The Business of Sports

Five Bold Sports Predictions for 2012


As the calendar turns to 2012, we finally can close the book on an historic sports year.

If the 2011 sports calendar is remembered for anything, it will be as the year of the lockout. For the first time ever, three collective bargaining agreements expired in the same year. Though Major League Baseball reached an extension with ease, the National Basketball Association and National Football League both endured prolonged lockouts before agreeing to deals.

2011 also saw record TV deals. NBC bid $4.4 billion for Olympic TV rights through 2020 and Fox (NWS) committed $500 million to the World Cup in 2018 and 2022. The biggest deal of all belongs to the NFL, which extended TV rights agreements with CBS (CBS), Fox, and NBC for a total of $27 billion over the next nine years. The league also extended ESPN’s Monday Night Football contract for $15 billion over eight years.

Some of our predictions a year ago for 2011 rang true: The NFL lockout lasted about as long as we thought it would, and both Tiger Woods and LeBron James signed significant marketing deals, despite respectively not winning a Major or the NBA Championship. We flunked out on our prediction that the federal perjury trials of MLB sluggers Barry Bonds and Roger Clemens would put a black cloud over baseball for much of the year; that job fell to the Los Angeles Dodgers, owner Frank McCourt, and the franchise’s bankruptcy.

A Mayan Sports Effect?

Looking ahead to 2012, will the world actually end on Dec. 21, as the Mayans once predicted?  If so, will it disrupt whatever low-level bowl game is scheduled for that day? Will the Occupy forces invade Indianapolis and Occupy Super Bowl XLVI? Will former NFL quarterback and broadcast commentator Craig James win a Senate seat from Texas?

Our short form answers: a) we’ll be too busy running for the Himalayas to worry about a bowl game; b) occupying Indianapolis would serve only to confuse liberal Colts owner Jim Irsay; and c) not if Mike Leach has anything to say about it.

Regardless of the fate of the world on Dec. 21, the sports industry will have 356 days to manage in 2012 until then. Here are five predictions on what will happen in sports during that span.

Tellem like it Is

Mark Cuban will once again fail in his quest to purchase a Major League Baseball franchise. Instead, the Los Angeles Dodgers will be purchased by a consortium packed with baseball insiders. A group led by veteran sports executive Stan Kasten, Guggenheim Capital Chief Executive Officer Mark Walter, and L.A. icon Magic Johnson and a second group comprising billionaire investment banker Steven Cohen and influential sports agent Arn Tellem (advised by former Deputy MLB Commissioner Steve Greenberg) will have the inside track.

Cohen and his team are among the first bidders submitted to MLB for vetting, according to baseball insiders. Initial bids for the Dodgers are due Jan. 13; under the bankruptcy sales process, the league can approve up to 10 bidders, with McCourt granted the right to conduct an auction and select the winner.

In Los Angeles, the Dodgers are now under even greater public pressure to return the franchise to glory, now that the L.A. Angels of Anaheim down South have signed Albert Pujols. This will be MLB Commissioner Bud Selig’s final opportunity to preside over the sale of one of baseball’s marquee teams before he retires. He won’t screw it up. The sale price will exceed $1.1 billion, a record in American pro sports.

Contrary to his current insistence, Frank McCourt will return to Boston after he realizes that he’ll never be able to get a dinner reservation, an executive producer credit, or even a date with a B-list reality TV personality in L.A. Jamie McCourt will start dating a motion picture mogul and turn her attention to being the face of a studio rather than a baseball team.

Olympic Game On

 The London Olympic Games will top a record-breaking 5.5 billion viewers worldwide after NBC and other global TV networks enable viewers to watch every sport in real time on their HDTV big screens, desktops, tablets, handhelds, MacBook Airs, and Big Macs. (Final numbers indicate that the 2008 Beijing Olympic Games captured 4.7 billion viewers in total.)

