First Look podcast: World Congress 2017 PBC plots path to maximize distribution NBA Turnstile Tracker Baseball returns to Kinston, N.C. David Stern investing in tech startups NBA regular season sees ratings drop Faces and Places at World Congress Are sponsors wary of outspoken athletes? On Deck With: Mike Unger, USA Swimming Labor & Agents: Rosenthal takes charge
SBJ/March 28-April 3, 2011/In DepthPrint All
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.
NFL Commissioner Paul Tagliabue delivers the keynote address.
The sports industry was ready for such an event, apparent by the fact that eight commissioners participated in year one, including the NFL’s Paul Tagliabue, who delivered the keynote address.
“The sports industry has never come together with a single voice,” said Arlen Kantarian, then chief executive of pro tennis at the U.S. Tennis Association. “This conference could set the stage for the sports industry to begin acting in our collective best interest.”
Big plans in Big D
Jerry Jones shared his early vision for a new home for his Dallas Cowboys.
Jones also suggested the team would be willing to spend $1 billion on buildings surrounding the new stadium to ensure that the complex was a year-round pursuit.
“One thing I see in the future is a 350-day way for the fans to touch us,” Jones said. “If we get the right combination there — a hall of fame, a Tom Landry Museum — they’ll be able to do it.”
The $1.2 billion Cowboys Stadium opened in 2009 in Arlington, with seating for 80,000-plus. The stadium is highlighted by a massive, center-hung video board, but has no hall of fame or museum. Also, the Cowboys now hope to find a naming-rights partner.
NBAE / GETTY IMAGES
Panelists debated the prospects of the Charlotte Hornets relocating to New Orleans.
“When our fans in Seattle read about the arrogance, the hubris of owners just picking up and leaving, and the way that trust and confidence has been broken in that environment, it’s very unhealthy for the NBA, and it’s very unhealthy for me in Seattle,” said Howard Schultz, then owner of the Seattle SuperSonics.
Schultz eventually sold the Sonics to Clay Bennett, who moved the team to Oklahoma City. Schultz later sued Bennett in an attempt to rescind the sale and bring the Sonics back to Seattle. As for the Hornets, they moved from Charlotte to New Orleans in 2002. But with the NBA currently seeking a buyer for the team, the franchise could find itself on the move again.
Remember the fan
The focus on the fan that sports properties have preached the last two years was a theme that also took center stage at the 2002 event.
“The National Football League has done a poor job [in this area],” said Bob Tisch, chairman and CEO of the New York Giants. “But we’re coming to the realization that it’s more than a three-hour game. The next 10 years in the NFL, we’re going to communicate better with our fans.”
AFL seen as trending up
During a panel on the future of sports, Dallas Cowboys owner Jerry Jones and Fox’s Ed Goren were bullish on prospects for the Arena Football League.
Said Jones: “I’m particularly excited about the Arena Football League.”
The league posted an average television rating of 1.1 in 2003, its first year on NBC, compared with an average of 0.2 in 2002 on TNN. The league ceased operations in 2009, but was revived under new ownership in 2010.
Looming labor unrest
NHL Commissioner Gary Bettman was facing a lockout.
“Fans will tolerate labor disharmony if a league has problems and fixes them,” Bettman said. “We need a system where all teams can be competitive. For that, we need all teams to be economically viable.”
The NHL put that theory to the test, locking out players and missing the entire 2004-05 season.
Does the Internet have legs?
Cutting edge computer technology, circa 2002. The sports industry was still guessing about the Internet’s future.
At various points of the event, executives discussed the possible cannibalization of sports television viewers by the Internet, and some wondered about the prospects for online video, at the time a choppy and limited experience to say the least.
“If video streams [from the Internet] become a reality, that could be a major source of new revenue,” said Jerry Colangelo, then chairman and CEO of the Arizona Diamondbacks and Phoenix Suns.
Use some restraint
“Unless you have some restraints — in other words a salary cap of some significance — you will see people doing things and making decisions they might not otherwise do in order to compete,” said Jerry Colangelo, then chairman and CEO of the Arizona Diamondbacks and Phoenix Suns.
Washington Capitals owner Ted Leonsis took it a step further, saying, “We need a ‘New Owners For Dummies’ manual.
“I was told, ‘You need stars; you need to increase payroll; they will come,’” Leonsis said. “So in our first year, we had a $30 million payroll and finished with 106 points and won our division and were the best team in the NHL. This year, we have a $51 million payroll … we brought in the best player of all (Jaromir Jagr), and we may not make the playoffs. And if we make the playoffs, we are going to edge out the New York Rangers, with a $70 million payroll, and haven’t made the playoffs in four years.”
