The Sports Business Outlook For 2014

Posted on January 02, 2014 by Marty Conway

In the sports business world, it can be a challenge to try to look ahead to the future and predict the next big thing, winners and losers or even events that will shape the industry. 

New personalities arise from seemingly out of nowhere. Major events, such as the Olympics, are often the catalyst for these new stars. Sport leaders transition into and out of roles, which impact the business side of the games. Money, the oxygen of the industry, is pumped into sports from unexpected people and places. 

But that should not stop us from trying to predict the most important sports business developments in advance, because, after all, that's where the fun is. Thus, in lieu of a crystal ball, I will slip on my pair of Google Glass glasses, and look straight ahead to 2014.

First, here's a look at what the top stories may be in Baltimore and the surrounding area.

1. The 2016 Major League Baseball All-Star Game city selection

MLB's past practice has been to select the host city for one of its jewel events at least 24 months in advance. With the 2014 game being held in Minnesota, and the 2015 having been awarded to Cincinnati, the 2016 city should be selected early in 2014. 

With all but a few exceptions, MLB has held to a rotation of alternating American League and National League cities as host. If that continues, an American League city should be the host in 2016. Baltimore last hosted the game in 1993. Also, 2016 will be the 25th season the Orioles play at Oriole Park at Camden Yards.

Given the practice of the rotation, as well as the time that has elapsed since the last time the Orioles hosted the game, one would presume there is a strong chance for the game to return to Baltimore in 2016. But the phrase "past is prologue" may not apply this time. MLB could consider an American League team such as the Toronto Blue Jays, who last hosted the game in 1991. 

Alternatively, if a National League team ends up being the 2016 host, two possible options are the Los Angeles Dodgers, who have not hosted an All-Star Game since 1980, and the Chicago Cubs, who in 2014 will celebrate the 100th anniversary of the franchise playing at Wrigley Field. 

2. Orioles-Nationals dispute about MASN rights fees

Since the end of the 2011 season, the Orioles have been in a dispute with the Washington Nationals about the rights fees owed to the Nationals for the Mid-Atlantic Sports Network's telecasts of their games.

Both sides see themselves as having a solid case on the merits. MASN, whose majority owner is Orioles owner Peter Angelos, relies upon a previous agreement between the two parties, which calls out how much the Nationals are to be paid for annual telecast rights fees (and, by parity clause, what the Orioles are to be paid). 

Provisions in the agreement call for the fees to escalate according to predetermined levels and methods of calculating such an increase. Meanwhile, MLB clubs in Texas and California are getting new, large rights fees from their respective regional sports networks, and the Nationals are asking for fees comparable to the current market rates.

It's likely that MLB commissioner Bud Selig would expect the Orioles and Nationals to put aside their differences and reach agreement on the dispute. If they don't, it could hurt Baltimore's chances of hosting the 2016 All-Star Game (see No. 1).

3. The University of Maryland's move from the ACC to the Big Ten

In 2014, the Big Ten conference will march into College Park, and Maryland's athletic department's hope for a tailwind of dollars will come with it. Athletic director Kevin Anderson and his department are reeling from the lack of revenue.

One of the reasons for the Terps' budget deficit is the Atlantic Coast Conference is withholding conference revenues while the legal dispute about Maryland's exit fees works it way through the courts. In order to avoid a total economic catastrophe, the university and the conference will need to reach an out-of-court settlement so Anderson and his staff can move forward with some level of economic certainty. Expect this settlement before Maryland football takes its first snap in the Big Ten conference.

4. The effort for Washington, D.C., to host the 2024 Summer Olympics

The summer of 2014 will be an important year as leaders in Washington, D.C., supported by officials in Maryland and Virginia, move their efforts along and position themselves to begin the bid process for the 2024 Summer Games. No U.S. city has hosted the Summer Olympics since the 1996 games in Atlanta.

Washington, D.C., would need to have a newly built Olympic stadium in order to host the 2024 Olympics, and it could be a catalyst for Redskins owner Daniel Snyder to seek to leave FedEx Field in Prince George's County, and seek a return home to D.C. for his NFL team. Expect the areas around Annapolis (sailing) and Deep Creek Lake (kayaking) to be featured in the process, taking advantage of the state's many natural resources in the bid process.

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On a national scale, here are some of the events that are likely to shape the sports business environment.

1. Can the Super Bowl succeed in cold weather?

Super Bowl XLVIII at MetLife Stadium will be the first outdoor Super Bowl, and weather conditions are expected to be cool. The NFL will be gauging how the most-watched annual sports event can function outdoors. There is a potential for snow during or before the game, which would impact the conditions for the game, the halftime show as well as the hospitality events that combine to create a top destination for corporate leaders to travel to each year. Owners in NFL cities such as Washington, D.C., and Philadelphia will be watching to determine whether it's possible to host a game in these conditions. If it is, look for Snyder to lobby NFL officials to host the country's biggest sporting event in the nation's capital.

2. Winter Olympics in Sochi, Russia, show the skyrocketing cost of hosting Olympics

Even before the first event, the 2014 Winter Olympics has made its mark on both economic and social fronts. The $50 billion gamble on bringing the Winter Games to the Black Sea resort area is already drawing criticism for both its ambition and scale. Sochi will be the most expensive Winter Olympics to date. By comparison, the 2010 Winter Games in Vancouver had costs that were reported to be in the range of $3.6 billion to $7 billion, according to various sources.

Additionally, anticipated Russian crackdowns on so-called "gay propaganda" have set the stage for what some experts are calling the most significant games socially since the 1936 games, held in Berlin. During those games, United States Olympian Jesse Owens, an African-American athlete, won four gold medals and was an icon of protest of Adolph Hitler's Nazi Germany, and its ideology of racial superiority. 

President Barack Obama has signaled the United States protest to the anti-gay environment by naming Billie Jean King, a former tennis great and openly gay woman, to lead the Unites States delegation, which will not include the president, vice president or any sitting U.S. cabinet member.

Locally, officials connected to D.C.'s 2024 effort will be watching carefully, because as the Olympics become more costly to host, political watchdogs and critics may argue that officials in D.C., as well as the surrounding areas, should not take the financial risk that is now required to host such a spectacle.

3. Can the World Cup in Brazil be a catalyst for transformation?

By taking the World Cup to South America for the first time with the 2014 event in Brazil, world soccer governing body FIFA is making a statement about the growth of the game. But that decision has also led to billions of dollars in construction costs, and it's going to be difficult to get all the stadiums ready to host the events, which will begin in June 2014.

Moreover, portions of the Brazilian populous have decided to seize upon the fact that the world's media has descended upon Brazil in order to demonstrate the conditions of poverty and government corruption present in Brazil. Protests have broken out in several cities, and athletes and spectators are being warned that the conditions in Brazil during the World Cup may not be safe. 

From the standpoint of sport and society, these types of protests serve to highlight that despite the promises of a flood of spectators, along with their dollars, little of the benefits find their way to the average citizens. The citizens are then left with more traffic and congestion, even billions in debt left to pay from the excesses and overruns that these events bring. 

Sports business leaders, the media and scholars will be watching closely in 2014 for developments that could impact the industry beyond the next 12 months.

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