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2012 World Series: Giants Win, Fox Loses

The 2012 San Francisco Giants celebrate their second championship in three years Sunday night.

Congratulations to the San Francisco Giants, who defeated the Detroit Tigers last night to win the 2012 World Series, their second championship in three years. The Giants dominated the series, outhitting the Tigers 32-20 and limiting Detroit to just six runs in four games. Third baseman Pablo Sandoval was named the Series’ Most Valuable Player, hitting .500 for the Series with 3 home runs.

That being said, the 2012 edition of the Fall Classic was not great for business. As great as fan bases are in Detroit and San Francisco, neither city is a major media market, and the absence of the New York Yankees cost Fox Sports millions of dollars in potential advertising revenue. The first two games earned Fox a 7.7 rating, the lowest two game stretch in World Series history. Fans like to see an exciting, close Series, as evidenced by last year’s World Series ratings (12.7 for Game 6 and 14.7 for Game 7). Even though Fox charged more than $400,000 for a 30-second ad during the World Series, the low ratings of the Series could prevent sponsors from advertising during the Fall Classic in the future.

Ticket revenues were also crippled by the short Series. Both San Francisco’s AT&T Park and Detroit’s Comerica Park were filled to capacity for four games, with ticket prices ranging from $100 to more than $1,000 per seat. However, if the Series eventually went seven games, the two teams would have earned an estimated $30 million in extra ticket revenues, not to mention extra parking, food, and merchandise revenue.

The players will also think twice about the Series when they get their bonus paychecks. The players’ annual postseason bonus fund is determined by ticket revenues, of which players get about 60%. Last year, when the St. Louis Cardinals defeated the Detroit Tigers in an exciting seven-game World Series, Cardinals players earned about $320,000, while Rangers players banked more than $250,000 a piece. The players in the 2012 World Series won’t earn nearly that much, but then again, it’s not like they need much more money.

The 2012 World Series is a textbook example of how media markets play a role in the world of sports. When you combine “mid-major” media markets, a short series, and poor TV ratings, profits drop. Until next fall, Fox Sports executives and MLB officials will have to hope for large market teams to make the Fall Classic again.

Cost Efficiency: An Underrated Aspect

With the 2012-2013 NFL Season just about halfway complete, it got me thinking: while touchdowns, punt returns, and interceptions are the “sexy” aspect of the sport, there’s also a less attractive yet necessary aspect of the game. Cost Efficiency.

Cost efficiency is defined as “productive relative to the cost.”  In English, that essentially means how much bang for your buck you receive.  Going back to the “sexy” aspect; other than the quarterback and running back in terms of excitement—and fantasy points—comes the wide receiver.   As such, I have decided to combine the two, and in no particular order, these are my Top 5 Cost Efficient NFL Wide Receivers in 2012.

A.J. Green, Cincinnati Bengals.   2012 base salary: $1,269,913

Selected fourth overall in the 2011 NFL draft and with seven touchdowns in seven games on a 3-4 Cincinnati Bengals team, A.J. Green is young quarterback Andy Dalton’s primary weapon.  Making the 2012 Pro Bowl, Green represents a bright spot in the Bengals’ future, and with both he and Dalton 24 years old, it’s very likely this team could contend sooner rather than later.  Green averages a steady 14.5 yards per reception and has 636 yards (4th in the NFL)  in his team’s first seven games.  Provided he doesn’t get hurt, he could easily break the 1,057 yards he set as a benchmark in his rookie campaign.

Victor Cruz, New York Giants 2012 base salary: $490,000

Going undrafted in 2010 than winning a Superbowl in 2012 with the New York Giants, life has been pretty kind to Victor Cruz in the last year or so.  Cruz’s trademark salsa dances in the end zone have become almost a routine, and after a year, he has gone from QB Eli Manning’s fourth wide receiver to Manning’s no.1 target.  With 50 receptions for 627 yards, Giants fans always seem to get the sense Cruz is going to do something big when the ball is in his hands, perhaps personified best last week with a literal last-minute game-winning 77-yard touchdown reception from Manning.  The Salsa Dancer has received 32 first downs, and already has seven touchdowns, two short of his high he set in 2011, his rookie year. Victor Cruz has already started writing his name into the sports books of New York and on the backs of fans across the sport.  With the USA Today reporting Cruz wants a new contract by the end of the season, can you really blame him?

Calvin “Megatron” Johnson, Detroit Lions 2012 base salary: $1,250,000

Considering “Megatron” signed an 8-year/$132 million contract back in March of 2012, this is probably the last time you’ll see Johnson on a list like this, but considering the Lions’ receiver already established repertoire and only the fact he is only 27, $1.25 million sure seems like a bargain.  The 2nd overall pick in the 2007 draft, Johnson currently graces the cover of Madden ’13, and although he only has one touchdown, his 592 yards currently rank seventh after Week seven of the 2012 NFL season.  In 2011, Johnson set a Lions franchise record, Most Receiving Touchdowns with 16.

