Like the universe after the Big Bang, the sports industry continues to expand in all directions.
It’s taking up more space on your cable listings, where TSN added four feeds and Al-Jazeera’s beIN Sports has added a pair of channels — one each in English and Spanish.
It’s on your mobile devices, where Rogers continues to seek creative ways to leverage an unprecedented glut of NHL content.
And it’s even in your closet, where equipment manufacturers like Bauer have begun marketing casual clothes cut to fit athletes’ unique physiques.
As 2014 ends the business of sport is as ubiquitous as ever, and as 2015 approaches here are five big trends to watch in the New Year.
• Rogers/NHL deal
Two months into Rogers 12-year, $5.2 billion agreement to broadcast NHL games nationally, the ripple effects are already reverberating. For CBC, the loss of revenue from hockey helped push the corporation to cut 657 jobs and more than $130 from its budget earlier this year.
Meanwhile, mobile carriers Bell and Telus have complained to the CRTC that aspects of the GameCentre online streaming service available exclusively to Rogers customers violate net neutrality. If the CTRC sides with Rogers’ rivals, what other ways will Rogers devise to use NHL content to drive cable and wireless subscriptions? And if the CRTC says the exclusive features are legal, what countermoves are left for Bell, Telus and others?
• The tumbling price of oil
What does this have to do with the sports industry?
Falling gas prices ease pressure on household budgets, making it less of a burden to outfit your kids for sports — especially expensive ones like hockey — and drive them to practice.
The problem for pro teams is that when the price of crude oil drops, it drags the value of the Canadian dollar down with it. In December 2013 crude oil cost more than $110 (U.S.) per barrel, and the Canadian dollar closed the year trading at 94.14 cents per US dollar. But in 2014, the price of crude has dipped below $60 (U.S.), driving the Canadian dollar down to roughly 85 cents (U.S.).
A weaker Loonie complicates finances for Canadian teams in U.S.-based leagues because they receive much of their revenue in Canadian dollars while paying player salaries in U.S. funds. The situation isn’t as dire as it was in the mid 1990s, when 65-cent dollars helped drive the Quebec Nordiques and Winnipeg Jets to the U.S., but a falling exchange rate would still place pressure on Canadian clubs that their competitors don’t face.
• The decline of the Football-Industrial Complex
This isn’t to say the sport will disappear soon, because it won’t. The NFL is on track to bring in $10 billion (U.S.) in revenue in 2014, and while a series of domestic abuse scandals dented the league’s reputation, the NFL’s overall popularity survived. Through first half of the season, every U.S. network broadcasting the NFL saw viewership increase compared with last year.
Still, as research reveals the extent to which football injuries can damage a player’s long-term cognitive abilities, the sport will become more expensive to insure. NFL teams can bear that cost, but high school and youth leagues might struggle.
And the cost of staying competitive is causing fissures in the NFL’s default minor league system, the NCAA. Earlier this year the governing body allowed teams from its five richest conferences to compensate players beyond the value of their scholarships. Mid-sized schools competing for recruits are forced to spend big on facilities and in-kind perks, and the cost of keeping up is steep. In December, the University of Alabama at Birmingham dropped its football program, citing mounting financial pressure. In football’s absence UAB will resurrect its men’s track and cross-country teams.
If the game’s dangers cause fewer parents to register their kids, and if more college teams opt out of the expense of big time football, which other sports will benefit from the talent runoff? It’s a long-developing trend worth watching.
• End of the long-term MLB free agent megadeal?
It’s not the end of the big-money contract, obviously. It can’t be when the Chicago Cubs agreed to pay pitcher Jon Lester $155 million over six years, and when the Blue Jays signed catcher Russell Martin for five years and $82 million.
But last year’s biggest free agent contract went to Robinson Cano, who signed with Seattle for 10 years and $240 million. The previous winter Albert Pujols also received a 10-year, $240-million commitment when he signed with the Angels. Both those players were north of 30 years old when they signed, meaning those contracts were guaranteed to pay them big money during what figured to be the least productive years of their careers.
Or you could view the elite salaries Cano and Pujols will earn in the early 40s as deferred compensation for the early years of the deal, when they still figure to perform like all-stars.
The fact that this off-season hasn’t featured any 10-year deals might signal a shift in how teams do business with free agents, paying a higher average salary over a shorter term rather than committing big money to aging stars.
Or it might mean no Cano-level megastars were available. Next year’s free-agent class might give us some clues about whether shorter deals are a trend or an aberration.
• Seismic Shifts in Boxing’s Business Model
Will Floyd Mayweather and Manny Pacquiao fight in 2015? Their flirtation continues but the numbers don’t lie. Pacquiao’s fights average half as many pay-per-view buys as they attracted before his 2012 loss to Tim Bradley. Mayweather’s six-fight contract with Showtime guarantees him $240 million, a sum the network will struggle to recoup given Mayweather’s weak pay-per-view sales. Neither of his past two fights have surpassed 1 million buys, and a renewed focus on Mayweather’s long history of domestic violence means his popularity doesn’t figure to rebound.
A superfight in the spring would give both fighters’ camps a record-breaking payday, but beyond that look for boxing de-emphasize pay-per-view fights in favour of broader distribution and the ad dollars that come with it. The sport remains popular – which makes network TV a viable option for promoters – but after Pacquiao and Mayweather retire the individual star power that makes pay-per-view a viable business model will diminish significantly.