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Volume 21 No. 2

Leagues and Governing Bodies

Near the end of a lengthy and detail-laden MLB ownership meeting late last season, a weary Tim Brosnan was desperately trying to draw the session to a close. Budget spreadsheets were folded, projections had been detailed. Three and a half hours into the session at a Cooperstown, N.Y., hotel, surely there was no more business to discuss.

But Boston Red Sox Chairman Tom Werner wouldn’t let Brosnan, MLB’s executive vice president of business, end the meeting before getting an update on the league’s leading social media initiative.

The holidays are cozy at the Cave, where MLB will be pitching sponsors this week.
Photo by: MLB
“You didn’t tell us about next year’s Fan Cave yet,” Werner insisted.

After a season during which MLB’s social media experiment yielded 236 million social media impressions and 1.3 billion total media impressions; attracted more than 250,000 Facebook and Twitter followers; led to visits by 66 current MLB players and 28 former players; and generated more than 300 online videos, ownership didn’t have to be convinced that another year is a worthwhile expenditure. So, MLB will announce this week that it will return to the 15,000-square-foot Greenwich Village space in which a pair of fans watched every MLB game last season, generating buzz and social media content and making the national pastime just a bit more contemporary.

In its first year, the Fan Cave’s two inhabitants were selected before the season by MLB. In 2012, the Cave will look more like “Survivor,” starting with perhaps six or so fans who will then be thinned out based on voting and other social media interaction. Look for sponsored “challenges” to be integrated, too.

MLB has also spoken to some of its clubs about building their own Fan Caves.

The Cave itself, at Fourth Street and Broadway, has been redecorated with a holiday motif, all the better for an MLB schmooze this week at which league marketers will try to cash in on the Cave’s success. They’ll look to sell more and deeper sponsor and licensee integration before the space is redesigned and reopened in time for spring training and the season next year.

One of the Fan Cave highlights was an August LMFAO concert. On other days, Sublime with Rome and Los Lonely Boys performed. “We saw music was a big draw, so we will look to grow that,” said Jacqueline Parkes, MLB chief marketing officer.

As is the case across marketing, there are more soft measures than hard metrics regarding the Fan Cave. Still, anyone engaged in social media will admit they are experimenting. MLB is just doing it on a grander, more public scale. There is an imperative for marketers to harness the power of social media, but clarity is in short supply.

“I’ve got 10 new social media experts every hour in my inbox,” said Jim Lyski, CMO at Scotts Miracle-Gro, during this year’s SportsBusiness Journal/Daily Sports Marketing Symposium.

At a time when the call for ROI is an ever-steady drumbeat, Brosnan said the Fan Cave brought baseball to the social media water cooler cost-effectively.

“I can’t put an exact number on all that, but what we told owners was that for the cost of one fancy commercial campaign, not including the media buy, we generated all those impressions,” he said. “We created social touch points for baseball fans and non-baseball fans, who then adopted this baseball-themed social platform as their own. We attracted plenty of fans, but we also attracted customers.”

According to MLB agency Hill Holiday, the average avid MLB fan is 45, while the Fan Cave fan is 30. “The goal was to have consumers engage in our game in a different way and to share that experience,” Parkes said. “We exceeded that goal and did so with an audience that’s substantially younger.”

For the first time since NASCAR TV viewership peaked in 2005, the sport this year saw a year-over-year increase in viewers.

This year’s rise reversed a five-year slide in ratings that cost NASCAR nearly a quarter of its TV viewers, and it allowed the sport to return to the same level of viewership it enjoyed in 2009.

Over the course of 33 races across three networks — Fox, TNT and ESPN/ABC — NASCAR attracted an average of 6.5 million viewers, which equates to a 3.8 Nielsen rating. Those numbers are up from fewer than 6 million viewers (+8%) and an average 3.6 rating (+5.6%) for 34 races in 2010.

An exciting “race to the Chase” helped the fall Richmond ratings increase 19 percent.
“It was great to step forward on the ratings front,” said Steve Herbst, NASCAR Media Group’s vice president of broadcasting. “We know we have work to do, but we’re really thrilled with where this season ended up. That combined with a terrific on-track product can only be good for the future of NASCAR.”

Coming after a year when NASCAR ratings seemed to bottom out, network executives weren’t ready to call the uptick a complete resurgence.

