very big part of that.”
NBC struck a deal with Florio 14 months ago to host, sell and promote PFT, and PFT represents the largest individual chunk of the monthly online traffic for NBCSports.com. PFT-branded video content is available through the NBC site, as well.
“NBC has done everything they’ve promised to do. They’ve aggressively marketed the site, and traffic has gone up,” Florio said. “A lot of people still don’t know about PFT yet, though, so we’ve got further goals we’re trying to reach, and we’ve done some things to try and expand the brand.”
NBC is also actively working with digital video outfit NeuLion to develop an iPad companion to the network’s TV and online coverage of “Sunday Night Football.” The free app will provide stats, highlights, drive charts, social-media integration and other interactive features. The offering is expected to be available in time for NBC’s broadcast of the Sept. 9 NFL regular-season opener.
The New Jersey Nets will sacrifice two home games this season as the team tries to develop international appeal by playing in the NBA’s first regular-season games in London.
Terms of the deal between the NBA and the Nets call for New Jersey to forgo two games at the Prudential Center in exchange for playing at the O2 Arena in London against the Toronto Raptors on March 4-5. The league holds all marketing rights to the London games and is planning to build ancillary events around the games to drive both fan and sponsorship interest.
“We are looking to do different things, from broadcast to other fan-interactive events,” said Sophie Goldschmidt, senior vice president of NBA Europe. “We are in discussions with current partners and new prospects. It is a great opportunity, and we will be capitalizing on it.”
The league will give the Nets an undisclosed financial guarantee roughly equivalent to what the team would typically generate for two home games.
Losing two home dates to play in London is a deal the Nets believe is worth taking as they try to expand their brand under new owner Mikhail Prokhorov, the Russian billionaire who took control of the team in June. The Nets are also set to play preseason games this year in China.
“We are encouraging the league to look at us a little differently now that we have new ownership in Prokhorov and his interest in globalizing the franchise,” said Brett Yormark, president and chief executive officer of Brooklyn Sports & Entertainment, which owns the Nets.
Nets season-ticket holders will be compensated for the loss of the home games with the choice of tickets to other Nets home games, a refund, or additional tickets to a “meet and greet” event with Nets players.
No decision has been made on any changes to team sponsorship deals for the loss of the two home games.
While the league will work to sell its own marketing platform around the London games, both the Nets and Raptors will try to leverage the games into new business for themselves. The Nets, for example, are planning to offer trips as incentive for new sponsors and for premium season-ticket holders who renew early for the 2011-12 season.
“We will use these [London] games to create a sense of urgency to get people to commit,” Yormark said.
“We look at the games in London primarily as a league event but there will be tactful things we can do,” said Tom Anselmi, chief operating officer of Maple Leaf Sports & Entertainment, which owns the Raptors. “We are looking at taking sponsors, rights holders and important clients and using the games as an example of our business.”
Verizon’s focus on developing exclusive wireless programming for its handsets has led to a sponsorship and content deal with the Izod IndyCar Series.
Verizon will soon launch an IndyCar app that has live timing and scoring from events; driver and team information; highlights; streaming of broadcasts; and social-networking links. The deal makes Verizon one of the more integrated partners in the sport, with sponsorship of Penske Racing’s Will Power to go along with its new series sponsorship and content play.
The free IndyCar app initially will be available on Android and BlackBerry devices. Future phases of development could make it adaptable to other handheld devices as well.
Verizon and the series did not release financial terms of their deal, but industry sources said it’s a multiyear agreement valued at $1 million annually and gives Verizon the designation of official wireless carrier of the series, in addition to the content.
Verizon is the U.S. market-share leader in the wireless service industry. It has been running ads featuring Power on ABC and Versus broadcasts of IndyCar events.
“They have a very aggressive marketing plan and they’re looking for ways to bring greater benefits to their customers through unique content,” said Greg Gruning, IndyCar’s vice president of sales. “For us, when you talk about growing your fan base, this is a great opportunity because Verizon brings 99 million subscribers.”
