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Tag: Sports Biz

Working in Colorado’s Professional Sports Industry is Not as Glamorous as You Think

Want a career in the business side of sports? Better stock up on sleep. 

You’re likely to need it, given the demand for long days, hard work and little respite from the grind even during the off-season. In other words: maybe not so terribly different from your current job. So, a pro-tip: Before you hit “send” on your application, it may be worth taking these words into account.  

READ: The Messi Effect — How One Player is Drastically Changing the Global Sports Media Industry

“Sports is a business.” — Matt Hutchings, executive VP and chief operating officer, Kroenke Sports and Entertainment 

“We have a P&L, and have to operate  as such.” — Damani Leech, president, Denver Broncos Football Club 

“Sports is not for everybody.” — Greg Feasel, president and chief operating officer, Colorado Rockies 

The three executives took the stage not long ago at the Denver Museum of Nature and Science to talk about their careers in the sports business. A major takeaway from the discussion presented by the Colorado Business Roundtable revolved around commitment: Those who enter the profession need plenty of internal drive.  

Exhibit A: The work hours

Denver Nuggets fans who head home after the final buzzer probably don’t realize there are plenty of people still on the job. We’re not only talking about hourly laborers who sweep up debris and toss out beer cups. The top dogs routinely keep the office lights on, too. Feasel, who was named president of the Rockies three years ago after more than a decade as chief operating officer, said his typical in-season workday runs from the early morning to well after midnight, at least on game days.

Exhibit B: A relentless customer-first mentality

“Our fans are our customers. That’s who we work for every day,” said Hutchings. Attentiveness to everything from the demeanor of ticket-takers to the temperature of hot dogs turned up repeatedly during the panel discussion as a consuming obsession. “Game day: It’s the biggest physical manifestation of your brand,” said the Broncos’ Leech.

True, but some game days are harder than others. For example, when multiple Denver-area teams are playing games simultaneously, it strains the region’s contract labor force, requiring some deft maneuvering to make sure there are enough workers on hand to assist fans from Boulder to LoDo.  

READ: Is the Future of Luxury Sports Suites Less… Luxury? Or Just More Practical?

Exhibit C: Getting hired in the first place

When Feasel worked for the Coca-Cola Co. early in his career, the number of jobs his employer maintained ran north of 200,000. For the Rockies, the number is south of 400. A tight labor market reflects strong demand for jobs in the sports world, coupled with a limited supply of open positions and relatively rare departures within the management ranks. “We don’t leave,” Feasel joked.  

Exhibit D: A shifting media picture.

The game-day experience captures lots of management attention, but there are also tricky decisions at work on the media side, where big-money partnerships with television networks, streaming services and radio broadcasters supply much of the financial oxygen that pays the bills.  It was revealing to hear Kroenke’s Hutchings, a former Comcast executive, describe the distribution standoff between Kroenke’s Altitude TV and Comcast not as a war of wills between two companies, but instead in the context of seismic industry shifts that are rattling well beyond Colorado.  

READ: Altitude Vs. Comcast — The Changing Economy of Sports Media

“I use the expression that we were the canary in a coal mine,” Hutchings told the roomful of business professionals and executives. Meaning: When their most recent contract came up for renewal, Hutchings and Altitude TV ran headlong into a broader national dynamic. With the phenomenon of “cord cutting” roiling the pay TV world, the environment for any regional sports network to be seeking a new, long-term rights deal had soured.

Altitude-Comcast became an early poster child for a sports-TV economic reckoning largely because the companies were early arrivals to a new world order. Now, the exact same rug is being pulled out from under regional sports networks everywhere. “We understand that the industry is changing,” Hutchings said. “We’re trying to adapt to the changes.”  

It’s that kind of uncertainty that sports business professionals have to deal with nearly everywhere. Another example in the category of “unforeseen consequences” is the fallout tied to Colorado’s Equal Pay for Equal Work law, which requires that companies publicly post the compensation levels tied to job postings.

The law has been tricky for sports team owners because it has had an effect of upsetting employees who spot job listings offering compensation that, at the higher end, is richer than what they’re receiving. What’s hidden here, Hutchings noted, is that compensation in the sports world often is tied more to experience and resume quality than to a generic job description.  

To be sure, nobody on the stage was asking for sympathy. Fielding questions from iHeartMedia radio journalist Susie Wargin, all three executives agreed their gigs make for satisfying, enriching careers. But they also noted that professional sports looks different from the inside.

For one thing, it’s a non-stop affair. When the season is over, athletes tend to hit the golf course or the beach for a very welcome rest. Not so for team executives and their employees. They wear normal business attire, not shoulder pads or eye black. Meaning: Game day or not, they still have to show up for work.  

