Tuesday, October 31, 2006

Time for the NBA to Hoop it Up

The National Basketball Association season tips off tonight with defending champions the Miami Heat at home to the Chicago Bulls, followed by two-time MVP Steve Nash and the Phoenix Suns visiting Kobe Bryant and the Los Angeles Lakers. The doubleheader will be televised on TNT. Wednesday night 13 more games will be held, highlighted by an ESPN doubleheader. The times they are very good for the NBA and its commissioner David Stern.

“We had a terrific preseason, which took place, as you know, in the United States and all over the world, and are coming off of what we think is a very important breakthrough with respect to the World Championship and the team that competed for the U.S. in Japan. That was an extraordinary building experience for our players and, to some degree, for our league as well,” David Stern offered at the NBA’s season opening press conference.

“Another subject that is pretty near and dear to our hearts, which is NBA Cares and the commitments that we announced prior to the last season when we said we would raise over five years 100 million dollars for charities; we’ve raised $32 million. We said we’d commit 1 million hours of volunteer service. At last count we were at 205,000. We said we would build 100 reading learning and play centers over five years and last year we did 108. So we are having a pretty good year,” Stern continued

“Our business is looking very good. The basketball business -- we are going to have a dozen teams, or close to a dozen teams that have 10,000 season tickets, full season tickets, and that was up from three years ago. And our teams are doing a great job in their markets and we’re coming off a year of increased viewership on our television; we hope and plan to have it go up again this year. And the game, where we always begin and end, seems to be in excellent shape in terms of openness, openness and flow and --- and that’s where we are,” Stern concluded.

And if business is good as David Stern suggests, there is no time like the present for Stern to speak with his cable network partners regarding extensions to their current agreements. Mediaweek reported that the NBA are set to begin the fifth season of its six-year, $4.6 billion rights deals with ESPN parent The Walt Disney Co. ($2.4 billion, including ABC broadcast coverage) and TNT parent Time Warner Inc. ($2.2 billion) have begun talks with both broadcast entities about contract extensions.

“Ratings were up last year and we’re expecting them to be up again this year,” Stern told Mediaweek. “We have great schedules for our partners and most importantly, we have great recognition of our young, talented players.”

The good news for the NBA, cable televisions two biggest networks (TNT and ESPN) appear to be as interested as the NBA is, in continuing their associations with the NBA.

TNT president David Levy told Mediaweek indeed talks with the league have begun and expressed confidence that Turner would continue its 22-year relationship with the NBA.

“It’s early and we have some time, but we absolutely believe in the product,” Levy said.

“[Turner Sports Media] is a valuable property for us and if we’re going to extend that brand further, you want the NBA to be there,” Levy added in the Mediaweek report.

ESPN’s plans include 71 regular season games, hoping to improve on last year’s 1.1 ratings average.

ESPN senior vice president of programming and acquisitions Len DeLuca told Mediaweek the network is “very open and willing” to discuss extending this relationship, before declining to address any possible terms. “Our relationship is good for ESPN and ABC, it’s good for the NBA and it’s good for the basketball fans.”

“We really want to tie together what’s great about the NBA, from its emerging stars like Dwayne and LeBron to veterans like Shaq and Kobe,” DeLuca said in the Mediaweek report. “We want to take the new stars and combine them with the history of the league.”

What’s never good news – at least seven of the NBA’s 29 franchises open the 2006-07 season with serious business issues -- Portland, Seattle, Sacramento, Oklahoma City/New Orleans, Memphis, Atlanta and New Jersey.

In Portland Paul Allen put the Trailblazers up for sale, and then thought better of it.

The Seattle Sonics play in a facility so terrible it forced Seattle native and Starbucks founder Howard Schultz to sell the franchise to Oklahoma City interests. Last week the NBA approved the transfer of the teams’ ownership to Clay Bennett. Bennett is saying all the right things about the team staying in Seattle, but let’s make it clear – Bennett is from Oklahoma City, and if Bennett and the NBA can’t convince Washington taxpayers to support the building of a new arena for the Sonics, Bennett will move his team to the city he lives in.

“Well, actually I have sort of a sense of optimism because although Clay and his ownership group are based in Oklahoma City, almost from the first day that Clay started looking at Seattle as an investment and then as a purchase, he stressed to me the vibrancy of the Seattle market, the revenue streams that could be available there, and its jumping off status to Asia and its business relationships to Asia, which is a subject on which the Board spent some time today, not in terms of Seattle, but in terms of the NBA’s opportunities. So, I went from kind of skeptical in a way, to kind of getting on line with “Ok, I get what you see here.” But, of course, the large investment that they’re making and that they’re continuing and willing to stand behind is dependent upon a new building. And, they actually have committed to resources for experts and consultants and the like, to follow a critical path that seems designed to exhaust every opportunity, including the political route, the governmental route that is necessary to have a new building. I’m delighted to see the effort so focused, and hopefully their intentions here will be reciprocated by the decision makers who have the opportunity to impact it in a positive way, “Stern offered after the BOG’s approved Bennett’s ownership of the franchise.

“David has said it very well. We, first and foremost in our evaluation, made a decision to invest in the NBA and to be a shareholder in what we view as a very important and growing, global business. We also view the Seattle marketplace as a remarkable opportunity – very dynamic, expanding economy, beautiful place to be. The connection to the Pacific Rim, the existing trade that is there, the future trade that will happen, and the league’s potential internationally and really a lot of work that is already being done in that pursuit. So, our interest is in that marketplace and in that economic model. I am encouraged by what has happened so far in terms of the development of a building. I think we’re being well received, and I think we’re making constructive progress toward that end. So, we’ve been working -- although we didn’t receive board (NBA Board of Governors) approval until today – we’ve been working, really since the day we announced (the purchase), on this project. So, we’re excited to really hit the ground and begin some serious work,” Bennett saying what any new owner would say on the eve of his first year as owner of an NBA franchise based in Seattle.

Bennett has made it clear he’ll give it a year (the Hornets “plan” on moving back to New Orleans in one year) and then he’ll look at his options – moving the Sonics from Seattle to Oklahoma City, in time for the 2007-08 season. Whatever Bennett and Stern suggest, Bennett bought an NBA franchise to ensure the city he does business in and lives in (Oklahoma City) has an NBA team. Once Bennett moves the Sonics to Oklahoma City the NBA may expand to Seattle (the Charlotte Bobcats) or move a team to Seattle (the New Orleans Hornets) but take it to the bank Bennett -- will move the Sonics to Oklahoma City, if George Shinn moves the Hornets back to New Orleans.

Another NBA franchise move you can make book (pardon the betting pun) on, Joe and Gavin Maloof moving the Sacramento Kings to Las Vegas. In what may be the worst proposal for a new sports facility ever put in front of voters for consideration, Sacramento voters will be asked to consider a ballot measure on November 7 that would earmark $470 million of the budgeted $542 million costs for a new arena to be covered by taxpayers’ dollars. There is no chance whatsoever; this will pass the mustard with Northern California voters, in a State where taxpayers are NEVER interested in building sports facilities – welfare for billionaires.

The Maloof’s own the $285 million Palms Hotel in Las Vegas. It makes perfect sense for the Maloofs to move their NBA franchise to the city they call home (see Clay Bennett and the Seattle Sonics). David Stern addressed the issue, offering a politically correct opinion.

“Answering backwards, we have made it clear in Las Vegas that our current policy is that as so long as our game is on the betting line we will not be relocating to Las Vegas or expanding to Las Vegas. That’s something that has been said many times. With respect to relocation of franchises, I think that the issue considered by owners is not necessarily history, but prospective success and I think it is fair to say that the current arena, which has been very successfully operated by the Maloofs and supported by the fans, is not the arena of the future. That’s been acknowledged by the city, by the developers and the fans. So I’m … we remain quasi-optimistic that we are going to see some movement upon the arena-front, whether that is before or after the election, I can’t say, but what I will say is that the arena development deal between the arena and the developer and the city doesn’t seem to be any place yet and in the absence of that deal having yet to be made. I think it puts the Maloofs in an untenable position because they are not in a position to be asking the developer to do certain things if he doesn’t even have an agreement with city to do all that the city had told them that they would do,” Stern offered

“I was under the mistaken impression that the deal between the developer and the city had been achieved and was done. We’ve learned in the course of the on-again, off-again public and private negotiations that no such thing is true. And so, in the absence of the deal between the city and the developer, I mean, I don’t know what, what any fair minded citizen of Sacramento is being asked vote on. I would love to see them support an arena development, but I would tell that that they’ve got to make sure that the city gets with it to see whether the deal can in fact be done. Right now, there’s no deal in place. So, and we would love to see both a deal and a successful ballot initiative, “Stern concluded.

The question – will Las Vegas sports books end betting on NBA in order to secure an NBA arena for Las Vegas? At least on the surface Las Vegas casino owners are usually big picture thinkers. Vegas sports books would never consider giving up betting on NFL games (the biggest weekend of the year in Las Vegas is Super Bowl weekend) and the NCAA Men’s Basketball Tournament (second biggest weekend in Las Vegas is the first weekend of the NCAA basketball tournament) but it makes sense for Vegas sports books to seriously consider ending legalized betting on NBA games in the belief an NBA franchise would be better for the business of Las Vegas.

Watch for the Maloof’s announce their ‘interest’ in the Las Vegas market during February’s NBA All-Star weekend in Las Vegas. Sunday evening USA Basketball (who operates at no more than an arms length from the NBA) announced the 2007 FIBA Americas Championship will be held in Las Vegas at the end of August. The event features ten national basketball teams (including the United States) competing for two spots at the 2008 Beijing Olympics. There is no way the NBA wouldn’t have given their complete approval for Las Vegas to host an event that will feature NBA players if the NBA didn’t believe Las Vegas was (and is) a city capable of being home to an NBA franchise. Yes there are a number of serious logistical issues the Maloof’s and the NBA will have to deal with, but those issues can be overcome – the Kings destiny as long as they are owned by Joe and Gavin Maloof has always been in Las Vegas.

David Stern has to be concerned about the state of the Atlanta Hawks ownership group. The never-ending legal battles among the principals of the Atlanta Spirit, the group that owns both the Hawks and the NHL Atlanta Thrashers remains tied up in litigation where it has been for more than 12 months.

“If I had the ability to do it, I would do it. I’m bumped up against the limits of Commissionership. I think that we have asked the courts to resolve it as fast as possible, and we’re on record as doing that. We’re working with the team. We’re in communications with all of the partners, and the best thing that we could do, and I think that it’s happening, is to get them to work together so that the team itself does not suffer at all while they work out their partnership issues. And that seems to be, hopefully, we can achieve that result,” Stern alluded to regarding the tangled mess in Atlanta.

