Sports Business

Sports Business '15 to Watch': MLB postseason in full swing

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Sports Business '15 to Watch': MLB postseason in full swing

1. NFL International: more games, more countries, more revenue. As originally reported by The Herald, but in an article found on the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the NFL has recently approved of more international games, some of which will take place outside of England. The league’s owners have given the green light to more games to take place outside the United States through 2025 – possibly some of which might take place in Mexico, Germany, and Canada. This decision is made coming off momentum from a successful Jets – Dolphins game in London during Week 4. Not only was the agreement for games in Britain extended through 2016 – the host country of two more NFL games later this season – but other nations will be considered as well. Also in talks of moving overseas is the Pro Bowl. Brazil, Australia, South Africa, and Asia have all expressed interest in hosting the all-star game and are being considered as potential sites if the game were to move from Hawaii. While this move would likely not happen until 2018, if it were to happen at all, it is still being discussed by the league. On the topic of moving games overseas, Commissioner Roger Goodell said, “We think it’s time to expand our international series to other countries and respond to the growing interest in our game not only in the U.K., but elsewhere around the world.” Newest wrinkle will be the exclusive Internet broadcast of the Jaguars and Bills from London the morning of October 25 – “the Yahoo game.” More details later.

2. Week 2 of Major League Baseball playoffs: an economic juggernaut. The first-ever postseason series between the Cubs and Cardinals is receiving the hype that it deserves. Secondary-market ticket prices have been surging, and more customers from Illinois bought tickets to Game 1 in St. Louis than from Missouri. Leading up to Game 1, the average ticket price for a seat in Busch Stadium was $140, the least expensive ticket for that game was a $115 standing room-only stub, while a right field terrace seat cost $148. Meanwhile in Chicago, for Game 3, prices start at $280, and that is for a standing room-only ticket. The average ticket price was $450 and the cheapest seat one could buy was in the left-field upper deck for $324. Cubs President of Baseball Operations Theo Epstein said, “We’ve actually invited all our full-time baseball operations staff, all the scouts and all our development people, when we host that first game at Wrigley, Game 3. They’ll all be there with their wives, which will be a really cool moment because they were all part of it.” Rank of net worth of remaining playoff teams: Dodgers at #2 ($2.4 billion); Cubs at 5; St. Louis at 6; Mets at 7; Texas at 11; Houston, Kansas City, and Toronto in the bottom third of value. Overall, over 20 percent increase in Major League Baseball franchise value from last year. Kudos to Commissioner Manfred.

3. Compensation for college coaches. According to USA Today’s list of the top-paid college football coaches, Alabama’s Nick Saban once again tops the national list. Earning nearly $7.09 million per year, Saban continues to lead the Crimson Tide as national championship contenders. But Michigan’s newly-hired Jim Harbaugh is a close second, making almost $7.01 million annually. Following Harbaugh and rounding out the top five are Ohio State’s Urban Meyer, Oklahoma’s Bob Stoops, and Florida State’s Jimbo Fisher. USA Today’s Brady, Berkowitz, & Schnaars report the average compensation for college football coaches at the 128 FBS schools is up to just over $2 million. With that, the average compensation package since 2006 is up more than 110%. Even when adjusting for inflation, that number has still nearly doubled in nearly a decade. College football coaches should be viewed as COOs of $100 million annual revenue corporations. In that context, the compensation schedule seems abundantly reasonable – though no less controversial.

4. Globalization and skyrocketing television rights. The Barclays English Premier League is reportedly on track sign a deal to sell its overseas TV rights for 2016-2019 for more than $4.6 billion, giving the league more than $1.53 billion annually. England’s top soccer division is widely regarded as the most popular sports league in the world in terms of territories covered and income gained from foreign sales, so this deal comes as no surprise to many. Nevertheless, this new overseas media deal will give the EPL over an additional $1 billion over the duration of the three-year contract. This would mean the Premier League “earns more from foreign rights alone each year than any major European rival” – La Liga in Spain, the Bundesliga in Germany, Serie A in Italy, and France’s Ligue 1 – make from all their annual, domestic, and foreign TV rights combined. In addition to foreign money, the EPL is currently making well north of $1 billion from live domestic rights from Sky and BT Sport, and that number is expected to soar with “some key markets doubling in value do far.” Soccer franchises clearly the most valuable properties, and television distribution across the globe enhances that value. Globecast and others continue to generate increased revenues by developing quality transmission and distribution alternatives throughout the world.