Percy Harvin, Minnesota Vikings 2012 base salary: $915,000

Despite requesting a trade from the Vikings over the summer and even hinting at a holdout at one point during the 2012 offseason, Harvin has been a crucial part to the Vikings’ current 5-3 season.  Having 60 receptions for 667 yards, he is currently only behind Patriots WR Wes Welker for the most yardage in the NFL as of Week Eight.  His 60 receptions rank first.  In eight games played, Harvin has averaged the same number of yards per reception at 11.1 as he did in 2011.  Doubling as a kick returner, Harvin also set a Vikings franchise record for Longest Kick Return at 105 yards back in September against the Detroit Lions.

 

Julio Jones, Atlanta Falcons 2012 base salary: $1,110,625

At the forefront of the currently 6-0 Atlanta Falcons success is Quarterback Matt Ryan’s 98.8 passer rating (4th in the NFL), as well as the fact that Ryan was named the Offensive Player of the Month for September.  While credit is necessary to the Falcons’ QB, another reason for his success is the fact that Wide Receiver Julio Jones has received 20 first downs, and is set to match or eclipse his rookie campaign benchmark of eight TDs, already having four.  Jones has 30 receptions, while his counterpart, WR Roddy White has 37, at a salary of $5.5 million, five times the amount of Jones.

While some of these names aren’t as yet defined as the Larry Fitzgeralds, Wes Welkers and DeSean Jacksons of the world, their production despite relatively cheap 2012 base salaries are a big factor to where their team is currently at.  Look for these five names to become the forefront of a national NFL discussion in a few years, if they haven’t already (Looking at you, Megatron).  Cost Efficiency is clearly one of the most underappreciated aspects of a sports-business relationship, and it must be taken into account when considering individual performances.

Sources: http://www.sportscity.com/nfl-salaries/
http://www.cbssports.com/nfl/stats

NHL Cancels November Schedule

A full 82-game NHL season is now out of the question. The NHL announced today it has cancelled the remainder of November’s schedule, which brings the total number of games cancelled to 326. As a result, the league cannot complete a full season with playoffs.

The NHL is also planning to withdraw its offer to the NHL Players’ Association, an offer that proposed a 50-50 revenue split between team owners and the players. The league has estimated that players have lost about 27% of this year’s salary because of the 41-day lockout. In the meantime, many top players continue to play in leagues in Europe and in the American Hockey League.

The NHLPA made three counter-offers to the NHL on October 18th, the last day that the two parties officially met. All three offers were quickly rejected by NHL management. Mathieu Schneider, special assistant to the NHLPA, said, “It’s been take, take, take on the owners’ side and give, give, give from the players’ side. There’s got to be a line somewhere and the players have drawn it.”

As of today, the NHL’s Winter Classic, scheduled for January 1st at the University of Michigan between the Detroit Red Wings and the Toronto Maple Leafs, is still on. So too is NHL All-Star Weekend, scheduled for January 26-27 at Nationwide Arena in Columbus, Ohio. Both events could be cancelled this month if no further progress is made. There are no commitments by the two parties to continue formal negotiations at this time.

 

Leaving His Mark: David Stern Announces Retirement

He may be gone come 2014, but David Stern’s legacy and impact will never be forgotten.

On February 1st, 2014, NBA commissioner David Stern will step down as acting head of the NBA, relinquishing his position to deputy commissioner Adam Silver. His tenure may be ending after next season, but no one will question whether he accomplished enough as the grand poo-bah of basketball. His impact on the game is immense, and can be measured by every dollar that the worth of the NBA brand has grown in the 28 years he has overseen all basketball operations in the NBA.

His involvement started back in 1978 when he was hired to oversee the NBA’s legal department. During this time, Stern learned all of the inner-workings of the NBA from a legal standpoint, which paved the way for his eventual takeover as Executive Vice President of the NBA under then-commissioner Larry O’Brien. In the early 80’s, cocaine and marijuana use began to run rampant across the United States, and it wasn’t exactly a secret that many NBA players were using drugs. Using his legal prowess, Stern successfully implemented a drug testing policy for the league’s players to end the controversy and reinstate these players as being the positive influences that role models need to be, which made these players a lot more appealing to market and endorse from a public relations standpoint.

Although they had different roles, make no mistake. Stern and Jordan were business partners. Period.

Even though he was supposed to be in the passenger seat next to O’Brien, his stabilization of the NBA continued when he acted as a mediator between the owners and players during the league’s first ever collective bargaining agreement that joined the two parties. By 1984, it was clear that the NBA was only going to grow in popularity, and Stern was the man to oversee it. After all: their recent success was orchestrated by him.So, on February 1st, 1984, 30 years before the date of his now-pending retirement, Stern took over as NBA commissioner. Under his rule, the NBA would see commercial success over the next few decades unlike any sports league in America at the time.

