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Editor’s note: Each quarter, Up Next will present issues and perspectives by Rich Luker, consultant with The Luker Co., that will try to move the industry forward in its thinking. There will be trending data on issues like the declining interest in sports among our youth, and thoughts from industry leaders about what’s on the horizon.
Pressure on companies to cut costs and improve the bottom line.
The shrinking pool of discretionary income available to middle-income families.
It should come as no surprise that these are the top two issues sports business leaders identified when looking ahead to the third quarter.
As part of the development of a “coaches poll” for rating the importance of issues inside and outside the industry, I asked 26 industry leaders to rate a list of 10 dynamics that might affect sports in the near- and long-term (see chart, below). In the future, it will be pared down to a “Future Five” of issues to watch.
Consumer sentiment was considered of midlevel importance in the Future Five rankings (No. 6 of 10), but recent research indicates the current economic troubles have led to a decline in American support for sponsorship investment (see Tracks, at right).
What does it all mean? In this quarter’s Forward Thinking With ... (at right), both GM’s Steve Tihanyi and A-B’s Tim Schoen address the pressure they are under to perform and the emphasis that is being placed on the value of sports activation.
Meanwhile, we should all be concerned with the state of youth interest in sports. Kids ages 12-17 have always spent the most time with, had the greatest interest in and have liked the most sports. But the biggest of the big — males 12-17 who are a “10” on the sports fan scale — are declining, and since 2004, the size of that group is smaller than the males 18-34 group (see The American Fan Base, above right).
If you are, or know of, an industry leader to consider for our “coaches poll,” or if you have an issue we should address or a comment to make, please send it to Rich Luker at Rich@lukerco.com.
FUTURE FIVE What will be the most important issue of the third quarter? RANK ISSUETOTAL POINTS (% of 1ST PLACE VOTES) 1 Impact of the pressure companies are feeling to reduce costs and improve the bottom line217 (35%) 2 Amount of discretionary income available to middle-income families206 (31%) 3 Investments in sports sponsorships by companies194 (12%) 4 Television ratings for nationally broadcast sporting events152 (0%) 5 Attendance at pro and major college sporting events129 (0%) 6 Popular sentiment regarding corporate investment in American sports125 (8%) 7 Changes in the industry that may be signaled by long-term deals finalized in the third quarter124 (0%) 8 Price of gasoline106 (8%) 9 Spending on sports-related products, from equipment to licensed products103 (0%) 10 U.S. government actions related to American sports74 (8%) Note: Results based on a survey of 26 industry leaders. Participants ranked each of the 10 issues, with 10 points being assigned for a 1st-place vote, nine points for a 2nd-place vote, down to 1 point for the 10th-place issue. Percentages have been rounded.
General director, media operations, marketing alliances and branded entertainment
What should we expect in sports from the auto industry yet this year?
Tihanyi: Under current conditions I think you will see a decline. I think all (automakers) are going through a process of extensive evaluation and looking for the (sports) that provide the best fit and the biggest bang for the buck.
What, if any, role do you think sports sponsorship will play in revitalizing the domestic auto industry?
Tihanyi: If it can deliver the desired results, meaning more direct connectivity to new-car buying consumers, or greater flexibility within the rights and allowing a manufacturer to spend more on activation to achieve greater direct business metrics, then I think you’ll see it help revive the industry. If it’s the same old play, I don’t think the role will be significant. I believe we’re at a crossroads with the sports industry in general, where the partners that understand the severity of what’s happening in the auto business [and that] adjust their expectations and how they allow manufacturers to engage will come out way ahead of the ones that continue to be bound by old relationship models.
Vice president, sports and entertainment marketing
What is the biggest impact the current state of the economy will have on your approach to sports marketing in the near and longer term?
Schoen: Activation becomes far more important. We are under pressure to deliver financial results and we have to do more to provide the relief Americans need with our investment dollars. Property costs have taken increasingly more of our dollars, and we need to make activation the priority now and into the future.