SBJ/April 18-24, 2011/Leagues and Governing Bodies

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  • Jewkes launches NASCAR communications overhaul

    More than a month after taking an offer to become NASCAR’s chief communications officer, Brett Jewkes last week began to reshape the organization’s communications efforts. He has developed both a 90- and 180-day plan that features goals ranging from hiring three more employees to meeting with each member of NASCAR’s executive team. The former Taylor executive spoke to staff writer Tripp Mickle recently about what he plans to do in his new job at NASCAR.

    Jewkes
    What are your short-term goals?
    Jewkes: One of the things that [Taylor CEO] Tony Signore taught me well is that transformation is a process, not an event. The first part of this whole process has got to be filling some open spots with dynamic and key talent. The openings are: the managing director, the No. 2 in the department; the director of digital and social media; and a director of brand and consumer marketing communications. Second to that, I’m going to look at how we’re organized around the NASCAR media and the Los Angeles office. It’s been good, but it’s been decentralized. We want to integrate all of these departments so that we’re all singing from the same music, which will make us more efficient and more powerful in our communication.

    You’ve talked about this being a mind-set change for the organization. What do you mean by that?
    Jewkes: It would be very fair to say there are a lot of things that NASCAR’s done that are good things, but they’ve been done in silos where one part of the business wasn’t aware of what someone else was doing in another department. The roll-out was great, but it could have been better if there were combined resources and combined efficiencies.

    Here’s a great example. Next week, there are some high-level strategic planning meetings. To underscore how things are changing, I’m moving up my start date because I’ve been included in those meetings. Right off the bat, you have a communications voice included in those planning meetings. That’s how Brian [France] and Steve [Phelps] have elevated communications.

    Ultimately, once we get this team built out, that will happen everywhere. We’re going to hire a brand and consumer marketing director and that person will be embedded in Jim Obermeyer’s [brand and consumer] group. He or she will be in weekly staff meetings, planning and living and breathing with Jim’s team. That person will be integrating across his peer leaders in [communications] so that something Obermeyer’s group plans to do at the final race at Homestead can be shared and others can pitch in and help. That hasn’t been the case. In the past, something would be planned and people would call PR to get a release.

    How will you address the issues of ratings and attendance?
    Jewkes: TV viewership is absolutely always going to be a critical metric. So far this year, things are trending toward some good news. As I’ve said all along, it’s one metric. It’s always going to be important to partners, but it’s not the be all, end all. There’s a lot of younger viewers who are turning to other resources to follow events, and we need to get a better handle on that from a league perspective. Every other league is trying to do the same. This is one area that I have to spend more time on.

    If we were to have this conversation three years from now, what would you like to be able to look back on with some sense of pride and accomplishment?
    Jewkes: I’m glad you said three years instead of one year. This is going to take some time. I believe in the deepest part of my heart there will be impact almost immediately, but the very nature of this model is longer-term planning. You should be better at dealing with day-to-day issues, but the real value from this approach is that you’re ahead of the game on opportunities and can therefore generate more value for teams, tracks, marketing partners, etc. So, I’m already thinking about the 2012 season and key things coming down the pipe there.

    It seems basic, but the key accomplishment would be that I hope that the industry will say that NASCAR is doing a much better job from a communications standpoint of driving the narrative on the sport and being very proactive in selling the sport, selling the drivers and personalities and pushing the value the sport can be for marketing and media partners. That will be a byproduct of having great talent in place on the team so internal communication is much stronger and productive. If that happens in three years, this will be a great success for NASCAR.

    What is an average day at NASCAR going to look like? Will you be working with Brian France closely?
    Jewkes: I don’t think there will be an average day. My outlook calendar is already peppered with all sorts of things, which is good.

    Based on what I’ve seen so far and what I think is necessary to get the job done, I think there will be a lot of communication with Brian. He’s very involved in this. He’s very supportive and excited about what we can achieve. One of my first meetings will be with him and talk about his vision. Steve Phelps is the guy who crafted this whole thing and got NASCAR to this point. This new model is new to the entire management team, so I’ll be spending a lot of time with them to help them understand what we need to do to build this thing out.

    One of the things I’ve preached to them is that we need to be more offensive, more agile and more proactive in driving the message. They agree and they’re ready to go on that.

