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SBJ/Dec. 9-15, 2013/Anniversary Special Issue
Twenty People and Twenty Stories that Mattered
Published December 9, 2013, Pages 8-26
Can you name anyone whose lasting impact on the NBA approaches that of David Stern’s? Stern, who will retire as NBA commissioner on Feb. 1 after 30 years in the job, has built the NBA from a league whose Finals were on tape delay into the powerhouse property that it is today. Arguably, he is the greatest commissioner professional sports has seen, a tough-minded visionary workaholic executive who leaves the NBA during one of its strongest eras. During Stern’s tenure, the league has landed huge TV deals, created a steady rise in international growth, and delivered an increase in team profitability.
CONCUSSIONS RATTLE AN INDUSTRY
What former Commissioner Paul Tagliabue dismissed as a “pack journalism” issue in the 1990s morphed into a full-scale crisis for the NFL and, ultimately, a nearly $1 billion settlement this year. Images of former players with health issues, and the early deaths of others, shook the NFL and presented a massive PR problem. Now, concussion concerns have spread to other sports and, perhaps most problematically, have even affected youth participation rates.
MASSIVE ESCALATION IN SPORTS TV RIGHTS
When the financials of ESPN’s most recent rights deal for the NFL first started leaking out in 2012, the amount of money involved sounded ridiculous. The Disney-owned network would pay an average of $1.8 billion per year for rights to “Monday Night Football”? Considering that Rupert Murdoch was mocked a little less than two decades earlier for committing an average of $395 million per year for the NFC package that got Fox into the sports game, ESPN’s deal sounded outlandish to most people. But Wall Street yawned, Disney’s stock price rose, and the market for big live sports rights is continuing to see wild increases. There is no indication that it will slow down any time soon.
As the owner of two teams in the nation’s third-largest market, Jerry Reinsdorf occupies a rare place in sports. But it isn’t from the owners’ suite at a White Sox or Bulls game that Reinsdorf wields the most influence. It’s from behind his desk, where he dons a headset each day and works the phone for hours. During the last 20 years, Reinsdorf’s influence on MLB has been second only to the commissioner’s on matters large and small, including labor negotiations, the development and direction of MLBAM, the launch of the MLB Network and who gets to buy a team.
Easily the most powerful union leader in sports during the last 20 years, Don Fehr is the only person to serve as executive director of two major sports unions, first for Major League Baseball players and then for players in the NHL. During his 26 years leading the MLBPA, players maintained unity through two strikes and one lockout, battles that ushered in two decades of labor peace. In leading the NHLPA, Fehr negotiated a 10-year collective-bargaining agreement after an ugly 119-day lockout.
SOCCER FINALLY BOOMS IN AMERICA
REGIONAL SPORTS NETWORKS
It wasn’t the first team-owned network — NESN launched nearly two decades earlier — but YES Network’s 2002 launch set a precedent for regional sports networks, showing teams the value of their local media rights. The success of YES essentially gave teams the leverage to extract more money from these rights than ever before. To prevent teams from launching their own RSNs (and to stay in the local business themselves), companies like Comcast and Fox committed increasingly more money for these rights. All these moves resulted in the value from local rights becoming teams’ most reliable revenue source.
SPORTS ON A GLOBAL SCALE
If any sports executive gained stature and respect during his term as commissioner, it would be Selig. Twenty years ago, he presided over the first canceled World Series in 1994 and saw his reputation in tatters. He was seen as being slow to deal with performance-enhancing drugs, which turned into a public crisis. But through all that, Selig perservered and brought major change to the game. He’s had unwavering support from ownership, and from his top, talented staff, and he now prepares for his exit as a commissioner whose impact has been as great as anyone in the sport’s history.
The steady, cerebral Tim Finchem has had a 20-year run as commissioner that’s coincided with the unprecedented global growth of the PGA Tour. From his roots in D.C. politics, Finchem came to the tour well prepared to wear the many hats of the commissioner, and his smart, strategic approach has grown the tour exponentially.
