Business of Sports
Going for Real Gold at the Rio Olympics
One city's loss is another's gain.
After the highly anticipated and mildly shocking Oct. 2 announcement, Chicago won't be hosting the 2016 Olympic Games, thus forgoing a projected $20 billion in tourism revenues and related investment. Winner Rio de Janeiro budgeted $14 billion for the Games—far more than the other finalists—and expects to generate $2.8 billion in revenue, including $570 million in domestic sponsorships, from the event.
The International Olympic Committee's selection process proves that the Olympics are a bigger business than ever, a bellwether of global business developments. The nod for Rio is also a confirmation that the hundreds of millions of dollars American pro sports teams have spent courting a Latin American fan and sponsor base is money well spent.
Rio's receiving the Games is a clear signal that Latin America is an emerging market now mature. Many of the U.S.'s largest companies supported Rio's bid for the 2016 Olympic Games, and major sponsors looking to add the 160 million people in South America under the age of 18 to their customer base will be racing each other to get on board within the next few months. The victory gives South America its first Olympics, and shows that the IOC is confident that Brazil can not only execute the 2016 Olympics right on the heels of the 2014 World Cup, it can keep sponsors engaged enough in the territory to sign on for the Games as well as the premier football event.
According to economists, Brazil is leading Latin American countries out of the recession, registering flat to slight growth this year and looking to a 3.5% expansion in 2010. (By contrast, the U.S. economy is estimated to contract by 2.7% in 2009 and grow only 1.5% in 2010.) Factors in Brazil's resilience include 2009 auto sales predicted to reach a record 3 million vehicles; substantial government subsidies; and strong foreign investment including up to $25 billion in Brazilian stock IPOs in 2009 alone.
Selecting Rio was largely perceived as the second-best option for the IOC on the broadcasting revenue front, behind the U.S. Since Rio is one hour ahead of the East Coast, broadcasters can still air such marquee events as swimming and gymnastics live in prime time. The IOC is expected to open bidding for American TV rights to the 2014 and 2016 Olympics within the next year; U.S. TV rights currently account for half of all IOC revenue. (NBC is paying $2.1 billion for the rights to the 2010 and 2012 Olympics, for example.)
2. MLB Playoffs Are Under Way
Now that the Minnesota Twins have defeated the Detroit Tigers, Major League Baseball playoff rosters are set. Five of the eight postseason teams—the New York Yankees, Boston Red Sox, Los Angeles Dodgers, Philadelphia Phillies, and Anaheim Angels—started the season with a payroll above $100 million; at $67 million, the Twins are competing with a payroll $20 million less than the next lowest roster, the St. Louis Cardinals at $87 million. Yet, MLB Commissioner Bud Selig insists this high-end-of-the-scales success rate is an aberration, maintaining the league has the "best competitive balance we've ever had."
Not at all disturbed by this baseball imbalance are playoff broadcast partners TBS and FOX, who look forward to solid big-market ratings and ad sales. TBS reports that ads during its coverage of the Division Series and the National League Championship Series are more than 75% sold out, with takers including Anheuser-Busch InBev (BUD), BlackBerry (RIMM), and JPMorgan Chase (JPM). And FOX's sales for the American League Championship Series and World Series are over 80%, from companies including PepsiCo (PEP), Gillette, Taco Bell, and General Motors. Ad rates are believed to be in the $70,000-$80,000 range for a 30-second spot in the Division Series, with spots in the Championship Series going for $120,000-$150,000.
With the 2009 MLB regular season in the book, final attendance numbers dropped about 6.5%, the biggest single-season loss since 1952. Two-thirds of teams saw attendance declines from last year, with five teams off 2008 totals by more than 20%.
3. The UFL: It's All About U
Just in case you're feeling like you don't have enough football viewing options right now, Oct. 8 marks the debut of the United Football League, the latest startup venture to cobble together teams from players who aren't quite good enough to play in the National Football League in sports venues sitting empty. The UFL is savvy enough to take stutter steps in 2009—the league opens with only four teams: Las Vegas, San Francisco, New York, and Orlando, which play a six-game schedule ending with a Thanksgiving weekend championship in Las Vegas.
UFL Commissioner Michael Huyghue describes the new league's relationship to the NFL as "complimentary," and is said to bristle when reporters describe the venture as a minor league for the NFL or "NFL light." "Our season is a short six-week season that kind of gets guys up and going," he says, "and then I think it's going to supply a lot of guys to NFL rosters."
Tickets are more than affordable. Las Vegas Locomotives tickets run from $7 to $42 for sideline center at UNLV's Sam Boyd Stadium, while $50 will get you a club sideline ticket in AT&T Park to see the California Redwoods.
4. NBA Preseason Tips Off
While it seems like mere weeks ago that the Los Angeles Lakers and thousands of fans were carrying on and celebrating their 2009 NBA Finals victory in the Los Angeles Coliseum, two-a-days in NBA training camps are now challenging out-of-shape players, and the league's first exhibition games are under way. Besides the headline-grabbing referee lockout and the sale of the New Jersey Nets to Russian oligarch Mikhail Prokhorov, the NBA, as has become its custom, opens the season with new global conquests.
ESPN and the NBA announced last week that they are collaborating on a multiyear agreement to air 100 live NBA games in Britain and Ireland. The package will include up to three contests a week, a Sunday prime-time game each week, the NBA All-Star Game, the Playoffs, and the Finals, as well as the NBA Fastbreak studio show, the NBA Action original series, and classic NBA games. The deal marks the first time NBA games will air on ESPN networks in Britain.
On Oct. 6, the NBA showcased the Utah Jazz and Chicago Bulls at London's O2 arena, the third consecutive season the league has placed a preseason game there. Over the summer, NBA Commissioner David Stern stated that the "ultimate goal is to establish several teams in Europe within six to eight years," and that the league plans to hold a regular-season game "somewhere in Europe" before the 2012 Olympics. Added Stern, "For us, the U.K. has been a low-key approach to get more kids to focus on the game."
India is also a target. In July, the NBA organized its first-ever fan clinic in Mumbai around Los Angeles Clippers guard Baron Davis. Davis' clinic attracted more than 10,000 fans per day, including Indian cricket stars Piyush Chawla and Irfan Pathan. The Indian event was one of 345 international events the NBA has hosted in 158 cities and 24 countries in the last year. Roughly 300 current and former NBA players, coaches, cheerleaders, and mascots have participated in such events—as well as more than 50 league sponsors.
5. Off the Beach-en Track: Volleyball Spikes New International Markets
The International Volleyball Federation (FIVB) has announced record television numbers for the 2009 FIVB World Tour and 2009 FIVB World Championships in Stavanger, Norway. Live footage of the World Tour has been distributed to 130 territories in 2009, with highlights reaching 200 territories; that compares to a combined total of 120 territories worldwide in 2007.
For the World Championships, 25 international broadcasters showed the finals live, an increase of 525% from the 2007 edition in Gstaad, Switzerland, where there were only four.
These achievements are particularly relevant within the current economic downturn, which has seen the collapse and default of many broadcasters worldwide. Spikes in interest in beach volleyball are the result of the FIVB's new global approach, including a new television strategy that has revolutionized the way beach volleyball is presented on television. With two World Tour events still to be held, beach volleyball's total worldwide revenues in 2009 are reportedly 180% higher than those of 2007, the last year in which the Beach Volleyball World Championships and World Tour were both played.
Extensive airtime during the 2008 Olympic Games didn't hurt, either—and matches on Rio's Copacabana Beach in 2016 could take coverage of the world's most uncovered sport to a whole new level.