Thursday, July 1, 2010
Is Free Agency Scripted?
Four years ago LeBron James, Dwyane Wade and Chris Bosh signed the same exact contracts as a team. In doing so, they gave themselves the option to actually become a team in 2010 and dominate the league for a decade. It is really a high concept and sounds "Pie in the sky" if you ask Bosh himself.
However, living in the heart of Hollywood for the past five years, I am of the belief that it sounds more like we are in the midst of what is called pre-production in this town. That is the stage in the process where you pitch an idea, which then has to be developed into a script which then needs to be "packaged" in order to create the perfect storm of money that gets a project approved, or "green-lighted".
When you get a green light in Hollywood, it means that you have raised the money required between the studio, investors, and sponsors/advertisers to push the project forward, get everybody paid and promote the heck out of it in order to create a blockbuster success. Blockbuster projects are what pay for the entire industry. Most projects fail to make money, but the big ones push the industry forward year after year.
Now, what is packaging, you say? Packaging is when you gather the best writers, producers, directors and actors in order to stack the odds of success in your favor. This is how power agencies like William Morris and CAA (Creative Artists Agency) have been running Hollywood for ages. They are the kings of packaging. All of the Hollywood "players" come away with a big wads of guaranteed cash whether the project succeeds or fails, because investors and advertisers are always willing to bet on the big names.
Why am I talking about this? Many of you already know that Wade and Bosh share an agent (Henry Thomas) and that they also work with the same agency that has LeBron's agent (Leon Rose). That agency is none other than CAA, which only got into sports business five years ago. The company that represents Spielberg, Clooney, Hanks, Pitt and Springsteen exploded onto the scene with the likes of Manning and Jeter joining their ranks. We have seen how prevalent Manning and Jeter are in the advertising world. However, I was a bit more intrigued by their power move of bringing David Beckham to America in a deal that was paid mostly by Beckham's shoe company Adidas.
You see, the Galaxy and MLS could not afford Beckham's $8 million a year salary, but the league was able to strike an agreement where the league paid $1 million, the club paid $1 million and ADIDAS paid $6 million. How were they able to structure that deal within American rules? ADIDAS bought the jersey ad space on the front of the Galaxy jersey and then sold it to local company Herbalife for a pretty penny once the Beckham deal was closed. Everybody wins. The league grows, Beckham gets paid the wages he was used to and moves to Hollywood where he can pitch products and pursue entertainment opportunities and Herbalife gets on the map by getting to put their logo on David Beckham and his replica jerseys.
That product has not reached expectations up to this point, but Beckham's arrival opened the gates for Cuauhtemoc Blanco to go to Chicago (which was a success) and soon to be arriving in another megadeal, according to rumors, is Reebok's Thierry Henry to the New York Red Bulls. If the formula continues to work, it is possible that Nike could bring Ronaldinho a few years down the road.
All of that tangent was to explain that shoe companies are making these sort of deals left and right in the soccer world and are now doing it in our country. It has been rumored for years that Nike would bring LeBron to a larger market and today we have the three biggest markets in America - Los Angeles, New York and Chicago - making their pitches to King James.
The dark horse in all of this is Pat Riley, who's legacy was built with the "Showtime" Lakers of the 1980s and knows exactly how business is run in that town and has opted to create a package that not only pairs up two stars, but instead three. Three is definitely better than two, you can take that to the bank. Also Riley has been seen with a mega star that has a huge fan base in Allen Iverson recently... Bosh, James, Wade and Allen Iverson were 4 of the 5 starters for last year's Eastern Conference All-Star squad.
Coincidentally, have you noticed who else besides the Big Three is being represented by CAA? None other than Allen Iverson. Oh, and wait just a moment. There are two other major names at the top of their client list - Carmelo Anthony and Tony Parker, the two biggest names in next year's free agent class, who also happen to be on the trading market, threatening to leave teams that have a hard time recruiting top end talent in free agency. There is a reason why Pat Riley was in Los Angeles for the first day of free agency. It is where basketball's future will be decided.
Call me crazy, but sports and entertainment are coming together and a LeBron, Wade and Bosh dynasty could be the first domino to fall. The fact that Riley, and other markets are offering these players package deals for less than the max suggests that the owners know a thing or two about how much money CAA can find for these players if they create something special on the court. While the free agent window has just opened, CAA has had plenty of time to pitch scenarios to advertisers. Agreements could already be signed that are conditional on players landing in various cities with specific teammates. Those deals could have built in clauses based on championships as well. Whatever the case, let's hope for the Hollywood ending to come to fruition, because Pat Riley has delivered the strongest package... one that already has "the Godfather" Pat Riley in place.
Possible Entertainment Revenue Sources:
I almost expect a reality show following Bosh, Wade and James to surface next year following their free agency plans. Basketball Wives and Shaq Versus were both successes. TO and Chad Ocho Cinco are reality stars now too. How far could the trio take it? Would they force each organization to make their pitch to the stars on camera?
If LeBron, Wade and Bosh filmed that footage, they could even make millions by turning this into a movie, in the mould of Michael Jackson's "This Is It". I don't know if this is in the works, but it would be a project that would easily be green lighted.
On the note of sports and "movie theaters", the latest experiment is the showing of 3D sporting events. I will be attending either the World Cup semi-final or final in a movie theater with 3D glasses on. You can laugh at me all you want, but ABC/Disney/ESPN have the rights to the World Cup and to the NBA for the foreseeable future and if they can come up with a way to sell out movie theaters around the country for basketball games, they will. Football games cannot be too far behind in some sort of megadeal with movie theaters and TV stations if this catches on. People are already spending lots of money going to sports bars in order to get together and share the game with friends, so if you can sell tickets to these events and have a vendor going up and down the aisles, you could have a major phenomenon on your hands.
Stay tuned, we are heading into a new era of sports entertainment and revenues streams are going to be maximized to unprecedented heights by this group of athletes thanks to their joining into the CAA fraternity.