1. NBA All-Star Game Parties on the Lowdown; Sponsors, Not so Much
Because of the downer economy, the upcoming NBA All-Star weekend in Phoenix—much like the Super Bowl—isn't expected to include as many over-the-top parties as in the past. (Among those canceled is Nike's (NKE) event, ESPN the Magazine's bowling party, and Zo & Magic's 8-Ball Challenge). But the All-Star bash is still expected to be the second-busiest major industry event next to the Super Bowl.
The Electronic Arts Sports party is still on, as is TNT anchor Kenny Smith's annual charity party, albeit scaled back. The NBA Players Assn. gala, long considered the weekend's top party because all the players drop by, will include fewer people, will feature a DJ instead of live acts, and will end an hour earlier than normal. This year, the NBAPA will present Steve Nash, Dwayne Wade, and Adonal Foyle with community service awards.
Also on is NBA's first-ever H-O-R-S-E contest, but it's going to be a different breed of horse. Instead of H-O-R-S-E, contestants—who'll be overseen by an NBA referee—will spell G-E-I-C-O. (G-A-G-M-E.)
The contest joins the slew of other sponsored contests that make up TNT's NBA All-Star Weekend offerings, including the McDonald's All-Star Celebrity Game and T-Mobile Rookie Challenge on Friday; Haier Shooting Stars, Sony PlayStation Skills Challenge, Footlocker Three-Point Skills Challenge, and Sprite Slam Dunk contests on Saturday. As part of the slam dunk coverage, TNT will have such NBA stars as last year's winner Dwight Howard imagine futuristic dunks, with EA Sports showing video simulations of the moves.
The NBA certainly hasn't forgotten about the fans. Also still on and center stage is the NBA All-Star Block Party presented by deodorant maker Right Guard, which will feature player appearances, live music, Electronic Arts video games, retail, and concessions. Right Guard, a division of German company Henkel (HNKG), moved into new headquarters in nearby Scottsdale in December. Toyota (TM), the official vehicle of the 2009 All-Star Game, is also a major participant.
2. Nascar Sponsorship at Daytona…and the International Motor Sports Outlook, Too
Like the NBA's loyal sponsor base, Nascar sponsors sticking with the sport are relying heavily on this year's circuit of races to generate business, according to the Charlotte Observer. Sprint Nextel (S), the title sponsor of the circuit's Cup series, will maintain a 10,000-square-foot activation center at each of the 22 racetracks hosting Cup races despite last month's announcement that the company will lay off 8,000 people. The telecom company, in fact, will increase Nascar expenditure this year, a clear vote of confidence in the power of the Nascar brand. Nascar has not lost a single site on its annual swift race across the U.S.
Home Depot (HD), which has also announced that it's cutting 7,000 positions, has renewed its sponsorship of the Joe Gibbs Racing #20 car driven by Joey Logano. And Bank of America (BAC) executives have emphasized that the bank's title sponsorship of the Lowe's Motor Speedway race on Oct. 17 and its status as "official bank of Nascar" will stay the same, albeit with less hospitality. (BofA formed a motor sports advisory group some time ago to "focus on Nascar lending opportunities.")
Meanwhile, the International Automobile Federation (FIA) announced further cost-cutting initiatives that would decrease team spending by up to 75% in two years. The FIA has proposed that teams will compete in 2010 on less than a quarter of the amount some were spending last season. The target is to get the cost of competing down to €50 million ($65.17 million) for everyone, including manufacturer teams. Some manufacturers such as Honda (HMC), which will not compete in the 2009 season, are estimated to have spent more than $300 million with the FIA last season. The FIA and the Formula One Teams Assn. have already agreed to a package of cost-cutting measures for 2009, including longer-lasting engines, limits on aerodynamic development, and a ban on testing during the season.
3. Tale of Two Endorsement Heroes
Tony Hawk better watch his back. The endorsement picture for a couple of his mates in last year's popular "Guitar Hero World Tour" ad spot got a little fuzzier last week as Michael Phelps and Alex Rodriguez came under scrutiny for pot and steroids, respectively. The fourth member of the quartet in pink oxfords and skivvies, Kobe Bryant, had his season of scandal a few years ago.
