http://www.mcnsports.com/en/node/7397
One Less Taxpayer Bill to Pay, AIG Replaced as a Manchester United Marketing Partner
By Evan Weiner
June 3, 2009
9:00 PM
(New York, N. Y.) -- American taxpayers got some good news earlier today out of Manchester, U. K. The Manchester United football club will have a new corporate logo on the team's uniform top starting in 2010 as the Chicago-based insurance company Aon has signed a marketing deal with the squad to replace the "to big to fail" insurance company, the American International Group or as it is better known, AIG as a ManU shirt sponsor.
For whatever reason, AIG executives back in April 2006 decided to partner with ManU, arguably the best known sports brand name in the world. The deal was for four years and paid Manchester United about 56.5 million pounds over the life of the deal. On January 21, 2009, the day after Barack Obama was sworn in as the 44th President of the United States, AIG officials announced the "too big to fail" insurance company would not extend the sponsorship.
American taxpayers, who own a good chunk of AIG, will be on the hook for a $25 million payment to the English football club for the 2009-10 season. That is, of course, a pittance compared to the monies the United States government has "loaned" the "too big to fail" insurance giant since September 2008.
In March 2009, House Democrat Ann Kirkpatrick of Arizona was threatening to hold hearings to see if any of the government bailout money was going to pay off the AIG-ManU agreement. Nothing came of that but AIG monies going to sports and junkets is a sensitive topic.
The idea of having the AIG logo on the ManU shirts was part of a marketing effort to expose the company to new clients around the world. That strategy did not work with AIG, at least not when you consider that AIG hit a liquidity crisis on September 16, 2008 and collapsed. The Bush Administration came to AIG's rescue by loaning the company up to $85 billion. AIG received more than $120 billion in the fall of 2008.
After the 2009-10 English Premier League season, AIG will be out of the sports business, at least in Manchester. Other companies seem to be leaving sports sponsorships as well and that is playing havoc with three National Football League teams, Jerry Jones' Dallas Cowboys, the Mara family and Tisch family owned New York Giants and Robert Wood (Woody) Johnson IV's New York Jets. Jones has been unable to sell the naming rights to his soon to be opened new Cowboys Stadium in Arlington, Texas and the Mara-Tisch-Johnson troika is still looking for a naming rights partner for the new Meadowlands stadium opening up in East Rutherford, New Jersey.
Finding marketing partners in Arlington and East Rutherford may be difficult in this economic climate when the truth of the matter is that no one can really quantify just how much business is brought in when a company spends money on naming rights at stadiums or arenas.
Jones, the Maras, the Tisches and Johnson need the naming rights dollars to help pay off debts incurred by stadium costs. Even though local governments in Arlington and in New Jersey are putting up hundreds of millions of dollars in developing the facilities, the owners were counting on corporate dollars to pay off the bills.
Because Jones, the Maras and Tisches and Johnson are not getting that money, it could spur them to really take a hard line in the just started owners-players collective bargaining negotiations. The owners want the players to understand that there may not be as much money available to pay them in 2011 and will suggest that give backs might be appropriate.
The old days of NFL Commissioner Paul Tagliabue and NHLPA Executive Director Gene Upshaw extending the 1993 labor agreement is done. Tagliabue has retired and Upshaw passed away last August. Also missing from the negotiating table is Dan Rooney, the Pittsburgh Steelers owner who was named ambassador to Ireland by President Obama. The players trusted Rooney.
Although the present labor deal ends in 2011, there is some pressure to get a deal in place shortly after next February's Super Bowl. The provision that wedded the owners and players to the 1993 agreement, the owners would lose the salary cap in the final year of the collective bargaining agreement while the players would cede the chance to be gain free agency after four years and would have to wait until six full years of service, expires sometime next March. That clause caused nightmares for both sides as the owners have set players cost while players, many of who never last six years, could bid their services to other teams after four and any change would upset the applecart. The owners though want change and are willing to risk losing the cap in 2010 if they are able to get the players to agree to cost reductions in the next collective bargaining agreement.
NFL owners recently extended over the air network contracts with CBS and FOX and reworked a deal with DirecTV.
