SBJ/January 21-27, 2013/Franchises

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  • Dolphins’ Ross is in the chase to purchase AEG

    Real estate company Related Cos., chaired and founded by Miami Dolphins owner Stephen Ross, is one of the approximately eight final groups bidding for Anschutz Entertainment Group, financial and other sources said.

    AEG has for years planned to build an NFL stadium in Los Angeles, so it is unclear if the league would be comfortable if Related acquired AEG and built the stadium, thereby having one owner serving as the landlord of another team.
    Both the NFL and Related Cos. declined to comment.

    What appears out of the question, however, would be for the real estate company to own equity in a team that moved into a new downtown Los Angeles stadium. That’s the proposal AEG’s made previously, and NFL rules prevent dual ownership.

    Several of the bidders have been previously identified publicly, such as Guggenheim Partners, which initially was eliminated in December and then allowed back into the process, sources said, as well as Los Angeles billionaire Patrick Soon-Shiong.

    The eight groups were culled from the initial bids due last month, and several of the remaining groups could and are likely to combine, sources said.

    Sources said that AEG, through its financial adviser Blackstone, is in the midst of management presentations, where the bidders get more in-depth information about the assets than they received previously.

    Much of AEG is a real estate play, so it is not hard to see why one of the world’s great real estate developers, Related, is interested. AEG owns arenas, hotels and property around the world, with the actually pure sports holdings, like the Los Angeles Kings and an interest in the Lakers, a relatively small percent of AEG’s holdings. The Staples Center, of course, straddles the company’s real estate and sports holdings.

    Related, a source said, is working with its RSE Ventures unit, which handles Ross’ sports endeavors.

    It’s by no means a certainty that the process, overseen by Blackstone, will conclude with AEG’s sale. Owner Phil Anschutz could still pull it off the market, sell AEG in pieces or negotiate individually with a buyer instead.

    A spokeswoman for The Anschutz Co., the holding company that owns AEG, declined to comment other than to say the process is proceeding fine. But the sources said the process is going slower than hoped, and an original estimate of a first-quarter sale now would be tough to achieve.

    AEG has proposed building a stadium in downtown Los Angeles as part of redevelopment of the convention center. Farmers Insurance agreed to name the stadium Farmers Field.

    The NFL, though, prefers its teams to control the stadiums they play in, which was not part of the AEG plan, and the league is believed to be considering several sites in the region. Another site is one championed by developer Ed Roski in the City of Industry, 20 miles outside of Los Angeles, and the league has long thought to want a stadium at Chavez Ravine. The Dodgers, owned by Guggenheim, play there.

    NFL teams have several more weeks to notify the league if they wish to relocate to Los Angeles for the 2013 season, a development that is highly unlikely to occur, insiders agree.

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  • Indians’ aggressive offseason reshapes organization on the field and in the marketplace

    Over the offseason, the Cleveland Indians have dramatically reshaped the organization. Among the recent transactions: the hiring of former Boston manager Terry Francona as manager; the signing of popular outfielder Nick Swisher to a $56 million deal that is the largest free agent pact in franchise history; the sale of the SportsTime Ohio regional sports network to Fox Sports in a deal pegged at more than $235 million in addition to a new 10-year TV rights deal valued at more than $400 million; and the change in the club’s designated control executive from owner Larry Dolan to his son, team Chairman Paul Dolan.

    Indians President Mark Shapiro last week discussed the changes with staff writer Eric Fisher.


    Shapiro said the sale of SportsTime Ohio benefits the team by adding incremental revenue.
    Photo by: COURTESY OF CLEVELAND INDIANS
    It’s been a very eventful offseason for the club. How much of this has been tied into a larger, overall strategy?

    Shapiro: The manager and free agent movement and large-scale trades were all very closely tied. They were all byproducts of the fact we needed to make some large-scale moves. In particular, “Tito” and Nick Swisher represented moves that we felt could be levers that we pull that have an impact well beyond just their individual positions. They’re both extremely positive guys and are talented guys who have had a lot of success in the past, but also have a lot of energy and are positive guys who wanted to be here.

