Moag and Company Sports Notes (18 January 2019)

Date: Jan 2019

Trivia

What were the first points scored in Super Bowl history?

Last Week’s Answer:  Brett Hull holds the 3rd spot on the list of most goals scored in an NHL season. He had 86 in the 1990/91 season while playing for the St. Louis Blues.

Football:

The San Francisco 49ers are blaming Santa Clara officials for "drastically gutting their projected profits and the city’s own revenue stream through a curfew on nighttime entertainment at Levi’s Stadium," according to the San Jose Mercury News. Instead of making about $5M from non-NFL events such as concerts, beer festivals and other sports, the team said that it "expects to haul in only about $750,000" in FY '18-19 (ending June 30) because of the 10:00pm PT city curfew for weeknight events and 11:00pm curfew for Friday and Saturdays events. The curfew has been a "major sore point between the city and the 49ers, which operate the stadium and say the hours are too restrictive." Singer Ed Sheeran reportedly "cancelled a show" for his '18 tour "because of the curfew." City officials responded in a written statement that the stadium’s management company "books money-losing, non-NFL events at Levi’s Stadium." The city also pointed out that the 49ers lost $8-12M from Levi’s hosting of the recent CFP title game. The 49ers have "butted heads" with Santa Clara Mayor Lisa Gillmor over a "number of other issues, including a stadium rent adjustment and the use of a nearby soccer complex for parking." The city council "voted unanimously to sue the team over availability of handicap parking spaces and allegedly improper storage in the stadium’s main parking lot".

Baseball:

With MLB's free-agent market "stuck in a deep freeze for the second straight winter, there is debate about whether MLB’s 'luxury tax' on big spenders" has turned into a salary cap, according to the Wall Street Journal. The competitive balance tax appears to have "turned into a de facto salary cap, with a diminishing number of teams willing to cross it." Just two teams -- the Boston Red Sox and Washington Nationals -- "surpassed the luxury-tax threshold" of $197M in '18, down from five in '17, six in '16 and four in '15. Their combined penalty amounted to around $14.4M, the "lowest amount paid" since '03. MLBPA Senior Dir of Collective Bargaining & Legal Bruce Meyer said, "It’s become increasingly clear that some clubs are simply using the [competitive balance tax] as a justification for the historic and short-sighted inactivity in the free-agent market".

Basketball:

The Golden State Warriors internally are projecting a "nine-figure increase in revenue when they move into the Chase Center next season," according to sources cited by ESPN.com. Kevin Durant re-signing with the team this offseason "potentially would send the Warriors toward a payroll" above $300M when luxury taxes are included. The franchise "might grumble about it, but they will be able to afford it." "Do not fret about the Warriors and cash flow". The Warriors "already make so much money on their home games," but a nine-figure bump in revenue is a "whopping increase -- one that could alone increase the league-wide salary cap a couple million dollars." This figure "doesn’t say how much more money will reach" Warriors ownership, as the team "could have greater expenses, including revenue-sharing obligations, in their new arena." Still, it is "hard to imagine this won’t be a windfall" for the Warriors.

Take-Two Interactive will pay the NBA and NBPA up to $1.1B "over seven years" as part of a new licensing agreement, "more than double the organizations’ prior licensing tie-up" in '11, according to a source cited by the Wall Street Journal. The deal, whose value is "based on a percentage of sales of Take-Two’s NBA games," allows Take-Two to "continue making its NBA 2K videogame franchise and other NBA-branded games, including smartphone apps." Game publishers "traditionally pay licensing fees to the major sports leagues ranging from 10% to 15% of a game’s revenue." Based on analysts’ estimates for the NBA 2K series, it appears the company is "paying a licensing fee at the top end of that spectrum or higher." Take-Two in June said the '18 installment of NBA 2K "sold a franchise record of more than nine million units in its first year." The most recent installment, "NBA 2K19," was released in September and was the "best-selling sports game -- and third-best-selling game overall -- last year in the U.S. as of November." The NBA also has a licensing agreement with Electronic Arts for the "NBA Live" series.

Soccer:

The Seattle Sounders' multiyear deal with online retailer Zulily that includes becoming the club's jersey sponsor could be worth more than eight figures annually, according to sources. Sounders COO Bart Wiley declined to comment on the terms of the deal, but said that on an annual basis, it is greater than its previous deal with Microsoft’s Xbox. The deal with Zulily also does not include matchday pitch rights, which Xbox previously held, nor naming rights to the training facility. The average jersey deal across MLS is worth about $3M per year, with the recent deal that expansion club FC Cincinnati signed with Mercy Health valued at $5M per year. Wiley said the club is "very content with where we rank across the league" in regard to revenue from jersey partnerships. The Sounders' overarching deal with Xbox was previously one of the league’s largest, with media reports speculating it was worth upwards of $5M a year. The deal, which dates back to the club’s inaugural MLS season in ’09, expired following the end of this season.

MLS Commissioner Don Garber officially recognized Austin FC as the league's 27th team, with the expansion franchise "set to begin play" in the spring of '21 at a privately financed, 20,000-seat stadium in North Austin, according to the Austin American-Statesman. The team will be majority owned by Austin FC Chair & CEO Anthony Precourt, but he also "plans to announce local investors soon." Garber has "hammered home in recent years that local ownership is a key for franchise success." Garber said, "The final ownership structure will be one that would satisfy our real strong desire and preference to have our clubs have local roots." Precourt said that he "plans to be heavily involved in day-to-day operations" and live in the area. Austin FC is the "first professional franchise for the city in any of the five major American sports leagues." While attendance for FC Dallas and the Houston Dynamo has "lagged behind other MLS clubs, the league is extremely bullish on Austin." Team officials "hope to break ground at the stadium site by September and are finalizing plans that would allow construction to begin on a training facility at a yet-to-be-named private site".

Other:

The Univ. of Alabama's "total athletics revenue" for FY '18 was $177.5M -- up from FY '17's $174.3M that was "then a school record," according to the Birmingham News. U of Alabama reported a $10.9M "surplus in its official NCAA budget report" for FY '18, which is down from the $15.6M it "made a year earlier even as revenues climbed" by more than $3M. The decline in surplus "wasn't a result of the football program," as UA football had a profit $48.2M -- up more than $2M over FY '17 -- and revenue of $111.1M. Revenue "climbed in media rights" up $2.2M to $46.1M, royalties up $1M to $13M and "investment income jumped" from $1.2M to $6.9M. Expenses "also climbed" $8M in FY '18.

Sources: SportsBusiness Daily; The Athletic; ESPN.com; The AP; San Jose Mercury News; Wall Street Journal; ESPN.com; Austin American-Statesman; Birmingham News

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