Jerry Jones Threatens “Severe Retaliation” Against League Owners, Jones’ Request for Special League Meeting Rejected

NFL owners sent a disciplinary letter to Jerry Jones (and his lawyer) accusing the Cowboys’ owner of “conduct detrimental to the league’s best interests”; stirring up talks that Jones could be removed (through a forced sale of his team) as a league owner. Jones has been trying to void Roger Goodell’s contract extension, which was unanimously agreed upon in May; threatening “severe retaliation” against the league and its owners if they were to pursue his removal. On Thursday, Jones formally requested a special league meeting to discuss the Commissioner’s contract extension negotiations — just one day after his fellow league owners told him to drop the issue. The compensation committee (Blank, Hunt, Kraft, Mara, McNair and Rooney) rejected his request and will meet on December 13 to work “diligently to fulfill its mandate.” (i.e. propose extension)

Howie Long-Short: When Jones bought the Cowboys in 1989, no American sports franchise had ever sold for more than $100 million; Jones paid $140 million for the Dallas football team. The most recent Forbes valuation had the franchise worth $4.8 billion. Forbes tends to undervalue franchises (valued Nets at $1.8 billion, team sold for $2.3 billion; valued Rockets at $1.65 billion, sold for $2.2 billion), so if Jones were to sell, the team would likely fetch $5 billion; an ROI of 3,371%.

Fan Marino: Jones is on an island here and he’s fighting a losing battle. Daniel Snyder is the only other owner who fully supports his efforts. With that said, he’s not being forced out of the league (this isn’t a Frank McCourt situation). They could suspend him (see: George Steinbrenner) and if he goes far enough, perhaps they could justify a lifetime ban (see: Donald Sterling), but no American professional franchise owner has ever been made to part with their team.

Jerry Jones Asks for Sit-Down With Fellow NFL Owners

For the balance of today’s newsletter, sign-up here!

ESPN Announces Name, Timeframe for Launch of D-T-C Streaming Service

On Disney’s Q4 earnings call late last week, CEO Bob Iger introduced ESPN’s new DTC streaming service, ESPN Plus (ESPN +). ESPN+ will launch next spring with a fully redesigned app; offering scores and highlights, the ability to stream the network’s linear cable channels and more than 10,000 live sporting events. Iger’s comments failed to clarify if the Bam-Tech powered service will require subscribers to maintain a cable TV subscription and no pricing information was disclosed; though it is expected that the service will cost less than Netflix.

Howie Long-Short: Disney (DIS) reported fiscal Q4 revenue declined 3% YOY (to $12.8 billion) and net income declined 1% (to $1.75 billion). The company’s media segment was hit particularly hard, with net income down 12% YOY (to $1.48 billion); the 6th straight quarter that figure has dropped. ESPN contributed to the decline with affiliate revenue growth unable to offset increased programming expenses (i.e. NFL, NBA broadcast rights) and a YOY loss in ad revenue. Despite the negative news, Iger remains optimistic about sports network saying, “the brand is strong. The quality of their programming is strong. There are always opportunities to improve, but we like where ESPN is these days.” Shareholders aren’t going to be happy with DIS’ worst calendar year performance since 2008 (-1.5% YTD), but there is no question that the quality of ESPN’s programming remains elite. Bowl season and the College Football Playoffs will showcase that.

Fan Marino: On October 31st, we wrote that ESPN was likely to lay off 40-60 employees after Thanksgiving. New reports indicate that number could now exceed 100, with SportsCenter on-air talent said to be among those who will be affected. ESPN’s primetime viewership (i.e. games) remains flat, but their total day audience declined 3% YOY during fiscal Q4; so, it isn’t like the existing line-up is setting the world on fire. As I’ve said before, if ESPN must cut costs; start with the on-air talent. The audience is tuning in for the game or the highlights, not the broadcasters or anchors.

ESPN Remains A Drag On Disney

For the balance of today’s newsletter, sign-up here!

