Running for the Wrong Reasons? (New York City Marathon Edition)

November 2, 2012

Hurricane Sandy has had a big impact on lives all across the Eastern coast of the United States.  One of the prime areas hit by the hurricane was New York City, leading to many deaths, large amounts of damage, flooding, and residents still without power in large areas.  While the airports are operational again, much of New York City’s mass transportation system is still down, the subways are flooded, and the bus lines are said to be overwhelmed.  With this in mind, the NBA cancelled the season opener between the Brooklyn Nets and New York Knicks, a move that seems quite smart as it seemed to be rather difficult to get people to come to, and actually care about a basketball game at this point in time.

The NBA seems to be a bit more aware of what is going on than the City of New York, who has decided to hold the New York Marathon this Sunday.  There are lots of arguments for why the race should be held: it will inspire people in this time of tragedy, it will show how resilient residents and the City of New York, and that it will help businesses that were hurt by the storm and create an economic impact for the city.

Earlier this morning on my drive to work, I listened to a guest on the Colin Cowherd show discuss how the New York Marathon is the sporting event which brings the biggest economic impact to the city.  The individual who was someone important in the track and field/running world said that the event will bring around $300 to $400 million economic impact to New York City.  Readers of this blog will note that the skepticism of the economic impact studies that are conducted by consultants, but to claim that a race needs to go on because of its economic impact is really a step in the wrong direction.  Sensitivity aside, the supposed economic impact that comes from a sporting event is from visitors to the location spending money in hotels, restaurants, shopping, and so forth.  With full flight schedules just starting this morning at airports in the area, it is already hard for visitors to be able to get into town for the marathon.  Additionally, fuel supplies are so low in the area we have seen several hour lines for gas, even airplanes flying into New York are taking on extra fuel because of shortages.  So travel to the area is going to be difficult, and that means the number of visitors who come for the marathon will probably go down.

Then there are other factors, like many businesses that would normally profit from marathons like sporting good stores having to close down locations because of lack of power, employees unable to get to work, or stores/merchandise being damaged and destroyed.  The owner of Modell sporting goods stores was on CBS this morning, and he noted that all his stores in the area are closed, and two of them are destroyed.  How is his business, and others facing similar issues going to benefit from holding a marathon?  Not at all.  If they are closed, there will not be people spending their money there.  And now local hotels are now starting to say that they will refuse to evict locals for marathon runners coming to town.  If we consider all the people who live within driving distance of the race, they may have lower discretionary income because they are dealing with bills for fixing damage to homes, property, vehicles and so forth, that they may come to run the race, but they might just not spend.

So when New York mayor Michael Bloomberg says the race will go on because of the economic impact, the city doesn’t really seem to be very understanding of the reality they are in.  Not to mention that at a time like this, there will be a demand on infrastructure and government manpower (emergency services, police, security, etc) to host such an event.  While the organization that is in charge of the marathon says they are using more outside contractors to help with these areas than before, there will be public money and costs to the city for holding the marathon.  Honestly, I think this isn’t the right time to hold the marathon, and the economic impact argument is a very weak one to back it up.


NHL Expansion as a way to end Lockout?

October 30, 2012

The hope I was feeling a few weeks ago regarding the NHL Lockout has been replaced by apathy.  Neither side seems to be in a rush to solve anything.  Both sides seem willing to let sand flow through the hourglass as they sit and wait for the other to make a “realistic” offer.  The NHL cancelled game through November and news came down yesterday the league is thinking about shutting down the Winter Classic.  This seems to be nothing more than an attempt to scare the Players Association by taking the Winter Classic out of the equation.  Doing so will take away some of the leverage the union has since it is believed that NHL will not risk its premier event.  Cancelling the Winter Classic does not seem to be in the best interest considering all the dollars associated with the event.  However, I stopped thinking rational thought between the two sides was an option a long time ago.

Paul Kelly thinks he has found a way for the union and NHL to end this lockout, expand the league.  According to the article written by Ken Campbell for The Hockey News, the former executive director of the player’s union thinks expanding the league to north Toronto and Quebec City is the perfect solution to this stalemate.  He believes expansion will bring in “at the very least 600 million” in fees for the owners.  That money, in his view, will help the owners and players narrow the gap between the two sides.  To promote stability between the two sides, he also proposes a longer agreement around nine years with an option for a tenth.  Decent article, but I see little that either side would agree to.

Is expansion the best course of action? Is Canada the only logical place to expand? Would expansion prohibit growth as it would water down the talent pool?  If there is one certainty with the NHL and NHLPA, when it seems they take a step forward they always find a way to turn around and run in the other direction.

