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Volume 21 No. 2

Leagues and Governing Bodies

NFL Commissioner Roger Goodell’s recent five-year contract extension will, by the end of its term, roughly double his current annual pay of about $10 million, sources said.

Atlanta Falcons owner Arthur Blank, chairman of the league’s compensation committee, declined to comment on financial details but confirmed the extension would bring Goodell in line with other top sports commissioners. MLB’s Bud Selig is believed to earn more than $20 million annually.

Unlike many top business executives, Goodell has no company shares or options.
“If you compare [Goodell] to any of the other commissioners in other sports, we think he would rank very high in that group, and he needs to be compensated on that basis,” Blank said in an interview at the Super Bowl.

Goodell, the shortest-tenured of the major sports league commissioners, has long trailed Selig and presumably NBA chief David Stern, whose compensation has never been public. MLB several years ago changed its tax status to for-profit, thereby eliminating the requirement to publicize top executive pay. Before it made that move, though, MLB disclosed Selig’s total compensation for the year ending October 2007 as $18.35 million, and he has had two contract extensions since then that are widely believed to have taken his annual compensation north of $20 million.

NHL Commissioner Gary Bettman’s total compensation was $7.5 million for the 2009-10 season, according to that league’s most-recent tax filing. MLS Commissioner Don Garber in 2010 received a new contract to lead that league through 2014 that sources at the time said could push his total pay to more than $3 million a year.

The NFL does file its tax returns publicly and is due to do so by Wednesday unless it seeks an extension. Because of problems with its e-filing system, the Internal Revenue System is allowing not-for-profits to file late. The NFL Players Association, for example, has used the grace period, delaying its usual mid-January filing.

In the NFL’s most-recent public return, filed last year, Goodell’s compensation was $9.89 million with a contract running to 2014. His money includes deferred pay, bonus and other benefits, in addition to base salary.

The filing due out this week will reveal Goodell’s pay through the 12 months ended March 31, 2011. That period will reflect the first several weeks of the lockout, when Goodell said he would take a $1 salary.

The five-year extension, announced in the run-up to the Super Bowl, runs through March 2019 and rewards Goodell handsomely for overseeing the most successful sports league in the country. The new employment contract also can be viewed in the context of Goodell’s role in negotiating an end to the labor standoff last year that saw a big swing in revenue to the owners from the players.

Cathy Griffin, a sports compensation adviser, said it is important in assessing the commissioner’s pay to consider that because the NFL is a private company, and the owners are the equity stakeholders, Goodell has no company shares or options. Taken in that light, she said, Goodell’s pay is competitive for the head of a major entertainment and sports brand. “He has been uniquely trained for this job so he is worth a fortune,” Griffin said.

Indeed, Goodell began his career at the NFL as in intern in 1982 and rose through the ranks, working as his predecessor’s number two executive. When Paul Tagliabue retired in 2006, the owners elected Goodell to succeed him, and three years later gave him what would be his first, five-year extension.

“His interests are not in being loved by everybody but respected by a lot of people,” said Blank, also the co-founder of The Home Depot. “He is loved by a lot of people … but first and foremost, he is respected.”

Four months after its championship race ended with a tragic crash that killed driver Dan Wheldon, Izod IndyCar Series CEO Randy Bernard is optimistic the sport will bounce back in 2012.

Izod IndyCar Series CEO Randy Bernard cites new business such as Discover’s deal to be the official credit card provider.
“I’m predicting our attendance will be up 15 percent,” said Bernard, who today will deliver a state-of-the-sport address in Indianapolis. “We have a better marketing strategy and schedule than we did last year. Our goal is to increase our TV viewership by 15 percent, as well.”

Bernard said that IndyCar has stayed out of the media since last October out of deference to the Wheldon family. It spent the last several months talking to drivers and gathering ideas for how to make the sport safer. It also dealt with a schedule that was thrown into disarray as events scheduled for oval tracks in Texas, Las Vegas and California were reconsidered by both the series and the tracks.

A 2012 race in Las Vegas, which was expected to be announced right after the 2011 race, was canceled after the IndyCar Series bought its way out of a multiyear contract at the facility. The race at Texas Motor Speedway was eventually scheduled for June 9 and the race at Auto Club Speedway in California was confirmed for Sept. 15.

“[The Vegas crash] put a black cloud on us for a couple of months, but I think in everything in life there are going to be highs and lows,” Bernard said. “You’ve got to rise above it and continue to go on. The sport has been very committed and working very hard to be sure this season brings new and great competition and entertainment.”

The sport already has some early momentum on the sponsorship front. Today, it is expected to announce a new five-year agreement with Discover, which will develop a series credit card. It is the first partner the series has had in the category since 2006 when it had a deal for affinity cards with MBNA. Financial terms of the agreement weren’t available.

Discover will develop a series credit card.
Discover signed on as the credit card provider for IndyCar with First National Bank of Omaha, which will issue a series of two IndyCar-themed credit cards. The company’s IndyCar branded card will offer fans a chance to redeem points for special offers like tandem car rides.

“We’ve expanded our sports portfolio over the last few years,” said Kevin O’Donnell, vice president of credit issuance at Discover, who added that the company sponsors the Bowl Championship Series, Orange Bowl and the NHL. “IndyCar is a very unique organization. There’s obviously a business relationship but we’re partnering with them to help them reward their fan base, and we’ll process their (fans’) transactions, which obviously benefits us.”

In addition to Discover, IndyCar signed Fuzzy’s Vodka, renewed its agreement with tiremaker Firestone and signed a new merchandising agreement with retailer Lids.

The Lids deal, which was announced last week, will put IndyCar merchandise in more than 1,000 retail outlets nationwide. The company also will take over management of IndyCar’s online merchandise sales.