Super Bowl cold-weather prediction
Bob Tisch, chairman and CEO of the New York Giants, said he thought the NFL would vote the following week to lift the ban on Northern and cold-weather cities hosting the Super Bowl outdoors.
“I think there is a very strong possibility the 2007 Super Bowl will be here in the city of New York at Giants Stadium,” said Tisch, who died in 2005.
His prediction took a few years longer to play out. NFL owners voted in 2010 to award the 2014 Super Bowl to New Meadowlands Stadium, the new home of the Giants and Jets, marking the first time in the event’s history that it will be held outdoors in a cold-weather market.
The rise of league-owned networks
A discussion about the revenue-sharing deal between the Arena Football League and NBC raised the question as to whether the relationship would serve as a blueprint for other sports rights deals.
Panelists dicussed a media landscape that included more league-owned networks.
HBO Sports President Ross Greenburg added: “I think there will be more of a migration into leagues owning networks that they built, a la the NFL channel. So the migration will probably be that the leagues will start to keep the product for themselves if they can build infrastructures in that network and channel that they create, in order to sell their own advertising and make their own money.”
Greenburg’s prediction played out in the marketplace as NFL Network started providing prime-time games, and MLB launched its own network as well to provide live game coverage.
Sponsors speak out
Tony Ponturo, then vice president of global media and sports marketing for Anheuser-Busch, took on the trend of leagues and events selling non-exclusive sponsorships.
The late Chuck Fruit, then senior vice president of worldwide media and alliances for Coca-Cola, said: “We are going to be more selective as we go forward in terms of the number of relationships and sponsorships we enter into. … We’re going to make a bet on which half we think is working and which half isn’t working, and move our money from one pot to the other.”
A call for better marketing efforts
Dallas Mavericks owner Mark Cuban used one panel to question the job the sports industry does in marketing itself to consumers.
Cuban continued, “Right now, our marketing consists of marketing to people already in the church by promoting in our games, and I don’t think that’s going to get the job done in the future.”
He predicted that high-definition television was “going to make a huge difference in the promotion and selling and viewership of sports.”
However, Turner Sports President Mark Lazarus questioned whether consumers would be in any big rush to buy HDTVs, saying, “It’s important to remember that there are still a lot of consumers out there whose VCRs are still blinking ‘12:00.’”
Was migration to cable the start of a trend?
NBAE / GETTY IMAGES
The NBA’s shift to cable had media executives wondering if other major properties would follow.
McManus said he didn’t see the NBA’s move as the start of a trend, saying he was a “firm believer that most of the major sports you see on network television today are going to stay on network television.”
Yet HBO Sports President Ross Greenburg countered: “We’re all dinosaurs up here to one degree in that we all grew up with ABC, NBC, CBS. … All of our kids do not differentiate to a large degree between the cable television universe and the networks. When they watch a television show, they don’t care what channel it’s on.”
The migration to cable continued over the next several years, with “Monday Night Football,” select MLB playoff and NHL Stanley Cup games, and the BCS championship among the programming gradually showing up on cable.
Who was right on media rights?
CBS President and CEO Les Moonves delivered a keynote address where he stated, “The days of networks paying ever-escalating rights fees may be over.”
Les Moonves wondered if rights fees would flatten out.
CBS Sports President Sean McManus said the Olympics could be the exception: “Major corporations are trying to figure out how they can take the Olympics over a period of a number of years and maybe generate some new revenue.”
Predictions of flattening rights fees turned out to be wishful thinking as most of the top sports properties continued to flex their muscles. In fact in 2010, CBS struck a unique, 14-year, $10.8 billion partnership with Turner to share the NCAA tournament.
As for the Olympics, NBC later that year agreed to pay $2.2 billion for rights to the 2010 and 2012 Games, an increase of more than 30 percent over what the network had agreed to pay for the 2006 and 2008 Olympics.
One cat's vision for a network
Given that he founded BET, no one was surprised when Bob Johnson’s plan for growing his new Charlotte Bobcats NBA franchise involved forming a regional sports network tied to the team.
SEAN BUSHER / C-SET
The Charlotte Bobcats pulled the plug on their regional sports network after only a few months on the air.
Johnson said “the basketball product is going to be the anchor tenant, if you will, but we’re going to try to put on every college sport that we can get our hands on in the Carolinas. We’re going to go after high school sports. We’re going to go after motor speedway kind of sports.”