The NFL has had a problem for years with revenue sharing and it was not with the players. The owners have apparently abandoned the "leaguethink" policy which NFL Commissioner Pete Rozelle in 1960 or 1961 usurped from Lamar Hunt's newly formed American Football League after Hunt borrowed the concept from Branch Rickey's Continental Baseball League which was looking for owners in 1959. Rickey's league never got off the ground but his idea of sharing TV revenues among the Continental League owners along with other revenue streams took hold in Rozelle's NFL in 1961 and 1962 after Rozelle convinced Jack Mara in New York, George Halas in Chicago and Daniel Reeves in Los Angeles that sharing TV money equally with the Green Bay Packers, Steelers and Baltimore Colts would strengthen the league. Today, big market teams want to keep large revenues generated within their markets and not share it with small market franchises. That has caused a discrepancy between large and small market teams because some of the large market teams use the money to pay off debts or create larger football coaching staffs or scouting staffs.
That divide is still a problem for the owners.
Naming rights are a big deal. But do naming rights really promote a company. The New York Mets and Citibank entered into a $400 million-20 year naming rights deal that started well before the bottom fell out for the bank. American taxpayers have put money into Citibank along with Bank of America which has the naming rights for the Charlotte football stadium and a multiyear deal with the Richardson family's Carolina Panthers.
But does a name slapped onto a football stadium, baseball field or an arena really bring in business? Does an AIG logo on ManU's shirts mean business for AIG? That is a question that is probably unanswerable. Companies still invest in sports because they believe that it is the best way to get their message across to 18-34 year old men. The only thing that is sure that American taxpayers are off the hook after the upcoming Manchester United season for $25 million a year as the AIG logo will fade into ManU's history book. But they are still on the hook for Citibank, Bank of America, General Motors and other entities that have received bailout money for sponsorships and while the monies paid for sports sponsorship is a drop in the bucket, the question of propriety should be answered. Should government back entities like AIG spend even a nickel on any advertising?
eweiner@mcn.tv
Showing posts with label bailouts. Show all posts
Showing posts with label bailouts. Show all posts
Wednesday, June 3, 2009
Friday, January 30, 2009
Should Sports Leagues Bailout Newspapers Sports Sections?
Should Sports Leagues Bailout Newspapers Sports Sections?
By Evan Weiner
12:00 PM
January 30, 2009
(New York, NY) – A few weeks ago, Dallas Mavericks owner Mark Cuban suggested that perhaps it was time for sports leagues like the National Basketball Association and sports teams to serious think about forming what he called a “beatwriter co-operative.” Cuban laid out a premise that “pro sports, every single league from the NFL to NBA to MLB to MLS to NHL need newspapers” because local coverage of teams on the Internet is not as extensive as it would be in a hometown newspaper.
Newspapers in the United States, Spain and France to name three countries are becoming an endangered species. The New York Times is in major financial trouble. The Chicago Tribune newspapers, which include the flagship Chicago Tribune, the Los Angeles Times and the Baltimore Sun among others is in Chapter 11 bankruptcy protection in the U. S. The Minneapolis Tribune is suffering the same financial fate. The Rocky Mountain News is still in business in the Denver, Colorado area but it may join the New York Sun and the Cincinnati Post as recent additions to newspaper heaven. The Seattle Post-Intelligencer is on death row and will be put to bed permanently in less than two months unless a buyer emerges. The Tucson Citizen will give up the fight in March. The Baltimore Examiner will vanish in two weeks.
Gannett is ordering workers to take a one-week leave without pay. In Spain, the Metro newspapers have been put out of business. In France, the government is giving 18-year-olds a free newspaper subscription to whatever paper that 18-year-old wants in an effort to get young people interested in reading a newspaper and the country plans to double France’s advertising commitment to county newspapers.
America’s radio and TV industry are also in awful financial shape. Even the World Wide Sports Leader, ESPN, is lopping off workers.
There are numerous reasons for the state of the media industry in the U. S.. Radio was severely hampered by the 1996 Tele Communications Act which allowed companies like Clear Channel and Infinity to became behemoths and own hundreds and thousands of radio stations and the industry consolidated as by 2005 there were six major media companies controlling radio. The model proved unworkable. Clear Channel wants to exit the industry and Infinity would like to follow.
