SBJ/February 25-March 3, 2013/Opinion

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  • Cartoon: Career aspirations

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  • Leadership issues in the air at All-Star Weekend

    I did a quick trip for the NBA All-Star Weekend, mostly centered around the Tech Summit on Friday morning. Here are a few takeaways from my time in Houston:

    One clear observation was the continual transition of leadership from Commissioner David Stern to Deputy Commissioner Adam Silver. This wasn’t prevalent during the Tech Summit, which Stern still opened and closed, but it was evident during the annual State of the League press conference, which I watched Saturday night on NBA TV. During the session, Stern referred (or deferred) to Silver on a number of questions. At one time, Stern looked down at a note Silver pushed his way and said, “I told Adam, remind me to speak about Seattle and Sacramento. So it says, ‘Sac‑Seattle’ because I knew I would forget.” On the topic of expansion, Stern said he was leaving that issue for the “next commissioner, and let him decide how that gets answered.” 

    NBA Commissioner David Stern defers to his successor, Adam Silver, about who will host the 2015 All-Star Game.
    Photo: GETTY IMAGES
    So we’re starting to see the foundation of an Adam Silver-led NBA, and one area where he will make his mark is in selecting future sites of the All-Star Game. One of his first decisions will have interesting ramifications in the New York market, specifically: Who will host the 2015 All-Star Game? Both Madison Square Garden and Barclays Center have bid for the game, and Silver said that one of them will win the bid. MSG will be done with its massive, $1 billion renovation by that point, while Barclays Center will be only 3 years old, and the NBA likes to showcase new venues. There is also the undercurrent of the cross-town rivalry between MSG Chair Jim Dolan and Nets Chair Mikhail Prokhorov, and continuing down the line to Hank Ratner and Brett Yormark, as well. These executives will do all they can to lobby Silver for the game, and the decision he makes on this point, likely a year away, will be fun to watch. Stern even said almost gleefully, “I think that Commissioner Silver is going to have a great time with those applications. I really do.”

    Of course, talking about future All-Star sites, Stern had a little poke at the NFL in saying that Silver is “going to play it outdoors in New York.” But all kidding aside, the future “big-event strategy” of All-Star Weekend will be another topic on Silver’s to-do list. More than a few sources in Houston believe the weekend is in need of a revamp, and media reviews coming out of the event were tough — to be kind — on the Saturday night skills competition. The future of the weekend was clearly on Silver’s mind when he acknowledged that discussions have already been taking place. “We’ve discussed playing internationally, All‑Star Games. I’m not sure if it will work logistically, but it’s something we’ll continue to study,” he said. “We’ve looked at other neutral cities. We’ve looked at refreshing All‑Star Saturday Night and other innovative events for the weekend.”

    The big issue before Silver will be leading the decision on jersey sponsorship. This will happen, but one new aspect that was mentioned by more than a few team executives was the question of whether they have the sales experience necessary to sell such complicated inventory. That is certainly part of the discussion when the debate comes to whether the league or teams should sell the inventory.

    n The move by the National Basketball Players Association to remove Executive Director Billy Hunter was the right one. There have been too many questions about Hunter’s leadership for him to continue and, frankly, players deserved better. But the question now becomes, Who drives the change, and what does the change look like? The role of the game’s top agents during a change of leadership in any players association is closely monitored, as they wield great influence in telling clients what type of leader is needed. I found the answers from two such agents in recent interviews to be revealing. Both David Falk and Arn Tellem look for executives who can work with the league to increase revenue during a time of labor peace, but they also see leaders from different backgrounds.

    Falk told USA Today, “When I hear some of the names being bandied about — former agents or former players — that’s not remotely what the players need right now. The players need almost a corporate executive who got hired to increase the sales of a company, who can come in and work with the league to exploit new income streams.” But Tellem offered a different view, telling SportsBusiness Daily: “A profound knowledge of labor law is, of course, essential. The director has to be masterful at internal politics, like an old congressional hand who is adept at mollifying fractious constituents. Most importantly, the union’s executive director must educate, unify and motivate the players.”

