15 to Watch (Week of Sept. 27)
#BizBall trends to watch
Sports Business Insider Rick Horrow takes you off the field to detail this week's top #BizBall trends to watch...
Superstar Spieth wins FedEx Cup and $10 million additional bounty... The “official” PGA Tour season ended Sunday at the Tour Championship in Atlanta. The President’s Cup in Korea formally finishes the season, but most would agree the drama ended Sunday. Spieth winning over $20 million as 2015 prize money -- the most ever in professional golf. While Spieth is still well behind Tiger Woods' $109.8 million career earnings on the course, he is well ahead of the pace that Tiger Woods set early in his career. This year more than doubled the $10.9 million record for a single season that Woods set in 2007. At 22 years old, Spieth earned almost 10 times the $2.9 million in career earnings that Woods had at the same age. That pushes his 2015 on-course earnings to over $22 million. He is also the youngest player since 1929 to win five events in a year. Represented by Lagardere Sports, Spieth continues to generate substantial off-course endorsement monies through AT&T, Under Armour, and others. At this pace, Spieth will destroy Woods’ record for most career earnings. More importantly, the Tour seems to have completely recovered from a “Tiger-less” stretch -- with Spieth, Rory McIlroy, and Jason Day leading the “business” well into the future.
New racing sponsorship
Sunoco Signs on at Daytona... Daytona International Speedway has signed Sunoco as the sponsor of its fourth "injector" entrance that is being built of as part of the $400 million Daytona Rising renovation project. The four injectors had asking prices of $2-2.5 million annually over 10-15 years. The other three previously announced injector partners are Toyota, Florida Hospital, and Chevrolet. A unique activation method for sports sponsorships, each partner is being allowed to design their entranceway however they see fit. Chevy’s entrance will resemble a car dealership, while Florida Hospital’s will feature healthy concessions. Sunoco plans to design its entrance in a way that recreates the feeling of being on pit road or in victory lane during the middle of or after a race. The Daytona Rising renovation will include expanding the track’s grandstand, widening the concourses, and adding concession stands, all in an effort to enhance the fan experience at races. The upgrades also are expected to boost parent company ISC's annual revenue at the track by $20 million. As the facility opens during Speedweeks 2016, it should revolutionize the perception of racetracks into motorsports/entertainment facilities. Look for Super Bowl 50 in Santa Clara and Daytona Rising in Daytona to be the two major sports business events of early 2016.
Tablets on the field
At the Crossroads of Sports & Technology... Several MLB teams including the Pittsburgh Pirates, Cincinnati Reds, and St. Louis Cardinals have been using iPads in the dugout during games this season under strict guidelines set up by MLB. One of those guidelines is that the iPads cannot be connected to WiFi during the game, so all information on the device, such as scouting reports, must be downloaded before the game. Despite the limitations, users such as Cardinals coach Mike Matheny said that using the iPad has cut some prep work in half. While the MLB has been slow to adapt tablet usage, all NFL teams have Microsoft Surface Pros on the sideline through the league’s sponsorship deal with the tech brand. Microsoft in 2013 committed to spending $400 million over five years through its partnership with the league. However, like MLB, the tablet’s capabilities are limited. Coaches and players can only use tablets to look at still pictures from previous plays. Tablets replaced binders filled with black-and-white photographs in 2014. In any event, look for teams to continue to adopt tablet technology in the years to come. Teams in all sports grapple with new technology -- how to use it, and how to gain a competitive edge. Look for leagues to provide identical equipment to all of their teams (preferably through sponsorship deals with technology companies), and draft specific usage and implementation rules around them -- to ensure a level playing field.
Daily Fantasy Sports Report... A category that didn’t even exist a few years ago, Daily Fantasy Sports today is one of the biggest advertisers on TV. The two biggest players in the space, DraftKings and FanDuel, have combined to spend $500 million on advertising already this year. Across the NFL’s TV partners -- CBS, ESPN, Fox, NBC and NFL Network -- the companies have spent $200 million. Most of the money has come from venture capital funding, as the two daily fantasy leaders fight to acquire new customers. While more than 50 million people are believed to play fantasy sports, only 1.5 million play daily fantasy.
Just doing it
Nike Continues to Grow in Domestically and Internationally... This past week Nike came out with its Q1 report in which it “posted a 23% jump in quarterly profits and particularly strong sales gains in China,” according to Germano & Stynes of the Wall Street Journal. The sportswear company reported a $1.18 billion three-month profit to begin fiscal year 2016, as sales rose 5% from a year earlier to $8.41 billion. Nike reported that its global sales rose 14% last quarter, and China led all regions in revenue growth, as revenue jumped over 30% to $886 million. In what used to be a tough spot for Nike to succeed, China is now a popular, thriving, and growing market for the company to tap into. Domestically, Nike saw a revenue increase of 3% for Converse, thanks in part to the new Chuck II’s that released earlier this year. Companies are expanding their revenues in all contexts (especially abroad): Retail revenue in all continents; transmission revenue and capability with Globecast and other hi-tech entities; league and team values “across the pond.” This trend will obviously continue.