Gruning said the IndyCar Series’ ability to own and control its assets was critical in making the deal happen. IndyCar owns its website as well as the live and archived digital content that comes from the track.
Verizon’s motorsports marketing agency, Indianapolis-based Just Marketing International, worked with the company on the deal.
Verizon is still planning how IndyCar will come into play at its retail locations, but creative and promotional plans are in the works. Verizon also has a NASCAR Nationwide Series sponsorship at Penske and is in the final year of sponsoring Penske’s Sprint Cup car driven by Brad Keselowski.
The NFL Players Association’s marketing arm recently notified NFL sponsors that their rights to use players in advertising end in March if, as expected, the league’s collective-bargaining agreement expires. The group, NFL Players, in a letter dated Aug. 6 also offered league sponsors the opportunity to continue using players through a separate union deal.
In addition, sources said, NFL Players has been talking to NFL sponsors’ competitors as well as marketing agencies about potential deals.
The sponsorship agreement regarding NFL players is not part of the CBA but it runs concurrently with the labor deal. The NFL pays the NFLPA as part of the agreement, which was signed in 2001. In return, the union does not sign competitor sponsors, while league sponsors have to go through the union for player group licensing deals.
Last year, the NFL paid the NFLPA a $25.1 million sponsorship fee as part of a $43.8 million sum that also included fees for Internet rights and other player marketing, according to the union’s annual filing with the U.S. Department of Labor.
“The overall Sponsorship Agreement between NFL PLAYERS and the NFL is set to expire on March 4, 2011,” states the letter from Allison Tucker, vice president of business development and corporate sponsorships for NFL Players, which was obtained by SportsBusiness Journal. The CBA expires at the same time.
“NFL PLAYERS has exclusive group rights of all players in the National Football League and we receive a portion of your sponsorship payments to the NFL in exchange for access to these rights. As of March 4, 2011, however, we will no longer be receiving this payment and the group player rights will no longer be included in your NFL sponsorship.”
“Looking ahead, we want to prevent any interruption to your business, and want to continue providing you with the ability to market your products, brands, and services by using our players, while continuing to restrict access to the group player rights by competing entities,” the letter said. “Accordingly, we wish to discuss an option we have developed to continue our partnership in the event that the overall Sponsorship Agreement expires for any period of time.”
It is not clear how the option for continued access to players rights would function. NFLPA officials declined comment for this story.
Greg Aiello, NFL senior vice president of public relations, when questioned about the letter, responded, “This just came to our attention, and we will address it with the union.”
The NFL, Aiello added, has not advised sponsors how to continue using players if the CBA and sponsorship agreement expire in March.
Industry experts said they were not surprised NFL Players had sent the letter now, seven months from expiration, because companies plan their sponsorship activities months before the NFL season.
If NFL Players were to sign companies that compete with league sponsors, it wouldn’t be the first time for that type of union-based effort. The NFLPA competed with the NFL for sponsorships from at least 1989, when the union decertified, until 2001, when it reached the current sponsorship agreement with the league. The league and union signed the current CBA in 1993, but it would take another eight years to strike the sponsorship side agreement.
Some industry insiders viewed the letter to the NFL’s sponsors as a veiled threat. Frank Vuono, who ran NFL licensing and marketing from 1985 to 1993 and now works as a sports consultant and adviser, said the letter is certainly a threat to sign with the union, or else.
“The people involved are very savvy,” he said.
When Vuono was at the NFL, the league at one point represented 900 players for marketing rights, he said. Ultimately, the NFLPA assumed that role, but Vuono said if the current structure evaporates, there is nothing to prevent a third party from trying to represent them.
A key question, Vuono said, is the value of the players without the team marks — meaning that by divorcing team rights from players, the players could not appear in uniform in ads. Also, the use of the term NFL would be restricted. In 1999, for example, a federal court ruled that the NFLPA could not tout Coors as the official beer of “NFL players” because the league controlled the word NFL.
