Sunday, March 29, 2009

Will a new football league be an NFL rival?
By Evan Weiner
March 29, 2009
1:30 PM EDT
(New York, N. Y.) --- Is North American ready for more professional football leagues? That question will be answered shortly as there are investors ready to put $30 million into a new fall football league, the United Football League. There could be more after that as well. The National Football League has had many competitors come and go, three American Football Leagues, the All American Football Conference, the World Football League and the United States Football League all failed although the NFL took one team from one of the AFLs back in the 1930s, the Cleveland Rams, three AAFC teams, San Francisco, Baltimore and Cleveland along with 10 AFL teams into the fold. Three other teams, Dallas, Minnesota and Atlanta were formed as the result of the AFL, New Orleans received an expansion team in 1966 because Congress would not okay the NFL-AFL merger without a New Orleans team and the WFL forced the NFL owners into an expansion in 1974 to Tampa and Seattle. In the 1990s, relocation issues forced the NFL to add a 31st and 32nd team in Cleveland and Houston.
The NFL doesn’t add teams unless prodded. The UFL doesn’t figure to pose much of a threat to the NFL’s dominance but the NFL also brushed the fourth version of the American Football League aside. The NFL owners showed a remarkable lack of understanding of their product in the 1950s.
The most successful rival to the NFL was the fourth incarnation of the American Football League (AFL IV). Formation of AFL IV began in 1959, led by Dallas Texans Owner Lamar Hunt. Hunt had previously applied for expansion franchises in Dallas, and had also tried to buy the Chicago Cardinals with the idea of moving them to Texas, but the NFL rejected both of his offers. After attempts to create an NFL team failed, Hunt began to organize a rival league, AFL IV.
NFL attendances had increased 60 percent from 1950 to 1960, growing from an average of 25,000 per game in 1950 to over 40,000 per game by 1960. Many NFL owners were calling for expansion to absorb the increase in demand, and were interested in adding franchises in Houston, Dallas, Miami, Minneapolis, and Buffalo. However, with a unanimous vote of all NFL owners required under NFL rules, and with two owners in opposition of expanding, no expansion occurred, perhaps to the detriment of the NFL. Had the NFL expanded, AFL IV may never have existed.
In 1959, Lamar Hunt lined up six owners for the new AFL. A number of future AFL IV owners had repeatedly petitioned the NFL for expansion teams or tried to purchase existing teams (such as the Chicago Cardinals, which were forced to move once the NFL decided they could not share the Chicago market, the second biggest in the country, with the Bears). Clint Murchison tried to buy the San Francisco, Washington, and Chicago franchises to no avail. William H. Sullivan, among the first to conceive of putting luxury boxes into a stadium in 1958 (and knock down Fenway Park in the process in order be a dual use stadium for the Red Sox and an NFL team), failed to bring a team to Boston.
Hunt's first move was to meet with K.S. (Bud) Adams in Houston, as Hunt believed a Dallas-Houston rivalry would be important for the new league. The first meeting was held in Chicago in 1960, and consisted of Hunt representing his Dallas franchise; Bob Howsam, with a Denver franchise; Bud Adams, with a Houston franchise; Barron Hilton, with a Los Angeles franchise; Max Winter and Bill Boyer, with a Minneapolis franchise; and Harry Wismer, owner of the New York City franchise. Buffalo, owned by Ralph Wilson, became the seventh franchise, and Boston, owned by William H. Sullivan, became the eighth team.
“I think there was an opportunity, the sport needed to grow. It had gone through a consolidation period and we had seen the 1958 great championship game between the Giants and Colts,” recalled Hunt. “There was great national interest in the game and there were a lot of cities frankly that were growing, and not all of them had great stadium facilities. But it was beginning to happen. The public was beginning to perceive that this game had a national appeal.”
In response to the threat of a rival league, the NFL tried to push forward an agenda of four expansion teams, one of which would be in Dallas, but was vetoed by one owner, George Marshall of the Redskins. Hunt talked with George Halas about the potential for the NFL expanding to include the six teams that he had lined up for his new league, but Halas informed him that the NFL limited expansion to four teams, and would not accept the offer.
“When the AFL started, admittedly it was a new league and everybody thought it would fold immediately,” said Jack Kemp, a backup quarterback with the NFL’s New York Giants. “I would say in 1960, the NFL was the Gold Standard and the American League was the fledgling rookie league. But I loved it, it created a lot of jobs and a new enthusiasm for football fans.”
During the fall of 1959, AFL IV held its first organizational meeting in Minneapolis and considered the entry of a Minnesota team into the league. The Minnesota owners were also conducting negotiations with the NFL to become an expansion franchise, and when news of this leaked, the Metropolitan Stadium Commission of the Twin Cities withheld its approval of a stadium deal with AFL IV to see if it could get a more desirable NFL team instead. This resulted in the Minnesota owners pulling out, and AFL IV assigned the franchise to Oakland.
In early 1960, the NFL changed its bylaws to require a 5/6th vote to approve league expansion, but retained its unanimous vote requirement for expanding into an existing team’s territory. A unanimous vote led to Clint Murchison being awarded a franchise to operate the Texas Rangers franchise in Dallas for the 1960 season, which later became the Dallas Cowboys. The Cardinals were also permitted to relocate to St. Louis for the 1960 season. Soon after, Minnesota was granted a franchise for the 1961 season.
Even though NFL owners were trying to throw Hunt a roadblock in his efforts to establish both the AFL and his Dallas franchise, the NFL did not go out of its way to make the Rangers (Cowboys) a very competitive team. Since the draft had finished before the franchise was awarded to Dallas, the team was instead given the chance to select three of the worst nine players on the 12 existing NFL teams. As a result, Dallas started a scouting system that brought in many free agents, such as Cornell Green, Don Perkins, and Drew Pearson.
The expansion fee paid by Dallas and Minnesota was $600,000, paid over three years. These fees were quite low given the revenues of teams at the time, with some NFL franchises sold for greater than twice the expansion fee. In comparison, expansion fees for AFL teams were a mere $25,000. As a result of these actions, the AFL sued the NFL for violating the antitrust laws by trying to prevent the AFL from existing by moving NFL teams into markets where the AFL was planning to operate.
For the 1961 season, there were 14 NFL teams and 8 AFL IV teams. In general, AFL IV was establishing itself in mid-sized markets (e.g., Houston, Buffalo, Denver), but because of the importance of television network contracts, it needed to be present in the larger television TV markets of New York, Los Angeles, and the Bay Area. In its initial years, teams in AFL IV shifted locations as they found markets in which they could compete financially. For instance, in 1961 the Los Angeles franchise moved to San Diego, Oakland restructured its ownership, and Denver was sold. In 1962, AFL IV decided against expanding after considering the entry of Kansas City, New Orleans and Atlanta. Hunt, in his own life and death struggle with the ailing Cowboys, decided to move the team to Kansas City if the city guaranteed season ticket sales, expanded Municipal Stadium, and constructed an office and practice facility for the team. Hunt moved the team that year, naming the team the Chiefs after the nickname (“Chief”) of Kansas City Mayor H. Roe Bartle, who fashioned the offer.
The biggest off-field business move for AFL IV happened on March 28, 1963, the day a five-man syndicate led by David (Sonny) Werblin purchased the bankrupt New York Titans for $1 million (to become the Jets). The syndicate included Leon Hess, who owned the Jets until his death in 1999. The club was so financially unstable that players could not even guarantee they would get paid. Alex Kroll, a player for the team, remembered what became a normal routine, the Friday afternoon mad dash to the Irving Trust bank to get money.
“It got to the point where the Irving Trust, which was the bank of the New York Titans would only allow one branch office to cash checks and only one teller. When the lady gave you money for your check she'd scratch off that amount of money from the total amount the Titans had,” he recalled. “If you were a lineman like I, and got there after the quarterbacks and the flankers, you were likely to get nothing.” One Friday, the Titans coaches surreptitiously left practice and left the players on the field to get their checks and beat the players to the Bank (the players later got paid).
The New York Jets played in a brand new stadium starting in 1964, but their lease would not allow them to play or practice at Shea Stadium until the Mets (baseball) were finished. The Jets eventually built a training complex at Hofstra University in Hempstead, New York but that came after the team held its practices at Riker's Island prison. Practicing in a prison called for some unusual precautions, such as not chasing a ball out of bounds (where the prisoners were), and checks under the bus and in the luggage compartments for prisoners. Before the Jets were able to secure Rikers Island Prison as a practice facility, the team searched Queens for an empty field to practice on, with the players having to remove garbage and glass from the fields so the team could practice.
The Raiders played in San Francisco in 1960 and 1961, then in Oakland in 1962-1965. Before Davis joined the Raiders, the team lost 25 of 28 games in 1961 and 1962, improving to 10-4 in Davis' first year in Oakland. When the Oakland Coliseum opened in 1966 Davis had left the team to run AFL IV.
AFL IV both competed with and improved the NFL, expanding the presence of professional football. “The AFL jerked the game of pro football forward rapidly into an era where all of a sudden instead of there being 12 teams, in one year's time there were 21 teams,” recalled Hunt. “Before 1960, you had two West Coast cities in the NFL and the rest concentrated in the northeast. The AFL changed all of that. Suddenly you had pro football in cities that didn't have it before, Dallas, Denver, Houston and Buffalo…. There was a need for a second football league…. There was a need, a natural opening for it. The AFL was very fortuitous, it had perfect timing.”
This was the first rival league where television income played a critical role it its survival. Before it began play in November 1959, AFL IV approved a cooperative television plan whereby the league office negotiated the television contract and equally divided proceeds among member clubs. In 1960, AFL IV signed a network contract with ABC for $2 million per year for the first five years, which amounted to $250,000 per team per year, approximately 15% less than received per team in the NFL. This was quite high given the uncertainty surrounding the success of the new league. Part of the success of the league in attaining coverage was due to New York Titans owner Harry Wismer, who was also a noted sportscaster of the time. Wismer got AFL IV game coverage on the Associated Press and United Press International wires and helped the league land a contract with ABC. In 1963, NBC was awarded exclusive network broadcasting rights for the 1963 AFL Championship Game for $926,000, and later signed a five-year, $36 million television contract with the AFL IV to begin with the 1965 season.
At the time, the NFL was under a court-ordered injunction, as a result of United States v. NFL, that prevented it from signing a league-wide contract with a network. After operating under local contracts for the 1960 and 1961 seasons, the NFL pooled its television rights and sold them to CBS following the passing of an act by Congress that exempted league-wide television agreements in sports from antitrust laws (see discussion of Sports Broadcasting Act of 1961), for $4.65 million annually for the league. By 1969, television income had risen to $1.6 million per team in the NFL and $900,000 per team in the AFL.
While AFL attendances were quite high, they were never as close to NFL attendances as was the AAFC. However, the television revenues were large enough to keep the AFL profitable, and the AFL was generally considered a well-financed league. There were some league failures, with Denver and New York failing to draw fans. Despite having a good team, Los Angeles played before just 8,000 fans when it played in the Western Division championship at the Los Angeles Coliseum. Moreover, the AFL lacked a major league presence that might have helped it to succeed. Houston played on a dirt field in a high school stadium, and the Boston Patriots played in different stadiums on Friday nights so the team would not compete with New York Giants telecasts in New England on Sunday afternoons.
Exposure was the key that allowed this fourth American Football League to survive. Wismer was the conduit between the AFL owners and the media decision makers.
"It was pretty good but not equal," according to Hunt."We certainly had good inroads and the media, interestingly, really wanted the AFL to succeed, a lot of them did.
"That's not always true; I think sometimes in a new league like Major League Soccer, I think the media is very ho-hum about it because they have plenty to cover.
"Harry was very important, a battler and fighter and helped make things happen that would not have happened otherwise."
Despite the news coverage, and ABC exposure, the league had trouble spots. Oakland played its games in San Francisco at Kezar Stadium, Denver was a laughing stock, Boston was constantly looking for a stadium and the New York Titans weren't drawing people to the Polo Grounds. Los Angeles has playing before thousands upon thousands of empty seats despite having a good football team.
The AFL and NFL slugged it out between 1960 and 1966. No other rival league lasted that long.
As a result of the escalating competition between the leagues, George Halas decided he had had enough with the war with the AFL, and pushed for a merger to end it. Tex Schramm and Lamar Hunt had already devised a comprehensive plan before Halas came to them with the merger proposal. Congress approved the NFL-AFL merger when an anti-trust exemption was added as a rider to an anti-inflation tax bill. President Lyndon B. Johnson signed the bill into law, thus creating a newly expanded NFL. The AFL and NFL announced their merger on June 8, 1966, with the two leagues consolidating to form the American Football Conference and the National Football Conference of the NFL.
Under the merger agreement, the two leagues combined to form an expanded league with 24 teams, to be increased to 26 in 1968 and to 28 by 1970 or soon thereafter. All existing franchises would be retained, and no franchises would be transferred outside their metropolitan areas despite a proposal to move the Jets to Los Angeles, the Rams to San Diego, the Chargers to New Orleans and the Raiders to Portland or Seattle. While maintaining separate schedules through 1969, the leagues agreed to play an annual AFL-NFL World Championship Game beginning in January 1967, and to hold a combined draft, also beginning in 1967. Official regular-season play would start in 1970 when the two leagues would officially merge to form one league with two conferences. Rozelle was named Commissioner of the expanded league.
“It was the right thing to do,” said Hunt. “It consolidated the sport. It assured the continuity of every team in both leagues. There were some teams that were pretty weak financially at that point. Some teams going out of business generally accompanied previous mergers in sports. We assured that every team would stay in business. We assured the addition of new teams in Cincinnati and New Orleans. It gave the public the Super Bowl. It also provided the teams and the league with a common draft, which provided for an equal dissemination of playing talent.”
Terms of the agreement included AFL payments to the NFL of $18 million (over 20 years), much of which went to the San Francisco 49ers ($8 million) and the New York Giants ($10 million), whose territories were being invaded. The AFL also agreed to pay the NFL the $7.5 million it received from the Cincinnati expansion fee.
No other rival football league has equaled Hunt’s success. The UFL has tough sledding ahead. Between college football and the NFL, there seems to be enough football today unlike 50 years ago and throw in the recession that will make the UFL’s road even tougher.