“We’re still cautious,” said Lenny Daniels, Turner Sports’ chief operating officer and executive vice president. “Numbers like these tend to be cyclical. NASCAR’s been on a slide for a while. It is slowly working [its] way back in the other direction.”

Perhaps most encouraging was the fact that young male viewers returned in 2011. The sport saw a 24 percent decline among those viewers in 2010, but the group came back strong in 2011, with a 17 percent increase among the male 18- to 34-year-old demographic.

The viewership increases come at a critical time for the sport. Its current TV rights agreements expire in 2014, giving it two more years to show networks that it can deliver the type of viewers that allowed it to command $4.48 billion in combined rights fees from Fox, TNT and ESPN in its current deal.

Herbst said NASCAR has not made any decisions about when it will go to market with those rights. It was in 2005 that it closed the eight-year agreement with Fox, TNT and ESPN that began in 2007. Network executives say they have not started renewal talks yet.

“We look forward to sitting down with our partners to talk about the future,” Herbst said. “We don’t have a date or timeline attached to that right now.”

Television network executives were quick to cite the season’s competitive races and compelling story lines as reasons for the ratings jump. Eric Shanks, co-president and co-COO of Fox Sports Media Group, said his network made a concerted effort to focus more on the sport’s personalities and less on the sport’s mechanics.

“We changed the tone of our coverage this year and started focusing more on the drivers and their stories,” Shanks said. “More man, less machine.”

Julie Sobieski, ESPN’s vice president of programming and acquisitions, also credited NASCAR’s personalities for driving ratings. She cited 17 drivers who traveled to Bristol, Conn., this season to appear on ESPN shows.

The sport’s executives believe many of the rule changes they made prior to 2011 finally started paying off in the form of new and returning viewers this season. The sport added double-file restarts in 2009 and in 2010 fostered a more competitive environment by adopting a “boys have at it” philosophy, which encouraged drivers to race more aggressively. This year it also adopted a wild-card system for its postseason, reserving two spots in the NASCAR Chase for the Sprint Cup for drivers who won races in 2011.

The changes helped make the sport more competitive. NASCAR had 18 Sprint Cup race winners, one shy of the series record, and five first-time winners. It also had 14 drivers in contention for the final three spots in the Chase heading into the regular season’s last race at Richmond. That helped push up ratings for the race 19 percent from 2010.

The sport was able to sustain that late-season momentum even after the NFL season started largely because it shifted the start of its races from 1 p.m. to 2 p.m. ET this year, therefore avoiding the finish of its races competing head-to-head with the conclusion of early NFL games. A year ago, when races began at 1 p.m., ratings would build over the course of the race and then fall around 4 p.m., when the 1 p.m. NFL games concluded every Sunday.

“We saw a lot of benefit from not going head-to-head with the 1 p.m. NFL window,” Sobieski said.

For example, the Sept. 25 Sylvania 300 at New Hampshire delivered a 3.1 Nielsen rating on ESPN, up 35 percent from 2010. Growth over the last hour of the race, when the 1 p.m. NFL game was over, increased 27 percent compared with an 18 percent increase in 2010.

Similarly, the Oct. 9 Hollywood Casino 400 from Kansas delivered a 3.1 rating on ESPN, up 15 percent from 2010, largely because the viewership increased 69 percent over the last hour of the race, up from a 25 percent increase in the last hour of the race in 2010.

Moving races also allowed ESPN to program its pre-race show, “NASCAR Now,” on ESPN immediately before the 2 p.m. race start time. When races were held at 1 p.m. in 2010, it showed “Sunday NFL Countdown” on ESPN and shifted “NASCAR Now” to ESPN2.

The foundation for NASCAR’s ratings increases were set at the Daytona 500 at the start of the season. The 2010 Daytona 500 was marred by a pothole problem that resulted in several delays and delivered a 24 percent decline in ratings. This year, significant promotion on Fox during the Super Bowl along with a repaved track and a surprise Daytona 500 winner, Trevor Bayne, combined to push ratings up 17 percent at the start of the year.

NASCAR built on that momentum two weeks later in Las Vegas. In 2010, the race went head-to-head with the Vancouver Olympics’ gold-medal hockey game featuring the U.S. and Canada. The weekend was devoid of competition this year, and ratings soared 34 percent from 2010.