In tomorrow’s Insider – as a full slate of NBA games mark day two of the 2006-07 schedule, a look at the serious challenges the NBA faces with the New Orleans market, the sale of the Memphis Grizzlies, the ongoing challenges Bruce Ratner continues to face with getting an arena built for the Nets and the NBA continued move forward in embracing technology.

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

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Monday, October 30, 2006

The Passing of an American Legend – Red will never be forgotten


Life presents opportunities which when offered are what makes for “moments in time” moments where life stands still, occasions that you’ll remember forever. April 1989 was one such moment in the life of yours truly. Recently hired by Basketball Canada and tasked with organizing a tribute dinner of the late Jack Donohue, the man who brought basketball to Canada, a sport invented by a Canadian, I had the responsibility of contracting many of Coach D’s New York and New England basketball honchos. Coach D’s connection to Red Auerbach came first from Coach D’s coaching days at New York’s Power Memorial High School (coaching among others Kareem Abdul Jabbar) and then at New England’s Holy Cross College, it made perfect sense to give Coach Auerbach a call to see if he’s like to be a part of an evening dedicated to an old friend.

One little problem about contacting Red Auerbach, yours truly grew up a Celtics fan, and the cigar smoking Auerbach was a boyhood hero of mine for the man he was. What exactly do you say to someone who you wrote a paper on when you were 10 years old and attending afternoon Hebrew School? The paper I wrote in 1966 while living in Montreal, great Jewish heroes. The entire class wrote papers on biblical heroes of yesteryear. When you’re ten-years old and asked to write a paper on a Jewish hero – Moses was a popular choice.

I choose a sports figure, a basketball coach, who the teacher at first didn’t believe was Jewish. The teacher thought maybe I’d write a paper on Sandy Koufax (that was next year’s choice) but honestly had never heard of anyone named Red Auerbach, and when first told coached the Boston Celtics believed Auerbach had to be Irish. Forty years later, as clear as if I had written the paper yesterday, I remember why I wrote the paper on Auerbach. I loved the Celtics, the Celtics won and the Celtics didn’t care who was on their team (as long as they won), and Auerbach and his cigars made me laugh as a youngster. Forty years later, basketball remains central of my professional and personal life and today the world is a little sadder without Red Auerbach, but at the same time the world is a great deal better for the greatness Red Auerbach instilled.

Growing up in Montreal in the 1960’s you had access to the Burlington, Vermont ABC affiliate (through UHF – not cable), televised the Celtics, Red Sox and Bruins. Les Canadiens dominated life in Montreal, but basketball was always a passion and the Celtics filled that fervor to youngsters not only in New England but in Eastern Canada as well.

Montreal in the 1960’s was a city on the move, where race was never an issue. Jackie Robinson broke baseball’s color line when he joined the Montreal Royals in 1946. Robinson made a lasting impression on Montreal’s sports community. Auerbach who broke basketball’s color barrier four years later when the Celtics drafted Chuck Cooper who became the first African-American in 1950, sent a message to Celtics supporters. Red wanted to win; he wanted players who could lead the Celtics to championships. The Boston Red Sox where the last Major League Baseball franchise to have an African American on their roster, Elijah (Pumpsie) Green, who joined the Red Sox on July 22, 1959. Would the Red Sox have been more successful if they’re concern was a man’s ability to play baseball and not the color of a man’s skin. Five key members of the 1955 World Series winning Brooklyn Dodgers where African Americans. Red Auerbach cared about winning and anyone who could help him accomplish his goal was welcomed to the Celtics.

In 1995 The Center for the Study of Sport in Society (CSSS) at Northeastern University, recognized Auerbach’s contributions to sports by inducting Auerbach into its Hall of Fame. Auerbach was the second person to be honored, following Muhammad Ali’s 1994 induction.

Auerbach whose life lessons are what legends are made of shared a key learning lesson with John Feinstein when the two got together for the best selling 2004 book -- Let Me Tell You a Story: A Lifetime in the Game. One summer while attending Washington’s George Washington University in 1938, Auerbach along with three teammates, joined, four from Georgetown, four from American, and four from the University of Maryland -- were given internships to work at the National Training School for Boys. The man who twelve years later integrated the NBA was offered a unique opportunity to understand what it was like to be young Black man in the late 1930’s.

"It was, basically, a very tough reform school," Red recounted in the book. "It was for kids who were federal offenders. They had stolen cars and taken them across state lines or committed crimes that involved guns. Some of them weren't kids, either, because birth certificates weren't all that easy to track down in those days."

"The place was segregated. There were four white companies and two black companies. I worked there 20 hours a week. I don't think I ever learned more about leadership, about discipline, about dealing with people than I learned there."

"One of the men in charge of one of the black companies was Mr. Burns. I don't think I ever knew his first name. He was unbelievable. He was tough, so tough that when he took time off they had to bring in three guys to sub for him. But he understood people. He knew when to get in their faces and when to reason with them. He told me that the best way to get your job done wasn't to intimidate -- which I couldn't have done anyway -- but to earn their trust. You said something was going to happen -- good or bad -- make sure it happened. I tried to remember that."

"One time, I caught a bunch of my guys with a still out in the back. They'd found a bunch of dandelions out there and had managed to brew up some awful, cheap alcohol. They were drunk as could be. I got 'em back inside, sobered 'em up, and put 'em to bed. Didn't turn 'em in. Who could blame them for wanting to get drunk in that environment? They remembered that."

"Another time, we're getting ready to go out for exercise, and I realize that one of the master keys is missing. This is a big deal, because someone has that key, they can get in anyplace on the complex, steal just about anything they want to steal. I get my guys together and say, 'We're not going out until I get that key. I don't care who took it, I'll turn my back, and whoever has it just throw the key on the floor.' Nothing. So, finally, I take this guy named Frenchie aside. He was the leader. That's another thing Mr. Burns had taught me: Every group has a leader, and that guy knows everything. So I said to him, I didn't want any information at all, but I know that you know who has the key, and we aren't going anywhere, today, the next day, whenever, until I get the key back. I told him he had five minutes, or I had to go to the higher-ups."

"Frenchie goes back into the room. I wait. A minute later, I hear the key clattering on the floor."

"I'm not going to sit here and tell you they were all good kids who'd had bad luck. But some of them were. I'd bought a car that year, finally got my dad to give me 100 bucks to get one. It was a Ford convertible [to this day Red drives a convertible]. The radio broke. One of the kids said he could fix it for me, so I said fine."

"I go over to see how he's coming, and the engine's running. He says, 'I didn't want to run your battery down, so I just hot-wired the engine.' He also fixed the radio."

"A lot of those kids got out during the war by volunteering for the service. Years later, I still heard from some of them. If I learned nothing else from Mr. Burns, it was when to trust people and when not to. You look a guy right in the eye and he doesn't look right back at you, you can bet he's lying. He looks back, he's either telling the truth or he's a damn good liar."

Former Celtic M.L. Carr hit the nail on the head when he shared some his Auerbach memories with the Boston Globe Sunday.

"I remember my first year in Boston, we clinched the best record in the division and we were celebrating a little bit in the locker room when Red came in and he said, 'What's all this,' " said Carr, who won titles as a player in 1981 and 1984 and coached the team from 1995-97. "We told him what had happened. And he said, 'We don't celebrate division titles. We celebrate championships.' He set the bar high for everyone."

"This is not the passing of a man, it's the passing of an institution. He came into a hockey town with a 6-9 black guy [Bill Russell] and sold professional sports in a racially charged city. That was one sales job."

"Beyond his incomparable achievements, Red had come to be our basketball soul and our basketball conscience. The void left by his death will never be filled." -- NBA commissioner David Stern.

"Red was a true champion and one whose legacy transcends the Celtics and basketball. He was the gold standard in coaching and in civic leadership, and he set an example that continues today. We all knew and loved Red in the Kennedy family. He joined my first campaign for Senate, and President Kennedy tried never to miss a game. We were so fortunate to be able to go to the Boston Garden in its heyday and watch Red make magic, but more than being a legendary coach and Boston institution, Red was a person of the highest caliber with a heart and generosity that knew no bounds. When my son Teddy was receiving treatment, Red always made the time to stop by and visit him, which meant the world to all of us. With every whistle that blows for the Boston Celtics, Red's spirit is celebrated and his memory cherished. He was loved and never will be forgotten." -- Sen. Ted Kennedy of Massachusetts

An era that the sports world will never see again ended Sunday. It was an era that included the NFL’s Vince Lombardi, the NHL’s Toe Blake and the NCAA’s Bear Bryant. With the exception of Basketball Hall of Fame coach John Wooden, the greatest leaders and coaches in sports history have passed away. Their impact wasn’t in the games they won, their impact wasn’t in the titles and in the champions they won but in the examples they set as men and as leaders, in instilling ideals and life lessons.

"Red Auerbach was one of the greatest coaches in NBA history. He did so many things to help improve the game," said Bill Sharman, who played for Auerbach in Boston and went on to become coach and general manager of the Los Angeles Lakers.

"I believe he was responsible for making the NBA as popular as it is today by introducing the fast break and making the game more exciting. He was a coach who went out of his way to help his players and it was a privilege to play for him for 10 years and win four championships together. Besides being such a great coach, he was also a great friend and he will be truly missed."

"Nobody has had as much impact on a sport as Red Auerbach had on the game of basketball. He was a pioneer of the NBA," said Tommy Heinsohn, a Hall of Fame player in Boston before becoming a Celtics coach and broadcaster. "He left his philosophy of winning championships, playing hard and playing as a team with several generations of players. ... The game of basketball will never see anyone else like him."

And that phone call, that one time yours truly spoke with Coach Auerbach one-on-one? Auerbach answered the phone sounding as angry as ever, but the second I mentioned Jack Donohue (both men where raised in New York City), Auerbach’s demeanor immediately changed. Auerbach couldn’t make the dinner but what else could he do to help honor Coach Donohue. Within 48-hours Auerbach sent a video tribute acknowledging Donohue’s contributions to basketball (of course he had a cigar in hand). And a few weeks later, a box of Celtics memorabilia arrived for the auction that was a part of that great evening in 1989 with the proceeds being given to Basketball Canada. And Coach Auerbach didn’t forget that 11-year old who wrote his Hebrew school report on Coach Auerbach. The Celtics pennant signed by Auerbach, Larry Bird, Kevin McHale and Robert Parrish holds a cherished place in the offices of Sports Business News.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Boston Globe and the Canadian Press

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Friday, October 27, 2006

Inside the latest MLB CBA

With the St. Louis Cardinals taking a commanding 3 games to 1 lead over the Detroit Tigers after last night’s 5-4 Cardinals game four win, weather permitting the 2006 World Series could end as early as tonight if the Cardinals win game five of the Fall Classic.

