http://www.businessweek.com/lifestyle/content/apr2009/bw2009042_875604.htm

Business of Sports

NCAA: Strong Ratings, Weak Attendance


1. Marching Toward the Final Four in Detroit
Television ratings are dunk-high, as are some ticket prices. Yet attendance so far during this year's NCAA men's basketball tournament have, not surprisingly, been low. What will the Final Four in economically challenged Detroit bring for the NCAA, CBS, and the fans?

If the past is any indication, the Final Four will provide a welcome sports stimulus package for the region. More than 45,000 visitors and an estimated $50 million in local economic impact are expected over the upcoming weekend in Detroit—like St. Louis, home to the women's event—one of America's premier sports cities. Detroit, of course, has hosted numerous NBA Finals, the World Series, and Super Bowl XL in 2006, which brought an estimated $274 million in revenue to Ford Field and environs.

So far, CBS (CBS) has averaged a 5.9 Nielsen rating through the first eight days of the tourney, up 7.3% from a 5.5 overnight through the first eight days last year, according to Nielsen sources. That includes a 7.4 overnight rating for the Mar. 27 North Carolina-Gonzaga late broadcast; UNC also has earned the marquee late game this Saturday night, Apr. 4, against Villanova.

The ascent to the Final Four of North Carolina, which is not only America's most popular college basketball program but, at $25.9 million, its most valuable according to Forbes estimates, provides a bankable Tarheel TARP for broadcasters and ticket takers alike. And the inclusion of Michigan State, according to StubHub Director Sean Pate, "should be worth at least a $50 increase in each ticket sold on the site" because of the school's proximity to Detroit.

Certainly, cutbacks by the ailing auto industry are apparent. In February, General Motors (GM) announced it was cutting on-site spending at Ford Field by at least 60%, paring incentive trips for its automobile dealers, and not inviting anyone to watch the Final Four from its corporate suites—even though its Pontiac brand is the official car of the NCAA, as noted by CNBC.

Outside of UNC-Villanova and UConn-Michigan State, the NCAA is putting on a college basketball All-Star Game on Friday; the Hoop City interactive fan fest and the "Big Dance" concert and entertainment gala will go on all weekend in downtown Motown. Those events will provide affordable options for all fans, and students of the four schools are also eligible for $10 floor-level seats thanks to the new basketball layout inside the football facility. On the other end of the wallet: Suite tickets are going for $1,495 apiece, according to L.A.-based Primesport.

Win or lose, this won't be the North Carolina basketball squad's last trip to a football facility this year. It was just announced that UNC will take on the University of Texas on hardwood laid out at the new Dallas Cowboys Stadium in December. The 2010 NBA All-Star Game and the 2014 NCAA Final Four are also on the schedule at the new stadium, which opens in just a little over two months.

2. …And in St. Louis
Even though fewer than 3,000 fans attended the NCAA women's Sweet Sixteen game between Maryland and Vanderbilt at the 19,722-seat RBC Center in Raleigh, N.C., on Mar. 28, the 2009 Women's Final Four at the Scottrade Center in St. Louis Apr. 4-7 still evokes all the passion and excitement of the men's event, albeit on a slightly smaller scale. Organizers of the women's event anticipate 25,000-30,000 visitors to St. Louis, and cumulative local revenues near $25 million.

"Old timers" in St. Louis will recall that the first women's Final Four held in that city was a tipping point of sorts for women's basketball, attracting 30,000 to see Jackie Stiles, the all-time leading scorer in the college game at the time, and the unlikely Cinderella run of in-state darling Southwest Missouri State. This time around, it's almost unimaginable that unbeaten UConn—whose fans are as loyal to their female players as they are to the men—won't take center stage, while other media-worthy storylines include Stanford's high-scoring Jayne "The Big" Appel (a school-record 46 points vs. Iowa State in the Elite Eight) and Oklahoma center Courtney Paris' increasingly dramatic guarantee that her squad would win the national title or she'd give her scholarship money back.

Will newly minted future women's Final Fours in Denver (2012), New Orleans (2013), Nashville (2014), Tampa (2015), and Indy (2016) be affected by the growing media outcry this year? The Washington Post and other outlets are calling for an end to the tournament "pod" system, which was designed to create parity but instead has resulted in empty buildings. But perhaps FoxSports.com's Jason Whitlock has the best idea for women's tournament success—Whitlock unflinchingly states that the women's event should be played in April rather than March, giving the women designated reporters, airwaves, bandwidth, and space to establish an identity of their own.

3. NCAA Tourney vs. NIT—Weighing the Odds
Every March, Selection Sunday brings heartbreak to a handful of bubble teams hoping to make the NCAA Tournament. With that heartbreak, however, comes the consolation prize of an "invitation" to the NIT. Since the first teams out of the NCAA are usually the first ones in the NIT, with an increased chance of winning a second-rate tournament, is it better to suffer a first-round NCAA exit or win an NIT title?

