SPORTS MARKETING IN THE 90s

Accountability & Justification

The '80s were a time for increased spending, corporate takeovers and quite frankly
greed! As we enter our second year of the ‘90s, every one of us is being held
accountable for his or her actions. As such, advertisers and their respective agencies are
being asked to continually justify their recommendations and programs.

In the ’80s over 85% of all sports marketing decision were based on emotion or gut
instinct. In the ’90s, each of us will have to determine and measure the results of our
sports marketing activities as we do other traditional marketing vehicles.

Increased Use & Reliance On Sports Marketing Research

To be able to justify our actions, we will see a move to more thorough and specific
research into sports marketing. Research companies such as Simmons, Nielsen, MRI and
others will be asked, and they will comply, to provide more specific data into the area of
sports.

Many companies will also commission primary studies to provide independent and
objective data into sports and event demographics, psychographics, product usage and
purchase propensity factors. Companies will allocate from between 2 to 5% of their total
sports marketing budgets to insure that the programs they are involved in can be
measured and justified.

Companies will also join together with other non-competing advertisers to commission
and conduct syndicated or cooperative sports marketing research studies.

They will also charge back to event organizers a portion of such costs and provide them
with data that they not the organizer has collected.

Co/Op Sports Marketing Programs

Many companies will join one another to participate in cooperative sports marketing
programs and events in order not only to defray costs but to provide additional
marketing and promotional support behind such programs.

They will look to their suppliers, dealers, vendors and distributors first and then to other
non-competing advertisers for such support.

#1 brands and industry leaders will team with other #1’s to support each other’s
position as leaders.

Already you can see this trend emerging. An example is Nutrasweet and Diet Sprite
combining efforts to present the U.S. Figure Skating Championships in 1991.

Corporate Ownership Of Sports Events & Properties

Many companies such as GTE and Manufacturers Hanover have found that the ownership
of their own events or promotions is an effective way for them to control all relative
aspects of their event’s promotion and marketing. It’s also a good way to reduce the
overall cost of an event or promotion by soliciting other corporations as partners rather
than sponsors.

Our research and experience has shown that companies would much rather deal with
another major company than with a middleman or promoter. When a company pays a
promoter to title sponsor their event, in effect what they are doing is underwriting the
promoter’s risk and providing the promoter with needed capital.

Companies can hire the same individuals and sports marketing firms that a promoter
does and reduce their risk and investment. They can even turn a profit on the effort?

Use of Independent Sports Marketing Consultancies

European companies retain companies that they call sponsorship consultancies to

provide independent and objective advice on placement and measurement to companies
interested in sponsorship.

However, it is against their traditions and ethics to retain such consultancies who sell or
represent properties, athletes, events or sponsorships. Can you blame them?

Would you let your advertising agency place your media budget if they owned or
represented the newspapers, magazines, radio and television stations? Of course not,
yet this has occurred for many years now in America.

The ’90s will see corporations retaining the services of U.S. sports marketing
consultancies whose managements have diverse backgrounds in corporate marketing,
finance, research, law, communications as well as sports!

Increased Corporate Synergy In Sports Marketing

Perhaps one of the toughest tasks facing corporate managers today is how to create
synergy among other departments or divisions of their companies as well as their
respective advertising and communications agencies.

Those companies who are successful in sports marketing in the ’90s will take into
account the needs and support of all divisions and brands in their company as well as
the various departments such as advertising, sales, promotion, communications and
marketing. If they don’t, they will have a portfolio of events which compete with them-
selves rather than the competition.

Globalization of Sports Marketing

Sports marketing will evolve more into the international arena in the ’90s. With the
falling of economic trade barriers across the world and the opening of European markets
in 1992, sports will play a greater role for multinationals in each country as well as
smaller companies trying to compete.

Sports is the most effective way to break down language, communications, cultural,
social and geographic barriers to marketing.

As such, properties like the Olympics in Atlanta in 1996 and the World Cup in The U.S. in
1994 will command greater attention as well as higher sponsorship costs.

You will also see traditional North American sports such as basketball, football, hockey
and baseball exported to other countries throughout the world. By the year 2000, don’t
be surprised to see European divisions and teams in the NBA or NHL.

