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Volume 20 No. 42

Leagues and Governing Bodies

When USA Track & Field’s board convened this spring at an airport hotel in Denver to interview CEO candidates, the group was weary from an 18-month search for a new executive, but its mood changed the moment the second interview began.

Max Siegel, a former music and NASCAR executive and USA Track & Field board member, walked into the room and grabbed the group’s attention with a sharp critique of the organization. He called its TV contracts horrendous, the sites of its competitions subpar, and its negotiating approach inadequate. In his eyes, the organization had settled for the status quo, and the status quo wasn’t good enough anymore.

Max Siegel is seen as a visionary and skilled orator, but he found difficulties during his time in NASCAR.
“His interview was killer,” said Steve Miller, the USATF board member who led the CEO search. “He wasn’t the only one who spoke bluntly. He was just armed with the most information. His vision was very clear.”

The board later voted unanimously to hire Siegel, who they believe will help track and field regain its place as the pre-eminent Olympic sport in the U.S., a position it ceded over the last decade as doping scandals and dropped batons tarnished its reputation.

Just seven weeks into the job, that’s exactly what Siegel is trying to do.

The CEO, who this weekend will oversee his first Olympic trials in Eugene, Ore., has hired a new chief operating officer and begun a reassessment of the organization’s mission. He wants to reshape USATF for the future, and he’s started that process by highlighting problems he wants to fix, such as membership and sponsor attrition.

“Having a 50 percent attrition rate with your membership because they don’t see the relevance of being a member tells you that you have a problem with your brand,” Siegel said. “Having your sponsors leave over the years and taking hand-me-downs from the [U.S. Olympic Committee] is a real problem. If it were … easy and weren’t that complicated, then we wouldn’t be in this position and there wouldn’t be a need for me.”

Siegel, who is the organization’s fourth CEO in five years, comes into the track world with a mixed résumé in entertainment and sports. He had success in the music industry but ran into a series of challenges during his five years in NASCAR. The first NASCAR team he ran, Dale Earnhardt Inc., no longer exists. The second, Revolution Racing, has failed to pay bills on time and furloughed staff to control costs.

The struggles in NASCAR have led more than a dozen former colleagues to characterize Siegel as a visionary thinker who is adept at setting ambitious goals for an organization but dependent on staff to map out how to get there. He is a skilled orator in private settings, capable of laying out clear revenue goals before the USATF board or convincing Toyota to sponsor his race team, but guarded and evasive when it comes to setting goals publicly.

Since entering the sports industry full time in 2007, he has gravitated toward jobs that look impossible from the outside. He became the president of global operations at DEI right when Dale Earnhardt Jr.’s contract was up for renewal and the economy was on the verge of collapse. He subsequently launched a race team devoted to developing minority drivers for NASCAR, a sport that has had only seven African-American drivers in its 64-year history.

The track and field job looks similarly difficult from the outside. USATF had been without a CEO since October 2010 when it fired Siegel’s predecessor, Doug Logan. The organization has a reputation as the most political national governing body in the U.S. because of its array of constituent groups ranging from race walking to road running to track, and it is less than a decade removed from the doping scandals that tarnished the sport and triggered a decline in interest among casual Olympic viewers.

“We have the best team in the world, but Americans don’t know we have the best team in the world,” said Michael Lynch, the former Visa sports marketing executive who is now an independent consultant. “If I were to ask you how many track and field athletes were in a BusinessWeek list of the top 100 most powerful athletes in America, who would it be? There’s one, and it’s Usain Bolt, and he’s not even an American athlete.”

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Siegel was born in Indianapolis, where USATF is based. His father was a record executive and his mother a singer. When they divorced, he and his sister were abducted by his father, who convinced the two his mother was dead. It wasn’t until his father died of cancer when he was 12 that Siegel was reunited with his mother. He has described her as a functioning alcoholic, and he moved out of the home at 14. He eventually enrolled at the University of Notre Dame and its law school.

It was Siegel’s entrepreneurial spirit that got him his first job after graduating from law school in 1992. Jack Swarbrick, now the athletic director at Notre Dame, visited the school to interview students on behalf of his law firm, Baker Daniels. Swarbrick said most students he spoke to wanted to be in litigation, but Siegel told Swarbrick he wanted to create the firm’s first sports and entertainment practice. His vision was so compelling that Swarbrick decided to hire him on the spot.

