Sports Business

Sports Business '15 to Watch': Golf's final major


Sports Business '15 to Watch': Golf's final major

1. The PGA Championship, golf’s fourth and final major, begins in Kohler, Wisconsin. While the PGA of America is fixated on the tournament's $100 million economic windfall - attendance likely topping 200,000 patrons - and the highest-grossing ticket sales in its 97-year history, avid golf fans are much more focused on whether the Summer of Spieth will continue. Nearly 50 percent of ticket buyers are from outside the Wisconsin area. Qualifying for the Olympics is tied to golf's World Ranking. At the cutoff point on July 11, 2016, the top-15 will automatically make the Games, with the caveat that no more than four players from any country can be included. Under their current ranking's, Lagardere's Jordan Spieth, Bubba Watson, Rickie Fowler, and Jim Furyk would qualify.

2. NFL owners at this week’s special L.A.-focused meeting in Chicago will discuss implementing a program to allow fans to make deposits for season tickets at a temporary stadium in L.A. Meanwhile, the L.A. story continues to evolve. As originally reported by the St. Louis Post-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, a St. Louis judge ruled that the city doesn’t need voter approval to spend public tax dollars on a riverfront NFL stadium, calling sections of a city ordinance requiring a vote “too vague” to enforce. St. Louis’ stadium task force expects a new stadium to cost $998 million, with the public sector contributing nearly $400 million. Look for the NFL to develop specific guidelines and create a definitive timetable that will allow St. Louis, Oakland, and San Diego to either finish a deal or step away for good.

3. Deflategate hearing before U.S. District Court Judge Richard M. Berman this week. In the nearly seven months since the Patriots’ 45-7 victory against the Colts in the AFC championship game, the question is about PSI and other physics notions. This week, it’s all about process. Judge Berman will attempt to facilitate a settlement over process. Is the Roger Goodell discipline appropriate under the CBA that was negotiated by the NFL and NFLPA? He is committed to ruling by September 4. Significant pressure will be placed on both sides by the federal judiciary in order to attempt to avoid a protracted piece of federal litigation that could take years. Stay tuned for some rapid events before the beginning of the regular season.

4. Only a couple weeks left until the start of college football season. In hopes of improving strength of schedule for the CFP, Big Ten football teams starting in 2016 will have nine conference games, mandate at least one non-conference game against a Power 5 school, and not play any FCS teams. Big Ten Commissioner Jim Delany said previously contracted games with FCS schools could still be honored. Depending on the host school and the opponent, game guarantees can range from $300,000 to $1,000,000. Look for a trend in the Power 5 conferences to play less FCS in the name of “strength of schedule” – especially with four playoff sports and five power conferences. The impact on FCS school revenue, of course, will be significant.

5. With two weeks to go until the start of the U.S. Open, the ATP made a hard court stop in Washington D.C. Lagardere Unlimited’s consulting group scored an impressive win earlier this year in landing the Citigroup global sports and entertainment business, but the agency already had established an excellent relationship with the financial service brand due to its longtime stewardship of the D.C. tournament now known as the Citi Open. The tournament averages 72,000 fans over nine days. It has become incredibly difficult to sustain and advance a hard court summer event before the U.S. Open. Washington is a great tennis community; Donald Dell and Lagardere did an outstanding job in creating buzz around tennis in early August.

6. Digital rights are becoming increasingly important for sports teams and leagues. The NHL signed a six-year deal with MLBAM in which MLB’s media division will operate the NHL’s digital operations, streaming services, and NHL Network. The deal, valued at approximately $1.2 billion to the NHL over the course of the contract, will give the league a 7-10% equity stake in BAM Tech, a third-party business. In addition to the new agreement with the NHL, MLBAM also has done backend infrastructure work for HBO Now, WWE Network, and WatchESPN. Kudos to Gary Bettman, Bill Daly, and John Collins for their leadership in digital/internet/wireless. Look for NHL revenues to be significantly increased due to the average fans that will take advantage of this.

7. A major deadline is approaching for the city of Sacramento as it comes to the Kings’ new arena. Sacramento has until September 1 to pay its $255 million portion of the arena, or the club's lender, Goldman Sachs, has the right to declare a default on the team’s construction loan. While a default wouldn’t jeopardize the $507 million project, but it is a step the Kings and the city would like to avoid. The Kings broke ground on their arena last October and to date have spent $216 million on the project. Mayor Kevin Johnson, Kings owner Vivek Ranadive, and the Sacramento business community will intensify its partnership to ensure the implementation and development of a first-class arena.

