Sports Business

Sports Business '15 to Watch': NASCAR heads to Homestead


Sports Business '15 to Watch': NASCAR heads to Homestead

1. NASCAR leaves the Valley (of the Sun) and heads to Homestead. Enthusiasm for motorsports reaches unparalleled excitement in Arizona this week, as NASCAR completed the Quicken Loans Race for Heroes 500 at Phoenix International Raceway, and the Verizon Indycar circuit announced its return to the region in 2016. NASCAR drivers are battling to be among the four who will be title contenders at next weekend’s season finale at Homestead Miami Speedway. With that in mind, NASCAR fans have even more reason to tune in to the race that marks the last mega event in Arizona before University of Phoenix Stadium hosts college football’s national championship game less than two months from now. And the return of IndyCar on April 2 will feature a racing product that has experienced 38 percent growth in TV ratings and viewership over the past two years. The 2016 Verizon IndyCar Series season is poised to capitalize on that momentum, as the Valley, Phoenix, and Avondale will reap the economic impact of three signature races.

2. The NFL has now closed the book on another successful “season abroad,” as its three international games played in London delivered solid ratings and attendance. The NFL’s international activation has been so successful that the league is looking to add additional games in England, Germany, Mexico, and potentially, South America. Closer to home, the NFL’s Los Angeles expansion decision may be prolonged. While NFL watchers were hopeful of a vote around the New Year, the NFL could wait until March, or possibly April, to decide which teams – if any – are allowed to relocate to Southern California. The three franchises hoping to relocate – Oakland, St. Louis, and San Diego – each presented their merits to owners gathered in New York this week. The league has set a special meeting in Dallas on Dec. 2 at which substantial steps could come, including moving up from January the relocation application deadline. Within the next five years, look for the NFL to be firmly entrenched in Los Angeles with one or two franchises, and implementing a solid business plan across the pond.

3. Spieth at the top. The Official World Golf Rankings have churned at the top over the last few months, and this week they took another turn. Lagardere Sports and Entertainment (LSE) client Jordan Spieth has reclaimed the World No. 1 rank, supplanting Jason Day for the second time. Spieth first reached the top of the mountain back in August, only to be overtaken by Day and Rory McIlroy in the ensuing months. While Spieth has been on the rise as of late, another LSE client, Phil Mickelson, finds himself a little lower in the rankings than he has become accustomed to – dropping from 25th to 27th. Although Mickelson has dropped out of the top 25 for the first time since 1995, he's confident that his game will rebound after adjusting his team – most notably, letting go of longtime swing coach Butch Harmon. And one record book fact is certain: Mickelson’s record of 270 weeks at No. 2 will never be broken.

4. Solid Nissan/college partnership. As college football nears its peak and basketball season gets underway, Nissan has announced the most comprehensive marketing deal in college sports to date. The four-year agreement, comprising distinct agreements with IMG College, Learfield Sports, Outfront Media Sports, Fox Collegiate Sports Properties, JMI Sports, and Sun Devil Athletics, will make Nissan an official sponsor of 100 colleges across the country. Nissan will become the official car at 64 of the 65 schools in the “Power Five” conferences – the ACC, Big 10, Pac-12, SEC, and Big 12. The Japanese automotive manufacturer is set to spend $100,000-$400,000 per school, spread over multiple years. All told, the deal is likely to be worth around $25 million in total rights fees, before activation costs are taken into account. Among the “Nissan College 100,” notable schools include the University of Alabama, Duke, UCLA, University of Kansas, UNC, Harvard, and Stanford.

