Basketball Agent Steven Olenick - April 16th

Steve Olenick joined the Wharton Sports Business club over lunch to discuss his career path as a sports agent. Steve is a basketball agent with Entersport, LLC, one of the top agencies representing professional basketball players in the United States and abroad. Steve works with Mark Fleisher, whose current client roster includes Mehmet Okur and Andrei Kirilenko. Steve has worked within the sports representation industry for the past 8 years as an advisor and business manager for professional athletes. Prior to joining Entersport, Steve worked as an attorney for Paul, Weiss, Rifkind, Wharton & Garrison LLP in New York City, focusing on sports and media transactions.

Steve talked about the hard work, focus and ability to cultivate relationships that has helped him succeed as a basketball agent. We discussed a number of interesting topics during a wide-ranging hour long conversation:

NBA contracts. Interestingly enough, Steve said that the first contract for a player is typically very basic. Draft pick compensation is “slotted”, so there is not really a lot of room to negotiate an improved deal. Most of the value an agent can deliver during the first contact comes from their ability to land marketing deals, etc. The second contract is typically more complicated, and this is where you can see the deal-structuring ability and creativity of an agent pay off.

LeBron’s next contract. You might have heard, but there’s a rumor that LeBron might sign with the Knicks after becoming a free agent in 2010… One WSBC member said he’d heard that LeBron is looking for an equity stake in his next deal. Steve thinks that Dan Gilbert, the owner of the Cleveland Cavaliers, should strongly consider giving him an equity stake because if LeBron leaves for a larger market in 2010, the franchise value will take a very big hit anyway.

Overseas teams. In light of Josh Childress defecting to Olympiacos Piraeus, someone asked whether or not Steve thought this would become an emerging theme. He made several interesting points. First, the style of play of a typical NBA player does not necessarily translate well to the European game. NBA players are typically great athletes, but in games predicated upon spot-up shooting their ability does not always stand out. Second, Steve thinks the economic downturn will hurt the overseas market. Many of these owners are paying for players out of pocket. Russia in particular sets the market for players. Many of the Russian owners made their fortunes in oil, so the current economic downturn has hit them particularly hard.

Niche vs. mega-agency. Entersport, LLC focuses exclusively on basketball. One member of the audience asked what the pros and cons were of the niche vs. mega-agency approach. Steve thinks that the relationships IMG has are definitely helpful. However, he explained that a large agency like IMG will actually have in-house marketing and PR departments. In his opinion, if you have a great player, you can afford to hire a player-dedicated marketing and PR staff. In the end, the strength of an agent or agency’s relationships – both within the industry and with his players – is what will determine their success.

Overall, it was a very entertaining and enlightening hour. The Wharton Sports Business Club would like the thank Steve his time and condor in describing the life of a sports agent.

Article Contributor: Robert Sebastian

Sports Business Career Trek - Nov. 14

On November 14, the Wharton Sports Business Club organized their first career trek of the semester to New York City. First up were the offices of the NFL, where we were greeted in the reception by a 150 inch plasma screen TV beaming the latest news from the world of American Football. After a brief presentation from five members of the NFL, we were given the opportunity to ask questions about the NFL’s functions, strategies and possible career opportunities.

Many questions centered on the international strategy of the NFL. While internationalization is something that the NFL has been working on for some time now, it is only recently that they have realized that the key is to offer their best product. This means that instead of hosting less-intense preseason games overseas or supporting a developmental league such as the now disbanded NFL Europa, they must offer competitive regular season games. While concerns were voiced about whether this was fair to fans of the teams that had to travel to Wembley Stadium in London to play a regular season game, it was pointed out that the NFL offered travel packages and first option on the tickets to home fans should they wish to travel overseas for the game. Further, under the current arrangements each NFL team will only have to play one game abroad every sixteen seasons.

Following a tour of the memorabilia laden offices of the NFL, it was then time to visit the NBA. Although the NBA has 1,187 employees and offices all around the world, it soon became clear from the presentation that the real focus for growth and hiring over the next few years would be NBA China. With 100 employees already working in China, the NBA seeks to double this number in the next 2 years. So if you’re a MBA with a passion for sports and are lucky enough to speak fluent Mandarin, then the NBA could be the perfect opportunity. If on the other hand you’re like me and can barely speak English never mind Mandarin, then there are in the range of five paid internship positions available this summer in functional areas ranging from marketing, team partnerships and business development to mention a few.

The fact that the NBA seeks to hire those with functional rather than sports backgrounds was emphasized by Nina Tamenbaum, who herself joined the NBA from Blackstone 2 years ago. In her role as a Senior Director for Strategic Development she also emphasized the importance of China and India, where her department were focusing on grassroots events to grow the market. In addition to the international growth another topic that came up throughout the day was the impact of the current economic climate. The NBA is not immune to this downturn, and a large amount of time and energy is currently being spent on developing new strategies to ensure that people renew their season tickets, given that ticket sales are still the largest source of revenue for the NBA.

Next stop was the Jockey Club, where the smell of rich mahogany represented a striking contrast to the more contemporary offices of the NBA and NFL. For those of you unfamiliar with the work of the Jockey Club, its mission is to improve thoroughbred breeding and racing in North America and you must be registered with the Club in order to breed or race a thoroughbred. A thoroughbred is a breed of horse whose ancestry traces back to three foundation sires – the Darley Arabian, the Godolphin Arabian and the Byerly Turk. This selective breeding process in the horseracing industry has been going on for more than 300 years.

