Sports Business

Sports Business '15 to Watch': 3M extends deal with NASCAR


Sports Business '15 to Watch': 3M extends deal with NASCAR

1. In a revolutionary deal with the NFL, A-B InBev has agreed to extend Bud Light’s sponsorship of the league for another six pack of years, at a projected cost of $1.4 billion. The $1.4 billion price tag would be a 15% increase over A-B InBev’s current six-year NFL deal, set to expire after Super Bowl LI in 2017. Under terms of the new deal, the brewer’s contract will run through 2022 and replace the final year on the current contract. What makes this deal so revolutionary is that this marks the first time an NFL sponsor will be able to use game footage in highlight clips, placing them on Bud Light’s website, Facebook page, and other digital media outlets. A-B will also promote the brand throughout the year during events like the NFL Draft and NFL Kickoff. The extension also follows the release this fall of team-specific customized cans in 28 NFL markets to promote Bud Light and A-B InBev products, which helped sell more beer, according to the company. Expect more deals of this type to become commonplace across sports leagues as they try to create additional revenue streams to offset huge payments for content rights.

2. Every week there are new headlines coming from Daily Fantasy Sports companies like FanDuel. This week, FanDuel made it clear that they would not release an IPO anytime soon and that they are not looking to merge with any other DFS. After reportedly being valued at $1.3 billion, co-Founder and CEO Nigel Eccles said that his company “does not need to raise any more money at this point, and that the regulatory landscape for daily fantasy needs to stabilize before any company goes public.” And in terms of a rumored merger, Eccles was quick to ensure that it would not happen, saying, “I can see why it would be attractive to them. I don’t know why they think it would be attractive to us.” An IPO is prime for a company that is both growing and turning a profit, and with recent massive spending on advertising, FanDuel may not take the IPO route that quickly.

3. After upgrading construction plans for their new arena, the price tag on the Detroit Red Wings new structure will be $177 million more expensive than originally planned. With the price tag now at $627 million, team Owner Mike Ilitch “continues to add major upgrades to the state-of-the-art venue” in an attempt to make his new arena one of the “coolest” in the league. Upgrades to the 20,000-seat arena include a large LED screen in the adjacent outdoor public space, a practice and amateur hockey rink, and additional video and sound capabilities. Detroit natives don’t need to worry, though, because the upgrade funds won’t come from taxpayers – it’s all privately funded. Parent company Olympia Entertainment President & CEO Tom Wilson has said that the new price tag "may be not the ultimate construction cost" because the Ilitch family "continues to explore more potential changes." Like nearby Comerica Park and upgraded Ford Field, the new arena is part of ongoing and badly needed downtown revitalization plans for the city of Detroit – which help give fans of Detroit’s struggling sports teams something to cheer about.

4. The Jacksonville Jaguars recently proposed a $90 million facelift to EverBank Field with the intentions of splitting the cost 50/50 with the City of Jacksonville. The ambitious and expensive makeover is set to include an outdoor amphitheater and indoor football practice facility outside the stadium, along with upgrading its luxury seating area. The plan calls for the city to spend $45 million in hotel bed tax money. The City Council must approve the project first. The Jags would start construction as early as January, 2016. The city itself would own the amphitheater, and a company owned by team Owner Shahid Khan “would occupy, manage and run the venue under a 30-year lease.” This proposal marks the team’s second request in as many years for the city to help pay for a major improvement of the stadium, which the city owns. NFL International games by the Jaguars were instrumental in generating the sponsorship by Florida tourism entities, and the Jaguars continue to build on that relationship.

5. With a five-year extension being signed this weekend, 3M announced that is will continue its longstanding official partnership of NASCAR, with the company’s automotive-aftermarket division taking the lead role moving forward. Every car competing in the Sprint Cup will now feature the 3M logo on it and the automotive-aftermarket division of the company will continue to have rights to put NASCAR marks on products. They will also receive hospitality assets, which are a major facet of its B2B-focused NASCAR program. 3M automotive-aftermarket division U.S. Marketing Operations Manager Dale Ross said that the company is having that division take the leading role because that was the core part of the business that originally sparked the company’s involvement in NASCAR, and it made sense to get back to that focus. The deal now pushes the length of the two sides’ relationship to nearly two decades – another sign of NASCAR corporate stability.