Swarbrick, who did legal work for USATF in 2007 and 2008, described Siegel as a “serial entrepreneur” and said that was exactly what USATF needs.

“They need a new vision for the enterprise, and someone who will bring a fundamental new perspective,” Swarbrick said. “As long as there’s an outlet for him to build and create, he’ll be there long term.”

Siegel left the legal profession for a career in the music industry, starting first as an agent representing gospel artists and eventually becoming an executive at Sony. It was there that he showed his ability for diagnosing and solving problems. He recognized revenue at the label he managed was depressed because artists weren’t delivering albums on time. Missing deadlines is common in the music industry, but he met with artists and convinced enough of them to be on time, helping the label triple its revenue from $25 million to $75 million between 2001 and 2007.

“Where others said, ‘Oh, that’s a cranky performer,’ he went out and listened to the issue the performer had and tried to fix it,” said Eddie O’Loughlin, who runs a gospel label called Next Plateau/Universal. “He’s very persuasive. That was a big cause of that billing tripling.”

Siegel’s success in the music industry helped him land a job in NASCAR in 2007 when Teresa Earnhardt hired him to run her late husband’s race team, Dale Earnhardt Inc. He wanted to take the late Dale Earnhardt’s brand and expand its relevance outside the world of racing to make it relevant globally in entertainment and licensing.

Siegel wasn’t able to keep Dale Earnhardt Jr. (left) in the fold at DEI, leading to its demise.
Brian Barr, a sales director with the team, described Siegel as a manager who painted the big picture and pushed the staff to achieve that. After the team expanded in 2007, it was in jeopardy of losing primary sponsor Principal Financial Group. Siegel pulled the marketing staff together and told them to come up with innovative ways to keep the deal. The team put together a package that included access to its facility, known as the “Garage Mahal,” for business meetings, access to the DEI trophy room and a private coach for at-track hospitality. The team had never included so many elements in a package before, and Barr credited Siegel with getting them approved and later retaining Principal Financial’s sponsorship.

“Some people might see that as difficult if they’re task-oriented, but others rise to that if they’re self-motivated and enjoy the opportunity,” Barr said.

Few blame Siegel for DEI’s demise. Teresa Earnhardt, who owned the team, had a reputation as a micromanager who often intervened in day-to-day business matters. She also had a strained relationship with her stepson, Dale Earnhardt Jr., who was the team’s biggest asset.

Siegel was brought in to bridge that divide and convince Earnhardt Jr. to stay with the team. But the driver reportedly wanted 51 percent of the team, and when Siegel couldn’t convince him to pay for it or convince Teresa to give it up, Earnhardt Jr. left for Hendrick Motorsports.

The team hung around for one season after losing Earnhardt Jr., but a lack of funding forced it to merge with Ganassi Racing at the end of 2008.

Siegel subsequently won a contract from NASCAR to spearhead the organization’s effort to develop minority drivers. To do so, he created Revolution Racing, a team that gives young female and ethnically diverse drivers a chance to compete in regional racing series.

The team has had success in developing drivers. Its most successful driver, Darrell Wallace Jr., is now competing in Nationwide Series races for Joe Gibbs Racing, and current driver Kyle Larson won a recent developmental series race. But financial issues arose last year.

Much of Revolution Racing’s equipment was repossessed, it furloughed most of its staff, it owed more than $400,000 in back taxes, it moved to three race shops in a single season, and it was sued by the owner of one of the shops for not paying rent. The team relies on NASCAR and two of its partners, Toyota and Goodyear, for most of its financial support, and former employees said it struggled to secure sponsorship.

“Like many teams in this sport, we have had challenges over the last year, but every issue is being addressed or has already been handled,” Siegel said. “We now have the staff in place who manage costs and provide the oversight any business needs. Through every issue we have faced, my commitment to the team and the sport has remained strong and is the reason why I have chosen to restructure and right-size rather than take the more drastic measures that other owners have regretfully had to pursue.”

The team is back up and running this year under a new name, Rev Racing, and Siegel remains involved with it, holding weekly phone calls with staff, but his reputation in the sport has been tainted by the team’s financial troubles.

