Category Archives: Thinking Aloud

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?

1 Comment

Filed under sports business, Thinking Aloud

No Water, No Friction

Foodie Friday, and today we’re going to have a think about what microwave ovens can tell us about our business. I don’t know about you, but I use my microwave all the time. I tend to have a fair amount of leftovers around and it seems that my morning coffee gets cold before I can finish it. Both get a quick warm-up in the microwave. But let’s think for a moment about how a microwave actually works.

A microwave is less of an oven than it is a radio transmitter. The thing heats food by causing water molecules in whatever is being heated to vibrate as it sends out electromagnetic radiation. As they vibrate, the molecules rub against one another and it’s the friction that causes heat. If the thing being hit with the radiation contains no water (glass, ceramic, etc.), there is nothing to vibrate and, therefore, no heat created. That’s why the part of the bowl or plate you’re heating up that’s above/outside the thing being heated stays cool (at least until the heat from the food spreads outward). No friction means no heat.

I like to think of a business that way. A big part of what we want to do as businesspeople is to eliminate friction. We often talk about “frictionless” transactions. Business, after all, is built upon transactions between two parties, usually a buyer and a seller. It takes something – marketing of some sort, generally – to get some momentum going towards the conclusion of the transaction, but once that’s happened our job is to remove any impediments that create friction as the deal moves towards a conclusion. It can be a long line a the checkout, it can be unknowledgeable salespeople, it can be a lack of inventory. In short, we want to keep everyone “dry”, since no water means no friction, right?

Ask yourself what “dampens” your process. Where are the friction points? When the deal microwave is switched on, what begins to vibrate and create the heat that too often accompanies a deal?

Microwave ovens aren’t ideal for all forms of cooking but they excel when they’re used properly. Understanding how they work helps us use them appropriately, and we can take advantage of their speed and efficiency. Applying the “no water, no friction” thinking that makes a microwave work to our businesses can help us do the same thing there.

Leave a comment

Filed under food, Thinking Aloud

Independence Day Once More

I’m going to be a little lazy today since I have a sneaky feeling that many of you are off having fun for the extended holiday weekend. My laziness is taking the form of reposting this piece from July of 2008. As I reread it, It struck me that it’s even more appropriate now than it was 9 years ago (have I really been at this for that long??). No, it’s not an election year, but the rest of it struck a chord with me. You?

It’s going on July 4th and to all of us raised on the Red, White, and Blue we know it’s a day (OK, a long weekend) during which we can celebrate the fundamental principles that make the US of A what it is.  No, I’m not going to venture into politics (although it IS an election year and there’s a LOT to talk about).  What I do want to write about is the contradiction of the “independence day” term.

The Constitution (I know – a bit after the Declaration) begins with the word “we.”  We The People.  Not “me.”  The independence rightly celebrated this weekend is, to me, about the specific rights and freedoms we have to be ourselves as a people, with all the quirks that make us unique.  WE are independent of other folks (Great Britain, specifically, long ago) but NOT from one another.  I’ve spent the last 30+ years learning how critical having a strong bunch of folks around you is as well as setting the bar high in terms of with whom you do business as best you can.  Why?  Because the better they are, the better you become.  As I’ve transitioned from corporate life to consulting, the friends and business friends I’ve made over the last 30 years have been an unbelievable support network, even for a guy who is now independent.

Jack Ingram puts it well in his song “We’re All In This Together“:

We all think we’re special
And I hate to have to say
There’s a bunch of us on every corner
Of any town U.S.A.
We all got our problems
We all pay our dues
So if you’re thinking no one understands
I’ve got news for you

Chorus

We’re all in this together
Whether we like it or not
So we might as well have a good time
With the little piece of time we got
Life’s too short to fuss and fight
So we might as well be friends
‘Cause we’re all in this together
Together till the bitter end

So Happy July 4th.  Enjoy being independent.  Together.

Leave a comment

Filed under Reality checks, Thinking Aloud

Burgers And Dogs

It’s Foodie Friday, and we’re heading into what I hope is a long Fourth Of July weekend for you. At some point, hopefully, your plans include firing up a grill of some sort and cooking some hot dogs and hamburgers. Simple? You bet, but this is a weekend for leisure time and not getting all sweaty in front of a grill. Besides, you never know when your crew will get hungry, and burgers and dogs can be ready in no time. And what meal could be more All-Amercian (even if both foods come to us from German origins)?

