SBJ/Feb. 7-13, 2011/Leagues and Governing Bodies

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  • When would NFL tap $4 billion in media fees?

    The NFL is not budgeted to use the $4 billion in media fees that are at the center of a bitter dispute with the players union until a potential second year of a lockout, according to two well-placed sources.

    The NFL Players Association has appealed to a federal district court judge a special master’s decision last week allowing the NFL to use those funds in the event of a lockout, which could begin as early as March 4. However, the NFL is not planning to tap the media money until March 2012, if necessary, the sources said, apparently making the outcome of the appeal largely moot in the context of the heated labor debate. Most observers expect the league and union to reach a new labor deal long before spring 2012.

    If it’s true that the NFL does not even need the media money right away, it shows that the NFL has prepared for a doomsday scenario, said Bill Gould, a Stanford University law professor who writes on sports labor and is a former chairman of the National Labor Relations Board.

    “The NFL has a lot of resources,” Gould said. “They can afford to be patient.” The players, Gould added, who were already nervous about what a work stoppage could mean for them may now have reason to be even more concerned.

    Grubman
    The NFL declined to comment for this story, but last month, the league’s executive vice president of NFL ventures and business operations, Eric Grubman, told reporters, “There are a lot of risks we account for, and to prepare for them, we line up sources of capital. [The TV money] is only one. We have other sources of capital that we lined up to account for any risk that we can think of that might face the league.”

    The union has aggressively challenged the league’s control of the TV money, charging that the NFL negotiated below-market rates for the broadcast deals in exchange for a promise that the money would flow whether games are played or not. The league is required to maximize revenue under the collective-bargaining agreement. Underlying the charge, of course, is that the money is critical for keeping the owners afloat during a labor disturbance.

    “Now for the good news: The NFL, until the appeal in Minnesota, has $4 billion to not play football next year. VICTORY!”, union spokesman George Atallah tweeted soon after the decision on Tuesday. Atallah did not reply for comment for this story. The district court that the NFLPA has appealed to is in Minnesota.

    The NFL already is building a $900 million lockout fund, seeded with national revenue the league has held back from teams along with savings from teams not paying players non-health care benefits last year. Under terms of the CBA, the teams’ obligation to pay these benefits, such as life insurance and pension-plan payments, ceased with the expiration of the salary cap last March.

    The union spent heavily to lobby its case with the special master, Stephen Burbank, who under the CBA hears disputes between the sides. The NFL said the union spent twice the more than $6 million Burbank awarded the union, a penalty tied to what he judged as the mistiming of whether some TV money should have been counted in 2010 or 2011.

    The union used two law firms to argue its case, a source said: Dewey & LeBoeuf, its longtime legal adviser, as well as Latham & Watkins. NFLPA Executive Director DeMaurice Smith worked for Latham & Watkins until 2006, when he moved to Patton Boggs. He left Patton Boggs when he assumed the NFLPA post in 2009.

    The NFL has emphasized that the TV money has to be repaid, with interest, after games resume, presuming some of the 2011 season is lost. Grubman, speaking last month, said to think of the money as debt.

    “This is cash money lost we can’t spend,” he said. “We have other sources we can tap, not just the money that is the subject of the [special master].”

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  • NHL All-Star Game back with a bang

    The NHL All-Star Game, which took a hiatus in 2010 due to the Vancouver Olympics, returned this year with robust viewership, an innovative new event in the All-Star Draft and a high level of engagement from the host city, Raleigh.

    Nielsen ratings for the Jan. 30 telecast on Versus rose 33 percent from 2009 numbers, earning a 1.2 average rating, or 1.5 million viewers. The average rating for the Jan. 29 skills competition, which traditionally has lagged behind the game, also rose from a 0.7 in 2009 (870,000 viewers) to a 1.0 rating this year (1.18 million).

    In Canada, CBC’s “Hockey Night in Canada” recorded its largest audience for an All-Star Game with 2.39 million viewers, up 56 percent from 2009 (1.53 million viewers).

    The game also sold out without a public sale. Carolina Hurricanes season-ticket holders, team and league partners and staff accounted for all 18,680 tickets.

    ON DRAFT: Much of the buzz at this year’s game revolved around the new format, which saw players Eric Staal and Nicklas Lidstrom pick teams during the Jan. 28 All-Star Draft. The televised draft was staged in the Raleigh Convention Center at the Fan Fair expo, drawing a 0.5 rating on Versus (624,000 viewers) and 1.5 million Canadian viewers on TSN, or roughly double the regular-season game average for both networks. The draft, which was sponsored by Cisco and produced by TSN, also provided the league a third televised event for the weekend.

