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Sports Biz with Darren Rovell

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  Sunday, 9 Dec 2012 | 2:32 PM ET

How High School Sports Have Turned Into Big Business

Posted By: Mark Koba
Eagle Stadium in Allen, Texas.
Source: Aerial Photography Inc. | Wikipedia
Eagle Stadium in Allen, Texas.

Naming rights for stadiums,TV and Internet broadcasting revenues, coaches with big pay days and multi-million dollar game day facilities. These types of money deals in sports are usually associated with the pros and college.

But American high schools are taking a page out of the same playbook by doing similar kinds of deals. While the money is nowhere near the pro and college level, schools are nonetheless turning their athletic programs into one of the most explosive areas in sports business, say analysts.

"It's an economic juggernaut," said Mark Conrad, associate professor of legal and ethical studies at Fordham University's school of business. "If you think about where people are on Friday nights in areas like the South and Midwest, they are at their local high school football game. It's no wonder the market for high school sports has expanded."

Conrad said the fan devotion that's fueling the business expansion is comparable to what some people feel about a company like Apple. "People love their iPhones and iPads and it's like a religion to them. It's the same with high school sports."

The money began slowly pouring into high school sports in the 1980's when local networks, along with ESPN, started featuring high school events, especially football. Budget cuts, even before the recession of 2007-09, forced many schools to seek out lucrative deals. But for some schools, the funding keeps flowing in from all sides-public and private.

For instance, a $60 million state-of-the-art high school football stadium that seats 18,000 – the money approved by voters in a local referendum - opened this past summer in Allen, Texas. Meanwhile, shoe company New Balance paid $500,000 last year to help refurbish an existing high school football stadium in Gloucester, Mass., as well as getting the stadium's naming rights.

Similar high school stadium naming deals with local businesses have been made across the U.S., including in Lakewood, Ohio ($320,000) and Noblesville, Indiana ($575,000).

Broadcasting rights and money are also expanding. Last summer, the New York City public school system negotiated a two-year, $500,000 contract with the MSG Varsity Network — a Cablevision network — to broadcast all types of high school athletic events.* And the California Interscholastic Federation just signed a 15-year deal with Time Warner Cable to broadcast high school football playoff games, for $8.5 million.

"The money in sports is looking for the next generation and high school sports are huge economically. It's natural in a way that big money is going in that direction," said Robert Boland, academic chair of the NYU Tisch Center for Hospitality, Tourism and Sports Management.

It's the constant demand for any kind of high school sports product that's spurring business growth, said David Rudolph, CEO of PlayOn, a high school sports media company.

"The number of people who go to high school is three times the number in college and almost everyone can identify themselves as a high school fan," said Rudolph, whose company broadcasts some 30,000 high school sporting events over television and the Internet. "Most people played high school sports and they love to watch it."

PlayOn became an independent company with venture capital money in 2008 after initially being part of Turner Broadcasting. Rudolph said the Atlanta based firm has a breakdown of 98 percent digital broadcasting and 2 percent television.

"There's no central high school organization like the NCAA in college, so we pay state wide school sport associations for the broadcasting rights and then license those to cable companies and get advertising fees," Rudolph said. "We're right at profit."

But as the marketplace for high school sports heats up, so too is the cost of doing business, Rudolph said.

"We pay less than six figures for the rights to high school events but they are going up in price as the competition for those rights heats up," added Rudolph.

The money from a PlayOn, ESPN, New Balance or a Time Warner goes to the local school boards and districts for them to dish out to the actual high schools. And that could be a problem, said Boland, as some schools may be more equal than others on and off the field.

While the national average salary for a high school football coach is around $39,000, in football-loving Texas, that average is more than $88,000, and one coach at Euless Trinity High School made more than $114,000 in 2011.

"In a school district, the schools will likely be competing among themselves for money," said Boland. "Some schools will have higher-paid coaches and better sport programs and they can keep getting money while leaving others behind."

For Naomi Storey, a resident of Hiram, Ga., the worry is that all the money will make a bad situation worse.

"Many kids are already putting too much emphasis on sports and not academics, "said Storey whose children and grandchildren have gone to local area high schools in this northwest section of Georgia. "And a lot of them are getting injured with broken bones and blown knees and arms."

Storey, who worked as a substitute teacher for 19 years, added that she's experienced firsthand the negative influence of money and competition at the high school level.

"My granddaughter's husband was fired last year as a football coach from one of the local high schools after 18 years because one of the highest donors felt like his son wasn't getting to play enough," Story said. "Luckily he got hired by another high school principal."