Parity has become a watchword for this years’ Fall Classic. When the St. Louis Cardinals or Detroit Tigers are crowned world champions, it will mark the seventh consecutive season a different Major League Baseball franchise has won the World Series. Taking a page from the David Stern playbook, Major League Baseball like the NBA did during the 2005 NBA Finals choose their championship series as the perfect platform for their new collective bargaining agreement. Baseball had an unwritten rule, major announcements where frowned upon during the World Series. With 1,800 accredited media covering the World Series, MLB commissioner Bud Selig showing some forward thinking by utilizing the World Series as an opportunity to highlight how strong a business baseball has evolved into.

When all the dollars are finally counted from the 2006 season, Major League Baseball revenues are expected to exceed $5.2 billion. MLB established an attendance record for the third consecutive season. In America’s three major cities – New York, Chicago and Los Angeles, the six franchises collectively sold more than 20 million tickets. Media pundits who compare baseball’s recent economic success and compare MLB to the NFL are comparing apples to oranges. The National Football League generates $3.75 billion annually in television revenues, greater then annual the collective totals for the NBA, MLB, NHL, NASCAR, NCAA and the last two Olympic Games combined together.

The five year collective bargaining agreement represents somewhat of a labor breakthrough on a number of different levels for the Lords of the Diamond. MLB and to endure eight labor work stoppages before reaching an eleventh hour four-year agreement on August 30, 2002. The five-year agreement the players and owners announced Tuesday is the longest labor agreement in MLB history since the two sides negotiated their first CBA in 1968.

The ‘guts’ of the five-year agreement is remarkably similar to the four-year accord that was set to expire on December 19, 2006. It would appear, MLB have moved on from what would have been the most contentious issue they would have ever attempted to force on the players – a salary cap. Teams will be free to spend whatever they wish, teams that exceed certain thresholds will be taxed – call it the Robin Hood Clause. Taking from the rich and giving to the poor. The formula remains – the top 13 revenue generating MLB franchises contribute to a fund that benefits the bottom 17 revenue generating franchises.

The CBA ‘primer’ provided by Major League Baseball, hints at some small but important changes with the new CBA. Revenue sharing and a luxury tax make perfect sense, as long as the teams taking are spending. The Florida Marlins received close to $56 million this year, when the Marlins revenues from revenue sharing and baseball’s national television deal are combined. The Marlins remained competitive for most of the 2006 season, on a team payroll of less than $15 million. Under Jeffrey Loria’s ownership the Marlins have consistently traded away their established players for prized minor league players from other teams. In theory that system makes sense if you trade for the right players, and then sign those players to long-term contracts. That was the philopshy the Cleveland Indians won the 1997 American League pennant with, they had seven years of winning baseball, and filled Jacobs Field for a major league record 455 consecutive game sellout streak. The Marlins haven’t showed they’re prepared to follow that mind-set. Loria seems content to build a team, and then dismantle that franchise as soon as some of his better young players become eligible for salary arbitration, certainly once they qualify for free agency after their sixth season. It’s a mindset that flies in the face of the rationale behind the “Robin Hood Affect”.

Under the executive summary released by MLB Tuesday – included the following vaguely worded statement -- Provision requiring revenue sharing recipients to spend receipts to improve on-field performance retained with modifications. At the press conference held before game three of the World Series a member of the media asked MLB Players Association executive director what those changes are in the new CBA?

“I think that there are two things. First of all, you obviously have a generalized concern when you look at what the landscape is. Having said that, we have always believed that the best way to do that is to create the right kind of positive incentives, not negative incentives. And one of the things that the 31 percent marginal rate does in terms of revenue sharing, which is 17 points lower than it was for recipients under the prior agreement, we think gives them a big incentive to raise revenue. You don't raise revenue very long without having a better team on the field. We think that does it,” Fehr said

“There also were some modifications in the other language relating to enforcement of that provision just to make sure that if circumstances require it we can do that, but the most important thing is the margin rates,” Fehr continued.

The competitive balance tax (aka the luxury tax) has some interesting modifications. The current four-year agreement had a $136 million threshold for the 2006 season. The Yankees as they have done for the three previous seasons exceeded the threshold, with a projected season ending payroll of around $201.5 million. The Yankees will pay a 40 percent premium on the $65.5 million exceeded the threshold, or $26.2 million.

The good news for the Yankees, their threshold has been increased, from $136 million to $148 million in 2007, $155 million in 2008, $162 million in 2009, $170 million in 2010 and $178 million in 2011. The bad news for the Yankees, a special gift for the Evil Empire – the only team who paid a 40 percent tax in 2006 will be forced to pay a 40 percent luxury tax for every dollar they spend over the threshold in each of the next five seasons.

Will that prevent the Yankees from spending less in the next five seasons – of course not. The Yankees play in the largest market, generate close to $200 million annually from their local broadcasting agreement with the YES Network (a broadcast entity the Yankees own 38 percent of) and are moving into a new Yankee Stadium in 2009 that will generate hundreds of millions of dollars in additional revenues for the Bronx Bombers. The Yankees last won the World Series in 2000. However, under the current MLB collective agreement the Yankees can afford to make mistakes (the two-years left on Carl Pavano’s four-year $39.5 million contract come to mind) and find an even more expensive replacement part. The Yankees have the financial resources to make mistakes and fix those mistakes.

The Toronto Blue Jays increased their team payroll from $51.5 million in 2005 to $76 million in 2006. The Jays signed A.J. Burnett to a five-year $55 million contract prior to the start of the 2006 season and the reliever B.J. Ryan to a five-year $47 million contract. If either player doesn’t deliver during the five-years of their multi-million dollar contracts, Blue Jays owner Ted Rogers isn’t likely to follow George Steinbrenner’s example of throwing money at a problem in hopes of fixing it. Rogers has the money, but not the revenues from the baseball side of his various businesses to justify spending like the Yankees do. The Blue Jays received $31 million from revenue sharing in 2006 – money they directly invested back into their on-field product.

The Pittsburgh Pirates will continue to enjoy the benefits of MLB’s revenue sharing program. Does that mean the Pirates are going to spend more on their team payroll?

"We have a good core of young players," Pirates owner Kevin McClatchy, told the Pittsburgh Post Gazette. "It's how we spend the extra money that's important. Hopefully, we'll use it wisely."

However, when asked if the new CBA with promised financial resources provided by MLB would allow the Pirates to begin negotiations with National League batting champion Freddy Sanchez on a long-term contract, McClatchy offered little hope to Pirates fans.

"This has no bearing on that," McClatchy said. "We haven't had those discussions yet."

What message is McClatchy sending to Pirates fans when the Pirates received $25 million from MLB’s “Robin Hood Affect” this year, along with more than $20 million in national TV money? The Pirates had an opening day payroll of $46,717,750 and received close to that amount from MLB. If you’re a Pirates fan the question you need to ask how committed is your team owner to building a contending franchise when he isn’t prepared to commit to reaching a long-term contract with one of his few marquee players?

"Everybody's doing all right," said McClatchy, who serves on MLB's labor relations committee but who was not part of the negotiating team. "We've gone from virtually no revenue sharing to now [more than] $300 million -- and that continues to grow. It will get better. What we have to work for is incremental change."

The Minnesota Twins are another team who has enjoyed the fruits of baseball’s revenue sharing plan. The Twins who won the American League Central regular season title in 2006 collected $22 million in revenue sharing and their national TV money (just north of $20 million). The Twins clearly understand you have to spend money to win and to make money. The Twins 2005 opening day payroll -- $56.1 million. The Twins 2006 opening day payroll -- $63.3 million.

"There's no question that the Twins organization has been a beneficiary of an industry that continues to grow and make significant incremental strides, both in terms of revenue as well as in terms of competitive balance and in the relationships between ownership and players," Twins President Dave St. Peter told The St Paul Pioneer Press.

"No question, the revenue sharing has been the crux of increased competitive balance of the game, and I think we expect clearly in the new ballpark a pretty significant change in what we receive in revenue sharing," St. Peter continued in the St. Paul Pioneer Press report. "It's always been our goal to zero that out, to not be a recipient .... We're a midsized market, not a small market and not a big market. If we do things right, maybe we're paying a little bit in the first few years of a ballpark."

St. Peter made it clear where the Twins beneficiaries of baseball’s revenue sharing are putting the tens of millions of dollars they’re receiving -- "I can assure you 100 percent of (the revenue-sharing money) was poured into baseball operations," he said. "It's all about funding a competitive baseball operation, which has been the edict sent out by the Pohlad family. I think the on-field results speak to that."

The Twins are moving forward with plans to build a new ballpark, a facility being built with private and public (taxpayer) dollars. Five years ago the Twins where a franchise being targeted for contraction, a remarkable turnaround for a franchise headed for the scrapheap.

"What makes us bullish on the future," St. Peter said, "is that with local revenues, that (revenue-sharing threshold) gap is going to tighten significantly as our new ballpark comes online in 2010."

If Selig’s vision of continued parity among MLB franchises, a vision of equality where franchises like the Yankees and the Red Sox are free to spend whatever they wish on their payrolls are going to compete with teams are at the other end of the spectrum the Marlins, Twins and the Pirates, its incumbent on the teams at the lower end to follow the business philopshy of the Twins, not the Marlins.

Major League Baseball has provided the financial mechanism for parity. Manage your business effectively, make the right personal decisions (how any business should be managed) and you’ll have an opportunity to produce a successful business that can generate a profit. The onus shouldn’t be on the big market teams to make sure the small market teams are competitive. The tools are being provided by Major League Baseball’s collective bargaining agreement. It’s up to Jeffrey Loria and Kevin McClatchy to build their teams following the examples being provided to them by the Minnesota Twins and the Toronto Blue Jays.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Pittsburgh Post Gazette and the St. Paul Pioneer Press

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Thursday, October 26, 2006

NFL heading to Canada, not to Los Angeles

Who would have imagined there will be a National Football League game played in Canada, Germany, England and Mexico before there will be a game played in Los Angeles? Tuesday, the NFL announced that starting with the 2007 season the NFL will play as many as two games in Canada, Mexico, Germany or England. While Canada isn’t a part of the NFL’s plans for 2007, it’s a near certainty a regular season game will be played in Toronto, Montreal or Vancouver during the 2008 season. The 2007 games are expected to be played in Berlin and London.

As for Los Angeles, NFL team owners attending a Board of Governors meeting in New Orleans, finally admitted what had been obvious to anyone who understood the NFL’s future in Los Angeles – there isn’t a future.

