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SBJ/February 28 - March 6, 2011/In Depth
Tech gets a seat at the table
Back-office duties remain, but technologists today are helping to set the strategy on revenues, sponsorships and improving the fan experience
Published February 28, 2011, Page 16
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The technology summit was held Feb. 9 using Cisco's TelePresence to connect participants in New York, Los Angeles, San Jose, Orlando and Charlotte.
Denise Taylor, AEG: We're getting called upon for much more than just core systems and services. They're coming to us for revenue generation, products that will enhance the fan experience. One of the biggest areas of our growth is our involvement with our sponsorship group. I spend the majority of my time, at least 65 percent of my time, out in the field working with our various business units on solidifying sponsorship deals and working with business units to develop their individual technology strategies going forward.
Larry Bonfante, USTA: IT is a key business enabler for every aspect of the business. … Whether it's helping to drive our programs throughout the country or whether it's actually starting to monetize some of our assets, and start to drive top-line revenue, IT really is in every aspect of the business at this point.
Craig Neeb, ISC: Early on it was a very infrastructure-oriented approach in our sport. But as technology has been more and more adopted by our consumers, the strategic advantage around technology has played a bigger role. It's also viewed as one of the key innovators as well as how do we do things differently, how do we engage with our fans more, how do we listen to our fans more. We're basically now … at the table in helping to set the overall business direction, and then that closely aligns to what the total corporate strategy may be and where we're trying to go as a business.
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Peter Brickman, New Meadowlands Stadium: From the stadium point of view, when I came on, I was tasked by our ownership to take the stadium experience to a higher level than what viewers can see at the home. We use technology in many different facets to create multiple touch points and provide a very robust experience. More than just the scoreboards, but a stadium that's bathed in Wi-Fi and tons of interactive experiences through our StadiumVision product, and the ability to plug and play into the future for new technologies that come, as they get developed, and quickly get them implemented and bring them to market.
You're all in agreement that technology leaders command a different seat at the table than they used to. How has that changed?
Bonfante: When I first got to the USTA, IT was viewed as a utility, and not a very effective utility, to be honest with you. So it has evolved as we've built credibility in terms of what we can deliver for our consumers. We've been more engaged in the process to the point now that we run side-by-side with business folks on everything they do.
Neeb: When you compare the sports entertainment industry to other more traditional industries that use technology, be they manufacturing or retail, technology was core to those businesses. I came out of that into sports entertainment, this was 2000, and it was a quick realization that the same view didn't occur in sports. It was viewed more as that utility and I have to keep the lights on and keep the plumbing working and all those things. What has happened … is that the consumer is what's really driving the demand for that new experience and that new technology. And so the relative importance of it has certainly bubbled up. As leaders you have to earn your way to the table, too, and you have to be able to be part of the business strategy and earn that respect and be able to talk in that fashion and deliver against those solutions.
Schwalb: I'm the first CIO/CTO for NASCAR. I think it is a direct response to your point that the elevation and recognition by the governing body and the leadership at NASCAR that technology was going to play a critical role in all aspects of the business. So they wanted to have someone with a seat at the table to participate in business strategy, everything from competition to marketing, through running operations, through our media, and different channels of distribution for our content. I would say that's a fairly new recognition for NASCAR, but they clearly understand the importance of that from the top down.
Rob Hunter, ESPN: I think the thing that has changed most, that has changed the nature of the seat at the table, is the requirement across functional teams for technology to integrate capabilities. If you think back even 10 years ago, there was a telecommunications person and they were largely responsible for telecommunications. Today the telecommunications function crosses everybody else's universe. You can say the same thing about data networking. … Live-event production was one class of skills, studio production was another class of skills. There wasn't necessarily correspondence between them. Neither one of them leaked over much into the digital media space. Today, it is our role as technologists to help each of those different functional groups leverage their skills, and the skills of their colleagues, and that's a big, big difference — the integration requirement's really changed.
If you look at the role of the CIO/CTO today, and you go out three to five years, what will that look like, and where are those individuals being created? Are they coming from the other sectors? Are they being created within the sports and entertainment field?