Analysts say the worry with all this money is of course what it could do to the student-athlete, the coaches and the schools under the increasing exposure to media coverage. There's pressure to perform through injuries, the danger of recruitment violations by coaches, the special treatment to schools - at the expense of others - that are deemed winners by districts.

"These are just kids really and so vulnerable in many ways," said Boland. "These high school sports have been monetized and it's not always in the best interests."

But the spotlight on high school athletics - and the money that comes with it - just continues. ESPN broadcast nationally some 24 high school football and basketball games this year while Fox Sports Florida, a regional network like FSN Pittsburgh or Comcast Sportsnet, shows a high school game every weekend live and in prime time through the season.

It just proves, said Mark Conrad, that no one should expect the money that's pouring into high school sports to get thrown out of the game anytime soon.

"There may be a saturation point to all this but right now it keeps growing. The market in high school sports keeps expanding," Conrad added. "The dedication to high school sports from all sides is endless."

*CNBC is part of NBC Universal which is majority owned by Comcast.

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  Tuesday, 4 Dec 2012 | 1:19 PM ET

MLB's Winter Meetings: Bobbleheads and Deals

Posted By: Brian A. Shactman
MLB Winter meetings, Nashville, TN
Brian Shactman | CNBC
MLB Winter meetings, Nashville, TN

Major League Baseball's winter meetings are not what you think they are.

Movies have made it so that most people think that the super agents and team general managers huddle in hotel rooms, making deals, while journalists corral in lobbies, drinking coffee and wait for anyone of note to walk through or to make a blockbuster announcement.

That is NOT the case at the Gaylord Opryland Hotel. First of all, it is a labyrinth of walkways, gardens and ecosphere-like glass ceilings.

There isn't one lobby. There might be five.

There are tourists mixed in with baseball people. Just fifteen yards from all the TV cameras, you can ride the Shrek Christmas ride.

It's bizarre.

»Read more
  Monday, 2 Jul 2012 | 3:31 PM ET

My Farewell To CNBC

Posted By: Darren Rovell

Forrest Gump.

That’s whose life I feel like I’ve lived over the past six years at CNBC.

I played basketball against Dwyane Wade (I promised him I would tell you I didn’t score a point). I’ve crashed into the wall at the Charlotte Motor Speedway with Kurt Busch at the wheel. I’ve taken an Andy Roddick full speed serve to the chest.

I lived in Beijing during the Olympics. I’ve reported on Nike factory workers in Vietnam. I covered a Presidential Election from a bowling alley in Pennsylvania and played cornhole with a Coors Light girl before the NFL season opener in Indianapolis.

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  Monday, 2 Jul 2012 | 2:26 PM ET

Miami Heat Owner Says Team Will Likely Lose Money This Year

Posted By: Darren Rovell

Miami Heat owner Micky Arison is thrilled the team won the NBA title, but he says he’s hardly ringing up the cash register.

Arison told CNBC that the final numbers aren’t in yet, but his guess is that the team lost money again.

“This is a hobby of passion, it’s not a business,” said Arison, the CEO of Carnival Cruise Lines who took control of the team in 1995. “Every year in the building we’ve lost money aside from last year, under the old Collective Bargaining Agreement, because of LeBron.”

The Heat have been playing in American Airlines Arena for 12 seasons. They also haven’t ever paid rent thanks to loopholes in the agreement with Miami-Dade County including a clause that allows the team to pay itself back for its contributions to the arena’s cost before sharing the wealth.

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  Thursday, 28 Jun 2012 | 4:49 PM ET

With A Month To Go, Tensions Rise In Olympic Ticketing Game

Posted By: Darren Rovell

With the Olympic Games less than a month away, a major ticket dispute between a ticket broker, the London Organizing Committee of the Olympic Games and the official credit card of the games, Visa, is taking place.

A detailed view of the prototype design of the new golden Olympic torch during its unveiling at St Pancras Station on June 8, 2011 in London, England. 8,000 torchbearers will carry the Olympic Flame around the UK during the 70-day relay, which starts at Land's End in Cornwall on May 19, 2012.
Getty Images
A detailed view of the prototype design of the new golden Olympic torch during its unveiling at St Pancras Station on June 8, 2011 in London, England. 8,000 torchbearers will carry the Olympic Flame around the UK during the 70-day relay, which starts at Land's End in Cornwall on May 19, 2012.

