Category: Crain’s Detroit Business

This summer, 22-year-old Andre Drummond will become a very, very rich man.

The All-Star center is up for a new contract, and the Detroit Pistons have every intention of giving him a big one. Drummond averaged 16.2 points and 14.8 rebounds per game, good enough to earn All-NBA Third Team honors. (I guess free throws don’t factor in to that decision.)

Is Drummond actually worth north of $20 million per year? Maybe, maybe not. But the Pistons have to give it to him.

Drummond was a restricted free agent last summer, meaning the Pistons had first dibs at re-signing him and had the option to match any offer another team gave him. Instead of cashing in, Drummond accepted a qualifying offer, a one-year offer every team makes to their impending restricted free agents worth 125 percent of last season’s salary.

The move seemed like a selfless act by Drummond; it allowed the Pistons to sign point guard Reggie Jackson to a four-year, $64 million deal. But it was also a savvy move on Drummond’s part.

New television deal

The league signed a new television deal with ESPN, ABC and TNT in 2014 and it goes into effect this upcoming season, worth $24 billion over nine years. Compare this to the previous deal signed in 2007 worth $7.4 billion. The payments to the league increase every year, rising from $930 million to $2.66 billion, according to the New York Times.

Rising salary cap

Andre Drummond

So what does the NBA’s television deal have to do with Drummond cashing in this offseason? The money from the deal is factored into “basketball related income,” which is a component in determining the salary cap for the league. The more basketball related income, the higher the salary cap.

The projected salary cap for 2016-17 is $94 million. This is an increase from $70 million in 2015-16, which was an all-time high for the NBA. The figure is projected because the league doesn’t officially set the new salary cap until the beginning of July.

Players currently under contract for next season will see their salaries rise in proportion with the salary cap, which is nice for them, but even better for free agents. Salaries will balloon and non-superstars will be getting superstar money. Andre Drummond likes that scenario.

In the NBA, teams cannot sign players for as much money as they want. There is a limit to how much money a player can earn per year, based on number of years in the league and a percentage of the salary cap. For a player with six or fewer years’ experience in the NBA, like Drummond, the maximum salary per year is 25 percent of the salary cap. Do the math, and that works out to be $23.5 million for the first year. Not too shabby.

If you think these numbers are outrageous, just wait for the 2017-18 season. The salary cap will likely jump even higher to $107 million, making the outrageous deals this offseason seem conservative.

New apparel deal with Nike

The NBA reached a deal with Nike to be the official apparel provider of the league. The eight-year agreement is worth about $1 billion and will go into effect for the 2017-18 season. This is a 245 percent increase annually from the previous deal, according to ESPN. That’s a lot of basketball-related income to inflate the salary cap.

Adidas AG previously had an 11-year deal with the league and decided not to negotiate a new deal.

Jersey advertisements

For the first time in the history of the four major U.S. sports, the NBA will allow advertisements on jerseys starting in the 2017-18 season.

No, you won’t be rooting for the General Motors Pistons any time soon.

The advertisements will be a 2½ by 2½ inch patch in the top corner of the jersey. ThePhiladelphia 76ers became the first team to sell the patch, agreeing to a three-year, $15 million deal with StubHub.

This isn’t quite on the level of European soccer jersey advertisements. Chevrolet andManchester United signed a deal in 2014 worth $80 million per year, according to Forbes. The Sixers will be making mere chump change compared to those soccer teams, but the NBA sees this as a revenue stream that will only get bigger.

The money from the jersey advertising will be split in half. The first half will be split again in half, with one portion going to the team that sold the ad and one portion going into a revenue-sharing pool. The second half will be split with the players.

Is Drummond worth it?

So why do the Pistons have to re-sign Drummond? Well, because they can’t do much better than him right now. The other centers on the Pistons’ roster are Aron Baynes and Joel Anthony. Baynes was a serviceable backup last season, but the drop-off in talent was evident when Drummond was off the court. The Pistons are likely to release Anthony.

Drummond is also the best available center on the free agent market. Following are centers who will become free agents this offseason:

• Andre Drummond (Detroit Pistons): Age 22, 16.2 PPG, 14.8 RPG
• Hassan Whiteside (Miami Heat): Age 27, 14.2 PPG, 11.8 RPG, 3.7 BPG
• Dwight Howard (Houston Rockets): Age 30, 13.7 PPG, 11.8 RPG
• Al Jefferson (Charlotte Hornets): Age 31, 12 PPG, 6.4 RPG
• Joakim Noah (Chicago Bulls): Age 31, 4.3 PPG, 8.8 RPG
• Bismack Biyombo (Toronto Raptors): Age 23, 5.5 PPG, 8 RPG

Drummond is the youngest and had the best stats out of the top five free agent centers.

However, one stat left off that list is free throw percentage. Drummond set the NBA record for worst free throw shooting last season at 35.5 percent. This makes him a liability in late-game situations, when teams foul him intentionally so he has to shoot free throws. Coach Stan Van Gundy usually has to take him out of the game at this point because of his inability to make anything from the “charity stripe.”

Paying someone $23.5 million to sit on the bench during the most crucial part of the game might seem preposterous, but in the economic boom era of the NBA, the preposterous will become the norm.

http://www.crainsdetroit.com/article/20160628/BLOG200/160629718/new-tv-deal-means-pistons-andre-drummond-set-to-cash-in

The Detroit Zoological Society has launched a new marketing campaign titled “The Zoo That Could,” focused on highlighting the zoo’s recent wildlife conservation, energy sustainability and education efforts.

Poetry, art and animated videos are used in the campaign, which will also include print, digital and social media elements, according to a release.

“This campaign changes the conversation and explains what we do and why we do it,” Ron Kagan, Detroit Zoological Society executive director and CEO, said in a statement. “We hope it will educate and inspire the community to think of their zoo in a whole new way.”

Southfield-based advertising agency Doner developed the campaign for the zoo pro bono, and has worked with the zoo for 34 years. Animation was done by New York-based creative agency Psyop. The campaign has been in development for about nine months, said Patricia Mills Janeway, communications director for the Detroit Zoological Society.

“The zoo has a great image already,” David DeMuth, president and co-CEO of Doner, toldCrain’s. “People love it; they set record attendance numbers. [The goal] is to enhance their image in a different way so people appreciate all the work the zoo does behind the scenes or around the world with animal welfare and green initiatives.”

Two videos are already up on the campaign’s website, thezoothatcould.org. The other two videos will debut later in the campaign. The animated 60-second clips are narrated by a child and each video focuses on one of four areas the zoo wants to highlight: conservation, animal welfare, sustainability and education.

“We wanted it to stand out, and we thought the visual approach and the poetry, it’s sort of like viewing it from a child’s eyes,” DeMuth said. “Telling those impactful stories that way will get people to pay attention.”

The organization will spend $250,000 on ads on Detroit TV stations that will run starting Monday and through July. The print and digital elements will run through September.

The zoo announced in April that it will become the first in the U.S. to use a biodigester. The $1.1 million project will convert more than 400 tons of animal manure into compost and capture the methane byproduct to help power the Ruth Roby Glancy Animal Health Complex. In another energy conservation effort, the zoo said in December it would switch to 100 percent renewable electricity from wind farms to power its Royal Oak campus. The zoo also stopped selling plastic bottles of water last year.

The Detroit Zoological Society, which operates the Detroit Zoo and the Belle Isle Nature Zoo, was named 2015 Best-Managed Nonprofit by Crain’s. The Royal Oak location hosted nearly 1.5 million visitors last year and is home to 2,400 animals.

Originally posted: http://www.crainsdetroit.com/article/20160613/NEWS/160619925/detroit-zoos-new-marketing-campaign-highlights-wildlife-conservation

SRG Global Inc., a tier one interior and exterior trim supplier, is moving its world headquarters to Troy from Warren.

The new facility, at 800 Stephenson Highway north of 14 Mile Road, is more than 51,000 square feet. It will be home to more than 250 employees who support the company’s global and North American business, the company announced Tuesday.

No timetable was given for the move.

“Our new facility was created to inspire greater collaboration between our employees and customers, which will help drive more innovation into our designs and manufacturing solutions that meet the auto industry’s evolving needs,” said Dave Prater, president and CEO of SRG Global. “The building serves as a creative center focusing on our employees’ fulfillment and will be a place for them to foster ideas, share knowledge, inspire new technology developments and to develop their capabilities to create the greatest value.”

The company employs more than 5,600 people worldwide and has an advanced development center in Taylor.

SRG Global is a Guardian Industries company.

Originally posted: http://www.crainsdetroit.com/article/20160614/NEWS/160619902/srg-global-to-move-headquarters-to-troy

Fifteen health centers in Michigan will receive $5,583,097 to expand oral health services and increase the number of patients they can serve, the Health Resources and Services Administration announced Thursday.

“The funding we are awarding will reduce barriers to quality dental care for hundreds of thousands of Americans by bringing new oral health providers to health centers across the country,” Sylvia Burwell, U.S. Department of Health and Human Services secretary, said in a statement.

Following are the health centers and how much funding they will receive:

• Alcona Citizens for Health, Inc. (Harrisville) – $350,000
• Baldwin Family Health Care (Baldwin) – $350,000
• Center for Family Health, Inc. (Jackson) – $350,000
• Cherry Street Services, Inc. (Grand Rapids) – $350,000
• Covenant Community Care, Inc. (Detroit) – $525,000
• Detroit Central City Community Mental Health, Inc. (Detroit) – $350,000
• Detroit Health Care for the Homeless (Detroit) – $525,000
• Family Health Center, Inc. (Kalamazoo) – $350,000
• Grace Health, Inc. (Battle Creek) – $350,000
• Health Delivery, Inc. (Saginaw) – $350,000
• MidMichigan Health Services, Inc. (Houghton Lake) – $333,097
• Northwest Michigan Health Services(Traverse City) – $350,000
• Oakland Integrated Healthcare Network (Pontiac) – $350,000
• Upper Great Lakes Family Health Center(Gwinn)- $350,000
• Western Wayne Family Health Centers (Inkster) – $350,000

Along with the Michigan funding, HRSA will provide nearly $156 million in funding for 420 health centers in 47 states, the District of Columbia and Puerto Rico, according to a news release. The money will go toward hiring approximately 1,600 new dentists, dental hygienists, assistants, aides and technicians for 785,000 new patients.

HRSA was created in 1982 as an agency of the U.S. Department of Health and Human Services and has a budget of $10 billion.

Originally posted: http://www.crainsdetroit.com/article/20160616/NEWS/160619818/michigan-health-centers-to-receive-5-5-million-to-expand-oral-health