In terms of young, male viewers returning, TV network executives attributed some of the gains to having more broadband product available. “It’s not all about the TV product,” Daniels said. “In any sport, if you don’t offer content across every platform, you just end up missing big, young audiences.”

The boom in online content was driven by a deal cut between Turner and ESPN that allowed both networks to stream races online. ESPN aired complete broadcasts of its races on its WatchESPN mobile app, and Turner offered in-camera video of select drivers on its “Race Buddy” platform at

Three weeks removed from predictions of a “nuclear winter” for pro basketball and dueling lawsuits between the league and its players, the NBA is implementing local outreach efforts and unveiling two new advertising campaigns in hopes of winning back any fans discouraged by the five-month lockout.

Details were still being finalized late last week, but the teams’ initiatives are slated to begin with Friday’s expected opening of training camps. Nationally, the crux of the effort is a new leaguewide ad campaign dubbed “Big Things Are Coming” that will run across all NBA broadcast and social media platforms. Teams also will activate around the campaign, as the league tries to spark interest in a 2011-12 season slated to tip off, as of last week, on Christmas Day, with five nationally televised games.

Teams also are expected to hold open practices and free scrimmages in the wake of
the tentative resolution to a labor fight that wiped out the first two months of the NBA’s regularly scheduled season.

The “Big Things” campaign was expected to begin last Friday and run through the first two weeks of the season. The league plans to follow that with a second new campaign. That still-to-be finalized effort is expected to replace the league’s “Where Amazing Happens” campaign used in recent years.

With smiles from dealmakers and players back on the practice courts, the league is starting up its “Big Things” campaign, which it expects to run through the season’s first two weeks.
Goodby, Silverstein & Partners is the NBA’s agency of record.

“We have [lockout] history on our side and we know what has worked,” said Danny Meiseles, executive vice president and executive producer, production, programming and broadcasting for the NBA. “The ‘Big Things Are Coming’ campaign evolved into the start of the season. … There also will be fan events and game-related events.”

In 1999, when the league worked to come back from a lockout that cost it the start of its originally scheduled 1998-99 season, teams held open practices and team events in hopes of reigniting fan interest. Ultimately, for the 50-game season that started in February, average attendance was down 2 percent from 1997-98, Michael Jordan’s final season in Chicago.

With the NBA now similarly poised for a shortened, lockout-induced 66-game schedule following a boom season for the league, NBA Commissioner David Stern told SportsBusiness Journal last week that the regular-season tipoff on Christmas Day will serve as a barometer for any damage inflicted by the year’s labor strife.

“It’s hard to know about [how the lockout has affected fan interest] before Christmas,” Stern said. “Let’s see what that day looks like. Fans connect by coming to our games and watching them on television, and buying our products.”

For the past five months, what fans saw was animosity and discord between the league and players, with comments from both sides being particularly visible in today’s era of Twitter and social media. Miami star Dwyane Wade tweeted in October, “STERN’s ‘WORDS’ 2day hurt the ppl who work at the AAA, other arenas, as well as local businesses & our fans.” He later posted, “Those are the ones who are affected by STERN’s ‘WORDS’ 2day...It’s a Lockout — NOT a Strike.”

Stern, more recently, referred to the union taking the labor fight to court as the beginning of a “nuclear winter” for the NBA. That followed the league issuing what became cast as a “take it or leave it” ultimatum to the players, while union outside counsel Jeffrey Kessler accused owners of treating players “like plantation workers,” a comment for which he later publicly apologized.

Highlights of tentative new NBA labor deal

The players’ share of basketball-related income is no less than 49 percent and no greater than 51 percent. Players’ BRI share is down from 57 percent under the expired collective-bargaining agreement.

The soft salary cap system remains in place, as under the previous CBA. During the deal’s first two years, tax rate on teams is $1 for every $1 spent over the cap, the same as in the previous CBA, but the new deal includes incremental tax increases beginning in year three of the 10-year deal, ranging from $1.50 to $3.25 for every dollar spent above the salary cap.

The new deal decreases the maximum annual salary increase for “Bird” exception free agents to 7.5 percent, down from 10.5 percent in previous CBA. The non-Bird annual free agent salary increase is 4.5 percent, down from the old CBA’s 8 percent allowance.