“He can be a little hard to deal with,” said Todd Braun, whose family estate is suing Revolution Racing for unpaid rent. “It doesn’t seem like his deals really work out.”

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Siegel’s transition from his work in NASCAR into his new job at USA Track & Field concerned many senior leaders in the Olympic movement. He was a member of the organization’s board of directors for three years before resigning last October so his marketing agency, Max Siegel Inc., could be hired to manage USATF’s marketing and sponsorship sales.

When the board decided to hire him six months later as CEO, it brought back memories of the USOC’s controversial decision to appoint former board member Stephanie Streeter as CEO in 2009. But USATF’s chairman, Stephanie Hightower, pointed to examples of other organizations elevating board members to CEO as evidence that such a move is common in the corporate world.

“The real issue here is that Max was not on the board when he was selected for this position,” Hightower said. “I don’t understand why anyone would be cringing, because he was not a board member when we started this process.”

In contrast to his predecessor at USATF, Doug Logan, who was brash and quick to set public goals for the organization, Siegel has taken a measured approach to the job. He wants to build consensus with the staff, the board and track constituents before laying out his goals for the future.

“The challenge is this isn’t like private business,” Siegel said. “When you have government and constituent issues, you can’t make a decision overnight.”

The staff is in the process of setting departmental goals. Once those are completed in the next 35 to 45 days — right before the London Olympics — there will be a clearer picture regarding how much membership will increase and how much sponsorship revenue will be generated.

Increasing the organization’s annual revenue is a priority, but Siegel declined to specify how much. His predecessor, Logan, set a public goal of doubling USATF revenue to $30 million, and increased it from $14.7 million in 2007 to $19.1 million in 2011, the comparable year in this quadrennial.

“Any board member or anyone out there could say, ‘Hey, go get me more money,’ but how are we going to get there?” Siegel said. “I have a solid handle on that, probably a better handle on where our business is and what we need to do organizationally than anybody in the last few years.”

Siegel’s immediate priority is to create a predictable schedule each year that TV partners can promote and sponsors can plan their media budgets around.

Right now, the only event USATF owns outright is its championships. It puts together the rest of a season by partnering with existing events such as the Penn Relays, which are owned by an organization in Philadelphia. Historically, USATF bought the television rights to those events and then tried to place them on TV and find a presenting sponsor for the broadcast. Oftentimes, it does so at a loss.

“Our biggest asset and our biggest opportunity is to relaunch the brand in the media space,” Siegel said. “If you don’t know when your events are and you get not-so-great airtime and your schedule isn’t organized, then you don’t have a chance to get people to invest because people need to plan their media.”

He sees a direct link between that and sponsorship sales. Siegel believes it takes 18 months to sell a new sponsorship, and though he plans to hire a new sponsorship sales director, he cautioned that it will take time for the organization to cut new deals. He didn’t sell any new sponsorships in the six months he worked as a consultant, and the organization has not announced any since he took over as CEO on May 1.

“No one is going to stroke a check in three months,” Siegel said. “We have to get ahead of the sales cycle.”

Siegel’s challenge will be to speed up the 18-month buying window he said media planners need. Track will be in the spotlight at the Olympics this summer. After that, it will be largely invisible to most brand marketers in the U.S.
“The best time to be selling the next four years is now,” Lynch said. “I hope that he’s pounding the pavement and making sure the corporate community is embracing track and field now.”

Track stakeholders are encouraged by what they’ve seen from Siegel so far. They’re impressed with his desire to build consensus and work with promoters and top athletes to increase the visibility of the sport. He met with New York Road Runners President and CEO Mary Wittenberg and representatives of the Armory Foundation, which owns the Millrose Games, during a recent trip to New York and began a discussion about how their respective organizations could work together to raise the profile of track and running in the U.S.

Winning over the support of athletes won’t be as easy. Top athletes don’t need USATF for much. Many can go abroad and earn enough money at international track meets to support themselves financially. But agents, promoters and Olympic observers hope Siegel can bring them into the fold.

“He can draw the sport together,” said Mark Wetmore, a meet promoter whose agency, Global Athletics & Marketing, represents top athletes such as sprinter Tyson Gay. “The professional side is alive. Is it well? For a lot of athletes it is. Could it be better? Of course. The most important thing he can do is raise the profile of the sport and make it more visible so athletes can be more visible.”

