Sports Business

Sports Business '15 to Watch': Digital explosion for NBA Finals


Sports Business '15 to Watch': Digital explosion for NBA Finals

1. NBA Finals ends this week, but creates a lasting impression from the media perspective. Traditional television ratings up 33 percent from last year over the first four games of the series.  Most significantly, the Finals is expected to generate more than 134 million views on the NBA’s official YouTube channel.  This is compared to approximately 7.6 million views from the World Series, 3.8 million from the Stanley Cup Final, and 9.5 million from the two weeks surrounding the Super Bowl.The NBA also signed an apparel deal with Nike worth $1 billion over eight years beginning with the 2017-18 season. The rights fee is approximately a 245% increase over the NBA’s previous apparel deal with Adidas. Unlike during the NBA’s deal with adidas, Nike’s logo will appear on game jerseys. Average $1.1 billion franchise value will undoubtedly increase exponentially after the Finals, the media rights arrangements that kick in next year, the individual superstars like LeBron James and Stephen Curry, etc., etc.  Kudos to Adam Silver.

2. NHL Stanley Cup Final concludes this week. Both the Blackhawks and the Lightning will receive over $2.25 million per team for distribution – the champion pocketing nearly $4 million. NHL franchise values are at least 18 percent higher than last year. As originally reported by Arizona Republic, 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 Glendale City Council voted to cancel its 15-year, $225 million arena lease agreement with the Arizona Coyotes.  The city expects to lose $8.7 million on the arena deal this year as a result of a shortfall in revenue sharing with the team. Industry stability requires resolution of problems in all markets – Commissioner Gary Bettman has been personally committed to keeping an NHL franchise in the Valley of the Sun. This is a significant test of legal, political and business community support.

3. Phoenix International Raceway will officially be renamed Jeff Gordon Raceway for the NASCAR Sprint Cup Series Quicken Loans Race for Heroes 500. The race is the semifinal race for the Chase for the NASCAR Sprint Cup and will be Gordon’s last Sprint Cup Series race at the track as a full-time competitor. PIR President Bryan Sperber should be commended in creating a unique driver branding opportunity as a way to honor Jeff Gordon, boost the race profile, increase awareness four months before the actual event, provide resources to major charities, and the like.

[MORE SPORTS BIZ: Impact of Yahoo!, NFL streaming deal]

4. United States Golf Open heads to Chambers Bay, Washington for the first time.  Direct and indirect economic impact in the Northwest may exceed $70 million.  “Old guard” Tiger Woods is viewed from a different perspective – struggling to regain any part of his game.  Jordan Spieth comes off of his “defining” Masters victory, with major Lagardere Unlimited-related promotion and marketing efforts helping his corporate image.  Phil Mickelson (another Lagardere Unlimited client) is the top ranked golfer in the recent Forbes survey of the world’s highest paid athletes -- $50.8 million in total annual pay.  Notably, Tiger is next at 9 and Rory McIlroy next at 12.  “Television musical chairs” defines the golf industry – Fox beginning its 12-year, $100 million annual deal with the USGA.  NBC Sports (outbid for the U.S. Open) enters a deal with the British Open in 2017 – paying over $50 million a year for at least 10 years (doubling the amount that ESPN/ABC paid for the event). Big winner is the Golf Channel, televising the actual British Open event, validating their 78 million homes and their economic expansion.  U.S. Open should also generate significant television numbers, as much of the event is televised “primetime” back to the East Coast by Fox.

5. International sports dominate the landscape over the next two months after the U.S. Open in Chambers Bay:  Wimbledon, Tour de France, British Open in golf. Lagardère Unlimited, one of the world's preeminent sports marketing and management firms, has further strengthened its influence in the European sponsorship market by acquiring German agency Akzio Ajoint Group. The acquisition comes a month after Lagardere purchased Ufa Sports, the Hamburg-based sports rights agency. Globalization of sports requires global solutions. The worldwide business of sports now generates over $1 trillion per year, much of it in Europe.  Last month’s acquisition of the German agency Akzio Ajoint Group by Lagardere continues that trend. 

6. Women’s World Cup in soccer moves into elimination rounds.  Fox pays $425 million to exclusively own the English language U.S. television rights to all FIFA events through 2022.  The return on the investment might be worth it.  The U.S.-Australia open gaming were the most watched women’s World Cup Stage 1 game in history – 3.3 million viewers, up nearly 35 percent from the 1999 record. Welcome diversion from the FIFA scandal – economic impact in Canada might reach $1 billion with all games televised, and venues from Vancouver to Moncton and everything in between.

