Business of Sports

NCAA '09: No Cinderellas but Plenty of Fairy Tales


1. NCAA 2009: Gentlemen, Cover Your Privates!

While there are no real Cinderellas left in the 2009 NCAA men's basketball tournament—you can't really count an Arizona team formed under the tutelage of Lute Olsen—there are plenty of fairy tales and wacky stories. Here are a few of our favorites that have emerged in the past week:

• After the first weekend, not a single perfect bracket still exists among the 5 million entries submitted to ESPN.com's annual bracket challenge; the four people tied for the lead each have two losses.

• Nor will Dell Sports have to pay out the $100 million it offered for a perfect bracket: The four brackets still in contention Saturday hit the hardwood on Sunday.

• The dozen MGM Mirage (MGM) properties in Las Vegas, usually booked to the rafters, still had rooms available the Wednesday before the tourney tip off. The casinos reportedly took a bath when Gonzaga beat Western Kentucky by two.

• Domestic relations in the White House have apparently chilled after President Obama failed to place Duke, alma mater of his personal assistant Reggie Love, among his Final Four picks. (Obama's Final Four comprises the University of North Carolina, Louisville, Memphis, and Pitt.) The Secret Service is mum on all side-bet rumors.

• Much like the NFL before Super Bowl Sunday, the NCAA is mailing off a raft of cease-and-desist letters to violators who use its "March Madness" and "Final Four" trademarks without permission. Among the wrongdoers: NASA, which has been asked to stop advertising its "Mission Madness" promotion, asking fans to vote on its greatest-ever space mission, and an adult Web site running a bracket game featuring porn stars and naughty puns.

• March Madness followers are apparently dirty in a different way—Scarborough Sports Marketing reports that the most popular personal activity among college basketball fans is gardening. Over 48% said they'd gardened in the last year.

• Porn stars aside, it's no coincidence that the Cleveland Clinic Glickman Urological & Kidney Institute is busier at this time of the year that any other. Dr. J. Stephen Jones confirms that his surgery schedule for vasectomies is booked up for March. If men are going to be laid up on the couch for a day, the scalpel-wielding doctor declares, "It might as well be on a day when they would be watching basketball as opposed to 'Oprah.'"

2. March Madness: Graduate School

Varied efforts have been made over the years to tie NCAA tournament seedings to school's academic records, citing the horrible graduation rates most schools post as a factor in the argument. The NCAA itself reaps $6 billion from the tournament from its current TV deal alone—the breakdown for 2008 included $548 million for a portion of those rights and an additional $40 million from sponsorships and ticket sales—and the tournament represents 96% of all NCAA revenue. Except for the very top-tier programs, the schools, however, lose out. According to The Wall Street Journal, a median Division I men's basketball team generates $480,000 in revenue, has operating expenses of $1.33 million, and thus yields an annual operating loss of $850,000.

Many students lose out even more. Largely thanks to the NBA age limits, basketball's "one and done" situation has resulted in dismal graduation rates: 37% at USC, slightly more than half at Duke.

But in 2009 we do appear to have taken a baby step toward progress. Based on a recent NCAA graduation success rate survey, fully seven tournament teams this year announced 100% graduation rates: Binghamton, Florida State, Marquette, Robert Morris, Utah State, Wake Forest, and Western Kentucky. What do these kids major in? The Journal unearthed the majors of 636 players, and unsurprisingly, business majors commanded the majority, with 145 student athletes thusly declared. 112 are undecided, 64 each major in communications and sports management. Criminal justice drew a dozen; agricultural leadership, a quartet.

Possibly preparing for a basketball career overseas, one player is majoring in Russian literature. And never say that a jock isn't a rocket scientist—a lone tournament participant majors in nuclear engineering.

3. Mad Women—the Female Side of the NCAA Tournaments

Reggie Love isn't the only one giving President Obama flak right now—several women's advocacy groups have spoken up to ask why the President failed to fill out a "First Bracket" for the NCAA women's tournament alongside the men's. (Perhaps this should rightfully become an official activity of the First Lady, who could surely use her brother, Oregon State men's coach Craig Robinson, as a sounding board if needed.)

Other than that, the biggest story line of the 2009 NCAA women's tournament has undoubtedly been the pledge of Oklahoma star center Courtney Paris to refund her $64,000 athletic scholarship funds if the Sooners fail to win the tournament.

