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Bust, Boom, and Hope: June 16, 2011

By Rick Horrow and Karla Swatek

June 16, 2011

"Bust": Top Five Reasons the Armageddon Is Near

1. In yet another possible blow to the tradition of the game, Major League Baseball is looking at the possibility of realignment that would create two leagues of 15 teams as opposed to the current structure of 16 teams in the National League and 14 in the American divided into multiple divisions. One option discussed has been eliminating the divisions altogether with 15 AL and 15 NL teams vying for five playoff spots within each league. The Astros and Marlins are considered leading candidates to move to the American League.

2. In the wake of the recent mega deal between the Pac 10 and ESPN, the SEC is dropping hints to ESPN that it would like to revisit some terms of its 15-year deal with the network that is only into year three. The Pac-12 deal is believed to be more lucrative than the SEC’s and the Pac-12 is also starting its own network. This fall, Texas and ESPN will launch the Longhorn Network, worth $300 million over 20 years to the Texas Athletic Dept. while the ESPN-SEC deal precludes schools from creating their own network. Thus the SEC wants to evaluate changes that could bring more exposure and money.

3. Coconut water brand Vito Coco has signed Yankee star Alex Rodriguez to an endorsement deal, but officials with rival Zico claim that Rodriguez is an investor in their company and that they are shocked by the new deal. Rodriguez says he started drinking Vito Coco because Zico changed their formula to concentrate and he felt that the taste was weakened. Zico fired back that it has video of Rodriguez drinking the product from concentrate and recommending it. Much is at stake as coconut water is projected as a $200 million industry this year and athletes are doing much of the marketing for the two leading brands.

4. Growing disinterest among networks such as ESPN is placing the future of poker on TV in serious question. It’s a product that has grown to about 50 programs airing each week. But in April, the U.S. Department of Justice went after the founders of the largest online poker enterprises and the networks have been folding shows since.. Fox has folded two of its shows, PokerStars Big Game and PokerStars Million Dollar Challenge and ESPN has pulled PokerStars North American Poker Tour, its top spring poker show. Other shows like Poker After Dark on NBC and ESPN’s World Series of Poker also could be in trouble, particularly if advertising dries up due to frozen assets in the online poker industry due to the indictments.

5. Aside from luring a team to Los Angeles, a longstanding mistrust between the city and the NFL due to so many false starts on stadium concepts is impeding efforts to build a stadium and land a team. But AEG, which is taking the lead in the effort, calls the current plan that involves $350 million in bonds the best deal that’s ever been made for any city in the history of the NFL. AEG Chair Philip Anschutz is planning to become majority owner of a team looking to relocate. So far every team he mentions issues denials it is interested.


"Boom": Top Five Reasons That Prosperity Is Right Around The Corner

1. There is a lot of buzz out of Dallas that the member of the NBA champion Mavericks who will cash in the greatest on the newly won NBA title in terms of sports endorsements is owner Mark Cuban. Cuban already has a relationship with Samsung, was a contestant on ABC’s Dancing With the Stars and made a cameo appearance as himself in HBO’s Entourage. Now he is being lauded for his uncharacteristically impeccable behavior during the finals, which included allowing original Dallas owner Donald Carter to accept the championship trophy. It is believed Cuban will get many offers to serve as a pitchman for business-related products and services.

2. UFC now is eyeing its own cable network to build an even closer relationship with the sport’s growing fan base. The conglomerate is in talks to buy control of NBC Universal’s struggling G4 gaming network. UFC’s contract with Spike TV expires at the end of the year and UFC has been demanding a substantial increase in money to renew it. A deal is also in place to distribute some events on Comcast-owned Versus. But having control of its own network would open new revenue streams for UFC and allow it to collect monthly carriage fees from cable and satellite-TV companies. A deal with Comcast could also include specials on NBC.

3. After winning the NBA Most Valuable Player award in just his third season, Bulls Guard Derrick Rose emerged as one of the league’s most marketable stars. Rose has become the figurehead of worldwide marketing for adidas, which gave Rose his own shoe in year two and has now turned it into a best seller. Off the court, Rose is wearing a lot of adidas sweats and hoodies and more adidas Originals type-style, surprising adidas in how quickly it is capitalizing on its investment in Rose.

4. After just one season in the NFL, Denver Broncos QB Tim Tebow has already joined Colts QB Peyton Manning, Steelers S Troy Polamalu and Saints QB Drew Brees in the NFL’s group of most marketable pitchmen. Tebow recently released an autobiography, Through My Eyes, and has major deals with Nike and the sports drink (FRS Energy). The underwear section of many department stores feature Tebow in Jockey shorts. He also has one of the best-selling jerseys in the NFL.

5. Under Armour is hoping to double its sales to $2 billion over the next three years after hitting $1 billion for the first time last year. To reach that goal, Under Armour is going to rely more on sales to young athletes and women. The company is rolling out new lines of Armour sports bras and "Perfect Pant" pants for women into yoga and working out, projecting that its women’s sales eventually will surpass men’s. The company also plans to boost sales of its products among teens and young adults, roll out two new shoes over the next year and place its underwear in 600 department stores nationwide.


"Hope": Top Five Reasons That Creativity Is The Key To Economic Survival

1. New York Knicks forward Carmelo Anthony is working on making the most of his first offseason in The Big Apple, expanding his brand beyond the basketball court. The opportunity to grow by living in a big market like New York was a major reason he pushed for the Nuggets to trade him during the season. Anthony recently shot a campaign for Ultra Sheen Men and launched a new Nike sneaker.

2. Izod IndyCar Series driver Helio Castroneves is also trying to spread his wings as a product endorser. Castroneves recently began appearing in a series of broadcast, print and online ads for Shell and Pennzoil, co-sponsors of his Team Penske No. 3 IndyCar Series Honda. While Castroneves is only shown smiling in the TV spots, it’s the end of a 12-year wait to land a commercial. The Brazilian lacked options while his team was partnered with tobacco giant Philip Morris.

3. Comcast executives are working overtime to assure shareholders that NBC’s $4.38B deal to keep U.S. television rights to the Olympics through 2020 will be profitable. The Comcast/NBC bid was nearly id="mce_marker" billion higher than the next closest proposal, from Fox. But Comcast felt it was strategically important to have a long-term relationship for four games rather than two. The Games will cost NBC $775 million in 2014, $1.226 billion in 2016, $963 million in 2018 and $1.418 billion in 2020. The business plan is to combine NBC’s broadcast and cable networks with Comcast’s sports assets, which include Versus, Golf Channel and 11 Regional Sports Networks.

4. Over the last 18 months, PGA Tour officials have been meeting with golf federations of several countries with hopes of starting a PGA Tour-branded circuit in South America, Latin America and the Caribbean. Expanding the PGA Tour even further would help develop talent. The series could begin as soon as 2012 with 12 to 14 tournaments from eight countries. The proposed expansion will not replace the Tour de las Americas, but work alongside it.

5. Soccer star Mia Hamm lured American girls to soccer in droves and Nike’s Jordan Brand is hoping new endorser Maya Moore has the same marketing impact in basketball. Moore is the first four-time, first team All-American in the history of college basketball and led Connecticut to two national titles. Few WNBA players have individual sneaker endorsement deals, so most wear adidas under the league’s apparel contract.

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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.

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