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Volume 20 No. 42

Leagues and Governing Bodies

The WTA Tour chief executive is again earning more than $1 million annually, making Stacey Allaster one of the highest-paid female executives in sports, if not the top one.

According to the WTA’s recently filed 2011 tax return, Allaster earned $1.32 million last year, up 40.5 percent over her compensation for the previous year, which was her first full year running the tour (see salary chart below story). Her predecessor, Larry Scott, now commissioner of the Pac-12 Conference, several times surpassed the $1 million mark while running the WTA, a major breakthrough for a women’s sports group at that time. Scott was WTA chairman and CEO from 2003 through mid-2009.

Women who earn more than $1 million in sports on the business side are a small sorority. Stephanie Streeter in 2009 earned $1 million as interim CEO of the U.S. Olympic Committee, and Michelle Wilson in 2008 earned a similar amount as the U.S. Tennis Association’s chief marketing officer.

“Most women don’t earn that much money in sports,” said Cathy Griffin, a sports executive recruiter, who said she was surprised by Allaster’s compensation amount.

Carolyn Bivens in 2010 earned $765,338 for what was her last year running the LPGA, according to a tax filing for that group.

Tax returns are publicly available for the men’s and women’s tennis tours, the USOC, the LPGA and the USTA, but information is not fully available for all leagues, including the WNBA, nor for senior-level executives at teams or major sports agencies.

Ilana Kloss, president of World TeamTennis, said Allaster’s pay is in part a function of the sport of tennis, which is global in nature and has long been the dominant sport for women.

“Women’s tennis has always led the way when you think about women’s sports,” said Kloss, who played on the tour in the 1970s.

Whether Allaster continues to receive a million-dollar compensation in coming years will likely depend on her ability to find a replacement for Sony Mobile as top sponsor of the tour. The telecommunications company is exiting the sponsorship next month.

Allaster’s 2011 compensation included base pay of $550,000, a $668,194 bonus and other benefits. The bonus is structured to reward her for the commercial success of the WTA, which posted 2011 revenue of $61 million, up 15 percent, according to the tax return. That revenue figure is for money flowing though the governing body and is not inclusive of tournaments other than the season-ending events controlled by the WTA.

Though Allaster had more than $1 million in compensation for 2011, she was far behind then-head of the ATP Adam Helfant, who earned $3.5 million, according to the ATP’s most recent tax return. Helfant left the ATP in part over a dispute regarding his pay, an amount that many on the tour saw as inflated. He received a $1.8 million bonus as part of his pay in 2011. Sources said he wanted that reflected in his new base pay, but the board of directors rejected that suggestion.

ATP revenue jumped 25 percent in Helfant’s final year to $81.6 million. His 2012 successor, Brad Drewett, earned $541,110 in 2011 as head of the tour’s international unit and chairman of the season-ending championship.

The USTA, which normally files its return at the same time as the WTA and ATP, said the Internal Revenue Service had granted it an extension through February.

Thirteen days before her department was to run the events for the 2012 MLS Cup, Jen Maurillo was at home in Connecticut, watching the Western Conference Final on ESPN with a personal interest in learning the location of the league’s championship game.

“I’ve never watched a match with so much interest,” said Maurillo, vice president of special events for MLS. “It could have been Seattle or Los Angeles. We were prepared for both, but still, you wanted to know.”

The Galaxy and Dynamo meet again at The Home Depot Center, but it’s no longer neutral ground.
The Los Angeles Galaxy closed out its two-game aggregate series with Seattle on Nov. 18 to earn the right to face Houston for the MLS Cup on Saturday and host the league’s first title match not played at a predetermined site.

In the first 16 years of the league, the location for MLS Cup was chosen from a pool of applicant cities and announced in the spring. The host club, league executives and corporate partners had six months to prepare for the event. Now, Maurillo and company had 13 days.

MLS caught a break for the new venture, though. The Home Depot Center hosted the MLS Cup last year (coincidentally, also between the Galaxy and Dynamo). The Carson, Calif., venue was the selected neutral site of the championship game in 2003, 2004 and 2008, as well.

