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Volume 23 No. 13

Leagues and Governing Bodies

The exit of former USA Gymnastics CEO Kerry Perry (second from left) has the governing body flailing once again as it tries to navigate the turmoil brought on by the Larry Nassar sex abuse scandal.
Photo: Getty Images
The exit of former USA Gymnastics CEO Kerry Perry (second from left) has the governing body flailing once again as it tries to navigate the turmoil brought on by the Larry Nassar sex abuse scandal.
Photo: Getty Images
The exit of former USA Gymnastics CEO Kerry Perry (second from left) has the governing body flailing once again as it tries to navigate the turmoil brought on by the Larry Nassar sex abuse scandal.
Photo: Getty Images

When former USA Gymnastics CEO Steve Penny was forced out in March 2017 as part of the Larry Nassar sex abuse scandal fallout, it was at least a fortuitous time for an abrupt leadership change at a major Olympic sport governing body — still more than three years from the next Games.

 

Now 18 months, one failed CEO and an entirely new board later, the Indianapolis-based organization finds itself once again in the same place: without a chief executive and still in search of a clear sense of progress out of the post-Nassar turmoil. This time, however, planning for the 2020 Tokyo Olympics is ramping up in full force with less than two years to go.

 

After the Rio Olympics, at least nine other U.S. sports governing bodies installed new chief executives, but most of them have been in place for a year or more. Whoever ultimately is chosen to replace Kerry Perry, who resigned under pressure Sept. 4, will have little time to learn on the job.

 

U.S. Olympic Committee CEO Sarah Hirshland, who helped force the latest change by publicly questioning Perry’s leadership three days before she resigned, acknowledged “urgency” in finding a replacement, but said it can’t be rushed.

 

“We are all in on helping rebuild USA Gymnastics, but at the same time, USA Gymnastics needs to create an autonomous organization that can run itself,” Hirshland said. “That’s not easy to do overnight. So there’s a sense of urgency for sure, but it’s also important to get it right.”

 

As of Sept. 20, USA Gymnastics had been without any CEO, interim or otherwise, for 16 days. A four-person management committee that includes new board chair Karen Golz and members David Rudd and Kathryn Carson is currently making day-to-day decisions.

 

Golz was unavailable for an interview, but in a prepared statement provided by a spokeswoman attributed only to USA Gymnastics, the organization said a search for an interim CEO is underway. Board member Brent Lang is chairing the search committee. One person known to be considered is USA Track & Field COO Renee Washington, who coincidentally works one floor beneath USA Gymnastics headquarters.

 

“Our goal is to identify a leader who will help the organization build on the progress to date and achieve the fundamental cultural changes necessary to move the sport forward,” the statement reads. “While we would like to identify that person as quickly as possible, it is more important to take the time needed to find the best candidate for the job.”

 

The statement continues: “The business of the organization, including athlete training and preparations for Tokyo, has never stopped.”

 

On the competition side, the top position of high-performance coordinator was filled by Tom Forster in July. That job previously was held by Martha Karolyi and Valeri Liukin. The governing body notes that the team has continued to be competitive at international events throughout the Nassar scandal and the rebuilding of the front office.

 

Among the pre-Olympic duties that need attention is deciding on a site for the trials. The location of the 2019 U.S. championships has been finalized but not announced.

 

If the organization hopes to rebuild its commercial portfolio, which was wiped out by sponsors bailing as the Nassar scandal unfolded, that work will have to start in a few months, said Mike Jaquet, former chief marketer at U.S. Ski & Snowboard.

 

“In my experience, these deals take 12 to 16 months to get done, from start to finish, and that’s not up against opening ceremony but the entire six- to eight-month lead-up window [which would start in early 2020],” he said.

 

Sheryl Shade, a veteran gymnastics agent who has represented stars such as Nastia Liukin and Shannon Miller, disagreed, saying sponsors can afford to wait until the likely makeup of the 2020 team becomes more clear next summer.

 

The organization also has no chief marketer right now. Lee Johnson, former vice president of marketing, left to become CEO of USA Diving and has not been replaced. The highest-ranking permanent staffer is COO Ron Galimore, who has been there 24 years.

 

Regardless of when a new CEO is named, the timing of USA Gymnastics’ return to normalcy remains uncertain because of the numerous lawsuits currently pending against it from abuse victims. As long as the ultimate financial cost of those lawsuits remains unknown, and the cases are still in the public eye, it will be hard to close deals, Jaquet said.

