Sports Business

Sports Business '15 to Watch': The economics of baseball are evolving

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Sports Business '15 to Watch': The economics of baseball are evolving

1. We’re still stuck in the NFL preseason, but relief is in sight. HBO's “Hard Knocks” show continues to generate interest. And the featured Houston Texans are proving they’re just as deft at using their social media real estate to promote the show as they are on the football field. According to data compiled by MVPindex, the Texans are the 16th ranked NFL team on social media. They are currently the eighth most followed NFL team on Instagram with 459,000 followers, the 13th most followed NFL team on Twitter with 644,000 followers, and the 16th most liked NFL team on Facebook, with 1.97 million page likes. As an entity, the Texans have over three million direct audience members to which they can promote Hard Knocks content. Moreover, episode two of “Hard Knocks: Training Camp with the Houston Texans” handed HBO 831,000 viewers, up 23 percent over last year’s second episode performance. The Texans episode two also returned to the series’ tried-and-true formula of focusing on rookies, including DB Charles James, WR Jaelen Strong, LB Lynden Trail, and CB Kevin Johnson, repped by Lagardere Unlimited and selected by Houston as the 16th pick in the 2015 NFL Draft. As for veterans, it’s a sure bet every episode will feature superstar J.J. Watt, and brash LB Brian Cushing.

2. There are opportunities aplenty for digital sports content creators. Sportsmanias (a sports news aggregator site that combines a dynamic mix of professional beat writer news with team and athlete social media content) combined with the Knight Foundation to host the definitive digital media summit in Miami this past Friday. Pew research shows 2.1 billion people had at least one social account in 2014, and in December 2014, the top eight social networks drove 31 percent of all web traffic. As the sports landscape goes digital, 66 percent of devoted fans go online at least once per day for sports related content. A large portion of time sports fans spend online is related to fantasy. According to the Fantasy Sports Trade Association, 57 million play fantasy sports in the USA and Canada. Daily Fantasy players are power media consumers. A DraftKings survey found that 70 percent of respondents said their sports consumption increased after they began playing daily. A FanDuel survey found that 50 percent of its users watched more sports on TV as a result of daily fantasy play. The panelists included digital experts from all major networks, emerging companies, technical providers, opinion leaders, and ethicists. I was fortunate enough to host the event, and it should provide some unique thought leadership in an incredibly diverse and expanding industry!

3. For the first time in a long time, the NCAA gets a major legal win. The National Labor Relations Board dismissed a petition from Northwestern football players that would have allowed them to unionize. The NLRB in its decision held that asserting jurisdiction would not promote labor stability due to the nature and structure of D-1 football. Had the board affirmed a 2014 decision made by a regional director, it would have opened the door for players to unionize at other schools. As a practical matter, the Power Five conferences have already provided governance leadership to allow schools to provide key new benefits for players: guaranteed scholarships, stipends, superior medical care, etc. Ironically, it may actually be the fact that players need unionization protection much less today as the NLRB took its action. Look for this area to evolve significantly in months to come.

4. The economics of baseball are evolving, and the numbers are staggering. As originally reported by ESPN, but in an article found on the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, with the acquisition of Chase Utley, the Los Angeles Dodgers are close to becoming the first MLB team with a $300 million luxury-tax payroll. The trade raised the Dodgers' projected payroll for tax purposes to about $298.5 million. Performance bonuses for other players and end-of-season award bonuses could push the Dodgers over the $300 million milestone. Tip of the iceberg as large market teams are driven substantially by stadium processes, mega season ticket sales, suite revenues, and (most importantly) mega TV deals – unshared with their baseball brethren.

5. As more advertisers look to celebrity endorsers to promote their brands on Twitter, one NBA star costs a lot more money than his peers. A sponsored tweet from Cleveland Cavaliers star LeBron James is valued at $140,000, or $1,000 per character, according to Opendorse, a company that specializes in social media campaigns for athletes. LeBron more than doubles the value of the next highest U.S. athlete, the Oklahoma City Thunder’s Kevin Durant, whose tweets are worth nearly $67,000 each. This metric may be industry defining, as we now have a method to evaluate the commercial value of tweets. Look for corporations, agents, and athletes to jump on this process rapidly!