Costas: NFL’s Pending Demise is the “Most Significant Story in American Sports”

Speaking at the University of Maryland’s annual Shirley Povich symposium, Bob Costas created headlines on Tuesday night while pontificating on the pending demise of the NFL; calling it the “most significant story in American Sports”. Costas said that once “a cash machine”, barring technological developments in safety, the game of football is facing extinction. The NBC Football Night in America host believes as more research becomes available on the risks associated with CTE, families will come to the “common sense conclusion” that children should not play football until the age of 18; and once that happens “the whole thing could collapse like a house of cards.”

Howie Long-Short: To imply the league is anything but a cash cow right now is misleading. The NFL is going to bring in an estimated $14 billion this season; 40% more than MLB, the second biggest revenue generator in America sports. Despite the league’s declining ratings, TV advertising revenue is up 2% YOY. The NFL has its problems, but generating cash is not one of them.

Fan Marino: I don’t subscribe to the “football is facing extinction” narrative. Participation in youth football (ages 8-14) grew (1.9% for tackle and 8.7% for flag) between 2014-2015 and the states of Oklahoma, Florida and Arkansas have added a combined 150 high school teams over the last 5 years. The Boston University study that found 99% of former NFL players (who donated their brains for research) had CTE, also indicated that just 3 of the 14 former high school players tested showed signs of the disease. No CTE was found in the brains of the 2 players who ended their football careers prior to high school. I would not hesitate to let my child play youth football.

Bob Costas on the future of football: ‘This game destroys people’s brains’

For the balance of today’s newsletter, sign-up here!

$100,000 For the Right to Book a Hotel Room

Texas A&M is holding a lottery for football season ticket holders later today. Those selected will win the right to purchase (cost: one-time $100K tax-deductible donation) a guaranteed room option (GRO), at a yet-to-be built hotel, across the street from Kyle Field. The GRO entitles the rights holder to book a specific room on any day for the next 10 years (they also get an engraved name plaque on the door); a luxury in a college town that lacks hotel rooms. The hotel, which will be ready for the start of the 2018 season, will have 250 total rooms (including 2 penthouses and 11 luxury suites) and a conference center; to which the school is looking to sell the naming rights to for north of $20 million.

Howie Long-Short: Texas A&M (and several others in the SEC) are abiding to the motto “if they come, we will build it”. They’re holding a lottery because more than 750 people expressed interest in the program. From a fiscal perspective, this doesn’t make sense for GRO rights holders. $100K does not include the nightly cost of the hotel room. Even if you were paying $500/night for a room regularly priced at $125/night, you would have to attend 267 games to break even. SEC teams are only going to play 70 home games (max) in a decade.

Fan Marino: The $28.5 million the A&M athletic department will bring in from GRO sales will come in particularly handy should the school decide to fire Head Coach Kevin Sumlin (which seems inevitable). Sumlin has a $10.4 million buyout on his contract; though that number shrinks by more than $400K/month. I wouldn’t fire Sumlin.  Jimbo already said he’s not coming. Leach & Kelly aren’t taking SEC jobs (too much media attention) and James Franklin has no reason to leave Penn State. Chad Morris and Matt Campbell are good coaches, but I don’t see them as improvements over Sumlin.

Coming Soon to Campus: The $100,000 Hotel Room

For the balance of today’s newsletter, sign-up here!

Trends Point to a Future of Multi-Purpose Venues, Away from Single Sport Facilities

There is a trend in stadium/arena development to diversify venues, moving away from single purpose facilities that sit vacant for long periods during the calendar year, towards ones that can host a variety of non-traditional events (i.e. marathons, conferences, video game tournaments etc.) and draw spectators with varied interests. These new facilities are being built in more desirable locations (see: downtown) to encourage more visitors to attend. Flexible venues are also easier to finance with multiple parties contributing; as the public funding that used to subsidize the development of new sports facilities has, for the most part, dried up.

Howie Long-Short: New stadium construction can now cost more than $1 billion, so it makes fiscal to maximize ancillary revenue from stadium event rentals. Still, 86% of economists say that public funding for sporting venues is likely to cost taxpayers more, than any economic benefits realized by the finished facility; and most taxpayers are unlikely to ever step foot in the building. I’m all for multi-purpose venues, so long as the total expenditure for construction is coming out of owner(s) pockets.

