LeBron to Knicks would add $150MM to Team's Value?

According to a report in Crain's New York Business, the signing of LeBron James could add $150 million dollars to the market cap of Madison Square Garden Inc, the parent company of the New York Knicks. Every time the mention of him signing with the Knicks comes within a wiff of the stock market, it's ticker jumps. The stock is so sensitive to the possibility of LeBron heading to NY that it jumped 12% when the Cleveland Cavaliers, his most recent team, lost their playoff series against the Boston Celtics.

Currently, the Knicks are one of the worst teams in the NBA. The past couple of years have not been kind to their fans as they shed the outsized contracts of players like Stephon Marbury, Jared Jeffries, Jerome James, Allan Houston and others that took up more space on the bench, disabled list and the payroll than they did on the stat sheet or all star team. The shedding of those contracts has provided the team with $35 million in salary cap room, more than enough to sign King James or two other top tier free agents.

For a fan base used to winning and expecting it every year this was a shock to the system. Fans stopped going to games and stopped watching the team on their MSG Network. The team disappeared from national telecasts it used to be prominently featured in just as quickly as it slid out of playoff contention.

The thought is that anyone, not just LeBron James, anyone signed to a contract representing an improvement over the current collection of players that would be on the island of misfit toys, were this a Christmas special, would represent an upgrade and cause more cash flow into the team. Higher TV ratings would mean more advertising revenue; more competitive games would mean more people in the seats at the Garden; eventually they could even raise ticket prices when they make the playoffs. A planned $850 million dollar renovation will also help bring fans into the outdated arena for at least a season. In addition to 78 new luxury suites, there will be 40% more points of sale for concessions that should add t to the bottom line.

That would be great for MSG shareholders, but signing LeBron would be like investing in an exploratory oil drilling company shortly before it makes its first big find. Currently, according to Forbes, the franchise is valued at $586 million. That value could rise as high as $736 million should LeBron come to the Knicks says Patrick Rishe, a professor of economics at Webster University and director of consulting firm Sports Impacts. This would come in the form of an immediate $10-$20 million boost in revenue and the rise in TV ratings that having the most dynamic player in the NBA on the team would provide. Not to mention that boost in advertising inside the arena because of the increased exposure of the team being on national TV again as well.

In summary, the gains would come from sponsorships, higher ticket prices, playoff games, eventual subscriber fee increases from cable and satellite operators—and rocketing ad rates on the MSG Network, the company's main source of profits according to Crain's.

Overall, according to Crain's, the company has performed reasonably well considering the difficulty of the Knicks to field a competitive team. In its first quarter since it was spun off from Cablevision Systems Corp., the new company's revenues rose 9% over the year-earlier period to $307 million. It had net income of $17 million, compared with a loss of $2 million in the first quarter last year. Its stock has risen 16% since its February debut, closing at $21.48 on Friday.

The arena bills itself as the "World's Most Famous Arena" has no real competition just yet. Not until the Nets move into the Barclay's Center in Brooklyn anyway. That's when they will need a star like LeBron to draw the crowds investors in MSG Inc will expect, new Nets owner Mikhail Prokhorov is playing for keeps.

Tweeting Sports

Twitter has many uses: communicating with their favorite celebrities/athletes/politicians, product announcements, companies communicating with their employees/customers, people who think the world cares about their trips to McDonalds, etc. The list could go on for days.

One unexpected use of it has been by the news media to scoop breaking news stories faster than other outlets and before they can arrive on the scene with their people/equipment. The 2010 Haiti earthquake broke on Twitter before anywhere else. With all of these uses, what would you believe set the all time record for tweets per second? Sports of course!

Twitter announced on Friday that the following records were set in the 30 seconds following each goal during the World Cup:

1) Japan scores against Cameroon on June 14 in their 1-0 victory (2,940 TPS)
2) Brazil scores their first goal against North Korea in their 2-1 June 14 victory (2,928 TPS)
3) Mexico ties South Africa in their June 11 game (2,704 TPS)

Now that's a lot of tweets! The records did not stand much longer than Mark McGwire's single season home run record though as Lakers fans/bandwagon jumpers set the record shortly after they dismissed the Celtics to win the NBA Championship with 3,085 TPS as the last few seconds ticked off the Boston Three Party's time together.

Twitter's usefulness as a barometer for social trends has been known for about as long as its existence, who knew Ashton Kutcher was so popular? What it is now becoming useful as is a tool of the media to be able to report news without needing the resources they previously did to gather information, results and even stats. Want a sound byte from an athlete? Go to Twitter. Want to know last month's player of the month for the Yankees? Go to Twitter.