“There’s definitely a familiarity,” said Maurillo, who has been with MLS since 2000. “We’re very comfortable in Los Angeles.”

It was a year ago that the league’s ownership board approved moving the MLS Cup from a neutral site to the city of the conference champion with the best record.

“We thought the idea of a stand-alone event would be special, and our industry would be able to come together,” MLS Commissioner Don Garber said of the first 16 title matches in league history. “But the trade-off was that we were playing a game without having a home crowd. Unlike the Super Bowl, where the home fans travel anywhere, we were not getting that environment. It wasn’t an environment that was as special as any of our regular-season home games.”

Garber said the league’s attendance growth — MLS set a record in 2011, when the decision was made, and the league set a record again this year — convinced the owners that the host team could sell out the game with less than two weeks’ notice. Ticket prices for the 2012 MLS Cup, which will be broadcast on ESPN, TeleFutura, TSN and RDS, range from $57.50 to $450.

“Years ago, we didn’t think we could sell out only a week or two in advance of a game in early December,” Garber said. “In many of our markets, we would have been concerned about attendance. That’s a no-brainer today.”

The match is expected to sell out, even with Home Depot Center’s capacity increased by temporary seating from 27,000 to more than 30,000. The Galaxy helped the league get a jump at the box office: After Los Angeles took a commanding 3-0 lead in the first leg of its playoff series against Seattle on Nov. 11, the team held an advance sale for its season-ticket holders, allowing them to buy their own seats plus additional tickets.

“We actually had to put the brakes on it a little bit,” said Chris Klein, Galaxy vice president. “This is a big deal for L.A. We started hearing from everyone on Monday morning [Nov. 19]: celebrities, star athletes, corporate partners. The problem won’t be selling out the game but having enough tickets for everyone to purchase.”

Further adding to the atmosphere is the fact that the game will be a farewell match for David Beckham, who announced last week that the MLS Cup will be his last game with the Galaxy.

The Dynamo last Monday received 1,000 tickets from MLS to sell to supporters and season-ticket holders in Houston. The tickets, made available online on a first-come, first-served basis, sold out immediately.

There were concerns, however, about the ability — and in some cases, willingness — of some of the league’s top sponsors to activate at the MLS Cup on short notice.

“It’s a race to book flights, arrange staffing and have materials shipped,” said Tracy Drelich-Knauer, associate promotions and sponsorship manager at Castrol. “There’s no question that any hassle will be compensated by the intense home-crowd atmosphere for the match, but there is a lot of work to be done.”

David Wright, MLS senior vice president of global sponsorship, acknowledged that a few league sponsors — including Panasonic, which is focused on its sponsorship of a tour of the U.S. women’s national team — declined to activate in Los Angeles this weekend.

“The new format is another example of the league’s growth,” Wright said, “but there will always be a handful of partners that aren’t able to activate due to logistical or geographic constraints.”

Wright added that sponsors skipping the MLS Cup are “already gearing up” for the First Kick platform, the league’s opening series of games to the start of the 2013 regular season.

Among sponsors participating in Soccer Celebration, the pregame activation space on the stadium grounds, are A-B InBev, Allstate, AT&T, Castrol, Continental Tire, El Jimador Tequila, Makita, National Guard, Xbox, The Home Depot and Volkswagen.

For the visiting team, taking sponsors on the road can be good for business. At last year’s title game, Dynamo executives hosted several prospective clients. Among them were representatives of BBVA Compass.

“We paid a lot of attention to them,” said Dynamo President Chris Canetti.

Three weeks later, Houston signed BBVA Compass to a 10-year, $20 million deal as naming-rights partner of the club’s new stadium, which opened in May. Canetti said the Dynamo did “more prospecting than entertaining” last year in Los Angeles and that this time it will be the other way around. Canetti also hopes for a change in the outcome on the scoreboard. The Galaxy defeated the Dynamo, 1-0, to win the 2011 MLS Cup.

The winning team this year will receive a new spin on the standard championship T-shirts and caps. The champion will receive scarves and wool skull caps in team colors marked 2012 MLS Cup Champions.