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  • AFL extends contract of commissioner Kurz

    The Arena Football League has signed a two-year contract extension with Commissioner Jerry Kurz.

    Kurz, 61, signed a one-year deal with the Tulsa-based AFL last September, and his new deal keeps with him with the league through September 2013.

    Financial terms were not disclosed.

    “The owners wanted a three-year deal, and that is what I think it will take to finish a lot of what they asked me to start,” Kurz said. “We are growing the league at a slow and steady pace.”

    The 18-team AFL is in its second season since emerging from bankruptcy. Under Kurz’s leadership, the AFL this season put new teams in Kansas City, Philadelphia, Pittsburgh and San Jose, while shuttering its Oklahoma City franchise.

    Kurz also helped the AFL secure a new television deal with the NFL Network, and the AFL this year signed league sponsorship deals with the National Guard and with NAPA Auto Parts.

    — John Lombardo

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  • Drama sells for NBA

    It began with the frenzy surrounding LeBron James and the onset of the evil empire Miami Heat, continued with midseason drama involving the game’s biggest stars, and ended with the resurgent play of the big market Chicago Bulls and New York Knicks. So compelling was the NBA regular season that it pushed leaguewide revenue to an all-time high of $4.3 billion, delivered a record television audience for its network partners and brought higher than anticipated gate revenue.

    But against the backdrop of the league’s dizzying regular season, the NBA also recently reported to the National Basketball Players Association that it lost about $340 million during the 2009-10 season, following a $380 million loss for 2008-09. While the league does not yet know what the specific loss will be from this season, the most recent $340 million loss figure will be a key talking point as the league heads toward a June 30 expiration of its collective-bargaining agreement.

    Overall, the league drew 21.3 million fans for the season, the fifth-highest attendance in NBA history, as story lines played out all over the league. There was the high-profile trade of Carmelo Anthony to New York, the emergence of superstar rookie Blake Griffin that made the Los Angeles Clippers relevant, and the challenge of the Kobe Bryant-led Los Angeles Lakers in defending their dominance.

    “Top to bottom, the NBA has never been as competitive,” said Gary Stevenson, former NBA executive and sports consultant. “There were so many marquee matchups on any given night. But the big elephant in the room is labor.”

    Average attendance this season grew by nearly 1 percent to 17,323 fans per game, in line with preseason estimates, league officials said. Nineteen out of 30 teams saw an average attendance increase, compared with 13 teams last season.

    League officials would not disclose specific gate revenue or the rate of increase, but ticket sales typically account for about one-third of total league revenue, meaning that the league’s gate is an estimated $1.4 billion.

    Ratings soared across all of the NBA’s network partners (TNT, ABC and ESPN) while about half the league’s 30 teams saw double-digit increases in local cable ratings.

    Leaguewide team sponsorship revenue hit record levels, though league executives would not disclose specific figures. The average number of team deals stands at 100.

    “We have great momentum and our teams are capitalizing on the great halo over our game right now,” said Chris Granger, executive vice president of team marketing and business operations for the NBA. “Revenue generation hasn’t been the problem; it is the cost of generating revenue that has been the issue.”

    For example, Granger said, many teams have added ticket sales and service staff while investing in more sophisticated marketing and digital efforts in an effort to drive revenue.

    The Chicago Bulls led the NBA in attendance this season, drawing an average of 21,792 fans per game, while the Indiana Pacers ranked last, averaging 13,538.

    The largest percentage gain in attendance came in Miami, where the Heat, led by their offseason free agent acquisitions of James and Chris Bosh, saw their attendance jump 11.6 percent to a capacity 19,779 fans per game at AmericanAirlines Arena. The Detroit Pistons posted the biggest drop in attendance, with an 11.2 percent decline to an average of 16,660 fans per game.

    Driving the increase in gate revenue are double-digits hikes in group sales and individual-game ticket sales.

    Teams played to 90.4 percent capacity, the seventh consecutive season the league played to at least a 90 percent capacity mark.

    “We had a good year on all fronts with very strong renewals, record full-season-ticket sales, and record groups and individual tickets sales,” Granger said.

    NBA ratings this season on TNT rose 45 percent to a 1.6 U.S. rating (2,453,000 viewers) over 52 games compared with a 1.1 U.S. rating (1,728,000 viewers) over 53 games last season. By averaging more than 2.4 million viewers per game, Turner recorded its largest viewership for TNT since it began broadcasting the NBA in 1984.