 

Hirshland said she took the step of seeking Perry’s ouster because, under her watch, USA Gymnastics kept creating controversies instead of forging a path out of the scandal.

 

“At that point in time, we saw that the organization was having a hard time creating stability and creating forward progress, and that’s really important for them right now,” Hirshland said. “They need to get their feet on the ground and start taking some tangible steps to moving forward.”

Industry veteran Bill Polian with Peyton Manning in 2015.
Photo: Getty Images
Industry veteran Bill Polian with Peyton Manning in 2015.
Photo: Getty Images
Industry veteran Bill Polian with Peyton Manning in 2015.
Photo: Getty Images

The XFL won’t start play for more than a year, but the competition for football talent between Vince McMahon’s relaunched league and the new Alliance of American Football is happening now.

 

On Aug. 31, the day before NFL clubs made their final roster cuts, XFL Commissioner Oliver Luck sent a mass email to NFL agents warning them of issues “that may inhibit your client’s freedom in choosing to join our league when we launch in 2020.”

 

One of those issues, multiple sources said, was an 18-month non-compete clause inserted into the standard AAF contract that prohibits playing in a competing league with regular-season games between February and July. Both the XFL and AAF are spring leagues; the AAF is set to launch Feb. 9, 2019, while the XFL plans to launch a year later.

  

Asked about his letter to agents, Luck said this month, “I can tell you it is our plan over the next 13 to 15 months to engage in a series of letters from me to the agent community informing them of issues we believe are pertinent to their clients: potential players for us.” Luck added that he planned to write to NFL agents as often as every two to three weeks, and that the XFL would begin signing players as early as January even though the league had not, as of last week, set its start date for 2020.

 

The AAF, meanwhile, has signed 335 players, 75 percent of whom have some kind of NFL experience, according to co-founder Bill Polian. The AAF is offering three-year, $250,000 contracts, but players who hit performance goals can make more than $100,000 a year, the league says.

  

“We’re real,” Polian said. “We are signing players and we will be ready to go on the fourth of January with training camps.”

 

The XFL has not revealed details of how much players will be paid, but Luck has told agents in a letter that “exceptional players” can make more than $200,000 a year.

 

Polian said he had not read Luck’s letter to agents but he’d heard about it. Both the XFL and AAF will allow players out of contracts to pursue an opportunity in the NFL. The 18-month clause in the AAF contract pertains to players who, after getting a job in the NFL, are then cut.

 

“If we are voluntarily releasing a guy to go — and we are not under obligation to do so — all we ask is that once his NFL playing days are over, whenever that may be, that if he is going to play in the spring that he return to play with us,” Polian said. “That’s only fair.”

 

The XFL was the first new league announcement out of the gate this year. McMahon, owner and chairman of WWE, announced Jan. 25 that the XFL, which had a previous incarnation for one season in 2001, would relaunch in 2020. Polian, along with film and television producer Charlie Ebersol, the son of former NBC Sports chief Dick Ebersol, announced the creation of the AAF on March 20.

 

But the AAF may be getting the jump on the XFL, not just by hiring players first but also by locking down front-office talent with NFL experience, such as former Rams GM Billy Devaney, former Browns GM Phil Savage and former NFL coach Mike Martz, to name a few.

 

Oliver Luck is lobbying agents to secure the best available talent for his upstart league.
Photo: AP Images
Oliver Luck is lobbying agents to secure the best available talent for his upstart league.
Photo: AP Images
Oliver Luck is lobbying agents to secure the best available talent for his upstart league.
Photo: AP Images

“I’m tremendously pleased with the people who are affiliated with, coaching-wise and front office-wise, the AAF,” said David Canter, a veteran NFL agent. “They have a very legitimate front office. … These are real-deal guys. They are as real as any NFL organization’s front office.”

 

David Dunn, CEO of Athletes First, which represents more than 100 NFL players, said he has seen alternative football leagues come and go over the last 25 years, but he thinks the AAF may be different because of the personnel involved. “While I have been skeptical of these leagues in the past, this has the people to make it a success,” Dunn said.

 

NFL agent Harold Lewis said he has sent 25 player clients to the AAF and may send some to the XFL when it gets up and running. “Both of these new leagues are a dream come true for so many people,” Lewis said.

