Sports Business

Sports Business '15 to Watch': Carli Lloyd next corporate focus?

sports-biz-insider.png

Sports Business '15 to Watch': Carli Lloyd next corporate focus?

1. Women’s soccer: what’s next? United States captures its third World Cup (the most of any nation). The first since 1999 in an incredibly successful World Cup final in Vancouver. Television, awareness, and corporate satisfaction are “off the charts.” Most notably, Sepp Blatter was not there. He argued that he did not want to become a “distraction,” although many lawyers would have advised him against traveling into North America for a variety of reasons – especially given the ongoing Justice Department investigation accusing FIFA of $150 million in bribes over a 24-year span. Biggest question: will Carli Lloyd become the next “corporate focus” for women’s sports? Her hat trick led to a four-goal lead. More importantly, corporate endorsements may await her return to the United States. After the disappointing 2011 Finals loss, our Power 100 corporate sponsorship index revealed that Serena Williams was ranked 12; Gabby Douglas 18; Maria Sharapova 20; Victoria Azarenka 32; Aly Raisman 47; Kerri Walsh 48. An Olympic year, but one year after the last World Cup. Notably, Abby Wambach was ranked 43. There's a hunch that Lloyd and Serena Williams will become the top two most marketable female athletes at the end of 2015.

2. Superstar marketability off the (any) court. As Wimbledon enters its second week, Lagardere Unlimited client Andy Murray has launched a charity raffle to win a tennis ball signed by him and late tennis legend Fred Perry. The prize is the only known piece of tennis memorabilia signed by the two British Wimbledon champions. At the same time, LeBron James seeks positive reviews for his role in the upcoming comedy movie “Train Wreck.” It is unknown whether James will seek a film career when his playing days are over, but he and actor Kevin Hart are attached to play brothers in a comedy for Universal Pictures that currently still in development. While the primary “driver” for superstar marketability is still on-court performance, creative alternatives exist to maximize the brand and generate increased awareness and interest.

3. Across the pond takes center stage. International sports issues have global consequences. The British Open begins in St. Andrews next week, with an injured Rory Mcllroy capturing the news. Just east of St. Andrews, the 102nd Tour de France is underway and runs through July 26. The event is made up of 21 stages covering a total of 3,360 kilometers. Globecast will once again help to bring innovative and dramatic coverage of one of the world’s most iconic sporting. In total, 560 different media outlets send teams to cover the Tour de France, of which 350 are newspapers or web sites, 75 are photo agencies, and 50 are radio stations. Road races, auto races, marathons, and other mega-events covering large spaces pose tremendous logistical difficulties for event professionals. The trillion dollar international sports business depends on covering events in a more sophisticated manner than ever before.

4. NBA player bounty. NBA teams agreed in principle to pay over $1.4 billion in salary to players on the first day of free agency. The sharp increase in spending coincides with an imminent increase in the salary cap as a result of the lucrative new TV deals that will go into effect in 2017. Next year’s salary cap is expected to be as much as $2 million higher than initial projections. Teams have been operating with an estimated cap of $67.1 million. When the new TV deal goes into effect next year, the cap will jump to $89 million. Teams are “showing them the money” more than expected, as a way to lock up players before the massive salary cap increase years from now. Anthony Davis signed a deal worth $145 million guaranteed with the New Orleans Pelicans; the dominoes set to follow as the free agency commitment should be finalized on Thursday. Kevin Love with the Cavaliers at $110 million, Goran Dragic with the Heat, Kawhi Leonard with the Spurs, Jimmy Butler with the Bulls for $90 million, Draymond Green with the Warriors for $85 million, LaMarcus Aldridge with the Spurs and DeAndre Jordan with the Mavericks at $80 million. 

5. Cities assess their future. Since 2000, over $3.1 trillion has been spent on community-related infrastructure: streets, parks, communications, and spectator and convention facilities. Sportsmanias held its inaugural City Summit event in Orlando. The event brought together key Central Florida stakeholders from the world of sports, media, politics and business for an in-depth discussion on the future of the region's sports landscape. 13.3 million people visit Orlando each year for sports-related activities. More events are planned – Dallas, Chicago, San Francisco, other major regions. It is obvious that communities and regions are sharing information and best practices to maximize public/private partnerships in the years ahead.

6. NFL aligns with sponsors. Hyundai signed a four-year deal to become the official auto sponsor of the NFL. Hyundai replaces GM, which ended its deal with the NFL this past season after holding sponsorship rights since 2001. Terms of the Hyundai deal were not disclosed, but GM was paying $25 million annually, excluding advertising time buys. Hyundai is counting on the new NFL deal to increase its exposure in the U.S., which will ultimately lead to an increase in sales. The automaker in recent months has cut costs and reduced production as sales and profit decline. Hyundai and its sister company Kia have invested heavily in sports marketing over the years. After Rice-gate, deflate-gate, text-gate, noise-gate, and other off-field turbulence, the “juggernaut deal” confirms that sponsors will pay dearly for the right to align with the league. Simultaneously, the league is creating additional value for their sponsors – an opening concert event in Santa Clara on Thursday, September 10, as a prelude to Super Bowl 50.

