Sports Business

Sports Business 15 to Watch: Irresponsible spending on NFL free agents?


Sports Business 15 to Watch: Irresponsible spending on NFL free agents?

1. Instead of calling the annual NCAA basketball tournament March Madness, perhaps we should call it March Ad-ness. According to Broadcast and Cable, CBS and Turner Broadcasting claim they're virtually sold out of commercials for March Madness and have generated record ad revenue on both TV and digital. The two companies share the tournament and jointly manage ad sales. Prices for TV ads this year are up in the mid- to high-single digit range, and revenues are up double digits because there’s extra inventory to sell. On the digital front, revenues are up 20 percent. Turner Sports executives point out that the NCAA’s corporate marketing program helps generate revenue from official sponsors led by AT&T, Coca-Cola and Capital One. New advertisers this year include the Hilton hotel chain, financial services company SoFi — fresh off a successful Super Bowl ad run — and yet to be named automakers. In all, according to Kantar Media, the NCAA men's tourney brings in upwards of $1.15 billion in advertising revenue.

2. Most 2016 conference tournaments saw big attendance numbers, which bodes well for this week’s first- and second-round games in Oklahoma City, Denver, Spokane, Des Moines and elsewhere. A rowdy crowd of 19,812 attended Saturday night's Seton Hall-Villanova Big East Tournament championship game at Madison Square Garden, while Verizon Center hosted 20,719 for the North Carolina-Virginia ACC Tournament title game and the Kansas-West Virginia Big 12 Tournament title game at the Sprint Center was played before a crowd of 19,046. In Des Moines, hosting March Madness games for the first time ever, Convention and Visitors Bureau officials see the opportunity as a trial run. If they do a good job with this weekend’s events, estimated to generate an economic impact of $3.1 million, the NCAA might reward the city with future tournament games. The NCAA is accepting applications for March Madness host cities between 2019 and 2021, due in June. Last year’s Big Dance, according to the Washington Post, generated $700 million overall.

3. Sports team and venue owners constantly obsess about how to make their events more fan friendly. For a blueprint, they should look no further than this week’s BNP Paribas Open and its host, Indian Wells Tennis Garden. Since Oracle founder and the world’s seventh richest man Larry Ellison bought the tournament and its grounds in 2009, the site is an eagerly anticipated getaway on the tennis calendar for players, avid tennis fans and casual onlookers alike. Ellison has invested an estimated $200 million so far, with another $100 million to be spent on ongoing renovations over the next few years. The grounds around “tennis’ fifth slam” feature two — and soon to be three — luxurious stadium courts and include two massive shaded lounge and picnic areas, a soccer field specifically for tennis players’ leisure and a seasonal on-site Nobu restaurant. What’s more, the tourney’s $400 million prize money and projected 480,000 attendance this year might soon overtake the French Open in scope.

4. Maria Sharapova's news that she failed a drug test at the Australian Open is a bombshell reverberating in Indian Wells and beyond. And as points out, the Russian’s likely suspension for using a banned substance is “potentially a devastating piece of news for the WTA." With tennis already shaken by match-fixing allegations, the game can’t afford to lose its marquee stars, of which Sharapova is certainly one. She drives spectator interest and sales of the many products she has pitched, including Porshe, Nike, Tag Heuer watches, Cole Haan bags and her own line of Sugarpova candies. While sponsors including Nike and Tag Heuer have withdrawn their support, Sharapova remains the highest-earning female athlete, with an estimated annual income of $29.5 million, according to Forbes. If she’s suspended, it’s highly unlikely she can maintain that income. Over the next month, it will be insightful to see if the International Tennis Federation makes an example of Sharapova and imposes a full four-year ban or works behind the scenes to protect one of its biggest stars.

5. NFL owners gather in Florida for their annual meeting next Saturday, and now that the “L.A. question” has been largely resolved, the first issue they might tackle is the spending spree that broke out when free agency started last week. Across the league, with nearly $1 billion available in salary cap space as the NFL’s year began, teams have handed out huge contracts and dueled each other for veteran players. The most lucrative free agent deals so far include Houston handing former Denver quarterback Brock Osweiler — who started just seven games for the Broncos — $18 million annually and Giants general manager Jerry Reese committing $147 million to four unproven free agents. The precedent this profligate spending is setting is downright irresponsible. As Frank Schwab of Yahoo! Sports concluded, running backs will see Jaguars signee Chris Ivory has just one 1,000-yard season and "wonder why they aren't also making" $32.5 million over five years. The market "has been completely reset.”

