July 11 - 17, 2011 Vol. 14 — No. 12

Top Stories

  • Eyeing the homestretch

    On a recent June afternoon in London, Paul Deighton strides into his spartan, 15th floor office in Canary Wharf carrying the 2012 Olympic torch. He raises it and holds it inches from his eyes, scanning its honeycomb design with a look of admiration.

    The torch was revealed a day earlier at St Pancras International station, becoming the latest physical evidence of the London Olympic Organizing Committee’s (LOCOG) long march to the 2012 Games. Though Deighton, LOCOG’s chief executive officer, wasn’t in attendance, he knows the specs of the torch by heart and ticks them off like a stamp collector detailing the significance of a prized postmark.

    “It’s 800 millimeters tall. Made of aluminum alloy. It weighs 800 grams. It has 8,000 circles representing the 8,000 torchbearers. And what else can I tell you? Designed over there,” Deighton says, pointing out a floor-to-ceiling glass window, “in East London. Engineered to the north of here in Essex, and manufactured in the midlands in Coventry, the heart of manufacturing in the U.K. It’s quite light.”

    After handing the torch to a colleague in the office, Deighton notes that he wouldn’t be among those 8,000 torchbearers. “I don’t know how much time you spend in this country,” he says, “but the general attitude is that we shouldn’t have any advantages as a result of our position.”

    Sitting the relay out would be unthinkable for many previous Olympic chief executives. Billy Payne ran the Olympic torch across the football field at the University of Georgia in the 1990s, and Mitt Romney passed it on in Utah before the Salt Lake Games in the early 2000s. But Deighton will abstain from the opportunity, and his decision to do so is reflective of his understated, behind-the-scenes management of the 2012 Games.

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    Olympic mascot Mandeville joins Deighton to open the London 2012 store at Heathrow Airport in March.
    During his five years of working on the Olympics, Deighton has earned a reputation as an understated team player with unshakable optimism, strong interpersonal skills and sharp business instincts. Those attributes have been critical, as he’s balanced the interests of groups ranging from government to sports federations to the International Olympic Committee, and confronted the unprecedented challenge of the recent global recession. His success has positioned him as the first CEO of a summer organizing committee since 1996 to manage an Olympics from beginning to end.

    “This is a very difficult job,” NBC Olympics President Gary Zenkel said. “It’s a seven-year cycle, a six-year run. There are a lot of changes that happen naturally. Macro changes. Economic changes. Public opinion shifts and wanes. There are government changes. Local priorities change. I can’t imagine and haven’t witnessed anybody who has dealt with that better than Paul. He’s doing a fantastic job.”

    One of the reasons Deighton has succeeded to date is because of the partnership and division of responsibilities he shares with LOCOG Chairman Sebastian Coe. The gold medalist and two-time world record holder in the 1,500 meters attends media events like the torch unveiling and responds to the majority of media requests, while Deighton oversees the day-to-day operations of raising sponsorship money, controlling expenses and developing operational plans for the Olympics. It’s a combination that’s served each of them well.

    “He’s got a chairman that’s good at the public facing bit, and he’s got enough on his plate for Christ’s sake without
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    having to worry too much about the public facing side of it,” said Simon Clegg, the former CEO of the British Olympic Association and the current CEO of Ipswich Town Football Club.

    With Coe’s help, Deighton has built an organizing committee that is positioned to deliver the Games on time and under budget. Venues are on track for completion this summer, test events are beginning, and anticipation is mounting in Olympic circles that LOCOG will deliver a Games that may not rival the spectacle of Beijing 2008 but will be a more than fitting encore.

    “Some of the qualities you will see in abundance are energy, enthusiasm and vibrancy, and the combined weight of that will create an atmosphere that will be unprecedented,” said Darryl Seibel, the head of communications for the British Olympic Authority. “It will be very different but no less remarkable [than Beijing] due to Paul and Seb and their team.”

    Answering the call

    Chief Executive. London Organising Committee for the Olympic Games. A role of the greatest national importance for an outstanding and visionary leader. The person: Skills and experience must include exceptional team building and leadership qualities …

    The more Alison Deighton read the classified in The Economist, the more it grabbed her attention. It seemed written for her husband Paul, who was seated nearby watching a soccer game that Sunday.

