SBJ/Feb. 7-13, 2011/Opinion

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  • Cartoon: Commercial interest


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  • Marketing interest not equal for all NFL retirees

    Your article on the new relationship between 16W and NFL Alumni [SportsBusiness Journal, Jan. 24-30] mischaracterizes my testimony in the Parrish case. I agree with George Martin that a vibrant market exists for retired players, but only for some players. An undisputed fact in the Parrish case, which my testimony supported, is that NFL Players (formerly Players Inc) paid millions of dollars to hundreds of retired players over the years in question in the suit. In fact, each of the hundreds of retired players whose names and images were provided by Players Inc to a licensee was paid by Players Inc. Companies were then, and are now, willing to pay for the right to use hundreds of well-known and marketable former players such as Joe Namath or Jim Brown, but they were then, and are now, much less interested in using the thousands of average retired players who are relatively anonymous. What companies did not do then, and do not want to do now, is pay extra for the opportunity to access all retired players.

    The model is different for active players who receive much of their licensing compensation on an equal share basis (in direct payment to the players and in payment to the NFLPA to fund its operations). Why? Because licensees never know when an unheralded late-round draft choice will get hot during the season and be instantly in demand in the marketplace. Or when a team not expected to do well will suddenly catch fire and be in contention for the Super Bowl. So licensees pay guarantees and royalties to NFL Players for the right to use all active players on the roster, to protect themselves in the marketplace and to meet the demands of consumers. Licensees don’t have that problem with retired players. They know that Doug Allen will never be famous or marketable like Namath or Brown. What they told us when I represented Players Inc was that, while they appreciated the opportunity to use all retired players, since they didn’t need most of them, Players Inc should pay for their availability out of existing royalties. That would have required taking money from active players, and from well-known and marketable retired players, to pay to thousands of retired players who were not marketable and were not used by licensees.

    Despite some public comments to the contrary, most marketable retired players were not willing to share with all retired players, what, for many, was their main source of income. And active players were already using their leverage to get increases in benefits for retired players and were paying for a fully staffed NFLPA retired players department and benefits department out of active player licensing proceeds.

    While I believe that the decision in the Parrish case would have been overturned on appeal, I understand De Smith’s decision to settle the matter to help unite retired and active players. I wish anyone representing retired players in the licensing and appearance marketplace great success, but, because I understand the realities of that marketplace and my place in it, I won’t be surprised or disappointed if I am not one of the retired players utilized by licensees.

    Doug Allen
    Bal Harbour, Fla.

    Allen is former assistant executive director of the NFL Players Association and former president of NFL Players (formerly Players Inc).

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  • How do your fans value what you offer?

    In high school economics, we’re taught the standard supply and demand curves. As price goes up, demand goes down and vice versa. So when we look at our half-empty stadiums, arenas and ballparks, our first thought is that if we lower ticket prices, surely attendance will increase. Sometimes we even consider making our tickets free because at least then we’ll make some money on concessions and merchandise. As Julia Roberts quipped in “Pretty Woman,” “Big mistake. Big. Huge!”

    Sure, ticket prices don’t always reflect what the market will pay, but usually that’s not the case. Those economic demand curves, where quantity sold goes up as price goes down, only work when customers care about what you’re selling. The issue we’re facing is not one of price but of value.

    We do formal or even informal surveys to determine why people are not attending our events, and so often we hear, “It’s too expensive.” This is like asking someone who’s declined your dinner invitation why he’s not coming. He’ll probably say he “has to work” or some other gentle, easy excuse when in reality he doesn’t get along with your other friends and would prefer not to spend two hours at your house. The bottom line is that if they really wanted to be there, they would be. If the customers valued our event, if they felt it was worth their time and money, they would pay for the tickets.

    Therefore, we need to focus on increasing value, not necessarily decreasing price. Obvious things like a winning team and better seat locations increase value, but if we really seek to understand our fan base, other valued amenities and experiences will be uncovered. Perhaps it’s a play area for kids or novel concessions. Finding out what people value takes diligent research and time, so don’t wait until you have a problem to try to understand your fans. And if you already have a problem, don’t focus your research so much on price; try to understand what your potential fans value and alter the value proposition you offer accordingly.

    We can also create value through creative pricing. For instance, how much should a Division I 18-game college basketball season-ticket cost? Those of us in the industry could probably give a ballpark number, but on the whole, a fan on the street would be pulling a number out of the air if we asked. Let’s say we determine that a season-ticket package is $225. Is that a good or bad price? What if I add that a nine-game plan is $200? How much better does that season ticket seem? By building in our own pricing benchmarks, we can create value for our customers.

    The price we are exposed to the first time we purchase a service or product becomes a very strong anchor on what we believe that product/service “should” cost. This is the danger in giving away our tickets for free, especially to our first-time consumers. We are attributing a value of zero to our own products! We send the message that our product is not worth any of their money. They may be excited to be there for free, but are they ever going to pay to come back?

    I accidentally ran an experiment that highlighted this effect. We had one group of 100 pay for discount group-rate tickets to a basketball game, and we had a second group of 100 that qualified to receive complimentary tickets. Eighty-seven of the people from the paid ticket group picked up their tickets. Only 18 of the people from the complimentary ticket group picked up their tickets. The latter group had no value attributed to the event.

