Sports Business

Sports Business 15 to Watch: Canadian dollar affecting NHL revenues

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Sports Business 15 to Watch: Canadian dollar affecting NHL revenues

1. As NHL prepares to celebrate its All Star Game this weekend, the continued descent of the loonie toward 60 cents on the U.S. dollar has increased the likelihood of the NHL’s escrow tax climbing over 20% next season. According to the New York Post, the Canadian dollar’s weakness is negatively affecting league revenues, despite the NHL’s seven Canadian teams producing a disproportionate amount of hockey-related revenue; its Rogers Canadian national TV deal also dwarfs the NBC national deal in the U.S. But when that income is reduced by about 30% by the currency imbalance, overall league revenue suffers. Many note that it would not be a surprise if the NHLPA forgoes its 5% salary cap bump next season due to the issue. The struggling Canadian dollar could also have repercussions for the group trying to bring the NHL back to Quebec City, as smaller-market Canadian teams will "need to draw from the league’s revenue-sharing arrangement this season as a result of the currency issue."

2. As the Denver Broncos and Carolina Panthers look forward to their Bay Area journey, a handful of San Francisco supervisors this week "will introduce an emergency resolution" demanding that the city recoup from the NFL the nearly $5 million it "is expected to spend on city services during Super Bowl 50 celebrations," according to the San Francisco Chronicle. Three supervisors last week denounced “what they view as the terrible deal the city has struck with the NFL and the Super Bowl 50 Host Committee and demand the two sides renegotiate." Kim this Tuesday will file the emergency resolution, as the setup for Super Bowl City gets underway in downtown San Francisco. Asked whether it is realistic to expect that the city renegotiate in such a short time frame, Kim said, "I can’t guarantee that’s going to happen, but it’s going to be what we ask for." The city of Santa Clara, which is hosting the game at Levi's Stadium there, is getting fully reimbursed by the host committee for city services costs. In the big business that is sports, knowing how to negotiate is just as important as knowing how to tackle.

3. Tech giant Apple is to rekindle its association with the Super Bowl after agreeing to sponsor the Super Bowl 50 Host Committee. Apple, which famously aired an ad for its Macintosh computers during Super Bowl XVIII in 1984, is among a raft of technology companies supporting the regional committee. Under the deal, Apple gains local marketing rights around, and hospitality at Super Bowl 50. It is also permitted to use the host committee’s logo, which features San Francisco's Golden Gate Bridge and a football and is distinct from the NFL’s official Super Bowl logo, in its communications. Apple is one of several Silicon Valley-based tech companies sponsoring this year’s host committee, alongside the likes of Intel, SAP, Microsoft, Google, HP, and Uber. NFL rules permit Super Bowl host committees, which are comprised primarily of local staff, to sign multiple sponsors in the same category if that category is particularly fruitful in their respective area. To date, the Super Bowl 50 host committee has raised some $50 million in private financing; the committee has committed to donating 25% of that income on local charities.

4. Global solutions provider Globecast was recently chosen by Russian broadcaster Channel One to help integrate European and Asian markets. With this move, the broadcast network hopes to dramatically extend its reach to new audiences around the two continents. Globecast is set to provide dual illumination via HotBird in Europe with an MPEG-4 channel in addition to the existing MPEG-2 service that it provides for the broadcaster. The Russian channel currently carries a mix of news, documentaries, feature film productions, and entertainment content. Biliana Pumpalovic, General Director at Globecast Moskva in Russia, said, “We’re delighted to be helping Channel One make this important step in increasing its reach by delivering its content to a new audience. This partnership is also a good illustration of how Globecast can ensure customers meet both their current and future business objectives in a cost effective way, with no disruption to their service.”

5. As NFL All Stars head to Honolulu for the Pro Bowl, the Oakland Raiders’ Khalil Mack has made NFL All-Pro history. Mack has been named the first player ever selected at two positions – defensive end and linebacker – to the 2015 AP All-Pro Team. Moreover, his teammate, Raiders wide receiver Amari Cooper, is one of five finalists for Pepsi NFL Rookie of the Year. This season, Cooper led all rookies with 72 receptions and 1,070 receiving yards, both franchise rookie records. Along with Cooper, the finalists include Todd Gurley (Rams RB), Tyler Lockett (Seahawks WR-PR-KR), Marcus Peters (Kansas City CB), and Jameis Winston (Buccaneers QB). During the regular season, Cooper led all rookies by winning the Pepsi NFL Rookie of the Week four times, ahead of Winston (three), Lockett (two), and Kwon Alexander (two). Mack and Cooper share another distinction – both are represented by Lagardere Sports President of Football Joel Segal.

