Business of Sports
Having a Ball at the U.S. Open
But tennis in New York has always been a fashion show and marketer's paradise, perhaps never evidenced more than now, as the U.S. Open at the USTA Billie Jean King National Tennis Center kicks off in Flushing Meadows. In New York no one bats an eye when Federer and his young family spend their off-court time in the $3,075 a night "Roger Federer Suite" at the Carlyle, Rafael Nadal wears attire inspired by the city's famed yellow taxi cabs, and Serena Williams' clothing is "said to have been inspired by cocktail party attire," according to the New York Daily News. Would we really be surprised if the courtside ball girls, decked out in Polo Ralph Lauren (RL), came out in spike heels?
Not when the New York Post reports that tennis diva Maria Sharapova, sponsored by Nike (NKE) and Prince, has partnered with Cole Haan to create Maria Sharapova by Cole Haan, her first head-to-toe clothing collection. One of her best fashion moments, Sharapova was quoted as saying, was at a Cole Haan dinner in April, when for the "first time I had a chance to wear a pair of stilettos from the collection I designed."
Among the most iconic items of apparel on sale throughout the Flushing Meadows complex are those bearing the Open's dozen year-old "flaming ball" logo. Sales of such items account for about 42% of all sales at the National Tennis Center during the event, according to USTA officials. All told, on-site retail operations at the tournament bring in close to $14 million.
Even the balls in New York are bigger —the giant yellow collectible Wilson Sporting Goods autograph balls, that is. The balls Wilson sells at the U.S. Open are 11 inches in diameter, two inches bigger than those sold at other Wilson-sponsored tournaments. The ever-present New York markup persists—the balls cost $40 each at the event, $34 on Wilson's on-site store—where they reportedly account for half of all sales. The company expects to sell as many as 8,000 throughout the duration of the event.
2. U.S. Open: Hospitable on TV and in Person
With record attendance of almost 60,000 on opening day and almost 24,000 for the evening session anchored by matches featuring Venus Williams and Andy Roddick, the U.S. Open is on pace to have its "second- or third-best financial performance ever, despite the down economy," according to SportsBusiness Journal. According to USTA sources, revenues close to last year's $208 million and profits of $110 million to $115 million are likely, and attendance is "expected to reach 675,000."
Despite the economy, all 85 suites within the National Tennis Center are sold out, and only a few long- term sponsors, such as New York-based financial giant JPMorgan Chase (JPM), are reining in hospitality at the event. Although JPMorgan Chase signed a six-year, $90 million extension of its U.S. Open sponsorship in 2007, the company has decided to limit its corporate hospitality to only the final six days of the tournament this year.
Outside of the Arthur Ashe suites, much of the corporate hospitality will be found in the National Tennis Center's new Indoor Tennis Facility, a 12-court, 265,000 square feet warren that will serve as ground zero for the family-oriented SmashZone and fans willing to spend $475 to $1,500 a head to be entertained.
If your idea of U.S. Open hospitality tends to center on your own refrigerator and couch, you've never experienced more wall-to-wall coverage than this year. ESPN is televising the U.S. Open for the first time this year, with coverage on ESPN2, ESPN360.com, and ESPN Mobile TV. Coverage sponsors include IBM (IBM), DirecTV (DTV), American Airlines (AMR), Lexus (TM), and Miller Genuine Draft 64.
Likewise, Tennis Channel, in the midst of a battle for Cablevision (CVC) carriage reminiscent of last year's standoff between the cable provider and the NFL, will air more than 70 hours of live tournament coverage; nationwide, Time Warner Cable (TWC) will offer a free preview of Tennis Channel to all subscribers through Sept. 13. Tennis Channel has reportedly purchased $500,000 to $1 million worth of ads in the New York metro area to criticize Cablevision for insisting that the channel be placed on a sports tier; the ads urge Cablevision customers to switch to DirecTV, Dish TV (DISH), or Verizon (VZ) for their U.S. Open fix.
And even if you're more into singles than doubles, ESPN will offer a double dose of McEnroe—for the first time, brothers John and Patrick are sharing booth duties in front of the camera. Says Patrick McEnroe of working with his brother: "When you talk the U.S. Open, you talk Johnny Mac…I'm happy to be going along for the ride."