“It is in line with our demo, the Gen Y crowd,” said Maribeth Towers, senior vice president of consumer products for MLS. “Our players have expressed a desire to do something different, and we embrace being indie and edgy.”

Of course, the league’s most radical move is to give one team a home-pitch advantage in the championship match. MLS’s commitment to the new format is open-ended.

“Think of the World Series, but only one game,” Garber said. “That’s the kind of experience we’re looking to do locally.”

NASCAR is in the final phase of developing a cleaner, simpler website and new suite of mobile and tablet applications that will launch in January.

The effort comes a year after NASCAR cut a deal with Turner to reacquire its digital rights and follows an eight-figure investment in a new digital division. NASCAR hopes that it helps drive race viewership and attendance and helps the sport engage a younger audience that almost exclusively consumes news and information digitally.

The sanctioning body will offer its first public overview of the site this week at SportsBusiness Journal/Daily’s NASCAR Motorsports Marketing Forum in Las Vegas.

The new site features a dominant, full-screen module that spans the width and most of the length of a browser window. The top module will rotate through two to three features at any one time. Above it are a series of tabs for

things ranging from standings to drivers. Visitors can click on those tabs and jump to pages on those subjects or scroll through a series of modules below to reach browser-wide sections on news, standings, drivers and other new media elements.

The design was developed with a tablet in mind so that the site will look the same in size and shape on an iPad or Samsung Galaxy as it looks on a desktop or laptop computer. It also makes written news secondary to digital illustrations and informational graphics predicting the winner of the next race. For example, modules designed with next year’s Daytona 500 in mind show the three drivers most likely to win the race and a horizontal line graph highlighting the probability they succeed. A separate module shows Jeff Gordon’s car for the

NASCAR will offer its first overview of its new website this week. The overhaul includes new applications for mobile and tablet users.
Daytona 500 surrounded by a series of numbers that visitors can scroll over to pull up a video about restrictor-plate racing or a short text burst on brakes.

“We’re looking at different ways to deliver and a broader definition of content,” said Marc Jenkins, NASCAR vice president of digital media. “It’s not about a 1,500-word story, necessarily. It’s — how do we tell the story of the coming Daytona 500? We’re really taking advantage of the digital nature of what we’re doing and the interactive nature.”

In addition to concentrating on delivering a digital rather than print experience, NASCAR focused on developing a site and apps that provide a second-screen experience for TV viewers. The digital team logged long hours working on a live leaderboard that keeps up with changes on the track throughout the race. The leaderboard can highlight NASCAR-selected, featured drivers such as Gordon and Clint Bowyer, who recently fought after a race, or the race leaders or a fan’s favorite drivers.

NASCAR’s live leaderboard will look the same on its website as it does on both the free and premium apps it plans to offer next year.

“We spent a ton of time on it,” Jenkins said. “It was one of our core objectives if not the core objective — that second screen complement.”

Customization was another area of focus when NASCAR developed the new digital offerings. The company worked with its digital developer, SapientNitro, to develop an algorithm that can determine what news fans get based on their avidity levels. Casual fans could get an info graphic that explains the banking of a track while avid fans could get an info graphic laying out the various lines on a track.

Fans also can personalize their digital experience by selecting their favorite drivers. Images of those drivers’ and the recent race results will appear at the top of the driver page, and news on those drivers will dominate the website’s news section. Those drivers will also be highlighted on the website’s and apps’ live leaderboard.

NASCAR worked with Omnigon, a digital strategy agency, and SapientNitro on its two apps — NASCAR RaceView and NASCAR RaceView Premium.

RaceView is a free app that includes the live leaderboard and news on a fans’ favorite driver. It includes offers to buy upgrades like in-car audio.

RaceView Premium, which NASCAR will charge for, features a more data-rich experience that includes telemetry and virtual video that follows any car around the track, so that hard-core Kasey Kahne fans can follow him at all times around the track even if Fox or ESPN is following Dale Earnhardt Jr. during the race broadcast.

Pricing for NASCAR Race-View Premium is still to be determined. Sprint subscribers will get the higher end app for free.