There is too much TV product now with hundreds of cable TV stations competing with the traditional American TV networks, ABC, CBS and NBC along with what really is a syndicator of product, not a network FOX. But the radio and TV discussion should be left for another day. Mark Cuban wants to talk about newspapers.
In Cuban’s Dallas market, the Dallas Morning News and the Fort Worth Star Telegram plan to share content. Sam Zell’s Chicago Tribune Company’s Baltimore Sun and the Washington Post will be sharing stories. Paradoxically, with the Internet, sports talk radio, cable TV, cell phones and radio there is more information available to the consumer but in sports, the local newspaper and the beat writer are the lifeblood between the fans and the teams.
The dirty secret that is well known in the media industry but not to fans is that sports talk radio could not exist without the beat writer. The beat writer generates the story, which the sports talk radio hosts read and then put his or hers spin on what the beat writer reported. The same holds true with TV sports readers on local news, but that might be a dying business as well as local TV news executives look at the bottom line and look to cut out costly segments of newscasts.
Cuban’s suggestion, made on December 24, 2008, would have been unworkable in the past. Newspapers do accept advertising money from teams and there are stories from the early 1960s about certain baseball writers who would pocket airline fares that were supposed to be given back to teams for flying on charters in exchange for favorable articles. But there was supposed to be a wall between a journalist and a subject that journalist was covering.
But newspapers are looking at various funding methods, including accepting donations and turning themselves into a not for profit venture. Accepting a government bailout like France is offering would have been unthinkable but the United States government has propped up ESPN, CNN, MSNBC, FOX, a plethora of regional sports networks, Comedy Central and other cable TV networks through the 1984 Cable TV Act which allowed cable systems operators to take The Weather Channel, CNN, ESPN and bundle them into a basic expanded tier and deny cable subscribers to buy those channels on an a la carte basis. CNN, MSNBC and FOX are taking money from subscribers whether those subscribers want that programming or not. Those are bona fide news organizations that exist because of the way the government allows them to be funded.
CNN, MSNBC, FOX, the New York’s area News1, News 12, the DC area’s NewsChannel 8 and other cable TV news covers the people who help fund them---the US Government.
Newspapers should not be slammed if Cuban’s idea gains traction. After all, CNN has lived that way for 25 years; they have been funded by people who are buying a basic expanded tier. Without that law, CNN, MSNBC and FOX would be scrambling to make ends meet. It is so funny that people on FOX like Sean Hannity scream about government involvement in too many programs and how a gadfly like Grover Norquist goes on cable TV shows screaming about the need for smaller government in the U. S. without acknowledging that cable TV funding method that was mandated by Congress and President Ronald Reagan, a small government advocate and someone who was for media deregulation. Hannity would not be making a living without government assistance both on Cable TV and radio.
So there is a precedent for Cuban’s newspaper bailout plan.
For what it is worth, here is the Cuban “beatwriters co-operative.” Cuban wrote, “we need to create a company that funds, depending on the size of the market and the number of teams, 2 or more writers per market, to cover our teams in depth. The writers would cover multiple teams and multiple sports. They will report to the newspapers where the articles will be placed, who will have complete editorial control. In exchange, the newspapers will provide a minimum of a full page on a daily basis in season, and some lesser amount out of season. That the coverage will include game reporting that is of far more depth than is currently in place, along with a minimum number of feature articles each week in and out of season. And most importantly, these articles will be exclusive to print subscribers”
Cuban even is suggesting a pay scale for those writers, $65,000 annually with $10,000 worth of health benefits and that big markets pay more into the “beatwriter co-operative” than small markets for the 100 writers that are needed.
Cuban did not include golf, tennis, boxing writers in his plan nor did he discuss Olympics coverage. His plan is as he pointed out, a starting point.
Whether the leagues and teams will say yes is another story. The NBA and NFL have laid off employees, individual teams have cut back employees including the Washington Redskins. Even Cuban realizes that having leagues pay for sportswriters is a “violation of editorial church and state.” But Cuban rationalized his idea by writing “watching papers going out of business and not even being able to give themselves away means its time to start a new branch of that church.”
