In the 1980s, sports has become one of the most efficient routes to prestige--but don't bother with a map; just bring a checkbook.
Twenty stories above the heart of downtown Indianapolis, for example, the $85 million Hoosier Dome looms as a monument to America's love of big-time sports. To be ready for play by the summer of 1984, the 63,500-seat facility, designed for both football and baseball, covers more than two city blocks of downtown real estate. When completed, a Teflon-covered fiberglass dome will span 93,000 square feet of artificial turf and the Hoosier Dome will be the equal of any National Football League or major league baseball stadium in all respects but one.
It doesn't have a team.
Financed by $35 million in grants from the Indianapolis-based Lilly Endowment and Krannert Charitable Trust and a 1-percent tax on food and drinks served in Indianapolis bars and restaurants, the Hoosier Dome is one illustration of the lengths a city will go to secure a major league sports franchise.
"Yes, we are taking a chance," admitted Thomas W. Moses, chairman of the board of the Indianapolis Water Co. and one of the Hoosier Dome's leading boosters. "Let's cross our fingers and hope we can get a franchise. At least the dome is not a dream anymore. They can come to town and see it."
In a broader sense, the Hoosier Dome is only one example of the symbiotic relationship between big money and big sports that has become one of the dominant themes in athletics during the 1980s.
It is part of a pattern that permits ABC-TV to pay $225 million for the rights to telecast the 1984 Olympic Games in Los Angeles and then to silence its more cautious critics and assorted doomsayers by selling out 90 percent of its Olympic advertising--for revenue already nearing $650 million--at prices of up to $250,000 for a 30-second prime-time spot.
It is part of a pattern that permits the University of Michigan to spend $1 million a year on its football program, knowing that gate receipts and television income from football alone will bring back $9 million to the Michigan athletic department. Or to allow the Atlantic Coast Conference to increase its television revenue for basketball from $600,000 to $6 million--in four seasons.
It is the same competitive pattern that pressures sports team owners into offering superstars multimillion-dollar contracts while other owners complain that high salaries are driving professional sports leagues bankrupt.
Professional sports are, from most accounts and with the exception of several franchises in the National Basketball Association and the National Hockey League, far from bankrupt. But wherever one looks nowadays, one will find a bidding war underway--an ever-more intriguing, high-stakes sport in itself.
In football, the U.S. Football League's search for credibility, for recognizable names and high-quality players such as Walker, has significantly driven up the earnings of players in the USFL and NFL.
The USFL is bolstered, to a large degree, with $19 million in rights fees from ABC and $9 million from ESPN, the cable sports network, over two years. And the NFL's teams are paying for this battle with the fruits of another: the commercial networks last year entered an unprecedented five-year deal with the NFL for more than $2 billion, a figure many believe was deliberately inflated to eliminate competition from cable and pay TV.
"Pete Rozelle should be given whatever gold medal is in order," said pay-cable TV consultant Bob Schmidt, "for scalping the networks for what I call 'the last hurrah.' The next time around, in my opinion, the NFL will make a deal for pay television, not commercial television."
The NFL may have to, Congress willing, the way player salaries are going. Quarterback Elway will make $600,000 in his first year with the NFL's Denver Broncos, and Jim Kelly $500,000 to lead the USFL's new Houston Gamblers. In 1983, the highest-paid NFL quarterback (the Bills' Joe Ferguson) made $400,000.
In baseball, NBC this year offered the major leagues $500 million for half of a five-year television pact, and offered another $400 million if ABC turned down its half of the agreement. ABC asked the contract be extended a year, and the net result--a $1.2 billion, six-year agreement--is now viewed with much interest by the players, who are due to renegotiate a collective-bargaining agreement next year, and with much skepticism by advertisers, who will ultimately have to pay.
"Professional football and baseball are the cornerstones of network sports, having the longest seasons, giving you the most exposure, being the most attractive, audience-wise, for advertisers," said NBC Sports President Arthur Watson. "As for prestige, no question--you must be involved in those, as a network sports department, to maintain your position, your viability, in the network game. Not at whatever cost. We think we made a very attractive deal for NBC."
And certainly for baseball. In 1974, radio and television rights to major league baseball went for $43.2 million, including individual team contracts and network money. In 1983, due largely to the growth of regional pay-TV networks, the figure had risen to $153.6 million. Before the new network contract. Starting next season, the average baseball franchise will take in $7 million in total TV revenue, $5 million more than this season's average.
In an era when commercial television's audience is threatened by cable and pay television and video games, the networks place a premium on such relatively low-cost, reliably riveting sports programming.
"If you're prepared to invest your money, sports is an area where you know you will get quality product, and product that rates well," said Neal Pilson, president of CBS Sports.
The major league baseball contract has set off some rumbling among advertisers.
"They probably paid more money than they should have," said one Madison Avenue observer of broadcast sports fare. "The feeling is that the two networks probably overbid by maybe $300 million. NBC was so anxious to have baseball that what they did was bite immediately at the bait thrown out, rather than sit there and negotiate."
"Something is going to have to give," said Anheuser-Busch's Gerry Solomon, who places the giant brewery's sports-related advertising. He predicts the networks will soon find they have to cut their asking prices for time when advertisers start balking at the ever-rising cost.
So it comes as no surprise that many sports entities are looking seriously into pay TV--programming supported directly by viewers, rather than advertising sponsors.
"I think (commercial TV revenue) is going to reach a kind of saturation point," said John D. Swofford, athletic director at the University of North Carolina, where total commercial television income rose from $393,000 in 1980-81 to an expected $1.5 million in 1983-84.