6. Sports and politics have long been bedfellows – just ask golf buddies Tom Brady and Donald Trump. But a recent report from Arizona Republican Senators John McCain and Jeff Flake has made them uncomfortable ones. Last week, the politicians slammed the Pentagon for paying over $6.8 million to pro sports leagues to back “patriotic events.” The pair examined and reported on 122 contracts that the Pentagon has held with various sports leagues – such as paying $49,000 for the Wisconsin Army National Guard to sponsor performances of “God Bless America” at Brewers games and $20,000 for the Jets to honor New Jersey Army National Guard soldiers as hometown heroes at home games. According to McCain, the misstep is making taxpayers fund these acts of patriotism. “Honoring our troops as we do in virtually every major professional sport is a wonderful thing,” he said. “But to charge the taxpayers for it in the name of patriotism is disingenuous at best and, frankly, unacceptable at worst.” While shows of patriotism at sporting events should and will ensue, tax payers will likely no longer pay for them. Using taxpayer funds for these activities will be debated as the National Defense Authorization Act is scheduled for the House floor this week.

7. The Chicago Blackhawks and NHL may still be undecided on how to proceed, but as of now no charges will be filed in the rape case against All-Star Patrick Kane "because of 'significant material inconsistencies' between the woman’s claims and those of witnesses and also contradictory physical and forensic evidence that didn’t support her allegations." Kane is not yet in the clear with the NHL though, as the situation is pending further league investigation. The Blackhawks, on the other hand, will consider the circumstances of this situation – having given him a “zero-tolerance ultimatum” back in 2012.

8. After a series of race-related incidents on the University of Missouri campus were handled poorly by President Tim Wolfe, black football players at the school said they “would no longer participate in ‘football related activities’” until the president was no longer in office. Multiple players sent out a statement via social media along with about 30 pictures linking arms with Jonathan Butler, a graduate student who "began a hunger strike Monday, pledging he would not eat “as long as Wolfe was still the president.” Butler (and others) can begin eating again, as President Wolfe resigned Monday amid all of the controversy. Wolfe has been under fire as of late, and Missouri coach Gary Pinkel recently tweeted out this past weekend a photo showing support of his players. This issue comes at a bad time for the state of Missouri, which is still recovering from last year’s chain of race-related events that took place in Ferguson.

9. The forced short sleeve jersey fashion for the NBA may be back out of style really soon after LeBron James ripped his sleeves in half on national TV during a game this past week. The NBA and Adidas have been forcing this agenda since 2013, when they first introduced the new style. Fans and players alike have been complaining about them since their inception into the league, but many speculate that LeBron’s actions spoke louder than any words possibly could have. The NBA and Adidas "were concerned that fans didn't like to buy tank top replica jerseys and were hoping to increase merchandise sales by introducing the sleeved format." But the sleeves "have alienated the league's fan base, its labor force and now its best player. As Nike is set to take over as the league’s official jersey supplier at the start of the 2017-2018 season, expect that to mark the end of this short-lived style.

10. HSBC will continue to show its support of tour-level professional golf beyond this year, as it just elected to extend its role as title sponsor of three elite tournaments in the Middle East and Asia. HSBC, a global banking group, has signed new multi-year deals to remain the title sponsor of the World Golf Championships – HSBC Champions in Shanghai, the HSBC Women’s Champions in Singapore, and the Abu Dhabi HSBC Golf Championship. HSBC has served as the top sponsor of the HSBC Champions, one of four World Golf Championships events that feature both the PGA and European Tours, since 2005, while only signing on to the Abu Dhabi tournament in 2011. Both of these contracts will run for the next five years. Many speculated as to whether or not HSBC would try to renew all three of its title sponsorships – all three were due to expire at the end of the year. Nevertheless, the company announced its intention to stay involved in golf at the HSBC Golf Business Forum, an annual get-together of global golf executives that is being held in Shanghai ahead of this year’s World Golf Championships-HSBC Champions at the Sheshan International Golf Club.

11. With the NFL reaching its halfway point through Week 8, viewership numbers across networks have varied. Overall, primetime on broadcast TV has been a bright spot for the league. CBS and NBC have seen audience gains while ESPN and Fox have been slightly down. NBC is averaging 23.6 million viewers for its games to date, marking the best figure for an NFL primetime package through Week 8 since 1996. CBS – which has all its game simulcast on NFL Network – has been averaging 17.6 million viewers for its showing of Thursday Night Football, up from the network's first run last season when it averaged 16.7 million viewers for a package of games that featured a string of lopsided scores. ESPN is averaging 13.2 million viewers for its Monday Night Football games to date this year, down 6% from 13.99 million viewers last year, but up from figures in both 2012 and 2013. NFL television/streaming/new media/Internet is still the “gold standard” for all professional sports.