Bucks getting busy
Bucks Continue to Move Forward in Arena Deal... Construction in Milwaukee will begin as soon as possible on the Bucks new facility after a $47 million city spending plan “won Common Council approval,” the final endorsement needed for a $250 million public financing package that “includes state and county cash,” according to Tom Daykin of the Milwaukee Journal Sentinel. The council voted 12-3 in approval of this plan, a huge step for the city of Milwaukee and the Bucks franchise. The Bucks also need council approval for the $500 million project’s design, with that review likely to occur later this Fall. A big step in this process is the remaking of a 1,243-space parking structure; the old one will eventually be demolished and replaced with a privately financed entertainment center with restaurants, taverns, and possible retail space. It looks like the arena is a “done deal” (if that is ever possible in the turbulent world of facility development). The public revenues are generated primarily from income taxes on NBA players who would not be contributing but for the arena. Even former presidential candidate and Wisconsin Governor Scott Walker can certainly support this plan.
Gaming league on the horizon?
eSports Beginning to Make Headlines... Two of sports media’s largest companies have teamed up with the hopes of tapping into a largely untouched demographic: Young male gamers. With the world of eSports growing at an exponential rate, now more than 205 million people watch eSports worldwide, Turner Sports and WME-IMG officially announced their partnership with the intention of making a new competitive gaming league. While details of this partnership have yet to be announced, this deal has been under work for the past year and is expected to be a long term one. WME-IMG Chief Content Officer Mark Shapiro said, “I don’t think any property has a better hold on that young male audience than eSports. While it has been consoles and online and in-arena up until now, adding that last component of such a powerful medium as television to the equation will ultimately take this to another level.” This effort has the best of all worlds: Fantasy, league camaraderie, “skillful” outcomes, young demographics, advertising benefits. Look for this to expand wildly in years to come.
Investigation of Sepp Blatter Continues... The FIFA scandal involving former FIFA President Sepp Blatter has gone from bad to worse. Swiss authorities have now opened an investigation on Blatter with “suspicion of criminal mismanagement and misappropriation,” according to Sam Borden of the New York Times. The case involves a contract in which the former president is “said to have signed that assigned valuable World Cup television rights to the control” of former CONCACAF President Jack Warner. The new charges "accuse Blatter of violating his fiduciary duty to FIFA in his role as president by signing the contract in 2005, which it called 'unfavorable to FIFA.'” All of this comes after Blatter was pressured into stepping down from his position; he became the centerpiece of a massive corruption scandal of soccer’s top officials’ worth over $100 over two decades, and now is also being accused of making a “disloyal payment” of just over $2 million to UEFA President Michel Platini. The investigation has been multinational from the start, but Switzerland is intensifying its criminal searching as well. Just as FIFA makes its “unpopular” decision to move the 2022 World Cup to November/December in Qatar, the Blatter investigative heat intensifies.
NHL's turn to play disciplinarian
Evidence Tampering in Kane Case Causes Confusion... In what has already been yet another long, strenuous, and confusing case of alleged sexual assault against a professional athlete, Patrick Kane’s situation took an unexpected turn when it came out that a police evidence bag in the case “had been tampered with.” But the Hamburg (NY) Police Department said that no evidence “had been tampered with under its control.” All while this is going on, Kane did not travel with the team in their preseason game against the Detroit Red Wings at Joe Louis Arena, but the NHL “is backing the Hawks’ decision to put Kane on the ice” while he sits in limbo during the ongoing investigation. Many have suggested that the NHL launch its own independent investigation against Patrick Kane, similar to what the NFL did during the Ray Rice incident that found him guilty of suspected abuse. The creation of a uniform, comprehensive, transparent domestic abuse policy is clearly easier said than done. How does a league process relate to a police investigation? When does the league decide to step in with an investigation as the justice system evolves? What standard of evidence should prevail? The NFL has dealt with all of these questions and more after Ray Rice. Now it might be the turn of the NHL.
Only one NFL team destined for LA?
NFL Reportedly Wants One Team in LA... After planning a move to potentially bring not one, but two NFL teams to Los Angeles, the league may have had a change of heart. According to a source cited by Mike Florio of Pro Football Talk, the NFL “may ultimately move only one team” to LA, and that would “happen not as a short-term thing, but as an indefinite move that could result in a second team never going” there. It is suspected that if only one team were to move to Southern California then it would be the St. Louis Rams, as owner Stan Kroenke has already purchased land and has plans to build a one-team stadium in Inglewood. This move would complicate things for the San Diego Chargers, a team that is looking to move into a new stadium. This shift in mindset to only wanting one team in LA stems from the league’s “intense desire to get it right” by not oversaturating the number two market in the US. Nothing has changed: Oakland, St. Louis, and San Diego have the “incumbent advantage” to complete their respective stadium processes by roughly the end of this season. At that point, there should be a rapid deployment of “musical chairs” by the NFL to resolve all uncertainties by Super Bowl 50 in early February.
