Sports Business

Sports Business '15 to Watch': NFL international series – one down, two to go

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Sports Business '15 to Watch': NFL international series – one down, two to go

1. MLB playoffs finally here. The Elite Eight: the 97-win Chicago Cubs, New York Mets and New York Yankees, juggernaut Los Angeles Dodgers, Missouri division winners, and intense stories in Houston and Toronto. With their first division title in 22 years, the Toronto Blue Jays and their fans have taken advantage of every opportunity to celebrate and honor their memorable season. The team “unleashed a flood of new products” and merchandise sales have been off the charts ever since. A promotional tweet went out on the Blue Jays official team account at around 8:00 p.m. ET this past Wednesday evening, and by Thursday morning at 11:00 a.m. ET most of the new apparel was already sold out. In Canada, Kristen Lipscombe writes, “Blue Jays fever has infected Halifax, and local sports retailers are medicating the masses with hats, jerseys, and T-shirts.” With playoff baseball in Toronto, expect merchandise sales to continue to spike surrounding games, especially if the Blue Jays can continue their magical run late into October. With four playoff teams in the largest three markets, the compelling Missouri rivalry, the Dodgers West Coast stability, the amazing stories in Chicago, Houston, and Toronto – look for baseball viewership and interest to be off the charts.

2. Paying the student-athlete. As originally reported by USA Today Sports, but in an article found on the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the 9th U.S. Circuit Court of Appeals upheld a lower court ruling this past week that NCAA rules limiting what athletes can receive while playing sports violate antitrust laws. The three-judge appellate panel was unanimous in finding that the NCAA rules violate antitrust laws and that the association must allow schools to option of offering scholarships that cover the full cost of attending college, not the traditional elements of a scholarship – tuition, room and board, books and fees. While the appellate panel upheld the lower court ruling when it said that “the NCAA is not above the antitrust laws,” the panel also threw out a plan that would have allowed schools to provide deferred athletes compensation of as much as $5,000 per year for the use of their name, image, and likeliness. NCAA President Mark Emmert said this is a “very, very welcome decision” during a conference call after the ruling. Judge Jay Bybee commented on this case, “The difference between offering student-athletes’ education-related compensation and offering them cash sum untethered to educational expenses is not minor; it is a quantum leap.” Five years ago, it would have been unheard of to even discuss the concept of a stipend, scholarship guarantee, etc. Now, it might be each school within the Power Five conferences recruiting high school superstars “to the highest bidder!”

3. NFL international series – one down, two to go. NFL “across the pond” looking for awareness, television, fan intensity, and corporate partners. The NFL and American burger chain Five Guys have reached a deal to team up in the United Kingdom. All 32 Five Guys in the U.K. will be assigned a specific NFL team and be rebranded with the teams’ respective colors. Every restaurant will feature an NFL locker-style installation of their selected team – including helmet, game jersey, game ball, and fun facts. NFL U.K. Managing Director Alistair Kirkwood commented on the deal, “It is the biggest consumer promotion that we’ve done in the U.K. by some distance. That’s the kind of initiative we need to be building on as we try and become more mainstream. One of the best ways of doing that is to be part of people’s everyday life.” From what started as a single game in London between the New York Giants and Miami Dolphins in 2007, has now evolved into at least three NFL games per year taking place in the United Kingdom. While the NFL is not immediately contemplating a permanent franchise overseas, positive deals like Five Guys only helps bring excitement and momentum across the Atlantic. Kirkwood noted that sponsorship revenue for the three NFL International Series games in London has increased by “about 30 percent” in comparison to last year, a sizeable boost. All eyes now on the latest NFL idea: a game that is purely “streamed” on the Internet – the Yahoo partnership between Jacksonville and Buffalo on Oct. 25.