Twitter recently started a new advertising system that has promoted trends below the trend stream us twitter users know and love. They also recently started banning ads in stream, an annoying problem that they had to fix. Basically, you can have "Lakers, Celtics, Champs and World Cup" as trends and below them you may have a paid trend for a new movie coming out. Additionally, should a team purchase a promoted trend for its apparel, you would see a promoted trend for it at the top of your search results should you search for the team itself or one of its marquee players.

To quote, and agree, with Mashable CEO and founder Pete Cashmore: Brilliant!

Not only can teams and leagues use this to promote their wares, but Twitter can now start earning that valuable revenue that has eluded it so far. Also, all this can happen without ruining the simple, perfect experience that is a tweet.

World Cup 2010 in the States

In watching most of the World Cup matches in bars in Manhattan so far a few conclusions have been made by your editor: Soccer fans do exist in this country, not all of them are rooting for other countries and drinking at 10am is fun!

Let's start with that first point. People assuming that Americans could care less about the beautiful game have a point, but they also miss a huge one according to ratings released so far. For the UEFA Final, there were 1.6 million viewers according to this NY Times soccer blog post. The blog goes on to say that FOX had hoped for at least double that number, but also notes that it was more than the 1.4 million people who watched the last UEFA Final on ESPN.

Next, the ratings for the USA vs England match which aired live on a Saturday afternoon on the east coast averaged 14.5 million viewers between the English language broadcast on ABC and the Spanish broadcast on Univision, according to the LA Times. Which, according to Sporting Intelligence, is almost the same number of people who watched the match in England and, more importantly, more than the number of people who watched the first four games of the NBA Finals between the two most storied franchises in that NBA.

That more people are watching soccer is clear, how many will grow to is not. Strictly based on population, if only 10% of the US population becomes a regular soccer watching audience, this country could rival any audience in Europe or South America. Advertisers are keenly aware that soccer here is akin to mobile phones in China, there has not been total market penetration and there is room for growth. They want to cash in on what could be a bonanza in the coming years. With DVRs lessening the significance of live TV outside of sporting events, advertisers crave another outlet to reach a specific target audience, even if it is only a niche group like the US soccer fan. Of course, with the US currently down 2-0 to Slovenia at the half, soccer could be a bigger bust than Ryan Leaf.

Another thing is clear in bouncing from bar to bar, blog to blog and friend to friend; not everyone is rooting for teams of their ancestry or where they immigrated from. The one problem, which is the only way to look at it in terms of soccer, is that people in this country tend to think of themselves as Irish, Italian, German, Mexican, etc-American. They are foreign first and American second. This leads them to root for European or Latin American teams before they root for Team USA. This applies not only to soccer, but to other international sports as well.

This year that tide has changed. Many people that formerly would laugh at the US soccer team are now taking them seriously and rooting for them as they would the Yankees, Aresnal or the Lakers. People from other countries that did not qualify (Ireland, Peru, to name a few) are rooting for the US and some are even wearing team USA jerseys with regularity. For this to continue, the Americans will need more goals like the one just netted by Landon Donovan to start the second half. Absolutely brilliant. Should they flame out, that support will also dwindle.

Less than a year ago I had to search all over the channel guide for the USA vs Mexico World Cup qualifying match in Mexico City. It should have been on ABC, NBC, FOX, ESPN or Univision. Anything that is a national network. It was on Mun2, which happened to be as high on the channel guide on Comcast as the music and PPV channels at the time. That game would be on national TV in any other country, it is a disgrace it was not here. How are you supposed to build up support for a national team if no one is able to see them play?

Now we have UEFA Finals, EPL matches and all team USA matches on ESPN/ABC. This is a marvelous trend that hopefully continues. Anyone who has seen an MLS game knows that the quality of players in that league just isn't quite there yet. Having that be the only option to soccer starved fans in this country for nationally televised games will not work long term. Access to European soccer is a must and is coming slowly but surely.

Not only are Americans now able to watch European matches live on ESPN, but we are now able, via ESPN 3, to watch just about any major soccer event live on our PCs and TVs after a recently announced deal between ESPN and Microsoft that will bring the service to 23 million Xbox Live subscribers here in the US. That service should, according to the WSJ, hit the consoles in November 2010.

Now on to the most important point of this whole exercise, morning drinking! Many bars in Manhattan have been opening at 7am for the World Cup matches. Turn out has been great at the bars I have visited. There have been some great drink specials as well, including $3 Carlsberg drafts for every match at one of my favorite bars in midtown.

The foundation is there, the momentum in building. Let's hope it can keep moving in the right direction, without those vuvuzelas crossing the pond. Michael Bradley just scored the tying goal, we may have hope yet. If the team can have a few recognizable stars that's all it will need in order to make it a brand name, especially after the brilliant come from behind win that this could end up being.