Guarding the Gate
February 24, 2012
More slowly than I would like, because it’s not a field in which I’ve had formal training or extensive practical experience, I’ve been learning about the world of startup companies and venture capitalists that discovered the sports world in the 1990s and have proliferated during the past decade.
Usually with their founder making the contact, many of these young companies have reached out to the MHSAA, hoping we will embrace and endorse or utilize their new product or service. Almost all owe their existence to the World Wide Web and to the passion of their founder, either for sports or for a concept they think solves some need of athletes, coaches or fans . . . or advertisers and sponsors.
And almost every one of these startups is looking for an exit; looking for a bigger fish to swallow them whole. And paying them handsomely for consuming the young guppy. A lucky few make what the industry calls the “Big Exit,” like a major network buying the startup for many millions of dollars.
We hear from many of these startups that the advertisers are clamoring for this or that they are promoting, but we usually see one of two things happen. Either the advertisers show so little interest that the startup fails, or what support the advertisers do provide goes to the venture capitalists and not to those providing the content.
As we screen the plethora of proposals to capitalize on high school sporting events in Michigan, we look for two kinds of assurances. First, that the suitor doesn’t have an exit strategy; and second, that the initiative will have direct benefit in terms of both money and message to those providing the content: i.e., schools.
Most of the initiatives we screen will assist schools with neither money nor message, and some of them would actually provide a message that is contrary to the mission of educational athletics.
So we’re guarding the gate, in both directions – controlling the entrance to the high school sports market in Michigan, as well as the escape of those who are in our market for a fast buck and quick exit, big or small.
Investments
July 9, 2014
Bristling from criticism that our associations are money-grabbing exploiters of children, my counterpart from Colorado said, “If we were running our programs just to make money, we would do very many things very differently.” I knew exactly what he meant.
Because we care about the health and welfare of students, because we mean what we say that the athletic program needs to maximize the ways it enhances the school experience while minimizing academic conflicts, and because we try to model our claim that no sport is a minor sport when it comes to its potential to teach young people life lessons, we operate our programs in ways that make promoters, marketers and business entrepreneurs laugh, cry or cringe.
If money were the only object, we would seed teams and select sites to assure the teams that attracted the most spectators had the best chance to advance in our tournaments, regardless of the travel for any team or its fan base. If money were the only object, we would never schedule two tournaments to overlap and compete for public attention, much less tolerate three or four overlapping events. If money were the only object, we would allow signage like NASCAR events and promotions like minor league baseball games.
Those approaches to event sponsorship are not wrong; they’re just not right for us. And we will live with the consequences of our belief system.
During the 2012-13 school year, 438 of the MHSAA’s 2,097 District, Regional and Final tournaments lost money. Not a single site in golf, skiing or tennis made a single penny. Over 17 percent of all other sites brought in less revenue than the direct expenses incurred at the site. In no sport did every District, Regional and Final site have revenue in excess of direct expenses.
In fact, in only three sports – boys and girls basketball and football – is revenue so much greater than direct expenses overall that it helps to pay for all the other tournaments in which the MHSAA invests.
That’s right: invests. When we present our budget to our board, we talk about the MHSAA’s investment in providing tournament opportunities in all those sports and all those places that cannot sustain the cost of those events on their own.