The Business of Sports: From College Corruption to Stadium Innovations
Issue 29
Cracks in the Game
What Happened?
College basketball was broken.
Proposed Solutions:
- Eliminate the NBA’s one-and-done rule, allowing players to go pro straight from high school.
- Allow players to have agents when negotiating contracts and deciding whether or not to go pro.
For 15 years, the NCAA and NBA knew about corruption and fraud. NCAA President Emmert called for radical action to change college basketball, emphasizing the need for decisive measures beyond incremental change.
The Core Issue:
College players deserve and have the right to be paid.
NFL Sponsors Cite Impact of Anthem Protest
Papa John’s became the first NFL sponsor to publicly criticize the league’s handling of anthem-related protests. Anheuser Busch stated that the national anthem is a point of pride for the company and its veteran employees. Negative fan reactions arose towards kneeling during the anthem.
Papa John’s CEO blamed the NFL for a 1% sales decline, attributing it to the anthem issue. Colin Kaepernick initiated the protests, sitting and then kneeling during the anthem to raise awareness about police brutality. It’s important to note that the NFL comprises 32 independently owned organizations.
Founding Deal Gives Pepsi Pouring Rights, Club at Chase Center
The Golden State Warriors partnered with Pepsi as a Chase Center founding partner. The deal includes pouring rights and a branded club within the $1 billion arena opening in 2019. The club will hold approximately 1,000 seats.
Pepsi, with a leaguewide NBA deal featuring Mountain Dew as the lead brand, has 11 NBA team deals and is a founding partner of Levi’s Stadium and MetLife Stadium. Genesco serves as Pepsi’s agency of record, CAA Sports represented the Warriors, and Accenture and United Airlines join Pepsi as Chase Center founding partners. Future partners may include a technology brand and a telecommunications company.
Putting a Stadium Feel on Golf’s Short Game
A pop-up sports venue in Las Vegas, tied to the Major Series of Putting (MSOP), offers a unique experience for amateur and professional golfers, with $1 million in prize money. The 70,600-square-foot temporary facility features an 18-hole course, a 4,000-square-foot clubhouse, and a 19th hole for playoffs.
The inaugural 10-day event attracted over 1,000 participants. Tournament admission was free, with a $35 fee for spectators wanting to play. A round takes about 30 minutes. The facility, designed by Populous, can accommodate up to 2,000 spectators. MSOP secured sponsorships from 15 companies.
World Series Title in Hand, Houston Astros Now Get Down to Business for 2018
After their World Series victory, the Houston Astros aim to increase attendance beyond 16,000 in 2018, with a long-term goal of at least 20,000 full-season equivalents annually. The club implemented a row-based pricing strategy for 2018 season tickets, resulting in a nominal price increase for half of the season-ticket accounts and an 80% increase for prime seats.
With a 2017 payroll of $124 million, the Astros’ 2018 payroll is projected to exceed $140 million. The team’s community engagement efforts are spearheaded by the Community Leaders program, established in 2012. Following Hurricane Harvey, the Astros achieved an impressive 18-3 home record and 8-1 postseason record.
Las Vegas Track Outlines Renovation Plans
The Las Vegas Motor Speedway will upgrade its premium grandstand seating and create social, digitally connected areas for all ticketed fans. Access costs $900, and the clubhouse areas, with a capacity of 1,100, are already 75% sold.
Two loge box offerings on the Petty Terrace will cater to premium customers seeking a more private experience. These areas will offer over 200 tickets. The upgrades aim to create multipurpose-friendly spaces. The Las Vegas Convention and Visitors Authority granted the track $17.5 million, or $2.5 million annually.
MLS Extends Fanatics Deal, with Aim of Broadening Product Lines
MLS and Fanatics extended their e-commerce partnership, with Fanatics gaining rights to produce fan gear, apparel, hardware, and goods for retail and wholesale, along with sublicensing rights. The deal’s financial details remain undisclosed.
Adidas holds a six-year, $700 million deal, providing all products worn by MLS players and staff. MLS has over 50 licensees. The partnership aims to expand products online and wholesale globally. Fanatics, based in England, operates the online and retail business for teams like Manchester United, Real Madrid, and Manchester City. The company also runs e-commerce for five MLS clubs: Atlanta United, Chicago Fire, Houston Dynamo, Minnesota United, and Vancouver Whitecaps.
Twelve Ways Sports Networks Will Adapt to Evolving Marketplace
1. Subscriber Fee Increases
Lower for larger players like Charter+Time Warner and AT&T+DirecTV. Sports networks will need to increase growth rates or penetration to compensate, in exchange for relaxation.
2. Direct to Consumer
ESPN may add MLB and NHL from its BAM acquisition to ESPN3 content, along with some NBA content, creating branded offerings for varied interests. ESPN, CBS, NBC, and Turner have announced sports streaming initiatives.
3. TV Everywhere
Networks may combat revenue loss by limiting simultaneous streams and charging for mobile access instead of providing TV Everywhere.
4. New Mobile/Digital Products
Traditional formats like “SportsCenter” may not resonate with younger fans. The NBA has created a new, concise game feed for smaller screens.
5. Primary Channel OTT
In Canada, Rogers Sportsnet offers six branded services (with national NHL, NBA, Blue Jays, and MLB rights) direct to consumer at $25/month.
6. Audits
Cable affiliations conduct audits of MVPDs.
7. Programming Replacements
Networks may acquire rights for alternative audiences (e.g., NBC buying Spanish rights for Telemundo) or cut low-ROI packages.
8. Slowing Rights Growth
9. Trim Overhead and Reduce Experimentation
ESPN and Fox offered buyouts to longtime employees. ESPN let go of over 100 talents and two senior executives. R&D on VR and 4K may decrease.
