Saturday, September 30, 2006

The New York Yankees – as Evil an Empire as ever

October baseball begins Tuesday. Eight cities will experience playoff baseball. Tickets are sold out and the secondary ticket market is out of control. World Series tickets are close to crossing into rarified air, where the average baseball fans have little if any access to tickets. The secondary ticket market resembles a runaway train, with the New York Yankees sending a not so subtle message to their ticket holders – try and sell your tickets on the open market and you’ll lose the right to buy your tickets next year.

In the last ten years, the face value of World Series tickets has increased by more than 300 percent. Regular box seats for the World Series are selling this year for $250 apiece, a 35% increase over last year. Tickets for the American/National League Division Series and the American/National League Championship Series are 10% higher then they where last year.

There is good and bad news when it comes to finding post-season baseball tickets. Unlike the National Football League which only offers a small percentage (18 percent) of Super Bowl tickets to each participating team, MLB franchises guarantee full season ticket holders’ access to League and World Series tickets.

When the Pittsburgh Steelers and Seattle Seahawks took whatever tickets they needed for their major corporate partners from the allotment of tickets each team was given for Super Bowl XL in Detroit it likely meant that less than 15 percent of season ticket holders for each respective team where able to buy Super Bowl tickets. Super Bowl XL tickets had a face value of $600 and $700 each. The Super Bowl disenfranchised ‘Joe’ football fans many years ago.

Major League Baseball teams each play 81 home games. Each franchise creates full and mini-season ticket packages that include the right to buy League and World Series tickets. According to a recent Wall Street Journal report, the Los Angeles Dodgers (likely to either win the National League’s Western division or the NL Wild Card) since 2004, have grown their season-ticket base to the equivalent of more than 26,000 full-season ticket holders, from 20,000. (The Dodgers say they left "plenty of seats available" to the general public for the playoffs.") The New York Mets this season increased season-ticket sales by more than 26% over last year.

"You have to accommodate the plan-holders first," says Dave Howard, executive vice president of business operations for the Mets, who clinched the National League East championship in a Wall Street Journal report. The team, he says, has slightly fewer seats available to the public than for the 2000 playoffs, although he says it's within the same 10,000-15,000 per-game range.

The New York Mets have the best record in the National League, and while the Mets have faltered in recent weeks and lost the ace of their pitching staff Pedro Martinez for the playoffs, there is a real possibility the Mets will win the National League pennant. Their cross town rivals, the New York Yankees are playing their best baseball of the season and are the prohibitive favorites to win the American League pennant. A Subway Series may not generate great ratings for Fox, but a Subway Series will push the secondary ticket market through the roof in New York.

A report earlier this week in The New York Daily News suggested average tickets for game seven of a Subway Series played at Yankee Stadium could cost $10,000 per ticket. There are tickets currently being sold at Stubhub, with a price tag of $10,000 per ticket, that can’t even be considered good tickets. Four of the $9,999 tickets are in the front row of the left field stands and the other four are in the front row of the upper deck in right field according to the Daily News.

"It's conceivable," said Sean Pate, spokesman for StubHub, where the $9,999 tickets and hundreds of other playoff seats are already being resold by fans.

"For something like a Yankees-Mets series, you can definitely see someone paying that."

The Yankees were very quick to react to the Daily News report, determining who the ticket holder was. Last month the Yankees sent a letter to longtime season ticket holder Orlando Bautista, informing the Yankees fan the team would be revoking tickets he had tried to sell on StubHub.

“Why pick on me?” said Orlando Bautista, a doctor in Smithtown, N.Y., who was told by the team in August that his upper-deck and bleacher seats at Yankee Stadium, would be revoked after the season.

He added: “I’m a good fan. I don’t drink. I don’t curse.”

The Yankees response, exactly what you’d expect for the Evil Empire – sheer arrogance and gall.

“It’s a violation of our policy to resell tickets,” Lonn A. Trost, the Yankees’ chief operating officer told The New York Times. “It’s in our contract. If you don’t want to sign it, you don’t have to buy tickets.”

As offensive as Trost’s suggestion was, Trost told the New York Times, the Yankees were getting ready to launch their own secondary ticket agency.

“Times change,” he said. “You re-examine everything.”

The hypocrisy is unbelievable, even for an organization as immoral as the Yankees can be at times. The New York Yankees COO isn’t saying you can’t scalp your Yankees tickets, he’s suggesting the Yankees will take care of the scalping for you. The argument has been made before and it will be made again, anytime a ticket for a sporting event or a concert is sold above face value its ticket scalping. Many National Football League, Major League Baseball, National Basketball Association, National Hockey League and NCAA institutions have corporate partnership agreements with secondary ticket agencies. Those are embarrassing enough to the sports teams. But for an organization that has the profile the New York Yankees enjoy to suggest they’re going to set up their own ticket agency and revoke the tickets for any ticket holder who decides to take their business elsewhere is reprehensible.

Adding even more confusion in the Yankees marketplace when it comes to secondary ticket sources, WCBS the flagship station for Yankees radio broadcasts runs StubHub commercials during Yankees broadcasts that feature the “voice of the Yankees” John Sterling. The Yankees told WCBS they’d ‘prefer’ if they didn’t run StubHub ads, but haven’t demanded the spots not be aired on the broadcast. The average baseball fan isn’t going to understand the Yankees selling the rights to WCBS and they in turn sell the advertising. The average Yankees fan is going to assume if the “voice of the Yankees” is endorsing StubHub, its fine with the Yankees.

If you can believe this, according to the New York Times Yankee game day security regularly question people arriving at Yankee Stadium with tickets in a StubHub envelop.

“It’s a witch hunt against us and eBay for giving fans more access to these games,” Sean Pate, a StubHub said. “These aren’t scalpers. Season-ticket holders are their most loyal fans.”

What makes the Yankees look that much worse – both the Mets and the San Diego Padres operate their own ticket agencies? While both the Mets and Padres try their best to point fans in their direction if they want to resell tickets, both organizations haven’t adopted the Gustopo like tactics the Yankees have set up.

“Our license says not to resell unless it’s on a Padres Web site,” said Jim Kiersnowski, the Padres’s ticket operations director. This season, 36,000 tickets have been resold on the Padres’ site. “We could revoke their tickets, but we don’t think it would help our relationship with our customers,” he told The New York Times.

The Yankees, as Trost made very clear – could care less what anyone thinks! “Most of the individuals say they did it just once. Pity me,” he said. “Or, ‘I gave it to the salesman who gave it to his brother, who gave to his son and he put it on eBay,’ and it’s usually not true.”

The Yankees made it clear in a letter included with their each season ticket holders’ playoff and World Series ticket invoice, you had better pay attention to the rules the Yankees fully intended to enforce, making it very clear what the organization would do if it caught anyone trying to resell Yankees playoff and World Series tickets.

"Please be advised that you will be neither invoiced nor entitled to any tickets to the 2006 post-season," Yankees associate general counsel Alan Chang said in a letter to one season-ticket holder. "And you will not be offered a license for the 2007 baseball season and beyond."

The Boston Red Sox season ends Sunday. Despite a disappointing season on the field, the Red Sox had another great season at the box office selling out Fenway Park for the entire 2006 season. The Red Sox sold out their entire 2004 and 2005 regular seasons as well. The last time a game at Fenway Park wasn’t sold out -- May 15, 2003.

The Red Sox operate their own secondary ticketing service, with a major twist – tickets cannot be sold above face value. Dubbed Red Sox Replay, season ticket holders can list tickets for any games they don’t want to attend. It cost $65 to register to buy tickets; the fee is a one time charge. There is no service fee to resell tickets. You can buy as many tickets you’re interested in purchasing for as many games, subject to availability. The Red Sox regard this as a service to their season ticket holders, not as a revenue generating opportunity.

Jacobs Field opened on April 4, 1994. The Cleveland Indians sold out the first 455 games they played at ‘The Jake’. The sellout streak ended early in the 2001 season. Three times the Indians sold out their entire season before the players reported to spring training. Times have been tough both on and off the field for the Indians since the sellout streak ended. The Indians have only sold out a handful of games since the streak ended. However, the Indians continue to operate a ticket board on the teams’ official website, where season ticket holders can try and sell tickets to games they’re going to miss. More often then not, the Indians are competing against themselves by managing the ticket board. The Indians see the bigger picture and understand its all about the customer, its called customer service, a misnomer for the Evil Empire.

The Yankees will lead Major League Baseball in attendance for the second consecutive season selling close to 4.2 million regular season tickets. The Yankees will average more then 52,000 fans per game, playing to more then 90 percent of Yankee Stadium’s capacity.

Yankees fans love their teams, but do the Yankees love their fans? Any business, that operates with a belief system that treats fans as badly as the Yankees do is a business that is having a great time while they’re on top of the world. In doing so have forgotten how the other half of the world lives. The Yankees have clearly forgotten what goes around comes around. It’s how you treat people when you’re on top of the world that determines how they’ll treat you when you’re on your way down. The Yankees can enjoy the ride while they’re on top of the baseball world, when they fall (and that fall is inevitable), the Yankees are going to pay a terrible price for the appalling examples they’ve set in mismanagement.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The New York Times, The Wall Street Journal and The New York Daily News

Friday, September 29, 2006

The Death of ESPN Mobile – not everything ESPN touches turns to gold

Thursday, the “suits” at ESPN announced that ESPN Mobile, one of the largest product launches in ESPN history, was finished. Less then nine months after launching ESPN’s much discussed about service that would link cellular phone service and ESPN content, those who ultimately decide the fate of the direction ESPN takes on any initiative – the money men, the decision makers, realized that everything ESPN touches does not turn to gold.

“Our MVNO (mobile virtual networks) effort created a tremendous wireless asset widely recognized for quality and innovation and as a result we have been approached by well-entrenched carriers about a licensing model. We have decided to pursue it,” said Salil Mehta, executive vice president, ESPN Enterprises. “With a redefined approach we have a greater opportunity to reach millions of fans while achieving our strategic and financial goals.”

Continued Mehta: “ESPN is now able to take advantage of market opportunities that simply did not exist with our content before we built the MVNO. We remain committed to serving fans in the wireless arena."

An MVNO doesn't have its own wireless network. Instead, it puts its own brand on another company's wireless network operator's service — for Mobile ESPN it was Sprint Nextel Corp. — paying that company to connect calls and deliver content.

Sales of the product ended immediately. ESPN announced they’ll offer current customers the content they’ve purchased through the end of the calendar year, but not beyond December 31, 2006. Regardless of how ESPN attempts to spin this story, it is a setback for the Disney owned company.