 

Prior to the two startups, the Canadian Football League essentially was the last chance to play pro football for the roughly 1,000 players who are cut from NFL teams each year. A standard deal in the CFL is for two years, but CFL Commissioner Randy Ambrosie said the league has started offering contracts for incoming players that allow them to join the NFL after one season. The “NFL option,” as it is called, had been offered in the past, but not for years.

 

“It has been closed for a number of years and we just decided to re-open it this year,” Ambrosie said. “It’s in response in part to the AAF. It is also a response, in part, to some of the feedback we got from our players this past offseason.”

 

The talent side of the NFL is a small community where GMs and agents talk frequently and have known each other for years. The juxtaposition of Polian and Luck as rivals has agents interested — and somewhat entertained. For his part, Polian doesn’t find it strange at all.

 

“Everybody competes with everybody else in this business,” he said. “I have a lot of friends in the NFL that I competed against for a long time, too. That’s what this business is about.”

Bill Polian and Oliver Luck crossed paths at a football game recently and didn’t lower their pads.

 

Polian, who spent nearly 40 years working in the NFL in various roles, from scout to general manager, was vice chairman of the Indianapolis Colts from 1998 to 2011. Luck, who has held numerous executive positions in sports, is a former NFL quarterback whose son Andrew is the Colts’ QB. They ran into each other at Indianapolis’ season opener against Cincinnati.

 

“Oliver and I said hello to each other at the Colts game on Sunday,” Polian said recently. “Yeah, it was just a pleasant hello.”

 

The subject of the letter (see previous story) — or any other respective AAF or XFL business — didn’t come up.

 

“I saw Bill after the game,” Luck said. “We chatted a little bit. Just pleasantries.”

Scott Dixon celebrates his championship at the season finale at Sonoma Raceway.
Photo: Getty Images
Scott Dixon celebrates his championship at the season finale at Sonoma Raceway.
Photo: Getty Images
Scott Dixon celebrates his championship at the season finale at Sonoma Raceway.
Photo: Getty Images

The 2018 Verizon IndyCar Series season saw several positive storylines develop but also a viewership drop and a title sponsor search that’s extended into the offseason.

The open-wheel series wrapped up its season Sept. 16 at Sonoma Raceway, with Chip Ganassi Racing’s Scott Dixon winning his fifth championship in CGR’s No. 9 PNC Bank Honda.

IndyCar built on recent momentum with another packed crowd for the Indianapolis 500 that was slightly larger than last year’s 300,000 attendees; it introduced a new spec aero package designed to produce better racing and lower costs for teams; continued to draw strong attendance at most races including its return to Portland; landed a new three-year media rights deal with NBC Sports; and is primed for year-over-year growth in the number of teams, with new entrants including Harding Steinbrenner Racing and possibly McLaren Racing.

Still, in the final year of its bifurcated media rights deals with ABC and NBC, viewership fell 10 percent, albeit with that figure dropping to just 3 percent if excluding the Indy 500, which was down about 7 percent in viewership from last year (from 5.27 million viewers to 4.91 million).

IndyCar CEO Mark Miles said the series is confident that NBC is going to increase those figures next year. “There’s a temptation on our part to just look forward to what we think will be a stronger next year, but I think we held our own,” Miles said. “Down 3 percent (minus the Indy 500) — I think most live sports licensors would take that.”

Without a lucrative media rights deal, IndyCar is still not yet profitable, Miles allowed, though Indianapolis Motor Speedway is profitable. Exact figures were not available, but Miles added that the series is heading in the right direction via increased sanction fees from tracks, among other revenue streams.

As for scheduling, IndyCar continues to see a renaissance of sorts in returning to formerly longtime venues that had fallen off the schedule. IndyCar saw robust crowds again at Road America and Gateway Motorsports Park, both of which rejoined the schedule in recent years, while it saw an estimated crowd of 40,000 at Portland International Raceway, which rejoined the schedule this year. The one failure in terms of returns to iconic venues was ISM Raceway near Phoenix, whose market did not respond. The track was dropped from next year’s schedule and will be replaced by Circuit of the Americas.

First Look podcast for Sept. 24, 2018:

The series continues its title sponsor hunt and is not believed to have an imminent deal. It recently started working with CSM Sport & Entertainment on the hunt. Miles reminded that the series did not unveil Verizon as Izod’s replacement for the 2014 season until just before that campaign began.

IndyCar also is working on landing new partners in official categories that don’t involve the series title sponsorship, and sources have said that India-based IT company Infosys has been weighing a deal to become the series’ official technology partner.

