Sports Business

Sports Business '15 to Watch': Justice Department goes after FIFA


Sports Business '15 to Watch': Justice Department goes after FIFA

1. The U.S. Justice Department charged 14 people affiliated with FIFA of corruption and bribery. Allegations include wrongdoing that goes back more than two decades, including $110 million in bribes linked to the 2016 Copa America tournament, which will be held in the U.S. Tip of the legal iceberg; 209 nations and 41 associations, $5.7 billion in World Cup-related revenue last event. With numerous guilty pleas and a global investigation, look for this story to get larger in the months ahead. It's extremely rare to see a six-page Department of Justice press release, especially with language from top IRS officials: “IRS Criminal will continue to investigate financial crimes and follow the money wherever it may lead around the world, leveling the playing field for those who obey the law.” This story will not go away for years.

2. The NBA Finals begin on Thursday in Oakland. The Golden State Warriors' Western Conference Finals-clinching win over the Houston Rockets averaged 8.9 million viewers, making it the most-watched NBA game on ESPN since the 2012 Eastern Conference Finals. The game also marked ESPN's second-most viewed telecast of the year behind the College Football Playoff championship. Amazing season for Adam Silver and the NBA. The average NBA team is now worth $1.1 billion, 74 percent more than last year and the biggest one-year gain since Forbes began valuing teams in 1998. The Warriors are the seventh highest-valued team, worth $1.3 billion, versus the Cavaliers, worth $915 million (15th). Twitter is normally dominated by soccer and WWE, but Steph Curry was No. 1 last week according to MVPIndex and LeBron James was No. 2. Expect that to continue.

3. The Stanley Cup Final begins on Wednesday in Tampa. The average NHL team value rose 18.6 percent during last year to an all-time high of $490 million. The 12-year, $4.6 billion agreement for Canadian television with Rogers and a blockbuster NBC deal leads to unprecedented stability. This year's Final features a clash between the $625 million net worth Blackhawks (fifth in the NHL) and the $180 million net worth Tampa Bay Lightning (ranked 29th). The Lightning's economic fortunes undoubtedly will change as Jeff Vinik plans long-term development opportunities in downtown Tampa to coincide with the renovation of Amalie Arena. Commissioner Gary Bettman continues his tenure as the senior statesman of NHL commissioners, appointed when Whitney Houston’s “I Will Always Love You” led the Billboard charts on Feb. 1, 1993. The NHL had $400 million in revenue when he was hired compared to approximately $4 billion today. Congratulations, commissioner.

4. The French Open heads toward its final weekend in Paris. Even though she exited Roland Garros much earlier than she had hoped, Caroline Wozniacki did not leave empty-handed. While in Paris, she and her marketing agent, Lagardere Unlimited's Drew LeMesurier, completed a one-year deal with Italian coffee brand Lavazza, the company's first-ever athlete endorsement. Lavazza recently signed deals with the French Open, U.S. Open and Wimbledon. The epicenter of the tennis business is Paris and London through July. It's not surprising that major corporate deals are signed by world-class agencies using the tournament as a negotiation setting.

5. American Pharoah goes for the first Triple Crown win since 1978 this weekend at the Belmont Stakes. There will be major coverage of the race on the NBC family of sports networks. A multitude of Kentucky Derby and Preakness winners have failed at the longer and more exhausting Belmont Stakes, but annual excitement during the seven-week period continues to rise. It would be a major shot in the arm for horse racing's economic malaise if American Pharoah comes through and could be viewed as one of the most important horse races in history from that perspective.

6. The NFL heads into post-Deflategate training camp preparation. As originally reported by the Houston Chronicle, the Houston Texans will be featured on the HBO series “Hard Knocks” this season, marking the team’s first appearance on the show. The Texans will become the 10th team featured on “Hard Knocks,” and owner Bob McNair believes the show will bring positive attention to the NFL. Tom Brady will appeal the Deflategate ruling in four weeks. Expect a fairly rapid resolution after that so as to reset the NFL season as training camps open in mid July.

7. The NFL has begun the process of establishing a relocation fee for the team, or teams, that might move to Los Angeles, and the cost for moving could be in excess of $500 million. The relocation fee could vary from market to market, with the nearby San Diego Chargers paying less than the St. Louis Rams. Six Missouri state legislators have sued Governor Jay Nixon and the public board that owns the Edward Jones Dome to block funding of a new NFL stadium in St. Louis. The suit alleges that Nixon’s stadium-financing plan illegally uses $250 million in taxpayer money. The NFL's process on relocation value, vote and territory will undoubtedly coincide with the final best offers from St. Louis, Oakland and San Diego. The California cities of Carson and Inglewood are providing great NFL leverage for this textbook process.

