Is March Madness bad for business?
{{#rendered}} {{/rendered}}Editor's note: Here is the weekly look at the intersection of sports and business by Rick Horrow and Brian Finkel with an eye to the bottom line on the following topics:
March Madness
Between billions of dollars in economic impact, broadcast rights, ad revenue, and gambling, March Madness unquestionably is big business. Regardless, it also might be bad for business.
For all the money that flows through the NCAA men’s basketball tournament, employers are at risk of seeing money flow out of their company.
{{#rendered}} {{/rendered}}According to the annual study done by Challenger, Gray & Christmas Inc., online March Madness coverage could attract more than 2.5 million unique visitors per day, each spending an average of 90 minutes watching games. That’s about $175 million in lost productivity over the first two full days of the tournament alone.
Bottom Line: While it’s impossible to predict who will win the national championship, the biggest winner of March Madness is New Orleans. The city continues its post-Katrina revitalization by hosting the BCS title game, Final Four, and the Super Bowl, all within 13 months. The biggest loser is American employers, who should expect a major drop in worker productivity over the next month.
Giants & A’s Battle for San Jose
A longstanding turf war between MLB’s San Francisco Giants and Oakland A’s spilled into the public last week, with both teams releasing statements regarding the A’s proposed move to San Jose. The A’s have sought a move to San Jose for several years now, but the Giants own territorial rights to Santa Clara County. MLB’s territorial map has been reaffirmed four times since 1990, including most recently in 2008. Commissioner Bud Selig has had a panel looking into the issue for more than three years and a decision, in the Giants’ favor, is expected soon.
{{#rendered}} {{/rendered}}Bottom Line: The A’s, playing in one of MLB’s oldest stadiums, have experienced seven straight years of declining attendance. The team’s lease at O.co Coliseum expires after next season. If, in fact, San Jose does belong to the Giants, the city of Oakland could put together a package to help keep the A’s. No relocation has been discussed to date.
Indian Wells
Conceived out of a dusty patch of land in the California desert, Indian Wells became a reality in 2000 in the form of a $77 million, 24-court tennis palace whose central 16,100 seat stadium is the biggest tennis facility in the world outside of New York’s Arthur Ashe.
Oracle founder and tennis fanatic Larry Ellison purchased the tournament for about $100 million three years ago, and the event now includes Hawkeye line-calling technology on every court used for competition – a feature not even the sport’s four Majors can boast – and prize money totaling $4.7 million, with the winners of the men’s and women’s singles each earning $1 million.
{{#rendered}} {{/rendered}}In 2011, the Tennis Garden and surroundings attracted more than 350,000 attendees throughout the two week span of the BNP Paribas Open, a top-tier tournament for both the men’s and women’s pro tours, pumping a record $289 million into the region’s economy, according to a study conducted by The George Washington University.
Bottom Line: With the gradually-improving global economy, the tournament hopes to improve on that number at the event’s 13th iteration in 2012, aiming for more than 380,000 fans.
NASCARTrack Naming Rights
Infineon won’t renew its naming-rights deal with the speedway in Sonoma when the deal expires this May. According to raceway President Steve Page, the decision didn’t come as a surprise, and he’s known for three or four years that Infineon wasn’t going to renew.
{{#rendered}} {{/rendered}}The original naming-rights deal signed in 2002 was worth $34 million over 10 years. The move leaves Auto Club Speedway in Fontana as the only NASCAR Sprint Cup Series track currently with a naming-rights partner.
Bottom Line: Racetracks have always had a tougher time than stadiums securing naming rights deal. Unlike stadiums, which host dozens of major events, racetracks usually only have one marquee date on the calendar each year. Sponsors lose even more value when a track with a naming-rights partner competes with a race with a naming-rights partner. Regardless, Page says that raceway remains on the market for a new partner.
Spring Training: Going in Opposite Directions
As Major League Baseball moves closer to the regular season, a few teams are going in opposite directions… in a business sense, at least.
{{#rendered}} {{/rendered}}New York Mets owners Fred Wilpon and Saul Katz, their families, businesses and charities must pay $83 million to Irving Picard, the trustee of victims in the Bernie Madoff Ponzi scheme. The two sides also will go to trial later this month over an additional $303 million Picard is seeking.
On the other hand, the two biggest spenders in MLB free agency are seeing big returns on their investments. Over 40,000 fans showed up at the Miami Marlins’ new ballpark for the team’s annual FanFest, buying more than 130,000 single game tickets in one day. Across the country, the Los Angeles Angels sold 30,000 single game tickets in the first day they were on sales.
Bottom Line: As the Marlins and Angels add payroll and sell tickets, the Mets’ off-field issues are ruining a once proud franchise. That New York could have the lowest payroll in the NL East is a testament to how far they’ve fallen.
{{#rendered}} {{/rendered}}Rick Horrow is the "Sports Professor," and is the Sports Business Analyst for Fox Sports. He has been the Visiting Expert on Sports Law at the Harvard Law School, and has authored "When the Game Is on the Line" and "Beyond the Scoreboard: An Insider's Guide to the Business of Sports." His show "Beyond the Box Score" is posted on a weekly basis on FoxSports.com, and the latest emerging trends in sports business can be found at www.horrowsports.com.
Brian Finkel is Creative Director for Horrow Sports Ventures. You can follow him on Twitter @TheFinkTank.