 

Stewart Schley JpegStewart Schley writes about sports, media and technology from Denver. Read this and Schley’s past columns on the Web at cobizmag.com and email him at [email protected]

The Messi Effect — How One Player is Drastically Changing the Global Sports Media Industry

We have seen the future of televised sports. It wears No. 10.  

The jersey belongs to one Lionel Messi, captain for Argentina’s national soccer team and more recently a forward for the Major League Soccer team Inter Miami, where in short order he has become a pink-shirted human highlight reel whose powerhouse left foot routinely terrorizes hapless goalies. Exhibit A was a dramatic laser of a free kick against FC Dallas early in August, tying the game in the 85th minute as the ball shot to the back of the net with such purity it seemed almost ordained. “I thought we had it,” FC Dallas coach Nico Estévez said after losing in overtime. Many have.

Messi’s arrival on the MLS scene has been energizing not just for Inter Miami but the entire league, the Colorado Rapids included.

“For the league as a whole, and not just from the Rapids side of things, Messi coming over to the U.S. is huge,” says Nate Christiansen, vice president of business development with the Colorado MLS team and its parent Kroenke Sports & Entertainment. So far, there’s no date set for a Messi appearance at Dick’s Sporting Goods Park in Commerce City, but Christiansen is hopeful the scheduling gods will ultimately make it happen. In any event, he said, “only good things can come to U.S. soccer from it.”  

READ: Live from Colorado — The Future of Sports Betting

The halo effect Christiansen is witnessing has to do with more than raw athletic prowess. It’s also providing a signal about future relationships between players, leagues and media partners, and where they’re likely to go next. One likely destination: Cupertino, California.  

The Silicon Valley city is headquarters for the world’s most valuable company, Apple, whose market capitalization now runs north of $2.8 trillion. Apple is the economic force that’s injecting new life, and a new business model, into MLS, and very possibly into the broader sports environment.  

It’s all about new flavors of synergy. Apple, you may have noticed, very much prefers that the world channels its activities through Apple’s suite of technologies and services, each of which exists in a braided ecosystem of apps and capabilities. iPhones play music from Apple’s subscription music service, store data within the connected iCloud server array, allow for easy transaction payments via Apple Pay, pass through subscriptions to news sources and dish up movies and TV shows from Apple’s all-original video service, Apple TV+.  

The newest Apple media gambit is a big carve-out for MLS that is very much interlaced with Messi’s arrival on the scene. Apple has taken over the MLS Season Pass service that gives the soccer-loving and the soccer-curious access to every league game for an annual payment of $99, or $14.99 per month.  

READ: Altitude Vs. Comcast — The Changing Economy of Sports Media

The MLS video offering isn’t new; it’s been around for years. But it has never had the level of visibility and cross-marketing muscle Apple now provides. Nor has it ever been graced with the star power of the world’s greatest soccer player. This is where the Messi-verse comes into play in a big way. The business relationship between the soccer superstar and Apple has widely been reported to revolve around a relationship that gives Messi skin in the game. Multiple press reports have indicated Messi individually nets a piece of the MLS Season Pass subscription action, effectively earning a commission every time someone signs up.  

And thus, we might just be seeing the hazy outlines of a very different-looking sports-media future. The old way was a four-part dance: Player signs with team for big money. Team and its league negotiate media deals with the ESPNs and Fox Sports of the world. These partners then find money to pay the bill by sharing in subscription payments from an aging “pay TV bundle,” coupled with chunks of advertising budgets from the likes of Ram Trucks and Budweiser.  

Notice, in this traditional formula, how far removed the player is from the sources of funding. Apple is now upending that tradition by discarding various middleman players within the money chain. Here, Apple and Messi are directly tethered: Apple sells subscriptions, and reportedly hands some of the proceeds to Messi.  

Where does this all lead? To interesting places. Speculatively, it’s possible forthcoming generations of sports fans will be monetizing player earnings in a new way. It’s not so much of a stretch to imagine that one day, fans may be invited to pay a premium for the equivalent of “Russell (Wilson) Vision,” a mechanism for seeing the game of football play out from the viewpoint of the Broncos quarterback’s helmet camera. Maybe we’ll pay $5 per month for the privilege, with Russ pocketing $1 or $2 himself.

Again, we’ll look to the tech titans to play a big role. Apple’s recent introduction of a new augmented-reality headset augurs for a day when live sports events can be seen in entirely new ways, well beyond the boundaries of today’s fixed-location cameras. Things might get even weird. The commissioner of the NBA, Adam Silver, has talked about incorporating player biometrics into the action: How nervous does a next-generation Jamal Murray appear to be at the free throw line, based on a real-time calculation of his heart rate? Silver thinks we might want to know.

All of this is a work-in-progress. But looking at the business relationship evolving now between a soccer superstar and a major tech player, we can start to see the possibilities take shape. Every time No. 10 rockets a ball into the back of the net.