According to an Associated Press report, Disney has invested a combined $150 million in developing Mobile ESPN and Disney Mobile, which are two of the highest-profile and most-heavily marketed efforts to create what's known as an "MVNO," or mobile virtual network operator. Its likely Disney invested more than $100 million in ESPN Mobile before Thursday’s announcement.

Disney Mobile is a recent addition to the more than 175 MVNO brands either launched or planned as of April of this year, according to the research firm ARCchart. More then two-thirds of the slightly more 100 employees at Mobile ESPN will likely lose their jobs next year as the company transitions to a licensing business, though some may find other positions at ESPN, executives said.

"The focus of the ESPN organization is that we took a risk, but in doing so we have the benefit of having created the industry's leading wireless application, and we're going to figure out a way to bring that to fans and make the most amount of money," Mehta, told the media. Mehta’s comments will not comfort the now 70 fired ESPN employees.

ESPN Mobile was launched at Super Bowl XL in February. The ABC telecast of Super Bowl XL (the networks last NFL broadcast), featured a 60 and 30 second commercial on ESPN Mobile. The value of the commercial inventory was in excess of $5 million.

"There remains a very strong residual mobile opportunity for ESPN," Doug Mitchelson, a media industry analyst for Deutsche Bank Securities, wrote in a note to investors according to an Associated Press report. "While the phone effort might have failed, the software developed to serve the sports fan through a mobile phone was very powerful, and a clear leader in the sports category."

"It's important that we do not overreact to this," Jaimee Minney, an analyst with M:Metrics Data, noted in an e-mailed comments on Thursday. "In the end, asking consumers to view a brand with a connotation as purely a media company as a provider of telephony is too great of a conceptual leap. Brands like Virgin, a lifestyle brand, or brands that are already providers of communications services, such as a cable company or ISP, stand a much better chance as an MVNO, as do companies that are pure-play MVNOs."

What exactly went wrong with ESPN Mobile? There is no stronger brand in sports than ESPN. Created in 1979, the remarkable evolution of ESPN has included the creation of seven different cable sports networks, the largest all-sports radio network, the Internet’s premier sports web destination and an entertainment division that offers ground breaking sports programming.

When anyone thinks of sports, they think about ESPN. It was no mistake when Disney announced in August all ABC Sports programming would carry the distinctive ESPN brand. ESPN bills itself as the world-wide sports leader; it’s all that and a great deal more. Is this a failure on the part of ESPN or is this an indication that while the technology may exist to offer ESPN programming on a cellular phone, the demand to watch a football game on a cellular phone doesn’t dictate a multi-million investment?

ESPN had planned on launching ESPN Mobile in 2005, announcing on December 1, 2004 the birth of their latest venture.

"Our goal is to extend our leadership and expertise in the two-screen environment, the television and computer, to a third screen that is becoming increasingly important to sports fans -- the wireless device," said George Bodenheimer, president of ESPN Inc. and ABC Sports at the time of the original announcement. "This enhances our mandate to serve fans anytime, anywhere, and Sprint's leadership in this medium will help lay the foundation for our success."

"ESPN Mobile will bring a unique and loyal audience to the wireless table, and we look forward to combining their experience and sports-related content with Sprint's enhanced nationwide network," said Len Lauer, president and COO, Sprint again at the time of the original 2004 announcement. "We believe ESPN's involvement in wireless will help stimulate even further consumer demand for high-speed data services, capitalizing on the strength of Sprint's EV-DO strategy."

Fifteen months later and missing two critical marketing/selling opportunities, ESPN Mobile was finally launched in early February. The Christmas gift giving season is the most important period for cellular phone operators. Close to 70 percent of new cellular phone sales takes place in the three month period between October 1 and December 31. Announcing a product launch on December 1, 2004, promising that product in 2005 and failing to deliver on any of those promises is a receipt for disaster. It sent a message to consumers, the product was in trouble long before they ‘might’ decide to buy the service.

Still when ESPN Mobile was ready, ESPN’s steadfast belief that their mantra is to deliver everything and anything sports (and that the consumer will buy it) was as steadfast as ever.

"Our mission is to serve sports fans on any platform," said Manish Jha, senior vice president and general manager of Mobile ESPN days before the early February launch. "What we realized a couple of years ago is that the cell phone industry is highly fragmented. Cell phone carriers are trying to reach 17 different groups of people, and the effectiveness of that is limited."

Several analysts told online industry newsletter CNET News.com, ESPN indeed might be making a mistake.

"Not every Scotch or 3M needs its own branded cellular service," said Fedor Smith, director of strategy at telecommunications industry research firm Atlantic-ACM. "Companies need some sort of unique content or service, or even an established cool brand to make this work."

ESPN believed they where going to offer sports fans exactly what Smith was suggesting – unique content and service. ESPN believed cellular phones where the next logical step for SportsCenter, Pardon the Interruption and other ESPN programming. They believed sports fans would pay $400 for a phone (the cost of the phone) and monthly service plans ranging from $34.99 a month for 100 minutes of talk time to $224.99 for 4,000 minutes.

"It's not for every brand," Marina Amoroso, an analyst at the Yankee Group warned in a CNET News.com report. "Aside from the cost issue, you also don't want to damage the brand you've built up. Nike may not want to shoulder the burden of a cell phone service that drops calls."

ESPN wasn’t going to be deterred – nothing was going to get in the way of how ESPN looked at the mobile phone opportunity.

"Mobile ESPN has defined a new wireless category, and with that, we are positioning the service and our marketing around the idea that life will never get in the way of sports again," said Manish Jha, senior vice president and general manager of ESPN Mobile in report published by EcommerceTimes.com just prior to the product launch. "This is more than a phone -- it is like putting ESPN in your pocket."

"I think branding is going to be key and this ESPN offering has a built-in customer base -- all ESPN viewers and readers," telecom analyst Jeff Kagan told the E-Commerce Times. "So they have that universe of customers to start with. Now they have to develop the kind of content at the kind of price that the base will choose to access."

The $100 million question would sports fans pay what amounted to a king’s ransom for ESPN programming offered on a cellular phone? ESPN used every available platform they could too create product awareness and market ESPN Mobile. ESPN Mobile was promoted on the seven different cable networks, on ESPN radio and was front and center at ESPN.com. None of that mattered, the consumer was never interested.

On July 19, Merrill Lynch analysts Jessica Reif Cohen and Michael Kopelman issued a note to investors that it was time for ESPN to “throw in the towel” on its cellular phone venture. They believed that "it is time for Disney to pull the plug on Mobile ESPN," charging that since Disney launched the service with much fanfare during Super Bowl XL, the company has had little luck landing paying subscribers.

Merrill added that while Disney significantly reduced the cost of the handset in April, dropping the price of its Samsung model to $99 after the original Sanyo handset launched at $399, “the model does not appear to be a particularly attractive use of capital,” as the reseller business traditionally offers a low return on investment. Cohen and Kopelman’s greater concern was ESPN initial projection of 240,000 subscribers by years end would fall below 30,000.

ESPN’s last stand in moving ESPN Mobile forward took place earlier this month. ESPN announced it would broadcast college football games over mobile phones this fall, via its struggling Mobile ESPN wireless service.

ESPN announced it would offer up to 25 live broadcasts a month beginning Sept. 2. The move marked the first time that broadcasts of entire sporting events was regularly available for viewing over a U.S. wireless network.

Mobile ESPN, which launched nationwide in February, made the college football broadcasts available to all of its customers who subscribed to its Total Sports Package. The package cost an additional $25 a month above the customer's monthly calling plan.

Less then a month after offering the Florida State – U of Miami Labor Day game from Miami’s Orange Bowl, looking like a boxer that has endured a terrible beating, ESPN has tossed in the towel on offering content on cellular phones.

Major League Baseball's MLB Advanced Media subsidiary, which sells the broadest range of online multimedia content among all major U.S. professional sports leagues, charges $6 a month for its Gameday Audio service, which provides audio broadcasts of every MLB game on Sprint. Other sports events have been available on a one-off basis: For instance, Deutsche Telecom's T-Mobile wireless subsidiary broadcast 20 soccer matches in Germany during this year's World Cup.

Was ESPN’s decision to offer college football games through its cellular service a last desperate act? Given that ESPN, believed it was in their best interests as a company to abandon a medium that had invested more then $100 million in, days before the key annual selling period for that product, ESPN Mobile was an unmitigated disaster for ESPN and Disney.

However, ESPN may have made the right decision. Better to end a failed experiment, then throw more good money after what was for ESPN a bad idea. ESPN has done nearly everything right in developing their brand in the last 27-years. Sooner or later, something was inevitably going to go wrong at ESPN.

The bigger question what if anything does it say about content and cellular phones? Sports fans love having instant access to scores and the latest sports news. Information (scores and results) and watching SportsCenter, a football game or Pardon the Interruption are very different concepts.

Clearly ESPN overpriced the product when it was finally released, and never really offered value for what they where offering. ESPN failure is more a reflection of their lack of understanding of the consumer, not the buying public rejecting sports related content on cellular phones. ESPN’s failure opens the door to a competitor to get it right.

For Sports Business News this is Howard Bloom. Sources cited in this report: Forbes, Associated Press, and EcommerceTimes.com

Thursday, September 28, 2006

Terrell Owens – time to fire your publicist

Wednesday was a day Terrell Owens is never going to forget. In a football career that has been filled with inane, inept and at times embarrassing behavior, Wednesday was another example of the evolution of how important it has become in the ‘information age’ to, at all times control the message you are attempting to disseminate.

The morning began with the mainstream media news services (CNN, MSNBC and Fox News) leading their newscasts with reports that Owens had attempted to kill himself Tuesday evening; and ended late Wednesday afternoon with Owens publicist Kim Etheredge suggesting in no uncertain terms that the Dallas Police Department had lied in a police report filed early Wednesday morning.

First reported by Dallas TV station WFAA and then by The Dallas Morning News, a police report obtained by WFAA suggested in no uncertain terms Owens had tried to commit suicide Tuesday evening. According to the police report (a sworn statement by the Dallas police department) officers answered the rescue call made by the Dallas Fire and Rescue to Owens Dallas home. According to the report: when asked by the police if she believed Owens was depressed Etheredge answered, “Yes.” Late Wednesday afternoon, a disheveled Etheredge told a packed media conference at the Dallas Cowboys training facility the police were lying – she had never made that statement. The police report also said that Etheredge had told them she had tried to remove at least two pills from Owens mouth. Etheredge also said that never took place. To suggest not once, but twice the Dallas Police Department had lied in a police report are serious allegations that are certain to keep this story alive indefinitely.

