The Business of Sports

New Towns for NBA and NHL Conference Championships


For two U.S. cities, right now is the best of sports times—and the worst. For several others, pro sports playoffs are causing their civic plots to thicken.

In Chicago last year, the National Hockey League Blackhawks won the Stanley Cup, a feat largely credited to the energy surrounding new owner Rocky Wirtz and an invigorated franchise. This year, the Blackhawks are out of it and the city's playoff hopes are now pinned on National Basketball Assn. Most Valuable Player Derrick Rose and the Chicago Bulls for the first time since Michael Jordan was king of the United Center court.

In Boston, Celtics fans who watched their team ascend to the NBA Playoffs last year have now been beaned into submission by old age and treachery (in the form of the Miami Heat). Accordingly, Bostonians have jumped onto the NHL Bruins bandwagon en masse. It's been 19 years since the Bruins reached the NHL Eastern Conference finals and hockey is now the hottest ticket in town, with prices for the games at TD Garden going for $150 to $500 on the secondary market.

In 1993, civic leaders from Oklahoma City unveiled Metropolitan Area Projects Strategies (MAPS), the largest-ever single-issue referendum in U.S. history, which included plans for an NBA-caliber civic arena. One of the major theme lines in the MAPS referendum was "Mess with Texas," focusing on the intense rivalry with the sister state to the south. Now that the NBA Dallas Mavericks are playing the Oklahoma City Thunder, this is a major theme—economically, culturally, and sportswise.

Like a tornado, the Oklahoma City plot twists further: The franchise just advanced to the NBA Conference Finals for the first time since 1995-1996, when (as the Seattle SuperSonics), they eventually lost to the Chicago Bulls in the NBA Finals. The Oklahoma City Thunder just beat the Memphis Grizzlies to advance. The Memphis Grizzlies, if you're still with us, used to be the Vancouver Grizzlies—playing in a city whose Canucks are now battling the San Jose Sharks in the NHL Western Conference Finals.

Suds, Stars. and Color

Whether in basketball or hockey—or pretty much any other sport—one story line remains constant: beer. Effective July 1, the NHL has signed Molson Coors (TAP) in Canada and MillerCoors in the U.S. to a broad North American deal that constitutes the most lucrative sponsorship pact in league history. Anheuser-Busch (BUD) had held NHL league-level sponsorship rights since 1994. MillerCoors has committed to spending $375 million through the deal's duration, split almost evenly between rights fees, media buys and club spending obligations, and activation expenditures.

Jeff Vinik, chairman of the NHL Eastern Conference Finals contenders Tampa Bay Lightning, and his wife, Penny, are donating more than $10 million through the Lightning Foundation to deserving Tampa Bay community heroes and charity partners over the next five years. The move by Tampa Bay Sports & Entertainment, parent company of the Lightning, is part of a complete franchise brand and business overhaul under Vinik's ownership. When he purchased the Lightning in March 2010, Vinik had pledged to make the franchise a world-class leader in the community.

Individually, sponsors of NBA MVP Rose are capitalizing on his growing fame. Adidas (ADS:GR) created a 30-second ad recognizing the Bulls guard's MVP achievement, while Coca-Cola's (KO) Powerade ran spots congratulating Rose, with plans to extend them if the Bulls advance to the NBA Finals.

Meanwhile, the Thunder's 22-year-old Kevin Durant is fast becoming the NBA's next marketing superstar, to match his exploits on the court. Durant's national TV commercials with Nike (NKE) and Pepsico's (PEP) Gatorade are helping put Oklahoma City on the map as an NBA powerhouse. The most recent Davie-Brown Index reveals that Durant ranks No. 389 out of the 2,800-odd celebrities in the Davie-Brown database, a higher endorsement-confidence factor than that of all other NBA players, save the Celtics' Shaquille O'Neal, the Heat's Dwyane Wade, and the Magic's Dwight Howard.

