Sports Business

Sports Business '15 to Watch': Fantasy sports continue to grow

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Sports Business '15 to Watch': Fantasy sports continue to grow

1. A deadline is looming to see who is interested in hosting the 2024 Summer Olympics. The city of Toronto still has not decided whether it will enter the race.  Toronto reportedly is weighing the cost of the Games, plus the ability to reuse facilities and the amount of public support.  Los Angeles expects to spend less than originally thought on its bid for the 2024 Games.  The city is reconsidering a preliminary budget that called for raising $75 million in donations and spending $65 million in the two-year competition for hosting rights.  Hamburg has formally submitted its bid for the 2024 Olympics.  City officials and German Olympic leaders signed the bid application last Wednesday before sending it to the IOC.  The bid still faces a referendum among Hamburg residents on November 29.  All major candidate cities are looking at both 2024 and 2028 as the appropriate window for this bid process.  Despite the problems getting bidders for the 2022 Winter Games, the Summer process has produced very strong, viable, and financially sustainable candidates – including the new Los Angeles process!

2. A win-win in fantasy sports for players and media networks. With the proliferation of fantasy sports over the last few years, participants need to find an edge over their competitors.  That edge can come in the form of real-time information about players on their fantasy team.  The app Sportsmanias has developed a new feature that’s being called a game-changer for fantasy players.  The app allows players to import their fantasy team from the three largest fantasy platforms available – CBS, ESPN, and Yahoo – and stay informed on their players to make smart lineup decisions.  In addition to being helpful for fantasy players, it’s also advantageous for the media networks to drive increased traffic.  As fantasy currently represents a $26 billion per year business, the growth of the industry is larger than any sports segment (nationally and internationally).  Companies are framing their marketing campaigns around “friendly competition,” building on the goodwill from all sites and platforms.  Sportsmanias “Download/Import/Dominate” ad campaign encourages users to seek multiple platforms, but touts their product as “the app that turns fantasy players into champions.”

3. As Major League Baseball heads toward the playoffs, high school and college baseball players rejoice. Big changes could be coming for MLB agents.  The Power Five conferences are considering letting agents negotiate with MLB teams on behalf of high school and college baseball players.  The proposal, which was submitted by the Big 12 last week, will be voted on at the NCAA convention in January.  For years, the NCAA's no agent rule has severely impacted the eligibility of many college baseball players.  If the NCAA approves the new proposal, it would finally let baseball prospects have an agent in the negotiating room with MLB teams, something that widely occurs now against NCAA rules.  The Big 12 proposal is only for baseball, which has arguably the most complicated draft process of any sport.  Overturning the rule would be a victory for agencies like Lagardere Unlimited, which has negotiated over $100 million in MLB contracts.  Merely three years ago, the landscape was dominated by rhetoric suggesting that “student-athletes should not be paid.”  Now, we see high school and college recruiting, competition amongst Power Five conferences and schools for key players – extending to other sports beyond football and basketball.  Obviously, good for the athlete and long-term clarification for the process! 

4. Ready for Daytona Rising:  game-changer is coming to Daytona Beach. ISC plans to break ground on a Cobb Theatres movie complex across the street from Daytona International Speedway by year's end.  If that goal is met, the 12-screen movie theater would likely be completed within the first three months of 2017, making it the first tenant to open at the long-awaited 181-acre One Daytona mixed-use complex.  Other tenants set to open at One Daytona in 2017 include a Bass Pro Shops and a Marriott Autograph Collection hotel.  In total, the One Daytona development is expected to cost $812 million.  It’s separate from an ongoing $400 million renovation of Daytona International Speedway.  The opening of the new “stadium” in February ushers in a new world for spectator comfort, corporate activation, and perception of NASCAR.  Super Bowl 50 and Daytona Rising clearly destined to be the biggest events next February.

5. And don’t forget about international sporting events. The 11th African Games are ongoing in Brazzaville, Congo.  This year marks the 50th anniversary of the African Games, as well as their return to Brazzaville, which hosted the first event back in 1965.  The African Games, also called the All-Africa Games or the Pan-African Games, are a continental multi-sport competition held every four years.  For international media distribution, Globecast will provide two flyaway antennas and dedicated satellite capacities from Congo to France, with more than a dozen people dedicated to these efforts.  International events continue to dominate.  Events in Africa will be carefully watched for revenue potential, sponsorship, development, and television distribution (especially with the deployment of Globecast expertise and technology).  Look for Africa to be a major player in the sports scene in the next 20 years.

6. NFL looks to make Thursday night a long-term staple on TV. The NFL plans to decide on a long-term “Thursday Night Football” TV package by early 2016, according to John Ourand of SportsBusiness Journal.  While there’s no specific deadline on a decision, league officials want to make sure the winning bidder has enough time to sell advertising and create marketing campaigns for the 2016-17 NFL season.  Looking to satisfy Roger Goodell’s goal of $25 billion in annual revenue by the mid-2020’s, long-term television packages (Internet, television, and multimedia) will carry the day.

