Monday, December 11, 2006

Stephon Marbury – Doing the Right Thing

In 1998 Spike Lee directed “He Got Game” a film based on a fictional account of a Brooklyn high school basketball player, the best high school basketball in America, Jesus Shuttlesworth and the interest everyone close to Jesus had in wanting a piece of his success.

The movie starred Ray Allen as Jesus Shuttlesworth. Jones cast Allen in the key role, but could have easily asked Brooklyn native and New York Knicks guard Stephon Marbury to play the role. Marbury had lived the life Lee created.

Marbury grew up with Cooney Island’s famed boardwalk serving as a backdrop to the tenement apartments and basketball courts Marbury and his younger cousin Sebastian Telfair called home as youngsters. Marbury is living proof greatness can take place when a boy grows up to be a man and that man does his very best to give back to his community. If the National Basketball Association wants to use one athlete as its role model they need look no further than Stephon Marbury.

He has been named to The Sporting News list of “Good Guys in Sports” three times. He was one of the highest donors to the NBA Player Associations Katrina Relief effort, donating 1 million dollars to the effort. He currently has 7 barbers on hire in Coney Island giving free haircuts to neighborhood children. But it’s his Starbury Ones basketball shoes that represent what one day might become Marbury’s lasting legacy to basketball to tens of thousands of children and their families – affordable shoes and basketball apparel and to the community.

Last week Footwear News an industry magazine recognized the impact Marbury’s product launch had on the industry by awarding Marbury its “Launch of the Year”. Footwear News who also publishes Women’s Wear Daily awards is thought to be the “Oscars of the shoe industry”. Marbury and his partners retailers Steve & Barry's last week also announced they are donating a free pair of Starbury One high performance basketball sneakers to every varsity high school boys basketball player in New York City. The donation of 3,000 pairs of Starbury Ones is part of a new agreement that makes the Starbury brand a Partner of the Public Schools Athletic League (PSAL). The PSAL directs all athletic competition among the 193 public high schools in the five boroughs.

Stephon played in the PSAL while growing up in Coney Island and attending Lincoln High School. As a senior, he averaged more than 28 points and 9 assists per game while leading his team to the 1995 PSAL championship.

"The PSAL helped me get to where I am today and I am real excited to be able to supply free sneakers to all of these kids," Marbury said. "I hope it inspires them to become better players, and even more important better men."

"We are very proud of Stephon Marbury's accomplishments on and off the court," said Donald Douglas, Executive Director of the PSAL. "Our PSAL basketball players will benefit greatly from Steve & Barry's generous gift of Stephon's Starbury Ones basketball sneaker and we are very appreciative of their support. We look forward to future endeavors that bring Stephon, Steve & Barry's, and the PSAL together for the benefit of our student-athletes."

Marbury launched his product ‘revolution’ on August 17, and followed that with a 21- city tour promoting the shoes and the accompanying clothing line. The product launch and the subsequent tour was timed to send a message to parents from lower income families as they were conducting their back-to-school shopping, you can afford to have your kids look and feel like an NBA basketball player.

Stephon Marbury said at the time of the release: "Kids shouldn't have to feel the pressure to spend so much to feel good about the way they look. I'm blessed to be in a position to do something about it, to help change the world. I couldn't find a better partner to create the Starbury Collection with than Steve & Barry's. For 20 years, their entire business has been about selling great quality clothes for much less than people expect they should cost."

Steve & Barry's co-CEO Barry Prevor added: “This is a very exciting moment for Steve & Barry's. When Steve and I founded our company in 1985, it was with a mission to bring people the most unbelievable values on clothes they've ever seen. That's exactly what Steph's vision for the Starbury Collection is all about, so this has been a fantastic partnership from the first day we met. Like Steph, we want to revolutionize how people shop, and this new line will help us continue to make that happen."

Marbury commented, "It was very important to me that the Starbury Collection have a strong social component for kids and parents, especially in urban areas. Steve & Barry's and I decided to conduct the design contest so kids could give real input into how the Starbury line is created and as a means to give back to youth and the community."

Marbury played one year at Georgia Tech, the highlight was his 26 points in leading Georgia Tech to the 1996 ACC Tournament title over Tim Duncan’s Wake Forest team. Drafted by the Milwaukee Bucks as the fourth overall pick in the 1996 NBA draft, and then immediately traded for Ray Allen to the Minnesota Timberwolves, Marbury was again traded to the New Jersey Nets on March 11, 1999. The Nets traded Marbury to the Phoenix Suns on July 18, 2001. The Suns traded Marbury to his hometown Knicks on January 5, 2004.

Four NBA teams in less then eight seasons, Marbury must have believed he would be living the dream when the Cooney Island high school phenom had returned with a chance at being the local hero. Unfortunately for Marbury and the Knicks, these have not been the best of times for the once proud franchise that calls Madison Square Garden home.

"It hasn't worked out the way everyone thought it would," Mark Jackson, the former Knicks point guard who has known Marbury for years told The New York Daily News in March. "Stephon Marbury came in with a lot of baggage and hasn't found success in New York. But this is a collective effort. There is plenty of blame to go around."

The Daily News report in March didn’t paint a pretty picture of Marbury. Titled, “The fall of a Starbury” was a damming look at the return of a not so conquering hero who had let everyone down in the 27-months (January 2004 to March 2006) since his return to New York.

"He's not a happy person," says Rob Johnson, the Queens basketball consultant who has known Marbury since he was a kid. "Steph treats everyone with a cold shoulder. I know he takes care of a lot of people and he does a lot of good with his summer tournament. But he's very moody and he's hard to get along with."

Marbury was the point guard on the ill-fated 2004 United States Olympic basketball team, the dream team that became a nightmare. Still the gold medal favorites, even after a disastrous sixth place finish at the 2002 World Basketball Championships, the United States finished with a bronze medal at the Athens Game. Larry Brown was American head coach with the 2004 Olympic team. Marbury and Brown began a battle in Athens that escalated into a WAR two years later. Brown was fired by the Knicks after the 2005-06 season, Marbury’s reputation destroyed after the very public battle while Brown served as the Knicks head coach.

"Anyone who witnessed what happened at the Olympics saw this coming," Jackson told The New York Daily News. "There is no denying that Stephon Marbury is a great player and Larry Brown is a great coach. But as far as being the type of point guard that Larry wants, Stephon doesn't fit the mold."

In a classic case of ‘what have you done for me lately’ the image Marbury had when the Starbury One product launch took place was terrible. That made the product launch that much more interesting. Yes, Stephon Marbury might have grown up without many of the niceties many children enjoy, but the image Marbury had in August was someone living in the lap of luxury. Marbury’s current six-year NBA contract (remember all NBA contracts are guaranteed) pays him $104,910,000 over the lifetime of the agreement. How could anyone who has made as much money as Stephon Marbury has been paid to play basketball become the face of discounted basketball shoes?

Adding even more ‘intrigue’ to the product launch, in the world of $100 million shoe endorsement deals (LeBron James has a $90 million contract with Nike), the Marbury who’s $16.45 million 2005-06 salary made him the fifth highest NBA player wasn’t guaranteed anything for endorsing the shoes, rather Marbury choose to accept a percentage of sales revenue generated from the sale of the product line.

In a world where the average sneaker costs more than $100 and shoes bearing the seal of Allen Iverson, LeBron James or Michael Jordan’s approval can cost between $150 and $300 for a pair of basketball shoes, Marbury was intent on being the spokesman for a shoe that would retail for $15 a pair.

'We are allowing kids to become more educated (but they) are not allowing themselves to see the big picture,' Marbury said days after the launch. 'The big picture is not having a $200 pair of sneakers when your mother's income is $15,000. When you walk into a store, you are not being held hostage any more. So it's an outlet for the people, especially from where I come from.”

The market reaction – the shoes have sold out wherever and whenever they have been available. More than 3 million pairs of Starbury’s have sold with little if any marketing behind the project except for the marketing and promotional tour since the product launch on August 17. Consider these points raised in a report from Design Bulletin’s Mark Ritson:

- The Starbury One shoe was designed by Steve & Barry's University Sportswear, which began as a collegiate apparel store at the University of Pennsylvania in 1985 and aims to provide quality merchandise at a reasonable price.

- Steve & Barry's currently has more than 150 stores in 33 US states and plans to expand to 200 by the end of this year.

- Stephon Marbury traveled to 40 US cities in 17 days to promote the shoe. So far, about 3m pairs have been sold.

- The US athletic footwear market is worth about $8bn

- Other NBA 'signature' shoes include Nike's Kobe Bryant Huarache trainers (priced about $120), Converse's Dwayne Wade sneakers (priced about $100) and the 'daddy' of sneaker endorsements - Nike and Michael Jordan's Air Jordan line (about $180 a pair). The first Air Jordans went on sale in 1985.

Erin Patton, principal of The Mastermind Group, the marketing agency behind the Starbury Collection, told Britain’s Manchester Guardian: "Stephon Marbury understood the difficulty parents and kids face keeping pace with the exorbitant price of sneakers. He knows what it means for inner-city living kids and the extreme measures that are sometimes used to get these products." Patton, who for five years was director of the Jordan brand at Nike, described Marbury's initiative as "an industry-changing event".

"Things are so crazy out there," Marbury said. "There's kids who are shot over jerseys for $150, $200. There's poor mothers and families out there who bury their child for a jersey. We're talking about clothes. Things have gotten too crazy."

“His intent is admirable. It's important because so few athletes have been willing to do this,” says Ken Smikle, president of Target Market News, a Chicago organization that tracks advertising, marketing and media aimed at black consumers in a USA Today report. “Marbury's move gives parents a way to offer their kids a reasonable alternative to those $200 basketball shoes.”

According to an October USA Today report, in 2004, black consumers spent $2.3 billion on alcoholic beverages and only $257 million on books; $22 billion on clothes and just $2 billion on computers. “It's more about social value than economics,” Smikle explains. “If you ascribe to a certain social value, you'll buy high-priced footwear.”

A New York Times report suggested Marbury’s initial motivation as at least in part personal reflections Marbury had with current Knicks coach Isiah Thomas about Marbury leaving a lasting legacy after he leaves professional basketball behind. Having earned well over $100 million as a basketball player the 29-year old will never have to concern himself with money again. However after talking to Thomas, Marbury decided there was more to life then the money he’s made as an NBA basketball player.

“He was explaining to me how my generation never went through anything,” Marbury told The New York Times. “There was a generation that went through things that we never even envisioned. For me to be able to talk with him, get insight on how things were back in the day, I got a picture of what he created for me to see. It made me feel like I want to put my mark on history as far as letting people know that I’m a part of something that I’m moving with. All this is brand new, this is revolutionary, the thing that we’re doing right now.”

