The Business of Sports



Is Cam New England’s Stairway to 7?

There are only a few free agent signings in the last 20 years of sport (Lebron James to the Heat, Barry Bonds to the Giants, Shaq to the Lakers, A-Rod to the Rangers, Rice to the Raiders) that rival what I believe will become the most impactful signing in the history of the NFL … Cam Newton coming to the New England Patriots.

There have been a few blockbuster free agent signings over the last 20 years … Lebron James to the Miami Heat may very well top the list. 

The storylines are endless.

  • You have probably the most dominant franchise in the history of modern sport in the Pats, seemingly abruptly halted with a wild card weekend defeat followed by the departure of their fearless leader and greatest of all time, Tom Brady.
  • Never once in the history of the NFL has a team lost a league MVP and acquired a league MVP in the same offseason.
  • There is now a QB race in New England between two former Auburn Tigers who couldn’t be any more different.
  • There may not be a more boisterous, off-the-field headache of a QB in the league in Cam Newton, coming into a more business-like team first environment in New England.
  • And on top of all this, you will have Bill Belichick who will be coaching a team for the first time in 20 years without Tom Brady, who will inevitably answer everyone’s question by season’s end … was it the Belichick system or the Goat TB12 responsible for the 6 rings?
Jarett StidhamQB
Jarrett Stidham has only thrown 4 NFL passes and one of them was a pick 6. Compounded by the fact that he was a 4th round selection and is only 23 years old, many believe Stidham may not be ready. While others, especially close to the organization, maintain Stidham may very well still be the starter when the 20-21 season begins.  

Why this is a great signing for the Patriots:

  1. Jarett Stidham isn’t ready to start. Stidham has thrown a total of 4 passes in the NFL, one of which was a “Pick-six” interception. By all accounts, the New England coaching staff is very high on Stidham, but coming in at 23 years old trying to replace the GOAT is a formidable task.
  2. Cam Newton is an upgrade over Brian Hoyer. While Tom was the GOAT, he was not mobile whatsoever. Josh McDaniels and the offense are likely going to change things up quite a bit schematically with a more mobile QB leading the way. The positive about Hoyer was that he knew the Patriots system … but unfortunately for Hoyer, that system is likely changing now given the personnel.
  3. Cam gives them the best chance to win this season. If healthy, Newton is undeniably the more talented QB (and it’s not close). Cam was a former #1 Overall Pick, 3x Pro Bowler and a former MVP. Belichick is a win first type of coach, and Newton (again, if healthy) gives them the best chance to win this season.

    Cam Newton was a National Champion and Heisman Trophy Winner at Auburn (coincidentally Stidham’s same alma matter), as well as a NFL MVP and 3x Pro Bowler with the Carolina Panthers. If healthy, Newton will be the most talented QB ever to wear a Patriots uniform. 
  4. True QB competition this offseason. Many people thought the Pats were going to draft a QB in the draft and yet they held tight. Many thought they were going to make a move earlier in free agency for a guy like Jameis Winston. Competition breeds success and having two legitimate QBs in the mix will make them both better.
  5. The Value was absolutely insane. Newton agreed to a one-year deal with a base of $1.05 mill, the minimum salary for a player with his amount of experience (9 years) in the league … and only half of that money is guaranteed. Now with all the incentives, Newton can earn an additional $5.75 million, creating a max value of the contract of $7.5 million. Low risk, high reward … it doesn’t get any better than that.
Antonio Brown played in one game as a New England Patriot and cost them $9 million. Needless to say that was an investment did not pay the expected dividends. 

The Patriots have a history of bringing in controversial, yet talented players over the years . Some have worked (Corey Dillon, Aquib Talib, Randy Moss) and some haven’t (Chad “Ochocinco” Johnson, Adalius Thomas and most notably and most recently Antonio Brown).


It’s the most important position in all of sport. It has been the most dominant franchise in the history of sport. And now you have one of the most polarizing talents in the National Football League who has been handed the keys to replace the GOAT.

The Greatest Dynasty of All Time

sports dynasty is defined very concisely as a “team or individual that dominates their sport or league for an extended length of time.” Or more broadly defined by Merriam’s Webster Dictionary “a powerful group that maintains its position for a considerable time.”

