The NBA looks like it will be back just in time for Christmas

November 26, 2011

That’s right, after all the fighting between various groups that was highlighted in several posts here at the blog, the NBA owners and players association has come to a handshake deal after a 15 hour bargaining session lasting Friday and Saturday morning.  If the deal is accepted (they only have a handshake deal at the moment), the league is scheduled to begin play on December 25th, Christmas Day.  Reports coming in are saying that the first game will be a rematch of the finals, with Dallas playing Miami.  I don’t know if it the Holiday season that got the two groups together again to get a deal, but the owners are claiming that it wasn’t time or the calendar which was forcing them to get things done.  Really, it seems that the mounting financial pressures on both sides was what really helped get to the point where they are at now.  As ProBasketballTalk (NBC Sports) notes, the owners were not looking forward to losing an entire season of revenue, and the players were not looking forward to losing an entire season of salary.

So now that it looks like the NBA will be back, there is still the question of how long it will take for fans to get back into the league.  Research shows that attendance and fan interest in professional sport leagues tends to drop off after the league goes through a lockout.  And this was no short lockout, it lasted 149 days, and was the end point of almost two years of negotiations.  The NBA looks to overcome one big hurdle, but the new obstacle which may cause a drop in revenues is the lack of interest from consumers.  I’ll be curious to see how many people show up to games once it starts back up.


More conference realignment fun

November 3, 2011

Last week the Big 12 gave an official invitation to West Virginia University (WVU) to become a member of the conference.  Things were confused as Louisville and WVU seemed to have both been competing for the spot, but it was WVU which was ultimately extended the invitation.  Things have become more complicated as the Big East tried to block WVU from leaving immediately for the 2012 season.  WVU has countered now by filing a lawsuit against the Big East.  This lawsuit is to let them out before the 27 month waiting period which schools in the Big East are suppose to go through before they are allowed to be released.  The lawsuit (full version here) states that WVU should be allowed to leave because:

“the denigration of the Big East football conference is a direct and proximate result of lack of leadership and breach of fiduciary duties to the football schools by the Big East and its commissioner.”

They pretty much say the Big East is falling apart, and thus we should be allowed to go do as we wish.  The lawsuit does also note that Texas Christian University (TCU) were allowed to leave the Big East for the Big 12 without being held to the 27 month rule, and that other schools have also been trying to leave the conference as well.  Of course there are major financial implications here, but things got a little interesting today when former WVU head football coach Rich Rodriguez decided to speak up about this issue.

For those of you not familiar with Rich Rodriguez (RichRod to some), he left WVU to go coach at Michigan in 2007, and was forced by WVU to buyout the rest of his contract with the school.  NBC CollegeFootball Talk posted this post (with video) of Rodriguez talking about how WVU had told him that “a contract is a contract” and expected him to pay for leaving early.  Some have pointed out that there is a bit of irony in the situation now that WVU wants to leave without having to pay anything, though I’d be quick to point out that the Big East has pretty much fallen apart, and allowed others out.  RichRod, this is an entirely different situation than your contract issues with WVU was in my opinion.

All of that said, it is curious to see how this will all end up.  Conference Realignment seasons gets interesting with each passing day.  The big question around these parts (the Midwest) is when/if Missouri will leave the Big 12 for the SEC.

Pac-10 Lands new TV “Mega” deal

May 3, 2011

Earlier last month I blogged about the new Big-12 secondary rights media deal.  In it I argued that the deal may not be big enough to keep the Big-12 from keeping schools from leaving for other conferences for more lucrative media rights and larger revenue pools.  In the post, I noted that the Big-12 deal still put them behind the Big Ten (who is the process of renegotiating certain parts of their deal, which was the biggest until today’s Pac-12 announcement) and the Southeastern Conference in regards to media revenue deals.  The conference in last place among the big four conferences was the Pac-12, who had a smaller media deal which had many in Big-12 country laughing and scoffing at the Pac-12.

Today the Wall Street journal has announced that the Pac-10 (or Pac-12, or whatever they are called now) has reached a new TV deal.  The new deal follows closely behind that used by the Big Ten who created their own television network, and allows the Pac-12 their own network which they will have better control of.  The deal is said to be worth around $2.7 billion for 12 years with ESPN is the biggest in history for college sports.  Breaking the numbers down, it means approximately $18 million in revenue per year for each school, a significant boost in revenues for all programs in the Pac-12 conference.  The big winners might be Colorado he bolted from the Big-12 to join the Pac-12 this year, and will probably see a big gain in revenue because of this.

The Pac-12 did note that it helped that the Big Ten was the first to make their own conference, and that they learned a lot from that deal in helping to make this deal for themselves.

The Wall Street Journal article also notes that the 2014 and 2016 Olympic game media rights bidding is coming up next month, with the U.S. network preparing their bids as we speak.

NFL Doomsday Scenario?