The need for Eastern European counties to revitalize their economies will pose in-
teresting possibilities for Americans to export some of our best exportable products - -
namely sport!

Increased Local & Regional Attention Toward Sports Marketing

While you will see an expanded plethora of international sports marketing opportunities,
you will also see significant increases in the amount of local and regional sports
marketing opportunities designed to reach specific segments and market niches.

These will include traditional grass roots programs, children’s programs and support of
local participant sports such as road rallies, bike races and running races. Local
professional, college as well as high school teams will see added marketing support from
not only large corporations but smaller regional and local companies including private
corporations and mom and pop operations.

Increased Spending On Sports Marketing Beginning In 1992

Somewhere between the middle of 1991 and the beginning of 1992 after a mild
recession, you will see a shift to more spending on sports marketing particularly among
Japanese and European multinationals. This shift will coincide will the lifting of trade
barriers in Europe in 1992 as well as both the Winter and Summer Olympic Games in
Europe that year.

American companies will be hard pressed to preempt their foreign competition from
their most prized sports properties. If you need evidence, look at the current TOP
Olympic sponsors and the new sponsors of the PGA Tour in recent years.

Fragmentation Of Television Coverage & Market Niches

Americans, and for that matter all of the world’s population, will be exposed to more and
more sports events and television programming through the increased use of cable,
network and satellite television.

An increased emphasis will be placed on pay per view television with the true test of its
viability coming in 1992 when the Summer Olympics and NBC will offer three menus for
such coverage.

Don’t be surprised to see ESPN, TBS or another network or Foreign broadcasting group
purchase interests or control of the slew of local and regional sports channels across the
country. For a network like ESPN it would reduce competition and clutter while at the
same time providing programming of a targeted nature and easier sales to advertisers.
A combine of regional networks as well could occur. They could then offer double
headers with a national game of the night in the NBA or NHL preceded or followed by
regional telecasts similar to CBS’ and NBC’s coverage of the NFL on weekends.

Emergence of Women As Sports Enthusiasts, Spectators & Viewers

The ’90s will see the emergence of women as sports enthusiasts with networks,
advertisers and cable outlets focusing more attention on this most desirable group. Look
for figure skating to have a professional tour similar to tennis and golf with larger purses
and corporate support.

This will be entirely due to the interest of advertisers to reach women who will be harder
to reach as the ’90s continue. Other sports such as skiing and basketball, especially the
NBA, will grow to all time highs in popularity caused directly by an increase of interest by
women, in those sports.

Use of Strategic Sports Marketing Approach

Above all, the ’90s will see a move by all companies to a more strategic use of sports to
address real marketing and communications needs and problems rather than to satisfy
the personal whims of executives and sales forces.

While you’ll still see support of sports that are supported by executive management but
not widely followed by consumers and viewers, you will see advertisers involved in those
sports tailor their efforts to meet more marketing related objectives.

You will see companies take an approach where they will more systematically plan their
sports marketing activities and develop portfolios of events and programs as they do
their brands.

The first step will be analyzing their real situation and need, followed by developing a set
of necessary objectives which can be measured against and a strategy on how these
objectives will be met.

These points will be highlighted in formal sports marketing plans which will act in adjunct
with a company’s overall marketing and business plans.

Increased use of research, feasibility study and testing before approvals to roll out
programs will take place before the actual execution.

Before, during and after the execution, you will see companies spending as much as 5%
of their sports marketing budgets to obtain results through primary research that they
can analyze to determine just what if anything they are being provided by their
marketing participation in sports. After this is completed they will revaluate their
situation and restart the process from scratch.

In closing, sports marketing will become your most valuable marketing weapon in the
’90s, provided that you follow many of the steps highlighted above and take a strategic
approach to sports marketing rather than an emotional one.
SPORTS PREDICTIONS FOR THE YEAR 2000

Pay Per View

Many in sports are predicting that pay-per-view television will be their savior when
network television contracts in baseball and other sports begin to fall. There are
proponents of pay-per-view who claim that all sports will eventually gravitate to pay-per-
view in the future.

We strongly disagree with this assessment. Yes, pay-per-view has been successful in
limited areas such as major boxing events. However, the people who follow boxing are
ardent fans who have been accustomed to “paying” for big boxing events since the 70s.

