Column: Baseball's Economic System Favors The OwnersIf you think this winter has been a cold one, it’s been even colder for MLB free agents. With pitchers and catchers reporting next week, 110 players remain unsigned, wondering if they’ll have a job this season.
A number of theories have been advanced to explain the stalemate - a less talented group of free agents, the reluctance to part with draft picks, teams saving their resources for a star-studded group of free agents next year, the financial benefits of staying under the luxury tax this year, and the “C” word - collusion.
Marvin Miller, the first executive director of the MLBPA, would be aghast at the direction the union has taken in recent times. Under Miller, the union was focused on economic issues – salaries, pensions, arbitration and free agency. When Miller came on board in 1967, the average player salary was $19,000. Today, it exceeds $4 million.
Don Fehr succeeded Miller and Michael Weiner took the reins of the union after Fehr retired in 2009. Tony Clark took over as executive director in 2013 after Weiner’s tragic death from brain cancer. Miller was an economist, Fehr and Weiner lawyers. Clark was a long-time MLB player who vowed to represent the players’ wants and needs. Today’s players value “personal comforts,” like off-days during the season, above economic issues.
In fairness to Clark, the players’ percentage of league revenue began shrinking before he negotiated the last CBA in 2016. Despite an increase in average salary, the players’ cut of MLB revenues shrank from a high of 56 percent in 2002 to 38 percent in 2014. Baseball players now receive the lowest percentage of revenues in the four major league team sports.
The players’ position is best illustrated by Dodgers’ pitcher Rich Hill, who signed a three-year, $48 million contract as a free agent last year. “Something that doesn’t seem very fair (is) going on,” said Hill. “Players just want what’s fair.” Based on this winter’s slowly developing free agent market, what players see as fair apparently isn’t viewed by the owners as fair. One prominent agent has recommended that the players boycott spring training. Kenley Jansen of the Dodgers has suggested the players should consider a strike.
The unrealistic nature of those comments are in sharp contrast to the realism exhibited by Brandon Moss. In an interview with the MLB Network, Moss said the players’ union has to take responsibility for the balance of power that has tilted greatly towards ownership. “It’s our own doing,” said Moss. “These past two collective bargaining agreements…I think that we have given the owners…who are very, very business savvy, a very good opportunity to take advantage of a system that we have created for ourselves…We have the right to bargain and set our price just like the owners have the right to meet that price.”
Moss couldn’t have said it better. The players have allowed the balance of power to shift from them to the owners. How that plays out in the future is yet to be determined.
Column: Clemens & Bonds Still Outside Looking InFour players were elected to the Baseball Hall of Fame this year but in their sixth year of eligibility, Barry Bonds and Roger Clemens will not be among the inductees on July 29.
Clemens is without doubt the greatest pitcher of his generation, perhaps of all time. Ditto for Bonds as a hitter. Yet neither player was able to garner 75 percent of the vote from the Baseball Writers Association of America, the minimum required for election to the Hall. Their totals this year – 57.3 percent for Clemens, 56.4 for Bonds – represent only a slight increase from last year’s numbers. With only four years of eligibility remaining, they are still a long way from enshrinement in Cooperstown.
Baseball is an institution that struggles to confront its past honestly and directly and the same can be said of both the voters and the Hall. While the Hall is a separate entity from MLB, the influence of the latter over the former is undeniable. Past and present MLB executives as well as former players populate the Hall’s Board and various voting committees, the lone exception being the BBWAA which votes on players during their first 10 years of eligibility. And no one in baseball wants to be reminded of an issue – steroids – they turned a blind eye to while it was happening.
Joe Morgan, a 1990 Hall of Fame inductee and Vice Chairman of the Hall’s Board, sent an impassioned letter to voters in November imploring them not to vote for Bond or Clemens, although neither was mentioned by name. Morgan, speaking for himself and “other but not all Hall of Famers,” threatened a boycott of the Hall should “players who failed drug tests, admitted using steroids, or were identified as users in Major League baseball’s investigation into steroid abuse, known as the Mitchell Report” be admitted.
In 2007 Morgan was a member of the Veterans Committee that failed to elect Marvin Miller, former Executive Director of the Major League Baseball Players Association, to the Hall. Morgan defended his actions by saying, “It is a little more difficult for me to look at an executive and know how much he contributed to the game…It's much easier for me to evaluate the players."