Two years ago while Paul Tagliabue was commissioner, league owners where told it would cost around $500 million to renovate either the Rose Bowl of the Los Angeles Coliseum. Two years later those plans are out the door, if the NFL heads backs to Los Angeles where an NFL hasn’t been played since the 1995 season, NFL owners were told the cost of a new stadium will top $1 billion.

"I don't think at this meeting anybody was prepared to pay that for a Los Angeles stadium," New Orleans Saints owner Tom Benson, chairman of the league's finance committee told The Los Angeles Times. "I don't know if somebody else is out there who's willing to come into the NFL and do that or not. At this moment, I think it's on the back burner."

"I don't know if somebody else is out there that's willing to come in and do that, or not," New Orleans Saints owner Tom Benson told The Los Angeles Daily News. "(But) I think there's something to that. I'm cautiously optimistic that somebody - we've tried working with government and local people - that maybe now an entrepreneur will come out."

Denver Broncos owner Pat Bowlen agreed, adding in the Los Angeles Times report: "We've got a lot of other things going on. I think Los Angeles is on our radar screen, but we're not concentrating on it right now."

"There's no doubt about it," Jerry Jones told The Los Angeles Daily News. "You don't have the passion, the proprietary feeling because the people making this decision (the other owners) aren't going to be the home team there.

"They're going to be playing there, and we've got a lot of passion for what we can do in Los Angeles, but there's another level that you want to go to, and that's when you get the people that are going to be responsible for making the franchise successful. They need to be in this picture, in my mind."

The NFL’s about face concerning Los Angeles may have come as a surprise to those who drank the Fool-Aid the NFL has been serving for the last ten years concerning placing a tam in Los Angeles.

As early as 1996, then NFL commissioner Paul Tagliabue addressing the media at his Super Bowl press conference made it clear Los Angeles was very much in the picture when it came to NFL expansion.

''I've said several times already we have to take a hard look at expansion to deal among other things with Cleveland and Los Angeles,'' Tagliabue said, emphasizing he doesn't consider moving current franchises to those cities as an acceptable option.

''Our first goal, and one I think we made a lot of progress on, is team stability. We solved very difficult problems in the last 12 months in Tampa and Cincinnati and Detroit and we made a considerable amount of progress in Seattle. We accomplished our goals in Cleveland under the agreement we struck early last year.

''Hopefully, we can accomplish the two goals together: team stability, no more moves, and teams in Cleveland and Los Angeles.

''Earlier this week, Mayor Thomas White announced all the goals have been met, that the Browns will be in a new stadium on the lake front playing as the Browns in Cleveland in 1999. That plus the LA situation requires us to look at expansion.''

The NFL awarded an expansion franchise to Al Lerner in September 1998. Lerner paid $540 million. That left the NFL with 31 franchises. Historically the NFL doesn’t like to have an odd number of franchises. While the league has continued bye weekends for teams (initially created when the Cleveland Browns returned to the league in 2000), the NFL wants every team to play the first few and last few weekends of each years’ NFL schedule.

After awarding Cleveland the league’s 31st franchise, the league made it clear it wanted to award their 32nd franchise to Los Angeles. The NFL considered the Coliseum in 1998 and stadium projects in Hollywood Park and Carson. After then California Governor Gray Davis opted not to deploy $150 million in taxpayer money to build new parking garages, suggesting taxpayers had more important priorities, the NFL’s plans to expand to Los Angeles began to fall by the way side. The NFL’s Los Angeles stadium suggestions died on September 15, 1999.

Former Disney president Michael Ovitz and the grocery chain executive Ron Burkle emerged as the leading candidates interested in owning an NFL team using land around Hollywood Park. Six weeks later Ovitz and Burkle were on the outside looking in, as was billionaire Marvin Davis who didn’t believe he could make it work.

It was only then; the NFL began to seriously consider Bob McNair. McNair was ready to pay an expansion fee and had a $310 million stadium plan in place for Houston. He was ready, Los Angeles wasn’t.

''We should give Houston the team, and look forward to another day in Los Angeles,’’ the late Robert Tisch, the co-owner of the Giants and a member of the league's finance committee told The New York Times on September 29, 1999.

Greg Aiello, a league spokesman, told The Times only expansion would be discussed at a meeting the following week in Atlanta. ''We're looking at the possibility of expanding by a 32nd team,'' he said. ''But long term, we'd like to be in both cities.''

The NFL awarded their 32nd franchise to Bob McNair for a then record expansion fee of $700 million the following week at meetings in Atlanta. At the dawn of a new century, the NFL accepted that America’s most important entertainment center would be without an NFL franchise for the foreseeable future.

Not a great deal happened, until ten months ago, when now retired NFL commissioner Paul Tagliabue met with California Governor Arnold Schwarzenegger in November 2005. The two focused their discussions on being able to bring an NFL expansion plan to NFL owners in March.

At his last Super Bowl press conference on February 3, Tagliabue addressed where the league was as far as expanding back to Los Angeles.

“I think we're making the kind of progress that I anticipated in November when I was out there to meet with the mayor and the governor. At that time I said we were looking to have two clear-cut alternatives, focused on the Coliseum and Anaheim to bring to our membership at the March meeting and I think we're on track to do that. As to which one is in the lead, I think is something we'll be talking about at our March meeting,” Tagliabue answered that day as part of his state of the NFL question and answer period.

On March 28 NFL staff offered the league’s 32 owners a 30 minute presentation regarding two potential locations for an NFL Los Angeles expansion franchise, a new stadium beside the Coliseum and a new stadium in Anaheim, located near Angels Stadium. Each facility would cost more then $800 million to build.

"My guess is that we will be going forward with those presentations on behalf of the Coliseum and Anaheim so that we can make some decisions in Denver," Tagliabue told The Los Angeles Times, referring to the league's spring meetings May 21 to 24.

Asked what those decisions would entail, Tagliabue said, "To select one of the stadium projects and to go forward with the process of identifying a team and building a stadium."

Tagliabue led the 11-member Los Angeles Stadium Working Group to California for a series of meetings in early May. The end result – the league announced they would invest $10 million in feasibility studies for both ($5 million for each) interested location.

"I do believe the sooner we do it, the better," said the New England Patriots' owner, Robert K. Kraft, a member of the 11-member Los Angeles Stadium Working Group in a New York Times report a week before the NFL’s May meetings. "We all realize this is important for our future. In the end, we need to have a team there."

Steve Tisch, the Giants' chairman and executive vice president and a member of the Los Angeles working group, told The New York Times, "We think it is important to have a team in Los Angeles, but the conditions have to be right, the economics have to work, and the business community has to be strongly involved."

As for interest in Los Angeles, it was lukewarm at best, when the New York Times spoke to several Los Angeles based business people to gauge the level of interest.

"It's not a mandatory part of the culture here, like it is in other places where it's the dominant part of civic pride," said Kevin Roderick, a lifelong Angeleno and the editor of LAObserved, a Web site about life in Los Angeles. "You have an entire generation of kids growing up without football."

Of the new team, Roderick added: "They just better win. They better have a charismatic person on the team, a Kobe or Shaq or a Sandy Koufax, who can be the face of the team."

"It's like your wife left and 12 years later you say, 'I don't care,' " Jack McGrath, a Los Angeles based public relations executive told the New York Times. "We're getting along quite well without them. What are you going to do, keep crying? They left.”

"But that gets rekindled again. If you know you have a stadium and you know you'll have a team, you'll start getting pretty excited."

Ten days later the NFL moving at a snail’s pace ‘tabled’ any definitive plans to expand to Los Angeles. The owners met on May 23, and quickly realized putting a team back in Los Angeles was a political and economic minefield. A stadium had to be built. An expansion fee had to be paid. And whoever owned the team had to have the capital to operate the franchise. If you take a moment to consider all of the financial obligations the owner of an NFL franchise could be expected to secure, it easily tops $2 billion, an impossible financial number for anyone to seriously consider.

"The L.A. thing is hard to get your hands around," Dallas Cowboys owner Jerry Jones said in a Los Angeles Times report. "We don't have an owner. We don't have a team. We've got some leadership that we haven't had before. We've got a L.A. market that's better than it's been the last seven years. We got viability out there."

"Every constituent involved has to be willing to overdo here and be willing to have an area where you don't have the answers," Jones said. "That's why I use the example of buying the Cowboys. When I bought them, I did not have all the answers. I thought I had all the answers. I thought I had a way to keep from going broke, but I wasn't sure. I don't know an owner who has come into this league knowing he's is going to come into this league thinking he's going to make money owning a football team."

"We are looking at an investment of multiple hundreds of millions of dollars and a partnership that hopefully will extend over most of the next century. The emphasis is to do it right and do it thoroughly and not set deadlines that turn out to be meaningless," Tagliabue told The Orange County Register.

"We need to be a lot more reliant on something called value engineering, and to understand what are the best ways of monitoring stadium construction costs," Tagliabue said. "We've got to work really hard on the costs. There is not money to be wasted there. I think the committee and I emphasized to the membership that we have to be looking in the analysis of each of the new stadiums to be looking for two teams."

Eight weeks into his tenure as NFL commissioner Roger Goodell is saddled with a very difficult challenge. Goodell made it clear he’s well aware every day the NFL hasn’t found anyone interested in building a stadium that could cost close to a billion dollars, and paying an expansion fee that will be close to a billion dollars as well.

"If you delay it, it would be a significant increase," Goodell told the Los Angeles Times. "When you're talking about billion-dollar projects, a 10% increase is pretty significant."

"We haven't been successful to date on the approach that we've taken," he said. "We do believe we've made some progress. But circumstances may change where we take a different approach to go forward."

What exactly that approach is going to be either Goodell doesn’t know, or he isn’t saying what his plan(s) may be. If the NFL is serious about putting an expansion franchise in the second biggest market in the United States, the NFL had better gain a better understanding of California politics. The options the NFL faces in Los Angeles are few:

Allow Tom Benson to move the New Orleans Saints to Los Angeles. Benson could then either agree to play his games in the Los Angeles Coliseum or at the Rose Bowl. Neither stadium offers any of the amenities needed to make an NFL franchise work economically. However that would be Tom Benson’s problem and not the NFL’s. The NFL would have a franchise back in Los Angeles and as long as Goodell makes it clear to Benson the ‘lay of the land’ in Southern California he would be free to move at his risk.

Allow the San Diego Chargers to move to Los Angeles (same as above). The bottom line, permit any franchise seriously interested in moving to Los Angeles to move the team. The bottom line NFL owners have held cities hostages since the Rams left Los Angeles for St. Louis in 1995 and the Raiders played musical cities and went back to Oakland the same year. It’s insulting to common decency to believe a current NFL franchise is going to move to Los Angeles without a taxpayer built stadium – and that is never going to take place.