It wouldn’t be the screed if we didn’t use the simplicity of burgers and dogs as a jumping off point for some business-related thought, right? As I was musing about that, it came to me that there are, in fact, a lot of possibilities with either of those basic dishes, even if you’re not stuffing your own hot dog casings or grinding your own meat for the burgers (I do the latter; the former is well beyond my patience). Think about the almost endless variations on the hot dog. I used to patronize two very fine establishments who were renowned for their extensive takes on various dogs. You can change up the meat (all beef, beef and pork, etc.), you can change the dressings and roll (compare the classic Chicago dog with a classic Detroit Coney Island, a chili dog and onions), but the thing is still a boring old hot dog (not).

It’s the same with burgers. I have a few different burger books in my cookbook collection, and while the dressings, meats, and buns vary a lot, it’s still some form of ground meat shaped into a patty and grilled. Heck, you can even taste the difference (if you’re brave) between a simple burger from McDonald’s vs. one from Burger King (cooking on a grill vs. a griddle). It doesn’t take much to change the dish.

The business point is this. Even if you’re in a very crowded space, your business can distinguish itself. You do this by becoming a brand – something that is instantly recognizable for the promise to the customer it contains. You can do this through great service, great value, smart marketing, or any other number of ways.  What makes a Chicago Dog unique are the sport peppers, the poppy seed bun, and the celery salt. What makes you unique? How does your vision differ from all the other people in your business area?

Enjoy your Fourth and your cookout. Just remember that even if it’s plain old burgers and dogs, you’re the secret sauce that can make everything unique, both on the grill and in the office.

Leave a comment

Filed under food, Thinking Aloud

Cars For Dummies

I bought a new car yesterday. Mine was going on 10 years old and was beginning to show those little warning signs that it was heading downhill. Advocate for proactive action that I am, I decided that 10 years was a good run and that the car and I should part as friends. I know this will come as a shock to you but today’s post isn’t a screed about how my salesperson mistreated me (he didn’t) or how the paperwork takes forever (well, only about an hour) or how I had to negotiate my butt off to get a fair deal (we agreed on numbers in about 30 seconds – yay for the internet bringing transparency).

What has surprised me instead is how much more complex the car is. The decade has turned our vehicles into rolling computers. The owner’s manual – which comes in a few volumes – is roughly the size of a paperback edition of War And Peace. It should have a “hernia hazard” warning on the cover. The car has radar on all sides so that there is no longer a “blind spot”. I can set the cruise control and the radar in front of the car will keep me at a pre-determined distance from the car in front of me regardless of the speed I’ve set. The car will also hit the brakes if it thinks I’m moving toward an object too quickly – useful for idiots that are texting and driving I suppose, but also in case the car in front of you stops short.

I have the ability to connect via Bluetooth, which I had in my old car, but the functionality is much more advanced. In addition, I can link in via a USB cable and have the car perform dozens of functions through my phone and the car’s software. I can install apps in the car, which has its own ISP address. Of course, that’s assuming I can understand how to use all of this. The media center has its own rather large manual as well. My favorite passage in both manuals so far? A warning not to test the collision avoidance system. I suppose some moron thinks driving at a wall doing 40 to see if it works might be fun.

Why am I bring this up? Cars are very complicated machines and while I’m certainly a long-time user of them (as well as a relatively sophisticated user of digital products) I’m kind of overwhelmed. Part of what we need to remember as we introduce new features to current users or our product to new users is that they need help. Jargon isn’t helpful nor are explanations written by technical writers who are engineers first and consumers second. I would have loved a short pamphlet that showed the “Top Ten Things You Will Want To Do First”, written in plain language, highly illustrated, and backed up by a newcomers’ hotline I could call if I ran into trouble. Expensive to support? Sure, but cars are expensive products. Could the dealer have sat with me and provided that service? You bet. Did they? Nope.

Selling the product is only part of the process. Making sure the customer gets every bit of value out of what you’ve sold them is just as important. I’m off to figure out just what I’ve bought here. At least I knew how to get it home!

