Investigating sports business IRE 2009 June 11-14, 2009 Baltimore Jodi Upton, USA Today & Paula Lavigne, ESPN jupton@usatoday.com paula.lavigne@espn.com Reporting on the business of sports isn’t much different than reporting on business in general, but there are some unique facets that will help you focus your efforts on the game at hand. Professional sports Player salaries: Through documents, agents and research, USA Today has compiled a comprehensive database of salaries of professional athletes in the NHL, NFL, NBA and MLB. You can find it here: http://content.usatoday.com/sports/salaries/ . The salaries are searchable by player, team and year. Agents: Agents are obviously the link between players and teams, often a multimillion dollar link. There are several agent directories online and it might be worth investing in one. (Example: http://www.sports-agent-directory.com/) In some states, agents have to be licensed. Agents are obviously good sources, but take them with a grain of salt. USAToday.com, ESPN and many other sites have been publishing salaries for several years, but agents can be a good source for new contracts and new players. http://content.usatoday.com/sports/football/nfl/salaries/default.aspx Also, a sortable, searchable database of NFL drafted players and where they came from is here: http://www.usatoday.com/sports/football/nfl/draft-historygraphic.htm Teams: With few exceptions, most teams are privately owned in the U.S. But you can often look into the individuals or companies that have a stake in them. Many of those people or companies end up having some sort of public disclosure of their assets or finances. Use the same tools to investigate them as you would any business. For public companies, examine their filings with the Securities and Exchange Commission at www.sec.gov . Start with the company's annual report, or 10K. They will include the names of the executives and the board of directors along with their compensation. The SEC also has information on investment advisers and brokers at http://www.sec.gov/investor/brokers.htm . For non profits, use services such as Guidestar.org or CharityNavigator.org to look at their IRS 990 files, which give the company's financials. For private companies, you can rely on Hoovers.com for some free information and a more-detailed report for a fee. If you have access to services such as Lexis-Nexis or Westlaw, you might also have access to Dun & Bradstreet reports that offer even more detail. Other resources: Several online services, including those already mentioned such as Lexis-Nexis and Westlaw, have information on all types of businesses. If you can get access to it, Mergent Online at MergentOnline.com is also a valuable, comprehensive resource for getting company financials. Yahoo! Finance has a great (FREE!) collection of sports-related companies, both public and private. It’s probably the best roundup I’ve seen: http://biz.yahoo.com/ic/715_cl_all.html or Investing > Industries > Complete Industry List > Sporting Activities (under services) Other team-finance angles to consider: Sponsorships and endorsement deals. (Check public companies' 10-Ks to see how much they spend on advertising and if they make specific mention of the value of sports marketing.) Stadium/facility construction. (Those funded partially with public funds likely will have to disclose more information about their operation.) Be sure to check marketing deals and considerations cities and states receive for on-going support of the stadium. A little reverse-engineering of the contract finances may yield a workable estimate. Contracts with vendors, such as concessions, aircraft, uniform suppliers, etc. Campaign contributions. These can come from people employed by teams or by a few sports-related political action committees. Lobbying. Check http://www.senate.gov/legislative/Public_Disclosure/LDA_reports.htm or http://www.opensecrets.org/lobby/search.php Federal funds. Find out if a company or institution is getting government contracts or grants at FedSpending.org a project of OMB Watch. This also shows grants given to colleges and universities, including a $700,000 grant to study fantasy football. Charities. The leagues, teams and athletes have their own charitable organizations. It’s worth taking a look at their financials. Here's a good guide from the American Institute of Philanthropy that ran in The Seattle Times: http://seattletimes.nwsource.com/html/sports/2003855928_webevaluate02 .html Keep an eye on court filings, especially breach-of-contract lawsuits and bankruptcies. They can provide a great deal of information about teams, agents and athletes. Get copies of economic impact studies. These are the studies that consultants or business managers put together when trying to decide whether to bring - or keep - a team in town. They try to predict how much money the new team or facility will bring to the city, or drain from it. Simply check the company's Web site. Look in the "About us" section to find names of executives and company histories. UCC Lien. A Uniform Commercial Code lien is a financial document stating that a lender (secured party) has a claim in certain property belonging to someone else (debtor). UCC liens can show you who someone has been doing business with and it can indicate whether someone is in financial dire straits. By filing a UCC lien, a secured party establishes his or her priority for payment over subsequent secured parties if the debtor defaults on the loan. Some UCC liens are listed on a state's Secretary of State Web page. Lexis-Nexis, Westlaw and related services also have information on loans. Corporation filings. When someone starts a business, he/she usually files incorporation paper with the Secretary of State. Several Secretary of State offices have online searchable databases. Just Google the name of the state and "secretary of state." (I.E. "Texas secretary of state.") You might have to dig around a bit, but you should find a link to a searchable corporations or business filings database. Unions: Players unions also have a significant impact on rules and salaries. You can keep tabs on them through the U.S. Department of Labor site (and this terrible URL): http://www.dol.gov/esa/olms/regs/compliance/rrlo/lmrda.htm#1?link-ref=1956261 Immigration: You can track when teams request visas for players, coaches or trainers through the Foreign Labor Certification Data Center or FLCDataCenter.com . It also includes wage information and the status of some applications. Players generally come in on P-1 or P-2 visas, but you'll want to check to make sure. College teams Private colleges: Most private colleges have to file an IRS 990 form, the financial disclosure required for non profits. You can find these forms on Guidestar.org, and the law also requires the nonprofit itself to provide its 990 upon request. Starting with fiscal years beginning in 2008, non profits will be required to disclose even more information, including more detail about top salary earners. This means that you'll get even more information about the salaries of coaches at private schools. Downside: it's usually filed a year or two in arrears. Public colleges: Information on revenue from ticket sales, licensed products, etc., and team expenditures should be public record at most public colleges. Last updated in 2007, USA Today researched all 120 Division 1A head football coaches' salaries: http://www.usatoday.com/sports/graphics/coaches_contracts07/flash.htm Head coach salaries and average salaries for assistant coaches are reported to the NCAA. Ask for the NCAA's EADA report (*not* the report filed with the Department of Education, which is less accurate) which details athletic expenditures and head coach salaries reported by the school. Also ask for the outside income report, which all athletic-related employees must fill out. It can include revenue from book deals, shoe contracts, etc.