Johnson launched C-SET in 2004, but closed the RSN after just seven months, unable to secure wide distribution and sufficient content. He sold the Bobcats in 2010 to Michael Jordan.
Rogge talks Athens, New York City's bid for Olympics
Jacques Rogge said the IOC had no anti-American sentiment.
Later, Rogge addressed New York City’s bid to host the 2012 Summer Olympics and tried to assure people that no anti-U.S. movement existed at the IOC. “The  vote is in 2005. That is a long way away. There is no anti-American sentiment in the IOC, let me assure you.”
Athens got its buildings ready in time, but just barely. As for New York’s bid, the city lost out to London in the second round of voting. Then, in 2009, Chicago lost its bid to host the 2016 Games in the first round, with the IOC awarding the event to Brazil.
One panel looked at whether sports properties were hurting their growth potential by moving from networks to cable, lured by hefty media rights paydays. Another panel featured a lively exchange over who is truly responsible for rising player salaries — the owners or the players unions. And yet another addressed the potential for the International Olympic Committee to place spending limits on host countries, as construction in Beijing went into overdrive.
MICHAEL GOOD PHOTOGRAPHY (2)
Fox’s David Hill (center) joined other sports leaders to discuss the future of the industry.
“In the future, the stadium is worldwide. It means leagues and sports teams can control the egress that the public has to them, so the day will come — but it is not going to happen in the next decade, in 20 years — that everything will be [PPV] and you will be buying a ticket and you will have a worldwide stadium.”
Is moving to cable a short-sighted decision?
“As soon as sports leaves [free] television, you virtually guarantee you can’t grow that fan base,” Hill said. “You are almost guaranteeing that the people tuning in are [already] fans, and if that is the case, your fan base continually erodes. … That is what is happening with the NBA, the ratings are dropping.”
Tony Ponturo, then vice president of global media and sports marketing for Anheuser-Busch, echoed the sentiment. “The decisions sports teams are making are, ‘No. I can’t say less; I have to say more. What allows me to say more?’ That structure points to pay cable. That is lower ratings. … That is not necessarily good for the product.”
Despite such warnings, there was no letdown in the migration to cable. Some of those making the move most recently include the BCS championship, most of the NASCAR Chase for the Sprint Cup races, and the British Open.
Competition for ESPN?
NESN President Sean McGrail addressed the possibility of someone stepping to the plate to take on ESPN.
No new venture was launched, but when Comcast completed its purchase of NBC at the start of 2011, it created a formidable foe for ESPN. Combining the likes of NBC with Comcast’s Versus and family of regional sports networks creates a company that may be able to go toe-to-toe with ESPN on future rights deals.
One panel tackled the issue over whether ESPN was right to pull the plug on its “Playmakers” series in 2003, after the NFL complained about the series’ portrayal of professional football players.
Mandalay Entertainment Group Chairman Peter Guber said that ESPN didn’t make a mistake by airing the show, and should be commended for taking a risk.
“I think the real challenge is to the NFL to realize that, at the end of the day, dramatic narrative and story telling is their business. They are in the emotional transportation business. … They are not in the hut, hut, hut, hut, business. If they embrace that, they will continue to grow their league; if they don’t embrace risk and story telling as part of the process, they may go the same way as some other leagues we know.”
However, Rick Dudley, Octagon Worldwide president and CEO, said ESPN could have risked its relationship with the NFL had the series continued.
“I think the distributor [of sports content] has a responsibility as a caretaker. … And I know the guys at the league were very, very upset and the players association was upset.”
“In the Beijing region, they’ll add more power than England has in existence today; they’ll build a whole new city for the Games,” said Mark Lewis, then vice president of General Electric’s Olympics sponsorship division. “I feel sorry for the winning city in 2012. The IOC is already addressing cost containment, and [IOC President] Dr. [Jacques] Rogge is talking about white elephants and the concern of cost containment.”
The IOC continued those talks, but so far, no spending limits have been established for future hosts.
MICHAEL GOOD PHOTOGRAPHY
As the NHL faced a labor showdown with players, the labor relations panel was front and center.
Saskin seemed to upset Daly by maintaining that the current labor market was controlled by the owners. “One thing the union does not do is we do not set wages,” Saskin said. “The owners set the wages in our system. It’s a marketplace system.”
“Yeah, it’s a marketplace,” Daly retorted. “It’s a total free marketplace. There’s an entry-level system, there’s restricted free agency, there’s salary arbitration, there are minimum salaries and there are qualifying offers. It’s a marketplace defined by its rules.”
