February 28 - March 6, 2011 Vol. 13 — No. 43

Top Stories

  • NBA studies AT&T proposal as part of wireless push

    Recognizing the lack of sufficient wireless capacity for fans inside their arenas, the NBA is taking a more active role in helping its teams meet growing demand.

    The league is currently refining a proposal from AT&T in which the telecommunications giant would give its facility owners the option for the company to build in both Wi-Fi and mobile networks within their buildings.

    The proposal with AT&T calls for the company to build the roughly $2 million Wi-Fi and mobile networks in arenas at no charge to facility owners. AT&T customers in those venues would automatically get access to the network while non-AT&T customers would have to register to get free in-arena access, giving the company the opportunity to gather valuable consumer data while attracting more subscribers. The proposal is not tied to an NBA leaguewide sponsorship or technology partnership deal and the option would be available only to NBA teams that own or control their arena operations. Other tenants such as NHL teams or other events in the NBA-controlled arenas would be included in the increase in wireless access.

    In addition to the AT&T scenario, the NBA is presenting teams with the option to use a third party to build their overall wireless system, or to use current league partner Cisco to install entirely new digital platforms that would include wireless access. Each choice would remain voluntary to teams. There is no specific timetable on teams to boost their wireless capacity.

    The move is part of the NBA’s effort to help teams meet exponentially surging demand for wireless access inside arenas, a thorny issue the entire sports industry is facing (see related roundtable discussion, page 16).

    Mobile 3G and 4G networks from major carriers, as well as Internet Wi-Fi networks, are routinely clogged at most sports venues as consumer interest in mobile content continues to balloon beyond projections.

    In addition to mobile and social media content, the fast-growing technology that will allow fans to buy concessions and merchandise through their smartphones is expected to further tax wireless networks. NBA data shows more than 70 percent of its fans attending games own smartphones.

    “You could say the stars are aligned for us and we want to provide fans with access,” said Steve Hellmuth, NBA Entertainment executive vice president of operations and technology. “There is upside for our teams.”

    Facility owners generally charge each wireless provider $2,000-$3,000 a month for in-arena access. Under AT&T’s new proposal, the company would build the networks using Cisco technology. Cisco is an NBA leaguewide technology marketing partner, renewing its deal as a non-exclusive technology partner last year. There is no specific AT&T branding in the building should a team choose that system, allowing teams to keep local wireless deals intact, Hellmuth said.

    “We have reviewed AT&T’s proposal and we are refining it,” Hellmuth said. “We specifically want to understand how it works with our marketing partner in Cisco.”

    Leagues generally have some base-level communications requirements for key functions such as game operations and security. But in-venue connectivity has largely been a market-by-market and team-by-team function, with building operators attempting a wide variety of temporary and more permanent efforts to try to keep up with demand.

    “The importance for better wireless service in arena is critical to the future of our business,” said Alex Martins, president of the Orlando Magic, which used a third party to install a wireless system inside the new Amway Center. “With the proliferation of handheld devices, [fans] will be in need of excellent access.”

    The NBA’s effort is rare as it attempts to offer a coordinated, league-level solution.

    “I don’t know of anything quite like this,” said Bill Schlough, San Francisco Giants chief information officer, who along with AT&T has created one of the most technologically advanced sports facilities at AT&T Park. “The concept they’re after seems to make some sense.”

    Cisco has developed technology that seeks to avoid wireless bottlenecks by targeting separate sections of arenas. AT&T’s proposal to the NBA is based heavily on that technology. Teams, however, will still not be obligated to use the AT&T option if they have a better one, but it’s too early to get an industrywide sense of how teams will respond.

    “We are not saying to teams that one way is better than another,” Hellmuth said. “Our wireless systems in our arenas have been overrun and we are not able to service our customers the way we’d like. We want to improve it, and we want fans on smartphones in our arenas.”