In late August, Bob Basché, the chairman of the sports marketing agency Millsport in Stamford, told Ad Week he believed sales of the shoes would be limited to the New York area, the story wasn’t bigger than a local (New York story) and Marbury didn’t have the cache to sell shoes nationally like LeBron James, Michael Jordan or Dwayne Wade, adding::this will be profitable for Marbury and Steve & Barry’s, but it won’t impact the industry.”

He added, “Marbury has a New York following but doesn’t command the attention of the entire basketball nation the way LeBron James, Dwyane Wade and Michael Jordan do.”

Andy Todd, the president of Steve & Barry’s, disagreed. “I would invite you or him to come to any of our stores, not just in New York, but in Detroit and Los Angeles, where they’re also sold out, and see if it’s changing the world,” he said in a telephone interview yesterday. “It’s become a movement. People have taken to this. And it’s not a New York story at all. This whole Starbury collection is about Steph’s vision to eliminate the pressure that parents and kids feel to spend top dollar on the latest sneakers and clothing.”

Needless to say the industries product launch of the year, more than 3 million shoes sold, Mr. Basché was wrong on nearly every assessment he made relating to Stephon Marbury, Starbury One and what the consumer is looking for. Mr. Basché may believe he was right, but he couldn’t have been more wrong.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The New York Times, The New York Daily News, Footwear News, Brand and Republic and Adweek.

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Friday, December 08, 2006

FIFA – a world few truly understand (or Herr Sepp and his Band of Merrymen)

Imagine if you will for a moment the National Football League facing two major business related crisis’s, both dealing with ethical business issues in the space of 24-hours. Roger Goodell faces challenges everyday as NFL commissioner, as does Bud Selig in his role as Major League Baseball commissioner, NBA commissioner David Stern and Gary Bettman NHL commissioner. Each man faces a unique set to challenges everyday, but are men of honor and integrity when it comes to ethical business issues. The same set of rule may not apply to an organization that on a world-wide level is bigger than MLB, the NHL and the NBA and in many ways nearly on the same level as the NFL -- FIFA (Fédération Internationale de Football Association).

Late Wednesday, FIFA’s ‘ethics committee’, an oxymoron if there ever was (An oxymoron (plural oxymora or, more commonly, oxymorons) (noun) is a figure of speech that combines two normally contradictory terms) announced the results of their investigation into charges FIFA senior vice-president Jack Warner had created his own secondary ticket market with tickets to this summer’s World Cup in Germany. According to FIFA’s own independent auditors, Warner allegedly profited close to $1 million in the reselling of tickets he had purchased.

Thursday, U.S. District Court Judge Loretta Preska granted a preliminary injunction filed by MasterCard, which had sought to block the Visa deal that was awarded last spring. Visa had agreed to pay $180 million for the sponsorship, which was to start in January and run through the end of 2014, according to legal papers.

The ruling and lack of action on the charges leveled at Jack Warner seriously throws into question how FIFA conducted their negotiations for one of the most coveted sponsorship categories – financial services and for that matter what business practices one of the sports world’s most important governing bodies follows!

MasterCard’s relationship with FIFA began in 1990. MasterCard contended in their lawsuit their current four-year agreement, which was scheduled to end on December 31, 2006, gave MasterCard the contractual right of first refusal for an extension. How important are FIFA sponsorship agreements? An Olympic sponsorship costs $20 million annually, FIFA sponsorship fees are pegged at $35 million a year. (Remember FIFA allows on-field event advertising, while the Olympics do not permit any commercial signage within any event facility). How important was this particular agreement, if MasterCard had lost Thursday, Visa effectively would have controlled the key global sports marketing properties.

In her ruling the Judge made it clear she wasn’t a happy judge. "Because MasterCard and FIFA agreed on all terms of the 2007-2014 MasterCard agreement and the 'final version' of that agreement was sent by FIFA to MasterCard for execution, and the duly executed agreement returned to FIFA, it is fair and equitable that FIFA be required to specifically perform the 2007-2014 MasterCard Agreement.," the judge wrote.

If you read the Judge’s ruling correctly what possible rationale could FIFA have used to have reached an agreement with MasterCard, only to ignore that contract and sign a new deal with MasterCard’s biggest competitor? Certainly FIFA had to be aware MasterCard had a right of first refusal included in their current agreement they negotiated with MasterCard. Why would any sports governing body fully understanding their contractual obligations decide they wouldn’t respect their own sponsorship agreements?

Sports Business News contacted FIFA, MasterCard and Visa Thursday; each group offered the following to SBN.

This first MasterCard, “We are delighted the court has ruled for MasterCard in recognizing that the actions taken by FIFA were a blatant and deceitful violation of our rights.”

“Judge Preska’s decision to issue a permanent injunction prohibiting FIFA from moving forward with an agreement with Visa, and directing FIFA to honor its commitment to MasterCard for the 2010 & 2014 FIFA World Cup tournaments supports our long-standing position.”

“The court clearly recognized the credibility and solid business ethics of our executives in contrast to the bad faith conduct of FIFA.”

“This ruling stands as a victory for sound business ethics over the deceptive and deceitful practices perpetrated by certain members of the FIFA management team,” commented Noah Hanft, General Counsel, MasterCard Worldwide. “We now look forward to reforms in FIFA’s business practices going forward.”

Visa’s reaction to Sports Business News inquiry was ‘interesting’ to say the least, “Visa negotiated and executed a global sponsorship agreement with FIFA in good faith. We were assured by FIFA that the agreement was valid and binding and did not conflict with any of MasterCard’s rights. During the trial, Visa was surprised and dismayed to learn that during the negotiations, FIFA had not been truthful with Visa regarding its obligations to MasterCard. Nevertheless, we are disappointed by the court’s ruling today and we are currently considering all of our options.” Michael Sherman Visa’s vice-president for Global Communications.

And what of FIFA, the governing body, the object of MasterCard’s lawsuit, what about their reaction?

“FIFA is dismayed by the decision of the US Federal Court in New York which upheld MasterCard's complaint regarding the granting of the financial services category sponsorship package. FIFA will appeal this decision and fully expects to prevail.”

“FIFA remains convinced that at all times it acted in good faith and it will therefore continue to vigorously pursue its case. Furthermore, FIFA notes that the Zurich arbitration tribunal is competent to hear this dispute, and FIFA awaits the outcome of this proceeding.” FIFA’s Andreas Herren told Sports Business News.

Visa has to be “concerned” about their long-term relationship with FIFA. As part of the prospectus Visa released in October in advance of their planned IPO, Visa officials included a 22-page overview of the payments network. Among other attributes, Visa trumpeted their nearly $1 billion of sponsorship programs to promote its brand, including sponsorship of the World Cup.

A November Wall Street Journal reported suggested the key to Visa and MasterCard’s pursuit of a FIFA sponsorship is both companies interest in building their presence in soccer crazy Latin America. One of Visa’s key sports sponsorships remains is its long-standing Olympic sponsorship. While Visa (and other Olympic sponsors are unable to enjoy the benefits of event signage as part of their sponsorship agreements) Visa’s Olympic promotional focus in part focuses on Visa being the only credit card accepted at the Olympic Games and for the purchase of Olympic tickets.

MasterCard actively promoted the same benefit in relationship to its FIFA sponsorship agreement in advance of June’s World Cup in Germany. MasterCard also leveraged their $35 million FIFA sponsorship with contests and other consumer benefits with their banking partners. After the Olympic Games the biggest sports event in the World is soccer’s World Cup.

"There is no sponsorship platform anywhere in the world that rivals the FIFA World Cup in terms of the global reach and breadth of penetration it affords to sponsors," according to the complaint filed by MasterCard.

MasterCard and FIFA had enjoyed a 16-year relationship, which focused on a series of four-year agreements. FIFA decided they wanted an eight-year agreement with MasterCard when the two sides began negotiating an extension to their agreement late last year. MasterCard wasn’t pleased with FIFA’s insistence on an eight-year agreement, initially walking away from those discussions.

MasterCard and FIFA began talking again in early March, quickly reaching terms on the eight-year sponsorship agreement FIFA wanted. According to the court filings, citing a trademark issue, FIFA’s executive committee then refused to sign off on the MasterCard agreement. A few weeks later despite having agreed to an eight-year sponsorship agreement with MasterCard, FIFA announced an eight-year sponsorship agreement with Visa.

How important is their FIFA sponsorship agreement? Again when you consider Visa’s current Olympic sponsorship agreement runs through the 2012 London Olympics, if MasterCard lost their FIFA sponsorship Visa would have a lock on the global sports sponsorship market in the financial services category.

One of the most important issues that needs to be resolved following Thursday’s ruling is what next, and who exactly has the sponsorship rights? MasterCard’s Chris Monteiro, cited the following language from Thursday’s ruling when asked by Sports Business News late Thursday as whether or not MasterCard or Visa now control FIFA’s financial services sponsorship category.

“MasterCard Is entitled to permanent injunctive relief for the foregoing reasons, MasterCard is entitled to: a) a permanent injunction enjoining defendant Fédération Internationale de Football Association (“FIFA”) from implementing or otherwise proceeding with its purported 2007-14 “FIFA World Cup” sponsorship agreement with VISA or otherwise granting to VISA, or any other entity, any package of advertising and sponsorship rights, with respect to payment solutions products or services, in connection with FIFA soccer competitions during the period 2007 to 2014”

“b) a permanent injunction directing FIFA to specifically perform its obligations under section 9.2 of the Agreement by granting to MasterCard the package of advertising and sponsorship rights, which previously was offered to and accepted by MasterCard, with respect to payment solutions products or services, in connection with FIFA soccer competitions during the period 2007 to 2014; and 125.”

“In accordance with section 22 of the Agreement, judgment granting MasterCard all of its “costs and expenses in connection with its enforcement of its rights, including all reasonable legal fees, costs and disbursements.” Monteiro told SBN.

The alleged resale of tickets for this year’s World Cup should be considered nearly as troublesome by FIFA as the serious sponsorship issues the organization is being forced to deal with.

FIFA’s auditors Ernst and Young identified that World Cup tickets purchased by FIFA senior vice-president Jack Warner where resold for thee times their face value by Warner’s son Daryan. According to Ernst and Young the tickets where sold through the Trinidad and Tobago travel agency Simpaul, which is owned by Warner's family. The tickets where bought at face value by Jack Warner, and then resold by his son through an agency owned by Jack Warner and his family.

