Sports Business

Sports Business '15 to Watch': Cardinals under investigation


Sports Business '15 to Watch': Cardinals under investigation

1. As originally reported by The New York Times, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, the FBI is investigating the St. Louis Cardinals for allegedly hacking into the Houston Astros’ computers, compromising internal discussions about trades, proprietary stats and scouting reports. The attack represents the first known case of a professional sports team hacking the network of another. Major League Baseball franchises are worth a record $36 billion collectively as team values hit a record $1.2 billion average. Entrepreneurial and creative, Rob Manfred cannot afford to lose momentum — a rapid, transparent and comprehensive investigation is absolutely necessary.

2. U.S. Bank has signed on to be the naming rights partner of the Minnesota Vikings’ new $1.1 billion stadium that will open in July 2016. The deal for what will be called U.S. Bank Stadium is worth $220 million over 25 years, around the same amount as what Levi’s paid for rights to the 49ers’ stadium. On the other hand, the Philadelphia 76ers have decided to stop referring to the Wells Fargo Center by name in all news releases and on its website because the bank is not a sponsor of the team. Comcast Spectacor owns the arena, and no funds from the naming-rights deal flow to the 76ers. Corporate naming and sponsor partners continue to thrive, as long as the specific benefits are unique, deliverable and highly visible.

3. Corporations are becoming more involved in television and vertically integrated advertising than ever before, according to PwC’s annual global entertainment and media outlook. U.S. advertising revenue is forecast to rise at 3.5 percent, increasing from $193.8 billion last year to $230 billion in 2019. Internet and video game advertising, both forecast to grow at 11.1 percent, continue to dominate the growth landscape. Mobile Internet advertising will likely surge at a 25.6-percent increase. The key takeaway is that large agencies should be positioned to maximize corporate revenue for all vertically integrated platforms in the years ahead. Lagardere Unlimited's acquisition of Akzio Ajoint Group shines the spotlight on the need to expand all types of services for corporations, events and leagues on a worldwide basis.

4. As originally reported by The Sacramento Bee, but in an article found and accessed from the Sportsmanias app, the site that provides fans with real-time information on their favorite teams, Sacramento-based Golden 1, one of the nation’s largest credit unions, signed a 20-year, $120 million deal for the naming rights to the Kings’ new $477 million downtown arena. At an average annual value of $6 million, the deal is one of the largest naming-rights deals for a single-tenant NBA arena. Another example of a naming deal that fits: local and unique. It also validates the strength of the NBA, new Sacramento Kings ownership and the market.

5. International media growth continues at a rapid rate. Global television and video revenues covering 64 countries will reach $51 billion in 2020, a massive increase from the $4.2 billion recorded in 2010 and the $26 billion expected in 2015. While the U.S. will remain the dominant territory, China’s television video revenues will rocket from $40 million in 2010 to $281 million in 2020. Growth of international television revenues signals growth in the television distribution and service industry. Significant expansion into North America by Globecast and the growth of television and technology distribution and service companies attempts to take advantage of this monumental international growth.

6. San Francisco 49ers CEO Jed York anticipates at least one NFL team relocating to Los Angeles in advance of the 2016 season. York indicated that the Inglewood site being championed by St. Louis Rams owner Stan Kroenke is further ahead than competing stadium proposals. Stadium proponents in Oakland, San Diego and St. Louis are rapidly striving to finish their “incumbent deals,” while Inglewood and Carson remain significant leverage points as the NFL attempts to stabilize all of their markets by Super Bowl 50.

7. An "Outside the Lines" investigation found that college athletes accused of crimes are likely to avoid criminal charges and prosecution at a rate that far exceeds that of non-athletes. Among the factors contributing to the discrepancy are access to high-profile attorneys, intimidation of witnesses and athletic department officials inserting themselves into the investigation. No surprise that celebrities seem to be treated differently in all facets of life. The real substance arises in specifics of league domestic-abuse policies, college athletic suspension and punishment procedures, and other objective indications that seek to “level the playing field.”