6. With college football season getting underway, a major school signs a major marketing deal. UCLA has decided to renew its marketing partnership with IMG College instead of joining the Pac-12’s new multimedia rights business, according to Michael Smith of SportsBusiness Journal. The deal is valued at $150 million over ten years, or triple what the Bruins got in their old deal. The school and IMG College have been partners since 2005. Every college president, athletic director, media expert, and conference is currently reevaluating the value of respective media deals. Look for significant increases that relate to traditional television (and the increased value of “second screens,” mobile, Internet, etc.).

7. One NFL team is drawing a line in the sand when it comes to public demands for building a new stadium. The Washington Redskins refuse to consider a name change in order to get a new stadium built. The Redskins’ FedEx Field lease runs through 2026, but team officials reportedly already have begun discussions about designs and the site, with possible locations in D.C., Maryland, and Virginia. D.C. in particular appears unlikely to welcome the team if it keeps the Redskins moniker. Redskins naming controversy may have a realistic leverage point as owner Dan Snyder seeks public participation from the District of Columbia, or the neighboring states. In the meantime, all NFL stadiums that were done in the 1990’s or a bit later will soon face renegotiation, renovation, or new structure issues. Stay tuned!

8. With the NFL season just weeks away, league sponsors prepare to roll out new marketing campaigns. Bud Light is launching a new marketing campaign around the start of the upcoming NFL season, selling team-specific cans at retail locations across the country by the end of the month. In all, Bud Light will produce 28 NFL team-related cans for the 28 teams the company sponsors. More than 10 different TV ads have been produced to support the new campaign. A significant part of the $12 billion annual NFL revenue comes from all types of corporate partnerships. As Roger Goodell challenges his staff to increase that revenue number to near $25 billion annually, more companies have been brought into the NFL fold (Hyundai, for example) to generate more revenue in more categories than ever before.

9. Danica Patrick continues to draw new sponsors to the sport of NASCAR. Stewart-Haas Racing signed a multi-year deal with healthy-snack maker Nature’s Bakery to be the main primary sponsor of Patrick’s No. 10 Chevy beginning next season. Nature’s Bakery, which sells products in all 50 U.S. states and 22 countries, replaces GoDaddy as Patrick’s top sponsor. The company will be the primary sponsor on Patrick’s car for 28 of the 36 Sprint Cup races. While terms of the deal weren’t disclosed, SHR was seeking $18 million annually or the rights. Patrick’s deal was more about diversifying the fan base and expanding the demographic than a reward for her past performance. Hopefully for all parties, future performance will justify the new economics in her favor.

10. Baseball pennant races are heating up, but one battle MLB doesn’t want to see is a TV showdown against the NFL. MLB released its schedule for the 2015 postseason. For the second year in a row, the World Series will begin on a Tuesday, avoiding TV conflicts with CBS’ Thursday Night Football and ESPN's MNF. MLB had previously employed a Wednesday-start schedule for the World Series from 2007-13. Should the World Series go at least five games, it will play a November contest for the first time since 2010. A pleasant problem to have – a dynamic baseball pennant race and playoffs competing against a prolific early season NFL schedule. The bottom line is this: Network mega executives understand the value of synergy and cooperation as it relates to increasing the value of the entire industry.

11. The transition from athlete to owner isn’t always an easy one. Michael Waltrip Racing announced that the organization would not field a full-time entry in the NASCAR Sprint Cup Series next season, and that it has granted driver Clint Bowyer a release from his contract at the end of this year. MWR has faced several scandals since entering Sprint Cup competition in 2007, but the team’s lack of on-track success in the last two years proved to be the final blow for its future. Contrasted to Item 9 above (The Danica Patrick deal), the “traditional” NASCAR demographic requires much more creativity and entrepreneurialism to generate long-term future sponsorships in this highly competitive environment.