In the first draft under Stern’s watch, the NBA gained a player that both helped grow the industry’s marketing value and can most likely lay claim to being the most marketable professional athlete of all time. I’m referring, of course, to Michael Jordan. With Nike as his partner, Jordan would build a brand name that few athletes can say they have even sniffed at when considering today’s athletes, and each of them have tainted their brand names at one point or another. In Jordan’s era, you could get anything from Jordan brand shoes to a McJordan sandwich at McDonald’s. With the use of Jordan, along with other fan favorite players ranging from John Stockton to Shaquille O’Neal, Stern  took marketing to a whole new level to take the league to new heights. Making the NBA appeal to as many people as possible was always Stern’s goal, and he never took his eyes off of that prize.

Stern seemingly could do no wrong with his strategies to broaden the NBA audience. His first year as commissioner saw the reintroduction of the NBA Slam Dunk Contest, which instantly became a sensation that still remains more popular than most all-star sporting events. One of the most successful aspects of Stern’s tenure is his adaptation of the NBA draft. In his first year as commissioner, Stern helped to create hype for the NBA draft by broadcasting it from Madison Square Garden in New York City and by adding a coin flip between the league’s two worst teams to decide the first pick, which added the element of curiosity to the draft. In the years that followed, the NBA draft lottery was created, which generated more interest in the draft itself.

The 1984 draft wasn’t only The Dream’s NBA debut, but it was Stern’s, as well.

Stern’s first draft as acting NBA commissioner, along with the NBA as a whole in years to come, would reel in the international audience with the integration of foreign players: starting with that year’s first pick Hakeem “The Dream” Olajuwon from Nigeria. The following year’s draft also made a foreign player its first overall pick: a Jamaican by the name of Patrick Ewing.  Later in the 1980’s, the integration of the great Yugoslavian basketball scene with players such as Dražen Petrović and Vlade Divac broke international basketball ground, but that wasn’t the key to raking in the international audience.

To expose the world to how the awe and amazement that is brought on by the athletes of the NBA, Stern and his fellow NBA heads orchestrated what would come to be known as the Dream Team: the 1992 Olympic team. Their efforts to gather all of the top NBA players, who had been reluctant to play in the Olympics in years past, paid off incredibly by garnering previously uncharted levels of international interest in the NBA. The globalization of the NBA was truly declared when Yao Ming,  the first Chinese basketball superstar, joined the NBA in 2002. His dominance in the NBA opened up a whole new Asian market that the NBA hadn’t seen before. Today, the NBA plans to build an NBA arena in China.

Thanks to the marketing and leadership of the Stern administration, basketball can lay claim to being one of the world’s most popular sports. According to Forbes, the 2012 NBA Finals was  streamed online and broadcast live  by 90 international outlets in 47 languages and 215 countries, while 278 million fans followed on social media networks. Right here in the United States, TVbythenumbers reported that ABC drew in 18.5 million viewers when Miami defeated Oklahoma City in last year’s Finals: the highest for an NBA elimination game in history.

The NBA truly is “money ball.”

So what does this all mean monetarily? That’s precisely where Stern’s impact can be seen the clearest. According to insidehoops.com, Since Stern became commissioner in 1984, the profit of the NBA’s television broadcasting contracts have soared from 10 million dollars a year to a staggering 366.67 million dollars a year in 2008. Under Stern’s watch, the NBA has only had one year of reporting losses, which was in 2009 when the average NBA franchise took a 3% hit in value, according to the findings of the sports finance group WRHambrecht and Co. The same findings reveal that the NBA rebounded the next year, and NBA franchises are now worth more than ever before.

No one will ever question David Stern’s impact on the NBA. Though his administration did deal with four separate lockouts, it also saw the relocation of 6 NBA franchises to more profitable markets, while also creating 7 new NBA franchises. So, thank you, David Stern, for making basketball the global phenomenon it is today. Adam Silver certainly has some hefty shoes to fill.

The Price of A-Rod

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Alex Rodriguez is no stranger to controversial success. But after another disappointing postseason performance in the 2012 MLB Playoffs, in which he hit just .120 and was benched for the Yankees’ final two games, many people are left to ask: What exactly is New York Yankees third-baseman Alex Rodriguez worth?

In 2007, the final year of the 10-year $252 million deal he had signed with the Texas Rangers, Rodriguez strung together an impressive season: hitting .314 with 54 home runs and an impressive 156 RBI.  Deciding to opt out of that deal seeking a larger, more secure contract, Yankees ownership, essentially panicked, outbidding themselves.  On November 13, 2007, Rodriguez and the Yankees agreed to a 10-year, $275 million deal, which covers A-Rod until the 2017 season, when Rodriguez will turn 42.

