Here's our weekly look at the intersection of sports and business:
Labor Deals
Cooler heads finally prevailed, as NBA owners and players reached a new labor agreement over the Thanksgiving weekend, ending a 149-day lockout that claimed the first seven weeks of the regular season.
The league will have a 66-game campaign beginning on Christmas Day. The labor deal is for 10 years, with both sides having the option to opt-out after six. Per the agreement, the players' guarantee of basketball-related income will be no higher than 51% after being 57% in the last CBA. That amounts to nearly $3 billion over the length of the deal.
Like the NBA, Major League Baseball and its players association reached a collective bargaining agreement last week, signing a five-year deal that ends a string of recent sports league locked outs. Among the highlights in the MLB labor deal are HGH testing, a minimum salary increase, and instant replay expansion. MLB also plans to add a Wild Card team in each league and move the Houston Astros to the American League. The NHL is the next labor deal up for negotiation. Their CBA expires after this season.
Bottom Line: The NHL’s collective bargaining agreement expires September 15, 2012, but after that, we go through a period of relative labor peace. MLB’s new deal expires in 2016, the NFL’s in 2021, and the NBA’s as late as 2022.
NBA Lockout: By the Numbers
The NBA lockout finally is over, and not a minute too soon. Let’s check out the impact of the NBA lockout, by the numbers.
$4-12 million- Each NBA team lost between $500K-$1.5 million in ticket revenue for games cancelled during the lockout. A 66 game season means eight lost home games per team, or $4-12 million.
$100 million- The city of Orlando projects $100 million in economic impact from hosting the 2012 NBA All-Star Game. Losing the game would have been devastating for the local economy.
$480 million- In losing 240 games, the NBA lost an estimated $480 million. Those game – and that money – isn’t coming back.
$500 million- Financial analysts predicted the shoe industry would lose $500 million if the NBA cancelled the entire season. That’s nearly a quarter of the annual basketball shoe market.
Bottom Line: The NBA is a $4 billion business. To put that into perspective, the NBA is a bigger business than Hasbro Toys, JetBlue Airways or MetroPCS. Try imaging one of those companies shutting down operations for a whole year. Glad we won't have to worry about it!
NASCAR in the Offseason
The NASCAR season ended in dramatic fashion last weekend, as Tony Stewart pulled away from Carl Edwards in the final 50 laps at Homestead-Miami Speedway to win his 3rd NASCAR Sprint Cup Series Championship. Taking out the hour-long rain delay, TV ratings were up 12% over last year. Stewart’s win brought huge exposure to his main sponsors Office Depot and Mobil 1. Even though he lost the title, Edwards win big for his marketability. He got Aflac great exposure, and by being gracious in defeat, he boosted his own awareness and likability.
NASCAR’s in a great position heading into the offseason. Goodyear Tire recently extended their sponsorship agreement for the next five years. The deal is valued at $12-15 million a year, and keeps Goodyear as NASCAR’s official tire. Goodyear’s business relationship with NASCAR dates back more than 50 years. Additionally, Speedway Motorsports Inc. has sold out all of its race title sponsorships for the 2012 NASCAR Sprint Cup Series season. It’s the first time since 2008 that the company has sold all of the sponsorships prior to the upcoming season.
Bottom Line: The key is building on this momentum. NASCAR attendance and TV viewership have been slipping in recent years. Could having a new champion for the first time since 2006 buck those trends? For NASCAR’s sake, let’s hope so…
College Football Conference Championships
Even though several college football conference championship take place this weekend, game outcomes are unlikely to have any impact on the BCS national championship matchup. Number two Alabama is idle this weekend, while top-ranked LSU is expected to make the title game regardless of what happens in Saturday’s SEC Championship. So much for the BCS’s slogan that “Every Game Counts.” However, if the games count for anything, it’s for TV revenue and local economic impact.
Because they expanded to 12 teams this summer, the Big Ten and Pac-12 are hosting their first conference championships. The Big Ten’s game between Wisconsin and Michigan State is expected to generate more than $20 million for the Indianapolis economy. Meanwhile, TV rights to Friday’s Pac 12 Championship in Auzten, Oregon, are worth nearly $15 million. Both the Big Ten and Pac-12 games will be on Fox, the SEC game will be on CBS, and the ACC game on ESPN.
Bottom Line: In big time college football, extra games mean big money. One of the main reasons conferences like the Big Ten and Pac-12 expanded to 12 teams was to capitalize on the financial benefits of having a championship game.
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. Watch Rick talk about sports every Monday at 1 p.m. ET with FBN's Tracey Byrnes on "FoxNews.com Live."
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