April 27, 2011

National Football League (NFL) Commissioner Roger Goodell has been given space in today’s Wall Street Journal to write his own opinion piece of what he believes will happen if the players win this lockout battle going on between owners and the players.  The picture which Goodell paints, is one of a true Doomsday scenario for the league and owners.  He believes that the recent ruling by Judge Nelson which will potentially end the lockout will cause a lot more problems for the NFL and potentially lead to the demise of the league.  While the ruling is still being considered by Judge Nelson, and even if she did rule in the players favor, the owners would still probably get time with the business friendly Eight District Court of Appeals.  In all of this, what Goodell see’s as the future is if the players manage to have rulings made in favor of them, it will give too much power to the players, and that the players would want to take more and more away from the owners.

Now this is quite funny in my opinion, as it was the owners who wanted to take away more money from the players, and the players refusing which lead to the owners locking out the players, not the players going on strike.  In fact, it seems many of the players would liked to maintain a status quo, with the league and players keeping their splits from the previous collective bargaining agreement (CBA) without the owners trying to pull over $1 billion from the pot before things were split.  Now to have Goodell, who is really acting in the best interests of the owners, not necessarily the league as a whole is writing what looks to me to be a piece that is focused more on scare tactics than reality.

Goodell tells of a league that has no draft, where all players are independent contractors, and everyone is an unrestricted free agent.  While the players would love such conditions in many cases, as it would allow players to try and demand higher salaries and really test their value on the market, this scenario seems more likely to be something Goodell has nightmares about, than necessarily becoming reality.  Goodell in his piece notes:

In an environment where they are essentially independent contractors, many players would likely lose significant benefits and other protections previously provided on a collective basis as part of the union-negotiated collective-bargaining agreement. And the prospect of improved benefits for retired players would be nil.

And that reasoning would indicate that this is exactly why the players would most likely come back to the table even without the lockout ended by a judge and negotiate a new CBA.  In fact, many players came out and discussed this topic today, including Jeff Saturday, the Players Union Rep for the Indianapolis Colts.  On both the radio and television he noted all the players want is things to basically go back to the system they had before, the one where owners weren’t pulling out an extra billion dollars.  As noted before, if the owners opened their financial statements and showed hardship, then they might have a case, but they continue to refuse to do so, and really make things tough on themselves.  Goodell does end by trying to pander to the fans.

Is this the NFL that fans want? A league where carefully constructed rules proven to generate competitive balance—close and exciting games every Sunday and close and exciting divisional and championship contests—are cast aside? Do the players and their lawyers have so little regard for the fans that they think this really serves their interests?

As Gene Wojciechowski of ESPN notes, the Wall Street Journal isn’t probably the best venue to reach football fans.  He also notes:

Goodell said in the WSJ piece that the current system provides “incentives” that resulted in “two dozen new and renovated stadiums.” Interesting, since Goodell has argued in the past that the current system isn’t conducive to new infrastructure expenditures such as stadiums. So which is it, Commish?

Really, Goodell seems to be losing his war against the players union, and it could be costly for the owners if they come to some agreement soon.  Will it “endanger” the league as Goodell claims it will?  In the short-run I doubt it, in the long-run, it will probably be in the owners and players best interest to get a CBA back in place.

New NFL offer to players would change rookie compensation

April 13, 2011

The National Football League (NFL) owners and players have been engaged in contract talks over a new collective bargaining agreement for quite some time, and has been discussed several times in previous posts here on the blog.  While things have been somewhat quiet for the last week, ESPN is reporting that the league has made a new offer, which would essentially put a rookie compensation structure into place, and that some of the revenue being taken away from rookies would go to compensate veteran players.

Specifically, the new deal would take about $300 million a year away from first-round draft picks and move that money to veteran player salaries and benefits for all players.  This new offer is said to free up around $1.2 billion in the next five season, and would help to reduce payments to rookies which have been quite high over the last several seasons.  In 2010 alone, over half a billion dollars was paid by NFL owners as guaranteed money to the 32 players who were selected in the first round of the draft.

This new proposal would not be setting a rookie wage scale, but rather would be capping the maximum salary allowed to be paid to a new player entering the league.  Of course several agents for potential first round draft picks in this years draft are already coming out public with how unfair this new system is, as it may cost them and their clients millions of dollars in guaranteed salary.

Agent Peter Schaffer might be the brightest of the group with his comments, he notes that bringing in a new system would be “scouting insurance” in case a team made a bad choice on a first round draft pick.  He also notes:

“It also makes the rookies more valuable when you reduce the amount you are paying to the young guy, This will eliminate the veteran middle class because teams can have younger players who are making less and are under fixed contracts.”

Personally, I think its about time the NFL tried to make this concession in the labor talks.  I figured that they would try to take a bigger piece of the pie, but try to compensate the veterans (who are a big group of those representing the players in the negotiations) by pulling money from rookies.  Though it would be interesting to see how such a change in the rookie wage scale, might cause teams to try and get rid of veterans earlier if a rookie with comparable skills and ability can replace them for a much cheaper price than before.

