Around the Horn: May 24th

Fewer people tuned in to watch last Saturday’s Preakness Stakes on NBC than last year’s race (viewership declined by 8%). Many had actually expected to see a ratings increase with the stage set for another potential showdown between Kentucky Derby winner I’ll Have Another and runner up Bodemeister, but apparently the budding rivalry was not enough to attract more eyeballs.

It isn’t all bad news, however, for NBC.  According to Fang’s Bites (a website that analyzes sports media), overall viewership for the Preakness Stakes on NBC is up an average of 63% in the last 11 years compared to the previous 8 years’ of race coverage on ABC.  NBC should also expect to see a nice boost for its coverage of the Belmont Stakes.  Interest in the race has spiked as I’ll Have Another pursues the coveted Triple Crown.  According to USA Today, since 2000, the eight Belmont races without a Triple Crown candidate averaged 4% of U.S. TV households while the 4 races with horses contending to become the first Triple Crown winner since 1978 averaged 10.1% of households.  Expect a nice number for NBC on June 9th…

Many have suggested a correlation exists between the National Football League’s rise in popularity and the explosive growth of fantasy football.  If a correlation does indeed exist, should we see a boom in the popularity of fishing as a spectator sport?  Bassmaster’s website features a fantasy fishing league and it appears as though thousands of fishing enthusiasts are actively participating…great idea by Bassmaster to drive traffic to the site while giving fans a reason to consistently interact with the brand.

According to a recent USA Today report, the National Guard spent nearly $33 million in NASCAR sponsorship fees in fiscal 2011.  The same report also suggests the National Guard spent $20 million in professional fishing and $90 million overall in motor sports in 2011 and 2012…this apparently led the government to enact an effort to ban all military spending on sports sponsorship.  If the government succeeds, how significant will the impact be on the industry?  Just ask Dale Earnhardt Jr. (sponsored by the National Guard), Brad Keselowski (U.S. Navy), or Ryan Newman (sponsored by the U.S. Army) who collectively risk losing millions…

Despite what is becoming an increasingly crowded space, Gatorade continues to dominate the competition.  A story that appeared recently on bloomberg.com suggests the sports/energy drink market was $41.5 billion in 2011, representing the fastest growing segment in the beverage industry (up 14% from 2010).  According to the article, Gatorade did $13.8 billion in sales last year, capturing 33% of the market. That’s impressive.

Today’s parting shot:  The NY Rangers Gnome (@NYRGnome) started a Twitter account at the beginning of NHL playoffs. It already has 5,250 more followers than I do…

Is LeBron James Underpaid? ESPN the Magazine Thinks So

The average Major League Baseball salary is expected to be nearly $3.5 million in 2012, up 4.1% from last year, the steepest annual increase since 2008….To put that into perspective, consider Babe Ruth earned just over $910,000 TOTAL throughout his 22 year big league career (according to baseball-reference.com).  Yet a story published in ESPN the Magazine‘s recent “Money” issue argues many of today’s pro athletes are actually underpaid.

Here’s the thing.  They actually make a pretty compelling case.  In a market analysis conducted by ESPN, the magazine identifies the most undervalued and overvalued “assets” in the industry today.  To illustrate the point, the Mag points out that a recent survey conducted by Yahoo! Finance and Fitness magazine suggests Americans think LeBron James is the most overpaid celebrity not named Snooki or Kim Kardashian.  The Mag counters by suggesting that, while earning $16 million this season, LeBron would actually be worth an estimated $45 million on the open market if you consider the factors that prevent players from truly maximizing their salaried earning potential such as arbitration, the draft process, salary caps and luxury taxes.  Do these restrictive “policies” indeed prevent players from being compensated commensurate for what they are actually worth?  They do, according to ESPN the Magazine, primarily because owners of professional sports teams are in total control.

Also among the sports business assets described as “undervalued”, Albert Pujols (generated $93.3 million in value for the Cardinals the past three seasons while the club paid him $43.5 million), Danica Patrick (the 37.5 minutes Patrick’s GoDaddy car was on-screen during the Daytona 500 broadcast was worth nearly $12 million in exposure), and the commissioner of each of the “big four” professional U.S. sports leagues (according to Forbes, the value of the 122 major sport franchises has increased by $10 billion to a total of $70.5 billion over the past five years).

While the Mag suggests many in the sports biz are undervalued, the story also presents a case for those assets that are overvalued.  One such asset would be MLB closers, including Mariano Rivera (pre-injury).  As the article describes, “He became the Yankees closer in 1997, and since then, New York has won 97.2 percent of games it led entering the ninth. Meanwhile, the lowly Pirates have won 94.7 percent of those games with studs such as … exactly.”  The story also suggests assets such as “big-name managers” (apparently no statistical correlation exists between managers and player performance) and NBA draft picks chosen after the first five selections would also qualify as overvalued.

While most fans will likely cite evidence to the contrary, the “Money” issue does provide a strong position that many professional athletes are actually underpaid.  Either way, it is an interesting article that offers a different perspective on the “overpaid athletes” topic that has long been a lightning rod for criticism among sports fans.  If you aren’t a subscriber, I’d recommend grabbing a copy at the nearest newsstand.