Sponsors

Panel Detail:

Wednesday, April 30, 2008
2:10 PM - 3:25 PM

The Business of Sports

Moderator:

Jim Gray, Sportscaster, NBC (Olympics), Showtime and Westwood One Radio

Sumner Redstone of Viacom argues that the Web will be a huge source of future revenue growth in the world of sports.

Recession became a key topic for the panelists, who agreed that sports teams suffer when consumers spend money elsewhere. The business of sports is based substantially on advertising, and Timothy Leiweke of AEG added that when consumers stop spending, retailers cut their sports advertising. Sumner Redstone of Viacom Inc, argued that "the best will survive because those companies are good at what they do." When he owned the New York Knicks, the team succeeded, he said. When he sold it, "they tanked."

Even in times of recession, said Casey Wasserman of the Wasserman Media Group, sports rights will continue to grow because new channels are developed faster than for any other media types. Grey commented on a recent statistic from Disney Inc.: 50 percent of its market capitalization is represented by ESPN. Redstone agreed, adding that "at CBS, sports are very important — they make the money."

Ed Goren of Fox Sports responded that all his company's contracts with sports entities generate profit, regardless of the deal size, although the Super Bowl is the single most profitable event in any day for Fox, earning the company over $600 million in one day. In fact, said Wasserman, nine of the top 10 most watched shows of all-time, have been Super Bowl games. "That," he added, "is the power of sports!"

The sporting industry in the United States constitutes a $51 billion market, growing at a rate of 37.6 percent a year. With Los Angeles offering a substantial market base, Grey asked the panelists if they thought there would be an NFL team in L.A. by 2015. "It would take two to three years to design a stadium, one to two years to sift through politics, two years to build the stadium, and that's not even talking about the team," said Leiweke. "I don't see how it could happen."

Globalization has been a growing phenomenon in sports, and Grey wondered what sport is best positioned to go overseas. Wasserman said he believes the NBA has the lowest barriers of entry and the biggest stars in the world, concluding, "The NBA can transport globally better and more efficiently than any other sport." Leiweke agreed but argued that sports facilities around the world are the biggest hindrance to the NBA spreading globally. "Once new facilities come online and the infrastructure needed to succeed is developed," he said, "this will enable the league to be global." Goren countered that baseball is the best positioned as a global sport. For example, when Japan won the World Baseball Classic, that victory empowered other countries to believe they could compete as well. "It created opportunity for expansion as a global sport," he said. Even so, Wasserman pointed out that soccer is currently the most global sport by far, and he doesn't see that changing any time soon. A testament to Major League Soccer′s success is its ability to build the "right" infrastructure in other countries.

Transitioning from soccer to "branding" and athletes, Grey stated that the top three sports brands are the New York Yankees, Real Madrid and Tiger Woods. "Tiger has an enormous impact in the business of golf," said Redstone, and the panelists agreed they didn't foresee another powerful athlete in our lifetime.

The most controversial topic of the session was mixed martial arts, which has been called a brutal sport and for which no standardized fight rules exist. All panelists recognized the sport's growth but said it directly conflicts with social responsibility. For that reason, said Goren, Fox didn't offer the sport. Redstone agreed, saying, "There is a difference between the bottom line and social responsibility. I don't believe MMA is socially responsible, but it′s good for the bottom line. Still, I don't like it."

As for gambling, Wasserman said there is a taboo in the United States that restricts gambling as a growth sport. He recommended we define what gambling is specifically because fantasy sports, such as March Madness brackets, are drawing a fine line. Leiweke warned that there must be some separation between those who own and gamble, but he predicted there will be a team in Las Vegas soon.

Finally, Grey asked how sports companies could capitalize on digital content. Digital sports media constitute their own $3 billion industry already. Fox rents its product to Internet media to protect the content rights, said Goren, but many entities give up these rights and it hurts business. Redstone acknowledged that the Internet "is still a small pot of business." However, "as we move ahead, it will be the growth business." As an illustration of how times have changed, Leiweke said, "ESPN was a secondary consideration when Disney initially bought its parent company."

Tweet