NHL’s newest proposal

October 17, 2012

While the past few weeks have gone with no real movement between the two sides, the National Hockey League sent a new proposal to the NHL Players Association today. The new proposal calls for a 50/50 split of hockey related revenue and may address some concerns players have regarding current contracts.  It would also allow the league to play a full 82 game schedule beginning November 2.  NHL players were to take part in a conference call Tuesday afternoon to discuss the terms.

The latest proposal seems to be an olive branch from the league in what was becoming a very stagnant process.  The two sides have been meeting the past few weeks.  However, talks never seemed to wade into the meat of the dispute only discussing secondary issues.

A few details from the NHL’s proposal include an increase to around 200 Million in revenue sharing, player contracts being capped at five years in length, all entry level contracts be two years and unrestricted free-agency beginning after eight years of service.  One of the major sticking points for players is getting money from their current contracts.  The NHL does seem to address this issue, but the particulars are not known at this time.

Did the NHL’s newest proposal shift public perception in favor of the League?  Is this the beginning of true negotiations between the two parties? Don Fehr, you and the Players Association are now on the clock.  At the very least, there is hope we see a light at the end of the tunnel.

Los Angeles will get a football stadium, but will they get a team?

September 29, 2012

Los Angeles City Council has given approval for Anschutz Entertainment Group (AEG) to build a $1.2 billion football stadium in downtown LA, next to the Staples Center which is also owned by AEG.  What is interesting in this whole process is that I just discussed about a week or two ago that AEG was selling off all of its Los Angeles based business, and this would surely include the football stadium which will be called “Farmer’s Field”.  This may mean that the price for AEG’s Los Angeles operations just went up by several hundred million (or maybe even more than a billion).  As noted in the article listed above, there were many interested parties at the City Council vote, including individuals from Staples Center with “Farmer’s Field” t-shirts, some fans wearing the colors of the old Los Angeles Rams, and other potential interested parties.

Deadspin notes that the San Diego Chargers could have been the ones to move to LA, if the deal had been done sooner, but that is no longer a possibility.  Likewise, the Oakland Raiders are said to not be favored, as the state would not want to fund such a big project just to move a team from one part of the state to another.  That would indicate that the new stadium will be looking for an NFL team from outside of the state.  The Vikings and Jaguars look to be stuck in their current cities for quite a while, so the next choice falls down to the St. Louis Rams and Buffalo Bills.  Both teams have had troubles drawing fans to games in recent years, and Stanley Kronke (owner of the Rams and Arsenal) would certainly have to consider the possibility of moving the Rams to one of the major markets in the U.S. if St. Louis doesn’t start to helps the Rams out some more.  I’d say Kronke is in a good position to hold St. Louis hostage for some tax money, as he’ll simply just say he will pack the bags and move off to LA if they don’t.

He would not be the first owner to make this threat, and he certainly will not be the last.

I’ve started to get the questions about the economic impact the new stadium will have on Los Angeles.  The answer is a complicated one.  Research shows that facilities don’t necessarily bring big gains to the economies of local regions.  That said, stadiums do bring fans and business to local restaurants, bars, and hotels that are located near a sport facility.  A good discussion of this can be found in the San Jose Mercury News, were professors Roger Noll and Dan Rascher (both very prominent sports economists) discuss the economic impact of the NHL lockout.  Dr. Noll notes that this local business will probably suffer, but not the economy as a whole.  Dr. Rascher adds on that there is some impact for the San Jose with the Sharks not playing, because only 28 percent of those who come to Sharks games live in San Jose.  Considering the size and scope of the Los Angeles area, it is quite possible that you would see similar percentages of out-of-town visitors for Los Angeles NFL games.

So for now, the answer is: we shall see.

Lockouts and Scabs

September 26, 2012

The NHL lockout claimed more victims today, with “just under 20” employees of the St. Louis Blues being laid off by the organization.  Additionally, other employees have taken pay cuts or switching to a four day work week.  Layoffs are spreading around the league, the Florida Panthers even have laid off their mascot.  Some are comforted that Bettman is not taking pay while the league is locked out, but it is important to note that he is the lowest paid commissioner in the major North American sports.  Still he took home close to $8 million in salary last year.

There has been some other news in the NHL, and much of it seems to be coming out of Alberta.  First, the Edmonton Oilers are said to be considering Seattle as a potential site for relocation.  While Bettman and the Edmonton mayor have been telling fans to note worry, it is worth noting that the Oilers owner was in Seattle to talk relocation.  Also coming out of Edmonton is the news that the Oilers and the Calgary Flames are trying to have the lockout ruled as being illegal in the province.  The NHL and NHLPA lawyers have congregated in Alberta, where they are currently arguing in front of the Alberta Labour Board as to whether a lockout is legal by the laws of the province.  It would be curious to see how this turns out.  If the lockout were found to be illegal in Alberta, though a similar motion has already been struck down in Quebec courts.