5. More revenue across the pond. Pending Australia’s Channel Nine surrendering their right to broadcast Saturday night National Rugby League (NRL) matches in exchange for a payment of $28 million per year from Fox Sports, a $1.3 billion NRL TV deal between the league and Fox Sports is likely to be signed from 2018-2022, according to the Sydney Morning Herald. Fox Sports Super Saturday coverage "is critical to the News Corporation owned network, allowing it to sell the same number of games to subscribers as it does under the existing deal, which still has two years to run." The $658 million five-year deal Nine negotiated with the NRL in August meant that four games per week would be seen on free-to-air TV, a potential tipping point for subscribers to consider a sporting life without Foxtel. Fox Sports offered $92 million a year for these four games, but NRL passed. Another example of substantial increases in rights fees, distribution, and revenue – companies like Globecast will continue to provide more efficient and entrepreneurial means of transmission and distribution – further boosting the rights.

6. Daily fantasy has been the hottest topic in sports these past few months, with hundreds of millions of dollars being pumped into media and advertising, and federal investigations ensuing. This past week, DFS world took another turn for the worse when New York Attorney General Eric Schneiderman issued a cease-and-desist order against the companies allowing paid participation from residents in the state. This decision will have a significant impact on DFS companies – FanDuel, for example, has more than 600,000 players in New York, representing about 10 percent of its entire customer base. FanDuel and DraftKings executives will meet with Schneiderman’s office this week to seek a reversal. FanDuel will pursue its own strategy as opposed to coordinating one with DraftKings, which has hired sports attorney extraordinaire David Boies, veteran of multiple NFL and NBA collective bargaining battles, to mount its own legal challenge to Schneiderman. Look for ongoing litigation, negotiation, and hearings on appropriate “taxation” – the industry is too entrenched.

7. The PGA Tour just signed a lucrative title sponsorship agreement – the lengthiest in the Tour’s portfolio. The deal between the PGA Tour and Sanderson Farms, the Mississippi-based poultry producer, extends Sanderson’s tournament title sponsorship for the next ten years. The third biggest poultry concern in the U.S., Sanderson Farms processes over nine million chickens a week. It will continue to back the Sanderson Farms Championship in Jackson, Mississippi until at least 2026, in a deal believed to be worth around $3 million a year. The event has had four title sponsors in the last ten years, with Sanderson Farms initially getting involved via a one-year deal in 2013. PGA Tour continues to generate new revenue through novel and creative sponsorship arrangements.

8. Worldwide stadium and arena security alert. In wake of the tragic acts of terrorism that took place outside an international soccer match and all around Paris on Friday, the NFL upped security at all games on Sunday, and going forward. While all NFL security procedures have been certified by the Department of Homeland Security since 2008 as effective anti-terrorism steps, increased security at games is meant to further ensure the safety of fans and players alike. “Following the events in Paris on Friday,” read an NFL statement, “we are closely monitoring events and have been in communication with the Department of Homeland Security and the FBI, which have informed us that there are no known threats against an NFL stadium. In addition to our standard procedures…there will be an increased security and law enforcement presence both inside and outside stadiums….” Sophisticated intelligence network between security forces and facility operators are more important than ever.

9. Taking stock in pro sports franchises. In a rare occurrence, a professional sports franchise will soon become publicly tradable on the NASDAQ. Liberty Media, owners of the Atlanta Braves, said that it will “create a tracking stock that will provide a way to invest in the Braves’ financial performance separate from the rest of the conglomerate.” The tracking stock, designated “Liberty Braves Group,” will include the club’s interest in the new SunTrust Park and adjacent mixed-use development in Cobb County. The teams’ new stock is expected to begin trading on the NASDAQ exchange in the first half of 2016, making the Braves one of the few professional sports franchises with publicly listed shares. The New York Knicks, New York Rangers, and Manchester United are among the current few publicly traded sports franchises; the Boston Celtics, Cleveland Indians, and Florida Panthers have offered a public stock in the past.

10. Color controversy on the field. The NFL and Nike have had a bright relationship ever since the sportswear company took over as the league’s official outfitter a few years back. But the pair hit a bump in the road when they debuted their new “Color Rush” apparel during Thursday night’s Bills-Jets game. The jerseys - solid red for the Bills and green for the Jets - created the unintended consequence of some colorblind viewers being unable to distinguish between the teams. Red-green colorblindness is the most common form of the affliction. The “Color Rush” campaign – which substitutes two primary colors for the traditional dark and light home and away – is set to cover three more Thursday Night Football games this season. As retailers experiment with creative designs and material, some hits and misses should be expected.