Based on tournament payout alone, the NCAA is far superior to the NIT, paying out $167,000 per game played, compared to a paltry $3,000 in the NIT. The NCAA also offers prime TV coverage through a lucrative contract with CBS, as opposed to the NIT, which despite being on ESPN, barely receives a smidgen of publicity.

However, could an NIT run be a catalyst for an NCAA bid the following year? Consider this: Of the 13 at-large teams eliminated in the first round of last year's NCAA Tournament, only six made it back this season (46%). Of the eight teams in last year's NIT quarterfinals, four moved up to this year's Big Dance. That total includes Dayton and Arizona State, each of which made the second round, and Syracuse, which had a reasonable path to the Final Four before losing in the Sweet Sixteen.

Winning the NIT title is like winning the San Diego County Credit Union Poinsettia Bowl. If it comes down to an NCAA first-round exit or an NIT title run, I'll take the NCAA trip every time. Even if such a school as Kentucky manages to take home this year's inferior trophy, they will surely keep it polished. Just don't expect to see that trophy in the same display case as all the NCAA ones.

4. New Women's Pro Soccer League Debuts
And yes, they're allowed to Tweet during matches!

If the Mar. 29 inaugural match between the Washington Freedom and host Los Angeles Sol at the Home Depot Center in Carson, Calif., is any indication, Women's Professional Soccer, or WPS, is kicking off the right side of the foot. The match attracted 14,832, a solid crowd by any standard. And the upstart league has attracted league-wide sponsors, has a national TV deal in place, and has already confirmed it will add an eighth franchise next year to the seven teams starting out this week.

The second attempt in the U.S. at a major pro soccer league for women after the Women's United Soccer Assn. shut down after only three seasons in 2003, San Francisco-based WPS imposes a strict salary cap on teams, which pay $31,000 per player on average. Major League Soccer's marketing arm is selling WPS league sponsorships, and had its first big win with Puma (PUMG.DE)—the German shoe and apparel manufacturer is reportedly paying $7.5 million over three years-plus to outfit WPS players with uniforms, boots, and game balls.

League officials estimate that the fledgling organization will break even if 5,000 fans attend games on average in New York, Washington, Boston, Chicago, St. Louis, and Santa Clara, Calif., in addition to Los Angeles (Philadelphia will come on board in 2010). Season tickets sell for $100-$1,300 in some markets, while single-game tickets start at $18.

Many of the world's top female footballers have jumped at the chance to play for WPS, including the Sol's Marta; the Brazilian phenom is the three-time FIFA women's world player of the year. The likes of Marta and veteran World Cup champions helped the league to forge a "game of the week" agreement with Fox Soccer Channel; WPS will split advertising revenue with the cable network under the deal.

5. Vancouver Olympics Update: Academy Awards Delay…and No Torch?
In the wake of the announcement that the Beijing Summer Olympics made an operating profit of $16 million (never minding that city's $40 billion infrastructure buildup beforehand), the U.S. Olympic Committee and International Olympic Committee have reached an agreement to negotiate a new revenue-sharing deal, and Oscar has stepped aside…albeit for a few weeks.

The Academy of Motion Picture Arts and Sciences plans to hold Hollywood's biggest event on Mar. 7, rather than late February, to avoid a conflict with the 2010 Winter Olympic Games' closing ceremonies. The move prevents the Oscars, broadcast on ABC, and NBC's Winter Olympics in Vancouver, from cannibalizing each other's advertisers and viewers.

High prices for Vancouver Games packages will likely turn more than a few would-be attendees into viewers…even though ticket demand is currently running at about six times the demand for the 2006 Winter Olympics in Turin, according to CoSport, the official U.S. vendor. Official CoSport packages for two including lodging and event tickets currently range from about $3,800 for two nights to $18,000 for five nights.

Meanwhile, Coca-Cola (KO) has unveiled a new green initiative for the 2010 Vancouver Games. One aspect of the plan includes having workers wear uniforms made from recycled bottles. And Olympic officials have called for an end to international torch relays in the aftermath of a year that spawned protests around the globe before the Beijing Games. An IOC spokesman confirms that relays would be limited to within the Olympic country starting next year in Vancouver.

6. DirecTV Out-of-Market Sports Packages: Total Cost
DirecTV (DTV) has renewed its deal with the NFL to be the exclusive satellite provider of all NFL out-of-market games. After upping their annual payment from $700 million to $1 billion per year, the burden will inevitably fall on the consumer. Based on 2008-09 figures, here is what consumers pay for DirecTV sports packages:

1. $280 NFL Sunday Ticket
2. $189 MLB Extra Innings*
3. $189 NBA League Pass
4. $169 NHL Center Ice
5. $79 MLS Direct Kick
*MLB Extra Innings price expected to increase after the Apr. 12 early-bird deadline. NASCAR and DirecTV mutually agreed to make NASCAR Hot Pass free for the 2009 season.