“I’m not so focused on the timing and more on the levels of interest,” Miles said. “We’ve got a few really good conversations going on and hopefully we’ll get an ideal title sponsor going forward.”

Brent Dewar will step down as NASCAR president and transition into an advisory role.
Photo: Getty Images
Brent Dewar will step down as NASCAR president and transition into an advisory role.
Photo: Getty Images
Brent Dewar will step down as NASCAR president and transition into an advisory role.
Photo: Getty Images

Brent Dewar’s confirmation that he’s stepping aside as NASCAR president is the latest development for a leadership group already in flux.

 

The move comes more than a month after NASCAR indefinitely suspended Chairman and CEO Brian France, who most industry executives believe will not return to his old role.

 

NASCAR announced that COO Steve Phelps will replace Dewar, whose role was reduced in recent months. Phelps will become NASCAR president on Oct. 1; Dewar will remain with the company through the end of the year and then move into a senior consulting and advisory role.

 

Dewar was hired in 2014 by France, who NASCAR suspended in August after he was charged with driving under the influence in the Hamptons, on Long Island. France has pleaded not guilty and is awaiting his next court date.

 

A growing number of well-placed executives at or close to the sanctioning body say all indications point to France not returning to his prior position. NASCAR declined comment.

 

First Look podcast for Sept. 24, 2018:

Since France’s arrest, his uncle, Jim France, has stepped up from his vice chairman role into that of interim chairman and CEO. Jim France has kept a low profile and not spoken publicly.

 

Jim France is not expected to hold onto the expanded role permanently, and sources say that NASCAR has a new CEO search quietly underway.

 

One name that had been speculated before Dewar’s announcement as a possible new CEO was IndyCar executive Jay Frye, who has helped oversee a rebound of that series. However, IndyCar CEO Mark Miles, who speaks frequently with Frye, told Sports Business Journal last week that he expects Frye to be back with IndyCar next year.

 

Phelps’ name often surfaces as well. Last week’s announcement marked the third promotion for him this year, underscoring how his stock has been rising rapidly with the France family.

Editor’s note: This story is revised from the print edition.

Three of the league’s co-founders plus COO Andy Dolich (white shirt) welcomed Joe Montana aboard.
Photo: Courtesy of FCFL
Three of the league’s co-founders plus COO Andy Dolich (white shirt) welcomed Joe Montana aboard.
Photo: Courtesy of FCFL
Three of the league’s co-founders plus COO Andy Dolich (white shirt) welcomed Joe Montana aboard.
Photo: Courtesy of FCFL

Football legend Joe Montana is investing in a new startup football league, but not one of the more traditional spring offerings — the XFL and the Alliance of American Football — that have attracted great attention in recent months.

Instead, he is investing his money — and his time, as chief strategic adviser — into the Fan Controlled Football League (FCFL), which plans to launch Memorial Day 2019. The league is set up to allow fans to control most aspects of the eight teams, from drafting players to calling plays. The actual game is designed to last no more than 90 minutes.

“There is room for something new and different, and I haven’t seen anything like this before,” Montana said. “As much as I love the NFL, … it’s hard to get people to sit still. Unless it is … two really good teams, it is hard to sit and watch for three, three and a half hours all the time.”

Sohrob Farudi, FCFL co-founder and CEO, said that what distinguishes his league from the AAF (also set to launch in 2019) and the XFL (slated for 2020), is that the FCFL is akin to a live version of the popular “Madden” video game series.

“It’s an incredibly tough business to make work in the traditional sense. Obviously a lot of spring leagues have come and gone,” Farudi said. “We don’t even really consider these guys real competition for the simple fact we think we are in a different sport altogether; we are creating a real-life video game.”

The FCFL is also hiring Andy Dolich as chief operating officer. Dolich, who has had top executive roles with the San Francisco 49ers and Oakland A’s, called FCFL a disrupter that gives “fans the ultimate driving wheel.”

The FCFL was born out of the Indoor Football League’s Salt Lake Screaming Eagles, who in 2017 ranked third in offense with fans calling the plays through a smartphone app (the Eagles are folded into the new FCFL).

The FCFL’s planned innovations, including a running clock, are designed toward luring attention-challenged millennials.

“Basically, this is a combination of esports, fantasy and real football,” said Ken Rosen, vice president of original content at IMG, the FCFL’s production company.

