Sports Business

Sports Business '15 to Watch': Serena goes for the slam


Sports Business '15 to Watch': Serena goes for the slam

1. The U.S. Open gets underway in New York City.  The 2015 U.S. Open is the 135th edition of the tournament.  The U.S. Open has made a five-year agreement to increase the total prize money to about $50 million by 2017, with this year’s purse raised to about $42.3 million.  Overall attendance for the 2014 edition passed 700,000 for the seventh time in eight years.  With Serena Williams looking to capture her first single-season Grand Slam, there’s no reason to think this year’s numbers won’t top last year’s grand total of 713,642 fans.  The event will generate an estimated $700 million in economic impact for the New York market over the next two weeks.  Economists and analysts should compare the “Serena Williams effect” with a new corporate headquarters coming to town – it is that prolific.  More media, more awareness, more attendance, more corporate partnerships, more activation, and more “overall buzz” as she strives for her first Calendar Slam.

2. The college football season kicks off Thursday night. 2015 marks the second year of the CFP era in college football.  Last year’s initial playoff was a rousing success and generated tens of millions of dollars.  Recent conference realignment was driven by money, and it’s clear why.  Collectively, the Power 5 conferences generated about $1.5 billion in total revenue in fiscal 2013-14.  Last year’s CFP championship game averaged 33.4 million viewers, becoming the first show in cable TV history to top 30 million viewers.  While Northwestern football players lost their bid to unionize, their effort to reform college sports has prospered.  A majority of schools are offering cost-of-attendance scholarships, with the total across D-1 being about $160 million committed.  Auburn leads all schools with $2.1 million earmarked for these scholarships.  Year Two of college football in many ways will be more turbulent than Year One – Power Five recruiting; guaranteed scholarship money; television revenue growth.  Maybe most important, five viable conferences (plus Notre Dame) for four playoff spots.  Interesting, as always.

3. As college football begins, the NFL has one more week to prep.  The key question remains what will happen with Deflategate, as judge Richard Berman has yet to rule on Tom Brady’s suspension.  Another big story heading into the season is the growth of fantasy sports.  Cisco opined that the number of mobile connected devices surpassed the population in 2014, and the Fantasy Sports Trade Association notes that the average fantasy player spends $465 per year on fantasy.  Not surprisingly, DraftKings debuted a new ad campaign built around the daily fantasy site's NFL regular-season offerings.  As DFS increases in popularity, Sportsmanias is releasing a new feature on its app to provide personalized player alerts and feeds.  The feature is agnostic in the sense that it’s compatible with multiple fantasy platforms.  Players can import their fantasy teams from Yahoo, CBS, and ESPN to receive real-time updates from hundreds of news sources, giving players an edge over competitors when it comes to making roster moves.  The Knight Foundation and Sportsmanias recently hosted the “Digital Media Summit” focusing on revenues, ethics, and standards for the fast growing industry.

4. The FedEx Cup enters its second week – heads for the Deutsche Bank tourney in Boston.  Is it the reincarnation of the Big Three – McIlroy, Spieth, and now Jason Day.  He has won three of his last four events, earning $6 million prize money this year before the Barclays (and another $1.48 million for winning it).  It may make us “forget” Tiger Woods (though no one talks about that directly).  The FedEx Cup is a bonanza for tour players:  the four events create an opportunity for $33 million in prize money, $35 million in bonuses, and a $10 million “windfall” for the overall winner (before taxes!).  The mega-agencies shine as well – a spotlight on Lagardere Unlimited.  The company represents 42 players on the PGA Tour, including high profile stars Jordan Spieth, Phil Mickelson, and Keegan Bradley.  The firm also reps Davis Love III, who won the Wyndham Championship two weeks ago.  The $972,000 in prize money Love III pocketed was far less important to him than the 500 FedEx Cup points he earned, which allowed him to compete in this past weekend’s The Barclays.  Remember the controversy surrounding the announcement of the first FedEx Cup and playoff – tweaking will continue, but we have certainly come a long way.

5. Live streaming takes a big step for baseball.  MLB and Fox are closing in on a local streaming deal that could begin next season, according to John Ourand and Eric Fisher of SportsBusiness Journal.  Fox, which holds local media rights for 15 teams, has been in active negotiations with the league for several years over a streaming service.  As part of the agreement, MLB is requiring that Fox RSNs use MLBAM as the vendor to manage the live streams through its new stand-alone BAM Tech operation. Also in global media, Globecast has installed the Actus Platform monitoring solution in its media centers. The new implementation will enable Globecast to provide compliance and content quality monitoring to its broadcast clients, including BBC Worldwide.  International players continue to generate business success – Globecast and its new platforms; MLB and its deals with Fox, NHL, and otherwise.

6. Local media rights know no limits.  Los Angeles Clippers owner Steve Ballmer has turned down a $60 million per-year deal from FS Prime Ticket for the team’s local-TV rights.  Prime Ticket, whose deal with the Clippers runs through next season, currently pays the team a rights fee of $25 million a year and offered a 140% increase.  If Ballmer follows through on plans of launching his own over-the-top streaming network, he would be the first owner of a major US sports team to deliver games direct-to-consumer via a Web-based service.  The move shouldn’t come as a complete surprise.  The former CEO of Microsoft, Ballmer pledged to overhaul the Clippers brand when he bought the team last year.  Ballmer has pushed the envelope in many ways – Microsoft, Clippers purchase, prolific rebranding.  It may be time for him to lead the “sports rights debate” by injecting live streaming on a comprehensive basis.  Stay tuned.