Texas-based ticket firm Golden Tickets is accusing the London Organizing Committee \(LOCOG\) of trying to enforce rules it cannot legally enforce, Visa of wielding its sponsorship power to cut off what it says is legitimate reselling of Olympic tickets and a payment processor called iPayment of fining the company without legal grounds.

After selling Olympic tickets, Golden Tickets president Steve Parry was informed by his comptroller that $25,000 was taken out of the company’s bank account without warning.

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  Wednesday, 27 Jun 2012 | 12:29 PM ET

Poll: A Ring Didn’t Make LeBron James More Marketable

Posted By: Darren Rovell
NBA Finals MVP LeBron James of the Miami Heat looks to move against the Oklahoma City Thunder during Game 5 of the NBA Finals on June 21, 2012.
Don Emmert | AFP | Getty Images
NBA Finals MVP LeBron James of the Miami Heat looks to move against the Oklahoma City Thunder during Game 5 of the NBA Finals on June 21, 2012.

Winning a title finally got the monkey off LeBron James’ back, but that doesn’t mean he will be seen as more marketable in the eyes of Madison Avenue.

Results of a poll taken by the Davie-Brown Index after the Heat’s Game 5 title-clinching victory over the Oklahoma City Thunder, and exclusively released to CNBC, reveal that the general population did not find James to be a different man from an endorsement perspective.

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  Tuesday, 26 Jun 2012 | 11:23 AM ET

Can Justin Gatlin Be Marketable Again?

Posted By: Darren Rovell
Justin Gatlin
Getty Images
Justin Gatlin

Justin Gatlin was on top of the world after winning the 100 meters at the 2004 Olympic Games.

But he lost the fastest man in the world title and all the marketing that goes with it to Usain Bolt four years later, as Gatlin was in the midst of sitting out a four-year ban from the sport as a result of testing positive for testosterone.

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  Monday, 25 Jun 2012 | 2:47 PM ET

Anthony Davis Trademarks His Brow

Posted By: Darren Rovell
Anthony Davis
Getty Images
Anthony Davis

Anthony Davis, who will likely be taken as the No. 1 pick in this Thursday’s NBA Draft by the New Orleans Hornets, is getting down to business -- literally.

Davis, known for his connected eyebrows, trademarked the phrases “Fear The Brow” and “Raise The Brow” earlier this month.

“I don’t want anyone to try to grow a unibrow because of me and then try to make money off of it,” Davis told CNBC. “Me and my family decided to trademark it because it’s very unique.”

Davis said that people frequently tell him to cut it, but Davis said he won’t because “everyone’s talking about it.”

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  Wednesday, 20 Jun 2012 | 1:49 PM ET

Fans: LeBron’s Image Won’t Be Repaired With A Title

Posted By: Darren Rovell
LeBron James
Getty Images
LeBron James

Following “The Decision,” where LeBron James declared he’d take his talents from Cleveland to Miami, he went from being hero to a villain in the eyes of many.

People who once rooted for his greatness started cheering for his downfall. They clapped at his inability to make the big shots at the end and reveled in his disappointment of losing to the Mavericks in last year’s NBA Finals.

With the Heat up 3 games to 1, and LeBron on the cusp of hoisting the Larry O’Brien Trophy for the first time in his nine-year NBA career, the question is, does finally winning the big one change how people think of the NBA’s “King.”

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  Tuesday, 19 Jun 2012 | 3:02 PM ET

Baseball Hall of Fame Must Have Steroid Era Wing

Posted By: Darren Rovell
National Baseball Hall of Fame, Cooperstown, NY.
Getty Images
National Baseball Hall of Fame, Cooperstown, NY.

Cooperstown is in serious trouble.

The voters, the Baseball Writers Association of America, have spoken and they’ve shown us that they will not vote through any player who has been found to have used performance-enhancing drugs.

They also have issues with players who are suspected of using performance-enhancing drugs.

What does this add up to? Not a whole lot of marketable stars to induct.

And what does that add up to? Attendance problems.

From 1998 through 2008, the National Baseball Hall of Fame drew more than 300,000 fans each year. But when the steroid era meant that big names weren’t getting in, interest waned. For three straight years, the 300,000 number hasn’t been in sight.

» Read More

About Sports Biz with Darren Rovell

  • Darren Rovell brings you his unique take on the business of sports: a multi-billion dollar global industry and obsession full of personalities and products. On Sports Biz, Darren will give you his up-to-date take on everything from salaries to endorsement deals to marketing and promotions, trades and tirades — in short, everything that makes sports so exciting.

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