March 28 - April 3, 2011 Vol. 13 — No. 47

Top Stories

  • World Congress at 10: A decade in the making

    Looking back at the people, panels and predictions that helped make the World Congress of Sports one of the industry's most talked about events

    When the World Congress of Sports convenes this week in Miami, it will mark the 10th anniversary of the event designed to take the pulse of the sports industry.

    To mark the occasion, we looked back at the last decade of the Congress. What was said and who said it? What were the challenges and the issues? What resonated and what didn’t?

    This year’s event will take place in Miami, with labor concerns certain to be a focal point. Only once before, during the 2005 World Congress in New York, was a league facing such a difficult labor scenario. During that event, the NHL was in the midst of a 310-day lockout.

    So as we prepare this week to discuss where the industry is going, let’s take a few moments and see where it has been.

    2002: Inaugural World Congress of Sports in NYC

    2003: The rise of league-owned networks

    2004: Pay-per-view prediction

    2005: Mobile's youth movement

    2006: A la carte cable in the plans?

    2007: Focused on China

    2008: Recession proof?

    2009: Exploring the Twitterverse

    2010: Hints on the NFL and L.A.

  • Does public opinion matter yet?

    No NFL game has been missed and no practices canceled, but there’s been no shortage of trash talk across the league in recent weeks.

    Phrases like “liar,” “modern-day slavery” and unions across the board have “exceeded their bounds” have become commonplace. And the combination of Twitter, Facebook and other 24-hour media outlets has created what amounts to a constant screaming match, unlike any sports labor conflict in the past.

    The taunting and name-calling is all part of a high-stakes battle to sway public opinion. It’s a battle that will likely have little effect on ongoing negotiations but could go a long way toward determining how deeply the fallout will be from the lockout. It’s also a dangerous game. Any lopsided shift in public opinion not only could add pressure on one side, it also could undermine the image of the league. In the long run, that could cost both owners and players revenue should the screaming match alienate fans too much.

    The NFL recently hired Frank Luntz, a leading Republican pollster and expert on messaging.
    For that reason, the NFL and NFLPA have sunk tremendous time and resources into message control during the work stoppage. The NFL has recently hired Frank Luntz, a leading Republican pollster with expertise in developing phrases that resonate with the public, like Newt Gingrich’s famed “Contract With America,” and the players have hired Phil Singer, a veteran political consultant who worked on Hillary Clinton’s 2008 presidential campaign. The high-profile hirings underscore what’s at stake for each side.

    “This is the preseason of communication,” said Ari Fleischer, head of Fleischer Communications and a former White House press secretary. “Come August or September, public opinion is going to become awful sharp and can create pressure on both parties. If you wait too long to be staffed up and ready, you’ve missed the boat, [because] if one side makes a mistake or one side is more savvy than another, it can shift public opinion into that lopsided area where you can get business leverage. ”

    Behind the battle

    The last major work stoppage in sports occurred seven years ago. When the NHL locked out players in 2004, league and union communications teams launched a nonstop battle to win public support.

    NHLPA Communications Director Jonathan Weatherdon remembers long days that began with compiling news clips at 6 a.m., outlining talking points with union leadership, posting key messages for players on an internal website, working the media throughout the day, and scheduling player interviews in markets across North America.

    “It was nonstop, and it never ended,” Weatherdon said.

    Communications teams at the NFL and NFLPA are working similar schedules.
    The NFL’s strategy is being directed by longtime NFL communications executive Greg Aiello and former Ogilvy & Mather executive Paul Hicks, who came to the league last summer.

    So far, the league’s strategy has emphasized making owners more accessible to media than they have been in previous sports work stoppages. Whereas in the regular season NFL owners were fined if they spoke about labor negotiations, recently both league and team officials have been seeking the press. Media analysis after recent talks broke down shows a number of owners speaking both in the national and local marketplace about the league’s willingness to negotiate and repeating a similar refrain — that players walked away from the table and are more interested in litigation than negotiation.

    Giants co-owner John Mara has been very
    visible and consistent in his remarks, and only a few owners have gone off message, namely, Dolphins owner Stephen Ross, who was particularly candid in saying this was “not his idea of ownership” and highly critical of unions.