6. As March Madness gets underway, it looks like Major League Baseball is taking a page from college basketball’s playbook. MLB has announced that the Braves and Marlins will play a game July 3 at Fort Bragg in North Carolina, marking the "first time a professional sports league will hold a regular-season game on an active military installation," according to the Fayetteville Observer. The game will air on ESPN and will take place at a new on-post ballpark that will be built by MLB and the MLBPA via MLB’s Industry Growth Fund. Approximately 12,500 people, mostly members of the armed serves, are expected to attend. Tickets "will not be available to the public," as they instead will be "restricted to Department of Defense ID cardholders." The military baseball game resembles the handful of college basketball games that have been played on active aircraft carriers from Norfolk, Va., to San Diego in recent years, which have drawn awareness and funds to multiple active duty and veterans’ issues, including healthcare.

7. It might be the Manly Month of March, but a pair of upcoming sports leagues are tightly focused on the betterment of women. This Friday, the NFL will hold its inaugural Women’s Career Development Symposium in Boca Raton, Fla., in conjunction with annual owners meetings. As part of its expanding the Rooney Rule to include interviewing women for all open executive positions, the NFL has handpicked 40 women from across the league to hear presenters including Dolphins Executive VP/Football Administration Dawn Aponte and Lions CFO Allison Maki discuss their own career paths and advise symposium participants. Similarly, organizers of the ANA Inspiration, the LPGA’s first major of the year, will hold the inaugural ANA Inspiring Women in Sports Conference on March 29, just prior to the tournament at Mission Hills Country Club in Rancho Mirage, Calif. Among those set to address the state of women’s sports are Annika Sorenstam, Missy Franklin, Lindsey Vonn, Abby Wambach, Kristi Yamaguchi and Paralympian swimmer Jessica Long — all champions on and off the field of play.

8. As the U.S. Soccer Federation released a budget that includes projections for a net loss, Major League Soccer continues to thrive and expand. According to the Philadelphia Enquirer, U.S. Soccer’s newly released budget showed national team expenses outweighing revenues by $3.3 million — despite it being an Olympic year — for an overall deficit of $421,000. A positive swing in the projected budget and the actual one was caused by the U.S. women's national team winning the FIFA World Cup last summer. Meanwhile, MLS’ next expansion franchises, Los Angeles Football Club and Atlanta United FC, are on schedule to open the 2018 MLS season in new stadiums. And last week, the Los Angeles Times notes, the St. Paul city council approved plans for a project that would include a $120 million, 19,000-seat soccer-specific stadium. In Georgia, Atlanta United President Darren Eales reports that "more than 29,000 fans have already made deposits for season tickets for the team, a team without a coach or players at the moment."

9. With its wacky cable television regulations and sheer geographical expanse, America often finds itself in catch-up mode when it comes to broadcast technology. Such European-based media companies as Globecast are often light years ahead of U.S. firms, most recently in the realm of Ultra High Definition technologies. Next month, however, DirecTV is bringing its first-ever live 4K broadcast to subscribers, direct from Augusta National’s Amen Corner. The Masters feed will mark the first time U.S. viewers will be able to tune into a live UHD broadcast, available through the satellite provider's dedicated 4K channel. With 4K UHD, viewers with a 4K-compatible TV get roughly four times the resolution of HDTV, including sharper lines and a deeper color palette. The detail is so rich that you might even see the divots in the turf as if you’re right there on the green and get a better feel for Augusta’s sculpted contours and elevations. It’s hard to realize how steep the climb to the ninth green is unless you’ve actually made the trek.

10. The culturati is gathered in Austin, Texas, this week for the annual festival of technology, cinema and music known as South By Southwest. Not surprisingly given that it’s held in Texas, South By can now be viewed through more of a sports lens. SXSW introduced SXsports in 2014 as a convergence track of the annual event. The three-day, sport-focused programming is now open to all SXSW Film and SXSW Interactive registrants. SXsports explores cultural impact and the human experience, tackles the future of sport in all its forms and embraces technology and innovation. 2016 programming highlights include an opening session with NBA Commissioner Adam Silver, New York Giants wide receiver Odell Beckham Jr. and UFC star Ronda Rousey, as well as 13 film screenings, including Richard Linklater’s new baseball film "Everybody Wants Some." New this year is the NBC Sports Lawn at SXSW, offering attendees free beer, lawn games, charging stations, live sports and an in-depth exclusive preview of the Rio Olympics.