    So a corporate turnaround strategist and rainmaker, or a politically skilled diplomat? And are they mutually exclusive? No timeline has been given on when a decision could be made, but it’s a rare opportunity for a new commissioner and new executive director to work together at building a relationship while expanding the game.

    A highlight of the NBA Tech Summit was a one-on-one with Twitter CEO Dick Costolo and CNN’s Soledad O’Brien. Costolo is a lean-in, excitable, engaged speaker whose passion for his product is clearly evident. One takeaway for me — as I am a voyeur but not a poster on Twitter — Costolo’s focus on showing new users just how indispensable the service can be.

    > LEADERSHIP AT THE NCAA: Outside of the NBA All-Star Weekend, I’m getting more and more questions about the leadership of the NCAA, and it’s fair to say that Mark Emmert hasn’t had the best start to the year. Last week’s termination of Vice President/Enforcement Julie Roe Lach over the botched investigation at the University of Miami led to numerous calls for Emmert’s resignation. That’s not going to happen. But make no mistake about it: There is serious unrest in the ranks of collegiate sports with the current leadership, especially when it comes to enforcement. This embarrassment over the Miami case only heightens the pressure on Emmert. Lach was well-respected within the collegiate world, and she was promoted by Emmert when he first joined the NCAA. She’s being viewed as the person taking the fall for an issue that was seen to be mishandled at the highest levels.

    There’s been a lot of turnover under Emmert — on the operations and business side, and now within enforcement and compliance. Some believed the new faces were needed, but it’s caused a great deal of unrest among member institutions and business partners. I’m not ready to give up on Emmert. I like him and grew more enthusiastic the more time I spent with him. He’s tried hard to change the system and the model of NCAA oversight, which we all know to be flawed. He said time and again he wants to reform the rules and the enforcement process. It’s been one of his strongest pledges over the last two years.

    People point to the fact that if he truly was unaware of the methods being used to gain information in the Miami case, then he wasn’t paying enough attention to an area that he’s identified as critically important and in need of change. He’s seen as not being accountable to some of the organization’s key decisions.  I believe he must change the way he’s leading, or I’m concerned that more mistakes and questions regarding his handling of the next big issue may put Emmert’s standing with the NCAA Executive Committee, and its Chairwoman Lou Anna Simon, in peril.

    Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.

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  • How disgrace insurance protects companies when scandal hits

    Because an endorsement from the right athlete can raise a company’s profile and result in increased sales, companies will routinely spend millions of dollars to partner with a well-known athlete or feature him or her in an advertising campaign. Pairing with a high-profile athlete spokesperson, however, is by no means without risk.

    A company relying on an athlete spokesperson can suffer considerable financial losses when the athlete spokesperson suffers personal disgrace, as dozens of companies recently learned when cycling legend and popular product spokesman Lance Armstrong found himself at the center of a public doping scandal.

    Over the last three months, a number of Armstrong’s sponsors and corporate backers took steps to distance themselves from him. Sunglasses manufacturer Oakley and brewer Anheuser-Busch, among others, ended long-standing marketing relationships with Armstrong late last year. Another company, nutrition food manufacturer Honey Stinger, announced that it was removing Armstrong’s image from its product packaging. Fitness center chain 24 Hour Fitness likewise announced plans to remove Armstrong’s name and image from its six Armstrong-branded fitness centers located in Texas, Oregon, and Colorado.

    Given the commercial fallout that can result from an athlete spokesperson’s fall from grace, it is no surprise that an increasing number of companies are relying on disgrace insurance as an important risk management tool. Disgrace coverage protects companies against the myriad financial losses that can result when an athlete spokesperson suffers public personal disgrace.