10. Production Costs
REMI (remote integration model) reduces travel and rental costs while optimizing personnel utilization.
11. Brand Name Talent
Today’s talent multitask across radio, pre-game and post-game shows, game announcements, stand-ups, social media, and writing. Big names will still be prominent for major events like the NBA Finals and NFL games.
12. Consolidation
BAM acquired the NHL Network, Sinclair bought Tennis Channel, Turner Sports and CBS collaborate on events like the NCAA tournament. Potential future consolidations include AT&T acquiring CBS, Fox or NBC buying independent and/or AT&T’s RSNs, and ESPN or Fox acquiring additional league/conference networks.
Issue 30
Pop-Culture Brands Drive MLB Promotions in 2017
MLB teams leveraged pop-culture icons like Charlie Brown, Darth Vader, Captain America, Lord Snow, Hello Kitty, Jerry Garcia, Jimmy Buffett, and the Beatles for promotions at 98 games. The Milwaukee Brewers were the most active, with”Star War” as a focus.
The San Francisco Giants’ Marvel-themed event attracted 84% new attendees. Ten clubs hosted Marvel events, distributing over 100,000 co-branded items. Bobbleheads remained a popular giveaway. The Boston Red Sox increased theme nights from 29 in 2016 to 35 in 2017. Baseball and”Peanut” are considered integral to American pop culture.
Changes Expected at MLB
MLB Commissioner Rob Manfred oversaw the acquisition of a majority stake in BAMTech, MLBAM’s digital video support subsidiary, by Disney. MLB is set to move into a new midtown Manhattan headquarters in 2019, housing both MLB and MLBAM.
Bob Bowman spearheaded BAMTech’s creation. Disney now owns 75% of BAMTech, MLBAM holds slightly over 15%, and the NHL has just under 10%.
Nomadic Turning Eyesore into Super Bowl Party Central
AT&T and DirecTV will be the title sponsors for the Super Bowl eve event, branded as DirecTV Now Super Saturday Night. Taylor Swift performed at the previous year’s event. Tickets are expected to start at $250 for general admission.
Club Nomadic at Mystic Lake Casino will host four nights of entertainment. Nomadic is constructing a 64,000-square-foot pop-up venue at the resort. Previous sponsors include PepsiCo and EA Sports.
Brooks First Chief Innovation Officer at NBA
The NBA appointed Amy Brooks as its first Chief Innovation Officer. Brooks, a former Stanford basketball player, brings a decade of experience from TMBO. Her role focuses on exploring new ways to enhance the league’s and teams’ business.
Key projects include developing game and non-game content and delivering it to consumers globally through preferred consumption methods. The position presents opportunities to innovate the game, marketing strategies, and player promotion.
Legends Selling PSLs for Chargers’ New Home
Legends, co-owned by the Dallas Cowboys and New York Yankees, is selling suites for both Rams and Chargers games at a preview center. The 125 suites range from $350,000 to $800,000 per year, with initial 10-year terms.
The Chargers join a growing list of Legends’ NFL clients, including the Rams, San Francisco 49ers, Atlanta Falcons, Cowboys, and Oakland Raiders (for their Las Vegas stadium). Legends aims to generate up to $1 billion in PSL sales for the $2.6 billion L.A. stadium, with the Rams projected to contribute around 60%. The Chargers relocated to L.A. from San Diego after the NFL chose the Rams’ Inglewood stadium project.
Stadium Planners Face Uncertainty Thanks to Tax Bill Provision
A provision in the new tax law could impact stadium financing, including the $1.9 billion Las Vegas NFL stadium, which relies on tax-exempt bonds. The NFL plans to lobby against the provision.
While the Raiders have signed a lease, a general agreement is pending. The new tax law’s applicability to the stadium remains debatable.
Snapchat Getting ‘SportsCenter’ of its Own
·ESPN last year also brought a version of “College GameDay” to Snapchat Discover
·Snapchat, conversely, has actively sought more name-brand video programming and has worked with other publishers and programmers including Bleacher Report and MTV
Mid-American, mid-week: MAC at home in non-Saturday slots
·The MAC’s unique arrangement is a byproduct of its long-term media deal with ESPN,
·ESPN likes the non-Saturday tilts because they provide live college football in prime time for ESPN2 and ESPNU during the week when they need programming
·The MAC’s deal with ESPN grosses about $10 million annually
·ESPN also sublicenses MAC games to CBS Sports Network
·Jordan also suggests an aggregated model where Conference USA, the MAC, Mountain West and Sun Belt negotiate their media deals as one package instead of separately. A combined deal like that would deliver 20 to 30 football games per week.
Technology adds critical value along its path of disruption
·The North American sports marketplace is expected to reach $73.5 billion by 2019
·disruption is creating new revenue streams for owners, changing how we define category exclusivity for marketers, improving performance for athletes, and influencing real-time decisions for coaches and managers
·NFL’s partnership with Amazon, is enabling a more flexible viewing experience for fans. Fast and reliable connectivity has become a priority for the game-day experience, with state-of-the-art facilities like Levi’s Stadium and the Barclays Center now offering more than 700 wireless access points to satisfy this need for game attendees.
·enhancing fan experience, companies like Intel, SAP and IBM may immediately come to mind
·Technology approaches:
oNFL coaches, wearing Bose headsets, benefit from more than 30 years of research
oNew England Patriots and Kansas City Chiefs, Bud Light distributed their Touchdown Glass to fans featuring the Super Bowl LI banner.
oU.S. Open Tennis Championships, fans were able to purchase Snapchat Spectacles for the first time at a professional sporting event
oTechnology-driven marketing is creating a win-win situation for our industry, for fans, it provides a more enriching experience. And for brands it allows for richer customer connections and stronger brand loyalty