 

Stewart Schley JpegStewart Schley writes about sports, media and technology from Denver. Read this and Schley’s past columns on the web at cobizmag.com and email him at [email protected] 

Is the Future of Luxury Sports Suites Less… Luxury? Or Just More Practical?

The Broncos are down by seven against the Texans with just 12 minutes to go, but Russell Wilson and Co. are on the march, staring down a first-and-ten on the opponent’s 22-yard line. On the lookout for a one-on-one matchup, Wilson scans the defense. And then sees it: Wideout Eric Saubert, lined up in the slot position, covered by a lone linebacker. As the ball is snapped, with the clock ticking and the game on the line, it’s decision time: Make one last visit to the build-your-own sandwich bar, or snag a custom-decorated Broncos cookie? 

Welcome to NFL football, suite-style.  

READ: Navigating Sports Politics as College Football Evolves — CU Buffs Aim High

For 30 or so high-achieving sales representatives being feted by their employer, the game-day experience on this September afternoon is far removed from the raucous fandom happening in the stands below and above their section 200 enclave. Inside this leather-meets-polished steel suite, nobody’s getting foam-sprayed by a stranger’s beer as Wilson lobs a touchdown pass to Saubert. Instead, the fans all know each other, the environs are climate-controlled, the seats are wide and the drinks are free — or at least, already paid for by the boss. When the game’s over — the Broncos end up winning 16-9 — guests exit clutching customized jerseys and a gift bag stuffed with logo-ized water bottles and game-day towels. Shwag in hand, they’re whisked down a private elevator to a waiting attendant who squires them to a reserved car — air conditioner billowing — for a quick getaway.  Life here is suite, indeed.  

At least it is for those who get an invite. “For most people, it’s a once-in-a-lifetime experience,” says Allison Farrar Welch. “It’s not every day you can go to a luxury suite for a pro game.” 

Farrar Welch’s Denver-based event-management and personal concierge company, As You Wish, arranged the behind-the-scenes maneuvering for last September’s home opener, handling everything from hiring drivers to arranging babysitters to ordering the customized jerseys. The rest, including the suite, the air conditioning, the plush leather seats and the ever-smiling attendants, was supplied by a Denver Broncos organization that, like its NFL peers, is determined to make the premium-seating experience a bigger-than-ever part of the team’s economic calculus. 

READ: Live from Colorado — The Future of Sports Betting

“It’s another revenue stream, and if they do it correctly, teams can make so much money on the markup,” says Kelly Evans, an assistant professor within Metropolitan State University’s Sports Management program.  

To her point, private suites and new members-only stadium clubs represent a bet that teams can improve average revenue-per-patron numbers by elevating the game-day experience for a selected cadre of fans and the organizations they work for. For example, 20-person suites for Colorado Avalanche games generally price out at anywhere from $5,000 to $10,000, depending on service levels, according to listings maintained by Suite Experience Group, a national sports-suite broker. Even at the low end, the price point works out to at least $250 per patron, more than twice the average ticket price for an Avs game, as calculated by ticket seller Seat Geek. At the upper end, the price per fan can quadruple.   

Teams understand the math and are eager to take advantage. New possibilities for reconfigured suites and other forms of premium seating represent some of the impetus behind a $100 million upgrade for Empower Field, and could even lead to a possible relocation to a new stadium for the Broncos altogether. Operators of other local sports venues including Ball Arena, Coors Field and Dick’s Sporting Goods Park are playing the same game by reconfiguring older, stodgier suites into zippier, modernized spaces. They’re also building premium club environments and rethinking the way they price, present and market premium seats.  

“Teams are getting deeper, and more creative,” says Scott Spencer, founder and CEO of Suite Experience Group. “The definition of ‘premium’ has really changed.”  

One of the latest examples locally is the Breckenridge Bourbon Club, a 9,000-square-foot eating, drinking and mingling space just above field level on the east side of Empower Field at Mile High. Starting this season, the new space opens for business along with the stadium’s other two posh clubs, the 5280 Club and the United Club. The Breckenridge Bourbon club is available to season ticket holders who pay a premium for admission to the well-appointed gathering spot for enjoying the action, schmoozing things up, and sipping the “official bourbon of the Denver Broncos.”

Sponsored by the Colorado-based Breckenridge Distillery, the club delivers what the Broncos and just about every NFL team want: higher per-ticket revenue, financial backing from a like-minded sponsor, and an opportunity to signal that the team is very much open for business. Reflecting the importance of the new venue and the category it represents was the close attention to the club’s architectural design contributed by team co-owner Carrie Walton Penner, who worked closely with design teams and with Breckenridge Distillery founder Bryan Nolt on a space that aims to blend a “swanky” aesthetic (Nolt’s word) with an energetic “mountain” feel. “Carrie was just really dialed in on getting the design and the mojo right,” Nolt said.  