When the Ernst and Young report was released three months ago, FIFA Czar Sepp Blatter announced the formation of an ethics committee. The so-called ethics committee would be chaired by Sebastian Coe the head of the London’s 2012 Olympic Organizing Committee. How serious was Herr Sepp about dealing with the charges leveled against Warner? Consider Coe’s mandate -- he was not granted the authority to step in on cases retrospectively that predated his appointment. The ethics committee would have no power whatsoever to look seriously at any ethical issues that predated their appointment.

Nonetheless, earlier this week Herr Sepp released the following statement regarding the alleged ticket selling practices of one of Herr Sepp’s most trusted associates, Jack Warner.

"It could not be evidenced that Mr. Jack Warner had knowledge of the resale of these tickets at a higher price. The resale is certainly forbidden, but the person who did the re-selling is not subject to the FIFA jurisdiction, because it is the son of Jack Warner."

This despite ample evidence from FIFA’s appointed and independent auditors, that Warner had been at the center of a million dollar ticket reselling scandal. And if Herr Sepp is to be believed; how effective can Jack Warner be as a senior FIFA official when Warner (if Herr Sepp again is too be believed) wasn’t aware his own son was reselling tickets Warner had purchased for three times their face value. At the very least, Herr Sepp should dismiss Warner as FIFA senior Vice President.

Simpaul the travel agency owned by the Warner family reportedly sold World Cup tickets to British football supporters (among the most loyal fans in the world), for England’s quarter-final World Cup game against Portugal.

Mark Perryman, a member of England's official supporters' club, told London’s Daily Mail, after he learnt FIFA wasn’t prepared to seriously address Warner’s reselling of World Cup tickets: "FIFA are is quite right to punish fans for hooliganism. Touts and those corporates who take the tickets off fans are hooligans in suits and should be treated likewise. Jack Warner robbed fans of tickets. He is not the only one - he has got off very lightly.

"What we need FIFA to do - rather than protecting their own - is to launch a serious investigation into why hundreds of thousands of tickets - the numbers are almost unbelievable - are awarded to sponsors and VIPs at the fans' expense. There were virtually no instances of hooliganism at World Cup 2006 - a fact which should be celebrated - but the scandal of Germany 2006 was the story of those tickets in corporate hospitality pockets."

What could Sebastian Coe have been thinking when he agreed to head up an ethics committee for an organization that doesn’t understand the meaning of the word? Then consider the risk to Coe’s reputation? The 2012 London Olympics are in a spending free fall with the overall costs of the London Games nearing a projected $20 billion.

Perryman offered some advice for Coe to consider in trying to correct what’s gone very wrong at FIFA.

"What I hope Seb Coe will do is to listen to the experiences of fans. Sometimes, people think supporters are stupid but everyone accepts that if a company is going to sponsor the event they will receive some tickets.

"But can it be right that in the stadium which staged the Portgual versus England quarter-final in the World Cup, 30 per cent of the seats were occupied by corporates?

"Seb Coe portrays himself as a genuine football supporter. What I would suggest he does is to hold an open day so each supporters' group can discuss their issues with him and perhaps go forwards from there so that this is not allowed to happen again."

Another senior FIFA official, executive committee member Ismail Bhamjee of Botswana, was sent home from the World Cup in Germany for selling tickets. Bhamjee, 62, sold 12 tickets for England's match against Trinidad and Tobago for US$380 each, three times their face value.

There is no question whatsoever if Commissioners Goodell, Bettman, Selig and Stern had ever been involved in anything close to the allegations being leveled at the organization Herr Sepp runs (FIFA), Commissioners Goodell, Bettman, Selig and Stern would make the honorable resign and resign from their position or they would be fired by their respective organization. If a scandal of this proportion took place with any North American based sports organization, corporate America would run and hide. Evidently the same sets of rules do not apply when it comes to dealing with Herr Sepp and FIFA (Fédération Internationale de Football Association).

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

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Thursday, December 07, 2006

Off to a pretty good start – Roger Goodell

Earlier this week the “Roger Goodell Rocks America Tour” visited Miami the home of Super Bowl XLI, kicking off South Florida’s Super Bowl festivities. 100 days into an opportunity Goodell worked a lifetime to achieve, Roger Goodell is living his dream. At end of the day, as Goodell pointed out, business is pretty good these days for the National Football League.

“A Super Bowl unites not only this community but can also to bring this country and this world in someway, hopefully everyone comes together to enjoy a special event which we believe the NFL does better than anyone else. The Super Bowl serves as an opportunity to celebrate pride, enjoy what’s gone well in the past year and maybe if need be to forget about what hasn’t gone well at the same time.” Goodell said.

The Super Bowl has evolved into a larger than life event. With 30 second commercials being sold for more than $2 million, the game annually is among the highest rated television programs. Determining the actual economic impact from a Super Bowl is a subjective question at best. South Florida hotel rooms will be filled from January 29 to February 4, but given that the Super Bowl is being held in Miami it’s reasonable to assume most hotels in South Florida would be at near capacity during the dead of winter.

Super Bowl XXXIX held in Jacksonville was an entirely different story. Jacksonville appears ready with over 120 special events over a 10-day period culminating with the game on Feb. 6. The Jacksonville Super Bowl organizing committee believed they generated over $300 million in economic impact for the First Coast region, in addition to validating Jacksonville as a legitimate major league/mega event city. Jacksonville wanted what South Florida and Tampa had before they began hosting Super Bowl games, the perception that both areas are tourist destinations.

The Jacksonville host committee raised more than $12 million in private funds and the city kicked in close to $3 million, as well, with an additional $5 million in Super Bowl related offset with sales tax and hotel surcharge revenue alone. Security expenses for Super Bowl XXXIX cost around $6 million, with costs split between various local, county and state governments. The Coast Guard patrolled the river, which sparkled at night thanks to new lighting on four of the city's seven bridges closest to the stadium area. Jacksonville understood they might never host a Super Bowl game again and were determined to take full advantage of the opportunity.

In 2000, Jacksonville voters approved a $2.2 billion growth management plan that helped change the face of downtown. Those changes all in advance of hosting the Super Bowl included the building of a 16,000 seat arena, a minor league ballpark and a new three-mile river walking/biking/jogging trail, a library, courthouse, equestrian center, and major improvements at the zoo.

Goodell made that point home in Miami, “Clearly one of the points we want to drive home with hosting a Super Bowl is the benefits of being hosting the game and being home to an NFL franchise.”

While South Florida can look forward to hosting the Super Bowl, the Miami Dolphins with a 5-7 record appear to be heading for not only a losing season, but one where they won’t be making the playoffs.

“Its been a great season on the field, very exciting and unpredictable, that really is what we’re trying to bring forward each and every week. For a football fan, there’s nothing quite like experiencing your team going from last to first, making the playoffs and challenging for the Super Bowl. That’s what the National Football League is all about, giving you passion and creating a game everyone can be excited about.”

It has been a great year for the NFL both on and off the field. The NFL obliterated its previous sellout streak, selling out the first eleven weeks of the 2006 schedule. If not for the Buffalo Bills inability to sellout their late season games it’s reasonable to belief that the NFL might have sold out their entire season. From a television perspective with a month left in the regular season and with close to half of the teams in serious playoff contention, the amazing TV ratings the NFL has achieved this year are only going to get better.

Earlier this week NBC is no longer looking from the bottom up when it comes to network ratings, celebrated their second place overall ratings finish during the key November ratings sweep, admitting NBC owes all of its current success to Dick Ebersol’s decision to buy back into a product (the NFL) he and NBC turned their backs on in 1999 believing it wasn’t economically viable to pay the NFL for what they considered overvalued rights.

Seven years later, the embarrassment of the failed XFL behind Ebersol and the network, and $600 million a year in rights fees for Sunday Night Football NBC finished the November sweep up 15 percent versus last November in the key adults 18-49 demographic, and up 10 percent in viewers, boosting the network to a #2 finish for the month. NBC was the only network to show year-to-year growth in various key ratings categories, including adults 18-49 and total viewers, according to Nielsen Media Research.

NBC's 15 percent growth in adults 18-49 (3.8 vs. 3.3) is the network's biggest year-to-year increase in a major sweep month in more than a decade, excluding Olympics (May 1995). It's the network's biggest gain for a November sweep in People Meter History. In total viewers, NBC's 10 percent gain (10.5 million vs. 9.55 million) is the network's biggest year-to-year increase for a November sweep in People Meter History.

NBC's Sunday November average of a 6.0 in adults 18-49 is the highest rating for any network on any night during the sweep. Clearly as far as NBC executives are concerned their ability to generate advertising dollars is directly linked to the National Football League.

“In an era where there are so many choices for the consumer, NFL ratings continue to rise. Our ratings have increased for every one of our broadcast partners and needless to say we’re thrilled to be able to deliver that.” Goodell said.

There was a great deal of debate in the industry when Disney allowed ABC to walk away from Monday Night Football, but opened the door for ESPN to grab what had been ABC’s franchise program for more than 30-years. Not only did ABC bid farewell to MNF, allowing the on-air team they had developed (Al Michaels and John Madden) to leave for their competitors Sunday Night Football opportunity (NBC), but agreed to pay the NFL $1.1 billion a year for rights to Monday Night Football, which doesn’t include any playoff or Super Bowl games. Remember NBC’s $600 million annual agreement includes two Super Bowl’s during the lifetime of their current agreement.

ESPN’s numbers speak for themselves. More importantly it has extended to every aspect of ESPN’s brand.

MNF on ESPN is averaging a 10.0 rating and 9,204,000 homes (12,370,000 P2+) for 14 games in 13 weeks. These represent increases of 38%, 41% and 40%, respectively, compared to the first 13 weeks of last year's ESPN Sunday Night Football (7.2 rating, 6.529 million homes, and 8.827 million viewers).

ESPN leads all networks - cable or broadcast - in delivery of all key male demos on Mondays in primetime: men 18+, men 18-34, men 18-49 and men 25-54.

ESPN leads all cable networks in overall household delivery in primetime (an average of 2,571,000 households throughout the week).

ESPN's 14 MNF games so far are cable television's largest 14 household audiences of the year.

"Monday Night Surround" on

Online,'s NFL and "Monday Night Surround" content viewed on computers and wireless devices generated more than 20 million page views Monday, up 47% over page views last year according to Web measurement tool HitBox. In addition, there were 1.65 million views of pro-football-related videos on ESPN Motion and ESPN360 on Monday (through Tuesday at noon).

The FOX Sunday national game this past Sunday December 3 (mostly Cowboys-Giants) was viewed by 27.6 million people, ranking as the most-watched NFL regular-season game since the 1999 Dolphins-Cowboys Thanksgiving Day game on CBS.

