Year in sports business. Sportfolio starts right now hello im record out and welcome sportfolio what an incredible year its been for the nhl. When it started, there was a work stoppage that threaten to wipe out the bowl season. All signs indicate that the league is back at full strength. Last month, the nhl announced a deal with Rogers Communication that will bring in five point 2 billion for its Canadian Media properties. Rogers holds all the tv rights and will operate the digital services. Take control of the iconic hockey night in canada franchise in cbc for at least the next four years. It is a remarkable revenue boost for the nhl. They are also into a tv contract with nbc sports. The chief operating officer john collins joins us now on sportfolio. Is 5anadian tv deal billion for the league. I assume you are happy with it. Is a great deal for our clubs. It is a validation for how good the game is. It is a strategy that we have put in place a couple years ago. To us fans and sponsors activate around the league, as opposed to the club level. It is a good strategy that has been well received. Or, it is assion major validation for the commissioner, it is a major validation for the nhl coming on to canada. Never underestimate the canadian passion for hockey. Fundamentally, what gary has done, he has changed the Business Model for the league. It was a business that even seven years ago, when we were a 2 billion industry, 95 of net revenue was driven through the clubs. Looking forward, we will be a 4 billion industry. More of our revenue will come from the National League level. Lets talk that revenue is divided, 5050 with the players. It is groundbreaking and incentivizes everybody. And you are leveling the Playing Field with the larger and smaller markets full National Revenue is split 5050 with the players. The salary cap system, the more National Revenue can be shared equally between the clubs. Haveis why we have sad had such good success with the clubs. The winter classic started off as a one off and then experiment. Now it is significant. The commissioner talked about not diluting that classic. Now we may have 60 who knows what the number is. But it is an amazing event for a lot of reasons. The winter classic, the event strategy was a big cornerstone activate we begin to trends and sponsors at the National Level . Our partner nbc was all in with us at the time. They saw a gap, i we know around new years day where there are a ballgames, but the biggest games have moved off of that window. It was a great opportunity for us to come in and do something on the National Level antics those the game, not just to court hockey fans, but to casual sports fans. Peopleat moment on, viewed the winter classic and these Outdoor Games as a different kind of property. A property that could really engage that castles boards then. Casual sports fan. Would you do it snows on february 2 . We have the same guys on retainer. The Weather Channel guys have been on retainer. Ofit isnt an example leveraging your tv partners for maximum benefit. My history is with nfl films. They have done a good job of telling those stories. They had a heavy hand in shaping the image of the nfl. Hockey, we have so many of those stories. Our athletes are phenomenal guys. When fans get to know who they are, they will really like them. We have been doing hbo 24 7 now or three seasons. The opportunity with the Outdoor Games in l. A. And new york and chicago and then cooper, along with the sochi olympics, created some great opportunities for us to tell stories about these buyers. You will come out of the olympics with some very good benefits icing . Hockey is a global sport. The nhl wants to have a global business. The olympics is a great platform. To use itere going more effectively this year. Ultimately, i think part of the answer for us is to have our own world cup. It world cup of hockey, which is a big tradition in hockey and has been very successful. Whether that is something we do parallel the olympics or instead of the olympic is something for the commissioner to figure out. Others a big opportunity from a business stand point for the nhl stop 3. 3 billion dollars and you are now publicly stating that 4 billion is a legitimate benchmark. I think he rogers deal start to get us there. Someve some maturation of of the platforms, the event platforms. Our Digital Media platforms begin to do it. International gets us there. Everybody might argue that there were some challenges about the rapid growth of the nhl a couple of decades ago. It is reasonable growth in the future. The kansas city, houston, quebec city, similar areas happy . You talk about expansion in the near future . Do you grow your Minor League System . Saide commissioner has that expansion is not on the horizon. He is hoping in listening. Us, the growth of the business has been at a good annual clip on a National Level. We think that is sustainable. We are constantly introducing new media platforms and ways and ways of bringing our product to fans. The rogers deal in canada will be a big part of that. Digital media and the ability to target fans, not just in north america, but internationally, will grow us in the future. Good luck with the stadium series and good luck with the winter classic. Good luck