Bust, Boom, Hope: April 28, 2014

Bust, Boom, Hope: Olympics

Bust: Brazilian authorities have increased the 2016 Rio Olympics budget by 25% in the wake of project delays. The overall cost of the Games has risen to $16.3 billion, not including more than half of the 52 projects or facilities that will be used exclusively for the games and still require approval.

Boom: Nike and USA Track & Field signed a 23-year sponsorship extension valued at more than $400 million. The current eight-year deal Nike signed with USATF through 2016 is worth an estimated $10 million a year. Sources valued the new deal, which runs from until 2040, at more than double that.

Hope: USA Swimming, USA Gymnastics and USA Track & Field are bundling their media and hospitality inventory into a single sales package ahead of the 2016 Rio Games, according to Tripp Mickle of SportsBusiness Journal. The “Trio to Rio” marks the first time since 2007 the NGBs have pooled their sales assets.

What it means: Within Olympic circles, concerns reportedly are growing more serious that Rio will not be ready for the 2016. For all of the good intentions in awarding future Olympics to new parts of the world – places such as Rio and Sochi – the IOC really needs to reevaluate its selection process. The best host cities are the ones that already have much of the necessary infrastructure.


Bust, Boom, Hope: NFL

Bust: U.S. District Court Judge Anita Brody again denied preliminary approval of the NFL’s settlement with former players in their concussion class-action suit. The judge is worried that the $765 million fund isn’t large enough to cover up to 20,000 players for 65 years, as intended.

Boom: The Cincinnati Bengals and Hamilton County reached a deal to fund a $16.5 million renovation of Paul Brown Stadium. The deal includes a new $10 million scoreboard, an expanded locker room, and upgraded WiFi as required by the NFL. The Bengals are contributing $6 million to the project.

Hope: Renowned sports architect firm HKS is designing the Minnesota Vikings’ new football stadium to be able to accommodate college basketball Final Fours. Minneapolis is one of eight finalists to host a Final Four between 2017-2020. HKS has designed other NFL/Final Four stadiums in Arlington and Indianapolis.

What it means: There’s a reason so many NFL teams have recently tapped HKS to design their stadium. Led by innovators Bryan Trubey and Mark Williams, the firm is the best in the industry at designing stadiums that maximize revenue opportunities. Don’t be surprised when the NCAA selects Minneapolis and the new Vikings stadium as a future Final Four host.


Bust, Boom, Hope: College Sports

Bust: University of Texas AD Steve Patterson believes schools would stop competing in most sports if they’re forced to pay players. While Patterson supports having a system that provides athletes with the full cost of a scholarship, few schools actually operate at a profit, and would need to find new revenue streams.

Boom: The University of Louisville extended its apparel deal with Adidas for $39 million over five years, making it the third-largest-known agreement of its kind in college sports. At nearly $8 million per year, the Louisville contract trails only Notre Dame’s $9 million deal with Under Armour and Michigan’s $8.2 million deal with Adidas.

Hope: The NCAA has approved a new proposal to give all Division I athletes unlimited food and snacks. Prior to the change, NCAA rules allowed three meals per day for athletes on full scholarship but limited snacks, and limited meals for walk-ons.

What it means: The deal might sound like a lot of money, but Louisville’s brand has increased dramatically with the school’s move to the ACC and the Cardinals’ recent athletic success. Louisville last year became the first school to win a BCS bowl game, have both its men’s and women’s basketball teams in the Final Four, and have its baseball team reach the College World Series in the same season.


Bust, Boom, Hope: NBA

Bust: The Los Angeles Lakers’ on-court struggles resulted in the team posting their lowest TV rating in franchise history. The team on the season averaged a 2.15 rating in the L.A. market, down 20% from their previous low season in 2004-05. The Lakers’ TV deal with TWC is worth $3.6 billion over 20 years.

Boom: Thanks to a boost in league-wide revenues, next season’s NBA salary cap is projected to increase $5 million to $63.2 million. If the estimate holds, the increase would represent 7.7% growth over this past year’s cap, suggesting NBA revenues are rising at a record rate.

Hope: Bacardi has signed on to be the sole advertiser on a new basketball website that focuses on the lifestyle of NBA players. Bacardi reportedly paid $1-3 million for the nine-month sponsorship of the “Triangle Offense” site, which launched just in time for the NBA playoffs.

What it means: The actual salary cap won’t be set until early July, so it’s possible that the projection could fluctuate. Regardless, with the cap tied to league revenue, the fact that it might increase so much speaks to the strength of the NBA’s business. The bigger cap also could play a key role in free agency, as teams would have more money for the likes of LeBron James and Carmelo Anthony, should either opt to test free agency.


Bust, Boom, Hope: MLB

Bust: The Oakland A’s appear resigned to stay at O.co Coliseum after striking out in several attempts to build a new stadium. The A’s had hoped to relocate to San Jose, but the San Francisco Giants, who hold territorial rights to the city, blocked the potential move.

Boom: Despite recent years of poor play and declining attendance, the Seattle Mariners are in arguably the best financial shape in team history. The Mariners over the past five years have doubled in value to $710 million, and may be worth even more because of their ownership stake in the RSN Root Sports Northwest.

Hope: The San Diego Padres signed their first-ever educational partner in California-based National University. As part of the deal, Padres players and coaches will make regular guest appearances at school events, and beginning in 2015, the school will hold its commencement ceremony at Petco Park.

What it means: Having to stay at O.co Coliseum is a big disappointment for the A’s, but adding insult to injury, the county wants to reach a long-term deal with the Raiders first. Meanwhile, the A’s are seeking a 10-year lease extension with nominal rent payments in exchange for investing $10-12 million in stadium improvements. That deal is a far cry from planned $400 Cisco Field they hoped to build in San Jose.

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