From NBA to Dodgers: 10 money losers of ’11
For the business of sports, 2011 has been quite the wild ride.
Lockouts dominated coverage of the NFL and NBA (the football guys ultimately settling things more easily than the basketball guys), major college conferences were shaken up across the country, and the vaunted Los Angeles Dodgers went bankrupt. The Indianapolis Colts handed Peyton Manning a huge contract and then watched him miss the season as they lost their first 12 games. To top things off, troubling sexual assault scandals have rocked Penn State football and, potentially, Syracuse basketball.
So who lost big at the business of sports this year? Start with the NBA players, who held firm against the owners through a 149-day lockout only to pretty much cave in the end. The players’ traditional 57 percent take of league revenue has been whittled to 50 percent, just what the owners wanted. Result: $300 million out of the players’ pockets. For all the players’ posturing over five months, by November they missed their paychecks. A 50-50 split began to look a lot better. Professional ball in China might help while away the time and pay a few bills, but it’s not a viable replacement for life in the NBA.
|In Pictures: 10 sports money losers of 2011|
“They just lacked the leverage that the owners had,” says industry consultant David Carter, who runs the USC Sports Business Institute.
The biggest losers of the NFL settlement, meanwhile, were the high first round picks whose lofty contracts came back down to earth in 2011. Top overall pick Cam Newton, the Heisman Trophy quarterback from Auburn, didn’t find Sam Bradford or Matthew Stafford money waiting for him from the Carolina Panthers. Instead, he’ll be subsidizing those NFL veterans that had been complaining about huge rookie contracts. Newton got four years and $22 million from Carolina, instead of the six years and $78 million the St. Louis Rams lavished on Bradford the year before.
And which sports franchise is in a trickier spot these days than the Indianapolis Colts? Owner Jim Irsay, perhaps more out of gratitude for a job well done over 13 years than out of an objective analysis of his team’s future, recently heaped $90 million over five years on franchise quarterback Peyton Manning. No sooner did he sign the contract was Manning – riding a streak of 227 consecutive starts – forced out of the lineup after neck surgery.
With the Colts’ foundation around Manning already on the decline (10-6 last year after seven straight seasons of 12 wins or more), the team has fallen apart completely in his absence, losing its first 12 games in 2011. Even if Manning comes back next season, Irsay is stuck with an expensive 36-year-old veteran with little talent around him. True, Manning’s entire contract isn’t guaranteed. But short of his injury being truly career ending, it’s hard to imagine the Colts risking the PR hit that would come from forcing their greatest all-time player out the door.
The contract may turn out to be as big a boondoggle as a couple of 2011’s biggest baseball busts, the White Sox $56 million deal with Adam Dunn and the Nationals’ inexplicable $126 million contract with Jayson Werth. Neither hit a lick during his first season with a new team.
On the college football front, financial hits extend beyond the $10 million or more that Penn State is expected to lose in the Jerry Sandusky scandal. This year brought a few more cases of the old dead money problem – paying off millions to coaches to leave campus. Among this year’s expensive firings: University of Mississippi coach Houston Nutt, who will get a $6 million to $8 million buyout after going 1-15 in Southeastern Conference play the past two seasons. The schools’ total tab on Nutt: between $16 million and $18 million for a four-year run of 10-22 in the SEC. Carter notes an additional intrinsic cost to replacing coaches before their contracts are up – public relations.
“You’re hit with the double whammy of paying off the old coach and hiring a new one who will immediately become the highest paid employee of the university, at a time students are protesting tuition increases,” he says.
Of course, people love their sports so much that winning ultimately solves a lot of problems. More support is always potentially around the corner. As the saying goes, “wait ‘til next year.”
• NBA players cave to owners
• Peyton Manning’s massive contract
• Frank McCourt and the Los Angeles Dodgers
• The Big East turns down TV deal
• The Chicago White Sox hand $56 million to Adam Dunn
• See more of 2011’s worst sports deals