Saturday, March 28, 2009

Drug testing and privacy issues cloud Soccer's Olympics future

Evan Weiner
Business of Sports Examiner

Drug testing and privacy issues cloud Soccer's Olympics future

March 27, 2:08 PM

The merry band of men who run the World Anti Doping Agency (WADA) are not a happy group. The World Anti-Doping Agency, a group that thinks it is always right and has seized the moral high ground in the war on the usage of performance enhancing drugs in sports, has come up with a new proposal to clean up cheating in football or as it is called in the United States, soccer.

WADA wants to football federations to keep track of players 365 days a year, 24 hours a day so they can administer drug tests. WADA has a new sheriff in town, John Fahey who is seemingly not very happy that two football organizations have no intention of using Kremlin-like tactics to spy on players. WADA put out an angry statement that is supposed to show who is boss, after all, WADA thinks it has more juice than any police department or government.

“WADA was surprised and concerned to read the statement issued on March 24 by the world and European football governing bodies, FIFA and UEFA, in relation to universally harmonized whereabouts requirements that took effect on January 1, 2009.
Under the 2009 International Standard for Testing, which was unanimously approved in May 2008 by WADA’s Executive Committee (including representatives of International Sports Federations), the limited number of top elite athletes included in an International Federation or National Anti-Doping Organization registered testing pool must indicate one hour a day during which they can be tested at a specified location. The new Standard also provides team sports with the opportunity of submitting the whereabouts of their relevant athletes on a collective basis as part of team activities. This specific point was the result of requests from and extensive consultation with team sports, including FIFA, and was specifically made to accommodate team sports.
Under the Standard, the one-hour time-slot indicated by the athlete or his/her team can include any location, including training grounds. But the opportunity for anti-doping organizations to test athletes is not limited to the chosen one-hour time-slot and location.
“One of the key principles of efficient doping control is the surprise effect and the possibility to test an athlete without advance notice on a 365 day basis,” said WADA’s President John Fahey. “Alleging, as FIFA and UEFA do, that testing should only take place at training grounds and not during holiday periods, ignores the reality of doping in sport. Experience has demonstrated that athletes who cheat seize every opportunity to do so and dope when they believe they won’t be tested. Some substances and methods disappear quickly from the body while keeping their performance-enhancing effects. Anti-doping organizations must therefore be able to test athletes at all times in an intelligent fashion. WADA stakeholders have recognized this reality, and the feedback we have received from the overwhelming majority of other sports, but also from athletes and all those who support doping-free sport, strongly contradicts FIFA’s and UEFA’s stance.”

FIFA and the UFEA have told WADA to get lost and have brought up the issue of privacy rights, something that WADA doesn’t believe is valid for elite athletes. The International Olympic Committee, a cheerful group of people who also believes it is above the law as IOC President Jacques Rogge attempted to prove in 2006 when he suggested to Italian authorities that the IOC take control of the Turin Olympic Village drug enforcement laws because taking illegal performance enhancing drugs really wasn’t breaking the law, rather it is just cheating, is backing up WADA in this case fully, to the point where the IOC might want to get rid of soccer in the Summer Games.

WADA put out a statement on the site with a not so veiled threat.
“At a meeting between the International Olympic Committee (IOC) Executive Board and the Association of Summer Olympic International Federations (ASOIF) held on March 25 in Denver as part of the Sportaccord Convention, the IOC President, Jacques Rogge, reiterated his strong support to the fight against doping and WADA’s work. He also urged all sports to comply with the World Anti-Doping Code.
The Olympic Charter provides that only sports that comply with the Code can be part of the program of the Olympic Games.”

FIFA President Seth Blatter thinks WADA’s is conducting a “witch hunt.” Of course, this is nothing new for WADA connected people. When the Montreal lawyer Richard Pound was running the group he had a laundry list of complaints which included his accusation that one third of the players in the National Hockey League were using illegal performance enhancers and going after Tour de France champion Lance Armstrong.

WADA and the IOC are partners in taking on the drug culture and apparently are willing to do their testing without search warrants at any time. The football people are correct, test the players at the facilities. The neither WADA or the IOC should have the right to knock on someone’s door at 3AM and demanding a test. If they suspect a player is taking illegal substances, get a search warrant from the rightful authorities, law enforcement agencies.

The IOC runs roughshod over governments in terms of the economic damage caused by IOC demands if a city wants to hold an Olympics. The economic carnage in Montreal, Sydney and Athens was passed onto taxpayers. Because the IOC got mad at Major League Baseball for not sending stars to the Summer Olympics, they started complaining to people like Arizona Senator John McCain about MLB’s lax drug testing policies. Somehow the steroids issue made it into President George W. Bush’s 2004 State of the Union address and by 2005 Congress was wasting time on steroids use in baseball. The IOC basically told United States officials New York and other American cities would not get the Olympics unless American sports leagues adhered to the IOC drug testing standards.