11. Selling a stake in the Timberwolves? After winning the NBA Draft Lottery this year, Minnesota Timberwolves Owner Glen Taylor is reportedly engaged in serious talks to sell a 20 percent stake in the franchise to a group led by Memphis Grizzlies Co-Executive Chair Steve Kaplan. Many believe that a large motivation for Kaplan and his group to buy the minority stake is to better position themselves to buy the majority share once Taylor decides to sell it. While Taylor says that he does not intend on selling his majority interest anytime soon, sources say that Kaplan is partnering with former Grizzlies CEO Jason Levien, DC United and Inter Milan Owner Erick Thohir, and Indonesian coal magnate Nandy Soetedjo to make a future push at buying the franchise. There is no assurance that Kaplan’s group would have an inside track on eventual majority ownership, despite these efforts.

12. Boosting the 2024 Los Angeles bid. In an effort to further develop their bid with the hopes of landing the 2024 Olympic Games, L.A. 2024 has named Goldman Sachs senior partner Gene Sykes as its CEO. The veteran investment banker will be in charge of the day-to-day operations, stepping down from his leadership positions at the firm and electing not to participate in Goldman’s daily activities while involved with the bid. Los Angeles Mayor Eric Garcetti talked about appointing Sykes to the bid. “Gene has built a distinguished career advising the world’s greatest companies and nonprofit organizations,” Garcetti said, “and I’m confident he is the ideal executive to be trusted with the day-to-day responsibility of our city’s bid.” LA approaching the bid process with intelligence, entrepreneurialism, and passion – needed against keen competition from Europe and otherwise.

13. Happy Anniversary, Warriors ownership group. This past weekend marked the fifth anniversary of the Golden State Warriors’ ownership exchange, and Co-Owner and CEO Joe Lacob is seen as the “driving force” behind the franchise’s rapid rise to success, according to the Oakland Tribune. Lacob’s “passion and lofty standards have fueled the change from laughingstock to champions for the first time in 40 years.” His highly-anticipated move to San Francisco is the next major step for the franchise. While the decision to move out of Oakland comes with scrutiny, Lacob made it clear that he is not anti-Oakland, just that the city cannot support all three sports franchises. The Warriors are off to a sizzling start with the NBA’s best record, and Lacob intends to maintain that.

14. NHL Hurricanes staying put. Despite continued efforts by Carolina Hurricanes owner Peter Karmanos Jr. to sell his majority share of the team, NHL Commissioner Gary Bettman is not worried about the franchise leaving Raleigh anytime soon. The Hurricanes have seen a recent decline in revenue and attendance, ranking last in the NHL so far this year, but Bettman said he does not think “anyone needs to worry about the future” of the club in North Carolina. Even though Bettman remains confident, many speculate that if Las Vegas or Quebec City are not given expansion teams, one of the ownership groups could look to buy and relocate a current NHL franchise – potentially, the Hurricanes. Gary Bettman has been a longtime fan of market stability, giving regions every chance to survive and thrive. This is no different.

15. Uncle Drew is back. Pepsi’s Uncle Drew campaign started years ago with a YouTube video, and has since exploded into a viral internet sensation. The character, played by Cleveland Cavaliers guard Kyrie Irving, returned for Chapter 4 of Pepsi’s popular marketing campaign. This time, Uncle Drew squared off against arch-nemesis Walt, played by former NBA sharpshooter Ray Allen. All throughout the video, fans and Uncle Drew alike can be seen drinking and promoting Pepsi products, a brilliant move by the beverage company. Nike has reportedly produced 150 “Uncle Drew” boxes featuring a special Uncle Drew version of Kyrie's signature shoe that he wears in the film, a sweatshirt with a new Uncle Drew logo, and a bobble head. Another example of companies emphasizing the unexpected and creative in their advertising over time.

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.