All that pay-per-view does for boxing is add to or replace those who would venture out to
their local theater or arena to view a “closed-circuit” telecast of a major boxing match-
up. Pay-per-view has also allowed the suburbanite, who was afraid of going to arenas in
the city, the ability to watch a major event in the comfort of their home.

Pay-per-view has a prior history in the sense that is similar in concept to closed-circuit
television and even cable to some extent. It has been many years since we have truly
seen a big match-up on “live” and “free” network television. As such, people are
“accustomed” to paying to see a big fight and there are relatively few of these major
extravaganzas each year. Thus, pay-per-view in the fight game has been very successful
and will continue to increase as more and more homes become wired for this capability.
Currently, only 1/3 of the estimated 56 million homes with cable are wired for pay-per-
view capabilities according to Nielsen Media Services.

However, football and baseball fanatics are accustomed to seeing their games on free
network or local television. Football, baseball and basketball fans would revolt if forced
to pay for the “privilege” of watching their local teams. Unlike boxing, where we have
individuals pitted against individuals, our local teams are close to not only our hearts,
but our pocketbooks as well.

In many major cities, the professional teams compete in stadiums and arenas that have
been either partially or entirely financed with community taxes, abatements or secured
bond issues. It’s highly unlikely that the average taxpayer and fan would enjoy being
totally shut-out.

And, most colleges are funded by state and national tax dollars so you will never see a
wide-scale pay-per-view situation in the collegiate sports ranks. There would simply be
too much hostility and anger perpetrated by fans and followers of each university.
You would also see vocal opposition against such a move and the sport or team who
would impose such a situation would, more than likely, be ostracized by the fans,
politicos and the media. You would see Congress enter such a fracas by removing
previously awarded exemptions from our nation’s antitrust laws.

Or they could invoke compliance with the Telecommunications Act of 1934 which states
that the viewing or listening audience should be left “no worse off after the introduction
of new technology than there was before.”

In addition to the political problems, technology is rising at increased rates each year
while prices for such equipment such as satellite dishes and scrambler decoders are
selling like hot cakes.

If any team or league would move to pay-per-view, you will see boycotts, protests and in-
creased “pirating” of the available signal. The fan is simply not conditioned to pay for
something that he or she has traditionally received for free.

The true test of pay-per-view and its precarious wide-scale future will come in the
summer of 1992 when NBC will offer viewers three pay-per-view options to watch 24
hour coverage of the 1992 Olympic games in Barcelona in addition to its 160 hours of
“free” Olympic coverage.

NBC has invested heavily in this programming, upwards of $250 million, and its
projections are somewhat unrealistic. NBC will price its packages from $95 to $170.

SMG predicts that the pay-per-view offering for the 1992 Olympics will cost NBC at least
$75 million in losses with the potential to lose at least $50 million more. As such, Wide-
scaled pay-per-view will not occur for the remainder of the 90s.

Yet, you’ll be pleased to know that we’ll see more sports on network and national,
regional and local cable channels not pay as you see!

Death of Multi-Sport Events Except For Olympics

The recent commercial failures of the Pan Am Games and Turner’s Goodwill Games will
undoubtedly spell death for these types of events in the future. In addition to the
commercial failures of these events, there are several political and economic reasons
why we predict this outcome.

First, the television production costs for such events, especially when outside U.S.
confines, are extremely high. In order to provide professional quality telecasts of the
highest standards, the networks must devote tens of millions into production costs as
well as the many millions more spent on rights fees.

Except for the Olympics, the telecasts of the Goodwill & Pan Am Games have fared
miserably in the ratings games. Projections of ratings have been far off with the
networks having to provide make-goods, thus saddling the networks with substantial
financial losses.

According to our research and calculations, under existing market conditions [current
ratings and current rights fees] there is no way that a network, even with a cable
partner, can afford to make a profit from these events. Even if a network or cable
channel were to undertake these events for overall image building, brand identity or
exposure, the losses incurred would have a severe effect on their financial stability.

This will only be compounded in the coming years when each Olympic Games, Winter or
Summer, will occur every two years instead of the existing four. The public’s attention,
as well as the networks and their corporate advertisers, will be focused on the huge
marketing and sports event called the Olympics.