    The use of discount and free tickets probably isn’t going away any time soon, but at the very least, we must make certain our customers know what that ticket should have cost. We need to ensure the monetary value of that ticket is very clear, both on the ticket and more importantly in their brain.

    Pricing is not about us; it should not be about our costs, our budgets or our revenue goals. Pricing is about the consumer and what they value and perceive as value. 

    Elizabeth Cunningham (ecunningham2009@kellogg.northwestern.edu) is the associate director of marketing in the Northwestern University Athletic Department.

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  • Success on social networks involves creativity, fan interaction

    The rapid growth of social media is old news by now. However, in sports, using this medium in a productive and meaningful way still may be intimidating and foreign to many.

    There is a growing disparity between properties that embrace social media and others that hold involvement in sites like Facebook and Twitter at arm’s length.
    The Lakers’ Facebook fans top 5.6 million.

    The NBA’s number of Facebook fans is almost triple what the NFL’s is, and yet pro football dominates TV ratings and overall popularity. The L.A. Lakers lead U.S. teams with more than 5.6 million Facebook fans. Meanwhile, the New York Knicks, who play in the No. 1 media market and were recently ranked atop the Lakers on the Forbes NBA team values list, have fewer than 400,000.

    The total number of Facebook fans or Twitter followers is not a lone indicator, but it does help illustrate the gap. Some properties are taking chances, others are dipping their toes in the water, and many are waiting on the sidelines.

    Finding success

    The NHL and its teams are aggressively utilizing social media. This is not surprising when you consider hockey’s younger, more tech-savvy fan base. The Guardian 30 Match-Up, where fans voted on Facebook throughout the month of January for newly created team superheroes, is a great example of how to appeal to younger fans while generating interest leading up to the All-Star Game, where the 30 characters were showcased.

    The NHL teamed with Stan Lee to develop team superheroes with the help of Facebook followers.
    The Los Angeles Kings ran a promotion called “50,000 Strong.”In addition to increasing their exposure on Facebook, thecampaign included a sweepstakes overlay. Fans were encouraged to list the Kings as their favorite team on their profile page. Once the Kingsreached their goal of 50,000, one lucky fan was selected to win a VIP ticket package, autographed jersey and a meet-and-greet with team President Luc Robitaille.

    To support the Winter Classic game on New Year’s Day, the NHL and NBC launched an integrated campaign using Facebook, Twitter and on-air promotions.

    Other factors clearly played a role in the successful ratings, including the switch to a prime-time airing because of the weather and the HBO “24/7” show in the weeks leading up to the game. In addition to generating a positive TV rating, in the two weeks between Dec. 29 and Jan. 11, the NHL’s total number of Facebook fans increased by more than 50,000 and Twitter followers by approximately 11,000.

    Spreading the word

    These numbers may seem arbitrary and are not as easily quantified as TV ratings in terms of dollar value. What is a Facebook fan or Twitter follower worth to a team or a brand? Typically, online media is measured and purchased by impressions, but placing a monetary value against a fan on Facebook is elusive. We may not be able to answer this yet, but we do know social media provides a vehicle to reach and interact with consumers. It allows fans to take ownership by becoming personally vested while at the same time helping spread the word to their network.
    Every team owns a Facebook page and Twitter account, but how properties utilize these assets and communicate with their fans will separate the leaders from the pack.

    Sheer volume of Facebook fans may just be a byproduct of a team’s popularity, but what are they doing to engage these fans besides game recaps, injury updates, etc.? The quality of interaction, feedback from fans and influencing behavior will be the ultimate measurement.

    For those who are reluctant, the best thing to do is to jump in and get immersed in this space. Look at what other teams and brands are doing. Many are hiring full-time personnel, such as a director or manager of new media, to oversee this endeavor.

    There are probably several younger staff members at every organization, regardless of what department they work in, who could be a valuable resource. Social media is most likely second nature to them and a big part of their everyday lives.

    Getting sponsors involved

    If sponsors are not asking for social media assets already, they soon will be. There is tremendous value here, but don’t look to nickel and dime them on this. In some cases, they may be much further ahead in their efforts and could provide reciprocal support to the team. Brands such as Coca-Cola (22 million) and Red Bull (15 million) have millions of “likes” on Facebook.

    Open the dialogue by asking sponsors what they are doing and find ways for integration. Make social media a major piece of a sponsor promotion in addition to the usual TV or radio drop-ins. Create a post and link to a sponsor sweepstakes from the team Facebook page or send out a tweet informing fans about a player appearance at a retail partner. It’s pretty simple, doesn’t cost anything and will go a long way.

    For team marketers, ask fans for feedback about events, promotions and in-stadium experiences. Teams are often afraid of receiving negative comments for the public to see. However, social media provides an opportunity to respond and show someone is listening. Be part of the conversation, offer a solution and you may even change someone’s opinion. This can become a team’s instant exit poll or customer survey.

    This is a great time to be creative, progressive and expansive in your efforts. At a minimum, you can learn more about your fans or customers. Most importantly, you can create a one-to-one connection and hear what they are saying. The risk should be minimal, and by doing nothing you may be left behind.

    Jason Klein (jasonk@88marketing.com) is the founder of 88 Marketing and an adjunct professor for the University of San Francisco sports management program. Follow him on Twitter @88marketing.

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