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Volume 21 No. 6

Leagues and Governing Bodies

Major League Baseball recently collaborated on the first baseball-themed TV series in China, helping advance the sport’s interests in the world’s most populous country.

The league served as a technical consultant and provided its MLB Development Center in Nanjing, China, for “Boyhood,” a 40-episode TV series airing both on TV (Hunan Satellite TV) and digitally. The series featured the TFBoys, a highly popular Chinese boy band, as players on an up-and-coming youth baseball team seeking to overcome a series of obstacles.

The league served as a technical assistant to the series, which featured the TFBoys.
Courtesy of: MLB
Hunan Mango Entertainment Ltd. produced the series. During its monthlong run in July, “Boyhood” was the top-ranked TV show in China in its prime-time slot, generated more than 5 billion video views digitally and was the No. 1 topic on Chinese social media platform Weibo, a first for baseball there. The TFBoys have previously set their own traffic records on Weibo, and have used a wholesome image to amass more than 60 million Weibo followers and a slew of recording industry awards.

Similar to MLB’s efforts on domestic TV series such as Fox’s now-canceled “Pitch,” the “Boyhood” effort in China involved trying to place baseball squarely in other segments of pop culture.

'Boyhood' placed baseball in other segments of pop culture.
Courtesy of: MLB
“This is another example of trying to do something more strategic and integral to the culture than simply plastering up the silhouetted batter [logo],” said Chris Park, MLB senior vice president of growth, strategy and international. “We think this really helps build awareness for baseball in a really important market like this by presenting the sport right along with key trendsetters.”

The “Boyhood” series also featured 17 actual baseball players groomed at MLB’s Development Center in China, including three who have signed minor league contracts with MLB clubs.

“Boyhood” additionally intersected with another major MLB business initiative in China: the league’s multiyear deal with Le Sports to live-stream MLB games in the country. A promo spot for “Boyhood” jointly produced by MLB China and the show’s producers ran during live MLB games on Le Sports. And viewers of MLB’s All-Star Game and Home Run Derby on Le Sports had a chance to win limited-edition posters from the show.

Le Sports, however, has serious financial issues, losing digital content contracts with the Asian Football Confederation and ATP World Tour over missed rights fee payments and shedding 10 percent of its staff late last year.

The NFL is close to extending Commissioner Roger Goodell’s contract through 2024, and an announcement may be coming as soon as this week, sources said.

The 32 owners do not need to vote on the renewal because they unanimously agreed at their May meeting to give that authority to the six-owner compensation committee, a league source said.

Since he was hired in 2006, Roger Goodell has received contract extensions in 2009 and 2012.
The commissioner’s current contract runs through March 2019. The new term is for five more years, which means Goodell will oversee the next round of labor and media negotiations. The collective-bargaining agreement with the NFL Players Association expires after the 2020 season, and the media deals run through the 2022 season.

The NFL declined to comment.

“The continuity of both the labor negotiations and the broadcast contracts are not just negotiating them but being able to implement and execute them,” Marc Ganis, a sports consultant close to the NFL and Goodell, said in explaining why the league needed to keep Goodell and get him signed soon. “The preparation for labor negotiations takes years, not months.”

The compensation committee comprises the chairman, Atlanta Falcons owner Arthur Blank, and five other owners: the New England Patriots’ Robert Kraft, Kansas City Chiefs’ Clark Hunt, Houston Texans’ Bob McNair, New York Giants’ John Mara and Pittsburgh Steelers’ Art Rooney.

Those last four were added in the past year after some owners complained that Goodell’s compensation was decided by just a handful of the league’s top power brokers. (Carolina Panthers owner Jerry Richardson dropped off the compensation committee after he withdrew himself from league business in protest over how the relocation to Los Angeles had been handled.)

Unlike other committees, the new members were chosen by Blank, not the commissioner.

Goodell, whose pay shot up after the 2011 CBA, annually earns in the mid-$30 million range. His high pay drew withering criticism from many quarters, so much so that the league changed its tax status in order to no longer disclose how much the commissioner and other top executives earn.