7. The state of the TV industry is having a big impact on the future of Thursday Night Football.  The NFL is reluctant to agree to a Thursday Night Football contract with CBS for longer than a year, primarily because of cord cutting and the changing media landscape.  The league has signed two separate one-year deals with CBS to broadcast TNF games.  It remains unclear whether the goal is to grow the package on regular TV or to distribute Thursday night games through digital channels.  Last year, the $1.43 billion average NFL franchise value increased 23 percent over the previous year, the biggest yearly increase since 1999.  Most of it directly reflects the new television rights negotiations that have been ongoing.  This also reflects more confidence in the NFL and its ability to create new value in new categories.  If the NFL were a stock, buy it!

8. This Bud’s for you, but it’s Busch for NASCAR moving forward.  Anheuser-Busch next year will switch its lead NASCAR brand from Budweiser back to Busch.  The move comes after A-B conducted a comprehensive reassessment of its NASCAR deals, some of which were up for renewal in coming years.  The brewer holds a primary sponsorship of Stewart-Haas Racing’s No. 4 Chevy, valued at $11-13 million annually, as well as deals with several ISC tracks.  Parallel to the FedEx Cup, the Chase for the Championship begins in earnest – leading to the climax in Homestead in November.  A time for corporate activation, entrepreneurialism, and substantial exposure as NASCAR continues to stabilize.

9. Time flies when you're having fun.  The efforts implemented this season in MLB to speed up the pace of play are having significant impact, as the league’s eight-minute decline in playing time is the biggest since 1963.  The average length of a nine-inning MLB game has dropped from 3 hours 2 minutes in 2014 – the first time it had been over 3 hours – to 2:54 this year.  Continued Kudos to Commissioner Manfred.  Relatively minor changes have resulted in a more fast paced (and exciting) product.  Let’s see if the pace of play continues through the pennant race, playoffs, and World Series.

10. College football players look to capitalize on their names – in the future.  Top college football players increasingly are filing for trademarks and phrases associated with their names.  The NCAA generally restricts players from making money off their athletic success while in school, but by having legal ownership of phrases tied to their brands, players can pave the way for lucrative licensing deals in the future.  Ohio State RB Ezekiel Elliott this month applied for trademarks to use his nicknames “Zeke” and “Eze” on merchandise, while Mississippi State QB Dak Prescott applied for the trademark on his name last fall, along with “Dak Attack” and “Who Dak.”  College athletes might not be able to make money now, but there’s no reason they shouldn’t position themselves for future earnings.  As college football and basketball realign their governance and rules structures, individual athletes (and their “advisors”) position themselves for future gain.  The “Johnny football” process when Manziel was at Texas A&M is the tip of a larger “name and likeness” iceberg.

11. When the NFL season opens, one old stadium will have a brand new look and feel.  The Miami Dolphins unveiled the first phase of their $425 million renovation of Sun Life Stadium.  The first phase includes a redeveloped seating bowl and moving seats closer to the field.  Phase II, which will be completed next summer, will add HD video boards and a canopy to the stadium.  The renovation was supposed to cost the team $400 million, but the price tag has steadily increased.  Both industry thought leaders and fans should scrap the term “renovation,” and embrace the new stadium.  It will generate a number of Super Bowls, mega-events, and overwhelming economic impact throughout its “new life.”  Kudos to Steve Ross and Tom Garfinkel for phasing the process – allowing a “second opening” next August after the “canopy” is installed.

12. New sponsorship deals as college football gets underway.  Delta announced a series of college partnerships with nine schools, including Duke, Florida, and Michigan. Sports-related activation will include the Delta Celebration Grill appearing at select football tailgates, sponsorship of Midnight Madness college basketball events, and participation in alumni-organized football watch parties. The airline has existing sponsorships with six other schools.  Inevitable quest for new revenue – retail deals, naming rights sales, stadium expansion, and the like.  Now, new sponsorship/partnership opportunities with as many schools as possible – generating revenue for women’s sports, “minor sports,” and the inevitable payment of student-athletes.

13. Here’s one team you won’t see in next year’s Chase for the Sprint Cup.  Outgoing Michael Waltrip Racing owner Rob Kauffman announced that MWR would cease operations after this season.  Kauffman, who is buying a stake in Chip Ganassi Racing, said MWR couldn't have stayed afloat without his substantial and continued financial support.  Kauffman did not indicate how much he has invested into MWR to date.  A reminder that sponsorships require constant activation, attention, and evolution.  As NASCAR continues to survive and thrive, sponsorships involved in that industry must continue to evolve as well.

14. A first for an NBA team. The Charlotte Hornets’ new broadcast team will make Stephanie Ready the NBA’s first full-time female game analyst.  Ready, who also has coached in the NBA D-League in the past, has always wanted to work as an analyst.  Previously the team’s pregame host/sideline reporter, Ready was given the expanded role after signing a contract extension with FS Southeast.  Over 41 percent of sports fans are female.  An obvious recognition of the growing trend, look for women to increase their positions of visibility and leadership in broadcast, team and league administration, and coaching!

15. The next generation of sports venues will focus on sustainability.  As originally reported by the Sacramento Bee, but in an article found on the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the Kings’ new arena will be 100% solar-powered, and will use a cooling system that relies on recycled water.  The Golden 1 Center will seat 17,500 fans for Kings games and can expand even further for concerts.  The $477 million arena is scheduled to open in October 2016.  Years ago “environmental responsibility and sustainability” was viewed as the “politically correct” thing to do.  Now, as more financial incentives are available, and as more efficient means to save energy actually show up on the balance sheet, look for more and better sustainability methods in the future.

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.