The IOC actually did New York a favor. New York City and New York State are not on the hook for the billions of dollars to build facilities for the 2012 Summer Olympics.

The IOC may be in for a rude surprise if it pushes football or soccer. FIFA doesn’t need to be in the Olympics. The World Cup is a bigger sports event that is bigger than the IOC’s every four year summer sports orgy. The football people value privacy, something the neither IOC nor WADA officials care about.

Friday, March 20, 2009

"Hooverville" meets 21st century sports economics in Sacramento

Evan WeinerBusiness of Sports Examiner
"Hooverville" meets 21st century sports economics in Sacramento

March 20, 11:18 AM ·

There is probably nobody who is connected to the National Basketball Association that has a harder job that John Moag. For lack of a better description, Moag is the NBA’s point guard in the league’s attempt to get public dollars from Sacramento elected officials to help build a new area for the owners of the local NBA franchise, the Maloof brothers.

It is in Sacramento that 2009 economic reality is intersecting with the needs of a major league sports business. A “Hooverville” tent city housing the homeless has sprung up not far from the Cal Expo grounds, the place where the NBA and Sacramento officials want to build a new arena to house the Sacramento Kings.

"Hooverville” was the given to shantytowns built by the homeless on open spaces during the Depression. It was named after President Herbert Hoover who led the nation during between 1929 and 1933. Nobody has recorded any songs like “Brother Can You Spare a Dime?’ as the jobless rate hasn’t reached 25 percent but clearly wealth has been lost in the economic downturn.

Both the residents of the Sacramento “Hooverville” and the Maloof brothers’ basketball team have one thing in common, financial problems. A little background is needed to fully explain the connection between the 300 or so residents who are living near the American River and the Maloofs’ basketball team. Both need public handouts to survive. The economy is taking a toll on people who have lost jobs and have had their homes foreclosed and some of those people have ended up in tent towns.

The Maloofs are not hurting for money, their portfolios could be down because of being shareholders in the Wells Fargo bank, but they still have the Palms hotel and casino in Las Vegas along with a beer distributorship. But their basketball team suffers in comparison to other NBA franchises because the team plays in an outdated arena that lacks the big revenue producing luxury boxes and club seats that are so important to team owners. The franchise needs more money to run as a viable business.

Sacramento is small market and a government town that lacks both a rich, local cable TV contract and a multitude of big money, big spending businesses that buy the luxury boxes, the club seats and advertising inside the arena but small markets can survive in new arena with all the money making gadgets. But there is just enough money to support one big time pro sports team and in this case, it is an NBA team. Sacramento is also important because it is the capital of the country’s biggest state, California, and the NBA does a lot of business in California with two franchises in Los Angeles and one in Oakland. It always helps to have a team in the state capital for lobbying purposes in the event the NBA needs government help to solve a problem that could crop up.

Sacramento has been a problem franchise for the NBA for years. The "Hooverville" tent city has been a Sacramento problem since the economic downturn. Both are related.

Sacramento Mayor and former NBA player Kevin Johnson wants to see a new arena built and there are plans to construct an arena as the centerpiece of an arena-village at the Cal Expo although no one is sure how it would be funded. Johnson governs an area that has been hard hit by the recession hurt by job losses and home foreclosures. It is those people who have lost their jobs and homes who could be Kings ticket buyers.

Mayor Johnson wants to close the Sacramento “Hooverille” as quickly as possible and move the residents to homeless shelters and other more secure shelters including some places at Cal Expo.

That is why John Moag’s job has become even more difficult than it was after NBA Commissioner David Stern appointed him to help get the new Sacramento arena built following two crushing referendum defeats in November 2006. How do you get public money to build an arena for expensive entertainment in an area that clearly has many other public needs? An NBA team is not a quality of life issue. “Hooverville” clearly is a quality of life issue.

The question is pretty simple. How do you justify building an arena with some public funding when Sacramento’s jobless rate is more than 10 percent? One answer is that building an arena will create construction jobs. But those construction jobs will not materialize for another two years or so because no developer has stepped forward to help pay off some of the costs of building an arena and surrounding village. The money is not available for the project at the moment. Credit markets remain frozen.

The Kings franchise was born in Rochester, New York in 1945 as the Royals and played in the National Basketball League. The franchise moved to the Basketball Association of America in 1948. The BAA became the National Basketball Association in 1949. Rochester had become too a small and financially challenged NBA city in the 1950s and the franchise moved to Cincinnati in 1957. Cincinnati could not financially support an NBA team either and the franchise shifted to Kansas City where it was renamed the Kings in 1972. Kansas City was also a money loser.

The Kings franchise ended up in Sacramento in 1985 not long after the owners of the Kansas City Kings threw in the town and sold the franchise to a Sacramento group who wanted a team in California’s capital. In 1996, the Kings owner at the time, Jim Thomas, proposed building both a Major League Baseball stadium and an NBA arena in the city, but by January 1997, the idea fell apart and Thomas began threatening to sell the team because the franchise was losing money. Sacramento city leaders, fearing that Thomas might move the team to Anaheim or some other city, loaned him $82 million to help ease his financial burden. Thomas then sold the franchise to the Maloof brothers in 1998.
In 2001, Sacramento's mayor, Heather Fargo, put together a task force to study whether Sacramento should green light an arena and entertainment center in the city's downtown area and, by November 2002, there was some sort of commitment to the plan. But the Maloof brothers pulled out of the proposed venture within a year, partly because they didn't want to get stuck with a debt service bill. When the issue was revisited in 2004, the Maloofs were unhappy that a city councilman offered a resolution that would cap spending at $175 million for the city and $175 million for the Maloofs.

Apparently a salary cap on NBA players' payroll was fine for the brothers, but a municipal spending cap for an arena was unacceptable.

In 2006, the Maloofs and the city seemed to have struck a deal for a new arena that would have secured the franchise for decades if voters said yes in a November 2006 referendum The city, through the general tax, would have put up at least $470 million for the arena and parking. The city would own the building, but all of the revenue generated for all events held inside the building would go to the Maloof brothers. Not only that: The siblings would keep all the money earned from selling the naming rights to the city owned arena.
The Maloofs would pay off Thomas' old loan, which they inherited after they purchased the team. Additionally, they would pay $4 million in annual rent, an amount that could easily come from naming rights. They will also have to kick in $20 million for arena repairs. The Maloofs walked away from the deal however.

The Maloofs and the city fought over development surrounding the arena, the city wanted commercial and residential building to ring the new facility to spur downtown development but the Maloofs, who would get just about every nickel of revenue inside the building, wanted the land for an 8,000 space parking lot. The Maloofs wanted the big parking lot because they would keep all of the money generated from the lot. The Maloofs wanted the same parking deal they had and still have at the old arena.
That might not seem like a deal breaker until you do the math. Assuming the Maloofs fill the lot and charge $10 a car, that would mean $80,000 a night multiplied by 41 and you get more than $3 million annually from parking alone just from Kings events. The Maloofs would also get parking money from non-Kings events at the building, so the parking lot issue was a deal breaker.

“Hooverville” has met the Maloofs in Sacramento. The 1930s and 21st century sports business reality will meet at the Cal Expo when some “Hooverville” residents are placed in shelters on the Cal Expo grounds, land that someday might house the Maloof brothers’ Sacramento Kings.

Wednesday, March 18, 2009

Can't afford the cost of a sports event? Blame Reagan and Congressional Democrats in 86

Evan WeinerBusiness of Sports Examiner
Can't afford the cost of a sports event? Blame Reagan and Congressional Democrats in 86

March 18, 1:51 PM

Major League Baseball Commissioner Bud Selig has in recent interviews admitted that he is not sure what to expect when it comes to how many tickets will be sold to Major League Baseball games this season. Given the economic news that comes out daily, it is probably a good bet that ticket sales along with corporate sponsorship dollars will plummet this year. If that happens, it will be the first time since the Reagan years that baseball revenues will tumble except for the strike era in the mid-1990s.

Big time sports, whether it is Major League Baseball, the National Football League, the National Basketball Association, the National Hockey League, Major League Soccer or major college sports like football and basketball have been on an upward financial projection since the 1986 Tax Act, which inadvertently changed the entire sports industry. If people have been priced out of sports events, blame Ronald Reagan and the Democrats who controlled Congress back in 1986.

With a strike of the pen, President Reagan who changed league dynamics and accelerated the movement to build new stadiums and arenas complete with huge sources of potential income from luxury boxes and club seating. The National Football League Commissioner Pete Rozelle knew all about luxury boxes back in 1982, telling this reporter that “it was the bane of football.” Dallas and the New York Giants had boxes and were able to make more money that the teams could spend on players and Rozelle predicted that NFL owners would start moving around hoping to find stadiums with luxury boxes. NFL owners starting in the 1970s with Baltimore’s Robert Irsay were looking for greener pastures.

