by Ryan J. Swift, E.A.

As an avid sports fan, sportsman, econ aficionado, and entrepreneur, I pay very close attention to sports business. As a University of Oregon Duck, I naturally pay close attention to sports marketing. Uncle Phil wouldn’t have it any other way. (Notice: I’ll never call myself an economist. They’re wrong too much of the time. It’s like hovering around the Mendoza Line. I’m an econ aficionado [E.A.]).

American professional sports is going to undertake a metamorphosis in the next decade. These are my predictions:

1) The most valuable uninhabited real estate isn’t in the Alaskan tundra, or the untapped Rocky’s. No, it’s actually on sports uniforms. A billboard that moves with the associated brand, in real time and in video or images. Fútbol, the global sport, has done this for years. Shockingly, the trend hasn’t penetrated American professional sports yet. Fans wouldn’t like it, and franchise owners know it. It would be a bold move to desecrate beloved uniforms like the Yankee pinstripes, or the iconic purple and gold (which is clearly yellow) typeface of the Lakers. But it is just a matter of time. We’ll join the likes of Manchester United and Chelsea, sooner rather than later, that share the uniform space with a corporate sponsor. Major League Soccer (MLS) has already followed suit with it’s foreign counterparts on jersey billboarding. The New York Red Bulls have even one-upped them: name the club after the corporate sponsor, or owner in this case. Awesome. The Austrian energy drink company that produces Red Bull bought out the franchise when they were the New York/New Jersey MetroStars. Technically if jersey billboarding is already happening in America, it can’t be a prediction. But the MLS doesn’t matter in this country. This trend is coming to the big three American sports: football, baseball, and basketball. Just wait.

2) In sports that have salary caps and revenue sharing (football and basketball) this may not apply. But for a sport like baseball with no salary cap, and an increasingly large chasm between payrolls of large and small market teams, a fan tax will be instituted to keep a team’s stars in town. While teams like the New York Yankees, Boston Red Sox, New York Mets, and L.A. Dodgers line up to nab the best free agents every off-season, often those players come from small to mid market teams who just can’t compete. Even if the Oakland A’s and Florida Marlins of the world could pay as much as the big boys for one particular player, it would paralyze their ability to pay for the rest of a complete roster. In the future, fans will just pay an additional tax for tickets, concessions, memorabilia, parking, or whatever else, to help raise money to keep big time players in house. Take a team like the St. Louis Cardinals. It is a franchise with great tradition, 10 World Series titles, and a loyal, passionate fan base. They have a first baseman named Albert Pujols who will be a free agent this upcoming winter. Pujols is probably the best non-pitcher in the game right now, and easily in the top 3. Based on the 5-year, $125 million contract given to Phillies first baseman Ryan Howard last year, Pujols stands to sign a contract probably ranging between $30-40 million/year. St. Louis is a mid-market team which will have trouble affording such a hefty contract. One day, team’s in such a predicament will ask their passionate fan base to pay a tax in order to keep their heroes in town. If you think about it, fans technically already pay a beer tax to finance some of the payroll. If you’re a die hard fan, and you already get taxed a million different ways in your life that you despise, why not pay one more tax to keep your team a contender? Most die hards would probably agree that’s better than paying to map radioactive rabbit feces or study the sex lives of female college freshmen. The fan tax, exploiting the emotional passion we have for sports, is coming.

3) Similarly, small to mid-market baseball teams will explore other ways to keep their best players around. Another option for the salary mix is to offer a player ownership stake in the team, or at least claims of revenue streams. It is rumored that both Magic Johnson and Kobe Bryant were offered ownership stake in the Los Angeles Lakers as incentive to resign as players. This is illegal in the NBA, even if the ownership doesn’t “kick-in” until retirement. Among other reasons, a player/owner would cause a conflict of interest. What side would the athlete be on during a labor conflict? I can’t substantiate these rumors, but they certainly do not seem far-fetched. Kevin Goldstein of Baseball Prospectus shares his insight on current MLB players having financial interests in the team they play for:

“The first thing to look at is Schedule A of the current collective bargaining agreement, the ‘Uniform Player’s Contract.’ This is the building block for any player’s deal, and all contracts are subject to the rules therein. Rule 4(c) makes things fairly clear regarding this matter:

4.(c) The Player represents that he does not, directly or indirectly, own stock or have any financial interest in the ownership or earnings of any Major League Club, except as hereinafter expressly set forth, and covenants that he will not hereafter, while connected with any Major League Club, acquire or hold any such stock or interest except in accordance with Major League Rule 20(e).

Fairly cut and dry really. A player can’t have interest in a team. But what about the exception at the end regarding Major League Rule 20(e)? This is where things get difficult. The official, public major-league rules really only cover the game itself, but unfortunately, the game’s inner-working rules are not made public. Luckily, another team official, who was interested in the hypothetical situation once I shared it with him, came through in the clutch.

Rule 20(e). WITHIN CLUB. No manager or player on a Club shall, directly or indirectly, own stock or any other proprietary interest or have any financial interest in the Club by which the manager or player is employed except under an agreement approved by the Commissioner, which agreement shall provide for the immediate sale (and the terms there of) of such stock or other proprietary interest or financial interest in the event of the manager or player’s transfer (if a player or playing manager) to or joining another Club. A manager or player having any such interest in the Club by which the manager or player is employed shall be ineligible to play for or manage any other Club in that League while, in the opinion of the Commissioner, such interest is retained by or for the manager or player, directly or indirectly.”

So it seems that a player/owner scenario is possible in MLB. This is a long way from happening in the NFL. Their collective bargaining agreements don’t even guarantee players the contracts they sign. In the most brutal and violent major sport in America, players can be cut at any time, regardless of how many years are left on their “contract”. As a result, the contracts in football are front-loaded with signing bonuses to help guarantee some compensation. Either the worst negotiators in business work for the player’s union or the NFL owners are crafty geniuses.

The Magic/Kobe deal would help keep players like Pujols in St. Louis, although only the best of the best, who are already deeply associated with their franchise, would likely receive ownership. More common would be an expiring equity sharing agreement, or revenue sharing deal. Some players would be worth sharing revenue with, given their measurable impact on fan attendance and jersey sales; not to mention wins.

4) Mikhail Prokhorov, the Russian billionaire who recently acquired majority interest in the New Jersey Nets, will begin the true globalization of American sports franchises. The globalization of athletes has been occurring for decades; no more so than in basketball with Chinese, Mexican, Brazilian, Turkish, Spanish, Lithuanian, French, German, and Canadian imports very prevalent (among others). But Prokhorov is the first majority foreign owner in the NBA, and the only one I know of in American pro sports. His mantra since taking over the Nets … well, I’ll allow him to tell you:

“[We'll] be the first really global team in the NBA. For me, being the first foreign owner, I want to do my best to invite all the fans for the team all over the world. I think the NBA is worldwide. But other teams [possess a] more local mentality. We are going to create and to build a global franchise to sell all around the world. I think I have a competitive advantage compared to other owners.”

Translation: you go ahead and be mom & pop. I’ll be Richard Branson’s Virgin.

Touche, Russian billionaire. Prokhorov’s team is fleeing Dante’s Inferno aka Newark (nine circles of suffering located within the Earth) for Brooklyn and a new arena in two years. Doesn’t get much more global than New York, or in vogue than Brooklyn. When Prokhorov succeeds in creating a global brand for the franchise, look for team owners from all sports to replicate his business model.

Keep an eye out for these four major predictions for American Professional Sports. They will be, as sports broadcasters love to say, “game changers”.