On the off chance Tom Benson (Saints owner), Alex Spanos (Chargers owner) or Zygi Wilf (Vikings owner) move their team(s) to Los Angeles, the NFL will be able to expand to New Orleans, San Diego or Minneapolis. Each city has an NFL ready stadium or enough local political support to finance a shared public/private stadium. It would be addition by subtraction.

Assuming (and it’s a pretty good bet) every NFL owners realizes they can’t move to Los Angeles and play in antiquated facilities, the league can expand to Los Angeles, but as Goodell suggests under a different business model, one that take courage and conviction. The NFL expands to Los Angeles, agrees to cover the cost of a stadium and charges an expansion fee of $1.2 billion. The NFL builds the stadium in the belief having a team in the second biggest American market is important to the evolution of the business of the NFL and needs to be very creative in moving forward with a workable solution.

"The one comment you hear is it's got to be the right deal for everybody," said John Mara, co-owner of the New York Giants, who is working on a cooperative $1-billion-plus stadium deal with the New York Jets in a Los Angeles Times report. "For whatever reason, we haven't been able to get to that point yet.

"I'm worried about building my own billion-dollar stadium right now. I have another team helping me with it, and I know how difficult that is. At some point, I think everybody in the room would like to have a team in Los Angeles. Whether it will happen or not, I don't know."

Cowboys’ owner Jerry Jones a member of the 11-owner Los Angeles Stadium Working Group made it clear he believes the NFL needs to find an owner for an expansion NFL franchise and then make it incumbent upon the owner to determine where his team will play.

"I have always felt you're missing a very critical ingredient when you don't start with a team and ownership group," Jones told The Orange County Register. Does Jerry Jones or any rationale business person really believe anyone in their right mind would consider a plan that could cost as much as $2 billion to put an NFL franchise back in Los Angeles? When you get to the heart of the issue, not even Jones believes the NFL has a future in Los Angeles.

"There's a point where it doesn't work," Jones said. "You're just sticking your neck out too far."

The Lords of the Pigskin know what must do. They need to have courage, conviction and a sense of purpose. They need to be visionaries. With the average NFL valued at more than $800 million, a business that guarantees franchises $106 million annually in television revenues, already shares 83 percent of all of their revenues, the Lords of the Pigskin know what has to be done; now will see if they’re capable of doing it.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Los Angeles Times, The Los Angeles Daily News and The Orange County Register

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Wednesday, October 25, 2006

NBC a much happier NFL TV Partner

NBC is in the first year of a $3.6 billion six-year agreement with the NFL, giving NBC the rights to 16 Sunday night telecasts, the league’s Thursday season opening game, Super Bowl XLIII (43) in 2009 and Super Bowl XLVI (46) in 2012 -- and two AFC-NFC Pro Bowls. The big caveat in NBC’s agreement is the right to coordinate with the NFL which game the network would televise Week 11 through Week 17 with the exception of any weekend that conflict with Christmas. Tuesday, as expected NBC took full advantage of the opportunity they negotiated with the NFL selecting the Chicago Bears visiting the New York Giants at the Meadowlands.

The game features teams in the two biggest markets home to NFL franchises. The Bears and the Indianapolis Colts are the NFL’s two remaining undefeated teams. The Bears should be 8-0 by the time they meet the Giants, with home games against the San Francisco 49’ers (2-4) and the Miami Dolphins (1-5).

NBC was the long time television home for the NFL’s American Conference League games. NBC walked away from their NFL relationship in 1998, a relationship that dated back to 1955 when NBC became the televised home to the NFL Championship Game, paying $100,000 to the league. Dick Ebersol, then as he is now the President of NBC Sports, believed NFL television rights fees where out of control in 1998, promoting NBC to lose AFC television rights to CBS.

“We want to see NBC get off to a strong start, and we believe this schedule has accomplished that without jeopardizing the success of our Sunday afternoon partners,” said Howard Katz, the league’s senior vice president for media operations and the scheduling chieftain told The Wall Street Journal during the summer.

When the NFL schedule was announced in April, Weeks 11 through 15, and week 17 did not include a ‘scheduled’ Sunday night game. CBS and Fox each are allowed to protect five afternoon games over seven weeks of the season. Each has chosen four and will pick one more.

NBC Sports President Dick Ebersol told the media during a conference call Tuesday afternoon, the NFL had ‘protected’ one game during weeks 11 through 15 and week 17, games that CBS and Fox could not select to protect. The Bears – Giants was the game the NFL had ‘protected’ for NBC. You have to believe Fox would have protected a game featuring franchises in the New York and Chicago markets.

"The game was never formally announced," Ebersol said. "It couldn't be protected by the other networks. That's never been announced and the NFL asked us never to confirm what those games are. I will say that it's comforting some weeks to know there's a game, no matter what, if we want it, it's ours."

"I just wanted to say how happy we are with the announcement by the League today that the first game for Sunday Night Football under the League's new flex scheduling policy, Sunday night November 12, will match up arguably the two best teams in the NFC right now, certainly surefire Super Bowl contenders. They represent the two largest NFL home city markets in the United States,” Ebersol added. “You couldn't ask for a better start to this whole new policy of allowing the late season games to evolve into the top matchup of the day as often as is possible. And in this particular week, this game at this point with the undefeated Bears and the NFC East leading Giants, sure promises to deliver a lot."

The news that the flex schedule isn’t as flex as it was reported to be, shouldn’t come as a surprise to anyone. The NFL’s rationale for offering NBC a flexible schedule was in part based on longstanding issues network executives at ABC had with Monday Night Football. Disney the parent company for both ABC and ESPN choose to move Monday Night Football to ESPN, paying the NFL $1.1 billion annually for MNF rights. ESPN had been the home of Sunday Night Football, ABC the home of Monday Night Football for 35-years before ending their relationship with the NFL at the end of the 2005 season.

Sunday night is an important night for the four major networks. Fox follows their NFC coverage with The Simpson’s and similar original programming. CBS offers 60 Minutes, Cold Case and Without a Trace, and ABC offers Desperate Housewives and Sisters & Brothers. After a day where football has ruled televisions, the NFL knew the network needed marquee games to attract bigger audiences.

Ebersol for his part did his best to deflect any criticism that might be directed at NBC from his competitors, particularly Fox and CBS who at least in theory are paying the NFL more money, but stand to lose some of their best games to NBC in the second half of the NFL season.

"The League put this policy into effect when they negotiated the television deals with CBS and FOX in the fall of 2004. Our deal wasn't made until April of '05 so we inherited flex scheduling. We're able to say to the League, 'here is a game that we would like to have, and here are reasons why we think this the most compelling game.' And then their television department and the Commissioner make the final decision.”

"The League did protect one game for us for each week of flex. The game was never formally announced; it couldn't be protected by the other networks. That's never been announced and the NFL asked us never to confirm what those games are. I will say that it's comforting some weeks to know there's a game, no matter what, if we want it, it's ours.”

"There may be a week where we want 'X' game and there may be another game that the League rules equally or more compelling and they'll make the determination that that is the game that we're going to do. They have the final authority."

The NFL is the industry leader when it comes to making the decisions they believe are in the best interests of the NFL and its TV partners. CBS hasn’t said very much about the opportunity offered to NBC. According to a 2005 USA Today report, CBS considered bidding for the Sunday night games, with the benefit of a flexible schedule. CBS did significant market research and determined the benefit of a flexible schedule would only increase viewership by 0.2% of TV households. Still as far as Ebersol is concerned a flex schedule is the natural evolution of sports leagues and their television properties.

"All this stuff went down because after 20 years of discussing it, the League and its television committee determined, in late summer of '04 and the early fall of '04 that they were going to put flex scheduling in as a permanent fixture. And if ABC had held on to Monday Night Football, they probably would have had to move it to Sunday night, because the only way there was going to be flex is if it took place on Sunday night so that no team would be inconvenienced by having to change an additional 24 hours on 12 days notice.”

"All this stuff that gets written sort of makes it seem like this was come up with on the fly. This goes back to the negotiations they had with those two companies [Fox and CBS] back in the fall of 2004. They knew what they were buying into."

"Flex was created to make sure that there was the strongest possible primetime attraction, so you wouldn't end up with the kind of situation, for example, that Freddy [Gaudelli] ended up with last year, or has existed many times in the past, where the back end of the schedule was loaded with mismatches between teams whose hopes had fallen during the season. They were no longer playoff contenders and the games just did not look like the merited being on in primetime on a network. Flex was conceived by the NFL so if a team is really making an impact that wasn't expected, they may be able to play themselves onto the broadcast primetime package."

Fox spokesman Dan Bell declined to comment on the Giants-Bears game being taken away from the network. CBS had even less to say Tuesday offering no comment. However, last week The New York Times Richard Sandomir spoke with a representative from CBS about the inevitability of NBC getting to take away games their network would have televised.

''It's really difficult,'' said Tony Petitti, the executive vice president of CBS Sports. ''We looked at whether there was a dominating game we had to protect; at NBC's games to see how likely they would hold up; and at our schedule, even when NBC's game looks pretty good, to see what would happen if we lost X game.''

Before the season, Ed Goren, the president of Fox Sports, said, ''Why should our crystal ball be better than NBC's in trying to figure out which games are protected?''

The NFL on their part acknowledged the evolution of their scheduling with a simple three sentence press release. NFL owners met Tuesday in New Orleans. NBC created the media opportunity, without any participation from the NFL.

Howard Katz, the league's senior vice president for media operations, told The New York Times last week, ''We want to get the information out to our teams and our fans out as quickly as we can.''
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'The concern was that if you let CBS and Fox protect too late in the season, a surprise team couldn't play its way onto the prime-time schedule,'' Katz said, ''because they would always be protected.''

Katz made it clear to The New York Times; NBC would not get every game they wanted.

''We have to look at what losing a game will do to the competitive balance between CBS and Fox,'' he said. ''NBC can't say, 'I want this game because it's unprotected.' ''

Needless to say, Fred Gaudelli, the producer of NBC’s Football Night in America, couldn’t be happier with the opportunity he’s been presented with.

"There's no question we're the benchmark of the NFL weekend," "Sunday Night Football" Gaudelli told the Contra Costa Times. "The NFL itself positioned us like that. (Former NFL commissioner) Paul Tagliabue said the premier game is now seen on NBC on Sunday nights. But America has to make the adjustment. They're not ever going to just abandon 'Monday Night Football.' It's part of our country."