Advertising dollars will be short as corporations strive to put their money into more local
and grass roots programs tailored, not only to specific countries, but to local and regional
market areas within those countries as well as their related cultures.

Networks and cable channels will be reluctant to invest money, not only in rights fees but
the production charges that would need to be incurred. Since the networks are faced
with the current climate of reduced advertising expenditures in mass media, they will
focus their attention and dollars on those sports such as football and basketball which
provide the highest return on investment possible.

The current political climate in the Soviet Union also severely damages the original
marketing and business strategy of the “Goodwill” Games which was to serve as a
“peace” making vehicle of sport between the U.S. and the “old” Soviet Union. However,
as democratization of the Eastern Block accelerates, the need for the Goodwill Games
becomes pointless.

Additionally, the Soviet Union has enough of their own economic problems without the
major investments and risks that would be necessary for them to stage a Goodwill
Games without total and complete underwriting from Western Sources, namely the
Turner Network and its advertisers and sponsors.

The recent political strife within the USOC with regards to Robert Helmick’s, their former
president, involvement with Turner suggests that support might weaken within the USOC
for support of the Goodwill Games. The expenses of fielding and training teams and the
constant pressure to “win” all the time, will scare off support for these events since the
pros are now needed to compete on an international basis.

While the NBA and its teams are relinquishing its rights over players like Larry Bird and
Michael Jordan every “four” years, their support would be less than enthusiastic for the
need to have their high profile stars compete and risk injury each or every other summer
season.

Mix these problems with the political strife in the USOC, whose support is necessary for
the Pan Am & Goodwill Games, and you have a formula for evaporation. The nineties
should see the fall of the Goodwill and/or Pan Am Games.
A Completely Open Professional Olympics By 2000 Summer Games

Michael Jordan and Larry Bird moving up the court against a defenseless Vladi Divac.
Boris Becker serving to John McEnroe. These are just a couple of the examples that will
most likely occur in the 1992 Summer Olympics in Barcelona. If anyone says the
Olympics are for amateurs only, he or she is either greatly naive or hypocritical.

The Olympic Games and the individual sports and governing bodies that make up the
Olympic Games is big, and I mean big business! Billions, not millions, are spent on this
soon-to-be semi-annual affair. Nations and cities go into debt to stage one. Networks go
into a bidding frenzy to broadcast one. Athletes and their families sacrifice their lives
and livelihoods to compete in one.

What this all means is that the Olympics, and their teams, need money. Again, with the
democratization of the former Eastern Block countries, countries who are in dire financial
straits, will lack the ability to field and train teams let alone stage the Games without
financial support.
The Eastern Block, with their former “communist” governments, were major “powers” in
many international sports governing bodies. These nations have traditionally been the
most dominate forces in opposing free-sweeping change and radical reform in many
sports, especially with regards to the professional issue.

However, the move away from communism and a rapid move to a free and open market
economy in these countries , will inevitably push them in the direction of a free and open
professional Olympics as well. They will begin to use one of their greatest exports - -
sports - - to earn valuable and needed revenue for their countries.

Besides the revenue that can be gathered in the form of taxes from athletes, these
countries could be excellent venues for major sports events in tennis, hockey, boxing,
soccer and track & field. Already, there are major promoters and sports governing
bodies exploring expansion into Eastern Europe.

Exiled athletes such as tennis stars Martina Navratilova and Ivan Lendl can go back and
have their own tennis exhibitions and events in their countries with the help of Western
corporate sponsors who desire to enter new and emerging markets.

An argument can now be made by proponents for professionalism in each governing

body to once and for all remove the hypocritical double-standard of having athletes
receive “income” that is placed into a “trust” which they can access when their career is
over. It’s ridiculous to ignore that track & field, skiers and other athletes who are
supposed to be amateurs aren’t receiving payments and under-the-table appearance
fees.

The former so-called amateurs of the Eastern Block will exert their country’s new found
individualism and demand to be paid like their Western counter-parts, for their
appearance or performance at international events. Soviet and Eastern block stars in
hockey and basketball will increasingly migrate to the U.S. to compete in the NBA or
NHL.