    To what degree were these moves made possible by the new TV deal?

    Shapiro: Our revenue projections, which were a byproduct of a lot of things, certainly played into our moves this offseason. At the same time, the Shin-Soo Choo trade is a recognition that while we are going to make some strides financially, we’re still not going to move from a lower-revenue team and we still have to operate with an understanding there is nothing more important than us infusing controllable talent into our system at all times. We can never lose sight of that.

    Where are you projecting to land on payroll for the ’13 season? There have been some suggestions you will be down from last year [$78.4 million].

    Shapiro:
    We will not be down. Payroll will be above last year. It will clearly be above last year.

    The TV deal folded into a strategy Fox is pursuing but also was a retreat from having a team-owned network that many clubs want. What do you see as the upside?

    Shapiro: The benefits of our aligning with Fox, this is a group we’ve had past experience with and are excited to be reunited with. They have a great platform for producing a quality product. There’s also the benefit of incremental revenue, of course.

    It’s still early, but how are ticket sales for the coming season tracking?

    Shapiro:
    It is early. We haven’t really started selling single games yet, but I’d say it looks fairly flat right now.

    The Indians have been among the most active clubs in social media, and in Nick Swisher you’ve acquired one of the most popular athletes on Twitter in any sport. Fair to say you’ve got opportunities to do some interesting things this year in this realm?

    Shapiro:
    He’s got 1.6 million followers. The team, I think, has something like 30,000. It’s a pretty staggering contrast. These, of course, are not the type of things that enter into the process on a strict player-personnel decision, but you’ve got a guy here who embraces a public role, embraces a community role, and this is something that certainly will be a benefit to us.

    What does the shift of the club’s designated control executive from Larry Dolan to Paul mean to the Indians?

    Shapiro:
    I don’t think there will be any change on what we see in the day-to-day operating of the team. But on a sentimental level, there is a tremendous amount of appreciation for Larry Dolan and who he is as a human being. So to the extent we may see him a little less, there’s disappointment on a personal level. But on a business level, this is making official what had naturally transpired over the last couple of years.

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  • Monumental to launch digital net

    Monumental Sports and Entertainment Chairman Ted Leonsis will launch a full-fledged digital network this week in what is the first step toward setting up his own local TV channel.

    The broadband sports and entertainment channel will be called Monumental Network and will feature programming related to the teams and Washington, D.C.-area arenas operated by Leonsis’ company, including the NHL Capitals, NBA Wizards, WNBA Mystics and those teams’ Verizon Center home.

    The broadband channel eventually will grow to include more than 20 affiliated websites.
    The broadband channel will be housed at MonumentalNetwork.com and eventually will grow to include more than 20 affiliated websites that will be available via the primary site.

    “We want to become a cable network,” Leonsis said. “This is a next-generation property that could very easily exist on cable or satellite as well as the Web.”

    Currently, Comcast SportsNet Mid-Atlantic controls the Capitals’ and Wizards’ local TV rights and will do so for the next several years: The Caps’ rights are tied up for the next five years; the Wizards’ for the next 10. In an interview last week, Leonsis was complimentary of Comcast SportsNet, calling it a “great relationship.” He did not discuss the possibility of bringing his teams’ rights to his network, but that clearly appears to be a long-term option for the former AOL executive.

    “We don’t know what the long-term future holds,” he said. “But we’re not going to not develop lots of interesting and new Web-based applications.”

    Monumental Network will feature a blend of video and blogs. While it will not have access to live games, it will offer highlights and shows with names like “Caps Red Line” or “Wizards/Mystics Magazine.”

    Monumental executives have looked into the possibility of carrying tape-delayed games, but Leonsis said he has not made a final decision on that yet.

    Leonsis was clear that the network will offer more than just sports content. Similar to MSG Network in New York, Monumental Network will feature content from events at arenas that Monumental Sports operates — Verizon Center, Patriot Center and Kettler Capitals Iceplex. That is expected to include concerts and behind-the-scenes coverage.

