Three trends from the upfront season Kroenke comfortable wearing 2nd hat From the Field of Risk Management Plaintiff seeks documents from FSG Demos key to Microsoft’s MLS deal People: Executive transactions Reinsdorf values people he knows, trusts Racetracks attract music festivals For the WNBA, time for a clutch 3 Super Bowl’s numerals: Still a classic
Bravo to the New York Yankees and their media relations director Jason Zillo. The team recently completed “Hope Week,” the second season of a weeklong program of good will. Zillo came up with the idea for Hope Week in 2009 as a way to recognize and reward inspirational members of the community, while also encouraging service.
This season’s effort was another widely successful initiative, with significant player buy-in and tremendous national PR. New York Magazine called Hope Week, “a great little thing.” NBC News ran moving segments during “Nightly News” and “The Today Show,” with co-host Meredith Vieira saying there “are so many wonderful things that these teams do that need to be recognized” as “we often hear about players behaving badly.” Even the local tabloids praised it, with the New York Daily News’ Mike Lupica writing “there was a magic” throughout Hope Week. Lupica: “Magic and the power of sports. This isn’t just what sports teams can do over a week like this, it’s what they’re supposed to do.”
All franchises give back, and they shouldn’t face the unenviable comparison or position of looking like late-to-the party imitators. The Yankees achieve recognition purely for being the Pinstripes, but it shouldn’t put a damper on what other teams look to accomplish in their market. What Zillo and the Yankees have done rightfully deserves praise, and the team has set the bar so high that we are eager to see how they can continue to inspire.
You may recall almost a year ago when we chided Beijing bureaucrats for glibly announcing the 2008 Olympic Games reportedly made a tidy operating profit of $146 million. We were concerned then about the challenges of assessing true economic impact for a mega-event, the traditional underestimation of “legacy” intangibles and the “circus politics” of these reports.
Well, Vancouver 2010’s turn to pontificate is imminent and, although you’ll likely hear different, we’re confident VANOC and the city of Vancouver lost money but gained equity. In fact, we think, based on information trickling out of Lausanne, Switzerland, that the International Olympic Committee is sufficiently prepared to help compensate VANOC for revenue losses tied to the shattered global economy (2008-10) and pre-Games weather.
Driving this issue is a little-read report given to the Vancouver City Council (heard in late April and based on preliminary data) suggesting that after the Canadian and British Columbia governments picked up a tab of about $175 million (all figures Canadian), the estimated bill for Vancouver would approach, if not exceed, $600 million.
In simple terms, the morning-after economic indicators are clearly pointing south.
But what if various Vancouver parties did lose money? Is that all bad?
Our assessment: It isn’t. That’s because the cost of building things or growing city reputations can’t always be booked as losses. As we noted previously, never underestimate the future economic value of intangibles like city pride and volunteerism, or the indirect benefits like tourism and brand enhancement.
But start with this: If economists were given full access to all Vancouver data, they would likely suggest Vancouver did well from a capital perspective although the city’s cash flow analysis and projections were ugly.
Additionally, the fact that none of Vancouver’s capital benefits (highways, athletic facilities, social housing, etc.) and intangible gains would have happened when they did without the procurement of the Games is important here. How we determine the value of these benefits drives how independent parties view Vancouver’s economic success or failure.
Third, relatively speaking, debt of $600 million, amortized over the long term, is not horrific. Although the city had to take over the athletes village project when its original financier pulled out (thought to be about $1 billion), you must remember Vancouver was Canada’s third Olympic Games in 34 years. That gives us two extreme precedents:
Conservative Calgary, at one end of the spectrum, enjoyed estimated profits in the neighborhood of $100 million, not including government-funded infrastructure projects, which funded many initiatives and grew as an endowment under the Calgary Olympic Development Association.
Manic Montreal sits at the other end with an estimated debt of $1 billion. Its legacy includes numerous facilities that hung like albatrosses around the city’s sagging neck.
But if we benchmark versus other Olympic cities, there are marketing positives to infer. Think of the benefits of putting a city on the map for tourism and economic development (e.g., Sydney, Atlanta), or building unprecedented awareness for a ski resort region (e.g., Lake Placid, Albertville).
City branding as a concept is now well-established and holds the potential to offer long-term benefits for many municipalities, although quantifying is difficult and expensive. Contemporary scholars know this and are working on research showing how sponsors can indirectly benefit from strong city branding via mega-event management.
Finally, as hinted above, keep in mind Vancouver’s budget assessment is only one piece of the budget equation. Three other organizations pitched in considerably. The final numbers of VANOC, the province and the federal government are not yet out. Their budgets were $1.75 billion, $763 million and $898 million, respectively. Combined, that’s $3.41 billion invested in a region that features a great ski destination, one NHL team and one MLS expansion unit (the Whitecaps start play in 2011).
“It’s all fabulous but it was very, very expensive,” said Vancouver City Councilor Geoff Meggs, in comments published in April by The (Toronto) Globe and Mail. “The largest part is in the capital costs, and it cost more than it should have. There was no budget control under the [previous] administration.”
Vancouver City Councilor Suzanne Anton suggested Meggs was missing the point. She told The Globe and Mail, “The report makes the expenses look exceptionally high because the city’s budget office included every project completed in advance of the Olympics, even if it was already on the books to be done.”
Wars with words are born in the reality of casual economics. As soon as a city wins a major event bid that requires construction (i.e., the Olympics) the cost of concrete, cranes and crowbars doubles and triples. Why? The simple answer is massive locked-in demand, specialized suppliers and limited supply. Add to that an immovable deadline and global scrutiny, and it’s a foreman’s dream.