SHAKING UP THE COLLEGE MAP
While conference memberships have evolved over the years, the most recent round of realignment, starting with the Big Ten’s signing of Nebraska in 2010, set off a flurry of moves that reset college sports. Conferences were no longer satisfied with a membership that made geographic and competitive sense. It became (gasp!) about the money. The more power schools a conference could grab, the more negotiating leverage it had for TV contracts. College sports became less about tradition and rivalries, and more about expanding the footprint into new markets.
When then Texas Rangers owner Tom Hicks agreed to pay Alex Rodriguez $252 million over 10 years in December of 2000, it rocked the sports world. Some said Hicks was foolish or crazy, while others said he was a savvy businessman who understood the value a superstar player could have on a franchise, as well as his ability to generate revenue. Owners and leagues fretted that long-term deals with players in excess of $100 million could harm their bottom line, if not their franchise’s financial viability. Salary escalation and the concerns about it were pervasive throughout sports, but while leagues acted to quell salary escalation in collective bargaining, the rise of nine-figure contracts for star players is likely to continue.
Former Commissioner Paul Tagliabue built the NFL from one of the country’s top sports into the unquestioned leader. Money, TV ratings and popularity hit all-time highs under his leadership, and he forged an effective working relationship with the players union, ensuring labor peace. His legacy has taken a hit, though, since he retired. First, an unpopular labor deal that he helped craft in 2006 so upset the owners that it led to the 132-day lockout in 2011. Now, he’s seen as having not being forceful enough in dealing with early signs of a concussion crisis.
THE LEAGUES BECOME MEDIA COMPANIES
Building a company with $2 billion in annual revenue is one thing. Accomplishing that feat on Nike’s turf is even more impressive. Founded by Plank in 1996, Under Armour has become a touchstone brand in the face of the most fearsome competition, and has showed that even in the most mature categories, innovation can still be a powerful differentiator. Under Armour has built a brand meaningful to its infamously fickle ‘tween and teen core consumer. Plank insists, “We haven’t made our defining product yet.” All the kids wearing UA gear would be surprised to hear that. No one outside of Beaverton is betting against it.
The stock car racing evangelist took a rural sport and turned it into a major enterprise that made Madison Avenue and all of America take notice. During his 30 years of leadership, France made a host of changes to the sport that made that possible, but perhaps the one most critical to its success came when he, at son Brian’s suggestion, convinced racetracks to pool their television rights and sell them collectively. The deal gave NASCAR consistent TV coverage on Fox, NBC and Turner Sports and generated $400 million a year in TV revenue. He handed the reins to Brian (left, in photo), who has pushed a progressive agenda to maintain the sport’s growth.
THE SECONDARY TICKET MARKETPLACE
The last 20 years have seen Phil Knight take his brand into sports previously unexplored, most notably soccer, golf and cricket, along with a brief and ill-fated foray into hockey. The best-known Nike athlete, Michael Jordan, evolved into a Nike subsidiary brand. For all of Nike’s expansion, Knight remains most closely connected with basketball — so much so that in 2012 he was inducted into that sport’s hall of fame. He also became a trendsetter in the collegiate space by taking his University of Oregon Ducks under his powerful wing.
Gary Bettman has been NHL commissioner for 20 years, serving as a sometimes controversial leader but also one with great resolve and with support from ownership. During two decades at the helm, Bettman led three lockouts, but has also made the NHL a stronger business, taking the league from 24 to 30 franchises and increasing revenue from $400 million in 1992-93 to $3.3 billion in the 2011-12 season. With labor peace until at least 2020, the 61-year-old Bettman is as enthusiastic about the league, and his job, as ever.