READ: Altitude Vs. Comcast — The Changing Economy of Sports Media

Premium seating in the form of redesigned suites and private clubs like Nolt’s is important for a new generation of sports team owners who have moved beyond a bygone economic formula: buy a team, lose money for years while taking advantage of tax write-offs, and then cash out by finding an eager buyer down the road.  The modern approach, instead, is to run prized sports assets with much more attention to the real-time P&L statement. The greater the profit, the more leeway to invest in players, coaches, facilities and resources. And possibly, to win more games.  

But building suites is different than populating them; it takes year-round marketing and salesmanship to keep the sellout levels where owners want them to be. Each of Denver’s major professional teams, along with the University of Colorado and other area colleges, maintains full-time staff devoted to marketing premium suites and premium clubs to patrons.  

The tactics here have been shifting lately. Traditional selling techniques — chatting up prospects, making cold calls, sending out brochures, identifying leads, closing deals — are now intertwined with newer e-commerce avenues and a thriving secondary lease market. A handful of independent brokers have popped up to showcase available suites controlled either by teams themselves, or by long-term lessees who aren’t always able to get things together to fill a suite on game day. Roam through the website maintained by the Colorado-based company SuiteHop and you’ll find hundreds of premium suite listings across the country, along with published prices. A few clicks and a ping to the credit card, and your suite awaits.  

SuiteHop’s CEO Todd Lindenbaum, who started the company from a Denver LoDo office in 2008, says e-commerce has become a major force in the secondary suites market. Before the COVID crisis, most of Lindenbaum’s business came from selling luxury sports suite rentals the old-fashioned way to business clients like banks, law and accounting firms. Now, the ratio is turned upside down: Close to two-thirds of SuiteHop’s revenue comes from one-off transactions with individuals who roam the web for deals. Suite Experience Group, a competitor in the secondary suites market, has seen a similar trend, with direct-to-consumer transactions now far more common, says CEO Spencer.  

Budget range 

For Colorado companies looking to entertain, a wide array of possibilities and budget levels awaits. Farrar Welch’s Denver-based client spent close to $30,000 last fall to entertain its top salespeople at the Broncos home opener, a sum that spanned the suite rental itself plus accompanying accouterments and support. The price wasn’t cheap, but it represents a bargain compared with the other extreme: A private suite was recently listed online for the 2024 NFL Super Bowl just outside Las Vegas with an asking price of $1.5 million.  

Happily for budget-watchers, it’s possible to book premium seating for Colorado sports events for a much lower outlay. One example comes from Dick’s Sporting Goods Park, home to the Colorado Rapids of Major League Soccer, which can outfit a small party with a private suite experience offering an expansive field view for as little as $2,500, inclusive of food and non-alcoholic beverages (they’re available, but for an upcharge).  

That offering is part of a wholesale rethinking of how the Rapids and its parent company Kroenke Sports & Entertainment are approaching the broader premium category. Nate Christiansen, a vice president for Kroenke Sports, says the strategy is to widen the field of play by making premium seating more diverse and more affordable for smaller firms, families and groups that want to get in on the good times and the great views without breaking the bank. Among recent stadium improvements, the Rapids organization carved out space within its “Northern Boundary” area for a new “Mesa” area offering private tabletop reservations that give parties of four people an expansive field view and food/beverage service from a dedicated attendant.  

READ: The Business of Sports — Uniting Colorado

Similar thinking – devising ways to broaden the premium seating category – was behind the popular Lexus Club at Kroenke’s Ball Arena, and the creation at Ball Arena of new loge boxes that exist somewhere between a normal arena ticket and a dedicated suite. A like-minded approach also has taken hold at Coors Field, where the Colorado Rockies renovated all of the team’s infield suites for the 2023 season, modifying the interior décor of spaces accommodating anywhere from 12 to 60 takers, and integrating food and beverage packages into an all-in-one price advertised at $200 per person. At the same time, the Rockies continued to welcome fans to the Rooftop Club that lords over right field as a popular social watering hole. The Rooftop hangout, along with the End Zone space created by Kroenke Sports for Colorado Mammoth games, serves a clear purpose, points out Metro State University’s Evans: playing to a younger demographic cohort that’s more attuned to socializing and party experiences than the classic suite-holders of old. “These are social spaces where strangers can meet like at a bar, and create Instagram-able moments,” she says.   

To be sure, suites, party places and stadium clubs aren’t for everybody. Some hard-core fans find watching a game from a private suite to be a stretch too removed from the action on the field or the ice. “It’s like you’re watching a game at a hotel room, but there’s no bed,” one critic posted on the online message board Reddit.  