There was a period in the US when horseracing filled grandstands to capacity but in recent times it has dropped down the list, being eclipsed by the likes of Nascar in terms of popularity. With regards to how to respond to this, James Gagliano, Executive VP and Chief Administrative Officer of the Club explained that unlike the NFL and NBA which operate revenue sharing schemes, one of the problems with racing is that each racetrack is by and large out for itself as a result of the organizational structure. Further, there is no central marketing authority to promote the sport and there is no central regulatory body in the United States with each State having its own racing commissioner. A very informative Q&A session ended with a discussion about the interrelation between horseracing and gambling, and with an estimated $15 billion bet (legally) on the sport of horseracing last year, it’s safe to say that the sport still has a great deal going for it even in these difficult economic times.

Thanks again to Wharton Sports Business Club Trek Directors Jeff Wilen and Amrita Bagaria for organizing the event and to the NBA, NFL and Jockey Club for their time and hospitality.

Article Contributor: Donal Mcelwee

Fall 2007 Wharton Sports Business Club NYC Trek

On November 16, seventeen MBA students traveled to New York to attend the Wharton Fall Sports Business Trek. The group, comprised primarily of first years, was given comprehensive insights into the growing demand for an MBA skill set in sports and sports related media companies. The agenda included visits to 3 leading companies: The National Basketball Association (NBA), Major League Baseball Advanced Media (MLBAM) and TAKKLE.

Under the explicit orders of Commissioner David Stern, the NBA is making a targeted effort to hire more MBA’s into its organization. One of their first initiatives under this mandate was to form a partnership with the WSBC, Wharton’s Sports Business Club. During the breakfast meeting, trek participants heard speakers from Team Marketing and Business Operations, the International Group, and the Marketing and Media Group. Rebecca Chiu (WG04), Director of the International Group, and Paul Bamundo (WG99), Director of Marketing Partnerships, are both Wharton MBA Alumni. They spoke about the NBA’s expansion plans overseas, particularly in the Asia Pacific, and how the league works with corporate sponsors to promote the game of basketball.

The next stop was a visit to what many consider the crown jewel of Major League Baseball, their interactive arm - Major League Baseball Advanced Media. The company operates the official web site for the league and 30 Major League Baseball club web sites via MLB.com, which draws over four million visitors per day. The group met with Justin Schaffer, SVP of New Media, who discussed the company's history and a number of new strategic initiatives. MLBAM was founded in 2000, and already has an estimated $450MM in revenues with double digit revenue growth and EBITDA margins that are 30% of MLB’s entire operations. Each team shares MLBAM's profits equally, which augments the current revenue sharing agreement to ensure more competitive balance for smaller market franchises. MLBAM just recently was able to pay back the roughly $80 million investment used to fund its start—nearly $3 million per team. While CEO and Wharton MBA Alum Bob Bowman was unable to attend, Justin held a highly interactive conversation covering topics such as MLB’s pending fantasy sports litigation, the launch of the MLB TV Channel, and the convergence between sports and social networking.

The trek ended with a visit to TAKKLE, an online social network focused on high school sports. TAKKLE, which recently completed a $7 million financing, is led by Wharton grads David Birnbaum (CEO, WG05) and Mike Mortellaro (COO, WG05). The Company has grown rapidly to 40 employees and is backed by Sports Illustrated. The executive management team spent well over the allotted hour and a half to discuss their personal stories and passions that helped them get to where they are today.

All in all, the Wharton Fall Sports Business Trek was deemed a success by the participants, and planning will soon be on the way for a spring visit to ESPN, NFL and MLS, and other potential future Wharton MBA employers. Reach out to the club to get involved!

Article contributors: Samir Mayur, Peter Spartin, and Tim Lacey

Professor Justin Wolfers discusses his research on racial discrimination by NBA referees

(November 8, 2007)

Last week, members of the Sports Business club were treated to a lecture by Professor Justin Wolfers, the co-author of a study that sparked national debate and significant media coverage earlier this spring. While Professor Wolfers has performed research on such significant subjects as the death penalty, none of his previous research created the stir that his paper on racial bias amongst NBA referees had caused.

First, it is important to consider the motivation behind his research. The main question is whether a referee of a given race shows any bias towards his own or another race. This is not an attempt to discover if these officials are themselves racist, rather it is to find if they harbor a bias, possibly unknown even to themselves.

He chose the NBA for two major reasons. First, while the teams of referees are not randomly assembled, their assignment to a given game is; and given the significant repetition, the result was a quality data set. Second, the group as a whole was a good target, as this type of bias would seem to be rare in a setting with such high visibility, transparency, and strict monitoring. As mentioned by Professor Wolfers, David Stern, the commissioner of the NBA, the referees are closely monitored by the league at all times.

His research eventually concluded that there was some level of bias, but only by a slim statistically significant amount. The bias appeared to suggest that the non-black players in the NBA were called for more fouls based on the makeup of the officiating team. Results aside, more importantly was the subsequent backlash from the national media. Ranging from the cover of the New York Times to significant coverage on ESPN shows such as PTI, the study was scrutinized for days.

In the end, Professor Wolfers’ study is statistically sound, and possibly reveals some underlying biases that exist in our society today. Ironically, while many of his studies have a greater perceived social impact, none have garnered the attention of a study on the NBA. As he noted from a conversation with sports writer Bob Ryan, sports is something people truly feel is “important”.

Professor Justin Wolfers is an assistant professor of business and Public Policy.
See the original article: http://bpp.wharton.upenn.edu/jwolfers/Papers/NBARace.pdf

And the New York Times article about the reaction from the sports media to the controversial research: http://www.nytimes.com/2007/05/02/sports/basketball/02refs.html?n=Top/Reference/Times%20Topics/People/S/Stern,%20David.

Article contributor: Andrew Chun