Contract lengths are shortened, from a six-year maximum to a five-year maximum for players re-signing with their teams and to four years for other free agent contracts.

Midlevel exception of up to $5 million starting salary with four-year maximum contract length for teams that don’t exceed the luxury tax threshold by more than $4 million. The midlevel salary exception during the last year of the prior CBA was $5.7 million for a five-year maximum length.

No reduction in rookie scale or minimum salaries.

Extend-and-trade contracts will continue to be permitted, but with adjustments in contract lengths.

— Compiled by John Lombardo
“I suspect that if there are any lingering bad feelings between [the two sides] they will dissipate quickly,” said Ed Horne, chief operating officer of Madison Avenue Sports and Entertainment and formerly an executive with the NHL during its 2004-05 lockout.

The challenge for both sides, upon formalizing the new collective-bargaining agreement, is to jointly appeal to fans. Late last week, the players were working to re-form their union in order to vote on the new labor deal. Owners must also ratify the deal, but the expectation was that the new CBA would be in place in time for training camps to open and free agency to begin on Friday.

“A relatively sophisticated marketer wrote me a note,” Stern said, “and it said, ‘People have not missed you yet, so opening on Christmas Day with so many games should be a bonanza.’ But the very early indications in areas like online buying, brick and mortar buying at our store, sponsors planning activation, and advertising sales by our network rights holders [for our sponsors] are all exceeding expectations.”

NBA Deputy Commissioner Adam Silver said that getting a labor deal done by Christmas will help regain the momentum lost after last year’s blockbuster season that delivered records in both television viewership and full-season-ticket sales.

“I don’t think we ever went past the point of no return in terms of fan interest and avidity,” Silver said. “Christmas Day was the marker, and we are meeting that. Humbled as we should be, we think our fans will come right back. On the business side, our partners were all very supportive, and to them as well, I think it was important to return on Christmas Day. So I think we will have not lost a beat. I really think we will bounce right back.”

The NBA’s fan-engagement efforts began over Thanksgiving weekend, almost immediately upon word of a tentative new labor deal being reached. Some teams sent letters to their season-ticket holders informing them of the pending end of the lockout and pledging outreach plans.

Last week, both teams and arena managers were busy compensating suite holders, their highest-paying customers. While terms vary by team and market, clubs and buildings in general are providing cash rebates or hospitality credits for future games.

Air Canada Centre in Toronto lost 17 games during the lockout. The arena’s 142 suite holders have deals tied to a formula that guarantees them 135 events over the course of the season, equally distributed among NBA and NHL games and special events. For every arena date lost over that total, suite holders receive a “go forward” credit, said Bob Hunter, Air Canada Centre’s executive vice president of venues and entertainment and the building’s general manager.

TD Garden in Boston, by comparison, does not guarantee suite holders a minimum number of events. Instead, Delaware North Cos., the arena’s owner/operator, provides options that include corporate use of the event floor on dark days. Those activities are branded as “Play on Parquet” and “Slice the Ice,” said Amy Latimer, TD Garden’s senior vice president of sales and marketing.

Staples Center in Los Angeles took the biggest hit over the lockout. The home of the Clippers and Lakers lost 24 regular-season games and five preseason dates. AEG, the arena’s owner/operator, guarantees suite holders 150 events annually. As of last Thursday, AEG officials were still working out the details for compensating those premium patrons, said Lee Zeidman, Staples Center’s senior vice president and general manager.

Staff writers Terry Lefton, Don Muret and Kristen Heimstead contributed to this report.

NBA owners are expected to vote this week on an overhauled revenue-sharing plan at the same time they vote on the league’s new labor deal.

Over the course of the five-month lockout, the league’s planning committee, chaired by Boston Celtics owner Wyc Grousbeck, hammered out a final revenue-sharing plan that long has been on a dual but separate track with a new collective-bargaining agreement. The NBA would not discuss specifics of the plan until after the vote, but a source confirmed that the planning committee has kept to its effort to quadruple the amount of local revenue to be shared among the NBA’s 30 teams.

This year, the NBA was expected to share some $60 million in revenue. The planned increase means the shared revenue pool is expected to grow over the coming three years to about $240 million annually, as the league looks for more financial balance across big-market and small-market teams.