Turner is selling advertising on and the fleet of apps. It will sell ads to NASCAR sponsors, team sponsors and corporations and brands not involved in the sport.

“Part of the reasons we brought our digital rights back in-house is because it’s such a powerful activation channel,” Jenkins said. “We’ll take any advertisers. We won’t shut anyone out, but at the end of the day, I think you’ll find there’s higher value for industry partners.”

NASCAR’s new website doesn’t have any tabs for teams. The focus is on drivers. Jenkins said teams will have a chance to collaborate with NASCAR and contribute news and information on their drivers, but how that will work is to be determined. He added that may add links to the team sites at a later date.

After it launches the site next January, NASCAR Digital plans to tweak the site based on user feedback, Jenkins said.
“In our mind, this is a major step, but it’s just the first one,” Jenkins said. “The fans will tell us what the next one will be.”

The NHL’s consumer products business will have to be rebuilt after this year’s lockout.

Even if a deal is reached immediately, licensees would still miss the vast majority of holiday sales and then be faced with the daunting task of having to reclaim shelf space at retail in January and February — the worst months of the year for most retailers.

“Our NHL business is off substantially,” said Mitchell Modell, CEO of the 150-store sporting goods chain which bears his family name. “The dollars are small relatively, but the percentages are big. Thank God for the NBA, because it came back strong last year [after that league’s lockout] and they are more than offsetting our NHL sales.”

Last spring’s strong NHL playoffs resulted in impressive sales for NHL-licensed products, especially notable since the Boston Bruins’ 2011 Stanley Cup Championship was such a bellwether for the league. Accordingly, year-to-year sales of NHL merchandise for licensed sports ecommerce specialist increased 14 percent from January into this month. However, sales of those same goods from July through last week on showed a 14 percent decrease. Fanatics operates ecommerce for the league, but those totals do not include sales on

Licensees with agreements across multiple sports properties have been through all this before, having faced lockouts from the NFL, NBA, and now the NHL.

“With any of these [work stoppages] it gets to a situation where no retailer wants to pre-book orders, or if they do, it is 300 pieces, instead of 3,000,”  said Adam Pennington, owner and CEO of Game Time, which has a license for watches from the NHL, along with MLB, the NBA, NHL and NFL. “We’re way down, even in Canada — [but] that’s what happens when there’s no game on. The good news is that the other leagues [NFL and NBA] bounced back well and our overall business is strong. We’ll survive this because the NHL is a smaller piece of our business. But any licensee that has most or all of their whole business in hockey is going to be hurting, if not out of business.”

Rookies drive the trading-card business and a lockout means no access to rookies in the uniform of their new teams. So Panini has not been able to issue cards for the top overall NHL draft pick, 18-year-old Nail Yakupov. Jason Howarth, Panini vice president of marketing, said the company had released three NHL sets so far this season of the 11 anticipated, but had not yet made a decision on reducing future releases.

“If there’s a positive to any of this, it’s that we’re getting better at managing these situations,” he said.

Kraft Foods’ decision last week to cancel its annual Hockeyville promotion, in which an NHL exhibition game has been staged in a small Canadian town since 2006, brings into sharp focus the league’s sponsorship business, likely the biggest casualty of a lockout moving into its third month.

Hockeyville was the largest activation staged by any single NHL corporate sponsor, so with the NHL’s third lockout in 18 years, and the cancellation of the Winter Classic outdoor game, an event emblematic of the “new NHL,” the question of the impact on the league well beyond missing games is gaining attention.

“National sponsors will eventually have to move their dollars because they have to sell soap, beer or whatever,” said Peter Luukko, president and CEO of Comcast-Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center. “Locally, there’s more loyalty, sponsor-wise, and not as many choices, though obviously we don’t take them for granted.”

Respecting NHL bylaws, Luukko declined to speak specifically about the lockout or labor negotiations. But his comments on the league’s sponsors — and the memories that lockouts canceled the entire 2004-05 season and shortened the 1994-95 season to 48 games — resonate with marketers.

