Friday Dump 🥟 - Pac-12 resuscitated, T-Wolves subpoena, Honey Deuce surge

Author

Michael Sheinfeld
September 13, 2024

PSA: Friday Dump 🥟 DOES NOT eat cats and dogs

Each Friday, we’ll breakdown 3 sports business stories that have caught our eye throughout the week. They will be assembled in the following format:

🔴 - Stories that make us stop, think, and question.

🟡 - Stories with a hint of risk and unpredictability.

🟢 - Stories that make us feel good to go and empowered.

But we’re hungry for a juicy newsletter!

Hungry Season 3 GIF by The Lonely Island

Gif by thelonelyisland on Giphy

Photo: Soobum Im-USA TODAY Sports

🔴 The Pac-12 showing signs of a pulse. A year after full out chaos occurred within the Pac-12 where we saw 10 schools leave for greener pastures (i.e. the previous commissioners couldn’t secure a media-rights deal and all the schools left…except for Oregon State and Washington State), we have news from the western mountainous region…4 Mountain West schools — Boise State, San Diego State, Colorado State, and Fresno State will be added to the conference that used to be home to USC’s Reggie Bush and Matt Leinart, Stanford’s John Elway and Christian McCaffrey, Cal’s Tony Gonzalez, and Arizona’s Tedy Bruschi. It’s been a sad year for the Pac-12, but fortunately for them, they’re now one step closer in maintaining their Football Bowl Subdivision (FBS) status.

  • Why is that important? Per NCAA rules, the Pac-12 needs 8 total football-playing members to keep its bowl-division designation

    • In other words, they need to poach 2 more programs for their conference to be playoff eligible!

    • The Pac-12 states that the incoming members will help choose the next 2 programs as geography looks to be a major factor (don’t get your hopes up East Coast schools!).

  • Financially this doesn’t look great, it’s already going to cost ~$110M in exit fees and “poaching penalties” just to land the Pac-12 a media-rights deal.

    • The Pac-12 is already set to pay $43M for poaching four schools, as mandated by its scheduling partnership with the Mountain West — if they poach additional programs from the MW (for example: UNLV), they’d have to shell out millions more.

In a dumpshell…pretty hefty fine for a poorly run conference, right? Now, close your eyes and imagine the Pac-12 being a Power 5 conference…that’s right they lost that privilege once schools like USC, UCLA, Arizona, etc. left. So even though the Pac-12 is throwing out fines left and right, they’re doing it so they can become a Power 5 conference again because the winners of a Power 5 conference have automatic bids to the 12-team College Football Playoff. And if a team of yours is in the playoff…who knows what can happen and how much revenue you can bring in for your school/conference!

There are still plenty of things that need to be figured out with this Pac-12 rebuild:

1) Can new Pac-12 commissioner Teresa Gould secure a more lucrative media-rights deal over the current deal with CW and Fox?

2) Will the Pac-12 find two more West Coast-ish teams that would excite fan bases and prop up viewership?

3) If a Pac-12 makes the CFB playoff, will this $110M fine be worth the cost?

Pictured: Minnesota Timberwolves owner Glen Taylor

🟡 More drama in The North Star State. Don’t you dare lie! You had no idea what The North Star State even was, did you? Lol we didn’t either, how fun ! After months of back and forth and their first trip to the Western Conference Finals in 20 years, we have an update on the infamous Minnesota Timberwolves “sale?”. Now, even more lawyers are getting involved than before. Current owner, Glen Taylor, has subpoenaed the NBA in the ongoing fight over ownership of the Minnesota Timberwolves. If you think this is a weird/rare move, it’s because it is!

  • For months now, the NBA has tried to distance themselves from this ownership battle between Taylor and the partnership group of Alex Rodriguez, Marc Lore, and newly appointed partner, Michael Bloomberg (ever heard of him?).

  • For all our non-Law & Order die hards: subpoenas are orders to provide sworn testimony (in person or via written remarks), or to produce copies or inspection of certain documents (including emails, texts and social media messages).

    • The risk for the NBA with a subpoena is private league communications and financial information could potentially be exposed to the public.

    • They might also worry about discussions regarding ownership in general, and revenue and contracts could be subject to disclosure in a subpoena.

In a dumpshell…of course this situation gets messy before it gets any better. As we wrote about before, the mediation session four months ago failed to reach a resolution. After that it looked like the two sides were heading toward a binding arbitration in November. A binding arbitration is often used by pro leagues to keep matters away from public viewing (arbitration is a dispute resolution process conducted in private and outside the court system) — but that’s where Taylor has come to wreck the party. The subpoena he issued now has a greater than zero chance for personal information to be viewed by the public.

After such a great season, the last thing this franchise needs is to fall back on its back by triggering a public dispute and involving the NBA. We’ll see where this goes, but for a team that has championship aspirations, this type of negative attention is not advised (that’s free advice for you, Mr. Taylor 😉).

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Photo: Brad Barket/Getty Images

🟢 Bartender, 7 Honey Deuces please & keep the tab open. Last week, one of the boujee-est sporting events wrapped up in Flushing, NY as two Americans (one in the men’s and one in the women’s brackets) placed as runner-ups in the 2024 U.S. Open. Unfortunately for the men’s side, it would have been the first time an American man won a grand slam singles title in 21 years (there’s always next time, boys!). But probably the biggest story to come out of this 3-week event came from the bars within Billie Jean King National Tennis Center. Yesterday, the UTSA announced it sold ~557K Honey Deuce signature cocktails during the U.S. Open. Each drink sells for $23, which means the organization made more than $12.8M in revenue from the drink, representing a 26% increase over 2023.

  • What is the Honey Deuce? It’s a Grey Goose vodka-based cocktail made with lemonade, Chambord (raspberry liquor) and honeydew melon pieces shaped like tennis balls (cool, huh?!) — it’s become synonymous with the U.S. Open over the past few years.

  • The number of drinks purchased during the 3-week event nearly doubled from 2017 (201K) to 2022 (399K), and it continues to rise.

    • You know what the means…the Honey Deuce price has increased along with demand.

    • Back in 2012, it cost only $14 — now resulting in a 64% price increase!

  • The main reason for this price increase is due to the high attendance of fans. Attendance reached a record 833K (+4% from 2023) and a 13% bump from the highest mark before the pandemic.

Table 1

In a dumpshell…it might sound a little silly but brand awareness is important. It’s something sporting events can hold onto and market constantly throughout an event. Think strawberries and cream during Wimbledon or pimento cheese sandwiches during the Masters. To give you an idea, UTSA reported operating revenues of $581M last year, $514M of which were generated from the U.S. Open (see: Table 1) — meaning Honey Deuce sales would account for ~2% of revenue in 2024. Not only that but, the $12.8M in Honey Deuce sales ends up being more money than the men's and women's winners and runner-ups combined prize money of $10.8M 😱 

Take that top-tier athletes! You keep playing while we keep sippin’.

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