The very nature of a dynasty evokes a physiological sense of envy. If you’re looking up from the bottom, “they’re cheaters!” … and if you’re at the top looking down, “they hate us cuz they ain’t us.” This lofty term could not ring any more true than it does with what now can be considered as one of the greatest professional sports dynasties in the modern  sports era … the New England Patriots.

Their story is one from a fairy tale … their star QB Drew Bledsoe going down against their hated rival (the New York Jets) in 2001, only for their 2nd year, 6th round draft pick QB Tom Brady to survive a snowstorm and invent the “Tuck Rule” against Oakland and go on to lead his team to their first ever Super Bowl win in 2001 as a -14 point underdog to the St Louis Rams. Since then, they have not had one losing season, they’ve won 15 divisional titles and played in 12 AFC Championship games, been to 7 Super Bowls, and are attempting to win their 5th Super Bowl title next Sunday. They’ve won 196 times (average of 13.75 wins per season) in the regular season since 2001 (next closest is the Colts with 166). In the playoffs, they have 24 victories (9 more than the next closest in the Steelers).

Brady celebrates after defeating Oakland. The birth of the “Tuck Rule” allowed the Pats to maintain the football on a critical drive, setting the stage for Adam Vinatieri and the Patriots to win their first ever Super Bowl Title.

Undoubtedly, there has been controversy … whether it was “Spygate” in 2007 where Head Coach Bill Belichick was disciplined by the league for videotaping the Jets’ defensive coaches’ signals from an unauthorized location, or it was “Deflategate” in 2015 where Tom Brady was accused of tampering with footballs in the AFC Title game against the Colts. $1 million dollar fines, loss of draft picks, and the suspension of their superstar players.  Most recently, there was a rule change surrounding Belichick’s deceptive offensive substitution methods which “unfairly” confused defenses. Oh and mixed in there, one of their star players was charged with murder and sentenced to life.

Before we digress any further, what this conversation should naturally lend itself to is the discussion of whether this Patriots franchise is truly the greatest dynasty in the history of sports or, perhaps more specifically, of the modern sports era?

Comparing dynasties is hard because you’re not comparing apples to apples … and thus there is some wiggle room based on how you evaluate league structure, salary cap constraints, league competitiveness and a number of other variables relative to the number of titles won over a period of time.

Tim Duncan and the San Antonio Spurs are probably the most comparable modern sports dynasty (5  Titles in 17 years from 1999-2014) to the New England Patriots.

Let’s start with the NBA. You have the Boston Celtics who won 11 NBA Championships in the span of 13 years from 1957-69 led by Red Auerbach and Bill Russell. You have MJ’s Chicago Bulls who won 6 titles in 8 years (1991 – 98). And most recently the San Antonio Spurs, who have taken 5 NBA Championships in the last 17 years (’99, ’03, ’05, ’07 and ’14) under Tim Duncan. The difference between basketball and football is there are 5 players playing at one time for a team versus 11 in football. Historically it has been a sport that has catered to superstars being able to carry their team and thus much easier to dominate, just ask Lebron, MJ, Russell or Magic.


Red Auerbach, Bill Russell and the Boston Celtics won 11 NBA Championships in 13 years from 1957-1969.

The MLB of course belongs to the Bronx Bombers, where the New York Yankees rattled off 16 World Series from 1936-64 in what started with the rise of Joe DiMaggio and ended with the twilight of Mickey Mantle. The caveat here was there weren’t any playoffs back then; rather, it was simply the team with the best record who went right to the World Series.

Joe DiMaggio and Mickey Mantle and the New York Yankees won 16 World Series titles from 1936-64.

The NHL’s best dynasty was the Montreal Canadians who won 16 Stanley Cup Finals from 1951-1979 … although at the time there were only 6 teams in the league and thus simply not comparable.

Two of the greatest dynasties in sports came from college basketball. John Wooden led the UCLA Bruins to 13 Final Four appearances and won 10 national titles from 1962-76,  and on the women’s side, Geno Aueriemma has led the UConn Lady Huskies to win 11 of the last 21 national championships. The Lady Huskies have been to nine straight Final Fours and have two separate win streaks of 90 or more games. While these are respectable in their own right, college athletics is simply not comparable to professional sports. The NCAA actually lends itself to “dynasties” by its very structure. There is no draft or salary cap, and so when a team wins a championship, they’re able to attract the best recruits in the country and consequently you see “rich get richer” phenomena … look at John Calipari’s Kentucky Wildcats and Nick Saban’s Alabama Tide.