To that end, Dockery Clark, a former sports marketing executive with Miller and Bank of America, said players historically are used more by non-league sponsors in advertisements, pointing to the example of MasterCard spokesman Peyton Manning. Rival Visa is the NFL sponsor.
“Player rights are not as important as you might think [to league sponsors],” Clark said. “I haven’t seen much activity with the significant sponsors. All the league [sponsorship] represents is the shield, the jewel events and collective rights of all the teams.”
Some sources saw nothing threatening in the letter. One person noted that if the union wished to act threatening, it could have sent a letter warning, “Your rights will expire by March 4 and you are hereby notified.”
In the letter, Tucker wrote, “We are working hard to enter into a new Collective Bargaining Agreement and an extension to the Sponsorship Agreement. Please note that it is our sincere intention to shield you from any dispute we may have with the league — our sole concern is to allow you to continue your utilization of group player rights no matter the overall labor or business climate.”
The NFL this month is unveiling an array of new digital products, including live streaming of out-of-market preseason games, expanded in-game highlights on NFL.com and NFL Mobile, and a number of relaunched team sites.
The moves represent essentially the third phase of an internally driven digital content strategy for the league, a plan it launched publicly three years ago. The NFL elected to retain most of its digital rights as opposed to pursuing a licensing-driven model. The plan started with the more basic elements of the online space, such as integration with the NFL Network. Now, the league is working to more fully exploit its digital rights.
Also among the new digital products are a previously announced NFL.com fantasy football game that will include video animation, data and performance projections from partner EA Sports; a redesigned, video-centric NFL.com home page, which debuted late last month; and mobile distribution of the RedZone channel through the league’s new wireless deal with Verizon.
Under development for later launch are applications for the iPhone and iPad that will contain content and functionality not tied down within the Verizon pact.
“We’re now to the point where we can get very aggressive and release a bunch of products we believe will really drive consumption,” said Brian Rolapp, NFL senior vice president of digital media.
The fantasy push is among the chief efforts in the broader digital strategy as it directly boosts traffic and usage of virtually every other portion of NFL.com and the league’s team sites. League officials declined to disclose registration numbers to date, but the strong expectation is that NFL.com will become the fourth truly major player in the fantasy football industry, along with Yahoo!, ESPN and CBS Sports.
The fantasy game efforts will be supplemented by a new, online 90-minute show devoted to fantasy football that will run live on NFL.com each Sunday from 11:30 a.m. to 1 p.m. The preseason game broadcast package, priced at $39.99, is also geared largely to fantasy players.
“Fantasy’s a tough business — very data- and traffic-intensive — and definitely not for the faint of heart,” Rolapp said. “But we obviously have assets that nobody else does and really want to take our slice of that pie.”
The NFL now operates 21 of its 32 teams’ websites on a common, recently rebuilt technology platform. The other 11 team sites are expected to roll into the program over the next year. The league handles the back-end and technical aspects of the sites, while the clubs retain the ability to create a distinct design and feel for their online destinations. They also retain some ad inventory for locally driven sales.
Club sites most recently relaunched include those for New Orleans, Tampa Bay, Cleveland, Green Bay, Denver, Pittsburgh, Kansas City and the New York Jets.
The NFL also has deepened its alliance with video partner NeuLion heading into the 2010 season. The company had been powering Game Pass, the NFL’s international live game package; Audio Pass, the live online radio product; and Game Rewind, an online replay service. Those products will return with higher video resolution and expanded multiview capability in the case of Game Pass and Game Rewind, and enlarged social-media functions and interactivity. NeuLion is also supporting the preseason game package, having built the video player.
With the Chuck Greenberg-led purchase of the Texas Rangers approved last week, MLB continues its active pace of franchise turnover and executive control change.