12. Sky Sports completed its inventory of Premier League rights in the U.K. through 2019, securing near-live extended highlights to add to its planned live schedule. The three-year agreement with the TV network gives Sky Sports viewers extended highlights of all 212 EPL matches not broadcast on live TV and for the first time, fans will also be able to watch these extended highlights On Demand whenever they want. For the first time, the broadcaster will offer a dedicated section for each club featuring every match they have played from the season, rivaling “Match of the Day’s” highlights. Network Managing Director Barney Francis said, “We are giving fans more ways to watch extended highlights, with the content now available on demand in the individual club section so fans can catch up on the action when they want." A large contributing reason for the inclusion of On Demand highlights for Sky Sports is due to the fact that on-demand soccer content rose by 152% from last season.

13. Open for what might be a golf course’s shortest season ever – just five days – The Links at Petco Park has been a smashing success during its all too short run. The collaboration between top golf brand Callaway (the 11-year home of San Diego native and Hall of Famer Phil Mickelson) and the San Diego Padres to provide golf and baseball fans alike with a unique golf experience inside an MLB park has drawn great reviews. The creative course, comprising nine par-three holes crisscrossing the park, sold out all of its initial public tee times within the first three hours of going online, for $50 per. Two days were added to help accommodate the 1,000+ parked on a waiting list – meaning 1,600+ golfers were “swinging for the fence” at Petco Park over the long weekend. (It’s not known if Mickelson, repped by Lagardere Sports, was among them.) As a result of the Padres’ clever offseason innovation, other MLB teams have been in contact about bringing a similar event to their own parks, notably the Boston Red Sox and Texas Rangers. Also intrigued are NBA and NHL reps, as teams and sponsors alike continually look for new ways to give fans a unique and unforgettable sports experience.

14. NHL celebrates its legacy. Seven hockey greats inducted into the hockey Hall of Fame in Toronto: Pter Karmanos, Nick Lidstrom, Chris Pronger, Sergei Fedorov, Phil Housley, Bill Hay, and Angela Ruggiero. This year, they’re getting a new place to celebrate and meet with the media. Instead of conducting media sessions in the traditional Esso Great Hall, this year the inductees headed downstairs to the new Tisso World of Hockey Zone. It’s a fitting venue, because, for the second straight year, the Hall of Fame is inducting a class with four former NHL players from four countries. To celebrate hockey’s international growth and reach, the Hockey Hall of Fame spent $2 million to renovate the World of Hockey Zone. And wrapped around this prestigious annual event is the equally global – and equally as prestigious – PrimeTime Sports Management Conference and Trade Show, in its eighth year of presenting Leading Edge Strategies for Managing and Marketing the Business of Sport. The two-day PrimeTime Sports event attracts a fair amount of hockey notables to its stage to be sure, but also welcomes a full roster of other sports executives sharing their knowledge and expertise, from the Los Angeles Dodgers’ Ned Colletti and Janet Marie Smith to Kevin Abrams of the New York Giants, NFL alum and founder of Fast Traffic Events Frank Supovitz. As the NHL anticipates revenue beyond $4.5 billion annually, the sport takes its place in celebrating its past glories and future opportunities.

15. MLS in Miami – real or not? Tim Leiweke, David Beckham’s top negotiator that made the move from MLSE this past month, said this past weekend that the owners of the private land needed from a soccer stadium in Miami “probably will blow this deal up.” Leiweke warned that failing to negotiate with local landowners over the property within a few weeks could be the end of Beckham’s push to bring his own MLS team to South Florida. The partnership continues to make progress with the city to purchase land across the street from Marlins Park and then transfer it to the Miami-Dade School Board, which would shield the new stadium from property taxes. Leiweke said that parallel negotiations to purchase six private parcels on the proposed stadium footprint have "stalled as land owners haggle for unreasonable prices. Given the history of false stadium and arena starts in South Florida over the past 30 years, all aspects of this deal should be carefully monitored as a “reality check.”

Why Cirque du Soleil, NFL experience could come to Chicago

Why Cirque du Soleil, NFL experience could come to Chicago

With the success of the NFL Draft going mobile, the league may eventually decide to take another NFL experience on the road.