Newspapers owners arrogance is a big part of the newspaper problem. Newspapers were slow to react to the changing world. Newspapers did survive radio, which delivered news faster than a paper in the 1920s, 30s and 40s and in World War II. They survived TV, which televised events, but newspapers didn’t know how to use new technology and have failed to become multi-media properties. Craig Newmark’s Craig’s List destroyed the help wanted, things for sale sections of newspapers and deprived papers of a major source of income. The newspapers didn’t see that coming. Nor did they see a recession coming and the tightening of credit lines.
Cuban’s suggestion might not prevent the continued erosion of sports coverage in newspapers. Cuban’s plan does not factor in the cost of putting a writer on the road which includes travel, hotel-motel, car rentals and eating bills which is a huge expense as two papers in New England have found out.
The Red Sox Nation around New England will not get stories from Boston Red Sox spring training from a beat writer for the Hartford Courant or from the Portland (Maine) Press Herald, but there will be enough coverage to go around New England. Newspapers need to get very local anyway, they need to cover school board meetings and little league baseball and if they do that people will buy the product.
By Evan Weiner
12:00 PM
January 30, 2009
(New York, NY) – A few weeks ago, Dallas Mavericks owner Mark Cuban suggested that perhaps it was time for sports leagues like the National Basketball Association and sports teams to serious think about forming what he called a “beatwriter co-operative.” Cuban laid out a premise that “pro sports, every single league from the NFL to NBA to MLB to MLS to NHL need newspapers” because local coverage of teams on the Internet is not as extensive as it would be in a hometown newspaper.
Newspapers in the United States, Spain and France to name three countries are becoming an endangered species. The New York Times is in major financial trouble. The Chicago Tribune newspapers, which include the flagship Chicago Tribune, the Los Angeles Times and the Baltimore Sun among others is in Chapter 11 bankruptcy protection in the U. S. The Minneapolis Tribune is suffering the same financial fate. The Rocky Mountain News is still in business in the Denver, Colorado area but it may join the New York Sun and the Cincinnati Post as recent additions to newspaper heaven. The Seattle Post-Intelligencer is on death row and will be put to bed permanently in less than two months unless a buyer emerges. The Tucson Citizen will give up the fight in March. The Baltimore Examiner will vanish in two weeks.
Gannett is ordering workers to take a one-week leave without pay. In Spain, the Metro newspapers have been put out of business. In France, the government is giving 18-year-olds a free newspaper subscription to whatever paper that 18-year-old wants in an effort to get young people interested in reading a newspaper and the country plans to double France’s advertising commitment to county newspapers.
America’s radio and TV industry are also in awful financial shape. Even the World Wide Sports Leader, ESPN, is lopping off workers.
There are numerous reasons for the state of the media industry in the U. S.. Radio was severely hampered by the 1996 Tele Communications Act which allowed companies like Clear Channel and Infinity to became behemoths and own hundreds and thousands of radio stations and the industry consolidated as by 2005 there were six major media companies controlling radio. The model proved unworkable. Clear Channel wants to exit the industry and Infinity would like to follow.
There is too much TV product now with hundreds of cable TV stations competing with the traditional American TV networks, ABC, CBS and NBC along with what really is a syndicator of product, not a network FOX. But the radio and TV discussion should be left for another day. Mark Cuban wants to talk about newspapers.
In Cuban’s Dallas market, the Dallas Morning News and the Fort Worth Star Telegram plan to share content. Sam Zell’s Chicago Tribune Company’s Baltimore Sun and the Washington Post will be sharing stories. Paradoxically, with the Internet, sports talk radio, cable TV, cell phones and radio there is more information available to the consumer but in sports, the local newspaper and the beat writer are the lifeblood between the fans and the teams.
The dirty secret that is well known in the media industry but not to fans is that sports talk radio could not exist without the beat writer. The beat writer generates the story, which the sports talk radio hosts read and then put his or hers spin on what the beat writer reported. The same holds true with TV sports readers on local news, but that might be a dying business as well as local TV news executives look at the bottom line and look to cut out costly segments of newscasts.