The arrival of Greenberg, leading a group called Rangers Baseball Express that includes team President Nolan Ryan, marked the 10th MLB franchise sale since the beginning of 2005. In addition, the lead control executives for five other franchises have changed in the same period, with a sixth expected to arrive later this year once Cleveland Indians President Paul Dolan takes over for his father, Larry.
That means half the league will have seen a primary leadership change in barely more than half a decade, a run that comes right after eight more franchise sales between 2002 and 2004.
“There’s unquestionably been quite a lot of turnover,” said the Houston Astros’ Drayton McLane, who himself has periodically entertained offers for the team during his 18 years as owner. “But fortunately, what I’m seeing now is a lot more well-financed individuals coming in that are really solid [and] well-backed, and that’s going to be a big benefit to the game going forward.”
The turnover is also rapidly making the fraternity of team owners significantly younger. The forthcoming Dolan transition mirrors recent moves in New York, Minnesota and Toronto, in which Hal Steinbrenner, Jim Pohlad and Edward Rogers, respectively, took over for their now-deceased fathers. Chicago Cubs owner Tom Ricketts is 44 years old, and Greenberg at 48 is 15 years younger than outgoing Rangers owner Tom Hicks.
The other common denominator is a significant loyalty to MLB Commissioner Bud Selig. There has not been a franchise transfer since he became fully fledged commissioner in 1998 in which the club sale did not yield a preferred party of his as the victor.
“The profile of the group has definitely changed in recent years,” said Derrick Hall, Arizona Diamondbacks president and chief executive officer. “There’s a ton of energy in the group, and I think a lot of common commitment to making this sport better.”
In-market pace slows: The San Diego Padres, one of two MLB teams to date that have pursued live online in-market streaming of their games, announced last week it would make four games available for free later this year, the first two coming this week against the Cubs in Chicago. The club and MLB Advanced Media, manager of baseball’s interactive rights, said the move was not a signal that in-market streaming in baseball is a failed proposition, despite the fact that the quick succession of teams following the Padres and New York Yankees predicted by several league executives has yet to occur.
“These were games that Cox was not scheduled to show locally on TV, so it was simply about making them available a different way to our fans,” said Tom Garfinkel, Padres president and chief operating officer.
Bob Bowman, MLBAM president and chief executive, said the move will also help expose fans to the in-market product, similar to how MLBAM offers free previews on its other subscription video products.
“Sampling continues to be important, and to the extent that happens here, that’s certainly a good thing,” Bowman said. “We still need to get a critical mass of teams involved, and we’ll likely be in a better position on this in 2011.”
Target Field fete: The owners and general managers gathered last Wednesday night at Target Field for their typical owners meeting dinner party, giving many of the executives their first opportunity to see the much-celebrated outdoor ballpark that opened in April in downtown Minneapolis. Even veteran owners and executives who have traveled extensively around the league raved the following day about the stadium’s sight lines, intimacy, integration into the downtown landscape and success overcoming numerous engineering obstacles given the locale’s extremely tight footprint.
“It’s an absolutely fabulous setting,” Selig said. “Just a sensational ballpark, and we really enjoyed ourselves.”
The gathering included remembrances for Yankees owner George Steinbrenner, who died last month, as well as the late Twins owner Carl Pohlad, who fought for years for a new facility to replace the Metrodome but did not survive to see the opening of Target Field.
The Twins were not in town during the meetings, preventing the owners from taking in a game as well. But team President Dave St. Peter said that was actually preferable; not having to navigate groups around a packed facility made it easier to accommodate the many requests for ballpark tours from the visiting executives.
The founding executives of Rivals.com, Shannon Terry and Bobby Burton, are returning to digital sports media with the creation of 247Sports.com, an independent entity that will seek to blend local and team-based affinity sites with social media and mobile technology.