The game was also the second most-watched show of the TV season, trailing only the Nov. 15 “Dancing with the Stars” finale (27.7 million).

Goodell didn’t avoid the one ‘blemish’ on his first 100 days as NFL commissioner, the debut of live NFL games on the NFL Network. The NFL believed the three year old network would be in 65 million homes when the Denver Broncos traveled to Kansas City to meet the Chiefs on Thanksgiving Day. The NFL Network number for that game on that fateful Thursday evening – the HH% for the Broncos/Chiefs = 6.8% and 2,364,000 HH’s (Households). It was the second lowest rated NFL game in the history of televised football. While in Kansas City for the first live NFL game broadcast, Goodell revised where the NFL Network believes it’s headed in terms of its subscriber base – 50 million in a few years time. Currently the NFL network is available in 41 million homes.

“Our belief remains the NFL Network is going to offer more football and more entertainment to football fans, and that can only good.” Goodell related.

Goodell hammered home his belief that the NFL unites a community better than anything else can accomplish, extending that to include not only sports, entertainment but any industry.

“The biggest pressure I felt I’ve felt in the last few years and in the last 100 days is to ensure the National Football League doesn’t stay complacent that we continue to move forward as a business. That includes the ability to be open to change, not being afraid to move away from how we’ve done certain things for many years.”

“Those decisions included moving our cable game to Monday night with ESPN, moving our Sunday night game to network television and moving forward with our first NFL games to be televised live on the NFL Network. All of these decisions where based on our belief that it allowed the NFL to reach our fans in even better ways.” Goodell said

Goodell once again discussed why he’s so excited about the NFL’s Board of Governors October decision to move forward with one or two regular season games each year being played outside of the continental United States. The NFL is expected to announce where the international games will be played in 2007 (likely London and/or Berlin). Goodell sees those games as an opportunity to grow and extend the NFL’s brand, furthering suggestions Goodell made last week regarding the NFL expanding to either Toronto or Mexico City in the next decade.

100 days can barely be considered a ripple in what will be a lengthy period for Goodell as NFL commissioner. The first 100 days have been easy, other than the disappointment of the NFL Network’s inability to secure more cable carrier agreements, the business left behind by Paul Tagliabue when he retired on August 31 remains focused on doing exactly what Roger Goodell suggested they are focused on, moving forward and making the necessary changes to ensure the NFL remains on top of the sports industry.

For Sports Business News this is Howard Bloom

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Wednesday, December 06, 2006

Maybe the Dukies don’t have the Dollars

When it comes to the Duke basketball program you either like the Dukies or you detest the Dukies. There is no color in this equation it’s as simple as black and white. The image many have of Duke University, preppy central, a school with an affluent white student body. One issue when it comes to Duke that cannot be denied and must be respected – the school’s men’s basketball team has been one of the most successful college basketball programs in the last 15 years, winning the 1991, 1992 and 2001 National Championship. Two members of the those first Duke national championship teams, Brian Davis and Christian Laettner proposed purchase of the Memphis Grizzlies appears doomed to fail – something the two former Dukies likely never learnt when Mike Krzyzewski was their coach at Duke.

Joel Litvin, NBA President, League and Basketball Operations, issued the following statement Tuesday regarding the proposed purchase of the Memphis Grizzlies: “The NBA has not yet received from Messrs. Davis and Laettner sufficient information to conduct our review of their proposed purchase of the team, in accordance with NBA rules. Among other things, and despite numerous requests from the NBA, we have not been provided with important information about other potential investors, including the sources and amounts of funding that they would supply.”

“In addition, based on the limited information that we have received, it appears that certain elements of the transaction would not comply with NBA rules. As a result, and contrary to their public statements, the NBA is not taking any action at this point with respect to the proposed transaction.”

Earlier Tuesday a story in The Memphis Commercial Appeal suggested the sale to Davis and Laettner was in serious trouble. The paper reported the sale must close no later than January 15, 2007, according to the terms of the purchase agreement Davis (the lead investor) signed with current Grizzlies majority owner Michael Heisley. Davis’ agreement with Hiesley calls for Davis and Laettner to purchase 70 percent of the franchise. If the deadline is not met Davis stands to lose several million dollars.

"I'm going to be patient," Heisley said. "I'm not going to get into speculation on whether he can or can't do it. We can wait until the 15th to see if the guy can deliver.

"I've been supporting (Davis' bid) from the beginning. I expect him to perform on the 15th. I have no reason to believe he won't."

Davis’ bid has been pegged at $252 million for Heisley's share, based on a $360 million franchise value. In 1995 the NBA awarded two expansion franchises to Canadian cities. John Bitove was awarded the Toronto Raptors, Arthur Griffiths the Vancouver Grizzlies. Within a few short seasons both owners where on the outside looking.

Griffiths was forced to bring Seattle businessman John McCaw and McCaw’s Orca Bay Entertainment to Vancouver to help finance the Grizzlies and the building of GM Place. Griffiths lost the Grizzlies, GM Place and the NHL’s Vancouver Canucks in short order once McCaw came to Vancouver.

McCaw first sold the Grizzlies to Bill Laurie. The NBA rejected the sale to Laurie (McCaw sold the team to Laurie for $150 million) believing Laurie had bought the Grizzlies to move the team to St. Louis. A few months later McCaw sold the Grizzlies to Heisley for $165 million (April 2000). Nine months after Heisley bought the Grizzlies (January 2001) Davis and Laettner and saying in no uncertain terms he would keep the team in Memphis, Heisley began the process of moving the team from Vancouver.

A year after buying the team (April 2001), with the NBA’s blessing Heisley announced he was moving the franchise to Memphis. After denying the sale of the franchise to Wal-Mart heir Bill Laurie for ‘suggesting’ he would move the franchise, the NBA embraced Michael Heisley’s decision a year later. In essence Michael Heisley did exactly what Bill Laurie said he would do.

The NBA expressed moral indignation when Laurie tried to buy the Grizzlies, but accepted Heisley and his assurances the Grizzlies would stay in Vancouver. Five short years later, a question that begs to be asked – would it not have been in the best interests of the National Basketball Association to accept Laurie’s bid and not moved forward with Heisley?

A key to Heisley’s decision to move the Grizzlies was based in large part on a decision by taxpayers to build the $252 million FedEx Forum for Heisley. A condition of the arena being built was the franchise stay in Memphis and play in the arena for 17 years. Needless to say the good citizens of Memphis hadn’t paid attention much attention as to how and why Heisley justified moving the Grizzlies from Vancouver to Memphis.

On Monday October 2, 2006, Michael Heisley announced that he has reached an agreement to sell his seventy percent interest of the NBA’s Memphis Grizzlies and the operator of FedExForum, to Grizzly Acquisition Holdings, LLC, to an investment group headed by former NBA player Brian Davis.

"Owning an NBA team in Memphis has been one of the most rewarding experiences of my professional life,” said Heisley. "I will be forever grateful to the people of Memphis, especially our great Grizzlies fans who supported me personally from the very beginning. I am proud of all that this team has accomplished, and confident that the future ownership will continue our success."

“I am honored and thrilled to have an opportunity to become Majority Owner of the Memphis Grizzlies,” said Davis. “I believe very strongly in the future of this franchise and in the future of Memphis. I intend to move my family to Memphis and invest money in real estate developments in this city. I look forward to working closely with our local owners and admire their commitment to the Grizzlies and the entire community. I believe they represent the heart of Memphis.”

Early in the sale process the group that owns a minority stake in the franchise (the remaining 30 percent) had a sixty day window where they could buy the 70 percent Heisley had agreed to sell Davis’ group for $252 million. Last week that group decided to pass on that opportunity. The remaining thirty percent of Hoops, LP (the group that currently owns the Grizzlies) includes: Memphians J.R. "Pitt" and Barbara Hyde, Staley and Andy Cates, Fred Jones and Elliot Perry.

As the December 1 deadline approached where the minority owners would have to decide if they would buy the remaining 70 percent, questions began to be raised in the Memphis Commercial Appeal relating to Davis’ purchase of Heisley’s 70 percent. On Tuesday, November 21 (two days before the start of the Thanksgiving weekend holiday) J.R. 'Pitt' Hyde III expressed ‘concerns’ regarding the proposed sale to Davis.

"We're as aware as anybody else the clock is ticking on this thing," Hyde said. "They say they're going to get us the information."

"There are two questions," Hyde said. "No. 1, we'd like to have the benefit of knowing who our proposed partners would be, obviously, so that we feel comfortable with them and feel like we have the same goals and objectives."

Days later the Commercial Appeal obtained copies of the Davis’ business plan when and if he took control of the Grizzlies. According to the published report the Grizzlies are projecting losses of $29.7 million this year (2006). The Grizzlies current payroll stands at $60 million. However, Davis and Laettner’s plan is to develop a bargain basement NBA franchise dramatically cutting back on the teams’ payroll.

"Davis and Laettner, based on their collective knowledge of professional basketball and the NBA, believe talented players can be recruited at lower payroll costs in order to execute the Business Plan," according to the information.

According to the Commercial Appeal: Cutting payroll is crucial to the prospective owners' plan because of two factors outlined in the information:

"The Memphis market ranks in the bottom quartile of all U.S. NBA markets by total population, media market penetration and household income."

"The team already has strong corporate and community support and it will be difficult to further penetrate the corporate community for additional financial support."

The real question that needs to be asked, if Davis and Laettner are correct in their assessment relating to the demographics of the Memphis market why would the NBA have allowed Michael Heisley to move a franchise from Vancouver to Memphis in April 2001? Did it ever make any sense to allow Heisley to move to an economically depressed market like Memphis?

As co-captains of Duke’s national championship teams Davis and Laettner, had to deal with the media spotlight focused on their basketball achievements. As the potential lead investor in an NBA franchise Davis’ has experienced the media glare few athletes would ever care to experience – being viewed as a businessman. The Wall Street Journal offered an in-depth profile of Davis’ purchase on Monday, November 27 titled “An Unlikely Mogul Attempts to Crash the NBA's Exclusive Owners' Club”. Davis offered little to the WSJ, forcing the WSJ to deal with those close to Davis.

"Brian always has had big dreams and cockiness or a confidence of achieving that. It's like Miracle-Gro with him," says Duke head coach Mike Krzyzewski. "When he got here, he was thrown into an environment on a day-to-day basis with some of the most successful young men and women at the country at Duke. And then you threw him in to a basketball environment where you have Grant Hill, Christian Laettner and Bobby Hurley on the team, he has the ego and the confidence level to feel like he's as good or better than them."

