Friday, October 31, 2008
What Am I On? I'm On My Bike
Now, after a two year hiatus, Lance is returning to race in the Tour. I’m sure he’s going to try to win—he probably will—but he’s also returning to raise even more awareness for the Lance Armstrong Foundation and LiveStrong. So far he’s been quite successful. A recent survey of nearly 500 marketing executives found that Armstrong topped the list of both celebrities and athletes whose actions and causes were the most influential.
To be sure, Lance is on of the movers and shakers in the sports industry. He comes in at 15th in Businessweek’s most recent Power 100 which ranks the most powerful people in sports. So his return to the Tour is thus being well received by many in the sports marketing and branding world. Companies such as 24 Hour Fitness, FRS energy drinks, Oakley and Nike are certainly excited to have Lance back. According to Sports Illustrated, Armstrong pulled in between $17-20 million in endorsements in 2005.
The key to Lance’s marketing success is the personal connection he makes with the public. His story, his success and the causes he works for produce an overwhelmingly positive image that companies and, more importantly, the public find attractive. As Lance returns to the Tour next summer, he will be in a position to take his brand and cause global. He will likely try and partner up and collaborate with global companies and initiative promoting similar cause agendas. The French may not be excited to have him back, but I and many others are definitely excited to see Lance race for his eighth Tour victory.
Tuesday, October 28, 2008
Arbitrage in the NBA--New Trend?
Greg Easterbrook over at ESPN.com made an interesting economic observation about a recent trade(?) just struck in the NBA. New trend?
The idea at work here is arbitrage: whereby a person makes an arrangement of similar deals between two imbalanced markets with the profit being the difference between the two market prices. In this instance, New Orleans basically sold (for cash) first round draft pick Darrell Arthur to the Portland Trail Blazers just a short time after selecting him. Hours later Portland sent (sold for cash) Arthur to the Rockets in Houston. Then, a mere few hours later, Houston traded Arthur to the Memphis Grizzlies.
According to the New Orleans Times Picayune, Portland gave the Hornets about $3 million for Arthur. So the Trail Blazers' part of the transaction -- buying
Arthur's rights from the Hornets for $3 million, then almost immediately later
selling Arthur's rights to Houston -- would have made sense only if Huston paid
more than $3 million. That in turn means New Orleans failed to get top dollar,
because Houston was willing to pay more for Arthur than Portland was. Note:
Though it's normal for NBA teams to sell draft picks or rights to players, the
league always insists on announcing that the pick or player has been traded for
"cash considerations." In what way do "cash considerations" differ from "cash"?
The “Note” is particularly revealing. In European soccer, players are bought, sold and even loaned out in exchange for players and most often cash. Teams pay “transfer fees” to complete the transaction. The NBA isn’t quite so harsh on the words. The PR work on the part of the NBA is well-structured in this instance. I’ll be interested to see how this develops.
NASCAR Gets "Sweetened"
I was doing some work a couple of weeks ago which required me to sift through all 400+ pages of the financial bailout bill passed in early October. As we know, the original bill failed to pass in the House and it was sent over to the Senate where it proceeded to be nailed with “sweeteners” and other swine meat in hopes that it would pass on the second go-around. One “sweetener” that caught my eye will extend a tax rule for two years classifying racecar tracks and other motorsports facilities as “amusement parks and other entertainment complexes.”
Huh? I guess it’s amusing to drink Budweiser and watch cars go in circles hoping for a big crash. But last time I checked, NASCAR was a sport. It turns out that the “amusement park” classification allows track to write off their capital investments over a seven year period as opposed to fifteen years that would have been required due to an IRS inquiry into motorsport investment practices. This distinction will have the effect of reducing a track or facilities overall tax bill once their investments have been written off. Technically this is not a tax break but will provide an incentive for motorsports companies to invest in new projects and facilities. NASCAR executives in particular were happy with this development who are eyeing track improvements and expansions in the coming years.
So why add this “sweetener” to the second version of the bill? Interestingly, a separate bill aimed at instituting this classification was sponsored in the House a few months before by Rep. Mike Thompson, D-CA, and co-sponsored by Rep. Robin Hayes, R-NC. This bill, however, failed to get legs and puttered out. Now, Thompson voted against the original bailout but then flipped and voted for the bailout the second time. Hayes voted against twice. It is unclear whether Thompson flipped because the Senate added this “sweetener.”
This is an interesting case study for many reasons. One, it shows the ugly political underbelly of getting legislation through Congress. What could have been a pure bill focused on the bailout itself was subsequently muddled with add-ons unrelated to the essence of the bill. But it also reveals the governments continued relationship with sport and makes clear that sport business as well as entertainment.
