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Under Armour No Longer the Underdog

19 years ago, a 23-year-old former special teams captain from the University of Maryland football team began a business from his grandmother’s basement in Washington, D.C. Kevin Plank was tired of having to change out of the sweat-soaked T-shirts worn under his jersey. Yet he noticed that his compression shorts always stayed dry during practice. This observation inspired Plank to develop his first prototype of a moisture-wicking synthetic fabric t-shirt. He gave the shirt to his Maryland teammates and past teammates who had gone on to the NFL. The recent college grad perfected the design that effectively wicked moisture and kept athletes cool, dry, and light … and the company that we now know as Under Armour was launched.

Kevin Plank, the Founder and CEO of Under Armour, started the business 19 years ago in his grandmother's basement in Washington D.C. — Kevin Plank, the Founder and CEO of Under Armour, started the business 19 years ago in his grandmother’s basement in Washington D.C.

The first major team sale came with Georgia Tech football requesting 10 shirts from Plank. This led to contracts with other Division 1 football teams totaling $17,000 in revenue in year one. In 1999, Warner Brothers used Under Armour in two major films, Any Given Sunday and The Replacements, which coupled with an ad in the ESPN The Magazine, generated about $750,000 in sales. In 2003, the company launched its first television commercial centering on the motto “Protect this house” which played into the company’s notion of being the underdog. Four years later, in 2007, Under Armour opened its first full line full-price retail location in Annapolis, Maryland. On January 21, 2014, Under Armour announced their official apparel and equipment partnership with Notre Dame, making it the largest of its kind in the history of college athletics. The company has maintained an operating profit of more than 30% since its inception and soared to over $3 billion in revenue this past year and over 8,000 employees. And this past year, Under Armour passed Adidas as the second-largest sportswear company in the US.

Under Armour has marketed its underdog story through the slogan "Protect This House." — Under Armour has marketed its underdog story through the slogan “Protect This House.”

Last month, Under Armour reported a 29% growth in revenues over the same period last year, leading to a 7.3% jump in the company’s stock price. And so this begs the question, how does the company continue to grow at such a rapid place?

The biggest growth categories for Under Armour recently have been golf-related items, women’s products, and basketball shoes and apparel. Not coincidently, Plank attributes much of the company’s recent success to that of Jordan Spieth, Misty Copeland, and Stephen Curry.

In today’s market, athletes are one of the most sought after groups of professionals for endorsements of products across a wide range of industries and categories. Being able to leverage an athlete’s appeal, recognition, and following within the general public in order to create a strong, positive association between a fan favorite and a brand, is a company’s dream. When you are dealing with a brand that happens to be a sports apparel brand, the value of endorsement is that much more amplified. This is not by any means a “new” marketing technique in the industry, however Under Armour has proven to be consistently good at identifying target areas of growth and then moreover, getting the right athletes in those areas.

Stephen Curry was one of Under Armour's most lucrative endorsement deals after bowing out of the negotiation for Kevin Durant. — Stephen Curry was one of Under Armour’s most lucrative endorsement deals after bowing out of the negotiation for Kevin Durant.

Let’s start with Stephen Curry. One of Under Armour’s recent initiatives has been in basketball apparel and more specifically shoes. Under Armour’s global basketball e-commerce traffic has been up more than 300% year-over-year. The basketball-shoe business is dominated by Nike, with brands affiliated with Michael Jordan and Lebron James drawing massive revenues. However, in signing Stephen Curry, Under Armour has put a huge dent into Nike’s basketball market dominance. After Curry’s MVP season and winning the NBA Finals (over Lebron), the Curry One shoe has been a huge success especially with Under Armour’s e-commerce site. The revenue for the footwear business increased 40% compared to the same quarter last year, to $154 million.

Ballerina, Misty Copeland, has proven to be a huge marketing success for Under Armour as they've seen a huge spike in their women apparel. — Ballerina, Misty Copeland, has proven to be a huge marketing success for Under Armour as they’ve seen a huge spike in their women apparel.

Misty Copeland recently became the first black woman to be named principal ballerina at the prestigious American Ballet Theater. Her face and image has significantly contributed to the growth of capris, shorts, sports bras, and running footwear.

http://www.youtube.com/watch?v=ZY0cdXr_1MA

Jordan Speith, however, may be the single largest contributor to the company’s ongoing rapid growth. Plank said this about the company’s golf platform:

In just the sport of golf in the last two years our revenues have more than doubled. We’re seeing key category growth throughout the rest of the year — things like on our website — our playoff polos are a number one item at our Brand House and our e-commerce site. The business is basically up everywhere. Having the right asset in Jordan … has been a home run for us.

Jordan Spieth was the youngest golfer to win the Masters since 1923 and did so with a record tying score this April ... Under Armour's stock prices increased 2% the following morning. — Jordan Spieth was the youngest golfer to win the Masters since 1923 and did so with a record tying score this April … Under Armour’s stock prices increased 2% the following morning.

Back in April, the 21 year old Spieth, epitomizing the company’s underdog story, won his first Master’s championship, while Rory McIlroy (Nike’s golden boy) finished fourth and Tiger Woods, a longtime Nike athlete, tied for 17^th. Since then, he won the U.S. Open championship, becoming the youngest golfer since Bobby Jones to win the tournament in 1923. Soon thereafter, Spieth nearly won the British Open as well. Spieth’s Masters win caused Under Armour shares to spike 2 percent in trading the following morning.

You see, Under Armour invests in athletes the way value investors pick stocks. The company does not fear spending vast amounts of money, and yet Under Armour will typically bid up a top prospect before walking away from the negotiating table. This marketing strategy often causes the Swoosh to pay more than what they wanted for the top prospect, while Under Armour positions itself for a cheaper talent.

