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Volume 20 No. 42

Leagues and Governing Bodies

The NFL is planning to form a more than $32 million venture capital fund to invest in startup media, technology and entertainment businesses that tie into football.

Owners were briefed on the concept last week at their meeting in Houston. The subject is expected to come up for a vote at the owners’ next gathering, possibly in December.

The NFL would be the first league to pool owners’ money to invest in outside businesses.

“We are in conversations with venture capital firms,” said Robert Kraft, the New England Patriots owner, who described ownership as committed to moving forward. “We can drive new technologies and hopefully invest in our fans.”

Each team would be called on to set aside a sum of more than $1 million, a league source said, to be available when the NFL is ready to invest. The cash would be the owners’; it would not be taken out of money shared with players.

However, the NFL Players Association might be given the opportunity to invest alongside the league, the league source said.

“Our assumption is we would work in tandem with other venture capital funds,” the source said. “This is really an outgrowth of trying to grow revenues.”

Venture capital fund representatives might be invited to make presentations at the next league meeting. Representatives might also be asked to join an advisory board the league may form.

While no other sports league is believed to have its own venture capital fund, there are examples of such funds elsewhere in the corporate world, such as with Comcast, Intel and Adobe, the league source said.

If the NFL indeed becomes an investor in sports-related media and technology, it would join a growing number of investment firms that have targeted sports, including Providence Equity and Falconhead Capital. However, those firms tend to take large stakes in existing companies or buy them outright. The NFL is looking at what might be called “angel investing”: getting in at the ground floor of companies as they launch.

It’s unclear precisely what the NFL might invest in, though the array of technology and media companies tied to sports has grown greatly in recent years. The league source even pointed to Twitter as something the NFL four years ago could have invested in because of its reach into sports.

The initiative is commissioner- and owner-led and spearheaded by Neil Glat, an NFL senior vice president, and the corporate development team he leads.

The investing decisions would be handled in-house, though the idea is to work alongside other venture capital firms.

The more than $30 million the league would deploy is not considered a huge sum in the investment world. However, the league source said if the league found a startup it liked that needed more funding, the owners could be asked to put more money in.

The new initiative would not have occurred without the new collective-bargaining agreement, the league source said. The new CBA gives the owners a greater share of revenue than the old deal.

Insiders at the league often talk about watching brands like ESPN grow on the back of the league. In part, the potential new fund is a chance to capitalize on outside businesses that may profit from the NFL.

The Houston Texans, as part of their new 10-year radio deal, are taking most of their operations in house. The club will hire the announcers and sell the ad inventory. Texans President Jamey Rootes described the new deal, announced before the meetings began, as a collaboration with CBS Radio Network in Houston, but the club has editorial control when the deal kicks in on March 1.

The CBS Radio affiliates already carry the Texans’ games and have done so since the team’s debut in 2002.

The move continues the trend of NFL clubs forgoing radio rights deals and bringing operations in house. Teams have been doing this in part because rights fees were falling, but also to control the editorial message and offer commercial partners more inventory.

“It is much more comfortable to have a rights fee, but we think we can do even better, which is proven out in TV,” Rootes said. When the Texans took in their TV rights for preseason games several years ago, the club was able to receive twice the rates for ads by packaging the spots with other Texans commercial inventory, Rootes said.

The radio deal includes nine hours of broadcast time on game days and a total of 15 hours a week during the season, and then at least once-a-week coverage in the offseason.

Rootes said the move was long planned and was unrelated to the new collective-bargaining agreement, which gives teams an increased share of local revenue streams.

The breast cancer “pink” promotion may serve as a model for a Veterans Day effort.
CAUSE ORGANIZATION: The league might replicate its celebration of breast cancer awareness this month with a similar push for Veterans Day. While it’s unclear whether the promotion will be ready by next month, Mark Waller, the NFL’s chief marketing officer, said the league would like to honor veterans in a more coordinated fashion than it has in the past. The league for several years has launched an aggressive breast cancer awareness effort, complete with pink cleats, hats and towels. While many teams honor veterans around the Nov. 11 Veterans Day holiday, the effort does not have the same coordinated push that the breast cancer awareness initiative does.

