If, as President Calvin Coolidge once said, “the business of America is business,” the business of present-day America might be sports.
And Americans, from corporate boardrooms to average fans, love to plunk down their cash to rub elbows with the great and not-so-great.
Whether it’s money well-spent might be in the eyes of the spender. After all, who can say how much a share of Green Bay Packers’ or Manchester United’s stock is really worth to the owner? And will tennis star Li Na really sell Mercedes Benzes to Chinese car buyers?
And then there’s the deals that start out good, then turn sour. Just think of Tiger Woods and Lance Armstrong, for instance.
With that in mind, AdvisorOne humbly offers a look at 10 great and not-so-great sports business deals with our rating for each.
(And if your supervisor walks by while reading this, just click this handy BOSS BUTTON.)
1. Manchester United – $1 Billion IPO – (Best)
You might think initial public offerings have run their course. Manchester United, the behemoth of soccer clubs, thinks otherwise. Kick this around: Man U is expecting to reap $1 billion from its IPO this fall on the Singapore stock market. Man U would then be valued at $2.4 billion.
The team is enormously popular in Asia, so the Singapore locale for the stock sale is logical.
Of course, it’s not all profit for the Glazers, the American brothers who own the team. The team has angered some fans by piling up huge debts and is putting 30% of the team’s stock up for sale to help ease the problem.
A billion here, a billion there and the club just might be profitable one day.
The New York Mets seem to have a knack for making big financial deals that backfire when the public finds out. The investments the Wilpons, the club’s owners, made with Bernie Madoff have put their hold on the team at risk.
Then there’s the matter of the naming rights deal the team made with Citigroup for its brand new stadium, which opened in 2010. The deal calls for the Mets to receive $400 million in equal payments for 20 years. That’s tied for the richest stadium rights deal ever with the contract the New Jersey Nets made with Barclay’s for its as-yet-opened arena in Brooklyn. Right behind those deals on per-year bang for the buck, is MetLife’s $400 million, 25-year naming deal announced Aug. 23 for the new Giants-Jets Stadium.
The Mets thought they had a sweet deal all around, but the ink was barely dry before the financial meltdown of 2008 sullied Citigroup’s name. The public was not amused, as derogatory versions of the name, Citifield, flew around the country.
It could have been worse. The Houston Astros played at Enron Field for a time. Now that was a public relations problem.
3. Li Na – Mercedes Sponsorship (Best)
The Chinese economy, unlike everywhere else, has been on the rise. The latest evidence is the increasing stature of its athletes, like basketball giant Yao Ming, who retired recently from the NBA, and the tennis star Li Na.
Janis Joplin has nothing on Li. The bluesy rock singer famously asked the Lord to buy her a Mercedes Benz. Li has done her one better: Mercedes is paying her as part of a three-year endorsement deal.
The figures weren’t announced, but CNBC pegged it at $1.5 million annually. The motivation, of course, is the chance for the automaker to tap into the huge Chinese market.
Part of the deal includes Li wearing a Mercedes patch on her shirtsleeve. Wonder what they would have paid to have their logo bolted onto Joplin’s microphone.
College football is big business. That basic fact gets critics howling about the purity of the amateur game. But those days, if they ever existed, are a distant memory.
But not all the sponsorships are for beer and other consumer products. Sometimes the backers of the sport have the athletes’ interests in mind.
Fidelity Investments, for instance, recently signed on to be sponsor of the Scholar-Athlete Awards bestowed annually by the National Football Foundation & College Football Hall of Fame.
The program currently provides $300,000 each year in post-graduate scholarships to 15 of the nation’s top scholar-athletes from all levels of collegiate play.
Fidelity is the first sponsor since the program began in 1959. Sometimes, sports and commerce combine in ways that hark back to the purity the critics pine for.
Financial services companies can’t seem to find enough sports to sponsor. And they simply have a love match with tennis.
Anyone watching the French Open won’t be able to avoid having dreams involving BNP Paribas. And the U.S. Open has smashed two financial aces: Among its sponsors are JPMorgan Chase and American Express.
Every time a line call is challenged, viewers see the Chase Challenge system put into play. Every commercial break is almost sure to include Andy Roddick or a Williams sister (or maybe two) shilling for AmEx.