Reagan and the Congressional Democrats have allowed sports owners to practice sports segregation, a practice that forces owners to go after well-heeled customers instead of blue-collar fans. Those customers can afford the high prices for luxury boxes and club seats, high prices for foods and drinks, high prices for parking and merchandise. Poorer fans had two choices; cough up more money for less desirable seats or watch games from home on TV, generally on cable TV where they paid for the service as opposed to over-the-air television. It was Reagan who put the mechanism in place in 1986 that really started ownership free agency and a battle between cities for National Football League, Major League Baseball, National Basketball Association and National Hockey League teams.The Tax Reform Act of 1986 opened a loophole in the tax laws and gave owners ammunition in their battles with cities and states to get stadiums. The new tax law capped revenues that were raised inside the new or renovated facility that went into the cost of building the facility at eight cents on every dollar. An owner could get 92 cents out of every dollar spent in the facility in theory and also keep all of revenues from stadium naming rights, although leases could be negotiated that would give the municipalities more money to help pay off the construction. Municipalities also paid off stadiums through various taxing schemes including hikes in sales taxes, hotel and hotel taxes, rental car taxes, cigarette taxes, alcohol taxes, and breaks in property taxes including payments in lieu of taxes (PILOT).

With the new or renovated stadiums on line, owners were able to met players salary demands and those owners who did not have the revenue sources provided by new or renovated stadiums played city against city to get new facilities in an attempt to keep up with those owners who were in upgraded facilities.The law gave municipalities a federal tax exemption on bonds to build new stadiums. The results are stunning. In 2009, 26 of the NFL's 32 teams have new stadiums or renovated facilities with enhanced revenue streams.Of the six that have not gotten new stadiums, the New York Giants and the New York Jets ownerships have partnered on a new stadium that will open in 2010 that is getting tax breaks and incentives from New Jersey. Tom Benson’s New Orleans Saints franchise is getting handouts from Louisiana, although Benson should be the 27th team to get an updated facility as the New Orleans Superdome was renovated because of the damage from Hurricane Katrina on August 29, 2005. Benson’s handouts end following the 2010 season and that could set up a possible departure from the Crescent City. San Diego’s Spanos family is still looking for a new stadium for their Chargers franchise and Minnesota’s Zygi Wilf wants a new stadium for his Vikings franchise. The York family still is hoping Santa Clara, California will still build a new facility for their 49ers even though San Francisco Mayor Gavin Newsom would still like the family to reconsider and look at a plan to keep the team in “The City.”Sports-team owners started putting pressure on municipalities shortly after Congress sent the completed bill to Reagan for his approval. In 1988, Bill Davidson’s Detroit Pistons began making all sorts of extra money at the Palace of Auburn Hills with the leasing of 180 luxury suites. Davidson built the facility without public money and other sports owners noted his success.

The need for a new stadium/arena frenzy really kicked in by 1989 as the Chicago White Sox ownership threatened to move to a publicly funded stadium in St. Petersburg, had the Illinois General Assembly not given approval for building a new ballpark on Chicago's South Side. Baseball expanded to taxpayer-funded stadiums in Denver, St. Petersburg and Phoenix. Most cities built new ballparks for their Major League teams. The Cubs, Red Sox, Dodgers, Royals and A’s and Marlins still play in old facilities. Baseball is looking for a taxpayer-funded stadium for the Florida Marlins in Miami. Kansas City and Jackson County, Missouri are paying for renovations for the Royals ball park. Washington opened a new stadium for the Nationals last year, new stadiums in New York for the Yankees and Mets open in less than four weeks and Minneapolis’ new stadium opens for Twins baseball in 2010. It is possible that A’s owner Lewis Wolff will be the only owner with a stadium problem in the near future if Miami-area elected officials give the go ahead to build a Marlins StadiumSpring training is different, too, with little cities being forced to build state-of-the-art complexes in a bid to keep teams from leaving for better offers in other areas of Florida or Arizona.In 1990, Major League Baseball and Minor League Baseball signed a new agreement that mandated cities and states across the country to either build new facilities or renovate existing parks by 1994, or Major League owners could pull out of those cities. It's no coincidence that independent baseball minor leagues sprung up, using cities that Major League Baseball deserted as the basis for their business ventures.The National Hockey League was able to expand from 21 to 30 teams and relocate two Canadian-based franchises to the United States during the 1990s because of the 1986 Tax Act. The only non-U.S. city the league added was in Ottawa. Quebec City moved to Denver, Winnipeg ended up in Phoenix and the league added teams in new facilities in San Jose, Tampa, Miami, Anaheim, Nashville, Atlanta, St. Paul and Columbus, and Hartford relocated to Raleigh, N.C., when Connecticut said no to a new arena. Almost every NHL franchise has a new building with the exception of the two New York-area teams.The NBA expanded in 1987 to Orlando, Miami, Minneapolis and Charlotte. Minneapolis eventually had financial difficulty and nearly moved to New Orleans in 1994. The Minnesota Legislature bailed out the team. The NBA awarded teams to Toronto and Vancouver; the Vancouver team moved to Memphis, Charlotte ended up in New Orleans; and Charlotte built a taxpayer-funded arena for its new team. Seattle ownership was unable to get a new building and decided to move to Oklahoma City Only the New York-area teams; Sacramento and Orlando have old buildings, although the Magic ownership is getting a new building next season. Having a new building doesn’t guarantee financial success as the owners of the Indiana Pacers, the Simon Brothers, are looking for financial help from Indianapolis officials as running the city’s new arena along with the money-losing franchise has become too costly.

College programs have new or renovated facilities. The renovations included the building of luxury boxes and concession areas. With the enhancements came hikes in ticket prices, concessions and parking. Students like sports fans had to make a decision, buy higher priced seats in the same locations or watch games from home in front of a television.

Major League Soccer, which did not exist when Reagan signed the tax bill in 1986, has also benefited from the rush to build new stadiums. Seven new soccer stadiums have been built since 2002 with others scheduled to open in the next few years.

Going to a major league sports event or a big time college football game is no longer an option for everyone. In fact, a survey cited by Paul Pelosi, one of the major backers of the new United Football League, said that 66 percent of those of identified themselves as NFL fans never expected to see an NFL game in person. Why? The cost of attending a game.Are the games too costly these days? Blame Ronald Reagan. His signature on the 1986 Tax Reform Act changed the world of

Sunday, March 15, 2009

In Binghamton, what is the cost for March Madness? In Binghamton, what is the cost for "March Madness"

March 15, 1:00 PM
Here is hoping that Dr. Lois B. DeFleur and George Pataki are enjoying Binghamton University's first trip to March Madness, the NCAA Men’s College Basketball Tournament, more than say Bryan Steinhauer. Hopefully both Dr. DeFleur, the President of Binghamton University, Pataki, the New York Governor between 1995 and 2007, along with members from both houses of the New York State Legislature who approved Binghamton's step up to Division I men's basketball and allowed some $33.1 million in funds to go into the construction of an new athletic facility, to house the program, will keep Steinhauer in their thoughts.

But why should they? He wasn't a major contributor to Binghamton's success this year. In fact he wasn't even in school this year.

You see Steinhauer will forever be the symbol of what happens when a school chooses to house a big time sports program. The cost is more than just money. In Steinhauer's case, he was left in a coma after one of Binghamton basketball recruit, Miladin Kovacevic got into a bar brawl with Steinhauer in the early hours of May 4, 2008. Kovacevic, who is 6-9 and weighs 260 pounds, got into a fight with Steinhauer who was 5-9 and about 100 pounds lighter. Kovacevic beat Steinhauer into a coma. The only reason Kovacevic, who came from Serbia, was at Binghamton was his ability to play basketball.

Steinhauer finally emerged from a coma but doesn't remember the incident. Meanwhile Kovacevic fled to Serbia after being arrested with the help of the Siberian consulate. United States officials have demanded that Siberian officials return him to New York where he would face a trial, but Serbia claims they cannot do that because Serbia's constitution does not allow for extradition to the United States.

After the beating, Dr. DeFleur and New York Governor David Patterson along with members of the legislature should have suspended the program and looked into what the school got itself into by reaching for the big time. Instead it was business as usual. Prepare for the 2008-09 season and win the America East Conference under Coach Kevin Broadus.

Dr. DeFleur acted like so many other college and university presidents and chancellors. She overlooked the criminal incident like her peers at the University of Nebraska and other big time schools. The thinking seems to be something like this when it comes to the presidents and chancellors. Maybe in due time people will forget that some college athletes act like thugs and are arrested but somehow continue playing sports. Kovacevic lost his scholarship according to school officials before the Steinhauer incident, possibly because he was injured in 2007-08. Coaches can take scholarships away as easily as handing them out.

Binghamton University along with Buffalo, Stony Brook and Albany are the crown jewels of the New York State University system. All have gone Division 1 in many sports. Buffalo and Stony Brook are football schools, Binghamton and Albany are basketball schools. There was no need to go big time in Binghamton, yet in April 2003 when Binghamton was recruiting students, one of the school's selling points at an assembly aimed at parents who were helping their child in the school selection process was the commitment to basketball and that one day Binghamton would beat perennial powerhouse Syracuse in a match up. That is how important basketball became to Dr. DeFleur.

Basketball has become too much of a burden for a school that is rated one of the best academic state colleges or universities in the United States.

Of course it could be argued that Binghamton, a Northeastern rust belt city, has been in a recession after losing IBM and other companies for more than a decade and a half along with a lot of upstate New York municipalities and needed something to attract students other than classes and a few seedy downtown bars and a basketball team competing on a Division 1 level could do just that. Also, with a D-1 school, alumni and boosters would pump more money into the school's sports programs.

But America East schools don't play big time basketball like the Big East, the ACC, the Pac-10 and other conferences. America East schools lose money on sports and America East games are not must see TV even when the few that do get on TV are shown.

