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Volume 20 No. 42

Leagues and Governing Bodies

After posting record-setting attendance each of the previous two seasons, Major League Soccer has experienced a slight downturn in the first half of 2013.

Through July 8, attendance across the league was down 5 percent when compared with the same point last season. But MLS President and Deputy Commissioner Mark Abbott said last week he is not too concerned about the dip.

“It’s still early,” Abbott said. “The second half of the season, when playoff races heat up, tend to be better-attended. Attendance is one of many ways in which we track our progress, and it’s one we think is best analyzed in large sample sizes and in trends over time.”

Abbott pointed out the league was able to decrease the number of weeknight matches from 60 in 2012 to 34 this season, and with much of that change playing out in the season’s second half, it adds to Abbott’s expectation of attendance gains to come.

Chivas USA continues to be the primary drag on attendance leaguewide. The club averaged a league-low 8,811 fans through its first nine home games this season, down 33 percent from the midway mark of 2012. Abbott said the league still believes Chivas USA can be successful in the Los Angeles market.

Also in Los Angeles, despite the departure of international star David Beckham, the Galaxy is down just 2 percent this year and is still averaging 21,950 fans per game, second-best in the league.

D.C. United is 17th in the 19-team league, averaging 13,645 per game, down 3 percent. Those figures come with the club having posted a 2-13-4 record this season after reaching the Eastern Conference final last year. The franchise, which plays in outdated RFK Stadium, also remains in search of a deal to build a soccer-specific stadium.

MLS has not benefited this year from the bump that comes with the opening of a new stadium, as it has in the past three years, with venues opening in Houston and Montreal (2012); Portland, Kansas City and the renovated BC Place in Vancouver (2011); and Philadelphia and New York/New Jersey (2010). The Montreal Impact, whose Stade Saputo opened last year, is averaging just over 21,000 fans per game, down 17 percent from 2012, but that stems in part from the Impact drawing crowds of more than 58,000 for a pair of first-half games last season at Olympic Stadium.

In all, nine of the league’s 19 teams have experienced a drop in attendance over the 2013 season’s first four months versus the same mark a year ago.

For the full 2012 season, MLS averaged 18,807 fans per game, marking the league’s best figure in its 17-year history. That average was up 5 percent from 2011, which previously stood as the league’s best.

NASCAR this week is set to announce several competition-related changes aimed at accelerating its adoption of new technologies and clarifying its rules, penalties and appeals process.

The changes follow an eight-month review of its competition division by a committee led by NASCAR Vice President Steve O’Donnell, New York-based consultancy McKinsey and former Chevrolet executive Brent Dewar. It is the latest in a series of evaluations of NASCAR’s business groups that began four years ago with a review of its communications division.

NASCAR's four areas of competition changes

Deterrence: Change its approach from having NASCAR officials “catch” rule-breakers to putting more onus on teams to use the correct parts. That will result in spelling out penalties for breaking a rule.

Officiating: Incorporate technology into the officiating process.

Governance: Shift its rule-making responsibilities from its officiating group to its Research and Development Center, and refine its appeals process.

Rules: Formalize its parts-approval process and simplify its rule book, which will be available in a digital format. It is considering making the rule book available to the public for the first time.

As a result of the evaluation of its competition division, NASCAR will make several adjustments (see chart), including shifting its rule-making responsibilities from its officiating group to its Research and Development Center and developing a new, digital rule book.

“We’re envisioning a world where you take our rule book, and it’s a lot of words, and transform that to modern day,” O’Donnell said, adding that doing so would make NASCAR more transparent and allow it to work closer with manufacturers on incorporating factory-car technology into stock cars.

“The ultimate goal is that my son, or a 13- to 15-year-old, is sitting in the car and having the same experience that Jeff Gordon is having. That they’re in essence sitting in the driver’s seat and reacting to the same information and technology the drivers are seeing.”

NASCAR executives hope that the emphasis on technology helps increase interest in the sport and boosts the bottom line.

O’Donnell said that shifting the responsibility for rule making from the officiating division to the R&D Center will allow NASCAR to develop rules that are forward-looking and viable for five or 10 years rather than reactionary and designed to address changes in parts and designs on a year-by-year basis. The ultimate goal is to reach a point where the R&D Center simultaneously develops new rules and new cars, such as a Gen-7 car that is timed to the release of new vehicles.

“We want to get fans excited potentially about new launches every year,” O’Donnell said. “The goal is to really lay it out to teams, [manufacturers] and our fans, so they can anticipate where we’re going long term.”

NASCAR also plans to incorporate technology into its officiating model. For example, it may adopt intelligent lugnut guns that could time a pit crew’s installation of a lugnut and make it unnecessary to have a pit-road official determining if any lugnuts are missing in order to assess a penalty. NASCAR could share the speed of lugnut installation with fans, enhancing the fan experience, O’Donnell said.

Another fan enhancement would come as a result of a new inspection process where teams would be scheduled for inspection and fans would know when their favorite driver’s car would be evaluated. Such a change would have the added benefit of allowing teams to shave a day of travel time off each race weekend, which would save them money.

Bringing technology to pit road could reduce the number of officials needed and save NASCAR money, but O’Donnell said any savings would be reinvested in hiring staff and adding technology at the R&D Center. The biggest financial upside he sees in the changes could be in new sponsorships. He pointed to NASCAR’s recent, multimillion-dollar deal with HP as an example.

“If we get this model right, where we’re able to showcase technology, I’d use our Green Platform as an example [of the potential],” O’Donnell said. “We were nowhere in that space and now we have [two dozen] partners involved. If we get this right, you’ll see tracks and teams benefit from an innovative culture.”