4. Golf 2015 season reaches the final stop: the Presidents Cup in Korea. The 2015 PGA Tour season is about to end, but that doesn't mean the game's brightest stars are resting on their putters. Take Phil Mickelson, for example. The 42-time PGA Tour winner, represented by Lagardere Sports, spends much of his offseason time growing Phil Mickelson Design (PMD), his golf course design firm. Over the next few weeks, Mickelson will focus his attention on the Presidents Cup in South Korea, where he’s playing as a Captain’s Pick, and on the WGC HSBC Champions in Shanghai – where he'll no doubt pay a visit to the Agile Mickelson Shanghai International Club, one of PMD’s most lauded course designs to date. Still another highly-anticipated championship course design project is underway in Calgary. Mickelson is currently working on his first Canadian golf course, and he is going all out on it. The Mickelson National Golf Club, set to open in 2017 near Calgary, Alberta, could ultimately play nearly 8,000 yards from the tips. Mickelson said the course is designed with both the everyday golfer and Tour professional in mind. With construction beginning this fall, Mickelson National is hoping to eventually host a Canadian Open and other Tour events. While it might take at least two or three years after opening to get to this level – tweaking and adjusting the course will take time – the future is looking bright for PMD's latest design project.

5. Under Armour marketing juggernaut. As LU client Mickelson designs in Canada, LU client Jordan Spieth continues to be part of the significant Under Armour expansion. Under Armour shows no sign of slowing down its expansion into college athletics, as it just signed an extension with Auburn University in what will be the third-largest apparel deal in the country. The nine-year deal, which will run through June 2025, is worth $78.1 million, making it an average if $8.68 million per year. The deal includes a base compensation of $22.5 million, a product and apparel total worth $40.5 million over the duration of the deal, and Auburn will be provided $10 million in company stock, $4.5 million in royalties, and $675,000 in marketing. While Notre Dame leads the way nationally at its $9 million per year deal with Under Armour, the sportswear company is expected to make a bold pitch to the University of Texas to bring the Nike school under its wing. Under Armour now has deals with 13 schools across the country, but is clearly trying to expand by signing lucrative deals with major athletic departments. Also, the “Spieth impact” cannot be underestimated. After last year’s Tour Championship, Under Armour stock was hovering around $69/share. Last week, one share of Under Armour stock sold for over $96/share, a 52-week change of over 41 percent.

6. NBA preseason begins; key marketing plans in Charlotte, Detroit, and elsewhere. The Charlotte Hornets are gearing up for the 2015-2016 NBA season with their new “Enter The Swarm” ad campaign, putting a focus on their in-arena atmosphere. With the Hornets setting records in nearly every conceivable business metric last season – their first since switching from the Bobcats – the team is trying to sustain and build on that positive momentum and success. While plans are still being finalized for the campaign, Hornets Executive VP and Chief Sales & Marketing Officer Pete Guelli said, “We wanted not just simply a forward-facing campaign, but something the fans could be a part of…something that will be a part of every price of our game presentation.” Meanwhile in Detroit, the Pistons undertook a $3 million renovation of The Palace of Auburn Hills’ east side this offseason, marking the first upgrade the East Terrace has seen since opening in 1988. Three new dining concepts, a 30-foot-long bar, and other new dining options highlight the new project. While these additions are exciting, they are just just a small step toward a $40 million facelift The Palace is receiving – all privately financed by owner Tom Gores. A three-year project, worth $6 million, to install 20,000-plus new black leather seats in the bowl is the highlight of this massive undertaking. NBA teams are dusting off their “marketing playbooks” in anticipation of maximizing season ticket, suite, and sponsorship revenue three weeks before the beginning of the 2015-16 season.

7. NASCAR Chase for the Championship – quest for superstar continuity. Within the span of nine months, two of NASCAR’s all-time greats have announced their pending retirements. Jeff Gordon announced his retirement in January, and now Tony Stewart recently made it clear that he will do the same after the conclusion of the 2016 season. Gordon has won 92 races in his 24-year career, dating back to 1992, and Stewart has accumulated 48 wins in his 17-year career which began in 1999. With the departure of Gordon and Stewart, NASCAR has a spot to fill, as two of its biggest poster-boys of the past two decades will no longer be on the track come race day. This news is certainly devastating for NASCAR fans and the sport itself, seeing two legends walking away simultaneously, but it is also setting up what is bound to be a Hollywood finish in this year’s Chase for the Sprint Cup. The final two months of racing this season could provide a massive spike in viewership, social media attention, and attendance.

