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Bust, Boom, and Hope: College Sports, MLB, NASCAR, NHL, and NFL

By Rick Horrow and Karla Swatek

January 8, 2013

Bust, Boom, Hope: College Sports

Bust: Attendance at college football bowl games is down nearly 5% compared to last year, with several games seeing year-over-year declines of more than 5,000 fans. One of the biggest disappointments was the Sugar Bowl, which posted its worst attendance since 1939 and the smallest crowd ever for a BCS bowl.

Boom: The college football playoff that will begin in 2014 is expected to generate double the money from bowl entitlements than what the current system yields. Currently, BCS bowl title sponsors pay $15-20 million annually for the entitlement and a yearlong media buy. The projected playoff sponsorship fee is $35 million per year.

Hope: Boise State, which had been highly coveted in conference realignment, is staying in the Mountain West after renegotiating its TV deal. Under the new agreement with the MWC, rights to Boise State’s home football games will be sold separately from the conference’s rights package.

What it means: As attendance plummets, some critics are questioning whether there are too many bowl games. Though there are quite a few, bowls still provide tremendous economic impact for local communities and give graduating seniors one last opportunity to play. As long as the games don’t incur huge financial losses, there’s nothing wrong with having this many.


Bust, Boom, Hope: MLB

Bust: The Tampa Bay Rays are having a tough time generating local support for a new ballpark as a poll of Hillsborough and Pinellas County residents found a majority opposed to using taxpayer money. The team will meet with the Pinellas County Commission later this month to discuss stadium issues.

Boom: Major League Baseball this season generated $7.5 billion in revenue, up from $7 billion last year and a 435% increase over 1995. With new national TV contracts going into effect in 2014, league-wide revenue could top $9 billion within the next few years.

Hope: The San Diego Padres launched a new membership rewards program in order to build a stronger relationship between the team and its fans. The program provides access to special team events and discounts at participating sponsors. The program will be open to both season ticket and single game buyers.

What it means: The ancillary national TV revenues will be worth an additional $800 million to MLB and its teams. But the windfall doesn’t end there as several teams have or are close to signing multibillion-dollar local TV rights agreements. With long-term labor peace on the horizon, it’s safe to say the business of baseball is booming.


Bust, Boom, Hope: NASCAR

Bust: Showtime has decided not to renew “Inside NASCAR” after airing the show for the past three years. The network cited a change in programming strategy as the reason for discontinuing the relationship. NASCAR is seeking a new partner to air the show.

Boom: Included in the fiscal cliff compromise is a measure allowing racetrack owners to accelerate their depreciation expenses, thus reducing the taxes they must pay. The so-called “NASCAR loophole” is saving track owners $46 million this year and $95 million through 2017.

Hope: NASCAR unveiled a redesigned website after taking back control of the site from Turner Sports. The sanctioning body recently invested eight-figures in a new digital division, and hopes the new site will increase interest and attendance for the sport.

What it means: The “NASCAR loophole originally” was enacted in 2004, and since that time, track owners have spent hundreds of thousands of dollars lobbying Congress to keep it. However, $95 million in tax breaks for tracks means an equal cost to taxpayers.


Bust, Boom, Hope: NHL

Bust: Prospective Phoenix Coyotes owner Greg Jamison was unsuccessful in trying to land minority investors through the U.S.’s Immigrant Investor Program. The program gives wealthy immigrants a green card in exchange for a $1 million investment in a U.S. business.

Boom: New Jersey Devils owner Jeff Vanderbeek completed the process of refinancing the team’s debt and buying out his partners, making him the sole owner of the franchise. Terms of the buyouts weren’t disclosed, but Forbes recently valued the team at $205 million.

Hope: Proctor & Gamble’s Gillette brand has resigned Washington Capitols star Alex Ovechkin as a global ambassador, a role he’s held since 2010. The deal runs through 2014, intentionally coinciding with the upcoming Sochi Winter Olympics. Ovechkin is from Russia.

What it means: Seeking foreign investors was a novel approach by Jamison, and could be an option for future sports owners seeking minority investors. Nevertheless, one source said the plan was unsuccessful for Jamison because the Coyotes just aren’t a good investment.


Bust, Boom, Hope: NFL

Bust: A record seven NFL head coaches and six general mangers were fired on “Black Monday,” the day after the regular season ended. Among the coaches let go were Philadelphia’s Andy Reid and Chicago’s Lovie Smith, both of whom compiled winning percentages over .500 in their respective tenures.

Boom: CBS is virtually sold out of advertisements during next month’s Super Bowl, with all but two 30-second spots remaining. Ads during the game are going for a record $3.8 million per 30 seconds, with some commercial time reportedly selling for $4 million.

Hope: The Minnesota Vikings are interested in putting a retractable roof on their new stadium, and the team should know by spring whether its within the building’s $975 million budget. The stadium, which is being designed by renowned architecture firm HKS, is scheduled to open by 2015.

What it means: One explanation for the unusually high number of firings is that no coaches were let go during the season, a rarity in today’s “what have you done for me lately” coaching culture. The last time that happened was 2007.

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Beyond the Scoreboard
Rick Horrow, America’s leading expert in sport business, and coauthor Karla Swatek give fans an inside look at the multibillion-dollar world of professional sport.
Beyond the Scoreboard eBook
Rick Horrow, America’s leading expert in sport business, and coauthor Karla Swatek give fans an inside look at the multibillion-dollar world of professional sport.
Beyond the Scoreboard: Chapter 1. The Mega-Master Super Series XLXL eBook chapter

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