Wednesday, 28th March 2007

HEADLINES OF THE DAY

UFC Scores TKO on Business Rival

Fans of the world's two biggest mixed martial arts promotions, Ultimate Fighting Championship and Japan's Pride Fighting Championship, have argued long and loud over which group boasts the best fighters. That question remains unresolved. But on a business level, there's no doubt about the result: UFC owner Zuffa LLC just scored a TKO with the purchase its business rival's assets.

The UFC now oversees a staggering collection of talent, including nine fighters in FOXSports.com's world pound-for-pound Top 10 ratings. And their vision for the rules of the sport on a worldwide basis — or at least the Unified rules accepted by American state athletic commissions, with five-minute rounds and uniform weight classes — will be implemented in both groups effective immediately.

What the transaction does not do, despite what you may read elsewhere, is give the UFC anything close to a monopoly over the business.

This deal went down in large part because several other well-heeled players have gotten into the American mixed martial arts game, from Gareb Shamus' International Fight League to the Showtime-backed Elite Xtreme Combat to offshore gambling magnate Calvin Ayre's Bodog Fight promotion. It was likely no coincidence the announcement of the purchase was held just hours before a press conference in Los Angeles announcing an ambitious Showtime-backed show in June at the Los Angeles Memorial Coliseum featuring MMA legend Royce Gracie.

In the short term, not much will change for the average viewer aside from rules changes, which means the foot stomps and kicks to the heads of downed opponents that distinguished Pride from the UFC are no more. Zuffa will continue to run the Japanese company as a separate entity, with its separate roster of fighters separate champions, and separate office staff. Pride will continue to air in America on FOX Sports Net, and Zuffa officials indicated they are working on getting the brand back on Japanese TV.

UFC president Dana White is promising "Super Bowl of MMA"-style shows eventually, featuring matchups between the top stars of the two promotions. But the company's patience in growing their business — they endured several years and seven figures worth of losses building the brand before hitting paydirt last year — indicates they're not going to burn through the potential biggest-money matches in their history anytime soon. Source: Fox Sports, 28th March 2007

The Making Of A Sports Mogul

When Casey Wasserman was a lad, Sundays meant tagging along with his granddad, MCA chief Lew Wasserman, to the famously downscale Beverly Hills deli Nate 'n Al. There, Hollywood players on the make would stream by the table, pitching projects, asking favors, or just schmoozing with the man who all but invented the modern studio system. "It was like a college education on how to do business and treat people," recalls movie producer Steve Tisch, who used to frequent Nate 'n Al with his father, a Wasserman friend.

Now 32, he is in the middle of building a sprawling sports marketing agency, Wasserman Media Group--a challenger to the behemoth of the business, IMG. After a four-year spree of acquisition by checkbook, WMG today represents 400-odd clients, including 6 of the top 30 picks in last year's NBA draft. Last summer, Wasserman was selected--over competitors like IMG and the William Morris Agency-- to sell naming rights to the planned New York Giants and Jets $1 billion-plus stadium in New Jersey.

Not bad considering that eight years ago, Wasserman was a rookie sports owner who had plunked down $5 million for the Los Angeles Avengers of the then-shaky Arena Football League. Wasserman could have gone into show biz but chose to step away from the shadow of his famous granddad. "If you're Michael Jordan's kid, you had better be one heck of a basketball player," he says. Today, the Avengers franchise is worth $25 million, though like most sports teams it still makes no money. Wasserman calls the Avengers experience his "MBA in sports." Article Continues on Business Week, 2nd April 2007

Why Did IMG Let All Those Stars Walk?

It seems an odd strategy for sports marketing powerhouse IMG: Build the business by letting your star athletes leave. But that's exactly the path IMG is taking these days. Certainly not all its athletes are making for the exits. IMG still crosses the T's on Tiger Woods' Nike deals and makes sure Roger Federer's Wilson rackets are strung. But since private equity mogul Theodore J. "Ted" Forstmann spent $750 million for the company in 2004, IMG hasn't been the glitzy campus for sports studs that it used to be.

The question swirling around IMG: Is that transformation part of Forstmann's new strategy to expand the business in profitable, new directions--or a fumble that cost the company $30 million-plus? One thing is clear: Last summer, IMG got out of the team-sports business. The move came after a shake-up that resulted in Forstmann firing one of the company's senior executives, Peter Johnson. A few months later two of the company's top sports agents left IMG, taking their clients, including baseball's Derek Jeter and football hotshots Peyton Manning and LaDainian Tomlinson, with them.