Fan Marino: The Washington Redskins have released plans for a new 60,000 seat stadium that would offer locals far more than a place to watch football games. The proposed venue will include a moat that can be used for kayaking and surfing in the summer, and ice skating in the winter; while the stadium’s exterior will double as a climbing or rappelling wall. That doesn’t sound like a modern stadium, it sounds like an urban outdoor enthusiast’s dream.

More Than Sports: Stadiums Try Video Games and Surfing

For the balance of today’s newsletter, sign-up here!

The Company Powering the Biggest Names in Sports and the Content They Publish on Social Media

Corporate advertisers have found that content shared by athlete endorsers receive 6x the engagement that same content would receive, if shared on their own platform. However, brands struggle to get athletes to share their content as intended. Athletes want to build their personal brands and provide their fans with high quality content, but lack the bandwidth to create with so much of their focus on the field. opendorse has built the solution to both issues, a marketing platform that provides brand partners with direct access to an endorser’s personal social media channels; while giving athletes a way to access, approve and activate content from their brand partners in a single click.

Howie Long-Short: There is an ongoing shift occurring in the way sports rights holders distribute content, with an increase in broadcast related video being shared by professional athletes; as sports leagues look to increase distribution and grow their audience. That makes sense to me. Athletes have the reach and influence, while the leagues own the rights and can pre-package the content for distribution. Everyone seemingly benefits. It’s worth noting that the 2,400 athletes on the opendorse platform have a combined reach of 800 million followers, 4x ESPN’s reach when you combine all their social channels.

Fan Marino: opendorse was founded by former Nebraska Cornhusker football players Blake Lawrence and Adi Kunalic. The Lincoln (NE) based company has maintained its ties to the program, recently closing on a $3.5 million series A round with more than 1/3 of the capital coming from former Huskers; including Bears CB Prince Amukamara.

For the balance of today’s newsletter, sign-up here!

NFL Owners Discuss Terminating Goodell Extension, Jerry Jones Spearheading Movement

17 NFL owners participated in a conference call to “discuss the possibility of halting commissioner Roger Goodell’s pending contract extension”, with Cowboys owner Jerry Jones said to be spearheading the movement. Jones is among a subset of league owners (Kraft, Blank) who feel the commissioner should take the fall for “the Los Angeles situation”, “the Ray Rice situation”, declining television ratings and player protests that have plagued this season. As one owner said, “you don’t get to have this many messes over the years.” Despite Jones’ pleas, it is expected that the commissioner’s 5-year extension, through the ’24 season, will be approved as planned. Goodell’s current contract is scheduled to expire at the end of the 2018 season.

Howie Long-Short: Goodell has grown revenues by over 300% (to $15 billion) since taking over in 2006. Yet, he remains grossly overpaid. Between 2006-2015, Goodell made $212 million; more than every athlete, besides A-Rod and Kobe Bryant, during that time. Goodell made $34 million in 2015, the last year that the league maintained a tax-exempt status that required his salary be made public. Only 16 Fortune 500 CEOs earned that much in 2016 compensation! At a minimum, those opposing Goodell’s extension should push for his compensation to be rolled-back.

Fan Marino: It’s not a coincidence that the owners who want Goodell out, are those who perceive their teams have been slighted by the league office. Jones is upset about the 6-game suspension imposed on RB Ezekiel Elliott. He can argue punishment from the league office has been inconsistent, but a yearlong investigation found that Elliot physically assaulted his former girlfriend on 3 occasions. Here’s to hoping the other 31 NFL owners can convince Jones that going to bat for a man who hits women, isn’t the hill he wants to die on.

NFL Owners, Led by Jerry Jones, Turn Their Attention To Roger Goodell’s Contract Extension

For the balance of today’s newsletter, sign-up here!

