Business of Sports

Will Revenues Be Below Par at the British Open?


1. Turning to Turnberry—the 2009 Open Championship and Golf Economics
When the BBC, TNT, and other television cameras begin rolling at Turnberry on Scotland's rugged Ayrshire coastline on July 16, they'll capture a site that is sacred to golf. Not like Musselburgh or the Old Course at St. Andrews, synonymous with the centuries-old roots of the game itself. Rather, Turnberry is a symbol of a much more modern form of the game: as the first recognized golf resort to be built in the world, it's a monument to golf's commercial viability and economic reach. Looking to win his 15th major title at the 138th Open Championship this week is none other than the modern embodiment of golf's commercial success, Tiger Woods. Playing alongside Woods are the faces of the sport's multinational future: 17-year-old Ryo Ishikawa of Japan, 20-year-old Rory McIlroy of Northern Ireland, and fellow American of South Korean heritage, 24-year-old Anthony Kim. To cover Woods and other stars young and old (like 54-year-old Greg Norman, who won the Open at Turnberry in 1986 and captivated the world last year at Royal Birkdale), the BBC is reportedly dispatching 420 people to Scotland this week. But in a nod to the down economy, "not one member of staff, including the main presenter Gary Lineker and commentator Peter Allis, will be put up in hotels." Instead, they are "being herded into university halls and shared rented houses." And after the British media exposed lavish expense bills at the government-owned broadcaster last month, no senior BBC executives are planning to attend. With Woods gunning for his 15th major, defending champion Padraig Harrington in a slump, and Phil Mickelson staying in California to nurse his wife and mother through breast cancer treatments, the cameras of TNT, which won exclusive live coverage in the U.S., will no doubt be focused on Woods the majority of the time. CBS' coverage of Woods' AT&T National tournament two weeks ago earned a 4.6 rating, up 207% from the 2008 event when Woods was injured and unable to play. TNT is likewise expecting banner ratings for its British Open coverage. Like Woods, McIlroy has fast become the object of constant media scrutiny. He won his first European Tour title in Dubai in February, and finished 10th at last month's U.S. Open. McIlroy counts and Titleist ( (FO)) among his growing list of sponsors, and has won enough money on tour that he bought a Ferrari F430 earlier this year. Outside of longtime Open Championship sponsors Royal Bank of Scotland ( (RBS)), , Lexus ( (TM)), Unisys ( (UIS)), and Nikon ( (7731.T)), United Parcel Service ( (UPS)) in May announced efforts to expand its international golf sponsorship, completing a four-year deal as an official supplier of the British Open. The agreement adds to UPS's deal to sponsor six PGA European Tour events annually as its official logistics and express sponsor. The company also announced separate deals with golfers Lee Westwood and Pablo Larrazábal to become UPS global brand ambassadors. In the U.S. the PGA Tour's Ty Votaw said the tour is expecting a drop in its bottom-line results from tournaments of 7% to 15% this year from a record $124 million last year, largely due to the economy and lower tournament participation from subsponsors. To help compensate, following the lead of the NBA and NFL, the PGA Tour is considering allowing liquor company sponsorships. Estimates say the new sponsorships could total $50 million a year in revenue. At the same time, major golf equipment supplier Callaway ( (ELY)) announced that sales fell to $272 million in Q1 2009 from $366 million in the year-ago period. A final economic footnote—while the champion's share of Open Championship prize money will be the same as last year, £750,000, should Woods or another American win, the current exchange rate means that he will pocket $1.2 million, down from the $1.5 million the exchange rate produced last year. But what's bad for potential American victors is undoubtedly good for American golf tourists and the buying power they bring to Scotland. 2. British Open: The Props
