Sports Business

Sports Business '15 to Watch': Maple Leafs hire Mike Babcock


Sports Business '15 to Watch': Maple Leafs hire Mike Babcock

1. As originally reported by ESPN, 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 NFL has rejected the NFLPA’s request to have Commissioner Roger Goodell recuse himself from hearing Tom Brady’s appeal of his four-game suspension.  The NFLPA wanted a neutral party to serve as an arbitrator since Goodell was the one who levied Brady’s penalty.  Overwhelming pressure from all sides to move on – certainly before training camps start.  Robert Kraft puts the league first; Tom Brady has legitimate interests in protecting his reputation (from his perspective); regardless of the substantive outcome, Roger Goodell reemerges as the “on-field integrity” Commissioner.

2. The NFL could begin hearing relocation requests as early as late in the 2015 regular season with a vote of the league’s 32 owners coming a few weeks later.  Rams, Chargers and Raiders officials in June will make presentations on the progress of their respective projects to the NFL’s L.A. committee.  The NFL process anticipates leverage from four or five additional sites complementing the three locations for long-term processes.  NFL attempting to resolve all relocation issues by Super Bowl 50 in San Francisco.

3. As originally reported by the Toronto Star, 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 Toronto Maple Leafs made Mike Babcock the highest-paid coach in NHL history with an eight-year deal worth $6.25 million annually.  Babcock was the subject of a bidding war between the Leafs, Buffalo Sabres, and Detroit Red Wings, whom he coached for the past 10 seasons.  NHL coaches finally get their economic due.  The inevitable “semi-shock” about the high salaries permeates sports – college coaches, NBA, etc.  People forget that CEOs make substantial money, but are also entitled to stock options if a public money.  None exists here.

4. The French Open tennis tournament heads into its first week, with over 150 million Euros of economic impact and the epicenter of the tennis world for 15 days.  Globecast is the technical provider for French and European distribution.  In addition, during the event, Globecast in cooperation with France Television will do a 4K/UHD demo live from Roland Garros on May 29th.  Superstars, corporate marketers, mega-agencies, and opinion leaders in the tennis business gather for the annual “clay rite of early summer.”  Tennis business better than ever and as Nadal, Djokovic, Murray and Federer continue to hold off the next level of male superstars.

5. Golf season continues to feature new names challenging the old guard.  Chris Kirk wins in Ft. Worth.  PGA Tour getting an unexpected boost with the hoopla surrounding Jordan Spieth and his Dallas homecoming.  Lagardère Unlimited generates substantial revenue with Under Armour, AT&T, and other “mega-sponsors.”  Spieth’s character, credibility, and likeability helps all golfers and athletes; Lagardère avoids over-exposure; corporations more than satisfied, leading to longer term and bigger deals for all.

6. FIFA sponsors Adidas, Coca-Cola and Visa have expressed concerns about the safety of migrant workers at stadiums being built for the 2022 Qatar World Cup.  Since the 2010 vote that awarded the tournament to Qatar, FIFA has faced allegations of corruption and calls for improved labor conditions.  International soccer events culminating with various European and world championships; overriding concerns are the perceptions concerning Qatar and the 2022 World Cup.  As we know, perception is incredibly difficult to change (especially with the intensity surrounding the initial selection process).

7. MLS expansion team LAFC announced plans to build a privately financed, $250 million soccer stadium.  When the building opens in 2018, the 22,000-seat stadium will be the first open-air professional sports venue built in L.A. since Dodger Stadium in 1962.  Originally identified as the Chivas Los Angeles entry, a second MLS club has “rebranded” under the marketing expertise of Peter Guber and others.  Long overdue.

8. San Diego’s proposal for a new football stadium includes funding from the city, the Chargers and the NFL.  Under a plan released by the city’s stadium task force, the league and team would contribute a combined $500 million to the $1.1 billion project.  The plan also calls for the Chargers to pay $10 million in rent each year.  Predictably, we will see the best proposals each “incumbent city” has to offer – San Diego, Oakland and St. Louis.  In that context, Inglewood and Carson are effective “leverage alternatives.”  Note the NFL included Los Angeles in their Super Bowl candidate mix once again – the signal is unmistakable.

9. The Pac-12 topped all college conferences by generating $374 million in revenue during the 2014 fiscal year.  The total revenue includes income from the conference-owned Pac-12 TV network and the conference's marketing and media division.  The conference distributed $21 million to each member school.  Power 5 conference benefits begin with revenue collection – each conference ultimately will attempt to “out-recruit” high school superstars with promises of scholarships and other benefits.  As the free market takes over, college student-athletes will be the well deserving beneficiaries.

10. David Beckham is in talks with the University of Miami about partnering on a stadium for both college football and professional soccer.  Beckham has had trouble finding a stadium site for his MLS expansion team, while UM would like to play football in a venue smaller than Sun Life Stadium.  As we have experienced, South Florida stadium solutions do not happen overnight.  University of Miami clamored for a new stadium even in the glory days of the 1980s.  However, Dolphins interests were always larger and north.  In fact, this could be an interesting fit.  Watch the politics, however.

11. The NBA is expected to approve Tony Ressler’s ownership of the Atlanta Hawks and Philips Arena by the end of next month.  Ressler’s $730 million purchase is contingent on approval by the NBA, which will vet all aspects of the transaction before submitting it to the BOG for a vote.  NBA seems enamored with the new Hawks ownership, regardless of their on-court performance against the Cavaliers.  While nowhere near the $2 billion that Steve Ballmer paid, the Atlanta Hawks look stable for a long time.

12. The Pac-12 is considering forming its own in-house, multimedia sales team, which would cut out rights holders such as IMG College and Learfield and generate an extra $2 million per year per school.  It’s uncertain how long the conference will take to determine whether or not to pursue the model.  As conferences generate additional comprehensive revenue streams, each is faced with a decision on how to nurture and protect them.  Always the case of allowing an outside agency to take the risk as compared to hiring inside staff to generate incremental sales.  Stay tuned.

13. Verizon is not renewing its naming rights sponsorship of the Washington Wizards and Capitals’ D.C. arena when the deal expires in 2018.  Verizon inherited the entitlement in 2006 after it purchased previous sponsor MCI out of bankruptcy.  Naming should proceed at a high value – Washington market; premier location; Capitals and Wizards playing well; Leonsis’ enlightened stewardship, etc.

14. The University of North Carolina has received a notice of allegations from the NCAA regarding the re-opening of its academic fraud investigation.  UNC has 90 days to appeal the notice of allegations, after which they would await a hearing before the NCAA.  The case originally began in 2011.  Seems that the Tar Heels case may finally move toward conclusion; rampant academic concerns transcend sports in this particular case.

15. A coconut water brand created by a Chicago Blackhawks staffer is gaining popularity throughout the NHL.  Coco5 was created in 2009 as an alternative to Gatorade.  At present, 18 NHL teams or their minor-league affiliate buy the drink for their players.  Interesting niche marketing opportunity that may be sweeping the NHL by storm.  Key for marketers these days is to generate a unique opportunity amongst the clutter of larger sponsorship deals.  This may be one of those.

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.