MLB CONSIDERING EXPANSION, RADICAL REALIGNMENT AND A REVAMPED PLAYOFF FORMAT

MLB is reportedly considering expansion, radical realignment and a revamped playoff format. Portland and Montreal have been mentioned as the cities most likely to receive expansion franchises. Expansion would bring the total number of MLB teams to 32, leading to the creation of 4 8-team divisions (currently 6 5-team divisions) based on geography and the addition of two playoff teams.

Howie Long-Short: Why would a league that struggles to find quality pitching with 30 teams, add 2 franchises? Expansion fees! Arizona and Tampa Bay each paid $150 million to join MLB back in the late 90s. The NFL got $700 million to add a Houston franchise. MLS is taking in $150 million for their expansion franchises. The addition of 2 teams is going bring the league’s existing owners more than $1 billion to divvy up. I’m sure that will help them get over their frustrations with the 5th starter.

Fan Marino: Should the league decide to expand, it is likely the number of games/season would be reduced to 156 (from 162). Each of the 4 division winners would qualify for the division series with the next 8 teams, regardless of division, qualifying for Wild Card games. Playing 156 games (none of which are a one-game series) to determine the 12 best teams and then having 8 of them play in single elimination games, makes no sense. I’m certainly no baseball purist, but the elimination of the American and National Leagues is likely to upset those that are.

EXPANSION COULD TRIGGER REALIGNMENT, LONGER POSTSEASON

COLUMBUS CREW MOVING TO AUSTIN FOR PUBLICLY FUNDED STADIUM

Columbus Crew Owner Anthony Precourt has announced the MLS team will be moving to Austin for the 2019 season, if plans for a downtown stadium in Columbus are not approved within the next 12 months. Columbus has struggled financially, finishing in the bottom 3 of every MLS business metric for a decade, as stadium amenities lag far behind league standards. Team President Alex Fischer said Precourt has turned down offers to sell the team to investors who wish like to keep the franchise in Columbus.

Howie Long-Short: Same story, different city/franchise. Precourt wants a public subsidy for his private business and since Columbus hasn’t been willing to give it to him, he will go to Austin to get it. Stadium deals are never a good investment for taxpayer funding. The taxes collected on any hypothetical “economic growth” will never off-set the upfront funding spent.

Fan Marino: Precourt has no intention of staying in Columbus, even if they were to approve public financing for a new stadium. Any pretense of staying in Columbus is about squeezing more money out of Austin. That’s a shame. The Crew are an original MLS franchise and had the league’s first soccer-specific stadium. They’re also having a good season on the pitch, qualifying for the 2017 playoffs. It’s always the fans that lose in these negotiations.

Columbus Crew Angling Toward Relocation to Austin in 2019

FC BARCELONA OFFERING MESSI $100 MILLION TO SIGN HIS NAME

FC Barcelona is reportedly offering star Lionel Messi a record $100 million to sign a contract extension with the club, worth $650,000/week; as his current deal expires with the end of this season. Barcelona, having already lost Neymar to Paris Saint-Germain (following a record $263 million transfer) this year, could not afford to lose Messi too. Rumors had been circling that the Argentinian star was interested in leaving the club to play for Manchester City. Messi has yet to formally accept the extension, but Barcelona captain Andres Iniesta has indicated he will.

Howie Long-Short: FC Barcelona spends 84% of total revenues on player salaries. That is an astoundingly high figure. NBA, NHL and MLB players are guaranteed roughly 50% of total revenues and NFL players take home slightly less than that. The NFL generated $13 billion in revenue in 2016. A 35% difference would mean that NFL owners are splitting $4.55 billion, that is earmarked for players in Europe. I’m sure American athletes will love reading that.

Fan Marino: To put $100 million into perspective, only 26 players in NFL history have made that much in total on-field earnings. For Messi, that is just the signing bonus. Peyton Manning made more money than any other NFL player in history ($248.7 million) and his brother Eli Manning ($219.3 million) is the only other NFL player to have made $200 million in on-field earnings.

Barcelona is reportedly giving Lionel Messi a record $100 million signing bonus — and they’re going to use an unusual way to pay for it