That of course leads to the question. Why is Binghamton going full throttle on building a basketball program? Another question. At what price does a school sell its soul?

A few weeks ago, the New York Times wrote a less than flattering article on the whole culture of the Binghamton University basketball program which included the Kovacevic incident and other incidents including a story about Malik Alvin was charged with assault and theft at a local Wal-Mart. Alvin was charged with stealing condoms, an item very much available on campus free of charge. The charges were dropped. In January, Dwayne Jackson was suspended for violating team rules and Devon McBride quit the team for his “loss of interest” in the game. McBride in that article also claimed that his teammates, most of whom were under the legal drinking age of 21 were consuming alcohol and smoked pot, which is illegal.

The mess at Binghamton University is what Dr. DeFleur, a former college basketball player, has on her watch. The mess is what former Governor Pataki has on his watch. Of course, the Binghamton University president has gone on the offensive and told the New York Times that "All of our basketball players are eligible and are making progress toward graduation." Dr, DeFleur also added that "Since we’ve been Division I, all of the players that have stayed in the program have graduated.”

It would be refreshing if in the coverage of March Madness if the National Collegiate Athletic Association's television and broadband partner CBS or its radio partner Westwood One would devote some time to real journalism on the presentation but don't expect that. CBS is paying the NCAA billions and while the network can dictate the times games tip off, they, despite paying all of that money to the NCAA, dare not criticize or even suggest that college sports is plagued with problems like graduation rates, arrests, allegations that professors have been coerced into giving "student-athletes" better grades and a host of other issues including "student-athletes" rights and the fact that coaches make money off endorsements on the players backs. But all CBS Chairman Sumner Redstone, CBS President Leslie Moonves, CBS News and Sports President Sean McManus and other network officials want are good ratings on TV and record numbers of visitors to the streaming videos of the games. There will be fluff pieces on CBS network news programs promoting March Madness, but don't expect any pieces on Kovacevic and the United States Department of State and New York Senator Charles Schumer's attempts to get the Serbian basketball player back to face assault charges. That would get in the way of entertainment and what the big time playing football and basketball schools want.


Thursday, March 12, 2009

Sports economy, is it tanking?

Evan WeinerBusiness of Sports Examiner

Sports economy, is it tanking?

March 12, 9:42 PM
Has the sports economic bubble burst? The answer would seem to be yes, although Major League Baseball's Spring Training ticket sales are up and both Major League Baseball and the Major League Baseball Players Association seem to be making money on the World Baseball Classic as World Baseball Classic, Inc. will be distributing more than $15 million in proceeds from the 2009 World Baseball Classic to the participating federations and the International Baseball Federation according to a March 4 news release. The participating teams will split $14 million, which is nearly double the $7.8 million that was awarded after the inaugural event in 2006. In addition, the IBAF, the worldwide governing body for the sport of baseball, will receive over $1 million to invest in game development globally.

The 15 million dollar haul is pretty sizeable considering that the global economy is tanking despite a Wall Street rally over the past few days.

Last Monday, Major League Baseball announced that Spring Training attendance was up by two percent over last year's pace for overall Spring Training attendance through Sunday's exhibition games. "A total of 871,502 fans have gone through Cactus and Grapefruit League turnstiles in 154 games, an average of 5,659 per exhibition. That compares with an average of 5,548 through the same number of games in 2008," according to the news release.
So far, Major League Baseball based on the WBC and Spring Training attendance looks to be recession proof. But looks might be deceiving. It is far too early to tell if regular season attendance will drop, if luxury boxes will be sold or be empty over the course of an 81 game home schedule and if teams like the Yankees or Pirates can replace a sponsor like General Motors and get comparable dollars when someone jumps in, if someone jumps in, to take General Motors place. The real test comes once the regular season starts. April will not only be a litmus test for Major League Baseball, but Minor League Baseball, the National Basketball Association and the National Hockey League as well. NBA and NHL playoff bound teams are looking for their patrons to buy playoff tickets at a higher price than the regular season.
The NBA and NHL sold all of its sponsorship and inked all of its marketing partners for the 2008-09 before the crisis hit last September. NBA revenues in 2008-09 are up two percent from 2007-08 levels but there is trouble ahead. Major League Baseball is either selling new sponsorship or renewing expiring marketing agreements during the economic meltdown, the NBA and NHL are just selling playoff tickets now, the National Football League is beginning to sell tickets for 2009. The economic conditions are not favorable. Bill Davidson, the owner of the Detroit Pistons, will be lowering season ticket prices in 2009-10. Detroit may be the hardest hit sports market in either the US or Canada. The continuing troubles of the Big 3 automakers combined with a falling Canadian dollar will have an affect on The Pistons along with the Detroit Red Wings, Detroit Tigers and the Detroit Lions.
In Charlotte, a city dominated by the banking industry, Bobcats owner Bob Johnson will slash season ticket prices by an average of 17 percent in 2009-10.
Also this week, the NBA was hit with major economic jolt. The Simon Brothers told the Indianapolis Capital Improvement Board that they no longer could afford to assume the losses of their Pacers franchise and operate the team's home arena. The Simons are seeking relief and could sell or move the franchise with some city layer of government doesn't step in. The problem with that threat is simple. There are very few places that can take on a team. Kansas City is one place but that was a risky market even before the economic downturn. Kansas City's market is too small for the NFL's Chiefs, MLB's Royals and NASCAR, adding another team would just drain the other sports entities in the Kansas City market. Las Vegas is a dead market right now.
In good economic times, the Simons claimed they lost money on the team and they were one of eight ownership groups who asked for additional revenue sharing two years ago.
The NBA has offered 15 teams "bailout" money to help them get through tough economic teams. The NBA and the National Basketball Players Association still have two years left on their Collective Bargaining Agreement and a lot can happen between now and 2011. The economy could pick up or conditions could deteriorate.

All seems to be quiet in the NHL compared to the NBA. New York Islanders owner Charles Wang wants to see his "Lighthouse Project" given the go ahead by various Long Island governments. The Phoenix Coyotes franchise has major financial problems and the falling Canadian dollar is not helping the six Canadian teams. The NHL is in better shape than the Russian Kontinental Hockey League which was fueled by oil money. The KHL season is drawing to an end and it will be interesting to see how many of the 24 teams that started last September will be back in 2009-10 and if the KHL can hold onto big name players, particularly Jaromir Jagr.
In all of this economic chaos, there is some glimmer of hope for the sports economy and growth. The fledgling United Football League on Wednesday held a news conference to discuss plans for the 2009 season, the first one for the league. Paul Pelosi, who along with other investors, has sunk $30 million said the establishment of the UFL was "a tremendous opportunity, recession is time of opportunity."
Pelosi, the husband of United States House of Representatives Majority Leader Nancy Pelosi, thinks his league will thrive in time. Pelosi will know by December 1, long after the NBA, NHL and Major League Baseball have found out just how much the economy has dragged them down.

Monday, March 9, 2009

Can Nancy Pelosi's husband and Versus lift the UFL?

Evan WeinerBusiness of Sports Examiner

Can Nancy Pelosi's husband and Versus lift the UFL?

March 9, 4:43 PM ·

In this economic downturn, the last thing you except is that investors would sink money into a new football league. But the United Football League (UFL) has attracted attention from a heavy hitter, San Francisco businessman Paul Pelosi, who happens to be the husband of United States House Speaker Nancy Pelosi, and Comcast, the county's largest multiple systems cable TV operator. Pelosi and his group are putting up $30 million to get the enterprise off the ground while Comcast Chairman and CEO Brian Roberts will give the league exposure on the cable giant’s Versus sports network. Versus is available according to UFL officials to 75 million cable TV subscribers. Roberts is one of the most important people in the sports industry as Versus and some of Comcast's regional sports cable TV networks pour hundreds of millions of dollars in Major League Baseball, the National Basketball Association and the National Hockey League. Roberts' company also owes the Philadelphia 76ers and the Philadelphia Flyers.

Just what is the UFL and why is there a UFL? The simple answer comes from the league's mission statement.

"The UFL was developed to fulfill the unmet needs of football fans in major markets currently underserved by professional football by providing a high quality traditional football league comprised of world class professional football players. The UFL will serve the communities with pride, dedication and passion, and uphold a leadership role in the development of football worldwide. The UFL will provide every fan with an affordable, accessible, exciting and entertaining game experience.

"In these economic times, people have become more discriminating with their leisure dollars. It is unfortunate that it has become cost-prohibitive to take a family of four to a sporting event; we want to enhance the way sports is perceived and provide more value for less dollars. Our goal is to make a fan-friendly environment for all ages as we understand that this is the only way to develop the next generation of fans"

The league has not announced ticket prices yet. The UFL will name head coaches for the four teams on Wednesday and the league claims "Our coaches’ salaries will be competitive with those of most NFL coaches’ salaries. Our player salaries are on a per game basis and will be typically higher than the NFL’s minimum salaries and practice squad salaries."

There will be no big name players in the UFL meaning that league officials are borrowing a page from Vince McMahon's XFL, an entity that folded shortly after the final game of the 2001 season, the only season of XFL play. McMahon had no big name players either and was probably the most well known person in the XFL. McMahon's league went out of business because his business partner, General Electric's NBC TV division decided that the XFL had lost too much money.

The launch of the UFL may be more in line with the Spring Football League which featured teams in Houston, Los Angeles, Miami and San Antonio. The SFL planned to test out its product with a four game season between late April and late May but lasted just two weeks. The SFL ownership wanted to return in 2001 but never followed through.