Johnson, then IMG's CEO of sports and entertainment and a loyalist of the firm's late founder, Mark McCormack, oversaw the agency's team-sports business. A 30-year IMG veteran, Johnson had close ties with Tom Condon, who represented football clients, and with baseball agent Casey Close. The relationship was so tight that both agents had "key man" clauses in their employment contracts giving them the right to leave IMG if Johnson ever departed. Four months after Johnson was fired, Condon and Close sold their practices to Creative Artists Agency Inc. Condon, whose lineup of 75 National Football League players established IMG AS A FOOTBALL POWER, collected $30 million.

Competitors are still amazed over how simply Close and Condon were able to leave IMG and take their clients. "Nothing like that has happened that I know of," says Donald L. Dell, the pioneering sports lawyer who founded the ProServ agency, now called SFX Sports Group Inc. "I don't think Teddy was in favor of just giving away his assets." Article Continues on Business Week, 2nd April 2007


SPORTS SHORTS

* A deadline of April 18 has been set for bids for the internet and mobile rights in China for the Beijing Olympic Games in 2008. Over-the-air rights for the Games belong to CCTV. Timo Lumme, IOC of television and marketing, said: "We are looking for offers from media companies that will develop the promotion and coverage of the Olympic Games, embrace new technologies and guarantee the widest possible audience in China for the Olympic Games across a variety of media platforms." Source: Sports Media, 27th March 2007

* Japan’s Fuji TV sued former dot com luminary Livedoor on Monday for $292 million in damages over losses it absorbed after buying a stake in the since disgraced Internet portal company. The lawsuit, filed in Tokyo District Court, seeks compensation for the loss in value of nearly 134 million Livedoor shares the Tokyo-based broadcaster bought in 2005 for 44 billion yen ($373 million) as part of an alliance. Fuji took a substantial loss when it later sold the shares to Livedoor's new partner, Usen, for about 9.5 billion yen ($80.5 million). Source: Telecom Asia, 27th March 2007

* Showtime Arabia the leading Pay-TV network in the Middle East today re-launched its locally-produced platform with more, great programming and new features offering more choice, control and better customer experience at no extra cost. 3 new SHOWSPORTS channels replace the Sportsnet channels with SHOWSPORTS 1, SHOWSPORTS 2 and SHOWSPORTS 3 - being the home of the Premier League from August 2007 and of many other exclusive leagues. Source: AME Info, 26th March 2007

* Asia Pacific Broadcasting takes a look at how digital broadcasting in all its forms. TV, mobile, and broadband, is fundamentally changing the way sports content is consumed. The trick, it concludes, will be finding a way for a single transmission site to serve multiple content providers and devices. And sports rights holders are taking notice as the IOC announced that it would award mobile-TV rights, in addition to the traditional free-to-air TV rights for the 2012 Olympic Games in London. Source: Summarized on Sports Video Group, Full Article on Asia Pacific Broadcasting, March 2007

* Four days remain in Major League Baseball's negotiating window, and a U.S. Senate committee put increased pressure on the sport on Tuesday to find a way to offer its Extra Innings package to a broader audience served by cable providers. If not, DirecTV, a satellite-only provider, will have exclusive rights to the package for seven years and a 20-percent stake in the Baseball Channel, which will be offered on its basic tier beginning in 2009. DirecTV has agreed to pay $700 million for that exclusivity. Source: Major League Baseball Official Site, 27th March 2007

* Russia's state television, Sport TV Channel, will broadcast Russian Premier League matches in 2007 under an agreement with NTV-plus. The deal is the result of a turn-around after NTV-plus purchased exclusive rights from the Russian Football Union (RFU) to live soccer matches for the next four years under a $100 million deal at pay-per-view rates instead of on state terrestrial channels. NTV-plus’ deal was reportedly criticized by President Vladimir Putin but under the new sub-licensing deal, all live matches will now be broadcast free this year. Source: Sport Business, 12th March 2007

* Nortel says it's made the first live call over an Ultra Mobile Broadband network delivering high-definition video and VoIP. Nortel says it used MIMO advanced antenna technology in its major 4G technologies - WiMAX, Long Term Evolution, and UMB. Clear voice conversations can be delivered with other high bandwidth applications running simultaneously on the network using its IP Multimedia Subsystem (IMS) and UMB technologies. Voice calls can also be maintained when users cross UMB coverage to 2G without interruptions in their conversations using Nortel's VoiceCall Continuity (VCC) based handover. Source: Mediacaster, 20th March 2007

