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Volume 21 No. 2

Leagues and Governing Bodies

The 2011 MLS Cup set a high-water mark for sponsorship and media, with Los Angeles hosting the game between the home team Galaxy and Houston Dynamo. But the league’s decision to award future MLS Cup hosting duties to a finalist club may change the event’s sponsorship footprint.

Previously, league executives chose the site of the MLS Cup from a pool of applicant cities, and the announcement was made in the springtime, giving the host club six months of preparation time. Under the new format, which was approved Nov. 19, the host club will be announced two weeks before the event.

Thanks to a new site selection process, more MLS champs may be celebrating at home.
League officials believe the short prep time will not affect the readiness of a club to host the event, and all clubs must now develop and submit a plan for hosting the MLS Cup several months in advance. Officials said the new format would ensure a sellout and drive awareness at the local level. The Galaxy, for example, built temporary bleachers to raise capacity from 27,000 to 30,000 to accommodate the demand for tickets.

But several partner representatives said the new format could shrink the size and depth of their on-site activation, because of the shorter lead-in time. El Jimador Tequila, for example, must research local liquor laws before designing its activation, which includes sampling tequila drinks. Dick’s Sporting Goods must decide whether to bring its retail trailers or inflatable tents. Home Depot organizes on-site construction projects at local parks and community centers.

Nick Sakiewicz, CEO of the Philadelphia Union, said the move could shift sponsor focus from the championship game to the All-Star Game. “I think All-Star becomes the league’s seminal event,” Sakiewicz said. “But from a competition standpoint, [MLS Cup] will still be a high-pressure game with great atmosphere.”

League representatives admitted the shortened time frame also could shrink hospitality and entertainment options.

Scott Guglielmino, ESPN’s senior vice president of programming, said the new format will force the network to keep a wider block of programming free on game day, as the game could be played on East Coast or West Coast time.

“If it’s Los Angeles in the Pacific or Philadelphia in the East, as a broadcaster you have to set aside the whole window of time,” Guglielmino said. Guglielmino said the new format shouldn’t diminish the game’s production value.

GROWTH PLANS: Sakiewicz said the Union is investigating plans to expand PPL Park from 18,500 to 22,000 seats for 2013. The club sold out its 13,000 season tickets in 2011 and is on track to sell out for 2012.

Elsewhere, the Seattle Sounders and Portland Timbers are expanding their respective seating capacities. Seattle will add 2,200 seats, raising its full capacity to 38,500 next year. Portland, which has a 5,000-person waiting list for season tickets, will add 3,000 seats to reach 20,323.

IMPACT UPDATE: The Montreal Impact is nearing 6,000 season tickets sold for its 2012 debut. Richard Legendre, executive vice president of the Impact, said the club hopes to sell between 13,000 and 15,000, but the fact that the team has drafted only three players has presented a marketing challenge.

“We have to educate our fans about what MLS is,” Legendre said of the Impact, which is moving to the league from the North American Soccer League. “We tell them it’s as if the [American Hockey League’s] Hamilton Bulldogs are becoming the Canadiens.”

COMMUNITY TALK: In September and October, San Jose Earthquakes President David Kaval invited community groups to his office every Monday to quell fears that the team’s planned $450 million stadium project would create traffic and noise problems. The project is being financed by the team and built by Devcon Construction.

Kaval said the team agreed to not hold concerts at the new stadium in order to win public support.

The team is waiting on the city of San Jose to sign a design-and-use permit, but Kaval said shovels could be in the ground in early 2012.

“If you don’t talk with people, they get really suspicious,” Kaval said.

The era of lucrative executive pay among major tennis groups appears to be dimming, a review of the organizations’ most recent tax returns shows.

Between 2008 and 2010, the U.S. Tennis Association sliced overall compensation 22 percent, to $38 million, while the WTA Tour dropped overall pay nearly 8 percent, to $7.9 million. The ATP World Tour also shaved pay 11 percent in that time, to $12.9 million, though its mark for 2010 is up from 2009. Outgoing Executive Chairman Adam Helfant earned $2.3 million in 2010, and sources have said he earned about $3 million this year, sums that became a bone of contention with the ATP board and that, in part, led to his decision to step down next month.

At press time last week, it remained unclear whether the ATP would choose Helfant’s successor by year’s end or enter the 2012 season with the seat empty.

The three organizations’ most recent tax returns, covering 2010, were filed with the IRS earlier this month. The returns cover a period that saw key changes in the groups’ leadership. Larry Scott left the WTA in 2009 to join the Pac-10 Conference (now the Pac-12) and Arlen Kantarian left the USTA in late 2008. Considering the departing Helfant, as well, the executives during their respective tenures earned record-breaking pay packages that to some degree sparked controversy.

The ATP’s Helfant (above) earned $2.3 million in 2010. Allaster’s pay at the WTA approached $1M.
Photos: GETTY IMAGES (2)
Kantarian earned $9 million in his last year at the USTA, an amount that made him among the highest-paid executives in all of sports that year. Scott took in $1.6 million in 2007, a huge sum for the WTA, where previously the leader had been making around half a million dollars. Helfant’s pay more than doubles the pay of the top amount previously paid by the ATP to its leader.

An ATP spokeswoman wrote that since Helfant took over in 2009, “ATP commercial revenues actually will have risen by 80 percent and ATP net assets (reserves) by 1400 percent. We’re very happy with these increases, which reflect the strength of our business and global popularity of the sport right now.”

The tour’s global sponsorship with Mercedes-Benz expired the day before Helfant took his post in 2009, meaning ATP commercial revenue had dropped sharply when he took over.

According to the ATP’s 2008 tax return, which included the last year of the car deal, sponsorship income that year totaled $38 million. In Helfant’s time as executive chairman, the tour stopped breaking out sponsorship totals and instead put those sums into a category called “member services and benefits,” which totaled $22 million in 2009 and $24 million in 2010.

In 2008, the ATP reported total revenue of $61 million. In 2010, the amount was $65 million.

Helfant has added several top sponsors, including FedEx and Corona, and his bonuses, a source said, were based on the income he brought in rather than on exceeding levels from prior to his tenure. His bonus alone in 2010, $755,059, exceeded the total compensation received by any other ATP executive, according to the tax return.

Helfant, through the ATP, has denied his pay was tied to his stepping down. Numerous sources in tennis, some of whom are close to the ATP board, disagreed, calling it the pivotal issue that led to his departure.