6. While baseball has no “buzzer beaters,” MLB hit one this past week by settling a federal lawsuit regarding the league’s TV market territories and blackout policies mere minutes before trial was set to begin. While details of the settlement have not yet been disclosed, the New York trial was projected to last two weeks and include high-ranking league and team officials. Plaintiffs and defendants debated over whether MLB’s current market territories and blackout policies violated federal antitrust laws and restricted consumer choice. The proposed agreement would see the league offer its MLB.TV streaming package for $84.99 per year for the package for the next five years, according to USA Today, with the option of upgrading for a full league deal for $109.99. These moves appeared to address many of the issues raised in the lawsuit, leading to the 11th inning settlement.

7. The NBA is once again going all-in for the Chinese New Year, February 3-21, planning a slate of promotions around the festivities. Included in the marketing is a new NBA Chinese New Year television spot, entitled “Dining Table,” featuring Stephen Curry, James Harden, and Jeremy Lin sharing a Chinese New Year reunion meal with a Chinese family. Activation will include the Warriors, Rockets, and Wizards wearing special Chinese New Year uniforms paying tribute to Chinese culture; 51 live games broadcast and streamed by 10 broadcasters in Greater China, showcasing all 30 NBA teams for the first time; and the Chinese New Year Celebration Season of Giving initiative for underprivileged communities in China. As the NBA continues to make China one of its most important international priorities, expect more of these tie-ins throughout the Chinese calendar year.

8. The Farmers Insurance Open at equally legendary Torrey Pines gets underway this week, and it is getting in the music business as well. When you think of a theme song for a San Diego sporting event, you usually conjure famous crooner Bing Crosby and his “Where the Surf Meets the Turf” tune penned for the Del Mar Thoroughbred Club. Now, the Farmers Insurance Open has announced a partnership with Pacific Records, in which songwriter Gary Hyde and the San Diego-based label's production team have produced a theme song, titled “Momentum,” for the tourney's 2016 marketing campaign. Hyde started out in Nashville playing piano at the world famous Carousel Club, performing with such notable artists as Glen Campbell and Kris Kristofferson. After many recording projects with top industry producers, Hyde focused locally on anthems for the San Diego Gulls, a Del Mar Thoroughbred Club refresh, and now, the region’s signature PGA Tour event. As part of the partnership, Pacific Records artists will perform during the Post Party Concert Series presented by Harrah's Resort Southern California.

9. Facebook has strapped its football helmet on for good. The social media giant launched its first official sports product around last weekend’s NFC and AFC Championship games. Dubbed the “Facebook Sports Stadium,” the site allows Facebook users to follow games through posts, stats, and videos centered on specific games. “We want to make this a rich, second-screen experience and really bring to light something that already exists on Facebook,” said Facebook Head of Global Sports Partnerships Dan Reed. The Facebook Sports Stadium features four tabs that users can navigate. One collects Friends posts about the games; one aggregates the Facebook posts and videos posted by the teams, league or media; one provides real-time updates; and one provides up-to-the-minute statistics. While the feature rolled out during one of the NFL’s busiest weekends, Facebook execs expect to roll it out for all sports. While no official partnerships are in place, leagues, teams, and broadcasters will now be able to more easily tap into the online sports fan community.

10. 20-time Premiere League champion Manchester United has added golf equipment, footwear, and apparel bearing its crest and colors to the ten-year, $1.28 billion apparel deal it signed with Adidas in 2014. “We know that there are thousands of golfers on the terraces of Old Trafford each week and around Europe, and to be able to partner with the club to create this range of bespoke merchandise is a fantastic opportunity,” said David Silvers, managing director of TaylorMade-Adidas Golf in Europe, Middle East, and Africa. ManU representatives in turn expressed confidence that the partnership would be a year-round way to expand the brand. "We believe the range of Manchester United golf attire and accessories produced will be popular with our fans across the globe,” added Manchester United group managing director Richard Arnold. United are currently five points off the top four for the 2015-2016 season, having won only three of their last 13 matches.