Bonfante: I think it's less about where people are coming from and more about the competencies they're bringing to the table. Historically, the CIO has been more of an information technology professional who you want to keep the lights on. I think the focus now is on someone who knows how to drive organizational change, someone who knows how to develop relations both at the consumer level and the board level, and someone who really knows how to drive change, be a leader in the organization, and engage with every aspect. … I think the focus is different. I think the competencies are different moving forward.
Brickman: I think as we mature and go forward we are going to spend a lot more time on the product offering of the company more so than just the back office, working with whether it's the content producers or whatever to facilitate their needs. Typically, what I've seen now … is that we're spending a lot of time with the sponsorship groups, spending a lot of time with the production groups and the marketing groups, to create these new experiences and figure out how to execute whatever it is they need. But we do start to step into the actual product offering as opposed to making sure we have enough servers and bandwidth to make it happen.
Hunter: The notion that the technology leadership is at least involved in, if not responsible for, the product development is pretty key. We have a great deal of respect here for the folks who run facilities, whether it's Denise … or what Peter's been doing with the New Meadowlands. If we look at the platforms they have to create, and of course they are customer facing on a daily basis, so they can't break, they can't not work, when someone walks through the door … what that really says is that we have a direct responsibility today to facilitate the delivery of product. And that, I think, is a bit of a change from the notion that the CIO was a utility operator and as long as the utility was flowing, everybody was going to be happy. That's not good enough today.
You've talked about aligning your strategy, your technology groups, with the business, strategic goals. What have been the challenges there?
The U.S. Open's command center makes sure the event delivers for consumers.
Give us a specific example of how you've been able to drive change in your organization.
Bonfante: One of our big initiatives is 10-and-under tennis. We're trying to get kids involved in tennis earlier, have a more positive experience, so they grow up playing tennis for a lifetime. Every aspect of how we're driving that program and the awareness of that program is through the use of technology, whether it's social media, whether it's Web presence where parents and providers can go on to get every aspect of what they need to know to get kids involved in tennis — everything that we're doing to drive that program forward has technology as an underpinning, especially when you consider that this generation of tennis players, that's where they live, that's how they engage, is with those types of media.
Neeb: One of the things that we started a couple of years ago was really the need for information around our customers and who they are, what they like, what their interests are. It's the classic relationship management, or CRM. And that concept for years in our sport really wasn't necessary because our sport was growing so rapidly. Then, as it peaked and flattened out, and certainly with the economic situation started to decline, what we've been able to build over the last two years is that 360-degree view of the customer where every time we touched a fan, no matter what channel we touched that fan, we were asking for information, storing that information about who that fan was, so that we could go back and segment around those fans and understand what their likes and dislikes are, and their propensities to deal with us and have business with us and engage with us.
What are some of the barriers or roadblocks to innovation, and how are you addressing them?
Bonfante: I think the biggest barrier to innovation quite frankly is a cultural barrier. You have to create a culture where prudent risk is recognized and rewarded. A lot of people, especially in technology, grew up that the lights have to be on constantly, and if anything went wrong, that they were put out behind a tool shed and shot. The whole idea with innovation is that you're going to take risks, and some of those risks are going to work and some of them aren't, and it's OK if they don't work as long as you learn something from that process and move the change forward.
Taylor: For us the biggest challenge with innovation is actually balancing the wants and the needs. Our culture at AEG is very, very dynamic and very entrepreneurial, so the ideas come forward all the time. So it's really looking at it and making sure we take advantage of those innovations that there's a goal attached to it, and not just a want out there. … Like I said, we work in a great culture that produces ideas, generates thoughts, has lots of collaboration across multiple business units. Then it's really narrowing it down to those decisions where we really want to take the risk.
Schwalb: In the culture, especially in NASCAR and other places I've been, a lot of good ideas are popped around, and how do you put a good filter in place, because a lot of good ideas can get in the way of a great idea. You want to make sure you focus your energies and resources on that great idea that can really move the ball forward versus getting mired with a bunch of just little good ideas. … The other part about it is that I'm always mindful, too, of respecting tradition and heritage. Innovation can move you off where your real core path is if you're not careful and understand where you're heading. So keeping that anchored appropriately, not to hold you back, not to keep you from moving forward, but in keeping with what your core value structure is, is important as well.