    The move comes with potential conflicts between wireless sponsors and embedded building systems that are slowing the dream of universal Wi-Fi across sports venues.
    “It’s going to take time,’’ said Shervin Mirhashemi, COO for the Global Partnerships unit of AEG, during a panel discussion last week in New York, hosted by architecture/design firm Gensler. “It’s not cheap to retrofit. … Someone’s got to pay for it and you’ve got to be able to monetize it.’’

    Woody Thompson, executive vice president at Octagon, which has clients including Sprint and wireless internet provider Clear, said any technology rollout holds both promise and fear for brands. “If you promote that you are Wi-Fi capable for all, the minute someone can’t get their Facebook page up and post pictures from the game, they are blaming the sponsor or the venue or both — and it can become a nightmare,’’ he said. “That is a real concern. Even if it doesn’t work for 15 minutes, people get very frustrated and the sponsor gets blamed.’’

    Added MasterCard sponsorship chief Michael Robichaud, “There should be a way for teams and venues to monetize this on the back end.”

    AT&T and Cisco officials could not be reached for comment.

    Staff writer Terry Lefton contributed to this report.

  • Fox, Turner show interest in NHL

    Fox and Turner are taking an early look at the NHL’s cable TV package, raising the likelihood that the league will have a competitive bidding process — with as many as four networks — as it negotiates new TV deals this year.

    Versus’ exclusive negotiating window ended in late January, leading the league to send out feelers to several networks to gauge interest in the NHL’s TV rights. The league reached out to ESPN, which held the NHL’s TV rights from 1992 to 2004, and is still engaged in talks with Versus, its current rights holder.

    For the past several months, ESPN has been open about its interest in kicking the tires on the NHL’s cable package and was considered Versus’ main competition for the rights. Many NHL executives have favored a move back to ESPN. And with the NBA facing the possibility of canceling games next season, ESPN could be in the market for more winter sports on its schedule. Plus, ESPN has a history with the NHL, having launched ESPN2 in 1993 with a heavy schedule of NHL games.

    Versus is expected to make a strong bid to retain the NHL, which is the Comcast-owned channel’s highest-rated programming. This will be the first major TV sports negotiation by the combined Comcast-NBC since federal regulators approved their merger last month. The league is hoping that Comcast will want to send a message that it’s serious about picking up sports rights by stepping up and keeping the NHL.

    But the league’s outreach to Fox and Turner shows that it wants to build an auction process that will push the TV rights package well above the $77.5 million annual payout it gets from Versus.

    Sources at those two programming groups said that while things still are in the exploratory stage, they are interested in examining the  rights package further.

    Fox has been looking to add sports to its FX cable channel, and many of its regional sports networks have deals with NHL teams. Turner could be interested in bringing more sports to its TruTV cable channel. In March, TruTV will begin telecasting some NCAA Tournament games.

    While they’ve been happy with the production quality, some NHL executives have been frustrated with the overall visibility of Versus, which still is not available in many bars and restaurants. It also has the lowest distribution of the potential networks. ESPN2 is in 99 million homes, FX is in 96 million homes, TruTV is in 92 million homes and Versus is in 76 million homes.

    As the next big national rights deal to be negotiated, the NHL is hoping that these channels will view hockey as a way to build their on-air sports portfolio. Any deal also could include the NHL’s international TV rights, which also are up.
    “Looking at the next bunch of rights deals that are up, it’s the NHL, the Pac-10, the Olympics and the NFL,” said a source involved with the talks. “That’s kind of it for a while.”

    The NHL is going into this bidding process with a fair bit of momentum. The league’s viewership numbers on Versus are up 13 percent this year. Through Feb. 20, Versus’ NHL games have averaged 319,000 viewers, compared to last year’s 283,000 through Feb. 9.

    The NHL’s negotiating position was helped last week when it signed a $375 million deal with MillerCoors in the U.S. and Molson Coors in Canada that includes at least $100 million in committed media buys.