Ah, Britain. As puritanical as Americans generally are about betting (at least in public), the Brits will pretty much bet on anything. Here are current odds and proposition bets for the 2009 Open Championship. Tiger Woods vs. the field is a popular prop bet on Betfair.com and other online wagering sites. Outright betting on Bodog.com puts U.S. Open winner Lucas Glover at 100-to-1 odds and U.S. Open surprise contender David Duval at the same. Behind Woods, Spain's Sergio Garcia is the next favorite at 20 to 1. Irishmen Padraig Harrington and young Rory McIlroy are neck-and-neck at 22 to 1; Britain's Ian Poulter is currently at 28 to 1. Senior fan favorite and 2008 contender Greg Norman is a long shot at 250 to 1. But no props on whether he'll be caught on camera smooching wife Chris Evert—that's a given. Largely thanks to Tiger and the strong American field, odds on the nationality of the winner put the U.S. as the favorite at 1.61 to 1; England is at 5 to 1, Australia 10 to 1, South Africa 12 to 1, and all other countries 16 to 1. Tellingly, Betfair.com offers betting odds with and without Woods in consideration—without Tiger, Hunter Mahan is the odds-on American favorite, at 8.6 to 1. Other prop bets include 9 to 4 odds that the Open will be won in a playoff. Odds that Tiger will win two majors this year are at 6 to 1, odds that he'll win one more major in 2009 are 6 to 5. Our favorite prop thus far: "Will there be an albatross at the 2009 Open Championship?" is coming in at +3300. 3. Bye-Bye Bivens
On July 13, Commissioner Carolyn Bivens ended her tumultuous four-year reign over the LPGA. During a formal announcement at the women's pro golf tour's headquarters in Daytona Beach, Fla., the LPGA named board member Marty Evans as acting commissioner, replacing Bivens, who formally resigned her post after a week that began with a letter from a group of top players asking her to step down. The announcement was carried live on the Golf Channel and included board members Marsha Evans and Christina Kim and retired player Annika Sorenstam. Evans, a retired Naval officer, will hold the "acting" title while a search is conducted by executive search firm and the LPGA's newly formed executive search committee. Bivens had 18 months remaining on her $500,000-a-year contract; sources reported that a general agreement with her on financial terms was reached last week. The drama surrounding her clouded the U.S. Women's Open last weekend, timing that Kim and others called "deplorable." As on the PGA Tour, player support is critical to the commissioner's tenure, and now that Bivens has departed, The Philadelphia Inquirer reports that the LPGA is "expected to bring in an interim chief to soothe the irritated owners and work on renewing contracts, but the economic situation will make that difficult." The players' move comes as the tour "enters a crucial period in terms of putting together a schedule for 2010," says Golf Digest. Over the past few months, the LPGA tour has lost the Ginn Open, Corning Classic, and Kapalua Classic events; the Wegmans LPGA, Jamie Farr Owens Corning Classic, and Michelob Ultra Open are on shaky ground. Countless other local tournament sponsors have been lost to the economy, and Bivens had also championed "hundreds of thousands of dollars in fee increases" scheduled to go into effect next year, increases which will likely now be eliminated. Early candidates for Bivens' job, according to industry sources, include Nike ( (NKE)) Golf President Cindy Davis, former Director of Sports & Entertainment Marketing Dockery Clark; WNBA President Donna Orender; Octagon Golf Co-Managing Director Chris Higgs; University of Texas Women's Athletic Director Chris Plonsky; and NBA President of Global Marketing Partnerships & International Business Operations Heidi Ueberroth. Former golfer Jan Stephenson also said on July 9 that she "would absolutely love" to be LPGA Commissioner, and that if she landed the job she would "help second-tier tournaments stay afloat by instituting more creative, fan-friendly formats, including team play and mixed fields with senior legends like Nancy Lopez, or even male golfers from the Champions and Nationwide tours." 4. MLB All-Star Break by the Numbers