Sometimes they're sponsored, and sometimes they're just logoed. Whatever the scenario, according to the Wall Street Journal, team "color outs" that feature fans throughout an arena dressing in inexpensive giveaway T-shirts, in either white or a team color solid, count as a factor in the playoff home-team advantage. "Since 2006, when the Heat popularized 'white-outs' en route to its first NBA title," explains the Journal, "home teams have won 68.8 percent of postseason games." In instances when fans in T-shirts turned arenas into a solid block of color, the home team won almost 75 percent of the time. These statistics aren't a surprise to the NHL, whose Phoenix Coyotes, née Winnipeg Jets, started the white-out tradition in the late 1980s.

Record Playoff Numbers on TV

Cable network TNT has averaged 4.8 million viewers through the first two rounds of the NBA Playoffs, putting the channel on pace for the most-viewed NBA postseason ever on cable TV. TNT drew 11.1 million viewers for Sunday's Heat-Bulls Eastern Conference Finals Game One, making it the most-viewed NBA game in cable history. The previous high was 10.8 million viewers for the 2003 NBA All-Star Game, Michael Jordan's last such event.

TNT's viewership through the NBA Playoff's second round (35 total games) was up 33 percent, from an average of 3.6 million viewers last year (33 games). Walt Disney's (DIS) ABC is also up 28.5 percent from roughly the same place in the Playoffs last year, and ESPN also saw gains through the first two rounds of postseason play, up 16 percent from last year.

A lot of basketball fans may be tuning in just to boo the Miami Heat. As Dan Le Batard writes in the Miami Herald: There "has never been a team this loved locally" that was "this hated everywhere else … sports teams always are symbols for civic pride, so the more villainous America makes this team, the more the Heat's players become our villains."

In South Florida, the Miami Heat's local TV ratings on Sun Sports have "doubled" this season, and "merchandise sales are up as much as" 455 percent, according to the Palm Beach Post. While ticket sales have been strong for the franchise, with "all the tickets accounted for, it doesn't mean all the seats were." In a situation similar to one that has long dogged the Los Angeles Lakers, South Florida sports fans are notorious for arriving really late and departing really early—leaving large patches of TV-unfriendly empty seats in their wake. To combat the vacancy problem, the Heat launched a "Fan Up" campaign at the beginning of the season. To increase the noise level during games at AmericanAirlines Arena, franchise employees armed with microphones wander through the stands ordering fans to cheer. Is it all in vain? As WQAM host Sid Rosenberg puts it, Miami "is a football town … Miami is the only city in America where you go to any professional sporting event and you can expect half the crowd to root for the other team."

From a TV ratings standpoint, it doesn't seem to hamper hockey fans' interest that three of the four teams in the NHL divisional playoffs are either upstarts or underdogs; the Boston Bruins are the only old-school championship contenders. Coverage of playoff games so far this year on Versus are up 8 percent, according to Nielsen, while NBC's first-round coverage of the road to the Stanley Cup posted its highest numbers since 2004.

Is Cable Catching Up to Broadcast TV?

Labor uncertainty in the NBA and the National Football League is coloring this year's TV network upfront presentations. This week, ESPN and Turner (TWX) hosted presentations to advertisers, promoting their new fall lineups and seeking billions of dollars in advance advertising commitments.

The total take for cable channels during upfronts, according to the New York Times, could range from $9 billion to $9.2 billion, a 10 percent to 15 percent increase from last year's upfront season and "close or equal to what the broadcast networks are expected to sell." If cable channels were to achieve "parity with their broadcast brethren, it would be a first for the television business."

What remains unknown, adds Daily Variety—given the labor stalemate between NFL players and owners—is "whether TV's most formidable attraction will be around not just to attract eyeballs, but to assist in promoting and launching new series." Right behind the NFL's labor woes, a potential work stoppage in the NBA further muddies the prime time and sports-specific TV landscape, at least through spring 2012.

ESPN, NBC, CBS (CBS), and Fox (NWS) are all allied with the NFL, while TNT, ABC, and ESPN have sizeable stakes in the NBA. Thanks to Major League Baseball, the Hollywood trade publication concludes, "Fox is the only network heading into the fall certain at least one of its major sports will suit up next season."

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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