Sports Business

Sports Business '15 to Watch': Fallout from DeflateGate

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Sports Business '15 to Watch': Fallout from DeflateGate

1. Tom Brady’s off-field brand image could take a big hit after the New England Patriots QB was implicated in the “Deflategate” scandal. Forbes last year listed Brady’s endorsement income at $7 million through deals with Dodge, Ugg Australia, and Under Armour. The Wells Report should lead to swift disciplinary action – no matter what the result. Interesting positioning for Players Association: support one of their highest visibility players, or the notion of protecting the “integrity of the game” for all players? NFL should move swiftly through this so it can be a distant memory as training camp starts.

2. NFL Draft was an astounding success of all levels: $150-200 million of economic impact; stage set for rotating-city format; television ratings “off the charts.” Arguably no sports agency had a better class of prospects taken in the NFL Draft than Lagardere Unlimited. Lagardere had a total of 10 players drafted in the first four rounds, plus three undrafted players who ended up signing deals with teams. The headline of Lagardere’s draft class was Alabama WR Amari Cooper, who was selected fourth overall by the Oakland Raiders. Mega-agencies offer full service/globalized services – more of a necessity these days for high profile “international clientele.”

3. Wisconsin Governor Scott Walker said a financing plan for a new Milwaukee Bucks arena is being put on the backburner while the state deals with bigger issues. The team hopes to receive nearly half of the proposed arena’s $500 million cost from the state. Bucks plan now in a form of “political limbo.” National presidential aspirations may take precedence over the resolution of a key local economic issue. Hopefully, the ultimate public/private partnership will be put in place before “relocation threats” materialize.

4. As originally reported by ESPN New York, 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 New York Yankees refuse to pay Alex Rodriguez a $6 million marketing bonus for hitting his 660th career home run. The Yankees believe they are not obligated to pay Rodriguez since he has admitted to PED use and was suspended for the 2014 season. Contract bonus is merely the “tip of the perception iceberg.” If A-Rod plays astoundingly week (and the Yankees succeed because of it), interesting unexpected impact on his long-term legacy.

5. MLB Advanced Media is exploring spinning off its digital video streaming business, according to Eric Fisher of SportsBusiness Journal. While specific figures aren’t available, the third-party part of MLBAM is valued at at least several billion dollars. Baseball’s Internet entity continues to set the “gold standard” for league-based spinoffs. Unexpected revenue/value from MLBAM driving franchise net worth higher in every instance.

6. With the current collective bargaining agreement between MLB and the MLBPA set to expire after the 2016 season, the union has expressed interest in shortening the regular season to 154 games. The current 162-game schedule has been in place since 1962. Quicker games and shorter seasons – Commissioner Manfred expresses his preferences (and, potentially, his significant mark on the game in very short order). Unprecedented labor peace provides a solid bank of goodwill from which to proceed.

7. The UAB Athletics Assessment Task Force has raised nearly $6 million in pledges to help reinstate the school’s football, bowling, and women’s rifle programs. The next step is converting the pledges into official UAB gift agreements. Easy maxim to remember: harder to resurrect a team or program after the plug has been pulled – Houston Oilers, St. Louis football Cardinals, Los Angeles Rams, UAB Blazers.

8. Bayer’s Dr. Scholl’s brand signed a three-year deal to become an NBA promotional partner and will use league marks to market its foot-care products, according to Terry Lefton of SportsBusiness Journal. Bayer’s hope to use its NBA partnership to gain incremental sales in large sporting goods retailers. First sneakers, then socks, then bandages – the NBA finds novel and intriguing ways to monetize feet!

9. As David Beckham’s Miami stadium efforts continue to stall, MLS Commissioner Don Garber said it is no guarantee that the market will land an expansion team. Garber is expected to travel to Miami in the near future to help Beckham negotiate a stadium deal. It took us eight years to build the first Miami Arena and receive the Miami Heat expansion franchise in the late 1970s and early 1980s. Actually, no one should expect that this is any different in a highly charged multilingual political South Florida landscape.

10. Georgia Governor Nathan Deal signed the “Todd Gurley Bill,” making it illegal to entice student-athletes to break NCAA rules for money. The law’s name references the ex-University of Georgia star who was suspended last year after accepting $400 in exchange for autographs. NCAA can go only so far – state and federal legislation can pick up the slack. In this case, the precedent is set for as many states as possible to follow Georgia’s lead. This is especially critical in the highly charged, competitive SEC.

11. Under Armour announced a special edition shoe to commemorate endorser Stephen Curry being named the NBA MVP. The black, white, and gold shoe is called the "MVP Limited Edition" and will launch on Under Armour's website and select retail locations in June. Another example of Under Armour being “all in” on their athlete spokes-brands – Stephen Curry is a high ceiling, low risk investment that is another testament to Kevin Plank’s entrepreneurialism.

12. DC Mayor Muriel Bowser has reached out to the Washington Redskins about bringing the team back to the District. Bowser said DC is working on a number of scenarios at the RFK Stadium site, including a new stadium with park space and other surrounding development. Many real estate scenarios abound – tax credit enhancements, federal land swaps, and other significant public incentives. While the 2024 Olympic choice of Boston instead of Washington might slow this process down, it does not stop it altogether.

13. DC United is using the mobile dating app Tinder to sell discounted tickets. The team says it has been exploring emerging social media channels as a way to grow its fan base. The Atlanta Hawks held a Tinder promotion this year, but that was focused on helping fans meet each other while at a game. Another way to meet eligible singles – at a sporting event. Appropriate, demographically-oriented, publicly acceptable, and probably fun!

14. As originally reported by Toronto Sun, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, Maple Leaf Sports & Entertainment unveiled a $99 million renovation of BMO Field that the company says puts the Toronto soccer stadium on par with NFL facilities. The renovation expanded the stadium’s capacity to 30,000 seats, making it the biggest soccer-specific venue in MLS. Example of the vertically integrated sports development agency of the largest city in Canada reaching out to adapt its facilities to the future – technologically and culturally.

15. The NCAA has approved three new college football bowl games for the 2015 season. The new games in Austin, Orlando, and Tucson, brings the number of bowls up to 42, more than double the total from 20 years ago. Approximately 64 percent of FBS schools will participate in bowl games. Another example of the “economic viability” of niche bowl games: highly charged television, intensely avid fan base, tourism and promotion enhancement, and a “holiday window” reserved for that specific game. Pundits and cynics questioned whether the playoff would eliminate the “minor bowl games” – this is obviously the answer!

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.