Outside of their Activision old-time rock-and-roll union, Phelps and Rodriguez share no sponsors. But the two currently face many of the same issues. Both are facing-illegal substance scrutiny for activities in the "off season": Phelps was not actively competing, and Rodriguez's positive steroids test came from a batch of "monitoring" tests in 2003 that were supposed to remain anonymous and entailed no penalty for positive results. Both are in the prime of their careers, earning multimillion dollars each year in endorsements (A-Rod a reported $6 million from Nike, Topps, Rawlings, and Oasys Mobile; Phelps reported $5 million from Speedo, Omega, AT&T (T), Powerbar, VISA (V), Argent Mortgage, and Subway. And both had likely reached their ceiling of endorsement income before last week—Phelps because his sponsor window comes around only once every four years, and Rodriguez because he's never been a marketing icon and doesn't seem to care.
Where Phelps' and Rodriguez's stories diverge radically is in the court of public opinion. While poll after poll conducted about Phelps' situation indicates that the vast majority of fans think one bong hit is not serious enough to condemn the kid for life, A-Rod's steroid use may cost him multiple endorsement deals and keep him out of the Hall of Fame—a severe punishment for a guy who has the opportunity to go down as one of the all-time greats.
4.The Stimulus Bill Sports Wish List
Citigroup (C), receiver of $45 billion in TARP funds, reportedly is exploring the possibility of backing out of its nearly $400 million marketing deal with the New York Mets. Across town, the Atlantic Yards development, with its Barclays arena centerpiece, could progress or fold depending on President Barack Obama's $827 billion stimulus plan. The New York Post notes that although stadium projects "don't qualify to receive money through the stimulus bill, arenas are not mentioned in the document."
Because these major New York City sports-centric projects remain under high national scrutiny, it's interesting to note for which projects smaller cities are trying to obtain sports-related funding under the new stimulus plan.
Among them: $2.3 billion worth of projects in Shreveport, La., including "$6 million for three aquatics centers with water slides, which would create quality of life." San Bernardino, Calif., wants $1.1 million for park improvements, including two splash park installations and a skateboard ramp. Virginia Beach wants $1.8 million to build municipal tennis courts; Boynton Beach, Fla., is seeking $4.5 million for an "eco park" featuring butterfly gardens and gopher tortoises. The Conference of Mayors also cites more than a dozen golf course-related projects, including $3 million for an eco-friendly muni golf clubhouse in Lincoln, Neb. And in the vein of keeping Austin, Tex., "weird," that city wants $886,000 to build a 36-hole Frisbee golf course that would be "environmentally and financially sustainable."
What do these projects have in common? A primary goal of keeping average Joes in good physical and mental shape—and not providing a billion-dollar playgrounds for pampered athletes, owners, and corporate execs.
5. UNC-Duke: Tent City Blues
Another way to combat the financial crisis is to focus on mega events, such as this week's monumental Tobacco Road basketball clash between No. 3 North Carolina and No. 6 Duke. With most season ticket holders for home team Duke coming from out of state (thanks to the school's ironclad rule that all alums wanting tickets must join the pricey Iron Duke Club, only 11% of season ticket holders are regional), the annual match up has an economic impact similar to the ACC tournament or early round NCAA tourney play.
At Duke, the weeks leading up to the big game evoke the Great Depression in an entirely different way. The 1930s had Hooverville cardboard shacks full of the unemployed on bread lines; UNC-Duke features K-ville, a temporary tent village close to Cameron Indoor Stadium filled with prosperous undergrads in line for tickets.
The undergrad student ticketing process for the annual North Carolina game is so arduous that it requires five pages just to explain the rules. In a nutshell, there are four types of Duke home basketball games: walk-up games, wristband games, tenting games, and the senior game. The UNC game is a "tenting game"—meaning that if you want one of the 1,200 tickets made available to the 5,000 undergrad students, you have to camp out in a tent to get one. For weeks on end, all day and all night, in the coldest part of the winter, and midterms be damned. Sure, you camp in groups of eight, so you can take turns showering and going to class. But if I'm a Duke parent paying an undergrad tuition of $36,173 (compared with $5,397 in-state, $22,295 out-of-state at UNC), do I really want my kid staked out in a freezing cold tent for two months just for a lousy basketball ticket?