    It’s unclear if ownership will continue to be vocal or yield to league officials as negotiations continue. Regardless, sports executives and media analysts all agree that the league and its owners will have to walk a fine line in talking about players because any comments that appear to vilify players would denigrate the very talent they use to market and promote their teams.

    “You never want your players viewed as the bad guys or in a negative fashion,” said Dan Courtemanche, executive vice president of communications at MLS, which signed a new collective-bargaining agreement a year ago. “We knew at some point our players would be back playing for MLS clubs, and we didn’t want fans to have a negative view of players that would make them less likely to attend a game in person or view one on television.”

    The NFL has several, inherent advantages in the communication battle. It does a weekly poll of 300 fans, and also has a panel of 10,000 fans it can survey occasionally — not to mention it has an e-mail database of 5 million fans it can deliver messages to directly. It’s using all three to stay in touch with fans and has tapped its e-mail database to deliver letters from Commissioner Roger Goodell about negotiations.

    In addition to its own communications staff, the league also has 32 teams with their own communication departments who have relationships with news outlets in 30 markets nationwide, doubling up in New York City and the Bay Area. Those departments have established relationships with media outlets that make it easy for them to schedule interviews for owners and team executives. The value of those local ties was evident earlier this month when the NFL urged teams to have their owners and presidents speak to local media after the union decertified. One team communications director estimated 19 of 32 teams did, amplifying the league’s message that NFL players walked away from negotiations in order to drown out the players’ position that the league had locked them out.

    “That’s a powerful tool leagues have,” Weatherdon said.

    Let us play

    George Atallah, the NFLPA’s assistant executive director of external affairs, crafted a communication strategy for players that’s designed to combat those challenges (see related story). The strategy has encouraged players to emphasize four key messages: This is a lockout, not a strike; open the NFL books; the lockout hurts local businesses; and players just want to play. The last point has been turned into the tag line, “Let Us Play,” for which the union created a commercial that CBS College Sports refused to air.

    KEVIN KOSKI / NFLPA
    George Atallah (center) crafted a communications strategy for the players.
    Like the NFL, which created nfllabor.com to chronicle the lockout, the players launched nfllockout.com. The site details the players’ position on what the lockout is about and provides links to stories like a recent Sports Illustrated article about NFL revenue and repeats the players’ allegation that owners won’t open the NFL’s books.

    The players have supplemented the site by posting Ustream videos and direct chats with players such as Brian Dawkins, a Denver Broncos defensive back who attended the recent players meeting in Florida.

    The addition of Twitter and Facebook as media platforms has made it easier for players to communicate directly with fans. Some players, like NFLPA player representative and Saints quarterback Drew Brees, have more than 400,000 followers, and have used those platforms to their advantage. The day the league locked out players, Brees wrote, “The NFL brought this fight to us — they want $1 billion back, we just want financial information to back up that request.”

    But the immediacy those platforms provide mean they have some downsides, as well. Unlike the league, which has only 32 owners to keep on message and the ability to fine those who get off message, the players association has to manage and follow comments by more than 1,500 players. Atallah called the task impossible.

    While players such as Alge Crumpler have stayed on message, saying “We just want to get back on the field,” others have attacked league executives personally and made incendiary remarks. As a result, the players association has had to deal with players like free agent Kevin Burnett calling Goodell a “liar” and Vikings running back Adrian Peterson comparing the NFL to slavery.

    Both management and labor officials said those types of remarks and personal attacks can turn off fans whether they’re made by players or management.

    “Anyone who degenerates into that type of rhetoric hurts themselves on both sides of the table,” said Stan Kasten, former president of the Washington Nationals, who worked through collective-bargaining negotiations in MLB and the NBA. “Fans don’t want to hear it. If you’re being personal and unprofessional, it maximizes the damage.”

    Pulse on the polls

    There’s no clear winner yet in the battle for public opinion, but early polling favors NFL players. Five of eight polls by outlets ranging from CBSsports.com to Bloomberg News show fans blame owners for the current labor unrest. The margin of blame, however, was more narrow if fans had the option of blaming both parties.

    Executives who have been in labor battles downplayed the early polling results, saying that fans won’t be truly engaged in the labor issue until it affects them directly by disrupting training camp or games.