Thursday, October 23, 2008
World Series 2008
It will also be interesting to see what kind of viewership ratings that the series draws. Many are speculating that since the Phillies haven’t been to the Series in over 25 years, and the Rays have never been, that there will be less than stellar ratings. To be sure, TV executives would have preferred the Red Sox to have made it due to the larger national media market that such a series would have drawn. As MLB.com reported, Boston’s taking the ALCS to a seventh game delivered the highest rating—7.9 US Household rating—of any game of the 2008 regular and postseason, and, shown on TBS, it was the highest rating ever for a cable-broadcast game. But Boston is no longer around.
Sure, underdog stories are nice. It’s fun to ride the bandwagon and it’s been fun watching Rays fans experience a feeling that they certainly have never felt before. But the likelihood of the series drawing record numbers looks small. However, should the Rays and Phillies take the series the distance and make a drama out of it all bets are off. Rating histories show that viewership grows as a series progresses. As tension builds, more fans become drawn to the drama. When the Marlins won back in 1997 they were a relatively unknown team—indeed they had only been around since 1993. Yet that series earned a respectable 16.7 rating due to the fact that game seven drew more than twice the number of viewers as game one.
An aside—I have recently begun work on a major research project looking into Congress’ and the Court’s special treatment of MLB as it relates to antitrust issues. I am hoping that out of this study I will be able to present a unique view of baseball’s affect on American society as a national pastime. If anyone has any thoughts or book suggestions they are more than welcome!
Friday, October 17, 2008
Bonds' Saga Continues & Its Larger Impact on MLB
Since Bonds’ agent Jeff Borris ceased efforts to find a suitor around the All-Star Break, the MLB Players Association has been investigating the league’s treatment of Bonds as a free agent. Just yesterday, the MLBPA said that it has found evidence that teams and their owners colluded against Bonds to prevent him from being signed. However, the player’s union struck an agreement with the Bud Selig’s office to delay the filing of any grievances.
Bonds, MLB’s home run king, has found no interested teams since becoming a free agent following the close of the 2007 season despite his interest to continue playing. Michael Weiner, the General Counsel for the MLBPA, said that their investigation found numerous signs that teams had acted in concert. But his public statements have remained fairly ambiguous due to the possibility of his needing to testify should the issue enter into arbitration.
“Our investigation revealed a violation of the Basic Agreement. It’s a violation of the Basic Agreement related to Barry Bonds and free agency,” Weiner said. The supposed violation would be a breach of Article XX (e) of the Collective Bargaining Agreement. Specifically, “Players shall not act in concert with other players and clubs shall not act in concert with other clubs.”
Should this case go to arbitration, and should it find any collusion, the MLBPA and Bonds could be entitled to a hefty settlement. Indeed, Bonds’ situation has historical precedent. The MLBPA won similar cases back in the late 1980’s that resulted in Owner’s Management agreeing to a $280 million payment and that future acts would result in triple damages.
But the larger issue here is twofold. One is potential the legal ramification that could result. The rules on this specific case seem well defined, but baseball’s legal structure can provide for confusing and counter-intuitive proceedings. Indeed, with its anti-trust exemptions MLB is immune from many of the business practice laws that govern other industries. How this case plays out could lead to some tinkering or rethinking of baseball’s legal status. Second is the obvious treatment (mistreatment?) of one of the game’s greatest players. It would be a shame if Bonds’ career went the way of Pete Rose. Haven’t we learned our lesson there? Despite your feelings towards Bonds personally, the fact of the matter is that there were dozens of players using performance enhancing drugs and that fact should preclude Bonds from taking the fall for all guilty parties. Baseball should be careful in painting a black veil over twenty years of its history.
Follow this link to see some of my Barry Bonds photos.
Wednesday, October 15, 2008
Who Will Face the Brunt of Sponsorship "Pull-Outs"?
Darren Rovell, who pens the SportsBiz blog, says that without question it will be the PGA Tour who suffers most—and I agree. They will face the brunt of the sponsor “pull-out.”
Partly due to its squeaky clean image, but also due to the demographic which follows the game, golf has been able to attract the likes of Accenture, AT&T, KPMG etc. as sponsors. They’ve also, and now sadly ironically, been able to sign the likes of Citigroup and Wachovia as promoters. Citi, who is in dire financial straights, may pull the plug on their decision to back the Presidents Cup and the Wachovia event will be turned over to Wells Fargo. How companies such as FBR, Northern Trust, MasterCard, Zurich, Morgan Stanley, Barclay’s, Deutsche Bank—all major tournament sponsors—react to the current financial struggles will prove profoundly important for the Tour.
