Seemingly counter-intuitive, at least to me, a study reported by Bloomberg claims that in the five days following the award of the hosting of an Olympics the stock market of the new host gains an average of 2%. I say counter-intuitive because with the exception of the recent games staged in America, almost every Olympics in the last 30 years or more has lost money, often considerable money.

The award of an Olympics to an American city does not have as marked an effect on the US stock market as an American city is not as significant to the American economy as is any city hosting an Olympics in any other host country. With Chicago’s likeliest strongest competitor being Rio, the impact on the Brazilian stock market may not be as significant as the Olympics has been in the past, given that the Brazilian market has been one of the world’s best performing markets this year, with the Bovespa index up 63% so far this year. On Intrade this morning, Chicago’s chances are up 1.4 to 63.4, while Rio was unchanged at 34.6

The Keeneland September Yearling Sale is the largest and usually most expensive sale of thoroughbred yearlings in the world. It recently concluded its annual 14 day run while posting the largest declines in its history, as the full weight of the global economic crisis and the difficulties faced by horse racing in states that have not adopted some form of casino gambling or video poker, primarily Kentucky and Maryland.

The sale’s $191.9 million gross was down 41.5 percent from last year, with only 3,159 yearlings sold, compared to 3,605 last year, a 12.4 percent decline.This year’s average sale price of $60,734 was down 33.2 percent, while the median of $22,000 was down 40.5 percent.

It hadn’t dropped near this bad since 1947. The largest buyer was once again the representative of Sheik Mohammed bin Rashid al Maktoum, the ruler of Dubai, who bought the sale topper at $2.05 million, the cheapest topper since 1997. There were only four yearlings sold for over $1 million compared to 18 last year and more than 30 in each year from 2005-2007.

To sum it up , the thoroughbred industry is in free fall and it won’t likely get better anytime soon. The only bright spot on the horizon is still several years out and that is rationalizing production as a result of these sales results. Stallion fees will go down again this winter and fewer mares will be bred. Next year’s crop will be smaller and in time, supply and demand will begin to equalize but until the global economy turns and the industry does some serious work to heal itself, with significant help from a few state legislatures, Kentucky included, there will be several very lean years ahead.

The introduction of personal seat licenses about 20 years ago revolutionized the financing of stadium and arena construction around the country. By asking fans to pony up a lump sum merely for the right to buy tickets, team owners and colleges and universities created a revenue stream basically out of thin air. The personal seat license revenue stream could then be used to collateralize bonds to pay for a portion of the construction costs of the stadium. Who would have thought, prior to this, that fans would pay for the right just to buy a ticket.

Well, the next logical step is now being tried by the University of California. The problem with the PSL from the standpoint of the fan, is that you are always exposed to market rate risk. As ticket prices rise, your costs of attendance increase and since most PSLs were for no more than 10 years, at the end of the ten years, another PSL fee would come due. What the folks at Cal are doing, according to the Wall Street Journal, is essentially taking a stadium seat and transforming it from a rental into a condominium. For a significantly larger fee than a PSL, $170,000 to $225,000, payable over 50 years, for the best seats, a fan has “title” to his seat and has capped his cost for the next 50 years: no ticket price to pay, no fee increases. Cal secures the funds to pay for its stadium renovation and the fans secure cost certainty.

Nice idea, but I’m skeptical than enough people in this economy will be willing to sign on to that type of commitment. Of course, we are talking about football and I’ve learned never to underestimate the lengths to which college football fans will go to spend their money in pursuit of their sport.

The defending Heisman Trophy winner, heart and soul of the number one college football team in the country and the man crush of half the state of Florida, Tim Tebow, suffered a concussion in Florida’s destruction of Kentucky last Saturday. Tebow’s injury was significant enough to warrant his spending the night in the hospital in Lexington before returning to Gainesville on Sunday. Rather rashly, but totally in character, Florida coach Urban Meyer is suggesting that Tebow will likely be ready to play when the Gators take on number 4 LSU a week from Saturday.

It’s timely then that a study commissioned by the NFL reports that Alzheimer’s disease or similar memory-related diseases appear to have been diagnosed in the league’s former players vastly more often than in the national population — including a rate of 19 times the normal rate for men ages 30 through 49.