11. Will we one day see a Super Bowl in London? As the NFL’s universe turns its attention to Santa Clara and Super Bowl 50, NFL Executive Vice President, International Mark Waller last week confirmed that the U.K. "is 'on track' to have its own American football franchise within six years." Waller said, "I felt in 2007 it was always a 15-year journey. I think we're on track to deliver that. I fundamentally believe we will deliver that. ... We are in a unique position as a sport because of the way our season is structured – we only play one game a week. It's not something other American sports could do.” Now that the NFL’s Los Angeles situation is finally getting settled, look for the league to put even more energy and resources into international expansion over the next few seasons.

12. The countdown to the Olympic Games in Rio de Janeiro is on, but stateside, USA Track & Field has a new hurdle to leap before it turns its attention to Rio. The legal team behind O’Bannon v. NCAA has another target in sight: USA Track & Field and the USOC. Hausfeld LLP and outspoken middle distance runner Nick Symmonds filed suit in Oregon last week claiming antitrust violations. At issue are advertising restrictions at July's Olympic Trials. Symmonds said, “This is round three of 12 that I will fight over the course of my career or my lifespan.” The only plaintiff is Run Gum, a caffeinated gum company co-founded by Symmonds. If O’Bannon v. NCAA is any indicator, this latest lawsuit will not be settled until long after the last race in Rio concludes. Regardless, every step in the legal process is moving to put in place real compensation for amateur athletes.

13. In St. Louis, the NHL Blues will almost be the only game in town. After the Rams depart for L.A. this year, Blues officials said that becoming the city’s second-largest franchise "does expect to provide an economic boost" for the club, but it "hasn’t happened overnight and won’t happen without continuing with plans that were laid out long before" last week’s Rams news, according to the St. Louis Post Dispatch. The Rams’ departure "will make available millions in sponsorships and leave thousands of season-ticket holders without a sporting venue to call home." The Blues "have been insistent on not coming across as opportunistic during what has been widely considered a loss for the city." But in the coming weeks, they will be "checking on which doors closed in the past might have a chance of reopening." In the fast-break world of pro sports, teams have to seize revenue opportunities every chance they’re given.

14. College football’s Southeastern Conference had $527.4 million in total revenue for the fiscal year ending Aug. 31, 2015. This is the first fiscal year in which the conference "began receiving money from the formation of the SEC Network and from the new College Football Playoff," according to tax returns cited by USA Today. The total revenue figure is "more than 60% greater than the SEC reported" the previous fiscal year. The conference announced last spring that it "would be distributing" about $455.8 million to its 14 member schools -- or about $31.2 million per school. The SEC ended 2015 with a $17.2 million annual revenue surplus, the league's best surplus since $7.6 million in 2008 and likely its "greatest single-year surplus." Media rights fees increased by close to 50%, and the conference also had "enormous growth in its revenue from postseason events," reporting $162.8 million in such revenue, a 65% increase over 2014. On and off the field, the SEC continues to be the gold standard in college football.

15. The Indianapolis 500 has its first-ever presenting sponsor, with PennGrade Motor Oil signing up ahead of the 100th running of the event. The D-A Lubricant Company-owned brand will sponsor Indycar’s marquee race until 2018. May’s race will officially be known as the 100th Indianapolis 500 presented by PennGrade Motor Oil, in a deal estimated to be around $5 million in total. Indiana-based D-A Lubricant has historic ties to the race, having sponsored entries in the 1950s. Last year the company returned to the event as a sponsor of driver Graham Rahal, who finished fourth in the 2015 Verizon IndyCar Series championship. To promote its new presenting sponsorship deal, D-A Lubricant will release a new line of PennGrade Motor Oil products with packaging that carries the Indianapolis Motor Speedway (IMS) and IndyCar logos. Said Mark Miles, chief executive of IMS and Indycar rights holder Hulman & Company, “PennGrade Motor Oil, with its deep understanding of the heritage and tradition that fuels the Indy 500, is the perfect presenting sponsor for the world’s greatest race.”

Karla Swatek contributed to this story.

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.