SBJ/August 6-12, 2012/Franchises

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  • AS Roma strengthens ties to U.S.

    A midsummer visit to the United States by Italian soccer club AS Roma started with three exhibition matches for its players and ended with two days of meetings in Disney World for its top executives.

    AS Roma drew more than 37,000 for its match against Liverpool at Fenway Park.
    GETTY IMAGES
    AS Roma is the only club in the top Italian league, Serie A, owned by a U.S.-based group, having been purchased in April 2011 by the Raptor Group, a Boston-based financial company run by James Pallotta. The lead investor is Tom DiBenedetto, who owns a minority stake in the Boston Red Sox.

    Since the purchase, the new leadership has attempted to re-energize the club’s fan base in Italy and grow its brand globally.

    AS Roma CEO Mark Pannes, a former HSBC Holdings banker, called the trip a “successful experience, and an educational one.”

    Unlike the majority of the 32 exhibition matches featuring international clubs in North America this summer, AS Roma opted to not have its tour produced by Soccer United Marketing, Major League Soccer’s marketing arm, and CAA. The team drew 74,020 fans for its three-game tour: 22,200 for a match against Polish club Zaglebie Lubin at Wrigley Field, 37,169 against Liverpool at Fenway Park, and 14,651 for a friendly against the El Salvador national team at Red Bull Arena in Harrison, N.J. According to an industry source, revenue for AS Roma from the tour was expected to be in the low seven figures.

    The club expressed no regrets over its decision to not utilize the significant marketing and publicity resources of SUM.

    “Although we’re still somewhat new to this, we’re comfortable not using a third party,” Pannes said. “It’s not a commentary on MLS, whom we have great respect for. By doing the tour on our own, we can meet our own strategic objectives and deliver to our corporate partners.”

    Said MLS Commissioner Don Garber: “Not every club touring here partners with us, and we respect their decision. We will always wish them well because, if they’re successful, it’s good for soccer.”

    While AS Roma considered the tour a success, it did not come off without a hitch. Its July 27 match at Red Bull Arena drew only 65 percent capacity. Documents finalizing the deal for the game were signed on July 2, providing a small window for promotion and ticket sales. The event also occurred during a logjam of international friendlies in the East, with Red Bull Arena hosting a French Ligue 1 match the following afternoon and one between the Red Bulls and Tottenham Hotspur four days later.

    “We have no regrets because the event came off well and it was a success for us financially,” Pannes said. “But yes, I do have some concerns about oversaturation and whether we should tour when so many other matches are happening around the same time. Like I said, that’s part of the learning process.”

    Next summer — which unlike this year will be a year without the Olympics, Euro or World Cup — AS Roma will embark on an extensive tour in Asia, but it will return to North America for matches in the coming years, according to Pannes. The team will train in Orlando during New Year’s week as part of its four-year agreement, signed last March, to become the club in residence at Disney’s ESPN Wide World of Sports complex.

    AS Roma chose to produce its own tour, which included a stop at Wrigley Field.
    GETTY IMAGES
    Last week, Pannes, Sean Barror, the managing director of RaptorAccelerator — Raptor Group’s sports and entertainment division — and AS Roma commercial officer Christoph Winterling met in Orlando with Disney officials to discuss the club’s visit to the park. Unlike Chelsea, Disney’s previous club in residence, AS Roma plans on sending its entire starting lineup and hosting fan-friendly events, such as open practices. Vacation packages to visit Disney World and participate in activities with AS Roma will also be sold to fans.

    “AS Roma is a renowned football club, but they were interested in an in-depth and authentic relationship,” said Mike Millay, director of sports development at Walt Disney World Resort. “Having their first team actually train at our place each winter is going to be an extraordinary experience for the youth soccer players who compete at Disney, the many U.S.-based Roma fans who will get a more intimate interaction with their favorite players at Disney than anywhere else. We will further expose America’s youth soccer players to world-class European football and expand AS Roma’s brand among U.S. consumers.’’

    Pannes came away from the meetings excited by the partnership’s potential.

    “The theme of the meeting was, how can we best provide access to soccer fans, but still allow our players and coaches to meet their training goals?” Pannes said. “The end result is that, with our partners at Disney, we’re treating this like a Major League Baseball team does spring training — but we’re going to be even more accessible.”

    In Italy, the club has plenty of business to attend to before the start of the Serie A season in late August. Average attendance fell last year from 41,000 to 34,665. The season-ticket base fell from 20,000 to 16,000. “When we took over, the club didn’t even have a season-tickets sales force,” Pannes said.

    As of last week, season-ticket sales had increased to 21,000 and premium-seating sales were up “over a million Euros” from last season, according to Pannes.