11. The Boston Pride on Saturday won the National Women’s Hockey League’s inaugural Isobel Cup, sweeping the Buffalo Beauts in a best-of-three series at the Prudential Center practice facility in Newark, N.J. Fans packed inside the Devils' practice arena to "witness both games in the series." Said Sports Illustrated, the "excitement and energy with seeing the historic event overflowed throughout the weekend." NWHL Commissioner Dani Rylan before Saturday’s game said that the league "will 'definitely' be back for a second season next year and that she also plans on having a longer season and more games." The NWHL might also be planning on expanding to Canada, which might not sit well with the Canadian Women’s Hockey League. The CWHL has teams in Montreal, Toronto and Toronto suburb Brampton. Look for more news on the professional women’s hockey front to unfold as the weather warms and hockey gains attention as the NHL Stanley Cup Playoffs commence.

12. Bay Area tech giants Yahoo! and Facebook continue to expand their sports offerings, respectively locking in a partnership with the NHL to deliver free, live games to fans and on-demand, premium content and working to stream “Thursday Night Football” games. Through the Yahoo!-NHL deal, fans will be able to watch out-of-market hockey games on the platform sans cable subscription or authentication. The alliance will now see Yahoo! Sports serve up four games a week with an NHL “Game of the Day” to U.S. fans in addition to condensed games, “Best of the Day” and “Best of the Week” top plays and post-game highlights. Yahoo! is also introducing new video advertising options that will run within commercial breaks during the live streams of live sporting events, which includes NHL and MLB games. On the NFL side, Facebook is reportedly in talks with the NFL to stream its Thursday night games. As Facebook faces more and more competition from social media startups for customers and ad dollars, the social media stalwart sees live sports as a way to stay relevant.

13. If big snow dumps in the Sierra Nevada continue, California’s Mammoth Mountain could stay open til July 4, and happy trails could be awaiting California’s $3 billion ski industry. This winter, according to the Los Angeles Times, ski resort operators throughout California say lift ticket sales have increased as much as 50 percent compared to the last few years, music to the ears of the California Ski Industry Association, a trade group for the state’s 27 ski resorts. Manufacturers are also smiling: Ski and snowboard equipment sales in the Western states jumped nearly 11 percent to $214 million over the last four months compared to the previous year. Another draw for customers: The lengthy drought pushed ski resorts to invest heavily in summertime moneymaking ventures, including concerts, mountain bike trails and zip lines.

14. The New York Mets have retained their official digital camera partner for a further three years after Japanese brand Nikon signed an extension to its deal. The deal will see Nikon occupy the largest static sign at the Mets' Citi Field, as well as several interactive areas around the ballpark. These will include five “Nikon Photo Spots,” designated as places for fans to take photos and share memories over social media using the hashtag #NikonMets. "We are excited to extend and enhance our partnership with Nikon," said Mets executive vice president and chief revenue officer Lou DePaoli. "Like the Mets, Nikon has a very loyal fan base, and we look forward to partnering with them to enhance the fan experience at our games." Like many MLB deals signed under the year-long reign of Commissioner Rob Manfred, the Mets-Nikon deals seems camera ready for success.

15. Chris Kermode will continue as executive chairman and president of the Association of Tennis Professionals (ATP) for a second three-year term. The 51-year-old Englishman will now head up the men's tennis body until 2019 after a meeting of the ATP board of directors. He will remain based at the ATP's London offices. Kermode was appointed by the ATP in January 2014 after a 10-month search for a replacement for Brad Drewett, who died in May 2013 after suffering from Lou Gehrig's disease. Kermode has maintained his late predecessor's successes, overseeing a sustained period of growth on the ATP World Tour and securing a new headline partnership with Emirates late last year. However, Kermode was pressed to respond in January to reports of match-fixing attempts at major tournaments, including Wimbledon. Roger Federer chimed in: "Chris has done an excellent job and shown great leadership since heading up the ATP. The tour is in great shape.”

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.