    Other programs will include coaches shows, “Scouting Report” produced by SB Nation reporters, and “Press Row,” a “Sports Reporters”-type show featuring beat reporters and broadcasters.

    Leonsis also plans to draw on programming from SnagFilms, the online documentary production company he launched in 2008. He said SnagFilms will build a sports-themed library that he expects to be akin to ESPN’s “30 for 30” documentary series.

    Monumental Network’s launch comes a couple of months after Leonsis created an in-house production company called Monumental Productions with about 20 employees.

    “I’ve made it well-known that I believe our destiny is to be in the media business,” Leonsis said. “It might be that in the future there is a broadband cable sports and entertainment network. Or it might be that the network exists on all platforms. We just want to be prepared for it, so we made this investment in productions.”

    MonumentalNetwork.com was built and developed by the Virginia-based Perfect Sense Digital.

    Staff writer John Lombardo contributed to this report.

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  • NHL team presidents: Time to move forward

    As their teams prepared for the start of the abbreviated NHL season this past weekend, five club presidents took the time to share their thoughts on the effect of the new CBA and the post-lockout fallout. Participating were:

    Ted Black, Buffalo Sabres
    Peter Luukko, Philadelphia Flyers
    David Morehouse, Pittsburgh Penguins
    Mike Priest, Columbus Blue Jackets
    Michael Yormark, Florida Panthers

    What does the new CBA — with its eventual clawback of revenue to a 50-50 split and contract term limits — mean for your team?

    Priest
    Priest: Lots of people will debate whether the revenue-sharing model is improved or not. The reality is, in the NHL, it’s tough to predict how revenues will grow. As a recipient of revenue sharing, the Blue Jackets feel it was solidified in the new deal, or could possibly increase. It’s a positive for us. How much? Time will tell.

    Luukko: It is meaningful for the Flyers and the rest of the league. The new CBA should provide financial stability. This will give more teams an opportunity to compete financially. I really believe that.

    Morehouse: After three stoppages in 18 years, the 10-year term will make it easier to work with our corporate partners and fans. It means we don’t have to answer the questions about labor issues for a very long time. For the viability of the franchises that haven’t been as fortunate as the Penguins lately, it helps strengthen them so they can operate at their best. The deal is better for the entire league.

    Black: The term is the most important thing. It’s 10 years that we don’t have to go through this again. We can move forward. As for individual economics, we never comment on that.

    Yorkmark
    Yormark: Ten years of stability means that partners will have the confidence to fall back in love us without a labor issue. It’s a fair deal for the Panthers. It enables us to compete on a level playing field with the other 29 teams. It helps us sign our own players long term and keep them Panthers, potentially, for their entire careers.

    What is your team’s approach to selling this abbreviated season and growing your fan base long term?

    Morehouse
    Morehouse: Let’s get back to what the Penguins do best: trying to meet our fans’ needs and putting the best team we can on the ice. Put the focus on those things, and not on any of the unpleasantness of the past few months.

    Yormark: Be aggressive. We’re going to embrace our fans like we never have before. It’s one of the most aggressive campaigns in our franchise’s history. Our relaunch campaign, “Get It On,” is the Panthers’ call to action. We need to activate the marketplace boldly.

    Black: Our approach remains the same since Terry Pegula bought the team [in 2011]. We want the Sabres to be a premier destination for players, and we want to connect with our fans. Every decision we make has those two components in mind.

    Luukko
    Luukko:
    The Flyers’ strategy is we’re back and thanks for your patience. Best way to thank them is by offering great value.

    Priest: We want to thank the fans for putting up with the serious inconvenience of the lockout. But we want to do it all early. It’s crucial that we move forward.

    What are some of your biggest fan initiatives out of the gate?

    Yormark: We’re offering the best deal in the NHL: Season tickets cost as little as $7 per game, plus free parking and a free Panthers jersey. We’re raising a banner to celebrate our fans, “The 7th Man.” We’re dedicating this season to them.

    Priest: For our home opener against Detroit, Blue Jackets fans have an offer of 2-for-1 tickets, plus a free T-shirt, schedule magnet, Pepsi, hot dog and popcorn.

