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Bust, Boom, and Hope: November 28, 2011

By Rick Horrow and Karla Swatek

November 28, 2011

“Bust”: Top Five Reasons the Armageddon is Near

1. Penn State University merchandise sales have fallen 40% compared to the same time last year because of the school’s sex abuse scandal.  Penn State, which typically ranks in the top ten nationally in merchandise sales, made about $3 million last year from sales of royalty products.
2. Though the new NBA labor deal may bring some relief, mounting losses could force the Miller family to sell the Utah Jazz within the next few years.  The Jazz lost an estimated $17 million last season, and the Millers’ other sports venture, Miller Motorsports Park, has been losing money as well.
3. Formula One chairman Bernie Ecclestone has threatened to call off the 2012 U.S. Grand Prix in Austin if a contract isn’t signed immediately.  Track developers reportedly are having major financial troubles, while the state of Texas has been reluctant to appropriate money until a contract is signed.
4. Despite record revenues and a 7% increase in league-wide attendance, less than one-third of MLS teams are expected to turn a profit this year.  Even the MLS champion Los Angeles Galaxy likely will post a loss on the season, thanks to having the league’s most expensive payroll.
5. Pittsburgh Pirates “Charter Seat License” holders are upset with the team because they no longer are getting price breaks on their season tickets.  The Pirates next year will raise ticket prices for the first time in a decade.  The team says the seat license discount was guaranteed for one year, but lasted seven.


“Boom”: Top Five Reasons that Prosperity is Right Around the Corner

1. NBA owners and players reached a new collective bargaining agreement, concluding a lockout that lasted 149 days.  The league will have a 66-game season beginning on Christmas Day.  Per the agreement, the players will give back nearly $3 billion to the owners over the length of the deal.
2. Like the NBA, MLB and the MLBPA signed a new five-year CBA, ending a string of sports leagues that locked out players this year.  Among the highlights in the new labor deal are HGH testing, a minimum salary increase, and instant replay expansion.
3. Boosted by an exciting finish and taking out the hour-long rain delay, TV ratings for the season-ending NASCAR Ford 400 at Homestead-Miami Speedway were up 12% over last year. Tony Stewart’s championship win brought huge exposure to his main sponsors, Office Depot and Mobil 1.
4. The average pay for head football coaches at FBS schools this year is $1.47 million, up 55% over the last 6 years, according to a study by Brady, Upton & Berkowitz of The USA Today.  At least 64 coaches are making more than $1 million a year, while 32 coaches are making at least $2 million.
5. ESPN’s broadcast of the MLS Cup between the Los Angeles Galaxy and Houston Dynamo saw ratings increase 60% over last year’s title game.  Additionally, MLS during the playoffs averaged nearly 20,000 fans per game, the second highest total in league history.


“Hope”: Top Five Reasons That Creativity is the Key to Economic Survival

1. Sprint is in negotiations to extend its NASCAR title sponsorship.  As part of Sprint’s current 10-year, $750 million deal with NASCAR that expires in 2013, the telecom company has naming rights to the season series, All-Star race and championship.
2. MLB hopes to accelerate the process of determining whether the Oakland A’s can move to San Jose, according to Ken Rosenthal of  The decision has stalled because the San Francisco Giants are reluctant to give up their territorial rights to the region.  The Commissioner’s Office has been studying the situation since March 2009.
3. University of Maryland President Wallace Loh approved a committee recommendation that the school drop eight of its 27 varsity sports.  However, Loh is giving the affected teams the chance to raise eight years of total costs by June 30 to save themselves.  Among the teams at risk are men’s track, men’s and women’s swimming and diving, and aerobics.
4. Tony Ponturo, the Lombardi producer and former Anheuser-Busch exec, is working on a play about basketball hall of famers Magic Johnson and Larry Bird.  Magic/Bird opens March 21 and consists of 20 scenes over 90 minutes.  Both Johnson and Bird have been active in the creative process.

5. International soccer star David Beckham was unveiled as the new brand ambassador of U.K. supermarket chain Sainsbury’s.  Financial analysts in London say Beckham’s $8 million endorsement deal could increase Sainsbury’s revenues by several millions of dollars.

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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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