And, don’t be surprised to see the NBA or the NHL especially, expand to include Soviet
and Eastern European teams by the turn of the century.

Globalization of Sports

Sports marketing will evolve more and more into the international arena in the 90’s.
Falling economic trade and political barriers across the world and the opening of the
European marketplace in 1992, will make sports an even more attractive marketing
vehicle.

Sports is the most effective way to break down language, cultural, social and geographic
barriers to marketing. As such, global properties like the Olympics in Atlanta in 1996 and
the World Cup in 1994 will command greater attention as well as higher sponsorship
costs.

Don’t be surprised to see the NBA and NHL expand into Europe by the end of the century
or at the start of a new century. International business and the need of American
companies to expand their brands abroad will dictate a movement toward exporting
American sports into Europe and Japan.

Basic business judgment will dictate this move. If the current economic climate in the
advertising and media world continues, you will see a “significant” reduction in TV rights
fees. This is supported by the recent reduction in broadcast rights fees for the NHL. Its
television deal was reduced 71% from $17 million a year to $5.5 million.

While the NHL may not be the best example of such reductions, due to their lack of
geographic distribution and popularity, it does signal a new sense of “realism” in big-
time network sports. What else would you call a 71% reduction in rights fees.

When the next round of major television sports contracts come out, except for football
and the NBA, look for significant reduction in rights fees paid by the networks. And,
don’t think cable and pay-per-view are the answer.

The answer will come in exporting American sports and American athletes abroad to
markets in Europe, Asia and Latin America. Sports like baseball, whose “product life-
cycle” is on a downward trend in America, will look to new markets such as Central and
Latin America, including a potential free and democratic Cuba to market their product in
the future.

While the World League of American Football was a success in Europe this past year [and
a miserable failure in the U.S. as we predicted last year] Europeans in the future will not
want to spend high prices on sports related entertainment for a second-class or inferior
product.

Europeans, if not more than Americans then at least equally, treasure the romance of
first class charms.

Americans weren’t the ones who crafted the social class structure. As such, Europeans
may accept today’s product, but tomorrow they will want and demand the best and be
willing to pay for it. The same rationale applies to Japan and the rest of Asia as well.

When American owners of major teams, leagues, franchises and events are faced with
large financial deficits without the large television incomes they have come to count on,
you will see them look toward foreign investment in their product be it a team, a league,
an event or an athlete.

This has already occurred in sports such as golf and tennis. In tennis, there have been a
couple of sales of existing “franchises” [the place on an international professional event
calendar of a sport] to the Japanese and Europeans.

A couple of years ago, the Maureen Connelly Brinker Foundation in Dallas, Texas sold off
its right to hold a Virginia Slim’s women’s tennis event in Dallas to a Japanese
advertising and media conglomerate. The foundation received millions while the
Japanese received a new women’s tennis event.

With supersonic aircraft such as the Concorde and the new “rocket” planes that are on
the drawing board, overseas’ markets will be as easy to reach as the next major city
across the state line. Globalization and an increasing trend toward democratization will
make friends and neighbors of former enemies as well as allies.
Sports will be the glue which binds Americans and the rest of the world together through
television and major events such as Wimbledon, the Grand Prix of Monaco and the British
Open. Additional television revenue will come from overseas networks and private cable
and satellite operations.

Best bets: Major League Baseball Franchises in Cuba, Puerto Rico and Venezuela. NBA
teams or a “European” division in Spain, Yugoslavia, Russia and Germany. NHL teams or
division in Sweden, Germany, Poland and Russia. A PGA or PGA Seniors Tour into Europe
and Japan.

Baseball’s Not A Viewer Sport - But A Damn Good Spectator Sport

In January of 1990, we predicted the fall from grace of baseball’s popularity. While
baseball may not be America’s favorite sport — it still is America’s favorite pastime. Our
study of American’s sports interests, as well as our subsequent study of baseball, found
that while people liked to go to the old ballpark, they really didn’t care to watch it on
television. Except for special games such as the All-Star Game, World Series and a Nolan
Ryan vs. Roger Clemens match up or a pivotal game in the final week of a pennant drive.