8. Successful tennis season coming to an end – especially for Serena. This past week, Serena Williams announced she “will not play any more tournaments this season.” With that, she will miss next week’s China Open in Beijing and the WTA Finals in Singapore. Williams – a player seen as one of the top two driving forces of revenue in women’s tennis – cited that she “has been hurt much of the year” when asked why she is shutting it down. The announcement of Williams’ absence has sent ripples across the tennis world and is expected to impact WTA major Asian events over the next few weeks. The China Open is “one of just four premier mandatory events on the circuit, and the WTA Finals is the tour’s most important event, in both financial and competitive terms.” Asia has been a focal point of the WTA’s growth strategy in recent years, and Williams could compensate for her withdrawal by doing promotional work for the WTA Tour. Given the amount of excitement both she and Novak Djokovic have brought to the tour this year, they should be applauded as they look back on an incredible 2015 business season.

9. More speculation about the NFL in Los Angeles. After months of debate, negotiating, and maneuvering, some have recently speculated that the “most efficient solution” for the league would be to have the St. Louis Rams and the San Diego Chargers both play at Rams Owner Stan Kroenke’s Inglewood stadium site. While that idea seams plausible to the league, it may not be a realistic goal for Chargers Chair Dean Spanos. In 2013, Spanos approached Kroenke about pairing up on the site and purchasing the land together. Spanos “didn’t hear back from Kroenke for weeks” and “later learned that Kroenke had excluded Spanos from purchasing the land himself.” With that backstory in mind, it seems that pairing the two franchises together in L.A. would be a forced marriage, as neither owner openly wants to partner with the other. The situation gets a little complicated here, though, as it is widely believed that Kroenke lacks the 24 necessary votes from the 32 league owners to relocate, but the Rams believe they have enough votes to block the Chargers and Raiders from gaining approval for their Carson stadium site. After one quarter of the NFL season, the speculation continues. All of the San Diego, Oakland, St. Louis jockeying is interesting copy – but it totally depends on the specifics of the respective stadium processes in all three locations. Watch the NFL deal with this in one integrated package before Super Bowl 50.

10. A new intense sponsor-partner in the private aviation space. Wheels Up continues to make moves and spread their wings. The two-year-old private aviation startup has decided to enter motorsports with their recent sponsorship of young star Joey Logano. The 25-year-old NASCAR driver and Wheels Up have reached a one-year pact, with an option to extend multiple years, that will be formally rolled out this coming week. Wheels Up is coming off a very successful year – one in which they sponsored Triple Crown winner American Pharoah – and are looking to add more two-legged talent to their already-impressive roster of brand ambassadors. As of now, the startup has deals with Serena Williams, Erin Andrews, Rickie Fowler, J.J. Watt, and Russell Wilson. Wheels Up CEO Kenny Dichter said the brand zeroed in on Logano because he is a young yet successful driver, and the brand is trying to reach a young demographic, albeit a highly targeted one. Eventually, Dichter noted, Wheels Up hopes to have 20-25 NASCAR drivers as customers. As with fantasy and other “competitive categories,” look for the private aviation competition to be good for the entire industry: athlete endorsements, league relationships, and team sponsorships!

11. Potential FIFA fallout: major corporate sponsors (Coca-Cola, McDonald’s, and otherwise). Global fast-food giant McDonald’s is set to introduce a much more aggressive vetting process before signing multi-million-pound sponsorship deals of the World Cup and other global sporting events to protect itself from becoming entangled in a repeat of the ongoing FIFA scandal. The food chain will now insist that its future sponsorship deals of events such as the Olympics and World Cup will include a series of clauses so it is able to terminate agreements in light of a scandal. John Lewicki, a senior executive for the company, said, “We are a FIFA World Cup sponsor and there are some issues with FIFA right at the moment. And that directly affects us and all the other sponsors who are involved with FIFA.” McDonald’s is currently signed on as a sponsor of the 2022 World Cup in Qatar – an event that has already caught bad publicity because of potential bribery, human slavery to build non-existent cities in preparation for the games, and the excruciating heat that has claimed the lives of workers. It is unclear if other sponsors will follow McDonald’s lead here, but stay tuned to see if McDonald's drops their sponsorship of the tournament as a whole.

