September 30, 2017
Sportsradio 950 KJR parent iHeartMedia may avoid declaring bankruptcy, with its biggest creditor considering revised terms. New debt issued in mid August provides favorable terms for that creditor, Franklin Resources. And now with the completion of 3Q, investors will soon get an update on the media behemoth’s financial condition, along with news regarding yet another debt restructuring. Needless to say, its been an eventful run. This all would seemingly be an improvement on the dubious spring announcement about the company as a “going concern” after discussions with Franklin hadn’t made progress.
iHeartMedia, formerly known as ClearChannel before being taken private in 2008, has yet to recover from the debt load placed on the company during that buyout. It’s not obvious where KJR ranks amongst the company’s important, or profitable stations, but it’s fair to wonder whether the parent company’s financial position has prevented 950 from bidding on, or retaining (UW football/basketball), local sports rights. Though KJR is far from the only sportsradio station in iHeart’s stable of programming, so any future changes would likely not be felt by 950 alone. We may be a few weeks away from knowing whether those changes are for the better or worse.
August 29, 2017
Not exactly a gripping headline when stating the obvious. But this month the Sounders announced they’re seeking a new naming rights partner, perhaps most prominently for the jersey. The current deal with Microsoft, extended multiple times since the inaugural MLS season in 2009, expires at the end of the 2018 season. Adrian Hanauer acknowledged in media reports covering the story that the team doesn’t earn much revenue from its TV deal (currently with Q13 FOX). One can infer the radio deal (97.3 KIRO-FM) doesn’t bring in much either.
So this upcoming naming rights negotiation represents a big opportunity for the club to grow its revenues. Maybe better media deals will follow. All will only further boost a team value that Forbes pegs at $295M, good for second in the league.
Notably, the Mariners are currently looking for a new stadium naming rights partner, while OVG reportedly is already seeking corporate sponsors for its proposed KeyArena remodel. We’ll see how the final deals shake out in terms of value compared to league peers and whether the teams stay local when finding their partners. There’s no better time than now to explore opportunities in the thriving Puget Sound region. And for the defending MLS Cup champs, seemingly a lot of runway to grow the business.
July 26, 2017
With the Houston Rockets now for sale, the possibility arises that the NHL could again look at that market. The Rockets owner remained unwilling to consider sharing the arena on any terms that would have been acceptable to NHL partners throughout his ownership of the franchise (though minor league hockey was played there). And during his ownership reign, the NHL continued its sun belt market focused strategy. It’s fair to conclude that given Houston’s size, wealth and location, the city would have appeared near the top of the list with a more welcoming arena partner.
Houston’s strengths as a market still apply, which could impact Seattle’s NHL hopes. The Toyota Center is NHL ready, a franchise there could be placed in either conference, or allow another Central time zone club to switch conferences. That lessens the need for Seattle as an addition to the shorthanded Western Conference. It probably also helps to have a ready made rival nearby in the Dallas Stars. And Houston has a surprisingly robust hockey history, ranging from the WHL to various minor league teams.
This all goes to show that those who claim to want a modern arena developed within Seattle, along with their involvement in the excruciatingly slow process, best get moving. Events far from here, and outside local politicos reach, can have just as much impact in determining whether the city gets to suit up in the NHL or NBA (again) in the future.
June 17, 2017
CenturyLink extended its naming rights deal for the stadium shared by the Sounders and Seahawks for another 15 years at roughly $10M/yr, reportedly doubling the previous agreement. The value reflects a stadium in a growing, upper medium sized market that houses teams that consistently make the playoffs in their leagues.
The CLink is one of three facilities that serve as permanent homes for NFL/MLS teams in their markets, along with Gillette (New England) and Mercedes Benz (Atlanta). The Atlanta stadium’s opening has been delayed multiple times and now is expected to open in August. With both of these other stadiums being in larger markets, one can expect those naming rights deals to be larger, especially the new Atlanta stadium. But the newness of the stadium is just one of many factors considered when such agreements are signed, as the linked article notes.
