Moag and Company Sports Notes (12 October 2018)

Date: Oct 2018

Trivia

When did the New York Yankees win their first World Series Championship? 

Last Week’s Answer: Rob Gronkowski of the New England Patriots achieved his record setting fourth 10+ touchdown season in 2014. Gronk had 10 touchdown receptions in 2010, 17 in 2011 (a single season record for tight ends), 11 in 2012, and 12 in 2014.

Football:

NFL owners are scheduled to vote at their Fall meeting to eliminate the decades-old cross-ownership rule, which prevents owners of other big four sports teams in NFL markets from buying football teams. The rule also prevents an NFL owner from buying a non-NFL big four team in a league market. The rule is in place to prevent NFL owners from competing with their fellow owners in the local sports marketplace. However, with valuations of teams so high, the pool of prospective buyers has shrunk, leading to a rethink of the rule, sources said. Only three bidders emerged for the sale of Carolina Panthers, which David Tepper bought for $2.275B in August. While that amount was a record for an NFL team, it still came in under expectations. The rule change would have a very positive effect on the NFL and other sports assets. It opens up the market for an NFL team to a large group of very wealthy people. The NFL has not always strictly enforced the rule. Stan Kroenke in '10 exercised an option to buy the St. Louis Rams despite already owning the Denver Nuggets and Colorado Avalanche. After a long grace period, he did not sell the Denver teams but moved their ownership to family members. The league several years earlier prevented the Glazer family, which owns the Tampa Bay Buccaneers, from bidding on the Los Angeles Dodgers. While at the time there was no NFL team in L.A., the league considered L.A. a league market.

Baseball:

The Texas Rangers claimed throughout the '18 season a decline in attendance "would not impact the long-term payroll and baseball-operations budget," but the drop in ticket sales ended up being a "bloodbath that will put a strain on finances," according to the Dallas Morning News. The sharp decrease also raises a "question as to whether a disenchanted segment of the fan base can be retrieved." The Rangers finished 19th in MLB for "tickets sold at 2,107,107, a drop of 400,653" from '17. By a "very conservative estimate," that adds up to a "decrease in revenue" of at least $16M this season. The Rangers have "squandered much of the goodwill they generated with strong showings" from '10-13. Coming off of a "second consecutive World Series appearance" in '11, the Rangers "set a club record with 3,460,280 tickets sold" in '12. The sales drop between then and '18 is 1,353,173, the "10th-largest decrease within a seven-season window in baseball history." Using a $40-per-ticket estimate, that "translates to a revenue shortfall" of $54M. However, the Rangers "believe they can win back the block of ticket-buying customers" who have "temporarily turned their back on the team." Rangers Exec VP/Business Operations Rob Matwick said that the team is "encouraged that it has maintained a season-ticket-equivalent base that ranks among the top 10" in MLB. That base was at "about 16,000 this season." Matwick said that the attendance decline over the past few seasons "primarily came from single-game tickets." The Rangers hope that the final season of Globe Life Park in '19 and the opening of Globe Life Field in '20 "spurs attendance"

MLB execs and casino industry reps during a panel talk both "vigorously defended what they believe is their right over the money wagered" through legal sports betting, according to the AP. MLB Exec VP/Gaming & New Business Ventures Kenny Gersh told the crowd at the Global Gaming Expo in Las Vegas that a proposed integrity fee (0.25%) is "essentially a royalty that casino companies should pay if they are going to make money off of the sport." He "defended it as a case of 'fairness' and partnership with casino operators." Gersh: "If you are going to designate someone to be able to make money off of what at the end of the day is our sport and our events because if the New York Yankees weren't playing the Boston Red Sox last night, you are not betting on the Yankees and the Red Sox ... We think we should be involved in that." But American Gaming Association Senior VP/Public Affairs Sara Slane said that MLB wants a "cut of the revenue without any of the risk that's associated with it." Slane: "That's why we have to go through the regulatory process. We invest billions of dollars in buildings, in our licenses that costs us millions of dollars to go through. You want us to take that risk, pay you and then you are going to benefit on the back end as well. ... What you guys are proposing is not financially viable".

Basketball:

The Brooklyn Nets-Toronto Raptors game at Bell Centre in Montreal was "played against the backdrop" of a news conference "touting the possibility" of an NBA expansion franchise there, according to the Montreal Gazette. Former politician Michel Fortier and former Montreal Canadiens COO Kevin Gilmore "made their case in a presentation to the Montreal Board of Trade." There are a "few obstacles in the way, starting with Fortier’s admission that the NBA has no immediate plans for expansion." Their "lone commitment to date" comes from security firm GardaWorld CEO Stéphan Crétier, who is in for 10% of the team. The press conference was a "surprise to NBA Canada officials who had spent three days promoting basketball in the city." The word is they were "not pleased someone tried to hijack their party". The NBA "isn’t currently looking to add any expansion franchises," but the Montreal group intends to be "ready should the day come when new teams are on the table." Members of the group said that the NBA has been "made aware of the interest, which originated" in '14, but has been "ramped up" with the addition of Crétier as a main investor. They have also informed NBA Commissioner Adam Silver that "while they recognize 'Montreal isn’t on anybody’s short list,' they don’t mind being Plan B for now".

Soccer:

The founding family of St. Louis-based car rental company Enterprise is "making a bid for one of the last two planned MLS expansion team slots," according to the St. Louis Post-Dispatch. Members of the Taylor family are forming the group, which would "make the team majority-owned by women, the first in the league and one of few ownership groups controlled by women in all of professional sports." The Taylors said that a roughly $250M, 20,000-seat stadium "dedicated to the soccer franchise would be 'overwhelmingly' privately financed." Public help would likely come from "dedicated sales taxes on concessions and other merchandise sold to patrons, a property tax break from a city agency owning the stadium site and leasing it to the group, state tax credits and a break on the city’s 5 percent ticket tax." The Taylors are teaming with the family of Missouri-based World Wide Technology CEO Jim Kavanaugh, a former pro soccer player who was part of last year’s "failed bid" for an MLS team and stadium. Kavanaugh also is part-owner of USL club St. Louis FC, which would "serve as a development club if St. Louis lures an MLS team." Because the families are "not seeking any commitment of citywide resources, a public vote like the one that doomed the financing package for the last effort" in April '17 "won’t be necessary." St. Louis aldermen would "need to pass legislation approving the deal." Similar to the last MLS proposal, the new effort is "eyeing the same land." Enterprise Exec Chair Andy Taylor said that a timeline is "still in flux but that he hopes the league could make a decision within months".

Liga MX President Enrique Bonilla at the Leaders Sports Business Summit in London said that a combined North American soccer league with MLS "could be the main legacy" of the '26 FIFA World Cup, according to Reuters. Revenues for global TV rights and sponsorship across North America "pale in comparison to the top leagues of Europe." Bonilla said that may be "something that could be changed with a new combined continental top-flight division." Bonilla: "It's a possibility, a North American league. We have to determine how and see the pros and cons but I think that's a way to grow and to compete again." He added the "main idea" is that MLS and Liga MX have to "grow together to compete." Bonilla: "If not, there is only going to be the rich guys in Europe and the rest of the world." MLS and Liga MX earlier this year "launched a partnership which included the introduction of the Campeones Cup, a match between the winners of each respective league." Plans also have been "discussed to play an All-Star game between the two leagues". MLS Exec VP/Communications Dan Courtemanche in a statement said, "We have been discussing with Liga MX additional ways we can collaborate on and off the field, and we are excited about the future opportunities that exist between our two leagues".

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