The story took on a life of its own very early Wednesday morning and progressively (but very quickly) lost control. ESPN Radio, Sporting News Radio, Fox Sports Radio and the nationally syndicated Jim Rome show abandoned their scheduled programs offering wall-to-wall T.O. suicide watch reports. The NFL Network offered live wall-to-wall coverage. ESPN offered extensive coverage on several of its seven different cable networks.

ESPN mid-morning host Colin Cowherd proved once again how unformed and a terrible radio host he is. Cowherd led off his show with Dr. Joel Fish, a Sports Psychologist, followed that with ESPN The Magazine’s Tom Friend and then went to The Miami Herald’s Dan LeBatard. Both Fish and Friend shared Cowherd’s sensationalistic view on the days events -- it was time to lock Terrell Owens up, but when LeBatard tried to suggest maybe everyone was getting ahead of themselves in reporting this story, Cowherd countered LeBatard’s view saying it was possible but highly improbable.

During his show Cowherd read verbatim (at least according to Colin) the police report. Colin announced his source was “The Smoking Gun.” According to Colin, The Smoking Gun is the ‘definitive source for police reports’ ESPN is owned by ABC. ABC’s parent company is Disney. When a company owned by media giant Disney suggests “The Smoking Gun” is an important media source – heaven help Mickey, Pluto, Goofy and Donald.

The challenge that Cowherd, Jim Rome and others faced Wednesday was how important accurate information is in the age of instant communications. In fairness to Cowherd, he had no choice but to focus his radio show on a larger than life story. Doing his best not to sound like Fraser Crane or any other dime store psychologist, Cowherd said several times he wasn’t a psychologist. That didn’t stop him from offering his opinions of the ‘troubling life’ of Terrell Owens.

Throughout his football career Terrell Owens has often been his own worst enemy. Consider these selected career highlights:

• Sept. 24, 2000: As a member of the San Francisco 49’ers Owens celebrated a pair of TDs in a win over the Cowboys by posing on the star logo at midfield in Dallas. Result: suspended for a week.

• Oct. 14, 2002: Celebrates a TD catch on Monday Night Football by pulling a marker from his sock and autographing the ball.

• Dec. 15, 2002: Celebrates a TD catch in a loss to Green Bay by taking pompoms from a cheerleader and dancing behind the end zone.

• Aug. 13, 2004: In interview with Playboy magazine, when asked if he thinks Garcia is gay, responds: "Like my boy tells me: If it looks like a rat and smells like a rat, by golly, it is a rat."

• Nov. 15, 2004: Draws criticism for a MNF promo in which "Desperate Housewives" actress Nicollette Sheridan, dressed only in a towel, asks Owens to skip the game then drops the towel and jumps into his arms. Later apologizes.

• Aug. 10, 2005: After a shouting match with Reid during training camp, is sent home for a week. A circus ensues as he works out in the driveway in front of his home.

• Nov. 3, 2005: In an ESPN.com interview, says the team would be better off with Brett Favre starting at QB than with injured McNabb and blasts the team for not marking his 100th career TD catch.

• Nov. 5, 2005: Philadelphia suspends Owens over the latest comments and two days later, the Eagles extend the suspension to four games and tell Owens not to return.

• Nov. 23, 2005: An arbitrator rules that the Eagles' suspension was justified and that the team is within its rights to deactivate Owens for the remainder of the season.

• March 14, 2006: Philadelphia Eagles cut Owens.

• March 18, 2006: Four days after being cut by the Eagles, Owens signs a three-year, $25 million deal with the Dallas Cowboys that includes a $5 million bonus and a $5 million salary in 2006. "I'm a star among stars now," Owens says at a news conference.

• July 5, 2006: "T.O.", the second setting-the-record-straight autobiography Owens has written in 22 months, is released five days ahead of schedule. The biggest revelation: His relationship with Philadelphia quarterback Donovan McNabb soured for good when Owens was told "Shut the (expletive) up" in a huddle. McNabb later calls the autobiography a "children's book."

• July 13, 2006: At his first book signing, Owens claims he was misquoted in his autobiography, saying he didn't say his return in time for the February 2005 Super Bowl was "heroic," even though that's what he wrote. He called it one of the words chosen by his co-author.

• Sept 27, 2006: A police document obtained by media outlets before being formally released by authorities says Owens was depressed and attempted suicide, which Owens later denied. He said he became groggy after mixing painkillers with supplements. Publicist Kim Etheredge, who made the 911 call, denied she removed pills from Owens' mouth, as described in the police document, and said it was unfair for anyone to think Owens would kill himself.

There is no proof whatsoever; beyond what is now a disputed police report that Terrell Owens doesn’t have full control of his mental faculties. To draw any other conclusions that Terrell Owens based on his behavior pattern of the last seven years is mentally unbalanced is nothing short of irresponsible reporting by people who aren’t qualified to offer their opinions on a very sensitive subject.

Has Terrell Owens behaved badly at times? Does Terrell Owens enjoy being the center of attention? Has Terrell Owens made the wrong choices at times? The answer to all three questions is a resounding yes, but that does not offer any evidence that Terrell Owens is suicidal. It doesn’t even suggest Terrell Owens actions show a pattern of deviant behavior. It does show Terrell Owens might have made some better choices in life.

Once again, there are suggestions Terrell Owens behavior is based on his upbringing. Terrell Owens’ mother and grandmother played the key parenting roles in the development of Terrell Owens. There was no adult male figure in Terrell Owens life when he grew up. Owens credits his grandmother for being a guiding force in his life and has both tremendous respect and love for his mother. But can some of Terrell Owens actions as an adult be traced back to the lack of a father figure when he was a youngster? Undeniably the issue of single family homes, without a male figure and its impact on the understanding young boys have on the world has to have an impact on their actions as adults. However it does not suggest young males who grow up without a father figure are in anyway suicidal.

Does Terrell Owens enjoy being the center of attention? Terrell Owens is a high performance athlete who has lived his life in a bubble. Some of his actions may appear to be improper, but Terrell Owens is a product of a society that heaps praise on athletes for what they accomplish on their respective playing fields and seems to find whatever they do off their respective playing fields entertaining.

How big is T.O.’s image? According to Editor and Publisher: Universal Press Syndicate Wednesday sent an editor's advisory to "Tank McNamara's" clients because this Sunday's strip features a story line about Dallas Cowboys wide receiver Terrell Owens.

There have been press reports saying Owens might have tried to kill himself yesterday by overdosing on pain medication.

The Oct. 1 comic -- sent to newspapers in late August -- features Owens as a bobble head doll and pokes fun at the controversial player for his training camp and off-field activities.

"In light of recent events, this may appear to readers as insensitive," said John Glynn, who edits "Tank" at Universal.

"Tank," a sports-related comic drawn by Bill Hinds and written by Jeff Millar, appears in about 120 newspapers.

There are more then 450 all-sports radio stations in America today. In 1986, there was one, New York’s Fan 1010 (the original frequency for the first all-sports radio station).

ESPN is 27-years old, and now includes seven different cable sports network. Monday night beat every other network (cable and over-the-air broadcasters) in establishing a new single night cable ratings record of 10.8 million viewers for Monday Night Football.

Wednesday was an example of the ‘genie getting out of the bottle.’ Driven by media frenzy, the Terrell Owens story was so out of control, CNN interrupted an ongoing high school hostage situation in Colorado for live coverage of Terrell Owens press conference. When did the reaction of a professional football player to a personal event in his life become more newsworthy then the lives of high school students? Time and time again, example after example, society continues to place athletes on an impossibly high pedestal. Wednesday may have been a bad day for Terrell Owens, an even worse day for some of those people close to him, but once again it was a day where the sports media embarrassed itself.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: ESPN.com

Tuesday, September 26, 2006

Baltimore Orioles fans – When not enough is too much

The Baltimore Orioles home schedule ended Sunday, with the Orioles losing 6-3 to the Minnesota Twins, a game played in the rain, a game that took 3 hours and 5-minutes to complete, a game that featured 13 pitchers – a terrible end to what has been an embarrassing season both on and off the field for the once proud MLB franchise. The Orioles ended up with a losing 40-41 home record. Attendance for the year, was the worst ever at Camden Yards and the Orioles worst since 1988.

Sunday's crowd was 23,005, putting the Orioles' total in 81 home dates at 2,153,139 for the season. The average attendance was 26,582, the fifth lowest in the American League. The total, down nearly a half-million fans from last season, represented the lowest in the 15-year history of Camden Yards and the lowest for the club since 1988.

Thursday, Orioles fans sent a strong message to the teams’ owner Peter Angelos. More then a thousand fans who bought tickets to the Orioles home game against the Detroit Tigers, left the late afternoon game in an orchestrated demonstration at 5:08 PM, missing the Orioles 4-3 late inning comeback win.

Nestor Aparicio, who owns WNST Radio in Baltimore, organized the fan boycott. The ‘timing’ the "5" in honor of Brooks Robinson and the "8" for Cal Ripken Jr. Nestor’s career highlights include a stint on Sporting News Radio. Nestor has always been a believer in Baltimore baseball. Several years ago Nestor pulled the nationally syndicated Jim Rome from his radio station after Rome delivered a tirade against Baltimore. As far as Nestor is concerned, if you insult the city of Baltimore you won’t be doing business with any of the all-sports radio station he owns.

"The situation is pretty dire unless somebody does something," Aparicio said. "Peter is myopic. He thinks they're going to get Barry Zito this off-season. He thinks if they get off to a 21-5 start next year, the ballpark will miraculously fill up and sponsors will start coming back.”

"They're gone and they're never coming back, and Peter is the only one that doesn't understand that. He thinks the ballpark is empty because they've lost for nine years. He doesn't understand how angry people are at him” says Aparicio

Angelos led a group of investors that purchased the team in 1993 for $173 million, a year after Camden Yards opened. Camden Yards changed the Orioles and Major League Baseball forever. Camden Yards was baseball’s first retro park, a stadium that featured a ‘back to the future’ look but with all of the modern amenities and revenue generating opportunities MLB franchises need to be successful.