The eight teams will play a three-month season at a 50,000-square-foot production studio in Las Vegas with a full-sized football field. At most 1,500 fans can attend, free of charge. Most games will be streamed on Twitch as part of a two-year deal, with one potentially on a linear network. The FCFL’s sponsorship and TV business is handled by CAA Sports.

Fans get crypto tokens for participating, and their voting power increases based on their engagements. Sohrob foresees a fan with enough earned tokens calling a play (rather than having a vote).

Montana’s role is part football adviser and part cheerleader. The Hall of Fame quarterback, who has technolgy investment funds, will tweet during games and help recruit celebrity captains for each club. He was approached by other leagues about investing but said of the FCFL, “This game seems to be right for me.”

Photo: Courtesy of p1440
Photo: Courtesy of p1440
Photo: Courtesy of p1440

A year after refusing to sign an exclusive contract with the only surviving American beach volleyball tour, the sport’s most famous player will launch her own circuit this week. She insists it’s not a competitor.

 

Three-time Olympic gold medalist Kerri Walsh Jennings’ p1440 tournament series comes out of the gates Sept. 28-30 at San Jose’s Avaya Stadium with a $300,000 prize purse, which is bigger than any single stop on the AVP tour she spurned.

 

The p1440 tournament is just one part of Walsh Jennings’ business, which includes a wraparound music and lifestyle festival on site, along with plans for a subscription-driven health and wellness digital vertical. P1440 offers athletes the prospect of more per-event prize money without asking them to forego other events, and the website notes it is “created with athletes in mind.”

 

“We see ourselves as an enhancement to the sport, and ideally a rising tide lifts all boats,” Walsh Jennings said. “The more opportunities there are to make money, the more events there are in the sport, the better it is for athletes and awareness.”

 

In 2017, Walsh Jennings refused to sign a new four-year contract with the AVP, arguing that it wasn’t offering enough prize money to expect players to be exclusive. This year, the AVP gave out $1.46 million in prize money spread across eight stops. Before it went bankrupt in 2010, the old version of the AVP peaked at $4.45 million over 18 events in 2008, according to BVBinfo.com.

 

The distinctive name of Kerri Walsh Jennings’ volleyball startup comes from the number of minutes in the day. She and her husband Casey Jennings say their way of life is to live all of those minutes “with purpose.”
The distinctive name of Kerri Walsh Jennings’ volleyball startup comes from the number of minutes in the day. She and her husband Casey Jennings say their way of life is to live all of those minutes “with purpose.”
The distinctive name of Kerri Walsh Jennings’ volleyball startup comes from the number of minutes in the day. She and her husband Casey Jennings say their way of life is to live all of those minutes “with purpose.”

The first four events of the p1440 tour will total $1.2 million in prizes.

 

“The No. 1 [women’s] player in America made $38,000 last year, so you can imagine what No. 5 or No. 10 makes,” Walsh Jennings said. “No one wants handouts; they just want an opportunity to play.”

 

AVP owner Donald Sun, who acquired the defunct league out of bankruptcy in 2012, said “prize purse shows just one aspect of growth and success.” He pointed to a new distribution deal with Amazon, the start of a developmental league and the return of a Hawaii event as signs of progress.

 

While the AVP remains far off its prize levels of the pre-recession glory days, Sun said his emphasis is on sustainability and the long term.

 

Walsh Jennings acknowledges she does not expect p1440 to be profitable in the near term with the larger purses and festival concept, but could not say when she projects profitability. Financial backing is coming from co-founders Kasia Mays and Dave Mays, of logistics company Landmark Global. (Walsh Jenning’s husband and fellow pro beach volleyball player Casey Jennings is also a co-founder.)

 

Walsh Jennings recently hired WME to represent her personal brand and assist p1440’s launch, possibly by aiding sponsorship sales.

 

The p1440 season doesn’t conflict with the AVP tour, but any player who wants to pursue the p1440 prize pool will jeopardize his or her AVP contract. Sun said the four-year deals that AVP players signed in 2017 have not been amended recently. At press time, at least 18 athletes currently listed as AVP players were billed as participants in p1440.

 

P1440 will go to market with a key distinguishing factor compared to the AVP: It will charge admission, $40 per day and $80 for the three-day event. That price includes concerts, fitness talks, yoga and meditation sessions, cooking demonstrations and other experiences.

This week, Executive Editor Abe Madkour and writers Bill King and Adam Stern have an in-depth discussion on the issues facing NASCAR, IndyCar and F1.