    “This job is for you,” Alison said, looking up.

    Deighton, who was the chief operating officer of Goldman Sachs’ European division at the time, scanned the ad and chewed over the opportunity. He had spent 22 years at Goldman, the bulk of his professional carer, and seen the firm expand its European operations from 100 employees to 4,000, but the Olympic job did seem written for him. He called the headhunter at Odgers Berndtson and added his name to a list of 500 candidates.

    He doubted he would be considered because his background as an investment banker didn’t make him the prototype to become CEO of a sports organization, but he interviewed well and ultimately earned the approval of the U.K. government, the mayor of London and the British Olympic Association.

    Though it was the only job Deighton said he would leave Goldman Sachs for, he was still unsure of what to expect
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    Deighton is content to do much of his work behind the scenes while LOCOG Chairman Sebastian Coe (right) serves as the public face of the effort.
    when he was named CEO in December 2005. He had no sports experience, he had never worked with the government and he knew next to nothing about the IOC.

    “I came to it expecting to be surprised, to have moments of enormous challenge, to have moments when it would be quite unclear to me how we would get through and sort something out, to have moments when we had difficulty with different partners,” Deighton said. “So I came in expecting a real challenge. But that was why I was interested in doing it.”

    Deighton made up for the gaps in his knowledge after he started the job by collecting loads of information about the Olympics. He traveled to New York and met with Zenkel and other NBC executives. He visited Vancouver 2010 CEO John Furlong. “He went around and really educated himself,” Zenkel said.

    Deighton then began installing at LOCOG some elements of the corporate culture he had left behind at Goldman Sachs. Like the investment bank, he wanted LOCOG to rely on teamwork, provide effective internal communication, and thrive on the shared passion and enthusiasm employees had for delivering a once-in-a-lifetime event.

    Charlie Wijeratna, the former director of commercial negotiations at LOCOG who is now the executive director of the English Premier League’s Tottenham Hotspur, said the LOCOG staff bought into Deighton’s team vision because he didn’t make organizational changes too quickly or bring in too many of his own people. Instead, he earned their trust and favor by meeting with each member of LOCOG’s staff for half an hour.

    “It was brilliantly done,” Wijeratna said. “That transitional phase was handled very skillfully, and I don’t think he lost anybody emotionally or relationship-wise along the way.”

    He maintained the support of his top executives by empowering them to make key decisions, Wijeratna added. For example, the commercial department recommended that LOCOG award the domestic Paralympic broadcast rights to Channel 4 rather than the BBC because the former was a more favorable financial deal. Doing so meant that LOCOG, which relies heavily on government support, would be awarding something to a private company, Channel 4, rather than a public one, the BBC. But Deighton didn’t waver, and he took the commercial department’s recommendation.

    “The Goldman Sachs ethos is that we work as a team, so that it’s not about me but what we do together,” said Terry Miller, LOCOG’s general counsel and the former international general counsel at Goldman Sachs. “He brought that skill with him, and it’s something that’s worked in a way that everyone has seen the benefits of [at LOCOG].”

    He didn’t just build that type of trust among his internal team. He also built it with LOCOG’s most important external partners, the Olympic Delivery Authority, which is responsible for constructing all of the permanent venues for the Games. In some previous Olympics, like the Sydney Games, the local bodies have been plagued by infighting. But Deighton formed a strong friendship with former ODA Chief Executive Officer David Higgins by meeting weekly to “chew the fat.”

    “No agenda. Just the two of us,” said Higgins, who resigned last year to run Network Rail. “We had a very open relationship. I would tell Paul everything that was going on even if it was commercially against our interest and Paul would do the same. We kept those confidences.”

    Beating the crash

    Deighton made a number of shrewd business decisions early that kept the organizing committee on sound footing. Prior to his arrival, the committee had already launched a public lottery and begun raising some of the $3.2 billion it needed to operate, but Deighton pushed the committee to accelerate its plans for selling sponsorships.

    He had the commercial division hire McKinsey & Co., the management consultancy, to assist it with determining when to go to market, what categories to sell first and how much to ask for sponsorships.