The retro-style ballpark began a trend among other cities to construct more traditional, fan-friendly ballparks, including Jacobs Field in Cleveland, Coors Field in Denver, Ameriquest Field in Arlington, Texas, Safeco Field in Seattle, PETCO Park in San Diego, California, PNC Park in Pittsburgh, Citizens Bank Park in Philadelphia, Busch Stadium III in St. Louis, AT&T Park in San Francisco, Great American Ball Park in Cincinnati and Comerica Park in Detroit.

Between 1992 (the year before Angelos bought the team) and 1999, eight consecutive seasons, the Orioles where the toughest ticket in baseball – averaging more then 44,000 fans per game, virtually selling out Camden Yards. Attendance at Camden Yards has been on a steady decline since the 2000 season. By the time the 2006 season ends Sunday, the Orioles will have finished fourth, seven times, fifth once and third one other time. If not for the Tampa Bay Devil Rays, the Orioles would be the worst team in the American League East over the last nine years. Nine years of bad baseball – Orioles fans have had enough and they’re determined not to take it anymore.

Angelos for his part is offering anyone any apologies for the team he has put on the field in the last nine years.

"Whoever joins that protest has no comprehension of what it costs to run a baseball team," Angelos told the AP from his law office the day before the protest. "When you get down to facts, putting together a team that can compete in the AL East means having a payroll between $100 million and $110 million. That money comes from the consumer, and I have chosen to keep ticket prices to a minimum."

"Our payroll is $75 million, and our ticket prices average $22. Some of the teams we compete against charge an average of $45," Angelos added. "We're going to have to match the competition. How to do that is a decision I will make in the future."

The ‘some’ teams Angelos referred too – one team the Boston Red Sox who play their home games in Fenway Park, MLB’s smallest ballpark with a seating capacity just below 35,000. The sheer arrogance of Angelos, being well aware only the Red Sox charge an average ticket price of $45 shows how completely out of touch Angelos is with baseball fans in Baltimore.

While Angelos stayed away from Thursday night’s protest, key members of his front office staff did their best to understand why Orioles fans are so upset.

Mike Flanagan, the team's executive vice president of baseball operations, told MLB.com he welcomed the protest.

"I'd say this: I thought they showed a lot of passion and a lot of exuberance today. Frankly, it reminded me of the '70s and '80s, when I was playing," said Flanagan, a former southpaw pitcher who won 167 games in the big leagues. "They seemed to be into every pitch. In some respects, I wish it would continue for nine innings.”

"We're on the same page with them. I think we share that same passion and exuberance. We want to go into the off-season, and I think we're going to have some good news down the road on some issues."

"It's pretty hard to miss," said starting pitcher Kris Benson. "I think all the players liked it. We don't mind if they come to the field every single day and do that kind of cheering for the team. Everybody enjoyed it, from the time we stepped on the field to the time that they left. Everybody was pretty excited to have some pumped up fans."

"I'm really confused," said Jay Gibbons, summing up last Thursday's events. "If we come back here next year and we're in first place, are those fans not coming to the game? Or are they coming? Are they our fans or not? I just know I'm a fan of a lot of things. As a sports fan, I root on my team no matter what.”

"I'm at the game [and] I'm watching on TV whether they're in first place or last. I'm a Raider fan. Put it that way -- I've been there for a long time. I understand people being upset, but there's different ways of doing things. I'm confused who they're upset at -- is it us or is it the owner? I don't know."

"I don't think people can comment on who should own a club and who shouldn't own a club. What came through loud and clear to me is that they're passionate Orioles fans and they want to win," Flanagan told The Baltimore Sun. "We want to win [and] I want to win. I want to be here and have races in September that mean something and have that kind of cheering in the stands again. It's been too long.”

"That's part of the reason I wanted to take on this job -- to change and get the culture back to where it was. Winning was the norm and losing was unacceptable. Hopefully, we'll head in that direction this off-season."

Can Orioles fans look forward to a better team in the not too distant future? Not if you consider what Angelos told The New York Times Murray Chass last week.

“We’re doing the best we can with a $75 million payroll,” Angelos said. “It’s tough to deal with teams that have double the payroll or triple. We expect to be increasing that payroll to compete.”

How much of an increase?

“In order to be competitive in the American League East,” the owner said, “you have to spend $100 million at a minimum, unless you push the right buttons and have the insight that Billy Beane and Terry Ryan has.”

The Orioles won the A.L. East title in 1997 with a $64 million payroll, second in the major leagues to the Yankees’ $67 million. The Orioles’ payroll remained second to the Yankees the next two years, but then began plummeting — in successive seasons to 5th, 12th, 14th, 15th and 21st in 2004.

Is Peter Angelos a bad owner? Yes and no. What Peter Angelos is, is a businessman. The Orioles, the Toronto Blue Jays and the Tampa Bay Devil Rays play in the American League East. The challenge those three teams face – the New York Yankees and the Boston Red Sox.

The Yankees own 38 percent of the YES Network, the Red Sox 75 percent of The New England Sports Network. Multichannel News recently estimated the Yankees stake in the YES Network may be worth a billion dollars. The Red Sox majority ownership of NESN is likely worth at least a billion. The Yankees and the Red Sox want to win every year, but it’s essential both teams remain competitive every year to drive ratings for each teams’ respective sports cable network.

Angelos owns 90 percent of the Mid-Atlantic Sports Network. However, Angelos clearly doesn’t have the same understanding George Steinbrenner has regarding the YES Network and John Henry has relating to the NESN Network. All was has to do is consider the short history of the Mid-Atlantic Sports Network. (this from several media reports and press releases)

Mid-Atlantic Sports Network (MASN) is a joint network that broadcasts both Baltimore Orioles and Washington Nationals games in the Washington/Baltimore area. When the Montreal Expos were relocated to Washington, D.C. in 2004, the issue arose regarding television rights for the new franchise.

The Baltimore Orioles expressed concern about the new franchise, which club officials claimed would reduce attendance at Orioles games. Ever since the Senators left Washington for Texas, to become the Texas Rangers, the Orioles had always considered the DC Metropolitan area their territory.

Eventually, a compromise was worked out with Major League Baseball and the Baltimore Orioles. In this compromise, Washington Nationals games would be combined with Baltimore Orioles games on television in a new cable network called "MASN", or Mid-Atlantic Sports Network, with Orioles owner Peter Angelos having a 90 percent stake in MASN and MLB paying Angelos $75 million for 10 percent of the new regional sports network.

Over the next 30 years, the new owners of the Washington Nationals can increase their share of MASN up to 33 percent. Under the current arrangement, MASN paid the Nationals $20 million to broadcast their games in 2005. This is the only situation in MLB in which the owner of one team owns/controls the TV rights of another team.

It should not come as a surprise to anyone that Peter Angelos’ belief system is based on adversarial relationships. Angelos is a legendary litigator, who has earned hundreds of millions of dollars winning lawsuits against builders who used asbestos. Angelos also represented Maryland in a lawsuit against the tobacco industry, signing a contract that eventually would have brought him more than $1 billion. Angelos eventually settled for $150 million, to be paid over five years.

The image of George Steinbrenner has been tied to the Yankees image since 1973. Love him or loathe him, ‘The Boss’ has stood and delivered time and time again for the team he owns and Yankees fans. John Henry, Larry Lucchino, and Tom Werner delivered the Red Sox first World Series in 86 years two years ago. Henry, Lucchino and Werner where front and center during the Red Sox amazing 2004 World Series run, just as Steinbrenner hopes to be in the coming weeks for his Yankees. It seems Peter Angelos doesn’t really care if the Orioles are competitive.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Baltimore Sun, MLB.com, the New York Times and About.com

Monday, September 25, 2006

Show me your money – The National Football League heads to China

Sunday night, National Football League commissioner Roger Goodell confirmed the New England Patriots will meet the Seattle Seahawks on August 8, 2007 in the first NFL game to be contested in China. According to the NFL’s release the game “will serve as the kickoff of the one-year countdown to the opening of the XXIX Olympic Games in China.” The game will be played at Beijing’s Workers Stadium (corporate stadium right agreements are not permitted in China).

It’s interesting to note the Beijing Olympic Organizing Committee selected an American style football game as its key event to mark its one-year countdown to hosting the biggest event ever held in China. When you consider American football is contested (only) in the United States (NFL Europe always lives on deaths door), is only played by Americans and isn’t even in anyway part of the Olympic Games. How important the Chinese market is to American based sports groups as well as businesses becomes that much more obvious to even a casual observer.

This is the same country the National Basketball Association and the NFL so lovingly covet, on Thursday was condemned by Amnesty International, the London based human rights group for failing to improve human rights conditions in China. Amnesty International’s report focused on what they believe is some of the key human rights issues less then two years before the start of the Beijing Olympic Games.

"With just two years to go until the Olympic Games take place in Beijing, the Chinese authorities are failing to meet the human rights commitments they made when Beijing was awarded the Olympics in April 2001," the group said in a report. "Serious human rights violations continue to be reported across the country, fueling instability and discontent."

The 1989 Tiananmen Square crackdown on student dissidents may have cost China the right to host the 2000 Games (awarded to Sydney in 1993). Not a great deal changed in the eight years between when Sydney being selected to host the 2000 Games and 2001 (when Beijing was chosen to host the 2008 Games) politically in China. The country is still a Communist country – freedom does not ring out in a country home to a fifth of the world’s population. While nothing has changed politically, businessmen like New England Patriots owner Robert Kraft can only hope time will help people forget the horrific images of students being gunned down in the streets of Beijing in 1989.

“My family has been doing business in China for nearly 20 years and we are proud that The Kraft Group is New England’s number one exporter to China,” said the Patriots’ Kraft. “Based on our own experiences in China and the growing interest in American sports there, we launched a Patriots website in Chinese in 2004. It was the first of its kind. It is a privilege and an honor to be selected to participate in the NFL’s inaugural China Bowl in 2007. I think our players and staff will be terrific ambassadors for the game of football and I hope that it will be an experience that they will never forget. I look forward to developing new relationships and building a legacy for the Patriots and the NFL in such a great country.”

More likely Kraft and ‘the Lords of the Pigskin’ enviously watched David Stern and the NBA take full advantage of Yao Ming’s presence in the NBA. The Houston Rockets selected Ming with the first overall pick in the 2002 NBA draft. Ming became the first ‘big name’ Chinese athlete to play in a major American sports league. Two years later, the NBA headed to Beijing for two pre-season games before the start of the 2004-05 season.

"In order to bring two teams here, and over 100 NBA employees, to pay for travel, accommodation ... we have spent several millions of dollars," NBA commissioner David Stern told the media who traveled to Beijing for a pair of games that featured Ming’s Rockets and the Sacramento Kings.