Gaudelli couldn’t be more correct about Monday Night Football being ingrained in American Culture. Monday night, ESPN's Monday Night Football, a 36-22 New York Giants victory over the Dallas Cowboys, was seen by the biggest audience in the history of cable television - an average of 11,807,000 homes, based on a 12.8 rating (16,028,000 viewers, P2+). The previous record for a scheduled program on cable television had stood for nearly 13 years, CNN's November 1993 NAFTA Debate between then-vice president Al Gore and Ross Perot on Larry King Live (11,174,000 homes). (That previous record excluded breaking news which ESPN has also exceeded; four CNN telecasts of the Gulf War in 1991 were seen by more homes than the NAFTA Debate, topped by 11,742,000 homes on January 17.)

"We've never believed the acronyms NAFTA and MNF belonged in the same sentence, and we're thrilled to have established MNF as the home of cable's biggest audience ever," said Norby Williamson, ESPN executive vice president, studio and remote production. "Many people here have worked very hard to establish our day-long, multi-media approach with lead-in and post-game programming plus 'Monday Night Surround' on ESPN.com. That fans have responded with the record is very rewarding and a vivid reminder of the power of Monday Night Football."

"NBC has really embraced it (Sunday night football) and put it on a pedestal," Gaudelli added in The Contra Costa Times report. "It made it the cornerstone of revitalizing prime time for the network. The ratings are higher than 'Monday Night Football' last year and we haven't even got to the meat of our schedule yet."

The NFL’s decision to offer a flexible schedule to NBC for their Sunday night package came after ABC suffered with its Monday Night package for the last three years. Less then stellar ratings, largely created by stale late season games led to the NFL’s decision to offer a flexible prime time package. While not a great deal has been discussed regarding why ESPN paying nearly twice as much as NBC is paying the NFL ($1.1 billion vs. $600 million) it’s well worth noting ESPN’s game doesn’t have to compete against any other NFL games being played that day for fans attention, while NBC is facing football fans who have already had an opportunity to spend an entire day watching NFL football on CBS and Fox. For the National Football League it was another example in a long line of great business decisions.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The New York Times, USA Today and The Contra Costa Times

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Tuesday, October 24, 2006

The Good News a new MLB labor accord, the Bad News a new MLB labor accord II

Major League Baseball and the MLB Players Association Sunday night hours before game two of the 2006 World Series the two sides reached a five year extension on the collective bargaining agreement the two parties reached on August 30, 2002. The current four-year CBA which encompassed four baseball seasons (2003 through 2006) was set to expire on December 19, 2006.

Bud Selig and MLBPA executive director Donald Fehr are expected to hold a press conference in St. Louis as early as today, where games three, four and five of the World Series will be played. The Selig/Fehr press conference follows the current NBA CBA announced before game five of the 2005 NBA Finals in San Antonio. With 1,800 accredited media covering the Fall Classic, the World Series is a prefect platform for Selig and Fehr to present a united front.

There are many questions yet to be answered, but several key issues have been settled. Major League Baseball will remain the only major North American sport without a salary cap (maximum team payrolls), or a salary floor (minimum team payrolls). Revenue sharing and a luxury tax will remain in place, but it appears certain big market franchises can and will continue to spend whatever they wish on team payrolls, and franchises at the other end of the spectrum (those receiving revenue sharing like the Kansas City Royals) won’t be forced to take the money they’re receiving from their partners and put that money back into their payroll.

The 1994 baseball strike which directly led to the cancellation of the 1994 World Series was based on the owners’ insistence to share incoming revenues with players on an equal basis (down from the estimated 56 percent the players where receiving at the time) the elimination of salary arbitration and phasing in a salary cap. Once again it was ‘back to the future.’ The elimination of arbitration would have effectively tied a player to the team he was drafted by for the first six years of his MLB career with the team having the ability to control a player’s salary for that six year period.

The end result – Donald Fehr recommended the players reject the proposal which the MLBPA estimated would have cost the players $1.5 billion over the lifetime of the proposed CBA.

The year long National Hockey League lockout in large part accomplished its objective because NHL commissioner Gary Bettman had spent more than five years educating franchise owners the NHL could have a salary cap, but only if the owners remained united in their resolve. The National Hockey League Players Association made it clear to their membership, if NHL players wanted to maintain the NHL’s version of a free market system the players would have to have the same conviction the owners had. The players blinked first, NHL owners had their salary cap, tied directly to hockey generated revenue.

Gary Bettman learnt how to manage franchise owners at the foot of NBA commissioner David Stern. Bettman worked for Stern and the NBA before he became the NHL’s first commissioner in 1993. (Prior to Bettman the NHL designated a President as the head of their league). The NHL was a business run amok, 76 percent of league revenues went directly to the players. The NHL needed a new economic system or the league was faced with the real potential of collapsing as a business. Bud Selig may not be the commissioner Gary Bettman is, but Major League Baseball isn’t the National Hockey League.

The 1996 CBA included a provision of a competitive balance tax. Major League Baseball taxed the franchises with the five highest payrolls contributing to a fund that would be distributed to baseball teams at the other end of the spectrum. While on the surface the system may have made sense, “The Robin Hood affect” taking from the rich to give to the poor, didn’t include any safeguards forcing teams benefiting from adding to their payrolls.

The 2002 CBA added another ‘tax’ on teams with large payrolls, a luxury tax. Major League Baseball established what Selig believed would create a ‘drag’ on team payrolls. Teams would be tax based on a downward graduating scale. The tax would also increase each year their payroll surpassed the threshold. On September 9, 2002 the owners approved a four year CBA 29-1 (the lone descending vote where the New York Yankees).

MLB which had tried to introduce contraction before the 2002 CBA agreed to take that proposal off the table for four years. Minnesota Twins owner Carl Pohlad and the Montreal Expos (then owned by current Florida Marlins owners Jeffrey Loria) agreed their two franchises would be contracted by Major League Baseball. Pohlad and Loria reach the agreement with MLB in 2001 with Selig’s goal to contract the two franchises before the 2002 season. A series of lawsuits initially postponed that plan until 2003. A clause in the 2002 CBA included a provision preventing MLB from contracting any franchises until the end of the current CBA. It’s likely when the new CBA is announced this week MLB will agree to extend their ban on contracting franchises.

When the new CBA is announced in the next few days it will be more of the same, and in that business philosophy belies the problem MLB will face in the next five years. Esteemed baseball business analyst Maury Brown publisher of The Biz of Baseball.com in a report he prepared for Hardball Times offered the cold hard truth, the facts and the figures when it comes to who gives, who receives and what if anything happens as a result relating to the dynamics of the current MLB CBA.

The following is a breakdown, based on the plan outlined above for those that are payers into the system. To place some context behind this, these 13 clubs moved $312 million to the 17 lower revenue clubs.

Team Amount paid (millions)
New York Yankees $76
Boston Red Sox $52
Chicago Cubs $32
Seattle Mariners $25
New York Mets $24
Los Angeles Dodgers $20
St. Louis Cardinals $19
Chicago White Sox $18
San Francisco Giants $14
Houston Astros $11
Los Angeles Angels $11
Atlanta Braves $10
Texas Rangers $.035

Is it any wonder George Steinbrenner is looking for a loophole to get out of some of these revenue sharing obligations? That is a key loophole that the lower revenue making clubs will zero in on as a portion of stadium construction can be deducted from revenue sharing obligations as it is viewed as "operating expenses" and therefore falls within section 5 of the revenue sharing provision of the current agreement.

While that's a concern for the lower revenue making clubs, the payees also have to concern themselves with how they are using their revenue sharing funds.
Here are the payees under the revenue sharing system:

Team Amount received
(Millions)
Tampa Bay Devil Rays $33
Toronto Blue Jays $31
Florida Marlins $31
Kansas City Royals $30
Detroit Tigers $25
Pittsburgh Pirates $25
Milwaukee Brewers $24
Minnesota Twins $22
Oakland Athletics $19
Cincinnati Reds $16
Colorado Rockies $16
Arizona Diamondbacks $13
Cleveland Indians $6.0
Philadelphia Phillies $5.8
San Diego Padres $5.7
Washington Nationals $3.9
Baltimore Orioles $2.0

So, back to that provision within the CBA where clubs are supposed to use the revenue sharing monies to improve on the field performance...

The loophole, of course, is that you can "improve" your on the field performance any number of ways, be it investing in scouting, or farm systems, or what have you. The verbiage in the provision is vague, in that sense. But, let's just look at those as payees and their Opening Day payrolls and see whether the clubs are using revenue sharing dollars toward improving on-the-field product:

Club Revenue Sharing Opening Day Payroll Difference
Tampa Bay Devil Rays $33,000,000 $35,417,967 -$2,417,967
Toronto Blue Jays $31,000,000 $71,915,000 -$40,915,000
Florida Marlins $31,000,000 $14,998,500 +$16,001,500
Kansas City Royals $30,000,000 $47,294,000 -$17,294,000
Detroit Tigers $25,000,000 $82,612,866 -$57,612,866
Pittsburgh Pirates $25,000,000 $46,717,750 -$21,717,750
Milwaukee Brewers $24,000,000 $57,568,333 -$33,568,333
Minnesota Twins $22,000,000 $63,396,006 -$41,396,006
Oakland Athletics $19,000,000 $62,243,079 -$43,243,079
Cincinnati Reds $16,000,000 $60,909,519 -$44,909,519
Colorado Rockies $16,000,000 $41,233,000 -$25,909,519
Arizona Diamondbacks $13,000,000 $59,684,226 -$46,684,226
Cleveland Indians $6,000,000 $56,031,500 -$50,031,500
Philadelphia Phillies $5,800,000 $88,273,333 -$82,473,333
San Diego Padres $5,700,000 $69,896,141 -$64,196,141
Washington Nationals $3,900,000 $63,143,000 -$59,243,000
Baltimore Orioles $2,000,000 $72,585,582 -$70,585,582

So, of the 17 clubs that are receiving revenue sharing, five clubs have actually spent less than $40 million of their own money on player payroll (Devil Rays, Royals, Pirates, Brewers, Rockies), and even that could be generous as the USA Today Opening Day Payroll figures do not reflect payments teams receive as compensation in some player trades in the individual or team salaries.

The business of baseball has never been better. Major League Baseball established an attendance record for the third consecutive season. More than 76 million people attended MLB games in 2006. Heading into the 2007 Major League Baseball has national over-the-air and cable TV agreements with Fox, ESPN and Turner Broadcasting that will on average generate $710 million per year, an average of $23.6 million annually, and a far cry from $106 million each NFL team receives from their national TV agreement. Remember NFL franchises share all television revenues; MLB teams have varying local television rights agreements, creating a disparity in revenues MLB teams can generate.

Last week while in St. Louis for the National League Championship Series Selig sang the praises of how great the business of baseball is in 2006. Selig pointed out MLB generated league wide revenues of $3.6 billion in 2001. In 2006 that total increased to $5.1 billion.

