Business Stuff On Labor Day…

You do not need to be an honors graduate of the Harvard Business School to recognize that the US economy is undergoing a period of inflation.  If you want to understand why that is the case and/or how such an economic trend might be altered, you should go and find an honors graduate of the Harvard Business School and get him to explain it to you.  In my simplistic reasoning, things cost more because there is more money out there in the economy than there was before.

Using my simplistic explanation, it is not unreasonable to expect that the sports world will see revenue growth in these times.  And there are reports of just such situations coming to pass.  For example, when the NFL recently announced its new media rights deals, some folks wondered if the prices paid by the media outlets represented a “bubble” – – an economic situation that could not be sustained because the costs were prohibitive to the broadcasters.  Well, here is the current situation:

  • Ad rates for NFL in-game time slots are up 7% over last year
  • A 30-second time slot in a national game (late afternoon on Sunday or Sunday night or Monday night) cost up to $860,000.
  • Networks report that more than 90% of the time slots for all NFL games have already been sold for the run of the regular season.
  • Media outlets will take in more than $7B from advertisers over the course of the NFL regular season.

Amazon, CBS, Disney, Fox and NBC will pay the NFL $110B over the next 11 years for the broadcasting rights.  Amazon will have the Thursday Night Football games this year and will certainly take in less money per game from advertisers than the other providers simply because Amazon Prime TV is available to fewer households.  But the other companies look to be in good shape economically since they have playoff games and then FOX has the Super Bowl telecast in February 2023 as added sources of revenue.  FOX reports that it has already sold “a majority of its inventory” for the Super Bowl and that the average in-game time slot is going for more than $6M.

As inflation continues, the networks can look to raise the rates they charge to advertisers while the payments they have to make to the NFL are fixed for the term of the deal.  So, maybe these cost levels for broadcast rights are sustainable after all?

There has been another recent economic event associated with the NFL that deserves a mention.  Recall that one of the Spanos siblings – – a co-owner of the LA Chargers – – was suing her brother and seeking to force the team to be sold claiming that the trust that allows the family to control the Chargers was in a financial state such that it could not meet its obligations.  That lawsuit had interesting potential because the finances of every NFL team other than the Green Bay Packers are not revealed publicly.  A trial of this kind would put a lot of that sort of information in the public domain.

Those folks who were relishing the opportunity to get a peek behind the veil got some bad news about a week ago. The judge in the case ruled in favor of a motion by Dean Spanos that the case would not be heard in open court but would be handled in the NFL’s arbitration system which is about as transparent as a block of granite.  Previously, the NFL named former US Attorney General, Eric Holder, as the person who would handle the arbitration proceedings.

Moving on …  There are reports that Netflix is considering a documentary on Johnny Manziel.  My first reaction was:

  • Why would anyone want to know anything more about Johnny Manziel?

But upon reflection, there is something attractive about watching a train wreck – – so long as you do not know anyone on the wrecking train(s).  And a documentary on Johnny Manziel would have train wreck qualities to it because it is a story of a rapid rise to celebrity status followed very quickly by a fall from grace to a status that is almost pitiable.  That is a story arc that a documentary film maker can exploit and sell to the public…

In the business of baseball news, the Oakland A’s would appear to be nearing a crossroads decision about the future of the franchise.  Earlier reports said that representatives of the A’s had met specifically with a billionaire in Las Vegas about specific  undeveloped piece of land that he controls in the city.  Now there is a report that the A’s have notched a victory in court that moves them closer to the ability to build a stadium and a surrounding developmental area in the city of Oakland.  Here is a capsule of what happened there:

  • The A’s proposed a humongous developmental project in a waterfront part of the city.  The plan would have a stadium, 3000 units of housing, retail space and a mid-sized hotel built on the plot.  Total cost estimate is $12B.
  • The A’s filed the necessary environmental impact statements and those documents were challenged in court by a variety of plaintiffs including the Union Pacific Railroad Company.
  • The court ruled in favor of the A’s saying the environmental impact statements were satisfactory.

For the A’s to realize their “Oakland option” the city needs to come up with a chunk of money to cover the development of necessary infrastructure in that part of town.  Currently the area is warehouses and a dock; clearly, that is insufficient in terms of infrastructure for the kind of development envisioned here.  There has been some money appropriated by the State of California and there is an application in for some Federal funding too.  Then the city will have to figure out if it can come up with the rest.

Finally, having mentioned Las Vegas as an option for the A’s above, let me close today with this definition from The Official Dictionary of Sarcasm:

Las Vegas:  A Nevada gambling and entertainment Mecca that sells itself as a naughty destination for the sexually adventurous nightclub set, when in reality it contains mostly doughy families from the Midwest whose idea of a night at the theater involves either a light show or a magician and row upon row of infirm emphysema cases going from one penny slot machine to another on their mobility scooters.  Sexy stuff, indeed.”

But don’t get me wrong, I love sports………