While no one seems to be holding her to her promise should the Sooners fall short—unbeaten UConn is heavily favored, having beat every opponent by double digits, including Oklahoma—$64K could tax even a top draft pick in the WNBA, where even star players typically make no more than $100,000 per year (far short, of course, of their male counterparts).

Never has it been clearer, however, that the popularity of collegiate women's basketball is on the rise. No fewer than 26 schools participating in the NCAA tournaments are fielding teams in both the men's and women's contests. Oklahoma regularly draws more than 10,000 fans to home games; in Louisville, where a decade ago women made up 52% of the student body but only a third of the athletes, home attendance averages 7,111, and 16,000 and 15,000 people turned out for the respective Kentucky and Rutgers games in December, according to Sports Illustrated. More to come on this growing phenomenon as we advance toward their Final Four in St. Louis.

4. WBC Wrap—A Good Idea Gone Missing?

While Major League Baseball continues to put on a cheerful face when discussing its World Baseball Classic, it's clear that interest in the international tournament in the U.S. is still far below what the league would like to see in terms of player participation and fan interest—among Americans, that is.

Without some of baseball's biggest names and without the U.S. playing in the finals, overnight ratings for the exciting 10-inning championship game between Korea and ultimate winner Japan fell far below the 3.4 rating earned by Puerto Rico on ESPN Deportes on Mar. 14, the tournament's high mark. Yet Dodger Stadium was packed with 54,846 screaming Japanese and American fans, and the public turnout in those countries was expected to eclipse the similar scenarios experienced three years ago. And 56 global corporate sponsors signed on this year—double the number in 2006. By clear international measures, the tournament is a rousing success.

Will it boost the chances that baseball will return to the Olympic Games? And if it succeeds, will that remove any reasons for the WBC to exist? We won't know the answer to the former until the IOC votes in October, and MLB Commissioner Bud Selig insists the WBC will next play out in 2013, for sure. Changes will abound—the schedule will likely be compressed and more games might be played outside U.S. borders. But it's clear these international games will go on.

5. Golf Participation Stable Domestically/International Golf Landscape

Despite the economy—or perhaps as a result of high unemployment figures—golf participation at all levels in the U.S. is holding steady, and in some cases increasing.

According to the National Golf Foundation (NGF) and information shared by PGA Tour Commissioner Tim Finchem during the CA World Golf Championship at Doral, participation is stable at approximately 29.5 million golfers, 500 million rounds, and 16,000 facilities. As of December 2008, the annual year-to-date number of rounds played was only down 1.8% against the same period in 2007. However, the NGF and Finchem estimate that half of core golfers are being affected by the slowing economy and are cutting back on spending for greens fees, food and beverages, and merchandise. The hardest hit group in this industry is the private courses, which are showing a marked drop in new membership sales.

Internationally, it was announced last week that UBS (UBS), Switzerland's second-largest bank, will no longer sponsor the Hong Kong Open tournament after this November. UBS has backed the $2.5 million event since 2005, and organizers are now searching for a title sponsor to take over. (Similar to U.S. banks, UBS received a $59.2 billion bailout from the Swiss government following the global financial crisis.) Almost simultaneous to the UBS announcement, Europe's biggest bank HSBC (HBC) revealed that it may not renew its sponsorship of the HSBC Champion tournament, Asia's most lucrative women's event. A decision will be made in the next two months.

While Tiger Woods is considered good for all things golf in the U.S., Australian politicians are reacting with skepticism on whether he's worth $13 million to Melbourne. Woods announced last week that he would play in the November Australian Masters, his first tournament in that country since 1998. After media reports revealed that half of his U.S. $3 million appearance fee would be paid with public funds, Melbourne officials defended the move by claiming Woods' appearance would generate $13 million in additional revenue. Opposition party leaders demand an accounting.

6. MLS League Expansion Fees

Thanks to Major League Soccer, we now know that for $40 million (and a secure stadium deal), you can own your very own soccer team. How does that compare to recent expansion fees of other professional sports leagues?

5. $40 million Portland, MLS (2011)*

4. $80 million Minnesota Wild and Columbus Blue Jackets, NHL (2000)

3. $130 million Tampa Bay Rays and Arizona Diamondbacks, MLB (1998)

2. $300 million Charlotte Bobcats, NBA (2004)

1. $700 million Houston Texans, NFL, (2002)

*Vancouver's expansion fee was lowered to $35 million.