7. Student-athlete payments of another kind. Thousands of current and former college athletes could receive money as a result of settlements from a series of lawsuits stemming from the use of players’ names and likenesses in video games. Nearly 93,000 former athletes were eligible to submit a claim for $60 million in combined settlement money from the NCAA, EA Sports, and CLC. With the Power Five realignment, mega-playoff revenues, and overall college restructuring – another example of a process to compensate student-athletes (both past and future).

8. Late night drama: rain; Dale Earnhardt; new television. NBC made its return to NASCAR for the first time since 2005 by televising this past weekend’s Coke Zero 400. The network, which in 2013 agreed to a 10-year, $4.4 billion media rights deal, launched its NASCAR coverage with new advertising partners and creative approaches. The power of auto racing never more evident than on July 5 on a rainy summer night in Daytona: with a “made for television” Sunday night date across from the women’s World Cup; mega-Florida summer showers; a Dale Earnhardt victory; as always, the business of NASCAR takes the green flag!

9. Daytona Rising! Chevrolet announced a long-term sponsorship of one of Daytona International Speedway’s five “injector” entrances being constructed as part of the $400 million Daytona Rising renovation. Terms of the deal weren’t disclosed, but the track has been seeking 10- to 15-year contracts at $2-2.5 million annually. Chevy joins Toyota and Florida Hospital as founding partners of Daytona Rising. The automaker will have the right to brand and market Injector #2, which has 20,000 square feet of space plus a connecting “neighborhood” that features retail and dining areas as well as restrooms. All eyes turn to the grand opening of the new mega-sports and entertainment facilities next February.

10. Olympic television bonanza. Discovery Communications has purchased Europe’s Olympic media rights through 2024 for $1.48 billion. Discovery now controls all European media rights to four Olympic Games in 50 European countries and territories. Discovery said the deal marks the first time the IOC has sold all the European rights to a single media company. IOC generates significant stability, consistency, and long-term growth – Discovery emerges as a major media player.

11. Boston public Olympic support. Boston 2024 released its “Bid 2.0,” which emphasizes conservative budgeting and cost overrun protection. The city’s new plan calls for about $4.8 billion in revenue and $4.6 billion in expenses, but leaves several major venue questions unanswered, including the location of a cycling velodrome, an aquatics center, and a media headquarters. USOC Chairman Larry Probst said the Boston 2024 Summer bid must show “dramatic gains in public approval” in order to maintain the organization’s support. Sochi, Tokyo, and London all won over a skeptical public before winning the Games, but many Boston critics are opposed to the Olympics – apparently on principle.

12. Redskins stadium and brand struggles. As originally reported by the Richmond Times-Dispatch, 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 National Park Service, which owns the land beneath RFK Stadium, is unlikely to accommodate construction of a new Washington Redskins stadium unless the team changes its name. The team has been exploring options to move back into the city, but has faced mounting pressure to rebrand. Redskins owner Dan Snyder claims that he would “NEVER” change the Redskins nickname – maybe the leverage accompanying a new stadium development plan may force him to reassess!

13. College football revenue takes another leap. 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 signed a 10-year extension with CLC for exclusive licensing that will pay the school about $100 million, making Alabama one of the few schools to receive a guarantee rather than a royalty. Alabama ranks first among CLC’s best-selling schools, just ahead of Texas and Michigan. During Alabama’s run of national football championships in 2009, 2011, and 2012, Alabama added more than $5 million in incremental revenue. As the pressure mounts to pay student-athletes in all contexts (scholarships, stipends, licensing rights, etc.), schools are searching ways to maximize all types of revenue – facility naming, merchandise, alcohol sales, etc.

14. NFL marketing creativity. The Detroit Lions are set to become the first NFL team to host a LGBT pride night during a game at Ford Field. The Detroit Regional LGBT Chamber of Commerce already has hosted successful LGBT pride nights with the city’s three other major professional sports teams. Look for other NFL teams to follow suit: more revenue, marketing synergies, and the “right thing to do.”

15. College revenues Part Two. Georgia Tech will open its 2016 football season against Boston College in Dublin, Ireland, and the school will likely make more money abroad than it would have if the game was held at BC's Alumni Stadium. The contract between Georgia Tech and Irish American Events Limited, which is hosting the game, states that all related direct costs associated with the game for the school will be paid directly by IAEL. Look for more schools to play mega-event football games in international stadiums, during special preseason “events” and neutral site “classics.” 

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.