THE GROWTH OF ESPN’S CULTURAL INFLUENCE
It’s not accurate to say that ESPN was an afterthought when the Walt Disney Co. paid $19 billion for Capital Cities/ABC in the summer of 1995. But with a broadcast network, movie studio and theme parks as part of the package, ESPN was hardly the prized asset of the deal. Fast forward 18 years, and ESPN unquestionably is the main cog in Disney’s media empire, recently valued at more than $65 billion. Outside of the financials is ESPN’s force as a cultural icon and agenda-setter. ESPN has become so big and so powerful that other broadcasters have launched or acquired sports channels over the years to help them compete.
THE RISE AND FALL AND RISE OF TIGER
The influence that Dallas Cowboys owner Jerry Jones enjoyed from fielding championship teams had begun to fade as SBD and SBJ launched. One playoff win in 18 years dulls the glow of those three Super Bowls early in Jones’ ownership. But his off-the-field influence is enormous, in everything from how the NFL sells sponsorships, to what commercial rights teams enjoy, to how the league approaches TV and labor talks. Throw in the dollars flowing from his stadium, which set a new bar for venues, and perhaps, from the business side, Jones can be forgiven for the on-field struggles.
THERE’S NO STOPPING FRANCHISE INFLATION
The Los Angeles Dodgers’ unprecedented price tag of $2.15 billion in 2012 made everyone with a sports franchise stop and think. TV money and new media potential is driving these heady valuations. Teams with far less pedigree also showed massive appreciation. The Jacksonville Jaguars are arguably the NFL’s worst team, located in one of the NFL’s smallest markets, and they play in one of the league’s worst stadiums. Yet, Shahid Khan paid $770 million for the team in 2012. With sports venues increasingly important as anchors for real estate development, the position of sports franchises as asset plays is more firmly established than ever.
THE STEROID ERA
The best known sports media executive of the last 20 years, Ebersol spent more than two decades fashioning NBC Sports in his image. Ebersol dealt with virtually every top league, creating deep relationships with each commissioner who crossed his path. It was Ebersol’s TV productions that set the bar, particularly with the Olympics, where he pioneered the strategy of telling the stories behind the athletes rather than just showing the competitions. A strong, yet controversial voice at times, Ebersol consistently portrayed the image of an executive with his finger on the pulse of the sports industry.
THE HIGH COST OF LABOR DISPUTES
When SportsBusiness Daily was born in the summer of 1994, George Steinbrenner was little more than a year removed from his second suspension from baseball. By the time he died in 2010, Steinbrenner had led the Yankees to five additional World Series titles and played an influential role in nearly every major industry trend, including new stadium development, the creation of team-owned regional sports networks, the mushrooming of sports licensing and merchandising, and the elevation of concessions operations. The brash, demanding Steinbrenner elevated the Yankees into a dominant global brand.
REWARDS OF TITLE IX
As ESPN’s president from 1999 to 2011, Bodenheimer oversaw the biggest era of ESPN’s growth, using revenue from the channel’s annual affiliate fee hikes to create the country’s biggest sports media organization. Under Bodenheimer, ESPN became dominant on TV, with the well-respected executive convincing most sports leagues to move many of their biggest games to cable. Bodenheimer, who stepped down at the end of 2011, oversaw a digital business that is the envy of the industry, and his tenure is marked by experimentation and aggressiveness.
Outspoken and unyielding, the Big Ten’s leader has set the bar for what the modern-day conference commissioner should be — consensus-builder, media expert, visionary and negotiator. In nearly 25 years at the Big Ten’s helm, Delany has negotiated NCAA and conference TV contracts, overseen expansion, and realigned his conference into the biggest revenue-producing behemoth on the block. His legacy will forever be tied to the Big Ten Network, which launched in 2007 and survived the distribution wars to become a cash cow for the league’s members.
AT THE FANS’ FINGERTIPS
THE STADIUM BUILDING BOOM
He bought the New England Patriots in 1994 for a then NFL-record $175 million, and in the last 20 years, Robert Kraft has become one of the most influential voices in sports. His Patriots have been to six Super Bowls, he was a charter member in Major League Soccer and his business operations are creative and successful. But it’s also the way he has positioned himself as a consensus builder and innovator, and his connections at the top levels of entertainment, music and pop culture, that place him among the most dialed-in executives in sports.