There are some key similarities between Rivals.com, now a Yahoo!-owned market leader in college sports and recruiting content, and 247Sports.com. The new site, like Rivals.com, is launching with a focus on college sports, with more than 30 individual sites devoted to specific programs. Also similarly, 247Sports.com will operate with a mix of ad-supported and subscription-based content.
But 247Sports.com intends to take its operational model to pro sports as well, beginning this fall. And unlike the Rivals network, which leaned primarily on affiliate relationships, 247Sports.com is focusing more on an owned-and-operated model. Plans call for hiring experienced, known talent in local communities — in many cases, veteran newspaper writers — and using that talent to start sites from scratch.
Yahoo! bought Rivals.com in 2007 for $98 million. Chief executive Terry and COO Burton left the company last year. Since then, the two have quietly waited out various non-compete and non-solicitation clauses.
The creation of 247Sports.com brings Terry back to his primary love of developing startup companies. In the late 1990s, he founded and ran Rivals.com forerunner AllianceSports. 247Sports.com is being launched with about 30 employees and with $6 million in startup funds — all from company executives, with Terry providing the largest individual piece. Terry serves as CEO; Burton is president.
“This is about creating something that as a fan I would want to consume myself,” Terry said. “This is not a re-creation of Rivals. Instead, this is a very different editorial and technology platform, and an evolution of where I believe the industry should be going.”
A gradual rollout will begin this week, with message boards for several major college football programs that integrate directly with social media channels. A full battery of team sites, a recruiting database and news feeds are slated for release by November.
The planned mobile elements include availability for consumers via wireless applications and, internally, programs that will allow for quicker and easier publishing by the site operators at any place or time.
Among the individual properties aligning with 247Sports.com are Bucknuts.com, which covers Ohio State, and OUInsider.com, which covers Oklahoma.
247Sports.com is operating out of the same Brentwood, Tenn., office park where Rivals is headquartered. Terry acknowledged odd feelings of being so near and now competing with his prior creation.
“I guess we’re competitors now,” he said, “but what we’re doing now is very different, and I want to take the next step.”
The Connecticut Tigers, a short-season Class A minor league baseball team playing in a Norwich, Conn., office park, rank a meager 12th in the 14-team New York-Penn League in attendance, with an average draw of about 1,400 fans per game. The club is not yet certain whether it will be profitable this year. And team officials freely acknowledge that they are playing in a market with historical challenges: The previous tenant, the Class AA Connecticut Defenders, left last year for Richmond, Va.
But after a move early this year from Oneonta, N.Y., where minor league baseball had been played since 1966, Tigers officials say they have absolutely no regrets about their own relocation. There was little economic choice in their eyes, and slim, if any, chance for long-term success in the small upstate New York town.
The Tigers drew just 692 fans per game in 2009 at outdated Damaschke Field, an average that was the lowest in Oneonta since 1976 and marked the continuation of an extended attendance decline. Available 230 miles to the southeast was Dodd Stadium, a 15-year-old ballpark with much more modern amenities.
“You never want to be the folks who relocate, but this was an opportunity we simply couldn’t pass up,” said Andrew Weber, Tigers general manager. The club’s move happened despite their pledge two years ago to stay through at least 2010 in Oneonta, a market where dozens of future stars including Don Mattingly, Jorge Posada, and Curtis Granderson made their pro debuts.
“The landscape in minor league baseball has changed,” Weber said. “It’s really much more of a business now. We’re fighting for the disposable income like never before. People don’t have as much of it, and what they do have, they’re being much more conscientious with it. Before, people might go to a game and a movie in the same week. Now, it’s one or the other.”
The Tigers are a microcosm of a rapidly shifting dynamic within minor league baseball. Serving as the player development arm of Major League Baseball, the affiliated minor leagues have historically been a grassroots version of the game, with many team operators not obsessively concerned about profits and losses. The Tigers under previous owner Sam Nader, who sold the club to New York attorney E. Miles Prentice in late 2008, operated the franchise as more of a local community asset and did not sell beer, a principled decision on his part that cut significantly into revenue.
