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Sports Business Update: February 3, 2014


February 3, 2014

by Rick Horrow and Karla Swatek

 

David Stern Retires
For the first time in 30 years, David Stern isn’t commissioner of the NBA. Stern steps down 30 years to the day since he assumed the job. Since that time, the average NBA team value has increased from $17 million in 1984 to $634 million today. Stern has also overseen the NBA’s growth from 23 to 30 teams, the building or renovation of 28 arenas, and the opening of 11 international offices. Additionally, under his watch, league revenues have increased 30-fold, from $165 million to $5.5 billion.

While Stern undoubtedly was the driving force behind the NBA’s incredible growth, his tenure as commissioner wasn’t always easy. Six teams relocated over the last 30 years, and the NBA went through four lockouts. Maybe the biggest blemish on Stern’s resume is the Tim Donaghy betting scandal. Regardless, there’s never been a pro sports commissioner quite like David Stern, and it’s hard to imagine there ever will be another like him.

NFL Back to LA?
Could the NFL finally be heading back to Los Angeles? Though Farmers Field and Ed Roski’s proposed stadium in City of Industry remain at a standstill, a new possibility has materialized. St. Louis Rams owner Stan Kroenke reportedly has purchased 60 acres of land near Hollywood Park outside of L.A. Though Kroenke hasn’t expressed interest in relocating the Rams, the team’s lease at the Edward Jones Dome expires after the 2014 season. The Rams and the St. Louis Convention & Visitors Commission have been negotiating stadium renovation plans, but the two sides are believed to be hundreds of millions of dollars apart. The threat of relocation is certain to put added pressure on St. Louis to get a deal done.

Having previously played in Los Angeles, the Rams are a logical choice for bringing the NFL back to L.A. for the first time sine 1994. However, several challenges could prevent the team from actually moving. First, the site Kroenke acquired is believed to be too small for a NFL stadium and parking. Environmental laws mean it could be a couple years before a stadium is approved by the state. The Rams would also need NFL approval, something that isn’t a given considering other teams have used the “L.A. threat” to get their own new stadium. In any event, this is definitely a story to keep an eye on.

Greatest Sports Business Deal of All-Time
It’s been called the greatest sports business deal of all-time. When the ABA merged with the NBA in 1976, two teams were paid not to join. The Kentucky Colonels’ owners took a $3 million payment, while the owners of the Spirit of St. Louis accepted $2.2 million and a percentage of NBA TV revenue in perpetuity. At the time, no one expected sports TV rights to be worth billions of dollars. But since the deal was struck, the Silna brothers, owners of the St. Louis team, have received approximately $300 million. After years of trying to get out of the deal, the NBA may finally have reached a settlement.

The league reportedly will pay $500 million to buyout most of the brothers’ stake in the TV rights. Per the settlement, the brothers will continue to receive a piece of the league’s TV revenue, albeit a much smaller percentage. With the deal, the brothers will have made a whopping $800 million by agreeing not to carry their team over to the NBA 38 years ago. Not bad for an original investment worth just $1 million.

Olympic Athletes to Watch
Every two years, athletes on the Olympic stage try to capitalize on their fleeting popularity. When we conducted our 2010 Horrow Sports Ventures Power 100, a ranking of the most powerful athletes on- and off-the field of play, Winter Olympians Shaun White, Apollo Anton Ohno, and Lindsey Vonn all finished in the top 15. This year, none of America’s “Big Three” is competing in the Games. So with White, Ohno, and Vonn staying at home, here are a couple American athletes to keep an eye on.

The first is Lolo Jones. After failing to medal in the 100-meter hurdles in the London Olympics, Jones joined the women’s bobsled team. Her sponsors include Ascis, BP, and Red Bull. From the men’s hockey team, watch out for Patrick Kane. The Chicago Blackhawks star already has two Stanley Cups to his name, but an Olympic gold medal could elevate Kane’s national prominence. Finally, Ashley Wagner was a controversial add to the figure skating team after she struggled at the U.S. trials. America loves a good redemption story, so Wagner could be a marketing darling if she comes home with a medal.

Olympics Set to Begin
By nearly all measures, the Sochi Games are on pace to be a disaster. From terrorist threats to bloating costs and corruption, the IOC should have seen this coming when it decided to hold these Winter Olympics in a Russian beach resort town on the border of war-torn Georgia.

In particular, because of safety concerns and the expensive cost of traveling, nearly 300,000 tickets remain unsold for the Games. The U.S. has cautioned its citizens on heading to Sochi for the Games, and the country will have two warships on standby should a terrorist attack occur. In comparison to the 2010 Vancouver and 2012 London Olympics, which sold 97% of their ticket allotment, Sochi has sold just 70% of available tickets.

For years, the Olympics represented the best of sports – top athletes from around the world gathering to compete. Sochi is single-handedly throwing that perception into doubt.




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