10 TO WATCH WEEK OF 10/24/16
PUBLIC SECTOR SPORTS ENTERTAINMENT ISSUES OF THE WEEK
- As the NBA prepares to tip off its 2016 season on Tuesday, Commissioner Adam Silver still believes that North Carolina will host All-Star Weekend in the near future. This year’s NBA All-Star Game was moved out of North Carolina following the implementation of that state’s House Bill 2 (HB2). According to the Charlotte Observer, Silver said that bringing the 2019 All-Star Game to Charlotte is a “high priority,” but that if the bill does not change, the game “won’t be there.” “Our owners and teams are based all over the country in red states and blue states and purple states,” said Silver. “It was a strongly-held view that HB2 was inconsistent with the values of this league.” The NBA and other professional sports leagues have been recognized for their “progressive” values, in which equality and inclusivity are both stressed. HB2 was scrutinized nationally upon its instatement, and North Carolina continues to lose key athletic and non-athletic events due to its existence. NBA has been sailing along under the Silver administration with franchise values tripling. As December 15 becomes “D-Day” to extend the labor agreement, most folks believe the deal will be finished by Thanksgiving. As the league continues its “economic stability,” it can be aggressive on societal issues – such as influencing the change of the North Carolina law.
- The golf retail industry may be in a slump – witness the bankruptcy Golfsmith filed this year – but this week’s IPO by Massachusetts-based Acushnet Holdings, parent company of Titleist, will “peg the market value” of that company at around $1.7 billion, according to the Boston Globe. The record golf industry offering is expected to raise roughly $435 million from the “sale of 19.3 million shares priced between $21-$24.” The majority of voting shares will be “retained by Fila Korea Ltd., which bought Acushnet in 2011. Investors are likely drawn to Acushnet’s IPO by Titleist, one of golf’s most iconic brands. Overall, however, the $8.7 billion golf industry is in a decline, with other companies such as Nike and Adidas exiting golf equipment following successive years of diminishing sales. Acushnet reportedly “plans to use the capital influx from the IPO to develop new Titleist balls and clubs, to expand further into golf clothing and gear, and to continue to grow globally, especially in emerging markets like Southeast Asia. What remains to be seen is whether this buoyant golf boat will keep all parts of the industry afloat. Luckily, a healthy Tiger Woods is no longer imperative, and the superstar scenario remains diversified – Day, McIlroy, Spieth, and maybe Fowler.
- Despite reportedly engaging in expansion talks with 20 different schools over the past few months, it turns out that the Big 12 is not ready for expansion. The last three months were full of expansion talks for the league, but following conference meetings last week, officials announced that it will stand firm with 10 members. According to SI.com, the Big 12 interviewed 11 of 20 potential schools, though the league found none to be ideal candidates. Oklahoma President and Big 12 Board of Directors Chair David Boren said that the decision was “unanimous and no specific schools were discussed or voted on during five hours or so of expansion talk while Big 12 presidents and chancellors met.” In electing to keep only 10 members, the Big 12 still stands as by far the smallest of the Power 5 conferences; the Pac-12 is the second-smallest with 12 members, and the ACC is the biggest with 15. Will it smaller size impede the conference’s ability to consistently advance to the CFP Playoffs? The schools’ on-field play will tell. With the Big 12, expansion was tabled because the economic deal was not perfect. However, if schools like Oklahoma start looking elsewhere, watch out how quickly the Big 12 may reconsider. Now the college football rhetoric shifts to the possibility of a 6-8 team playoff, combined with a mega-conference merger into four super conferences. Neither is out of the question in the short-term.
- Owner Mark Davis took a major step last week toward relocating the Oakland Raiders to Las Vegas, but the potential move is not unanimously popular amongst NFL executives. As it currently stands, Nevada plans on building a $1.9 billion, 65,000-seat domed football stadium in Las Vegas, according to the Las Vegas Review-Journal. NFL observers are characterizing the Raiders relocation vote “as a battle between progressive NFL team owners who want to test the Las Vegas market and NFL Commissioner Roger Goodell, who may be buying time for an alternative plan to emerge to keep the team in Oakland.” Apart from the city’s reputation as a national gambling hub, other league owners close to the problem cite the desert city’s small size as a real concern for the plan’s viability. One team official said, “In general we don’t like to leave big markets for small markets. That’s as big as anything. I think most people are not crazy about that.” Vegas days from a “radioactive” sports market to the strong probability of having two teams before 2020. The appeal is not gambling, but the two million family residences who crave consistent spectator sports. A Rams-Chargers Los Angeles deal and the Las Vegas Raiders may settle the NFL “musical chairs” for quite some time. It will also produce a new Super Bowl, Final Four, NBA All-Star, and another mega-event venue in Las Vegas for all sports to leverage in the future.
- The MLS has grown at an accelerating rate over the past decade, adding eight teams across the United States and Canada, and the domestic soccer league has shown no sign of slowing down. According to the St. Louis Business Journal, a group led by St. Louis businessman Dan Corder “unveiled plans to build an MLS stadium on a 13-acre site” currently owned by St. Louis University. The plan calls for a new 22,500-seat stadium that has an estimated cost of $135-$150 million. Cordes noted that the stadium “would be mostly privately funded, though the group would seek public assistance in the form of tax increment financing.” The benefit of building the stadium on SLU’s property is that the university would own that land, thus allowing its men’s and women’s teams to utilize the MLS stadium and their home base as well. St. Louis is just one of multiple potential expansion cities being floated by MLS, also including San Antonio, Austin, Oklahoma City, Sacramento, and others. Will Don Garber be able to get $150 million for an expansion fee, including the cost of stadiums as part of each ownership group – remains to be seen. MLS does face challenges – next round of television negotiations, labor issues, etc. Overall, it is in much better health than it was even a few short years ago.