"It's not going to increase in the next 10 years the way it has in the last 10. But in the next breath, I would say that there are some changes going on technically, in television, when you get into pay-per-view and subscription television, that will bring some added money in . . ."
Advertising, however, remains a big part of modern athletics. When American corporations want to cultivate a public image, sports is so pervasive a part of American culture that many companies eagerly spend millions to surround it with their presence.
Just to be associated with the Los Angeles Olympics, 29 corporate sponsors are putting up $120 million in payments ranging from $4 million to $13 million apiece that will entitle them to use the Olympic logo in advertising and promotional campaigns.
That is but one more illustration of what California Institute of Technology economist Roger Noll said is an increasing demand for sports that began at the turn of the century Noll said, "The overall demand for sports has grown steadily throughout the century."
At the same time, the concept of a sports franchise as a business entity has, of necessity, also grown.
"I think you're going to see--well, we're seeing it already--the disappearance of the 'sportsmen' who own baseball teams," said William Giles, president and general partner of the Philadelphia Phillies.
The way the economics are today in baseball, it's pretty much impossible for an individual, or even a family, to own a ball club.
"I think you'll see more and more broadcast entities being involved in ownership," said Giles, who points as examples to Turner Broadcasting's Atlanta Braves, the broadcast-affiliated Chicago Cubs (owned by the Chicago Tribune) and White Sox and the Phillies themselves (Taft Broadcasting owns a 47 percent interest in the team). "I don't think it's bad. I think television is going to be such a vital part of the future of all sports, that it's nice to have the expertise involved in ownership."
So vital a part will television play in the future of sports, said consultant Schmidt, that "whereas now, with the exception of professional football, roughly 66 cents of every dollar comes from the stadium or arena where the teams perform, eventually the ratio will be more like 90-10--with the 90 percent coming from pay television.
"Look at what Eddie Einhorn did," said Schmidt, referring to the White Sox' principal owner, a onetime TV syndicator who participated in the negotiations that led to baseball's $1.2 billion TV contract. "He gave the team owners an opportunity to get even in that network contract. You know what baseball did last year, as a business? It lost 50, 60 million bucks. Who says that's a business?"
At the college level, an area that can never become as corporately cozy with broadcasting interests as professional sports, escalation of TV rights fees has triggered a feud between the NCAA and the College Football Association that could undo the NCAA's governance.
At issue is whether the NCAA can continue to negotiate television rights to football games for its member schools or whether the schools can negotiate for themselves. Hundreds of millions of dollars are at stake in the dispute, now tied up in federal courts. If the CFA, an organization of 60 top football colleges, gets its way, it would negotiate for late Saturday afternoon and prime-time telecasts, leaving individual schools and conferences to make their own deals for the early Saturday telecasts, says CFA Executive Director Charles M. Neinas.
Don Canham, athletic director at the University of Michigan, is concerned that the result will be chaos in college athletics.
"If the courts put the NCAA out of business, it will hurt the smaller schools badly," said Canham. "That's what I don't like to see. If you have free and unlimited television, you will drive the rates down, but not for the barn burners. The Pitt-Notre Dame game will always draw. The rich will get rich and the poor will get poorer.
One of the largest college athletic operations, the Michigan program, like many others, is dependent on TV and gate receipts and, to a lesser extent, on contributions. Football generates $9 million, basketball $1.5 million to $2 million and the rest comes from hockey and fundraising. With that, Canham has to support 500 athletes in 21 varsity sports, 11 for men and 10 for women.
And like many college athletic directors, Canham is concerned that the system that permits the Michigan athletic program to thrive is easily upset, either from a change in the marketing of television rights to college sports contests or from rules against professional leagues signing undergraduates.
NFL Commissioner Rozelle has said on several occasions he's opposed to the signing of college undergraduates. In the meantime, he has been preoccupied with litigation in California and legislation on Capitol Hill over the issue of the Raiders' move from Oakland to Los Angeles. Until the issue is resolved, he said, there will be no more expansion.
But in the meantime, cities like Indianapolis, Memphis and Phoenix are still campaigning hard.
In Memphis, John Malmo, president of an advertising agency, has been working for the better part of the last decade on a committee to secure an NFL franchise.
He thought he had one in 1979, Malmo recalls, when Baltimore Colts owner Robert Irsay was talking about moving the team.
On behalf of the city, Malmo offered Irsay a guarantee of $7.28 million in gate receipts a year for eight years, a total of $65.52 million, plus expansion of the Liberty Bowl Stadium and an office-training complex.
"Nothing puts a major-league stamp on a city as quickly as an NFL team. We thought it was the best offer in the NFL at the time," Malmo said. "But Mr. Irsay just excused himself to go to the bathroom, and he never came back again."
In Indianapolis, Thomas M. Miller, chairman of the board of the Indiana National Bank, said, "Having a major league franchise is a state of mind. You're not considered a major city unless you have major league sports."
For several years, delegations from Indianapolis have been attending meetings of the NFL and major league baseball lobbying for a team in the Hoosier Dome. For fees in the $100-an-hour range, Peter Bavasi, former president of the Toronto Blue Jays, has signed on as a consultant to help persuade the baseball owners. So far, the Indianapolis people say they're encouraged by the response they've gotten, but nobody's promised a team.
"We're pretty much a smokestack state," said Tom Moses. "We need to do something to project a major league image so we can attract new industries. Otherwise, we may be left at the post."
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