7. Are the Chargers close to heading north? The city of San Diego and San Diego County have been unable to come to terms with the Chargers for a new stadium, eliminating any chance of the city holding a January 12 special election on the project.  City officials thought they would have until June 2016 to put a stadium proposal before voters, but city officials and their stadium task force repeatedly ignored the advice of the NFL.  The lack of a stadium deal increases the likelihood of the team relocating to Los Angeles.  Race to Los Angeles heating up, with San Diego, Oakland, and St. Louis scrambling to maneuver around a late 2015 deadline.  NFL certainly attempting to settle this situation by the Super Bowl 50 celebration in California.

8. Trading the swoosh for three stripes. As originally reported by the ESPN.com, but in an article found on the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, Adidas announced a multiyear endorsement deal with Green Bay Packers QB Aaron Rodgers, who will debut new Adidas cleats this season and take a lead role in the brand's upcoming marketing campaigns.  Rodgers will travel on behalf of Adidas to major global sporting events and brand initiatives.  Superstars continue to lead the athlete leverage between Nike, Under Armour, and Adidas.  While other brands are in the mix, these three will pay ever-increasing fees to colleges, leagues, celebrity endorsers, and others for the opportunity to increase market share.

9. Carriage dispute continues in Los Angeles. Time Warner Cable is not planning to air final the Los Angeles Dodgers’ final six regular-season games as a goodwill gesture to fans without SportsNet L.A, a move the network made last year.  TWC has not been able to sell the channel to all area distributors since the RSN launched last year.  The Dodgers are on the verge of making a third consecutive postseason appearance for the first time in franchise history.  Hopefully, the intensity over this issue will force a negotiated end to the carriage stalemate as early as possible – clearly before the beginning of the 2016 season.

10. In college sports, the race to have the biggest and best facilities is real. The University of Florida announced a $64.5 million renovation of the Stephen C. O’Connell Center, $20 million more than where university and athletic officials had begun when they put the project out to bid two years ago.  The renovation will include a new concourse and entryway, premium upper deck seating, a state-of-the-art sound system, and a separate entrance for the aquatic center.  New college construction or renovation hits an all-time high – with nearly 95 facilities modernized, planned, or developed through the end of this century.  Facility competition drives much of this, but the necessity to create new revenues to pay stipends, cost of attendance, and other new responsibilities is most important.

11. The next generation of NFL rights – digital. CBS President & CEO Les Moonves said that the network’s OTT video service – CBS All Access – could eventually include NFL games.  To date, the NFL has limited its online and mobile streaming rights to deals with Verizon and DirecTV’s NFL Sunday Ticket, though CBS will live-stream seven games this season.  Look for the next trend in media:  vertically integrated media companies with traditional television, Internet, mobile – comprehensive approaches and larger deals with teams and leagues as a consequence!

12. When a sports sponsorship becomes a sports partnership. Hendrick Motorsports sponsor Axalta broke ground on a 45,000-square-foot Axalta Customer Experience Center that will be located on HMS' campus in Concord, N.C.  Although Axalta has been a sponsor of Hendrick Motorsports for the past 23 years, the move to open a center on the race team’s campus is unprecedented in NASCAR.  Racing has always led the way in creating corporate structures and partnerships beyond the norm.  Look for more corporate real estate partnerships in the future.  They create long-term business ventures that transcend the peaks and valleys of any given race year.

13. NBA jerseys could look different when Nike takes over apparel rights, and that doesn’t even account for possible jersey ads. Nike reportedly will push for an overhaul of the Oklahoma City Thunder's brand identity once it replaces Adidas as the league's apparel partner in 2017.  Nike and the team are already talking, and the Thunder hasn’t ruled out a more explicit weather-related secondary mark.  The big retail companies will put their own stamp on team uniforms, not only to generate increased attention and revenue, but to bring awareness to their brand and the investment they are making.  Also, ads on jerseys within the next two or three years should be a virtual certainty.

14. Why attendance really matters for MLB teams. Increased attendance at Wrigley Field this season will allow the Chicago Cubs to spend more on payroll next year.  Roughly 2.9 million fans will have attended Wrigley Field by the end of the season, resulting in what could be a $21 million increase in player salaries.  The Cubs’ payroll budgets have remained flat in 2014 and 2015 at roughly $100 million each year.  Plan is working perfectly:  Wrigley renovation generates more revenue and excitement; young team over-performs; more revenue created to pay the higher payroll as contracts mature and as new players are added.  The last chapter in the book would include playoff wins and multiple World Series.  Let’s see.

15. Getting ready for the playoffs, MLB at the intersection of sports and technology. MLB At Bat upgrades were unveiled as part of a new Apple TV rollout at a company event last week.  The new MLB At Bat app that will feature HD video at 60 frames per second, split-screen for games, notifications and live data sync with the broadcast.  MLBAM has been at the forefront of new technological innovation – more revenue and an opportunity to create a business that other leagues follow and deploy.  MLBAM working with NHL to expand their Internet business – more to come.

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.