News Corp. executive Chase Carey has spent his career using sports to grow his businesses. He put together Fox’s bold bid of $1.58 billion to wrest the NFC package from CBS in 1994 — a deal that essentially created Fox Sports. He used a similar strategy at DirecTV, where he competed against cable by building the satellite company’s reputation as the home of sports. He was directly responsible for the launches of MLB Network and the Big Ten Network, as both channels cut their first affiliate deals with DirecTV. He returned to News Corp. in 2009, and spent the ensuing years driving retransmission fees for Fox and launching Fox Sports 1.
ONCE SEEMINGLY INVINCIBLE, THE SPORTS ECONOMIC IMMUNE SYSTEM GIVES IN
Sports once seemed immune to the ups and downs of the economy, but that changed in 2008-09 when the country was hit by the biggest economic downswing since the 1930s. Leagues and teams laid off workers as sponsor dollars got tight or, in cases such as the financial services sector, disappeared entirely. Naming-rights deals also went into the deep freeze with new NFL venues in New Jersey and Arlington, Texas, opening without corporate names. The good times seemed to return with recent TV rights fees, naming-rights deals at new NFL venues, and the record-setting sale of the Los Angeles Dodgers in 2012. However, the suite and premium seating markets may never recover, and it may be a while before the industry, as a whole, regains its aura of invincibility.
Roger Goodell was at Commissioner Paul Tagliabue’s side as the NFL emerged as America’s biggest sports business. And when Goodell ascended to the top job in 2006, he quickly put his stamp on the game, whether through a tough stance in labor talks, or an emphasis on player health and safety. While not always loved by fans and players for his strong positions, he has guided the league, despite significant hurdles such as the lockout and concussion crisis, to off-the-charts popularity and profitability.
For many sports fans, thinking they’re smarter than the coach or general manager is a core part of the entire experience. Two industries — fantasy sports and sports video gaming — have grown into thriving multibillion-dollar entities allowing fans to exercise those dreams from the comfort of their couch. Fantasy sports slowly but steadily grew from its origins in the 1960s, exploded in the mid-2000s once live online scoring became possible, and now represents a core audience draw for major media companies. Simulation sports video gaming, meanwhile, now represents one of the foremost licensing components for each of the major professional leagues.
THE LOST SENSE OF SECURITY
The bombing at Centennial Park during the Atlanta Olympics in 1996; the terrorist attacks of Sept. 11, 2001; the two bombs detonated during the Boston Marathon earlier this year — each significantly changed the way that organizations that deal with large crowds view security. Entry lines are slower than they were two decades ago. Bag searches are commonplace. There are restrictions on what you can bring in. Whether you’re waiting to board a jet or going to see the Jets, your life has changed.
Phil Anschutz has had a profound impact on teams, facilities and the development of downtown Los Angeles as a sports hub during the last 20 years. He has been the owner of the Los Angeles Kings since 1995. His company, AEG, is a minority owner of the Los Angeles Lakers. Some would say he single-handedly lifted MLS into the U.S. sports scene, as he was a founding investor in 1993, and at one time simultaneously owned six teams. And his development of Staples Center and L.A. Live has changed the face of the nation’s second-largest market.
In 1990, a 38-year old executive became president of ESPN, and Steve Bornstein¹s legacy with the company during that time is unmatched. He took ESPN from a single cable channel in 1990 to a suite of channels that included ESPN2 and ESPNews. He extended the ESPN brand to radio, online and into pop culture, by launching restaurants and a magazine. He set ESPN up as a legitimate competitor to the broadcast networks. His pioneering efforts continued at the NFL, as he launched the NFL Network and RedZone, and developed a much more robust digital presence. He’s been the league’s rainmaker when it comes to delivering media riches.