Another provision expected to be part of the new revenue-sharing plan is a requirement for teams to meet performance criteria. One potential criterion would be that teams operate under a certain range of expenses in order to receive full revenue-sharing proceeds, according to a source.

In addition to its current limited revenue-sharing system, the NBA shares its national television revenue, which last year amounted to about $30 million for each team. There has been a growing disparity between franchises because of local TV deals, however, as big-market clubs like the Los Angeles Lakers and Boston Celtics sign lucrative new local contracts.

Published reports have put the Lakers’ new 25-year deal with Time Warner Cable, beginning next year, at $200 million annually. The Celtics have signed a 20-year extension with Comcast Sports Net New England, running until 2038, that brings the team equity in the network along with a major boost in rights fees that currently average around $20 million annually.

Those teams, along with other high-revenue clubs such as the New York Knicks and Chicago Bulls, stand to contribute the most amount of local revenue to other teams under the new formula.

The NFL is about to hit pay dirt. Again.

The league is close to renewing TV deals with all of its broadcast partners that will result in massive rights fee increases of more than 60 percent across the board, underscoring the unrivaled strength of NFL programming.

For the first time, each of the broadcast networks will pay an annual average of at least $1 billion for the rights to carry NFL games. The expected windfall from CBS, Fox and NBC will be worth more than a combined $24 billion over the next eight years.

The league can hold back more games from Fox and CBS as part of the broadcast agreements.
Sources expect the deals extending through the 2021 season to be finalized this month, though a formal announcement may come later. The broadcasters’ current deals end after the 2013 season.

The size and scope of these deals offer further proof of the stunning power of NFL programming, which makes up the highest-rated shows on TV. Looking at the total revenue from the next round of national media deals puts the immense nature of the deals into better context. Combined with ESPN’s annual average of $1.8 billion a year for “Monday Night Football,” DirecTV’s out-of-market “Sunday Ticket” deal, the league’s planned Thursday night game package that it is preparing to shop, Sirius Satellite Radio, Westwood One radio and Verizon’s mobile deal, the NFL could wind up generating close to $7 billion annually in national media revenue starting in 2014. That represents a whopping 64 percent increase over the $4.28 billion that the NFL received from national media before the most recent round of renewals.

In fact, the $7 billion figure is more than the league’s total combined revenue from just a few years ago.
The league’s huge rights fee increases are coming far quicker than even the most optimistic projections. In February, Moody’s Investor Services predicted that NFL media money would hit $8 billion annually over the next two renewal rounds. With these deals, the league will close in on the figure after just its first renewal round.

No deals have been signed. But the NFL and its broadcast partners have agreed to general deal terms that are similar to the NFL’s deal with ESPN, which was announced in September at a 63 percent increase. The broadcast deals will be eight years in length, sources said. The networks will get more inventory for those payments, as they will obtain the rights to show games on tablets as part of the media industry’s TV Everywhere initiative — the idea of being able to watch TV no matter where you are on broadband and wireless devices.

Broadcasters expect to be able to offer games on tablets as soon as next season. But sources said the two sides have not reached agreement on that point yet. Broadcasters also have pushed for the rights to stream games to mobile phones, but the league sold those rights exclusively to Verizon last year.

Spanish-language rights are being negotiated at the same time. Currently, ESPN Deportes carries “Monday Night Football” in Spanish and Telemundo carries some “Sunday Night Football” games in Spanish. Currently, none of the NFL’s Sunday afternoon games are available on Spanish-language networks in the United States. It’s not known how the Spanish-language rights will shake out.

As part of the broadcast agreements, the league has the right to hold back more games from CBS and Fox. It’s believed that the league will use those games to create an early-season eight-week package on Thursday nights. The league is expected to shop that package to cable networks next year.

All deals have been negotiated on the basis of a 16-game schedule. None of the deal terms contemplate expanding to an 18-game schedule, sources said. If the league expands to 18 games, it’s not known if it would be able to charge additional fees.

NFL Commissioner Roger Goodell has said he hopes to begin flexible scheduling of the Sunday night game earlier in the season, which means CBS and Fox, potentially, could be ceding more high-profile games for NBC’s “Sunday Night Football.”