    For instance, if a company’s spokesperson is involved in a public scandal, the company may deem it necessary to modify or cancel a marketing campaign featuring the athlete. In such instances, disgrace insurance could cover the cost of hiring a substitute spokesperson, as well as the cost of reshooting or reproducing the advertising material. Disgrace insurance may also allow a company to distance itself from a disgraced former spokesperson by covering, among other things, the costs associated with removing the athlete’s image from product packaging and repackaging the product. Some disgrace insurance policies also allow the company to recoup some or all of the money paid to the disgraced former spokesperson for his or her endorsement.

    Disgrace insurance can be purchased either as a stand-alone coverage or as part of a broader policy covering other advertising-related risks, such as the risk that the insured spokesperson will die or become disabled during the covered advertising campaign. The cost of purchasing disgrace coverage generally ranges from 0.5 percent to 1 percent of the policy’s limits, so companies will typically pay between $5,000 and $10,000 for every million dollars of disgrace insurance purchased. Insurers may, however, charge substantially more to cover an athlete spokesperson prone to indiscretions or scandal. In fact, a company may have to pay as much as 5 percent of policy limits to cover a marketing campaign featuring an athlete spokesperson with a history of domestic violence, substance or alcohol abuse, or criminal misconduct. An insurer may also require the athlete spokesperson to sign a warranty relating to his or her lifestyle, consumption of alcohol, or drug use.

    When purchasing disgrace insurance, companies should explain their coverage needs and expectations to their insurance brokers. Disgrace insurance policies are non-standard, meaning that their terms and conditions can vary. As a result, a company needs to make certain that the policy it purchases provides the desired scope of coverage. For instance, if a company pays tens of millions of dollars to an athlete spokesperson, that company might place greater emphasis on recouping some or all of its investment in the event of a scandal. Other companies may care more about the costs associated with hiring a substitute spokesperson and reproducing the advertising material. For other companies, the cost of removing a spokesperson’s image from product packaging is of paramount importance. Because not all disgrace insurance policies will provide the same scope of coverage, a company should carefully review its policy prior to purchasing coverage to ensure that it meets its precise needs.

    It is also important for companies to purchase policies that define the term “disgrace” broadly enough to capture any potential form of criminal conduct or offensive behavior. Even then, the possibility remains that a company and its insurer will not agree that a particular scandal is sufficiently “disgraceful” to constitute a covered loss. For this reason, it is critical that a company facing a scandal work closely with its insurance broker and insurer throughout the claims process.

    Furthermore, a policyholder should be mindful of timing-related limitations on the right to initiate litigation or arbitration against its insurer once a claim has arisen. Disgrace insurance policies often will include contractual limitations provisions that dictate the time frame in which a policyholder must initiate litigation against its insurer. In other cases, this time frame will be set by statute or regulation. Jurisdictions have different rules regarding how contractual and statutory limitations periods are to be applied. Accordingly, policyholders must make sure to navigate these rules with care so that they preserve their right to pursue coverage.

    Because other policy terms and conditions may likewise be relevant, companies should carefully review their disgrace insurance policies not only when purchasing them, but also when pursuing a claim for coverage. Doing so will help companies maximize their recovery and obtain the full benefit of their disgrace coverage.

    Shaun H. Crosner (crosners@dicksteinshapiro.com), a Los Angeles-based attorney, is the leader of the Insurance Coverage Group’s Sports Practice at Dickstein Shapiro. His practice focuses on the representation of policyholders in disputes with their insurers.

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  • Despite progress, diversity hiring in sports media still poor

    Lapchick
    Editor's note: This story is revised from the print edition.

    Of all the racial and gender report cards produced by The Institute for Diversity and Ethics in Sport at the University of Central Florida, the most discouraging was the first Associated Press Sports Editors report card in 2006. Unfortunately, that sentiment is still applicable today.

    It is discouraging because the percentages of people of color and women in the top-level positions in sports media remain dismally low. The hiring practices of ESPN appear to be the only factor that is bringing up the percentages.

    In the report that’s due to be released this week, the grade for racial hiring practices for APSE newspapers and websites last year remained a C+, the same as in 2010. The F grade issued for gender hiring practices remained constant as well. The combined grade for 2012 was a D+.