Waller also mentioned next year perhaps better organizing the throwback-jersey trend. Many teams wear throwback jerseys during a particular game. The league might move to have the clubs do it all on the same weekend.

ESTATE PLANNING ACTION: Owners here approved estate-planning moves by the Houston Texans, Jacksonville Jaguars and Denver Broncos. Sources said shares of the teams were moved into the trusts of the children of the teams’ owners — Bob McNair, Wayne Weaver and Pat Bowlen, respectively. With franchise values rising, passing on a team is increasingly difficult because of estate taxes. By slowly moving shares into a trust while the owner is alive, it reduces the estate tax hit if the team passes to the next generation,

U.K. OK, BUT FOCUS ON LONDON: Waller said the league was not sending any messages in approving a resolution to play overseas games in the United Kingdom instead of just London. The league needed to renew its plan for overseas games here, and much of the attention focused on the push to play more than one game a year in London. The league will decide how many on a year-by-year basis. The resolution passed, however, did not say London, but rather the United Kingdom, and Commissioner Roger Goodell did tell reporters the league could be interested in cities like Birmingham and Manchester. But Waller said the U.K. designation was more a byproduct of the league’s country-by-country marketing approach and that the plan for now is to play in London at Wembley Stadium.

NAMES AND NOTES: Miami Dolphins owner Stephen Ross will be the guest host of “Squawk Box” on CNBC on Nov. 18. He said he plans to have Goodell on as a guest. … Oakland Raiders CEO Amy Trask chose not to attend this meeting, saying she felt her place was with the team just days after the death of owner Al Davis. She typically has attended meetings and represented the franchise in votes in recent years. The Raiders actually played in Houston the Sunday before the meetings began. Marc Badain, the team’s chief financial officer, represented the Raiders at the meeting, which began with a five-minute NFL Films tribute to Davis. … Speaking of missing faces, this was the first meeting in about five years without Proskauer Rose attorney Bob Batterman. He was the outside adviser to the league during the recent labor strife, and with a new CBA now in place, he has no need to attend any more meetings. He said via email that he received several emails from NFL executives noting how odd it was to have a meeting without him. … A discussion of the league’s credit line was pulled from the agenda. While the finance committee discussed possible future changes, apparently there was nothing serious enough to warrant a full ownership discussion.

The NHL has started another season without any local streaming deals in place for its U.S.-based teams.

The league is talking with Fox Sports Net and Comcast SportsNet, which collectively hold the rights to 15 of the NHL’s 23 U.S.-based teams. But, as in past years, talks have stalled about where the streamed games will be offered to viewers.

The NHL wants to make the games available through its online and mobile platforms. U.S. regional sports networks want to make the games available through their online services.

Both sides are optimistic that something can be worked out this season. But sources also caution that they were optimistic a deal could be cut at the start of last season, too, and no deal was ever done.

The Canucks and Leafs plan to resume streaming games.
Meanwhile, the two Canadian teams that streamed games locally last season — the Vancouver Canucks and Toronto Maple Leafs — both plan to restart their streaming services this season, though both started the season without it.

Another big issue for both Fox Sports Net and Comcast SportsNet is that online viewers need to be authenticated as pay-TV subscribers, sources say. Both groups want to offer streamed games as an add-on to existing pay-TV subscriptions and block out viewers who do not subscribe to their RSNs.

Fox rolled out its first authenticated service earlier this month when it began streaming Big Ten Network to broadband and mobile. It launched BTN2Go at the start of this football season, allowing a live feed and archived access to BTN programming for people who subscribe to a digital service that gets BTN.