As I said then, love him or loathe him, no one had a bigger impact on the business of baseball - how the game is played off the diamond - than Miller. If it weren't for Miller, Morgan would have spent his career as a serf in the kingdom of baseball. The fact that he couldn’t comprehend that makes anything Morgan says suspect.
As baseball historian Bill James – who should be in the Hall with Miller - once wrote of Carl Yastrzemski, "the Hall of Fame has lost the capacity to honor (Yastrzemski). It can only insult him." Such is the case with Bonds and Clemens. Neither can truly be honored by a plaque alongside a group of players who were inferior to them; they can only be insulted as long as they are ignored.
Column: Super Bowl Ads and WomenWhile the New England Patriots and Philadelphia Eagles and their fans are preparing for the Super Bowl on February 4, not everyone will be focused on the game. Viewing, analyzing and comparing the Super Bowl ads – dubbed the “Ad Bowl” – is a ritual almost as old as the game itself.
One of the themes marketers have historically used is the depiction of women as sex objects in an effort to peddle products, particularly cars, beer and food. Two of the worst offenders have been Carl’s Jr. and GoDaddy.
When I ask students in my Sport Marketing course to find the least effective ad one of the most frequent candidates is Carl’s Jr.’s 2015 Super Bowl spot featuring model Charlotte McKinney. The model, attired in a bikini, is seductively looking into the camera while preparing to chomp down on an enormous cheeseburger. Students uniformly discredit the ad, claiming no one who regularly eats oversized cheeseburgers could look like McKinney.
Another example of extreme sexism was GoDaddy’s risqué ads with NASCAR driver Danica Patrick that tried to convince us we needed a website.
In fairness to Carl’s Jr. and GoDaddy, both advertisers have scaled back their objectification of women in recent years. They aren’t alone. Most brands now refrain from featuring women as sex objects. According to a study conducted at Villanova University, during the past decade only 6% of Super Bowl commercials contained sexual messages. One reason for the trend may be the addition of more women on the creative side of the camera, although men still far outnumber women.
Another reason is the Super Bowl viewership has evolved over the years. According to Ad Age, less than a decade ago the television audience for the game was 60% men and 40% women. Last year’s Super Bowl audience was almost evenly split, 51% men and 49% women. Perhaps more importantly, women tend to be either the primary purchasers or the primary influencers on the purchase of a variety of products, a fact automobile manufacturers discovered years ago. Therefore, it behooves advertisers to create messages that resonate, rather than offend, women.
The beer industry, a major advertiser during sporting events, has begun targeting women to drive growth in a basically stagnant market. Anheuser-Busch brands Budweiser and Bud Light once featured women in less than complimentary roles. No more. Azania Andrews, VP of Marketing for A-B’s Michelob Ultra, told Ad Age, “We need women to drink beer, so it is not to our advantage to portray them negatively in any way.” A-B sees millennials as another potential market for growth. “They (millennials) are interacting with the world in a much more gender-neutral way," says Andrews. "It does a brand a disservice to play into these old tropes.”
In fairness to marketers, the recent public attention on harassment in the workplace was not the motivating factor in their effort to tone down the emphasis on sex to sell products. But given the media coverage of the #MeToo movement, advertisers should expect additional scrutiny on how women are portrayed in this year’s Super Bowl ads.
Column: The Escalation of College Football Coaches SalariesCollege football is a revenue machine on par with most professional sports leagues in the country. And football coaches have the salaries to prove it.
Division I football programs generate an estimated $8 billion per year, more than the NBA and the NHL. Most football programs also spend that revenue, in part by lavishing mega-contracts on their head coaches.
The highest paid coaches are Alabama’s Nick Saban and Michigan’s Jim Harbaugh at $11 million per year. Saban and Harbaugh aren’t the only coaches making a fortune coaching “amateurs.” Texas A&M recently gave former Florida State coach Jimbo Fisher a 10-year, $75 million contract, which temporarily qualifies as the richest deal in college football history in terms of total value. It’s also double the amount paid to Fisher’s predecessor, Kevin Sumlin, who “only” went 51-26 during six seasons in College Station.
When asked what he was looking for in his new coach, Texas A&M Chancellor John Sharp said, "Nothing serious, just want him to win a national championship." For that kind of money, Fisher should come with a guarantee.
