15 to watch (Week of Aug. 30)
Biz Ball trends to watch this week
CSN Bay Area Sports Business Insider Rick Horrow presents his top sports news/marketing/deal-making/business/corporate/endorsement issues for the week of Aug. 30.
Serena setting up big US Open
The U.S. Open gets underway in New York City. The 2015 U.S. Open is the 135th edition of the tournament. The U.S. Open has made a five-year agreement to increase the total prize money to about $50 million by 2017, with this year’s purse raised to about $42.3 million. Overall attendance for the 2014 edition passed 700,000 for the seventh time in eight years. With Serena Williams looking to capture her first single-season Grand Slam, there’s no reason to think this year’s numbers won’t top last year’s grand total of 713,642 fans. The event will generate an estimated $700 million in economic impact for the New York market over the next two weeks. Economists and analysts should compare the “Serena Williams effect” with a new corporate headquarters coming to town -- it is that prolific. More media, more awareness, more attendance, more corporate partnerships, more activation, and more “overall buzz” as she strives for her first Calendar Slam.
Year 2 of College Football Playoffs
The college football season kicks off Thursday night. 2015 marks the second year of the CFP era in college football. Last year’s initial playoff was a rousing success and generated tens of millions of dollars. Recent conference realignment was driven by money, and it’s clear why. Collectively, the Power 5 conferences generated about $1.5 billion in total revenue in fiscal 2013-14. Last year’s CFP championship game averaged 33.4 million viewers, becoming the first show in cable TV history to top 30 million viewers. While Northwestern football players lost their bid to unionize, their effort to reform college sports has prospered. A majority of schools are offering cost-of-attendance scholarships, with the total across D-1 being about $160 million committed. Auburn leads all schools with $2.1 million earmarked for these scholarships. Year Two of college football in many ways will be more turbulent than Year One -- Power Five recruiting; guaranteed scholarship money; television revenue growth. Maybe most important, five viable conferences (plus Notre Dame) for four playoff spots. Interesting, as always.
NFL ready for DFS?
As college football begins, the NFL has one more week to prep. The key question remains what will happen with "Deflate-gate," as judge Richard Berman has yet to rule on Tom Brady’s suspension. Another big story heading into the season is the growth of fantasy sports. Cisco opined that the number of mobile connected devices surpassed the population in 2014, and the Fantasy Sports Trade Association notes that the average fantasy player spends $465 per year on fantasy. Not surprisingly, DraftKings debuted a new ad campaign built around the daily fantasy site's NFL regular-season offerings.
FedEx Cup focus
The FedEx Cup enters its second week and heads for the Deutsche Bank tourney in Boston. Is it the reincarnation of the Big Three -- McIlroy, Spieth, and now Jason Day? He has won three of his last four events, earning $6 million prize money this year before the Barclays (and another $1.48 million for winning it). It may make us “forget” Tiger Woods (though no one talks about that directly). The FedEx Cup is a bonanza for tour players: The four events create an opportunity for $33 million in prize money, $35 million in bonuses, and a $10 million “windfall” for the overall winner (before taxes!). The mega-agencies shine as well -- a spotlight on Lagardere Unlimited. The company represents 42 players on the PGA Tour, including high profile stars Jordan Spieth, Phil Mickelson, and Keegan Bradley. The firm also reps Davis Love III, who won the Wyndham Championship two weeks ago. The $972,000 in prize money Love III pocketed was far less important to him than the 500 FedEx Cup points he earned, which allowed him to compete in this past weekend’s The Barclays. Remember the controversy surrounding the announcement of the first FedEx Cup and playoff -- tweaking will continue, but we have certainly come a long way.
Live streaming takes a big step for baseball. MLB and Fox are closing in on a local streaming deal that could begin next season, according to John Ourand and Eric Fisher of SportsBusiness Journal. Fox, which holds local media rights for 15 teams, has been in active negotiations with the league for several years over a streaming service. As part of the agreement, MLB is requiring that Fox RSNs use MLBAM as the vendor to manage the live streams through its new stand-alone BAM Tech operation. Also in global media, Globecast has installed the Actus Platform monitoring solution in its media centers. The new implementation will enable Globecast to provide compliance and content quality monitoring to its broadcast clients, including BBC Worldwide. International players continue to generate business success -- Globecast and its new platforms; MLB and its deals with Fox, NHL, and otherwise.
Ballmer changing the game
Local media rights know no limits. Los Angeles Clippers owner Steve Ballmer has turned down a $60 million per-year deal from FS Prime Ticket for the team’s local-TV rights. Prime Ticket, whose deal with the Clippers runs through next season, currently pays the team a rights fee of $25 million a year and offered a 140% increase. If Ballmer follows through on plans of launching his own over-the-top streaming network, he would be the first owner of a major US sports team to deliver games direct-to-consumer via a Web-based service. The move shouldn’t come as a complete surprise. The former CEO of Microsoft, Ballmer pledged to overhaul the Clippers brand when he bought the team last year. Ballmer has pushed the envelope in many ways -- Microsoft, Clippers purchase, prolific rebranding. It may be time for him to lead the “sports rights debate” by injecting live streaming on a comprehensive basis. Stay tuned.