    The first tender process in the financial services category, an area later ravaged by the global recession, began months earlier than envisioned in October 2006. In early 2007, Lloyds signed on as the official financial services partner in a deal valued at $125 million. It was the first of a series of tier one deals with Adidas, BP, British Airways and Nortel that LOCOG closed before the financial markets collapsed in the fall of 2008.

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    Venues are on schedule and some, such as the handball arena (above), have already played host to test events to work out operational kinks.
    Those early deals put the organization in a position where it didn’t have to panic after the recession. It also gave the organization enough momentum to sign 10 more deals in 2009 after the recession. Today, it has sold 95 percent of its sponsorship inventory and generated more than $1.4 billion of its operating budget, which puts it slightly ahead of schedule for hosting the Olympics.

    “There were several deals that if we had done after the crash wouldn’t have happened,” Wijeratna said. “Getting going early was very important, and Paul definitely put energy into that.”

    Deighton didn’t just have the foresight to help LOCOG beat the recession. He also protected its rights in several categories. When the IOC made a push to sign Cadbury as a sponsor of The Olympic Partner (TOP) program, Deighton pushed the organization not to do it. After the IOC backed away, LOCOG went on to sign a deal with the confectionary company worth more than $30 million.

    Similarly, he worked to persuade the IOC to let LOCOG sell an official grocer sponsorship. The IOC pushed back because it worried competitors of its global partner, Coca-Cola, might be able to get too close to the Olympic marks. Ultimately, the parties compromised and LOCOG sold Sainsbury, a U.K. grocery chain, an official sponsorship of the Paralympic Games.

    “He is an aggressive leader who aggressively and vigorously advocates for his position, but he does it in a proper way,” said Davis Butler, the president of Encompass, who was with the IOC’s marketing department at the time.

    The sponsors who signed with LOCOG found Deighton to be incredibly supportive. Though he didn’t attend many of LOCOG’s public events, he made a point of getting to sponsors’ public events. He spoke at a retailers’ conference two weeks ago for Adidas and appeared for the opening of every one of Adidas’ AdiZones, a series of multisport outdoor venues the company developed in each of London’s host boroughs.

    “His schedule must be so complex but he’s been very accessible, more so than any chief executive at an Olympic Games in the past,” said Erica Kerner, the head of Adidas’ Olympic efforts in London.

    Facing the finish

    Taped to the glass wall behind Deighton’s desk are a series of 8.5-by-11-inch color-coded calendars. They form a halo behind his head when he sits down to talk about the monumental task facing the bid over the next year.

    There are 55 Thursdays left until the opening ceremony. That’s the way Deighton likes to put it when he talks about the Games. It condenses the 300-plus days remaining to a smaller number that injects a sense of urgency into the task at hand.

    “We are 83 percent of the way through the time we get to stage the event, because we started on the 6 of July 2005, that inauspicious day for us in Singapore,” said Deighton, who’s dressed in a tailored pair of khakis and a blue, spread collar button-down shirt open at the neck. “We’re pleased with where the project has gone to so far, yet fully conscious of the fact that the final year and a bit has very significant challenges both because you have to pull together so much, particularly around the operational preparations and because at this point, the whole world is focused on every move and every step you make.”

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    Deighton joined Paul Bush (right), chief operating officer of EventScotland, in May in Edinburgh to announce the first confirmed locations on the Olympic torch relay route.
    Deighton is especially sensitive to that scrutiny. The organizing committee was facing sharp criticism for its ticket process, a ballot system that received more than 20 million requests for 5 million tickets. That led the press to question how the event could be the “people’s Games” if the people couldn’t attend, and to question where tickets not sold publicly were going. The issue has required consistent management from LOCOG’s communication team, but Deighton couldn’t be more relaxed.

    “There are always huge pressures around ticketing,” he said. “It doesn’t always take the same form. The form it’s taking here in some ways is a high quality challenge because so many people want to come. There just aren’t enough tickets to keep them all happy. You don’t want to disappoint anybody, but the reason we’re disappointing people is because so many people want to come.”

    The issue is only the first of many challenges that LOCOG will have to address during the last year. It will need to build its temporary venues, retrofit completed facilities it takes over from the ODA, host a series of trial competitions designed to test the new facilities, manage the addition of nearly 5,000 staffers, train a volunteer staff of 60,000 people, and deal with a host of unforeseen issues that arise.

