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Bust, Boom, Hope: January 24, 2014

Bust, Boom, Hope: Olympics

Bust: Because of safety concerns and the expensive cost of traveling, nearly 300,000 tickets remain unsold for the upcoming Sochi Olympics. In comparison to the 2010 Vancouver and 2012 London Games, which sold 97% of their ticket allotment, Sochi has sold just 70% of available tickets.

Boom: The Jamaican bobsled team is heading to the Sochi Olympics after fans donated $120,000 to help fund their trip. While the Jamaican Bobsleigh Federation is paying the travel expenses for athletes, the donations are covering training costs and shipping the bobsleds.

Hope: The Obama administration has purchased ad time during NBC’s broadcast of the Sochi Olympics to promote health coverage. The Department of Health & Human Services specifically bought ad time in markets with high levels of uninsured young people and their families.

What it means: By nearly all measures, the Sochi Games are on pace to be a disaster. In addition to the growing terrorism threat, the cost of the Games is spiraling out of control. The IOC should have seen this coming when it decided to hold these Winter Olympics in a Russian beach resort town.


Bust, Boom, Hope: College Sports

Bust: Rutgers University will be at a significant financial disadvantage when it joins the Big Ten Conference later this year. The $64 million in revenue Rutgers’ athletic department generated in 2012 would rank last in the Big Ten, and the school has the second-most subsidized athletics program in the country.

Boom: Valued at $90 million in cash and merchandise, Notre Dame’s new apparel deal with Under Armour is the richest in college sports history. According to Notre Dame AD Jack Swarbrick, the agreement also has a unique provision allowing the school to convert some of the cash into Under Armour stock.

Hope: Quicken Loans is offering a $1 billion grand prize to anyone who fills out a perfect bracket for the 2014 men’s basketball tournament. The contest is being insured by Warren Buffett’s Berkshire Hathaway, whose Geico subsidiary heavily advertises in college sports.

What it means: Rutgers certainly will be at a disadvantage in the short run, but the primary reason for the conference realignment is long-term revenue growth. Within a few years, expect Rutgers’ annual revenue to rival those of most Big Ten schools.


Bust, Boom, Hope: Soccer

Bust: Major League Soccer is losing between $75-100 million annually, according to Commissioner Don Garber. Despite the losses, all of the league’s owners remain committed to their teams, and the league hopes to receive a sizable increase in its next TV rights deal.

Boom: MLS next month reportedly will announce that David Beckham has purchased an expansion franchise to be based in Miami. As part of Beckham’s original playing contract with the Los Angeles Galaxy, the soccer icon has an option to buy a MLS team at a discounted rate.

Hope: Construction has begun on a new MLS stadium for Orlando City Soccer Club, which is joining the league in 2015. The $84 million stadium will be located in downtown Orlando, and will be designed to allow fans to tailgate at bars then march en masse to games.

What it means: Beckham reportedly is getting his team for $25 million, significantly cheaper than the $100 million expansion fee other teams are now going for. Regardless, giving Beckham an option to buy a team for cheap has always been worth it for MLS. Beckham’s decision in 2007 to come play in the U.S. did wonders for the league’s credibility.


Bust, Boom, Hope: Basketball

Bust: Though the NBA has expressed interest in European expansion, several obstacles remain before putting a team overseas permanently. Two of the biggest concerns are scheduling and a lack of proper facilities. The NBA has acknowledged that the best option may be creating an entire European division.

Boom: Over David Stern’s 30 years as NBA Commissioner, league-wide revenues have grown from $165 million in 1984 to $5.5 billion this year. Stern, who’s stepping down from the job on February 1, has presided over the league’s growth to 30 teams and the development of 27 new arenas.

Hope: The Sacramento Kings are the first major pro sports team in the U.S. to accept Bitcoin online currency to pay for tickets and concessions. The Kings claim to have a large number of tech-savvy fans, and the team believes utilizing Bitcoins will enhance the in-arena experience.

What it means: David Stern’s tenure at the NBA is arguably the most successful for a sports commissioner in history. While incoming commissioner Adam Silver has big shoes to fill, Stern deserves a lot of credit for having a strong succession plan in place once he decided to step aside. MLB would be wise to learn from the NBA, especially since Bud Selig is retiring next year.


Bust, Boom, Hope: Football

Bust: Despite the actual game being played in New Jersey, the state is receiving little respect in regards to hosting Super Bowl XLVIII. Much of the marketing activation is taking place within New York City, and the Super Bowl program has a picture of the Manhattan skyline on the cover.

Boom: All four of the NFL’s TV partners and Turner Sports submitted bids for a Thursday night games package. While networks were given flexibility in how many games they wanted to bid on, the package is expected to be worth at least $400 million.

Hope: NFL Commission Roger Goodell said the league is considering proposals to eliminate the extra point with the hopes of finding an alterative that makes the game more exciting for fans. Only five extra points were missed during the 2013 regular season.

What it means: It’s no surprise that all five networks chose to bid on a Thursday night game package. Given that Fox and NBC have new cable channels, and with Turner itching to acquire NFL rights, expect a bidding war that will drive up the value of Thursday Night Football.

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