Maybe so, but rising demand for suite space suggests there’s plenty of willingness to partake of the good life at the ballpark, arena or stadium. In interviews, several sector participants identified the same factor in this demand equation: the socialization possibilities of private sports suites and clubs. Hobnobbing with salespeople, clients and vendors has become more important, they said, in a business environment where many workers are spending at least some days at home in the post-COVID reality, isolated from co-workers and business partners.  

“Business is a contact sport,” says Jeff Morander, CEO of the Association of Luxury Suite Directors, representing teams, stadium operators and suite sellers. “Where else can you entertain that many people in a private space and dial up food and beverages?” Spencer of Suite Experience Group echoes the point, saying premium live-sports environments offer a networking experience that’s tough to match with stuffy business dinners or conference sessions. “Say you’re trying to woo the CFO of a company,” Spencer says. “If you invite that person and their family to an NFL game on a Sunday, they’re much more likely to say ‘yes’ than to Tuesday dinner at a steakhouse.”  

Even though demand for schmoozing may be on the rise, suite sellers have long memories of earlier pressures that led to a recalculation of the category. By 2015 or so, a combination of some over-zealous salesmanship and second thoughts about corporate budgets had produced sagging renewal rates on pricey leases across U.S. sports venues. That led to a visual nobody wanted to see: vacant suites. “People would look up and see suites empty,” says Lindenbaum. “That’s not good for business. “ 

It’s because of this that stadium and team owners have been shifting their points of emphasis. A common remedy has been to pivot away from super-sized suites hosting 40 or more people, to smaller, more affordable suites where companies can pare down the invite lists, or save money by sharing the space with another organization: same suite, different companies.  

At Dick’s Sporting Goods Park, for example, what used to be an arrangement of traditional suites has been converted to the Summit Club, where access to a private area with a buffet, carving table, beer and wine plus valet parking can be reserved by as few as two individuals. Similar redeployments are happening elsewhere. Overall, “we’ve seen a lot of shrinking of the inventory of the traditional suite,” Lindenbaum says.  

Coupled with this migration to smaller physical spaces has been a move to all-inclusive, fixed-price models where everything from beer and wine to snacks and meals is known up front. “Once you show up, you won’t have to take your wallet out of your pocket,” says Kroenke Sports’ Christiansen. There’s been a related recalculation on the season-longevity front: Besides moving to all-inclusive pricing, teams have also been more willing to offer pared-down game packages for suite holders rather than ask clients to pay big amounts up front for entire seasons.  

READ: How the Name, Image, Likeness (NIL) Revolution is Changing the World of College Sports

Cowboy heritage 

The wider range of sizes, prices and options reflects a premium seating category that’s shape-shifting its way out of an earlier era. When he oversaw the completion of the imposing Cowboys Stadium (now AT&T Stadium) in 2009, Dallas Cowboys owner Jerry Jones ignited a surge of investment in luxury suites. Not lost on NFL owners was that Jones was able to keep most of the suite money himself, using proceeds from multi-year suite licenses to support debt-service payments on the palatial building. The message was unmistakable: Suites were suddenly very much a thing in modern sports economics.  

Plenty of teams piled on. But over time, poor rates of renewal, keener corporate scrutiny of budgets, and later, the COVID crisis, forced the current re-thinking, and the move to a wider array of premium sports seating possibilities.  

Today, suites are still widely available across Colorado’s major sports franchises. But now, increasing premium seating action is occurring in the “club” sector, where destinations like Ball Arena’s Lexus Club, the Rockies new Legacy Club embedded behind home plate, and the new Breckenridge Bourbon Club at Empower Field represent a newer twist on the premium-seat economy, offering a larger expanse of real estate and lower entry costs per fan than dedicated suites, but preserving the members-only vibe. 

 

Stewart Schley JpegStewart Schley writes about sports, media and technology from Denver. Read this and Schley’s past columns on the Web at cobizmag.com and email him at [email protected]

Three Things Colorado Student Athletes Should Know Before Signing a Name, Image, Likeness Agreement.

On January 1, 2023, Senate Bill 20-123 became law in Colorado, which codified the statutory rights of student athletes to receive compensation for their name, image, and likeness (“NIL”). This new law comes at the heels of a transition in college sports where the National Collegiate Athletic Association (“NCAA”) is now allowing student athletes to receive compensation from NIL agreements — so long as those agreements are unrelated to an athlete’s decision to play at any given collegiate institution. 

While Colorado has enacted laws regulating student athlete NIL agreements, such laws do not always shield student athletes from predatory actors. Additionally, the NCAA has not yet established comprehensive NIL guidelines for student athletes. In the midst of such uncertainty, student athletes in Colorado should keep the following three things in mind when entering into a NIL agreement.