12. The quest for new NBA revenue: apron floor sponsorships. The Boston Celtics have ended their holdout, now joining about half of the league’s 30 teams with apron floor deals. The Celtics have signed a deal with Putnam Investments to put the company’s name on their legendary parquet floor in front of both team benches. Putnam is a new sponsor of the team. Financial terms for the sponsorship have yet to be announced, but floor apron deals are among the most valuable areas of inventory for NBA teams and typically command seven figures. The deal will also include in-arena branding for Putnam, including entitlement of the courtside Putnam Club, basket stanchion, and broadcast and digital advertising. Apron advertisements have come a long way since being introduced to the league in 2013 during a test run when the Indiana Pacers sold court space to the Indiana Economic Development Corporation and the Toronto Raptors signed a deal worth over $1 million to print a company’s name on their hardwood.

13. Women’s sports – WNBA. 2015 has been a tough year for the WNBA, and the league is currently stuck at a crossroads. This past weekend, the WNBA Finals kicked off with a rematch of the 2012 title bout, pitting Stephanie White and her Indiana Fever against Cherl Reeve and the Minnesota Lynx. While excitement and buzz surround the championship round, this past season saw a record-low attendance marker set in the league’s 19th season. The league average was 7,318 fans per game during the regular season this past year, down three percent from last season and below the previous low of 7,457 in 2012. WNBA President Laurel Richie did not seem phased by this statistic, stating, “Our biggest opportunity is to continue to grow our fan base…We are 19 years young, and on the journey we focus a lot of our time and effort on building a genuine and sustainable fan base to set the stage for the next 20 years.” On a positive note, the WNBA had 33 sellouts this past season – 25 more than last season, and the Phoenix Mercury led all teams with an average of 9,946 fans per game and a league-high nine sellouts. Marketers remain interested in the WNBA demographic and the ongoing relationship with NBA arenas and corporate partners.

14. NFL stadium modernization/renegotiation – the Tampa saga. After what seemed like a lock in early September, things took an unexpected turn in the Tampa Bay Buccaneers deal to renovate Raymond James Stadium. The proposed deal – one in which the Bucs have proposed to pay as much as $75 million toward a $100 million makeover – may not go through, as Hillsborough County and Tampa Sports Authority officials are “balking at some of the stipulations.” The Bucs want to play an additional “home” game in another city, which has become a major sticking point because county officials fear it could be used as leverage in future stadium negotiations. Enhancements would include new, massive HD scoreboards, a new surround sound system, a video board control room, and other items. Some of these improvements are required as part of the agreement to host the College Football Playoff Championship in 2017, and a major renovation would greatly help the team in their bid for either the 2019 or 2020 Super Bowl. Look for many other NFL and MLB stadiums to undergo similar discussions to extend their public/private partnerships: modernization, contiguous property development, new technology, public marketing support, etc.

15. NFL television juggernaut intensifies. Although the NFL season is still young, viewership ratings for the primetime Thursday Night Football (TNF) game have been impressively high so far. Through three games in the 2015 season, TNF is averaging a 13.2 rating on CBS/NFL Network, up 19 percent over this period last year. This past Thursday, CBS and NFL Network combined for a 13.0 overnight rating for the Ravens’ dramatic 23-20 OT win against their conference rival, Pittsburgh Steelers. That number is up 16 percent from the 11.2 rating the Giants-Redskins game posted during Week 4 last season. The game peaked at a 14.7 rating between 11:30-11:45 p.m. ET and won the night in primetime. These ratings look to be a great start for the NFL and are poised to only get higher as the season continues and divisional rivalries intensify. The Thursday night window, an early Sunday morning international window, exclusive Internet opportunities, etc. – all attempts for the NFL to create value for their current partners (and potential new ones).

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.