Apparently, Duke students aren't the only ones desperate for tickets. North Carolina State Senator Eddie Goodall wanted a pair of seats for Wednesday's game so badly that he put his Senate seat up for auction on eBay. (The eBay offer is actually for Goodall's black leather swivel chair, personalized with his name and the Senate seal, and purchased by the senator for $787.95. It's also a prank.)
6. Ticketmaster and Live Nation? Really!?!
I'm a big fan of the Really!?! segment of Saturday Night Live's "Weekend Update." (If you haven't seen Seth Meyers' roast of Kellogg's over canceling its contract with Michael Phelps, go immediately to nbc.com. It's hilarious.) In honor of Really!?!, here's my take on the proposed Ticketmaster (TKTM)-Live Nation (LYV) merger.
Really, Ticketmaster. After tacking 30% on to my AC/DC ticket from your niggling fees—including the outrageous buck or two you charge me to print out my own ticket on my own printer—you're now going to get in bed with the biggest concert promoter/artist manager in the business so that you vertically integrate and gouge me even more? Really!?! You're now going to make it so expensive for venues outside your clique to hold your events that they'll have to raise the rent for their resident sports teams, which, in turn, will increase the price of my season tickets? Really!?! Likewise, concessionaires will have to charge me $20 a beer instead of the "reasonable" $13, and parking my car anywhere near the joint will increase from $25 to $35? Really!?! And this new combined company isn't going to figure out how to get its mitts on sports and all the billions of dollars it could reap there? Really!?! And federal regulators aren't going to see this for the monopoly it is? Really!?!
In related but not so infuriating news, viagogo, a European secondary ticketing exchange launched in July, 2006, has secured $15 million of new investment from high-profile industry players. The company has now secured a total of $70 million of external investment, after making landmark deals to become the official secondary ticketing partner of EPL clubs Manchester United and Chelsea, and later Bayern Munich, Everton, and Hearts, and rugby clubs Leicester Tigers, London Wasps, and Harlequins RFC. New investors include Agassi Enterprises. (Andre and Steffi Graf are now ticket moguls? Really!?!)
7. Five Recent Sports Media Hires
Over the last month various media outlets have made splashes with their new sports mouthpieces. Here are the most notable, ranked from worst-to-first:
5. Matt Millen (NBC): Hired by NBC as part of its NFL postseason coverage, Millen is the poster child for people whose opinions don't matter. After "leading" the Detroit Lions to the worst season in NFL history, NBC hired him for his "analysis." Each time Millen appeared on TV in the Detroit market on Super Bowl Sunday, the NBC affiliate there ran a disclaimer stating, "Matt Millen was president of the Lions for the worst eight-year run in the history of the NFL."
4. Gus Johnson (Showtime): Hired to be lead announcer for Showtime Championship Boxing, Johnson is best known for his CBS March Madness commentary. Making his debut on Feb. 7, Johnson now has the pressure of replacing longtime broadcaster Steve Albert, who had held the position since 1987.
3. Jay Mariotti (AOL Fanhouse): It might not be TV, but Mariotti instantly became the headliner at AOL after his hiring at the beginning of January. Since he continues to appear regularly on ESPN's Around the Horn, AOL gets itself a nationally known—albeit nationally despised—journalist.
2. Joe Buck (HBO): Replacing the man who finished first on this list, Buck has been the lead play-by-play man for MLB on Fox since 1996 and the NFL since 2002. One of the better-known names in broadcasting, Buck has occasionally been criticized for his drab delivery. Regardless, Buck will thrive hosting a studio talk show at HBO.
1. Bob Costas (MLB Network): Since beginning his career in the late 1970s, Costas has covered the Olympics, World Series, NBA Finals, and this year's NHL Winter Classic. In addition to his work with NBC, Costas just signed an exclusive cable deal with MLB Network, adding more credibility to the newly formed channel. Don't act so surprised. Like George Will, Costas is a baseball guy at heart.
8. Houston Texans' Drillgate
While NFL owners may not like the CBA (since they opted out of it last May), their coaches are still obligated to abide by it until it ends in 2011. Apparently, Houston Texans head coach Gary Kubiak missed that memo.