Asked whether it is reasonable to assume Goodell would not receive the same level of pay, given the criticism, a league source said that is not necessarily a safe assumption. Another source said the compensation structure would be similar to the current contract: a few million dollars annually in salary, with a much larger bonus determined by the compensation committee.

For the many criticisms leveled at Goodell over the years, the owners like him for two main reasons: Business has boomed during his tenure and he shields them from the brickbats hurled at the league. The new renewal marks his third, following 2009 and 2012, since the owners voted to name him Paul Tagliabue’s replacement.

When Goodell took over in 2006, league revenue was slightly above $6 billion. Today revenue is more than $14 billion, and that growth came during a period that included the economic recession starting in 2008, and a spring and summer lockout in 2011. He’s set a goal of $25 billion in revenue by 2027.

The compensation committee began talks with Goodell around the March annual meeting. While rocky at times, the discussions became amicable by mid-July, a source said.

The league also hired a compensation consultant to advise on the commissioner talks, this source said. It could not be determined the identity of the consultant or whether the league had used one before.

Goodell would be 65 years old at the end of a contract running through 2024, with 42 years at the league after starting as an intern in 1982. He rose to chief operating officer before the 2006 election, when he beat a handful of other candidates.

The NFL is partnering with EA Sports to create a nationwide “Madden NFL 18” tournament involving all 32 teams, and the NFL says a bigger commitment to an esports league is coming.

The newly formed Madden NFL Club Championship will begin with local tournaments in each NFL market to determine which player gets to represent the team in the championship rounds. Each team will organize and market their own tournaments, which may be hosted at NFL stadiums and other team facilities. The championship-round events will be held at the Pro Bowl in Orlando and Super Bowl LII in Minneapolis.

The effort builds upon two other, smaller tournaments that EA Sports operates around its “Madden NFL” franchise out of its Competitive Gaming Division, formed nearly two years ago. Unlike the NBA’s partnership with Take-Two Interactive for the NBA 2K esports league set to debut next year, the NFL-EA Sports alliance does not involve the formation of a new league, team franchises or some type of equity transaction. But NFL executives said the creation of the Madden NFL Club Championship is an initial step toward a much more expansive presence in esports.

“We’re building towards a league and talking more about that over time,” said Chris Halpin, NFL senior vice president of licensing and consumer products. “There may be different paths toward that, but we wanted to build scale and awareness in this space, and do that organically. So we see this club championship as a great platform to capitalize on the enthusiasm of the fan base for both ‘Madden’ and the NFL.”

Financial terms for the creation of the Madden NFL Club Championship were not disclosed. EA Sports and the NFL branded it a multimillion-dollar initiative, and were quick to tout the involvement of the entire league, compared to the 17 NBA teams that have committed thus far to the NBA 2K esports league. But the NFL teams’ commitment is not at the same level of the participating NBA teams’.

Like the NBA’s effort, the EA Sports-NFL attempt to build a major “Madden” property is another key test for sports simulation games, which have thus far found little traction in esports compared to first-person shooter games or multiplayer battle arena games.

“We think this makes a big statement to have all 32 teams engaged in this program,” said Todd Sitrin, senior vice president and general manager of EA Sports’ Competitive Gaming Division.

Also unlike many other esports competitions, the Madden NFL Club Championship will not be a strictly professional or closed event. Rather, participation in the tournament will be freely available to anyone, and fans can elect to represent any NFL team without geographic restriction.

Media distribution plans for the tournament are still being finalized. But each of the 32 local tournaments will be streamed on NFL and EA Sports digital platforms, including ones EA Sports operates in partnership with YouTube and Twitch. There also will be coverage of the final-round competitions on the NFL Network.

The development of the tournament arrives as “Madden NFL 18” prepares for its retail release on Aug. 25, with New England Patriots quarterback Tom Brady as the cover athlete. A special “G.O.A.T” (Greatest of All Time) limited edition of the game will be released Aug. 22 with additional content and game enhancements.

The struggles of traditional retailers, and the vendors that sell products in their stores, is adding to the challenges NASCAR teams face in the search for sponsors.