He may have won this year's Home Run Derby, but Milwaukee's Prince Fielder didn't log nearly as many homers as Josh Hamilton and Co. did last year. Elsewhere in St. Louis, however, the 2009 MLB All-Star break put up some impressive numbers. The St. Louis Post-Dispatch estimates that 45,000-50,000 people attended the July 11 MLB All-Star Charity Concert headlined by Sheryl Crow. Further, according to , an announced crowd of 36,311 attended the July 12 XM All-Star Futures Game at Busch Stadium. Last week, MLB.com recorded 68.6 million votes for the four-day final vote push for Tuesday's All-Star Game, an all-time high. The vote for the 33rd (final) spot on each All-Star roster, won by Detroit's Brandon Inge and Philadelphia's Shane Victorino, generated 44% more votes than the previous record set last year. The average ticket price to the All-Star Game was down more than 50% from last year, while ticket prices to the Home Run Derby were up more than 9%. The average ticket to the All-Star Game July 14 was $679, down from $1,460 last year when the game was played in New York, according to . Yet the average ticket price to the July 13 Home Run Derby was $491 this year, up from $449 last year. Advertisers bought out all of the All-Star Game's 73-unit ad inventory on FOX about "two weeks ahead of last year," according to USA Today. MLB sponsor PepsiCo was the All-Star Game's biggest advertiser, with three ads for Pepsi ( (PEP)) and three for . Anheuser-Busch ( (ABI.BR)) also aired three spots, and had the Clydesdale horses and beer wagon on the field during the pregame. The biggest booster to the prices of in-game ads? None other than the First Fan himself. President Obama not only threw out the All-Star Game's ceremonial first pitch, he stuck around to do an in-booth interview with Joe Buck and Tim McCarver. According to USA Today, Obama's presence "helped Fox get a 30% premium on its unsold pregame ad slots." The President was in the booth during the second inning, keeping viewers tuned in after the game's start. Prior to the game, Obama and former Presidents Bill Clinton, George W. Bush, George H.W. Bush, and Jimmy Carter will appear in a video honoring the 30 winners of MLB and People magazine's "All-Stars Among Us" contest, marking the first time all living U.S. Presidents will take part in a ceremony at a sports event. 5. Which Sport Has the Best All-Star Weekend?
5. NFL: The only All-Star game that comes at the end of a season, Pro Bowl rosters are consistently filled with apathetic players trying to avoid injury. Although the game has been played at Aloha Stadium every year since 1979, the 2010 edition will take place the week before the Super Bowl in Miami. Hopefully, Steve Ross, the NFL, and the city of Miami can find a way to bring excitement back to the Pro Bowl. 4. NASCAR: Unlike most NASCAR races, the Sprint All-Star Race has a more selective field and a unique "segmented" format. With a $1 million winner-take-all prize, drivers often make reckless moves that result in frequent crashes. However, off the track, the All-Star Race does little to differentiate itself from a typical NASCAR Sunday. 3. NHL: In addition to the actual game, the NHL's All-Star Weekend holds the YoungStars contest for rookies and the Skills Competition. Do not expect All-Star festivities in 2010, however, as the league cancels the event in years of the Winter Olympics. 2. MLB: A bit of an exception to the All-Star Weekend rule, the Midsummer Classic takes place during the week. From its inception in 1985, the Home Run Derby is one of the most beloved All-Star events in all of sports, while the Futures Game and Celebrity Softball Game round out the Classic. To avoid another 2002-like debacle, when the game ended in a tie, the winner of the All-Star Game receives home-field advantage in the World Series. 1. NBA: Undoubtedly, the premier All-Star weekend belongs to the NBA. More of a show than exhibition, it feels as if the participants were warned against playing any defense. With countless events including the Slam Dunk Contest, Three-Point Shootout, Skills Challenge, and Shooting Stars Competition, it's the only All-Star weekend where the actual game takes a back seat. Besides, what other sport could pull off having their most recognizable player dance with the JabbaWockeeZ? 6. USOC Stirs Olympic Pot of Gold with TV Announcement
Last week, the U.S. Olympic Committee announced a deal with Comcast ( (CMCSA)) to launch its own cable channel, the U.S. Olympic Network, along the lines of the Big Ten Network and like cable television ventures. The channel could debut in 11 million homes sometime after the February 2010 Olympic Games in Vancouver. The announcement, however, has backfired on the USOC after the International Olympic Committee, 24 hours later, issued a statement condemning the USOC's plans and taking them to task for acting "unilaterally" and in "haste." Released to the media, the statement read, "The International Olympic Committee has always endeavored to work in close partnership with the USOC. We share a commitment to provide the best Olympic Games experience possible to spectators and athletes alike. We also believe that we should work together