"This is an extraordinary investment in an economy and country which is the largest in the world in respects of population and an economy that is outstripping the rest of the world in terms of growth.”

"Over the next 20 years, the growth of the NBA in China will mirror or parallel the growth in China."

Stern has always felt that China was an untapped market. China was always seen as a potentially important market down the road, he said. He continued, “I think it’s fair to say Yao Ming is the most important thing in the world for the development of the NBA in China that has ever occurred. With Yao Ming, this is even more extraordinary. But it would be historic with any NBA team. More than even that, however, it electrified a country.”

Never one to stand in the way of progress, the NBA announced earlier this month, the league would dramatically enhance its Chinese website NBA.com/China. The new multi-year deals, which further position NBA.com/China as a leading sports destination in China, will provide fans in the country with access to a record 87 web casts of NBA games in Chinese, including live video web casts of regular season and playoff contents, and complete game replays of select NBA games.

Additionally, the comprehensive site entirely in Chinese will feature a series of NBA classic games, hundreds of hours of on-demand broadband video and highlights, an exclusive NBA fantasy game, live stats, blogs, extensive photo galleries, player trackers, interactive forums, chat rooms and more, all throughout the NBA season.

“Renewing our partnership with NuSports and Sohu, two experts in China’s sports Internet landscape, will impart us with more opportunities to connect with our expanding fan base,” said Heidi Ueberroth, President, Global Marketing Partnerships and International Business Operations of NBA Entertainment. “As broadband usage in China continues to grow, NBA.com/China will provide fans with access to more game action and unique broadband features than ever before.”

How important is the Chinese market to the NBA? An August Wall Street Journal reported that 500 million Chinese residents purchased 400 million branded pieces" of National Basketball Association products, from jerseys to basketballs, last year.

Stern has visited China three times in the last two years – each trip the foundation for increasing the NBA’s business presence in China. Stern has even met with a company that produces Inner Mongolian milk about possibly sponsoring the league.

Mr. Stern said sponsors outside of China always bring up the country before he does. "Very little of the discussion we have with our international sponsors doesn't move very quickly to opportunities in China," he said. He adds wryly that he is pleased that the Chinese government labels his sport "important for fitness, exercise and harmony."

That may be nice, however Reporters without Borders offered their own insight last month – two years before the Beijing Games, offering their perspective on what they believe the reception the world’s media can expect in two years time.

"This silence allows the Chinese government to shamelessly continue its massive human rights violations," Reporters Without Borders said. "Already marred by corruption, the preparation of the games has been accompanied by a crackdown on dissent, which officials say is necessary to make sure they are safe." The press freedom organization also fears that all the surveillance and crowd-control equipment that China has bought from US, Israeli and French companies to ensure security at the games, will afterwards be used for repression.

None of that seems to concern David Stern who met with a company that produces Inner Mongolian milk about possibly sponsoring the league last month on his way to the World Basketball Championships in Japan. More likely when Stern met with Inner Mongolian milk representatives he pointed out that one of their major competitors Yili was going to be front and center at the Beijing Games.

Yili (a Chinese based milk company), whose corporate goal is to become a global brand by 2010, has been one of the most aggressive Olympics advertisers since it announced its sponsorship of the Games in November 2005. "Sports resources are limited, and whoever strikes first prevails," says Yili's brand director, who declined to be named. The company according to the WSJ report tried to sign up athletes before Yili had won the official sponsorship.

SA's Leo Burnett ad agency, told the WSJ he is recommending to some of his clients, which include McDonald's, to start planning -- but wait on delivering ads until the second half of 2007. "Local brands are now trying to build a competitive presence against multinationals," he told the WSJ. "But in terms of Olympic experiences, there is nothing going on right now. A lot of multinationals were using the World Cup to stay engaged instead."

The multinationals and Chinese brands may be on different schedules because they are looking for very different results from their expensive marketing rights. "The message for the multinationals is that, “We are here in China, and we are going to be part of this transformation that is taking place,” says Scott Kronick, president of WPP Group's Ogilvy public-relations agency in Beijing in the WSJ report. "The message for local companies is that, 'We are a famous Chinese company that has the potential to be a global brand.' "

Two weeks ago on the eve of the start of the 2006 NFL season, the league and Yahoo announced NFL would offer video streaming of their games into Europe, Asia, South America, Australia and Africa, but not into China. China Central Television (CCTV) is broadcasting NFL games in China this year and will be at Super Bowl XLI in Miami in February.

Is it wrong for the NBA and NFL to offer their product to the Chinese market – of course not. Let’s be very clear about one point, the comments of David Stern and Bob Kraft aside, both men, the sports leagues they’re a part of are going to China because it’s a good business decision.
Ask any NFL coach how he feels about uprooting his team for a pre-season game on the other side of the world? The only reason the NBA and the NFL are paying so much attention to China is because it’s a sound business decision.

However, it’s very important that everyone understand the political system that remains in place in China. The freedom’s that are so central to life in America, the everyday freedom Americans take for granted isn’t offered to anyone living in China. Hopefully, seeing Yao Ming excel in the NBA or experiencing an NFL game in China will offer hundreds of millions of Chinese citizens a glimpse of what freedom represents.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Wall Street Journal

Friday, September 22, 2006

Hosting an Olympic Games – be careful what you wish for

The City of Chicago continues to move forward with an ambitious plan to host the 2016 Summer Olympics. If you carefully examine the tea leaves, the 2016 Olympics will be held in the United States and Chicago is the likely city (ahead of San Francisco and Los Angeles) to host a two week global party that leaves behind a legacy of financial problems for any Olympic host city. Over the last week, reports from Vancouver, the city set to host the 2010 Olympic Games, paint a very scary scenario for the residents of this British Columbia city.

B.C. Auditor General Arn van Iersel released a report last week stating the 2010 Olympics are going to cost $2.5 billion, and not the budgeted $600 million. The report, which has sent reverberations throughout Vancouver, suggested British Columbia taxpayers better get ready to assume an additional $1.5 billion to pay for the Games.

"Our review of VANOC's venue capital cost estimates, however, indicates there are risks that may result in additional costs to the province," he said in his report. "There are still many pressures facing the capital budget for the Games and risks inherent in the operating budget as well."

Van Iersel included every potential Olympic related expense in his report. The auditor-general included the $775-million Sea-to-Sky Highway upgrade in his figures, as well as $41 million for the B.C. government's Olympic Secretariat and $20 million to build roads into the Callaghan Valley, the route to the 2010 Olympic Nordic Centre.

"The highway was included in the bid book in the first instance," van Iersel told The Province. "The purpose of the secretariat, as we understand it, is to help the province manage its Olympic commitment and we think that's a fair cost to include."

The Sea-to-Sky Highway is a classic example of how government’s position projects in hosting an Olympic Games. The current highway between Vancouver and Whistler (about 75 miles) is a treacherous two lane highway. If Whistler is going to become a world class ski resort, it will only do so if the highway between Vancouver and the ski resort makes Whistler more accessible. What Van Iersel seems to be forgetting, it was inevitable the Sea-to-Sky Highway would be built. The Olympic Games might have been the catalyst, but the highway was going to happen irregardless.

"Way back when we were bidding for the Games . . . one of the things we looked at was the access to Whistler," John Furlong head of the Vancouver Organizing Committee told the media after the report was announced. "We had a conversation with the province about the road and the plans were to build it by 2012. The Games have triggered a timing change, that's all."

Chris Shaw of 2010 Watch, an outspoken critic of Olympic bookkeeping, said van Iersel's report was a case of "I told you so."

"It's the Enron-style accounting we have been warning about since 2002," said Shaw. 'The question is what are they going to do to make sure things don't get worse?"

While the Sea-to-Sky Highway expense makes sense, a number of other key items and mistakes made by Vancouver organizers fit more along the lines of other Olympics Games – bad planning and poor economic projections have only made a bad problem only a great deal worse.

The Vancouver Olympic Organizing Committee had budgeted $470 million for facilities. That figure was revised to $580 million last week; a figure few observers believe is realistic.

"Whether the revised enhanced [$580 million] budget will be sufficient to deliver a venue package that meets [International Olympic Committee] satisfaction is questionable," warns the federal report by Pacific Liaicon, a subsidiary of construction powerhouse SNC-Lavalin Inc.

It’s interesting that while Furlong is quick to point out British Columbia had been in the planning stages for the Sea-to-Sky Highway, he can only spin the spiraling venue costs.

"This is a very, very complex project," said Furlong, who said last week the Olympics will come in under its $580 million construction budget. "I believe that we have the confidence of the people of the province.” Remember as the head of the Vancouver 2010 Olympic Bid Committee, projected $470 million. Why anyone would have any faith in Furlong’s ability to deliver a revised facilities budget nearly 25% higher then his original budget makes no sense.

"It is . . . abundantly clear that VANOC is not far enough along on design, completion of Project Definition Reports, or tender and award of contracts for all their venues to be able to state unequivocally that they can deliver Olympic 2010 venues within the revised $580 million total budget," the report concludes.

"Whether the revised enhanced [$580 million] budget will be sufficient to deliver a venue package that meets IOC satisfaction is questionable."

Of greater concern are the suggestions that the facilities would be ready well before the Games, offering Canadian athletes a real competitive advantage at the 2010 Games and that isn’t going to happen.

"It should ... be noted that in the worst cast scenario, similar to Torino 2006, the venues could be delayed to just prior to the Olympic events," the federal report by Pacific Liaicon report says.

"This would ... result in Canadian athletes not being able to do practice runs on the actual Olympic venues as presently planned. In addition, another downside effect is that additional escalation that is presently not provided for in the $580-million [construction] budget would be incurred."

Canada’s Winter Sports organizations reached their goal of finishing third overall at the Torino Games. Canada’s Federal Government is investing hundreds of millions of dollars in a self proclaimed “Own the Podium” program. A plan for Canadian Winter Sports athletes to dominate the 2010 Game one key component in that plan is to have the facilities finished well in advance of the Games. Anything less then ensuring Canadian athletes has every possible opportunity to excel at the 2010 Games is going to disappoint an entire country.

Poor planning and a lack of belief in the Canadian economy have cost organizers $150 million. Furlong and the bid committee projected a much weaker Canadian dollar when Vancouver was awarded the Games in July 2003.

"When the Games were awarded to Vancouver, the exchange rate could have been locked in at US $1 = $1.457, but steps to do that were not taken," noted the auditor-general. "As of the date of this report, the rate has fallen to US $1 = $1.125. That represents a loss for VANOC of approximately US $150 million for the broadcasting and international sponsorship revenues."