Siegel couldn’t have said it better himself.

The NFL is projecting that the salary cap will stay relatively flat through 2015, a period that represents the first half of the 10-year collective-bargaining agreement signed last August and runs beyond the start of the league’s new media deals in 2014, according to multiple team and league sources.

Player benefits, however, are projected to rise substantially during the period.

The projections were shared with teams in recent months and again last week at a meeting of team finance directors at league headquarters in New York.

The numbers run counter to any suggestion that the league’s new TV deals would drive up league revenue and lead, in turn, to immediate sharp increases in salaries for players under the cap.

“There is an overexcitement [among players] about the TV deals, which do not start at the higher levels and have to ramp up,” said Andrew Brandt, a former Green Bay Packers executive and co-founder of the National Football Post. “This is something that players will have to come to grips with, and agents and the union will need to be realistic on, with contract projections that this expected windfall in the rise in revenues is not happening any time soon.”

The NFL Players Association did not respond for comment. The NFL declined to comment.

The staggering of the media deals, which are rising on average 60 percent in the next round, is not the only reason the cap is projected at $122 million in 2014, up just 1 percent from the 2012 figure. The CBA contains complex formulas for determining the cap. It also provides for 2012 and 2013 a floor amount for the players of $142.4 million for the cap plus benefits, but only for those two seasons.

In 2012, the floor provision kicked in because the players’ share would have been less than $142.4 million after the calculations set out in the CBA. That is expected to be the case in 2013 as well.

Beginning in 2014, the sources said, that excess has to be adjusted back in favor of the owners, known as a “recapture” in the CBA.

While the cap may stay essentially flat until a projected 4 percent annual rise in 2016, the league does expect a substantial rise in benefits. The NFLPA also could negotiate, as it did for the 2012 cap, to shift the players’ monetary mix more toward the cap.

Benefits are rising for several reasons, including higher pension and medical insurance costs and injury protection fees. Performance-based pay is also included in benefits, though the NFLPA has the right to freeze or reduce this amount, thereby shifting resources back into the cap.

Benefits commonly consume about $21 million annually for clubs, but that amount will increase 25 percent in 2013, and on average 10 percent annually after that through 2016, one team source said. That would mean in 2013 the players’ full compensation would jump to more than $147 million and around $150 million in 2014.

Players commonly focus on the cap and not benefits, insiders in the sport agree. So if benefits are rising far faster than the cap, Brandt said, the union should try to shift its focus to the total amount.

To that end, when reports emerged earlier this year that New England Patriots owner Robert Kraft and Houston Texans owner Bob McNair said the cap would not spike in 2014 with the new media deals, NFLPA President Domonique Foxworth said in response that he would have to “crunch all the numbers.” Last month, NFLPA outside counsel Jeffrey Kessler sent a letter to players pointing out many of the benefits of the new CBA, like a higher share of cash going toward the cap. Kessler’s letter, however, did not address the issue of a flat cap. Kessler declined to comment for this story.

The league’s Bill Daly sees business as usual despite hockey’s labor uncertainty.
Full-season-ticket sales for NHL clubs are up more than 7 percent across the league for next year, according to NHL Deputy Commissioner Bill Daly, despite the potential of a work stoppage for the game this fall.

In a survey of all 30 NHL clubs, officials from 21 teams said season-ticket sales either were up for the 2012-13 season or that their respective teams were at capacity and renewing season-ticket sales at a clip of 90 percent or more (see list at bottom of page). Officials at only three clubs said sales were the same or down; six clubs declined to comment.

Although many team officials would not comment on what impact, if any, the labor situation was having on ticket sales, representatives from about a dozen teams said the potential for a work stoppage this fall has had little to no impact on season-ticket holders putting down deposits for next season.

The NHL collective-bargaining agreement expires on Sept. 15. Formal bargaining sessions for a new deal had yet to begin as of last week.

“It certainly does evidence that our Clubs continue to approach next season on a ‘business as usual’ basis, and are not putting the brakes on their businesses or otherwise preordaining a work interruption, as some would like to suggest they (or we) are,” Daly said via email. “No need to at this point.”

Daly said season-ticket renewals were up across the league by about 3 percent over last year and that full-season-ticket sales overall — renewals plus new subscriptions — were up in excess of 7 percent.