    As a result, Jet Set Sports CEO Mark Lewis, who worked on the Atlanta and Salt Lake City Games, said that it would be premature to say whether or not Deighton has done a good job as LOCOG’s chief executive.

    “It would be like saying a cake tastes great right after you put it in the oven,” Lewis said. “He may have baked the best cake ever, but we just don’t know yet. It’s a big job and they have attacked it well. We’ll see how it turns out. Everyone hopes they succeed.”

    To date, few criticisms have been leveled at Deighton’s management of LOCOG. The one thing some questioned is his reliance on data and information before he makes a final decision on something. It’s the Goldman way, but some observers wonder if that will prevent him from making snap judgments as the sand runs out of the hourglass on the Games.

    Those who know Deighton best, like Wijeratna and Miller, say it won’t be an issue. Gilbert Felli, the IOC’s executive director for the Olympic Games, believes it will be an asset.

    “That’s what I like about Paul Deighton,” Felli said. “A lot of studies have been made and can demonstrate the best thing to do. It’s proper management when you want to bring a solution forward.”

    Members of his leadership team, sponsorship executives and broadcast officials who have worked with Deighton are confident he can deliver on all the promise the Games have shown. They say the culture he has created is strong enough to integrate the addition of so many new staff and volunteers, and point to his ability to control costs to date as proof he will be able to manage the unforeseen expenses that pop up in the final stages of preparing to host the Olympics.

    “They have faced stronger headwinds than any organizing committee I can recall for a summer Games and at every instant, they’ve risen above the challenge and succeeded,” Seibel said. “I have to believe they will continue to do that.”

  • International soccer heats up in U.S.

    Clive Toye remembers when attracting Europe’s premier soccer clubs to play in North America cost little more than the average price of a U.S. home. Toye, who brought over European clubs in the 1970s and 1980s, said the highest appearance fee he ever paid a club was $100,000 to Italy’s Juventus FC in 1982. The club played at the small Varsity Stadium in Toronto and sold out all 25,000 seats.

    “It was a hard negotiation, but for the biggest team in the world, that was a reasonable price back then,” said Toye, who oversaw the New York Cosmos, Baltimore Bays and Toronto Blizzard during his 30-year tenure with the North American Soccer League. “We earned enough [on the game] to make it worthwhile, but it’s not like we said, ‘Whoopee, we can all retire!’”

    Fast forward 30 years, and the business of bringing the world’s finest soccer clubs to American fans has blossomed. Europe’s biggest clubs are regular attractions in the United States, and their “friendly” matches fill 80,000-seat football stadiums. Promoters sell lucrative television and sponsorship packages, while merchandise sales can run in the low seven figures. Ticket prices have skyrocketed: Cheap seats for the July 30 match between Manchester United and FC Barcelona cost $123.10.

    The cost of organizing the matches also has ballooned. Man U, Barcelona and Real Madrid now command $2 million to $2.5 million a game in appearance fees. Second-tier clubs, such as Mexico’s Club America, require anywhere from $150,000 to half-a-million to play. Stadium rent runs in the mid-six figures. A promoter must pay taxes and between 9 percent and 20 percent of gross ticket sales to the U.S. Soccer Federation in sanctioning fees.

    One source said the overhead for a major international match runs anywhere from $5 million to $10 million.

    According to promoters, Major League Soccer team presidents and Soccer United Marketing officials interviewed for this story, the profit margin for international games remains painfully thin. An inopportune rainstorm or scheduling conflict could result in sizable losses. “It’s not a business for those with a weak heart or a weak wallet,” said FC Dallas President and CEO Doug Quinn, former president of Soccer United Marketing. “Individuals who are looking for short-term gains and don’t have a strategic benefit lined out for [these matches] are wasting their time.”

    Plenty of groups appear willing to take the risk, though. This year, more than 60 games featuring international clubs will be played on American soil. The absence of UEFA’s World Cup and European Football Championships means more premier European clubs will come to the United States to play. Of the 18 MLS teams, 15 will host international opponents this year. MLS clubs pay the appearance and promotional fees for their own individual matches against foreign teams, although Soccer United Marketing can choose to take on partial risk in those matches. SUM’s involvement is generally reserved for matches against marquee opponents.