8. Charter Communications within the next few weeks will begin carrying the Time Warner Cable-owned regional sports network SportsNet LA. Distribution of SportsNet LA has been limited since its February 2014 launch as TWC and cable operators have argued over the channel’s high subscriber fee. It could come as a long-awaited breakthrough in Dodgers telecasts in the local market. Since local television brings in a lion’s share of team revenue and the Dodgers have been performing at a division-leading pace, this deal could not happen too soon.

9. Boston’s 2024 Olympic bid could be in jeopardy after it was found that the city’s bid book says the Games would require public money. Boston 2024 has long maintained that the Olympics would be paid for entirely with private funds. With $2.6 trillion of public infrastructure assistance committed to United States cities over the last 30 years, it's hard to fathom that Boston might lose this opportunity, especially given the unprecedented economic, cultural, political and legacy impacts stemming from a successful Games. The irony is that the USOC has the best chance of any it's had in the last two decades of landing the 2024 Olympics given its newfound positive economic relationship with the IOC.

10. Major League Baseball is conducting an economic impact study on shortening the season to 154 games. Among the revenue and expense streams that are being reviewed are ticket sales, concession sales, TV rights and the cost savings of not needing stadium workers for four home games. Commissioner Rob Manfred certainly has the credibility to attempt major changes, especially if he has analytics on his side.

11. The USOC reported $270 million in revenue in 2014, a 7.6 percent increase over 2010, the previous year the Winter Games were held. The growth was attributed to a $29 million gain in rights and licensing fees, according to an IRS form. Kazakhstan has tabled proposed anti-gay legislation that could threaten the country’s hopes of hosting the 2022 Winter Olympics. The decision came after several sports stars urged the IOC to reject Kazakhstan’s bid because of its stance on gay rights. While Summer Olympics generate billions, Winter Olympics still provide a handsome return, especially given the participation by strong, economically vital national governing bodies in sports such as skiing and figure skating. Major “social sports movements” are more likely to succeed before any deal is finalized, unlike the “lip service” given to social rights before the Sochi Games, opposition to anti-gay legislation in Kazakhstan certainly has more leverage at this stage.

12. The Golden State Warriors and Ticketmaster filed motions to dismiss a federal antitrust lawsuit brought by StubHub. StubHub alleges that the pair illegally conspired to force season-ticket holders to use only the Ticketmaster-powered platform for resale. The Warriors are tending to their major business concerns heading into the NBA Finals, attempting to solidify their ticket reselling rights and expediting the environmental approval for their new arena. Positive excitement and awareness generated from the “championship month fever” couldn’t hurt.

13. Orlando City SC announced that it will be privately funding the entirety of its new downtown Orlando stadium, as well as increasing the stadium’s expected capacity. The decision comes after stadium construction was set back following a delay in $30 million of funding from the Florida legislature. Commitment appeared to be in hand, as Orlando generates incredible excitement over its soccer franchise. Now, the only alternative appears to be writing a private check and hoping for subsequent reimbursement. Good luck.

14. Golf heads to the Memorial and prepares for its U.S. Open in Chambers Bay, Wash. PGA star and Lagardere Unlimited client Jordan Spieth is making the most of his sponsorship deal with AT&T. Spieth was born and raised in Dallas, which also serves as AT&T’s corporate headquarters and was home to last week’s AT&T Byron Nelson Championship. His ties to the area made him a natural ambassador for the telecom giant. Lagardere Unlimited is walking the fine line between generating as much excitement about Spieth and avoiding overexposure. They should be commended in their quality handling of golf’s next superstar.

15. As originally reported by the Miami Herald, fans criticized the Miami Marlins after no players showed up to the team’s charity casino night. While the players denied that the absence was an organized protest against the team’s recent managerial change, the news comes amid reports of growing discontent in the Marlins clubhouse. New manager Dan Jennings is on an early hot seat. South Florida is always a case study for sports turbulence: the Dolphins are using the Ndamukong Suh/DeVante Parker/Ryan Tannehill superstar model to try to win back fans, the NHL draft is buoying the Panthers and the Heat are looking at a rebuilding mode. Will the Marlins be left out?

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.