Neeb: I think the balancing is probably the most challenging thing in all of this because, as Denise pointed out and Andy, innovation is coming in from everywhere. It's that vetting process, but not being viewed as bureaucratic or inflexible. It's getting that ownership in from the other stakeholders that are helping to set that priority so that it doesn't come across that technology is the barrier or the impediment to getting it done. It really is collaboration around everybody setting what those priorities are, and making sure everyone buys into that process.
New Meadowlands Stadium takes full advantage of video signage, whether to help direct fans to entrances that have the shortest lines or to keep them up to date on scores of other games.
Brickman: What we're finding now is the explosive growth of Wi-Fi. In an 80,000-seat venue, you're never going to have enough bandwidth on cellular … to support streaming of content to the appliance. You're going to have to rely on other vehicles such as Wi-Fi. We have been talking to Cisco to develop the next generation of Wi-Fi streaming. It goes not only to the number of access points in the building, which will basically be doubled pretty soon, but also to the type of players that are on the appliance. We're working with the development of multicast
Bonfante: We have a similar situation where the Wi-Fi isn't an issue, because we have control over that. We've blanketed the campus with Wi-Fi. But when you get to the patrons and the fan experience, we could put 35,000 people on the grounds, and the Mets may be playing across the street with another 45,000, so you've got the better part of 80,000 people all trying to share that 3G or 4G bandwidth. We've got wonderful applications, we have a great U.S. Open iPhone application, but if you can't access it, it loses its value.
Brickman: We have very low-power, 500 cellular antennas throughout the building that can pick up, and each carrier has its own. The top carriers have been very supportive of the program. Now the second- and third-tier carriers are realizing that they have to come in.
Bonfante: You're playing football games for the better part of half of the year, so the carriers are willing to make that investment, whereas our event happens over a two-week period, so to build that permanent infrastructure just isn't cost effective for them.
Neeb: I share that pain with you, Larry, having to do that in facilities that may only operate two weekends a year. And then on top of that … the amount of acreage that we have to cover. Then we don't have any RF (radio frequency) plans, or any RF police around it, and that's something that we're working with the sanctioning body and NASCAR — how do we get more disciplined? You have your vendors who come in with their wireless, you have the teams, you have what's proprietary to the facility and everything else. It becomes a wireless mess for lack of a better term, to try to address. And getting back to Peter's point, the expectation of the customer is "I'm going to get a cell signal. I'm going to get wireless and I'm going to be able to do whatever I can do at home, in the stadium." And then when they don't get that, it's an upset customer and how do you address that?
Taylor: As much as we're impacting the customer with their expectations, one of the challenges we're running up against is that it actually affects our back-of-the-house operations. We use wireless for ticketing, for food and beverage, for merchandise sales, so we're dealing with a two-prong issue here. Obviously the upset fan is a huge concern for us, but in the same breath, too, if our operations can't run, we're going to have an even greater number of upset fans to deal with.
How does wireless fit into your overall business strategy? What kind of content and media rights issues do you see there, and how are you looking to deal with that to create new experiences?
Brickman: From the NFL stadium point of view, we have a unique opportunity because, the way the broadcast agreements are written, we have unfettered rights to anything NFL related within the stadium compound. So offering an NFL Sunday Ticket experience, offering up a Red Zone experience, offering up a cable cam experience, enhanced stats, we can deliver it to our TVs. We can customize stats-based channels and L wraps [stats and other messaging on video boards and other screens] to have fans create their own experiences, their own fantasy experiences. As long as it doesn't leave the confines of the building, we have unfettered access. … We are very interested in taking this to the next model where we interact fan-created content to league-based content. I know the NFL is very interested in where that goes going forward. This goes back to creating all of those experiences that you can't necessarily get at home.