    Games range in size, stature and target demographic. The game between Mexican clubs Atlas and Cruz Azul, which was to be played Sunday at San Jose State University’s Spartan Stadium, is organized by Marquez Brothers, a manufacturer of Mexican food products. The Manchester United-FC Barcelona match, which is part of the World Football Challenge series, is organized by the two major players in the space, CAA Sports and SUM.

    The Challenge

    The partnership between CAA and SUM has added significant clout to the World Football Challenge, which CAA started in 2009. This year, the WFC encompasses 14 games and features Man U, Barcelona, Juventus, Real Madrid, Club America and Chivas de Guadalajara playing at major venues such as Gillette Stadium, Los Angeles Memorial Coliseum and Cowboys Stadium.

    The WFC also represents a major turning point in the relationship between CAA and SUM, which formerly operated as rivals in the U.S. soccer space. The inaugural 2009 Challenge was seen as a direct competitor to SUM’s Gold Cup and FC Barcelona tour.

    “It definitely felt like a rivalry, even though we worked with CAA with different properties, [such as] music and entertainment,” said Tom Payne, president of the Los Angeles Galaxy. “I think the difference this summer is that [the WFC] has become too big to do on your own.”

    CAA did not hold the WFC in 2010 because of the FIFA World Cup, and instead partnered with SUM to bring Manchester United on a U.S. tour. The success of that tour led the two groups to partner in 2011 to bring back the WFC and incorporate MLS teams into the mix.

    “The Manchester United tour was a success, and the WFC is a natural evolution for CAA and us,” said Will Wilson, executive vice president of international business with SUM. “Bringing MLS teams into the tournament has been a central focus.”

    Before 2005, major European clubs favored playing Mexican squads over MLS teams during trips to the U.S., saying that the domestic teams lacked the skill level to compete. That, too, has changed. During this year’s WFC, Manchester United plays the New England Revolution and Chicago Fire, Manchester City plays the Vancouver Whitecaps and Los Angeles Galaxy, and Real Madrid plays the Galaxy and Philadelphia Union. “This is a way to communicate that MLS is not an inferior league,” said Nick Sakiewicz, CEO of the Philadelphia Union. “And it’s a way to expose [MLS] to fans of international soccer.”

    Sources familiar with the WFC say the tournament makes financial sense for both parties. SUM brings its relationships with FC Barcelona and Chivas de Guadalajara to the table, as well as its corporate and venue relationships, and its depth of North American soccer contacts. This year, the WFC will be televised on Univision, ESPN and ESPN Deportes. The WFC games were included in ESPN’s MLS rights package. The tournament’s corporate partners include both longtime MLS partners — including event title sponsor Herbalife, Adidas, American Airlines, AT&T, Pepsi and Volkswagen — as well as non-MLS partners Bridgestone, securities firm Incapital, video game manufacturer Konami and Lowe’s. According to sources familiar with the tournament, stand-alone WFC partnerships are valued in the mid- to high six figures.

    “Over the last seven years, we’ve seen consistency with [international games], which enables our partners to plan,” said David Wright, vice president of global sponsorship for SUM.

    CAA brings its relationship with Manchester United and other top European clubs to the partnership. It also brings Charlie Stillitano, arguably the man with the most experience in hosting foreign clubs and one with strong relationships with the world’s biggest teams. Stillitano’s ChampionsWorld series was the first effort to bring major European club teams to play in the United States with regularity. Champions-World launched in 2000, and by 2003 was filling stadiums across the country with international matches. But the company filed for bankruptcy in 2005, and Stillitano’s former partners are suing U.S. Soccer and MLS, alleging that the 9 percent to 20 percent of gross ticket revenue fee charged by U.S. Soccer damaged its business and broke antitrust laws. The case could go to court in the fall.

    Stillitano said the partnership with SUM has helped mitigate much of the risk associated with the games, but skyrocketing team appearance fees, he said, continue to drive the cost of the international matches. The fees, Stillitano said, shifted the business during the years he operated ChampionsWorld.

    “Teams are charging more, U.S. Soccer is charging you, so the only way to do it was to bring in sponsors and create a national TV platform,” Stillitano said. “The model used to be [about] ticket sales. Now there is real TV and sponsor money.”