7. MLS Contemplates Further Expansion

In the wake of announcements that Vancouver and Portland have claimed MLS's two new expansion franchises, the suspense of who will begin play in 2011 is over. However, since MLS Commissioner Don Garber announced plans to add two more teams by 2012, a new debate begins.

The odds-on favorite to secure one of those franchises is St. Louis. A hotbed for American soccer, St. Louis' long-standing relationship with Anheuser-Busch (BUD) shouldn't be overlooked. Budweiser was MLS's first official sponsor in 1995, and since A-B is giving the St. Louis group land for a stadium, their long-term chances improve greatly.

To illustrate how important sponsor relations are, look no further than Miami's failed MLS bid. Although the economy was widely cited as the reason the bid fell through, whispers hinted that it might have been FC Barcelona's relationship with Nike (NKE) that killed the deal. MLS has an exclusive apparel deal with Adidas (ADSG), which was very vocal behind closed doors about not wanting Nike's powerful soccer brand aligning with MLS in any form. (It's no coincidence that Barcelona is now looking to partner with Philadelphia, a city that already has a franchise.)

As for the other bid, Ottawa still needs to secure a stadium deal, and hoping the extra year will buy them time. Meanwhile, rumors are circulating that an MLS franchise in one of New York's five boroughs could become a reality. Garber has long been a proponent of such a project, and as the league continues to grow, now would be as good of a time as ever for it to happen.

8. Beckham Not a Kiwi Hit?

Tiger Woods taxpayer-subsidized appearance at the Australian Masters in Melbourne is being widely criticized, and Pac Rim citizens don't appear to be too keen on David Beckham, either.

Two senior Auckland Regional Council executives quit this week after the David Beckham soccer match fiasco in December. That month, the ARC-owned Mt. Smart Stadium lost $1.79 million after Beckham failed to appear as part of the MLS Galaxy exhibition match lineup against an "all-star" Oceania team; the game drew only 16,600 people instead of the 20,000 needed to break even. Parks general manager Lance Vervoort and Mt. Smart Stadium group manager John Lynch had been placed on extended leave following an internal review into the way December's Galaxy match was planned and managed. ARC chairman Mike Lee also called in the Auditor-General to investigate what went wrong when the stadium departed from its normal role as venue operator (charging a fee) to act also as event promoter and underwriter. The Auditor-General's report is expected to be released next month.

Last month, Lee said the future of Mt. Smart Stadium as a business unit in the parks network was being reviewed. The stadium carries $24.2 million in debt, mostly incurred by such capital projects as the East Stand. In the half fiscal year to Jan. 31, stadium revenue was $1.45 million in the red; in the previous seven years, earnings ranged from $874,000 to $1.59 million.

9. British Swimming: £15m Sponsorship Windfall and Plan for Splashy "Ryder Cup"

British Swimming, the governing body of swimming in Britain, has agreed to a new six-year, £15 million sponsorship deal with energy company British Gas. British Swimming has also unveiled tentative plans for a "Ryder Cup of swimming" that would pit European and American swimmers against each other in a new competition, possibly as early as late 2009, in Manchester.

The British Gas deal will see swimmers, divers, and water polo teams wear British Gas-branded apparel in the World and European Championships. The money generated will be split evenly between Britain's elite swimmers and grassroots activities, under the direction of British Swimming's performance director David Pursley. The swimming Cup event is conceptualized as highly targeted and select, drawing on a number of European countries to take on the U.S., the mightiest swimming nation in the world.

10. Five NBA-Liquor Sponsorships that Make Sense

With a need for new revenue streams in the midst of the current economic crisis, the NBA has decided to allow liquor marketing for the first time in league history. Regardless of the strict rules being applied to the ads and sponsorships (socially responsible messages, no direct designations), some potential pairings are too good to pass up. Here are my top five NBA-liquor partnerships that need to happen:

5. Oklahoma City Thunder and Rain Vodka: "Where there's Thunder, there's Rain"

4. Toronto Raptors and Beefeater Gin: "Beefeater: Why it's Fun to be a Carnivore"

3. Milwaukee Bucks and Jaägermeister: "At the End of the Day, we're all Bucks Fans."

2. Houston Rockets and Absolut Mandarin: "Bringing the Far East to the Southwest"

*Yao Ming as spokesperson, natch

1. Sacramento Kings and Crown Royal: "Because Kings wear their Crown Proudly"

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.

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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