NFL Owners walk away from the bargaining table. Is a lockout on the way? Plus some other NFL news…

February 11, 2011

NFL Owners walked away from the bargaining table on Wednesday and immediately canceled the second day of meetings with the NFL Players Association (NFLPA) on Thursday, as well as canceling an owners meeting which was scheduled for next week.  This means that after two years the owners and players still have not come to any agreement about a new contract, and thus moved one step closer to the lockout which many are dreading.  Gary Roberts, editor-in-chief of “The Sports Lawyer told USA  Today that with the current way things are going, as well as the standard of such labor disputes, that the owners and the players will probably not come to an agreement till September.  So what’s the big issue that is causing the problems?  Well as stated earlier here on the blog, the NFL wants to take back an additional $1 billion a year from the players (bringing the amount they take from one to two billion), the players want more financial transparency from all of the teams.  Some other issues on the table include: Revenue Sharing, Drug Testing, Rookie Wage Scale, an Expanded schedule to 18 games, better benefits for retired players, a new salary cap agreement, and international play.  I think some of these issues like international play could probably be easily agreed upon, but the expanded schedule and new salary cap agreement are probably going to be quite difficult to negotiate.

We are exactly three weeks away from March 3rd, the day when the current Collective Bargaining Agreement (CBA) expires.  In a league which has become some powerful from a financial standpoint, the owners and players both have a lot to lose if there is no agreement until September (or possibly later).  Projections are that the league would be out about $1 billion if they do not get going until September, and thus miss the preseason.  If a new CBA takes longer, the league would lose out on a lot of ticket, concession, and other revenue which goes along with the playing of regular season games.  The players also would lose out on a lot.  The issue isn’t just one about losing potential earnings and not having paychecks worth a good deal of money, but come March 4th, the players will lose their insurance coverage.  Really both sides stand to lose quite a bit if the lockout continues for a long time.

The owners do have a bit of insurance though.  Through various television deals, the NFL owners have guaranteed themselves $4.5 billion even if there is a lockout (that’s about $140 million per team).  The players tried to block the owners from getting this money, which they dubbed “lockout insurance”, however courts ruled that this money belongs to the owner and will not block them from getting it.

In a final piece of NFL news Anschutz Entertainment Group (AEG) owners of the Staples Center and the aforementioned Sprint Center in Kansas City have signed a deal with Farmer’s Insurance giving the insurance company naming rights for the new stadium they are planning to build in Los Angeles to hopefully attract an NFL franchise.  The deal is rumored to be worth around $700 million and would be a 30 year naming deal if the stadium was built.  Current estimates have the stadium construction costs at around $1 billion, thus these naming rights would cover 70% of these estimated costs.  While the NFL owners complain to players that they don’t have the money to build new stadiums because of the poor economy and the high salaries of players, AEG has gone out and shown the NFL that in some markets, the demand is high enough for a stadium project to potentially be worth private investment.

Probably the best moment of all of this lockout stuff in the last two weeks?  When Chad Johnson (Ochocinco) pictured above appeared at the State of the NFL address as a member of the media (he started his own media company, the Ochochinco News Network) and proceeded to try to grill NFL Commissioner Goodell about the lockout demanding that Goodell give an honest answer when this deal would get done.  Goodell of course dodged the question with an answer that really didn’t give a true answer.

All signs point to no deal anytime soon.  If the NBA goes to a lockout as well, the NHL may be the only major professional sport league playing in the winter next year in North America.

Justice Department Investigation of the NCAA

September 24, 2010

So, I was looking through ESPN and saw that the Justice Department was investigating the NCAA.  Apparently this is old news, and is something that actually which began earlier this spring.  In this USA Today article, it is detailed that the NCAA is now under investigation for potential violations of antitrust laws because of the current scholarship policy for student athletes.  Currently, the NCAA policy has scholarships that renew each year for student athletes.  That means if a student athlete is injured during the off season, the school which they can play for can withdraw their scholarship, often citing that the player “broke team rules.”  While not all schools may guilty of such a malicious use of scholarships, the fact that the scholarships are not guaranteed for four or five years is something that the Justice Department is looking into.  In the article it is evident that the Justice Department is interested in this manner, and have been interviewing sport management professors, and possibly others with intimate knowledge of the inner workings of college athletics.

Now the speculation seems to be that if the NCAA were forced to allow schools to open up the ability to offer multi-year scholarships, it is believed that schools will not be able to better compete for student athletes by offering longer scholarships.  That is, the Justice Department might not force schools to give single year scholarships, but instead make the NCAA change the rule, thus allowing schools to offer a four or five year scholarship if they wished.  The Justice Department possibly believes that through doing this, they are creating more of a free market situation, where schools could potential offer different a “price” (price in regards to the number of guaranteed years of scholarship) than other schools when competing for a student to play for their school.  In this, the current state of NCAA affairs may be akin to price fixing, at least that is what the authors of this article at hints.

Thinking about this from a financial standpoint, changing the rules could indeed allow schools to bid with longer scholarships for athletes, but this could also lead to higher potential costs for schools, as guaranteeing a four year scholarship to an athlete who may not be able to play the whole time because of injury or other issues could be costly to schools.  With the state of finances as they are for athletic departments (the majority of athletic departments are in the red), this move by the justice department could potentially create a more level playing field, but also could be more costly for many schools.  It will be curious to see how this plays out, its been several months now since this news was quietly broke, yet there seems to have been little progress since then.