with the stanley cup and Everything Else you do. Hockey is clearly hitting on all cylinders internationally. With 12 nation set to compete in the inch Winter Olympics at toshi. Coming up, we will go to the heart of Silicon Valley. The San Jose Sharks have gone from start up to success story. What is their secret . Their popularity overtime transcends hockey. Stay with us as sportfolio rolls on. Welcome back to portfolio. Sportfolio. In the 1990s, the nhl added new franchises. Teamscalled sunbelt live near the bottom with one notable exception. The San Jose Sharks are the 13th most valuable franchise. They raised just outside the top 10 in revenue last year. Most impressive, san jose is one of four nhl franchises that carries zero debt. New york three r b rangers, chicago blackhawks, and detroit red wings. The chief operating officer told me that it all began with clever packaging. The focus of the managing team at the time was to educate fans on the game of hockey and did create a uniform and a logo let people can associate with. We created a logo that was somewhat friendly but intimidating at the same time. It is a logo where a fiveyear old child would not be afraid of the logo, but it reflects a fast and aggressive hockey team. Is what the sharks have become over the years. We were also the First Major Team of the four major sports to call san jose home. Our popularity overtime transcends hockey, it is a very popular sport here, we have san jose in our time name. Open publiclyen about operating losses over the last couple years, but now you have zero debt. That gives you a lot of liquidity and options. How does that help you Going Forward . It goes back to her ownership mantra. We have a corporate faucet the, corporate goals if you will, to win the stanley cup beach year. It is the same for every hockey club. You need the resources financially to meet those goals. Im a dirty owner is committed to bringing a highquality team onto the ice. He wants to make sure that that product remains competitive on the ice. We do not have any debt. Our owners paid capital each year to get us to break even. We have some flexibility to grow our brand as needed. Unlikee the nhl the nhlsreview team, the sharks do not own or operating television network. They have responsibility for the facility, and they maximize their assets in the portfolio. We have the arena and our Minor League Team in massachusetts, but we also manage recreational ice facilities here in the bay area. We have three different locations. But lets talk about the building. Describe the current naming deal and the evolution. Quite simply, hp was looking to get out of their deal. Everyone is aware of their financial situation. Sap was looking to get more active in the Sports Marketing and sponsorship business. They were willing to take on the last two years that remained on the hp agreement and extended for three additional years. We expect them to activate on their sponsorship very regularly over the next ive years. It is a global and somewhat iconic company. That helps parallel with your brand. And you would argue that that is a global and iconic brand. It parallels very well for us. We have a lot of popularity worldwide and it has been accentuated this fall with the emergence of our star rookie player. It extends our brand even further. Give us an anecdotal example about how your rookie assist in your marketing strategy. Thatou take advantage of worldwide . The magnificent goal that hertl scored on october 8 had 5 million page views on our website next day. It had the highest number of usage on nhl. Com. You need a product that wins and plays well competitively. Winning products has been a hallmark of Silicon Valley over the last two decades. The sharks have adapted well to the regions culture of innovation. Is it fair to say that you grew up with Silicon Valley . We did grow up with Silicon Valley and we work well with them. They have a number of vibrant partners on the tech side were sponsors of the sharks. Companies like Barracuda Networks and the like. Base isore, our fan very sophisticated and they have for the most part Discretionary Income that they can and on hockey. That is a benefit of being in the bay area. Even our sharks ice facilities have the highest number of registered adult hockey players in the u. S. Over 5000 registered u. S. Hockey players. Beggars the brand as well. His people get to it or is the sport and then hopefully they buy jerseys at the end of the game. The sharks have played 28 100 capacity in their home arena each of the five seasons. Laster, they were the only member of their sunbelt expansion cohort to pull off that feat. Areng up, football fans heading to warmer climates to warmer climates future for their teams. What is the Business Climate in 2013 . Our next guest offers a forecast. And this week portfolio you name then first team out of the leads original six to win the stanley cup . Heres the answer to the stumper. The nhl had only six teams for 50 seasons. The first Expansion Team to win the cup was the philadelphia flyers. They won the championship in 1974. By comcast,re owned one of the largest boards and entertainment firms. They also work with a number of clients to provide Marketing Services and develop revenue streams. The president of front row marketing talks to us about a particular area of marketing, the marketing of College Football games. 