    Morehouse: We wanted to do as much as we could early. At our first four games, we’re offering 50 percent off on Penguins merchandise, along with a choice of three free concessions.

    How are you going about making up for the 17 lost regular-season home games with your sponsors?

    Black
    Black: The direction from Terry was to do whatever we need to do to make it right with our partners. Our only challenge is that we sell our own commercials for Sabres broadcasts on MSG Network. We’ll need to work through those make-goods over time.

    Priest: We’re taking care of all of them on a case-by-case basis. A few are going to ask for a refund, some want to be credited, others are looking at make-goods. We’re making everyone happy so that they stick by us for a long time.

    Yormark: The lockout was an issue of force majeure, so it requires us to make good on our partnerships and the Panthers will, as we always do. The sponsor reaction has been terrific. None of them have been primarily focused on the make-good, but on having their activations ready for the season.

    What can the NHL do to move past the lockout?

    Morehouse: Leaguewide, we need to focus strongly on repairing the NHL brand. We need to take a fresh look at marketing and fan relations. I want to be the best league at it. We need to be the best league at it.

    Black: We will begin to benefit when whatever wounds between the NHL and NHLPA begin to heal. I’m not saying it’s incumbent on the league or the union to do that. Everyone has their part to do. As president of the Sabres, I need to do everything I can to make sure that our players are proud to work for this team and be part of this organization and this league.

    Yormark: There’s no question that some damage has been done. We need to understand our fans’ and sponsors’ needs and make sure they see the value in partnering with us on a local and national level.

    Luukko: The damage in Philadelphia will be minimal, if any. For the markets that are challenged, there’s work to do. Having to sell out the last 500 tickets in a building like ours is obviously a lot different from having to sell out the last 5,000, especially in a short period of time. But as the season progresses, the excitement of a season where every game counts will make for one heck of a sprint.

    Priest: I feel strongly that the key is moving on. Make the acknowledgment of what happened these last four months, take care of your customers and then get back to growing the game.

    Staff writer Terry Lefton contributed to this report.


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  • Last season’s success, pre-lockout sales leave Rangers in strong shape with sponsors

    Beyond the obvious effects of losing 17 regular-season games, New York Rangers’ corporate sales have not experienced any significant damage as a result of the 113-day NHL lockout. In fact, the club says it’s doing better at the start of this abbreviated season than it was before the 2011-12 season.

    “For that, we have team performance to thank,” said Greg Economou, executive vice president of revenue performance at Madison Square Garden, which runs the Knicks, Rangers, Liberty and events at the arena.

    The Rangers reached the Eastern Conference final last season after finishing second overall in the league during the regular season.

    Greg Economou introduced Tissot as an MSG sponsor in October.
    Photo by: GETTY IMAGES
    Economou also pointed out an important difference between the NHL lockout and the NBA’s recent one, which lasted from July 1 until Dec. 8, 2011.

    “We missed fewer games in the NBA, but it presented a bit more of a challenge because that stoppage started in July, when teams are in major selling mode,” Economou said. “When the NHL lockout began in September, so much of our business was already done. Coming off the Rangers’ great season, new sales were up and we had a strong renewal season.”

    New sponsorship deals for this Rangers’ season were completed with Kia, Lexus, Wheat Thins, Circle Line, Living Social, Time Warner Cable and Tissot, among others.

    There will be at least two new activations during intermissions. Returning partner Duracell Powermat will sponsor the Human Puck Race, where contestants will race around the ice, pick up a large foam cell phone and place it on a supersized Powermat.

    Kia, which signed a multiyear deal with Madison Square Garden in October to become the official automotive partner of all of the arena’s entities, is sponsoring the Rangers’ version of Score-0. Any contestant who, after scoring into an empty net from the near blue line, can score on one of two shots from the red line into a 5-inch hole will win a new Kia Optima Limited. In comparison, many clubs give away only short-term leases on cars. During the 2011-12 NBA season, two fans — one in Miami, one in Madison Square Garden — won Kia cars in similar contests by hitting shots from half-court.