The NFL has long denied that its players have suffered cognitive disorders at a rate higher than average and predictably, the hired gun physicians are quick to find fault with this study. It is admittedly not a definitive study but it adds to the growing literature both anecdotal and clinical that are developing a fairly convincing case and one that needs to be heeded by the coaches and parents of youth, high school and college players. Far too often, these young players are quick to emulate their NFL idols who are paid to play through pain or a concussed head, which may not feel much different than how they feel after being numbed up to forget the myriad of other minor injuries they may have. The sooner concussions are taken seriously for the potential long-term damage that may result, the safer our young and old athletes will be.

The Big East, Big XII and the New York Yankees will announce tomorrow the creation of a new bowl game to be played in new Yankee Stadium. The game will pit the fourth place finisher from the Big East against the seventh place finisher from the Big XII, with the inaugural game taking place following this season, assuming NCAA certification can be obtained in time.

This new bowl will mark the first time a bowl game has been played in New York since the Gotham Bowl in 1962, when Nebraska edged Miami 36-34. Now, as longtime readers may recall I have a certain affinity for Big East football, but Bruce Wayne I’m not and there is simply no way that Gotham City in late December can possibly be seen as an appealing post season destination. The whole idea of bowl games was to attract fans from cold weather climes to the beach in the dead winter. Granted, that idea is a bit old fashioned (take a bow, Shreveport, Toronto and Detroit) but at least Toronto and Detroit are indoors.

If you are so inclined, the press conference will be broadcast live on the Big East’s website; you can register for free here.

Sorry for the absence of posts the last several days. I’ve had family in town and with Yom Kippur, I’ve been away from my computer, so I’ll try to catch up by throwing up a few links I had been collecting without too much commentary. There may be another post or two today that will be more of the regular pearls of wisdom you’ve grown accustomed to reading. So now on with the links:

As the Coyotes disaster heads to its final denounement, The Great One exits Phoenix with his legacy diminished (azcentral.com).

Interesting academic paper on game theory and sports: pitchers throw too many fastballs and football teams should pass more (NBER via Infectious Greed) Thanks Tad

Despite her less than ladylike appearance at the US Open, Serena Williams looks to retain her major endorsements, Nike, Kraft and most especially P&G’s Tampax, which is her newest are all staying on board. (NYT)

Herb Adderley and Jim Brown asked a US District Judge to allow them to join Sam Keller’s suit against Electronic Arts, Inc. for unfairly using their images in video games (Digital Trends)

ESPNBoston.com, the new Boston outlet of ESPN as it tries to compete with local newspapers, has entered into a sales agreement with Kraft Sports Group to sell local advertising. That’s Kraft as in Bob Kraft, the owner of the New England Patriots and presumably one of the anchor teams around which the site will be building its editorial content. (profootballtalk.com)

Another day, another Middle East royal buys into an English Premier League club; this time it’s Liverpool and the royal is Saudi Prince Faisal bin Fahad bin Abdullah al-Saud, who, among family ties is married to King Abdullah’s granddaughter. (Bloomberg)

President Obama is heading to Copenhagen to woo the IOC, substantially increasing Chicago’s chances for the 2016 Summer Olympics, where opening ceremonies would be held a short walk from his house. (NYT)

While Coyotes’ fans, Jim Balsillie and the NHL await a bankruptcy judge’s ruling on who will be the next owner of the team, Balsillie, who intends to move the club to Hamilton, Ontario if he is the winner, committed to keep the team in Phoenix for the upcoming season. The NHL had earlier made the same pledge and Balsillie wanted to remove that issue from clouding his bid for the team.

Judge Baum has given no further indication on the timeline for the delivery of his opinion. He earlier had said it would be before the start of the regular season. Balsillie and Coyotes’ current owner asked Baum to order mediation, a step the NHL opposes, as the league does almost automatically with any request that Balsillie makes. There has been no indication when Judge Baum will rule on that motion either.

Stay tuned, professional sports most interesting legal circus should continue to entertain us more than the Coyotes play on the ice for some months to come.