Buy NFL stock
The state of the TV industry is having a big impact on the future of Thursday Night Football. The NFL is reluctant to agree to a Thursday Night Football contract with CBS for longer than a year, primarily because of cord cutting and the changing media landscape. The league has signed two separate one-year deals with CBS to broadcast TNF games. It remains unclear whether the goal is to grow the package on regular TV or to distribute Thursday night games through digital channels. Last year, the $1.43 billion average NFL franchise value increased 23 percent over the previous year, the biggest yearly increase since 1999. Most of it directly reflects the new television rights negotiations that have been ongoing. This also reflects more confidence in the NFL and its ability to create new value in new categories. If the NFL were a stock, buy it!
NASCAR changing pace
This Bud’s for you, but it’s Busch for NASCAR moving forward. Anheuser-Busch next year will switch its lead NASCAR brand from Budweiser back to Busch. The move comes after A-B conducted a comprehensive reassessment of its NASCAR deals, some of which were up for renewal in coming years. The brewer holds a primary sponsorship of Stewart-Haas Racing’s No. 4 Chevy, valued at $11-13 million annually, as well as deals with several ISC tracks. Parallel to the FedEx Cup, the Chase for the Championship begins in earnest, leading to the climax in Homestead in November. A time for corporate activation, entrepreneurialism, and substantial exposure as NASCAR continues to stabilize.
Pace of play changes working
Time flies when you're having fun. The efforts implemented this season in MLB to speed up the pace of play are having significant impact, as the league’s eight-minute decline in playing time is the biggest since 1963. The average length of a nine-inning MLB game has dropped from 3 hours 2 minutes in 2014 -- the first time it had been over 3 hours -- to 2:54 this year. Continued Kudos to Commissioner Manfred. Relatively minor changes have resulted in a more fast paced (and exciting) product. Let’s see if the pace of play continues through the pennant race, playoffs, and World Series.
College football players look to capitalize on their names -- in the future. Top college football players increasingly are filing for trademarks and phrases associated with their names. The NCAA generally restricts players from making money off their athletic success while in school, but by having legal ownership of phrases tied to their brands, players can pave the way for lucrative licensing deals in the future. Ohio State RB Ezekiel Elliott this month applied for trademarks to use his nicknames “Zeke” and “Eze” on merchandise, while Mississippi State QB Dak Prescott applied for the trademark on his name last fall, along with “Dak Attack” and “Who Dak.” College athletes might not be able to make money now, but there’s no reason they shouldn’t position themselves for future earnings. As college football and basketball realign their governance and rules structures, individual athletes (and their “advisors”) position themselves for future gain. The “Johnny football” process when Manziel was at Texas A&M is the tip of a larger “name and likeness” iceberg.
New life for Sun Life Stadium
When the NFL season opens, one old stadium will have a brand new look and feel. The Miami Dolphins unveiled the first phase of their $425 million renovation of Sun Life Stadium. The first phase includes a redeveloped seating bowl and moving seats closer to the field. Phase II, which will be completed next summer, will add HD video boards and a canopy to the stadium. The renovation was supposed to cost the team $400 million, but the price tag has steadily increased. Both industry thought leaders and fans should scrap the term “renovation,” and embrace the new stadium. It will generate a number of Super Bowls, mega-events, and overwhelming economic impact throughout its “new life.” Kudos to Steve Ross and Tom Garfinkel for phasing the process, allowing a “second opening” next August after the “canopy” is installed.
Delta spreading its wings
New sponsorship deals as college football gets underway. Delta announced a series of college partnerships with nine schools, including Duke, Florida, and Michigan. Sports-related activation will include the Delta Celebration Grill appearing at select football tailgates, sponsorship of Midnight Madness college basketball events, and participation in alumni-organized football watch parties. The airline has existing sponsorships with six other schools. Retail deals, naming rights sales, stadium expansion, and the like center the inevitable quest for revenue. Now new sponsorship/partnership opportunities with as many schools as possible are generating revenue for women’s sports, “minor sports,” and the inevitable payment of student-athletes.
Wrap for Waltrip
Here’s one team you won’t see in next year’s Chase for the Sprint Cup. Outgoing Michael Waltrip Racing owner Rob Kauffman announced that MWR would cease operations after this season. Kauffman, who is buying a stake in Chip Ganassi Racing, said MWR couldn't have stayed afloat without his substantial and continued financial support. Kauffman did not indicate how much he has invested into MWR to date. A reminder that sponsorships require constant activation, attention, and evolution. As NASCAR continues to survive and thrive, sponsorships involved in that industry must continue to evolve as well.
Ready for a change?
A first for an NBA team. The Charlotte Hornets’ new broadcast team will make Stephanie Ready the NBA’s first full-time female game analyst. Ready, who also has coached in the NBA D-League in the past, has always wanted to work as an analyst. Previously the team’s pregame host/sideline reporter, Ready was given the expanded role after signing a contract extension with FS Southeast. Over 41 percent of sports fans are female. An obvious recognition of the growing trend, look for women to increase their positions of visibility and leadership in broadcast, team and league administration, and coaching!
Solar in Sacramento
The next generation of sports venues will focus on sustainability. As originally reported by the Sacramento Bee, the Kings’ new arena will be 100% solar-powered, and will use a cooling system that relies on recycled water. The Golden 1 Center will seat 17,500 fans for Kings games and can expand even further for concerts. The $477 million arena is scheduled to open in October 2016. Years ago “environmental responsibility and sustainability” was viewed as the “politically correct” thing to do. Now, as more financial incentives are available, and as more efficient means to save energy actually show up on the balance sheet, look for more and better sustainability methods in the future.