Bust, Boom, Hope: May 5, 2014


Bust, Boom, Hope: NBA

Bust: Sponsors are jumping ship on the Los Angeles Clippers in the wake of Donald Sterling’s racist comments. In the 48 hours after the story initially broke, four partners terminated their relationship, while eight others at least temporarily suspended their sponsorship with the team.

Boom: The NBA’s growing global value played a crucial role in the Milwaukee Bucks selling for a league-record $550 million, according to John Lombardo and Daniel Kaplan of SportsBusiness Journal. Several sports bankers were surprised by the high price due to Milwaukee’s small size and need for an arena.

Hope: The NBA’s TV partners want some form of flex scheduling in their next media rights deal, according to John Ourand and John Lombardo of SportsBusiness Journal. Owners are reluctant to add flex scheduling because of the impact it could have on teams’ lucrative local TV deals.

What it means: If the Bucks are worth $550 million, the Clippers could easily fetch over $1 billion in a bidding war. Expect to see a strong offer from Magic Johnson and Guggenheim Partners, who could buy the team and then sell TV rights to SportsNet L.A., their Dodgers-owner regional sports network. The Clippers’ existing TV deal expires in 2016.

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Bust, Boom, Hope: MLB

Bust: MLB has been excluded from a new Florida bill providing tax breaks for sports teams unless the league alters its policy on Cuban players. Under MLB rules, Cuban players must live in another country before they can become free agents. The rule gained notoriety because of news that human traffickers held Dodgers outfielder Yasiel Puig hostage while he tried escaping from Cuba.

Boom: The Atlanta Braves are in the process of buying an additional 25 acres of land near their new Cobb County ballpark for $15 million. Ballpark construction is expected to commence by February 2015 at a projected cost of $672 million.

Hope: A Facebook study analyzed MLB team fandom going down to the ZIP code level. Among the most interesting findings, the Yankees are preferred over the Mets in 98% of ZIP codes nationwide, the Dodgers are still the clear favorite in Southern California, and the Orioles aren’t even the second-favorite team in parts of D.C.

What it means: Florida obviously has a significant Cuban population, so it shouldn’t be too surprising to see the state legislature take this stand. The actual bill would make $12 million in annual subsidies available for stadium and arena projects. Organizations would apply for up to $2 million in annual tax breaks, with the state’s Department of Economic Opportunity ranking the applications based on expected economic impact.

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Bust, Boom, Hope: NHL

Bust: NHL Commissioner Gary Bettman said Seattle must figure out its arena situation before the league will consider expanding into the market. An arena plan put forth by investor Chris Hansen, which has tentatively been approved by the city, is contingent on relocating an NBA team, not an NHL team.

Boom: New York Islanders owner Charles Wang has put the team on the market for $370 million, offering 75% ownership of the club, with a five-year option on the other 25%. The team, which will move to Brooklyn in 2015, generated $84 million in revenue this year.

Hope: The Pittsburgh Penguins this season generated an additional $100,000 from the sale of holiday-themed clothing. The Penguins created two shirts for Halloween and one shirt each for Thanksgiving, Christmas, Valentine’s Day and St. Patrick’s Day, all of which sold for about $22.

What it means: Seattle is widely believed to be one of the NHL’s top markets should the league decide to expand. However, Hansen has made it clear that his interest is in owning an NBA team. It’s too big of a risk for the NHL to move a team to Seattle, temporarily play at Key Arena, and hope a new facility eventually gets built.

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Bust, Boom, Hope: Soccer

Bust: Five years after opening, the Philadelphia Union’s PPL Park has done little to stimulate development in the area around the Chester, Pennsylvania stadium. The Union currently are preparing to build practice fields on land originally earmarked for commercial development, which is increasing tension between the team and the city.

Boom: The 2014 FIFA World Cup should only help Adidas and Nike boost sales of soccer related merchandise, which last fiscal year reached all-time highs for both companies. Adidas, an official World Cup sponsor, expects soccer sales to hit $2.8 billion this year, while Nike’s sales should come in around $2 billion.

Hope: As Subway begins aggressive UK expansion plans, the sandwich chain signed its first English Premier League marketing deal with Liverpool FC. While terms of the sponsorship weren’t disclosed, the deal is believed to be worth up to $3.7 million annually.

What it means: Every four years, the World Cup gives Adidas and Nike the chance to slug it out for market share. While Nike’s soccer business has grown immensely in the last two decades, the company remains a distant second to Adidas on the international stage. Adidas is an official FIFA sponsor, whereas Nike isn’t.

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Bust, Boom, Hope: NFL

Bust: NFL Commissioner Roger Goodell acknowledged that some teams have pushed back over appearing on the HBO series “Hard Knocks.” While Goodell said a decision on the participating team would be announced soon, it’s unclear whether one will volunteer or will have to be selected.

Boom: Members of the Jacobs family, which owns the Boston Bruins and Delaware North Cos., are “deeply engaged” in talks about buying the Buffalo Bills. Because of the NFL’s rules restricting cross-sport ownership, Jacobs’ sons likely would have to take a leading role in any prospective ownership group.

Hope: The NFL once again might tweak its draft process, moving the event back to April from May and expanding from three days to four. Regardless of the changes, the draft would remain in its existing seven-round format.

What it means: Over the years, teams have been reluctant to appear on “Hard Knocks” because of the distraction and not wanting to give away any secrets. As a result, the NFL last year passed new rules to require teams participate. Teams that have a new head coach, made the postseason in one of the last two seasons or, were on the show in the last 10 years can opt out of being included. The Bears, Giants, and Steelers are the most likely candidates eligible this go-round.




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