However, Mainland America loves baseball in summer. Not only in the big urban markets
and cities, but the small rural cities in the heartland of America. Minor league and
college baseball are hot in places like Buffalo, Omaha and Raleigh/Durham. People love
to go to the ballpark and watch the game while enjoying a few beers, a day in the sun
and spending time with the family, the wife or a friend.

Unlike football, where fans are fanatical and are glued to their seats, baseball conjures
up the old image of going to the ballpark with your father or his teaching you how to bat
and throw. You see, our fathers, while they loved football, seldom taught us the sport
because outside of friendly Kennedy type touch football games, football was rigorous and
brutal. Yet they and we continue to love it!

We played little league and our sisters played softball, but we all watched football in the
fall. Also, in the summer people are vacationing, playing golf and tennis, boating and
water-skiing. They aren’t at home watching television as much as in the fall. Have you
ever wondered why we have a fall season and the first ratings sweep in television each
October.

It’s because at the end of the Labor Day Weekend, we get back to serious business, start
spending less time outdoors and begin to watch more television. As such, baseball does
not command our viewership attention in the same fashion as football does. Need
further proof. Didn’t basketball’s popularity increase when they expanded their season
through the fall, winter and spring?

So when it comes to baseball as a favorite viewer sport, it isn’t. But when it comes to
family and Americana and promotions in the ball park, baseball’s the way. Baseball is
one of Corporate America’s best vehicles for local and regional marketing. Even with
minor league teams where you can reach millions of consumers and families in the
heartland of America.

Baseball is getting wise to this by building new, yet nostalgic stadiums [Chicago and
Baltimore]. Baseball should stop trying to play to television and play to the fan and the
occasional spectator. Since baseball has 162 games and each team has half of those
games to market, they should focus their attention onto ways to fill their stadiums night
in and night out for big and small teams alike.

Athletes To Watch In The 90s

While Michael Jordan may be hot as fire now, his flame will ultimately be extinguished
from burn-out if he and his agents aren’t careful enough to protect this star. Recent
incidents and interviews with Michael bears this fact out. He personally states that he is
uncomfortable with his fame and his capture as a media star. Commitments both on and
off the court are denying him the chance to be with his family and spend time on the golf
course.

Our sources tell us that Michael has become difficult to manage and work with. Even his
teammates are beginning to grumble about the star treatment placed upon Michael at
the expense of teammates. If this trend continues, in all likelihood Air Jordan will
ultimately crash.

So who will replace Mike? If current indicators are right, look to two bubbly and charming
females in the Winter of ‘92 to steal America’s hearts. These two shining stars may
ultimately become America’s all-time darlings of the ice. Their names are Tonya Harding
and Kristi Yamaguchi.

Besides their equal chances of achieving Olympic Gold and greatness, both young ladies
demonstrate maturity and class both on and off the ice. With Yamaguchi’s Japanese
heritage will come countless offers from both Japanese and American companies.
Tonya Harding and her down home All-American appeal and charm will knock the winter
socks off many Americans. Add to this that she is a young and attractive woman and
you have an excellent spokesperson for family oriented products and services.

But which males will lead the new charge into our lives? Look for one familiar face to
become more familiar and one unsung hero to be the stars of the 90s. If you were ever
to choose two individuals who you would want your children to emulate and follow, these
two would be it.

Each of these young men have distinguished themselves as outstanding human beings
as well as athletes. Both would make any father or company proud. Their names?
David Robinson and Jim Abbott.

When you look at David Robinson, you are looking at that rare individual who possesses
talent, intellect, charm and human decency. Besides being arguably the best center in
the NBA in just his first three years, you are dealing with a man who has served his
country, graduated from the U.S. Navel Academy, plays classical piano and is not only
well-educated and articulate, but a natural on television and in dealing with people.

The military trains boys to become men and leaders of men. As the years come about,
you will see this man become the ultimate star of the NBA, especially if he moves on to a
team in a major market such as New York or L.A.

In L.A. however, may be one of America’s all-time great human interest and baseball
stories for Hollywood. Playing on an inferior team, this star has become one of
baseball’s finest pitchers in just his first few seasons. He has won the praise of both
teammates and opponents alike.

