Published>Sat, Jul 10 10 02:57 AM
Basketball superstar LeBron James' move to the Miami Heat has turned the team's sponsors and broadcast partners into big winners.
Heat owner Mickey Arison, chief executive of cruise line giant Carnival Corp, must be smiling as demand for tickets and sponsorships will skyrocket, while ad rates will soar for national and local TV partners, analysts said.
James' announcement on Thursday that he planned to join fellow all-stars Dwyane Wade and Chris Bosh made the Heat the instant odds-on favorite to win the next NBA title with many Las Vegas bookmakers.
"They are now going to be the glamour team of the NBA," said Marc Ganis, president of consulting firm Sportscorp Ltd.
"Sponsors are going to want to be a part of it, their tickets are going to be incredibly valuable, especially the better seats, and every single game is going to be an event and a happening in Miami this season," he added.
James' announcement during a one-hour prime-time show on Walt Disney Co's ESPN sports network scored an overnight TV rating in 56 top markets of 7.3, the highest rating for any program that night, according to Nielsen. A ratings point is a percentage of U.S. television households that watched the program.
The Heat will remain popular for national and local TV partners, including ESPN, ABC and TNT, and ad rates for its games could rise 10 percent or more nationally and as much as 25 percent locally, analysts said.
"Miami's going to be like the second home team for a lot of basketball fans because they're going to be on so much," said Brad Adgate, senior vice president at ad buyer Horizon Media.
Attendance also will be strong as the team's ticket hotline rang off the hook in the run-up to the LeBron announcement.
"The sale of premium seats and season tickets over the last couple of weeks has been extremely brisk, peaking in a new intensity the last couple of days," Eric Woolworth, the Heat's president of business operations, said in a statement. "As a result, we have sold out of our currently available season ticket inventory."
A RED SOX ANALOGY
Capping season ticket sales is a smart move to stoke demand, said Bill Sutton, a former NBA vice president of marketing who is now a professor at the University of Central Florida's DeVos Sports Business Program.
"I have two words for you: Fenway Park," he said of the small, always-packed home field of the Boston Red Sox baseball team. "Make sure demand far outstrips supply and you'll have a good, sustainable business."
Demand in the secondary market is surging too. Heat season tickets in the resale market averaged $8,250 on Friday from $3,240 before LeBron's announcement, according to FanSnap.
"For the Heat, the value of tickets and sponsorships should rise at least 40 percent now that the walking, talking, free throw-shooting stimulus plan has joined South Florida," said Rick Horrow, a sports lecturer at Harvard Law School.
The widespread attention has sponsors happy.
"With LeBron now a part of the Heat, it will take our return on investment into another orbit," Billy Sanez, director of promotions for American Airlines, said in an email. The company is the title sponsor for the Heat's home arena.
However, any new sponsors will probably pay as much as 30 percent more to align with the Heat, said Jim Andrews, senior vice president with IEG, a unit of advertising company WPP Plc that tracks such spending.
The excitement surrounding the Heat also may prove a boon for the NBA, which generated almost $500 million in sponsorship revenue during the 2009-2010 season, Andrews said.
Arison also has to be happy as LeBron's signing makes his team one of the NBA's most valuable, worth as much as $600 million, Ganis said. Forbes magazine in December estimated the Heat's value at $364 million.
Where there are winners, however, there must be losers. James' former team, the Cleveland Cavaliers, will lose value, while Madison Square Garden Inc, which owns the New York Knicks, another failed suitor, saw its shares fall 4.6 percent on Friday.
Other pro sports teams in south Florida, including the National Hockey League's Florida Panthers, Major League Baseball's Florida Marlins and National Football League's Miami Dolphins, could lose sponsors to the Heat, analysts said.
"No question, the newly constituted Miami Heat are going to suck the oxygen out of the Miami market," Ganis said.
James, who earns about $50 million a year through salary and endorsements, may have the greatest risk in abandoning his hometown Cavaliers, analysts said. However, win two or three titles and his global brand name is secure.
"What matters most at the end of the day is winning championships," said Doug Shabelman, president of Burns Entertainment, which matches companies with celebrities for endorsements.
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