Furlong said VANOC received "a lot of expert advice" on whether it should have hedged its broadcasting revenues and "we followed the advice that we got."

As is the case with similar multi-sport events, the Vancouver Olympic Organizing Committee included a significant contingency fund in their budget to cover cost overruns. In a meeting on April 13, 2006, the senior vice-president, service operations and ceremonies indicated there was only about $13 million left.

"Unless VANOC can, under the IOC rules, divert part of their $2 billion operating budget to cover capital cost overruns including escalations, the Government of Canada may be facing an additional funding request before completion of the venues," the report states.

A poll conducted last weekend after the auditor general’s report was released suggested British Columbia taxpayers understand the Games are going to cost more.

"People don't want to see a pullback on the Games," said Evi Mustel of the Mustel Group market research group, which carried out the poll from Sept. 15 to 17.

"People also tend to agree with the argument that these infrastructure projects, such as the Sea to Sky Highway, were things that are needed and would be built anyway but were moved up in time for the Olympics."

Canadians and in particular Quebecers have their own unique understanding of how much an Olympic Games can cost. When Montreal was awarded the 1976 Summer Games in 1970, then Montreal Mayor Jean Drapeau's infamous quote, “The Olympics can no more lose money than a man can have a baby.”

However, with rampant corruption, and lack of financial controls, Montreal did indeed lose money, over $2 billion dollars (US), when it was all said and done. In fact, the Quebec government — afraid the province would be humiliated internationally — stepped in at the eleventh hour and essentially put the entire municipal Olympic organizing effort under trusteeship. The facilities would likely not have been ready in time for the games had this not happened, a reality trumpeted by the provincial government in a series of "Because of Quebec, we've done it all!" television commercials.

The 2004 Athens Games played like a classic Greek Tragedy. Originally budgeted at $5.7 billion, revised to $7.2 billion, final estimations for the Athens Games have costs somewhere between $8.5 and $12 billion. Generations and generations of Greek’s will be forced to pay for what was no more then a two week party.

The 2006 Torino Olympics were billions of dollars over budget. Stefano Bertone, a Torino lawyer and co-founder of the Turin Anti-Olympics Committee wasn’t surprised hosting the Olympic Games was an economic nightmare for the citizens of the Italian city.

"There is no intention from the promoters and the bidders and organizers to reduce the impact and dimensions of the Games, they want public funds handed them to build and build," Bertone said. "It has nothing to do with sports and friendship or peace."

The Games were forecast in 1998 to cost $616 million US and ballooned to more than $3 billion US. What the final bill is and how long it'll take for taxpayers to erase the debt is anyone's guess. There has been no cost-benefit analysis or audit.

TOROC originally forecast 1.5 million spectators, a figure downgraded last year to 1 million. Organizers are scrambling to reach the 900,000 mark.

Bertone has forged alliances with anti-Olympics watchdogs in host and bid cities worldwide, including Vancouver's No Games 2010 Coalition.

For Vancouverites, he has this message.

"There is clear indication, clear evidence of negative impacts," he said. "You are paying (for) with your taxes a monster which you don't know who it is and who it's working for."

Vancouver is a world class city and creating investing the needed infrastructures capital in helping to position Whistler as a world class ski resort (what might even be the premier winter destination vacation spot in the world) is good for the Canadian economy.

Claims by Furlong the Games budget is under control make no sense. Every Olympic Games held since the Montreal Games (with the exception of the 1984 Los Angeles Games) has been well over budget. Early in 1976, Montréalers were reminded to enjoy the opportunity of hosting that summer’s Olympics. Quebecers were told, enjoy the two week party, the economic hangover is one you’ll never forget.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Vancouver Sun, the Vancouver Province and mostlywater.com

Thursday, September 21, 2006

Tom Benson – Will he keep the New Orleans Saints in the City

The New Orleans Saints return to the Big Easy Monday night, an event being billed by the National Football League as the second coming. If indeed the Saints are the second coming, it's going to be a short resurrection.

It has been said before, and it will be said again, the Saints ‘homecoming’ is an event that makes little if any economic sense, and long-term will prove itself to be an embarrassment to the National Football League. In a city ravaged by Hurricane Katrina, the $185 million spent on getting the Superdome renovated where it is capable of hosting a football game is a waste of money and an insult to common decency.

Long before Hurricane Katrina nearly destroyed New Orleans, Tom Benson the Saints owner had established his intent on moving the franchise from New Orleans to greener pastures unless the City of New Orleans and the State of Louisiana taxpayers replaced the Superdome.

Benson purchased the Saints for $65 million on March 1, 1985. Consider the average NFL franchise has a value in excess of $800 million 21 years later – Benson a former New Orleans banker and automobile dealer, has experienced an amazing return on his investment. He bought the Saints from John Mecom Jr. Benson and signed a forty year lease to keep the Saints in Superdome. He did however include a clause in the contract whereby he could move the Saints after the 2004 season if certain key revenue projections where not met – after Benson paid a $50 million penalty.

Tom Benson began expressing ‘concerns’ regarding the Superdome early in 2001. The Saints were last in the NFL in revenues after the 2000 season and Benson believed the team should be somewhere around the middle of the pack.

According to a New York Times report, the Saints and the State of Louisiana on July 9, 2001 they had agreed in principle to a financial package that the State of Louisiana believed would keep the team in New Orleans. Steve Perry, chief of staff to Gov. Mike Foster, said that Louisiana would provide the Saints $12.5 million in guaranteed operating cash to ensure the team's financial stability. The state also agreed to continue what was called an escalating inducement package until a new stadium or renovated Superdome is functional.

Benson made it clear he also wanted a new practice facility and a series of annual payments in excess of the State’s $12.5 million in the first year of the agreement. In addition the Superdome would have to renovated (and not along the lines of what took place after Hurricane Katrina) or replaced, with taxpayers paying a significant percentage of any construction costs. In essence Tom Benson wanted the State of Louisiana and New Orleans residents to subsidize his National Football League franchise with taxpayer dollars. The teams’ lease at the Superdome was revised through the 2010 season, with an $81 million penalty if the team left after the 2005 season.

As the Saints where heading to training camp two years later in 2003, the franchise wanted to alleviate concerns in the marketplace that Benson was going to leave the Big Easy, by signing a lease extension. The Saints and the State of Louisiana never reached an extension on the Saints Superdome lease three years ago. Benson had his very expensive ‘get out of jail card’ after the 2005 season.

Then came Hurricane Katrina, and as Spike Lee’s poignant movie “The Levee Broke” so well illustrated, the City of New Orleans would never be the same. The Saints 2005 home resembled a sideshow carnival – four games in San Antonio, three at LSU’s Tiger Stadium and one game at Giants Stadium where the Giants were billed as the visitors and the Saints as the home team. True vagabonds, the Saints ended the 2005 season with the second worst record in the 32 team NFL at 3-13.

Tom Benson kept quiet on the Saints future early in the 2005 NFL season. At the Saints-Falcons game on October 16, the second of two warm receptions of the Saints by the San Antonio community, San Antonio Mayor Phil Hardberger stated that Benson had agreed to schedule negotiations for permanent relocation once the 2005 season is over. In reference to Benson, Hardberger said, "I'm pretty comfortable in saying he wants to be here." Benson was born and raised in San Antonio.

On Monday, October 17, Benson in a story that captured national headlines dismissed Saints executive vice president Arnold Fielkow, who had been a public supporter of the Saints' importance to the state of Louisiana, and who had advocated the playing of home games in Baton Rouge. According to Fielkow, Benson told him that if he'd tender his resignation and sign a confidentiality agreement, he'd be paid the remainder of his contract; when he refused, he was fired outright.

Benson's actions quickly drew outrage from Saints fans as well as local and state officials. On Wednesday, October 19, New Orleans mayor Ray Nagin sharply criticized Benson for acts he deemed heartless and opportunistic. Said Nagin: "For them to be openly talking to other cities about moving is disrespectful to the citizens of New Orleans, disrespectful to the Saints fans who have hung in with this franchise through 30-something years under very trying times."

Two days later, Benson publicly stated that he has made no plans to move the Saints to San Antonio. "There are many factors that will affect the future location of our team," Benson said. "That is also true of many other New Orleans-based companies that are faced with deciding their future homes." He said he would make no decisions about the team's future until the 2005 season is over.

On Wednesday, October 26, Benson reiterated his commitment to the New Orleans area in the form of a full-page ad in newspapers around the region, including The New Orleans Times Picayune. The ad, a letter entitled "Tom Benson Wants to Return to New Orleans," acknowledged the negative reaction surrounding the team's recent actions, but promised that no decision has been made regarding the team's future. Said Benson in the letter, "It is too early to determine, but my desire is to return to New Orleans."

Benson's firm but noncommittal stance compares unfavorably to the statements of the New Orleans Hornets, the city's displaced NBA team. Though the Hornets are playing all but a handful of games this season in far-off Oklahoma City — and have even officially changed the team's name to the New Orleans/Oklahoma City Hornets at least for the 2005-06 and the 2006-07 seasons — the basketball team's ownership (George Shinn who moved the Hornets from Charlotte to New Orleans) insists they will be returning to the recovering city as soon as possible. The Hornets have also announced a community relations initiative to keep the team involved in the New Orleans area as it rebuilds.

Also, Benson's statements seem at odds with his team's reported efforts to break its agreement with the state of Louisiana. The team informed the state in late October it wanted to break the lease on its practice complex in Metairie, claiming the facility, which had been commandeered by FEMA as a base of operations following Katrina, was too damaged to occupy. However, a television report from WWL-TV in New Orleans showed the facility to be relatively unscathed and in spotless condition.

The problems between Benson and keeping the Saints in New Orleans continued seemingly unabated, with a report in the San Antonio Express News suggesting he would try and void his Superdome lease without penalty suggesting that an "Act of God" had prevented the team from using the stadium. Benson set a November 29 deadline. Louisiana officials where quick to suggest the Superdome, with its roof nearly blown off during Hurricane Katrina could be repaired so that the Saints could host some games in New Orleans during the 2006 season.

NFL Commissioner Paul Tagliabue met with Benson and Louisiana governor Kathleen Blanco at the Saints' first home game in Baton Rouge on October 30. After the meeting, he stopped just short of making a formal commitment to keep the Saints in New Orleans. Said Tagliabue: "The Saints are Louisiana's team and have been since the late '60s when my predecessor Pete Rozelle welcomed them to the league as New Orleans' team and Louisiana's team. Our focus continues to be on having the Saints in Louisiana."

