Sports Business

Sports Business '15 to Watch': More NFL games in England?


Sports Business '15 to Watch': More NFL games in England?

1. Fantasy sports are under review. Massachusetts is launching an investigation into Boston-based website DraftKings as a way to learn about the company’s business practices. Among the questions investigators will try to answer are whether DraftKings contests are legal under state law and whether contests violate any federal laws. The move comes as DraftKings and its main competitor, FanDuel, spend hundreds of millions of dollars on advertising around the start of the NFL season. The legality of daily fantasy has frequently been questioned, but the game is protected by federal legislation that permits general fantasy sports. Look for investigations of all types and sizes — congressional, state, federal, legal, etc. It’s not so much that fantasy is illegal. The loophole under the 2006 Unlawful Internet Gambling Enforcement Act is clear. Rather, it is the opportunity for taxable revenue that might drive these investigations.

2. But the Massachusetts investigation doesn’t make fantasy illegal, so how can you win your league? The SportsManias app is a game-changer in fantasy sports. Fantasy players can import their teams from CBS, ESPN or Yahoo and receive real-time news feed on their players from the top experts and news sources. This will give them an edge to make smarter roster moves. The SportsManias app makes it easy for consumer to access content from the best sources, giving them an edge while increasing traffic for media companies. It’s as simple as downloading the SportsManias app, importing your team and dominating your league. Fantasy players are massive consumers of media surrounding their teams. A DraftKings survey found that 70 percent of respondents said their sports consumption increased after they began playing daily. A FanDuel survey found that 50 percent of users watched more sports on TV as a result of daily fantasy play. Clearly, this app is a tide that lifts all boats.

3. The value of pro sports teams — and NFL teams in particular — keep increasing. As originally reported by the Forbes, but in an article found on the SportsManias app, the site that provides fans with real-time information on their favorite teams, the Dallas Cowboys are worth $4 billion, topping Real Madrid’s $3.26 billion to become the most valuable sports franchise in the world. The Cowboys are the most valuable franchise in the league for the ninth consecutive year. Forbes says the average NFL franchise is now worth $2 billion, a 38-percent increase from last year. The increased values are due in part to a $39 million increase in national television rights fees. The Forbes survey gives credence to the continuing increase of the economic juggernaut called the NFL — and a potential $25 billion revenue target by the mid-2020s.

4. A winning rebranding for a major sports and entertainment industry. Lagardère Group has relaunched its global sports business as Lagardère Sports, a division of Lagardère Sports & Entertainment (LS&E). The new LS&E, which replaces the name Lagardère Unlimited, is one of four major divisions of the Paris-based conglomerate. LS&E will be headquartered in London and comprises Lagardère Sports and Lagardère Live Entertainment. Lagardère Group built the company through the acquisitions of sports agencies and firms in six different nations. All of the U.S. companies as well as sports marketing agencies Sportfive, World Sport Group, IEC in Sports, Sports Marketing & Management and Lagardère Unlimited will be run under the LS&E brand. The agency partners with 70 European football clubs, 10,000 hours of programming, manages over 300 events and represents more than 280 athletes. The rebranding represents a significant effort to integrate and consolidate the service into a global game changer in the industry.

5. International sports business news. The NFL’s growth in the U.K. continues as league execs are looking at the possibility of playing a full season of games in the country within the next five years. The league will host three regular-season games at London’s Wembley Stadium this year. With last season’s three International Series games all sellouts, the league believes it can play even more games in the U.K. long-term. Meanwhile, Telstra has announced the rebrand of recently acquired business Globecast Australia to Telstra Broadcast Services, unveiling the new brand at the International Broadcasting Conference (IBC) in Amsterdam. The move cements Telstra’s commitment to providing deeper capabilities in media services for customers in the broadcasting industry. International headlines continue to dominate, especially with the media giants like Globecast, Telstra and other international entities.

6. Big changes could be coming to college sports. NCAA championships could be played in states that allow sports wagering, coaches could contact recruits via social media without restrictions and men’s basketball players could enter the NBA Draft multiple times without jeopardizing their eligibility, under proposals to be reviewed in Division I. These concepts are among 72 proposals that will be voted on by Division I this academic year. Of the 72 proposals being considered by the NCAA, 14 would change rules in the areas of autonomy granted to the Power 5 conferences. The new-found emphasis on team and conference competition for high school superstars might give rise to new standardization and more uniform rules. Ironically, the discussion on whether to pay student-athletes is no longer as relevant as how to structure their payments in a more uniform and competitively friendly way.

7. A creative (and long overdue) sponsorship deal on the verge of coming to the NBA. More than 60 years after the NBA instituted the 24-second shot clock, the league is close to signing its first timing sponsorship deal, according to John Lombardo & Terry Lefton of SportsBusiness Journal. The NBA reportedly is in advanced talks with multiple watch brands and technology companies for a deal that would designate the sponsor as the official timing partner of the league and would include all timing aspects of an NBA game. The value of this deal will not be known until companies like TAG Heuer and Tissot give their best offers. However, the agreement would include licensing rights for the watch category, national broadcast exposure, in-arena advertising and a great opportunity to generate new revenue from a traditional use. The NBA always cares about time, and it also cares about money.