The NHL’s labor battle led to the league canceling its next season.
Bullish on NFL rights fees
OMD Managing Director Ray Warren discussed whether the NFL could keep up its TV rights increases, since NBC had bowed out the last time.
No problem, indeed, as networks continued to dig deep for NFL rights. As for NBC, it’s in an eight-year, $4.82 billion deal with the NFL that runs through 2013.
New York City’s Waldorf-Astoria again played host to the event.
Technology continued to stay top of mind, whether it was ESPN’s use of its sports ticker or looking overseas for a glimpse of what was to come with mobile technology.
Panelists also discussed the problem with steroid use in sports, and the need for the sports business to practice corporate responsibility.
Mobile's youth movement
Watching video clips on cell phones was beginning to catch hold in 2005.
“One single medium in Europe is driving sports in the youth market, and it is mobile,” Payne said. “It is not that mobile is replacing television. Television remains king, but in terms of driving audience, driving eyeballs today on your mobile phone throughout most of the European markets and the Japanese market, they are getting the 30-second clips, the previews, the excitement of the event. And for the youth market, if you are not in that space, you have lost already.”
Carlos Silva, then AOL’s senior vice president of news and sports, said people should not buy into technology that offers capabilities for which people are more comfortable using their personal computers.
SportsLine.com founder Mike Levy said several hundred wireless companies had
Smartphones later revolutionized the media industry and the way content is delivered to consumers.
The question of placing a professional sports team in Las Vegas surfaced during one discussion.
“I do not think the NFL or MLB fits into Vegas just in terms of demographics,” said Jerry Colangelo, then the CEO of the Phoenix Suns. “I think demographically, an arena with 41 hockey or basketball games would be one of the two.”
Mark Lazarus, Turner Entertainment Group president, said the NBA was the most likely candidate.
“I think the league has shown a progressive stance toward growing their business, and I think they will be the ones that have the courage to do it first.”
Jeremy Jacobs, chairman and CEO of Delaware North and owner of the Boston Bruins, questioned if that scenario would play out.
“They don’t bet a lot on hockey in Vegas,” Jacobs said. “They do bet a lot on basketball, so I don’t see basketball going in. I don’t know if hockey would go, but I know that whoever goes is going to be tremendously successful.”
Several arena projects have since been pitched in Vegas, but neither the NBA nor the NHL are actively reviewing options for Sin City.
Pitcher Curt Schilling is sworn in while Mark McGwire and Rafael Palmeiro listen during a House committee hearing into steroid use in Major League Baseball, held in March 2005.
Stevenson called out MLB’s corporate partners over their lack of action, saying, “It troubles me that sponsors haven’t taken a stand.”
During a separate panel, Tony Ponturo, then vice president of global media and sports marketing at Anheuser-Busch, also discussed the issue of steroids.
“From an advertiser perspective, the only reason you are sponsoring sports is to align with the quality, integrity and image of these sports,” Ponturo said. “When that is jeopardized, you really have to second-guess that commitment.”
PGA Tour Commissioner Tim Finchem used his keynote address to discuss corporate responsibility within sports.
Despite the charitable component in golf sponsorship, the sport suffered during the current recession as financial companies came under fire for taking government bailout money while spending heavily in sports.
Behold the sports ticker
During one panel that allowed fans to ask questions of industry executives, one fan called ESPN2’s bottom line “distracting.”
However, ESPN’s executive vice president of programming and production at the time, Mark Shapiro, defended the scroll. He said ratings for ESPN2 went up almost 20 percent in the first year after the bottom line was implemented. Still, Shapiro agreed with the fan, saying, “The clutter makes me crazy.”
In more talk about stats packages and on-screen graphics, HBO Sports President Ross Greenburg said, “I have found myself watching NFL football, dare I say, and for some reason I can’t avoid looking up at that right corner to see Cleveland is beating Pittsburgh 7-3 and that Dallas is beating Detroit. And then I keep watching that and there is a goddamn game going on that I am not paying attention to. Well, something is wrong with that picture.”
Shapiro dismissed fans’ annoyance with in-game promotions, saying, “If you have the content, whether you have acquired it or created it, people will come. Yankees-Red Sox. You might not like the promos. You might not like the celebrity interviews, but what is the alternative? Not watching Yankees-Red Sox in the ALCS? Can’t do it.”
Attendees listen closely to a discussion with NBA Commissioner David Stern.
One panel took on the topic of teams becoming developers of real estate around their venues, and another discussed the “dot-com comeback” as booming online advertising had again made online properties hot commodities.