35 of them. Is it too many or the right number . You think there might be some bold fatigue in there with 35 games, but what you have is a content game. If content is the new oil, then certainly attendance and the ratings are stalwart. These things are interesting and people watch them. Yearsing at last attendance, some of the games were hot tickets. Others drew very modest crowd, including a record low attendance for the sugar bowl in new orleans. Should we be looking at attendance as a an indicator of health . You always look at attendance. Without attendance, you do not have the ability to get sponsors. Television comes first, what their ability to put multiple games on over the weekend. It gives a platform to partners. Television comes first. Localized and National Sponsorship is third. All the games are important to us. The most important bowl games are the sponsorship games. X and they are important alumni . Spendre are groups that the money to generate the ad time. Complainted about not having ticket sales and unsold tickets. Is that a big issue . Fax 11,000 take it commitments by certain schools put them at the max. They turned to groups like ourselves and we do a good job of marketing the teams and the games. You have to look at attendance and you have to look at where you are going. Every city has to be honest about whether or not they are a destination city. Shortfall, ive a assume they factor that in as a cost of doing business. Next year, the College Football playoff goes into effect and it could be argued that those lesser bowls maybe even less relevant. A rising tide raises all ships. Be some challenges, but what does the fan base do with your alabama . Do you go to both games or do you go to one . Rise in see a attendance and a rise in interest level for three weeks when National Partners can actually own the College Football playoffs. The super bowl from the nfl and ask, what could you redo . Now you have the College Football system. They will struggle to a degree in finding the partnerships that they have. But there are good teams and they will be fine. I believe that is the key. If yes the bold variants, they were in the semifinal. They will be ok. Is it really just a Conference Alliance between those minor bowls . How are they proactive to make sure they will be ok . Management of the bolt names will be even more important. You will have teams that may not have football background. What do you do with a great conduct he Basketball Team kentucky Basketball Team, but the Football Team does not travel as well . Thank you for your insight. I will go to a lot of those games. See you there. Tfolio is still far from done. We will establish assemble a panel of experts to discuss wendy 13. 2013. Welcome back. As we come to the end of the year, we thought we would reach out to some of our regular contributors to get their nominations for the most significant people, deals, and stories in the sports business of 2013. We ask longtime sports media executives, sports columnist, to the Legacy Agency ceo weigh in on several different categories. The first is sportsperson of the year. Surprisingly, there was some consensus. Two people chose the outgoing nba commissioner. Believe that stern has changed the sport more than any other individual in his sport. They made the nba a globally relevant property. The authors of the book League Football brought concussion issues into focus. I would split the award between two men who managed to crack a labor deal that may have saved their sport. We asked our panel to select the sports is this deal of the year. Zs rocumnist chose jay nation of sports. One person voted for the agreement between the big east Basketball School that led to the accretion of a new and basketballllege league. I will take an International Perspective and take the 100 Million Partnership between the city. S and manchester it is a transformative deal for soccer and brings together two of the greatest sports deals in the sports franchises in the world. There was much to choose from. Jason collins became the first athlete in a major sport when asked that he is gay. One man declined to highlight a specific story. Fox one also change the competitive nature of sports media rights. Tragic bombinge at the finish of the boston marathon. Sports businesses can be essential to the communities in which they work. Finally, we asked each of our contributors to predict a precht trend in sports business in the year ahead. For seth abraham, it is continued debate over performanceenhancing drugs. Some consumers are taking advantage of mobile platforms to customize their sports experience. We also sees sponsors names on jerseys. I think 2014 will be the year that the Business ModelCollege Sports changes forever. Pay for play, i doubt it. I predict that the power will continue to shift away from the ncaa. It will be interesting to see how it all plays out. Our thanks to all of our contributors and all who participated in this week show. Keep an eye on bloomberg. Com during the winter holidays for more bloomberg sports business overage and more sportfolio coverage. Im record of rick horrow. Thanks for watching