Franchise values for minor league clubs vary widely, from $25 million for some Class AAA clubs down to low seven figures for A-level ball. About half of the 176 affiliated minor league clubs historically lose money annually on a net accounting basis and perhaps one-third do so on an operating basis, according to Minor League Baseball.
Adding to the challenges for all teams most recently is the impact of the global recession of late 2008 and 2009, which cut industrywide operating income by an estimated 20 percent last year, a sizable amount given the tight economics of the game.
The financial environment is somewhat better this year, with MiLB attendance up 1.4 percent through July and sponsorship sales in many markets, particularly Class AAA and AA markets, on the rebound. Still, the business of minor league baseball is undergoing a historic maturation into something much more akin to the major league model, all while the teams and leagues try to retain their unique character.
“The downturn from 2008 into 2009 was fairly precipitous and it’s still definitely harder to make money than it once was,” said Pat O’Conner, Minor League Baseball president. “But as concerned as I may be about the economic environment, I’m not concerned about our model. We are still providing quality, affordable family entertainment.”
Marv Goldklang, chairman of the Goldklang Group that owns four minor league teams and has been in the business since the 1980s, sees the major changes in the business, too. Among those changes is a far more serious tenor behind the scenes.
“It’s night and day now from what it was,” Goldklang said. “We spend a lot more time these days at league meetings talking about marketing issues as opposed to the umpire with the tight strike zone that we’re all frustrated with. But there’s been a payoff there, too. Some of the best marketing talent in the business is found at the minor league level.” (See story, below)
Indeed, the minor leagues have made their mark and experienced both attendance and revenue growth over the past two decades thanks largely to promotions and giveaways that never would happen in the majors. Goldklang’s own partner, Mike Veeck, was the brains behind Tonya Harding Mini-Bat Night, Enron Night, the ill-fated Vasectomy Night, and scores of other newsmaking and attendance-boosting promotions.
Other marketing efforts, however, are more straightforward and aim to play into societal trends, in turn serving as something of a lab experiment for potential use at the major league level. The Goldklang Group’s latest marketing push is Be Your Own Fan, an effort that incorporates social media and online video to promote minor league baseball as a highly variable entertainment option, where a fan may come to a game for the baseball, a summer night out of the house, a group outing with friends and family, or for some other, individual reason.
The relentless marketing and sales push is borne out of necessity, whether for minor league baseball’s MLB-affiliated clubs or for those teams and leagues that operate as independents. Even with attendance remaining at historically high levels, the minor leagues are facing increasing pressure from scores of other entertainment options, both in and out of the home.
Generally speaking, the working agreements between MLB parent clubs and their minor league affiliates call for the MLB club to pay the salaries of players and coaches, some equipment costs, and per diems. The individual minor league teams then are responsible for stadium operations, business and marketing functions, team travel and other similar expenses. Individual minor leagues pay for their umpires.
Independent minor league teams and leagues are just that, independent, and do not have the financial support of MLB.
The Class AAA Indianapolis Indians, one of a handful of minor league teams whose stock is publicly owned and traded and thusly files financial reports, has been profitable for the last 37 years, with a 38th all but certain to happen. Profits for the team fell sharply last year, to $459,603 compared with $1.23 million in 2008. Even with an expected rebound this year in every key business metric, the club has some type of giveaway, promotion or theme night for every home game the rest of the season, with many games featuring multiple elements.
“We have such sincere competition in Indianapolis,” said Indians general manager Cal Burleson. “Particularly in August, there is a definite increase in the competition here for the entertainment dollar between the state fair, the [NFL] Colts starting back up, the [WNBA] Indiana Fever, high school and college football, kids going back to school. We have to do things at a higher level than we might otherwise.”
Reid Ryan, president and chief executive of multiteam operator Ryan-Sanders Baseball, said he notices a couple trends in particular in things being down from several years ago.