"Downtown Durham was not where I would have suspected that kind of success," says Gary Hock, president of Durham-based Hock Development Corp. Mayor Bill Bell calls the project a "catalyst" for others that have created a nucleus of new residential, office and commercial spaces. A second, larger phase of the project recently broke ground.

The WSJ report raised some serious red flags concerning Davis ability to complete the purchase. According to the report a key component in Davis’ plan to raise the money to pay the $252 million included a Baltimore property Davis owns. Davis the WSJ reported believes the property is worth $20 million. However, Baltimore city tax rolls value that property at only about $4.4 million.

"I have all the money I need to close the transaction," Mr. Davis assured the Wall Street Journal last week, adding that he would be able to reach the $54 million required for his share.

The WSJ report was followed by an Associated Press report where Davis once again refused to say how or who was going to be a part of his ownership group, simply saying he has his business affairs in relationship to the Grizzlies are in order.

"It's generally a product of just respecting the NBA process," Davis said. "We've tried to lay out the best plan we can for long-term success and that's the plan we've submitted to the league."

With David Stern in Sacramento trying to deal with the Kings arena issues, that left Joel Litvin to deal with Davis and Laettner ‘ownership issues’. The NBA had to be thrilled the Michael Heisley NBA ownership era was finally coming to an end. Six and a half years after buying his way into one of the most exclusive clubs in the world (being an NBA owner) the NBA would finally be rid of a businessman who moved an NBA franchise to a market that long-term may not be able to afford to be home to a major league sports franchise.

So what next? The sale to Davis and Laettner barring a midnight call from the Governor is dead. The Grizzlies minority owners have no interest in buying Heisley’s 70 percent. Heisley wants out. When the NBA season started two of the biggest issues David Stern faced where arena issues in Sacramento and Seattle. While both the Kings and Sonics have arena issues, neither franchise have ownership issues. And let’s not forget where George Shinn wants to keep his New Orleans Hornets.

Memphis has serious ownership issues but has a brand new arena and a long-term lease awaiting its new owner. It seems the trials and tribulations David Stern is facing never manage to slow down.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Memphis Commercial Appeal, the Associated Press and The Wall Street Journal

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Tuesday, December 05, 2006

Senator Mitchell – There is no gas in his engine II

On Thursday March 30, 2006 Major League Baseball commissioner Bud Selig announced former Sen. George Mitchell to head a full-scale investigation into the past use of performance-enhancing drugs in Major League Baseball. More than eight months later, as the baseball winter meetings begin in Orlando, Senator Mitchell’s investigation has proven to be an utter waste of time, an embarrassment to Senator Mitchell, and with Selig confirming he’s going to retire in three years the failure of Senator Mitchell’s investigation sullies the Selig’s image.

Today in part II of SBN’s Insider look at the issue of performance-enhancing drugs we’ll conclude our historical timeline and discuss why and how Major League Baseball should move on from the performance-enhancing drugs era.

Jan. 13, 2005 – Players and Owners Agree to New Drug Program, Names to be Made Public. During a quarterly owners' meeting in Scottsdale, Ariz., the owners vote unanimously to accept recently concluded negotiations between MLB and the union strengthening the drug program. The new punitive measures for Major Leaguers are a 10-day suspension for the first positive test, 30 days for the second, 60 days for the third, and one year for the fourth. All without pay. On the first positive, the players name is released to the public. The program is separated from the Basic Agreement, which expires on Dec. 19, 2006, and is extended until 2008.

Feb. 14, 2005 – Juiced, Jose Canseco’s Autobiography, Steroid Tell-All Released
Jose Canseco's new "tell all" book about his life in baseball using steroids and sharing them with some of his former teammates, hits the stores. The revelations are widely played in the media and carried by CBS in two segments on 60 Minutes during which the former Oakland A's slugger claims he helped inject teammates Mark McGwire, Jason Giambi, Rafael Palmeiro, and Juan Gonzalez, among others.

Mar. 5, 2005 – Selig Announces 1-2% of Players Fail Tests in 2004. Selig announces the results of the 2004 drug tests in Mesa, Arizona. Selig says he's "startled" by the drop in positive test results from 5-to-7 percent in 2003 to between 1 to 2 percent in 2004. The actual numbers were 12 positive tests in 1,183. No player tested positively twice, so under the rules of the old program, they were neither suspended nor had their names released.

Mar. 8, 2005 – Reform Committee Requests, Then Subpoenas MLB Players and Executives. The House Government Reform Committee calls a hearing in Washington to hear testimony from MLB executives, plus current and former players about steroid use in MLB. At first, the government sends out invitations, which are turned down by the various parties. The Committee then issues subpoenas, which are fought by MLB. In the end, all agree to attend, including Jose Canseco, Mark McGwire, Curt Schilling, Rafael Palmeiro, Frank Thomas, and Sammy Sosa, plus Selig, Fehr, Alderson and Padres general manager Kevin Towers.

Mar. 17, 2005 – McGwire Refuses to Talk, Palmeiro Denies Use to Reform Committee
At the 11-hour hearing that is sometimes contentious, Congressmen again tell MLB and union officials to beef up their drug program "or we we'll do it for you," said Henry Waxman, the committee's top Democrat. "And you don't want that." McGwire, almost in tears at times, tells the Committee that he has been advised by his attorneys not to discuss the issue. "My lawyers have advised me that I cannot answer these questions without jeopardizing my friends, my family or myself. I intend to follow their advice." Palmeiro vehemently denies ever having used steroids, and Sammy Sosa's lawyer reads a statement saying that Sosa has never done steroids or anything against the law in the United States or the Dominican Republic.

Apr. 3, 2005 – Alex Sanchez Tests Positive, First Major Leaguer Suspended
Tampa Bay's Alex Sanchez becomes the first big league player to test positively under the new Joint Drug Program. He is suspended for 10 days.

Apr. 4, 2005 – MLB Announces 38 Minor Leaguers Test Positive
MLB announces that 38 Minor Leaguers all tested positive for steroid use. Most of them were suspended for 15 games. By the end of the month, more than 50 Minor Leaguers have been suspended. The tally for all of 2005 was a staggering 82.

May 3, 2005 – Tom House Admits to Steroid Use in 1970’s
Former pitcher, Tom House, in an interview with the San Francisco Chronicle admits to a failed experiment with steroids, and claimed 6 or 7 pitchers on every staff were fiddling with steroids or hGH in the seventies. House attributed steroid use at that time to the general prevalence of the drug culture in the 1960s and 1970s.

May 13, 2005 - Committee Hears Evidence on Legislation to Regulate Testing
A subcommittee of the House Energy and Commerce Committee calls the Commissioners and union leaders from all five professional sports leagues to testify at two days of hearings to discuss a proposed bill that would regulate the testing of players for steroid and amphetamine use. Among the proposals under consideration are penalties that match international and Olympic rules: a two-year suspension for the first positive test and a lifetime ban for the second.

May 18, 2005 – Reform Committee to Intervene, Set Testing Standards
Selig, the NHL's Gary Bettman, the NBA's David Stern and the MLS's Don Garber appear before the subcommittee, which again tells them that the government is ready to intervene and set standards for drug testing in all professional sports. "In a perfect world I'd rather this just be done in collective bargaining or voluntary acceptance by the players in respective sports," said Congressman Joe Barton (R-Tex.)."But obviously we don't live in a perfect world. And in this case we need federal intervention. I think we've gone too long."

May 24, 2005 – Reform Committee Floats bill Calling for Olympic-type Testing
The House Government Reform Committee floats a bill also supported in the Senate by McCain. The new bill also calls for Olympic-type penalties of a two-year suspension for a first positive drug test and a lifetime ban for a second. The next day, the House Energy and Commerce Committee passes its bill out of the subcommittee.

Aug. 1, 2005 – Rafael Palmeiro Tests Positive for Stanozolol
Orioles first baseman Rafael Palmeiro is suspended for 10 days by Major League Baseball for violating its Joint Drug Prevention and Treatment Program. He denies any intentional use of steroids. Later Palmeiro suggested his positive test may have been the result of a tainted vitamin B12 shot he got from Miguel Tejada.

Nov. 10, 2005 – Congress Declines to seek Perjury Charges Against Palmeiro
A Congressional subcommittee decided to not seek perjury charges against Rafael Palmeiro following its investigation of the player's emphatic Capitol Hill statement that he had not used steroids.

Nov. 15, 2005 – MLB, Players Agree to New Testing Program, Penalties - 50, 100, Life
Major League Baseball and the players association reached agreement on a plan that significantly strengthens penalties for steroid and other illegal drug use. Penalties for steroid use will be 50 games for a first offense, 100 games for a second and a lifetime ban for a third. For the first time the plan also includes testing and suspensions for amphetamine use.

Mar. 23, 2006 – Game of Shadows Released, Details Massive Doping Conspiracy in Track, Baseball, Football
The book, by Lance Williams and Mark Fainaru-Wada, expanded their reports in the San Fransisco Chronicle in 2004 about the dealings of the Bay Area Labratory Co-op (BALCO). Citing mainly the leaked BALCO transcripts and court documents, the reporters pieced together the massive steroid conspiracy involving 'undectable' designer steroids, sophisticated training programs, and the supplement industry.

Apr. 13, 2006 – U.S. Government Investigating Bonds for Perjury and Tax Evasion
Multiple media reports say the U.S. government has begun investing Barry Bonds for possible perjury and tax-evasion charges. The case would prove difficult without the testimony of Bonds' trainer, Greg Anderson who twice went to jail rather than answer questions about Bonds.

Jun. 7, 2006 – Feds Raid Jason Grimsley’s Home, Admits Use, Names Others
Federal IRS agents raided the Arizona home of Jason Grimsley. Grimsley admitted using performance enhancing drugs and gave investigators the names of current and former major leaguers who have also used performance-enhancing drugs. He began cooperating with probers after he accepted a $3200 shipment of hGH at his Scottsdale residence on April 19, but his cooperation lasted only one week, until investigators tried to get him to wear a wire and gather evidence against other players including Barry Bonds.

Jun. 21, 2006 – Paxton Crawford Admits Steroid and hGH Use
In an interview with ESPN the Magazine, Crawford admits using steroids and hGH during the 2000 and 2001 seasons while playing for the Boston Red Sox. In the interview, Crawford said steroids ‘had a hold of the game’ and that players were ‘walking around like zombies.’