8. Since Charter cable systems have begun carrying SportsNet LA, ratings and viewership for Dodgers games have more than doubled compared with this season’s average. Charter promised to carry the channel in its 300,000 Southern California homes after agreeing to purchase Time Warner for $55 billion. Obvious validation of the significant demand for Dodger viewership as the entities in question strive to increase visibility and exposure as rapidly as possible.

9. A new TV rights contract with ESPN helped the ACC increase its revenue to $302 million in 2013-14, up 30 percent compared to the previous school year. In addition to TV revenue being up 35 percent, the conference experienced 33-percent growth in bowl-game revenue and an 11-percent increase in revenue from the ACC men's basketball tournament. Another example that television revenues continue to dominate conference coffers: Duke’s national basketball championship should continue to help the conference generate even more revenues in the future.

10. The USOC has published new guidelines allowing athletes to endorse non-Olympic sponsors during the 2016 Rio Games. According to the new rule, athletes and their sponsors are permitted to continue “in-market, generic” advertising campaigns so long as the USOC grants a waiver. The U.S. men’s and women’s rugby teams have qualified for the 2016 Rio Games, which will be the first time in 92 years that the sport is played at the Olympics. While NBC’s programming decisions will not be made until early next year, the U.S.’s participation makes it likely that rugby will be prominently featured. The Summer Olympics are less than one year away in Rio. Individual sports are thriving, and individual athletes are seeking to line up their sponsorships for Rio and beyond.

11. The NBA Draft should continue to generate significant interest this week. The NBA and the NBPA in August plan on beginning negotiations for a new labor deal, two years before the union’s opt-out clause in its current agreement will be exercised. Among the most critical subjects for discussion is a range of revenue-sharing issues. The average NBA team is now worth $1.1 billion, a 74-percent increase over last year. Eleven NBA teams are worth at least $1 billion, and the average NBA team had an operating profit of $23.1 million. Total league-wide revenue hit $4.8 billion, or $160 million per team. There is much at stake to keep union and management working hard to finish a deal.

12. The Los Angeles Angels have discussed adjusting the dimensions of Angel Stadium to benefit right-handed stars Mike Trout and Albert Pujols. Angels officials have not yet sent a request to MLB about adjusting the dimensions, and any change might not come until the team’s outstanding stadium lease issue is resolved. Teams have historically adjusted ballpark dimensions to fit their particular rosters. In this case, the bigger issue is the public/private stadium negotiations with Orange County, the city of Anaheim and the state of California.

13. The New Jersey Institute of Technology, college basketball’s last independent D-I program, is joining the Atlantic Sun Conference. The program has been at the D-I level since 2006-07 and was part of the Great West Conference until the league dissolved in 2013. NJIT replaces Northern Kentucky, which is jumping to the Horizon League. All D-I programs see the benefit of conference affiliations. Kudos to the New Jersey Institute of Technology for creating great stories last year vs. Michigan and otherwise.

14. Boston mayor Marty Walsh said he would not sign any document that makes the city responsible for Olympic cost overruns. If Boston refuses to accept unlimited financial responsibility for the 2024 Summer Olympics, it would significantly decrease the city’s chances of hosting the Games. Boston 2024 public/private partnership plans are significantly creative to allow for substantial corporate involvement, university commitments and other opportunities to generate support. Ultimately, the civic, political and business leadership should see a unique benefit to hosting the Games that should outweigh short-term skepticism on this issue. Time might be running out.

15. The NFL’s gambling policies are being called into question after the league shut down a fantasy football convention that was to be held at a Las Vegas casino. Though NFL rules prevent players from associating with casinos and gambling, there are few limitations preventing teams from doing so. There is a blurred distinction between fantasy and gambling as stadium signage, fantasy and gambling commercials and team sponsorships all are now permissible. Holding fantasy events in casinos might have gone too far and lead to rethinking.

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.