- The Sacramento Kings have not had the best product on the court over the past few years, but that is not stopping the franchise from striving to have the nicest facilities in the league. Aside from the brand new Golden 1 Center, the Kings are planning to build a new apartment building and shops “at the devastated corner of Eighth and K streets,” right near the arena. According to the Sacramento Bee, construction could begin as soon as next summer after the city council approved the sale of the land to the Kings for just under $6 million. Kings President Chris Granger said that the empty space just two blocks from Golden 1 Center is a “‘strategic site’ for the Kings as they seek to transform a large swath of downtown into a vibrant entertainment zone.” While the Kings’ new arena and community developments are top-notch, the team needs to start winning on the court if it wants to keep fans interested. Sports facilities now morph into entertainment centers and civic iconic meeting places. The better the facility, the more diverse the fan experience, the less important team performance is. You can be good, but you certainly can’t win every night, a facility destined to be a downtown magnet, a source of civic pride, and a tourist destination that minimize the impact of a lousy team.
- Golden State Warriors Co-Owner Joe Lacob recently accepted an award that may seem odd for an NBA team to win: the ENCORE Award. The distinction, which is given out by the Stanford Graduate School of Business Alumni Association, honors the Entrepreneurial Company of the Year. Lacob accepted the award from his graduate school alma mater, and the Warriors became the “first sports team” to ever win the accolade, quite a feat for the Oakland-based basketball team. “The truth is, we’re not really a basketball team,” said Lacob. “In this day and age, we’re much more than that. We’re a sports, media and technology entity.” Lacob, who got his start in venture capital in the late 1980s, has used his formal business background to shape the Warriors’ culture and business operations. ENCORE Chair Geoff Yang added, “It’s reinvented how the game is played, and how the organization is run.” Lacob and his organization prove that there is really very little distinction between sports, entertainment, and big business. The same business principles apply – attention to detail, management, motivation, etc. The difference is, you are not overwhelmingly booed as a corporate CEO whenever you have two or three consecutive quarter losses (you are, however, fired, demoted, or delisted).
- The San Diego Chargers are bringing in major fire power to help the team win over public approval for a new stadium. According to the San Diego Union-Tribune, the Chargers had quarterback Philip Rivers, former player Luis Castillo, and San Diego Mayor Kevin Faulconer appear at a news conference at Chargers Park to tell “their version of why voting ‘Yes’ on Measure C is imperative.” The official stadium-convention center proposal will be voted on in November, and the Chargers are in dire need of a new stadium. Months ago, the Chargers were one of the leading candidates to relocate to Los Angeles, but missed out. Now, as the Oakland Raiders continue their plans to move to Las Vegas, the Chargers are in a bind. If San Diego’s politicians and various factions “can’t get some sort of aid package together that voters will approve,” the Chargers “may very well leave,” though they now have no formal plans in place to do so. Currently, Measure C is polling far below the two-thirds voter majority required for the measure to pass. The predicted scenario is as follows: Chargers and Rams in Los Angeles; Mark Davis and the Raiders to Las Vegas. The NFL finishes its “leverage” process by finding homes for all teams who want to relocate. The remaining open question will be London and what kind of brand/team/series of games they might want in the future. And, how about the Jaguars?
- The 2020 Tokyo Olympics could feature a pretty special twist if approved: staging some events for the Games “in the northeastern region of Japan hit by the 2011 earthquake, tsunami and nuclear disaster.” According to the AP, IOC President Thomas Bach met with Japanese Prime Minister Shinzo Abe to discuss this possibility. In the initial meeting between the two leaders, baseball and softball were two events that were discussed to be played in the affected areas. Baseball and softball were dropped from the Olympics after Beijing 2008, but are among five sports added to the program for the 2020 Games. Both are “very popular in Japan and an event in the disaster-affected areas could send a powerful message of reconstruction.” While sports moved to this region would be done for honorary purposes, other events are set to be played outside of Tokyo due to venue issues. The Tokyo Olympics is intensely focused on legacy – from bringing back baseball and softball, to helping the northeastern prefecture, to overcoming the “right elephant” facilities left behind in Greece, China, and the like. Just what the Olympics needs, and also what Los Angeles is shooting for for 2024.
- The Los Angeles Sparks have a rich history of attracting a large following for the WNBA Finals, and this year was no exception to that. The Sparks topped the Minnesota Lynx in an epic Game 5 of the finals, 77-76, in front of 19,423 spectators. The game marked the Lynx’s first true sellout in franchise history at the Target Center and the best-attended finals game since 2007. According to the Star Tribune, the Lynx initially offered free T-shirts to the first 10,000 fans to arrive Thursday, but rewarded the community’s great response by handing out 18,000 T-shirts for a “Green out.” Current Timberwolves players turned out in full support to cheer on their female counterparts, including Andrew Wiggins, Karl-Anthony Towns, and Ricky Rubio. The most-attended finals game in WNBA history was back in 2003, when the Sparks played in Detroit before a crowd of 22,076. As the NBA seasons kicks off this week, the Lakers and Clippers are hoping to live up to the high standard that the Sparks set for Los Angeles basketball this season.