The Aggies were so determined to make the switch that they will pay Sumlin a $10.4 million buyout by January 25, even though he’s rumored to be signing a five-year contract with Arizona. According to an analysis by USA Today, Sumlin’s buyout represents approximately 10% of the total buyout-related salaries colleges will pay to this year’s group of terminated coaches.
Fisher’s new gig comes only one year after he signed an extension with the Seminoles that guaranteed him an annual base salary of $5.5 million through 2024. The extension included a buyout clause which was triggered by his move to A&M. Fisher must repay Florida State the total sum remaining on the contracts of his assistant coaches, which could total $7 million, depending on incentives contained in the contracts. Of course, Fisher won’t pay a dime of that amount. His new employer will pick up the entire tab, which, along with Sumlin’s buyout, means Fisher will cost A&M in excess of $90 million, not counting incentives. That’s more than the budgets of at least ten countries.
The Oakland Raiders recently conferred a 10-year, $100 million contract on Jon Gruden, the largest salary commitment to a coach in NFL history. But at least the Raiders make no pretense of the fact they’re a professional team, one that had a $170 million team payroll in 2017.
It’s not just head coaching salaries that are out of control. Assistant coaches at major college programs are making upwards of $2 million a year, an incomprehensible and indefensible sum.
Is there an end to the spiraling salaries? SEC Commissioner Greg Sankey told USA Today he believes there is, although he didn’t venture a guess as to when and at what figure. Sankey is a smart man and a great commissioner, but on this issue he’s dead wrong. As long as the NCAA adheres to its model of “amateurism,” where student-athletes provide free labor and coaches can move at will, salaries will continue to escalate.
Column: How College Sports Dodge TaxesWhen Alabama beat Georgia for the National Championship it put an end to the 2017 college football season. What will continue is the tax dodge engaged in by college sports programs around the country.
Historically, college sports were viewed as merely ancillary to the educational purpose of universities. The concept was akin to the U.S. Supreme Court’s decision in 1922 that granted MLB an antitrust exemption because, according to the Justices, baseball wasn’t “a business.” Both decisions may have made sense decades ago when revenues were generated primarily from ticket sales, but they seem absurd today. NCAA Division I sports programs generate an estimated $8 billion a year and tickets represent only a fraction of that total. That’s more income than the NHL and the NBA – approximately $4.5 billion and $6 billion, respectively - generate.
And like their “professional” counterparts, college sports programs and conferences receive the lion’s share of their revenue from television contracts and corporate sponsorships, for which they sometimes compete with professional teams and leagues. But unlike professional sports teams, college programs are entirely tax exempt, thanks to intense lobbying by colleges and universities. Even in instances when the IRS has sought to tax what are clearly revenue streams wholly unrelated to the educational mission, Congress has stepped in to “protect” that revenue.
Education is the magic word that allows our nation’s universities to shelter their billions of dollars of revenue. Universities are nonprofit entities that have designated “student-athletes” to be “amateurs” who are engaged in “extra- curricular” activities, not unlike members of the debate team or marching band. That fallacy, fabricated and perpetuated by the NCAA, has allowed its member institutions to escape a myriad of laws related to employment and antitrust in addition to the nation’s tax laws.
Even the most recent changes to the tax code substantially spared colleges and universities. Two provisions in the new law do target college sports programs – an excise tax on the salaries of university employees whose salaries exceed $1 million, and the partial elimination of a deduction for booster donations tied to ticket purchases. More than 85 of the nation’s Division I football coaches earn more than $1 million annually, topped by Jim Harbaugh’s $11 million.
Neither new proposal will generate much revenue for the federal government nor will it derail the college sports revenue juggernaut. It could have been worse. Two additional proposals failed to survive the House-Senate negotiations and ticket revenue, corporate sponsorships and television revenues remain tax exempt.
Most of the revenue generated by college sports programs is retained internally and used to fuel the voracious appetite of the athletic teams, mostly football and men’s basketball. It should be pointed out that some of the highest grossing programs – including Alabama and Ohio State, which generate in excess of $200 million annually – do contribute a portion of their spoils to academics. But they’re the exception, not the rule.
Exempting college sports programs from taxes is a dodge that has gone on long enough. It’s high time they paid the tax man.