His handsome good looks and his charming personality pale in comparison to his
courage and determination. Educated at the University of Michigan he has silenced all
critics who believed he would never make it in the major leagues. Not because he had a
good fast ball or curve, for he possessed these, but because this young man lacked one
possession each of us takes for granted — a hand!

Handicapped at birth, this young man has gone through with his life as if nothing ever
happened. He was an All-American at Michigan and went on to lead his U.S. teams in
international competition even gaining the admiration of Cuba’s Fidal Castro.

Jim Abbott is his name and baseball is his game and don’t ever underestimate this young
man, his talent or determination. America’s next “real” life story and hero, Jim Abbott
will eventually become one of America’s most admired and respected athletes.

Companies take note, Jim Abbott is America’s most undervalued athlete waiting for an
endorsement or commercial.

New Leagues & Professional Sports

TV and sports go hand-in-hand. CBS’ chief stockholder, Lawrence Tisch owns 50% of the
New York Giants, TBS/CNN & TNT’s Ted Turner owns the Atlanta Braves, numerous other
owners own local and regional television, radio and cable outlets and stations. Years ago
major newspapers and networks like CBS owned professional sports franchisees.

If stymied in their future growth, some teams may sell interests to media companies and
strategic alliances may be formed. But this is only one scenario. If the NFL, for example,
were to lose its battle with its players and it went on to negotiate a one network or cable
deal in the future, then one of the losing networks may “finance” a bid by players and
new “partners” such as media companies.

Other sports could face the same dilemma. Will the players stay if contract figures start
to come down instead of up since rights fees in many sports will decline? How will Joe
Montana or Jose Canseco feel if they win an MVP award; win a Super Bowl or World
Series; bat .341 or throw for 5000 yards and their team comes in with a lower contract
offer.

Then, none of the other teams are willing to pay them what they feel they deserve
either. This is not too far from reality. Look and see what will happen to baseball when
the next television contract is negotiated and teams lose money which will go un-
replaced. Their spending sprees will soon end.

The economic reality is that there are more cities and potential new owners out there
than there are available new or existing franchisees willing to relocate.

While there have been several failed attempts to take-on the near, if not total,
monopolies of football and baseball, sooner or latter sound management, business savvy
and marketing wise operators will launch a new and successful bid unless preempted by
the NFL or MLB. However, sports such as volleyball and figure skating will grow with new
leagues and teams and television exposure.

The NBA

Along with growth comes the associated problems of growth. The NBA has been growing
in popularity and attendance as well as in the television ratings race. While not yet
equal to the overwhelming popularity of football in this country, the NBA and collegiate
basketball as well are making significant strides toward equaling football’s popularity by
the end of this century.

Chief among these reasons is the attention the NBA is receiving from the women in
America. As the 90s continue, we will see even more women in the work place than
before. As such, their leisure time is less and increasingly more valuable.

They now turn to many outlets including participation in sports as well as their spectator
and viewer interest in certain sports.

Basketball, with its balletic grace and wide appeal is a sport that women are favoring
over other traditionally male-favored sports. This is especially true among women
between the ages of 18 and 35. Unlike football, basketball has been played at the high
school or grade school level by the majority of women in America.

They find it easier to understand and its a game that is non-violent [with minor
exceptions], unlike certain aspects of football and hockey that turn women off. Another
common comment we receive is that the ladies “like to see the bodies and cute bottoms
of the NBA stars”.

Basketball will continue to rise in popularity through the remainder of the century and
can obtain near parallel status as America’s most favorite sport by the year 2001.

Interest in Europe and Latin America as well as the dream team’s competition in the
1992 Olympics in Barcelona will contribute significantly to the NBA’s charm and appeal.

However, with growth comes the problems traditionally associated with rapid growth.
Look out for a potential strike by the NBA Players Association if the owners don’t
significantly increase or remove the salary cap. Unlike other major sports such as
football and baseball which would be hard to replicate in a successful new league, a new
basketball league could emerge with network and foreign investment.

Basketball games are easier to stage because they take less talent and resources. Every
city in America has an arena while the same isn’t always true for a major football or
baseball stadium.