3. College Football: Kicking the Can at Season's Start
In the world of college football, the last couple of weeks have presented an interesting contrast in the Battle of the Not-So-Secret Cash Cows. On one hand, star student athletes continue to mount an attack on the NCAA and the millions in revenues its member schools get from their likenesses—while they risk suspension if they accept so much as a restaurant Caesar salad with grilled chicken from their coach.
On the other, athletic directors of top-earning schools have effectively flattened a plan by Anheuser-Busch InBev (AHBIF.PK) to decorate Bud Light cans in collegiate color schemes. On the surface, this is a very public effort—one that has captured the attention of the Federal Trade Commission—to counter underage drinking. In reality, it's a concerted effort to quash a student revenue stream that isn't going straight into the schools' pockets.
Elsewhere, universities across the country are nervous about the effects of a possible federal tax on income that college sports programs receive through corporate sponsorships. Officials at big-time college sports programs are poring over a report from the Congressional Budget Office that reveals a tax on naming rights deals for college sports events, such as bowl games, stadiums, and arenas. Tax-exempt corporate sponsorship revenue alone totaled $275 million in 2004-2005, according to the report, and such payments, currently categorized as nontaxable income for the universities receiving them, could be reclassified as advertising revenue and become subject to federal taxes.
Do college athletics programs—where football provides the primary source of income, in most cases—deserve to keep their tax-exempt status? Have they "crossed the line from educational to commercial endeavors," as the report states? Anyone who has watched a college bowl game or March Madness coverage can answer this question.
As many NFL teams have experienced, college football fans might not be spending as much for tickets as last year. But a survey by secondary broker TicketCity shows that for the right match-up, they're still willing to open their wallets. The Sept. 12 Ohio State-University of Southern California game is the most sought-after ticket of the college football season and one of the most expensive in college football history, the survey revealed. The hottest tickets this season, according to TicketCity data, are:
1. USC at OSU $842
2. Arkansas at Texas A&M $620
3. USC at Notre Dame $526
4. Georgia at Florida $427
5. Oklahoma at Texas $430
4. UEFA Champions League: A Success Despite Recession
The world's most lucrative club football competition, the European Champions League, will earn a record $1.55 billion in marketing and television revenues this season for clubs and organizers. The recession-defying figure is a rise of 33% from last season. The payouts will be matched for two more seasons after the European governing body signed global television and sponsorship deals through 2012, including top-tier partners Ford (F), Heineken (HEIN.AS), MasterCard, (MA) Sony (SNE), and UniCredit (CRDI.MI).
The elite 32 teams featured in the group stage draw next week will share more than two-thirds of total commercial revenues. Their payouts do not include money earned from ticket and merchandise sales. This season, a tightly controlled distribution formula has created a pool of broadcast money totaling $481 million, a $90 million increase.
Each club is guaranteed a $10.1 million participation fee before play begins in September and will get bonuses based on results. A group stage victory pays $1.14 million, while the final next May is worth an extra $12.8 million to the winner and $7.4 million to the runner-up. A club that won all six of its group matches and advanced through the knockout rounds to lift the trophy would be guaranteed $44.4 million, plus a share of television rights.
5. The $100,000 Question for Women
The Wall Street Journal recently released a list of certain athletes and how long it took them to earn $100,000. Unfortunately, that list included no women. To even the playing field, we've taken the top five female seeds from the U.S. Open to see how many games it took them to hit the $100,000 milestone (tiebreaker games included):*
Elena Dementieva (4)
# of Games: 49
2009 Earnings: $1,920,679
Games Won: 940
Dinara Safina (1)
# of Games: 38
2009 Earnings: $2,515,020
Games Won: 948
Jelena Jankovic (5)
# of Games: 36
2009 Earnings: $3,064,465
Games Won: 1107
Venus Williams (3)
# of Games: 19
2009 Earnings: $3,747,565
Games Won: 709
Serena Williams (2)
# of Games: 18
2009 Earnings: $3,852,173
Games Won: 696
*On the mens' side, the Journal noted that it took top seed Roger Federer 28 games to earn $100,000 in 2009.