    “Right now, public opinion is secondary because America has not lost this pastime,” said Ian Pulver, a hockey agent who worked as an associate counsel for the NHLPA during the 2004-05 lockout. “It’s getting ready for baseball and the NHL and NBA playoffs. America won’t speak out until they’ve lost their pastime.”

    Right now, most experts agree that the NFL and NFL players’ spat appears to fans to be over nothing more than money.

    “I don’t think anyone wins in a story like this,” said Kevin Sullivan, a former White House communications director. “The average person doesn’t want to hear that it’s hard to agree on how to divide up the billions, and the issues are so complex.”

    The key to winning the public relations battle going forward will be changing that perception and showing how a labor agreement will benefit fans. The NHL did that by arguing that a salary cap would create more competitive balance in the league. To date, neither the NFL nor the players have effectively done that, said Mike Berland, who worked on behalf of the NHL during the 2004-05 lockout and runs market research company Penn, Schoen Berland.

    “The ultimate benefit has to be the fans,” Berland said. “If you can’t articulate why there’s a dispute and how the game will end up in a better place, as a fan, you’re left wondering why they’re taking away the sport.”

    The longer that remains the case, the more damaging it could be for the NFL. The league enjoys a pristine image and sustained economic success that’s unrivaled in sports, and all of that could be damaged by prolonged labor unrest.

    As one senior league executive, who declined to go on the record, said, “They do everything right and everything turns to money for the good of everybody, so PR and image is extremely important to them.”

    Kasten said that if a deal gets done in time for players to go to training camp, there won’t be any lasting damage from the early skirmishes in the battle for public opinion.

    “Football as a product is so strong that they’ll bounce back quickly,” Kasten said, “but I’ll never take that for granted.”

    One thing is clear: The NFL and its players aren’t.

    Staff writers Daniel Kaplan, Liz Mullen, John Ourand and Terry Lefton contributed to this report.

  • Early ticket sales point to rebound for MLB

    Major League Baseball is poised to end its three-year attendance slide based on preliminary ticket sales data for the 2011 season, set to begin Thursday.

    Commissioner Bud Selig declined to project a specific attendance increase for the season. But after drawing 73.06 million fans in 2010, down 0.4 percent from 2009, this year’s total will likely fall somewhere between 75 million and 78 million, an increase of 3 percent to 7 percent.

    Selig has established 80 million as a goal since finishing roughly 500,000 people short of the mark in a record-setting 2007, but that level appears at least another year away.

    “I’m really bullish on this season. We’ve got some great empirical data coming in,” Selig said. “I want to see a nice increase this year, and I’m very hopeful, very optimistic and confident that we’re going to do it. It should be a big, big year.”

    The pending ticket turnaround owes to several factors: an improving economy, continued aggressive discount offers and promotions by individual clubs, historic levels of competitive balance, and increased involvement by league officials in what has traditionally been a very local piece of the business.

    MLB over the offseason formed a new panel called the Commissioner’s Ticket Review Committee that involves several league departments, MLB Advanced Media and senior executives from six clubs: the Cincinnati Reds, Atlanta Braves, Chicago White Sox, Kansas City Royals, Seattle Mariners and Cleveland Indians. The group is exploring numerous trends around ticketing, including dynamic pricing, in an effort to better identify best practices from around the industry. Specific measures recommended by the committee and approved by Selig will then be disseminated to the other 24 clubs.

    The committee was established without a time frame and will stay at work as Selig continues to seek out that 80 million mark.

    “This is much more macro than traditional best-practices sharing,” said Jacqueline Parkes, MLB chief marketing officer. “There’s a tremendous wealth of knowledge that we’re looking to tap into as we look to learn how we can optimize the fan experience that the commissioner continues to believe is crucial to the growth of the game.”

    The hope for revived ticket sales represents a marked reversal from a lengthy period of uncertainty that included those three straight seasons of declines, a crippling global economic recession and calls from Selig for clubs to not get “cocky” on pricing. Even with the recent declines, though, attendance is still at historically high levels: The sport’s six highest turnouts have each come in the last six seasons.