    “Even with our high expectations, this is a record-setting year,” said Christina Miller, senior vice president of strategy, marketing and programming for Turner Sports. “From the biggest free agency period in a very long time to a huge tip-off to now, there have been great story lines.”

    Those story lines played well on the Web, as traffic on NBA.com grew to a record 5.9 million page views, up 35 percent, according to Turner, which runs NBA.com.

    NBA games on ABC generated an average 3.0 U.S. rating (5,110,000 viewers) over 15 games, up 30 percent over a 2.3 rating (3,694,000 viewers) over 15 broadcasts last year.

    The NBA on ESPN generated a 1.3 U.S. rating (2,025,000 viewers) over 71 telecasts, up 30 percent compared with a 1.1 U.S. rating (1,571,000 viewers) over 73 games last season.

    This was the highest-rated and most-viewed season on both networks since ESPN acquired the NBA rights in the 2002-03 season.

    “There have been so many plots and subplots that it is great television,” said Doug White, senior director of programming and acquisitions for ESPN.

    On the corporate sales front, the NBA signed new leaguewide deals with American Express and BBVA Group this season. Up for renewal this summer are Gatorade, T-Mobile and Anheuser-Busch.

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  • Sponsorship drives NHL to $2.9B in revenue

    The NHL saw impressive growth in its overall bottom line for the sixth consecutive year, reaching a record $2.9 billion in revenue this season thanks to healthy corporate sponsorship sales and television ratings. The gain equates to revenue growth of 7.4 percent, which matches the league’s midseason prediction.

    New corporate deals, including a seven-year, $375 million deal with MillerCoors, helped the league post its best earnings ever despite only incremental growth in ticket sales. The league announced its projected earnings in a release last Wednesday but declined to comment for this story.

    NHL Enterprises, the league’s merchandising and licensing division, showed the most growth, with a 14.8 percent bump in overall revenue from 2009-10 numbers. Much of those earnings came from increased sponsorship sales, as the NHL collected 33 percent more in gross sponsorship earnings from 2009-10.

    In addition to the MillerCoors deal, which is the league’s largest partnership, the NHL also brought on Canadian Tire, Discover, Tim Hortons, Huggies and Hershey as new corporate partners, with Discover and Tim Hortons becoming presenting sponsors of the NHL All-Star Game and the Heritage Classic, respectively. The league also renewed deals with Bridgestone, Cisco Systems, RIM BlackBerry and McDonald’s. The latter took on the presenting sponsor role of the NHL’s inaugural “Hockey Day in America,” which showcased six hours of hockey programming on NBC and Versus on Feb. 20.

    NBC and Versus also declined to comment for this story.

    The league’s “tent-pole” events received a boost with the addition of a second outdoor game: the Feb. 20 Heritage Classic in Calgary. The game generated the most revenue for a single event in league history and averaged 2.078 million viewers on CBC and 608,000 viewers on Versus.

    The Jan. 1 Winter Classic saw a 22 percent growth in sponsorship sales and became the most-watched regular-season event in 36 years, with an average viewership of 4.46 million on NBC. The NHL All-Star Game saw ratings increase 33 percent from 2009 numbers and revenue jump 64 percent from 2008, the last time it was held in the U.S.

    The All-Star Game was not played in 2010 because of the Winter Olympics.

    Versus averaged a 0.2 U.S. rating and 353,000 viewers across 78 televised games, which represents an 18.9 percent increase from 2009-10, when the network had a seasonlong carriage dispute with DirecTV. The Versus viewership count also represents a 68 percent increase from 2003-04, the NHL’s final full season on ESPN2.

    NBC, which broadcast 10 regular-season games, including the Winter Classic, posted a 1.0 rating and 1.648 million viewers for its coverage. The rating is flat but it marks a 1.4 percent increase in viewership from 2009-10.

    The league also broadened its reach online, based on SportsBusiness Journal calculations, increasing its number of average monthly unique visitors from 18 million in 2009-10 to 23.4 million in 2010-11.

    At the gate, the league posted a modest 0.3 percent increase in attendance, averaging 17,132 fans per game. Twelve teams posted at- or above-capacity attendance.