According to ESPN, the Texans' coaching staff forced players to engage in contact drills during a minicamp last May, despite the fact that the CBA forbids such practices. Three players suffered season-ending—and possibly career-ending—injuries. The drills went on despite complaints from the team's player representative to the coaching staff.
The ESPN report said that while it is common for coaches to arrange contact drills during minicamps, it's unusual for the drills to continue when players object. It is unlikely that the NFL will penalize the entire Texans franchise as it did the Patriots during their Spygate scandal, In that case, league officials believed that Pats ownership didn't know about the videotaping. Nevertheless, the organization was docked a first-round draft pick because, in the NFL's words, "Coach Belichick not only serves as the head coach but also has substantial control over all aspects of New England's football operations. His actions and decisions are properly attributed to the club."
The Texans face a lawsuit from OG Dan Stevenson, who tore his labrum and is now out of the league. Two grievances were filed against the team and are currently pending. As for coach Kubiak, expect him to face a hefty fine from the league.
9. Largest Partnership in Olympic History
The Sochi 2014 Organizing Committee has signed its first Tier One partnerships for the 2014 Olympic Winter Games, with Russian telecom companies Rostelecom and MegaFon. The deals are valued a combined $260 million, the largest domestic sponsorship agreement in the history of the Olympic Movement. Additionally, the new Sochi 2014 partners plan to invest about $200 million for infrastructure development in Russia's Krasnodar region, making their total investment in the Sochi 2014 project approximately $500 million.
The selection of Sochi 2014's telecommunications category partners at such an early stage of preparations will help to revolutionize the Black Sea coastal region's telecommunications infrastructure and deliver an innovative and technologically advanced Winter Games. Rostelecom and MegaFon will assume the status of general partner of the XXII Olympic Winter Games 2014 in Sochi; general partner of the Russian Olympic Committee, and general partner of the Russian Olympic team (2010-2016). The Sochi 2014 Organizing Committee is currently in discussions with several other leading companies that have expressed interest in becoming partners of the Winter Games. Open Tier One partnership categories are oil, gas, metallurgy and apparel. Worldwide Olympic Partners already signed up for 2014 are Coca-Cola, Panasonic, and Samsung.
10. Last week, we determined that cheerleading is a contact sport. So, apparently, is bikini modeling.
In the bikini model's case, however, the bulk of the contact is between media properties and their sponsor base, as we saw all this week with the widespread sponsor activation around Sports Illustrated's annual swimsuit issue.
Rather than just mail the magazine to sun-starved subscribers in the Midwest and wrap it in brown paper for newsstands, the magazine this year is turning its cash cow issue into a multifaceted swimsuit model marketing machine. After the issue's cover was revealed on CBS' Late Show Monday night, reported The Wall Street Journal, PepsiCo's (PEP) SoBe lizard mascot on Tuesday morning was featured with some of the models in YouTube video ads frolicking on the Canary Islands and in Naples. What's more, SI and its top retail outlet, 7-Eleven, partnered on a related Danica Patrick-themed promotion in which 7-Eleven stores handed out IndyCar Series/Patrick-in-a-bikini posters to the first 25 people who bought the swimsuit issue in each store. (Guess last week's Super Bowl "shower" ad wasn't enough bare skin for Danica.)
But that's tame compared with what Southwest Airlines (LUV) did. At New York's La Guardia Airport, Southwest unveiled one of its planes, temporarily dubbed SI One, emblazoned with a fuselage-sized image of cover model Bar Refaeli. The jet will fly 100 VIPs, including two dozen models, to Las Vegas for a weekend launch party and R&B concert for 1,000 that also will include "stunt drivers sponsored by Nissan Motor [racing] cars on a lot adjacent to the Luxor hotel, with swimsuit models as their passengers." All told, Vegas officials say they're spending more than $1 million with Sports Illustrated this week to feature swimsuit models in events.
SI acknowledges that promotions surrounding the swimsuit issue are generating about $3 million in additional revenue, which will help them offset the third-fewer ad pages sold in the issue this year than last. (The nerve of the economy to rain on this annual beach party.)
Rick Horrow is a leading expert in the business of sports. As CEO of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and other urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel.