Contributing Reporter

In the field of sports business, David Carter plays several positions. He's the go-to expert who's written three books on the subject, delivers regular commentary on NPR's "Marketplace Report" and has appeared on the "Today" show and other news outlets. His Sports Business Group is a one-stop consultancy shop for teams, facilities and marketing concerns. And he's a jock-wonk who since 1994 has taught the subject at his alma mater, USC. In October 2005, Carter co-launched the Sports Business Institute at USC's Marshall School of Business. More recently, Carter formed Sports Business Ventures, a private equity group that is looking for sport related deals. The Business Journal spoke with Carter, 42, just weeks before the Institute will inaugurate its Commissioners' Series, a series of conversations with the heads of professional sports leagues. On Nov. 9, Major League Baseball's Bud Selig is coming to USC to talk all matters hardball.

Question: I take it you are a big sports fan?
Answer: I am definitely not a gung ho sports fan, and I think that is really an advantage because I think you would lose some of your objectivity and get overly emotional about what happens on the field.

Q: So then why did you get into sports business?
A: When I was an undergrad, I interned with Shearson Lehman Bros. brokerage house in Palos Verdes. With the advent of sports marketing, TV contracts were getting big and sponsorship was becoming prevalent. By extension, athlete contracts were growing, so they needed financial people to help them. They never really needed that before, and I took note of that. I thought that there was an opportunity for people who understood the financial management of sports, especially when I saw what was likely to be explosive growth in the industry.

Q: Do you watch a lot of sports on television?
A: It's actually minimal. It probably turns out to out to be a few hours a week. During the course of the year it's largely checking in on big events to see how they are being presented, trying to understand what the advertisers are thinking and so forth. I am watching them but not necessarily as a fan is watching them.

Q: But don't you have any favorite sport?
A: College football. It still has some sense of amateurism and unpredictability. And I just say that having got back from Corvalis, Ore., where USC lost (to Oregon State).

Q: That must have hurt.
A: I took it fine. I am reasonably divorced from what happens on the field. I am clearly more on the business side than painting my face and worrying about which bowl game that my school is going to.

Q: Why did you decide to base yourself in academia?
A: My father taught here at USC, and I got both degrees here. I prefer marketing strategy, and joining the faculty helped me position myself more on the management side of things. Being grounded here is great. I was 29 when I started as an instructor at the graduate school (in 1994). The first class I co-taught was a sports marketing class. After that, I was essentially given my own course about the business of sports, which I taught as a part-time instructor for 10 years.

Q: In 1999, you formed the Sports Business Group to do consultancy work. What's the competition like for jobs?
A: When I first started, I wasn't thought of as the go-to guy for sponsorships or for stadium feasibility studies. When those would come up, I was competing against Deloitte & Touche or Price Waterhouse or Octagon or IMG powerhouses with far superior resources. I sat back and said, "I know this market really well. Let me re-double my knowledge of Southern California." So, I turned the tables and made my specialty our region. That improved my batting average and allowed me to leverage the relationships I have in town.

Q: How has teaching helped your consulting career?
A: If you're teaching sports business at a great business school, people assume that you know what you're doing. That's an obvious competitive advantage. When I'm in the classroom teaching, not only is it incredibly fun and motivating to be around the students, but most of them are the precise target market for the industry. They are part of the 18-34-year-old demographic. My students let me know, months in advance, that the mobile ESPN phone was not going to work.

Q: Give us an example of your consulting work.
A: I have been providing strategic advice to the Rose Bowl on and off for five or six years about where to take that venue as it grows older, what events they should hold and really how to keep that building relevant now that it has been here for 85 years.

Q: Is there any conflict between your consulting work and teaching the business of sports at USC?
A: I don't believe so. Many clinical faculty members like myself are involved in consulting work and take part in businesses, which is acceptable provided that those faculty don't breach any of the university's moral or ethical rules. Besides, there's enormous value in bringing real-life, first-person experiences to the classroom.

Q: What are students learning at the Sports Business Institute?
A: We have undergraduate students, many of whom are trying to get acquainted with sports business what does the industry look like, how and where are there jobs? At the graduate level, we want to be very tactical. We just finished a real-world consulting project with the Special Olympics of Southern California, where we had four M.B.A. students research and figure out where the Special Olympics should locate their corporate offices and host the summer games.

Q: Does the institute have a focus?
A: We would like to carve out the issue of leadership as ours. If you look throughout sports, we've seen some real failures in leadership, whether with breaches in ethics, lack of sportsmanship, or work stoppages. So, we hope to research and learn and critically examine the area of leadership and, in so doing, help improve the industry from that perspective.

Q: What is Sports Business Ventures about?
A: In taking meetings with sports executives and professionals, it became clear that there's an enormous amount of deal flow out there emerging companies, emerging content delivery platforms, emerging events and leagues. But no one was paying attention to them. So, we've put together a team that includes Alan Rothenberg, Neil Pilson, Randy Bernstein, and some others. Right now, we're serving primarily as an advisory firm. We're in the process of building an investment fund for sports industry. I can't talk about any specific projects right now.

Q: How can you do all this, and be available for media?
A: I start my day at 4 a.m., reading newspapers and the Internet and watching "SportsCenter." I have to make sure that I'm fluent in all breaking sports news because you never know when an existing or potential client or the media will call. There's an old saying that you have to read the sports pages twice. Once, from back to front, because the back is where all the transactions and trades and signings are found. Then, if you're a fan, you read it front to back. By late afternoon, I'm doing mop-up work. In the evening, I'll sometimes attend a sports function or a game.

Q: Is the sports business industry different from other businesses?
A: It's an industry that is addressing all of the same fundamentals as the others they just got a real late start. Some of the great economic modeling came out in the 1970s, with sports economists like Roger Noll and Gerald Scully becoming very prominent in that period. The point is, the sports industry is extremely new and is still refining itself. The difference is, it has to refine itself in its own section of the paper every day. So, it plays out in front of us, not always in a delicate fashion.

Q: What is the key issue in sports business today?
A: In the1990s, it was a lot about the public financing of stadiums. This decade, it's about accessing global markets and figuring out how to take advantage of technology. That's no different than what every other industry is going through.

Q: How about this market?
A: With every passing day, we're becoming a more diverse community ethnically, education levels, in terms of where people are living. It suggests that if you're running a sports organization, you had better make sure you don't have a one-size-fits-all marketing strategy. The other part of it is customer service, and how do you balance the ability of a family of four to go to a game with the business demands of fielding a team and generating revenue.

Q: Wouldn't losing that family of four at games be short-sighted on the part of the owners?
A: Yes and no. It's acceptable business practice to move fans out of the stadium and onto America's couches. As long as they're consuming sports, it's not the end of the world. Long-term, however, leagues have an interest in their teams in perpetuity.

Q: L.A. hasn't had an NFL team since 1995. What's the problem?
A: With California it always boils down to real estate values and the tax environment that is, whether the public sector and the taxpayers are willing to support football. As real estate prices continue to escalate, clearly the cost of doing stadiums anywhere in our region has gone up dramatically. The margins that an NFL owner might make out of this market might be pretty slim. If bringing an NFL franchise to L.A. were such a financial slam-dunk, private money would be flowing into that project.

Q: How about that recent report estimating the cost of an NFL stadium in L.A. at $1 billion?
A: I think it's an incredibly sobering number. Whether or not that number is accurate in terms of construction and other costs, it accurately depicts the cost of doing sports business in this market.

Q: Southern California is now pursuing the 2016 Olympics. How important are the Olympics to the region?
A: I'm never convinced to what extent we need, or don't need, anything sports-related in this town. Right now, I've got to believe that Southern California is a front-runner based on the business acumen of the people involved, their track record, and all of the assets of our region, ranging from weather to facilities.

Q: Does it work against L.A. that we hosted in 1984 and in 1932?
A: You have to be just as hungry the third time around as you were the first two times around. That can difficult in this market because we get pulled in a lot of different directions. Cohesion is important. What we can't do and I'm not suggesting we've done this is mail in the bid.

Q: How revolutionary is the Web and other forms of new media for sports?
A: There is no place on the Web where fans are marginalized. They're pulling technology to them, and they're expecting people to deliver game highlights, scores, fantasy news and statistics 24 hours a day. Anybody in our industry that doesn't afford them that opportunity is playing with fire.

Q: What's another big sports trend?
A: Certainly, with the AEG's support of the X Games at Staples and Home Depot Center, action sports will continue to grow in this market. Action sports are the next generation of sports, supported by the fact that so many kids have lost interest in the stick and ball sports.

Q: Is your 7-year-old daughter involved in sports?
A: I think she has looked at sports with ambivalence because she associates it with me being out or gone. But I am happy to say about two years ago I coached her soccer team the Laughing Leopards to a winless season.

Q: Is she still playing?
A: No.

David Carter

Title: Professor of sports business
Organization: USC Marshall School of Business
Born: Oakland, 1964
Education: B.S. in marketing, USC; M.B.A., USC
Career Turning Point: Decision to focus consulting efforts on issues pertaining to Southern California
Most Influential Person: Don Klosterman, a sports industry executive who played key roles in the development of both the AFL and the USFL
Personal: Married, one daughter age 7; lives in Redondo Beach
Hobbies: Jogging, reading and relaxing with family and friends

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