Target’s decision to not renew its sponsorship with Chip Ganassi Racing marked the latest big departure from a sport whose teams rely on corporate revenue for around 75 percent of their annual income.

As many business-to-consumer brands face greater scrutiny and narrowing margins, NASCAR teams and tracks are turning to new categories, doubling down on providing assets, dropping prices and working harder to forge business-to-business connections, according to interviews with executives around the sport.

Target, a longtime sponsor of Chip Ganassi Racing, chose not to renew its deal.
“[Consumer packaged goods brands are] under total pressure,” said Anne Hansen, vice president of marketing and business development for Mooresville, N.C.-based Bulldawg Marketing, which specializes in the retail space. “You’re always trying to increase consumption and purchase, but at some point you also have to look at increasing profitability — so it forces the brands to make hard choices.”

The issue can be a circuitous one. Retailers get squeezed by e-commerce rivals such as Amazon, then in turn squeeze vendors, who then need to cut costs — oftentimes in marketing.

Dollar General left NASCAR last year after going from 30 primary paint schemes with Joe Gibbs Racing to none in one fell swoop. Kellogg’s Cheez-It brand has scaled back its spending, similar to Nature’s Bakery, which went from 27 races in 2016 to just four in 2017 for Stewart-Haas Racing.

On the flipside, Monster Energy and Kraft’s Velveeta brand are among the brands that have entered the sport or stepped up their involvement in recent years. One team in particular, JTG Daugherty Racing, still has myriad CPG brands on its car as part of a vendor-model sponsorship with Kroger, which has also increased its presence.

Hansen, whose firm works with brands including those from 3M and Unilever, disputed the notion that B2C sponsors are struggling across the board, saying her firm continues to see consumer-focused brands earning the returns they envisioned. The key for CPG brands, she said, is to integrate racing programs around a company’s wider marketing objectives and campaigns.

“It comes down to not necessarily packaging it as motorsports but connecting the motorsports assets back to the brand,” Hansen said.

She cited as an example a program that Unilever brand Hellman’s Mayonnaise did this year around its “Strangewich” campaign. Hellman’s sponsors Xfinity Series organization JR Motorsports, which produced a video showing kids of team employees concocting sandwiches with Hellman’s Mayonnaise and other wacky toppings like Oreo cookies that their parents had to then eat on camera.

Teams have secured long-term renewals with other brands including Mars and Miller Lite, while Hendrick Motorsports this year eked out a one-year extension from Lowe’s. With Hendrick securing just a one-year extension for Jimmie Johnson’s No. 48 team, which has won seven Monster Energy Series championships, it emphasizes the pressure on retailers such as Lowe’s.

“It happened over a certain time period, but more and more, it’s less about impressions, likes and views and all about, ‘What was the incremental sales [lift]?’” Hansen said.

Across multiple categories, some deals are increasingly being built around B2B wins. For example, Shell’s fuels are used in the thousands of vehicles that are part of Team Penske owner Roger Penske’s automotive empire, and Joe Gibbs Racing enticed convenience-store chain Circle K to come aboard this season in part by offering B2B opportunities with some of its other partners. While B2B success is a positive, well-known consumer-facing companies help give the sport cachet and allow it to reach millions of consumers through in-store displays, special packaging and other promotions.

Jeremy Lange, vice president of Leavine Family Racing, said his one-car Monster Energy Series team is still talking to B2C companies, but success comes down to their objectives. “We’ve got to be talking to the right people who understand that there is value in the TV and racetrack [exposure], and talking to brands who look at it as a TV buy or buy media,” Lange said. “It’s right for the right brand who wants awareness and wants to activate.”

Interviews with multiple team executives and sponsorship hunters in the sport showed that deals involving a B2B component are the main ones thriving, but some consumer-facing categories are emerging as spenders. Teams are also adjusting sponsor pricing and in many cases lowering their asking prices to get deals done with sponsors that have smaller budgets (SportsBusiness Journal, June 26-July 2 issue).