There are three people who are the driving force behind the UFL. UFL Founder Bill Hambrecht, who was a minority investor in the Oakland Invaders of the United States Football League which lasted between 1983 and 1985 and was ultimately driven into the ground by Donald Trump and his wanderlust to compete against the National Football League in the fall and ultimately force the NFL to accept him and his New Jersey Generals into their league. Hambrecht's partner is Google executive Tim Armstrong. Paul Pelosi just came aboard recently.

The league hired Michael Huyghue as Commissioner. During his NFL tenure, Huyghue served on several of the NFL's committees, including NFL Management Council, the Executive Working Group Committee, the NFL College Advisory Committee, the NFL Europe League and as a Trustee of the NFL Players Insurance Trust. Huyghue was also the Jacksonville Jaguars Senior Vice President of Football Operations and a players agents. The UFL also has hired a number of former senior NFL executives to oversee team and league operations.

The UFL was supposed to get off the ground in 2008, the second of two proposed leagues that were scheduled to launch. The All-American Football League suspended operations before a planned spring 2008 kickoff because of a softening economy and the lack of a major TV contract. The UFL has been scaled down to four teams playing in seven cities. New York-Hartford will split home games in those cities, San Francisco will have two home games, Orlando will play two games at the Citrus Bowl and Los Angeles-Las Vegas will share a team. The UFL's first game will be on October 8 and the championship game will take place on Thanksgiving weekend in Las Vegas.

UFL investors plan to own a training facility in Casa Grande, Arizona which means that this is more than just a football venture. According to another news release, "(the UFL) will train and house its players in Casa Grande where a $20 million training complex is being constructed for the city and league use. On the adjacent property of the current Francisco Grande Hotel & Golf Resort, a state-of-the-art athletic facility is being built that will encompass eight playing fields, four field houses, sports training and rehabilitation center, locker rooms, office space and other amenities for UFL year-long use. Beginning September 1st, the UFL will train its players in Casa Grande and use its facilities throughout the six-week season."

There is no word on what the investors plan to do with the facility after training camp is done, but it is a good bet that the facility will not be dormant 46 weeks a year. The UFL investors can make some money from that facility away from football.

There is a long way to go before October though. The Versus deal has been set but the league needs a broadband agreement and a radio deal along with marketing partners and getting associates in this economy is getting more and more difficult. For years, automobiles and beer have been the staples of sports advertising. The UFL will probably be able to get a beer partner but getting a car maker may not be easy. One of the reasons that the American Football League was able to succeed was the marriage of NBC, Chrysler and the AFL back in the mid-1960s and a true lack of pro football franchises as there were just 12 NFL teams in 11 cities when Lamar Hunt announced the formation of the AFL in August 1959.

The only major American city underserved by the National Football league is Los Angeles.

Filling up rosters should be no problem. There are always players looking to play, particularly those who were in the Arena Football League who are looking for jobs because Arena League owners shut it down for a year as they reorganize and hope that the economy will pick up in 2010 when they plan to put a product out again.

Is there a need for a new professional football league? On the surface, the answer is no, there are 32 NFL teams and big time college football. Perhaps the UFL will find a niche in a very crowded industry in a weak economy and will be able to launch a full season in 2010.

Sunday, March 8, 2009

Oakland A's owner decision to relocate could change Major League Baseball

Oakland A's owner decision to relocate could change Major League Baseball

By Evan Weiner

March 8, 2009

1:45 PM EDT

(New York, N. Y.) – Lewis Wolff is taking some time off in his effort to find a community that wants his baseball team, the Oakland A’s. Wolff is not moving down the I-880 to Fremont but doesn’t want to stay at the Oakland Coliseum anymore either. Wolff doesn’t seem like the type of owner that could shake Major League Baseball to its core but if Wolff wants to move his A’s to San Jose, he just might have to do so. Wolff doesn’t have permission to go to San Jose, Major League Baseball gave that territory to the San Francisco Giants but if Wolff starts any negotiations with San Jose elected officials he will run afoul of Major League territorial rules and either would have to negotiate a compensation deal with Giants ownership or sue Major League Baseball to get into San Jose.
If that happens, Wolff will just be following the footsteps of previous A’s owners, Connie Mack in Philadelphia and Charley Finley in both Kansas City and Oakland in changing baseball’s structure.
In 1960, the Kansas City A's were purchased by Charles O. Finley, a Chicago insurance broker. Finley bought the team from Arnold Johnson who originally got the team from Connie Mack on November 5, 1954 and moved the A's from Philadelphia to Kansas City in time for the 1955 season. Mack always managed to put together talented teams but never had enough money to pay his players, twice breaking up championship teams. Mack’s first championship teams of 1910, 1911 and 1913 were broken up following the 1914 season due to rising salaries from the rival Federal League. Mack sold off his players because he needed money and turned down an offer to buy Babe Ruth’s playing contract in 1914 from the financially struggling from the minor league Baltimore Orioles.

The Federal League left two imposing imprints on Major League Baseball. The ballpark known today as Wrigley Field was originally built for the Federal League’s Chicago Whales and Major League Baseball enjoys an Anti-Trust Exemption because of the collapse of the Federal League. The Federal League’s Baltimore Terrapins' owners did not like buyout offer that was made to them by the American and National Leagues owners. The Terrapins owners filed a lawsuit claiming the buyout violated the Sherman Antitrust Act. In 1922, The United States Supreme Court ruled that the scheduling and playing of "base ball games" did not constitute "interstate commerce” which meant the Sherman Act and other federal laws and regulations did not apply to baseball.

Major League Baseball is a legal monopoly and although some elements of the 1922 ruling have been weakened through collective bargaining, it remains a powerful weapon in both Major League Baseball’s arsenal and for those who want something from Major League Baseball.

The second Mack dynasty, which included World Championships in 1929 and 1930 and an American League pennant in 1931 fell victim to the depression. Mack sold off players because he needed the money. By the 1950s, the lack of funding, a poor minor league system, Mack's age and the competition of the National League Champion Phillies in 1950 contributed to empty seats at Shibe Park. Mack's sons Roy and Earl bought controlling shares of the club from Mack's partners the Shibe family and their half brother, Connie Mack Jr. The Mack's soon had a large debt and were forced to sell off their concessions rights at the ballpark. By fall of 1954, Mack’s heirs had enough and got rid of the team. That move would eventually have major consequences for the business of Major League Baseball. Finley changed the way baseball marketed its product in numerous ways.Baseball uniforms became colorful; he threw gadgets into the park like a mechanical rabbit that popped out of the ground behind home plate when the umpire needed new baseballs. He had a home run porch in the outfield in Kansas City and proposed that players should all be free agents after every season. Most of Finley's ideas were considered at best goofy and at worst as anti-Baseball. He dumped the Athletics’ Elephant logo and replaced it with a mule that traveled with the team. "We had some episodes," said Howard (Doc) Edwards who was a Kansas City A's catcher in the 1960s. "Once we came into New York City and we were staying at the Americana, and the Americana at that time was the elite place in the city of New York. They rolled out the red carpet but forgot there was a marble floor underneath it and the mule looked like Bambi on ice coming through the locker room. We had a lot of laughs because of the mule, but I really respected the animal because it was beautiful. "It was a logo for Charley. It was like the team mascot. I think Charley, as it was proven later, was a promotional genius because of the different colored the time a lot of people laughed at Charley Finley, but years proved he had a great mind and I think one of the things with the mule was the mascot and we'd get publicity for the ballclub." Finley had a zoo in the outfield and had sheep grazing, rabbits running around and, of course the mule. "It was behind the fences. I think you got accustomed to it," said Edwards talking about the most unusual outfield setting in baseball. "I think you associated Charley with doing a lot of things for the game and he did a lot of great things for the game. I think, before the game there was a lot of hoopla and publicity but once the game started the only time you would think of it was if someone hit a home run. "That bell or horn from the Queen Mary went off and the sheep started running across the hill, then you had to notice them but otherwise once the game started you really didn't pay any attention to it. "The home run porch was something to copy Yankee Stadium because we had Jim Gentile at that time who was basically a left hand pull hitter and Charley felt that the home run porch would help him. But it really didn't because the home run porch took up such a small portion of the right field corner and the opposing teams had far more left handed hitters than we did and we actually lost the home run battle during the course of the year because of it." Finley eventually would develop a Mack like dynasty after he moved his team to Oakland. the A's won three straight titles in 1972, 1973 and 1974. Finley’s teams got good but that happened after the Kansas City days. Finley wanted out of Kansas City and threatened to move his team to a cow pasture in Louisville, Kentucky in 1964. Finley would finally leave Kansas City after the 1967 season, three years after the owners of the Milwaukee Braves decided Atlanta would give them a better business opportunity. While Finley dithered, Milwaukee became a baseball problem.
In 1964, the Milwaukee Braves ownership moved the franchise to Atlanta. That didn't sit well with the Milwaukee County Board of Supervisors who took legal action trying to stop the move. Braves ownership was forced to keep the team in Milwaukee for the 1965 season. In 1966, Milwaukee was without a team. By 1967, the case worked its way up to the Supreme Court and the high court refused to review a Wisconsin Supreme Court decision for a second time that Wisconsin court reversed Milwaukee Circuit Judge Elmer Roller's verdict that the Braves violated Wisconsin anti-trust laws by moving to Atlanta. A car dealer named Allan "Bud" Selig and his group, the Milwaukee Brewers Baseball, Inc. wanted baseball however and in 1967, they convinced the Chicago White Sox to play an exhibition game against Minnesota in Milwaukee on July 24. The game drew 51,144 people. In 1968, the White Sox scheduled nine regular season games in Milwaukee, and Selig's group sold about 7,000 season tickets for the nine games. With no threat of a rival league but faced with a possible loss of their Antitrust Exemptions because of Finley's move and the ranting of influential Missouri Senator Stuart Symington, Major League Baseball announced plans to expand in 1968. The American and National League's acted separately with the American League moving back into Kansas City after the A's left for Kansas City and Seattle. The National League would end up with Montreal and San Diego. Once again, a sports league reacted to political intervention. Finley's move prompted a series of actions. The American League met on October 18, 1967 to consider Finley's request to transfer to Oakland and entertain expansion. The league on a second vote that day gave Finley permission to go immediately and that a Kansas City expansion team would start play no later than 1971. While Kansas City Mayor Ilus Davis and Missouri Senator Stuart Symington weren't opposed to Finley leaving immediately, they were against Kansas City being without a Major League team for three years. Symington threw some nasty heat at the American League by threatening legislation to revoke Baseball's Antitrust Laws exemption. By midnight, American League President Joe Cronin opened the meetings again and the American League announced it pushed its timetable up for expansion by two years. Kansas City would get a team in time for the 1969 season. In January, 1968, the American League owners had selected owners in Kansas City and Seattle. Both cities would build new stadiums for the teams, with Kansas City building two stadiums for baseball and the NFL Chiefs as part of a $43 million complex approved by voters. In Seattle, the new team would also get a taxpayers assisted ballpark. The expansion baseball team would play in Sicks Stadium until that park was completed. The new Seattle team never did play in that new stadium and the 1968 American League expansion would become one of baseball’s worst business nightmares.