The PGA is probably paying particularly close attention to the Royal Bank of Scotland. Over the past week, the bank has seen more than 60% of its market value vanish. Just the other day, RBS was rescued by the British Government and if the bank uses some of those funds to continue sponsoring in the sports world there may be some discontented Members of Parliament. Losing RBS would prove damaging. RBS is the “Official” bank of the PGA of America, one of the USGA’s four sponsors, sponsor of this year’s Ryder Cup, and currently sponsors three of the four Major Tournaments on the PGA Tour. They also advertise incessantly during event broadcasts.
Now, the PGA Tour is fairly stable financially. But it will be interesting to see what kind of long term impact these landscape changes will have. Perhaps, for a short time at least, we’ll go back to the “good old days” and see tournaments named after players (Bing Crosby Pro-Am) instead of corporations (AT&T Pro-Am).
Tuesday, October 14, 2008
Real Clear Sports
10- Big Red – Western Kentucky Hilltoppers
9- Steely McBeam – Pittsburgh Steelers
8- Phillie Phanatic - Philadelphia Phillies
7- Stomper – Oakland Athletics
6- Burnie – Miami Heat
5- Mad Ant – Fort Wayne Mad Ants (NBDL)
4- Zippy the Kangaroo - Akron Zips
3- Sammy the Slug - UC Santa Cruz Banana Slugs
2- Otto the Orange - Syracuse University
1- Standford Tree - Stanford University
Check out the full article here.
And is it just me, or is anyone else surprised that these things haven’t been sold to sponsors or other advertisers. Perhaps there is some force out there maintaining their ‘mascot-ing’ integrity. Seems to me that with so many dumb mascots out there, selling a mascot to a corporate sponsor may not be a bad idea—indeed, it could be a good opportunity to hit the younger demographic market as they seem to be the only ones into these mascots. Then again, you might wind up with the ‘Kragen Autoparts Spark-Plug’ named Pluggie. That’d certainly be worse than Sammy the Slug.
In other mascot news, the Golden State Warriors have given Thunder his pink slip. Here is Ray Ratto’s sad, yet touching, obituary. Who will be the mascot for the 2008-09 campaign? Ideas?
Sunday, October 12, 2008
Ali and the Modern Sports Era
One of my favorite galleries focused on sports journalism. The exhibit traced the evolution of sports journalism and the effects that emerging technologies have had on how we receive our sports news. The display also featured case studies of particularly important moments and personalities in sports history. One of the best focused on Muhammad Ali. As anyone who has ever read about him knows, Ali was a loud, in your face, confident (arrogant?) man who had plenty of personality to spare.
He was also a man whose life was centered around controversy. This was not just the result of the less than popular political stances that he took. It was also because Ali represented a new kind of athlete. Sure, there were sports personalities that came before him—Ruth, Gehrig, Jack Johnson etc—but Ali was markedly different. Ali was unapologetic in his image of himself and never held back when it came to talking trash. Thus, the way in which the press treated him was revealing with regards to how the country felt and reacted to Ali. The establishment favored a quieter, more reserved athlete and preferred to focus on the team and its struggles in the vacuum of the diamond or ring. The new school, however, appreciated how sports and an athlete’s emotion could relate to and comment on current events such as Vietnam and the Civil Rights Movement. How you felt about him was a litmus test to see if you were part of the old-school—the establishment—or the new school: those who appreciated and saw what Ali had to offer. Indeed, Howard Cosell came to represent the new school.
Moreover, Ali came about at the crux of the 20th century modern sports era. This allowed him to take advantage of new technology and the new reporters that came with it as a way to craft his public image. Effectively, Ali shepherded in the concept of focusing on the individual and his story, not just the amalgam of a team’s collective efforts—although this certainly continued.
Where are we now, in 2008, in terms of where sports journalism sits? Certainly technologies such as HDTV and web 2.0 have ushered in exciting ways to report on and digest sports news. But the trend that Ali started—the rise of individual personalities—is still sloping upwards, as evidenced by the ever-popular athlete-as-sponsor model. I wonder if the tipping point is just on the horizon.
Wednesday, October 8, 2008
AEHPhotography: Sports Shots and other Photos
Here is a link to the sports section of my photo website. And, for those of you who are interested in my other photos—which include shots of San Francisco, Egypt, Jordan, and Africa—here is a link to my main page from which you can poke at my various galleries. Please enjoy, and all comments are welcome.
Video of the Week: Sapp Your Right Foot in Sapp Your Right Foot Out
Check out the video here: http://www.youtube.com/watch?v=8y3bcQN3FvA
As an aside, I'm amazed at the success of this show, especially in resurecting the profile of numerous athletes. Sapp is far from the first to participate. Past dancers have included Floyd Mayweather, Evander Holyfield, Laila Ali, Helio Castronevez, Jerry Rice and Emmett Smith, who one the thing two years ago. It's turned out to be quite the marketing tool. Who would have thought? This reality TV, turned game show/contest phenomenon is incredible.