READ: How the Name, Image, Likeness (NIL) Revolution is Changing the World of College Sports

1. Find a licensed attorney to review any NIL agreement

According to industry professionals, incompetent and predatory representation of student athletes is prevalent in the NIL market. On September 20, 2023, members of the House Committee on Small Business held a hearing (“September 2023 Hearing”) relating to the federal government’s role, if any, in regulating the student athlete NIL agreements.

The witnesses included current Athletic Directors of Texas Christian University and Ohio State, as well as the Vice President of the College Football Players’ Association. Each witness emphasized the need for firmer protections of athlete NIL rights and warned against predatory actors attempting to swindle student athletes.

One example mentioned at the hearing was Chicago Bears rookie Gervon Dexter, who signed over 15% of his pre-tax NFL earnings for the next 25 years in exchange for a one-time payment of $436,485 within an NIL agreement. Notably, Dexter is now set to earn 7 million dollars over the next four years. 

To prevent future unfair agreements, Colorado law requires any person providing legal representation to a student athlete to be a licensed attorney. This common-sense protection benefits athletes because all attorneys are legally bound to act in their client’s best interest, and in the case of grossly incompetent representation, nearly all attorneys carry malpractice insurance to compensate for an attorney’s behavior.

These ethical safeguards ensure student athletes get the best outcomes in their NIL agreements — and can advise on additional legal matters such as copyright and trademark protection, as well as complying with the Federal Trade Commission’s requirements for endorsers. 

Further, the NIL landscape is filled with legal obstacles that student athletes must navigate. The NCAA frequently updates its NIL guidelines, and Congress is considering federal legislation that, if enacted, would establish ground rules for all current and future NIL agreements.

Finding a licensed attorney to review an NIL agreement reduces the risk of non-compliance with NCAA regulations, as well as Colorado and federal law, while also safeguarding a student athlete’s interest in contract negotiations.

READ: Navigating Sports Politics as College Football Evolves — CU Buffs Aim High

2. Pay close attention to an NIL agreement’s duration and fee structure

Student athletes should pay particularly close attention to the duration and fee structure of any NIL agreement. A student athlete’s NIL agreements should never extend beyond the time an athlete is playing intercollegiate sports because, as with Gervon Dexter, professional athletes have substantially higher potential income and NIL value.

Some states, like Texas or Oklahoma, affirmatively protect this future professional value through requiring every NIL agreement to specify the duration of the contract to ensure the agreement does not extend beyond the student athlete’s participation in the intercollegiate program. See Tex. Educ. Code § 51.9246(g)(2)(C); Okla. Stat. tit. 70, § 820.25(C).

However, Colorado law does not contain this same protection — and Colorado student athletes should be careful to avoid entering into one-sided, long-term NIL agreements.

Student athletes should also pay attention to the fee and compensation provisions of an NIL agreement. In his opening statements during the September 2023 Hearing, Congressman and Chairman of the House Committee on Small Business, Roger Williams, referenced examples of student athletes signing NIL agreements with nearly 40% commissions, complex fee structures and one particularly egregious agreement that essentially signed a student athlete to a $100,000 loan.

As mentioned above, the length and terms of an athlete’s NIL agreement may affect an athlete’s future professional earnings, and here again, Colorado lacks any particular protections for standardizing NIL agreements or the fee structure of such agreements. Consequently, it falls on the shoulders of student athletes and their attorneys to closely examine such language to best position a student athlete to avoid predatory fee agreements.  

READ: Live from Colorado — The Future of Sports Betting

3. Student athlete endorsers must comply with Federal Trade Commission (FTC) requirements

Student athletes, like any other advertiser or endorser, are subject to the FTC’s authority to regulate commerce. Failure to comply with these FTC requirements may subject both student athletes and educational institutions to civil penalties for disseminating a deceptive advertisement.

Relevant here, the FTC requires student athletes to

  1. Make honest statements regarding an endorsed product or avoid making statements that could not be made directly by an advertiser.
  2. Become a bona fide user of an endorsed product.
  3. Have no barrier to disclosing its relationship to the brand, marking any content as an advertisement.

The FTC further explains the “most important principle” when complying with FTC guidelines is that a proposed endorsement represents the accurate experience and opinion of the endorsers. Student athletes, for instance, cannot talk about an experience with a product they have never tried, or if an endorser has only tried a product once, then that person cannot state he or she uses it regularly. 

Simply put, student athletes must be honest about their experiences with and opinions of any endorsed products. Practically speaking, student athletes should consider language in their NIL agreement which ensures the athlete will not be compelled to make any public representations or statements that conflict with FTC requirements and other fair advertising laws. 

 

Benjamin Longnecker headshotAndrew GreenBenjamin Longnecker is an associate in the Denver office of Snell & Wilmer. He focuses his practice on commercial litigation. He may be reached at [email protected].