A la carte cable in the plans?
Lucy Calautti, a senior adviser with Baker Law, which works with MLB, addressed the issue of a la carte cable programming, which at the time was building steam on Capitol Hill.
Lucy Calautti discussed the latest hot topics on Capitol Hill.
Sports attorney Phil Hochberg said a la cart posed a major threat to league revenue because it could trigger a decline in TV viewership.
“If viewership goes down,” Hochberg said, “ad revenue goes down. If ad revenue goes down, rights and payments go down.”
Despite the heightened alert among panelists, the federal government has not pressed for a la carte cable programming.
He called it on interest from Mexico
MLS Commissioner Don Garber said he expected to see a lot more interest from Mexican companies.
MLS Commissioner Don Garber (center) said the league was seeing increased interest from Mexican companies looking for sponsorship opportunities.
The following year, Mexico-based paint company Comex Group signed a deal to be Chivas USA’s jersey sponsor through 2009. Mexican convenience store Extra took over in 2010. Then, in January of this year, Mexican beer maker Grupo Modelo said it would be the team’s next jersey sponsor, through the company’s Corona Extra brand.
As for Bimbo Bakeries, in January of this year the company signed a deal to be the jersey sponsor of the Philadelphia Union.
Jeff Shell, then president of programming at Comcast, talked about the renaming and rebranding of OLN due that summer, and said he intended to pursue more exclusive rights to major sports in an effort to grow the property.
Still, he was not overtly optimistic that build-up would include an acquisition of MLB rights, with a part of the league’s cable package up for bid at the time.
“If something is available at the right price, we’ll take a look at it, but that’s the question, is it the right price?”
OLN became Versus and obtained rights to the NHL, IndyCar Series and the Ultimate Fighting Championship. As Shell suspected, Versus struck no deals with MLB.
Still high on high-def?
Said Bilotti: “Consumer awareness of this technology is abysmal right now, but that will change once people figure out how to monetize this.”
Land grab: Teams, leagues eye development around venues
Teams hoping to expand revenue growth in the future will increasingly turn to nontraditional sources like owning and developing land near their stadiums or buying into radio stations that broadcast games.
That was the prediction from then St. Louis Cardinals President Mark Lamping, during a session called “The growing portfolios of sports ownership and operations.”
Andy Dolich, former Memphis Grizzlies president of business operations, said he believed that sports franchises’ investment in real estate could expand following the completion of New Jersey Nets owner Bruce Ratner’s arena project in Brooklyn. If that project succeeded, Dolich said, expect a surge in real estate investment.
Phoenix Suns President and COO Rick Welts said the team planned to build a hotel and condominium complex beside their arena.
NASCAR also was considering land ownership in the future after witnessing the value its Kansas City track brought to the 450 acres around it, said International Speedway Corp. President Lesa France Kennedy. “We bring a lot of people in and we feel like that is something to spin into.”
Later that year, NASCAR scrapped plans to build a track on land it bought on Staten Island, New York, due to political resistance. As for the Suns, the hotel and condo project has yet to materialize.
Karmazin gets down to Sirius business
Sirius Satellite Radio’s Mel Karmazin (right) outlined the company’s revenue and subscriber projections.
Said Karmazin: “We ended the year with about 3 million subscribers; the amount of advertising revenue that we’ll have this year will be dwarfed in 2010 when we’ll probably have 18 to 25 million subscribers.”
Sirius posted 2007 revenue of $922 million. At the end of 2010, more than two years after merging with XM Satellite Radio, the company had 20.2 million subscribers and its revenue for the year totaled $2.8 billion.
Linking media rights to language
When asked about future marketing trends, F1 special adviser Michael Payne said, “I think you will see a permanent change in the management of media rights.
World Congress returned to The Pierre in New York City in 2007.
Participants continued to adjust to the brave new world of social media, looked at the growing role they expected China would play in the global sports landscape, and speculated on what the future could hold for sports on cable.
Mark Waller (left) and Mark Tatum discuss China’s growing economic stature.
A year away from the Beijing Olympics, panelists were bullish on the Chinese market.
“You are seeing Chinese brands that are going to become global brands very fast,” said Mark Tatum, then senior vice president of marketing partnerships with the NBA.
“Sport will be a key vehicle for those Chinese companies to become a global brand,” said Formula One adviser Michael Payne. “They’ve seen it in how the Japanese have done it with soccer, how the Koreans have done it in the last decade, and now they’re doing the same.”