Column: Is It Time To Get Rid Of Replay?If the names Don Denkinger and Jim Joyce ring a bell, you know why we have instant replay in sports. The two former MLB umps are part of MLB history – for the wrong reason.
Denkinger famously blew a call at first base in game six of the 1985 World Series when he called Kansas City Royals pinch-hitter Jorge Orta safe on an infield squibbler. Orta, leading off the bottom of the ninth inning with the St. Louis Cardinals up 3-2 and on the verge of closing out the Series, was clearly out. With two outs in the inning, the Royals scored two runs, won the game 4-3 and won game seven the next night. As any Cardinals fan will tell you, Denkinger’s gaff cost St. Louis the World Series.
On June 2, 2010, with Detroit Tigers pitcher Armando Galarraga one out from the 21st perfect game in MLB history, Joyce, like Denkinger, missed a call at first base. Joyce ruled Cleveland Indians’ Jason Donald safe on a ground ball to short when everyone in the ballpark and watching on TV knew otherwise. Joyce, acknowledged as one of the best umpires of his era, will forever be remembered for that blown call.
In both cases, instant replay would have rectified an obvious error, something the umpires, players and most fans would have welcomed. Unfortunately, MLB didn’t adopt replay until 2008 and only expanded replay to include calls on the bases in 2014. Hence, Denkinger and Joyce will be the answers to trivia questions for eternity.
Football was the first team sport to adopt replay, using it for preseason games in 1985. The NFL began using replay during the regular season in 1986. The league has tinkered with the system frequently since then in the hopes of making the game “better.” But this season, not a week has gone by without at least one controversial call, mostly involving what constitutes a “catch” or “possession” of the football. Game officials and league wonks in the League’s replay center have become the storyline, rather than the players and the game, thereby defeating the purpose of replay.
Replay was adopted to overturn clearly erroneous calls and there’s no doubt the technology exists to do that. But replay opened Pandora’s box. Games are delayed interminably while too many plays are reviewed ad nauseam. If replay has taught us anything it’s that on-field officials get the call right most of the time. Therefore, the argument goes, we should just get rid of replay. Scrap the experiment and stick with the call on the field. But that argument is short sighted. It isn’t the technology that we should be frustrated with, but the people who use the technology.
Rather than jettison replay, we need to reign in the humans who are making a mockery of it. Let’s begin by revisiting the original goal of replay - overturn the calls that are obviously wrong. If we need a reminder of what those look like, we need only ask Don Denkinger or Jim Joyce.
Column: Looking Ahead To 2018The age-old question – Where does the time go? – can never be adequately answered. But if you’re reading this, you made it through 2017 and hopefully you’re looking forward to 2018. So let’s dust off the crystal ball and see what’s ahead in the world of sports business.
NFL ratings continued to plummet in 2017 – by last count down by 8.4 percent over 2016, which declined from the previous season. While those numbers would give most leagues apoplexy, NFL programming is still the number one watched show on every network. In a world with more TV choices than ever, lower ratings aren’t taken as seriously as they might have been a decade ago. Don’t be surprised if NFL ratings continue to decline in 2018.
With the U.S. absent from the 2018 World Cup, expect interest in the event to diminish from four years ago when the U.S. team made it to the round of 16. The fact the tournament will be held in Russia – multiple time zones removed from the U.S. – will also discourage viewership. Fox won a bidding war with ESPN/ABC, agreeing to pay $400 million for the broadcast rights to both the 2018 and 2022 tournaments. Fox projects a $20 million loss based on advertising commitments to date.
The merger agreement between AT&T and Time Warner was extended to June after the government sued to block the deal. If it goes through, the merger would create a media and telecommunications behemoth of historical proportions. Time Warner produces original content while AT&T distributes media, phone and internet services. Hence, this is a vertical merger that is unlikely to limit consumer choices. Here’s predicting the deal will ultimately be approved, albeit only after the government imposes a number of stringent conditions on the new company.
The recent trend in “cord cutting” will continue, but what is lost in the headlines is that only 10% of consumers are streamers-only. A majority of consumers are cord “stackers” - they subscribe to both pay TV and streaming services. Bob Iger, CEO of the Walt Disney Companies, is the smartest man in sports media. Disney’s recently announced purchase of most of 21st Century Fox for $52.4 billion – plus $13.7 billion in debt - is a huge bet on the future of pay TV. The deal, which requires the approval of the Justice Department, will also enhance Disney’s previously announced creation of two new streaming channels.