Jun. 18, 2006 – David Segui Admits to Using hGH 'Legally'
David Segui went on ESPN's "Outside the Lines" and revealed that he was one of the redacted names from the Jason Grimsley affidavit. Segui claimed his drug use only consisted of hGH, was legal, obtained with a prescription, but never reported his use to Major League Baseball.

Sept. 21, 2006 – Game of Shadows Authors Sentenced to 18 Months in Prison
San Francisco Chronicle reporters Lance Williams and Mark Fainaru-Wada, who together published excerpts from the BALCO transcripts in 2004, were sentenced to 18 months in prison for not revealing their source to the grand jury on August 15. The 18 months represents the length of a typical grand jury term. Williams and Fainaru-Wada do not have to report to prison pending their appeal to the 9th U.S. Circuit Court of Appeals.

Oct. 1, 2006– Redacted Names From Grimsley Affidavit Leaked, Clemens, Pettitte, Tejada, Roberts, Gibbons
The Los Angels Times said an anonymous source with access to the unedited version of the Grimsley affidavit let the newspaper view it, but didn't provide a copy. The Times said a second source that identified the other players provided additional details about the document. Grimsley reportedly acquired steroids, hGH, and amphetamines from a source referred to him by Brian McNamee, strength and conditioning coach for Roger Clemens and Andy Pettitte. The affidavit also states that Grimsley told federal agents that former Orioles teammates Migeul Tejada, Brian Roberts and Jay Gibbons all "took anabolic steroids."

Dec. 1, 2006 – Eight months into his investigation into the use of performance-enhancing drugs in Major League Baseball, Senator George Mitchell announces his investigation has failed. "When I began, I was, of course, aware that I do not have the power to compel testimony or the production of documents," Mitchell said in a statement on Friday. "From the outset I believed that the absence of such power would significantly increase the amount of time necessary to complete the investigation, and it has."

There are two very important reasons why at the end of the day, Mitchell’s investigation is much to do about nothing.

Before 2004 it was legal to use steroids in America. It was however illegal to distribute and sell steroids. It has been illegal to use steroids since 2004. The 1991 Drug Act permitted the use of steroids by prescription (schedule III drug), not otherwise. However, the 2004 Act reclassified steroids into a tougher classification and explicitly bans possession.

Baseball didn’t begin a comprehensive drug testing program until 2004. However it is worthwhile remembering then commissioner Fay Vincent issued a memo in 1991 stating: “The possession, sale or use of any illegal drug or controlled substance by Major League players and personnel is strictly prohibited ... [and those players involved] are subject to discipline by the Commissioner and risk permanent expulsion from the game.... This prohibition applies to all illegal drugs and controlled substances, including steroids…"

If there is a sense of moral outrage from Major League Baseball officials, where was that outrage in 1998 when Mark McGwire and Sammy Sosa saved baseball from itself as the two went head-to-head in surpassing Roger Maris’ 37-year single season home run record. Maris hit 61 home runs in 1961; McGwire hit 70 in 1998, Sosa 66. Ask Major League Baseball and their cable partner ESPN how they felt on September 8, 1998 when McGwire hit home run number 62 at Busch Stadium? Even better ask Major League Baseball officials how they felt in the days following the horrific events of September 11, 2001 when Barry Bonds established a new single season record with 73 home runs?

Major League Baseball has set single season attendance records each of the last three seasons. How many Major League Baseball officials honestly can look at themselves in a mirror and not thank McGwire, Sosa and Bonds for reviving Major League Baseball? If the fans are buying tickets in record numbers and owners could care less, who then does care and why?

The self-righteous media continue to offer a holier than thou attitude. In the last seven days since the Baseball Writers Association of America released the 2007 nominees for the Baseball Hall of Fame, the moral indignation directed at Mark McGwire being on the ballot demonstrates how much members of the media believe they’re God’s, protectors of the game. As the timeline clearly demonstrates MLB’s steroid era began in the early 1990’s, and there wasn’t a firm drug testing policy until the 2005 season.

The members of the Baseball Writers Association of America clearly believe they know who used performance-enhancing drugs and who didn’t. How else can they vote for Cal Ripken Jr. and Tony Gwynn, but not for Mark McGwire when all three players have Hall of Fame credentials? There is nothing whatsoever to suggest Ripken or Gwynn ever used performance-enhancing drugs. McGwire – he’s out because of the accusations of a convicted felon (Jose Canseco) and March 17, 2005 when McGwire embarrassed himself at the Congressional Steroid Hearings. A foundation of the American legal system is your innocent until your proven guilty. The Baseball Writers Association of America not only is perverting a foundation of what makes America great, but they’ve made themselves out to be judge, jury and the ones who ultimately decides who is guilty and who is not, regardless of whether or not there’s any proof.

You have to feel terrible for Sen. Mitchell, consider what this man has accomplished in his lifetime: Senator Mitchell, a former Federal Judge and United State Attorney, is now a partner at DLA Piper Rudnick Gray Cary. He and members of his law firm will be assisted by Jeffrey Collins, a former United States Attorney and now a partner in the Detroit office of Foley & Lardner, as well as Thomas Carlucci, a former Assistant United States Attorney and now a partner in the San Francisco office of Foley & Lardner.

Senator Mitchell served the public as a Senator from Maine (1980-1995) and as the Senate Majority Leader from 1989 to 1995. He has had extensive investigative experience, having led numerous criminal investigations as a United States Attorney. Senator Mitchell also led the United States Olympic Committee's investigation into allegations of impropriety in the bidding process in connection with the selection of Salt Lake City for the 2002 winter games.

In 1996, the governments of the United Kingdom and Northern Ireland asked Senator Mitchell to chair the peace negotiations in Northern Ireland. Senator Mitchell led the negotiations for two years, work that ultimately resulted in an accord that ended decades of conflict. In May 1998, the agreement was overwhelmingly endorsed by voters in Northern Ireland and the Irish Republic. He received numerous awards and honors recognizing his service in the peace talks, including the Presidential Medal of Freedom on March 17, 1999.

Also, at the request of President Bill Clinton and Israeli and Palestinian leaders, Senator Mitchell served as chairman of an international fact-finding committee on violence in the Middle East. The Committee's recommendation, widely known as the Mitchell Report, was endorsed by the Bush Administration, the European Union, and many other governments.

A lifetime baseball fan, Senator Mitchell currently is on the Board of Directors of the Boston Red Sox. He is also Chairman of the Board of the Walt Disney Company.

When Bud Selig asked Sen. Mitchell to find the answers to the questions that needed answering, Selig had to know Sen. Mitchell was doomed to fail from the start. Friday, after Sen. Mitchell waved the white flag, Selig didn’t have a great deal to add.

“If we could get definitive answers, it would help,” Selig said in a telephone interview Friday, adding, “The one thing left is the one thing you’re talking about: What happened during X period of years.”

In no way is it right for athletes to use performance-enhancing drugs. It takes away from everything sport should stand for. It’s easy to understand why athletes do whatever they have to be bigger and better; you can run faster, hit harder and make a great deal more money. There are those who suggest Sen. Mitchell will allow baseball to have closure of the steroid era if he is allowed to ‘get the truth out’. Would anyone really trust any athlete who’s earned tens of millions of dollars to admit they took performance-enhancing drugs during their career? Especially if they’re retired. And if the records of baseball players for the last 15 years are as tainted as members of the media would like everyone to believe they are, did Babe Ruth really hit 714 home runs in an era when African-Americans where barred from MLB. Baseball managed to move on from its racist past, its time it moved on from its performance-enhancing drugs era and stopped the witch-hunt.

For Sports Business News this is Howard Bloom

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Monday, December 04, 2006

Senator Mitchell – There is no gas in his engine I

On Thursday March 30, 2006 Major League Baseball commissioner Bud Selig announced former Sen. George Mitchell to head a full-scale investigation into the past use of performance-enhancing drugs in Major League Baseball. More than eight months later, as the baseball winter meetings begin in Orlando, Senator Mitchell’s investigation has proven to be an utter waste of time, an embarrassment to Senator Mitchell, and with Selig confirming he’s going to retire in three years, the failure of Senator Mitchell’s investigation sullies the Selig’s image.

"When I began, I was, of course, aware that I do not have the power to compel testimony or the production of documents," Mitchell said in a statement on Friday. "From the outset I believed that the absence of such power would significantly increase the amount of time necessary to complete the investigation, and it has."

While club officials have testified, Mitchell can't order any of the unionized players to cooperate. No player is known to have testified.

"My investigative staff has conducted hundreds of interviews and received thousands of documents; however, much more work will be necessary," Mitchell said. "Cooperation has been good from many of those from whom we have sought testimony and documents, but has been less than good from some others. This will not affect the result of the investigation, but it has increased the length of time it will take me to complete the investigation."

Evidently when all is said and done, sentiments expressed by Selig, Mitchell and others when the investigation was announced on the eve of the 2006 season hasn’t amounted to anything.

"He has permission to expand the investigation and to follow the evidence wherever it may lead," said Selig, emphasizing the last four words of the statement after making the announcement during a press conference at the Commissioner's office on what is now an uneventful Thursday, March 30.

Selig’s rationale for moving forward with an investigation came on the heels of the release of “Game of Shadows” the New York Times best selling book written by San Francisco Chronicle reporters, Mark Fainaru-Wada and Lance Williams. Sports Illustrated published an expert from the book that focused on allegations Barry Bonds had allegedly used performance-enhancing drugs during the 2001 season when Bonds established a new single season home run record with 73 home runs.

"The speculation was originally fueled by the testimony of players before a federal grand jury investigating into the Bay Area Laboratory Co-Operative (BALCO) and by an alleged relationship between certain players and BALCO defendant, Greg Anderson," Selig said, referring to Bonds' former personal trainer, who was indicted along with three others by the grand jury. "A recent book has amplified the allegations and raises ethical issues that must be confronted head on."

"I have asked Sen. Mitchell to attempt to determine, as a factual matter, whether any Major League players associated with BALCO or otherwise used steroids or other illegal performance-enhancing substances at any point after the substances were banned by the 2002-2006 Collective Bargaining Agreement," Selig said. "It may be that conduct before the effective date of the 2002 Basic Agreement will be helpful in reaching the necessary factual determinations. If the Senator so concludes, he will investigate such earlier conduct as well."

"Nothing is more important to me than the integrity of the game of baseball," Commissioner Selig said. "The unique circumstances surrounding BALCO and the evidence revealed in a recently published book have convinced me that Major League Baseball must undertake this investigation.

"Senator Mitchell is one of the most respected public figures in the nation. His career in public service is beyond reproach and his integrity and leadership ability are beyond question. Major League Baseball is fortunate and pleased to have a person of such high character and acclaim to lead this investigation."

