Sports Business

Sports Business '15 to Watch': Manfred makes his mark

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Sports Business '15 to Watch': Manfred makes his mark

  1. MLB’s new pace of play rule changes have proved successful thus far, with the average game this season being completed nearly ten minutes faster than last year.  Among the changes that were implemented are a between-innings clock and making hitters keep a foot in the batters’ box.  Rob Manfred makes his mark yet again – 48 percent asset appreciation, nearly $10 billion in revenue, international expansion and a quicker game as a consequence of relatively modest rules changes.  America’s pastime continues to get stronger on a regular basis.
  2. A new study from the National Bureau of Economic Research found that just 16% of NFL players go bankrupt within 12 years of retiring.  While the number is troublesome, it’s far less than a 2009 Sports Illustrated report that said 78% of players are bankrupt or in financial trouble within two years of retiring.  There's a need for all involved to take significant responsibility in improving these numbers: the player and his family, coaches and management, the Players Association and the league itself.  As the economics get bigger and the stakes get higher, these issues will be more significant in the years ahead.
  3. Lagardère Unlimited Golf solidified its PGA Tour dominance with an impressive 1-2 finish at Augusta at the 2015 Masters Tournament.  Twenty-one-year-old phenom Jordan Spieth won his first Masters green jacket, while legend Phil Mickelson finished second at the tournament.  The company has done a stellar job in restructuring the Under Armour relationship for Jordan Spieth while not overexposing him. Phil Mickelson provides significant “business experience.”  The two clients (in addition to the rest of the athletic stable) provide significant diversity, experience and corporate reach over time.
  4. National and international television distribution is a major component of the economics of teams, leagues and television networks.  Globecast is expanding significantly throughout North America, complementing its worldwide presence.  Part of the Orange international conglomerate, Globecast manages and transports over 10 million of hours of video and rich media each year, across five continents.  Some examples of their major sports events include the ESPN Cricket World Cup, Roland Garros and the Tour de France.  More efficient and lucrative international distribution means more revenue for teams, leagues, players and the industry as a whole.
  5. The NBA and Coca-Cola have ended their partnership after 29 years.  Coke used its NBA league sponsorship to help revive its Sprite brand in the 1990s.  The NBA has already reached a five-year deal with Pepsi to take over rights to the sponsorship category.  The NBA always leverages one large sponsorship/partnership deal into a larger one.  
  6. As originally reported by the L.A. Times, 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 MLBPA is preparing for a fight with the Los Angeles Angels should the team try to recoup money from Josh Hamilton.  Hamilton is set to make $23 million this season, but he may not play for at least another month while he recovers from substance abuse issues.  Another example of the risks involved in “superstar athlete brand management.”  Hamilton seems to be approaching this issue with great respect and care, but the corporate sponsors and team owner will continue to monitor the impact on their respective brands.
  7. Nike is close to reaching a deal with the NBA to become the league’s new apparel partner.  While the framework of an agreement reportedly has been reached, there are still several details that need to be finalized before signing a deal.  Nike's new on-court rights will take effect before the 2017-18 season.  Nike and Under Armour continue to fight it out on and off the court, with adidas still involved. As the NBA apparel issue is resolved, next up: jersey sponsorships and the revenues that follow.
  8. Lagardère’s North American expansion continues at a rapid pace, and the award nominations continue to stream in.  LU received two nominations at the prestigious Sports Business Awards, as a finalist in the categories of “Best in Talent Representation and Management” and “Best in Corporate Consulting, Marketing and Client Services.”  Major North American expansion of a worldwide conglomerate means more opportunities for athletes, event promoters, teams, leagues and the industry as a whole.  High quality competition is good for everyone.
  9. The NBA averaged a league record 17,826 fans per game this season, as almost 22 million fans attended games.  NBA teams also had 700 sellouts, passing the previous record of 676 sellouts from 20 seasons ago.  The Chicago Bulls led all teams with 21,866 fans per game.  Another successful NBA season at the gate, coupled with $9 billion in revenue, the $2 billion Ballmer sale raising all values and other substantial NBA benefits leading into the playoffs.
  10. Taking advantage of MLB’s shift on liquor sponsorships, the Kansas City Royals signed a multiyear deal with McCormick Distilling to produce limited-edition Royals-branded bottles of its 360 Vodka.  The Royals join the Cubs as the only two teams licensing its logo for liquor packaging.  Look for this as the “tip of the alcohol iceberg”; teams should actively pursue liquor sponsorship deals (as long as they are tastefully done and coupled with the admonition against excess).  This should very easily expand into all other sports at a rapid rate – more money for everybody.
  11. As originally reported by the Cleveland Plain-Dealer, 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 Browns unveiled new Nike-designed uniforms with the word “Cleveland” displayed prominently on the front, making them the only team in the NFL with just the city name on front of the jersey.  Besides the city name, the Browns will be the only NFL team with its nickname on the pant leg.  The team will couple the nondescript helmet orange with a “busier” jersey and pant leg.  More money for the team, more money for Nike and more merchandise sales for the NFL.  Now a note to the Browns player personnel department: couple the logo excitement with positive team performance.
  12. Army has rebranded its athletic department and will now be known as “Army West Point.”  The school collaborated with Nike for 18 months on the rebranding, but also consulted the U.S. Army and Academy leadership, current and former cadet-athletes, coaches, historians and West Point graduates.  Another example of reaching the secondary logo and merchandise market through another method.  Not just changing logos and colors, but actually rebranding the athletic department – change of image, merchandise, logos, etc.
  13. Through Globecasts’s global reach and local presence on each continent, Globecast secures contribution, international distribution and broadcasts production for every type of sporting, news and festive events.  Globecast broadcasters get mobile and fixed satellite uplink/downlink, multicast distribution on any screen, including an IP feed broadcast who can be embedded into any web portal during the event.  Key in the television industry is to provide international reach, diverse services and an opportunity to more efficiently enhance revenues.  Look for Globecast to continue to be a major player in all aspects of media transmission and distribution.
  14. Georgia Tech is hosting a Rolling Stones concert at Bobby Dodd Stadium as a way to generate additional revenue to help cover the full cost of attendance.  Georgia Tech AD Mike Bobinski estimates that holding the concert could add an extra $500,000 to the school’s athletic department budget.  More schools will create more concerts for more additional revenue as well.  As the pressure on schools to provide more revenue for student-athletes grows, look for diverse merchandise, possible alcohol sales, corporate stadium names and additional stadium events like the Rolling Stones, across America.
  15. The NFL and Harris County are at odds over NRG Stadium improvements in advance of Super Bowl LI.  The NFL wants the luxury boxes and club seats at NRG Stadium to undergo a $50 million upgrade at the county’s expense, but county commissioners say the use of public money is a non-starter.  As new stadiums complete their initial financing/lease period, teams are renegotiating improvements based on latest technological and architectural advances.  In most cases, public/private partnerships remain critical in the base lease, subsequent renewals and refinancings for the overall facility as well.

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.