The salary cap, the draft, numerous penalties (loss of draft picks, fines, suspensions), countless personnel changes … and through it all Robert Kraft, Bill Belichick and Tom Brady have built, what should be considered the greatest sports dynasty of the modern era.

If you live outside New England you hate them – the star QB is a little too perfectly polished, he’s a little too pretty, he has the supermodel wife, and has been accused of facilitating the deflation of footballs in one game; while the mastermind coach wears ragged hoodies, says absolutely nothing to the media, and has been accused of filming opposing coaches to gain a strategic advantage.

Love ‘em or hate ‘em, one cannot ignore the magnitude of what this New England Patriots team has accomplished over the last 16 years. An empire, a dictatorship, a dynasty …  you can call them whatever you want. They win.

And while their diehard fan-base loves coining commandments like “Do your job”, “In Belichick, We Trust” and “The GOAT” … if in fact this Patriots team does beat the Atlanta Falcons and Roger Goodell has to hand them their 5th Super Bowl trophy in 16 years next Sunday, there will be little doubt that this dynasty is the “Greatest of All Time.”

How the NFL is Doing One Quarter into the 2015 Season

So what have we learned after the first quarter of the NFL season? Well first and foremost, the NFL continues its dominance amongst American professional sports as the premier league, not only in this country but also the world.


In 2014, the average NFL game drew 68,776 fans, more than 25,000 fans per game than the next-highest league (the German Bundesliga with 43,500). The English Premier League was third at 36,695 and Major League Baseball was fifth at 30,346. So far this year the NFL is right on par as last year at 68,000 fans a game in attendance per game.


In terms of television, the league continues to do extremely well. The opening game between the Patriots and the Steelers was the highest ever TV rating for an NFL opening game. The game tied the Vikings and Saints from 2010 with a 17.7 rating, which was up five percent from last season’s opening tilt between the Packers and the Seahawks. Given all the media coverage surrounding Tom Brady and Commissioner Rodger Goodell’s prior to the game, the record high TV ratings prove that scandal didn’t drive fans from the NFL, rather, it brought them in.

Tom Brady and the New England Patriots unveiled their 2014 Super Bowl banner prior to the 2015 NFL season opener against the Pittsburg Steelers.
Tom Brady and the New England Patriots unveiled their 2014 Super Bowl banner prior to the 2015 NFL season opener against the Pittsburg Steelers.

The NFL continued their tradition of playing games across the pond in London this past week when the Miami Dolphins and New York Jets played in the famous Wembley Stadium. This season’s international NFL matchup was the second-fastest selling game in the eight year history of the professional football league’s International Series. In fact, only the inaugural 2007 matchup that pitted the Dolphins against the New York Giants sold out quicker than this year’s game. The tickets to the game ranged from $26.53 to $241.08 according to the NFL UK website as 90% of the ticket holders were reported to be from the UK. These have been extremely lucrative to the league, as last year’s three matchups generated an estimated $30 million in revenue. This game was the first of three games to be held at Wembley Stadium this year, with the Bills playing the Jaguars on October 25th, and the Lions playing the Chiefs on November 1st . Both of these games are expected to sell out.

The Miami Dolphins played the New York Jets in front of a sold out Wembley Stadium in London, England in Week 4.
The Miami Dolphins played the New York Jets in front of a sold out Wembley Stadium in London, England in Week 4.

On the field there are still several, six to be exact, undefeated teams including the Bengals, Packers, Falcons, Panthers, Broncos and of course the Patariots. The New England Patriots Power Rating Index actually ranks this year’s team even higher than the 2007 undefeated team. Perhaps the two biggest surprises of those 6 undefeated teams come from the same division, the NFL South with the Atlanta Falcons and the Carolina Panthers both remaining perfect through four games.


A big talking point among the sports gambling world is the amount of buzz around Draft Kings and Fan Duel. These two startup gambling sites have made a killing from fan to fan wagering surrounding NFL games. DraftKings, a $1.2 billion, Boston-based startup, has raised $375 million in venture capital funding from investors like MLB’s venture arm, Melo7 Tech partners, the NHL, and Redpoint Ventures.

The two multi-billion dollar online sports gambling companies, Draft Kings and Fan Duel, have stolen the show with the amount of marketing dollars they've poured into the first quarter of the NFL season.
The two multi-billion dollar online sports gambling companies, Draft Kings and Fan Duel, have stolen the show with the amount of marketing dollars they’ve poured into the first quarter of the NFL season.