"I had dreams of things getting better but, no, in many ways this has exceeded my fondest expectations," Selig said last Tuesday night in St. Louis . "This sport has more parity than ever. We have more parity than any other sport."

Give Bud credit for this, he has put in place a system that continues the free market system, penalizes franchises that consistently spend money without any regard to their teams’ payroll, and puts in place a system that provides teams at the other end of the baseball spectrum the means to build their payroll through revenues provided by teams capable of generating significantly greater revenues. The YES Network may produce more than $200 million in annual revenues for the New York Yankees, but in large part thanks to the New York Yankees, the Tampa Bay Devil Rays where sent a $33 million check by Major League Baseball. The Florida Marlins where sent a check for $31 million. The Marlins opening day payroll was just north of $14 million. Where does the responsibility lie in a system that gives tens of millions of dollars to owners who refuse to invest those revenues directly back into their product? Is it the Yankees and the Red Sox who aren’t getting it right or the Marlins and the Royals who are getting it wrong?

"It's great to hear that the sides are closing in," former MLB commissioner Fay Vincent told the Boston Globe. "It makes great sense to get something done before the agreement expires. The economics of the game are excellent -- attendance records were broken -- so there's no reason to make drastic changes. Both sides are making a lot of money. I think you have to be realistic that there's no sense in tinkering with what works."

"There are no salary cap issues, no major shift by the union. The union is still very much in control and as long as the owners are all right with that, they'll get along. I would think a big issue would be revenue sharing and the luxury tax to make sure those clubs benefiting with that spend their money on players," Vincent added in the Boston Globe report.

If the National Football League, National Basketball Association and the National Hockey
League all have salary caps and salary floors, and Major League Baseball doesn’t have that economic system in place, which system is better? The NFL shares 83 percent of all of their revenues and remains the greatest single example of sports socialism. The NBA was headed towards destruction in 1984 when David Stern became commissioner. Stern instituted a salary cap and dramatically increased revenue sharing. The NBA flourished as a result. The NHL professional sports version of The Franciscan Sisters of the Poor had no choice but to force economic controls on their owners. In each case the salary cap came after protracted labor stoppages.

The difference between the MLBPA and the player unions in the other three so called major North American sports is in the determination and resolve of the players. From that first fateful day Marvin Miller was elected as the first executive director for the MLBPA, Miller instilled in the players an understanding how they could move forward in the free market system.
The average player salary in 1966 was $17,000. Ten years later in 1976 (the last year before free agency, but with salary arbitration in place) the average salary increased to $51,501. Five years later in 1980, the average salary increased to $143,756. The average player salary was $1.1 million in 1995, the first season after the 1994-95 strike. It rose to just under $2.3 million in 2002 and will be about $2.7 million this year. The average likely will top $3 million next year or in 2008.

Will Major League Baseball ever see a salary cap – it now appears unlikely. The reality is, the system is working better then it ever has. If you’re a fan of the Boston Red Sox or the New York Yankees your teams generate enough revenues they can afford to pay whatever they want for players, and if they’re taxed so be it, they can afford that too. Baseball fans shouldn’t care what happens in Boston or New York . However, if you’re a baseball fan in Kansas City or Miami and you’re upset your owner claims he doesn’t generate enough money to field a competitive team, just make sure your team is at least spending all of the money they’re being sent by Major League Baseball as part of the leagues revenue sharing program.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Upcoming CBA and the Battles Within It (Part 2) - Revenue Sharing (Hardball Times, written by Maury Brown), The Boston Globe and Revenue Sharing in Major League Baseball by Matthew Ryan McCarthy

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Monday, October 23, 2006

The Good News a new MLB labor accord, the Bad News a new MLB labor accord

Sunday evening hours before game two of the 2006 World Series the Associated Press reported Major League Baseball owners (the management side) had reached a new five year labor agreement with the Major League Baseball Players Association. Give Bud Selig and the owners credit, beaten by the players eight straight times, the owners waved the white flags before this even became a scuffle. Clearly when it comes to who’s running Major League Baseball, it’s the players, not the ones who pay the bills – the owners. Put in simpler terms – it’s a great day to be a fan of the New York Yankees or the Boston Red Sox. It’s a terrible day if you’re a fan of the Kansas City Royals or the Pittsburgh Pirates.

Sunday evening had to be great for Marvin Miller, alive and doing very well at the ripe old age of 89. Miller who must be recognized with enshrinement into the Baseball Hall of Fame became Major League Baseball’s first executive director in 1966. During a remarkable 16-year career Miller changed how the business of baseball was conducted, taking the players from an ownership philosophy of indebted servitude to the free market system ruling how franchises are built. When the new five-year collective bargaining agreement is announced in the coming days when the World Series shifts to St. Louis for games three, four and five the document will be remarkably similar to the CBA the two sides agreed to in 2002.

Optically the Lords of the Diamond will suggest we have ‘peace in our time’. The first CBA was negotiated in 1968. Eight work stoppages have highlighted how each CBA was negotiated since that fateful first agreement, except the four year agreement the two sides agreed to at Noon on August 30, 2002.

While there wasn’t a work stoppage when the last agreement was signed, one of the lasting images from August 30, 2002 is waiting to see if the Boston Red Sox would board their buses at Fenway to travel to a Cleveland for a weekend series against the Indians. The Red Sox where scheduled to depart at 7:30 AM but delayed their departure fearing all would be for naught, with Major League Baseball facing their ninth work stoppage. CNN had a camera fixed on the Yawkey Way on the Red Sox clubhouse. The Red Sox delayed their departure first for a few minutes, then for several hours as a nation held its breath – would the Red Sox emerge from their clubhouse and board charted busses to take the team to the airport, or would MLB face a ninth work stoppage that many observers believed would cripple the sport. Coming less than a year after the terrible events of September 11, 2001, many pundits believed if MLB forced fans to endure another work stoppage the game would go down for the count.

The fractured relationship between Major League Baseball and the MLBPA resembles a train wreck – with the owners being their own worst enemies each and every time.

Through it all Miller’s resolve remains a guiding force with the MLBPA. Miller became the first MLBPA executive director in 1966 after a 16-year career with the United Steelworkers of America. Miller brought not only determination and an understanding of what it would take to build a level playing field between owners and players, but a mindset that didn’t exist in sports in 1966. In the mid ‘60’s Major League Baseball teams ‘enjoyed’ the reserve clause, a contractual obligation that tied a player directly to the team he signed a contract with for his entire playing career. If slavery had been abolished, no one had bothered to inform MLB team owners. Similar working conditions existed in every sport – players where slaves to owners. Marvin Miller changed had sports operated. Marvin Miller made sports into a business.

His first Basic Agreement, signed in 1968, doubled pension levels, raised salary minimums, and addressed a variety of player complaints about working conditions. These gains and new licensing arrangements which directly benefited players, plus Miller's frequent tours of training camps and open-door policy at his New York office, soon overcame player resistance - even in the face of the owners' persistent efforts to label him a "labor boss" and a communist.

A year later, Miller found a baseball player who was tired of being treated like a second class citizen. Curt Flood the longtime all-star centerfielder for the St. Louis Cardinals was traded to the Philadelphia Phillies. Flood, an African-American had no interest in playing for a team in Philadelphia a city he believed was racially divided in 1969. Flood met with Miller in New York, telling Miller he refused to be traded against his will to a team and city he didn’t want to play in. Miller supported Flood, telling him it would be a tough uphill battle. Curt Flood was set to challenge MLB’s reserve clause, the cornerstone of player contracts.

Flood and Miller firm in their resolve did not win their fight. After a series of appeals, the case, technically a challenge to baseball's longstanding exemption from the anti-trust laws, reached the U.S. Supreme Court. In June 1972 the Court ruled, in a 5 to 3 decision, in favor of the owners. Once again, professional baseball's uniquely paternalistic system of labor relations was upheld.

Flood sat out the entire 1970 season. The Phillies traded Flood to the Washington Senators in a five-player trade, and signed a $110,000 contract with Washington. He ended his career with 13 games for the Senators in 1971 in which he batted only .200 and had lackluster play in center field.

MLB’s commissioner at the time was Bowie Kuhn. Much of Kuhn’s professional career was spent working for Major League Baseball. Elected commissioner in 1969, Kuhn’s 15-year tenure as MLB commissioner was preceded by 20-years as MLB’s legal counsel. Whether it was Bowie Kuhn’s philosophy or Marvin Miller’s determination, the two men where on a collusion course from day one. Kuhn is almost 6’6, Miller 5’5. Both men saw themselves as saviors for the game, just different sides of the game.

In 1972 baseball players went on strike for the first time in professional sports history. The strike began on April 1 and ended 13 days later. 86 games where lost, and the business of sports changed forever. Ownership was delivered a message – push the players far enough, and labor will refuse to work under those conditions.

A year later, a lockout ensued (17 days of spring training where lost) but arguably the most significant change in how contracts where negotiated took place -- salary arbitration.

In 1975, pitchers Andy Messersmith of the Los Angeles Dodgers and Dave McNally of the Montreal Expos, whose 1974 contracts had been renewed without their signatures or consent, filed grievances against the unilateral renewal procedure. In effect, it was a challenge to the Reserve Clause, with the owners, as usual refusing to negotiate. Peter Seitz's arbitration decision in the case, delivered on December 23, 1975, upheld the players. The 1976 Basic Agreement included a guarantee of "the right of players under their present contracts to become free agents" after serving six years with the team that first signed them. Miller was immediately hailed as baseball's "Great Emancipator."

In 1966 the average MLB salary was $17,000, ten years later in 1976 (the last year without free agency, but with salary arbitration in place) the average salary increased to $51,501. Five years later in 1980, the average salary increased to $143,756 in 1980. Bowie Kuhn and baseball owners had, had enough; they had the determination to destroy the players association led by Marvin Miller. Miller and union leaders general counsel Donald Fehr, former counsel Richard Moss, led the players in a strike that began on May 29, 1981 and ended on August 1, 1981. The CBA – the players won everything they wanted before the strike began, the owners lost.

Miller retired in 1983, Fehr took over, and nothing has changed. The owners continued to embarrass themselves and succeeded in bringing the sport into disrespect.

Kuhn left MLB in 1985 replaced by Peter Ueberroth. Ueberroth, served as the head of the 1984 Los Angeles Olympics Organizing Committee. The 1984 Olympics where a watershed moment in sports history, under Ueberroth’s leadership the Games became a money-making machine. MLB owners jumped at the opportunity to replace Kuhn with Ueberroth.