The pending deals are expected to close by the end of the month and could be ready for a vote as soon as next week’s owners meeting in Dallas.

While the incredible TV ratings of NFL games clearly are fueling the growth in the league’s media rights fees, the emergence of the TV Everywhere concept is a major factor in the escalating numbers. Media companies are willing to pay for programming that they can get to consumers through different viewing mediums.

Currently, in the U.S. the only NFL games that can be viewed away from traditional TV are the Thursday, Sunday and Monday night games. Verizon customers can view those games on their mobile devices. Verizon has exclusive mobile rights to NFL games as part of a four-year, $720 million sponsorship deal signed last year. Verizon’s exclusivity keeps any of the networks from streaming games to mobile phones. The Sunday night and Monday night games are available on broadband sites.

Following nearly a decade of successful channel launches by most major sports properties, the WWE is deep into negotiations with In Demand on a deal that would see the wrestling operation launch its cable channel in early spring, according to numerous media and sports industry sources.

WWE executives have told cable and satellite operators that it is expecting to reach 40 million homes for its April 1 launch, an impressive number that would put the channel on par with sports networks like Fuel and Fox Soccer.

WWE generally produces 13 PPV events annually, many of which would go to the channel.
Photo by: AP IMAGES
To achieve that distribution number, WWE would still have to cut carriage deals with more than just In Demand, a consortium of the nation’s biggest cable operators: Comcast, Time Warner Cable, Cox and Bright House Networks.

Using a blueprint that other sports properties have worked with successfully, WWE plans to seed its channel with live events that previously have been available on pay-per-view. WWE also has expanded its programming search beyond wrestling, sources said. That could include some professional team sports, sources said.

Comcast executives are taking the lead on the negotiations, which have been occurring over the past few months.
WWE has retained Sucherman Consulting Group, executive recruiters with offices in New York and Los Angeles, to hire 200 employees to staff the network.

The company has not named a network head yet, but candidates have been told that reality-show experience is preferred. The company’s chief marketing officer, Michelle Wilson, who also has pay-per-view under her purview, is overseeing the new network’s plans.

WWE has leased additional space in South Norwalk, Conn., that is close to the company’s Stamford, Conn., headquarters.

WWE executives have told sources that they hope to launch the channel by April 1 to coincide with its biggest pay-per-view event of the year, WrestleMania XXVIII.

That timing has led many to conclude that the network will be launched with WWE’s largest annual event, which delivers more than a million pay-per-view subscriptions.

Last week, WWE launched a website,, encouraging fans to notify their cable operator of the WWE Network. The website had a countdown clock that was set to expire on April 1, the same day as WrestleMania XXVIII. The site, however, was subsequently disabled. Visitors to the URL as of last Thursday were redirected to

Sources said one of the reasons Comcast is so interested in cutting a deal with WWE is to make sure the highly rated “Raw” series remains on USA, a cable channel now owned by Comcast. In 2009, WWE announced a four-year renewal with USA that will keep the series on the network through the fall of 2014.

The potential success of WWE continues the trend of having leagues and brands launch their own channels. Most recently, In Demand cut a deal to launch seven new channels with the Pac-12 (one national channel and six regional ones). In addition, WWE’s planned launch sends the signal of a welcoming marketplace to other sports entities looking to launch a network.

“You will see this trend continue until a channel crashes and burns,” said media consultant Mike Trager. “I don’t know if you can classify wrestling as a major sport. It is certainly a major entertainment vehicle.”

Citing pending negotiations, WWE’s Wilson would not comment on distribution or programming issues. She also would not comment on if the WWE network had any advertising commitments.

“There are some unique and strong attributes about WWE,” she said. “It’s a 52-week a year season, which makes for a different model. The amount of content we already create puts us in a unique and favorable position as it relates to launching a network.”

The planned channel’s marquee programming would come from most of, if not all of, WWE’s current pay-per-view events. The company generally produces 13 PPV events per year. Most will migrate to the channel. It’s not known how many would remain PPV.

WWE also has looked into running a “SportsCenter”-style show. The network would use the show as a lead-in to “Raw,” which USA telecasts on Monday nights. USA’s Monday night block of WWE wrestling programming typically is among the most popular windows on cable, according to Nielsen numbers.