12. A South Florida franchise has a lot to look forward to this season. As originally reported by the Palm Beach Post, but in an article found on the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the Miami Dolphins have sold nearly all of their 2015 season tickets, and the team expects every regular-season home game to sell out this year. According to team President & CEO Tom Garfinkel, all 47,000 season-ticket packages will be sold by the end of the week. Even with a massive renovation of Sun Life Stadium, 70 percent of tickets cost the same or less as last year. High expectations on the field, Ndamukong Suh, Sun Life Stadium renovation, and 50th Anniversary festivities all combine to substantially increase the value and excitement of the Dolphins in South Florida. More will surely follow suit.

13. Class is back in session and one school is bringing the student back to student-athlete. Florida State University is emphasizing off-field behavior in a new course that’s required for student-athletes. The course, which will be available to all students, will incorporate guest speakers, along with dealing with issues such as domestic violence and drug and alcohol abuse. The course also will teach the athletes how to manage finances in light of the NCAA’s recent passage of cost-of-attendance measures. Clearly, each school has its own responsibility for controlling behavior. While advisers, family, and others bear responsibility, FSU is providing substantial leadership in this area. Kudos to them.

14. When developments don’t go as planned. The Sacramento Kings said that the team's planned 16-story hotel and condominium tower will not be ready in time for the opening of the their new downtown arena prior to the 2016-17 NBA season. The team wanted the hotel and tower to be ready before the first game at the new arena, but the buildings won’t open until sometime in early 2017. The Kings also reduced the number of condo units included as part of the project. Mayor Kevin Johnson, owner Vivek Ranadivé, and Sacramento city experts are committed to the long-term development of this project. Hopefully, this becomes a downtown development success story like similar projects in Oklahoma City, Cleveland, Cincinnati, Denver, Portland, and otherwise.

15. The date makes a big difference. Darlington Raceway officials are optimistic about setting a record attendance mark for its Labor Day weekend NASCAR Bojangles Southern 500 race. The race this year is moving back to its traditional holiday weekend date after being held on Mother’s Day since 2004. Prior to that, the race was held on Labor Day weekend from 1950-2003. The race is expected to draw 75,000 fans. NASCAR continues to tweak the schedule, venues, promotion, television windows, etc. to maximize the opportunity for national growth. Clearly, the Southeast heritage does not automatically mean success in each southern track. In these hard economic times, all parties must work hard to ensure success.

The Daily Line: Week 6 Football Picks

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USA TODAY

The Daily Line: Week 6 Football Picks

The Supreme Court opened the door for sports betting legalization with its May ruling that struck down a 1992 law that banned commercial sports betting in most states. Sports betting is not yet legal in Illinois, but with football season underway, former Northwestern offensive lineman Eric Olson will take a weekly look at the odds surrounding the action on the field.

Eric is traveling this week so Bears producer Paul Aspan will fill in with a weekend of picks. Unlike Eric, he certainly does not have a Masters in Predictive Analytics and his football ‘career’ came to a crashing halt a few Falls ago with the loud pop of a hamstring on a Lincoln Park flag football field. Suffice it to say, you should not expect him to replicate Eric’s 11-1 heater over the last two weeks.

Steelers at Bengals, Sunday 12PM CT

Spread: Bengals -2

Betting Percentage:  62% of bets on the Steelers; 75% of the money on Steelers

The pick: Steelers +2

I just don’t believe in the Bengals. Whether they’re 4-1 this year or 8-0 in 2015, there has to be some psychological impact knowing that your ceiling is the Wild Card game. The Steelers have won six straight games against Cinci, and I’m trying to figure out what exactly the Bengals do well. Yes they score points (thanks for pointing that out).  But their defense isn’t very good, they don’t get off the field on third down and they’re actually middle of the road in every offensive category: passing, rushing, 3rd down…everything outside of the one that matters most – scoring (where they’re 5th) - they’re somewhere between 12th and 23rd in the NFL. It’s not like the Steelers convinced me they’re fixed by beating Atlanta last week, but they do get to the quarterback (they lead the NFL with 19 sacks) and if this is a last score wins game, I’ll take Roethlisberger over Dalton all day.

