What Happens in Vegas…

We all know how the saying goes. What happens in Vegas… stays in Vegas. However what about if you change the phrase into a question; “what happens in Vegas?” The first answer that will probably pop into your head is gambling, obviously. However in just a few months, you will be able to say, “NHL hockey happens in Vegas,” and a few years after that, “NFL football happens in Vegas.” That’s right – the moment the American sports world has been waiting for has finally arrived. Upper level professional sports are finally coming to Sin City.

For many people this is a long time coming. The NHL will expand from 30 teams to 31 teams this fall with the addition of the Vegas Golden Knights. With an odd amount of teams in the league, it is likely (in my opinion) that there will soon be another expansion team in the league. The home of the Golden Knights will be T-Mobile Arena, which was funded entirely by private funds. Meanwhile, the new Las Vegas home that will be built for the current Oakland Raiders team of the NFL will utilize $750 million in local taxes. And this will only cover approximately half the amount of money needed to build the stadium! The stadium will fit right in with the extravagant buildings lining Las Vegas Boulevard. However, many taxpayers are upset by the exorbitant amount of funds going into the stadium. Even the owner of the Vegas Golden Knight was critical of the move, saying the city, “could have spent Raiders money on ‘police, firefighters and teachers.’” This was clearly a move solely based on greed. While it might see great short-term returns due to all the hype, the franchises will face serious challenges in the future.

Artist’s rendition of the $1.6 billion stadium proposal for the Las Vegas Raiders

 

In all honesty, I think the move and the expansion to Las Vegas will not be successful in either sports. I had the pleasure of attending a professional sporting event in Las Vegas four years ago. Yes, Las Vegas is already home to the Las Vegas 51s, a AAA (highest level of minor leagues that feed to the MLB) baseball team. When I attended the game, it seemed as if there were about as many people there as at games played by my local minor league baseball team, the Harrisburg Senators. This is somewhat discouraging as Harrisburg has one-twelfth the population of Las Vegas. Furthermore, by looking at attendance records for teams in the Pacific Coast League, which consists of 16 AAA teams including the 51s, the 51s have consistently ranked 13th or worse in average attendance per game over the past five years. I think there is not a big enough local fan-base to support large scale professional sports teams in Las Vegas. In addition to the city having a somewhat small population, it is in the middle of the desert so the surrounding area’s population is pretty small as well. Only time will tell if the Vegas Golden Knights and the Las Vegas Raiders made a bad gamble or hit the jackpot.

 

Stop the Madness!

This time of year has a profound impact on the sports industry. According to Google, this year has had the most March Madness-related search traffic in its history. No matter what your background is, it seems like it would be close to impossible to not know someone in a bracket pool. In fact, last year it is estimated that there were over 70 million brackets entered into betting groups. This is more than the amount of votes (63 million) that President Donald Trump Received in route to his election this past November. So much for gambling being illegal! From my own personal experience, I have found that anyone can enter a bracket, and even have success, regardless of their basketball IQ; two years ago I was in a bracket pool in which the winner had never watched a college basketball game. The burgeoning popularity of the NCAA Basketball postseason has contributed to it being the most lucrative event in the US sports industry.

One thing that really intrigues me about the NCAA tournament is the fact that the athletes are not making any money. Meanwhile, the NCAA and teams that make a deep run in the tournament, reap the benefits of millions of dollars in profits. Because viewership reaches such a large demographic, the NCAA has a deal with CBS Sports/Turner that will be worth $1.1 billion per year starting in 2025. The NCAA currently makes nearly $800 million per year. CBS and Turner are not simply throwing away hundreds millions of dollars. In fact, the TV providers end up on top with over a billion in revenue from ads shown throughout the tournament. Just from the limited amount of time I have spent watching the tournament I have probably seen half a dozen commercials for Coca-Cola. Additionally, the games make millions in ticket sales. Additionally, merchandising over the course of the year brings in $4.6 billion in revenue. March Madness brings in a lot of these sales.

Although March Madness has been great for the sports industry, it has had the opposite effect on US businesses. According to a report by Challenger, Gray & Christmas, the 2015 tournament cost US employers as much as $1.24 billion in unproductive wages. In other words, while employees were being paid to work, the average worker spent over an hour watching live-stream action from the tournament.

Regardless of the negative aspects of the NCAA Tournament, I think it is an amazing spectacle. No other event could possibly make me so passionate about a random school like Florida Gulf Coast. In the midst of a stressful week full of exams, essays, a case competition, and friends visiting during their spring breaks, I am happy to have March Madness to alleviate the madness in my busy life.

Trust the Process

Since we go to school in Pennsylvania, I feel like I cannot avoid writing a blog about this. “Trust the Process,” the slogan popularized by Philadelphia 76ers star, Joel Embiid, has become the rallying cry of a fan base that has seen brighter days. Over the past few years, the team has amounted los after loss, at one point even accumulating the longest losing streak in the history of the National Basketball Association (NBA). While some fans have become restless (the 76ers have one of the lowest attendance levels in the NBA), others see how losing will actually (hopefully?) lead to sustained dominance in the long run.