    Relationship building

    Other sources confirmed that the appearance fees for even midlevel European clubs have become prohibitive to individual promoters and even MLS teams looking for one-off matches. Cheaper Mexican rivals, such as Tigres and Pumas, will play for $10,000 to $50,000. While the Mexican teams may not fill football stadiums, they do provide good business in soccer-specific stadiums.

    “It’s irrational at this point how much money these clubs want guaranteed,” said a team source. “We’ve turned down games because there’s no way we can make money on that.”

    Laurent Colette, CMO for FC Barcelona, said the fees are based on market value for the team and that U.S. promoters are in competition with other promoters in Asia, who pay handsomely to host the squad. In 2008, the club signed a five-year deal with SUM that included six games to be played in the U.S. Colette said the relationship with SUM is more about expanding its brand in the U.S. than generating revenue from appearance fees.

    “I think in the last 10 years we have seen the U.S. become a key market, and we hope this continues,” Colette said. “We are delighted to go [to the U.S.] every two years or so to further our relationships.”

    Kevin Payne, president and CEO for D.C. United, said MLS teams and SUM should focus on solidifying those relationships in order to create a better business model. Most of the international games are one-offs, Payne said, something that does not promote growth into areas such as player sharing or development. In addition, the European teams confirm games late in the process, he said, which affects sponsorship and ticket sales. “There are no long-term relationships,” Payne said. “Everyone has the best intentions, but we haven’t gone beyond playing friendly games.”

    Payne said the inability of MLS clubs to forge meaningful relationships with European teams leads him to believe the international games are more about appearance fees than brand extension. “Most of them talk about wanting to extend relationships here, but the end of the day, it’s about short-term money,” Payne said.

    The legacy of the 2011 World Football Challenge could be the strengthening of the relationships between top European clubs and MLS teams, as well as the creation of a profitable business model for the major international promoters.

    Whether the business of bringing international clubs to the U.S. becomes a sustainable industry or remains tied to brand building for local clubs is open for debate.

    But it’s clear that the strategy of bringing the world’s top clubs to play in the United States has become more advanced since Toye’s day, when American teams held the games to drum up local interest. In the 1970s, Toye chose the foreign opponents based more on the ethnic background of the host cities than on the visiting club’s name. The Polish national team, for example, might draw tens of thousands in Chicago but would be a dud in Boston; Peruvian teams drew crowds in Paterson, N.J.

    “It was all based on nationality; nobody cared about Manchester United or Liverpool,” Toye said. “I wanted those people from country X to come out and enjoy themselves so maybe they’d come back and watch my team.”

  • Troubled Mets, Dodgers take local ratings hit

    Two teams that have been in the news for the wrong reasons — the Los Angeles Dodgers, who are now in bankruptcy court, and the financially distressed New York Mets — have seen two of the biggest drops in MLB’s local TV ratings so far this season.

    Both major-market teams have faced high-profile ownership controversies that appear to be affecting local viewer interest this season. Dodgers games on Prime Ticket have the third lowest local rating among all U.S. MLB teams (1.19), and Mets games on SportsNet New York have the seventh lowest mark (2.30).

    But it’s the drop in ratings from last year for each team that is the most telling statistic. The Mets’ local ratings are down 29 percent from midseason last year; the Dodgers’ ratings are down 27 percent.

    Only the Astros (down 34 percent on FS Houston) and Rays (down 37 percent on FS Florida and Sun Sports) have seen steeper local declines.

    The Dodgers have struggled on the field this year, mired in last place in their division, and that surely has affected viewer interest. But just how far have they fallen? The team is in danger of being watched by fewer Los Angeles-area homes than Los Angeles’ second most popular NBA team. The Dodgers’ 67,000-home average is just above the 56,000
    homes the Clippers averaged last season. By comparison, an average of 271,000 Los Angeles-area homes tuned in for Lakers games last season.

    MLB’s local ratings — where 16 teams have dropped and 13 teams have increased — generally are trending the same as the league’s national TV ratings. Fox (1.9 rating for Saturday afternoon), ESPN (1.5 rating for “Sunday Night Baseball”) and TBS (0.4 rating for Sunday afternoons) are all flat with last year.

    The St. Louis Cardinals, last year’s local ratings champion, remain on top with the highest local ratings thus far in the 2011 season, posting a 9.06 average on FS Midwest.

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    * Compared to midseason ratings last year.
    Note: Comparable data was not available for the Toronto Blue Jays.
    Compiled by John Ourand and David Broughton
    Another strong story is in Philadelphia, where Phillies games on CSN Philadelphia are making a charge for the local ratings crown, posting an 8.87 average rating, up 29 percent from last year.

    The Yankees, once again, are producing the biggest overall audience, averaging 309,000 homes for each game.

    Other points of interest:

    The Red Sox are stopping their three-year ratings slide on NESN. Fueled by the team’s offseason acquisitions and its first-half story lines, Sox games are up 22 percent so far this season in the Boston DMA. The team’s 7.66 local rating is fourth best in MLB.

    MLB’s Florida teams are having a rough TV year. While ratings for the Rays (3.46) and Marlins (2.31) are in the middle of the pack, their drops from last year are significant. The Rays are down 37 percent; the Marlins are down 26 percent.

    Despite fielding its most competitive team in years, Nationals games on MASN and MASN 2 are down 24 percent, and their 28,000-home average is MLB’s lowest. Last year, ratings jumped during games when Stephen Strasburg pitched. He is injured and hasn’t played this year. MASN says the posted rating does not reflect bonus coverage on the RSN’s second channel, MASN2, after Baltimore Orioles games end. That bonus coverage would lift the Nats’ mark from a 1.17 rating to a 1.25.

    Some of MLB’s small-market clubs have enjoyed strong numbers so far. Fueled by their surprising first-half on-field performance, Cleveland Indians games on SportsTime Ohio are up a whopping 80 percent, the biggest increase in baseball. Their 6.32 average rating is seventh highest in the league and highest at this point in the season in the six-year history of the team-owned network. The Pirates (up 33 percent on Root Sports Pittsburgh), the Brewers (up 32 percent on FS Wisconsin), the Royals (up 26 percent on FS Kansas City) and the Reds (up 24 percent on FS Ohio) are also doing particularly well this season.

  • Class-action push brings new threat to NFL schedule

    As the NFL and its players strive to agree on a new labor deal to end the now four-month-old lockout, a separate issue has emerged that could still endanger the preseason and perhaps the regular season: how to unwind the antitrust case filed against the league by 10 players.

    Outside counsel for the players, which include Tom Brady and Drew Brees, are pushing for the case (Brady v. NFL) to become a class action before it’s settled as part of a new labor deal, multiple sources said. A class-action settlement requires a 30- to 45-day window for comment, perhaps longer. So even if a deal on issues like revenue split and rookie wage scale is reached as soon as this week, unless the league is willing to lift the lockout before the resultant settlement is formal — something league brass have publicly said they will not do — it could mean a longer wait to open the NFL season, these sources said.

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    Jim Quinn is representing players in the antitrust lawsuit, alongside Jeffrey Kessler.
    While the push for class standing could still be dropped, the outside counsel, Jeffrey Kessler and Jim Quinn, could want a class action in part because any other disposition of the lawsuit might suggest the NFL Players Association’s decertification and simultaneous antitrust lawsuit was a sham, as the league alleged. That could impair the strategy of decertification in the future.

    “I really don’t get how they get it done on time,” said Mark Levinstein, a sports labor attorney at Williams & Connolly who is a counsel to the United Football League. “The players’ view is the league will open camps on faith [once the framework is agreed to], and the league’s is players will just drop the lawsuit and have a union.”

    Quinn in an email replied “nonsense” to questions about whether pushing for a class certification would delay the process. He did not reply to follow-up questions about how the season could open on time if a class motion is filed and the league will not open camps until all legal procedures are completed.

    For Brady v. NFL to become a class action, counsel would need to file a class motion before the court, which would then give class members — in this case, all players — time to object. The court could then certify the class and approve the settlement, with the labor deal likely an amendment to the agreement. This is what unfolded with an antitrust case against the league in 1993.

    In late May, at an owners meeting in Chicago, NFL general counsel Jeff Pash said the league would not lift the lockout until every “i” was dotted and “t” was crossed. Asked later about the issues of class certification, he responded there was no class, so it should not be an issue. Indeed, two immediate options would be that the 10 named players could voluntarily dismiss the lawsuit, or only they sign a settlement.