    “There were a lot of unknowns in [the draft] from the league perspective — what we wanted to do was showcase the players and their personalities,” said Brian Jennings, executive vice president of marketing for the league.

    Jennings declined to discuss whether the new event broke even from a revenue perspective, but said a handful of league officials, including Commissioner Gary Bettman, Chief Operating Officer John Collins and Brendan Shanahan, vice president of hockey and business operations, will decide whether the event will return in 2012.

    LAST MINUTE: The NHL decided to relocate the 2011 game from Phoenix to Raleigh because of the Coyotes’ bankruptcy this past April, putting considerable stress on local organizers, whose preparation time was cut in half.

    “Typically for an event of this magnitude, cities have 18 to 24 months to prepare,” said Scott Dupree, who co-chaired the local organizing committee for the event. “We had nine months. We were just hoping to do the event correctly.”

    Raleigh has organized several major sports events in recent years, hosting the opening rounds of the NCAA men’s basketball tournament in 2004 and 2008, the 2002 and 2006 Stanley Cup Final and regional NCAA women’s basketball tournaments in 2002 and 2009. The committee raised a budget of $208,500, and from October through January blanketed downtown with street pole banners and large building-sized ads.

    The committee raised an additional $250,000 for a Jan. 28-29 outdoor festival called the All-Star Wide Open, which featured 100 local craft and food vendors and 20 musical acts and attracted 61,000 fans. It also rounded up 1,200 volunteers — the NHL required only 800 — to help staff the event.

    ENGAGEMENT: The All-Star Fan Fair, which was operated by the NHL and featured 30 partner exhibits at the Raleigh Convention Center, attracted 32,000 customers (tickets were $10), more than doubling the local committee’s predicted attendance of 15,000.

    Technology company Cisco, which renewed its partnership in December, promoted its consumer telepresence technology “Umi” in a converted Winnebago, and allowed fans to speak to players in their hotel rooms on the morning of the game, with 2,500 fans stopping in to see the product. The league’s Guardian Project partnership with comic book icon Stan Lee allowed fans to view the 30 superhero characters through 3-D goggles. Discover, the league’s newest partner, which bought presenting sponsorship for the All-Star Game, took photos of 7,500 individuals beside the Stanley Cup.

    “Of all the NHL properties, this seemed like the one that was the most family oriented,” said Jennifer Murillo, Discover’s director of advertising. “It’s not the playoffs or the finals, where your team could be eliminated; it’s a celebration.”

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  • Li's success seen as boost for tennis in China

    Sixty-five million people in China watched the Australian Open final featuring their countrywoman Li Na, according to the WTA Tour, which cited CSM Media Research, a TV ratings agency that is a unit of WPP.

    GETTY IMAGES
    Li Na made a run to the Australian Open final.
    For context, consider that the Super Bowl gets about 100 million viewers in the United States.

    Li’s run to the final — and her near win in the title match, which would have made her the first Asian Slam winner of either gender — sparked tremendous interest in China, where the game is emerging as a top sport.

    “It will have huge impact on the WTA in China,” said WTA President David Shoemaker. “It will catapult her into the conversation with Yao Ming.”

    While Li might have a ways to go before being on par with Houston Rockets center Yao — the 28-year-old’s play in Australia resonated little in the United States — the impact of her run in Asia was clear. Nike, for example, hosted viewing parties of the final across the country.

    The WTA’s rights deal with CCTV, which broadcast the Australian Open in China, expires at the end of this season. CCTV’s deal is for the top 20 WTA events, and Shoemaker, who opened the WTA’s Beijing office several years ago, is confident the rights fee will rise with the help of Li’s success.

    As for Li, this week she will unveil two new endorsement deals, said Max Eisenbud, her IMG agent who also represents Maria Sharapova. Nike was so eager to keep her last year that it cut a deal that allowed her to sell patches on her apparel, the first deal of its kind for Nike in a long time, Eisenbud said. Nike is known for its “clean” contracts, prohibiting patches.

    Eisenbud also is planning a series of Asian exhibitions between Li and Sharapova.

    Before Australia, Li had only two endorsements: Nike and her tennis racket maker, Babolat. During the Open, she signed with SpiderTech for medical bandages, and she will add the two new deals this week.

    “We are going to be aggressive to do deals,” Eisenbud said.

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