7. Tennis Executive Round-Robin
With the announcement that Women's Tennis Assn. Chairman and CEO Larry Scott is leaving the WTA Tour to become Pac-10 Conference commissioner, here is a look at other tennis executives who have moved in recent months:

• Harlan Stone: Now the chief marketing officer for the USTA, Stone has been all over the sports map in the last year. A former Velocity Sports and Entertainment exec, he was president of Major League Gaming before joining the tennis ranks. Stone will be one of four people assuming the duties of departed CEO Arlen Kantarian.

• Larry Scott: Unlike Stone, who is joining tennis, Scott is leaving the sport. Having worked within tennis his entire professional career, Scott was instrumental in negotiating the six-year, $88 million title sponsorship deal the WTA has with Sony Ericsson. He brings strengths of television and marketing to the Pac-10, notably that organization's biggest weaknesses.

• Adam Helfant: The Nike (NKE) global sports marketing vice-president was named executive chairman and president of the ATP, replacing Etienne de Villiers, who vacated the men's tour top spot at the end of 2008. Helfant was a surprise hire, considering that he had no previous tennis experience.

• Arlen Kantarian: The man who led the USTA for nine years decided to step down from his position as CEO in October 2008. Kantarian, who is credited for the growth of the USTA and the U.S. Open, serves as a special adviser to Miami Dolphins owner Stephen Ross, and he might open his own sports marketing agency.

8. Video Game Revenue Rises 9%
In these days of economic uncertainty, it seems, consumers favor virtual reality over the real thing.

In the month of February, video game revenue grew 9%, to $733.5 million, and overall industry sales including game consoles rose a full 10% over the same period a year ago, according to tracking firm NPD Group.

Even though the average retail price for games is 4% lower than 2008, consumers purchased nearly 20 million units of video game software last month, a 14% increase in units sold. Console manufacturers such as Nintendo (7974.T), the category leader, also saw a strong month, earning $532.7 million, up 11% from sales a year ago. Nintendo's Wii sold 753,000 units; 391,000 Microsoft (MSFT) Xbox 360s moved, while Sony sold 276,000 PlayStation 3s, 131,000 PS2s, and 199,000 PSP handheld devices.

Among the best-selling games for Wii were Wii Fit, at No. 1 with 644,000 units. Wii Play was No. 4 at 386,000, Wii Mario Kart No. 6 at 263,000, and rounding out the top 10 was Wii Guitar Hero World Tour at 136,000. Likely to blow that out for March, however, is the new Guitar Hero: Metallica game—yes, that of the hilarious March Madness-timed ad featuring Duke coach Mike Krzyzewski, Louisville coach Rick Pitino, North Coarolina's Roy Williams, and retired coach/ESPN analyst Bob Knight.

9. Lance Armstrong and the Convergence of Sports and Entertainment
By nature, sporting events are forms of entertainment. The Super Bowl is more spectacle than football game, the Final Four is more attraction than basketball tournament, the Olympic Games more international celebration than multisport competition.

Although we will never separate the two, has the line between them become too blurred? When does athlete stop and celebrity begin?

Witness Lance Armstrong, who broke his collarbone last week during the first stage of a race in Spain. Athlete, right? Not according to SunSentinel.com, which presented the accident as the top "entertainment" story of the day. The cycling crash bested Trick Daddy revealing that he suffers from lupus, and news that Robin Williams is recovering from heart surgery. Ironically enough, the No. 2 "entertainment" story was an announcement that the Patriots and Bills will open this season's Monday Night Football lineup on ESPN.

You might also notice that Matt Lauer was hit by a deer while biking on Long Island. I was shocked to see that tidbit wasn't in the sports section.

When did Armstrong getting into a bike accident become entertainment news? It's not like he was cycling down Sunset Boulevard trying to evade the paparazzi. I love the entertainment aspect of sports just as much as the next guy, but I'd rather read this story on ESPN, not EW.

10. Yankees Sod—The Latest Officially Licensed Incarnation of Going Green
From the same earthy vein of marketing genius/madness that brought us the Pet Rock, we now have…Yankee Sod. Yes, you, too, can now own a piece of the grass that Ruth never trod…though the farm which supplies the turf to the Yankees and now the world has been around since the height of the Ruth era, circa 1928.

Grown on a respected turf farm in South Jersey, it only takes two and a half acres of top quality bluegrass to cover the outfield et. al at the new Yankee Stadium. But since the team asks DeLea Sod Farms to plant and set aside 10 full acres for the stadium, there's a lot of excess grass growing there.

All it took was an overactive marketing mind to first sell the idea to baseball and then to Home Depot (HD), which will sell the officially recognized sod for $7.50 for a roughly five-square-foot patch in the greater New York region, as well as the seed. As The New York Times mused on Mar. 29, "It makes one wonder if other licensed permutations will follow—Cubs Ivy or Daytona Asphalt or Cameron Indoor Hardwood Floors."

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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