Senator Mitchell said: "I accept the responsibility placed on me by the Commissioner in full recognition of the seriousness of the many issues raised by the task. The allegations arising out of the BALCO investigation that Major League players have used steroids and other illegal performance-enhancing drugs have caused fans and observers to question the integrity of play at the highest level of our national game. These allegations require close scrutiny."

Selig can say whatever he’d like to on the issue of performance-enhancing drugs, but in looking back at the history of the use of performance-enhancing drugs by baseball players Major League Baseball was a lot like a salmon swimming upstream (salmon die at this point, unable to complete the swim)

Nov. 18, 1988 - Anti-Drug Abuse Act of 1988
This law amended the Food, Drug and Cosmetic Act and created criminal penalties for persons who "distribute or possess anabolic steroids with the intent to distribute for any use in humans other than the treatment of disease based on the order of a physician." Anti-Drug Abuse Act of 1988, Pub. L. No. 100-690, Section 4181.

Oct. 5, 1990 - 1990 Anabolic Steroids Control Act
Believing that the Anti-Drug Abuse Act of 1988 legislation was insufficient, Congress quickly replaced it with the Anabolic Steroids Control Act of 1990.

Jun. 7, 1991 – Commissioner Fay Vincent Issues Memo Regarding Steroid Use
After the U.S. Congress raises penalties for steroid possession, Commissioner Fay Vincent sends a memo to each team indicating that steroids would be added to Major League Baseball’s banned list. The memo stated: "The possession, sale or use of any illegal drug or controlled substance by Major League players or personnel is strictly prohibited ... This prohibition applies to all illegal drugs ... including steroids." The seven-page document didn't include a testing plan -- that had to be bargained with the union -- but it did outline treatment and penalties.

May 7, 1992 - The FBI Steroid Sting - Operation Equine
Curtis Wenzlaff was arrested May 7, 1992 for steroid distribution charges. The FBI found steroid regiments related to Mark McGwire. Years later, Wenzlaff admitted publicly to helping Canseco go from a novice user to steroid guru but refuses to discuss McGwire.

Oct. 25, 1994 – Supplements Industry Deregulated by U.S. Government
Dietary Supplements Health and Education Act passes, deregulates supplements industry.

Jul. 1995 – Randy Smith, Tony Gwynn and Jason Giambi Discuss Steroids with LA Times. Padres GM Randy Smith tells LA Times, "We all know there's steroid use, and it is definitely becoming more prevalent." In the same article, Expos GM Kevin Malone calls steroids “the secret we’re not supposed to talk about,” and Tony Gwynn estimates 30% of players using. Giambi says he’s heavier, stronger, and able to stay that way, then praises McGwire for his influence.

Aug. 22, 1998 – Mark McGwire and Androstenedione
A jar of androstenedione is discovered in the locker of St. Louis slugger Mark McGwire, who is neck and neck with Sammy Sosa in the great chase for Roger Maris' all-time record of 61 homers hit during the 1961 season. McGwire admits he uses the steroids precursor and goes on to hit a then record 70 homers. Using steroids, precursors or performance-enhancing drugs is not illegal at that point in Major League Baseball.

April 3, 2000 - 'Gen XXL' Implies Steroid Use in Early 1990s
In one of the first major media analyses of steroid use in baseball, Jeff Bradely described an encounter his brother, Scott, had with a former player who said that if he were still playing he would be using steroids. The article for ESPN Magazine said Scott never used steroids and was out of baseball within a couple of years.

Jun. 30, 2000 - Manny Alexander and Carlos Cowart
Carlos Cowart is pulled over driving Manny Alexander’s Mercedes. Cowart is taken into custody due to a previous warrant and the car is impounded and then searched. Police found vials of steroids and syringes in the glove compartment. A decision was made not to pursue the steroid charges against Cowart, a clear indication the police believed they were not his. Instead they pursued only the items from the previous warrant, driving without a license and failing to stop.

Apr. 2001 – MLB Implements Minor League Testing
MLB unilaterally implements its first random drug-testing program in the Minor Leagues. All players outside the 40-man roster of each Major League club are subject to random testing for steroid-based, performance enhancing drugs, plus drugs of abuse (marijuana, cocaine). The penalties are 15 games for a first positive test, 30 games for a second, 60 games for a third, and one year for a fourth. A fifth offense earns a ban from professional baseball for life.

Jun. 18, 2002 – U.S. Senate Tells Selig, Fehr to Negotiate Testing
At a Senate Commerce Committee hearing in Washington, D.C., Senators Byron Dorgan (D-ND) and John McCain (R-Ariz) tell Commissioner Bud Selig and MLB Players Association executive director Don Fehr that a strict drug testing program at the Major League level must be negotiated during collective bargaining for a new Basic Agreement, which is about to expire. Up to this point, no MLB player can be tested for drug use without probable cause. Fehr tells the committee that the Congress should enact laws to ban over-the-counter sales of performance-enhancing substances.

May 28, 2002 -- Ken Caminiti Admitted Using: Steroids (Non-specific). What he said: In an interview with Tom Verducci for Sports Illustrated Magazine, Caminiti admitted to using steroids, beginning in 1996 while he was recovering from a shoulder injury. Caminiti was the first star player to admit to using steroids. Caminiti estimated that 50% of players were using performance-enhancing drugs. Caminiti's admission was published in a May 28, 2002 article entitled Caminiti Comes Clean. On October 10, 2004, Caminiti dies from a drug overdose in a Bronx drug house.

Aug. 30, 2002 - MLB Unveils ‘Survey’ Testing For 2003
MLB and the union unveil Major League Baseball's Joint Drug Prevention and Treatment Program as an addendum to the new Basic Agreement, which is bargained at the 11th hour just as the players are about to go out on strike. The new policy calls for "Survey Testing" in 2003 to gauge the use of steroids among players on the 40-man rosters of each club. The tests will be anonymous and no one will be punished.

Feb. 17, 2003 – Steve Bechler, 23, Dies from Heat Exhaustion
Steve Bechler, a Baltimore Orioles pitcher, collapses on the field in Florida during a Spring Training workout and dies from heat exhaustion. He is 23 years old. An autopsy showed that the over-the-counter, performance-enhancing drug, Ephedra, was found in his system and was considered by the medical examiner as the primary cause of Bechler's death. Subsequently, MLB places Ephedra on the list of banned drugs at the Minor League level and the U.S. Food and Drug Administration (FDA) bans it from over-the-counter sales

Mar. 1, 2003 – MLB Survey Testing Begins
Drug testing begins in Major League Spring Training camps. Some teams, including the Chicago White Sox, consider balking at taking the tests to skew the results. A refusal to participate in the "Survey" phase is considered a positive test. That first year, all MLB players on the 40-man rosters are subject to be randomly tested once. In addition, MLB had the right to retest up to 240 players a second time by the end of the season. All players ultimately complied and took the tests.

Oct. 29, 2003 – FDA Bans THG, MLB Follows Suit
The FDA bans THG. The next day MLB places the designer drug on its testing list for the 2004 season, but is barred by its own agreement from retroactively re-testing the 2003 urine samples for THG traces.

Nov. 13, 2003 – MLB Announces 5 to 7 Percent of Players Fail Survey Testing
MLB announced that 5-to-7 percent of 1,438 tests were positive during the 2003 season, well above the threshold, setting in motion mandatory testing for performance-enhancing drugs with punishments for the first time in Major League history. The first positive test put a player on a medical track that includes treatment and further testing. Otherwise, there's no punitive for a first positive test.

Dec. 2003 – Ten MLB Players to Testify before BALCO Grand Jury
Ten Major League players, including Barry Bonds of the Giants, and Jason Giambi and Gary Sheffield of the Yankees, are to testify in front of a San Francisco grand jury investigating the machinations of the Bay Area Laboratory Co-Operative (BALCO), owned and operated by Victor Conte. None of the players are charged with using performance-enhancing drugs, although four men, including Conte and Greg Anderson, Bonds' personal trainer and childhood friend, are indicted for tax evasion and selling steroids without prescriptions.

Mar. 10, 2004 – Senate Commerce Committee has Hearing, Begins Legislative Process
The Senate Commerce Committee holds another hearing. Selig and Fehr again appear to testify. They are told in no uncertain terms that MLB's current drug policy is not strong enough. McCain says: "Your failure to commit to addressing this issue straight on and immediately will motivate this committee to search for legislative remedies," thus setting the legislative process in motion.

Apr. 8, 2004 – BALCO Grand Jury Subpoena’s Major League Baseball’s Anonymous Test Results. The grand jury presiding over the BALCO case issues a subpoena to obtain the results of all the drug tests collected from Major League players during the 2003 season. After negotiations by the union, which argues that the subpoena is violating privacy rights afforded to the players in the Joint Drug Agreement, the drug tests are turned over.

May 11, 2004 – MLB Moves Testing and Samples to World Anti-Doping Agency
MLB and the Players Association agree to move all of the collection of urine samples and drug testing for both the Major Leagues and Minor Leagues to World Anti-Doping Agency (WADA) facilities in Montreal and Los Angeles.

Jun. 2004 – MLB Begins Steroid Testing, Counseling, Anonymity, for 1st Offense
MLB begins drug testing Major League players under the punitive phase of the Joint Drug Agreement. The program includes anonymity and counseling as punishment for a first offence.

Oct. 22, 2004 – The Anabolic Steroid Control Act. President Bush signs into law the Anabolic Steroid Control Act of 2004 that the U.S. Congress passed earlier in the month. The bill added hundreds of steroid-based drugs and precursors such as androstenedione to the list of anabolic steroids that are classified as Schedule III controlled substances, which are banned from over-the-counter sales without a prescription. By virtue of MLB's own agreement with the union, all of the drugs banned by Congress are now on baseball's own banned list.

Nov. 2004 – The BALCO Transcripts are Leaked to the San Francisco Chronicle
The San Francisco Chronicle prints portions of leaked grand jury testimony given the previous year by Bonds and Giambi. Giambi reportedly admits injecting himself with steroids, and Bonds reportedly says he unwittingly may have allowed his former trainer, Anderson, to rub cream that had a steroid base on his legs.

In Tuesday’s second part of SBN’s Insider’s look at the tainted and failed history of MLB’s failed efforts to control the use of performance-enhancing drugs, more history and why at the end of the day no one really cares – especially baseball fans.