    The club shares Olympic Stadium in Rome with another team, but Lazio hopes to have a new stadium of its own by 2016. AS Roma is also in an exclusive negotiating window with jersey sponsor Wind, an Italian communications company. The current deal earns the club $8 million a year and ends after this season.

    Whether or not Wind returns as jersey sponsor, AS Roma is ready to take a more global approach to selling sponsorships.

    “Until recently, we felt like more of a domestic club,” Pannes said. “But now we have the deal with Disney, we have this U.S. tour under our belt and we have watched and learned a lot over the last year. It’s time to think bigger.”


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  • NFL reprises advisory role in Browns sale

    The NFL acted as financial adviser to the incoming owner of the Cleveland Browns, the second consecutive team sale in which the league has taken this role, sources said.

    Randy Lerner is keeping 30 percent of the Browns.
    AP IMAGES
    Jimmy Haslam, a current limited partner of the Pittsburgh Steelers, was directed to the Browns by the league, which guided him through the process, the typical job of a mergers and acquisitions expert.

    The league similarly aided Jacksonville Jaguars owner Shahid Khan on his purchase, which closed in January.
    The NFL confirmed it introduced Haslam to current Browns owner Randy Lerner, but declined to comment further.

    While leagues frequently signal whom they would like to own teams (in MLB, Commissioner Bud Selig has made it such a practice that owners are often called FOBs, or friends of Bud), the NFL is taking the practice much further.

    The NFL is involved in structuring the deal, performing financial analysis and other duties of an investment bank. The only area where the league will not get involved is advising on price, which in the Browns’ case is expected to be more than $900 million.

    That leads some experts to believe the buyers must quietly have other advisers.

    “I am sure those owners still have outside advisers on legal and technical financial matters,” said Andrew Kline, a partner with Park Lane, a sports investment banking boutique firm.

    Nevertheless, the most senior executives of the NFL are involved, led by Eric Grubman, a former Goldman Sachs media and sports investment banker who is executive vice president of NFL Ventures and operations. Chief Financial Officer Joe Siclare and Jay Bauman, vice president of legal and business affairs, are also key in the process.

    In sports, a crucial part of the financial adviser’s responsibilities is explaining the often very nuanced rules and regulations of leagues and team ownership, so there is likely no entity better suited than the league itself for that function.

    Keeping it in-house also prevents leaks. News of the pending Browns sale emerged publicly only at the end of the process, and the completion, subject to league ownership vote, came only days later.

    Haslam owns between 10 percent and 20 percent of the Steelers, sources said, a stake he will have to sell to buy the Browns. He is president and CEO of a Tennessee-based operator of travel centers. He has been interested in buying the Tennessee Titans, sources said, but the team, despite some rumors, is not currently for sale.

    Lerner is retaining 30 percent of the club, though the plan is for Haslam to buy that stake eventually. Assuming a $900 million sale means Haslam needs to pay $630 million. He can borrow $200 million under league rules, and JPMorgan Chase is arranging a loan, though it could not be determined for how much.

    That could brings his cash need down to $430 million (the Browns are not believed to carry much if any debt). He can reduce his cash requirement further by selling equity to limited partners.

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  • Everything but a tee time: Penguins’ new shop goes for a country club vibe

    The Pittsburgh Penguins plan to provide their customers with a country club atmosphere this season.

    The team and concessions partner Aramark are creating a specialty store at Consol Energy Center that will feature high-end apparel.

    The Club at PensGear will be home to upscale apparel from local licensees.
    Photo by: PITTSBURGH PENGUINS
    “It will be at the level you see in a pro shop at a top country club,” said David Peart, Penguins senior vice president of sales and service.

    The Club at PensGear will cater to suite holders, club seat holders and other upscale merchandise buyers at Penguins games and other events at the arena. There will be products offered by NHL licensees such as Reebok. But what will make the store unique to hockey will be the offerings of the club’s licensees, which include notable golf brands like Fairway & Greene, Cutter & Buck and Greg Norman Collection.

    “We’re projecting that this upgrade will help us increase our store sales by about 50 percent next season,” said Peart, who declined to provide last season’s revenue from merchandising.

    The new store will be at the Verizon Gate street entrance for the suite level and will be open to all patrons at the game. Construction is expected to begin this month, with a goal of being open for business for the Penguins’ first exhibition game at home Sept. 26.

    The upscale Penguins apparel of the local licensees will be available only at the new shop.

    Kirk Kowalewski, vice president of sales and marketing for special markets for Summit Golf Brands, the parent company of Fairway & Greene, said the Penguins and the licensees are providing a needed option. “Sometimes, a woven dress shirt or a classic-looking pullover with your team’s logo is the way to go,” he said. “It’s not always appropriate to throw on your hockey jersey.”

