Sports Business

Sports Business '15 to Watch': American Pharoah immortalized

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Sports Business '15 to Watch': American Pharoah immortalized

1. American Pharoah immortalized. The first Triple Crown since 1978, significant long-term discussion about industry revival, and a seamless television day from the French Open to the Triple Crown to the NHL Stanley Cup. Most important, owner Ahmed Zayat sold the horse’s “stallion rights” to Coolmore Farms in a deal believed to be worth more than $20 million. It should be a good year for all concerned: Affirmed’s 700+ foals resulted in nearly $40 million in revenue after his Triple Crown win. Hall of Famer, indeed.

2. Major international news stories across the pond. French Open champion Serena Williams wins her 20th major and heads for a possible calendar grand slam at Wimbledon and the U.S. Open. Globecast, a service company for the radio, television and media industry, was onsite in Paris for the French Open as the technical provider for French and European distribution. Globecast also was in Berlin for the 2015 UEFA Champions League Final when Barcelona beat Juventus, where the company provided a special 4k/UHD demo. Now the 24 hours of LeMans with qualifications and testing Wednesday and Thursday. The event begins Saturday morning with international television and distribution. While the Stanley Cup and NBA Finals dominate the domestic landscape, the economics of the international major events “across the pond” take center stage.

3. Yahoo is paying an estimated $10 million to live stream this year’s Jacksonville Jaguars-Buffalo Bills game, which will be played in London. The deal marks the first time the NFL is broadcasting a game for free over the Internet. The league reportedly is shopping social media rights to the game as well. Significant breakthrough selling for the NFL to sell special media rights during the game itself; look for the league to negotiate deals soon with Facebook, Twitter, and/or Snapchat. As part of the “early window” structure of the London game this year, the Bills/Jaguars will have the benefit of an exclusive broadcast early that Sunday morning. Potentially game changing!

4. NBA Finals exceed expectations as the first back-to-back overtime final games in NBA history maximizing television ratings. LeBron James takes his “homecoming place” as one of the top five marketable athletes on the planet. Economic impact in Cleveland will exceed $50 million for the week, with significant intangible impact associated with a more positive Cleveland image. Thank you LeBron with the most lucrative “industry relocation” the region has had in years.

5. With the UEFA League finals held in Berlin, sports in Germany continues to help define the European landscape. Lagardère Unlimited has acquired akzio! ajoint group, the market leading sponsorship agency in Germany. Lagardère Unlimited now employs 350 experts in 20 different locations in Germany. With this acquisition, the company is complementing its service portfolio in Europe following the global growth strategy in consulting and brand activation. Adequately servicing sports teams, leagues, and events in Germany requires specific regional and local awareness combined with global capabilities and sophistication.

6. Stanley Cup moves to Chicago for Games 3 and 4. The fifth most valuable Chicago Blackhawks (at nearly $1 billion) dominate the Chicago sports landscape this week, with a projected economic impact of over $60 million. The Tampa Bay Lightning have implemented policies aimed at limiting ticket sales to and apparel of Chicago Blackhawks fans at Amalie Arena during the Stanley Cup Finals. The Lightning through their Ticketmaster portal are blocking people with out-of-state credit cards from purchasing tickets. NHL playoffs seamlessly promoted by NBC – from American Pharoah to Kane to Toews, all sports benefit from the cross promotional package.

7. The SEC will distribute $31.2 million to its member schools after generating an NCAA-record $455.8 million last year. The distributions are an increase of more than $10 million per school from last year’s payout of $20.9 million per school. Despite the Pac-12 and Big Ten “catching up” on the field, the SEC remains dominant in the revenue boardroom – Alabama, Auburn, Georgia, Florida, Texas A&M, and other “football economic juggernauts”; now the issue is how to spend some of the revenue with cost of scholarship guarantees, stipends, etc.

8. As originally reported by AL.com, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the University of Alabama-Birmingham is taking steps to reinstate football just six months after the school disbanded the program. While outside donors have pledged $17.2 million to cover operational costs for football, there is no known timeline for the program’s return to play. Congratulations to those who persisted in generating support for the “other Division One Alabama football team.” Other “elevating programs” like Appalachian State, Savannah State, etc. can take notice that consistency and stability with a 5-10 year game plan should be allowed to reap the projected economic benefits.

9. The NCAA has charged the University of North Carolina with five serious violations connected to the school’s long-running academic fraud scandal, including lack of institutional control. The University now must attend a hearing with the NCAA Committee on Infractions, with sanctions being announced shortly thereafter. The charges are incredibly serious; now that the NCAA has crossed the “lack of institutional control” threshold, look for SMU-type penalties in the near future. Also remember that the NCAA is seeking to “reestablish its relevance” – maybe through unprecedented sanctions. Stay tuned!

10. Last month, the NFL's top rookies gathered at the JW Marriott Los Angeles for the four-day NFLPA Rookie Premiere, the first chance for companies to get one-stop access to the NFL's newest crop of potential stars. Among them was Lagardere Unlimited client Amari Cooper. Rice, Hardy, Deflategate all having significant long-term consequences. NFLPA expands its “rookie preparation” process to include all types of training. Amari Cooper effectively said it best: that it is all about good choices.

11. The Atlanta Falcons have already generated $77 million in revenue from PSL sales for their new $1.5 billion stadium, scheduled to open in 2017. To date, the team has sold 54% of the stadium’s 7,500 club seats. The most expensive PSLs go for $45,000 per seat. PSL-type sales for an existing team in an existing market is always difficult; this is especially the case if the stadium location is similar. Fans feel that they are paying “double” for the same product. Clearly, the Falcons and Arthur Blank’s retail acumen have risen above that, enhancing the fan experience in the process.

12. Montreal Mayor Denis Coderre said that MLB Commissioner Rob Manfred is open to the city hosting regular-season games in 2016. Coderre said that Manfred has been impressed with attendance at recent Montreal preseason games, and that several teams have expressed interest in playing games in the city next year. A return of the Expos? The key (as always) is a new baseball stadium, coupled with the corporate support of the French-speaking Canadian community. Long shot at this point, but a clear start.

13. As originally reported by the Washington Post, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the Washington Redskins have removed thousands of seats from FedEx Field for the third time in five seasons as attendance numbers continue to decline. FedEx Field once was the largest stadium in the NFL, but the Redskins have drawn fewer than 80,000 fans in each of the past four seasons. Large stadiums generate substantial revenues when the marketing juggernaut subsides; but create a significant demand problem with the team is on a downswing. The 2024 Olympic choice to Boston seems to have deflated many of the Redskins long-term stadium plans, and the controversy over the nickname will not go away.

14. The Los Angeles Angels are unhappy with their stadium lease talks and have no immediate plans to resume negotiations with the city of Anaheim. The team has until 2019 to opt out of their Angel Stadium lease and must disclose their intentions by October 2018. The stadium has been an Orange County landmark for years, and the Angels have attempted to move the process forward during their “rebranding.” The Southern California NFL hunt takes top priority, but watch this issue in coming weeks.

15. USOC Chairman Larry Probst has been appointed to lead a new panel that will oversee the launch of the IOC’s Olympic TV channel. The digital channel is projected to cost $600 million over the first seven years and will launch next April, just a few months before the 2016 Rio Summer Games. The Olympics have continued to be an economic juggernaut, largely because of the humongous television deals in recent years. The economic entrepreneurialism/uncertainty created by the new IOC channel requirements that has some significant scrambling in all television and corporate boardrooms.

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.