“Everybody is really struggling with those Monday to Wednesday dates,” he said. “People are still coming out, but more on the weekend [or] once a week as opposed to twice a week or so, like before.
“And for our [Class AA] Corpus Christi [Texas] team in particular,” Ryan said, “there has been a real big push on real substantial promotional items — a shirt or backpack or something like that — where that would enable people to perhaps avoid a trip to Wal-Mart.”
A fundamental part of minor league baseball, of course, is the relative inexpensiveness of its tickets. Like their major league brethren, minor league teams over the past two years have been particularly aggressive in promoting value-based offers. Dollar nights, two-for-one deals and scores of similar ticket offers are commonplace throughout the industry.
But there also, in recent years, has been a steady price creep at the high end, and that has some executives concerned. Box and lower-level seats that not long ago went for $8 to $12 in many markets are now frequently being sold in the $14 to $18 range.
“There’s a possibility that we could price ourselves out of our natural market and blur the distinction between us and more expensive recreational options,” Goldklang said. “If it’s costing $100 or more for a family of four to come to the park and have something to eat, it calls into question who we are. There hasn’t been a lot of dialogue on this, and that’s part of my concern, too.”
Part of the ticket price escalation has been designed to counter fixed and operational costs that have increased substantially throughout the industry. Items like insurance, travel and utilities — elements largely out of direct team control — have spiked in cost, eating directly into team profits.
The Class AAA Buffalo Bisons, whose opening in 1988 of what is now called Coca-Coca Field in downtown Buffalo helped spur the stadium building boom in both the majors and minors over the ensuing 20 years, has seen double-digit percentage increases in its utility and insurance costs and has drastically cut down on the number of flights it takes for road games. Team officials didn’t increase ticket prices for this season, with the peak price in Buffalo remaining at $11, but they do acknowledge the rising cost burdens.
“The price of baseball has gone up a lot,” said Jon Dandes, president of Rich Baseball Operations, which also owns the Class A Jamestown (N.Y.) Jammers and Class AA Northwest Arkansas Naturals. “With insurance, for example, the premiums and deductibles have both gone way up. You’re literally paying more now for less coverage. Other things we’ve had to deal with — workman’s compensation, training expenses, extra netting at the ballpark to reduce our [insurance] liability and so forth — it all adds up.”
If there’s another indicator to be had on the altered environment, it’s the level of facility construction activity. After a furious wave of development lasting more than 15 years, the market has slowed considerably. Outside of Florida and Arizona, where MLB clubs annually work on their spring training sites, there are only two projects among the affiliated minors currently on the board for opening in 2011 or 2012.
“I can’t remember the last time I’ve seen that,” O’Conner said.
That dynamic predictably owes to the minimal appetite cash-strapped municipalities have these days for financially supporting sports facility projects, same as what’s happening in the major leagues. Even when proposed ballparks would be privately funded, strict environmental requirements, tight credit markets and other hurdles have stifled activity. The result is that team operators have fewer new-ballpark opportunities available to them than in past years to help counter their increasing expense-side pressures.
The shrinking number of team sales and relocations in recent years reflects this reality. In fact, franchise activity has slowed greatly since the collapse of the financial markets in 2008 (see chart, at left).
The moves that have been made, such as those of the Tigers and Defenders, and Mandalay Baseball Properties’ pending purchase of the Class AAA Oklahoma City RedHawks and pending sale of the Class A Hagerstown (Md.) Suns, have been directly motivated by finances and a desire to get into better markets and more modern facilities — but no deal is easily done.
San Diego Padres owner Jeff Moorad, similarly, is leading a group looking to buy the club’s Class AAA affiliate in Portland and move it to California, perhaps to a new stadium to be built north of San Diego in Escondido. The Portland Beavers’ stadium is being converted into a soccer-specific venue, and efforts there for a new baseball stadium have failed. Numerous approvals and conditions must still be met before the Padres’ deal is completed and construction work begins.