National League owners were furious that the American League took the Seattle market and expanded by 1969. The National League approved expansion plans by December 1, 1967 with Dallas-Fort Worth, Buffalo, Milwaukee, San Diego, Toronto, Montreal and Denver seeking teams. National League owners committed to expansion but refused to give a timetable for the new teams. Baseball would undergo its biggest change since the turn of the 19th century in 1968. With Kansas City and Seattle entering the American League, the National League decided to expand although the league was taken aback by losing Seattle. By May 27, the National League added San Diego and a major surprise, Montreal. San Diego had a new 50,000 seat stadium ready for immediate use while Montreal had no stadium and planned to use the 25,000 seat Autostade as a temporary facility. Milwaukee might have beaten out Montreal for the second slot, but National League owners were miffed at Milwaukee and Wisconsin for bringing litigation against the league after the Braves move to Atlanta.Montreal drew more than a 1.2 million people its first year in the big leagues, Kansas City pulled in 900,000 customers but Seattle and San Diego did poorly at the gate. The Pilots were a financial dud and rumors began in midseason that the team majority owner William Daley of Cleveland was looking to sell. By September, Daley was negotiating with Selig's Milwaukee group and with Kansas City Chiefs owner Lamar Hunt who would purchase the team and move it to Dallas-Fort Worth. The American League wanted to keep the Pilots in the Pacific Northwest and came up with three conditions. Sicks Stadium would have to be expanded by 8,000 seats, plans had to be completed for a taxpayers supported $40 million stadium and there was local money available to buy out Daley. Eventually the Pilots ownership went into bankruptcy court and the team was sold to Selig's group for $10.8 million. While that satisfied Milwaukee and Wisconsin, Major League Baseball was once again having its Antitrust Exemption threatened. This time by Senator Warren Magnuson of Washington and by Seattle elected officials. Seattle would build its domed stadium and get a team back. Baseball would once again be forced to expand from outside forces and add Toronto and Seattle in 1977. Finley's move to Oakland resulted in six expansion teams, Bud Selig getting a franchise in Milwaukee and radical changes in the structure of baseball including free agency although he was not the owner that killed the reserve clause which tied players to their teams in perpetuity unless they were traded or released. Charley Finley reneged on the terms of the pitcher Jim (Catfish) Hunter's 1975 contract. Hunter filed for arbitration and won. He became a free agent and was able to talk to the other 23 teams. Hunter signed with George M. Steinbrenner's New York Yankees on December 31, 1974, the first free agent ever signed by Steinbrenner. Hunter was Major League Baseball's first free agent. The next year baseball owner's lost the reserve clause when an arbitrator gave Andy Messersmith and Dave McNally free agency. Finley left a large legacy in Major League Baseball history although he will never get that sort of credit or Hall of Fame recognition. He was an outsider in the baseball industry although he ultimately is responsible for expansion, night World Series games, colorful uniforms, and Bud Selig’s entry into baseball as a full time owner. Selig eventually would become Major League Baseball Commissioner.

Lewis Wolff wants a new stadium although he doesn't seem to want to change Major League Baseball. That is unless he wants to relocate in San Jose. If that's the case, he might have to sue Major League Baseball because MLB has awarded the San Jose territory to the San Franchise Giants ownership and because Major League Baseball has that Antitrust Exemption, Wolff can not move his business there. Perhaps Wolff could impact Major League Baseball after all, like Mack and Finley, because if he decides San Jose is right for him, a whole lot would have to change.

Saturday, March 7, 2009

2011 NFL Lockout: Here is another clue for you all

March 7, 7:25 PM · Add a Comment
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It is March and generally an NFL owner starts thinking about all the money that will be coming their way in the next few months from the sale of luxury boxes, club seats, in-stadium signage, naming rights, marketing partnerships and in the case of Tom Benson, the owner of the New Orleans Saints, a $23.5 million check from Louisiana Governor Bobby Jindal and Louisiana lawmakers thanks to a 2001 $186.5 million bailout that former Governor Mike Foster gave him as a thank you for keeping his football team in New Orleans through 2010. But this particular March is very different than those in the recent past as the owners begin preparing for the annual spring meetings which will be held in Southern California later this month. NFL owners have started digging in for what very well could turn out to be a protracted battle with their players over a new collective bargaining agreement with the 2011 season very much in jeopardy.

One clue for you all is the national over-the-air radio deal or the lack of a national over-the-air radio deal. The National Football League's association with Westwood One, an entity that has been firing people in waves since the fall because of financial ruin, was done with the 2009 Pro Bowl. Normally, the NFL has a new radio deal in place by the end of the final year of the old contract which allows the partner to start selling advertising well in advance of the season. This time around, Westwood One did make an offer to extend the contract but the radio syndicator is in brutally bad financial shape and has been delisted from the New York Stock Exchange. The NFL opted to talk to others including ESPN Radio, Sporting News Radio, Sports USA Radio and The Content Factory.

It was thought that the league would have a new deal by the middle of last week. It didn’t happen.

Length of contract and money are two primary factors behind the delay in reaching an agreement. The NFL would prefer a short term agreement, say two years, for the 2009 and 2010 seasons. The NFL's deal with the financially troubled Sirius Satellite Radio and another partnership with Sprint, which provides wireless play-by-play of games, also end in 2010. Coincidentally, the NFL's collective bargaining deal with the players as lo ends in 2010.

Another clue that the owners are ready to take a hard line stance against the players can be found in the league office and with individual teams. NFL Commissioner has taken a 20 percent pay cut and the league has let go 169 employees due to the recession. The NFL put out a statement saying "It will continue to take collective sacrifice to get through this challenging economic environment, but these and other steps by our office and clubs will enable us to be more efficient and better positioned for future growth."

New York Jets owner Woody Johnson is not laying off people who work on the business side of the team but Johnson has implemented cost cutting measures by making his employees take a two week unpaid leave in either June or July just prior to training camp. The workers are giving back two weeks pay but they will continue to have jobs and receive benefits which is better than the league employees without jobs or former workers of NFL franchises in Cleveland, Washington, Indianapolis and Carolina. The players will not be downsized because of the economy in 2009 due to the collective bargaining contract

The NFL has a salary cap which means teams have to pay at least $86.4 million in salaries and could shell out as much as $116.2 million on players. Most of the money for players salaries comes from the national TV contracts. There is no cap on coaching, scouting and managerial staffs. In 2010, the final year of the collective bargaining agreement, there is no salary cap or floor. Although there is a national TV deal socialism, the difference between high revenue and low revenue teams is the result of local radio contracts and local sponsorship dollars, signage in stadiums and the ability in the past for large market teams to charge more for tickets than their smaller market counterparts although there is revenue sharing on tickets sold. Detroit may be in for a horrible season financially with the potential of bankruptcy looming for General Motors, very high unemployment and a Canadian dollar that has fallen against the US dollar which may preclude those from the Windsor, Ontario area from crossing the tunnel and buy Lions tickets.

If the economy doesn't improve in each of the 30 NFL markets, the owners may decide to totally rein in spending in 2010 and not care about the win-loss record and then tighten their grip on salaries by locking out players starting with the 2011 free agency period. The owners can outlast the players in a strike/lockout scenario. The 1987 players strike was a disaster for the players as a number of big name players including Lawrence Taylor and Joe Montana cross picket lines to play. Eventually the National Football League Players Association caved in and returned to the field. The players and owners finally signed a new collective bargaining agreement in 1993 after a court battle.

The NFL might not have as much money in 2011 anyway as the Sunday Ticket deal with DirecTV will have ended by then. The NFL has seen escalating TV dollars for a decade and a half but that may come to an end if economic conditions continue to deteriorate for media entities.