Some of those brands most active of late have included apparel brand Li Ning, computer maker Lenovo and appliance maker Haier.
When the discussion shifted to Chinese athletes, Mark Waller, then senior vice president, international, for the NFL, said the league was training three Chinese men to kick field goals in hopes that one might be able to play in the league’s exhibition game in China, planned for the following year.
“Their accuracy is now pretty good. The issue they will struggle with is just the pressure,” Waller said. “And imagine being the first Chinese person to kick nationally on China TV in the first game in China. … That’s pressure.”
Alas, the NFL scrapped plans for the game in China, so those players never got their shot.
As panelists debated the headlines of the day, they were asked to describe the impact of social networking.
“We are a content company trying to figure out how to deal with a generation who doesn’t understand what they’re putting up,” said ESPN’s John Skipper.
Skipper said his son “made the mistake” of posting spring break pictures online and then being in the same room as his mother. Skipper said to him, “Don’t you understand? You don’t want to be famous with your mother.”
During a one-on-one interview, the MLB commissioner hinted at retirement, but he would later put those plans on hold.
MLB Commissioner Bud Selig covered a lot of ground during a one-on-one interview.
• On his retirement plans: “In 2009, I’m going to be 75 and I do want to teach and write a book. Even in Monopoly you get a ‘get out of jail free’ card, and I’m going to use mine.” Selig, however, renewed his contract and now says he doesn’t plan to retire until after the 2012 season.
• On whether Tribune Co. was selling the Chicago Cubs: “At this moment, they insist the team is not for sale. … If and when the Cubs are for sale, there are a lot of groups in Chicago wanting to buy it.” The Ricketts family bought the club two years later for $845 million.
• On efforts to get a new stadium for the Florida Marlins: “You learn to have patience in these situations. … Mr. (Bob) DuPuy’s going down there for his 200th trip tonight. I’m optimistic but there are things yet to confront.” The Marlins pulled together a deal for a new stadium, which will open in Miami in 2012.
• On celebrating Barry Bonds’ record home run: “We’ll take care of that if and when Barry breaks the record and we’ll handle it the way we do any record. Like in every other decision you make as a commissioner, you can’t let your feelings get in the way.” Bonds broke the record that season, and Selig called to congratulate him.
AEG President and CEO Tim Leiweke identified Berlin, London, New York, Los Angeles and Shanghai as key markets to AEG’s future growth.
“I think you’re going to see the true globalization of sports as we know it in the next five years, and I think the U.S. is going to lead the way for many of those sports, in particular basketball and hockey.”
Stateside, AEG currently is pitching the concept of a football stadium adjacent to Staples Center in Los Angeles. Overseas, the company partnered with the NBA to develop an arena in Shanghai, and also operates an arena in Beijing. The company now operates in five continents.
While addressing the future of sports on television, NBA Deputy Commissioner Adam Silver was asked if the league was happy to have NBA TV on a sports tier.
“We embraced the sports tier, but we subsequently became disappointed with the amount of support cable operators have given to the sports tiers,” Silver said. “But eventually [the issue] will become irrelevant, and it will come down to what they pay us.”
Randy Freer, then president and COO of Fox Regional Sports Networks, said tiers “will be successful when cable decides it’s more important, or as important, to market as their broadband service.”
Participants on one panel were asked about the next big thing in sports and entertainment.
Charles Schwab’s Becky Saeger and Visa’s Michael Lynch discuss keeping pace with evolving consumer demands.
• Cell phone advertising: “We have to be where [consumers] want to be,” said Becky Saeger, vice president and chief marketing officer with Charles Schwab. “We’re gonna find a way to do it, and it’s gonna happen fast.”
• Cell phones eventually being used as payment devices: Lynch said, “It’s inevitable — it’s the remote control of the future.”
A Beckham boost
Major impact 34 percent
Marginal impact 59 percent
No impact 7 percent
The soccer star played his first games with the Los Angeles Galaxy in 2007. While he had a marginal effect on ratings and attendance, his presence may have had a greater impact in boosting investor interest in the league.
Super Bowl predictions
• What will a Super Bowl ticket cost in 2012? The 2007 price was $600. About 77 percent of the audience believed the price would be at least $1,000, 23 percent said $800. Face value for tickets at the 2011 Super Bowl were $600 to $1,200.
• What will a 30-second spot on the Super Bowl cost in 2012? The most popular answer among the audience was $2.9 million to $3.1 million, which garnered 42 percent of the votes. NBC is testing to see if it can command as much as $3.5 million for a 30-second spot during the 2012 Super Bowl.