(see NICAR's tipsheet library for specific examples of what the document looks like) Ask for other types of contracts, including any related to construction or renovations. Keep in mind that some public colleges will try to hide their athletic expenditures through the use of private foundations associated with the university or the athletic department itself. The same information applies to colleges as it does to teams in terms of campaign contributions, lawsuits, etc. Make sure you check with both state and federal agencies in this regard. Other High schools: At public high schools, data on salaries, expenditures, sponsorships, etc., should be public information. International: In some cases, you can get information on teams owned in other countries. Public ownership of teams, especially football (soccer) clubs, is actually more prevalent in Europe where several teams are listed (or listed via a holding company) on the London Stock Exchange. (Londonstockexchange.com) Olympics: Every four years, the International Olympic Committee makes its financial statements available. You can find them on the Olympics.org site under "Documents" at the bottom. Scroll down to IOC Interim and Final Financial Reports and Marketing Reports. The U.S. Olympic Committee Committee's annual reports and non-profit tax filings are on its Web site at www.usoc.org under "About the USOC" and "Financial Information." Economic data: You can find trend data on sports spending and industry revenue at both Census.gov using the tools in the Economic Census links and the Bureau of Labor Statistics at BLS.gov (just type in sports or athletes in the BLS search field). The following link shows the list of databases the U.S. Census Bureau has on sports and sports spending: http://www.census.gov/compendia/statab/cats/arts_recreation_travel/recreation_ and_leisure_activities.html?link-ref=1892597 Ideas (You can find many of these in IRE's story library. Story descriptions are from the IRE site.) Cold Cash: Ski Resorts Profit on Cheap U.S. Land: This 2002 San Jose Mercury News story showed how "ski-resorts use federal land, such as national forests, but pay barely any rent to the government. In some of the more extreme cases, the resorts pay less than one cent per dollar." Money Players: This 2002 U.S. News & World Report story showed how NFL athletes have become victims to shady or inept financial advisors and have lost millions. High Schools in the money are also rich in sports titles: This 2004 USA Today story proved that money buys scholarships as schools in wealthier neighborhoods were more likely to win state championships than those in poor neighborhoods. Athletic spending grows as academic funds dry up: This 2004 USA Today story shows that athletic budgets at DI schools rose at more than double the increase of average university spending. Average coach salary tops $1 million: These USA Today stories from 2006 and 2007 show more than a dozen Div. I coaches make seven-digit salaries, even while schools are raising tuition and fees, and most athletic departments rely on the university general fund and/or tax dollars to run. Athletes sign autographs as punishment: This 2007 USA Today story showed most athletes who break the law - everything from abandoning a puppy to negligent manslaughter - usually sign autographs, make commericals or make celebrity appearances at sports camps to atone. Jerry's World: Operation Mickey Mouse: This 2003 New Times story showed how pro-team owner Jerry Colangelo made more than $300 million on development projects that never came to fruition. O.J. Mayo's Inner Circle: This 2008 ESPN story details the murky relationship among professional agents, pro teams and college athletes. NBA star O.J. Mayo was found to have been involved with a secret bank account and credit card used to finance luxurious gifts, meals, and travel. Risky Business: This 2008 ESPN story revealed that at least 85 Division I universities hired bus companies that violated federal safety standards amid concerns that belt-tightening at colleges would lead to booking even more questionable carriers. Follow the Money: This 2008 ESPN story detailed how corruption among street agents in the Dominican Republic has been public knowledge, but after a Chicago White Sox assistant general manager tried to bring $40,000 in undeclared cash into the United States a new story emerged: corruption among MLB employees. As its charity gives, Sonics receive: A 2007 story by the Seattle Post-Intelligencer that shows that almost half of the $1 million the Sonics' charitable foundation claims to have distributed as gifts went to buy Sonics tickets for underprivileged children. Pro sports figures more invested in this presidential campaign: A 2008 story by ESPN showing that donations to McCain and Obama from pro sports figures dwarf what the industry has given to past presidential candidates, with McCain leading the way. Miscellaneous resources BusinessJournalism.org The Donald W. Reynolds National Center for Business Journalism has several valuable resources. Take advantage of the FREE online classes, including lessons on how to read financial statements. It has offered targeted sports business workshops in the past. TheSportsEconomist.com This online blog offers daily commentary on sports business trends, trades, sponsorship deals, etc., at all levels of sport. SportsBusinessJournal.com Street & Smith’s Sports Business Journal provides in-depth coverage of all aspects of the business of sport and is an interesting read. Subscription required for most online content and for print edition. Sports Law Blog at http://sports-law.blogspot.com/ Keeps tabs of legal proceedings and issues that affect the sports industry. The list of contributors on the left menu includes some possible experts for whatever story you might be pursuing. Florida Coastal School of Law, Center for Law and Sports Professor Rick Karcher, (904) 680-7743, rkarcher@fcsl.edu San Diego State University Sports Business Management MBA Program http://www-rohan.sdsu.edu/~cba/sports/default.htm Check out the faculty/staff page for contacts.