  • NFL wants to keep players off field if union decertifies

    With the NFL collective-bargaining agreement scheduled to expire at midnight Thursday, the league is pursuing a strategy to lock out players rather than impose work rules even if the NFL Players Association disbands, according to sources familiar with the situation.

    Conventional wisdom within football circles is if the union disbands in order to file an antitrust lawsuit, the league would impose work rules and play the coming season, similar to the sequence of events that unfolded in 1989. That year started a stormy and litigious four-year phase between the league and players that culminated with the current CBA, struck in 1993. But no games were lost between 1989 and 1993 because, while there was no union, the teams still signed the players.

    Several key sources said the NFL believes allowing the players on the field would essentially fund a new antitrust lawsuit because it would take away the league's main leverage point: depriving the players of game checks. As a result, the league might not lift a possible lockout just because the union walked away, making it a condition of the players returning that they drop the lawsuit.

    Editor's note

    SportsBusiness Journal is using the term "decertification" in stories to describe the act of the NFL Players Association disbanding, as have most other publications covering the labor negotiations. Technically, however, what the union did in 1989, and may do so again, is what in labor parlance is called "disclaiming interest," or "a disclaimer."

    "The union leadership is in control of disclaimer; employees are in charge of decertification," said Seth Borden, partner in the employment and labor law practice at McKenna Long & Aldridge.

    When a union disclaims, Borden said, its executives essentially walk away from their leadership roles. In a decertification, the members vote to disband.

    While NFLPA members were reported to have voted for decertification in the fall, it's unclear if that was simply a vote to approve of disclaimer, if necessary.

    A true decertification requires the union filing a petition at the National Labor Relations Board, which would then conduct its own vote of members. In other words, a disclaimer is an easier path to disband.

    If successful, either disclaimer or decertification would get the NFLPA to the point of being able to file an antitrust lawsuit. But the union, sources said, plans to disclaim if events reach the point where it decides to disband.

    Because labor lawyers say that even they often use the two terms interchangeably, for easier reading and to avoid confusion, SportsBusiness Journal is using the term decertification to describe the possible disbandment of the union.

    "The difference this time is there will be a lockout," a league source said. "In 1989, there wasn't."

    The players would then almost certainly ask a federal court to force the league to let them play, a league source said.

    Whether this is an academic exercise or a description of events to begin unfolding later this week is uncertain. The union and league last week engaged in lengthy negotiations overseen by a federal mediator and were scheduled to meet again on Tuesday. The mediator noted in a statement last Thursday that progress had been made but there were still large differences between the sides.

    The NFL declined to comment on what it termed contingency plans. The NFLPA, like the NFL, was not commenting on all matters related to the CBA because the mediator had asked the sides not to talk publicly.

    But if the sides move past Thursday without a deal, or if the deadline is not extended, the sources said the NFL is intent on not repeating what it sees as its mistake in 1989: allowing the players to compete while they sued the league.

    It would be uncharted territory if the union were to disband and the NFL does not let the players on the field, said Gary Roberts, a former league outside counsel.

    "If the union decertifies, it is not really correct to call it a 'lockout,'" he said. "As soon as you don't have a union, it's an employer ceasing operations."

    Bill Gould, a Stanford University law professor and former chairman of the National Labor Relations Board, said a court would likely side with the players and allow them back on the field.

    "I think it would be a violation of the antitrust law to lock players out if, in fact, there is no union," he said.

    First, the NFLPA needs to disband, and the timing is important. While the NFL cannot lock out until the CBA expires, labor lawyers expect the NFLPA to decertify before that time. That's because the expiring CBA is worded such that players need to disband before Thursday midnight, the expiration moment, or it would have to wait six months to file the antitrust lawsuit.

    The NFLPA would disband for the same reason it did in 1989: Unions cannot sue an employer for antitrust violations. The NFLPA's decertification 22 years ago was viewed then as a radical and risky maneuver, but it paid off when the antitrust lawsuits resulted in a settlement with the league tied to a new CBA. That pact gave the players free agency and the owners a salary cap.