Andrew Green is an associate in the Denver and Los Angeles offices of Snell & Wilmer. He focuses his practice on commercial litigation, and represents clients in matters involving breaches of contract, construction disputes, trade secret misappropriation, trademark infringement, and unfair competition. He may be reached at [email protected].

Altitude Vs. Comcast — The Changing Economy of Sports Media

Don’t tax you, don’t tax me, tax that fella behind the tree! — The kicky chant coined by former Louisiana senator Russell Long encapsulates the quandary affecting whether the Denver Nuggets and the Colorado Avalanche show up on your television screen.  

The fault here lies with: Other Guy.  

Not the cable company, not the Altitude regional sports network. Other Guy.

In the good ol’ days of a bygone sports-media ecosystem, Other Guy helped to foot the bill for Nuggets games on TV. That was ironic, because Other Guy didn’t follow the Nuggets. Didn’t care how many offensive rebounds the team racked up against the Warriors. Thought the “Joker” was a Batman nemesis.

But he paid for the games anyway. Every month, he kicked in a few dollars from his cable bill to support the team’s owner, Kroenke Sports Entertainment, and its Altitude sports channel. This same formula prevailed nationally for tens of millions of pay TV customers and their regional sports networks (“RSNs” in TV language).  

It was what Charles Ergen, the dry-witted, Tennessee-bred founder and chairman of Colorado-based Dish Network, called an RSN tax: a fee you had to pay, whether you wanted to or not. Pretty much everybody chipped in.  

Until they didn’t. Around 2015, something started happening that was bigger than Altitude, Comcast or Dish Network. People started disconnecting their pay TV service altogether, fleeing to a new assortment of streaming services like Netflix. A few people at first, then a torrent. From 2015 to 2021, Comcast lost more than 4 million video subscribers – a drop of 19%. A bunch of them were in Colorado. 

As cable customers defected, the pool of “taxpayers” shrunk, putting pressure on an ecosystem that once spat out money like an ATM. Every time a subscriber checked out, Altitude lost a payment. Comcast felt the pain, too. Fewer people paying for television meant its video business was withering. 

You can see the standoff taking shape here: Altitude’s revenue from the cable guy was shrinking as people cut the cord, while pay-TV providers like Comcast and Dish TV were watching their video business deteriorate. Great time to be prepping for a new deal.  

Not long after, Ergen made a move that sent the RSN category trembling. In the summer of 2019, the Dish TV boss authorized managers to drop from the lineup 16 RSNs owned by a category newcomer, Sinclair Broadcast Group.  

Industry watchers gasped. Was Ergen losing his marbles? People surely were going to abandon his satellite TV service by the droves.  

Except, wait: They were already abandoning his satellite TV service. Ergen understood the cold reality of the moment. If the pay TV business was deteriorating anyway, why keep paying to carry expensive sports channels lots of people didn’t watch?  

A decades-old business model was officially under siege. But Ergen came out all right. The media industry analyst Rich Greenfield, a frequent CNBC contributor, calculated that a modest acceleration in Dish TV defections, costing Dish around $40 million, was more than offset by the money Dish saved by abandoning the Sinclair channels: close to $400 million. Ergen explained his decision to analysts, describing RSNs as “outliers … in terms of the amount of money they charge and collect versus the amount of people who actually view them.” 

Of course, this is not what Avalanche Fan wants to hear. Avalanche Fan just wants games to return to the television screen. But there’s a fair chance that won’t happen until a new economic model rises.  

One example is popping up out west. The NBA’s Los Angeles Clippers in October inaugurated ClipperVision, a “direct-to-consumer” video service that streams 72 of 84 live Clippers games for $199 per season. The RSN aggregator Bally Sports (a Sinclair corporate cousin) is eyeing a similar gambit across its RSNs, floating a price point of $20 per month.  

Whether Altitude might embrace a “direct” model remains an open question, although it’s a certainty management has run the numbers. For now, Kroenke Sports Chief Operating Officer Matthew Hutchings – a veteran media industry executive who used to run Comcast’s Houston-based RSN – is working with intermediaries like Fubo TV, an online video aggregator. Fans who sign up for Fubo TV can layer on the Altitude Now streaming service for an extra fee. But (at least as of yet) they can’t do what ClipperVision subscribers can do: purchase the streaming service in the internet wild, as a self-standing offering. 

To be sure, emotions run high here. But calling Comcast a bunch of “bullies,” as the late Peter McNab did on Twitter, doesn’t solve anything. Nobody is a bully, any more than the guy who pulls up to the parking lot with a taco truck is a bully. Taco Truck Guy has to eke out a living from paying customers. The same will eventually be true for RSNs. Taxing that fella behind the tree is no longer an option.