Since August 1, Draft Kings has spent $81 million on 22,000 ad spots, while Fan-Duel (another billion dollar fantasy sports startup), has spent $20 million on 7,500 advertisement airings according to the Wall Street Journal. The front-end heavy marketing strategy has paid off for DraftKings as they have grown their users from 3 million to 4.5 million over the course of the last month.


All the media coverage on the recent surge of both of these sports wagering startups has triggered lots of discussion of legislation changes and other policies being put in place. Both companies have temporarily banned employees from wagering on sports. Meanwhile, much state legislation has been discussed with politicians engaging in conversation about policies of banning online gambling.


Regardless, the NFL continues to soar as the world’s most successful sports league across the vast majority of key performance indicators.

Major League Soccer’s Model Organization in the Pacific Northwest

While many Unite States soccer fans point towards the growth of Major League Soccer, most soccer fanatics around the world continue to view the MLS as the place where good footballers go to earn their final paycheck. And while that may be partially correct in looking at guys like David Beckham and Thierry Henry, and most recently Steven Gerrard and Frank Lampard, there is one organization that stands out above the rest within the league, the Seattle Sounders.

The Seattle Sounders’ average attendance last season was 43,734 which would have put them sixth in the English Premier League (behind Manchester United, Arsenal, Newcastle United, Manchester City and Liverpool) and the 27th most supported in the world. In fact, the Sounders double the attendance figures of the next best MLS team. And yet many soccer fans around the globe don’t realize that because the organization is relatively brand new. So how have the Seattle Sounders been so successful so quickly in putting butts in seats and filling an NFL stadium every single home game?

Let’s first look at the top. The executive team is a crossbreed between the Seahawks and the Sounders. The vast majority of the organization’s employees, from ticket sales to corporate sponsorship sales to the business development team, work for both organizations simultaneously. This co-existing business relationship is rare for MLS teams that share a stadium with an NFL team. All business decisions are made with both organizations in mind. It is not until the actual technical aspects (scouting, player development, etc) where the Seahawks and Sounders organizations divide.

Eddie Johnson (left), formerly of the Seattle Sounders, Russell Wilson (middle) QB of the Seattle Seahawks, and Clint Demsey (right), current captain of the  Sounders all pictured together.
Eddie Johnson (left), formerly of the Seattle Sounders, Russell Wilson (middle) QB of the Seattle Seahawks, and Clint Dempsey (right), current captain of the Sounders all pictured together.

Secondly, the organization is run very democratically. There are 41 “alliance” season ticket members that sit on a council (voted on by all season ticket members) who meet with ownership on a quarterly basis to talk about strategy. The key, according to senior management, is keeping the fans engaged and excited because that ultimately drives everything. The decision to acquire Clint Dempsey was heavily weighed in on by the fans who wanted to see it happen. Moreover, every four years, the General Manager’s job is voted on by the fans, a practice implemented by Barcelona and Real Madrid in the Spanish Primera League.

Garth Lagerway, the Seattle Sounders newest General Manager and President of Soccer.
Garth Lagerway, the Seattle Sounders newest General Manager and President of Soccer.

When the franchise was bought in 2007, there were so many smart owners investing large amounts of money. Nonetheless, the Sounders seemed to pick up on some vital details involving fan engagement that helped elevate the club considerably higher than all others. For instance, the Sounders organization utilized their biggest supporter club “Emerald City” to lead a “March to the Match” an hour prior to every game to generate a true home field advantage, generally attracting three to eight thousand fans.

This group gets particularly rowdy when the Portland Timbers come into town. The Seattle-Portland “derby” is considered the best rivalry within United States soccer as it has spanned across several leagues including the USL, A-League, the NASL and now the MLS. The MLS has seemingly keened in on this notion of rivalries growing the game with the addition of New York FC this year (with the NY Red Bulls right next door) and Los Angles FC coming on in 2016 (with the LA Galaxy being right next door).

The Portland Timber's largest supporter group, the Timber's Army, in Providence Park during the Great Northwest Derby against the Sounders.
The Portland Timber’s largest supporter group, the Timber’s Army, in Providence Park during the Great Northwest Derby against the Sounders.