Bernard said that sponsorship revenue is on track to increase 5 percent from a year ago, and he expects that percentage to rise as more deals are signed during the season.
“That’s huge for us,” Bernard said. “We have great momentum on sponsorship.”

Last year, IndyCar focused much of its marketing efforts on its championship at the end of the season. It created a special promotion offering a driver from another series $5 million if the driver won the final IndyCar race of the season at Las Vegas. Bernard answered questions throughout the year about whether or not he’d heard from NASCAR or Formula One drivers interested in the race. When no outside driver took the challenge, Bernard brought on GoDaddy as the presenting sponsor of a special promotion that put Wheldon at the back of the field in Las Vegas and gave him a chance to split $5 million with a race fan if he won. The publicity stunt was questioned after Wheldon’s death.

Bernard said that this year the sport won’t have a seasonlong marketing effort akin to last year’s promotion. Instead, it will focus on telling the story of its new car and the entrance of new manufacturers, Lotus and Chevrolet. It also will concentrate on telling the story of its drivers, which Bernard believes will be easier to do now that Danica Patrick has left the sport in favor of NASCAR.

“I think Danica will do a tremendous amount for NASCAR, but I don’t think it’s a negative for us,” he said. “Sometimes I think her umbrella took some of the sunshine away from drivers like Dario (Franchitti) who should have been in the sun more. I really believe that.”

When Bernard said last year that he would quit his job if the last race of the season didn’t draw better than a 0.8 Nielsen rating, speculation arose that he might be looking for an exit from the sport he took over in 2010. That speculation only increased after the crash in Las Vegas. But Bernard reiterated that he had a five-year contract as CEO and said he has no plans of leaving any time soon.

“Some critics said I would quit,” he said. “Some said I would get fired. Some said IndyCar would be broke. I try not to listen to the critics. I have a five-year contract and gave the [Hulman] family my word. I don’t give up. I’m going to bust my butt every day to try and do what I came here to do, which is help IndyCar.”

The NHL has signed a three-year extension with wireless partner Verizon Wireless, and the new deal creates a premium mobile application exclusively for Verizon mobile subscribers.

The renewal was a three-way pact involving the league, Verizon and media partner NBC Sports Group, and live games from NBC’s weekly broadcast coverage of the NHL will now be available on the Verizon NHL GameCenter app. The NHL Players’ Association has struck a companion deal with Verizon, extending the carrier’s sponsorship rights to the players as well.

Financial terms were not disclosed, but when including total commitments to both the league and member clubs, planned media spending and other activations, the deal is thought to be worth an eight-figure sum annually.

“This is truly a content play, joined by more traditional sponsor elements,” said Keith Wachtel, NHL senior vice president of integrated sales.

A key goal for the league in the Verizon deal, however, was finding a workable middle ground that would give Verizon exclusive assets and content and help drive subscriptions and consumption for a key league partner, while at the same time not shutting out fans contracted with other mobile carriers.

The result was two versions of its NHL GameCenter app. The Verizon version will contain live feeds of the weekly NBC coverage, typically blacked out to mobile devices; NBC’s “Inside the Glass” analysis; bonus camera angles; on-demand plays of the week; and other material. The version of NHL GameCenter available to everyone else still carries scores, standings, photo galleries and other features. In-app upgrades, carrying additional fees, provide live game audio, in-game highlights and live game video.

Verizon subscribers with either a tablet or a 4G LTE smartphone will get the NHL GameCenter app free. Other Verizon subscribers can buy the app for the regular $9.99 price, but also get the exclusive content. The live out-of-market games, the most prominent of the in-app upgrades, carry an additional charge of as much as $169, with price reductions as the season progresses.

“GameCenter Live and the live game content that comes with it remains available to everybody. That is a very important consideration,” Wachtel said. “We need to provide as much content as possible for all our fans. The Verizon version builds on top of that.”

The NHL deal bears some conceptual similarity to the large-scale deal Verizon struck in 2010 with the NFL, which gives its subscribers an extensive package of exclusive material, including live streams of the NFL Network, and live Thursday, Sunday and Monday night games.

Verizon executives were not available for comment.

Global RallyCross and Speedway Motorsports Inc. have reached an agreement that will see the series take five of its events to SMI-owned racetracks this year.

Global RallyCross grew out of the X Games and features action sports stars like Travis Pastrana and Brian Deegan racing each other in compact cars on tight courses that feature jumps and other obstacles. The nascent motorsports series will hold races at Las Vegas Motor Speedway, Charlotte Motor Speedway, Texas Motor Speedway, New Hampshire Motor Speedway and Atlanta Motor Speedway.

The Las Vegas race will be the only stand-alone event. The Charlotte, New Hampshire and Atlanta races will take place on the same day as NASCAR Nationwide Series races, and the Texas race will take place on the same weekend that the track hosts the Izod IndyCar Series.

Financial terms of the deal were not available. SMI will promote the events and pay a sanctioning fee.

“When we started this thing, we never dreamed we’d be running with the big boys,” said Brian Gale, Global RallyCross founder and president. “Getting in front of the NASCAR crowd brings our brand and youth culture to a new audience.”

The deal is the latest in a string of moves by a member of the NASCAR industry to tap into a sport with ties to the X Games. Michael Waltrip Racing last year partnered with Pastrana, and Joe Gibbs Racing hired supercross champion James “Bubba” Stewart. NASCAR and its stakeholders have been focused on appealing to young people in the last year, and the partnership with Global RallyCross offers SMI a new way to attract young fans.

Tentative plans call for Global RallyCross to put its paddock outside the SMI tracks and hold the races inside the facilities.