Bears at Dolphins, Sunday 12PM CT

Spread: Bears – 3.5

Betting Percentage:  61% of bets on the Bears ; 55% of the money

The Pick: Dolphins +3.5

This line jumped from Bears -1.5 to -3 almost immediately, and late in the week it’s creeping higher. Everything points to the Bears this week, which I hate as far as taking their side. The Dolphins offensive line could be down three starters against the best pass rusher in the entire NFL in Khalil Mack. Starting left tackle Laremy Tunsil has practiced on a limited basis this week but is in the concussion protocol and watching his backup Sam Young get destroyed by the Bengals late in the Dolphins Week 5 collapse has to have the Bears foaming at the mouth. Home dogs have been hot (4-0 ATS last week), so I’m going back to that well and counting on the hook to make the difference.

Which brings me to a home dog teaser.

Two 12 PM CT games

  • Dolphins +3.5 vs Bears
  • Raiders +3 vs Seahawks (in London)

 

Two 3:25PM CT games

  • Titans +3 vs Ravens
  • Cowboys +3 vs Jaguars

 

Tease them all up 6 points at +260 odds (a $10 bet would win $26), and it looks like this:

  • Dolphins + 9.5
  • Titans +9
  • Cowboys +9
  • Raiders +9

 

Yes, I’m including the Raiders in my home dogs teaser. Who were the original Raiders? Pretty sure guys like Blackbeard and Jack Sparrow were British as hell. Factor in Mark Davis’ Beatles haircut and the Raiders should feel right at home at Wembley. The Seahawks had their Super Bowl last week, throwing everything they had at the Rams. They appeared to get past the Earl Thomas contract / injury backlash and the Russell Wilson favoritism fall out but this feels like a house of cards that might now just fall apart.

The Ravens – as we discussed on The Daily Line podcast – disgust all of us with their inconsistency. They’re currently 10/1 to win the Super Bowl which is insane, and I can’t not take the points against Joe Flacco with a Titans team that suffered a not all that unpredictable letdown in Buffalo after beating the defending Super Bowl champs the week before.

The Cowboys red zone defense balled out against the Texans but once again Jason Garrett’s (lack of) strategy & job security is already a hot topic in Big D. And speaking of QBs you can’t trust, Blake Bortles made sure to remind everyone last week with a nice little 4 INT game in Kansas City.

And I’ll just add this to the Dolphins: they lead the NFL in interceptions (10) as they suit up against young Mitchell Trubisky. Now that I’ve tried to pounce on the hot home dogs trend (16-6 ATS this season), here’s to hoping it waits at least one more week to regress.

Obscure College Pick of the Week:

Middle Tennessee State vs FIU Saturday 6:30PM CT

Total: O/U: 56.5  

Betting Percentage: 37% Bets, 64% of the money on the Over

The Pick: Over 56.5

To be honest I was just looking for a lopsided discrepancy between the percentage of bets (public money) and percentage of money (sharp money). And I knew I didn’t want to take an under because cheering for no points is no fun. So here we are.

The total opened at 58 and dropped to 56.5. Only 37% of the bets are on the over, but 64% of the money is on the over, so count me in on the over. And if that’s not enough of a draw for you, this is a battle for first place in Conference USA’s East division and features a father-son Coach-QB combo of Rick Stockstill & Brent Stockstill for Middle Tennessee State. Just don’t ask me how (or if) I plan on watching this game on Saturday.

The Daily Line Podcast, Chicago edition : Debut episode

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NBC Sports Chicago

The Daily Line Podcast, Chicago edition : Debut episode

On the debut episode of the Daily Line on NBC Sports Chicago, Ryan McGuffey and Paul Aspan are joined by VSIN’s Joe Ostrowski & Sam Panayotovich to take a look at the Bears and the rest of the NFL thru the eyes of the sports bettor.

How Vegas views the Bears after their 3-1 start and heading into Sunday’s game as a favorite in Miami. Is there any value on the Bears at 25/1 to win the Super Bowl or Khalil Mack at 28/1 to win MVP?

Plus NFL teams that are frauds and for real after 5 weeks. And of course a 6-pack of picks to get you thru the weekend. 

Listen to the full podcast here or via the embedded player below