Joe Roth, the majority owner of the Sounders, explains his research on developing the Seattle Sounders organization from a minor league team to a major league team practically overnight, “I didn’t pay much attention to the past. I did my homework on Seattle. What I found out was that Seattle has the highest per capita youth soccer participation in the United States, an adult league that had 60,000 people, a minor league team that was drawing five to eight thousand fans while other minor league teams were drawing a thousand fans and that AC Milan came over here on two weeks notice and completely sold out the stadium.”

Clint Dempsey, left, captain of the U.S. National Soccer Team, is introduced as the newest member of the Seattle Sounders FC MLS soccer team by majority owner Joe Roth, right, Saturday, Aug. 3, 2013, prior to a match between the Sounders and FC Dallas in Seattle.
Clint Dempsey, left, captain of the U.S. National Soccer Team, is introduced as the newest member of the Seattle Sounders FC MLS soccer team by majority owner Joe Roth, right, Saturday, Aug. 3, 2013, prior to a match between the Sounders and FC Dallas in Seattle.

At the end of the day, the way any businessman measures a business is the bottom line; that is the profitability. The team is worth five times the value it was when they started, where now the organization is estimated to be worth roughly around $150 million. Roth points to their fan base as an advertiser’s dream with their focus demographics being 18-49 year olds, 60% male/40% female, and an average income of over $100,000. Roth says, “Soccer is generational. Twenty years from now, this will be like the Washington Redskins where the only way you can get a ticket is inherited.”

Roth is perhaps the most passionate owner in the league today. When the Sounders lost 4-0 to the Galaxy in their first year, he was so disgusted he gave every fan their money back on their tickets, costing the organization $1 million. He says “If you’re not willing to stand out here and be part of everything, than you’re missing something.” Over the years, the Sounders ticket pricing has stayed relatively stagnant, ranking 7th in the league. According to Roth, “professional soccer in this country is very price sensitive, as it has gotten to the point of something like Notre Dame football.”

While most sports businesses look at their organizations through pie charts, spreadsheets and diagrams, the Sounders are unique in that they measure their organization’s value in their stadium. They measure their success in their fans; fans that are buying food and merchandise, who are promoting the brand organically. The team set up shop in a city rich with soccer enthusiasm and they partnered with an NFL organization that already had strong connections in the sports world and then they let the brand loose … they gave it to their fans.

The Power of the Pre-Draft Pick

One “arena” of the sports business world that is often overlooked is the athletic training facility for professional athletes, specifically for the sports of football and basketball. Many of the high profile collegiate or amateur athletes who declare themselves eligible for the NFL or NBA drafts chose to do their training at a world-class sports training facility. With the NFL draft less than 2 months past, and the NBA draft only 5 days away, this seems to be a highly relevant topic.

I think it might be important to understand the dynamics of this business before diving into the details of it. While these training facilities exist for athletes across all sports, the training facilities that focus on athletes preparing for the NFL and NBA drafts are easily the biggest. That is because those two drafts are the biggest in magnitude. The MLB draft has 40 rounds and thus loses its luster. Moreover, many of those prospects spend several seasons in the minors or play college ball before seeing a major league roster. Similarly, the NHL draft does not give fans the immediate satisfaction of seeing players that are “NHL ready.” It takes most top picks in the NHL draft 3-4 years before they are actually playing in an NHL game. Conversely, the NFL and NBA drafts generate lots of buzz, interest, and excitement from fans because nearly all first round picks are just about guaranteed to make their teams the following year giving fans a reason to watch the event on TV.

The NHL Draft attracts very low attendance figures compared to the NFL and NBA Drafts.
The NHL Draft attracts very low attendance figures compared to the NFL and NBA Drafts.

Many of the top agencies will sign athletes right when they declare themselves eligible for the NFL and NBA drafts. Both the NFL and NBA have formal pre-draft combines that are essentially showcases for NFL and NBA management to examine players. They both happen 1-2 months before the draft and allow NFL and NBA GM’s, coaches, and scouts to see all of the athletes’ performance measurements (bench press, vertical jump, etc). Because so much weight is put into these athletic measurements, agents will pay top-dollar for their signed athletes to do their pre-draft training at the very best facilities in the world. With GM’s making million dollar-drafting decisions sometimes based upon a tenth of a second in a wide receiver’s 40-yard sprint, the return on investment for agents on sending their clients to the very best facilities is ever important.