    “As we stand here today compared to a year ago, we’re definitely more optimistic, and we were more optimistic a year ago compared to ’09,” said Marc Bruno, president of Aramark sports, entertainment and conventions. The concessionaire works with 13 MLB teams, and its business to a significant extent depends on the amount of foot traffic at the ballparks in which it operates. “There’s a general sense of health around the industry and that people are increasingly willing to spend.”

    DAVID DUROCHIK
    The Twins are set to defy the sophomore jinx with record ticket sales at Target Field.
    MLB ticket sales remain a critical measure of the industry. Gate attendance is the sport’s largest single revenue source, and MLB has more ticket inventory to sell than any other property.

    Beyond the aggregate view, local sales are brisk in many MLB markets. The Minnesota Twins have already sold more than 2.9 million tickets for 2011, and are set to defy the industry’s historical norm of sophomore slumps in the second year of a new ballpark by setting another franchise attendance mark at Target Field. The San Francisco Giants’ sales, predictably, have soared after the club’s first World Series title in the city since moving from New York in 1957. Other traditionally strong sellers, such as Philadelphia, Boston and the New York Yankees, also have reported continued strong business.

    “We’ve been blessed with another competitive team, a good amount of star power and a ballpark we believe is an absolute game changer,” said Twins President Dave St. Peter.

    MLB still has several question marks in terms of attendance, notably the New York Mets, who are battling a nasty clawback lawsuit in the Bernie Madoff financial scandal and have employed an array of price discounts in an attempt to reverse a 19 percent decline in 2010. But other clubs toward the bottom of the league’s ticket sales are also showing revived business.

    “Our goals are relatively low compared to a lot other teams. But we’re optimistic we’re going to reach and exceed our budget goals,” said Oakland A’s owner Lew Wolff. The club, still seeking to move out of Oakland, drew 1.4 million last year and is projecting at least a similar number for 2011. “We’re definitely seeing the sales pace tracking ahead this year.”

  • AEG involved in massive Moscow sports complex

    AEG is nearing a deal to develop a massive new $1.5 billion sports and entertainment complex in Moscow, a landmark project that will dramatically change the way arenas and stadiums are built in Europe’s largest market.

    The sports venues are targeted to open in 2016, with the stadium a centerpiece of the 2018 FIFA World Cup competition. Meanwhile, the NBA has been in preliminary talks with the developers about a new concept, the NBA Club, a themed destination that could be part of the complex’s mixed-use development. The NBA Club, developers said, could include a restaurant, children’s play area, a small gymnasium and a retail store, serving as a way for the league to extend its grassroots development to Russia.

    MANICA ARCHITECTURE
    The venues are targeted to open in 2016.
    VTB Stadium and Arena — the working title of the project is named after VTB Bank, the Moscow bank spearheading the development — encompasses a new 45,000-seat stadium, a 15,000-seat arena tied to a high-end commercial district, and a five-star hotel in the city’s historic Petrovsky Park.

    VTB Bank, 85 percent owned by the Russian government, is the country’s largest financial institution and has about $150 billion in total assets, according to the bank’s website.

    AEG has been assisting VTB Bank for design and construction of the stadium and arena in the early stages of development, said Bob Newman, chief operating officer for AEG Facilities. Now AEG and VTB Bank, which controls the property through a 49-year lease, are close to signing a deal for AEG to continue working on a more formal basis, confirmed Andrei Peregoudov, VTB Bank’s senior vice president and chairman of the board for the sports development.

    The relationship could result in AEG Facilities signing a deal to operate both sports facilities, both officials said. In addition to the World Cup, the stadium will serve as the new home for the Dynamo Moscow soccer club, 75 percent of which is owned by VTB Bank. Two other teams, the Kontinental Hockey League’s Dynamo and CSKA Moscow basketball, will play home games in the arena. VTB Bank does not own those two teams.

    The NBA has been consulting with VTB Bank on the arena portion. League officials said they are interested in expanding its role on the project but did not disclose any specific plans.

    VTB Bank is close to completing financing for the project, Peregoudov said. Officials have been talking to other international banks about funding, about $1 billion of which is set aside for the 650,000 square feet of leasable commercial space. If nobody else is interested, VTB Bank could finance the project on its own, Peregoudov said. The Russian economy has survived the global recession better than other parts of Europe because of its vast oil reserves and surging oil prices, he said.

