The Business of Sports

The Boss Is Dead; Long Live the Boss


1. Ave atque Steinbrenner

Since his death this week of a massive heart attack at the age of 80, it is only fitting to take stock of George Steinbrenner's impact on baseball and on professional sports franchise ownership in general. The baseball empire that he built upon his family's shipping fortune upended free agency and became the template for spending whatever it cost to become and remain a champion—and turn a sports team into an international brand.

Steinbrenner's 37-year tenure as sport owner-in-chief also provided the industry and the never-sleep New York sports media with something just as important as wins—a constant storyline. Seven world championships, 11 American League pennants, a well-oiled turnstile for managers and a recurring character on Seinfeld gave the New York tabs plenty to cover on the field, on screen, and in the boardroom. The New York Yankees became a global sports property on the level of a Manchester United or Michael Schumacher, and the YES Network Steinbrenner helped create became the revenue model for every dedicated sports network from the NFL Channel to the Big Ten Network. As former Yankees PR Director Marty Appel told Sports Net New York: "He was a giant in American sports. He really redefined the role of what an owner does, how one owns the team. … He took the most distinguished franchise in the world to unimaginable heights."

Steinbrenner's business legacy includes a Yankees franchise that Forbes valued as $1.6 billion in April 2010, the highest in MLB, 7 percent more than the previous year, and a 15,900 percent increase over his 37-year ownership span, according to Bloomberg. A great deal of that, of course, came from revenue from $2.3 billion Yankee Stadium and other revenue streams from the globally known team.

Both Bombastic and Beloved

While the New York Yankees' chairman of the board was considered bombastic and difficult, Steinbrenner was also beloved in his adopted Tampa Bay for philanthropy there, and he was a staunch supporter of the USOC, serving as chairman of the USOC Foundation from 1997 to 2002 after a stint as vice-president of that organization from 1989 to 1996.

Steinbrenner received full honors during a tribute at Tuesday night's MLB All-Star Game, and starting at noon on Tuesday, ESPN Classic kicked off 56 straight hours of programming paying tribute to the man. (You could argue that the All-Star Game is a tribute to the Yankees in the first place, with the team's eight players named to the American League roster commanding a combined salary of more than $123 million, the amount of the total rosters of only four other MLB franchises this year, and the fact that the Yankees have sent no fewer than three players to the event in the past decade. Unfortunately for the American Leaguers, they suffered their first loss in 14 years.)

One record Steinbrenner won't be breaking: federal estate tax levies. Because Steinbrenner, whose personal net worth is estimated at $1.1 billion by multiple sources, died in a year in which there is no federal estate tax (2010 is the final year in a series of changes instituted by Congress in 2001), he saved his heirs a potential 55 percent estate tax on his assets, equating to a tax bill of around $600 million that would have had to be paid if the Boss had stayed in office through January 1, 2011.

With so many pro sports teams owned these days by corporations and syndicates, the age of the larger-than-life individual owner whose word is law and whose personality, for better or worse, defines a team seems to be drawing ever closer to an end. Steinbrenner was one of the great owners of all time, despite his flaws. We will not see his like again.

2. British Open Tees Off

The 2010 Open Championship tees off July 15 at St. Andrews in Scotland. The tournament will have a total purse of $7.3 million, up $60,000 from last year, with the winner earning nearly $1.3 million. Thanks to the major brand that St. Andrews conveys and a sound management strategy under its head, Peter Dawson, and Commercial Director Angus Farquhar, the Royal & Ancient can afford the bigger purse and look forward to the continued international expansion of the R&A that the Open Championship affords.

On Monday we sat down with Dawson, who is widely credited for tugging the centuries-old organization into the 21st century. The 61-year-old chief executive expressed "cautious optimism" about an economic turnaround in golf, given the new sponsorship deals that have been signed and the fact that existing deals are staggered over the next five-year period.

Riding on the proper coattails of the Open Championship, the R&A now has 132 worldwide affiliates. The organization's biggest global growth is in South Africa and Eastern Europe, where 40 new member countries have been added over the past five years. A mix of broadcasting, ticketing, merchandising, and other revenues fund the $10 million-plus cost to run the Open, and $5 million comes into international golf development annually from proceeds from the Open, held at St. Andrews every five years, with incremental increases in sponsorship. Golf participation in the Olympics, Dawson predicts, will be a major international growth point for the sport between now and 2016, when the event will held in Brazil for the first time in years.

Adidas' Marketing

Among the dozens of international companies promoting themselves in connection with the Open Championship is TaylorMade, whose Adidas Golf is turning up the heat on two Americans competing for the right to be named the company's next social media catalyst through its "Wear in the World" program: "a globetrotting golf adventure and interview process spanning 50 days and nine countries." Steve Olsen from Wisconsin and Portland's Chris Dukeminier will go head-to-head in a series of challenges selected online by consumers this week in Scotland. Dukeminier and Olsen began their quest June 26 in Herzogenaurach, Germany, at Adidas' (ADS.GR) global headquarters, where they played golf with PGA Tour superstars Sergio Garcia and Retief Goosen and celebrated in the streets with locals as the German national team notched multiple World Cup victories. During their trips around the globe, the two will be tasked with creating compelling content through Twitter, Facebook, YouTube, and other social media channels highlighting their adventures and building loyal Adidas Golf followers.

U.S. TV ratings for the British Open tend to be lower than those for golf's other majors, mostly due to those pesky time zone differences, but nonetheless Walt Disney (DIS) subsidiary ESPN is adding two hours to its Open Championship coverage, with telecasts starting at 4:00 a.m. ET on both Thursday and Friday. The added coverage will allow ESPN to carry Tiger Woods' opening round on Thursday in its entirety—it is not yet known whether Woods will sit down afterward to chat with Jim Grey about his intent to join the Miami Heat.

PGA Tour Commissioner Tim Finchem, meanwhile, indicated that he doesn't expect a smaller schedule in the next few years, despite the Tour looking for at least a half-dozen title sponsors. The Tour has either renewed contracts or found new title sponsors for 12 tournaments over the past two years. The immediate priority is finding new partners for Hilton Head and the World Golf Championship at Doral. Good luck in a still-difficult sponsorship market.

3. Africa's World Cup Legacy

The vuvuzelas are now silent, the stadium signage taken down, and the last of the revelers in Barcelona and Madrid have finally gone to bed. But there were really two winners in the 2010 FIFA World Cup: Spain on the field and South Africa off.

Many people doubted the young African nation could pull it off. But during the four weeks of the tournament and now in its wake, the world's media are as united as they ever manages to get in their praise of the World Cup events. Crime was minimized, racial tensions nonexistent or well-managed. Despite a few notable snafus—private plane logjam in the sky, e.g.—transportation roadblocks were minor, and while the matches on the pitch weren't the most thrilling in the history of the world, they did manage to capture more American eyeballs than ever, an important measure of the global TV pulse of the sport.

What's next this week, this month, this year for Africa's southernmost nation? Quickly ensuring that previously high crime rates don't balloon back up after the extra security forces go home, for starters. Later, pausing to address a warm invitation from IOC head Jacques Rogge to bid on the 2020 Summer Olympic Games.

Next stop is Brazil, and as Yahoo Sports' Ryan Bailey puts it: "Perhaps FIFA could have spent less time prosecuting attractive Dutch girls and more time investing some of the $3.3 billion profit it made from the tournament in putting butts on seats." No worries. While filling stadiums throughout Brazil will be top of mind for FIFA and for World Cup organizers in that country, it's pretty obvious that they already have the attractive-girl thing down pat.

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 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 (February 2010).

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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