Look for either further expansion, including overseas expansion in Europe and Latin
America or a new league if owners don’t give in to the player’s future demands. Unlike
the other major sports, a new world-wide professional basketball league could be easily
established.

Also look to the NBA to spread out its television contract to other networks in future
television contract talks. Additional teams and cable coverage will mandate that there
be more network coverage.

Furthermore, by spreading out the coverage to the major networks and cable outlets, the
NBA will establish a defense and preemptive strike against the possibility of a shut-out
network bank-rolling a new league.

The NHL

The NHL ranks 40th in popularity among the total U.S. population. The NHL is the lowest
ranked major team sport in the United States but ahead in popularity of such sports as
PGA golf, PBA bowling, soccer, professional mens and women's tennis.

Among men in the U.S., the NHL ranks 23rd in total popularity. It also ranks 23rd in total
popularity among those earning $40,000 and more in the U.S. However, it is tied with
PGA golf at 23rd in the income ranking for over $40,000 and surpasses the PGA when
you add those who make between $25,000 and $40,000.

Please bear in mind that these rankings are pretty high when you consider that each of
the 114 spectator and viewer sports has been broken down into its individual component
of the overall sport [i.e. auto racing is CART, NASCAR, IMSA, F1, NHRA etc. and football is
NFL, NCAA/CFA, high school, Arena and Australian Rules]. As such, 40th or 23rd is
relatively high in comparison.

To draw adequate correlations and comparisons for business and marketing purposes, we
compare any given sport, such as the NHL, to other sports. For example, PGA golf gets
wide spread corporate and television support and it’s perceived as having very high
support among high income groups. In fact, the NHL equals the PGA’s popularity in high
income groups, betters the PGA [#43] in total popularity and comes behind the PGA [#6]
among the most hated and disliked sports in the U.S.

However, the NHL ranks #14 in the most hated and disliked list with 30.6% of the total
U.S. population stating that they either hated or disliked NHL hockey. Among them,
38.1% of females in the U.S. said that they hated or disliked NHL hockey.

From follow-up one-on-one observation interviews, we have learned that the reason for
this is the vast amounts of violence and fights seen in NHL hockey. Anyone agreeing
with such strong statements of displeasure demonstrates strong convictions since beside
three positive responses there were two neutral responses that anyone could give for
each sport surveyed.

Sports that were highly disliked or hated either came from one of two general categories.
Either they were disliked for their aggressiveness and violence such as hockey, boxing
and wrestling or they were viewed negatively because of social and economic reasons
such as golf and polo disliked by lower income groups and roller-derby, drag racing etc.
disliked by higher income and social groups.

One last startling fact from our research, the NHL is more popular in the Western United
States [by 3 percentage points] than any other section of the U.S. including the North
Central, Midwest or Northeast sections of the nation.
The data and information we currently possess paints both a bright and cloudy picture
for the NHL. While the sport ranks high in popularity among males and high income
groups [top 25%] it ranks higher in the most disliked and hated category [top 10%].

This should provide the NHL with enough evidence once-and-for-all, to crack down on the
violence and fighting in its game. If it doesn’t, it will continue to alienate any potential
growth it may have which will have to come from additional female support or support
from overseas populations in Europe.

It is also our opinion that the NHL could achieve increased popularity and corporate
support if it followed the following recommendations:

• Move its rules and state of play to the “international game” with a higher focus on
speed, agility, passing and more wide open play.

• Eliminate the fighting that takes place in NHL games with stiff fines and penalties
such as total bans and one year suspensions. [The NHL must get away from the
mentality than fans come to see the fighting]

• Expand to the Western United states rather than Florida and Southern points.

• Transform the league into the “international” arena by expanding the league into
Europe. This, more than anything, will increase the league’s viability and would provide
it with the only means for increased popularity, television and corporate sponsorship
support.

• The NHL could receive wide spread media support and coverage by being the first
sport to expand overseas because within the next ten to fifteen years you will definitely
see overseas expansion in the NBA and NFL.

Franchise Awards In The 90s

Baseball Best Bets - Tampa/St. Pete, Phoenix, San Antonio, Washington D.C.

Baseball Losers - Seattle,

Football Best Bets - Charlotte, Jacksonville, Memphis, Baltimore, St. Louis, San Antonio,