Tag Archives: Business model

September 11, 2017 · 9:39 am

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

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September 8, 2017 · 8:43 am

Our Daily Bread

I was struck, this Foodie Friday, by an article written for the Civil Eats site about how much bread is wasted. I don’t mean financial resources. This is actual bread: loaves, bagels, even donuts. As the piece states:

There’s also the fact that, except in the most exclusive bakeries, a bare shelf is a no-no. Customers expect fresh bread and lots of it. Sugar and fat are also relatively inexpensive, so it is safer to make too much and donate the leftovers than it is to risk running out.

Apparently, it’s a worldwide epidemic, caused, in part, by the growth of factory bread. You know: mass-produced loaves that taste like nothing and are full of fat, carbs, and not much else. Putting aside the quality of the products, I hate waste in all of its forms but particularly when it comes to food. Yes, there are people in this country and around the world who are starving, but I don’t think for a minute that the food either you or I throw out is taken from their mouths. I also get that the statement is more a reminder to be thankful for what we have. What’s lost in idly tossing out food or giving away a bakery’s excess is something I learned from both my friend’s grandmother who taught me to cook and from watching Jacques Pepin on TV.

Nothing is to be wasted. Old bread becomes breadcrumbs or a panade to round out meatballs or a meatloaf. Maybe it’s even the star of a Panzanella. Top mac and cheese with fresh breadcrumbs. Veggie trimmings can be collected and used to make broth, as can shrimp shells or meat trimmings. Ground beef generally is, in fact, meat trimmings.Find some Jacques Pepin videos on YouTube and you’ll be struck by how everything he has is used somehow, even as a garnish.

Bakeries might need to do a better job of managing their dough, but so do we. The kitchen mantra of wasting nothing needs to apply to every business. I once saw the events group at the NHL dragging full garbage bins. They were tossing the contents of their closet which contained event signs and other stuff. We turned their garbage into a million dollar auction business. Nothing is wasted.

What if the bakeries and supermarkets changed the paradigm? What if empty shelves were a sign of an in-demand, high-quality product? What if they made less? Great BBQ places run out of food in hours. It sure makes projecting your P&L a lot easier when you know that you’ll sell everything you make. Sure, you’re losing a bit of upside by running out, but how does that compare with what you’re wasting? Food for thought!

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July 12, 2017 · 12:15 pm

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:

A 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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