MICHAEL GOOD PHOTOGRAPHY
St. Regis Resort in Dana Point, Calif.
Yet despite the challenges that appeared ahead, many of those in attendance thought the sports industry could weather a recession. Few, however, could have imagined just how severe that recession would become.
And beyond the economy, rumblings could be heard from the NFL, where talk shifted to the need for a new labor deal.
Bullish to the end
MICHAEL GOOD PHOTOGRAPHY
Bea Perez and George Gillett discuss the outlook for the economy.
“We’re actually looking at this as a huge opportunity for us and for the industry,” said Bea Perez, Coca-Cola’s senior vice president of integrated marketing at that time. “The break sports offers from the struggles of life can really capture consumers’ attention. For us, it’s ‘don’t ease up.’ It’s ‘do it bigger, do it better, do it stronger.’”
Executives said two key sports revenue drivers outside the gate — sponsorship and advertising spending — wouldn’t slow down
“Traditionally, sports has been relatively inelastic, and the ups and downs of the economy haven’t had a significant effect in a consumer respect,” said MLS Commissioner Don Garber. “It’s a very bullish time in the industry.”
“I think the sponsors and their economists are much sharper than the rest of us, and this is the time they’ll really put the pedal to the metal,” said George Gillett, then owner of Liverpool FC.
Still, there was plenty of caution delivered at the event.
“I think sports is recession-resistant,” said ESPN’s John Skipper. “I prefer we get through this recession as quickly as possible, because I don’t want to see how resistant we are or aren’t.”
“The problems are coming,” said sports researcher Rich Luker. “We’re not there yet. I’d be surprised if we’re not seeing some effects [of the economy and $4 gasoline prices] beginning between July Fourth and Labor Day.”
And then-USOC Chairman Peter Ueberroth said, “Sports may get an uptick initially because it replaces something else that’s more expensive — a vacation or something else. It’s a lagger in that sense, but it’s coming, and the economy is suffering in a way that’s going to last for some time.”
Does the U.S. get it on soccer?
MICHAEL GOOD PHOTOGRAPHY
“It makes me angry because it makes us look stupid,” Roth said. “It’s not possible that we as a country are so different than everybody else. It just hasn’t been tapped in the right way.”
Differences on streaming
Boston Red Sox Chairman Tom Werner said MLB team owners were wrestling with MLBAM, baseball’s interactive arm, over control and distribution of new media.
MICHAEL GOOD PHOTOGRAPHY
Werner was indeed correct that in-market streaming within MLB would not experience rapid growth, with RSNs and MLBAM still generally at odds on the topic today. Only two teams to date, the New York Yankees and San Diego Padres, now participate.
New York Giants co-owner Steve Tisch said the NFL’s labor deal made him feel “queasy.”
“We need to see beyond it, what our options are. It’s complicated. Roger [Goodell’s] going to have to bring everyone together with a united front.”
NFL owners opted out of the deal early, setting the stage for the current labor battle playing out today.
It's no game
EA Sports’ Peter Moore admitted that his company’s games were becoming “too damn hard.”
EA Sports has since broadened the scope of its game offerings considerably. Simulation, console-based games remain the base of its operations, but those titles have been complemented by entries into Facebook, browser-based online gaming and the more casual Wii console.
Music gaming, for its part, is now in significant decline and the Guitar Hero franchise was effectively dissolved earlier this year.
He may need a doctor
When George Gillett was asked if he would remain an owner in Liverpool FC, which he co-owned at the time with Tom Hicks, Gillett offered an anecdote about a doctor who gave a speech on living a long life. The key was to choose your parents wisely.
New England Sports Ventures purchased Liverpool in 2010. Gillett and Hicks opposed the sale and have since filed legal challenges against the new owners.
However, when the 2009 World Congress of Sports convened at Miami’s Mandarin Oriental, the sports industry faced a harsh reality that would force tough decisions and a fresh look at the way business is done.
As MLS Commissioner Don Garber said during the event, “I think we’ve got to look at this as a wake-up to try to take a step back and see how we can get a better perspective on our industry.”
How goes franchise values?
ALEX GORT SR.
Celtics owner Wyc Grousbeck makes a point as Bruins owner Jeremy Jacobs listens.
“It’s swung right this minute back towards individual [investors],” Grousbeck said. “They’ve pulled it out of hedge funds [and] I think institutions are more cautious than individuals are, so for the next couple of years we’ll find individuals buying teams. In the long term, there are institutional returns to be had here.”
