Sports Business

Sports Business '15 to Watch': Gearing up for the British Open


Sports Business '15 to Watch': Gearing up for the British Open

1. Gearing up for the British Open. With his victory at the U.S. Open, golfer Jordan Spieth has all but claimed the title of most marketable player on the PGA Tour. Counting his endorsement income from sponsors such as Under Armour, AT&T, Titleist, and Rolex, Spieth can expect to take home at least $25 million per year. Spieth's agent, Jay Danzi of Lagardere Unlimited, said that Spieth has had “more than 20 new offers but will be very selective in adding partners, and then only if they fit an overall brand strategy.” Unprecedented excitement at St. Andrews two weeks from now – last British Open for Tom Watson; Jordan Spieth opportunity to win the third leg of the Grand Slam; Tiger Woods playing a course he “masters.” Economic impact unparalleled every five years as the rotation favors Scottish tourism!

2. Wimbledon begins this week; unofficially shifting the “center of the mega-event summer sports business to Europe. While Wimbledon and the British Open carry the day, other major events abound. Globecast provided distribution of 10 channels to rights holding broadcasters in Southeast Asia for the 28th Southeast Asia Games in Singapore. The SEA Games were conceived as a means to help forge strong regional cooperation, understanding, and unity within the Southeast Asian community. Of the trillion dollar sports business, nearly 45 percent is directly or indirectly related to media. Look for increased significant long-term media development partnerships to carry the day.

3. Cities protect their investment. United States Conference of Mayors Professional Sports Alliance reviews best practices at the Annual Mayors Meeting in San Francisco last week. Additionally, SportsManias is hosting its inaugural City Summit event in Orlando this Tuesday at the Amway Center. The event will include two panels about Orlando’s pro and amateur sports landscape, featuring some of the region’s top sports executives. For the true diehard sports fan, SportsManias is the easiest, fastest, most complete source of team news on the web and mobile. Look for more of these meetings to inspire communities and decision-makers on the “best practices” to expand their professional sports interest; facility development; economic impact; and public/private partnerships. More to come!

4. The name game. As originally reported by The Tennessean, 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 Tennessee Titans reached a 20-year naming-rights deal with Nissan North America valued at $5-6.5 million annually. LP previously had a 10-year naming-rights agreement with the team, worth $3 million per year. The Titans plan to rename their home venue Nissan Stadium. U.S. Bank Stadium in Minneapolis, Golden 1 Arena in Sacramento, and the controversy over Wells Fargo Center in Philadelphia – corporations spend nearly $14 billion annually on naming stadiums, arenas, convention centers, and the like. Deals must create a win-win for all sides, and be easily understood by the fan/customer/consumer.

5. Deflate-gate; text-gate; spy-gate; hacking-gate; now salary cap-gate. As originally reported by Philadelphia Inquirer, 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 NBPA is investigating the Philadelphia 76ers for violating the spirit of the CBA by salary cap tampering. The Sixers were way below the cap floor until they made late-season acquisitions, which added the players’ full-season salaries to the cap while the team paid only a fraction of the contracts. Whether this is a legitimate, legal loophole or a breach of faith, Commissioner Adam Silver has proven that he will not tolerate shenanigans with the integrity of the game.

6. NHL heading into the off-season. The NHL will open a formal expansion process this summer, and Commissioner Gary Bettman said that the minimum cost for a team would be $500 million. The NHL is likely to grow by two teams starting with the 2017-18 season, with Las Vegas, Seattle, and Kansas City among the possible expansion markets. Commissioner Bettman is a seasoned veteran when it comes to expansion processes. Look for an organized, orderly, sophisticated analysis of expansion in general, and emerging markets in specific.