Michael Phelps’s swimming rival Ryan Lochte (current deals include Speedo, Gatorade (PEP), and Mutual of Omaha) and women’s soccer standout Alex Morgan (Women’s Professional Soccer champion New York Flash, post-World Cup deal with Bank of America (BAC)) will emerge as America’s new endorsement darlings, from Wheaties box covers to multimillion dollar deals with the Dove brand from Unilever (UN) and obligatory stops on the late night TV talk show circuit.

Jamaican sprinter Usain Bolt will remain one of the international faces of the summer Olympic Games, but will not be able to beat the world sprint record of 9.58 he established in 2009. (He’ll still be able to beat all of his competitors.)

After dealing effectively and peacefully with violence-inducing traffic jams in London, Olympics Chairman Sebastian Coe will instantly become a national hero and make the short list to become London’s mayor when newly reelected Boris Johnson’s latest term expires in May 2016.

Nike (NKE) is also poised to strike it rich in London during the 2012 Summer Olympics. One of the world’s largest NikeTowns is strategically located next to the Olympic village and an estimated 70 percent of ticket holders will pass through the store before entering the Olympic grounds.

 Go Danica

Does Danica Patrick need Nascar more than Nascar needs Danica Patrick?

As she announced on Aug. 25, Patrick—perhaps best known to non-race fans as the racy face of GoDaddy.com—is moving full-time from Indy Car racing to Nascar’s Nationwide Series in 2012. Patrick won one Indy Car race in her career on the international circuit and nearly became the first woman to win the Indianapolis 500 last Memorial Day weekend. She showed Nascar potential in her limited racing there in 2011, achieving three Top 10 finishes and one Top Five finish in a dozen Nationwide Series races.

Patrick’s Indy Car career brought her millions of dollars in endorsements, but the siren song of NASCAR’s bigger spotlight proved too tempting for the driver, who turns 30 in March. “I think obviously she’s got talent; she’s been successful in every form of racing she’s been in so far and I don’t see why she wouldn’t be successful here,” says current Nascar champion Tony Stewart.

But after Stewart’s dramatic victory at Homestead last month and a slow, economy-driven resurgence in TV ratings and track attendance for Nascar, the circuit seems to be doing fine without the Danica distraction. Patrick is not likely to win in 2012, but Nascar is poised to do so.

The NFL’s TV Station

In the wake of its landmark TV rights deals with CBS, Fox, NBC, and ESPN, the NFL will finally close a carriage deal for its NFL Network with Time Warner Cable (TWC). The NFL is already committed to add four regular season games to its NFL Network next season, giving it a total of 12 games. The additional content will help the league finally reach a deal with TWC.

In New York, TWC has also been fighting a regional battle with the MSG sports network over rising content rates—TWC CEO Glenn Britt recently went on record saying that he thinks all sports channels should be sold in a separate tier from a main cable TV package of channels. Look for the rising cost of sports programming to be a major industry issue in 2012.

The other big NFL issue to watch in 2012: Will Farmers Field in L.A. finally get a team?

Hockey Takes Fighting from Boards to Boardroom

In the end, the NBA didn’t challenge the National Hockey League’s dubious status of being the only major pro sports league to lose an entire season to a labor stoppage. But the NHL’s current CBA is set to expire on Sept. 15, before the season starts, and many hockey experts agree that the league’s next labor deal could be almost as contentious as that which canceled the 2004-2005 season.

Among the many issues that will be on NHL Commissioner Gary Bettman’s table are buyouts of guaranteed contracts, player fines for fighting and other forms of misconduct (currently capped at $2,500—pocket change for pro athletes), players’ ability to participate in the 2014 winter Olympic Games in Sochi, and the one that’s been grabbing the most headlines lately: the NHL’s concussion policy, helped to the forefront by a similar concussion study and player safety initiatives in the NFL.

Our take: Two canceled seasons in one sport is two too many. Bettman and Donald Fehr, head of the NHL Players Association and a seasoned negotiation veteran from his MLB Players Association days, will come to an agreement that may cost the league its preseason international series, but no further lost time on the ice.

Happy New Year.

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). Beginning Sept. 28, Horrow will host Sportfolio, a new program on Bloomberg TV that will air at 9 p.m. ET.

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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