Published October 03, 2011
Here's our weekly look at the intersection of sports and business:
Major League Baseball Playoffs
Major League Baseball’s playoff teams weren’t decided until the final two games on the last day of the regular season, leading to unbelievable finishes for Tampa Bay and St. Louis. However, if Commissioner Bud Selig gets his way, we may never have this type of excitement again. Major League Baseball could add a second wild card team in each league as soon as next season. The two wild card teams would then hold a one-game playoff to determine who advances. Had the change been in place this season, the playoff teams in each league would have been determined a week ago.
So why would Major League Baseball fix a formula that isn’t broken? Money. The league could make tens of millions of dollars every year by hosting a wild card play in game. In fact, TV networks prefer one game to a play in series because of the added intrigue.
Bottom Line: While people may question the new format – especially given how this year played out – it’s worth remembering that not all seasons will end this crazily. And if nothing else, maybe the new rule can help teams like the Pirates make the playoffs.
NHL Season Opening
The NHL drops the puck on a new regular season tonight, and despite the turbulent economy, the league’s business is tracking upwards. This first year in the league’s new 10-year, $2 billion TV rights deal with NBC Sports Network. At an average of $200 million annually, the deal far exceeds the previous record of $120 million per year that ESPN paid from 1999-2004. The NHL's last deal with Versus was for $77 million annually, plus a revenue-sharing deal with NBC.
The NHL also generated a record $2.9 billion in league-wide revenue last season, a 7.4% increase from 2010. The jump in revenue is being attributed to several new sponsorship deals and growth within the league’s merchandise and licensing divisions.
Bottom Line: The man that deserves the most credit is Commissioner Gary Bettman, who has overseen exponential revenue growth since taking the league’s top job in 1993. The NHL has bounced back magically from the lost 2005 season.
NBA Players Host Exhibition
As the lockout drags on, one thing basketball fans haven’t been denied is seeing their favorite players in action, as most have tried to keep in shape via a slew of exhibition games.
The most star-studded exhibition takes place the night of Saturday, October 8, in South Florida, when Miami Heat teammates LeBron James, Dwyane Wade and Chris Bosh host a charity game at Florida International University’s 5,000-seat U.S. Century Bank Arena. The game will pit Nike-sponsored players James, Bosh and Kevin Durant against Jordan Brand players Wade, Carmelo Anthony and Chris Paul, with all proceeds going toward South Florida educational concerns.
Bottom Line: So far, the body of NBA players remains unified – both behind their union chief Hunter and in the desire to keep their own bodies in ready condition. The players have been busy off the court as well. Durant began production on a major Warner Bros. film with a basketball subplot, while McDonald’s announced that James will star in ads for the annual McDonald's Monopoly promotion.
NBA Arenas of Concern
The two biggest losers in the event of a prolonged NBA lockout: arenas and TV networks. In such cities as New York and Los Angeles, shared tenancy with NHL teams will keep arenas full of fans even in the event of a lengthy lockout. Other cities are facing major financial drains, with little time to book the kind of other concerts and major events that draw lucrative crowds. The Golden State Warriors and Orlando Magic, two teams playing in government-owned arenas, must pay rent regardless of whether games are played.
On the TV side, a cancelled NBA season could cost networks more than $1 billion in lost advertising revenue. In particular, regional sports networks could be hit hardest by a lost NBA season because unlike national networks, they don’t have enough quality backup programming to fill the time.
Bottom Line: For all of the talk about big-market vs. small-market teams, these are just two more reasons that prove not all teams are created equal. If the lockout drags on, some teams will be at more of a financial disadvantage than originally expected.
Months after the initial announcement, FC Barcelona’s General Assembly ratified the club’s five-year, $225 million jersey sponsorship deal with the Qatar Foundation. Despite the magnitude of the deal, some Barcelona assembly members were upset the club was selling jersey advertising for the first time in its 112-year history. I’m sure those dissenters will get over the “tradition” once the multimillion dollar checks start rolling in.
Though soccer fever hasn’t caught on in the States just yet, EA Sports saw its best presale figures in its history for the FIFA 12 video game, according to Eric Fisher of SportsBusiness Journal. More than 800,000 people bought the game in advance, a 108% increase over the 2011 version of the game. FIFA is EA Sports’ best selling video game franchise, topping the iconic Madden NFL series.
Bottom Line: For all of the trouble international soccer has had catching on in the States, the EA Sports FIFA video game series proves that there is a market for the sport. MLS should do more to align itself with the game on a yearly basis.
Rick Horrow is the "Sports Professor," and is the Sports Business Analyst for Fox Sports. He has been the Visiting Expert on Sports Law at the Harvard Law School, and has authored "When the Game Is on the Line" and "Beyond the Scoreboard: An Insider's Guide to the $750 Billion Business of Sports." His show "Beyond the Box Score" is posted on a weekly basis on FoxSports.com, and the latest emerging trends in sports business can be found at www.horrowsports.com.