* The Western Australian Trade Office in Indonesia has announced the appointment of a football taskforce to develop people-to-people and business linkages through sport between Western Australia and East Java. Football Dynamics Asia, an Australian-Asian sports development firm with experience in regional development in Indonesia, will head the taskforce. It will focus on identifying opportunities for regular friendlies between Western Australia and East Java representative teams and the professional soccer clubs in both countries. Source: Football Insider, 27th March 2007

* The America’s Cup is set to generate €6 billion ($7.96 billion) and 61,300 jobs for the host country Spain. Host city, Valencia, is set to gain €3.7 billion from hosting 1 million visitors over the three months of the event, having spent over €2 billion on infrastructure improvements, according a report entitled The Economic Impact of the America’s Cup. The province will partially bear €1.3 billion of the costs. An extra 300,000 tourists are also expected to visit Spain in the years following the event. Source: Sportcal, 27th March 2007

* The US could lose the right to host the 2009 World Figure Skating Championships in Los Angeles over TV broadcasting conflict. The International Skating Union is yet to secure a host-broadcast TV contract with a US carrier, which would be a breach of an agreement the union has with other TV rights holders to provide a worldwide TV signal. The ISU’s existing contract in the US, with ESPN, expires in 2008 and although talks are underway over a new deal, no agreement has been reached. Source: Sport Business, 21st March 2007


MORE NEWS

Malaysia/General: G-14 Endorses New Malaysian Youth Tournament

European soccer pressure group the G-14 has endorsed a new international youth tournament to take place in Malaysia later this year. Fourteen top clubs have signed up to play in the Champions Youth Cup which will take place between August 5-19, in what will be a key platform for the clubs involved to market their club’s brand in the Asia market.

Clubs involved are: AC Milan, Ajax, Arsenal, Boca Juniors, Chelsea, Flamengo, Barcelona, Bayern Munich, Porto, Internazionale, Juventus, Manchester United, Paris Saint Germain and PSV Eindhoven. They will field under-19 teams alongside national youth teams of Qatar and Malaysia. The inaugural event is supported by Malaysian Youth & Sports and Tourism Ministries, backed by Football Association of Malaysia (FAM). The event is promoted by UK firm Gifted.

G-14 general manager, Thomas Kurth confirmed that G-14 was committed to developing a programme of ‘development assistance’ for Malaysian football in partnership with the Ministry of Youth & Sports and FAM and stressed that such a programme would be carefully constructed and implemented for long term benefit. Source: Sport Business, 20th March 2007

Korea/New Media: Chelsea Extends Asian Language Website Options

Chelsea has today extended its reach into Asia with the launch of its first ever Korean language website, Kr.ChelseaFC.com. The announcement with web partner MediaCorp took place at a ceremony set up by the Premiership champion’s official sponsor Samsung in Seoul (Korea). The Asian country is a key strategic market for Chelsea following its five-year partnership with Samsung which began in 2005.

The launch of the new website represents the latest development in Chelsea's new media strategy abroad. In January the club unveiled its first Mandarin language website for China and there are plans for further websites in other overseas markets. The connection between Chelsea and Samsung will be extended this summer when the Samsung Bluewings take part in a four-team tournament in Los Angeles with Chelsea, the Los Angeles Galaxy and Tigres. Source: Sports Media, Sport Business, 27th March 2007

Asia/Broadcaster/New Media: ESPN Star Launches Mobile Packages

ESPN Star Sports has launched a series of new packages in India for mobile phones in pursuit of hitting 10 million subscribers by 2012. Mobile ESPN will offer packages for regular updates on cricket, international football, English Barclays Premiership football and sports news in voice and SMS formats. Mobile ESPN is currently available on Airtel, Hutch and BSNL networks. The football value packs will cost consumers Rs50 (about US$1) per month.

The Premiership service, for example, will offer 22 SMS alerts every week related to five clubs - Manchester United, Chelsea, Arsenal, Liverpool and Newcastle United. The international football pack includes 23 SMS alerts every week related to five European clubs - Bayern München, Real Madrid, FC Barcelona, AC Milan and Inter Milan.