This season, the Chargers will join the Galaxy at StubHub Center for a three season stay until the new NFL facility in Inglewood is completed. Additionally, Vancouver and Toronto both have MLS/CFL stadium sharing agreements. So the economics behind the naming rights deals for shared football stadiums will continue to be focused on the long term nature of the setups in Seattle, Atlanta and New England (Foxboro) for the foreseeable future. And in the case of Seattle, the agreement is more valuable than expected if based on market size alone.
Your turn, Mariners.
May 8, 2017
The proposed Sinclair Broadcast Group’s acquisition of Tribune Media may have an impact for local sports fans. Sinclair owns KOMO TV, an ABC affiliate, which shows some programming from its Disney sister channel, ESPN. Locally, this means some Pac-12 football games and, well…the NBA.
Tribune owns KCPQ, also known as Q13 Fox, being a Fox affiliate. Because of that relationship, Q13 Fox broadcasts most of the Seahawks’ games. Additionally, they are the team’s preseason home. The station also holds the local rights for the Sounders and Storm. And similar to KOMO, Q13 Fox broadcasts Pac-12 football and basketball due to Fox Sports contract with the conference.
Sinclair is also trying to make a go of it with the American Sports Network. It’s billed as a multi-platform network, albeit one with secondary conferences and games. Perhaps the proposed merger is a way for Sinclair to boost distribution of ASN while also acquiring more sports rights to potentially feed its way.
So what changes for fans if the merger is approved? Probably not much, at least initially, but it bears watching. Sinclair would own stations that are affiliates of two of the four major broadcast networks, both of which show sports relevant to local fans. And, Sinclair would be the rights holders for the Sounders, Storm and preseason Seahawks games. Even mergers in far off places can work their way back to the local level.
April 30, 2017
Both AEG and OVG submitted their Key Arena proposals earlier in the month. With each willing to build before a tenant is guaranteed, they take substantial risk. And because of the returns their projects must generate for their proposals to operate profitability, that theoretically leads to less revenue and profit available for whomever may partner with them to own the team(s) in the building.
In the NFL, the recent proposal to keep the Raiders in Oakland, along with AEG’s Farmers Field project in Los Angeles a handful of years back, were frowned upon by the league because they didn’t want another party (the proposed stadium developers) standing between the ownership groups and the building revenues. I haven’t heard either the NHL nor NBA voice such concerns outright for arenas, or these Seattle proposals, in their leagues.
But it stands to reason that future NHL or NBA ownership groups in a remodeled arena will not benefit from the full profitable potential of the building because AEG or OVG will have rights to certain revenue streams. This may not matter to owners who just want to own a franchise. And it might appeal to some owners who may not have the wherewithal to finance both an arena and team themselves. Because of this, it’s quite possible that an ownership group operating out of a remodeled arena may not have as great a revenue potential as the Puget Sound market might suggest. Whether that hampers the competitiveness of the team(s) may be determined by the willingness of the owners to reach into their own pockets on occasion.
March 11, 2017
First & Goal Inc. announced the creation of First & Goal Hospitality (FGH), which took over the management and operations of all concessions at CenturyLink Field and related venues as of March 1st. FGH takes over from Delaware North, a big, long time player in the hospitality business.
It makes sense for Paul Allen’s F&G to do this as a way to increase incremental revenue at a facility the group already operates. FGH is also believed to be the first locally team owned organization to break into the hospitality sector. It’s a competitive sector nationally, from Delware North to Yankees and Cowboys’ owned Legends Hospitality to Centerplate (Safeco Field, Tacoma Dome), to Levy Restaurants (KeyArena, Moda Center), to the big heavyweight, Aramark (UW facilities), with over $14B a year in revenue and a market cap of $9B, dwarfing any sports franchise multiple times over. And these groups have long branched out from concessions, ranging from marketing and sponsorships to ticketing and consulting.
The local venues noted above serviced by the national players make obvious targets should FGH look to expand. None more so than Allen owned Moda Center in Portland. And just as the more established hospitality businesses broadened their product offerings, it wouldn’t be surprising to see FGH eventually go that route as well. So Seahawks and Sounders fans can look forward to new concession offerings this year, knowing that the genesis for those options are indeed, created close to home.