    “We’re always happy to give away a car at a major sporting event,” said Tim Chaney, executive director of marketing for Kia Motors. “There’s no better platform in hockey than Madison Square Garden and the New York Rangers.”

    Chaney said his company and MSG will work out any make-goods from the lockout with the Rangers without any difficulty.

    “We have contractual protection, and everything will be resolved with mutual satisfaction,” he said. “Our eagerness is to start getting Rangers fans engaged.”

    With the NHL season finally under way, Economou forecasts more new sales for the Rangers.

    “Now that the season’s started, we expect to do some more business,” he said. “We should have some new deals done over the next three or four weeks.”

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  • In true Kansas City style, barbecue helped seal Sporting KC jersey sponsorship with Ivy Funds

    When Tom Butch’s assistant told him that lunch had arrived at the Ivy Funds offices one day in early December, it was not what the company’s president and CEO expected. There stood Sporting KC goalkeeper Jimmy Nielsen, midfielder Graham Zusi and defender Matt Besler, presenting barbecue while wearing jerseys with the Ivy Funds logo.

    This human touch, one of the final pitches made between team and sponsor, was one of a few leading to a five-year deal with Ivy Funds to become the first revenue-generating jersey sponsorship in the 16-year history of Sporting KC. It took about 75 days to pitch and negotiate.

    Signs last week reflected the removal of “Livestrong” from Sporting KC’s stadium after the cancer foundation terminated its naming-rights deal.
    Photo by: AP IMAGES
    The contract was signed Thursday, providing some welcome news in a week when the team and cancer foundation Livestrong, rocked by former Chairman Lance Armstrong’s confession of performance-enhancing drug use, terminated the naming-rights deal for Livestrong Sporting Park.

    Based in Overland Park, Kan., Ivy Funds is a financial services company founded in 1937. Financial details of the jersey deal were not released. In October, Sporting KC Chief Revenue Officer Jake Reid said the valuation of a jersey sponsorship with his club was $2.5 million annually.

    For the soccer franchise, Ivy Funds met its biggest requirements for the deal: a local company with strong leadership and a community-minded approach. Ivy Funds executives, who became fans of the club when they first bought a midlevel advertising package two years ago, were impressed.

    “The lunch reflects what a great marketing operation Sporting KC has,” Butch said. “When you’re going to be partners for a long time, these are the kind of people you want to be around.”

    Sporting KC forward Kei Kamara sports the jersey with Ivy Funds CEO Tom Butch (left) and Sporting Club CEO Robb Heineman.
    Photo by: GARY ROHMAN / SPORTING KC
    A few weeks earlier, Robb Heineman, CEO of Sporting Club — SKC’s parent company — invited Ivy Funds marketing director Lori Dorsey and Butch to a meeting at the soccer stadium. When they arrived, Butch and Dorsey were escorted to the field, where they looked up and saw the team’s deal-points presentation on the scoreboard. They liked SKC’s ingenuity.

    “Still,” Butch said, “the deal had to hit every financial and business button in our analysis. And it did.”

    SKC sold out 16 of its 17 games at its 18,467-seat stadium in 2012. The club leads MLS in new season-ticket sales and renewals during this offseason. All of its 34 suites are sold out through the end of the 2013 season. The franchise’s growth has been covered in national publications, including Sports Illustrated and Sporting News.

    “Beyond the numbers, we’ve seen firsthand the impact Sporting KC has made in Kansas City,” Butch said. “We see the growth of soccer in the U.S. and the strides MLS has made as a major pro sports league.”

    Heineman said the club’s original hope was to have a jersey sponsor in time for the opening of the stadium in June 2011.

    “But it just didn’t come together,” he said. “It turned out to be a blessing. We didn’t jump at a deal too soon and below valuation. Attendance is great and we’ve gotten some national attention. Now we have a deal that’s the biggest in our franchise’s history. We’re going to invest a lot of time back into Ivy Funds. Every day will bring a new idea.”

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