8. How to maintain a home-ice advantage. As originally reported by the Tampa Bay Times, but in an article found on the SportsManias app, the site that provides fans with real-time information on their favorite teams, a new ticket policy by the Lightning will limit season-ticket resales in an effort to keep tickets out of the hands of scalpers and secondary markets. The preemptive measure is in anticipation of higher local demand following the team's postseason run. Fans had until late August to cancel their plans due to the new ticket-resale policy. The team will also begin a partnership with a ticket resale company to collect micro and macro data on customers. Look for the following trend: requiring season ticket holders to attend certain games and events in order to keep their priority and preferences.

9. The biggest athlete endorser doesn’t even play anymore. NBA legend Michael Jordan made $100 million last year from Jordan brand shoe sales, more than the $94 million he made in on-court earnings during his 15-season basketball career. Jordan's finances were recently disclosed in a court case over the use of his likeness. They indicated that Jordan made nearly $540 million from 2000 to 2012 from sponsors including Nike, Gatorade and HanesBrands. Jordan remains one of the few athletes who actively transcends sports. Clearly, his ability to hit left-handed pitches, and manage the Washington Wizards, did not come into play in his global branding accomplishments.

10. A long-running carriage dispute continues. The Pac-12 Networks have rejected a proposal by DirecTV’s parent company, AT&T, that would have allowed carriage on the satellite provider, but threatened the networks’ business model and long-term profitability. The proposal by AT&T reportedly included an equity stake for the telecom provider and likely would have forced the Pac-12 Networks to redo existing distribution deals at a lower subscription rate. Probably too late to resolve this issue by the end of the Pac-12 football season. However, as the Los Angeles Dodgers cable dispute demonstrates, a reasonable end to the cable wars is necessary for the lucrative Southern California sports viewer.

11. Hendrick Motorsports continues an impressive few weeks on the sponsorship front. Lowe's has extended its longtime relationship with Hendrick Motorsports by signing a two-year agreement that will continue its full-season primary sponsorship of Jimmie Johnson's No. 48 NASCAR Sprint Cup team through 2017. Meanwhile, HMS and Johnson also have agreed to a contract extension through 2017. The deals come after another sponsor, Axalta, recently broke ground on a customer experience center on the HMS campus. Sponsorship musical chairs continues to dominate the NASCAR landscape. Bedrock motorsports companies like Lowes should always be there. Companies like Axalta should be nurtured as dynamic newfound long-term revenue sources.

12. The NFL’s judge, jury and arbiter, no more? NFL owners are prepared to negotiate with the NFLPA about changing commissioner Roger Goodell’s role in the league’s player disciplinary system, with a goal of reaching an agreement before the end of this season. Ceding power would be a big loss for Goodell, who negotiated for the right to rule on player appeals in the last CBA. The discipline process has dominated the media headlines since the beginning of the 2014 season. However, the revenues available for the league (and its owners and players) have never been better. Clarification of a transparent and sustaining process is necessary to continue to move the league in a unified, positive direction.

13. Is the NHL one step closer to Las Vegas? AEG expects to have a naming-rights partner for its under-construction Las Vegas arena signed within the next two months. The facility will host as many as 140 events a year if the NHL awards a franchise to Fidelity National Financial Chair Bill Foley’s group. Capacity at the Las Vegas arena will be 17,500 for hockey and 18,800 for basketball. Look for Vegas to be awarded a franchise sooner than later — probably at a fee of over $500 million. The Seattle, Quebec City, Phoenix interplay will probably continue after that. The Coyotes might hold the key to that second expansion slot, if it exists.

14. And is a new arena in Milwaukee one step further than expected? Milwaukee Bucks investor Mike Fascitelli said that the team will complete its downtown arena project one year later than expected and is now targeting an opening to coincide with the start of the 2018-19 NBA season. Until Fascitelli’s remarks, Bucks execs had maintained the team still planned to break ground this year on the $500 million project. Governor Scott Walker’s presidential aspirations have had a significant impact on the Bucks local arena controversy. Since the revenues are primarily generated from team-related income taxes (which would not exist but for the arena and franchise), the public/private partnership should be relatively easy to sell and implement.

15. For one NASCAR track, timing is everything. Richmond International Raceway has asked NASCAR to move the track’s spring race from Saturday night to Sunday afternoon. RIR has scheduled two Saturday night races since 1998, and is the only track with a pair of prime-time events. However, RIR officials believe a change to the afternoon might draw a different audience. Each NASCAR track is in a competitive race within its market to remain entrepreneurial and flexible — especially with competition among other sports, entertainment and other options. Kudos to RIR to make bold moves based on fan convenience.

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.