The alerts will include daily morning football news headlines, match summary after every match and gossip from the international football arena. The Sportcenter service will cost Rs30 (US$0.60) per month and includes two SMS alerts daily - in the morning and evening - from the world of sports as they happen. The cricket SMS pack will also cost Rs30 per month. Source: Sports Media, 27th March 2007

Elsewhere/Rights: ICC Demands Removal of Footage from YouTube

The International Cricket Council has told video-sharing website YouTube that it must remove clips showing matches from the ICC's flagship tournament, the Cricket World Cup presently under way in the Caribbean. The ICC, together with the Global Cricket Corporation, the rights distributor for the event, has claimed that the website is guilty of copyright infringement.

In addition to video coverage of the event on the tournament's official website, www.cricketworldcup.com, British Sky Broadcasting, the UK pay-television broadcaster, Australia's free-to-air Nine Network and the North American satellite and cable group Echostar have all purchased broadband rights for the competition. Source: Sportcal, 27th March 2007

Elsewhere/New Media: Mobile TV Recording to Double

The SD Card Association, an industry standards association backing and promoting the SD Memory Card for digital connectivity, claims that the number of Japanese mobile phone users who can record TV programmes from their phones will more than double during 2007.

At the moment, 5 million consumers can record programming from their mobile phones on to either SD High-Capacity or SD memory cards. That figure will rise to 12 million by the end of the year, the association predicts. Thirteen handset models feature SD recording technologies and three-quarters of Japanese mobiles are equipped with SD slots.

In Japan, “one segment” digital-terrestrial broadcasting launched in April 2006. Handsets are equipped with mobile TV tuners to receive the signal and SD specifications to record the programming. In “one-seg” broadcasting, the simulcast DTT signal, aimed at mobile terminals, occupies one of 13 bandwidth segments allocated for the video portion of each DTT channel. Japan uses the ISDB-T standard for digital-terrestrial broadcasting.

The SD Association added it is working with the major mobile TV technologies, including the DVB Project, Korea’s DMB and Qualcomm’s MediaFlo to “increase the portability and interoperability of content in and between devices such as mobile phones, car navigation systems and portable DVD players.”


ARTICLES, COMMENTS & OPINIONS

TV Rights in Football: Will Fans Pay the Price?

Football Clubs in Europe should show solidarity when it comes to selling TV rights - that's the message in a report to be debated by Members of Euro Parliament on Wednesday. The report has been prepared by Belgian People's Party MEP Ivo Belet and the debate is likely to touch upon how fans watch football matches in the future.

Recent developments suggest that the days of football on TV for free may soon end. This is reflected in the amount that TV bidders will pay for the right to screen a first rank tournament - for example the TV rights for the European "Champions League" for 2006-2009 went for €647 million. With that kind of investment those who pay for them expect a return on their investment via pay-to-watch TV.

Individual vs Joint selling of TV rights

There are two ways of selling TV rights for football in the EU. The first is "individual selling" where single clubs conclude deals with TV broadcasters. Real Madrid have a €1.1 billion deal with Mediapro to televise their matches until the end of the 2013 season. Naturally, this guarantees Real a cash flow that other teams in the Spanish League can only dream about. In turn, this allows them to buy the world's best players and continue their domination of the domestic league. Belet believes that individual selling of TV rights "threatens completely to destroy the competitive balance" in football.

The method is "joint selling" where Clubs in an Association collectively sign a single contract with broadcasters. In January this year England's Premier League did that with 81 broadcasters in 208 countries. The deals will net €950 million from foreign revenue and €420 million from domestic sources. Although criticised as a "monopoly practices" this is the approach the Belet report favours.

Moreover, the European Commission recently ruled that this practice is not contrary to the EU's Competition law. Last year, the Independent European Sport Review concluded that “central marketing or collective selling of rights by the football authorities at European level is essential to ensure that solidarity nurtures the different levels of the pyramid, not least the grassroots”.

TV online and on the phone

Rapid advancements in technology have led to the internet and mobile phones being used to watch football. During the last World Cup in Germany 2.5 million people in the UK followed the matches on the internet. This is particularly so if games are shown during the day and people are at work with access to a computer.

However, controlling access can be a problem: UEFA - the governing body of European football is currently locked in a dispute with web TV stations in China and India over copyright issues. For mobile phones, a recent study indicated that mobile television could have 100 million subscribers in Europe by 2010. Clearly, the way football is watched will continue to evolve. The debate will air live online on the Parliament's website on Wednesday. Source: European Parliament Official Site, 27th March 2007