8. Fresh off of winning the college football national championship, Ohio State University is starting to see the fruits of that victory. OSU is planning three major facility projects that will cost more than $67 million to complete, and AD Gene Smith said the school’s recent athletic success has helped fuel the fundraising for the buildings. The projects include a $30 million home for Olympic sports and a $30 million arena for several sports, including wrestling, volleyball and gymnastics. Great example of a “have” program diversifying its revenues to improve the foundation of all other sports on campus. Kudos to the athletic department.

9. As MLB pennant races heat up, so do MLB daily fantasy races. DraftKings, which already is MLB’s official daily fantasy game, announced new sponsorship deals with 27 of league’s 30 teams. The new deals cover the entire league with the exception of the Arizona Diamondbacks, Seattle Mariners, and Toronto Blue Jays. While DraftKings is the official DFS sponsor of MLB, individual teams aren’t required to sign sponsorships with the company. That makes the extent of DraftKings’ team deals all the more impressive. In a race reminding us of the Wild West, DraftKings demonstrates quick entrepreneurialism in key sponsorship deals. Look for the rivalry to continue and intensify.

10. There might not be a better place to get to events for the price of one than in North Carolina. The ATP Winston-Salem Open and the PGA Tour Wyndham Championship in Greensboro, held the same week, have come together for the first time to offer a combo ticket option. Fans can purchase a one-day combo ticket for $50 or a three-day combo for $120. While it’s unknown how many tickets have been sold to date, the fact that dates don’t overlap and the events appeal to similar demographics should make the deal a hot seller. An example of creative promotions in an otherwise difficult tennis season; look for the tournaments to be a resounding success as these kinds of promotions carry the day.

11. Call it cross-sports cross-training. The Detroit Pistons and UFC are developing a cross-training program to expose athletes and their trainers to the approaches in other sports, according to Bill King of SportsBusiness Journal. Six UFC fighters last week spent four days in Detroit, working with Pistons training staff. Later this month, the UFC will host Pistons players for four days of MMA-style training at its facility in Las Vegas. The trip from Detroit to Las Vegas is more than 2,000 miles, but if it leads to better training for the athletes, it’s no doubt worth the trip. Visionary teams in major sports realize the necessity of thinking “outside the box,” especially if it means borrowing from best practices from successful ventures like the UFC.

12. What’s in a number? Apparently a lot. The University of Nebraska has become the latest college to stop selling jerseys featuring players’ numbers, as the school does not want to attribute any number to any specific student-athlete. The school said the change is “not specifically” due to the Ed O'Bannon antitrust case, but instead was more due to the general landscape of collegiate athletics. Expect to see more schools move to sell generic numbers such as 1, 10, or 15, to avoid suspicion of improprieties. Anticipated fallout from the player licensing litigation is that colleges will attempt to “standardize” their athlete promotions; let’s see what happens when an athlete of Heisman Trophy caliber gets into the mix!

13. As the NFL’s preseason gets underway, the San Francisco 49ers have a major grass problem. The 49ers cancelled a public practice at Levi’s Stadium because of ongoing turf issues. New sod at Levi's Stadium will be installed after this weekend’s Taylor Swift concerts and ahead of the preseason home opener against the Dallas Cowboys on August 23. For a stadium that cost $1.3 billion to build, it’s amazing that they can’t seem to get the turf right, especially with Super Bowl 50 taking place there. Major turf issues could not come at a worse time, especially as Levi’s Stadium looks to the opening concert on September 10 and the vision of Super Bowl 50 in early February.

14. The NBA has a new corporate sponsor to help with efforts to expand the league’s presence overseas. The league signed a sponsorship deal with Marriott that makes the company the official hotel of several international NBA events throughout the 2015-16 season. Financial terms of the one-year deal were not disclosed, but it gives Marriott Rewards members access to NBA games and events in the international markets. The NBA this preseason will be playing 10 games in foreign markets, including Italy, Brazil, and China. There clearly are no boundaries to limit growth of the league. As the NBA seeks to become the most global professional sports league, international corporate partners are key to this strategy. Look for more categories to emphasize global reach over U.S. coverage.

15. Citing low ratings and poor time slots, ESPN is walking away from televising the French Open after 13 years. The network, which reportedly paid Tennis Channel a sublicense fee in the low seven-figures, did not like its position as the second or third TV outlet covering the tournament. Even losing the ESPN coverage, don’t hold a yard sale for the French Open. The tournament distributed $30 million in prize money this year. French Open still preserves its spot as the third-most watched major. Special boost this year as Serena wins her second calendar Grand Slam and her third “Serena Slam,” but this may not be enough in the future.

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.