This gamesmanship played out in their approach of forcing Nike to resign Kevin Durant for about $275 million, while being able to capitalize on getting Stephen Curry in 2013 for a much lower price. In golf, Under Armour took a run at McIlroy, who at the time was the youngest player to amass $10 million in PGA Tour winnings. When Nike signed McIlroy in 2013, Under Armour turned around and signed the 19-year-old Spieth who had just turned pro.

Everyone likes a good underdog story. Under Armour’s origins and history is exactly that, an underdog story. Their unprecedented rate of growth have garnered the question from industry experts as to where the finish line might be for the company. And while they certainly are the underdog once again, that 4-lettered company on the other coast is starting to look in its rearview mirror.

August 19, 2015 0

Adidas Loves the Beard – Rockets’ Harden Inks $200 Million Endorsement Deal

Adidas has lured Houston Rockets guard James Harden away from the Swoosh with a 13-year, $200 million offer that was announced yesterday.

Right now, Harden will average $16.78 million on the final three years of his deal with the Rockets and $15.38 million annually. However, if Harden reaches certain benchmarks, it’s entirely possible that he will earn from Adidas than he will from the Rockets.

Adidas was in significant need of signing a marquee player. Under Armour has Stephen Curry, Nike has LeBron James and now Adidas has James Harden … all 2014-15 All-NBA first team selections. Nike claims approximately 95% of the U.S. basketball sneakers, while Under Armour is very quickly expanding its own line of products and passed Adidas last year as the second-largest seller behind Nike. In the first six months of this year, Adidas sold fewer shows in the U.S. than Skechers and New Balance. Part of Adidas’ underwhelming basketball brand performance can be attributed to big injuries to two of their main stars, John Wall and Derrick Rose.

Adidas’ new superstar James Harden faces off against the face Under Armour’s brand, Stephen Curry in last year’s NBA Playoffs.

Earlier this year, Adidas chose not to renew a deal with the NBA that had established it as the official outfitter of the league and in came Nike with an 8-year partnership that is worth roughly $1 billion. Moreover, Under Armour announced its own global marketing partnership with the NBA, which positions the brand as a title partner and outfitter of the NBA Draft Combine, presenting partner of the Junior NBA program in the U.S. and allows Under Armour to work with the league to launch an NBA FIT mobile app.

Nike and the NBA agreed on a league wide partnership worth about $1 billion last month that will make Nike the official jersey provider.

Adidas foresees Harden making a big splash in China, as the Rockets have remained a fan favorite in the Far East since the days of Yao Ming. The deal will feature a signature Harden shoe, his own apparel line, as well as Harden traveling on extensive brand tours in Europe and Asia. Additionally, Harden has started dating Khloe Khardashian who is a marketing machine herself and will undoubtedly raise his visibility into other demographics. Nonetheless, Harden’s jersey sales were only 14^th in the league last year behind players like Damian Lillard, Dirk Nowitzski and Chris Paul. Adidas is expecting the deal to help move his merchandise sales upwards.

James Harden and TV personality, Khloe Kardashian, have started dating.

Harden’s endorsement deal with Adidas, which will officially begin on October 1^st of this year, speaks to the increased value placed in brand marketing. Harden, who was not that long ago a sixth man for the Oklahoma City Thunder, will now be making more money from this deal than what seven-time NBA All Star Tracy McGrady and eleven-time NBA All Star Allen Iverson made throughout their respective careers from on-court earnings. In basketball and major U.S. sports in general, a highly marketable player and personality like a James Harden can earn more money by pushing a brand than his performance on the court. While on court performance and off-court marketability are highly correlative, Harden’s Adidas deal speaks to how marketability is valued more so now than ever.

James Harden will earn more money in his new deal with Adidas than either Tracy McGrady or Allen Iverson earned for their on-court performance in their entire careers. — Harden will earn more money in his new deal with Adidas than either Tracy McGrady or Allen Iverson earned for their on-court performance in their entire careers.

One thing remains the same, Nike is still firmly established as the dominant shoe and apparel company in basketball, as they hold long-running endorsement deals with the three most globally popular (active or former) players in the world in LeBron James, Kobe Bryant, and Michael Jordan. And so they have the luxury of being able to allow MVP runner-up and All-NBA mainstay James Harden bolt to their three-stripe rival without much fuss. Nike had the option to match Adidas’ offer but chose not to, perhaps because of their recent large investment in getting the NBA league wide deal.

August 14, 2015 0

Another EPL Season is Underway – How Does it Impact U.S. Soccer?

The 2015-16 English Premier League season started this past weekend with some very unexpected results but some very good television ratings. Saturday’s four matches on NBC, NBCSN & USA Network combined for 2.02 overnight rating which was the best ever in the United States for the EPL opening Saturday. This rating was up 43% from the prior record set last August. The 12:30pm ET match on NBC, a 2-2 draw between Chelsea and Swansea City, averaged a .93 overnight to rank as the best Saturday opener ever and topped last season’s NBC opener between Arsenal and Crystal Palace by 27%. Moreover the 7:45am ET match on NBCSN that featured Manchester United’s 1-0 victory over Tottenham in the opening match of the EPL posted a .49 rating which was the best overnight rating in the early Saturday window.

Chelsea defender John Terry is shown a red card in the defending champions' opening game against Swansea. — Chelsea goalie Thibaut Courtois is shown a red card in the defending champions’ opening game against Swansea.