In other lockout news, the NFL referee lockout is still continuing, and the fans are angry.  Last night in a key final play, the replacement referees seem to have made a mistake which changed the outcome of the game away from the Green Bay Packers to the fortune of the Seattle Seahawks.  Individuals across the country now bemoan the “horrid” refereeing in the NFL, yet they continue to watch the game.  Former 49ers QB Steve Young came out and said that if people are really so angry that they don’t like the product with replacement referees, they should stop watching.  That doesn’t seem to be the case, as ESPN’s Sportscenter scored ratings around a 5.0 for their midnight broadcast.  This is about four to five times higher than the normal viewership during this time period.  It seems that the bad refereeing is almost drawing more attention to the league.

New Jersey state senator Stephen Sweeney isn’t amused by the referees.  He has proposed that New Jersey consider banning replacement referees from working games in the state.  Senator Sweeney is naturally a Packers fan.

Yet here we see government now trying to get more involved in sport, should they not be working on more important things than whether your favorite team had proper officials for their game?

More movement in the LA sports scene

September 19, 2012

Today the Los Angeles Times published an article noting that Anschutz Entertainment Group (AEG), my former employer, headed by billionaire Phil Anschutz, was looking for someone to buy out the rights to their Los Angeles based sport properties.  Included in this are the Los Angeles Kings of the currently locked out National Hockey League (NHL), the Stapes Center where the Los Angeles Lakers and Clippers play (NBA), as well as the Los Angeles Galaxy of Major League Soccer (MLB).  This move came as a surprise to me, as AEG had long been working towards building a football stadium in Los Angeles in order to attract a National Football League (NFL) team.  As the plans have stalled several times and have moved forward and backward several times, it could be that AEG has finally decided to give up on the project, and abandon all their other Los Angeles projects as well.

At the same time, this is not the first time that AEG has sold off sport properties.  The company was one of the main investors along with Lamar Hunt to help get the MLS started in the 1990’s.  AEG once held the three major market teams in the MLS, the Chicago Fire, Los Angeles Galaxy and New York/New Jersey Metrostars.  Since then they sold of the Chicago Fire, as well as the Metrostars.  The Metrostars were purchased by Red Bull for a price reported around $100 million, which many thought was a great deal for AEG to sell off an MLS franchise at such a high price.  Now it seems that AEG is moving away from the MLS and is selling off a lot of their sport properties.  Additionally, it could be a combination of getting out of soccer while they can, selling off a franchise from a locked out league, and the LA football stadium problems that has pushed them in this direction.

In either case, if AEG does sell of the properties it will be a major change in the LA sports landscape.

Quick Update: NHL Lockout Official

September 17, 2012

Greetings, last night the National Hockey League (NHL) officially locked out players, making this the third lockout of Gary Bettman’s tenure as league boss.  I find it absurd that someone would be allowed to be the commissioner of a league after two lockouts, but now his leadership has presented us with a third one.  Of course, he really works for the owners, so as long as he is keeping the thirty or so super rich individuals across North America happy, he will stay in his job.

On Saturday, Bettman continued in doing his work for the owners when the league told the head of the players’ association (Donald Fehr) to not even bother trying to get a last minute face-to-face meeting to try and bring the sides to a compromise.  Granted, this may have been a waste of time as the sides are still too far apart on any deal happening.  The players had already taken a 24 percent cut in salaries to end the previous lockout in 2005, now the owners want the players to drop the percentage of revenues they share by around 8 to 10 percent.  The players weren’t going to agree to this, the Collective Bargaining Agreement was thus allowed to expire, and thus we are now in a lockout.

In my opinion the league has continued to slash costs, the previous time the league had some good arguments to reduce costs, but this time around it seems as if they just want to slash costs because they can.  The NHL is scheduled to begin play in October, but that seems to be in doubt as there is no way a deal will get done in time to get players to training camp and ready for the season by then… unless those players bolt to Europe.  The exodus has already begun, Evgeni Malkin has already left to play in the KHL in Russia.  The KHL was well prepared and set out rules about the number of players from the NHL a team can sign during a lockout, and that the salaries can’t exceed 75% of what the player makes in the NHL.

Already several players are headed over to play in Europe which makes me think that with other revenue sources for many players readily available, this lockout could last a long time. One wonders if this could be the end of the NHL as we know it.