It’s the perfect storm of financial disaster for the thoroughbred breeding business. In 2007, when the current crop of yearlings which are now going through the sales ring were conceived, stud fees were at their recent peak. As those yearlings now come to market, breeders are faced with the Great Recession, an oversupply of foals as a result of the breeding boom in the high times of 2007 and shrinking demand for horses as a result of the difficulties race tracks face.

This year’s yearling crop was bred in 2007, a year in which prices were still rising and the industry was still filled with speculators(sound familiar?). 2006 had seen a record price paid for a thoroughbred at auction with the sale of a two year old later named The Green Monkey for $16.2 million. He had not yet proven what type of race he would become at the time breeding decisions were made and stud fees were sold and paid for. Of course, he never won a race and his stud fee is now a mere $5,000.

Keeneland is in the middle of its September yearling sale. The first four days have concluded and it is those days at which the highest price yearlings are sold. This year, sales were down 42% and if the trend continues, the sale will record lower gross sales, average price and median price. For the first time in almost 20 years, those metrics will be lower for three straight sales. It is particularly hard on breeders since 2007 was the peak of stud prices in recent years.

We have recounted some of the problems the industry is facing at the track and if breeding farms are losing money in substantial numbers as well, that doesn’t bode well for the future of racing. While it is likely that the market will resolve breeding economics, it will not be without pain. The number of farms that will close is not yet known but it will be substantial, especially those with both significant debt and reliance on yearling sales. The crop of yearlings will be smaller, reducing supply and increasing demand, but the number of tracks may decrease as well, placing additional constraints on breeders that may not be foreseen in their current breeding plans.

Horse racing and breeding has always been a bit of craps shoot, to mix a gambling metaphor. It has been exacerbated by the global Great Recession, as smaller breeders are being pushed out of the business and larger breeders are reducing the numbers they buy. The Great Recession is also increasing the already difficult operating environment of race tracks without any additional source of income, i.e. casinos. That will also place a greater constraint on demand for horse, furthering the depression in thoroughbred prices and increasing the likelihood of smaller farms facing bankruptcy. As Kentucky legislators will again be called on to look at approving adding at least slots to tracks, they would do well to keep in mind the pressures on the Commonwealth’s signature industry. I would hate to see them have to redesign our license plates so quickly after spending all that money on new branding.

The sports shoe giant Adidas and smaller rival Puma were born of a feud between brothers in a small German town more than 60 years ago. The two companies were formed in 1948 when Adolf and Rudolf Dass had a falling out during World War II and split up their growing athletic shoe business. They each set up factories on opposite sides of the river in Herzogenaurach, a town of about 23,000 in southern Germany.

The rift between the companies is be bridged by a soccer match between workers of both companies to be held on Monday, September 21, in connection with the “Peace One Day”‘ initiative, an annual day of global ceasefire and nonviolence. Naturally, both brothers are no longer with us; Rudi having died in 1974 and Adi in 1978. Still, remarkably, it has taken more than thirty years after the deaths of both brothers for the rift between the companies to be healed and one small town in Germany to once again be united.

HT. SportsBusinessNews

Now that the Nets owner Bruce Ratner has secured all the approvals necessary to build his proposed new Barclays Arena in Brooklyn, the final search for the needed $700 million to fund construction is underway. In addition, or as part and parcel of the arena funding depending on which story you believe, he is negotiating a sale of a substantial and controlling (or managing) interest in the team itself. The leading candidate to provide the $700 million in construction funding, according to the Star-Ledger is Russian oligarch Mikhail Prohkorov, who would wind up with a managing interest in the Nets ownership for a dollar as part of the deal. Prokhorov is number 40 on the Forbes top 50 wealthy people in the world and is a metals mogul with close ties to the Kremlin.

According to the New York Times, whose story was not quite as detailed, the Nets are talking to Prokhorov about a sale of the team and are searching for planning to sell tax exempt bonds to fund construction. Of course, they could still do that if Prokhorov was the buyer.

In any event, it looks as if David Stern and the other owners are going to have to face the question of foreign ownership, something which hasn’t been on the agenda at owners’ meetings before now. It would make sense for the NBA to be the first major American sport with substantial foreign ownership, as it is the most globally focused league, and one of the two (with the NHL) with the most non-North American players. There is no reason not to accept foreign ownership, it will just make the vetting process a little tougher.