Tyson Webber, president of GMR Marketing, said municipalities, universities and colleges, health care companies, startups and even medical marijuana brands have become more active. Two recent examples are Liberty University and Florida Hospital. The regional hospital chain is one of the five “injector” entrance partners at Daytona International Speedway, which asked 10- to 15-year contracts at $2 million to $2.5 million annually for the rights.
Marc Bluestein, president and CEO of Aquarius Sports and Entertainment, which counts Florida Hospital as a client, said the hospital is using its Daytona asset as a way to market its Creation Health faith-based health and wellness program.

“If you compare the numbers to other stick-and-ball sports, the college space and other niche grassroots sports, the volume of the NASCAR audience and fan base are still there,” Bluestein said. “It’s about how you present that value proposition.”

Experiments with condensed schedules for select NASCAR weekends this season have gone well enough that industry executives expect them to continue, and potentially expand, to more race weekends next year.

NASCAR introduced the schedules this year in a bid to add energy to the weekend, save teams money and help with their crews’ time on the road amid a nearly 10-month season. The idea is to take racing that is typically spread over three days for the Monster Energy NASCAR Cup Series — between practice, qualifying and the race — and squeeze it into two.

The reformatted schedule is being tested at four Monster Energy Series weekends this year, three of which came in a row from late July to early August. The three tracks to have already run the new schedule are Indianapolis Motor Speedway, Pocono Raceway and Watkins Glen International. Martinsville Speedway will host the final one this season during NASCAR’s playoffs in October.

The presidents of the three tracks that have used the schedule said they thought the tests went well. In fact, Michael Printup, president of Watkins Glen International, said he could see the sport looking at using the shortened format for almost half the schedule next season. “With some minor tweaks, I think they’ll be good.”

NASCAR has yet to finalize plans for which races next year would run the new schedule.

Supporting series still run Friday, and tracks have started fan fests for Friday nights where Monster Energy Series drivers participate in activities with fans.

For Indianapolis’ Brickyard 400 weekend, the track held a fan fest on Main Street adjacent to the track. It featured a spate of drivers taking part in pit stop contests, kids relay challenges and the typical hauler parade. Pocono’s Friday night fan fest saw drivers on stage taking part in rapping and singing contests, a cooking contest and other activities. Pocono’s crowd at the fan fest was in the low thousands, according to Ben May, president of the track. Watkins Glen’s fan fest was rained out.

Doug Boles, president of Indianapolis Motor Speedway, said the addition of drivers to the Friday night event proved to be key, and could be a step toward helping rebuild the buzz around the city of Indianapolis that Boles said used to be commonplace when the race was seeing better attendance.

“I think it worked out pretty well for us; we’ve had the hauler parade for a while, which has been a successful event … but by far I think it was the best crowd that we’ve had there [for a Friday night event on Brickyard 400 weekend],” Boles said. “The feedback from the drivers was they thought the event was really cool. … They’re pretty savvy and know when it’s worked and when it hasn’t.”

The proposed Bruce Sherman-Derek Jeter $1.2 billion purchase of the Miami Marlins presents arguably the ultimate collision between one of the sport’s greatest winners and one of its thorniest problems.

Jeter was not present at the MLB owners meeting, due in part to the late-stage pregnancy of his wife, Hannah. But the spirit of the former New York Yankees shortstop, future Hall of Famer and five-time World Series champion was impossible to miss, as owners and executives across the game raved about the possibility of Jeter joining baseball’s ownership ranks. Even MLB Commissioner Rob Manfred, while refusing to handicap the chances of the purchase being approved, still heaped praise on Jeter.

“Derek’s been absolutely dogged and committed in this process,” Manfred said. “He’s also been successful in everything he’s ever tried to do. And I know he will do whatever’s necessary to be successful in Miami.”

Finding any sort of lasting success in Miami, however, is something that has escaped each of the club’s previous three owners. The Marlins are swimming in debt with tens of millions of annual operating losses, have baseball’s third-worst attendance this year along with one of the game’s worst local TV deals, and have been unable to spark meaningful development activity around the five-year-old Marlins Park.