For many clubs, there is no room for growth in season-ticket sales. Toronto and Montreal, for example, are sold out with waiting lists of thousands of people. Such is the case in Chicago, Boston and Buffalo, as well.

In Buffalo, there are 3,000 people on a waiting list for Sabres season tickets, and no one cancels their season tickets if they are unhappy, said Michael Gilbert, Sabres vice president of public and community relations. “They cancel because they died or moved away,” he said.

Business is up in some nontraditional hockey towns as well, including Dallas, where the Stars are operating under new ownership. Asked to characterize the Stars’ ticket-sales efforts, new team President Jim Lites said, “Pretty good. This is our first summer with a team that has missed the playoffs four years in a row … and we were two years in bankruptcy.” The Stars, Lites said, were tracking about 5 percent to 10 percent ahead of last year with about 6,000 season tickets sold.

As for any impact of the labor situation on sales, Lites said, “It’s an issue that gets discussed, but I don’t think it’s changing people’s buying attitudes.”

Ed Horne, who was formerly president of NHL Enterprises but left the league in 2009, said he was not surprised that season-ticket sales around the league were unaffected by the uncertain labor situation.

“I don’t think the potential for a work stoppage has reached the consciousness of the hockey fans,” said Horne, now COO of Madison Avenue Sports and Entertainment. “I think the fans believe that things that needed to be fixed were fixed the last time and they can’t envision a situation where they don’t have hockey again. As I think back to 2004, there was a lot of noise and a lot of chatter years before the agreement expired. This time, there is little noise from either side, which I think is smarter.”

Staff writer Christopher Botta contributed to this report.

Tracking NHL teams' season-ticket sales

Anaheim Ducks: About the same pace as this time last year.
Boston Bruins: Sold out of season tickets since the middle of their Cup-winning 2010-11 season; waiting list continues to grow.
Buffalo Sabres: Capped season-ticket sales at 15,500 last season; projecting 95 percent renewal rate, with 3,000 people on a waiting list.
Chicago Blackhawks: Renewal rate of more than 99 percent; sold out, as was the case for the previous four seasons; more than 10,000 people on a waiting list.
Columbus Blue Jackets: Down overall about 5 percent from this time last year, but new sales up about 10 percent.
Dallas Stars: Up 5 percent to 10 percent, with about 6,000 season tickets sold in their 18,000-seat arena.
Detroit Red Wings: Renewals at more than 90 percent for the first time since 2006-07.
Florida Panthers: New sales up 148 percent compared with the same time last year;
renewals up 14 percent.
Los Angeles Kings: Expect to sell out all season tickets for the first time since moving to Staples Center in 1999; season tickets expected to cap out at 15,500, up from 13,000 last season.
Minnesota Wild: Ahead of the past two seasons in both renewals and new sales.
Montreal Canadiens: As in years past, high renewal rate in a sold-out arena; 4,000 on a waiting list.
Nashville Predators: Sales up overall, with a 95 to 97 percent renewal rate and an
increase in new sales.
New Jersey Devils: Renewals pacing above 90 percent.
Ottawa Senators: Sales up 15 percent compared with the same time last year.
Philadelphia Flyers: Demand pacing well ahead of last season; at capacity for season-ticket plans.
Phoenix Coyotes: Renewal rate more than 90 percent, the best in franchise history;
more than 1,500 new sales.
Pittsburgh Penguins: Renewals projected at 97 percent, up from 96 percent last year;
sales are capped at 15,000; waiting list of 9,000.
St. Louis Blues: Both renewals and new sales up significantly over the same time last year.
San Jose Sharks: Pacing at the same renewal rate as this time last year.
Tampa Bay Lightning: More than 5,000 new sales last year; expectations for the same or more for 2012-13.
Toronto Maple Leafs: Renewals in the high 90 percent range, same as last season; 5,700 on a waiting list.
Vancouver Canucks: 97 percent for renewals, same as last year.
Washington Capitals: Renewals at 96 to 97 percent; sold out of season tickets with a
waiting list of about 3,000.
Winnipeg Jets: Sold out for the next three to five years thanks to contracts signed with
season-ticket holders as part of the club’s relocation.

Note: Calgary, Carolina, Colorado, Edmonton, the New York Islanders and New York Rangers declined to comment.  Sources: Club officials