Category Archives: sports business

The Real Magic

I bought a ticket yesterday to see the Michigan Wolverine basketball team play North Carolina. It’s a chance to see a team that I root for in person, and since I don’t live close to Ann Arbor, those chances don’t come very often without significant travel. It wasn’t cheap – over $100 to sit in a so-so seat – but as I’ve written many times, cost and value aren’t the same

Yes, the game will be on TV and I could just stay home and watch it, as I do many of their other games. In fact, as a person who made a living in the sports TV business, I often ask myself why people both going to games now at all. After all, it’s expensive, it’s time-consuming, and the viewing experience is often much better sitting at home. I know from my time at a league that clubs are well-aware of this and they try to make the game-day experience worth the time and money, and many do. But the real reason I and other fans go to the game is something that any of us can bring to our business: authenticity.

I’ve been to hundreds of sporting events. I’ve been to hundreds of concerts. They’re often forgettable – your team getting shellacked or a bad night for a band. But every time the experience is real, and part of that is sharing it with thousands of others. Some bands forget this – they use a lot of recorded sound in their show, often including vocals. Some teams come out tired and slow – maybe it’s their third game in four days. No magic there because in neither case are we seeing the real deal – an organization performing at its full potential. The fans know it too – there’s no electricity in the building (and in sports, there’s often a lot of negative energy expressed as booing). People want experiences, and especially experiences they can share.

This is something any business should remember. Customers want something real. They can tell when we’re “fake nice” or when we’re being unresponsive. They want consistency too. The fan who pays for the “off night” goes away unhappy and is unlikely to return. As our lives get more virtual, I think we all crave genuine things, experiences and businesses among the things for which we hunger. You?

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The Pivot

Way back when in 1995, I was working at ABC Sports as their VP of Marketing. My job entailed meeting with advertisers and constructing packages of media and on-site benefits. We’d collaboratively design in-program elements, popularly known then as “enhancements”, to capitalize on the marketers’ involvement with a sport or an event. These things all took place on-air or on-site. The other big “on” – online – didn’t exist.

One day the president of ABC Sports walked into my office and asked me if I knew anything about computers. As a user of AOL, Prodigy, Compuserve and other early services, I replied that I did. He informed me that I was in charge and was to attend a meeting. ABC corporate had made a deal with this little start-up of under a million users called America OnLine and I was now to provide sports programming on behalf of ABC.

That was my pivot into digital. I didn’t realize it at the time, but saying “yes” to my boss’ question and being willing to take on some new, different responsibility had changed my life forever. None of us knew at the time that digital was going to disrupt the television business. We certainly didn’t think of it as anything other than an interesting sideline. But we began to see a little money coming in based on what we were doing, and once in a while, I could add some online stuff to the broad package of rights and benefits I was offering in my “real” job. Less than 5 years later, my job had become fully centered on digital, as I was now running a division of the NHL that didn’t even exist when I entered the digital world.

Being willing to pivot is a critical thing. Many businesses would be long gone if they were unwilling to do so. Foursquare, for example, pivoted their business from a consumer product to a B2B product, providing “location intelligence” to marketers. 90% of their revenue comes from that change. YouTube started as a video dating site. Nokia was a paper company. Twitter was a podcasting network. None of those businesses would be as successful, or maybe even exist, if they hadn’t been willing to shift their business paradigm and pivot.

I’d love to tell you that I saw the digital tsunami coming and got out in front of it on purpose but that would be a lie. I was lucky enough to ride the wave once it did show up because in my mind we were just doing what we’d always done – making great content and deriving value from the attention users gave it – albeit through a very different channel. The pivot was allowing my mind to be open enough to make that connection and to take the risk that it would be a rewarding road. Is your mind open to things like that?

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Filed under digital media, Growing up, Reality checks, sports business

Not So Great Expectations

The gasoline that keeps a good portion of the sports machine running is sponsorship. I’m using the gasoline analogy today because there has been a high profile sponsorship dispute going on in the world of auto racing and I think it’s instructive to any of us who sell or buy pretty much anything.

You’ve probably heard of Danica Patrick, NASCAR‘s only female driver in its top-level series, The Monster Energy Cup. She drives for Stewart-Haas Racing (SHR), who sold the rights to sponsor her car in 2016 for several years. Somewhere along the line things went south and Nature’s Bakery terminated what was a three-year deal after the first year, claiming that SHR “did nothing other than collect Nature Bakery’s money”. An additional issue was that Danica personally endorsed a competing product (albeit one with no visibility on the car or around the races). SHR sued to recover the agreed-upon payments. As it turns out, Nature’s Bakery will sponsor four cars during this season, split between SHR’s drivers, as part of a settlement.

I spent a lot of years selling sports sponsorships and I know first-hand how hard it is sometimes not to over promise in your zealous pursuit of the sale. In this case,  Nature’s Bakery was told to expect a 4-to-1 return on investment. The reality was there was no significant increase in sales. That could have been due to any number of reasons, including some that had to do with logistics and not with awareness, but it points to a core issue.