    The Moscow mixed-use development, the first of its kind in the market, is expected to help transform the city of 14 million residents by providing new sports venues in a community sorely lacking those facilities. VTB Bank executives plan to adopt the Western model of marketing arenas and stadiums by selling naming rights, founding partners and premium seats, while outsourcing deals for facility services such as ticketing and concessions.

    AEG views the VTB Bank Arena deal as an opportunity to potentially bring all of its business divisions into Moscow with “bench strength” from the arenas it operates elsewhere in Europe, said Newman. AEG Global Partnerships, AEG Live, AEG Sports and AEG Real Estate could play key roles in selling the project, he said.

    No deals have been signed yet, but Peregoudov knows the AEG model and says it works well in other buildings.
    “It is the largest city in Europe and they have no modern arena to serve the sports and entertainment community,” Newman said. “It is a vibrant marketplace with a dynamic capital market. You start adding up all of its attributes, you can’t help but feel some energy toward the potential success of this project.”

    VTB Bank Stadium
    VTB Bank Arena
    Total seats: 33,000, expandable to 45,000 for FIFA World Cup
    Total seats: 12,000, expandable to 15,000
    Suites: 98
    Suites: 82
    Club seats: 6,750 Club seats: 1,632
    Stage-end restaurant, conference and meeting rooms on club level, 5,640-square-foot LED video board
    Stage-end restaurant; ice floor; four-screen, center-hung scoreboard, total display exceeds 900 square feet

    If those deals are completed, they would further extend AEG’s global footprint. The Moscow site is similar to AEG’s O2 London, an arena surrounded by retail shops and restaurants inside the old Millennium Dome. In Moscow, the old Dynamo Stadium, built in the 1920s, is being demolished except for the exterior wall, which will frame two levels of new commercial space. The plan is to build the new stadium and arena above the retail development.

    “They feel it’s a great fit for AEG’s global strategy with Moscow being next in line,” Peregoudov said. “This one will be bigger than London, which has an arena but no stadium.”

    Peregoudov last month met with NBA executives at the NBA All-Star Game in Los Angeles and toured the AEG-developed L.A. Live.

    The conversation between the NBA and Peregoudov about the arena project began in earnest last October a month after the NBA opened a new office in Moscow. The league and VTB Bank have a relationship that started three years ago when VTB launched a pro basketball league and consulted with the NBA on that venture. This time, VTB Bank asked the league for advice on arena design.

    NBA Commissioner David Stern, NBA Deputy Commissioner Adam Silver and Sophie Goldschmidt, the NBA’s senior vice president of NBA Europe, were “very helpful” in providing guidance for building an arena to NBA standards that VTB Bank and AEG expect to be a regular stop for the league’s preseason games, Peregoudov said.

    MANICA ARCHITECTURE
    The arena/stadium project will include a high-end commercial district and a five-star hotel.
    “We have had discussions with VTB about its proposed new arena and stadium development in Moscow,” Goldschmidt said. “We have been closely following the developments and plan to work together on the project in the future. Discussions have also included working together on grassroots activities and the creation of a multiuse health and lifestyle destination as part of the project. We think the proposed new state-of-the-art arena will be great for basketball and other entertainment in Russia.”

    The NBA Club’s mix of education and entertainment appeals to project officials and fits with their vision for the overall development.

    “Not everybody here likes soccer,” Peregoudov said.

    The NBA has staged a few preseason games in Russia, most recently in 2006. The New Jersey Nets, owned by Russian billionaire Mikhail Prokhorov, would be a natural fit to play exhibitions at the new arena. The Nets conducted a preseason basketball clinic last October in Moscow during a one-day visit to Russia, have marketing deals with Russia companies Aeroflot and Stolichnaya, and their games are broadcast on Russian television.

    VTB Bank officials have met the Nets’ new ownership group, with early talks on how the two groups could work together to expand business at the Moscow arena and Barclays Center, the $800 million arena the Nets are building in Brooklyn, Peregoudov said.

    The NHL is aware of the project but does not have any plans to play games there, said Deputy Commissioner Bill Daly.