O’Donnell, who worked with a steering committee that included NASCAR President Mike Helton; chief marketer Steve Phelps; Robin Pemberton, vice president of competition; and Gene Stefanyshyn, vice president of innovation and racing development, said NASCAR will begin making these changes over the next seven months, but full adoption won’t be completed until the 2015 season. McKinsey and Dewar will continue working with NASCAR through the end of the year.

In just the past two weeks, Scott O’Neil has been named CEO of the Philadelphia 76ers, Chris Granger has been named president of the Sacramento Kings, and Lou DePaoli has been named chief revenue officer of the New York Mets. Different jobs, to be sure, but the three executives share one specific business pedigree: Each came out of the NBA’s team marketing and business operations department, a group that increasingly is serving as an executive pipeline to some of the top jobs in sports.

Known by the acronym TMBO, the division comprises about 40 staff members who are responsible for developing, compiling, analyzing and sharing among teams ways to drive franchise profitability. While other leagues have executives with club-relations responsibilities, none has TMBO’s level of dedicated staff and structure.

The NBA TMBO executive tree

Bill Sutton

Helped create TMBO during his 1999-2001 tenure at the NBA. Left to teach at the University of Central Florida. Currently runs his own sports consultancy and the sports marketing graduate program at the University of South Florida.

Bernie Mullin
First director of TMBO, from 2000-04. Left to become CEO of Atlanta Spirit, owner of the NBA Hawks and former NHL Thrashers. Currently runs the sports consultancy The Aspire

Scott O’Neil
Ran TMBO from 2004-08. Left to work as president of Madison Square Garden Sports, 2008-12. Hired on July 8 as CEO of the Philadelphia 76ers.

Chris Granger
Succeeded O’Neil and ran TMBO from 2008 until this month. Takes over Aug. 1 as president of the Sacramento Kings.

Lou DePaoli

Was a vice president with TMBO from 2000-05. Left to work as CMO of Atlanta Spirit, 2005-08, and worked as CMO for the Pittsburgh Pirates from 2008-13. Recently joined the New York Mets as chief revenue officer.

Ted Loehrke
Worked in TMBO from 2007-12, leaving as senior vice president to take his current job as chief revenue officer of the Milwaukee Bucks in November 2012.

Brad Sims

Was a vice president at TMBO from 2007-12. Left in May 2012 to work in his current job as chief revenue officer at the Cleveland Cavaliers.
The typical TMBO account executive boasts an MBA from among the toniest business schools in the country. The executive typically works with four or five teams; for each of those franchises, they know they’ve got one particular individual at the league they can call on for counsel. The department also works for WNBA and D-League teams. Add in the person having a passion for sports, and the result is a finishing school of sorts for top-level talent, where teams increasingly are turning to fill their own executive front-office openings.

“[TMBO] has been an incredible engine of education for both the league and its teams,” said NBA Commissioner David Stern last week. “As a conveyor of best practices, it is an incubator for extraordinary talent.”

TMBO launched in 2000 as an in-house consulting division for the NBA to help teams share business practices and to improve the sometime rocky relationships between teams and the league. When a team was in need of assistance, TMBO staffers would come into the market and provide support.

While the department still serves that role — TMBO propped up the ailing Kings’ business operations until that franchise was recently sold — it has grown beyond that and into a vast resource not just in selling tickets and sponsorships, but in doing any kind of work related to a team’s bottom line.

“I don’t think we ever knew it would be such a pipeline,” said Bill Sutton, who helped create TMBO while working for the NBA during a sabbatical from his teaching job at the University of Massachusetts. “It was originally set up to improve team performance.”

Bernie Mullin first headed up the department, from 2000 to 2004, followed by O’Neil who ran the department from 2004 to 2008 before leaving to become president of Madison Square Garden Sports. Granger replaced O’Neil in 2008, and his replacement now that he’s departing is Amy Brooks. Also a veteran TMBO staffer (with the department since 2007), Brooks earned her undergraduate and MBA degrees at Stanford, where she also played on the women’s basketball team.

There have been other TMBO executives who have taken top jobs with teams, as well. Ted Loehrke recently signed on as chief revenue officer of the Milwaukee Bucks, while Brad Sims was hired last year as chief revenue officer for the Cleveland Cavaliers. Both worked as vice presidents for TMBO before joining their respective teams (see below).

So why is this department such a fertile field for prospective front-office leaders?

“At TMBO you’re getting a very high level Ph.D. in the business every day,” O’Neil said. “You are exposed to different situations and you get a patchwork quilt of things that work and don’t work. But it’s hard. ... There are a lot of different constituencies with different problems and limited resources.”

The nature of TMBO’s role also brings exposure not just to Stern and NBA Deputy Commissioner Adam Silver but also to team owners and other top executives, creating a high-profile proving ground for TMBO staff. Prosper and impress, and it’s impossible not to gain notice within the league’s hierarchy.

Additionally, Sutton said Mullin, O’Neil and Granger built on each other’s successes to create what stands as a teeming talent pool in professional sports.

“Bernie Mullin brought in sales training, Scott O’Neil brought in the idea of analytics, and Chris Granger brought it all to an art form,” Sutton said.

Granger, the most recent executive to leave the department, doesn’t see running TMBO simply as a steppingstone, though.

“I don’t view the job as a springboard,” he said. “The job itself is phenomenal. You are lucky enough to see every great idea and every terrible idea across all aspects of the business. When a team president job becomes available, we have a unique perspective on things.”

That “unique perspective” is not just focused on the NBA’s business. Stern makes certain of that.

“They understand what every team does and how you would consult on every aspect of team profitability,” Stern said of the TMBO staff. “They share best practices and generate information and tactics that reach across the entire league and other professional sports. We know which team in Major League Baseball is doing variable pricing and which team in hockey has the best game presentation. It is a treasure trove of knowledge.”