This opens up a market space for facilities that specialize in training professional athletes. To begin with, it’s a very saturated marketplace with hundreds and hundreds of trainers and facilities doing various versions of the same thing. One of the biggest training facilities is EXOS, formerly known as Athletes Performance. EXOS was founded in 1999 by Mark Verstegen and has exponentially grown to where now they have facilities in Tempe (AZ), Phoenix (AZ), Carson (CA), San Diego (CA), Gulf Breeze (FL), Raleigh (NC), and Frisco (TX). They boast 523 players drafted, seven #1 overall picks and 105 first-rounders. Jadeveon Clowney, Greg Robinson and Blake Bortles all attended EXOS and obviously their hard work at these facilities paid off with big pay-days as the #1 overall pick in the NFL drafts.

Another top facility for NFL pre-draft combine training is IMG Academy in Bradenton, FL. The Academy started as a tennis academy with the one of the best tennis coaches of all time, Nick Bollettieri, who was responsible for training about half of the draw in the 1986 US Open. From there, the deep pockets of IMG (International Management Group) were able to take it from purely a tennis academy to a world class training facility for many more sports, football and basketball being two of them. Within the last 10 years or so, IMG has landed 86 first round picks, five #1 overall picks, including names like Cam Newton, LaDainian Tomlinson, Luke Joeckel, Luke Kuechly, Ryan Tannehill as well as Super Bowl MVP’s like Drew Brees and Eli Manning.

The #1 overall pick in the 2014 NFL Draft, Jadeveon Clowney, trained at EXOS with Mark Verstegen.
The #1 overall pick in the 2014 NFL Draft, Jadeveon Clowney, trained at EXOS with Mark Verstegen.

On the basketball side, there are a few workout facilities that stand out: Impact Basketball (Las Vegas, NV), Project Basketball (Oakland, CA), and Evolution Athletics (Chicago, IL). Impact Basketball began in 1997 when former Division 1 coach, Joe Abunassar, applied his unique approach to basketball development to guide the careers of several of the best NBA players. Today, Impact Basketball has three locations as well as programs running in over a dozen countries … they have laid claim to over 100 NBA draft picks in the last 7 years. Joe’s early group of clients was Kevin Garnett, Chauncey Billups, Tyronn Lue, Al Harrington, Tayshaun Prince and Dahntay Jones. From there, Joe was able to start the IMG Basketball Academy in Bradenton, Florida. He then added facilities in Las Vegas and Los Angeles that train over 200 professionals, men’s and women’s national teams, McDonalds and NCAA All-Americans, foreign professionals and young talented amateurs who train at his summer camps and his Impact Academy.

Joe Abunassar has done an incredible job growing his Impact Basketball Academy.
Joe Abunassar has done an incredible job growing his Impact Basketball Academy.

Jeff Pagliocca, with Evolution Athletics in Illinois, is a little newer to the game of combine training, although is quickly building an impressive list of alumni. Everyone from Luol Deng, to Will Bynum to most recently Frank Kaminsky as well as Aaron and Andrew Harrison have used Pagliocca and his staff to prepare for the NBA draft combine.

Virtually all of these training facilities feature cross-training components including mental conditioning, speed training, nutrition, and other components of how to be the consummate professional. In virtually all of these examples of world-class training facilities, the business model has started from a well-known coach or trainer being able to attract a few big name athletes. From there it becomes a snow-ball effect in large sense, where other young up-and-coming athletes want to train where the other best athletes are training. It is here where managing the relationships with the large agencies becomes crucial, as they are ultimately the ones spending the dollars. At this point it becomes a marketing exercise, where the coaches rely on a marketing and business development staff to generate the buzz of who is coming to train at their facility and to permeate that news to the youth athletes, the high school athletes, the college athletes and even the professional athletes.

IMG Academy does a tremendous job in leveraging their NFL Draft combine athletes to market some of their other training products.
IMG Academy does a tremendous job in leveraging their NFL Draft combine athletes to market some of their other training products.

The business is now off and running and new revenue streams open up for these facilities. With the ability to market these big names, the facilities generally then create youth summer camps, individualized private training sessions, team training, events, consulting and sometimes will even look to get into player representation and player endorsements. If executed properly, the pre-draft combine training niche marketplace can have a rippling effect over a potential very large business.

It is a very saturated market with lots of facilities trying to do similar things … and like anything else; the cream generally rises to the top.

Nike’s Latest Win

It was just announced on Wednesday that Nike and the NBA have agreed to an 8 year, $1 billion jersey deal that will begin in the 2017-18 season.