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

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Friday, December 01, 2006

Just another day at the office for Gary Bettman and the National Hockey League

Thursday was just another day at the office for Gary Bettman and his followers – those who run the National Hockey League. A report from The Toronto Star indicated the bottom has fallen out of Canadian television ratings. Earlier this week reports from Pittsburgh reminded everyone of the Pittsburgh Penguins uncertain future in the Steel City. The NHL is poised to continue their blissful ignorance of ESPN and extend agreement with the cable sports network with less awareness then the NFL Network. NBC is ready to extend their no money down (no money to the NHL) over-the-air agreement.

In short, Gary Bettman continues to sell the NHL as a league moving forward. The only problem, nothing could be further from the truth. Under Bettman’s leadership the NHL continues their inevitable road to the end of the world. And clearly one of the biggest issues remains a lack of understanding those in charge of the NHL have relating to where the NHL stands in the sports marketplace.

There are few selling points the National Hockey League can count on in marketing the league. One of those positive signs had been Canadian television ratings, key words ‘had been.’ According to a report in Thursday’s Toronto Star, Hockey Night in Canada ratings are off 19 per cent for the early game, and a whopping 33 per cent for the late one compared to last year. TSN's ratings have dropped 18 per cent.

In fairness as the Toronto Star mentioned, coming off a year without NHL hockey Canadian NHL fans couldn’t get enough NHL hockey. CBC had their highest hockey ratings in ten years and TSN set an all-time seasonal ratings record.

"We all thought the numbers would come down, but this is more than we thought," admitted Joel Darling, CBC senior executive producer in The Toronto Star report. "It's a bit puzzling.

"It's like a lot of things; sometimes the honeymoon isn't as long as we'd like it to be."

Bottom line – the bloom has worn off the NHL’s Canadian rose and it couldn’t come at a worse time. Its current Canadian TV contracts will expire at the end of the 2007-08 season. The CBC is paying the NHL $65 million-a-year and according to The Globe and Mail, and generates an annual profit of between $25-million and $30-million.

Bell Globemedia (CTV and TSN) is poised to reportedly make a bid for Canadian English and French language TV rights in the area of $140 million a year. The CBC are expected to bid at least $100 million to retain the lock they have as Canada’s over-the-air television rights. The NHL is well into their negotiations with both sides. Given there isn’t an over-the-air carrier prepared to spend a dime on American rights, its incumbent on the NHL to sell Canadian rights for as much as they possibility can. The good news, the offers are on the table. The bad news, with the bottom having fallen out of the NHL ratings in Canada, Bettman and the NHL better get a deal done sooner rather than later.

"Canadians aren't flocking back to hockey the way they did last year," says TSN president Phil King. "There was that giant `We missed you and welcome back' that's not there this season.

"It wasn't just the lockout. Half the players changed teams, Gretzky was coaching, rules had changed. There was a lot of interest in everything."

King is likely a key negotiator on behalf of Bell Globemedia. If King, as he suggests, believes Canadians have losing interest in the NHL, the NHL is in a great deal of trouble if the league ever hopes to get close the $150 million annually league officials are praying they’ll be offered. That bargaining chip no longer exists.

Which brings the NHL back to where they are with their two American television agreements. Versus, owned by Comcast are expected to extend their current agreement for one year. All that will serve to accomplish is illustrating how terrible the decision was to leave ESPN.

Versus reached 65 million homes a year ago. A year later, according to a Los Angeles Times report the fledging cable network reaches 70 million homes. Meanwhile ESPN and ESPN2 each reach more than 100 million homes. ESPN had planned on placing NHL games on ESPN2. ESPN has taken cable television to another level averaging more than 10 million viewers weekly through the first six weeks of ESPN’s Monday Night Football coverage. While ESPN and their family of networks report on NHL games, without NHL hockey ESPN canceled their nightly NHL magazine show “NHL Tonight” last year.

"ESPN provides the sort of Good Housekeeping stamp of approval," said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon and a hockey fan in a Los Angeles Times report. The NHL, he said, "would be better off finding a working partnership between themselves and ESPN. If it were my decision, and not knowing the reason, this league needs as many symbolic attachments to maintain their position as a major professional sport."

A year ago, there was a belief Comcast was going to attempt to build a second national sports network to compete directly against Disney owned ESPN. Versus had talked about securing the last available NFL TV package, the eight late season Thursday/Saturday night games the NFL kept for themselves to build the NFL Network. Whatever reasonable opportunity Comcast had to create a major national sports cable network all but ended in January when the NFL made the best move they could for their cable network, putting actual live NFL games (sports most valuable property) on their own network. Cable operators are balking at paying the NFL the carrier rights the NFL is demanding to carry the NFL Network. Versus may be much cheaper but with a menu of NHL games and little else, Versus is doomed to failure.

"If we were going to grow, we needed to do something different," NHL Commissioner Gary Bettman said in defending the deal in a Los Angeles Times report. "While we gave up some distribution, the coverage was phenomenal. They will continue to grow over time and we think as a result, people will see better coverage of hockey."

Good intentions aside – if Comcast was really committed to creating a cable sports network they would have secured either the limited cable NFL rights the NFL Network has, and the regular season, and now LCS rights Turner Broadcasting secured Tuesday. The NHL can talk about being the ‘prince of Versus’ but when you’re the master of a domain that is empty – you still have nothing.

How terrible is the NHL’s agreement with Versus? This past week NHL fans rejoiced when something called The Hotel Network announced hotels and motels affiliated with The Hotel Network will carry Versus in more than 300,000 hotel rooms. Far to little and far too late, the NHL mistake of leaving ESPN for what amounted to pennies on the dollar will serve to haunt whatever legacy Gary Bettman leaves behind when he’s finally retired or fired.

And let’s not dismiss the value American networks place on NHL hockey – its worthless. With the NHL poised to sign a long-term extension with NBC, one that doesn’t guarantee the NHL any revenue, NHL rights are worth zero dollars. In an era when networks are throwing millions of dollars at any sports properties, the fact that the NHL can’t get anyone to pay the league anything for the leagues rights remains an embarrassment.

The NHL has passed the quarter point in their 2006-07 schedule. Gary Bettman had better hope St. Louis Blues owner Dave Checketts and his Sports Capital Partners have very deep pockets. Between 1999 and 2005 the Blues reportedly lost $285 million and that was with a sold out building every night. In the last two years, the Blues attendance has dropped by more than 40 percent. Checketts raised ticket prices by 10 percent this year, but with an empty building most evenings, the once strong St. Louis Blues are heading towards a very dangerous place.

"Last year, we set an all-time attendance record," said Bettman, resting his feet on the coffee table of his Sixth Avenue office in midtown Manhattan in a Reuters report.

"Part of that record was the strongest October we had ever seen... If you take away last October, we would have set an attendance record for October this year."

Bettman’s last remark shows how out of touch the man in charge of the NHL clearly is. Instead of admitting the NHL has some attendance issue, Bettman’s spin suggesting if October 2005 hadn’t taken place is ridiculous. Understanding the NHL enjoyed a ‘bounce’ after a year without hockey and realizing there would be an inevitable drop in attendance is what real leadership is about.

The good news, NHL attendance is down only about one percent from last year. It’s a silly to suggest the one percent makes a difference as it does to say there aren’t any problems. The one percent doesn’t matter, however, along with St. Louis there remain major attendance issues in Florida, Boston, Phoenix, Chicago, Washington, New Jersey and Long Island, New York. Along with bottom feeding St. Louis, eight NHL franchises haven’t sold on average more than 20 percent of their available ticket inventory. In a gate driven sports league, it’s great if more than two-thirds of NHL franchises are playing to arenas filled to at least 90 percent capacity. The NHL must deal with its eight weak franchises if the business is ever going to move forward.

A year into an NHL era of financial sanity (for that Bettman deserves the credit for getting the labor deal done), Bettman’s belief the ‘business of the NHL’ is strong is interesting as he told Reuters.

"The challenge moving forward with the foundation we have is, 'How do we grow new fans? How do we take casual sports fans and turn them into hockey fans?' That's what we're working on," he said.

"No one can question that this is a solid business, a strong league with an unbelievably strong brand. What other brand could shut down for a year and not lose its customers?

"Hockey fans are the most loyal fans in sports and for that we are so grateful."

One suggestion being raised, the NHL is poised to start streaming their games live online. Currently the NHL has an agreement with Google to show games on a tape delayed basis. Not all games are available, and despite reports in Sports Business News, Forbes, Buffalo Business First and The Globe and Mail, the delayed games are still free to view. (Another decision the NHL should be applauded for continuing).

It’s reasonable to believe reports of the NHL going to stream games live over the Internet are indeed true. As long as the NHL has the technical ability to video stream games live on the Internet, it would be a tremendous step forward in helping Bettman and his cohorts reach their goals of finding a bigger audience. And the NHL would be well within their rights to charge if they stream games live on the Internet. A move towards live streaming deals with the issues of the ill-conceived Versus agreement, allows the NHL some much needed exposure, offers displaced hockey fans an opportunity to follow the sport they love and can generate some revenue as well. In short – it’s a tremendous solution to many of the NHL’s issues.

Earlier this week Gary Bettman was in Pittsburgh making it clear that the Isle of Capri’s casino bid better be the one announced by the Pennsylvania Gaming Control Board as having received the sole gaming license awarded to one of three Pittsburgh applicants.

"Certainty comes to the future of this franchise with the Isle of Capri getting the license," Bettman said. "Without it, we will enter an era of uncertainty where a lot of things can happen."

"There is a lot of work that needs to be done to get this arena built," Bettman said. "But I don't think there are really any issues if Isle of Capri gets the license."

The fate of the Pittsburgh Penguins will be determined on December 20, when the Pennsylvania Gaming Control Board announces the winning bid. Wednesday, the gaming control board task force unveiled that the Isle of Capri’s bid would generate the least revenue from the three bids.

The so-called Plan B, the alternative plan to fund a new arena should the Isle of Capri’s bid fail is nothing more than political window-dressing. Plan B calls for new Penguins owner Jim Balsillie to contribute more than $120 million his own money, and for the winning Casino to give close to $200 million of their money. Each of the three bids guarantee a significant contribution from the winning bidder to the community. It makes no business sense whatsoever for any business to give away $200 million when they’re already making a significant contribution elsewhere.

The bottom line, at times it seems the NHL understands it’s not quite a major sports league, but much more than a minor sports league. The NHL has to stop believing it will ever be a league in the same class as Major League Baseball and the National Basketball Association (the NBA and MLB better realize their not in the same category as the NFL), and the NHL has to focus on staying a step ahead of Major League Soccer, the Arena Football League, and the WNBA. There’s nothing wrong with where the NHL is, there’s everything wrong if those in charge of the National Hockey League don’t accept and understand where the NGL is.

For Sports Business News this is Howard Bloom.

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