Sports Business

Sports Business '15 to Watch': NFL Draft in Chicago a success

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Sports Business '15 to Watch': NFL Draft in Chicago a success

1. The NFL has opted to transition away from its tax-exempt status, which NFL Commissioner Roger Goodell called a distraction to the league. Goodell said the move would not change the function or operation of the league office, but the Commissioner will no longer have to publicly disclose his salary. Most of the profit from league-related operations are taken through the individual teams anyway, and their owners are taxed for those profits. As a practical matter, the tax exempt status caused significant confusion and perception issues, and obviously NFL is concerned about perception on this issue.

2. GoDaddy announced it is leaving NASCAR at the end of the 2015 season and will not renew its primary sponsorship of driver Danica Patrick’s No. 10 Chevy car with Stewart-Haas Racing. GoDaddy has sponsored Patrick since the 2007 IndyCar season, and the company remained her primary sponsor as she transitioned into NASCAR. Patrick’s steady but victory-less performance, coupled with GoDaddy’s desire to explore other global initiatives, led to this change. Truthfully, the relationship benefited both parties significantly as they emerged into their respective roles.  Good example of corporate/athlete partnerships working well.

3. NFL Draft in Chicago was an astounding success on a number of levels — over $100 million of economic impact, nearly 100,000 folks assembled in Grant Park every day. Sports and entertainment agency Lagardere Unlimited had a strong showing in the NFL Draft. The Oakland Raiders with the 4th overall pick selected wide receiver Amari Cooper out of Alabama. Cooper was a 2014 Heisman trophy finalist and a consensus All-American. Another Lagardere client, cornerback Kevin Johnson, went 16th overall to the Houston Texans, and defensive end Arik Armstead of Oregon was chosen 17th overall by the San Francisco 49ers. Most importantly, the NFL has a new “mega-event” to move around to cities with significant support from ownership.

4. The Baltimore Orioles took a financial hit in having to move its weekend series against the Tampa Bay Rays to Tropicana Field. As a result of the Freddie Gray riots in downtown Baltimore, the Orioles will lose revenue from three home games as well as incur additional travel expenses. While Mayor Rawlings Blake is to be commended for her constant vigilance during the turbulence, the “spectator-less” game at Camden Yards and the “home series” in Tampa causes significant revenue issues for the Orioles.

5. An amazing Spring for Sin City. Over $300 million of economic impact from Pacquiao-Mayweather; NHL looking at possible 2016-2017 expansion at $500 million entry fee; and gambling makes more revenue than ever. A record $263 million was gambled in Las Vegas during the NCAA men’s basketball tournament. In total, $375 million was gambled in March on professional and college basketball games, up from the previous record of $344 million last year. As March Madness continues to become more accessible on all mobile platforms, look for more interest, more revenue, and more gambled dollars.

6. As originally reported by The Oklahoman, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, Oklahoma City Thunder signed former Florida Gators head coach Billy Donovan to a five-year, $30 million deal. The contract makes Donovan one of the highest-paid coaches in the NBA, trailing only Clippers coach Doc Rivers at $10 million a year and Pistons coach Stan Van Gundy at $7 million annually. College and pro coaches should be viewed as COO’s of mid-sized corporations. From that perspective, a $6 million annual salary is understandable for a $100-plus million operation.

7. Whether in sports, business, or politics, mega-international events require similar solutions. Globecast is fully committed in assisting UK and overseas broadcasters for the upcoming UK General Elections. More than 70 SNG trucks have been booked on behalf of all major news agencies in the UK. Coverage will include both the extensive build up, as well as Election Day and night itself, running from Thursday, May 7th, all the way through to Friday, May 8th. As television, Internet, and social media converge, a “one stop shop” approach is an absolute necessity to adequately service major mega-events. 

8. Not a great year for defending NHL and NBA champions. Los Angeles Kings failed to make the playoffs and the San Antonio Spurs were ousted in the first round by the Los Angeles Clippers. Heading into NHL conference semifinals and finals, franchise values continue to rise and television ratings continue to improve. NBA franchise values continue to increase by virtue of the $750-$800 million value set by the Atlanta Hawks sale. Steve Balmer’s $2 billion investment may be paying off emotionally, given his excitement on the sidelines after the Clippers victory over the Spurs.

9. The task force working on a new St. Louis football stadium expressed confidence that they will have a plan in place for NFL approval this fall. The group is hoping to get $400 million in public money, plus $450 million from the team and league and $150 million from PSL sales. NFL deferral of the voting on franchise relocation at their May meeting is based on the desire to give St. Louis, Carson, San Diego, Oakland, Inglewood, City of Industry, and other projects an opportunity to be finalized (or not) by late Fall. Look for the three-team “musical chairs” to be resolved by the end of the NFL season.

10. MLB’s new pace-of-play initiatives have been so effective that the league and players’ union will not implement a series of fines that were to go into effect last week. Average games this season are being completed nearly 8 1/2 minutes quicker than last year. Part of it is cold weather, part of it is good pitching, and part of it is Commissioner Manfred’s edict to quicken the games. While more subtle than other edicts, this may have a more profound consequence for years to come.

11. Big 12 Commissioner Bob Bowlsby acknowledged that his conference is at disadvantage in being selected for the CFP by not having a conference championship football game. Bowlsby recently spoke with CFP officials about the significance of the extra game in their deliberations. Whether adding additional teams, committing to a conference championship, or a combination, the Big 12 will adapt its business and economics to the momentum created by the other Power Five conferences.

12. NASCAR is in advanced talks with daily fantasy sports operator Draft Kings about the possibility of launching a new game. A deal with Draft Kings would add to NASCAR’s existing user base of about 250,000 for its traditional fantasy game, which is available on NASCAR.com. What an evolution: from fantasy being perceived as a lower form of gambling, to regular fantasy being accepted by each league, to “daily fantasy” emerging as a large revenue source — now nearly all teams and leagues have some form of relationship with one of the major “daily fantasy” providers.

13. Allstate’s Esurance brand has signed on as MLB’s new auto insurance partner.  The online insurance company will title sponsor fan balloting for July’s All-Star Game in Cincinnati, whose balloting this season is being conducted entirely online for the first time.  Financial terms of the deal were not disclosed.  Baseball’s stability and progress means more sponsorship dollars for everyone, new sponsor partners committed to the game, and more activation around them.

14. An anonymous group of donors to the University of California-S.F. has come out against the Golden State Warriors’ plan to build a new arena in San Francisco’s Mission Bay.  The emergence of the opposition group comes just a month before an environmental impact report about the arena will be released.  Warriors ownership understands that an arena process does not happen overnight, notwithstanding the significant economic impact, benefits, and image enhancement for the region.  Hopefully the Warriors on-course performance will hasten this process.

15. The golf industry moves to the Players Championship, ostensibly the “Fifth Major” within walking distance of the PGA Tour headquarters at Ponte Vedra. On the golf course, LU clients led by world No. 2 Jordan Spieth entered in the World Golf Championship-Cadillac Match Play Championship in San Francisco. Also in the tournament based on their world rankings were Chris Kirk (25), Keegan Bradley (33), and Brandt Snedeker (35). Golf business surviving and thriving without the need for “Tigerization of the Tour.” While Tiger remains a critical component of the Tour, MVP Index and other measurements demonstrate that Jordan Spieth, Rory McIlroy, Phil Mickelson, and some of the “young guns” are clearly taking the pressure off.

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.