The biggest sports deals of 2013
1. Alex Rodriguez’s suspension and appeal
His 211-game suspension for alleged dirty dealings with Miami rejuvenation clinic Biogenesis of America set a new precedent: at last, some said, commissioner Bud Selig and the MLB took a vocal step toward declaring that performance-enhancing drugs will not be tolerated in this sport. But others said it was too harsh, that Selig overstepped baseball’s Joint Drug Agreement. Rodriguez certainly believes the latter, and he sued MLB in October to dispute the suspension. He also sent a letter of complaint to the union, stating that they did not fairly defend him. An amended filing in November labeled Selig’s actions “cowardly.”
A-Rod’s fight against baseball’s powers-that-be is significant beyond the fate of just A-Rod himself: when a ruling comes (likely in January) on whether to uphold or adjust the most controversial suspension in league history, it will have lasting impact on the reputation of Major League Baseball as a business, on Selig’s legacy, and on what players caught using PEDs can expect in the future. The current collective bargaining agreement ends after the 2016 season; MLB, which has been free of union disputes for some time, might face problems depending on how this case plays out.
2. Indianapolis Colts sign Kenyan rugby player
In July, they signed him, and in December, they activated him: 24-year-old Daniel Adongo, a Kenyan rugby star who had played in the pros in South Africa and had zero football experience, made his NFL debut on December 8 on special teams (he even returned one kickoff) for the Indianapolis Colts.
This minor news story may seem insignificant. After all, Adongo isn’t the first international rugby player to join the NFL. The Jets signed Australian rugby player Hayden Smith in 2012 — he played tight end with the team for one season and was released last summer. But Adongo may be the most watched and most hyped; at six-foot-five, 270 pounds, he is very strong and very fast: many expect that he could have a strong career in the league.
What does that mean for the future? If Colts GM Ryan Grigson’s decision pays off, more teams could follow suit and look abroad, to foreign countries and a still-foreign sport, for fresh talent.
3. The end of the college football BCS
The current college football season will be the last to end in the traditional bowl game structure, predetermined matchups based on conferences. At last — though many believe it is still not yet ideal — there will be some form of a college football playoff. And it will be called just that: the CFP (College Football Playoff) will replace the long-running, much-criticized BCS (Bowl Championship Series), which revolved around a complicated structure of computer-selected AQ (automatically-qualifying) conferences and, for fans, often resulted in unsatisfying matchups. The new format will involve two national semifinal games based on rankings selected by a high profile, 13-member selection committee (including Condoleezza Rice, once the provost of Stanford University).
Back in 2011, Fortune tracked the money behind the BCS National Championship game (hint: big bucks, for the conferences as well as the local economies where the bowl games are held). How will the new system affect the income? Well, if fans feel that the CFP gives them a matchup of the two very best teams, it’ll probably generate even more money.
4. Ed O’Bannon v. NCAA advances
This year saw a four-year-old lawsuit grow in importance by leaps and bounds. Former UCLA basketball player Ed O’Bannon sued the NCAA, videogame maker EA, and licensing entity CLC back in 2009, arguing that college athletes deserve financial restitution when their likenesses are used for profit. In September, the latter two companies agreed to a settlement. In November, a federal judge partially certified current student athletes as a class, giving them the ability to bring a lawsuit against the NCAA. Now it’s a one-on-one battle.
At issue is the NCAA’s definition of “amateurs.” As former Nike executive Sonny Vaccaro said at a UNH panel discussion on the lawsuit, “The very word ‘amateurism’ does not apply to this group of people…. The NCAA has their own rules that they impose on these men and women that only benefit [the NCAA]…. It’s a human rights issue here.”
The NCAA is notoriously unyielding in disputes, but this case has serious legs, and in 2014 it will finally make its way to court, unless the NCAA settles (unlikely). Expect the trial, set for June, to be a media circus in which the big, bad NCAA — not the hard-working college kids — will look like the villain.
5. Lakers extended Kobe Bryant
In November, the Los Angeles Lakers re-signed its aging star and captain for two more years for an eye-popping $48.5 million. It means that, even at 35, and even after missing the second half of last season, he will remain the highest-paid player in the league. He will also become the first player to stick with one team for 20 years.
Why does all this matter for the business of basketball? Because, while many railed that GM Mitch Kupchak and the Lakers gave Bryant way too much — and that Bryant himself is at fault and selfish for not taking less money to help the team build its roster — the move is about off-the-court benefits.
Bryant’s name brand is tied to the Lakers organization, and to have him go elsewhere would be a detriment to the related merchandising, global power, and social media buzz (@kobebryant has just under 4 million followers; that’s more than the team itself has) that comes with having No. 24 in your family. It’s the decision the New York Knicks did not make when deciding whether to keep media sensation Jeremy Lin; most pundits think the team made a mistake. You can bet that Kobe’s $48.5 million, 2-year contract will have an impact on the next team to face a similar decision.
6. Fantex fails — for now
An SEC filing in October from Fantex Holdings, which aims to sell shares in human athletes as stocks, grabbed the attention of the sports and financial media for a good couple of months. That is, until it fizzled on the back (literally) of its first star: Fantex planned to IPO with Houston Texans star Arian Foster, but after an injury forced back surgery and ended his season, the company announced it would put its public offering on hold. It has signed a second athlete, fellow football player Vernon Davis, but for the moment now has no official launch date set for a Foster or Davis IPO. That’ll give investors even more time to ponder all the risks of investing in a player’s future fortunes: injury, scandal, decline of brand power. (For more on exactly how Fantex proposes to work, see: What happens if athletes become stocks?)