In recent years, many of the supposed fixes to the long-running franchise issues, such as getting a domed stadium, signing core players such as outfielder Giancarlo Stanton to mulityear deals, and adopting a more Miami-centric logo and color scheme, have been attempted and not proven to be panaceas.

It also cannot be ignored that Jeter has no experience operating a pro sports team, and the bid calls for him to run both baseball and business operations on a day-to-day basis. So what exactly makes Jeter more likely to succeed where many others have failed in South Florida?

Jeter’s prospective ownership colleagues repeatedly pointed to his ability to stay focused on long-term initiatives and not caught up emotionally on more fleeting issues. And Marlins President David Samson, who worked extensively with Jeter for months during the protracted bidding process, credited his quick intellect, something that has aided the rapid development of The Players’ Tribune.

“He was very understanding of all the complexities of a transaction like this. … He is very keen on learning and then acting,” Samson said of Jeter. “During the negotiations, he’d hear an issue and he’d be able to wrap his arms around it very quickly, having never heard of such an issue before — things that players would never concern themselves with. So we witnessed firsthand the transition from player into executive. It was a fascinating thing to see.”

One senior team executive, speaking on condition of anonymity due to the pending nature of the Jeter-Sherman bid, said the Chicago Cubs’ successful and sweeping on- and off-field multiyear rebuild provides a potential template that feeds into Jeter’s patience and doggedness.

“There is a big opportunity to reshape the franchise and reactivate the market,” the executive said. “It’s going to be a tough, long slog, and require a lot of money and patience. But the opportunity is definitely there.”

MLB owners are expected to vote on the Marlins sale in September, with the deal to close in early October.

Earlier installments in the Pistons’ “I Can’t Wait” campaign included business owners talking about their excitement over the team’s move to downtown Detroit.
The Detroit Pistons next month will roll out another piece of its “I Can’t Wait” marketing effort to drive business as the team moves from the suburbs to Little Caesars Arena in downtown Detroit.

The strategy will focus on Pistons players and will be featured in digital, print and TV marketing beginning in September. The team will produce other upcoming “I Can’t Wait” messaging featuring local celebrities and players and coaches from the area’s other professional and college sports teams.

'We are reaching people who may have been interested in us but the
Palace had been too far,' Metzger said.
“We are doing a lot of targeted efforts, events, and digital content,” said Charlie Metzger, chief revenue and marketing officer for the Pistons. “We are talking about the excitement of the Pistons coming back to the city.”

The team already has released a series of spots featuring Detroit businesses mixed in with Pistons imagery that highlights the anticipation of the team’s return to downtown Detroit.

The new spots to focus on Pistons players comes during an offseason filled with myriad branding efforts as the team relocates from the Palace of Auburn Hills to Little Caesars Arena, the 21,000-seat arena owned and operated by Olympia Entertainment, which also owns the NHL’s Detroit Red Wings.

The Pistons will lease the facility from the Red Wings and will play their first regular-season game of the 2017-18 season on Oct. 18 against the Charlotte Hornets. It will be the first Pistons game in downtown Detroit since 1978 when the teamed played at Cobo Arena. The Pistons moved to the Pontiac Silverdome for a decade and then played at the Palace of Auburn Hills from 1988 through last season.

Local business owners are excited about the team's big move.
“We see it as a new beginning for the organization,” Metzger said of the move back to downtown Detroit. “It is much more than just a physical move downtown. We are looking at things with a different lens and a different view of who we are.”

Since announcing the move late last year, the Pistons have unveiled new uniforms and logos, launched a new radio flagship partner, announced a deal to build a new downtown practice facility in a partnership with Henry Ford Health System, and reached a jersey patch deal with Flagstar Bank. Metzger, who this month was promoted to chief revenue and marketing officer from executive vice president and chief marketing officer, also said that the Pistons have beefed up their sales staff to drive the sale efforts during the relocation.

Under the “I Can’t Wait” campaign, which was produced in-house by the team and launched this summer, the Pistons have been looking to drive ticket sales for their new downtown location.

