Search

Ben_Slingerland

The Business of Sports

Tag

Baseball

America Will Be Watching Tonight

Listen, I get it … baseball causes many to hit the snooze button. There are 162 games in a season, twice the amount of games in a NBA or NHL season, and more than 10 times the amount in the NFL season. Games are longer than they have ever been before, with the average game lasting 3 hours, 5 minutes and 11 seconds. And when the fastest two growing sports in the United States right now are mixed martial arts (MMA) and lacrosse (MLL), two sports that specialize in high intensity, continuous action … America’s most historic past-time sport has begun to take a back seat over the recent years.

Tonight, however, in the country’s biggest sports and entertainment city, Los Angeles, all eyes will be on Game 7 of the World Series between the Houston Astros and Los Angeles Dodgers. Dodger Stadium, the country’s third oldest ballpark behind Wrigley Field and Fenway Park, holds 54,000, the 2nd largest stadium in the league behind the new Yankee Stadium. Ticket prices are averaging close to $2,000 which is about double the price paid on Game 7 tickets in 2014 between the Giants/Royals and triples what was paid for during Game 7 in 2011 between the Cardinals/Rangers.

ClaytonKershawDodgerStadium
Dodger ace, Clayton Kershaw, walks the field, with historic Dodger Stadium in the backdrop, which will be the stage to a pivotal Game 7 this evening.

Ticket brokers own about 15,000 tickets for each World Series game at Dodger Stadium. The Dodgers sell more season tickets to brokers than any other franchise in Major League Baseball, which allows the brokers to purchase a commensurate amount of postseason tickets. Going into Game 6 last night, an elimination game for the Dodgers, there was about $20 million in profit on the line for ticket brokers, because had the Astros won, the Game 7 tickets were going to be worth nothing. This caused a massive amount of ticket brokers to hedge their bets in Las Vegas and gamble on Houston to win last night. And despite, Houston’s Ace Justin Verlander being on the mound, who had a perfect 9-0 record in postseason elimination games … the miraculous LA Dodgers staged a late inning comeback to force a pivotal game 7.

IMG_3372
Celebrity actors Ken Jeong, Ashton Kutcher and Mila Kunis, George and Mario Lopez, and Rob Lowe all wave the Dodgers flags on top of the dugout last night prior to game 6 to rally the crowd.

Celebrities like Kareem Abdul-Jabbar, Mila Kunis, Ashton Kutcher, Ben Affleck, George and Mario Lopez, Lady Gaga, and Rob Lowe were all in attendance, many of whom were waving Dodger flags on top of the dugout to further contribute to an electrifying and high-profile crowd.

For only the third time in history, two 100-win teams will play a seventh game to decide a title. 38 times a World Series has gone the distance to 7 games, with the home and away team splitting exactly 19 wins each. After going down 1-0 in the series, the Astros miraculously came back in game 2 after being down 3-2 in the top of the 9th inning to force extras and eventually win the see-saw contest in 11 innings. Yet again in Game 5, with the series tied at two apiece, the two teams engaged in what many are calling the best game in baseball postseason history. Down 12-9 in the top of the 9th, the Dodgers rallied to score three runs, before the Astros walked off in the bottom of the 10th and escaped with the 13-12 victory.

AlexBregmanAstrosGame5
Alex Bregman drove in the game-winning run for the Astros in Game 5 in what many are calling the best World Series game in the Series’ history.

Needless to say, given the effects of Hurricane Harvey that recently devastated the city of Houston, the Astros have become the fan favorites and a source of restoring hope to a city in need of it. Meanwhile, the Dodgers have the advantage of home-field, and boasted the best record during the regular season.

Game 7 of the World Series … it does not get any bigger than this.

Show Me The Money

When the infamous words “Show me the money!” in Tom Cruise’s blockbuster movie Jerry Maguire came out in 1996, Hollywood brought attention to the world of sports and entertainment agency. Since Cruise’s classic, Hollywood has highlighted the glitz and glam associated with that world – the big egos, flashy athletes and everything in between. America has seen Ari Gold in the HBO tv series, Entourage and most recently, Dwayne “the Rock” Johnson in HBO’s comedy-drama series, Ballers.

Screen Shot 2017-10-26 at 7.22.07 PM
Tom Cruise (Jerry Maguire), Jeremy Piven as Ari Gold (Entourage) and Dwayne Johnson (Ballers), all portray the hustle behind the glitz and glam of sports agency. 

 

It sounds fun, doesn’t it? Scouting and identifying talent, working with professional athletes, and getting paid millions of dollars in commissions on big 7-figure contracts … who wouldn’t want to do it? Oh and you don’t necessarily have to have a JD, MBA or PHD from a top 10 school to be qualified to do it … if you have the rolodex of contacts, the savviness to build those relationships, and fortitude to build a reputation of trust, and maybe a little luck, you’re right there.

