10 TO WATCH WEEK OF 11/14/16
PUBLIC SECTOR SPORTS ENTERTAINMENT ISSUES OF THE WEEK
- Many maintain that sport and politics do not – or at least should not – mix, yet the result of last week’s presidential election will surely have an impact on the future of American sport for many years to come. Before and after Tuesday’s vote, there were widespread concerns that a Donald Trump presidency could harm Los Angeles’ ongoing bid to host the 2024 Olympic Games and any potential push from the U.S. Soccer Federation to stage all or part of the 2026 FIFA World Cup – which some had suggested America might co-host with Mexico. Other sports industry followers speculate that the prospect of uncertain trade relations with other countries could negatively affect major league growth aspirations abroad. Whether any of that is actually the case remains to be seen. In the meantime, in a darkly ironic coincidence, the U.S. men’s national soccer team lost 2-1 to Mexico on Friday in Columbus, Ohio, one of the swing states that delivered Trump the keys to the White House last Tuesday night. On the plus side, Trump’s experience as a sports league and team owner could mean that he will forge policies beneficial to the sports industry at home and abroad. Sports can also serve an important healing function during the orderly transition of power – consider the city of Cleveland coming together four months ago with the Cavaliers; five million people attending a Cubs victory parade three weeks ago. Hopefully, the country now focuses on what unites us rather than what divides us.
- If you were surprised by last week’s election results, you might be even more amazed at who’s atop Forbes’ “Fab-40.” Forbes’ just-released “Fab 40: The World’s Most Valuable Sports Brands” ranks the top-10 most valuable sports business, team, athlete, and events brands. Atop the athlete brand value list at $36 million was Roger Federer, who had a subpar year on the tennis court, ahead of world champion and NBA MVP LeBron James ($34m). In third position is five-time major champion Phil Mickelson ($28m), who leapfrogged Tiger Woods for the first time in golf brand value – Woods’ brand dropped 23% in the past year, to $23 million. According to Forbes, “The Fab 40 measures how much the name of each brand–all by itself–contributes to their value or earnings. Athlete brand values are the amount by which endorsement income exceeds the average endorsement income earned by the top 10 earning athletes in the same sport during the past year.” 27-year-old Rory McIlroy was the youngest member of the athlete brand list, at $13 million; rounding it out were No. 4 Usain Bolt in an Olympic year ($25m); No. 6 Cristiano Ronaldo ($19m); No. 7 Kevin Durant ($16m); No. 8 Lionel Messi ($15m); and at No. 10, cricketer Mahendra Singh Dhoni ($11m). It’s not surprising that athletes on this list represent seven countries. Expect this brand globalization to continue. Look for “athlete corporations” to be increasingly global with assets including international television, worldwide endorsements, and global charities.
- Whether or not you voted for Donald Trump, here’s one thing we do know about the man who will be America’s 45th President – he’s passionate about golf. So what could his presidency mean for his golf courses, and for the game? Consider Trump Golf’s 18 global properties against Golf Digest’s annual compilation of the world’s best 100 courses, a bucket list that virtually assures tee times. The $63 million Trump Turnberry in Ayrshire, Scotland, comes in at No. 22 on the 2016 list, followed by Scotland’s Trump International at No. 54. The R&A has pulled Turnberry from the Open Championship rotation following Trump’s negative comments about Muslims. While none of his American clubs made the Golf Digest list, Trump’s presidential victory elevated his national brand power overnight. In a survey by Brand Keys, the Trump brand “rebounded to levels close to or exceeding added-value measures seen just prior to his announced presidential candidacy in April, 2015.” Two things are certain about Trump’s golf influence. One, any trade agreement changes he makes will likely be in the best interests of his global golf holdings and thus will support the game’s global growth. Second, since he’s vowed to turn his business empire over to his children, he’ll be hands-off with Trump Golf.
- The San Diego Chargers may ultimately leave town in the wake of Measure C’s defeat. According to the San Diego Union-Tribune, city residents voted down two ballot measures that “could have brought a combined convention center annex and Chargers stadium” to the downtown area. Team reps and players campaigned hard for the measure, but their pitches didn’t do enough to sway voters. Had it been approved, the project would have included a hotel-tax increase sponsored by the Chargers, but the 41% support it received fell far short of the 66.7% bar it needed to pass. Related “Measure D” had a similar approval rating, with only 40% of residents behind it. Chargers Chair Dean Spanos “posted a letter to fans on the team’s website after midnight thanking all those who helped put Measure C on the ballot.” He said that there would be “no immediate decision about the way forward.” Spanos’ next move will impact Los Angeles, Oakland, Las Vegas, and maybe even San Antonio, as the NFL’s massive game of musical chairs continues. Look for two teams in Los Angeles and one team in Las Vegas in the near future. Ironically, as the “musical chairs options” continue, the long-term prognosis seems clearer – and will probably be resolved in the next three or four months.
- As the Detroit Pistons mull the idea of moving into soon-to-be-complete Little Caesars Arena, facility construction costs have sky-rocketed an additional $105 million, according to the Detroit News. Sources close to the situation are unsure exactly why costs rose by so much, but city Development Authority officials have reassured that the revised estimate “doesn’t mean there have been massive cost overruns.” The Red Wings will move into the new arena regardless of the Pistons decision, but the prospect of the two teams sharing the facility appears likely. Officials said that the increase is “mainly because of more specific prices paid for such things as materials, permits, design refinements, subcontractor agreements and other costs that were expected to rise in building the state-of-the-art venue.” The total cost of the project now stands at $732.6 million, up from the previous number of $627.6 million. While $105 million is a big number, it’s not surprising given ever-rising construction costs; Detroit needs to focus on the bigger issue of having a top-notch venue that can hold Final Fours, major concert tours, political conventions, and the NBA All-Star Game.