When you’re selling anything, setting expectations and agreeing on how performance is going to be measured is key. In this case, many of the measures of awareness did rise significantly, but if the client’s goal was sales then the buyer and seller seem misaligned. Keeping expectations of both parties on the same page and in alignment must be the goal of all parties, and the documents shouldn’t be signed until that goal is reached.

There also seems to be some inexperience in sports sponsorship at work here. A team that has Coke as a sponsor might very well have athletes who endorse Pepsi. An arena with Mastercard as a building sponsor might see an athlete who plays in that building in an American Express commercial. Danica is one of NASCAR’s most visible drivers and her personal endorsements should have been identified to the buyers (even though anyone could find them easily on her personal website). Always remember that a good seller sits on the same side of the desk (figuratively speaking) as their buyer since you’re both trying to accomplish the same thing.

Aligned expectations, appropriate measures of reaching goals, and transparency are how sports sponsorships (and others too!) get done and stay on track. You with me?

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Filed under Consulting, Helpful Hints, sports business

Is The End Near For Sports?

I know you might be thinking that my headline is just some outrageous form of click bait and that I can’t seriously think that big time professional sports are heading down the same path as traditional big media. Let me throw a few recent articles at you and maybe you’ll come to a different conclusion (which I do hope you’ll post in the comments).

The sports business is based on a few large revenue streams. One is income from the games themselves: ticket sales, concessions, merchandise, etc. What makes many of those things possible is a nice facility – an arena or stadium. We’ve seen franchises move (and piss off their fans) over the stadium issue, sometimes even before the bonds on the last stadium built for the team are paid off. I urge you to watch the John Oliver piece on the relationship between teams and towns but here is why I suddenly think there is an issue. As reported by Mondaq:

bill has been introduced that would eliminate the availability of federal tax-exempt bonds for stadium financing… The bill would amend the Internal Revenue Code to treat bonds used to finance a “professional sports stadium” as automatically meeting the “private security or payment” test, thus rendering any such bonds taxable irrespective of the source of payment.

In other words, it will make public spending on a private facility way more difficult. That will lead to fewer new facilities and a much harder path to growing that revenue stream. Strike 1.

Then there is the largest revenue stream for most big leagues: TV. Kagen recently reported that the U.S.pay-TV industry will lose 10.8 million subscribers through 2021, according to their latest forecast. You might already know that ESPN has been losing subscribers – May 2017 estimates were 3.3% lower than the year before. For every million subs lost, ESPN takes in roughly $7.75 million less PER MONTH – or $93 million a year, and they have already lost multiple millions of subscribers. Yes, some are being replaced via the sale of OTT services, but that requires spending to sign customers, something ESPN hasn’t had to do before. The same subscriber loss issue is true of every other sports network albeit to a lesser degree since their monthly fees are less than ESPN’s. Smaller subscriber fees mean a diminished ability to pay those large rights fees. Sure, other channels (some would say suckers) will step up – Facebook, Twitter, YouTube, and others. But my guess is that the outrageous increases many entities have secured over the last few rights cycles are gone for good. Strike 2.

Finally, costs are not going to go down, at least not without major disruptions such as the two recent NHL lockouts. Players aren’t going to make less (the downside of the salary cap), team personnel probably won’t, at least not without a lot of turnover, and many of the other costs are either already low (minimum wages) or difficult to cut (food costs in the concessions, etc.).  In an effort to mitigate some of the lower revenue and growing costs, some of the entities involved in sports are beginning to do what the airlines have done and make what was once part of the deal (in-flight meals, free bag check) part of an a la carte menu to grow revenue. Specifically, look, for example, at what NBC has done with their Premier League package. They are doing away in part with their NBC Sports Live streaming coverage in favor of a new premium streaming service called “Premier League Pass” that will be in addition to the matches that are already broadcast on live TV. The stand-alone streaming service will cost $50 in addition to whatever you’re paying for your cable subscription. That will bring in more dough but it will also anger fans. Strike 3?

Don’t misunderstand me. I think interest in sports generally has never been higher, and I think any sports entity that doesn’t rely on a big TV contract and employs athletes as independent contractors (I’m looking at you, LPGA) will be in good shape. I just think there is a major disruption coming in the next few years as we’ve seen in the TV and music businesses. Watch out as the next cycle of TV deals begins and if this bill is passed. It’s going to be a bumpy ride, don’t you think?

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A Lesson From Junior

I’m a fan of NASCAR, specifically of its top tier, now called the Monster Cup Series. For my non-gearhead friends and readers, don’t knock it until you’ve tried it, preferably in person (bring earplugs!).

      NASCAR.com

Some big news came out of the NASCAR world yesterday and it prompted a thought that is applicable to any of us in business. Dale Earnhardt Jr. is retiring after this season. Only 42, he’s been NASCAR’s most popular driver ever since his dad died on the last lap of the Daytona 500 in 2001 and leads an enormous fan base known as Junior Nation. Full disclosure: I’m a member. He’s really the spiritual leader and one of the last remnants of the NASCAR of old. As a USA Today article on his retirement stated:

A kid of means sent to work in an auto dealership by his father until he began racing, Earnhardt Jr. spoke the language of the fan, in a Carolina accent pleasing to the grassroots folks, was sponsored by a beer company and projected enough hell-raiser vibe to endear himself to the masses. A historian of the sport, he cited the exploits of Cale Yarborough or Richard Petty or Darrell Waltrip with a sharp recollection of fan and provided a generational and cultural bridge for NASCAR.