The results were surprising to say the least. Arsenal, who many considered a favorite to be atop the league after picking up Petr Cech in the off-season, dropped a 2-0 home match to West Ham. Defending champions Chelsea had a frustrating 2-2 draw with Swansea City. Liverpool were able to pull out a last minute 1-0 victory at Stoke City behind Philippe Coutinho’s “goal of the week” worthy winner. Manchester United squeaked by Tottenham in an evenly played contest 1-0. And yesterday, Manchester City impressed everyone in the way in which they beat West Brom 3-0.

Arsenal's big signing, Petr Cech, had a less than stellar performance as the Gunners dropped their season opener to West Ham. — Arsenal’s big off-season signing, Petr Cech, had a less than stellar performance in net as the Gunners dropped their season opener to West Ham.

One of the things we know about US sports viewers is that they like stars and that they like big events, especially when it comes to sports outside the “big 4” (football, basketball, baseball, and hockey). People in the U.S. are watching the World Cup in record numbers. The U.S. team’s final match against Belgium had an overnight rating of 9.6 (16 million viewers) on ESPN, the largest rating at the time for a soccer match on ESPN. Also of note, the match between Mexico and Croatia set a record on Univision, as did the Germany-Ghana match set a record on ESPN for most watched soccer match not involving the U.S. national team. These numbers suggest that soccer interest in growing in this country.

Thousands of fans gathered in Chicago's Soldiers Field on July 1, 2014 to watch the US take on Belguim in the World Cup, which at the time was the most watched soccer match ever on ESPN. — Thousands of fans gathered in Chicago’s Soldiers Field on July 1, 2014 to watch the US take on Belgium in the World Cup, which at the time was the most watched soccer match ever on ESPN.

Having said this, over half of the goals in the World Cup were scored by players who play in the German Bundesliga, the English Premier League and the Spanish La Liga. With NBC paying the Premier League more than $80 million annually to air every match of the season, Americans can now watch the stars of the World Cups on a regular basis. The U.S. viewership of the EPL has steadily climbed since 2007. Comparatively to Major League Soccer, where ESPN, NBC and Univision pay a combined $30 million, viewership has stayed relatively stagnant since 2009. Within the MLS television deal, many of the games are only available locally or with the MLS Live Subscription. This has caused very strong local fan bases (some of which rival the support of MLB, NFL and NBA teams). Along those same lines, attendance has increased over the last 14 years, with total attendance topping 6 million each of the last two seasons.

Former Chelsea legend Frank Lampard appearing in his Major League Soccer debut for New York City FC. — Former Chelsea legend Frank Lampard appearing in his Major League Soccer debut for New York City FC against the Montreal Impact.

The good news is soccer is growing as a sport in popularity in this country. The EPL is a more watched league, as it should be for the average sports fan. After all, the EPL is still a better product. Something Major League Soccer realizes it has to do a better job of is diverting stars (in their prime) away from the EPL and into the MLS. This year the MLS was able to do a substantially better job of this in getting Kaka to Orlando City, David Villa and Frank Lampard to New York City FC, and Steven Gerrard to the LA Galaxy. Meanwhile, they’ve been able to retain U.S. stars like Jozy Altidore (Toronto FC), Michael Bradley (Toronto FC), Jermaine Jones (New England) and Clint Dempsey (Seattle) away from Europe and back into the MLS.

Needless to say, the EPL looks to continue to maintain its dominance after a very entertaining opening weekend, as it clearly is the most popular soccer league in the world. While it may not be the best thing in the world for MLS, the continued rise in U.S. viewership numbers of the EPL speaks very well to the future of the game in this country.

August 11, 2015 0

Behind the Numbers: The Growing Trend of Analytics in the MLS

Sports statistics and box scores have existed for many, many years, but it wasn’t until recently that the perceived importance of “numbers” really exploded when it comes to sports. In 2003, Michael Lew published a book called Moneyball (which would turn into a film in 2011 starring Brad Pitt and Jonah Hill), which highlighted Billy Beane’s “sabermetric” approach with the Oakland Athletics. Beane’s rigorous statistical analysis demonstrated that on-base percentage and slugging percentage were better indicators of offensive success compared to the more popular statistics of stolen bases, runs batted in and batting average. This approach enabled the Oakland A’s to find undervalued players in the market while remaining competitive with teams like the New York Yankees whose salary cap was three times their size.

Oakland Athletics Vice President and General Manager Billy Beane and his sabermetric approach to analytics has caused a trickle down effect to how other sports view the importance of statistical analysis.

It is certainly a little surprising that this level of quantitative analysis has not existed to a greater level in the hyper competitive sports business industry. This level of quantitative analysis certainly exists in finance, real estate, medicine … the list goes on and on. Of all those industries, sports is one founded and based on getting that slight competitive edge to be better than your next competitor. Needless to say this heightened level of statistical analysis in baseball has seemingly caused a trickle down approach to other major sports, including soccer.

There is no better place to look at this emerging trend than Major League Soccer. Due to the salary-capped nature of the MLS, a disproportionate amount of competitive advantage can be derived from effective usage of the cap space. Unlike baseball, there are much less statistical categories in the game of soccer (goals, assists, shots, fouls, offsides, corner kicks) and so there is sometimes a perceived notion of less statistical analytical value. However, in a league like the MLS, where teams operate on extremely tight budgets in a vast, global, and competitive talent exchange; knowing what it is you are and what you are not, what you need and what you don’t, and how your limited dollars are best spent, effective analytics can offer concrete advantages. On top of all that, outside of the Designated Player exception, everyone is working under the same salary cap constraints, creating a very even playing field … increasing the incentive to recruit and evaluate current talent.