- Elite European soccer clubs like Real Madrid, Barcelona, and Manchester United are known for writing massive paychecks to attract some of the world’s best talent. But some clubs stand out from the rest for their ability to sell players at a premium. According to the London Daily Mail, English side Liverpool is ranked in first place on the list of “Top European Club Sellers,” having sold £384 million over the past 14 transfer windows dating back to January, 2010. The team’s biggest single sale came in 2014 when star forward Luis Suarez moved to Barcelona for £75 million. Valencia followed behind in second place and Italian powerhouse Juventus rounded out the top three. Juventus has sold just over £350 in player contracts in the past seven years, highlighted by the sale of Paul Pogba to Manchester United this past transfer window for a record £89 million. Real Madrid finished ninth on this list. Like us all, pro sports GMs would rather have money than no money – even though we know it can’t guarantee happiness. As teams like Leicester City, the Kansas City Royals, and others demonstrate, it’s what you do with the resources rather than how much you actually have.
- Everything really is bigger in Texas, especially the state’s professional sports facilities. According to the Dallas Morning News, local Arlington voters “easily” approved funding for the Rangers’ new retractable roof ballpark. The facility is set to cost over $1 billion and should be open and operable by 2021 at the latest and 2020 as the earliest. The deal calls for the city to issue $500 million in bonds “to help pay” for the ballpark. A half-cent sales tax, 2% hotel occupancy tax, and 5% car rental tax “would pay off those bonds over an estimated 30 years.” Voters also “approved a ticket tax” of up to 10% and parking tax of up to $3 at the new ballpark. The team’s current facility, Globe Life Park, can accommodate up to 48,114 fans, but the new stadium is expected to be downsized a bit. The Rangers’ agreement with the city mandates that the new ballpark “hold at least 38,000,” but the team expects it to hold up to 42,000. This ballot measure comes with a heavy dose of political irony – traditionally tax-averse “red state” voters cleared the way for a new Rangers ballpark, while “blue state” San Diegans couldn’t get the same done for the Chargers.
- The L.A Rams will break ground on their $2.6-billion stadium in Inglewood, California this week. The stadium, temporarily named City of Champions Stadium, is slated for a 2019 completion. According to those close to the project, the first phases of construction will begin with excavating nearly 100 feet down for the foundation. Rams owner Stan Kroenke has also confirmed the stadium will have a retractable roof, will seat 80,000, and will be part of an entertainment complex on a 300-acre plot of land. The state-of-the-art stadium will host the Super Bowl in 2021. The Rams’ new stadium will have a role to play in the Los Angeles 2024 bid as well. The revised 2024 Olympic plan “focuses on four Olympic sports parks and emphasizes the proximity to public transportation” and the L.A. and Orange County region’s “wealth of world class facilities,” which of course would include this new facility, according to the Orange County Register. If the Chargers decide to share the facility with the Rams, that deal will be cut quickly. The facility will become the NFL’s showcase facility and a rotating home for mega-events. If the Raiders ultimately move to Vegas, that new facility becomes a second mega-event facility – also in the presumptive Super Bowl rotation.
- With Thanksgiving around the corner, ‘tis the season to give back. In the past month, Jeremy Lin and Tyrann Mathieu have pledged $1 million each to their respective alma maters. Brooklyn Nets guard Lin’s $1 million donation to Harvard will help pay for renovation of the school’s basketball arena and for undergraduate financial aid. A three-time All-Ivy selection before graduating in 2010, Lin helped establish Harvard as a power in the academic-minded conference. Former LSU defensive back and current Arizona Cardinals CB Mathieu is giving back to LSU. His $1 million donation will go towards improvements at the LSU Football Operations Center. Mathieu was dismissed from the LSU program in 2012 after multiple positive tests for marijuana. He finished fifth in Heisman Trophy voting in 2011, and won the Chuck Bednarik Award that goes to the nation’s top defensive player. At a time when it’s needed most, sports philanthropy and charity rise to meet the need. Look for all sports to couple their targeted charities with general goodwill and social good as the holiday season approaches.
- The University of Illinois announced that it will discontinue playing its biennial matchup with Northwestern University at Soldier Field in Chicago. According to the Champaign News-Gazette, Illinois AD Josh Whitman was disappointed with the game’s attendance last year and thought it was time for a change. In 2015, the game drew only “an announced crowd of 33,514 two days after Thanksgiving to a venue that holds 61,500.” 2017 and 2019 games will now take place on campus at Memorial Stadium. Whitman, an Illinois alum hired last year, is taking the school in a different direction than former AD Mike Thomas. Thomas was adamant about raising “the program’s football profile in Chicago,” a city that does not have a dominant hometown college team. Whitman in a statement said, “We feel strongly that we should play our traditional rivalry games in Champaign…Our intent is to play a major non-conference opponent at Soldier Field once every four years.” Illinois’ dilemma is similar to the decision NFL owners make when they consider giving up a home game to play in London. Is the increased brand exposure worth forgoing the several million dollars in revenue each home game brings?