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10 TO WATCH WEEK 11/28/16

PUBLIC SECTOR SPORTS ENTERTAINMENT ISSUES OF THE WEEK 

 

  1. The Monday Night Football game between the Oakland Raiders and Houston Texans has shown the NFL how valuable of a market Mexico can be. According to the Houston Chronicle, the NFL is now aiming to grow its International Series to include a game in Mexico on an annual basis, expanding from the traditional games played overseas in London and the United Kingdom. The sport has grown immensely in Mexico, where nine games are televised live every week; viewership is up 28% in the past five years. Football’s overall popularity is also “growing,” as there are 6,500 league-sponsored teams in youth programs in 27 of 32 Mexican states. NFL Mexico General Director Arturo Olivé said that 2.5 million kids “play flag football in elementary schools.” Mexico City’s great metropolitan population reaches north of 20 million, meaning there is massive potential to draw in new fans. The game was an artistic, economic, and social success (smog and oxygen deprivation notwithstanding). The league should resolve its market and stadium issues by early next year – the Las Vegas/Oakland Raiders, San Diego Los Angeles Chargers, and Los Angeles Rams. At that point, the league will be free to assess its long-term/international alternatives: Mexico, England, Germany, etc.
  1. The Los Angeles Rams have officially broken ground on their new Inglewood stadium complex. According to the L.A. Daily News, Stan Kroenke’s new stadium will be built on a 298-acre lot with the goal of becoming the “most unique and fan-friendly stadium in the world.” NFL Commissioner Roger Goodell and Inglewood Mayor James Butts made an appearance at the ceremony to celebrate the groundbreaking for the $2.6 billion development. The 70,000-seat, open-air stadium is set to be open in time for the 2019 season and will be “surrounded by 2 million square feet of retail stores, a 6,000-seat performance venue, a theater, 2,500 homes, and 25 acres of public parks.” To put the scale of the construction site in context, the lot that the stadium is being built on is “3 ½ times the size of Disneyland.” Rams officials “already have been in talks with the NCAA about hosting future Final Fours, in addition to discussions about being a site” for a CFP championship game and “playing a role in the LA 2024 Olympic bid.” This facility will be the next great “iconic building.” The Astrodome, Madison Square Garden, AT&T Stadium, U.S. Bank Stadium in Minneapolis, Mercedes-Benz Stadium in Atlanta, and this new facility – all North American treasures.
  1. In an attempt to increase diversity among managerial roles, MLB has cut ties with search firm Korn Ferry. According to USA Today, the league was “frustrated that their managerial and GM vacancies this winter were filled without a single minority hired from outside an organization,” prompting the move. To start, the leadership search firm did a very poor job at identifying potential minority job candidates, let alone hiring them for the positions. The Twins “interviewed only one minority” for each of their two open front office positions this past offseason. The D-backs “interviewed two minority candidates” for their vacant GM position. “No MLB club has hired a minority GM from outside the organization since the D-backs hired Dave Stewart in 2014.” Commissioner Rob Manfred spoke in great depth about the importance of hiring minority candidates for top positions, even if that includes creating new positions to increase diversity. Baseball legitimately focuses on representing the makeup of its players, fans, and (hopefully) its future demographics as well.
  1. Change is coming to Oakland, where the A’s “shook up their upper management…and reasserted their commitment to building a privately funded” ballpark in the Bay Area. According to the S.F. Chronicle, team Co-Owner John Fisher will take over for Lew Wolff as managing partner, the latter of whom will sell most of his 10% stake in the club. MLS Earthquakes President Dave Kaval will take the same position with the A’s, replacing Michael Crowley. Wolff has played the most-influential role in the team’s management over the past decade, a period in which he was constantly scrutinized for “the team’s low payroll and attempts to move to San Jose.” Under the new management team, the A’s will look for a new stadium at an “unspecified location” in the Oakland area – not in another city. Kaval will play the lead role in finding a new stadium going forward. Commissioner Rob Manfred provided a clarion call with his informal timetable: get a stadium deal done within the year. Look for this mandate to shake up the Bay Area in an interesting game of stadium/facility/ community musical chairs.
  1. Bayer Leverkusen is looking to expand its fan base, and not in Europe. The German club is launching a new initiative to attract followers from North America and the United States, according to Sports Business Journal. The move by Leverkusen follows the likes of Bayern Munich and Borussia Dortmund as German clubs trying to tap into the American sports market. “While Leverkusen has yet to travel to the U.S. for a summer preseason tour, it will for the third consecutive year participate in the Florida Cup during the Bundesliga’s January winter break.” The team signed a media deal with Fox Sports last year to televise its games in the United States, which has proven to be a “catalyst” for the club in expanding the brand. The team has also launched new social media accounts with a primary focus on English-language content for overseas fans. This process intensifies an ongoing trend of European team marketers and managers reaching across the pond for American fans. The process has “gone the other way” for a number of years, but all international soccer executives see the tremendous potential in capturing the corporate base that includes avid North American soccer fans.