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  • Houston Rockets bet on casino industry executive to fill chief strategy position

    The Houston Rockets have hired gaming industry marketing executive Scott Andrews as the team’s new chief strategy officer.

    Andrews, who has no previous front office professional sports experience, was hired just weeks after Chris Dacey resigned after five years as chief strategy officer for the Rockets in early July.

    Prior to starting with the Rockets on July 30, Andrews, 42, worked for 10 months as chief marketing officer at the M Resort in Las Vegas. He previously worked in various marketing positions for Harrah’s Entertainment for nearly a decade after earning his MBA from the Tuck School of Business at Dartmouth College.

    In his new job, he will be responsible for various business analysis and development for the Rockets.

    “It is a role that is relatively unique in the NBA,” Andrews said. “It is a job that will encompass all aspects of the business; market research, analysis, and general insights into how to improve the business.”

    The Rockets did not use a search firm to fill the position.

    Andrews reports to Rockets CEO Tad Brown, who was not available for comment.

    “The job was brought to my attention from some friends who worked at the organization and it seemed like a good fit,” Andrews said. “I did not know Tad [before the job opened up.]”

    Despite the lack of professional sports experience, Andrews said his background lends itself well to his new job.

    “The casino business is heavily analytical and it is all about understanding what drives consumer behavior,” he said. “I have a lot to learn, but the nuts and bolts of the business strategy of the gaming industry applies to sports as well.”

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  • Rowley becomes go-to guy for Suns turnaround

    Newly minted Phoenix Suns President Jason Rowley is one of the NBA’s youngest top team executives, and the 41-year-old is looking to reverse the team’s recent slide both on and off the court.

    It’s a tall order for Rowley who on July 26 was promoted to president of business operations from chief operating officer after Brad Casper resigned after less than a year on the job.

    Getting to know …

    Jason Rowley,
    President, Phoenix Suns

    Age: 41

    Education: B.A. University of Arizona, 1994; law degree, University of Arizona, 2001.

    Professional experience: Joined the Suns as general counsel and senior vice president in 2008, promoted to COO in 2011, named president of business operations in July 2012.
    Corporate counsel, Van Tuyl Group 2006-08; attorney, Snell & Wilmer, 2001-06.

    A former U.S. Navy intelligence analyst and merger and acquisitions attorney, Rowley moves to the corner office with a sizable list of challenges after the Suns saw their attendance plummet by 11 percent last season. The Suns also ended the lockout-shortened 2011-12 season without a sellout for the first time in years. In addition, Rowley must market the team in the post-Steve Nash era after the popular Suns star left this summer via a sign-and-trade deal with the Los Angeles Lakers.

    Rowley, who joined the Suns as general counsel in 2008, also must inject some stability into the Suns front office after a steady diet of management changes over the past year. Rick Welts left as team president and took a job with the Golden State Warriors only to be replaced by Casper, who left after just nine months.

    It’s not the first time he’s had the top job, as Rowley worked as Suns interim president after Welts left last September and before Casper was hired in October. That brief run gave him a glimpse of what it takes to lead the team’s business operations.

    “With the labor dispute and then with the transition with Rick leaving and the transition with Brad, we have had some ups and downs, but I feel better than I have in a while about our prospects,” Rowley said. “We have gotten past those speed bumps and are excited to move forward.”

    Despite the popular Nash leaving the team, the Suns this year have a season-ticket renewal rate of about 83 percent and have seen an uptick in new full-season-ticket sales, though Rowley would not disclose specific sales figures.

    As chief operating officer, Rowley’s focus mainly was on the financial side of the business.

    “When Jason came to the Suns, we knew we had hired a great lawyer, but what we didn’t know was that we had hired a great business person,” Welts said. “He’s a quick study on business issues and came to be our go-to guy on the full range of issues every NBA team faces.”

    Now, Rowley must become more steeped in the team’s sales and marketing operation.

    “I am excited to jump into the sales side and feel more comfortable,” he said. “We are the original [professional sports] franchise here in Phoenix and that gives us a certain standing.”

    He’s focused on improving the Suns’ bottom line, which has suffered as the region has faced economic struggles and a major real estate downturn.

    “Some of our traditional sponsors and premium buyers were from that market and they are starting to come back,” Rowley said. “We still have a lot of work to do, but we are heading in a positive direction. We need to make sure we are doing a good job telling our new story.”