    The league, meanwhile, is already challenging the players' potential decertification. On Feb. 14, it filed a charge with the NLRB on the matter, arguing that decertification is a way to avoid serious bargaining, a charge the union denied.

    Lawyers describe that filing as the first step in the league's effort to halt decertification, which could be followed by lawsuits. It's unclear if the union's agreement to the intensive series of negotiations overseen by the federal mediator undercuts the NFL charge that the union has been engaged in surface bargaining designed to simply reach decertification.

    Because the NFLPA decertified once, only to reform as a union, Roberts predicted the NFL would surely emphasize the union move is not a sincere gesture to disband. "The NFL will no doubt argue that it is not a decertification and that no one on the planet will believe the union is going away," he said.

    The league could ask the NLRB to go to a federal court to file an injunction stopping the disbandment as a ploy because the union likely intends to re-form as it did in 1993.

    "At the end of the day, can you really require a union to perform its functions?" asked Josh Zuckerberg, a labor lawyer with Pryor Cashman, which advises unions and management. "I don't think the board can compel them."

    The union last fall won the blessing of its members to decertify. Decertified, the NFLPA could not collectively bargain for players or file grievances on their behalf and instead would operate as a trade association. NFLPA Executive Director DeMaurice Smith would run the group, and other employees are expected to retain their jobs in that circumstance.

    Some NFL sources, however, said that the league might not be willing to deal with Smith at that point on any issue. If he no longer runs a union, said these sources describing the league's thinking, and if an antitrust lawsuit is filed, the NFL could insist on talking only with the class counsel, likely Jeffrey Kessler, the union's outside counsel.

    In 1989, the league unsuccessfully challenged the NFLPA's decertification. After the NFLPA declared it disbanded, the league contacted the union on several occasions to bargain proposed changes to working conditions, according to an NLRB case. The union's then-executive director, the late Gene Upshaw, replied in writing that the organization was no longer engaged in collective bargaining. The NLRB, in a case brought by some players at the time, found the NFLPA was a trade organization.

  • Second set of NFL-NFLPA talks continues on parallel track

    Liz Mullen
    While the NFL Players Association and the NFL have been meeting about a new collective-bargaining agreement, the union and the league also have been meeting about another deal: a new commercial agreement that covers NFL sponsors’ rights to use NFL players in advertising.

    The overall sponsorship agreement between the NFLPA and the NFL is a separate document from the NFL CBA, but it expires at the same time: on March 4.

    “The position of NFL Players is we would be willing to do a commercial deal outside of the CBA and remain willing to discuss the possibility,” said Keith Gordon, president of NFL Players, the NFLPA’s marketing and licensing arm. “At this point, no deal has been reached and no additional sessions have been scheduled to discuss the commercial agreements since prior to the Super Bowl,” Gordon said early last week.

    Under the agreement, the NFL pays NFL Players a fee, which was about $25 million in 2009. In exchange, NFL sponsors have the right to use six or more NFL players in advertising, and NFL Players does not sign separate deals with companies that compete with NFL sponsors.

    NFL Players has sent two letters to NFL sponsors — one in August, one later last year — offering them a chance to sign deals with them in order to continue their rights to use NFL players in advertising. As of March 4, NFL Players would also be able to sign companies that compete with existing NFL sponsors to agreements.

    A source said that about 80 percent of the NFL’s current sponsors have had dialogue with NFL Players about renewing a deal, and other interested sponsors also have contacted the union’s licensing arm.

    ORNSTEIN EXPECTED TO REPORT TO PRISON: Mike Ornstein, best known as the former marketing agent to Reggie Bush, is expected to begin serving eight months in prison this week, sources said, after pleading guilty last year to two federal felonies involving plans to sell Super Bowl tickets and NFL jerseys falsely advertised as game-worn.