5. If it's October, it must be the new year – at least on the PGA Tour. After the world's top golfers completed the Presidents Cup last weekend, the PGA Tour calendar officially rolled over to 2016, a date book shift meant to boost interest and attendance in golf's "silly season" events. Kicking off the new season is the $6 million Frys.com Open, this year held at the historic Silverado Country Club in the heart of Napa Valley's wine country, and the only tournament on tour with direct sponsorship ties to nearby Silicon Valley. Tech retailing giant Frys continues to enjoy its title sponsor relationship in the fifth year of its continuing naming rights deal. The golf season opener is hardly low profile. Playing in Wednesday's Pro-Am are Steph Curry and Andre Iguodala from the NBA Champion Golden State Warriors. Frys.com continues its culinary partnership with superstar chef Thomas Keller, who will pair course side meals with the best Napa Valley vintages. And playing alongside veteran golfers eager to earn early-season FedEx Cup points, like Lagardere Sports' Brendon de Jonge, Harris English, and Pat Perez, are no less than Tiger Woods, World #7 Justin Rose, and World #3 Rory McIlroy. Hard to believe the 2016 season is already starting – and a good move by the PGA Tour to generate interest in an otherwise diluted Fall season.

6. Fantasy future: more revenues, but investigations, taxation, and potential litigation. Amidst a whirlwind of confusion concerning possible insider trading and potential scandal, daily fantasy sports hub DraftKings has elected to temporarily pull its advertising from ESPN. It is unclear if the programming will be pulled going forward; ESPN has also made a separate decision to scale back on DraftKings sponsorship graphics and language within its programming. Despite pulling ads from ESPN, the fantasy sports site has kept advertising on other networks like Fox Sports, which has a stake in the fantasy sports company. ESPN has a $500 million “exclusive advertising deal” with DraftKings. ESPN’s Darren Rovell said the sports network is “waiting for a little but more transparency” from DraftKings and FanDuel – the other major daily fantasy sports site – on if any more employees have won money on the sites. The legality of these two sites remains unchanged, but companies have recently been banning employees from playing their own daily fantasy sports games in wake of controversy. The fantasy industry is clearly legal based on the 2006 Internet gaming legislation – and also an industry growing faster than any on recent record.

7. Daytona Rising positively impacting all NASCAR facilities. With the Chase for the Sprint Cup heating up on the track, Bristol Motor Speedway is making moves of its own off the track. The speedway will soon have the world’s largest outdoor, permanent, center-hung scoreboard, featuring four high-resolution screens measuring approximately 30 feet tall by 63 feet wide; the scoreboard will rise via four massive support towers ranging in height from 190-220 feet and weighing in at approximately 437 tons. The new addition has been dubbed “Colossus,” with construction scheduled to begin in November on the video board. While this scoreboard will certainly boost viewership and attendance at Bristol Motor Speedway, just as the Dallas Cowboys massive LED-lit HD scoreboard, track executives are hopeful that this new scoreboard will help go beyond just NASCAR events. Scheduled for next year is the Virginia Tech-Tennessee football game that is expected to break the all-time college football attendance record with a sellout crowd in the 150,000 range. SMI CEO Marcus Smith, whose company owns the track, added, “I wouldn’t be surprised if you hear about bigger events coming to play or to perform at Bristol Motor Speedway, because they are not going to find another facility this big and this amazing anywhere else in the world.” Daytona Rising continues to move forward in anticipation of a gala Speedweeks 2016 opening. In the meantime, it influences all other facilities in and out of motorsports.

8. Hockey Week 1: NHL visibility, attendance, television, awareness all increase. Separately, the puck has officially dropped on a new era of professional sports for women with the sellout opener of the National Women’s Hockey League taking place this past weekend. The NWHL, which consists of four teams – the Boston Pride, Buffalo Beauts, New York Riveters, and Connecticut Whale, sold out its inaugural game, a great start for the league. The league is set to play an 18-game schedule with one game a week stretching into late February. The four founding cities were chosen by the league based primarily on USA Hockey’s girl membership numbers. And while the average salary for players is expected to be $15,000 with a minimum salary of $10,000, NWHL Commissioner Dani Rylan “calls those figures a first step and say that ‘obviously the big goal is to make this a full-time job in the coming years.’” But for the time being, the league has been designed and scheduled to allow players to work other jobs during the season. Hockey continues to diversify in all contexts, and a female professional league enhances those opportunities.

9. Major League Baseball playoffs: television bonanza and ad revenues. Although the MLB Playoffs just began this past weekend, TBS announced that it has effectively sold out all of its guaranteed NLDS and NLCS ad inventory. Turner Sports Executive Vice President/Ad Sales & Marketing Jon Diament said, “We’ve never been sold out quicker.” Diament projected that TBS’ postseason MLB revenue will be up 10% from last year, a significant increase, with endemic categories like auto, insurance, telecom, QSR/casual dining, and financial services leading the way. Meanwhile, Fox said that it is looking to finish 10-15% ahead of last season’s MLB sales. Media buyers said that the average unit cost of a 30-second in-game spot on the network is around $545,000, and that this number is up significantly from last year’s price. Value obviously increases as the World Series awaits.

10. The NFL has been off to a great start so far this season in respect to its primetime viewership numbers. Through the first four weeks of the season, NBC is averaging 25.31 million viewers for its primetime NFL games, which has included the NFL Kickoff game and four “Sunday Night Football” games. The 25.31 million marks the best viewership for an NFL primetime package through the first four games since 1993, when ABC was drawing 26.3 million viewers for “Monday Night Football.” NBC’s games are also up more than 10% from 22.98 million viewers last year at this point. At the same time, CBS and NFL Network are averaging 19.29 million viewers combined for “Thursday Night Football” games, up 20% from the 16.08 million viewers averaged at the same time last season. All networks involved are hopeful to continue to draw in more viewers as the seasons goes on and games start to hold more weight, but for the time being, everything is looking good for primetime games. Look for the league to solidify its long-term Thursday night package, Internet streaming exclusivity, and international television distribution in the near future.