Because of this recent heightened importance of high-level analytics within the MLS, those few clubs that are using the analytics are really not willing to speak publicly about the specifics of what they’re doing. The industry’s reliance on proprietary data sets restricts worthwhile discussion to a select few, and that’s ultimately unhealthy and stunts overall growth. A lot of teams are re-inventing the wheel behind closed doors and there is no strategy in place for collective growth. This has ultimately resulted in a “cold-start” problem that has hindered club’s incentive to make an investment into analytics. There is no club incumbent to decipher the difference between good and bad analytics and moreover there is no tangible way to measure the return on investment; thus creating a bottleneck of sorts for the industry.

Tim Bezbatchenko, Toronto's young forward thinking General Manager, has been a pivotal reason Toronto FC has been on the forefront of the analytics scene in the MLS. — Tim Bezbatchenko, Toronto’s young forward thinking General Manager, has been a pivotal reason Toronto FC has been on the forefront of the analytics scene in the MLS.

One club that has made a splash in these waters is Toronto FC. Toronto FC has a very young, forward thinking GM, Tim Bezbatchenko who has gone on record as saying “There’s more information available to coaches and General Managers. You need to collect it, organize it, and then look at it and try to figure out patterns and new ways of looking at the game… You don’t know what you don’t know.” Toronto has hired a Director of Analytics, Devin Pleuler, who previously worked for the Opta statistical service and has a strong soccer background writing as a columnist for MLSsoccer.com. Toronto will break down game film looking at trends in pattern of play while scouting their upcoming opponents. By processing games algorithmically, season trends are uncovered and it allows for game film to be watched with a specific focus. In addition to scouting opponents, this level of analytics also helps Toronto better understand their own strengths and weaknesses, which leads to useful information regarding player acquisition.

The San Jose Earthquakes, which coincidently share an owner with the Oakland Athletics, said they use a variety of services to provide data. The club has contracted with Wyscout for international scouting services, Match Analysis for in-game analytics, and Catapult to monitor players for overuse at practices. Match Analysis has a league-wide deal with the MLS and is an “xy coordinate system” that has become popular with many college programs within the United States. Catapult is a heart-monitoring device that is easily worn by players in practice, and is something that many teams throughout the league implement. However, they have not gone in greater detail about their specific use of these programs.

Two services that some teams use that San Jose didn’t mention are Pro Zone and Opta. Pro Zone, like Match Analysis, also has a MLS league wide deal. It’s a system that is used by over 70 college teams and is based in Leeds, England. They will turn a match back within 36 hours that has over 4,000 data points (touches, tackles, headers, etc). From these data points, coaching staffs are able to break down passing completion and accuracy as well as shots and shots on goal. Even more specifically, they can see where on the field certain players have success and where on the field they might have a high turnover rate. Opta, is a manually tracked system that is done live, giving it more practical use in the course of a match whether it be on a live broadcast or if it’s produced for a coaching staff going into the halftime locker room.

Sporting KC Head Coach Peter Vermes believes in using analytics, specifically around fitness levels, in order to evaluate his current players' performance — Sporting KC Head Coach Peter Vermes believes in using analytics, specifically around fitness levels, in order to evaluate his current players’ performance

Peter Vermes, the Head Coach of Sporting KC, is a big believer in analytical data. However, Vermes admits that soccer is unlike baseball in that there are so many variables that go on within a game (from pitch size and condition, to formation, to a team’s style of play). Thus, Vermes argues, you have to use both the statistical analytical data along with the actual game film to pick up a greater understanding of player trends. Sporting will rank each of its eleven players comparatively to the rest of the 19 teams in the league through a set of statistical categories. In general Vermes points out, if Sporting has at least 6 of their players in the top 10 (half) of the league they are successful.

A former Los Angeles math teacher, Tim Crawford, runs the New England Revolution’s analytics and they take more of a “best practices” approach. What I mean by that is the Revolution will try to understand what is successful in the MLS, what works. From there, they will take those data points to evaluate their own style of play and then take it one step further to use those higher valued statistical data points to scout players. The Revolution take a more academic sabermetric approach where they come up with a thesis and try to find a proof for it.

Jay Heaps, Head Coach of the New England Revolution, lifts the Eastern Conference Trophy after beating the NY Red Bull in 2014 to advance to the MLS Finals. Heaps, who was a former wealth management analyst for Morgan Stanley, is very big on statistical data analysis and has hired Tim Crawford to head the Revolution's analytics efforts. — Jay Heaps, Head Coach of the New England Revolution, lifts the Eastern Conference Trophy after beating the NY Red Bull in 2014 to advance to the MLS Finals. Heaps, who was a former wealth management analyst for Morgan Stanley, is very big on statistical data analysis and has hired Tim Crawford to head the Revolution’s analytics efforts.

The last club in the MLS that is known to use a fairly large amount of data specifically around injury prediction and prevention are the Seattle Sounders. While the club has become the model organization around the league from a business perspective, it should come to no surprise that they are out in front on the analytics side as well. Dave Tenney, the Sounders sports science and performance manager, uses the Catapult gps tracking heart-rate monitors in training to see how hard each player is working during certain sessions of training.

Ravi Ramineni, a sports science data analyst with SoundersFC, works at a station on the practice field as he collects data during a team training session on Wednesday, July 22, 2015, in Tukwila, Wash. MLS SOCCER - SOUNDERS FC TRAINING REGIMEN - STARFIRE SPORTS COMPLEX, TUKWILA - 148753 - 072215 — Ravi Ramineni, a sports science data analyst with SoundersFC, works at a station on the practice field as he collects data during a team training session on Wednesday, July 22, 2015, in Tukwila, Wash.