Finally, MLS continues to expand at a voracious rate. The league recently announced two more expansion franchises for a fee of $150 million each, plus a commitment to build soccer only stadiums for an additional $250 million. More expansion is on the horizon for a league that has yet to make a profit. Is this a great investment or a Ponzi scheme? More on that topic in a future column.
There you have it, my prediction for the biggest sports business stories of 2018. Check back next year to see how I did. Until then, have a safe, healthy and productive year. And thanks for reading!
Column: Tennessee Will Pay Greg Schiano For Not CoachingOn November 26, the University of Tennessee hired Ohio State defensive coordinator Greg Schiano to be its next football coach. Within a matter of hours UT experienced a case of buyer’s remorse, a decision that will cost the University millions of dollars.
Tennessee director of athletics John Currie and Schiano signed a Memorandum of Understanding setting forth the basic terms of their agreement. Schiano would have been paid $27.7 million over six years. The Memorandum further stated that it "constitutes a binding agreement between Coach and the University..."
UT backed out of the deal after fans, former players, elected officials, students and alumni created a firestorm on social media claiming Schiano covered up child rape while coaching at Penn State at the same time as convicted child molester Jerry Sandusky. The allegations stem from a deposition given by former Penn State assistant coach Mike McQueary, the star witness for the prosecution in a criminal case against Sandusky that led to convictions on 45 counts of sexual abuse. The August 2015 deposition, taken in a civil suit between Penn State and its insurance company to determine liability for payouts to Sandusky’s victims, came three years after Sandusky was sentenced to 30 to 60 years in prison.
In his deposition, McQueary said Tom Bradley, another Penn State assistant coach, had told him that sometime “in the early ‘90s…Greg had come into his office white as a ghost and said he just saw Jerry doing something to a boy in the shower.” Schiano has denied the allegation, as has Bradley. McQueary’s statement was double hearsay, which is probably why law enforcement never followed up on it. Yet the Tennessee faithful didn’t hesitate to light up social media and sully Schiano’s reputation, killing his chances of coaching the Volunteers. So much for due process. Currie was fired for failing to conduct sufficient due diligence on Schiano.
Two other clauses in the MOU are relevant here. Although Currie and Schiano signed the MOU, signature lines for UT’s chancellor and chief financial officer were blank. The University says without those signatures, the MOU isn’t binding. However, the last sentence of the MOU reads, “until such time that the Employment Agreement is executed, this MOU shall constitute a binding employment contract between the parties." Sounds like a contract to me.
If Schiano’s attorneys can overcome the lack of signatures, the damages to their client are clear. Paragraph 4 of the MOU states Tennessee may, in its sole discretion, terminate the MOU without cause. If the University takes such action, it must pay Schiano 75% of the base pay set forth in the document. If you’re counting, that’s $20.625 million. It’s unlikely Schiano will receive that amount, at least not without going to court, but you can be sure representatives of the parties are currently engaged in settlement talks that will result in Schiano being paid a significant sum.
Did Schiano see something 25 years ago that he should have reported? Perhaps. But whether he did or not, his trial and conviction by social media will cost UT dearly.
Column: Justice Served In Nassar Case“Today, the justice feels very incomplete.”
Those words were uttered by Rachael Denhollander after Dr. Lawrence G. Nassar was sentenced to 60 years in federal prison. Denhollander was the first person to publicly accuse Nassar, a former team doctor for USA Gymnastics and the Michigan State University gymnastics team, of sexually abusing hundreds of gymnasts – one of whom was only 9 years old - under the guise of medical treatment.
What would constitute justice for a monster who sexually abused hundreds of girls and women? More importantly, what should justice look like to Nassar’s victims? The sentence virtually guarantees that Nassar will spend his remaining life behind bars. Is that sufficient punishment when it will take his victims years, if not a lifetime, to heal from the wounds he inflicted upon them?