This deal will represent approximately a 245 percent annual increase from the previous deal that the NBA had held with Adidas. In 2006, the NBA announced an 11-year, $400 million deal with Adidas, who at the time had taken over for Reebok (a brand which it now owns). It was reported that Adam Silver and the NBA had become unhappy with Adidas after they fell to third in the United States in shoe and apparel sales, behind Nike and Under Armour. This past March, Adidas announced that they would not seek to extend its jersey deal with the league.

Nike has produced replica NBA jerseys through their Swingman brand line and produced official NBA jerseys in the 1990s.
Nike has produced replica NBA jerseys through their Swingman brand line and produced official NBA jerseys in the 1990s.

You might wonder why the NBA announced this so early in advance, as their current deal with Adidas is good through the 2016-17 season. The simple answer is that both sides have already mutually agreed to part ways at the end of the deal. Adidas still wants a return on their investment, so don’t expect to see any letdown from them in the coming years. They have done some new things, such as jerseys with sleeves and their special Christmas Day branded jerseys. With Adidas and the NBA coming to this decision to split early, there was no reason for the NBA to not go ahead and search for their next official jersey supplier.

Mark Parker, the CEO of Nike, is extremely excited about the new jersey deal with the NBA.
Mark Parker, the CEO of Nike, is extremely excited about the new jersey deal with the NBA.

A major win in this jersey deal for Nike is that the Nike Swoosh will appear on all NBA jerseys, a first for the league. Nike President and CEO, Mark Parker, is extremely excited about the deal, “In Nike, Jordan and Converse, we have three of the most connected brands in the world, and look forward to making the global growth of the game a successful strategy for both the NBA and Nike.” Since 1992, Nike has been a marketing partner of the NBA. At retail, they have been able to successfully produce replica NBA jerseys under their Swingman line. Furthermore, Nike and its affiliated brands, control more than 90% of the U.S. basketball shoe market at retail. The company holds endorsement deals with many of the league’s top stars: Lebron James, Kevin Duran, Kobe Bryant, Kyrie Irving and Russell Westbrook to name just a few.

Lebron James is one of several big stars that Nike has large brand endorsement deals with.
Lebron James is one of several big stars that Nike has large brand endorsement deals with.

In 2012, Nike was able to win the bidding war for the official uniform deal of the NFL, and they have extended those rights until the end of the 2019 season. Most industry experts would agree that Nike has been relatively conservative with their NFL jersey designs, excluding a few franchises like the Jaguars, Buccaneers and the Seahawks. NFL owners tend to be more conservative businessman compared to those owners of NBA franchises. It is expected that Nike may have a little more creative freedom with these NBA jerseys. Having said that, with the limitation of space on the NBA jersey canvas (no sleeves, shorts and not pants, no high socks, required number on the front of the jersey), Nike’s design team will have to be resourceful to create a groundbreaking design.

One issue of debate with the new Nike NBA jerseys is whether or not there will be advertising on the jerseys. That question may largely be tied to the television deal with Turner Sports. ESPN Sports Business Reporter, Darren Rovell, says, “With such a large and lucrative ESPN/Turner deal getting done, it brought into question the worry that there might be some companies who might try to cannibalize the business of TV and not buy television advertisements. I think that’s enough of a concern to keep advertisements off jerseys until the end of the TV deal and maybe forever.”

Adam Silver (left), the NBA's current commissioner, and David Stern (right), the NBA's former commissioner, have two different views on the league's jerseys.
Adam Silver (left), the NBA’s current commissioner, and David Stern (right), the NBA’s former commissioner, have two different views on the league’s jerseys.

Now, Adam Silver shares a much different opinion on the NBA’s jerseys than former commissioner David Stern maintained. Stern felt strongly that there should be no other competing brands on the NBA jerseys besides the team brands, which is what negated Adidas putting their trademark logo on the jerseys. Silver, however, not only feels strongly about putting the supplier’s brand on the jerseys, but is also pushing for corporate advertising on the jerseys.

This new deal will have no impact on a few teams who have new uniform designs coming out. The Philadelphia 76ers will be unveiling new uniforms next week; while the Toronto Raptors and Atlanta Hawks will be announcing new uniform designs later this summer as well.

Regardless, this is a huge win for Nike. Nike will now have the official jersey deals for the two US professional sports leagues with the widest global marketing reach.

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