Meanwhile, the Sounders use Ravi Ramineni, the team’s performance analyst and former Microsoft employee, to automate and streamline the data. Tracking software allows the technical staff to measure how often a player reaches top speed during a given practice, to design drills that best simulate game action. Players that are pushing themselves too close to the limit get dialed back, while teammates that are loafing are put through extra paces the following day. Sounders Head Coach Sigi Schmid sums his viewpoint on this data:

Analytics is just part of the identification package. I don’t think anybody is at the stage where you’re going to make that your sole identifying source or the sole determinant of your decision, but it certainly factors in. Does the objective data support what you’re seeing?’ I’ve never been a person that just looks at the data and goes, ‘OK, that makes them a good or a bad player… You’re looking at whether the objective data supports what you’re seeing subjectively.

Schmid’s words capture what seems to be a shared sentiment amongst the league. That is, “we see the value in collecting and reviewing data, but we are not completely confident in relying on the data standing alone.”

While teams like Manchester City in the English Premier League have upwards of a dozen analytics staff, MLS teams are lucky to have one. Those few MLS teams that are investing into the analytics field have remained very secretive about their processes. The verdict is still out as to who is really capitalizing on their investment into analytics. And so it seems that the growing trend towards capturing data and finding meaning to it all is very quickly coming to a tipping point in Major League Soccer.

August 9, 2015 0

What Went Wrong in Boston’s Bid For the 2024 Olympics

Last week the United States Olympics Committee (USOC) announced that it was withdrawing Boston as it’s proposed bid city due mainly to resistance from residents. As the process drew on, a growing skepticism lingered among the majority of Boston residents that they would have to foot a significant portion of the costs. And on last Monday, Boston Mayor Marty Walsh refused to risk his taxpayer’s dollars on the Olympic games.

Boston Mayor Marty Walsh shaking hands with a member of the United States Olympic Committee in January after winning the USOC bid selection process.

“If committing to signing a guarantee today is what’s required to move forward, then Boston is no longer pursuing the 2024 Olympic and Paralympic Games.” And shortly thereafter, the USOC officially pulled the plug on Boston’s bid. Mayor Walsh positioned himself, as the voice of fiscal sanity in seeking to protect taxpayers from having to pay for cost overruns, which polling all along had suggested was the central concern of a majority of Boston residents. While Mayor Walsh did suggest long-term benefits of hosting the 2024 games, he agreed, “No benefit is so great that it is worth handing over the financial future of our City … and our citizens were rightly hesitant to be supportive as a result.

Interestingly enough, Americans overall are very supportive of hosting the Olympics games at 89% (according to an Associated Press poll in June). However, that percentage sharply drops to 61% when people were asked about hosting the games in their local area. The number drops even lower, to 52%, when asked if public funds should be used on top of private funding.

When the USOC picked Boston over the other three US city contenders (Los Angeles, Washington DC and San Francisco) in January, Boston still didn’t have majority support, as just 46% were in support (and 44% were against). As the record-breaking snowy winter wore on and Boston’s mass transit system took a beating, support dipped to as low as 36%. Recently, support had risen back up to the low 40’s, but still nowhere close to what the International Olympic Committee (IOC) likes to see.

A video screen at a news conference held by the Boston organizing committee in January.

Ultimately it came down to the voters being concerned about paying for cost overruns. Cost overruns have happened for every single Olympic Games, and has averaged 252% since the 1976 summer games. For example, the 2014 Sochi Games ended up costing Russia $50 billion rather than the projected $12 billion. Quite simply, many Boston residents saw other needs like housing, transportation and education as greater importance to hosting a sporting event.

Another element to the ultimate collapse of the Boston bid was the notion of precedent. Mayor Walsh and Governor Charlie Baker both felt like they got strong-armed in not only being forced to sign off on covering cost overruns, but also having to sign an agreement as quickly as the USOC was asking them. In 1984, Los Angeles did not have to sign a guarantee. New York made a bid for the 2020 games that capped its exposure to $250 million. And Chicago, when it bid for the 2016 games, did not agree to an unlimited exposure until a month before the IOC chose Rio for those games. So the mayor and his staff thought the USOC, given the past precedent, would give them more time.

The lack of interest in hosting the Olympic games is not unique to the United States, as right now the IOC is meeting to choose between a mere two options for the 2022 Winter Games … Beijing, China and Almaty, Kazakhstan. It seems as though the notion to hold the Olympic games is perceived to be a glamorous opportunity, but when all the financial costs and sacrifices are made, it seems significantly less appealing.

Scott Blackmun, the Chief Executive Officer of the United States Olympic Committee, will need to scramble to submit another bid by the September 15th deadline.

Scott Blackmun, the Chief Executive Officer of the USOC, has said that the USOC intends to move quickly to prepare a bid from another city prior to the September 15^th deadline, which many expect to be Los Angeles. Having successfully hosted the Olympics twice before and perhaps more importantly, already possessing the Olympics infrastructure with the necessary stadiums, LA appears to be next in line.

While it looks unlikely that any US city bid will prevail over such bids like Paris, Rome, Hamburg, Budapest or Toronto in 2024, the larger question of bid selection process and USOC/bid committee communication appears in need of some revision.

August 5, 2015 0

Brady vs. Goodell – See you in Federal Court

Yesterday, NFL Commissioner Roger Goodell announced that the league was going to uphold Tom Brady’s 4 game suspension, causing a huge uproar specifically among Patriot Nation. The announcement caused lots of discussion as it marks just another chapter in the DeflateGate scandal. Now, Tom Brady and the NFL Players Association will appeal Commissioner Goodell’s decision to uphold the DeflateGate suspension.