RSNs are hesitant to sell mobile streaming services to people who do not subscribe to cable or satellite systems because they believe it will lower subscription fees from cable distributors, said Lee Berke, president and CEO for the consultancy firm LHB Sports Entertainment and Media. Thanks to its local sports content, RSNs are among the most expensive channels on cable systems.

In general, media companies believe it’s important to make services like this free to existing subscribers, primarily because usage has been underwhelming for most local streaming tests in the United States. Sports leagues, like the NHL, believe local broadband and mobile rights have more value and want to be compensated for them.

“There’s a certain amount of hesitancy to be the first ones to do it,” Berke said. “The RSNs are depending on subscription fees, and if a distributor says ‘Wait a second, you are charging me this amount and allowing your team to offer up games on technology that is competitive to mine,’ they might have to lower the fees.”

In Canada, the Canucks and Maple Leafs plan to stream their games live to mobile devices in-market. Unlike in the United States, where regional sports networks hold broadband and mobile rights to the games, the Canucks and Maple Leafs have retained those rights in Canada. Both teams held onto their mobile streaming rights in their separate local television deals with Rogers Sportsnet and designed streaming applications that are based on the NHL’s GameCenter Live mobile player, which is designed by NeuLion.

Canucks Live debuted in December 2010 and Leafs TV Interactive Mobile rolled out in January. The Canucks charged $9.99 for the application, and the Leafs charged $19.99 for their service.

Both teams declined to say how many users downloaded the application by the season’s end.

The teams have not launched the services this year because they haven’t settled on an effective price point.

Chris Hebb, senior vice president of broadcast and content for the Maple Leafs, said the Leafs will start offering the mobile game streaming service again in November.

In addition to the games, Hebb said the Leafs will stream team practices live to the application. Hebb said that the team plans to lower the price from last year but declined to say how much the application will cost.

“We played around with the price, and the one we had was probably too high last year,” Hebb said. “It’s still up in the air.”

A Canucks representative confirmed that the service would return for 2011-12, and said the team is working on an improved version of the application with NeuLion, which will stream live Rogers Sportsnet broadcasts as well as highlights, ice tracker and player stats. It will be supported on iPhone, iPad and Android systems.

The Canucks also declined to release the price point for the 2011-12 application and declined to say when the application would be ready to download.

Professional Bull Riders has introduced a new suite of digital products, a key piece of the property’s effort to take greater overall control of its media assets.

The organization has rolled out a dramatically redesigned website at and built in partnership with San Diego-based Lightmaker North America and a series of other vendors, along with introducing new mobile and tablet applications and a heightened social media presence.

A new website is only part of the package.
The launches for the products arrive in advance of the property’s World Finals Oct. 26-30 in Las Vegas and are the result of nearly two years of internal work and reorganization.

“We’ve taken a lot of time to rethink our entire media strategy, bringing our TV production in-house, and so forth,” said Sean Gleason, PBR president and chief operating officer. “So this is a lot more than just a new face to the website. It’s a total rework to how we’re producing and distributing content in general. And the result is that we can now feed content to any device or destination.”

The total cost of the new products was between $1.75 million and $2 million.

The new-look includes a large battery of live and on-demand video material, including the PBR Live Event Center featuring live data, highlights and alternate camera angles. A mobile website and free smartphone and tablet applications for the iOS and Android platforms will be released later this month. Spanish and Portuguese-language versions of the sites, tapping into the heavy South American fan interest and rider heritage in the sport, are slated for early 2012.

The bulls themselves have always been an integral part of PBR, but they take on even greater prominence with the new digital products, receiving the same individual pages and professional-grade portrait photography that the riders get.
The revamped digital structure will also feature more coordinated integration between the online and mobile properties, including a single sign-on for fans.

“Before you had a separate content management system, a separate e-commerce platform, a separate social media platform, and so forth, and none of them talked to each other,” said Ben Philyaw, president for Lightmaker North America, whose prior sports clients include Manchester United, tennis star Maria Sharapova and The R&A. “It really made for a suboptimal user experience.”