Cuban’s suggestion, made on December 24, 2008, would have been unworkable in the past. Newspapers do accept advertising money from teams and there are stories from the early 1960s about certain baseball writers who would pocket airline fares that were supposed to be given back to teams for flying on charters in exchange for favorable articles. But there was supposed to be a wall between a journalist and a subject that journalist was covering.
But newspapers are looking at various funding methods, including accepting donations and turning themselves into a not for profit venture. Accepting a government bailout like France is offering would have been unthinkable but the United States government has propped up ESPN, CNN, MSNBC, FOX, a plethora of regional sports networks, Comedy Central and other cable TV networks through the 1984 Cable TV Act which allowed cable systems operators to take The Weather Channel, CNN, ESPN and bundle them into a basic expanded tier and deny cable subscribers to buy those channels on an a la carte basis. CNN, MSNBC and FOX are taking money from subscribers whether those subscribers want that programming or not. Those are bona fide news organizations that exist because of the way the government allows them to be funded.
CNN, MSNBC, FOX, the New York’s area News1, News 12, the DC area’s NewsChannel 8 and other cable TV news covers the people who help fund them---the US Government.
Newspapers should not be slammed if Cuban’s idea gains traction. After all, CNN has lived that way for 25 years; they have been funded by people who are buying a basic expanded tier. Without that law, CNN, MSNBC and FOX would be scrambling to make ends meet. It is so funny that people on FOX like Sean Hannity scream about government involvement in too many programs and how a gadfly like Grover Norquist goes on cable TV shows screaming about the need for smaller government in the U. S. without acknowledging that cable TV funding method that was mandated by Congress and President Ronald Reagan, a small government advocate and someone who was for media deregulation. Hannity would not be making a living without government assistance both on Cable TV and radio.
So there is a precedent for Cuban’s newspaper bailout plan.
For what it is worth, here is the Cuban “beatwriters co-operative.” Cuban wrote, “we need to create a company that funds, depending on the size of the market and the number of teams, 2 or more writers per market, to cover our teams in depth. The writers would cover multiple teams and multiple sports. They will report to the newspapers where the articles will be placed, who will have complete editorial control. In exchange, the newspapers will provide a minimum of a full page on a daily basis in season, and some lesser amount out of season. That the coverage will include game reporting that is of far more depth than is currently in place, along with a minimum number of feature articles each week in and out of season. And most importantly, these articles will be exclusive to print subscribers”
Cuban even is suggesting a pay scale for those writers, $65,000 annually with $10,000 worth of health benefits and that big markets pay more into the “beatwriter co-operative” than small markets for the 100 writers that are needed.
Cuban did not include golf, tennis, boxing writers in his plan nor did he discuss Olympics coverage. His plan is as he pointed out, a starting point.
Whether the leagues and teams will say yes is another story. The NBA and NFL have laid off employees, individual teams have cut back employees including the Washington Redskins. Even Cuban realizes that having leagues pay for sportswriters is a “violation of editorial church and state.” But Cuban rationalized his idea by writing “watching papers going out of business and not even being able to give themselves away means its time to start a new branch of that church.”
Newspapers owners arrogance is a big part of the newspaper problem. Newspapers were slow to react to the changing world. Newspapers did survive radio, which delivered news faster than a paper in the 1920s, 30s and 40s and in World War II. They survived TV, which televised events, but newspapers didn’t know how to use new technology and have failed to become multi-media properties. Craig Newmark’s Craig’s List destroyed the help wanted, things for sale sections of newspapers and deprived papers of a major source of income. The newspapers didn’t see that coming. Nor did they see a recession coming and the tightening of credit lines.
Cuban’s suggestion might not prevent the continued erosion of sports coverage in newspapers. Cuban’s plan does not factor in the cost of putting a writer on the road which includes travel, hotel-motel, car rentals and eating bills which is a huge expense as two papers in New England have found out.
The Red Sox Nation around New England will not get stories from Boston Red Sox spring training from a beat writer for the Hartford Courant or from the Portland (Maine) Press Herald, but there will be enough coverage to go around New England. Newspapers need to get very local anyway, they need to cover school board meetings and little league baseball and if they do that people will buy the product.
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