Tom Brady and the New England Patriots have been the center of lots of controversy over the last couple years with SpyGate and now DeflateGate. However, Brady, Robert Kraft and the entire organization vehemently believe they are in the right in regards to DeflateGate.

In a statement yesterday, the NFLPA laid out its case against the NFL:

The commissioner’s ruling today did nothing to address the legal deficiencies of due process. The NFL remains stuck with the following facts:

The NFL had no policy that applied to the players;

The NFL provided no notice of any such policy or potential discipline to players;

The NFL resorted to a nebulous standard of “general awareness” to predicate a legally unjustified punishment;

The NFL had no procedures in place until two days ago to test air pressure in footballs; and

The NFL violated the plain meaning of the collective bargaining agreement.

The fact that the NFL would resort to basing a suspension on a smoke screen of irrelevant text messages instead of admitting that they have all of the phone records they asked for is a new low, even for them, but it does nothing to correct their errors.

The NFLPA will appeal this outrageous decision on behalf of Tom Brady.

The NFLPA CEO DeMaurice Smith will go forward in defending Tom Brady in appealing the decision against Roger Goodell.

In other words, the players union is arguing that the NFL misapplied its own policy. As written, the rules pertain to the handling of equipment apply to club officials and not players. Therefore, the NFL set a precedent when it punished Brady without any specific guidelines for how the situation should be treated.

Brady’s uphill legal battle against the NFL will include the attempt to obtain an injunction, which would prohibit the NFL from imposing any sort of punishment until a decision is reached in the court of law. The toughest obstacle for Brady will be demonstrating that he will be irreparably harmed if he sits for four games. On the backstretch of his career, Brady’s four missed games will certainly not hurt his body (but in fact help it with the rest) and should have zero effect on his future contractual negotiations. If the NFL’s final decision is vacated and Brady is paid the four paychecks for the four games on the bench then that would most likely be viewed as adequate compensation for the harm that was caused by the final decision.

Robert Kraft, the Owner of the New England Patriots, and Roger Goodell have had a number of disagreements over the years. Kraft and the Patriots feel as though their on-field success may have led Goodell to unjustly place a four game suspension on their star quarterback.

Upon upholding their decision to suspend Brady for four games, the NFL filed a lawsuit in a New York federal court seeking to have the court confirm the arbitration decision. By filing in New York, the NFL will most likely have its case heard on its home turf in New York. There was discussion that Brady would potentially file his own action to vacate the four game suspension in Massachusetts (which is labor friendly and Patriots friendly) or Minnesota in front of Judge David Doty, who has traditionally ruled in favor of NFL players and its union on multiple occurrences (including Adrian Peterson’s case involving child abuse charges). Federal courts typically follow the first filed rule … meaning that if Brady wants to play ball, then it will be in NFL’s stadium in New York.

Perhaps the most newsworthy piece of information that came out of Goodell’s decision yesterday was that on March 6, 2015, the very day that Brady was interviewed by Mr. Ted Wells and his investigative team, Brady instructed his assistant to destroy the cellphone that he had been using since early November 2014 and included almost 10,000 text messages. At the time he arranged for the phone’s destruction, Brady was aware that Mr. Wells and his team had requested information from that cell phone in connection with their investigation. Thus the court could determine that Brady engaged in spoliation of evidence – that is he violated a duty to preserve evidence. Certainly, the act does not make Brady appear to have acted in good faith when he failed to hold on to highly relevant evidence. However, Brady vehemently denies this, as he reportedly received information that his phone was not necessary for the investigation.

New England Patriots quarterback Tom Brady takes a football from a ball boy as he warms up before Super Bowl XLIX against the Seattle Seahawks at University of Phoenix Stadium in Glendale, Arizona.

Lastly, the Courts have a standard of not interfering with the decision when the two parties already have a binding arbitration process. “This decision is issued pursuant to Article 46 of the Collective Bargaining Agreement between the NFL and the NFLPA, which confirms the Commissioner’s authority to impose discipline for conduct by a player that is ‘detrimental to the integrity of, or public confidence in, the game of professional football.’ … [The full decision] will constitute full, final, and complete disposition of the dispute and will be binding upon the players, Clubs, and the parties to this Agreement.” Therefore, as a member of the NFLPA, Brady will have a challenging time explaining why he agreed to be bound by a process that he later believed to be unjust.

However, if Brady is able to prove any of the following, then the final decision could be vacated by a federal court; (1) that the award was procured by corruption, fraud or undue means; (2) that there was evident partiality or corruption in the arbitrator; (3) that the arbitrator was guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of Brady was prejudiced; or (4) that the arbitrator exceeded his powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

Tom Brady receives the Super Bowl XLIX MVP trophy from Roger Goodell after the Patriots defeated the Seahawks.

While, Brady and his legal team will most likely highlight the fact of impartiality in Commissioner Goodell’s ruling, Brady and the NFLPA agreed to a system that allowed for Commissioner Goodell to serve in the position of arbitrator. The course may very well come down to the Federal Court Judge’s view as to whether Commissioner Goodell’s level of impartiality interfered with the case in such a way to which he overstepped his jurisdiction as Commissioner of the NFL.

July 29, 2015 0

Is Miami Soccer Going to Happen?

There has certainly been a lot of speculation around the question of whether David Beckham is really going to launch his own Major League Soccer team in South Beach.

Well the international superstar and his team got one step closer to that this past Friday when the City of Miami came to a verbal agreement for the soccer specific stadium to be built next to Marlins Park at the former Orange Bowl site. David Beckham’s group states “We firmly believe we can build a world-class stadium at that site.” The site has always been the favorite to land a pro soccer field after Beckham’s first two pushes to build a stadium on the waterfront fizzled.