to constantly spread the values of the Olympic Family, not just in the United States but around the world. We were aware that the USOC had been considering a new 'Olympic broadcast network,' but we have never been presented with a plan, and we had assumed that we would have an opportunity to discuss unresolved questions together before the project moved forward…The proposed channel raises complex legal and contractual issues and could have a negative impact (on) our relationships with other Olympic broadcasters and sponsors, including our U.S. TV partner, NBC." The IOC's response obviously blindsided the USOC; Chief Operating Officer Norman Bellingham immediately stated that he will travel to Lausanne, Switzerland, to resolve the issues before the end of the month. Obviously, if the financial questions and rights issues can be resolved, the channel will greatly benefit the Games and all of its sports. Like the Big Ten Network, the U.S. Olympic Network is designed to provide year-round coverage of sports like swimming and track and field that don't normally receive a lot of airtime outside of Olympic years. The channel could also provide coverage of Olympic trial events, athlete profiles, documentaries, and classic Olympics footage. For the Chicago 2016 bid committee, the announcement likely couldn't have come at a worse time. The IOC is nothing if not political, and with the vote for the 2016 Games site coming up this fall, Olympic veterans like NBC's Dick Ebersol are publicly lamenting that the controversy has likely damaged Chicago's bid. 7. Armstrong Surge Boosts Versus Ratings, Interest in Tour
What's good for Lance Armstrong is good for cycling—and also good for Versus. For the first four days of this year's Tour de France, cable sports network Versus ratings were way up, and Versus.com saw a 120% increase in traffic compared to the start of last year's race, according to new digital director Neal Scarbrough. Riding for the Kazakhstan-sponsored Astana team, the 37-year-old Armstrong's return to the Tour after a three-year "retirement" is of course the main reason for the jump, but such new online features as Race Tracker, which combines live GPS-based rider tracking, play-by-play, interactive maps with elevation depictions, and other content have helped drive traffic to the site. Subscriber offerings add broadcast-quality video to the Tracker, while a lower-quality feed is available for free, a first in Versus' Tour de France coverage. Cadillac serves as one of Versus' major online sponsors, supporting a Tour widget and related sweepstakes. As of July, Versus can be found in more than 75.2 million homes, a coverage of 65.7% that is 1.1 percentage points higher than a year ago. Versus comes in fourth among all cable sports providers in penetration, behind ESPN (98.2 million homes), ESPN2 (97.8 million), and the Golf Channel (81 million). Should Armstrong maintain his strong performance and put up a legitimate quest for the yellow jersey, he will no doubt continue to dominate worldwide coverage of the Tour and further boost Versus' ratings and online traffic. 8. Beckham Returns to America
When David Beckham once again takes the pitch for the Los Angeles Galaxy on July 16 after a six-month stint playing soccer in Italy for AC Milan, he returns to a very different scenario than the one he left in the winter. Seven of the 11 players starting for the Galaxy at the Home Depot Center on July 11 were not even with the team when the midfielder left for Italy. More to the point, Beckham's return to the U.S. is accompanied by controversy and scorn—not the acclaim that greeted him and wife, Victoria, two years ago, when it was widely assumed that his very presence would rouse a passion for soccer in this country to rival the sport's popularity everywhere else in the world. This time around, Beckham's motives and professionalism are being derided, not applauded. On the verge of his return to the MLS, Galaxy teammate Landon Donovan questions Beckham's lack of commitment in The Beckham Experiment, a book just released July 14. And American soccer fans have gotten much more excited about the U.S. national team's suddenly bright World Cup prospects after the squad's victory over Spain and near miss against Brazil last month than they ever did about Beckham. Even the new MLS Seattle Sounders franchise has gotten more traction than the supposed world's most famous athlete. With the 5-3-9 Galaxy's success hinging on Beckham and Donovan's relationship, the two better bury the hatchet. Regardless of their reconciliation, the Galaxy will sell out Sunday's home match—a friendly against AC Milan. 9. Comin' Down the Mountain: NFL and NFLPA Meet Again