Gotta love The Process

The Process all started with a man by the name of Sam Hinkie, a brilliant guy who graduated from Stanford and really values the analytic approach to sports. Many 76ers fans were excited, believing him to be the Billy Beane (the main character of the movie “Moneyball”) of the basketball. He immediately implemented a game-plan that championed losing – or at least that is how some skeptics view it. Through this strategy, the team spent very little on veteran players that typically sign expensive contracts and opted to invest a limited amount of money in players that often would not even fit into the best team’s rosters. Naturally, this does not lead to much success in the win column. The benefit of this is that the worst teams in the NBA get the earliest selections in the draft of amateur players. This is typically beneficial to a team with a small budget like the 76ers can rely on inexpensive, home-grown players.

Many people get upset over teams that “tank” because they believe the teams are losing on purpose. However, if the team started winning, Nobody on the team would be angry. Teams that “tank” just simply do not make the financial commitment that big market teams are accustomed to. Hinkie’s time with the 76ers was short-lived due to the fact that he was pushed hard to resign from his position within three years of joining the team. He was certainly not helped by the amount of injuries to potentially high-level contributors during his tenure. However, the fruits of his labor are beginning to show as the 76ers already have nearly as many wins as they had past two years combined, although the season still has 15 games left. Perhaps more exciting for fans is that the team will likely have two intriguing new names in the daily lineup next year. In addition to getting a high pick in this year’s draft, they will also get to see the first action from the first overall pick in the 2016 draft, Ben Simmons, who missed this entire season due to injury. Although many people are caught up with the now, the faithful 76ers fans rest easy knowing that the team has a bright future ahead.

 

Money wins championships, but championships don’t make money?

This week, Forbes released their annual team valuations for the National Basketball Association (NBA). I have followed these valuations ever since I was a little kid with a dream that I would grow up to own an NBA team. I was a big fan of Pitt basketball when I was growing up and always thought it would be so cool for the city to have a professional basketball team to compliment the three other major sports teams that call the city home. While the valuations for teams have skyrocketed, my dream has lost some fuel. However, I still always find it interesting to see which teams are the most/least expensive.

This year I realized an absurdity in the rankings; two of the worst teams in the NBA have the two highest valuations and largest profit margins of any team. I am talking about the New York Knicks and Los Angeles Lakers. The two teams have not come close to the playoffs in recent years. As of right now, it does not look like they will be in the playoffs any time soon. The Lakers experienced their worst season in franchise history last year. Additionally, the Knicks had their worst season just two years ago. Although the numbers on the box score are not pretty, the front offices are cashing in on huge revenues.

Meanwhile, the Cleveland Cavaliers won their first NBA Championship in franchise history last year. However, they are only the 11th most valuable team in the NBA. Even more shocking is the fact that the team recorded a loss of $40 million last season. Part of this is due to the team having the highest payroll in the league. However, having as many superstars as the Cavaliers have is supposed to sell-out games. Winning a championship is supposed to translate to a devoted fan base. Unfortunately, ticket sales are not enough to

I wondered how the Knicks and Lakers are doing so well financially. Much like many consumer products, it is not always about the product – it is more about the brand name. The Lakers and Knicks are the hometown favorites of the two most highly populated metropolitan areas in the United States. They have longstanding histories of great teams and blockbuster deals. Nowadays they are relying heavily on their laurels. However, that seems to be working with them. Merchandise sales continue to be great sources of revenue. Millions of dollars are continuing to flow thanks to huge TV deals. Outside of the United States, the Knicks and Lakers remain foreigners’ favorite teams.

In the end, immense profits in the NBA do not come from being successful. They come from simply being a brand that people have come to know and throw their money behind, even when the quality of the product has become inferior to that of its competitors.

The Athlete-Student

This week I came across an interesting article written a few years ago about the business behind the National College Athletic Association (NCAA). The article opens by stating that “college sports are an $8 billion industry.” The article continues to speak about the money behind collegiate sports. It revamped a personal interest in the topic. Originally, I wanted to write my Civic Issues blog on whether or not college athletes should get paid. Then I began to worry that I would not have enough content for five posts. Furthermore, in my preliminary research I realized my opinion on the topic was less than ideal. Since this civic issue is related to my passion blog theme, this is my abridged civic issue in one passion post.

I have always thought that college athletes should get paid, especially the football and basketball players. The article opened  College athletes quite literally devote their well-being to performing at an optimal level. Between waking up early, watching their diets, and working out over a dozen times in any given week, college athletes often have to put themselves second behind the priorities of the team. An unfortunate repercussion from this is limited amount of time to devote to academics and other interest. In a sense, these kids are athletes first, students second – a contradiction of their status as a student athlete. Often, players get hurt and risk losing their scholarships while having to face the cost of medical bills without the help of the university. Of course, these are only personalized sacrifices that student-athletes have to make for their team.