The proposed soccer specific stadium would be adjacent to Marlins Park in Little Havana, Miami.

According to Beckham’s group, MLS officials have been visiting the area and are supportive of building a soccer-specific stadium on the site. When talks first started about the land there had been discussion about a joint football-soccer stadium where the University of Miami football team would also play. However, those talks stalled, and now Beckham’s stadium would be soccer specific. While Beckham’s group plans to privately fund the stadium, the land is largely city owned which begs the question will taxpayers get rent in the deal? Another questions remains as to what will happen to residents in the area?

The Miami Orange Bowl will be the location of the new soccer speciifc stadium. The Orange Bowl was the former home to the University of Miami football team who now play in Sun Life Stadium. — The Miami Orange Bowl will be the location of the new soccer specific stadium. The Orange Bowl was the former home to the University of Miami football team who now play in Sun Life Stadium.

Miami Commissioner Francis Suarez expects the commission on Thursday, July 23^rd to officially approve a negotiation between Beckham United and the city. And while there is still quite a few details to be worked out, it certainly seems as though the stadium is more likelier than not going to happen. In a letter last Friday, Beckham’s group released the following:

Three years, three years, 2017. That’s the idea if it all works out like we hope. I think three years is the objective because we’re creating a soccer team from scratch. We have to pick coaches, we have to involve the community, we have to pick a name, pick a jersey, we have to convince big-name players to come play for us.

The MLS has already awarded Miami the franchise, but had said they needed to start seeing some progress made on the stadium. 18 months had passed since Beckham first announced his public launch to his stadium quest. Cruise interests blocked his design attempts on Port Miami. The deadline for Beckham to exercise his option for an MLS franchise has been extended several times.

Pictured above is Don Garber (left), Commissioner of Major League Soccer, David Beckham, and Miami Dade County Mayor Carlos Gimenez (right) at a February 2014 media event.

So who makes up David Beckham’s ownership team? The two other big names on Beckham’s ownership team are Marcelo Claure and Simon Fuller. Marcelo is Bolivian and is the current CEO for the Sprint Corporation. In 2008, Marcelo bought BAISA, the entity that operates Bolivar, a soccer team in Bolivia. He also serves on FIFA’s Committee for Fair Play and Social Responsibility. The other partner is Simon Fuller, who is an English entrepreneur, artist manager and television producer. Simon is best known for his creation of the Idol franchise that was originated in the UK and sold to more than 100 countries including American Idol in the US. Simon and Beckham have been business partners for a while.

While there is no team name officially announced, rumors are that the “Miami Vice” or the “Miami Current” are the leading contenders. With Miami serving as the Latin American capital of the US there would certainly be a very strong fan base around the franchise. Moreover, with the face of David Beckham behind the organization, Major League Soccer certainly wants to see this franchise happen for all sorts of marketing and advertising advantages. The last obstacle is getting that final signature from the City of Miami.

July 23, 2015 0

Nike Inks Michigan to Largest School Deal Worth $169 Million

On Wednesday, Nike officially announced a shoe and apparel deal with the University of Michigan that was worth $169 million. The contract begins in the 2016-17 fall season and will run for 11 years through 2027, with an option to extend through 2031. The cash and equipment part of the deal over the guaranteed 11 years is worth $122.3 million, with $65.5 million in cash and $56.8 million in apparel and equipment. There will be another $46.6 million in cash and apparel through the four-year option. The only larger school and apparel deal in the country is Notre Dame’s deal with Under Armour that was worth in the neighborhood of $90 million over 10 years.

Under Armour CEO Kevin Plank (right) announces the deal worth $90 million over the span of 10 years with University of Notre Dame with the school's athletics director, Jack Swarbrick. — Under Armour CEO Kevin Plank (right) announces the deal worth $90 million over the span of 10 years with University of Notre Dame with the school’s athletics director, Jack Swarbrick.

Michigan’s current deal with Adidas was worth $8.2 million a year in cash and equipment and was the most lucrative among public schools in the country. The new deal struck with Nike will be worth $11.26 million per year over the course of the next 15 years.

University of Michigan Athletic Director Jim Hackett opted to partner with Nike over Adidas despite a higher offer made from Adidas.

According to reports, Nike was in fact the lowest bidder for the Wolverines new deal. However, given the angst over the much-criticized Adidas deal, Michigan interim athletic director Jim Hackett felt making the right deal with the right partner was important:

After careful consideration, the right partner for the University of Michigan was Nike. This decision is about more than Michigan athletics; at the core, it is about our University community and it is about two great names reuniting for an opportunity that speaks to more than uniforms and apparel.

This deal dwarfs Nike’s next largest shoe and apparel deal with a public school (Florida State) by two and a half times. Nike gives the Seminoles $4.4 million a year in cash and gear.

Comparatively to other Big Ten Schools, the deal doesn’t even come close to the next largest deals. Ohio State has the next largest deal that is worth about $4.16 million per year in cash and gear with Nike, followed by Wisconsin’s $3.5 million per year contract with Adidas and then Nebraska’s $3 million per year contract with Adidas.

Despite Michigan’s relatively weak performance in both basketball and football over the past few years, the shoe and apparel titan went to the mat for the Wolverines.

July 17, 2015 0

The 2015 ESPYS

On Wednesday evening in downtown Los Angeles at L.A. Live’s Microsoft Theater, ABC and ESPN put on the 23^rd annual ESPY Award Show. Actor and comedian Joel McHale hosted the award show, and spared no one in the audience, with jokes about Donald Trump deporting Triple Crown jockey Victor Espoinoza to Mexico, Super Bowl runner-up Russell Wilson choosing to throw and not run the ball on the goal line against the Patriots, and the lack of action in the Mayweather-Pacquiao fight. While McHale, like most previous ESPY hosts, set a tone of lightheartedness through comedy, the show simultaneously highlighted some stories that transcend sports to bigger issues.