    Ornstein has not officially been assigned to a prison, said Chris Burke, spokesman for the Federal Bureau of Prisons. The bureau website last week stated that Ornstein was “in transit,” which generally means he is in custody to some degree. “The marshals have him somewhere, but he hasn’t gone to his designated facility,” Burke said.

    Ornstein’s attorney didn’t return a phone call, but he has previously asked the U.S. District Court in Cleveland that Ornstein be assigned to Taft Correctional Institution, a medical facility prison in California.

    Ornstein was sentenced in November to eight months in prison at a hearing in which federal prosecutors said he was cooperating with multiple ongoing federal investigations. In January, his attorneys and the government asked for more time before he had to report for prison in a motion that was filed under seal.

    AGENT PAUL LAWRENCE DIES: Paul Lawrence, an agent with NFL player rep firm Maximum Sports Management, died suddenly of a heart attack earlier this month while playing basketball near his home in Seattle. He was 44.

    “It was a big loss for us,” said NFL agent and Maximum President Eugene Parker. “He was so personable. All of our clients and everybody in the company were extremely close to him.”

    Lawrence worked with Parker on a number of player clients, including New Orleans Saints cornerback Tracy Porter and Arizona Cardinals wide receiver Larry Fitzgerald. Despite the cutthroat nature of the NFL agent business, Lawrence was respected and liked by rival agents.

    He is survived by his wife, Holli, two daughters and a son. Memorial contributions are being taken at Chase Bank branches for the Paul O. Lawrence Children’s Memorial Fund.

    SIGNED FOR REPRESENTATION … : CAA Sports has signed Philadelphia 76ers guard Lou Williams for representation. A team of CAA agents, led by Leon Rose, will represent Williams, who was previously represented by Merle Scott. … NFL agent Drew Rosenhaus has signed USC defensive tackle Jurrell Casey for representation in the NFL draft. Casey was previously represented by Impact Sports.

    Liz Mullen can be reached at lmullen@sportsbusinessjournal.com. Follow her on Twitter @SBJLizMullen.

  • NASCAR gives boost to spirits category

    NASCAR plans to expand the rights it offers its official spirits sponsor, ending its conservative approach to the category.

    The sanctioning body’s agreement with Diageo, a seven-year deal valued at $2 million a year, ends this year, and under terms of the current agreement, Diageo can’t refer to itself as an official partner of NASCAR or use the sport’s logo and imagery at retail.

    NASCAR Chief Sales Officer Jim O’Connell said the sport will relax those restrictions in 2012 and encourage its partner in the category to promote its affiliation with the sport at retail and in advertising.

    The move should allow the sport to increase the sponsorship fee in the category and give the sport more exposure at retail.

    “The more activation our partners do, the better for everybody,” O’Connell said. “It helps us reach more fans and helps them get a better return on investment.”

    O’Connell said NASCAR is in discussions with Diageo about renewing and hopes that it will stick with the sport. He said that the sport wouldn’t look to break up the spirits category into subsets such as official whiskey. He added, “Our preference is to maintain partnerships. We don’t want churn.”

    NASCAR first lifted a ban on allowing liquor sponsorships on cars in 2005. After it did, Jack Daniel’s, owned by Brown Forman; Jim Beam, owned by Fortune Brands; and Diageo’s Crown Royal began sponsoring cars.

    Both Jack Daniels and Jim Beam ended their sponsorships in 2009, citing declines in the sport. Diageo’s Crown Royal brand continues to sponsor Roush-Fenway Racing’s No. 17 car driven by Matt Kenseth. That deal ends this year.

    Just Marketing International CEO Zak Brown, whose agency manages Diageo’s NASCAR sponsorship, said the spirits company plans to stay in the sport and is evaluating whether it will do so by spending on team, track or sanctioning body partnerships.

    Brown said that NASCAR’s decision to loosen restrictions on the category was a positive for the sport and the spirits category.

    “With the time that’s gone by, it’s only logical for NASCAR to embrace this category and market with it because they’re great marketers,” Brown said. “It’s the right category to open up and the right time to do it.”

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