The Business of Sports

BCS: Buckets of Cash Series


1. Bowl Series Brings Big Bucks

Alongside its on-field drama and pageantry and the controversy surrounding it almost every year, college football's Bowl Championship Series takes the conventional metrics of sports' economic impact to an entirely new level. The BCS Championship Game is much closer to the World Series or All-Star games than even college football conference championships in terms of ticket prices and demand, local revenue generated, and TV ratings. Moreover, when the BCS finale is held at the Rose Bowl in Pasadena, Southern California reaps the benefits of fans traveling to attend all three events that fall under the Tournament of Roses banner, beginning with the Rose Parade on New Year's Day.

Despite the down economy, the $182 billion sports travel industry continues to blossom. Researchers estimate that 10% to 15% of fans at pro sports events are visitors from out of town and that 27% of all travel expenditures are trips that involve some sports. The 34 college football bowl games, culminating in the BCS National Championship Game, are a sports travel bonanza, with 2009 attendance and revenue figures pleasantly exceeding expectations in many communities.

Coach Bobby Bowden's final game at Florida State, the Konica Minolta Gator Bowl, drew a record crowd of 84,129 to Jacksonville Memorial Stadium. FoxSports.com reported that demand for media credentials and tickets was "higher than the one Super Bowl" played there in 2005. The Seminoles won the game 33-21.

Huge Attendance

In Memphis, Arkansas' overtime besting of East Carolina in the AutoZone Liberty Bowl drew 62,742 fans, the "second-largest crowd in the game's 51 years," according to the Memphis Commercial Appeal. And in El Paso, the El Paso Times notes that the Brut Sun Bowl, where the Oklahoma Sooners beat the Stanford Cardinals 31-27, drew a record crowd of 53,713.

Back in Pasadena, UCLA's Anderson School of Management conducted an independent economic impact study on the 2005 Tournament of Roses that found its events produced $208.1 million in direct expenditures and a in total economic impact of $370.3 million on Southern California.

The following year, when the Rose Bowl doubled as the National Championship Game (before a second-tier BCS Championship was added) and Texas defeated USC 41-38 in the final 10 seconds of the game, Tournament of Roses organizers were smiling all the way to the bank. More than 40,000 Texas fans made the pilgrimage to Pasadena that year; UT, allotted only 20,000 tickets to the game, sold 28,000 tickets, and total attendance topped 93,986. The 2006 Rose Bowl Game produced a TV audience of 68.5 million in the U.S. and received a rating of 21.7, for a share of 35.

This year, Tournament of Roses officials anticipate the BCS National Championship Game, coupled with the parade and the "Granddaddy of them all," will produce more than $100 million in direct and indirect economic impact. The payout for the game? Upwards of $31 million.

Regardless of the economic impact of the championship game, fans still clamor for a proper playoff system. A new Quinnipiac University poll revealed that college football fans support sidelining the BCS in favor of a playoff system by a margin of 63% to 26%.

2. Ad Vantage

In defiance of geography, Miami is up and Vancouver is down.

With less than five weeks to go before Super Bowl XLIII at Miami's Dolphins Stadium, CBS (CBS) reports it has only four commercial spots still available during the Super Bowl telecast, despite a down economy that has forced many advertisers, including some U.S. automakers and Pepsi (PEP), a 23-year Super Bowl advertiser, to step away from the game. Sports industry marketing and advertising executives point out that CBS appears to be well ahead of where 2009 broadcaster NBC was a year ago. CBS has been charging advertisers $2.5 million to $3 million per spot during the Feb. 7 game, roughly the same pricing as last year.

A year removed from its Super Bowl hosting duties, industry ad buyers speculate NBC still has about 20% to 30% of its ad inventory available for the Vancouver Winter Olympic Games, which kick off in mid-February. Similar to the CBS Super Bowl scenario, NBC has been hurt by several long-term USOC sponsors that decided not to renew their deals, including Home Depot (HD), General Motors, and Bank of America (BAC). NBC paid $820 million in 2003 for the rights to the Vancouver Games, and as we noted two weeks ago, it has publicly stated it expects to lose as much as $200 million.

According to research firm Magna, the Vancouver Games will boost total U.S. ad revenue by $487.5 million in 2010, down 25% from $650 million during the 2006 Winter Olympics.

3. Tiger Tanks Stocks

When the February issue of Vanity Fair hits newsstands on Wednesday, a bare-chested, four-color Annie Leibovitz photo of Tiger Woods on its cover is sure to get the attention of passers-by—and morph into a gallery of impulse buys by people who'd normally rather five-putt than be caught rifling through the gossipy glossy.

According to a UC Davis study, however, it was shareholders of Woods' sponsors who lost their shirts, not the athlete exposed.

UC Davis economics professors Christopher Knittel and Victor Stango examined stock market returns for the trading days between Nov. 27, the day Woods' SUV accident was reported, and Dec. 17, one full week after Woods announced his indefinite leave from the PGA Tour. The two profs then compared the returns for Woods' sponsors—AT&T (T), Pepsi/Gatorade, and Nike (NKE) among them—during that 13-day span with each sponsor's closest competitor and with the market as a whole.

Their conclusion? Woods' sponsor companies lost a collective $5 billion to $12 billion during that period. As reported by the New York Post, Knittel and Stango hypothesized that "It seems plausible that the events beginning on Nov, 27 materially affected shareholder value." Tellingly, Accenture (ACN), which had already severed its relationship with Woods, "experienced no measurable ill effects" during that period.

AT&T ended its yearly contract with Woods only days after the study's results were made public.

And in a different sort of market watch, in the wake of the Woods scandal, the wives of several NFL players created a new company called Off the Market, which seeks to improve the relationships of athletes with their significant others. Off the Market founder Tia Robbins, wife of New York Giants defensive tackle Fred Robbins, claims the company was conceived before the Woods saga was exposed.

Rick_horrow
Rick Horrow is a leading expert in the business of sports. As chief executive officer of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel. Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports (2010). Horrow is also the host of Sportfolio, a new program on Bloomberg TV that airs Wednesday nights at 9 pm ET.

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