SBJ/September 12-18, 2011/In Depth

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  • Schools continue to feel the budget squeeze

    Each of the past two years, it took last-minute $250,000 donations by the likes of Michael Jordan and NASCAR team owner Rick Hendrick to save middle school sports in Charlotte from the chopping block.

    Last summer, Jordan and his NBA franchise, the Charlotte Bobcats, came to the rescue as the local school system battled budget cuts, pledging $250,000 for the 2010-11 year. Then, last month, Hendrick, one of the nation’s most successful auto dealers and owner of race cars driven by Jimmie Johnson and Dale Earnhardt Jr., picked up where Jordan left off, signing a sponsorship that promotes his HendrickCars.com website.

    Hendrick views the donation as more of a feel-good campaign than a hard sell. Growing up in rural Virginia, he played several sports in high school and credits his coach with instilling discipline and respect — and keeping him motivated to graduate.

    “I know what it meant to me,” Hendrick said. Keeping middle school athletics available in Charlotte “will help kids.”

    AP IMAGES
    School systems are doing everything from holding raffles to seeking equipment donations to make up for budget cuts. That’s the case at Orange County High School in Orange, Va., where Alyssa and Amir Waller pose on the football practice field last year.
    They need it. As the example above illustrates, the trickle-down effects of devastating cuts in high school sports are being felt at lower levels, too. And, for high school programs and districts across the country, what worsened during the recession is growing grimmer during its sluggish aftermath.

    Districts are scrambling to maintain programs while trimming costs and adding ancillary revenue wherever possible. Participation fees, corporate sponsorships, more ambitious booster clubs and other campaigns have surged in recent years as the reality of youth sports’ dire funding straits settles in.

    After surveying the landscape of late, experts remain pessimistic of a recovery any time soon.

    “It’s only gotten worse,” said Brian Greenwood, an assistant professor at Cal Poly San Luis Obispo who specializes in parks, recreation and youth sports. “With the stimulus money, a lot of school systems were able to piece things together. School systems are in worse shape now than they were two years ago.”

    Reductions in spending on youth sports in public schools totaled $3.5 billion the past two years, according to New York-based Up2Us, a nonprofit dedicated to increasing participation. The ripple effects of such cuts will be felt for years to come, coaches, administrators and other experts say.

    In an informal sampling of scattered schools and districts, several recurring themes emerged. Citing numerous studies, experts point to the costs of not funding sports programs: higher dropout rates, more truancy and gang activity, childhood obesity and higher rates of drug and alcohol abuse among children who are sedentary.

    A sampling of responses from across the country shows similar problems and a variety of stopgap solutions. Among them:

    At the Boston Scholar Athlete program, a public-private partnership aimed at using sports to improve academics,
    BOSTON SCHOLAR ATHLETE
    Boston Mayor Thomas Menino helps the Boston Scholar Athlete program kick off the 2011-12 academic year.
    college teams and corporations are among those trying to fill in some of the budget holes. Last year, New Balance donated 1,000 pairs of running shoes. Harvard’s football equipment contract with Nike provides new cleats each season, freeing up the old shoes for use by local high schoolers. And when Northeastern University eliminated football in 2009, the school gave Boston Scholar Athlete all of its helmets, shoulder pads and other equipment.

    In northeastern Ohio, schools such as Lake High in Uniontown are putting greater emphasis on ancillary revenue from local and regional sponsors. Bruce Brown, the school’s athletic director, said the board of education still pays for transportation ($100,000 annually) and coaching stipends ($150,000 to $200,000), but he has built sponsor revenue of $75,000 to $90,000 per year, money used for physical improvements including a new press box at the football stadium, turf and a roof for the batting cage. “We’ve really worked hard at developing strong partnerships with businesses,” Brown said. “That’s where the AD’s position has changed” beyond scheduling and making sure buses show up on time, he said. While Lake High has avoided participation fees, 44 percent of the state’s 1,604 public high schools and middle schools did use pay-to-play in 2010, said Ohio High School Athletic Association spokesman Tim Stried. He estimates the number now exceeds 50 percent.

    In California, where pay-to-play is illegal, many school districts have reduced or eliminated junior varsity and freshman teams while also pushing for more booster donations and sponsorship. Some schools and districts are so strapped for money they ask students to meet at the game sites to cut costs. “It’s scary,” said Marie Ishida, executive director of the California Interscholastic Federation. “There are all kinds of liability issues.”

    At the Mesquite Independent School District in Texas, a Dallas suburb, the five high schools and eight middle schools have 6,000 kids playing in sports programs. Over the next two years, the district faces a combined $7 million in cuts. Steve Bragg, the district athletic director, said participation fees have been avoided through a combination of cost savings and sponsorships. The district has two football stadiums and rotates the five high schools’ schedules to use those venues. Scoreboard ad revenue at the stadiums generates $50,000 annually. In recent years, other savings have been realized by reducing the number of drug tests for student athletes (cutting $50,000 annually), ending traditional reimbursements to booster clubs for banquets ($38,000) and limiting the number of tournaments in which junior varsity and freshman teams play.

    A litany of cuts has increased the prevalence of participation fees, the so-called pay-to-play model aimed at shoring up strained budgets. About 40 percent of schools now charge fees to play, said Paul Caccamo, Up2Us executive director.
    Greenwood, the Cal Poly professor, compares the pay-to-play trend in youth and high school sports with the proliferation of fees at America’s national parks.

    Students in his classes react with surprise when Greenwood tells them about Yellowstone and other national parks not requiring fees in the past.

    “They were meant to be free, but somewhere along the way we didn’t value the national parks to where we were willing to either increase our taxes or have the political will to get the money,” he said. “We said, ‘Sure, I’ll pay.’ People who can afford it don’t think twice. Then we start to do the research and we say, ‘Why are marginalized populations not visiting our parks?’ Now in youth sports, we’re seeing it go down the same path.”

    One piece of good news for schools and districts: Corporate interest and spending are on the rise. With 7.7 million participants in high school sports, or 55.5 percent of students, and more than 300 million spectators for football and boys and girls basketball alone, it’s easy to see why Nike, Under Armour, McDonald’s, Wendy’s and Gatorade, among others, have entered prep sports.

    “We view high school athletics from a corporate standpoint as an opportunity right now,” said Tyson Webber, vice president of client services at GMR Marketing.

    Intense interest in recruiting and more media exposure for young athletes have increased the appetite for prep sports. At the same time, challenges include a fragmented audience and a limited range of potential advertisers because of restrictions on what can be advertised to an audience that includes a large segment under 18 years of age.

    Erik Spanberg writes for the Charlotte Business Journal, an affiliated publication.

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  • Aiming for the youth sports market

    The continued growth of youth sports, including as a source of media content, has several companies looking to be a bigger player in the market. Here’s a sampling:

    BLUE SOMBRERO


    The logistics involved with most youth sports leagues can be a nightmare. Even for paid coaches, the teams are often adjuncts to their regular day jobs. Trying to manage registrations, fee collections, scheduling and other administrative tasks can be cumbersome. Blue Sombrero, an Atlanta-based outfit formed in 2002, has built a solid niche simplifying those chores with a series of online modules. The company has clients in more than 40 states, particularly among soccer clubs, church leagues and other private entities.

    I9 SPORTS

    Everybody plays. No tryouts or drafts. Optional practices. No fundraisers. A regional franchise business model. All fairly radical concepts for many hyper-competitive youth sports. But i9 Sports Corp., a nine-year-old firm based in Tampa, has developed a fast-growing network of youth sports leagues and camps in 25 states. The company operates its leagues on a firm basis of inclusivity, allowing kids to try different sports and positions in a way not typically possible in many other leagues.

    KORRIO

    Seattle-based Korrio started in 2009 and earlier this year closed on a $3.3 million Series A round of venture capital financing. Investors include former Nike, Reebok and Starbucks executive Martin Coles and IndyCar team owner Sam Schmidt. In addition to online registration, scheduling, statistics and roster management, Korrio’s flagship product, Playflow, conducts background checks on team volunteers. After an initial focus on soccer, the company is preparing to expand into other sports.

    PLAYON! SPORTS

    This Atlanta-based firm produces, develops and aggregates a variety of high school sports content, and distributes it on linear TV, online and via DVDs. Originally a small offshoot within Turner Sports, the now-independent entity recently closed on a $7.2 million Series C round of funding. PlayOn! Sports intends to use the fund to pursue a significant geographic expansion to grow beyond its current concentrations in the Southeast and Midwest.

    BERECRUITED.COM

    An early leader in matchmaking non-elite high school athletes and collegiate athletic programs, the company is now getting much more social and mobile. The company this year purchased sports social hub Fanvibe, and that outfit’s management now runs BeRecruited.com’s day-to-day operations. As a result, the socially driven efforts Fanvibe undertook to connect fans around events and games will now be applied to BeRecruited.com.

    IHIGH.COM
    This site already streams thousands of live high school games per year around the country. But the Kentucky-based firm this year made a big move into mobile delivery, optimizing video delivery sites for numerous events to be accessible for smartphones and tablets.

    FRONTIER COMMUNICATIONS
    The Connecticut-based TV, Internet and phone service distributor focuses primarily on rural areas, where high school sports often take on even larger importance. And the company recently aligned with CBS’s established preps hub, MaxPreps.com, to develop Game On!, an original video service featuring condensed games, interviews, fan-submitted content and other material. On-demand games from 14 states will be available as part of Frontier’s existing MyFiTV digital video portal.

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  • Good Sports pitches in with equipment and apparel donations

    When it comes to youth sports, it’s gotta be the shoes. Not to mention the bats, balls, shoulder pads, helmets and the rest of the apparel and equipment it takes to play sports of every type. This makes the mission of Massachusetts-based nonprofit Good Sports all the more important in these budget-strained times. Founded in 2003, the organization focuses on inner-city and disadvantaged children.

    As schools across all income levels grapple with reduced budgets and other funding woes, a disproportionate effect can be seen in urban areas, where participation is 40 percent lower than in the suburbs, said Christy Keswick, Good Sports chief operating officer.

    GOOD SPORTS / TODD ASHFORD
    The nonprofit focuses on inner-city and disadvantaged children.
    Participation fees have become more commonplace in recent years to restore lost funding, but in urban areas schools cut sports or reduce what is offered because they know families can’t afford to pay the fees, she said.

    Enter Good Sports, which seeks apparel and equipment from manufacturers and then donates the items to Pop Warner and Little League programs, school athletic programs and community recreation centers across the country. Past and present donors include Easton Sports, New Balance, Nike, Reebok, Spalding and Wilson, among others.

    “What we’re trying to accomplish, within schools and externally, is just to make sure kids have the option and the opportunity to continue to play sports,” Keswick said. “We have found through research that equipment is a huge driver of the cost of sports programs.”

    To date, Good Sports has donated just under $6 million worth of equipment and apparel, benefiting 300,000 kids spread across 750 youth programs. In the past year, the organization has worked in 30 states.

    Spalding was the first company to come aboard when Good Sports launched with a mission of serving kids in the Boston area.

    Dan Touhey, who served as a Spalding marketing executive at the time, said the concept resonates with manufacturers for several reasons. It allows companies to clear out aging inventory with tax-deductible benefits, helps children play sports and improve their health and, not least, provides brand awareness to kids who may become customers as they get older.

    In 2006, Spalding introduced a new NBA game ball made of synthetic material that led to so many player complaints it was shelved after a couple of months of use. Being able to donate the unused and unwanted game balls “helped make a bad situation better,” Touhey said.

    Erik Spanberg writes for the Charlotte Business Journal, an affiliated publication.

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  • Hands off high school sports?

    The growth of high school programming has raised some thorny questions over who should be allowed to carry such content, especially with the rise of networks affiliated with college conferences or individual schools.

    For example, worried about potential recruiting advantages, NCAA rules prohibit the Longhorn Network — a channel fully owned by ESPN — from showing high school games.

    Yet NCAA rules can’t stop any of ESPN’s national channels from scheduling high school games that involve Texas recruits. And what if ESPN decides to rebrand the Longhorn Network to something, like, ESPN Texas which doesn’t use the university’s marks? Would that channel have to adhere to NCAA regulations?

    JOE FARAONI / ESPN
    The NCAA ruled that networks affiliated with conferences or universities, such as the new Longhorn Network, can’t show high school games.
    High school programming on television and online is exploding at such a rate that new rules seem outdated almost immediately.

    “When we head down the road of what started with sports networks, then it went into conference networks and now we’re looking at school networks,” said Kim Carver, The Mtn.’s vice president and general manager. “Things are evolving faster than we can keep up with.”

    Last month, the NCAA convened a meeting with college sports networks and high school associations to try to make sense of the rules. At issue was the Longhorn Network’s original programming plan, which was to feature high school games and highlights. Following the meeting, the NCAA affirmed its rules that TV channels affiliated with conferences or universities are not allowed to show high school games.

    “It’s one of those things that gets into recruiting issues,” Pac-12 Commissioner Larry Scott said. “Especially in this environment and climate, I don’t think it would be particularly wise.”

    The Aug. 22 meeting in Indianapolis came at a time when high school sports coverage is taking up a bigger part of sports networks’ schedules than ever — a low-cost programming staple, particularly with regional sports networks. RSNs generally don’t view high school sports as a big profit center. But high school programming gives the channels a way to ingratiate themselves to the local markets.

    National networks, particularly ESPN, generally view high school sports as a way to highlight name schools and blue-chip prospects. That’s where the problems with high school programming on conference and college networks come into play.

    To date, neither the Big Ten Network nor The Mtn. have aired high school games. Neither channel plans to put high school games on its schedule. The Pac-12’s planned suite of networks also has no plans to show high school games. These decisions have as much to do with logistics as anything else. With conference networks serving so many markets, which high school games would they choose?

    Real questions arise over how much jurisdiction the NCAA has to enforce these rules. The Big Ten Network, for example, is majority owned by Fox; The Mtn. is jointly owned by CBS and NBCUniversal; and the Longhorn Network is fully owned by ESPN.

    “There’s a basic principle with the NCAA around recruiting of agency,” Scott said. “It would be very clear to us that ESPN is an agent of the University of Texas. Fox is an agent of the Big Ten from a recruiting perspective. Ownership doesn’t matter.”

    The Mtn.’s Carver said she would not make any decisions that would harm Mountain West Conference schools.
    But sometimes adhering to those rules could put conference or school networks at a competitive disadvantage. SportsNet New York, for example, is the official television home of the University of Connecticut’s football and men’s basketball teams. NCAA rules don’t apply to SNY because the network isn’t specifically branded after the school.

    “The NCAA was not interested in any way in discussing or restricting or even addressing the notion of what other entities can do,” said Burke Magnus, ESPN’s senior vice president of college sports programming. “That horse left the barn a long time ago. They were simply focused on networks and platforms that were branded with conference or institutional marks.”

    It’s all in the branding

    High school programming on conference or school networks has not been a problem yet because none of the networks has experimented with it.

    Since The Mtn. launched in 2006 as a venture between NBCUniversal and CBS, the channel has never considered carrying high school programming.

    “We have so many states and so many cities, where would I even start anyway?” Carver asked. “But if high school programming came into us, I would look at it.”

    That’s a situation that Carver believes will happen soon. Over the next several years, she predicted, high schools will become better equipped at producing their own games, which would mean a steady flow of content to channels like hers.
    “There are already high school websites that are streaming,” she said. “The content is going to be there.”

    Scott sounded a similar concern. The Pac-12 Conference has no plans to put high school games on its TV channels’ schedules, and Scott said he has no interest in doing so. But if others start to do it, Scott said he would reluctantly have to follow suit.

    “If the NCAA ever allows it, and if other conferences or individual schools and their affiliated networks ever broadcast it, then we would, in all likelihood,” Scott said. “It’s not part of our plan. It never has been. But to the extent others are doing it, there’d be a sense of obligation we’d have to our high school associations to support them.”

    Longhorn Network executives say they will bide by the restriction on high school games, even if they were part of their original plans. The network still plans to show high school highlights and cover high school sports as part of its news and information programming.

    “We don’t have any significant plans to do that in a wide manner,” Magnus said. “It’s not highlighting Texas recruits, but doing it by an objective criterion selection, like the top 10 teams in all the divisions across the state. The NCAA will be watching how we execute it, of course. But they understood that it was not something they have intended to restrict.”

    Big Ten Network did not make its executives available for this story. But they said carrying high school games is not part of the network’s current plans.

    The ESPN experience

    The hullabaloo over high school games started in June, when ESPN’s vice president of programming and acquisitions, Dave Brown, publicly suggested that the Longhorn Network would carry games that included Texas recruits. His comments created a firestorm and led to last month’s NCAA meeting in Indianapolis.
    ESPN
    ESPN has made high school sports a growing part of its programming, focusing mainly on widely recognized schools and prized recruits.


    ESPN executives say that Brown overstated how often the Longhorn Network would carry high school games, which would have been a small part of the network’s schedule. They say the “vast majority” of high school games would not have involved any potential recruits.

    But Brown’s comments mimic the way high school programming has grown on ESPN’s national networks, where ESPN has focused on the most widely recognized schools and the prized recruits.

    “From a national perspective, we’re really focusing primarily on the blue-chip recruits and the high-profile, top-ranked teams,” Magnus said of ESPN’s national philosophy. “That’s the approach we took during the early days at ESPNU, and it continues to be our approach broadly for a national game.”

    The strategy was different for a more local channel like the Longhorn Network, Magnus said. Magnus described high school football as part of the fabric of the state of Texas, which is something a local channel would want to document.

    “We’ve said all along that we thought this network, while primarily focused on University of Texas athletics, certainly had a vision to go beyond that, whether it was diving into life in Austin or academic and cultural issues both on campus and off,” he said. “To the extent that this network reflected the interest of the people of the state of Texas, we considered high school athletics, particularly high school football, as an interesting component to blend in with all the other content on Longhorn Network. Whether people choose to believe this or not, it was not solely from the perspective of highlighting high-profile Texas recruits.”

    Ironically, the ruling to ban the Longhorn Network from carrying high school games won’t hurt much, since Texas’ University Interscholastic League does not allow Friday night games to be televised.

    What about other nets?

    The NCAA may have kept high school games off conference and college channels, but that content is growing rapidly on regional sports networks, like SNY.

    The RSN hosts and televises a high school basketball tournament in New York every year with popular teams like St. Anthony’s. SNY uses the tournament to aid the community, spending profits from the event to fund schools and college scholarships, said SNY
    Fox Sports Net will stream more than 230 high school events this year in Wisconsin.
    President Steve Raab.

    “We don’t have a high school strategy; it’s a community strategy,” Raab said. “If and when the SNY Invitational gets to a profitable point, our intent is to plow that profit back into the schools.”

    Fox Sports Net also is expanding its high school footprint in various regions. In Texas, for example, it launched a six-hour Friday night show that offers high school scores and highlights. Its high school business is profitable, “but not by much,” said Jon Heidtke, senior vice president and general manager ofFox Sports Southwest.

    “In Texas, high school football is part of the DNA of these communities and of our coverage,” Heidtke said. “We realize how important it is. We put a lot of effort into it. We consider it one of our tentpole
    programming.”

    In Wisconsin, FSN will stream more than 230 high school events this year. More than 90 of those events will be repackaged for linear TV. That initiative is certain to grow, especially as high schools begin to produce more of their content and more companies enter the space, said Mike Dimond, senior vice president and general manager of Fox Sports North and Wisconsin. FS Wisconsin has partnered with Coincident TV and SnappyTV to aid the streaming effort.

    “It’s an investment that we’re making to the future,” Dimond said. “It’s not an overnight profitability.”

    In New York, Cablevision launched a cable channel entirely devoted to high school events, MSG Varsity, in 2009. The channel was launched as a way for the cable operator to retain customers, since it’s not available on satellite. The channel still is growing, having launched daily sports news shows this fall that are regionalized to its New York City, Long Island, New Jersey and Connecticut/Westchester County/Hudson Valley subscribers.

    By all accounts, the amount of high school sports on television and online will continue to grow.

    “I just expect more: more games on more platforms locally, regionally and nationally,” ESPN’s Magnus said. “Our activities as a company are getting more localized as well. You’ll see us apply that to high school athletics.”

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