In other words, Junior isn’t corporate, is authentic, and because of that, is beloved. That’s really a lesson for any of us. Consumers adore personalities but only if they believe that what they’re seeing isn’t an act. Any of Junior’s interviews will show you that he’s real. His language is sometimes salty, often grammatically incorrect, and is definitely not the creation of some media trainer’s badgering. Consumers can tell when a brand is inauthentic just as any of us can see it in a person.

This is why I rant sometimes about engaging in conversations with and not in advertising to our consumers. It doesn’t mean boasting about how “real” you are but it does mean defining what your brand means and sticking to it. The definition should be expressed in the language of your consumer and be relevant to why they’d engage with you in the first place. It means participating in social interactions with your fans, not in demanding or leading them.

I guess I’ll need to figure out where my driver loyalty heads next. It seems that NASCAR needs to figure that out as well. As a long-time fan, I’ve watched them migrate from their Southern roots and identity to something much more vanilla, at least that’s how I see it. Junior is the last bastion of the old, authentic NASCAR. Wherever they go next, I hope it at least half as real as he is. Now ask yourself if you’re “being real” too.

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Set, Forget, Fail

You probably didn’t know that we take requests here on the screed. Today’s post is by request and is sort of a joint effort with my friend and former co-worker Russ. He and I are both fans of Michigan football and we ran into one another at the game in New Jersey last Saturday. “Game” may be an overstatement since Michigan blew out Rutgers 78-0. The first half of the game was played in the rain, making sitting through the one-sided contest even less appealing. Needless to say, the stadium was half empty after halftime (the student section was empty, as were most seats on the home side of the field). No, this isn’t a rant about fickle fans.

After the game, I’ll let Russ (well, Russ’ post on Facebook) explain what happened next:

I root for Rutgers when they’re not playing Michigan. I want the program to be good. But you can’t send this automated email with the game score and line score attached to a survey asking fans to rate their experience at a game you lost 78-0. You just can’t.

That’s the email, and Russ’ point is a very good one. Many marketing programs have become “set it and forget it.” I applaud the folks in the Rutgers athletics department for surveying fans to find out how to make the game experience worth every penny. But this comes across like the old joke about the evening at Ford’s theater: “So other than that, how did you like the play, Mrs. Lincoln?”

We can never set and forget anything in business. As Russ so aptly posted in a comment: “I knew my buddies with e-marketing experience would understand how bad it was. “Our solution is fully automated!” Automation is great. You have to be able to defeat it with human sensibility when needed.” Exactly.

Had someone been paying attention the copy could have been modified to remind fans that winning (or losing) is just part of why fans attend sporting events. Sitting with friends and family, tailgating, or any of the other myriad components of game day could have been mentioned since Rutgers’ football team just isn’t that good.

I suspect most of the feedback on this survey involved firing the coaching staff. That’s not particularly helpful information. While the football team can’t win them all, the marketing team can if someone would pay attention and get beyond setting and forgetting. Make sense?

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Filed under Consulting, digital media, Huh?, sports business

Sport At The Service of Humanity

I’ve spent many years in the sports business. Having grown up playing many sports and spending many hours watching them when I wasn’t playing, working in the business was a dream come true. As with many businesses, however, I and many of my colleagues sometimes lost sight of the basic appeal of the product. It’s taken the Pope to help remind me, and hopefully many others, of that. Let me explain.

Any product needs to solve a basic need. Identifying that need and building products that serve it are the basis for any business. What often happens, however, is that we get focused on our own needs and not those of the customer. We worry about profits and supply chains and staffing, and we’d be insane not to focus on those things too. We can’t, however, let them blind us to the fundamental purpose of solving the problem and servicing the need of the customer.

What does the Pope have to do with this? He is running a conference which began today called Sport At The Service of Humanity. It’s billed as the first global conference on faith and sport. No, it’s not about getting every player to thank some higher power every time they score. It’s intended to launch a “movement” to develop ­­life skills through sports ­­ and characteristics across six principles: compassion, respect, love, enlightenment, balance and joy. You should check out the conference’s website here.

There are a couple of things stated in the “declaration of principles” that resonated:

  • Sport has the power to teach positive values and enrich lives. Every one of us, who plays, organises and supports sport, has the opportunity to be transformed by it and to transform others.
  • Sport challenges us to stretch ourselves further than we thought possible.

I liked to hire people who were athletes, and not just because it was the sports business. It was precisely for the reasons stated above. Moreover, ex-athletes “got it.” They understood the sheer joy of sports, and that joy is a big part of the reason why fans watch them.

The Pope’s conference is about using sports to make us better human beings, but I think it can also serve to remind us of a fundamental business principle too. Your product needs to serve people and not just investors. Using your product to make people’s lives better – in this case, to teach life skills – is really the goal of business in my mind. Yours?

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