To that end, we looked to the cities of Calgary (1988), Albertville (1992), Nagano (1998), and Salt Lake City (2002) — all in comparable locations to Vancouver. In each case, the local organizing committee broke even or reported a modest profit. However, in all but Salt Lake City, government bodies kicked in substantially for infrastructure.
Despite numerous challenges, we’ve mixed art with forecasting science to suggest VANOC will ultimately announce a profit of $29 million, not including the capital investments in roads, stadiums, etc. (which we are assuming as a break-even for the city).
So there you have it … we sat on the fence. We’ve reported the city of Vancouver “lost” money but believe VANOC will announce a “profit” just to make sure the politics of the circus remain friendly.
Call it modern sports economics at work.
Rick Burton (email@example.com) is the David B. Falk Professor of Sport Management at Syracuse University and the former chief marketing officer of the U.S. Olympic Committee. Norm O’Reilly (firstname.lastname@example.org) is an associate professor of sport business at the University of Ottawa.
Congratulations, Wizards. You’ve got your man. In John Wall, you have the total package: A versatile point guard with freakish athleticism, he has great lateral quickness, can create his own shot and can get to the free throw line.
But wait, there’s more. Wall’s got a face the camera will love, and he’s well-spoken, which means Washington’s marketing department is just as thrilled with him as the coaching staff that’s drawing up the X’s and O’s. Time to start plastering him all over the Verizon Center and throughout D.C., right?
Not so fast.
As tempting as it might be for the Wizards to declare Wall their Marketing Commander In Chief, let’s hope they show some restraint. Using him as the centerpiece of a marketing campaign may seem like a no-brainer, but it’s probably the riskiest move they could make. And my words of caution aren’t Wizards-centric. This advice applies to all pro teams, including the Wizards’ crosstown neighbors, the Nationals and Redskins, as they draw up and fine tune their respective marketing game plans around rookie sensation Stephen Strasburg and Pro Bowler Donovan McNabb.
This cautionary tale can be summed up in eight words: Ben Roethlisberger, Michael Vick, Tiger Woods, Gilbert Arenas.
No, I’m not saying all pro athletes are villains. I am saying it’s time to re-evaluate how we market our teams.
From this point forward, I’m asking for a moratorium on the “sell the star” approach. Who’s with me? I’m sensing intrigue, but I see few hands. Let me make my case.
In sports, winning or losing is determined by the effort of the team, not any one individual. (Just ask Allen Iverson.) So why doesn’t this same “band of brothers” mentality apply when it comes to the team’s marketing efforts? It should.
The default for most teams is to plaster a larger-than-life photo of their best player or hottest prospect on as many print ads and bus shelters as possible. And who can argue? It’s your highest scorer! Your leader! Your greatest asset! Merely showing his or her face will drive fans in droves!
Perhaps to a degree, but at what cost?
Tens of thousands of dollars are spent on photo shoots, TV spots, billboards, program covers — you name it. This is all well and good until that star heads into a bar’s bathroom with an underage co-ed or gets caught with an arsenal of firepower in a locker room. Then what? From a marketing perspective, the brand is dinged for sure, and guess what player’s image hangs on a three-story banner aside the arena? Yep, the one who got busted with the Glock.
Murphy’s Law states that trouble and high-profile athletes are two things that find each other. Yet marketers of all kinds — from sports teams to big corporations — are routinely unable to resist the temptation of pushing product by pushing personality. The most powerful recent reminder in the corporate world came in the form of Accenture. After the Woods debacle, they used one hand to flush away their multimillion-dollar investment while using the other to scratch their heads and wonder why they ever approved the headline, “We know what it takes to be a Tiger.”
Beside the fact that it’s a potentially expensive mistake that can be catastrophic to the brand, isn’t it also the easy way out? Does a face, alone, sell game tickets? I don’t believe so. Fans cheer for players so long as their guy is wearing the uniform, but it’s not the player who endures. It’s the logo, the lore, the stadium experience, the brand persona. Your star player isn’t your greatest asset; your brand is.
If we can sell dishwashing soap without showing the detergent and vodka without showing the spirit, why can’t we sell the game experience without defaulting to a huge image of a player dribbling down the court?
I bring these views to you from experience, because even the best-intended ad campaign can hit a snag. When our agency, Door Number 3, created the 2008-09 Dallas Stars campaign, we paired individual player portraits with determined headlines like, “Part man. Part brick and mortar.” for goalie Marty Turco, and “Leads the league in testosterone” for winger Brenden Morrow. While these players certainly didn’t find the same type of troubles that those mentioned above did, we didn’t anticipate when creating the campaign that Turco would hit a career-low slump and Morrow would go down with a season-ending knee injury. Fortunately, the campaign narrative was broader than any one player, so we tweaked the messaging and rolled on. But lesson learned: Don’t invest too many marketing dollars on any one guy.
Some teams have cracked the code. Check out the hilarious 2009 Boston Bruins Bear Rules playoff campaign or the emotive Chicago Cubs 2009 campaign anchored by outdoor boards and print ads portraying the classic ballpark experience. Oversized imagery of teammates were paired with inviting headlines framed within the iconic Wrigley marquee. Such headlines included, “Wrigley Field. Home of the brick and ivy time machine.” and “Wrigley Field. Home of working from home today.” I can almost smell the Cracker Jack from here.
My plea for a moratorium on the “sell the star” approach wasn’t created in a vacuum. I’m only echoing the best sports marketing advice I ever read. It came out in the early 17th century, before baseball, basketball or football were even invented. English poet John Donne’s words: “No man is an island.”
Mr. Donne, let’s hope the Wizards, and other teams, heed your advice.