 

Leave a comment

Filed under Thinking Aloud, What's Going On

The Health Inspector

For our Foodie Friday Fun this week, let’s talk about the grades restaurants receive from the health department. Depending on where you live, you might see an “A” to “F” scale or some number on a 100-point scale. Most jurisdictions require that the establishment display its most recent grade and I, for one, make a point to have a look at it, especially when it’s an unfamiliar place. I don’t know about you, but I won’t eat in a place where the grade drops below 92 or “A”. Better safe than sorry, right?

I looked up the record of a place in which I eat frequently. It’s well-run and I’ve peeked in the kitchen to see if my opinion might change (back of house and front of house are two very different worlds, after all). It too looked well run. Their last 9 inspections confirm this – they run from a low of 96 to a few perfect scores of 100. Does that make the food taste any better? No, but at least I have no qualms about tasting it.

Why do I raise this since most of us aren’t in the restaurant business? Because each of us gets inspected and publicly rated every day. Search for any business and you’ll almost assuredly see several review sites or actual reviews in the search results themselves. I’m not even thinking of influencers here, just normal folk who have some information (if they’ve patronized a business and you haven’t, that’s knowledge) and the ability to share it. I suspect that Amazon’s product reviews are almost as valuable an information source as their purchase data, and Consumer Reports has built a business in doing unbiased reviews for as long as I can remember.

Everyone who interacts with you business is a health inspector of sorts. The National Restaurant Association has some tips on how to prepare for a health inspection and a few just might apply to your business as well:

  • Walk into your establishment from the outside to get an outsider’s impression.
  • Brief your kitchen staff to review any problems post-inspection.
  • Ensure all staff are on the same page.
  • Know your priorities.
  • Train your managers to ensure they are up-to-date on the latest food-safety techniques.
  • Review your local health code.

In other words, approach things from the customer’s perspective, reinforce that need to everyone on the staff, operate as a cohesive unit, listen and respond to customer feedback, stay current and be sure you’re operating under whatever set of rules govern your field of business. Those tips will keep health inspectors of any sort happy, don’t you think?

Leave a comment

Filed under food, Thinking Aloud

Learning From The Apocalypse

While you’re probably aware of the loss of jobs in the coal mining sector, you might not have been paying attention to what’s going on in retail. Department stores alone have lost 18 times the number of jobs when compared with coal miners since 2001. That doesn’t include all the smaller players that have gone out of business nor the number of jobs lost among those who are support people at shopping malls – cleaners, etc. The term you see most often as you begin to research this topic is “apocalypse.” If you’re in the media business, the music business, or many others, you might think of it as just another incidence of disruption.

Inside an abandoned mall in Allen, Texas. The ...

(Photo credit: Wikipedia)

One of the most disturbing things I’ve read recently was as study by GetApp, which reported that

Two out of three business owners who currently run both an online and physical store believe that they will close their physical store’s doors within ten years and operate their business solely online, according to new research conducted by GetApp.

In fact, there were over 3,500 store closings from Macy’s, JCPenney, K-Mart, and others this year. It’s happening because of technology and globalization. Ask yourself when the last time you went to the mall to go shopping. The only times I’ve been have been when I needed something in my hands immediately, and even that reason is being addressed by Amazon and others. It’s not going to get better, either.

So what do you do if you’ve invested millions of dollars building malls or other large retail spaces? That’s really the situation many businesses find themselves in. Not with respect to owning physical space but in having to expand their thinking. Landlords who thought of themselves as containers for retail are now having to think about servicing a different clientele. Churches, movie theaters, medical offices, gyms, and other tenants can move in while others move out. I drove through what used to be an outlet mall this weekend, and while it was pretty deserted (and kind of depressing), there appeared to be a couple of small start-up companies who had leased space. I’m wondering if the space was less expensive than comparable space in one of the many start-up hotels that have popped up seemingly everywhere. Of course, servicing these other tenants will require a different set of services and skills but that’s what disruption breeds, isn’t it?

The retail apocalypse is just one manifestation of what’s been happening for the last 25 years. Every business is ripe for disruption and it’s really a case of how far along it is in the process. The real question is how prepared are you as it’s happening?

Leave a comment

Filed under What's Going On, Thinking Aloud