    The following (top chart) shows the percentages of white employees in key positions in 2010 and 2012:

    The following (bottom chart) shows the percentages of men in key positions in 2010 and 2012:

    Some improvements are evident. Nonetheless,
    if you look like me, you have a great chance for upward mobility in the sports departments of newspapers and dot-coms in the United States and Canada. If you are a woman or person of color, even in 2013, your chances are extremely limited.

    In each of the reports in 2006, 2008, 2010 and now, ESPN’s statistics for sports editors and columnists raised the numbers. Without their key hirings, the statistics would be even worse than they were in 2006.

    In the new report card, of the 12 people of color who are sports editors at “Circulation A” media outlets (the largest newspapers and dot-coms, with a circulation of 175,000 or more), four work for ESPN, which employed two of the six African-American sports editors and two of the four Latino sports editors. If ESPN’s people of color were removed, the percentage of sports editors in the “A” organizations who are people of color would drop from 15 percent to 11 percent.

    Of the 11 women who are sports editors at this circulation level, six work for ESPN. If the ESPN sports editors who are women were removed, then the percentage of female sports editors at this level would drop from 14 percent to 8 percent.

    Sports media continues to lag behind the leagues it covers when it comes to diversity hiring.
    Photo: NBAE / GETTY IMAGES
    Of the 52 men of color who are columnists at this circulation level, 37 work for ESPN, which employed 28 of the 40 African-American male columnists, three of the six Latino columnists, and all six Asian columnists. If ESPN’s male columnists who are people of color were removed, the percentage of columnists of color at this level would drop from 20 percent to 7 percent.

    Of the 35 women who are columnists at this circulation level, 23 worked for ESPN. If the ESPN columnists were removed, the percentage of female columnists at this level would drop from 13 percent to 5 percent.

    When we did the study in 2006, Jemele Hill, then a columnist at the Orlando Sentinel, was the only African-American woman columnist in America. Seven years later, Hill is at ESPN, and Shannon Owens, the woman who replaced her at the Sentinel, is the only other female columnist of color.

    We have a long way to go before women and people of color are fairly represented in our major newspapers and dot-coms. As we wait for that day to come, I have to wonder how many great stories we’ve missed covering, how many we might have covered better and how many we would have had a completely different take on were things different. In the meantime, I give credit to the APSE, which is the only organization that has ever asked us to hold its feet to the fire by publishing a racial and gender report card on it.

    Garry D. Howard, editor-in-chief at Sporting News (which is owned by SBJ parent American City Business Journals), and John Cherwa, an editor at the Los Angeles Times and who served as the adviser for this study, were instrumental in getting the report cards on the sports media started. I asked them where we are now.

    “I have seen the future today in Greg Lee of the South Florida Sun-Sentinel, Lisa Bell of The Buffalo News and Larry Graham of the San Diego Union-Tribune, and I am elated over their ascension to the top spot at their respective sports news organizations,” Howard said. “This gives me hope that upper management will continue to see fit to include people of color in the process to compete for the top jobs in their departments, not just sports editor, but columnist and managing editor as well. We’ve come a long way, but there are still many miles to go.”

    Said Cherwa: “Our business is going through seismic changes, and it’s interesting to see how that relates to our diversity efforts. And the answer is that those efforts continue to make incremental progress; less than we would hope for, but still headed in the right direction.”

    My primary recommendation to the APSE remains that it adopt a rule, similar to the Rooney Rule in the NFL, that would call for a diverse pool of candidates for each opening of these key positions. I would call it the Ralph Wiley Rule after the late writer. That may be the push that is imperative.

    Richard E. Lapchick (rlapchick@ucf.edu) is the director of The Institute for Diversity and Ethics in Sport at the University of Central Florida, which annually publishes racial and gender report cards on MLB, the NBA and WNBA, NFL, college sports, and the APSE. Lapchick is the author of 16 books that primarily focus on racial and gender issues and ethics in college sport.

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