Beginning in 1986, under the guidance of Ueberroth, owners tried collusion to stem the increase in player salaries. Teams agreed not to bid on one another's free agents. The strategy worked, for awhile. During the next two seasons, player salaries grew at lower rates and high profile free agents routinely had difficulty finding anybody interested in their services. The players filed a complaint, charging the owners with a violation of the labor agreement signed by owners and players in 1981, which prohibited collusive action. They filed separate collusion charges for each of the three seasons from 1985-87, and won each time. The ruling resulted in the voiding of the final years of some players contracts, thus awarding them "second look" free agency status, and levied fines in excess of $280 million dollars on the owners. The result was a return to unfettered free agency for the players, a massive financial windfall for the impacted players, a black eye for the owners and the end of the line for Ueberroth.

Bart Giamatti replaced Ueberroth. Giamatti, a lifelong Red Sox fan who understood the heart and soul of baseball died less than a year after being hired, and 10-days after banning Pete Rose from the game for life for betting on baseball. Giamatti was replaced by Fay Vincent. Vincent hired in 1989 was fired in 1992, setting up the Bud Selig era.

The former owner of the Milwaukee Brewers, a used car salesman by trade, on September 9, 1992 Selig was Chairman of the Major League Executive Council – de facto commissioner. Selig served a dual role as President of the Milwaukee Brewers Baseball Club and Chairman of the Executive Council until his appointment as Commissioner on July 9, 1998.

Selig’s ‘reign of terror’ as commissioner was highlighted by the 1994 strike that began on August 12, 1994 and ended on March 31, 1995. The 1994 World Series was cancelled. The owners started 1995 spring training using replacement players, another disaster for ownership.

On March 29, the players voted to return to work if a U.S. District Court judge supported the National Labor Relations Board's unfair labor practices complaint against the owners (which was filed on March 27). By a vote of 26-2, owners supported the use of replacement players. The strike ended when federal judge Sonia Sotomayor issued a preliminary injunction against the owners on March 31. On Sunday, April 2, 1995, the 232 day long strike was finally over. Judge Sotomayor's decision received support from a panel of the Court of Appeals for the Second Circuit, which denied the owners' request to stay the ruling.

Tuesday’s Insider will look at MLB and labor since 1995. For Sports Business News this is Howard Bloom. Source cited in this Insider Report: ESPN.com, Wikipedia, the free encyclopedia, MLB.com, The Economic History of Major League Baseball and Guide to the Marvin J. Miller Papers

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Friday, October 20, 2006

Steve Lyons – he was warned and he paid the price

The life and times of Steve “Psycho” Lyons continued unabated Thursday. The good news, with the World Series starting Saturday night at Detroit’s Comerica Park, Lyons will be no where near the Fall Classic, and his “15 minutes of fame” are all but used up.

The media for the most part has defended Lyons, suggesting the Fox network had no right to fire him. Memo to those media hacks who believe in that falsehood – if you’ve never been fired for making stupid comments, consider yourself lucky. As for Psycho, he should count his blessing; the Dodgers have agreed to employ him for the 2007 season, a questionable move at best, given that Lyons was well aware what would happen if he stepped over that mythical line in the sand at Fox.

The Los Angeles Times sports media reporter Larry Stewart Thursday reported that following the inappropriate comments Lyons made regarding then Los Angeles Dodgers outfielder Shawn Green missing a Dodgers game during the 2004 season in observation of the Jewish High Holiday – Yom Kippur, Lyons signed a clause in his contract giving Fox the right to fire Lyons if the network believed any comments Lyons made hurt the image of the Fox Sports network.

"It said, 'If I mess up again, they can fire me,' " Lyons told The Los Angeles Times.”But it's what they deem a mess-up-able offense."

Clearly either Steve Lyons has a very low IQ, or he just doesn’t get it. Steve Lyons agreed to a clause in his contract that gave his employer (Fox Sports) the right to fire him. If Lyons didn’t want to sign that clause, he didn’t have to. Fox Sports as would have been their legal right, likely would not have renewed Lyons contract.

"I didn't know that I would be offending anybody by trying to bring levity to a serious, serious situation, an anguishing thing for Shawn Green," Lyons told The Los Angeles Times.

Clearly Steve Lyons just doesn’t ‘get it’. The comments he made two years ago about Shawn Green (where all this began) may not have seemed offensive to Green but its very likely the ill-advised comments had to bother former Dodger and Baseball Hall of Fame member Sandy Koufax and the lasting legacy of another Baseball Hall of Fame member Hank Greenberg.

Two years ago according to a New York Times report: Lyons was suspended without pay after insensitive remarks he made about then Los Dodgers' Shawn Green, who is Jewish and chose not to play against the Giants in San Francisco on Yom Kippur.

On that telecast, Lyons told a national audience that Green had "probably" taken the day off "for the heritage and not the religion. He's not a practicing Jew," Lyons said. "He didn't marry a Jewish girl." Lyons should have stopped there, but he continued, saying, "And from what I understand, he never had a bar mitzvah, which is unfortunate because he didn't get the money."

Lyons was suspended without pay for the Giants-Dodgers game on October 2. 2004 (Eric Karros sat in for him), but was allowed by Fox to return for the playoffs without making an on-air apology.

In a statement, Fox apologized to those viewers who were offended and conceded that Lyons had "exercised poor judgment." The network said he "had expressed extreme remorse." A Dodgers spokesman, John Olguin, said in an e-mail message that Green had not been offended by Lyons's comments.

In 1934, Detroit Tigers first baseman Hank Greenberg decided not to play in a game during a tight pennant race because it fell on Yom Kippur; thirty-one years later, Koufax missed a contest for the same reason, this time Game 1 of the World Series.

"The team was fighting for first place, and I was probably the only batter in the lineup who was not in a slump. But in the Jewish religion, it is traditional that one observes the holiday solemnly, with prayer. One should not engage in work or play. And I wasn't sure what to do." - Hank Greenberg said in his autobiography.

"The only way I would even think that I might have been a hero in those days was the day I walked in Shaarey Zedek Temple and got a standing ovation because I showed up in temple on Yom Kippur," Greenberg said in 1984. "The poor rabbi standing on the podium 'davening,' praying, and suddenly I walk in and everybody in the congregation gets up and applauds. The poor rabbi looks around; he doesn't know what is happening. And I'm embarrassed as can be, because it was all totally unexpected."

The game that Green sat out mirrored Greenberg’s decision. Green sat out a key late season game against the San Francisco Giants on September 26 – a late season game with playoff implications.

''It's something I feel is an important thing to do,'' said Green at the time. He added that his decision was based ''partly as a representative of the Jewish community, and as far as my being a role model in sports for Jewish kids, to basically say that baseball, or anything, isn't bigger than your religion and your roots.'' Green, 28, told The New York Times his upbringing in Tustin, Calif., was not particularly religious, described his appreciation of his Jewish heritage as a ''slow awakening.''

Green told ESPN.com when he sat out the game he did so in large part thanks to the lasting Dodgers legacy Sandy Koufax left. During Game one of the 1965 World Series (all World Series games in the 1965 series where played in the afternoon) Koufax attended synagogue in Minneapolis. The Dodgers lost game one of the ’65 World Series 8-2 (Don Drysdale started), but won the World Series in seven games with Koufax pitching games two, five and seven of the series for the Dodgers.

Lyons should have been fired when he made what could have been considered racially insensitive comments about Shawn Green.

His comments where: insulting to anyone who has been or is a part of an interracial marriage. His assumption that every Jewish youngster receives a great deal of money when they have a bar mitzvah is insulting to what a bar mitzvah represents to Jews – a celebration of a young man being welcomed as a man by his faith. And to question how any member of any religious group chooses to observe the most religious day their faith observers in a given year, demonstrates a complete insensitivity on that person’s (Lyons) part.

If Lyons believes he didn’t offend Green that is his opinion. Thankfully Sandy Koufax didn’t address Lyons inane comments, and Greenberg passed away on September 4, 1986.

Lyons for his part is in full damage control, doing whatever he can to restore whatever is left of his image and reputation. Lyons sent out a release late Wednesday doing his best to spin his firing. Lyons’ title for the release -- Mis-Fired For 'Insensitive Comments' - FOX Sports Broadcaster Speaks Out. And what did Mr. Lyons have to say?

“I feel that it is unfortunate that after 11 years with FOX that my career would come to such an abrupt end and also at the expense of my personal reputation. It seems as though my comments actually had to be critically scrutinized to really make a connection. However, I truly apologize to anybody that was offended by my conversation with Thom Brennanman and Lou Piniella. The origin and intent of the joke was about my missing wallet, not race. I did not intend to single out any particular race and in fact have many close Hispanic friends and a bi-racial grandson. It never crossed my mind, it is a ridiculous and far reaching conclusion."

Lyons asserts that he is not a media risk and is confident about his future in broadcasting. "I love the game and I love sharing my passion for the game with fellow sports enthusiasts. I will be back!" states Lyons. Adding, "I loved my opportunities at FOX for 11 years, I hope they could look at this again and re-instate my ability to work and most importantly, my long hard-earned reputation."

Given that Psycho paid PR Newswire to distribute his release he had every right to make whatever claims and comments he believed makes him look how he wants to be portrayed.
No where in his press release did Lyons have the courage or the conviction to admit what he told The Los Angeles Times – he knew full well the Fox Sports network would be well within their rights to fire him. Steve Lyons may not believe he isn’t a media risk but Fox Sports believes hiring Steve Lyons isn’t a risk they’re prepared to take anymore.

Longtime Fox broadcaster Tim McCarver knows all too well where that mythical line in the sand is, unlike Lyons.

"You have to understand that it's a more sensitive world now," McCarver told the media in a World Series conference call. "What was said 20 years ago can't be said today. Just from a dignified standpoint, just being sensitive to the issues of the day, it's a little tougher being a broadcaster nowadays. I don't think there's any question about it."

The Dodgers, they of the legacy of Sandy Koufax, decided to continue employing Psycho for at least the 2007 season. In a release the Dodgers announced that Lyons would be asked to attend diversity training. And the Dodgers have followed the example set by Fox Sports – the Dodgers now have the right to fire Lyons if they believe he utters any comments they believe are inappropriate.

According to a Los Angeles Times report, Lyons combined income from his job(s) with Fox Sports and the Dodgers was around $500,000, 75 percent from Fox. Lyons has suffered a tremendous blow to both his wallet and his credibility.

Steve Lyons was a popular network broadcaster because people believed he was colorful. If Steve Lyons is the South Pole, the generic Tim McCarver is the North Pole. The two men are polar opposites in a baseball broadcast booth. The difference between the two men, one will be working at the World Series, the other will be watching the World Series.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Los Angeles Times, Baseball Almanac and The New York Times

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