New endorsement deal for Curry
Fanatics Authentic Signs MVP Curry... 2015 NBA MVP and NBA champion Stephen Curry of the Golden State Warriors just signed an exclusive autograph and memorabilia deal with Fanatics Authentic; the company wants to capitalize on Curry’s rapid rise to stardom around the world. While Curry’s new multi-year contract with Fanatics does not preclude him from signing for fans for free, this new deal will include signed shoes and jerseys, as well as game-worm memorabilia. Fanatics Executive Vice President Victor Shaffer said, “There was no question that after the MVP and the title, the velocity of orders picked up. But we also saw that his fan base was expanding way beyond his traditional markets.” Fanatics add depth to their already talented roster with the addition of Curry, they have exclusive contracts signed with Cubs 3B Kris Bryant, 49ers QB Colin Kaepernick, Red Sox DH David Ortiz, Broncos QB Peyton Manning, Capitals LW Alex Ovechkin, and Spurs PG Tony Parker. Fanatics has chosen quality over quantity in previous years. Curry is no different. His Q scores, likeability index, and Power 100 ranking are all consistently higher than ever before. Look for the annual Horrow Sports Ventures Power 100 to be released in mid-October.
Rome vs LA for 2024 Olympics?
2024 Olympic Bids Heating Up... In a plan that has largely remained a mystery to those surrounding it, new details have emerged about Rome’s bid for the 2024 Olympics. Bid chair Luca Cordero di Montezemolo recently revealed a list of “iconic venues” that will take “full advantage of Rome’s historic settings and Italy’s television-friendly backdrops.” While it is still in the works, it is reported that cyclists would finish the road race with a “sprint on the majestic Via dei Fori Imperiali,” sailing would take place off Sardinia, Sicily, or the Amalfi Coast, and the marathon route would run alongside Rome’s synagogue and mosque to “promote interfaith peace.” In regard to Rome’s readiness, Montezemolo said, “We can do the opening ceremony and athletics tonight, (we’re) ready. Swimming tonight... 70% of the venues are existing.” Meanwhile in Los Angeles, USOC CEO Scott Blackmun feels the Americans are deserving of being given the bid because 85% of the venues are “already in place, along with a stellar Olympic pedigree” as a two-time host. He also noted that if they want to make this push and campaign a success then “We need everyone aligned in this effort. We need to find the right formula to national LA 2024; to make it America’s campaign and make sure all of our constituents, their families, and friends are engaged in support of LA’s quest.” Olympic selection may be more competitive off the field than on. Cities like Rome and LA will compete against Paris, Hamburg, and Budapest for the selection in 2017. Look for the Los Angeles bid to generate widespread support and optimism throughout America.
Mission Bay arena road bumps?
Warriors New Arena Concerns... With plans of building a brand new, privately financed arena to host the 2015 NBA Champion Golden State Warriors in Mission Bay, Warrior executives may be forced into a tough situation with an unexpected road bump. A group of 20 scientists from the University of California–San Francisco sent a letter to Mayor Ed Lee voicing “familiar concerns” that the Warriors’ new arena “will make Mission Bay less alluring to biotech researchers and that it will create a traffic mess that endangers people needing to get to the three UCSF hospitals nearby” when the 18,500-seat arena opens to host nearly 200 events per year. While the Warriors arena will be privately funded, public support remains critical for infrastructure, retail development, and other aspects of the entire project.
Sock game strong
Stance Bringing Fashion to NBA... After signing on to be the NBA’s official on-court sock provider, Stance is “turning athletic socks into a big fashion business” with the company’s popularity being the “result of savvy partnerships and marketing, but the socks are also simply a product that customers consider a huge improvement over existing options,” according to Evie Nagy of Fast Company. With the exceptions of Christmas and a few other special events -- when the NBA came out with themed socks and gear -- players were limited to wearing the generic NBA socks. But with a large investment in the company from Miami Heat G Dwyane Wade, Stance has catapulted itself onto the scene and throughout the league, giving players a new, unique, team-specific sock option that they did not have before. The Stance sock deal should send a positive message to other smaller companies seeking high visibility and exposure in exclusive categories. Look for all sports teams and leagues to use this as an example of generating new corporate support in previously untapped areas of corporate interest.
Toronto tickets on fire
Blue Jays Playoff Push Drawing Record Crowds... This past week’s three-game series between the New York Yankees and Toronto Blue Jays, one in which the Jays clinch their first playoff birth in 22 years, averaged a staggering 1.8 million viewers per game on the Canadian-based network, Sportsnet. The net’s season-to-date average comes in at 933,000 viewers, marking the highest season average ever for Sportsnet and up 59% from this point last year -- all thanks to Jays’ rapid rise to success this season in the always-competitive AL East. When the Jays actually clinched the postseason birth, ticket sales went off the charts. Four minutes after playoff tickets went on sale at 9:00am ET, 4,911 "had been sold, 9,000 were in transition, and 25,000 people were in the queue." Around 12:20pm, 70,000 people "were waiting." The Blue Jays "declared the Division Series tickets sold out" at 11:40am, and "just as quickly, they were being resold for double and triple the original price." Kudos to Rob Manfred to lead the seamless transition from Commissioner Bud Selig. Revenues are up; labor peace abounds; franchise values increase; and markets like Chicago, Toronto, Houston, and others are re-energized as a consequence of this year’s race.