“We’re all in the revenue business, and while we’re doing what we can to manage costs like everybody else, the main thing is to be able to grow revenue,” said Steve DeLay, Mandalay Baseball Properties executive vice president and chief marketing officer.
The group, which manages the publicly owned Class AAA Scranton-Wilkes Barre (Pa.) Yankees and PNC Field, has been in lengthy, often-tense negotiations with local and state officials about the future of that franchise and its aging ballpark. Mandalay has a purchase option for the club for a below-market rate of $13 million, but attendance has fallen off sharply since 2007, the first year of a new affiliation with the New York Yankees that has since been renewed through 2014. No conclusions have yet been reached, and several outcomes remain possible, but DeLay said the group is not looking at other markets for the club.
A key source of growing revenue is not occurring at the ballpark but instead online, via a new digital media strategy. The creation of the Baseball Internet Rights Co. (BIRCO) in late 2008 has grouped many of Minor League Baseball’s individual teams, leagues and the official MiLB site into a cooperative agreement with MLB Advanced Media. The new structure, seeking in part to replicate MLBAM’s own success at the major league level, has yielded a series of relaunched websites and new mobile offerings this season.
On an anecdotal level, online video consumption and traffic for Washington Nationals pitcher Stephen Strasburg’s high-profile tour through the minors this spring mirrored the sharp attendance increases seen at the ballparks. More Strasburg-type stories are anticipated, as MLB teams continue to embrace the annual player draft and in-house player development as more efficient means of roster construction.
“What we’ve done is put in a structure that now makes it far easier to follow people like Strasburg and do so wherever you are and in real time. That’s a very exciting development for our industry and something as individual franchises we’re far less equipped and able to do alone,” said Frank Burke, BIRCO chairman and owner of the Class AA Chattanooga (Tenn.) Lookouts.
O’Conner, however, cautioned that the BIRCO story is far from fully told.
“The thing with the digital space, obviously, is that changes so rapidly,” he said. “But we’re beginning to make real progress. We haven’t won the war yet there by any means, but we are winning some battles.”
The U.S. Open Tennis Championships is renewing sponsorships with Citizen Watch and Polo Ralph Lauren, two of its leading partners, in five-year deals worth a total of up to $28 million.
The companies’ deals were up after this year’s tournament, which begins Aug. 30.
Polo will pay about $8 million in value over the coming five years in its renewal. In a separate deal, Polo is hiring Venus Williams for a one-time webcast tennis clinic next week in a deal that could portend a larger relationship with the world’s No. 4-ranked player.
“It’s kind of a get-to-know-you process, and hopefully the clinic will be high-profile enough to bring some attention for our relationship and how we do,” said David Lauren, Polo’s senior vice president of advertising, marketing and corporate communications. “This is a way to test the relationship and see how we can work together.”
Polo and Williams, who designs and wears her own clothing line, are producing a co-branded dress she will wear during the clinic and will be sold on-site at the Open. She will not wear the dress during the Open.
The webcast is also backed by Open sponsor Mercedes-Benz, which sources said is paying $250,000 for the affiliation. The webcast will be available via Polo’s website.
Polo has been an Open sponsor since 2005. The fashion company outfits the tournament’s ball boys and girls, referees, and chair umpires.
Citizen, which has been an Open sponsor since 1993, is also next year picking up official timekeeper status at the Western & Southern Financial Group Masters and Women’s Open, an event that, like the Open, is owned by the U.S. Tennis Association. The watchmaker is also renewing sponsorship of Pilot Pen Tennis, another USTA-owned event.
In total, Citizen’s new five-year commitment, including the other events, is worth $15 million to $20 million, sources said, with the vast majority of that being tied to the U.S. Open.
The renewals serve as the most recent indicator that America’s top tennis event continues to resist sluggishness in the sports economy. Last year, in the teeth of the national recession, the Open had its second-best year financially.