Joel McHale hosted the 23rd ESPY's and took a number of digs on the world's top athletes in his opening monologue. — Joel McHale hosted the 23rd ESPY’s and took a number of digs on the world’s top athletes in his opening monologue.

One of these heavier stories was that of Cincinnati Bengals defensive tackle Devon Still and his cancer-fighting daughter, Leah. The two were honored for the Jimmy V Perseverance Award because of how they served as a beacon of hope for other families facing similar battles. In June 2014, Leah was diagnosed with Stage IV neuroblastoma, a rare pediatric cancer that left her with a 50-50 chance of survival. Devon was unable to concentrate on football that summer and so the Bengals placed him on the practice squad, which meant Leah would still be covered by the team’s health insurance policy. Devon delivered a moving speech stating, “I always used to dream about how I was going to be able to show [Leah] so much about life, but in the five years I’ve been with [her], she has taught me more about life than I could ever do.”

Cincinnati Bengal Defensive Tackle Devon Still and his daughter Leah, who has been battling a rare form of pediatric cancer, were honored with the Jimmy V Award for Perseverance.

Another moving story was that of Lauren Hill who was honored for the Best Moment. Hill was a Division III women’s basketball player at Mount St. Joseph’s who inspired people with her fight against brain cancer. Her dream was to just play in one college basketball game. The NCAA agreed to move Mt. St. Joseph’s opening game against Hiram College up by two weeks because her condition was deteriorating. Xavier University offered it’s 10,000 arena so more people could attend the game, and sure enough tickets sold out in less than an hour. Hill inspired people with her fight against brain cancer and helped raise over $1.5 million in cancer research before she lost her battle to the disease on April 10^th. Her parents, Brent and Lisa Hill, accepted the award on her behalf.

Brent & Lisa Hill, parents of Lauren Hill, accept the award for Best Moment. Lauren was a Division III women's college basketball player who died of brain cancer but was able to play in Mount St. Joseph's opening game and help raise $1.5 million towards cancer research. — Brent & Lisa Hill, parents of Lauren Hill, accept the award for Best Moment. Lauren was a Division III women’s college basketball player who died of brain cancer but was able to play in Mount St. Joseph’s opening game and help raise $1.5 million towards cancer research.

As is tradition with the ESPY’s, the big moment of the award ceremony was the presentation of the Arthur Ashe Courage Award. The Arthur Ashe Award was awarded to Caitlyn Jenner – the transgendered woman formerly known as Bruce Jenner. Caitlyn Jenner delivered a very emotional speech where she thanked her family for unconditional support and urged acceptance for others who are transgendered. As you might imagine the award presentation was met with mixed responses and some controversy, but she received a standing ovation from the star studded audience after the 10-minute speech.

From the stage, Caitlyn Jenner thanked Diane Sawyer, who interviewed her in an interview on ABC in April and helped break the news to the world that she was becoming a woman. Noting her powerful celebrity platform, the 1976 Olympic decathlon champion and current reality TV star vowed “to do whatever I can to reshape the landscape of how transgender people are viewed and treated.” Bruce Jenner was the epitome of masculinity as the 1976 Decathlon Olympic Champion with big muscles and supreme athleticism, and so this announcement was all the more surprising. Coming on the heels of the gay marriage rights announcement, Caitlyn Jenner’s story and this award seemingly gained extra attention especially among social right activists.

Caitlyn Jenner, formerly known as Bruce, was the 1976 Olympic Decathlon World Champion won the Arthur Ashe Award for Courage. — Caitlyn Jenner, formerly known as Bruce, was the 1976 Olympic Decathlon World Champion and won the Arthur Ashe Award for Courage after coming out as a transgendered woman.

The award was marked with controversy when RadarOnline.com reported Wednesday that Jenner’s representatives approached ESPN suggesting the network give her the Ashe award in exchange for plugs on her upcoming E! documentary series “I am Cait.” Allegedly, Jenner’s representatives approached ESPN, prior to the ABC interview with Diane Sawyer, forming an agreement to do the interview on ABC in exchange for the Arthur Ashe Award. Disney owns both ABC and ESPN.

Whether or not these reports are accurate, some have expressed disagreement with using the ESPY’s as a platform for such issues like gender identity and transgendered equality. And while these topics are controversial in nature, it seems by the rating numbers and the audience reaction, the Arthur Ashe Award for Courage was extremely well received. The three hour show averaged a 2.2 rating/8 share in adults 18-49 and 7.7 million viewers overall on the ABC stations from 8 to 11pm. These numbers more than tripled last year’s telecast on ESPN which did a demo rating of 1.1 and only about 2.2 million viewers.

The US Women's Soccer Team won the Best Team of the Year Award. — The US Women’s Soccer Team won the Best Team of the Year Award.

Other highlights of the show included the US Women’s Soccer team taking home the Best Team of the Year, Rob Gronkowski winning Best Comeback Athlete, Odell Beckham Jr’s one-handed catch taking Best Play, Steph Curry capturing Best Male Athlete and the Patriots-Seahawks Super Bowl XLIX winning the Best Game Award.

The ESPY’s once again proved to the world the unifying effect sports have on society and how sports can effectively be used as a vehicle to bring attention to widespread global issues.

July 16, 2015 0

Ben_Slingerland

The Business of Sports

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