    That would destroy the leverage of NFL players in future negotiations, Levinstein contended. The threat to decertify and file antitrust cases is a major weapon of players, he said.

    In recent weeks, the sources said, Kessler and Quinn have advocated for a class certification as a way of protecting NFL players’ future rights.

    If a class is certified, the lawyers would likely become trustees of the class, which would earn them fees. Kessler had been trustee of the now-defunct “White class,” which formed in 1993 in the wake of the settlement of the Reggie White antitrust case. The White class expired with the old CBA in March.

    In addition, antitrust cases that are settled traditionally bring judicial oversight. The league opposes judicial oversight of the NFL’s labor ties with the NFLPA. Commissioner Roger Goodell told reporters in May that he anticipated a new deal would drop judicial oversight. The NFLPA has declined to comment on this point. So even if the league and players can figure a way to agreeably and expeditiously resolve the lawsuit, they would still have to agree on the issue of dispute-resolution mechanisms.

    “Thirty-two owners will stay shut for the season over that one,” said one league source about judicial oversight.

  • WPP Group buys stake in Just Marketing

    The international marketing company WPP Group has acquired a stake in Just Marketing International.

    The deal, which is expected to be announced today, values Just Marketing International at $100 million. WPP will join existing shareholders Spire Capital Partners, Credit Suisse and Zak Brown, who founded the agency. Its investment is believed to give it a stake of roughly 25 percent in the agency.

    “This is a huge compliment,” said Brown, 40, who will remain CEO of JMI. “For [WPP Chief Executive Martin Sorrell] to say, ‘I think motorsports is a great place to invest’ is a great sign for the industry.”

    WPP is the second major investor in JMI in the last three years. Spire Capital Partners took a majority stake in the agency in 2008 when the agency’s revenue was close to $80 million.

    Since then, JMI has diversified its business by expanding its operations overseas. Based in Indianapolis, it now has offices in Singapore and London, and about 60 percent of its revenue now comes from international markets. Its client list includes Castrol, LG Electronics, Singapore Exchange, Subway and UBS, which last year cut a $200 million, five-year Formula One deal.

    Brown believes WPP’s investment will help JMI grow by providing it with access to the company’s corporate client base and supporting it with the expertise of subsidiaries specializing in areas such as digital media.

    “There’s no doubt it will operationally benefit us,” Brown said. “Whether it’s efficiencies or buying power, I’m sure we’re going to gain and learn a lot.”

    WPP has more than 2,400 offices in 107 countries and employs more than 146,000 people across the areas of public relations, branding, communications and direct, digital and promotional marketing. It has acquired a number of agencies in the last year, including Blue State Digital, the group behind Barack Obama’s presidential campaign, a Turkish public relations firm and an Asian digital agency.

    The company has several subsidiaries that work in sports, including GroupM ESP, Wunderman and Prism, a United Kingdom-based sports marketing agency. Brown said it’s possible JMI could do work with those agencies but more likely that it works with complementary specialties such as a media buying agency like Mindshare or public relations agency like Hill & Knowlton.

    Brown got to know Sorrell through Formula One. Sorrell is a non-executive director of the motorsports series, and Brown played a central role in bringing UBS into the series as a global partner. The two began talking several years ago about the possibility of a deal, and WPP’s mergers and acquisitions group began formal negotiations this year.

    “We are strong believers in the marketing power of international motorsports for global brands,” said Andrew Scott, WPP’s director of corporate development, in a statement. “JMI is a leading company in the sector so this investment is a natural fit for WPP and will help to offer our clients exciting new opportunities in the field of motorsports.”

    Brown said that JMI will remain focused on motorsports and continue to increase its revenue internationally. Though JMI has the resources to acquire other agencies, he doesn’t envision it doing so in the near future. However, it occasionally will expand beyond motorsports by doing hospitality and marketing campaigns for existing clients who want help in other sports and entertainment sectors. It began doing that last year when it managed DirecTV’s experiential marketing promotion around “Monday Night Football.”

    “There are a lot of areas for growth and that will be one we will look at on an opportunistic, client-driven basis,” Brown said. “Where we’ll have the most growth is being able to offer larger, deeper services in sports by stepping up our digital game, our advertising game and other supplementary opportunities.”

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