So let’s cross from Hollywood into what the sports agency landscape looks like in reality today.

To a large extent, Hollywood is not far from the truth. The spots agency business is booming. Media right deals, salary caps and the size of professional athletes’ contacts are bigger than ever. In Forbes’ 2017  ranking of the “World’s Most Valuable Sports Agencies,” the firms featured have negotiated a collective $43 billion in current professional athlete contracts, netting over $2.1 billion in commissions, nearly a 10% increase from 2016.

CAA
CAA, the number one sports agency in the world, lands 5 out of the 20 most successful individual sports agents. 

There is one agency that is head and shoulders above the rest. Creative Artists Agency (CAA). Their total in contracts managed is larger than the next three top agencies combined at $8.5 billion (equating to $318 million in commissions). CAA leads the way in football and hockey, and is only second behind to Excel Sports Management in basketball. CAA has 5 of the top 20 compensated sports agents:

  • #9, Pat Brisson – Hockey – $44.05m in commissions
  • #11 Tom Condon – Football – $42.17m in commissions
  • #16 Nez Balelo – Baseball – $28.92m in commissions
  • #17J.P. Barry – Hockey – $28.75m in commissions
  • #18 Todd France – Football – $27.95m in commissions

*Scott Boras (with Boras Corp) ranks #1, earning $108.33M in commissions via baseball.

ScottBoras
The world’s most lucrative sports agent, Scott Boras (right), sitting side by side his client Max Scherzer. Boras negotiated Scherzer’s 7 year $210 million contract. 

CAA’s biggest contracts include Matthew Stafford’s 5 year $135 million deal with the Detroit Lions, Robinson Cano’s $240 million deal with the Seattle Mariners, and Patrick Kane’s 8 year, $84 million deal with the Chicago Blackhawks.

Right behind CAA is Jeff Schwartz’s Excel Sports Management who may be the quickest growing sports agency company, acquiring an increase of over $300 million in contracts last year. Managing a roster of over 60 NBA players, including Blake Griffin, Kevin Love, and Andre Drummond, Excel has dominated the basketball space.

 

Behind Excel, is LA based, Wasserman, with about $2.7 billion in contracts. Wasserman recently acquired European soccer agency Mondial Partners, which makes them  the No. 1 ranked agency in soccer combined with its domestic soccer division.

Rounding out the top 5 is Independent Sports & Entertainment at No. 4 and Octagon at No. 5.

The sports agency business has traditionally had several barriers to entry. In fact, the top 5 conglomerated sports agencies in the world represent over one third of all professional athletes. While the top 40 agencies representing 3,6000 clients, this equates to about 60% of pro athletes in the top 4 US sports leagues (NFL, MLB, NHL, and NBA).

Today, a 24 and a 25 year-old out of New York City are dispelling that stigma. Two years ago, Andrew Hoenig and Daniel Hazan became the youngest agents with a player on a NBA roster with the New York City Knicks Jameel Artis. Today they have 20 clients and have negotiated 11 contracts. Neither of them were certified agents when they started, nor did they have many contacts, so they networked organically by adding athletes on Facebook while taking them to D-League open tryouts, paying for their travel and they learned the business instantaneously on their own. And while they still consistently loose guys they recruited (many of times starting at the beginning of an athletes’ 4 year high school career) to the big agencies like CAA, Excel and Wasserman who come in at the last minute and scoop up the highly talented.

Hazan and Hoenig are trying to develop their own niche specifically within the NBA. They are starting to get guys after they leave Wasserman, or CAA, who want more personal attention. For Artis, it was exactly that, “With me, it’s not about the age of the agent, not about how many people you are representing … They were all focused on me. They were all about Jame Artis getting in the right position.”

AHoenigDHazan.jpg
Andrew Hoenis (left) and Daniel Hazan (right) negotiated their first contract wiht the Knicks for client Jamel Artis (center). 

While the vast majority of agents’ income is made through commissions on their clients’ contracts, the other component to it is marketing and endorsement. Hazan owns his own marketing company called New Generation Management which promotes events and products for Jonathan Simmons, JR Smith and Charles Oakley. Agents typically earn 20-25% from marketing and endorsement contracts. Typically, however, these endorsement earnings just make up 1-2% of their overall player contract.

Needless to say, the sports agency landscape is an interesting one … filled with big egos and lots of money. Whether you’re a young entrepreneur, a seasoned sports marketer, or even an ex-professional athlete, there is opportunity.

 

Create a free website or blog at WordPress.com.

Up ↑