“If I was a company being courted by the NHL today, or if I was advising a company being courted, I would be concerned,” said Michael Neuman, the managing partner at Scout Sports and Entertainment, the agency for Geico, which has league sponsorship rights, and around 20 complementary NHL team deals. “The current commissioner [Gary Bettman, commissioner since 1993] has three work stoppages under his belt.”

Sponsors have clauses in their NHL contracts granting relief in the event of a work stoppage, reportedly after at least one quarter of the 82-game regular season is not played. Two weeks ago, MolsonCoors, the NHL’s largest sponsor, cited the lockout as one reason for lagging beer sales in Canada. The brewer said it will ask for financial compensation when the lockout ends.

Experts say interest in the NHL will be market-driven, but that leaves questions for weaker markets.
Photo by: ICON SMI
Neuman and others credited NHL Chief Operating Officer John Collins, who declined to comment through a spokeswoman, for his transparency with sponsors during this lockout. But despite the open communication, the lockout is now beginning to affect important activation platforms, and may cause NHL licensees to miss the entire holiday shopping season (see related story).

In the case of Kraft, the company last week very publicly canceled its title sponsorship of Hockeyville, in which two NHL teams play a preseason game in a Canadian town selected for its dedication to the sport. Kraft will instead donate $1 million to Hockey Canada, the country’s youth development program.

“Without the collective-bargaining agreement getting done by Nov. 15, we just couldn’t properly execute Hockeyville at the retail and consumer level,” said Jack Hewitt, vice president of marketing insight and services for Kraft Canada.

Hewitt confirmed that Kraft’s contract for the program has one year left and said the company still plans to sponsor Hockeyville in 2014. He added that Kraft was in regular communication with Collins, Bettman and NHLPA Executive Director Donald Fehr. “They understood where we were coming from,” said Hewitt.

While many observers believe Kraft’s cancellation will be a rarity among current sponsors, one former league sales executive offered a cautionary tale about winning new business.

“We shut down for a full season and it took us two years to get back to where we were,” said Andrew Judelson, who was senior vice president of sales and marketing at the NHL for eight years, including the canceled 2004-05 season, and is now an executive vice president for WWE. “There was a year of selling and then a year of getting those partners up to speed and activating. The unfortunate thing is that the league had so much momentum over the past several years, and now you wonder how much of that momentum has been extinguished. … The good news is social and digital media allow your sponsors to activate and plan to activate much more quickly and in the U.S., most of the NHL partner activation is during the Stanley Cup playoffs, so that is still very possible.”

Genesco Sports Enterprises CEO John Tatum, whose clients include league sponsors MillerCoors and Pepsi, also gave Collins and the NHL points for communication. Still, Tatum backed Judelson’s assertion that signing new corporate sponsors will be the league’s biggest challenge whenever the labor standoff ends.

“New sponsors are going to be the slowest thing to get back,” said Tatum. “They had so much momentum with last season’s playoffs and all the postseason games on national TV for the first time [on NBC and NBC Sports Network]. Fans will come back, but you have to reclaim some portion of their media consumption, because that has changed. I’m also concerned about the franchises that were struggling before the lockout.”

Luukko, from the perspective of a thriving club like the Flyers, agreed with Tatum’s assessment that the league’s weaker markets will resume play having even more challenges of getting attention.

“Fan-wise, the return will be market-driven” Luukko said. “Look at our strong markets: New York, Chicago, Toronto, Montreal, ourselves, and others will come back. You have to be concerned about some of the markets where we aren’t as strong. Where will they be?”

Former NHL Enterprises President Ed Horne, who worked for the league from 1994 to 2007, including the first two lockouts under Bettman, believes the NHL can utilize another lengthy shutdown as an opportunity to rebrand.

“It’s easier to sell after a work stoppage then you might think.” said Horne, now the COO of Madison Avenue Sports and Entertainment. “We had a new story to tell about the game coming back better than ever, and with new marketing efforts.”

On corporate sales, Horne revealed the game plan after the 2004-05 lockout: “The starting point was trying to hold on to the business partners we had,” said Horne. “We didn’t lose any [sponsors] because there was real transparency with our partners. If you can show the business community that your current partners have stuck with you, it makes for easier discussions with new and potential partners.”