7.  As originally reported by The San Diego Union-Tribune, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, San Diego could hold a citywide special election on a possible new Chargers stadium as early as December 15, few weeks before the January window the NFL has set for teams to apply for relocation.  The ballot likely will be based on a $1.4 billion financing plan released last month. NFL “stadium and city musical chairs” continues.  Key is to coordinate the decision-making deadline for incumbents San Diego, Oakland, and St. Louis – and reconcile them with Inglewood, Carson, and other alternatives – before an NFL final vote on the issue.

8. FIFA’s Audit & Compliance Committee Chairman suggested that Russia and Qatar could lose the 2018 and 2022 World Cups if evidence of bribery in the voting process emerges.  Also as a result of the ongoing corruption scandal, FIFA has postponed the 2026 World Cup bidding process.  While both selections have caused considerable controversy on the world soccer stage, substantial amounts of money have been spent on stadium construction, event promotion, and the like.  While international sentiment may dictate otherwise, it may be difficult to undue the logistics surrounding these major location decisions.

9. FIFA could hold a special election as soon as December 16 to vote on a successor to disgraced President Sepp Blatter.  A final decision on the date is not expected to be made until July, when FIFA will hold an emergency meeting of its executive committee. Most experts in international governance suggest a quick election may expedite international improvements for FIFA.  However, there are major procedural factors that may delay the actual vote until 2016 or beyond. 

10. A fantasy football convention organized by Dallas Cowboys QB Tony Romo was canceled after the NFL expressed concern about the event being held in Las Vegas.  The league contends that the National Fantasy Football Convention violated NFL rules by being held at a casino, even without gambling involved. Leagues remain increasingly concerned about direct or indirect relationships with gambling – especially as it impacts their star players.  The connection between fantasy gaming and traditional gambling is close enough without a major event being held at a Las Vegas casino.

11. DC United’s owners have finalized a stadium development deal to keep the team in the nation’s capital provided that the D.C. government secures the needed land by the end of September.  The proposed stadium is expected to cost $287 million and open in time for the 2018 MLS season. Soccer in Washington has developed a proud tradition, but DC United has had many false starts in the stadium game.  Hopefully, this is different.

12. The IOC has added four new events to the program for the 2018 Winter Olympics in Pyeongchang.  The Games will feature curling mixed doubles, speed skating mass start, big air snowboarding, and a team event in downhill skiing for the first time.  From the Summer perspective, Boston 2024’s first quarterly report shows that the group has raised $14 million in cash and in-kind donations since its inception in January 2014.  Of that total, nearly $4 million was raised in the first quarter of 2015.  Among the donors are Patriots owner Robert Kraft, Celtics co-owners Wyc Grousbeck and Steve Pagliuca, and Bruins owner Charlie Jacobs. Another example of “Olympic sports musical chairs.”  Whether it’s rugby and golf during the Summer, or these Winter sports, respective international sport organizations fight for recognition and Olympic approval.  Boston may begin to realize the significant impact of the Games – what they might win, and what they might lose!

13. NBA Commissioner Adam Silver is concerned about the increase of injuries to high-profile players this season.  Silver said the league plans on reducing the number of back-to-back games in order to give players more rest, but adjusting the length of the schedule could create conflicts with NFL training camps or the MLB postseason. Steph Curry and LeBron James Finals performances prove that the NBA is a star-driven league.  Erving, Durant, and other significant injuries have become marketing challenges, and the NBA and its labor and television partners seek to minimize the “opportunities for high-profile injuries.”

14. Leagues, teams, and agencies are taking steps to minimize retiree financial horror stories. The NHL and NHLPA are finalizing plans on a program to help players reenroll in school after they retire.  The league and the union have each pledged $1.5 million over the next three years to the pilot project, though it is unclear how the money will be spent. The responsibility for “financial intelligence” rests with a number of parties:  agencies, labor unions, teams, leagues, and (most important) the athlete and his family. 

15. The Cowboys signed a two-year deal with StriVR Labs, a virtual reality startup, to train the team’s quarterbacks using a VR headset.  Though not interactive, the technology aims to teach quarterbacks decision-making skills in the context of a real play. Next latest example of pervasive technology that may actually improve athlete performance.  Over time, a blurring of distinction between on-field and off-field video technology.

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.