However, Boston Bruins owner Jeremy Jacobs disagreed, saying that the recession would affect franchise values in some markets, but he said values wouldn’t fall enough to necessitate contraction.
“I don’t think in hockey that we’re going to see a failure,” Jacobs said. “We see a lot of troubled franchises, but I don’t think we’re going to see a failure.”
That May the Phoenix Coyotes filed for bankruptcy protection.
Recession challenges sports industry
With the nation mired in a recession, panelists said the time had come to buckle down and manage the business.
“We’ve never seen anything like this and I pray that we never see anything like this again,” said AEG’s Tim Leiweke. “I don’t think we’ve seen the [full] impact yet in sports. I think these next 12 months is when we’ll see the impact because so many of our buys and so much of our business came earlier.”
ALEX GORT SR.
Under Armour's Kevin Plank
Said sports researcher Rich Luker, “There is a palpable fear that [consumers] have that makes this one personal in a way other recessions have not been.”
The anxiety of the consumer was causing brands like Coca-Cola, Visa and Anheuser-Busch to rethink how they spend on sports marketing. The result was a greater emphasis on communities and activation programs that deliver value to consumers.
Coca-Cola’s Bea Perez highlighted a program that offered families hot dog discounts and soft drinks at games, courtesy of Coke. Similarly, A-B continued to invest in minor league baseball because it offered a sense of community and value for consumers.
Sam Sussman, senior vice president, program planning and strategy at Starcom Worldwide, predicted that the “rich will get richer” in rights fees in the future, pointing to the NFL’s $1 billion deal with DirecTV as an example.
Sussman’s prediction came true. Most recently, news broke at the start of the year that ESPN was completing a deal with the NFL to renew its rights to “Monday Night Football” for $2 billion a year.
Exploring the Twitterverse
A group of media experts said Twitter could serve sports brands and properties as a customer-service tool that offers a real-time perspective on how people react to a game, a deal or a critical decision.
Attendees also looked ahead to that year’s World Cup in South Africa, the return of Tiger Woods to competitive play, and the tough labor talks that awaited the nation’s top sports leagues.
AEG’s Tim Leiweke said “The NFL will be in L.A. The NFL needs to be in L.A.”
And Wasserman Media Group’s Casey Wasserman added that there may be other places that are more compelling for an NFL stadium than a site proposed by Ed Roski in City of Industry, Calif.
Later in 2010, AEG and Wasserman pitched the idea of a $1 billion downtown stadium adjacent to L.A. Live. Farmers Insurance has already signed a naming-rights deal should the project materialize and land an NFL team.
Nick Raffaele, Callaway vice president of sports marketing, said the company was disappointed initially when the Tiger Woods scandal broke, but the company had since changed its mind.
Raffaele added, “He’s come back. Augusta is the season opener. There’s a lot of pent-up demand. Now we’re looking at it as a positive. Tiger’s going to come back and he’s going to win.”
Tiger did return to competitive play at Augusta, but has failed to win since his return to play and at some events has even failed to make the cut.
SCP Worldwide’s Dave Checketts, owner of the St. Louis Blues, said the big issue in the backdrop of labor talks facing the top leagues is the change in owners and players since recent work stoppages.
“These guys that are here now were not there in ’99 when [the NBA] lost half a season. They weren’t there in the ’80s when we were at the table with players. They don’t understand yet, in my view, how damaging [a work stoppage] can be.”
MICHAEL GOOD PHOTOGRAPHY
Ken Solomon, chairman and CEO of Tennis Channel, echoed sentiments about the potential to increase sports media revenue in the U.S.
“In the entire world of entertainment, what has the upside? I bet on sports over anything except maybe $300 million motion pictures. I don’t think the blush is off the rose in terms of exploiting the value of what we have.”
Joseph Ravitch, founder and partner of investment bank Raine, said, “From a sports rights owner’s perspective, the most important area is going to be international. You’re seeing the acceleration of mobile and broadband technologies as well as paid television in a lot of these markets.”
Spain celebrates 2010 World Cup win.
Audience members predicted that ratings for the World Cup would be up in the summer compared with 2006, with 38 percent predicting ratings would increase significantly, 44 percent predicting they would be slightly higher, 14 percent predicting they would be flat, and just 7 percent saying they would be down.
The 2010 FIFA World Cup averaged a 2.1 U.S. rating and 3.261 million viewers, according to Nielsen data. Those figures were up 31 percent and 41 percent, respectively, from a 1.6 rating and 2.316 million viewers at the 2006 event.