    Eight teams posted drops in average attendance, with four teams — Phoenix, Columbus, Atlanta and the New York Islanders — drawing fewer than 14,000 fans per game. Columbus lost 10.7 percent of its attendance from 2009-10, Dallas lost 12.4 percent and the Islanders dropped 13.2 percent, falling to a league-low average attendance of 11,060 fans per game.

    The largest increase at the gate came from the Tampa Bay Lightning, which grew attendance by 11.4 percent and averaged 17,269 fans per game. Brad Lott, vice president of sales and marketing for the Lightning, said the team decreased ticket prices by 6 percent and rescaled prices in the lower bowl, and offered single-game discounts with Groupon.com to drive its best sales year since 2005-06.

    “Obviously winning has not hurt us, either,” Lott said. “We haven’t been the greatest on the ice in the last three years, so [the team] has given us something to be excited about.”

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  • USTA to alter sales, marketing staff

    Harlan Stone, the U.S. Tennis Association’s chief business and marketing officer, is changing his responsibilities at the tennis governing body to solely overseeing sales efforts. After this year’s U.S. Open in September, Stone no longer will be in charge of the organization’s marketing and communications.

    In a tersely worded statement, the USTA said that Stone, who was at the end of his contract, had re-signed through 2014 with the organization as chief business officer, for which he will still sell corporate sponsorships and television.

    Stone
    Stone will continue to report to USTA Executive Director and COO Gordon Smith.

    However, while Stone retains a USTA executive title, he is launching SJX Partners, a New Canaan, Conn.-based property representation firm, with longtime Velocity/Team Epic employee Jeff Jonas, who recently left the firm. Among the first clients of SJX Partners is the USTA, along with Cirque du Soleil, the Dew Tour and Alli Sports, which operates the Dew Tour. So far, the agency has five employees, Stone said.

    Stone said that his USTA contract was up and he “simply wanted to concentrate on my strength, which is making deals … and now so much of our marketing efforts are focused on the 10-and-under level [for grassroots tennis growth], that calling me the CMO was a bit of a misnomer.”

    As part of the reshuffling, managing director of marketing Sue Hunt, who had reported to Stone, will report to Kurt Kamperman, CEO of community tennis. Lew Sherr, managing director of corporate sponsorships, will take a more active role in day-to-day affairs, the USTA said.

    It’s uncertain whether or when the USTA will name a new CMO.

    With his new firm, Stone returns to the agency world, in which he spent much of his career, working in senior executive positions for the likes of Momentum, Octagon, Velocity and his own sports marketing shop, Stone Sports. Stone was also with The New York Times Magazine Group as head of Golf Digest/Tennis Sports and CEO of Internet startup mysportsguru.com.

    He was hired at the USTA in 2009 as chief marketing officer after an exodus of top executive talent. His hire, orchestrated by Smith, was the first high-profile replacement for a string of top executives who have departed the USTA since late 2008.

    A year later, he was promoted to chief marketing and business officer with the departure of Pierce O’Neil, and all business reports came into Stone, other than digital.

    On the sales side, he will be looking for a replacement for Olympus, in its last year as U.S. Open and U.S. Open Series sponsor.

    Staff writer Daniel Kaplan contributed to this report.

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  • World Series of Boxing’s first season limps to finish line after struggle to sell tickets in U.S.

    The World Series of Boxing trumpeted itself as the next best hope for reviving interest in Olympic-style boxing when it launched in November, fielding franchises at major venues in Los Angeles and Miami, landing national distribution of its matches on Versus and trumpeting the commercial impact of 25 percent stakeholder IMG.

    As it entered its postseason last week, with the Los Angeles franchise hosting a semifinal match against a team from Kazakhstan at a 1,000-seat Hollywood music hall, only the TV deal remained intact.

    Bleeding money in the Americas through its first two months as its teams struggled to sell even 100 tickets to their events, the WSB moved all three of its U.S.-based franchises from arenas to nightclubs and concert halls. It ran so far afoul of regulators that it had to postpone one of its events. It fired well-regarded upper management at its Americas conference office and at its franchise in Los Angeles. Earlier this month, it bought out partner IMG.