PBR has also been aided in its digital revamp by Connecticut-based industry consultancy Convergence Sports & Media, headed by former AOL, NHL and NFL Properties executive Tom Richardson.

PBR’s online scale remains quite small relative to other U.S. major league sports properties, posting 387,000 unique visitors in September, according to internal metrics. But the figure is a 35 percent jump compared with the same month in 2010.

Additionally, PBR has generated more than 240,000 fans on Facebook, a figure more comparable to other teams and events in the stick-and-ball sports.

“There hasn’t been much of huge push toward our digital products before. That’s going to change in a big way,” Gleason said.

Among the marketing vehicles for the digital products will be in-broadcast promotion, in-arena signs, email and social media campaigns.

Less than three months after its chief marketer stepped down, USA Track & Field is hiring an outside agency to manage its marketing and sponsorship sales efforts.

The organization has signed Max Siegel Inc., a 50-person operation based in Indianapolis, to a one-year agreement overseeing the organization’s marketing and business development. Siegel was a board member of the organization for three years and resigned in order for his agency to take on business development for USA Track & Field. There was no formal request-for-proposal process for the business.

Max Siegel Inc., which also is a consultant for NASCAR on youth and multicultural marketing, will take the lead for USATF in the areas of marketing, publicity, sponsorship sales and servicing, membership retention and development, and broadcasting sales and strategy. The agency, which will be paid a monthly retainer and no commission, will be working with a national governing body that has been without a permanent CEO since the fall of 2010.

Siegel will oversee the project and devote a team of 14 employees to the USATF business. His primary liaison at USATF will be Jill Geer, the organization’s chief communications officer, who oversees a newly created integrated marketing communications department.

It is not the first time USATF has turned to an outside agency for marketing and business development support. It joined USA Swimming and USA Gymnastics in selling its digital and sponsorship rights to Wasserman Media Group in 2007. The agency in 2009 abandoned its effort to develop an Olympic broadband network and sell sponsorships around those organizations’ content.

USATF interim CEO Mike McNees said the organization made the decision to hire Siegel because it believed that he could be far more helpful as a consultant than a board member.

“If we look at what we have, the tools and assets we have to get things done, the hole in our portfolio is expertise and firepower related to sports marketing, broadcasts,” McNees said. “We recognize that’s where our weakness is and by bringing Max Siegel on board we fill all of those gaps with one transaction.”

McNees pointed to USATF’s sponsorship portfolio as one of the areas where he expects Siegel to have an immediate impact. Currently, USATF has five sponsors: Nike, Visa, BMW, Gill Athletics and St. Vincent Sports Performance. By comparison, two national governing bodies that receive comparable exposure on NBC during the Olympics, USA Swimming and the U.S. Ski & Snowboard Association, have 10 and 17 sponsors, respectively.

In addition to signing new sponsors, Siegel said he will focus on servicing existing partners, developing a comprehensive television strategy with appointment-viewing telecasts, and building the brands of track and field athletes.

McNees and USATF Chairman Stephanie Hightower said that Siegel will be measured against revenue and membership growth targets.

“While we have what we believe is a recognizable brand, we want to reposition USA Track & Field in the same way we see other professional sports,” Hightower said. “We don’t want to be a once-every-four-years sport. We want to compete at the professional athletic level.”

Hightower said the cost of hiring Siegel was the equivalent of what the organization was saving by not filling a vacant sales position and open chief marketing position that paid approximately $120,000 before being vacated by Ivan Cropper in August. She added that the board had no concerns about hiring someone who was a former member to spearhead marketing for the organization.

“As we worked through how we can create the kind of marketing arm our sport needed, we realized we had someone with the expertise at the table,” Hightower said. “We believed we would be better served by having someone with three years of experience with the sport. We made sure from an ethics standpoint Max did what he needed to do and resigned from the board. These are things that happen in the corporate business world all the time.”