Additionally, there are numerous benefits to the college for which the athletes play. One of the obvious benefits to the university – free publicity. Whether it is through signing a high-profile recruit or an athlete having a great game, student-athletes often get their school free press. Additionally, universities benefit from jersey and ticket sales, marketing deals, and contracts with television networks. Finally, individuals (i.e. coaches and athletic directors) benefit immensely by bringing home huge pay checks for risking a whole lot less than the athletes out on the field. It’s easy to come to the conclusion that student-athletes deserve to get paid. But then I realized something.

By looking closer at the issue, I realized that, paying college athletes just simply isn’t possible. You see, what do you do about the division 3 players who are making the same personal sacrifices without any scholarship money. What do you do about the other athletic programs that are an integral part of the university, but don’t bring in the funds to support themselves without the help of the big ticket athletic teams. As unfortunate as it is, there is no pragmatic way in which college-level athletes can be compensated fairly for the time they devote to what they are doing.

A New Perspective

I don’t think I will ever be able to look at a sporting event the same. Don’t go jumping to conclusions though. This is not necessarily a bad thing. I recently started an internship with Penn State Sports Properties (PSSP) which handles accounts with companies that wish to advertise at sporting events. Conveniently, this internship is related to the theme of this blog.

I came across the internship in a weird way. Someone who graduated from my high school more than ten years before me works for PSSP. I had never met him before the fall semester started. But a week before school started I was talking to his mom who is apparently very good friends with my mom. She gave me his phone number and encouraged me to reach out to him just to talk about his experience at Penn State. We met and he told me about what he does and suggested that I apply for an internship. I thought to myself “why not?” I applied and ended up getting offered the job. Naturally I was excited to accept the offer, considering my interest in sports and business.

My only reservation was the lack of available information on what I would be doing. Honestly, I still have trouble describing my job to my peers. However, from the two times I have worked I have figured out that the job requires a lot less work then I expected. In short, I have to make sure that all the in-game advertisements that were paid for are run on the jumbo-tron and/or LCD banners around the arenas. Not too challenging. Except the game action is very distracting. Also, when something does not show I get really paranoid that I just missed a quick flash of the PA Partners or the sponsored replay, etc…

As I said, I have worked twice. The first time I worked was a men’s hockey game. It was slightly overwhelming. There was so much going on between the game and the advertisements. Also, the advertisements are supposed to run in a certain order, but lucky for me everything was being shown completely out of order. Fortunately I had an experienced intern there to calm my nerves. When he said, “don’t worry, I fuck up all the time,” I felt so relieved and my fear of losing my job after working one time quickly disappeared.

The following week I was on my ow working volleyball. This game was a lot less distracting as I am not all that interested in volleyball. And even despite my lack of interest, the advertisements only played between game action. Still, I had doubts but I think I ended up doing alright.

Last weekend I was at the men’s basketball game and I couldn’t help but notice the advertisements that were running throughout. My first time working basketball will be this weekend and I am looking forward to it. I just hope I can stay focused on the task at hand and not get too distracted by the game. If nothing else

Why Sports?

A lot of people misunderstand professional sports. People see it as a waste of time and money. After all, how do sports benefit society and why do the star players make eight figure incomes? And why on Earth do the bench-warmers make six figures? Apart from the grueling toll an athletic career has on the body, professional athletes devote their lives to their jobs. Loyal athletes weigh in every major life decision based on the interests of his or her team. Also, let’s not forget about the valuable life lessons that can be learned from sports; just check out this excerpt from my graduation speech:

“This evening, with the first selection of the 2016 MLB draft, the Philadelphia Phillies have selected Mickey Moniak.

It is interesting that, not too long ago, the Phillies were one of the most successful teams in Major League Baseball. For those of you who follow baseball, you know that the wheels rapidly fell off the cart that had been moving so swiftly. The veterans that were the faces of the organization began to retire or found new homes and those in charge of the organization simply had to go. The team was suddenly made up of a bunch of young, inexperienced athletes and administrators. The media kept the team under a highly critical microscope. Before this season started, the Phillies were pegged as easily the worst team in the MLB. What has ensued is a surprising resurgence that has wowed both the most devoted and most skeptical fans. At present, it seems they probably won’t make the playoffs. However, they are definitely better off than anyone had expected at the start of the season. Their future looks very bright.
I hope you recognize the similarities between the Phillies and our experience at STHS. This high school has quite a rich history, but unfortunately when we came up freshman year, it seemed like we heard nothing but bad news. However, throughout our high school experience teachers,  administrators, and we, the class of 2016, were able to overcome the circumstances that we had been dealt.”

 

Out of context, I understand if the comparison seems kind of confusing. The point I am trying to make is that when I see parallels between sports and my life, it just makes me appreciate sports even more. Combine my passion for sports and my studies in Smeal and you have my passion blog. Throughout my blogs this semester I hope to look at the world of corporate sports. I hope to come across topics that not only excite me, but my readers as well.