 

Stewart Schley JpegStewart Schley writes about sports, media and technology from Denver. Read this and Schley’s past columns on the Web at cobizmag.com and email him at [email protected]

Navigating Sports Politics as College Football Evolves — CU Buffs Aim High

Addressing reporters at the Pac-12 conference media day this summer, University of Colorado head football coach Karl Dorrell looked every bit the man in the maelstrom. For starters, the former UCLA coach used the words “challenging” and “disappointing” to describe the previous season, when the bowl-less Buffaloes ended up 4-8.

But that was then. Now, as Dorrell and a new offensive staff attempt to win games, bigger pressures lurk. The pending exits from the Pac-12 of the mighty USC Trojans, along with Dorrell’s alma mater UCLA, are two of them. The emergence of the college football transfer portal, which enables players to signal their desire to switch teams with a few keystrokes, is another. Then there’s the added flux stirred up by NIL – the acronym for “name, image, likeness” that allows athletes to auction off the rights for commercial use of their personas.

Somewhere in the mix, Dorrell has to actually coach a football team. But right now, devising formations and calculating fourth-down odds seem downright antiquated, given that college football at large is undergoing a pretty big jolt in the shoulder pads.  

CU’s football economic future hangs in the balance. As the university looked this summer for ways to grow football revenue beyond the roughly $43 million taken in last year, one consideration was to return to the Big 12 conference the university left behind in 2011. Alternatively, CU could hold fast to the Pac-12, hoping the conference can embolden its appeal with the addition of Boise State and/or other prominent programs.

No matter what CU does, the decision will have spillover effects on rivalries, fan interest, merchandise sales, season-ticket demand, TV ratings, and the colors of the uniforms worn by the opposing team.

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Fabulous Folsom

On a sun-blessed September afternoon at Folsom Field, there are few venues where a football game attains more grandeur. The stadium’s spectacular setting and the wild romp of 500-pound buffalo to inaugurate the game make for some serious pageantry.

The fans are into it. With loyalists pouring back after the worst of the Covid-19 scare, Folsom was near the top of the Pac-12 in terms of attendance last season: Average game-day crowds of 46,484 fans equated to more than 90 percent of Folsom’s roughly 50,000 available seats. Only Washington, USC, Utah and Oregon drew more fans in 2021.

But the local fervor hasn’t fully translated to the national stage. Through last season, Colorado ranked seventh out of the 12 Pac-12 teams in terms of national television viewers tracing to 2016 (but excluding the truncated 2020 season). Per the sports industry researcher Sports Media Watch, CU attracted bigger TV audiences than conference peers Utah, Cal-Berkeley, the two Arizona schools and Oregon State, but trailed Pac-12 belles USC,  Oregon, Stanford and UCLA, along with Washington and Washington State.

The national attention deficit reminds us that CU, which last won a bowl game in 2004, doesn’t control its own media destiny. Rather, it needs to draft on the airstream of more prominent peers to capture part of a media-rights pie that has been under intensive renegotiation in the wake of the USC and UCLA withdrawals.

There’s a lot happening here. The roiling of the Pac-12 dovetailed with: the SEC and the Big Ten prepping to expand to 16 teams by 2025; the Big 12 ushering in BYU, Central Florida, Cincinnati and Houston for 2023; Notre Dame continuing to tease various conferences (because: Notre Dame); and a general “who’s on first” sort of madness prevailing. It seems like a long time since CU’s pivot to the Pac-12 and away from a lineage of hard-scrabble games across windswept fields in places like Norman, OK and Lincoln, NE.

Now, the move to the Pac-12 seems fraught. The loss of conference powers Oregon or Washington could further dilute the conference’s appeal, forcing CU’s hand as university administrators consider alternatives to maximize exposure and media revenue.

It’s within this environment that Dorrell, a trim, confidence-exuding veteran – he’s 34 years and counting into his football coaching career – must navigate. The job is ridiculously hard, pockmarked not just by competition for marquee high-school graduates but the intrusion of the transfer portal, which requires from coaches a new dexterity for keeping players happy when everybody knows a more promising gig is always just around the corner. (Dorrell, rather diplomatically, called the portal and its impact “a natural process of attrition.”) The NIL market presents still another distraction, with schools like CU lodged into a weird place. They can’t act as dealmakers or brokers for athletes, but they nevertheless play a role in providing the staging ground against which a player might break through to prominence.

Now, all Dorrell needs to do to pull off one of CU’s more improbable comebacks is to find a way to win football games, snare a bowl bid, keep athletes in the fold, make sure CU remains relevant on the national TV scene, create an attractive backdrop for NIL profiteering, and keep CU at the forefront of any future conference maneuvering.

That, convert some third-and-longs, and beat USC on the road. To which we say: You go, coach.