He dispelled rumors that have the Saints relocating to Los Angeles. He also suggested that the Saints may need to focus on becoming more of a regional team, possibly implying a name change to the Louisiana Saints or the Gulf Coast Saints. Tagliabue formed an eight-owner advisory committee to help decide the team's future.

On October 30, 2005, Benson charged a cameraman with a raised hand while leaving Tiger Stadium following a Saints loss to the Miami Dolphins and lunged at the television news crew grabbing a camera and wrenching it down before being eased away by Saints security. A video also appeared to show Benson angrily responding to a heckling fan. NFL spokesman Greg Aiello said the league would likely take no action against Benson.

On November 1, 2005, an e-mail sent to Commissioner Paul Tagliabue from Benson was leaked to the press. Benson stated in the e-mail that he feared for his life and his family's safety upon his exit from Tiger Stadium, and would not be returning to any future games in Baton Rouge. Benson declared in the email that security in the stadium was "inadequate" and inaccurately claimed that his family "could all have been severely injured or killed." However, LSU officials were quick to point out that they had no negative comments from the Saints or the NFL concerning Tiger Stadium security. In addition, the videotape of Benson from October 30 showed him being escorted by at least one security guard, belying his e-mail claim that security was "non-existent." A day later, Saints spokesman Greg Bensel stated that Benson's e-mail was sent in frustration, and that Benson was undecided on whether he would attend any future games in Baton Rouge. Benson did not attend the following week's game at Tiger Stadium on November 6th against the Chicago Bears.

On November 4th, 2005, Benson made a deal with Louisiana governor Kathleen Blanco that would postpone two important termination deadlines in the team's Superdome lease until after the 2006 season. Benson extended his force majeure clause period until January 2007. Presumably this will keep the Saints in New Orleans until January 2007; however, Benson can still invoke the clause any time between now and then. This bought the Saints time to explore future options with state officials without having to make a decision on the future of the franchise now. This would also allow the state to focus on more pressing needs in the recovery efforts from Hurricanes Katrina and Rita, while allowing the Saints more time to determine whether the region's economy could rebound enough to continue supporting the franchise.

In the midst of this controversy, several groups of investors have approached Benson with offers to buy the team and keep them in Louisiana, the most publicized group being one led by FOX Sports analyst and former Pittsburgh Steelers quarterback Terry Bradshaw, who is a Louisiana native.

However, Benson had previously expressed whenever asked he had no intentions of selling the team and plans to eventually hand down ownership to his granddaughter, Saints owner/executive Rita Benson LeBlanc. Benson spoke to press following an NFL owners' meeting on November 15, at which he reiterated that the team is not for sale, and also stated that other NFL owners, along with Tagliabue, were working with him to keep the team in New Orleans.

On December 17th, ESPN reported that Benson had told Saints players that he planned to keep the Saints in San Antonio for the 2006 season and possibly beyond, and that he was willing to sue the NFL for the right to stay there. This was days after NFL Players Association director Gene Upshaw advised the Saints players not to renew their leases on their homes in San Antonio because the league planned to order them to return to their home facilities in Metairie. This was also a few days after Benson had reportedly told his staff that they could not return to their Metairie facilities because it was still being occupied by FEMA and National Guard officials and that the New Orleans area had become "unlivable." The State of Louisiana responded by sending Benson a formal letter asking him and the Saints organization to return to the facility at the end of the 2005 season. Included with the letter were statements from FEMA and the National Guard stating that they were no longer using the facility.

On December 30th, two days before the Saints' final game of the 2005 season against the Tampa Bay Buccaneers, Benson announced at a press conference that the Saints will return to their Metairie facility at the end of the 2005 season, and that the team would play as many of their home games as possible during the 2006 season in the Louisiana Superdome, which he said could be ready as early as mid-September, 2006. On January 11th, 2006, Benson and Tagliabue announced plans to play all of their 2006 home games in the Superdome. Tagliabue also stated that the NFL was committed to keeping the Saints in New Orleans beyond 2006, calling it a "multiyear effort" and not just a one-year deal. He also stated that the NFL was talking with city officials about possibly hosting another Super Bowl there in the near future, which would be the city's 10th. Benson stated that he was committed to New Orleans "forever, as long as the community commits to me."

What exactly had changed Benson’s mind about the Saints future in New Orleans. He had done nearly everything to alienate the City of New Orleans and seemingly had insulted residents of Louisiana, and that was after the worst natural disaster in American history had been inflicted on the city. In May 2005, well before Hurricane Katrina, San Antonio lawyer Stanley Rosenberg told The San Antonio Express News, Benson was seriously considering moving the Saints to San Antonio. Benson knew Tagliabue was going to retire before the start of the 2006 season. There would be a new ‘sheriff in town’ soon enough; Tagliabue was a short term challenge to a long term problem.

The problems the Saints had before Katrina have only been magnified. The Superdome has 137 luxury boxes; it has been years since the boxes have been sold out for more then the occasional game. The cities population before Katrina had fallen below 500,000. It’s a safe bet the population in New Orleans will never again approach 500,000. Thousands of businesses have left the Big Easy, and they’re never coming back.

On the positive side, the Saints still have a great lease. They pay the City of New Orleans $1 million a year in rent and retain every dollar of revenue the Superdome generates. And that $12.5 million taxpayer subsidy made to keep Benson happy in 2001 has increased to $18 million a year. And remember its nearly impossible for an NFL franchise to lose money given each NFL franchise receives $106 million a year in television revenues and the league shares 83 percent of all of their revenues.

''The Saints are everything to this community,'' Michael Siegel, a New Orleans developer told the New York Times in February, ''but Tom Benson is a businessman at heart and not a sports enthusiast.''

For reasons known only to Paul Tagliabue, the now retired NFL commissioner who made it a personal and professional priority to keep the Saints in New Orleans, at least as long as he was NFL commissioner.

''The Saints are maybe a $150 million business, whatever their revenues are,'' Tagliabue told the media at Super Bowl XL. ''The league is a $5.5 billion to $6 billion business. And I told the owners from the beginning that we needed to view this as a league responsibility.''

The NFL moved forward with their ‘committee of owners’. Tagliabue with new NFL commissioner by his side made four trips to New Orleans, even announcing new marketing and sponsorship initiatives with Benson in April.

The Saints announced in mid May they had surpassed 55,000 in season ticket sales. What wasn’t widely reported, 20,000 seats were offered for sale at less than $30 per game and the club instituted a $14 per game season ticket. Remember Tom Benson’s concerns as a businessman had always been on the Saints revenue generating potential. The Saints were last among NFL franchises in revenues before Katrina, that wasn’t going to change. With close to 25 percent of the Saints ticket inventory priced well below the NFL average ticket price of $62.38, the Saints may have sold out their entire 2006 home schedule before Monday night’s game, but they did so with some of the lowest ticket prices in the 32 team NFL.

"I love watching the Saints, but the Saints aren't a priority now," says Robinson, 53, whose home just outside New Orleans was gutted by flooding. "People think, '(Ten) months after the storm, it should be back to normal.' But when you go into my neighborhood, it's frozen in time.

"I'm never going through that again."

Frank Vuono, a sports marketing consultant hired by the NFL, assisted the Saints in securing a naming rights partner for the state-owned Superdome. He believes a deal could be worth $4 -$6 million a year to the state; most new stadium deals average 20 years. The Saints had aggressively tried to sell the Superdome’s naming rights before the facility hosted its last Super Bowl in 2002. The Superdome’s corporate naming rights have never been sold.

"There's no way the Saints can be long-term viable in New Orleans without more corporate sponsorship," says Vuono, who has worked on nine NFL naming rights deals in a USA Today report "We're getting good response from five, six corporate sponsors. But when they saw the record ticket sales, it took away the sense of urgency. There's still urgency."

"The Superdome naming rights would be the best move a national company could make," Vuono says. "The Saints' home opener is on a Monday night. All eyes will be on New Orleans and the grand reopening of the Superdome.

"The exposure that company will get will be damn near the equivalent of a Super Bowl. And companies pay $2 million for 30 seconds of advertising during the Super Bowl."

While Benson told the media on May 17th he was happy with the Saints season ticket sales for the 2006 season surpassing the 55,000 mark, he took the opportunity to point out corporate sponsorship was ‘slow’ and only 81 of 137 luxury suites, with leases ranging from $55,000 to $135,000 had been sold.

"You haven't seen the total commitment yet," Benson said. "No National Football League team can just live on tickets alone. ... The next big step is that the business community needs to step up."

"For Tom Benson to make that statement, he certainly doesn't have a grasp of the small-business situation," says Linda Friedlander, former chairperson for Second Wind NOLA, a small-business advocacy group. "It's a region of micro-businesses. The small-business community has stepped up. It may not be buying Saints tickets. But we're doing everything in our power to stay open."

When Paul Tagliabue announced in January the Saints would play their entire 2006 schedule in New Orleans he also said the league would pay $20 million of the estimated $185 million it would cost to fix the Superdome.

No one directly associated with the National Football League or the New Orleans Saints is prepared to commit the Saints will be in New Orleans beyond the 2006 season. Every single indicator points to the Saints leaving after the 2006 season. It never made any sense for the NFL to return to New Orleans for one season only to be faced with the same challenges the franchise had to deal with before Katrina. The only difference – the terrible toll from Katrina, $20 million spent by the NFL and $165 million by Louisiana taxpayers to fix the Superdome.

Just how embarrassing is it going to be 12 months from now if Benson moves the Saints? Try and imagine what could have been accomplished with the $185 million invested in one season of NFL football in New Orleans? The Saints returning to New Orleans for one season should be considered offensive to anyone with a sense of decency.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: Wikipedia, the free encyclopedia, the USA Today, The New York Times, The New Orleans Times Picayune

Wednesday, September 20, 2006

The NFL Network – The Anatomy of how to generate hundreds of millions of dollars

Ten years from now where will the National Football League be when it comes to television? The league is in the first year of a series of six year agreements with Fox, CBS, NBC and ESPN that will generate $3.7 billion annually for the league. Each NFL team on average can count on $106 million in revenue each year of the agreement. The current network agreements are limited to Sunday and Monday night games, the foundation for the vast majority of NFL games. Initially quietly tucked away were a series of late season Thursday and Saturday evening games. The NFL Network is now home to the games – and cable operators are not very happy.