11. Ongoing global FIFA turmoil. Sepp Blatter refuses to go down quietly. After being handed a 90-day suspension by the FIFA Ethics Committee, Blatter has filed an official appeal. The FIFA President was suspended from all international and national soccer activities alongside UEFA President Michael Platini with an option to suspend them for another 45 days. The decision to suspend these men came in wake of allegations made against them by a Swiss police investigation into corruption. Blatter called the suspension “brusque, and unfair, treatment,” and has decided to take action in defending himself. The suspensions of these men come at “crossroads moments,” especially for Platini, who intends to stand as a candidate to replace Blatter in the upcoming FIFA Presidential election scheduled for February 26. Both men issued statements insisting that they have done nothing wrong, while accusing the FIFA Ethics Committee of failing to follow FIFA rules. Other than NFL franchises, Premier League and international soccer franchises are among the most valuable sports properties around the globe – the FIFA scandal materially impacts that equation.

12. The long, strenuous process of moving an NFL team to Los Angeles has just been given a bit of clarity. NFL owners expect an L.A. vote by January as the clock continues to tick for cities to submit their proposals. Pittsburgh Steelers President Art Rooney II recently stated that he believes the three teams backing two stadium plans in Southern California “will all file for relocation at the end of the season, setting up a vote in January.” While the NFL owners will vote in early 2016, in L.A., Vincent Bonsignore wrote the more people “talk to owners and staff members, the more you get a sense there is an inevitability factor emerging as it relates to the NFL returning to L.A.” in 2016. So in that sense, it is not a matter of if, but a matter or who. The question now becomes what the league decides between Stan Kroenke’s Inglewood plan for the Rams and Raiders Owner Mark Davis’ Carson plan. With new rumors and developments constantly swirling around the league on a weekly basis concerning the league’s relocation plans, the 2016 vote cannot come soon enough for Commissioner Roger Goodell and the NFL’s top executives. Nothing has changed, other than the visibility and intensity of the issue. San Diego, Oakland, and St. Louis with a “final” chance to demonstrate irrevocable stadium reality – or risk losing their teams rather quickly.

13. Under Armour is continuing its hot pursuit to sign some of the country’s top athletic universities to long-term contracts. This time, it is the University of Wisconsin. The school is reportedly on the verge of signing a 10-year deal with Under Armour after 15 years with Adidas. The new deal would provide the school with a significant increase in revenue. If the deal is approved then UW would receive an annual cash contribution of $4 million from UA on top of $3.3 million in product for the school’s 23 sports programs during the first year of the deal. Wisconsin has been getting between $750,000 - $800,000 each year in cash compensation under its current deal, which expires on June 30, 2016. Following the first year of the Under Armour deal, cash compensation and product contributions would slightly drop, but still be worth millions annually – a great boost from the sub-million-dollar number the school is currently receiving on a yearly basis. University Athletic Directors view the “retail wars” as an appropriate and necessary step to generate significant revenue: paying student-athletes, guaranteed scholarships, stipends, etc.

14. Cleveland Indians looking for new ownership. The wait may be over for the Cleveland Indians, as the club is closing in on selling a minority share of the club. With hopes of having a minority owner by the end of the calendar year, Indians Chair & CEO Paul Dolan wants to bring in someone else to help run the club to ease his financial burden and add much-needed capital. The Indians hired Allen & Co. Managing Director Steve Greenberg in 2014 to help the team search for a minority owner, and Greenberg said the pursuit to accomplish this goal “has narrowed” as of late. The Cleveland-based baseball team drew just 1,288,905 fans to Progressive Field this season, the lowest figure in the ballpark’s 22-year existence and good enough to place them second-to-last in the MLB overall. The added ownership could not only help the club bring in more fans, but could potentially help the club expand its roster a bit with more capital.

15. Stadium creativity: environmental sustainability and new revenue. This past week, Real Salt Lake Owner Dell Loy Hansen unveiled Utah’s largest privately-owned solar array at Rio Tinto Stadium. The 2,020-kilowatt solar panel system was installed on the existing stadium structure as well as new covered parking areas, making it U.S. sports’ fourth-largest solar project to ever be constructed. Only trailing Indianapolis Motor Speedway, Lincoln Financial Field, and Pocono Raceway in terms of size, this addition makes it the first of its kind for an MLS-specific venue. The new system is expected to offset 73% of the Real Salt Lake’s total annual stadium power needs – “the largest offset among North American professional sports and entertainment venues.” The new system will save the franchise between $300,000 - $350,000 annually, as potentially as much as $4 million over the next 10 years. Environmental sustainability is important, but maximizing revenue is top of mind for everyone.

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.