The Never Ending Business of Sports

 

The New York Mets ownership group is fighting efforts by the court appointed trustee representing victims in the Bernie Madoff criminal enterprise.  The trustee, Irving Picard, is attempting to recover some $300 million he alleges the Mets’ owners took from Madoff’s investment enterprise, arguing that they should have known that the money was part of a massive fraud.

In the soap opera divorce proceedings involving Frank and Jamie McCourt she recently hired David Boies (who tried Gore v. Bush in front of the Supreme Court after the 2000 Presidential Election on behalf of Al Gore) in her battle against her husband.  Boies is also representing the National Football League in court in a proceeding against the remnants of the decertified National Football League Players Association.

Many people are of the opinion that the sports bubble in America has burst.  In addition to the above events, National Football League (NFL) owners have locked out the players because of finances and National Basketball Association (NBA) commissioner David Stern is ready to put the lock on the door on July 1, telling the players they are no longer welcomed until they give back some $800 million in revenue.

Yet more and more money is being poured into sports in the United States and elsewhere. In Australia, the Australian Football League signed a record four year, $125 billion (in Australian dollars or about $137 billion in American currency) agreement with three networks including one partially owned by Rupert Murdoch. In the United States, NBC’s new bosses, Comcast opened up their checkbook for a 10-year, $2 billion deal with the National Hockey League. The Pac 12 signed a 12-year, $3 billion contract with FOX and ESPN, which will give each member school $21 million annually over the life of the contract.

The bubble has not burst despite patches of empty seats at the new Yankee Stadium and a drop in Major League Baseball attendance early in the season. Television money is making up for the lack of revenue from unsold seats.

There is antidotal evidence of the problems in sports.  I recently spoke with a gentleman who was afraid that he could not afford to keep his season tickets to New Jersey Nets games once they move into their new arena in Brooklyn.  He explained that he had Nets season tickets for the past 26 years and he would have to pay triple for his seats when the franchise moves to Brooklyn. He will have to pay $385 per ticket for the same type of seats in Brooklyn as he had in the Meadowlands and in Newark. He was undecided about renewing his Nets tickets given that he could get Giants or Jets tickets at the Meadowlands now as the waiting list for season tickets for both teams has disappeared.

The fact that the man was undecided about whether pay $385 per ticket starting in 2012 was the prudent thing to do illustrates the hold that sports has on fans.

The late John McMullen, when he owed the New Jersey Devils, told me that sports is the only business where emotions – not rational thinking – guide business decisions for owners, executives, players and fans. How else can you explain the cheering in Sacramento when the NBA’s Kings owners – the Maloof brothers – decided to stay in the city for another season with the hope someone will find $500 million to build an arena and then give virtually all of the revenues in a mostly taxpayer-funded facility to them.

This idea is being pursued even though Sacramento’s unemployment rate is around 12 percent and the city is letting go of municipal workers because Sacramento (along with California) is broke.

The following happened on Monday May 2. Sacramento kept the team for a year and while that was happening NFL lawyers and attorneys representing the defunct NFLPA were positioning themselves to beg the 8th Circuit Court of Appeals in St. Louis to either allow the NFL lockout to continue or to lift it. Also this week, the U.S. Department of Justice (DOJ) wants to know more about the Bowl Championship Series in college football.

The DOJ is trying to figure out whether the Bowl Championship Series violates federal antitrust laws. The DOJ wants to know why there is no college football championship game. The DOJ is not asking any questions about the education of so-called “student-athletes” (a term invented so colleges could shield themselves from workers’ compensation claims) or the limit on how much money the so-called “student-athlete” can make from off-the-field jobs. They are not concerned with why college programs have anti-trust protection and college football teams appearing in bowl games don’t pay taxes on the take home revenue from the games.

Sports fans endure a lot of nonsense but they never turn their back on the games. A lot of people have been priced out of MLB, NFL, NBA or NHL games but that’s fine. They can watch games on television and buy all the overpriced jersey and hats and other things with team or league logos on it.

Owners and leagues care about the logo, not necessarily players. A logo is worth more than a great player. Sports fans like “our guys” no matter what city “our guys” play in – even though “our guys” are temporary workers at best who sell themselves to the highest bidder after being “drafted,” in an act that illegal under labor law but is made legal through a collective bargaining agreement.

In Sacramento, the Kings, are “our guys” and we need “our guys” for some reason. It isn’t because “our guys” are economic magnets who will propel the economy (that argument died in the 1990s) and bring new business to the California capital. It is because “our guys” bring some unexplainable something to any city or area. A small segment of the population feels good because their area is “major league”.

In Charlotte, after George Shinn moved his NBA Hornets franchise to New Orleans in 2002, one of the reasons that Charlotte mayor Pat McCoury gave for wanting to build a new arena to replace the then 14-year old Charlotte Coliseum and get the NBA back in town was because Charlotte would get mention on ESPN’s Sports Center.  McCoury got a new arena built and secured a replacement team — which has been an economic disaster.

In Glendale, Arizona, the city gave the NHL $25 million to cover the financial losses incurred by the league-owned Phoenix Coyotes. The city hopes to get the NHL to sell the team to a Chicago businessman shortly and keep the franchise in Glendale. If the city fails, the team will go to Winnipeg and make Winnipeg a “major league city” in North America, complete with that feel- good feeling that sports is supposed to bring.

Since Monday, Sacramento has kept a basketball franchise and now will turn over every rock possible to find money to satisfy the NBA and the Maloofs that the city (and a six county area that stretchea out to Lake Tahoe and the California-Nevada border) can act like a major league city and pay for an arena that will make the Maloofs feel good. Glendale has forked over $25 million to the NHL; the Department of Justice is looking into the Bowl Championship Series; the NFL is playing at a St. Louis courthouse; the International Olympic Committee put the word out to American TV networks that it is time to pay a king’s ransom if they want a crack at the Sochi 2014 Winter Olympics and the Rio 2016 Summer Games.

The NFL is hoping someone in the Minneapolis-St. Paul area will build the NFL Vikings a new stadium while Toronto Mayor Rob Ford wants to go after the Jacksonville Jaguars or the heavily taxpayer-subsidized New Orleans Saints and bring one of those teams to his city.

The NBA Players Association is not happy with the latest NBA owners’ proposal for a new collective bargaining deal as the old one expires on June 30 and David Stern has already bought a padlock. Major League Baseball may have to pick up the tab and pay Los Angeles Dodgers players as the Dodgers ownership – allegedly – has no money to pay the players next payroll checks that are due on May 31.

The Mets-Madoff saga continues with the Mets ownership still locked in a battle with Irving Picard, the trustee overseeing the Madoff victims’ claims, and there is no end in sight even though a partial interest in the team has been offered for sale.  Just another week in Fantasyland.

Evan Weiner, the winner of the United States Sports Academy’s 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on “The Politics of Sports Business.” His book, “The Business and Politics of Sports, Second Edition is available at bickley.com, Barnes and Noble or amazonkindle.

 

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