    David Manica, an independent architect in Kansas City who spent 13 1/2 years with Populous until leaving the firm in 2007, is designing the arena and the stadium. Manica helped AEG develop Mercedes-Benz Arena in Shanghai in accordance with NBA standards, one of the three arenas operated as part of AEG’s venture with NBA China. The other arenas are in Beijing and Guangzhou.

  • Intersport keeps State Farm, others linked to Final Four

    State Farm might not be an NCAA partner anymore, but it still has a strong presence at the Final Four.

    Intersport, a Chicago-based agency that creates sporting events and turns them into TV shows, has added more event programming to its Final Four lineup. That programming provides companies like State Farm and Papa John’s, which aren’t NCAA sponsors, an activation opportunity in the Final Four city, as well as a media buy within basketball programming on ESPN or CBS during the weekend.

    “It’s a perfect complement to a lot of the other activation we have in the sports space and within our college portfolio,” said Todd Fischer, manager of State Farm’s national sponsorships. Even though State Farm didn’t renew its NCAA deal, “the college fan is still very important to us and being a part of the Final Four is a great extension to our other college properties.”

    INTERSPORT
    The State Farm college dunk and 3-point contest highlights Intersport’s lineup.
    Intersport’s Final Four programming is growing this year with a new show and an additional event. This week, Intersport is producing two events in Houston, site of the Final Four, that will result in 3.5 hours of programming during Final Four weekend on ESPN and CBS, including the college slam dunk and 3-point contests that State Farm title sponsors. A high school version of the event is new this year.

    In all, Intersport will produce 4.5 hours of programming for Final Four weekend and 8.5 hours of college basketball programming including the week before the Final Four.

    The State Farm college dunk and 3-point contest will be held Thursday night at the University of Houston’s Hofheinz Pavilion and airs later that night on ESPN for two hours. The event was held inside the NCAA’s Bracket Town fan fest area last year, but sponsor conflicts caused it to move out this year.

    ESPN is the co-producer of the event and uses the program to fill the 9-11 p.m. slot after the championship game of the NIT. ESPN talent calls the event as well.

    The high school version of the dunk and 3-point contest will be Friday at the Berry Center and airs for 90 minutes Sunday afternoon on CBS.

    Another Intersport program, “Papa John’s Dunks of the Year,” will air on CBS for an hour Sunday afternoon. Papa John’s has had a presence at the Final Four in the past, thanks to pass-through rights from NCAA corporate champion Coca-Cola, but Coke shifted gears this year and went with Domino’s as its pizza partner. Earlier this week, “Geico’s Best of College Basketball” played on CBS and three episodes of the “State Farm Coaches Tournament Show” aired on FSN. Both are produced by Intersport, and the Geico show is new this year.

    The programs that appear on CBS are time buys by Intersport. The agency works with the network to find gaps in its Final Four lineup where the Intersport programming would be most useful.

    The sponsors signed by Intersport occupy all of the ad time on the broadcast. State Farm has sponsored the 23-year-old college dunk and 3-point contests since 2005, and Mercedes-Benz, Denny’s, Skechers, TD Ameritrade, the U.S. Marines and FRS Healthy Energy are sponsors as well.

    The spend for a title sponsor like State Farm, which has Intersport’s premier event and the “Coaches Tournament Show,” rises into the low seven figures, according to industry analysts. Participating sponsorships begin in the low six figures and can rise into the high six figures, depending on ad units and activation.

    “The amount of programming this year is definitely up from previous years,” said Scot Thor, Intersport’s senior vice president of programming and production. “We’ve got a few tentpole properties that we go to market with every year and we’ve got some events, like the high school dunk and 3-point contest, that are new. What these do, in part, is to help us ‘own the dunk’ this weekend.”

    Some sponsors cross over into multiple events and programs around the Final Four. Mercedes sponsors the college dunk and 3-point contest, the “State Farm Coaches Tournament Show” on FSN, “Papa John’s Dunks of the Year” on CBS and “Geico Presents the Best in College Basketball 2011” on CBS.

    Intersport is careful not to put sponsors from the same category into an event. State Farm is not eligible to be a secondary sponsor on Geico’s show, for example.

    “Sponsors typically get a package of ad units, on-site signage and significant integration into the show,” Thor said. “Our sponsors make up all of that national advertising. We may sell an occasional [scattered unit] here and there, but most of the inventory is packaged.”

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