Nassar’s sentencing came after he plead guilty in federal court to three counts of molestation. He is also awaiting sentencing after pleading guilty in state court on similar charges. In addition to the criminal complaints, 140 victims have filed civil suits against Nassar, USA Gymnastics and MSU. Allegations in the complaints date back to 1994 and some victims claim to have reported Nassar to MSU authorities as early as 1997. The complainants say in court records they were discouraged from filing “formal” complaints against the doctor. Furthermore, MSU administrators and coaches told the athletes Nassar’s actions constituted “legitimate medical procedures.”
Based on that evidence, it’s fair to say that Nassar isn’t the only monster in this story. Numerous adults were more concerned about their reputations, the reputation of their institution, their jobs and paychecks, than they were about the health and welfare of the athletes in their charge. That cover up is the real crime here. Nassar isn’t the only person who should be going to jail.
The Indianapolis Star broke the Nassar story in September 2016 when it published the accounts of two women, one of whom was Denhollander. The Star also reported that the federation had ignored complaints of deviant behavior against dozens of gymnastics coaches. Steve Penny, who had led USA Gymnastics since 2005, was asked to resign in March of this year but not before receiving $1 million in severance pay. The financial payment was the equivalent of two years’ compensation. After the Star detailed the Nassar story, Penny had faced criticism for not doing enough to protect gymnasts from sexual abuse, which included allowing coaches to move from club to club where their predatory activities continued.
Unfortunately, pedophiles exist among us. But once unmasked they should be prevented from interacting with children at all costs. Instead, USA Gymnastics and MSU covered up Nassar’s activities as if they were a mere mistake or oversight. The organization refused to acknowledge his misdeeds for decades, jeopardizing the health and safety of children they had a sacred trust to protect. In effect, they gave the fox the keys to the henhouse.
For the cruelty Nasser’s victims endured, and will continue to endure, Denhollander is right. Justice is incomplete.
Column: NCAA Continues To Embarrass ItselfPerhaps the only certainty in college sports is that the NCAA, the governing body for Division I, II and III sports, has made a cottage industry out of denying basic human rights while simultaneously embarrassing itself.
The latest, and certainly not the last, ridiculous ruling was the one-game suspension of University of Houston basketball guard Rob Gray prior to the season opener against McNeese State. Gray’s crime was playing in a church recreation league game over the summer. Apparently, the NCAA justified the suspension because a friend of Gray’s paid the $5 fee which allowed him to suit up for the Second Baptist Church.
You may recall this is the same organization that once ruled a bagel did not constitute an extra benefit, but adding cream cheese – who eats bagels without cream cheese? – was a Bylaw violation warranting a suspension.
Gray’s case isn’t the NCAA’s only recent farcical decision. Earlier this year the governing body ruled NC State freshman guard Braxton Beverly must sit out a year because he transferred from Ohio State to the Wolfpack. After Beverly committed to play for the Buckeyes, Coach Thad Matta was fired after 13 seasons in Columbus. Beverly chose not to play for new coach Chris Holtmann after the coach brought in a number of his own recruits. Ohio State did the right thing and released Beverly from his Letter of Intent.
However, the NCAA elected to treat Beverly as a transfer rather than a true freshman because he had enrolled in summer classes at Ohio State to get a head start on the academic year. Student-athletes who transfer are required to sit out a year, a rule designed to keep players from switching schools, in effect keeping the student-athletes enslaved.
NC State appealed the decision and based on what the NCAA characterized as “additional information,” Beverly was granted an immediate waiver after missing the first two games of the season. The 180 – after two denials - proves someone in Indianapolis has common sense, and perhaps a heart.
The irony of the Beverly situation is that Holtmann, who left his prior job at Butler to coach at Ohio State, didn’t have to sit out a year. Nor does new NC State coach Kevin Keatts, who moved over from UNC Wilmington. In other words, coaches receive a get-out-of-jail free card – freedom to move without penalty – from the NCAA, but not players.
Add in the NCAA’s ruling on the egregious University of North Carolina academic fraud case – paper courses and grade changes in the Department of African and Afro-American Studies – and the NCAA has accumulated a trifecta of ludicrous or hilarious – take your pick – faux pas this year.
The NCAA was formed in 1906 to protect the rich and powerful, i.e., coaches and schools, and disenfranchise the weak and vulnerable, the student-athletes. Nothing’s changed in over a century nor is it likely to do so in the ensuing 100 years. Next week or next month there’ll be another Rob Gray or Braxton Beverly. You can count on it.