The NFL has partnered up with Cirque du Soleil to launch an interactive exhibit in New York City this fall.

The attraction, titled NFL Experience Times Square, will include interactive screens, an auditorium for 4D shows, coaches clinics, autograph sessions and much more.

[BEARS TICKETS: Get your seats right here]

CSN Sports Business Insider Rick Horrow explains why taking the experience on the move could be a good thing for the franchise value of the Bears.

"This is an example of a $25 billion NFL business joint-venturing with another pioneer in the entertainment industry Cirque du Soleil to make it better," Horrow explained. "Here's the case, because the NFL Draft has become mobile with Chicago leading the way, then Philadelphia, the Pro Bowl, the Super Bowl, you can't believe it's not an opportunity for potentially doing this NFL experience along the streets of Madison Avenue, along State Street, as well as Michigan Avenue.

"How about downtown Chicago on the way to other places."

Watch the video above to see what else Horrow had to say about the NFL Experience possibly coming to Chicago.

Sports business: Using targeted promotions to earn more dollars

Sports business: Using targeted promotions to earn more dollars

In Monday's episode of National Public Radio’s (NPR) Fresh Air Joseph Turow, professor of communications and associate dean for graduate studies at the Annenberg School for Communication at the University of Pennsylvania, ominously "Warns That Brick-And-Mortar Stores Are Watching You."

While this may seem a bit like the real-life equivalent of "Big Brother" from George Orwell's book 1984, Turow is describing the reality that the tracking companies do in e-commerce has moved more fully into the offline stores. Using technology including mobile applications, iBeacons, loyalty cards, geo-targeting, and geo-fencing companies have more information about customers in-store buying and behavioral patterns. This enables companies to design targeted adds and promotions specifically tailored to customers that can increase the likelihood of them making a purchase.

While the ethical implications of this activity would require and entirely separate blog post, Turow and host Terry Gross discussed an important idea that comes from having this technology. In the past, companies have focused on rewarding and retaining loyal customers. Those are the customers that keep coming back and buying a company's products or service offerings. Because the cost of keeping a customer has been much lower than attracting a customer it would seem to make sense that companies would want to focus on keeping the customer's they have.

However, this may no longer be the optimal strategy for maximizing revenue growth. Instead, companies should be focused on the marginal customer rather than the most loyal customer. A loyal customer is loyal for a reason – he / she likes the company's service offerings. Why spend money on advertising and promotions if that person is already likely going to buy the product anyway?

Instead, targeted promotions should be focused on customers that will only make a purchase if they are influenced in the right way. For example, let's say a customer is indecisive about buying a pair of jeans. In the past, this customer may have tried a pair of jeans on and then left the store without purchasing them. Now, a customer can download a company's app to access additional content, deals, and other helpful information. In return for delivering these benefits the company can receive information from the app that shows the location of the person while he/she is in a store. It can then use a geo-fence, a virtual fence that surrounds a geographic area, to determine when a customer leaves a specific geographic area. If this customer leaves the store without making purchase after spending a certain amount of time (i.e. the time to try on the jeans) then the company could send a targeted ad saying that the customer has 15 minutes to come back to purchase the jeans at a 15 percent discount. Essentially, companies now can identify "disloyal" customers and then attempt to bring them back to stores to make purchases.

Using technology to reward "disloyal" customers is something that sports organizations need to increasingly focus on given the demands of the business. More specifically, there are loyal fans that are going to buy tickets, watch games, and purchase merchandise even if they do not see any advertising from a team. These customers add significant value and should not be ignored. However, sports organizations want to focus on targeting the marginal customer using new technology to encourage ticket sales, in-venue purchases and increase game viewership.

The added benefit of using technology and customer outreach in this way is that it should increase sponsorship revenue as well. Not only can sports organizations use targeted promotions to help their current sponsors expand reach, but organizations can also show how these targeted marketing efforts cause lifts in purchasing. For sports teams, clearly communicating how sponsorship/marketing assets are used to create a lift in sales provides powerful evidence of how similar tactics can drive new revenue for partners. Rewarding "disloyalty" seems counter-intuitive, but there are many ways that targeting marginal customers should lead to substantial revenue growth.

Adam is the CEO and Founder of Block Six Analytics. He is also a lecturer for Northwestern University's Masters of Sports Administration and the co-author of The Sports Strategist: Developing Leaders For A High-Performance Industry.