  1. It’s official: The Detroit Pistons will be moving into Little Caesars Arena next season. According to the Detroit Free Press, the Pistons will share the soon-to-be-complete arena with the Red Wings. The agreement between the Pistons and the Red Wings likely “goes beyond where the Pistons will call home.” The Pistons will “eventually sign a lease to move downtown and play in Little Caesars Arena,” which is scheduled to open next fall. Sources close to the team speculate that the lease will last 25 years, but that number is still undetermined. As part of this development, the team will now build a practice arena in downtown Detroit, separate from the arena. The entities will also “likely join forces and combine the concert businesses” of Palace Sports & Entertainment and Olympia Entertainment. PS&E is the umbrella organization “over the Pistons, the Palace and other music venues.” The Detroit area now has four teams – Pistons, Red Wings, Lions, and Tigers – that have made a significant long-term commitment to downtown Detroit. All have had other alternatives, all played in other locations, and all have chosen to migrate downtown in an attempt to generate significant economic, social, political, and developmental impact for the city of Detroit. Another example of sports as a catalyst for economic revival.
  1. Golf’s return to the Olympics this past summer in Rio drew mixed reviews, but the sport is “expected to retain its Olympic status…until 2024 at least,” according to The Guardian. The sport’s appearance in Rio marked the first time it was played in the Summer Olympics since 1904, “but it had not been promised a spot past the 2020 Tokyo Games.” British professional Justin Rose captured the gold medal this past summer, topping Henrik Stenson in the end, after many top players – including Jordan Spieth and Rory McIlroy – dropped out, citing Zika and a tough Tour schedule as primary reasons. The International Olympic Committee “meets early next year for a standard review and to announce what sports will feature in the 2024 Games.” On the women’s side, Inbee Park finishing in the top spot. Olympic officials understand the importance of golf as a corporate magnet, as well as a long-term economic engine. However, the key will be to tinker with the format on both the men’s and women’s side to generate incremental excitement for players, fans, and golf industry alike.
  1. Carolina Hurricanes President Don Waddell has reassured the public that the team is not for sale despite rumors circulating the sports world. According to the Raleigh News & Observer, Owner Peter Karmanos is “not actively looking to sell the team,” ending any doubts of the team’s intention to leave town and relocate. Waddell noted NHL Commissioner Gary Bettman has said more than once in the past year that the team “will not be relocated and the league is committed to having a franchise in one of the fastest growing markets in the country.” Karmanos is believed to have valued his franchise at $400 million. The Hurricanes are “last in the NHL in home attendance” at 11,256 through eight home games after finishing 30th last season at 12,203. But Waddell said that total revenue “hasn’t been negatively affected, due to the decision to significantly reduce the number of complimentary tickets.” The NHL should be proud of its Sunbelt strategy. Youth hockey development, Industry Growth Fund, cultivating long-term fans. The Hurricanes have been a centerpiece in that strategy since their Stanley Cup victory. Hopefully, that will continue.
  1. MLS has grown considerably in size and popularity across the United States and Canada over the past few years, prompting Deloitte to lay “out the benefits of introducing a pyramid system in the U.S. that is similar to what is used in many other nations” in a recent report. However, MLS Deputy Commissioner & President Mark Abbott claims this report to have “serious credibility issues,” according to the London Telegraph. The report stated, “We (Deloitte) believe the introduction of promotion and relegation into the existing league system could have numerous long-term benefits, including increased attendances, increased broadcast audiences, improved commercial revenue and a positive impact on both elite players and grassroots participants.” Abbott argued that this system would prove faulty if implemented in the United States due to the incredible amount of time, money, infrastructure and resources required to grow the sport domestically. MLS executives strive to grow the game, generate additional market support, and attempt to become a “top five international league” to satisfy their lofty goals. A difficult task, but one that will continue to have a chance to succeed as long as the league evolves positively.
  1. The United States Men’s National Team now needs a new coach after firing Jurgen Klinsmann. According to SI.com, Klinsmann is leaving a “complex legacy,” one that was once full of hope but became muddled with “unfulfilled promises.” In his early years as the manager of the USMNT, Klinsmann worked effectively to recruit key dual-residence players to wear red, white and blue. However, the USMNT last week lost 4-0 to Costa Rica, marking the “first time in 15 years” that the U.S. had “lost consecutive” World Cup qualifiers after falling to Mexico 2-1 earlier in the month, leaving the team’s hope of qualifying for the World Cup in jeopardy. Other key losses in Klinsmann’s tenure include a 2015 Gold Cup semifinal loss to Jamaica – the “first to a Caribbean team on home soil since 1969” – and a loss to Guatemala – the first loss to the country since 1988. American soccer has transcended the first hurdle: survival and stability. We all grew up in a generation of tremendous hope and long-term vision. Now, however, the pressure mounts to actually produce. Can the MLS continue to produce home grown talent to perform admirably on the international stage? We will see.