Although the project may still come to fruition (Fantex needs to succeed in selling 1.06 million shares in Foster’s future earnings in order to pay Foster his planned cut of $10 million), for now it looks as though, even with the wild success of increasingly detailed and realistic forms of fantasy sports, fans may not yet be ready to gamble real money on a human being’s future success. (And, hey, Fantex, maybe when you try again, look for a quarterback or a basketball player, not an injury-prone running back.)
7. Tougher doping tests ahead of the Olympics
This fall, well ahead of the 2014 Winter Games in Sochi, the International Olympic Committee publicly announced it had beefed up steroid detection efforts by re-testing frozen samples from 2006 and making a series of stringent amendments to the official Anti-Doping Rules. On-scene at the games, the committee will carry out 2,453 tests in Sochi, up from 2,149 in Vancouver. It’s all because, as attorney and former DI All-American runner Matt Lane says, “For every advancement in testing there’s advancement in the doping science.” The latter may be moving faster than the former, and that worries the (many) governing bodies that monitor doping.
Blame Lance: “Some of the new amendments are around not even [drug] use, but conveyance,” says James Nafziger, a law professor at Willamette University, “and I think that these amendments based on possession are related to the Lance Armstrong developments.”
Some athletes have already been disqualified from Sochi, some of them Russia’s own. Expect the committee to catch more cheaters during the Games; they’re certainly taking no chances. It’s all a sign of the overall fight against PEDs, which is growing stronger across the sporting world: just look at the unprecedented suspension of A-Rod in baseball. The Olympics and other sports governing bodies will not tolerate doping any longer. Another high profile fall a la Lance is sure to come, and it will have major business and sponsorship implications.
8. Miami Dolphins locker room scandal
At the end of October, the NFL was consumed with bad news out of the Miami Dolphins camp: that second-year lineman Jonathan Martin had left the team after being bullied by veteran teammate Richie Incognito. It only got worse from there as the story grew into a full-blown scandal, with text messages and voicemails published, emotional on-camera interviews given, and a flood of online think-pieces written about modern manliness in football.
Martin will surely not play for the Dolphins again, while Incognito will sit out the rest of the season, with pay. Beyond the effects on the careers of these two individuals, the scandal has been a black eye for the Dolphins. GM Jeff Ireland has become the target of much criticism, as has the team at large, for allowing Incognito, a player who already had a troubled record, to have an official leadership role on the team. What the scandal will lead to in the future: coaches and front-office executives now see that they will be held accountable for locker-room behavior, and that management of off-field player interactions is as pertinent as on-field performance.
9. NHL concussion lawsuit
While it doesn’t have the same financial gravity of O’Bannon v. NCAA, the giant lawsuit brought against the NHL in November has a scientific weight to it. The sport’s first concussion lawsuit of this size was brought by 10 retired hockey players, led by former Toronto Maple Leafs all-star Gary Leeman, and alleges that the league has not done enough to protect players from such head injuries. The NHL, in turn, will seek to show that it did what was adequate, but if Leeman and Co. are certified as a class and prove the league’s negligence, the NHL, led by commissioner Gary Bettman, will be on the hook for millions, if not billions.
The NFL’s $765 million settlement of a head injury lawsuit in August certainly had an impact on this fight, likely encouraging the hockey players to move forward and signaling to both sides of this new lawsuit what they can expect in the courtroom. What both the NFL and now NHL’s head-injury litigation shows above all else is that you can expect legal reactions to this ongoing sports crisis to only increase in fervor and frequency. Big money will be spent in the next year on head-injury litigation as well as new head-injury prevention measures.
10. Robinson Cano signs with the Seattle Mariners
In April, Jay-Z became a sports agent and signed former New York Yankee Robinson Cano as his first client. By December, Cano had signed a 10-year, $240 million contract with the Seattle Mariners.
Wha? The Mariners? Many criticized both parties involved in the deal: Seattle management was dumb to sign a 30-year-old for 10 years, and Cano himself was dumb to head over to a sleepy town like Seattle instead of staying in a major media market like New York. By the way, it was less cash than Cano and his agent reportedly had hoped for: $310 million was their goal.
But it’s a pretty huge deal nonetheless, and here’s what it suggests: this was enough money for Cano not to care about leaving New York. Yes, one would think that he signed with Jay-Z and Roc Nation Sports for the power of the rapper’s brand, to make Cano a bona fide star outside of baseball; the move to Seattle makes that unlikely to happen. It makes it difficult for Cano to become a Kobe Bryant or LeBron James-sized celeb. But Cano considered the deal too big to turn down.
The Mariners and GM Jack Zduriencik, meanwhile, deemed it worth overpaying to bring a giant star to town, even with the distinct possibility that Cano will not play 10 seasons. As many pundits have pointed out, the team paid a premium just to get him to Seattle. As baseball contracts continue to inflate every year, expect to see more eye-popping deals of this kind next year, and to see more marquis players sacrificing potential off-field stardom to join teams that are happy to overpay.