While Rodriguez saw his OPS remain a robust .965 in 2008 and a .933 in 2009, father time has not been so kind to the former three-time American League MVP: In 2010, A-Rod’s OPS declined to .847; .823 in 2011 and finally, a mere .783 in 2012 (a season in which he made $29 million).  While games played are a factor with OPS—Rodriguez only played 122 in 2012—it is clear A-Rod is no longer the prolific slugger he once was.

After an 0-for-18 showing with 12 strikeouts against right-handed pitching in the 2012 playoffs, trade speculation in the New York media involving Alex Rodriguez increased.  But, with five years and a staggering $114 million remaining—the question is, who would take him, if anyone?

Many have pointed the finger at the free-spending Los Angeles Angels of Anaheim.  With a combined $42 million owed to outfielder Vernon Wells in 2013 and 2014, there could perhaps be a bad contract for bad contract swap between New York and Los Angeles. Currently, the Angels need a third baseman and the Yankees need a corner outfielder due to free agent outfielder Nick Swisher’s impending departure.

Coupled with the fact that Vernon Wells can’t hit (.222/.258/.409 the last two seasons) and the fact that the advanced metric WAR (Wins Above Replacement) tags Wells at a -0.3 WAR since the start of the 2011 season, this hypothetical trade would appear to benefit the Angels, as Rodriguez has been worth 2.85 WAR since 2011.

However, Yankees fans should not get their hopes up, as the trio of General Manager Brian Cashman, Manager Joe Girardi and even Rodriguez himself have stated they anticipate Rodriguez’s return to the Bronx in 2013.

Another perspective to look at this is the free agent route.  If Alex Rodriguez were to hit the open market 15 days after the World Series is over, what would he be worth?  In a free agent class that features the names  over-the-hill veterans like Miguel Cairo, Eric Chavez, Placido Polanco and Ty Wigginton, it’s safe to assume Rodriguez would be the premiere talent at his position.

Going by WAR again, the closest third baseman would have to be the Angels’ Alberto Callapso, who manned 122 games at the hot corner this season and featured a WAR of 2.7.  For a salary comparison, MLBTradeRumors.com lists Callapso, who is arbitration-eligible for the third time, at a salary around $4.2 million.  A far cry for the $28 million A-Rod is slated to make in the 2013 season.

Considering the Rodriguez brand, the whole idea of A-Rod as a “clubhouse leader” according to teammates and the still consistent batting average (.272 in 2012) the Rodriguez that is a hypothetical free agent would probably receive a contract in the 3-year $15-20 million range.

Unfortunately, it looks as if Yankees President Hal Steinbrenner will be asking himself this same question for an additional two years and at least another $94 million.

Lance Armstrong Caught Yellow-Handed

For years, Lance Armstrong was the model athlete: he overcame the greatest of adversities and persevered on the grandest of world stages. After testicular cancer nearly derailed his cycling career in 1996, Armstrong fought and defeated the disease in 1997, and resumed his cycling career. From 1999-2005, Armstrong won a record seven Tour De France titles, practically owning the race’s signature yellow jersey. On top of his racing success, Armstrong the Lance Armstrong Foundation in 1997, and its signature yellow “Livestrong” bracelets became a global phenomenon.

Even after his return to professional cycling in 2009, Armstrong acted and behaved like a model champion, a role model, and a hero. Yet through all the triumphs and all the accolades, people questioned whether this remarkable performance was possible without the assistance of performance-enhancing drugs. After American cyclist Floyd Landis was stripped of his 2006 Tour De France trophy, pressure mounted on Armstrong to remain innocent and protect the image of American cycling. We now know that Armstrong, much like Floyd Landis, was not clean.

In June 2012, the U.S. Anti-Doping Agency officially charged Armstrong with the use of illegal performance-enhancing drugs during his cycling career, and later announced a lifetime ban for Armstrong and the removal of all his cycling championships since 1997, including his record 7 Tour De France victories. The UCI, cycling’s governing body, announced Tuesday they would agree to the same conditions as the USADA, effectively ending Armstrong’s career.

Armstrong also stepped down as the Chairman of his own Foundation, leaving doubt in many people’s minds whether Armstrong would ever return to the public spotlight again. Nike also announced the end of its relationship with the cyclist, a deal reportedly worth $10 million per year.

Nobody knows for sure how this shocking decision will affect business. Will Armstrong’s Foundation be negatively affected because of its founder’s past transgressions? Will “Livestrong” bracelets become a thing of the past? Could Nike suffer from its past relationship with a cheater? Only time will tell, but the economic impacts of this decision may not be the largest problem. Many people, including myself, looked up to Lance as a courageous, inspiring role model in the world of athletics. Now it can be known this man, considered a hero by many, is just another cheater.