Now that NFL Commissioner Roger Goodell has made it safely down from Mt. Rainer, the NFL and the NFLPA will held their second formal labor bargaining session July 14 in Washington, D.C., where the players' union is headquartered. (The first session under new NFLPA Executive Director DeMaurice Smith was held June 3 in New York.) The league's collective bargaining agreement expires in 2011—if a deal is not in place by next March, the 2010-2011 season will operate without a salary cap. This week's meeting wasn't expected to produce any headlines, since both sides have agreed to keep the talks confidential. But based on recent comments it's clear that Goodell and Smith have at least one goal in common—better positioning players for off-field success. The NFL's Rookie Symposium a few weeks ago is much more structured around financial planning, business management, and conduct in the era than in years past, with Goodell getting much of the credit for the change. In turn, Smith has been making the rounds of all 32 NFL teams to help players better understand the league's finances and their own piece of the pie. One item likely to come up during the CBA talks—new NFL stadiums and the revenue streams they generate. While new buildings such as Lucas Oil Stadium in Indianapolis and the Cowboys' new $1.2 billion home in Arlington, Tex., receive public subsidies and are a proven means to increase luxury suite and season ticket sales, owners are convinced that the millions in debt service they're currently saddled with is a legitimate reason why they deserve a bigger slice of team revenues. While it seems like not a week goes by without an NFL player being shot, drunk in public, or hauled into court, Goodell's stewardship of the league and strident attempts to change the gangsta dynamic are often lauded by the media. In Portland, Oregonian writer John Canzano says that Goodell "has character and a sense of social responsibility…I'm convinced he's exactly what sports needs." He is "busy demonstrating what we should come to expect from the people in prominent positions in business and society—leadership." 10. James in Good Company at Allen & Co.
The star power at the gathering in Sun Valley, Idaho, is usually relegated to such media moguls as , , and Michael Bloomberg (who moonlights as the mayor of New York). This year, however, the wattage increased a bit in the form of attendee LeBron James. James, who reportedly landed his coveted invite last week with help from Cleveland Cavaliers owner Dan Gilbert, a seven-year attendee, is building his own sports and entertainment empire, and it makes sense he'd go straight to the industry's biggest wigs for sound advice. Despite the economy, attendance at the annual event, sometimes called "summer camp for billionaires," was healthy. More than 260 media chieftains, venture capitalists, politicians, agents, academics, and investment bankers gathered at the Manhattan-based investment bank's annual five-day conference to exchange ideas about the media industry's future. Big deals have been known to come out of the conference during its 26-year history, including Walt Disney's ( (DIS)) deal to buy Capital Cities/ABC Inc. in 1995. Among the sports luminaries in attendance besides James were the four major pro sports commissioners, including the NFL's Roger Goodell straight from his charity climb; others included Chicago Bulls/White Sox owner Jerry Reinsdorf, Denver Nuggets/Aresenal owner Stan Kroenke, Washington Capitals owner , the Mets' Fred and Jeffrey Wilpon, and former MLB Commissioner Fay Vincent. , another former MLB commissioner who is better known for his Olympic work, was at the center of the biggest news to come out of the conference this year—the USOC's announcement about its dedicated Olympic TV channel was reportedly timed to Ueberroth's appearance in Sun Valley. Outside of sports, Redstone, , , , Google ( (GOOG)) CEO , and much of the entire Murdoch clan were front and center for the few interviews granted to the media during the secretive event. While it's unclear if James was able to pull together a decent pickup game, we know one thing—if any of the media moguls managed to dunk on him, we'll never see the footage.
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.
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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