    Rowley may have joined the Suns in 2008 but he already was familiar with the franchise from working as an attorney for the Snell & Wilmer law firm in Phoenix when the firm represented Suns owner Robert Sarver in 2004 when he paid $401 million to buy the franchise. As a midlevel merger and acquisitions attorney, Rowley was assigned to the Suns deal, which proved to be a pivotal assignment that eventually led to a full-time job with the franchise.

    “We got the deal done in 10 days and I got to know the team,” Rowley said. “Then I did [legal] cleanup work on and off for the team for a few years.”

    After leaving the law firm for an in-house counsel job with a local automotive retailer, Rowley was hired by Sarver in 2008 as the team’s general counsel and senior vice president.

    “I got to see all aspects of the business,” Rowley said. “I was involved in player contracts, working on the CBA and working on the business side. That served me well.”

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  • Stars’ sales stirring after shake-up

    The uncertainty of the NHL’s labor negotiations has not stopped the forward momentum of the Dallas Stars.

    Under new owner Tom Gaglardi, the franchise’s front office has undergone a major overhaul during the past eight months that is already showing results.

    The Stars had hit rock bottom, with only 6,000 season-ticket holders, at the end of last season. This summer, more than 90 percent of those subscribers renewed, the team has sold more than 1,000 new season tickets since the signing of free agents Jaromir Jagr and Ray Whitney in early July, and revenue from new corporate partnerships has increased by more than $4 million.

    Jim Lites (left) says Stars owner Tom Gaglardi’s passion for hockey can revitalize the club.
    Photo by: GETTY IMAGES
    “What’s the best way to dig yourself out of a hole?” said Jim Lites, who was hired upon the closing of Gaglardi’s purchase last November for his third tenure as team president. “Stop digging.”

    What Lites did was make several changes at the top of the executive directory. Last December, his first hire was Mike McCall, who was president and general manager of Minor League Baseball’s Class AA Frisco (Texas) RoughRiders, as executive vice president and chief marketing officer.

    “The goal was to make the Stars relevant again and to deliver players to the marketplace like never before,” McCall said. “With the success of the Mavericks and the Rangers, and the Cowboys being the Cowboys, it’s a steep challenge, but Tom Gaglardi and Jim Lites are putting us in position to succeed.”

    This summer, Lites brought back Brad Alberts as executive vice president of corporate development. Alberts had 15 years of sports experience in the Dallas area selling tickets, suites, premium seats and sponsorships for the Stars, MLB Rangers, and Legends Sales and Marketing, owned by the Cowboys and New York Yankees. Following Alberts were Grady Raskin as vice president of corporate partnerships and Matt Bowman as vice president of ticket sales. For the previous three years, Raskin, a former salesman for the Stars, had been a sponsorship sales vice president with the Texas Rangers while Bowman had been with the Oklahoma City Thunder.

    “To turn this around, we needed experienced people in the region who would bring credibility,” Raskin said.

    The culture change started with Lites. When Gaglardi, a Canadian businessman who owned the Kamloops Blazers of the Western Hockey League, bought the Stars from Tom Hicks, he hired arguably the most experienced person in the region. Lites, who was Stars president from 1993 to 2002 and 2003 to ’07, was managing the New York Giants’ personal seat license program at MetLife Stadium and had worked with Mavericks owner Mark Cuban on a bid to buy the Stars. When Gaglardi emerged as the league’s choice, Lites called him to say the Cuban group would not formally make a bid. Soon after, Gaglardi invited Lites to a meeting.

    “Tom had two main questions,” Lites said. “‘Do you have the energy to do this? Do you have the desire to do this?’”

    Lites said he did, but only because he recognized what Gaglardi’s passion for hockey would mean to the revitalization of the dormant Stars in the Dallas market.

    “He is the owner of a junior club in Canada,” Lites said. “He breathes hockey and he is committed to this area. I saw him as a man that we could overcome our failures and celebrate big successes with.”

    The optimism that flows throughout Dr Pepper Arena started with the arrival of Gaglardi. He has invested money in the roster and calmed fears that he bought the club to move it. He ended the prior regime’s policy of “papering the house” each game with hundreds of free tickets, which devalued the product and angered loyal season-ticket holders. Gaglardi lowered ticket prices, creating sections in the mezzanine with price points of $25 and $9. Most crucially, he has been earnest in communicating with fans.

    “We’ve had to reforge the bonds that were broken between the team and the community,” Gaglardi said. “We have fewer season-ticket holders than we’ve had in quite some time. We’ve got to go back and capture their imagination and build those emotional bonds that are required for a fan to buy a season ticket.”

    Gaglardi’s first converts were his new executives.

    Said Farris, “This market doesn’t yet know how good it has it with this owner.”

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