    The WSB ended up being far less than it set out to be, at least in the U.S., where it failed to make a dent on the sporting landscape. Still, it made it to the finish line. Now, its chief operating officer says it hopes to expand beyond its initial eight franchises in Europe and Asia and return next year with four teams in the Americas — if it finds investors to fund the teams. The WSB sold franchise licenses elsewhere in the world, but after failing to find buyers in the Americas it elected to fund those four teams itself for the first year.

    “There was skepticism about us being able to pull this off, but we did it,” said Ivan Khodabakhsh, COO of the Switzerland-based WSB, owned by the international governing body of boxing, the AIBA. “The boxing is there. We have met all the goals we wanted to from a sporting perspective. We hope … we can sell the franchise licenses (in North and/or Central America).”

    The business metrics from the first season were ugly.

    The Los Angeles franchise sold 175 tickets for its debut at Nokia Theatre on Nov. 28, according to documents filed with the California State Athletic Commission. Bumped to the adjacent Club Nokia for its second show, it sold 27 tickets. Back at Nokia Theatre for its third match it sold 149 tickets. Ticket revenue from those three dates — $8,215, $551 and $3,804, respectively — wasn’t even enough to cover fees and taxes assessed by the commission, never mind rent and other expenses.

    The Miami franchise fared even worse, at least on the revenue side. It sold 20 tickets to its opener at AmericanAirlines Arena on Nov. 23, according to documents filed with the state boxing commission. It sold 18 for its second outing on Dec. 9. For its third appearance, on Jan. 5, it sold 62. Ticket revenue from the three events at the same arena that is home to the Miami Heat: $3,671. Concessions totaled $8,295.

    In Memphis and Mexico City, the WSB’s other America’s markets, the struggles were similar, league and team executives said.

    As the season neared its close, all three teams pulled the plug on their larger venues. The Los Angeles team moved to the Avalon, a nightclub in Hollywood. Miami put on a show at a 6,000-seat arena at Florida International University, then settled in for its final two events at a music venue, the Fillmore Miami Beach. Memphis moved its final match of the season from its regular home at DeSoto Civic Center to a nightclub on Beale Street.

    While the shift to theaters didn’t boost attendance or revenue, it did cut expenses. The Miami franchise dropped its event costs to about one-third of what it was paying at AmericanAirlines Arena, plus it saved about $10,000 on TV lighting, said general manager Mike Sophia, who ran the team as a contractor on behalf of the Miami Dade Sports Commission, where he is executive director.

    “Cash flow became an issue,” Sophia said. “At no point were we able to promote or market the events in the way that it needed to be done.”

    The television deal also turned out to be a financial drain. While Versus delivered a national platform and some credibility, the broadcasts never led to any sponsorship revenue. The network paid about $150,000 for the rights, a team source said. The WSB paid production costs of about $900,000.

    Between the overhead of the large buildings and television production costs, the bills mounted far higher than the paltry revenue from events. In January, Khodabakhsh fired the two men he said he held responsible: Eric Parthen, executive director of WSB Americas, and Jeff Benz, general manager of the Los Angeles franchise. Both came to the league with strong pedigrees in the U.S. Olympic community. Parthen headed USA Boxing; Benz was general counsel at the USOC.

    When the league launched, executives in the Americas said each team had a budget of about $3 million for the first year. Khodabakhsh says that was only an expense number, and that he expected the franchises to offset that with far more revenue than they delivered.

    “Yes, we had calculated around $3 million, but not to spend,” he said. “We did not expect a profit in the first year. But nobody said, ‘I will give you $3 million; throw it out of the window.’ It’s never an investment if you put the investors’ money in and it’s completely gone at the end of the season. How do you go into the second season? That’s not investment. That’s charity.”

    Benz said Khodabakhsh approved every expense and was aware of the bleak revenue picture. “I sat with the guy in the lobby of the JW Marriott [in Los Angeles] and we went line by line,” Benz said. “He approved the budget.” Khodabakhsh disputed that.

    Embarking on a second season in the Americas likely would require an altered business model with lower event expenses, more money to spend on marketing and a better relationship with the state commissions that govern boxing, Parthen and Sophia said. Khodabakhsh said he remains optimistic all that can happen, given more time.

    “You have to have some serious cash backing to absorb the losses you took this year and take it into a second year,” Sophia said. “They want to be back in the Americas and see what we all see: a good product. Is there a market for it? We don’t know.”

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