The lack of a radio deal, the layoffs and furloughs of employees are just the tip of the iceberg. The economics of sports is probably changing hourly. Advertising dollars, marketing deals, selling club seats and luxury boxes has come rather easily for NFL teams, along with other sports leagues and teams throughout North America. As the Dow sinks, as the jobless rate continues and as banks refuse to lend money, something has to give. NFL owners told the players a year ago that they wanted changes in the collective bargaining agreement and that was before the economic meltdown. The owners and players have two years to got a new contract signed but reading the tea leaves it becomes very apparently, the owners are in no rush to sign a new deal and the lack of a national radio deal, the firings and furloughing of workers are two signs that the owners are ready to change the course and fight for a new financial system with the players.

Thursday, March 5, 2009

Evan WeinerBusiness of Sports Examiner

Cricket gets unwanted attention

March 5, 4:47 PM · Add a Comment
About two and a half years ago, I was a guest on a British Broadcasting Corporation World Service programme on the business of sports. The show covered a broad spectrum of world sports including cricket. I knew nothing about cricket and wasn’t called upon to discuss the business aspects of the sport but after listening to the shows that aired on October 18, 2006 and October 25, 2006, I quickly became aware of just how big cricket really is on a global basis.

Cricket’s world championship game gets more TV viewers globally than the Super Bowl. A Pakistan-India contest might draw 400 million viewers and the 2003 ICC Cricket World Cup in South Africa had an estimated 1.2 billion eyeballs glued to a TV set. There are 10 cricket “Test Match” playing countries. Australia, England, South Africa, West Indies, New Zealand, Indian, Pakistan, Sri Lanka, Zimbabwe and Bangladesh. The ambushing of the Sri Lanka team by terrorists in Lahore, Pakistan on Tuesday is not only a huge international incident in the world of cricket but also in the diplomatic world.

Cricket players are nothing more than entertainers but to Pakistan militants, the Sri Lanka team was a high level target. Eight people were killed, six of them policemen. Six Sri Lanka players, a coach and an umpire were injured in the biggest sports terrorist incident since the 1972 Summer Olympic Games in Munich, Germany when Palestinian militants killed 11 Israeli athletes and coaches in the Olympic Village.

Cricket players in Pakistan, Sri Lanka and the other countries are on the same level in their countries as baseball, basketball or football players are in the United States. They don’t make the money as their athletic counterparts in North American and in 2006, cricket promoters were investigating ways of expanding marketing opportunities with China as the major prize and the cricket community would like to get into Africa.

Cricket officials want the sport to grow beyond the 10 “Test Match” clubs and on that BBC show, they laid out they plans to get the sport more ingrained on a worldwide basis, because that is where the money opportunities exist.

Cricket officials are hoping to attract sponsorships and having those sponsors exposed to the billions of people in traditional non-cricket areas. Cricket got massive exposure earlier this week but for the wrong reason. Cricket has become the first sport to get caught in the “real” world of terrorism for the first time in 36 ½ years.

China remains the prize but that is in the future. Also in the future is the 2011 World Cup, which will be held on the Indian subcontinent. India, Bangladesh and Sri Lanka will host matches, but Pakistan is more than likely out after being told that they were going to get a match. Pakistan will not only lose the 2011 World Cup but also other international cricket matches. Sri Lanka was warned that Pakistan is a dangerous country but the Sri Lanka’s cricket board decided to go ahead with the match anyway.

Unlike the 1972 Munich Olympics when International Olympic Committee President Avery Brundage decided, “the Games must go on,” the Sri Lanka team was getting out of Lahore.

In April, the International Cricket Council will meet to talk about the 2011 World Cup venues but it is unlikely that Pakistan will see an international competition played on its soil anytime soon. There may be a review of the security on the Indian sub-continent as well.

The attack on the Sri Lanka team will cause not only the International Cricket Council but also other sports organizations to review security arrangements. The next big international sporting event is the 2010 Winter Olympics in Vancouver followed by the 2010 FIFA World Cup in South Africa. Vancouver is busting its budget to provide security for the Olympians and there will be massive security for the FIFA event. The 2011 cricket event will be held in a dangerous part of the world. The games will go on but will United States security be part of the cricket event? That is a question that hasn’t been brought up yet, but Pakistan is a central part of the War on terror as the cricket community found out this week.

Monday, March 2, 2009

Baseball contraction? If it is in the newspaper, it must be true Baseball contraction? If it is in the newspaper, it must be true
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March 2, 12:09 PM
by Evan Weiner, Business of Sports Examiner
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Back in 1977, the celluloid hero of the Slap Shot, Reggie Dunlop was eagerly showing his players on the Charleston Chiefs hockey team that Dickie Dunn wrote a newspaper story about the team moving to Florida after it became clear that the franchise would not be able to continue in Charleston because the local steel mill shut down. Chiefs fans would not have the money to spend on hockey games.

Dunlop, who had planted the story with the sportswriter to keep the spirits of his players high even though they were facing possible unemployment, told his players, “Dickie Dunn wrote this. It must be true.”

The New York Daily News baseball columnist has brought up the possibility of Major League Baseball dropping the Oakland A’s and the Florida Marlins because A’s owner Lewis Wolff struck out in his bid to build a stadium-village in Fremont, Ca., which is a little bit south on the I-880 of Oakland and the continuing struggles of Jeffrey Loria to land a baseball stadium in Florida. Madden suggests the rumblings of contraction have started although other than a column in Sunday’s Daily News, there have been no rumblings that Major League Baseball is ready to eliminate two teams.

But since it is in the paper, it must be true.

With the United States economy in shambles and with cities, counties, towns, villages, states and the federal government all struggling, now is not the best time to allocate hundreds of millions of public dollars to build baseball or football stadiums or indoor arenas.

Wolff pulled the plug on his plan to built a baseball park surrounded by commercial and residential properties in Fremont after there was a great deal of opposition to the plan.

Wolff wanted to build a 32,000-seat stadium and construct 3,150 residential units, shops, restaurants, an elementary school and a hotel. Fremont and Oakland have been said thanks but no thanks to Wolff’s plans. Wolff is taking his time and is trying to figure out what his next move will be.

Fremont is a stone’s throw from San Jose and there is some chatter that San Jose might be interested in making some sort of offer to Wolff and build a baseball park for his A’s. But it is not that simple. Wolff may know the way to San Jose is blocked by Major League Baseball.

Former A’s owner Walter Haas cannot move to San Jose without help from the San Francisco Giants ownership. In 1990, former Giants owner Bob Lurie was looking to leave San Francisco’s Candlestick Park and eyeing a move to Santa Clara. At a June 1990 owners meeting, the Giants territory was expanded beyond the 10 miles surrounding San Francisco and would include San Mateo and Santa Clara counties. On Election Day, November 1990, Santa Clara voters said no to a Giants stadium.

In 1992, San Jose voters said no to a baseball park. Even though two groups of voters in the South Bay said no to a Giants ballpark, by 1994, Major League Baseball clearly defined the territories of the San Francisco Giants and the Oakland A’s. Oakland’s exclusive territory was limited to the Easy Bay, Alameda and Contra Costa counties while the Giants ownership ended up with the west side of the bay with San Francisco, San Mateo, Santa Clara, Santa Cruz, Monterey and Marin counties becoming the team’s exclusive territories. Giants ownership ended up with the Santa Clara/San Jose territories even though local voters rejected the Lurie’s efforts to set up shop there. They didn’t want Luire’s Giants. For Wolff to enter San Jose, he would have to work out a deal with Major League Baseball and the Giants ownership or sue Major League Baseball in an effort to eradicate territories.

Wolff could follow two 1980s examples if he wanted to go to San Jose. His Oakland Coliseum fellow owners, the NFL Raiders Al Davis took his team to Los Angeles and got a court to agree with his move despite opposition from National Football League owners and NFL Commissioner Pete Rozelle and Donald Sterling took his National Basketball Association San Diego Clippers franchise to LA despite not getting requisite approval from his fellow NBA owners. Wolff might have a major obstacle; Major League Baseball is exempt from United States Anti-Trust laws while the NFL and NBA have to abide by those laws.

The decision to pull the plug on the ballpark-village may also have avoided a huge fiasco. Wolff might not have been able to get the money to build the entire complex.

Meanwhile, Miami elected officials will vote on a baseball stadium proposal on Friday. Miami and various Marlins owners, Wayne Huizenga, John Henry and the present one, Jeffrey Loria, have struck out with Miami and Tallahassee and former Governor Jed Bush in attempts to get funding for Marlins ballpark. The latest proposal is a $634 million park at the old Orange Bowl site. Loria has offered to pay $119 million as his share of the cost of the ballpark.

There are no suitable relocation spots for a Major League Baseball team. Loria kicked the tires in San Antonio and Las Vegas but neither is an appealing market for various reasons. Neither San Antonio nor Las Vegas as a ballpark or a big enough corporate community or TV market to support a Major League Baseball team. Without the leverage of another city bidding for a franchise, the one way Wolff or Loria can get some momentum to build a stadium in their own markets is if the threat of contraction resonates. If the Miami Commissioners say no to Loria on Friday, the contraction train may get onto the tracks and get some momentum but that only come if Major League Baseball can get whatever is left of the baseball writing community to pen columns with the theme of how now is the time to get rid of problem franchises like Oakland and Florida and how it is time to cut losses and stop throwing money into hopeless situations although Major League Baseball’s most troublesome franchise because of the failing economy and the dire financial straights of the Big 3 automakers in 2009 may be the Detroit Tigers.