7. NBA heading to its short summer break. ABC over the course of the six-game NBA Finals generated an estimated $224 million in ad sales revenue. All told, 190 brands bought ad time during ABC’s broadcasts, with movie studios promoting upcoming summer releases among the biggest spenders. Adam Silver and his marketing folks continue to do a masterful job in developing long-term partnerships with entertainment entities, major sponsors, and other partners. NBA franchise values increased 78 percent last year. While no $2 billion Steve Ballmer/Clippers transaction will impact the numbers this year, look for consistent and steady growth in the years ahead.

8. Pete Rose Hall of Fame hearing? A notebook obtained by ESPN’s Outside the Lines found that Pete Rose bet on baseball while he was still a player. While there was no indication that Rose ever gambled against his team, the documents debunk his longstanding claim that he only bet on baseball as a manager. As the annual Hall of Fame celebration in Cooperstown approaches, Commissioner Manfred indicates that Pete Rose will ultimately be able to state his case. Unfortunately, this information could not come at a worse time for him.

9. Latest in the “race to Los Angeles” saga. San Diego officials are accusing the Chargers of changing demands during stadium negotiations. Chargers officials said they haven't wavered on wanting a new stadium, but city representatives think the team’s inconsistencies indicate that they would rather move to Los Angeles. Look for ongoing drama in St. Louis, Oakland, and San Diego as the teams, cities, and business communities joust for a final deal before the end of the NFL regular season. Obviously, the leverage of Englewood and Carson (combined by a specific NFL deadline) will expedite the process to its logical conclusion.

10. Baseball Internet carries the day. MLBAM is in talks with investment bankers to spin off its non-baseball division, which has been valued at around $3 billion. MLBAM technology is used to stream a variety of non-baseball content, including HBO and Sony programming, WWE events, and NHL games. Commissioner Manfred runs a business of over $36 billion cumulative team value – large part includes the entrepreneurial Internet business. Clearly, the value of a joint and shared process among all teams carries the day in this perspective.

11. Tinkering with the game: Part One. The NHL’s Board of Governors voted to change overtime to a 3-on-3 format for a five-minute period in regular-season games tied at the end of regulation. Previously, the NHL played 4-on-4 overtime. Regular-season games tied at the end of overtime will continue to be decided by a shootout. An accommodation to the “casual fan” as opposed to the “hockey purists,” the rule will undoubtedly generate more significant regular season excitement – very good for the NHL.

12. Tinkering with the game: Part Two. The NBA is moving forward with its plan to seed conference playoff teams 1-8 regardless of division winners. Under the previous format, a division winner was guaranteed a top four seed in each conference. Just like the NASCAR Sprint Cup and PGA Tour FedEx Cup, NBA continues to “tinker” with its playoff format to maximize acceptability, awareness, visibility, and interest.

13. Crowded Olympic 2024 field. Paris and Rome each announced their intention to bid on hosting the 2024 Summer Games. Paris last hosted the Olympics in 1924, while Rome held the Games in 1960. Both bids are expected to have a budget of around $7 billion. Boston is broadening its footprint to generate additional statewide support. At the same time, the 2024 field crowds with major contenders. Public/private partnership campaign in Boston needs a solid cohesive business plan in order to take advantage of the “newfound positive relationship” between the IOC and USOC.

14. Playing with fire. The Glendale City Council decided it would not rescind its vote to terminate the Arizona Coyotes’ 15-year, $225 million agreement to operate Gila River Arena. Team officials will explore relocation if they lose a legal battle with the city. Cities like Houston, St. Louis, Cleveland, Baltimore, and others can testify about the significant difficulties and incremental costs involved in returning a professional sports franchise after the previous one leaves.

15. More Olympic protection. The USOC is taking a more aggressive role in promoting and protecting low-revenue college sports, according to Ben Fischer of SportsBusiness Journal. Popular Olympic sports such as swimming, wrestling, and gymnastics have faced cutbacks in spending over the last three decades. As showcased on Universal Sports “Beyond the Medals: The Business of Sport” last week, college designation of “emerging sports” for triathlon and others will help generate funding, awareness, and excitement.

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.