The NFL Network was launched November 4, 2003, only eight months after all of the league's 32 team owners voted unanimously to approve its formation. The league invested $100 million to fund the network's operations.

NFL Films, which produces commercials, television programs, feature films, and documentaries on the NFL, is a key supplier of NFL Network's programming, with more than 4,000 hours of footage archived in their library. Thus, much of the network's highlights and recaps feature NFL Films' trademark style of slow motion game action, and sounds of the game and the talk on the sidelines.

Last fall after the NFL secured network television revenues collectively that are greater then the sum total NASCAR, NBA. MLB, NHL, the NCAA and the last two Olympic Games combined, the NFL understanding that they were dealing from a position of strength looked at a number of different options for the eight late season games the league hadn’t sold the rights for.

The league's decision to build the NFL Network with regular-season games comes nine months after it completed deals with NBC Universal Sports on a six-year, $3.6 billion deal to carry Sunday Night games and with ESPN on an eight-year, $8.8 billion contract to show ''Monday Night Football.'' In November 2004, CBS and Fox extended their Sunday deals for six years, with CBS paying $622 million annually and Fox paying $712 million. DirecTV extended its contract for $3.5 billion over five years.

''I never thought eight games would be so valuable,'' Jones, the owner of the Dallas Cowboys, said before his team defeated the Eagles, 21-20, in Philadelphia on Monday night last November.

''I get up in the middle of the night to watch international news, and then I turn to the NFL Network,'' Robert K. Kraft, the owner of the New England Patriots told The New York Times. ''I watch it all the time, and many real fans do the same.''

In November there was a great deal of speculation the NFL would either use the eight games as leverage to create a national cable sports network or sell the games to Comcast who would in turn put the games on OLN. OLN, which reaches 65 million homes, secured national cable rights for the National Hockey League.

''We hope our potential programming partner can help us get more exposure, even without putting games on the NFL Network,'' Jones said.

Kraft added, ''If we can have the new multisport platform, and the NFL Network continues to grow, that would be the ideal solution.''

For their part, both Comcast and Turner Broadcasting (TNT) made it clear to The New York Times (at least in November) they were very interested.

"'We would love to have the NFL,'' said Jeff Shell, the president of Comcast Programming. ''We're thrilled to still be talking.''

Greg Hughes, a Turner spokesman, said, ''At the right price, we're interested.''

Ten weeks later, on January 27, 2006 the NFL realized they weren’t going to receive what they believed was fair market value for the eight games and announced the NFL Network would host the games. At least for the short-term (six years) Comcast and Turner weren’t interested in investing hundreds of millions of dollars in helping the NFL move the league’s in-house network forward.

The NFL Network was a ‘fledging’ operation at Super Bowl XL, reaching 33 million homes. For a league that over the last two weeks established record ratings for the first two weeks of Monday Night Football on ESPN (in excess of nine million viewers each week), ESPN’s 95 million homes offer the NFL the cable partner it needs to deliver ratings that can justify billions of dollars. The NFL Network didn’t have the reach or the awareness to deliver significant ratings to the NFL when the league decided to make what at best was an ‘interesting’ decision.

''They'll be able to build the NFL Network into something far more significant,'' said Marc Ganis, a sports industry consultant in a New York Times report last January. ''On the 357 days when games are not being carried, N.F.L. programming will be going into people's homes.”

NFL owners for there part, where pleased a broadcast venture they had invested $100 million in start-up funds three years earlier was ready to make a dramatic step forward.

Dan Snyder, the Redskins' owner, who is on the league's broadcast committee, said by telephone, ''The games are ultimately so powerful that we could propel this into a major network.''

Robert K. Kraft, the owner of the Patriots and a third member of the committee, said by telephone, ''In some ways, I had hoped that we would be able to do a deal with Comcast.'' But, he added, ''we're into the development of our sport, and our network is 24 hours a day, 7 days a week, 365 days a year.''

Nearly eight months later, the NFL Network is nowhere near their self established goal of being in 65 million homes when the NFL Network offers their first regular season live broadcast on Thanksgiving Day, November 23 when the Denver Broncos travel to Kansas City to meet the Chiefs at Arrowhead Stadium. Key television markets: Los Angeles, New York, Buffalo and Cleveland – markets with Time Warner and Cablevision as their key cable providers believe the NFL is holding a gun to their heads in attempting to force the cable providers to offer the NFL Network.

Time Warner, which until taking over systems from Adelphia Communications Corp. never carried the NFL Network, will be dropping the league-sponsored channel Friday from several markets.

Time Warner made it clear to Los Angeles Business their decision was based largely on cost, the NFL demanding a king’s ransom for the right to offer the NFL Network to their subscribers. They say the NFL Network wants to charge Time Warner $137 million annually to carry the network -- a 250 percent increase from what Adelphia had been paying. That translates to a per subscriber cost increase of 80 cents to $1 per month, officials say.

"The last thing we want to do is to come into a new community and drop things, but we have no choice," said Keith Cocozza, Time Warner spokesman.

The NFL announced at the start of training camp, they had collected a war chest in excess of $100 million, money they fully intend to use to battle any cable provider who wasn’t prepared to pay top dollar for a network that offers eight live NFL games a year.

The NFL Network offers replays of games, live coverage of team press conferences, a nightly NFL magazine show, focused Super Bowl coverage and a handful of “B” level college football bowl games. The only real hook beyond diehard football fans are the eight late season games that can’t be seen unless you have access to the NFL Network.

“People will go nuts on Thanksgiving when there's a game on and they can't watch it,” says Seth Palansky of the NFL Network. Forcing its way into another 25 million homes this season will bring the NFL Network two-thirds of the way toward its goal of matching ESPN's distribution of 91 million homes.

“The full weight of the NFL marketing machine will be used,” vows NFL Network spokesman Seth Palansky in an oft repeated line.

Can the NFL pull it off? Don't bet against this country’s most powerful and popular league, says cable TV expert Jimmy Schaeffler, a senior analyst with the Carmel Group consultancy. “They don't have leverage with individual operators, but they have leverage where it counts the most: with consumers. Who else gets in so many homes in less than three years? They're a one-of-kind entity.”

“There is no more powerful content on television,” says John Rash, senior VP for media-buying agency Campbell Mithun. “The NFL is well beyond sports: It is a national phenomenon, and it can drive distribution.”

One of misnomers the NFL isn’t reminding fans, the two teams’ home markets that appear in those late season NFL games will have the games televised by over-the-air television carriers (subject to NFL blackout rules) in each market. Clearly the NFL Network has set their sites on Time Warner, the second biggest cable provider, and New York’s Cablevision.

“We think it's asinine that Time Warner (the nation's No. 2 cable provider) carries 12 shopping channels and 50 other channels you don't want — but can't find room for one dedicated to the most popular sport in this country,” Palansky says. “We're replacing the kid gloves with bare knuckles.”

One ad aimed at Time Warner says, “Don't let Time Warner ruin your football season. You'll miss NFL games if you don't call and demand NFL Network now.” Another targeting Cablevision, a provider in metro New York, warns, “Don't let Cablevision shut you out.” The ad lists the channel's games and a toll-free number for NFL Network.

Time Warner and the NFL Network agreed had an uneasy ‘truce’ that ended Friday. Gone from homes in key NFL markets: Los Angeles, Cleveland and Buffalo was the NFL Network, with no negotiations (peace talks) scheduled.

NFL Network spokesman Seth Palansky told The Cleveland Plain Dealer Monday he isn't optimistic the dispute with Time Warner will be resolved soon. "We'll never have a deal with Time Warner under their current demands," Palansky says. He says the NFL Network won't agree to Time Warner's desire to offer the channel to local subscribers as part of a separate sports package - for an added monthly fee - rather than include it in Time Warner's basic subscription service. "That's totally unacceptable to us," Palansky says

“To suggest that anybody’s season will be ruined for missing eight games is ludicrous,” said Fred Dressler, the executive vice president of Time Warner Cable, which is feuding with the NFL Network.

The NFL Network was in 33 million homes on January 27 when the league announced the eight games where heading to the NFL Network. Today, they’ve managed to find their way into eight million additional homes, largely a result of agreements with DirecTV and Dish Network. DirecTV offers NFL games on their season ticket package. The difference between being in 41 million homes and 65 million homes is daunting, especially when you consider the NFL Network remains on the outside looking in, in key television markets.

When you ‘add’ it up, it becomes apparent immediately how much revenue the NFL believes they can generate from a handful of games on the NFL Network. The NFL charged cable operators 20 cents per subscriber before the NFL believed it was in their best interests to keep the games’ in-house. According to many media reports (The New York Times, Los Angeles Business, The Cleveland Plain Dealers among others), the league is now demanding anywhere between 80 cents and a dollar.

Pat Bowlen, the chairman of the league's broadcast committee and the owner of the Denver Broncos offered a very different understanding of how he believed the NFL would handle any rights fee increase early last February when he announced the NFL Network was ready to move forward with live NFL games on the leagues owned managed network.
''The question is whether 100 percent of our subscribers should have to pay for the interests of a smaller minority,'' Bowlen told The New York Times.

Surprisingly, Bowlen said, ''the last thing on my mind is raising the fees.''

Needless to say the NFL has done a complete about face in. The New York Times in a report Tuesday, using a 70 cent per person carrier charge fee from the NFL to cable providers determined that the NFL Network would amass $756 million in annual revenues if it were fully distributed to 90 million cable homes. The 90 million distribution figure is the NFL Network’s long-term goal; the 65 million subscriber goal is where the NFL Networks wants to be at by November 23.

Dressler, of Time Warner, said, “The NFL Network keeps the pressure on because it believes we will ultimately end up charging all our customers to satisfy the few who want these games.”

It remains to be seen if Time Warner, Cablevision and other key cable providers will give in to the demands the NFL Network is making for this years game. The NFL reportedly will consider offering the Thursday/Saturday night eight game package in two years. The eight game package isn’t about today, it’s much more an opportunity about where the NFL Network wants to be in six years time, the NFL Network is clearly thinking long-term.

“Long-term strategic, it's very smart on their part,” says Dick Ebersol, chairman of sports and Olympics for NBC Universal, which this year begins spending $600 million annually for a Sunday-night football package it hopes will revitalize its slumping primetime. “Who knows where our world will be in six years? Will there be four aggressive network bidders, and if not, why not find out what kind of business you can develop on your own as a potential home for more than just those eight games.”

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The New York Times, Broadcasting & Cable, Los Angeles Business and The Cleveland Plain Dealer