Detroit businesses anticipate increased success with team moving to downtown.
According to Metzger, the team to-date ranks among the top NBA teams in new full-season tickets with more than 2,000 new full-season tickets sold. The Pistons season-ticket renewal rate is currently at 75 percent, with the expectation to hit 80 percent.

“It’s a big building and we are seeing the anticipation of the new building and us being downtown,” Metzger said. “We are reaching people who may have been interested in us but the Palace had been too far.”

Italy’s Serie A has fallen far behind England’s Premier League and Germany’s Bundesliga in both visibility and media rights revenue in the U.S., something the league hopes to address as it looks for its next media rights deal.

Juventus is one of the headline teams in the Italian league.
The league, which features teams such as Inter, Juventus, Milan and Roma, has put out a request for bids for the rights to three seasons beginning in 2018-19, as well as the rights to its domestic cup matches. Serie A is being advised by Infront Sports & Media, a relationship that dates back to 2009 and one that has the Wanda Sports-owned agency overseeing both domestic and international media rights for the league. The deadline is Sept. 15, with the league and Infront expected to award the rights later in the month.

Aiming to break a perception that it is Europe’s fourth-best league behind England, Germany and Spain, Serie A and Infront adjusted the sales process to boost not only interest from potential rights holders, but hopefully revenue as well. For the first time, Serie A is aiming to sell its rights regionally to broadcasters, as opposed to doing a global deal with a distributor, creating packages that allow country and territorial exclusivity. In the last three-year cycle, MP & Silva won the rights to the league’s international distribution in a deal valued at roughly $710 million total, beating out IMG.

The league held a series of international roadshows for the first time last month, including stops in New York, London and Shanghai, according to documents produced by Infront for potential bidders. Executives from Serie A, Infront and clubs held 45-minute presentations for potential bidders that highlighted the league’s recent investments in broadcast production and its willingness to work with partners. It also is allowing for bids from both linear networks and potential digital or over-the-top bidders. Infront declined to comment while the sales process is active.

“We have a huge untapped opportunity in the U.S., and there was a lot of enthusiasm for how we’re packaging the rights differently this time,” said Jim Pallotta, chairman and owner of AS Roma, and who attended the roadshow in New York. “The Premier League has done a great job as a league here in the U.S. on television, but if you look at the last few Champions League Finals, it’s been teams like Juventus, Real Madrid and Barcelona from leagues that just don’t get the TV exposure the EPL has.”

The league is now broadcast on beIN Sports in the U.S. in a deal that expires after this season, which began this past weekend.. BeIN also broadcasts the Spanish league, which often shares kickoff times with the Italian league and relegates Serie A matchups to streaming-only availability. BeIN did not respond to a request for comment.

Pallotta said that while the league and clubs know they need to do more outreach to markets outside of Italy, he also believes that a more engaged rights holder could boost the league’s popularity. BeIN Sports was estimated to be in more than 22 million homes in February, compared with an estimated 84 million and 82 million for FS1 and NBCSN, respectively, according to Nielsen.

However, the early interest from potential U.S. rights holders could be described as tepid at best, according to sources with knowledge of the process.

That is due in large part to the league’s asking price, as well as its overall popularity in the U.S. The league and Infront are looking to nearly double the league’s overall international broadcast revenue to nearly $350 million per year in this next cycle. While its initial ask for the rights is unknown, the league views the Americas as an area of growth in light of the recent agreements between NBC and the Premier League and Turner and UEFA, in which the rights fees doubled in both deals.

During its season-opening week last year, the two Serie A games broadcast on beIN Sports both averaged 32,000 viewers.

The roadshow saw the league pitching its rights to companies including Amazon, DirecTV, NBC Sports Group and Fox Sports, as well as MP & Silva and several other potential partners.

While the process is still in motion, multiple sources said they believe the league may look to partner with a rights holder that can maximize its visibility via an OTT product, even if it means a lower-than-expected rights fee, as increasing its viewing audience in the U.S. may be viewed as more important than simply increasing its revenue.