Schwalb: From a NASCAR perspective, for us it's all about the connected fan, not only while they're at the tracks and enjoying the races directly. I think you mentioned earlier about that adjacent experience they may be having as well with a viewing companion. One of the key target things that we want to do to help grow the sport is to help bring new people to the sport. One of the barriers to bringing new people to the sport is awareness and understanding of what the sport is and the intricacies associated with motorsports and NASCAR in particular. To the extent that I can get delivery of a Galaxy Tab [tablet] application running on Wi-Fi that while they're watching the broadcast it can give them behind-the-scenes information about the particular run that Jimmie Johnson is making around the track and how that is affecting his competition with Jeff Gordon or something like that, and help illustrate some of the nuances that aren't necessarily evident on the broadcast itself, I think are going to be key. And bringing those not only to the stadium but also to home or wherever they're watching the sport. I think those are the kinds of things that are going to add value to us in the longer term, adding that augmentation.
What are some other roadblocks to innovation?
Brickman: In my mind, capital is always the hardest thing. You're always challenged to get capital for any project. Initially when you try to do an ROI on the cost of capital, unless it's something where a sponsor can come across and underwrite the cost of it, it's always challenging. … We were fortunate in that we were able to buy $100 million worth of technology from the beginning and ensure that it had capabilities to meet our needs going forward for the next few years. … If you're starting from an existing operation, you have to add a whole bunch of technology. Getting that financial commitment is very tough unless you get a firm revenue behind it.
Taylor: I completely agree. On our new builds of stadiums and venues, we can build those smart arenas; we're in it from the ground up. But when we have to go back and try to future-proof some of our existing arenas … it's much more challenging than with a new build. In addition to the capital budget that's needed, it's opening walls and obviously going through retrofits and construction.
To the extent that an investment has a proven ROI, even in a retrofit situation, shouldn't those investments be made? Or has how we are tied to sponsorships and the way the industry done business traditionally stood in the way?
Taylor: It is a bit easier if there is a proven ROI on a technology. But currently, technology is changing so fast, a lot of the new technologies coming out, the proven ROI is not there yet. So I think that is where the challenge is, in regard to being able to show the need for that budget. I do believe that as we're progressing and kind of moving along, and with the growth of the whole technology infrastructure kind of evolving, it's becoming a little bit easier. But a lot of the technologies today, except for the solutions such as StadiumVision, I don't believe there's a proven ROI model immediately. But we know and we see it out there and we see that it's working very successfully in numerous arenas and stadiums. We expect it to work in our venues as well.
Bonfante: I think there's two types of ROI. There's a quantitative ROI and, to Denise's point, that's perhaps not always possible to get your arms around. But there's also a qualitative ROI. So fans are expecting a certain experience when they come to your venue, your sponsors are expecting a certain level of capability when they come to your venue. I think getting those voices heard helps in getting the capital investment required to build out some of this infrastructure.
"For us it's all about the connected fan, not only while they're at the tracks and enjoying the races directly."
What are some of the priorities at ISC when it comes to the fan experience in terms of technology upgrades? Would it be with big screens or would it be with other elements?
Neeb: Certainly the large video format screens have proven to be very attractive to our fans and they like them a lot. We implement them in four of our venues. The feedback we get … has been tremendous. It's really more opportunistic when it comes to what are the technology priorities. For example, we're looking at some major changes out at our Phoenix racetrack. How do we build technology into that retrofit of that stadium? We're building new seats, we're going to build a new infield, a new media center. Where can we introduce new technology, be opportunistic, not necessarily leading the cause for change, but we piggyback on the change that is already existing and take advantage of that change to introduce technology hopefully as an incremental value add to the overall process.
Some of this is educating sponsors about what this technology can provide. What is the education you're giving to brands outside the organization to the technology possibilities?
Brickman: It's an education of the sales staff, too, to see what the new offering is. Typically the sports salesperson in sponsorship is used to doing a deal over a steak dinner and everybody slaps each other over the back and gets things done, and maybe you get signage on the stadium for the full season and such, and this has now changed. Now we have the opportunity to sponsor a Red Zone, sponsor a record breaker, sponsor a matchup, sponsor a whole bunch of different initiatives that can be created that may not have existed a week before, but now all of a sudden they're available to be sponsored. It's the education of the sponsor through the sales staff on how we get that done, and we need a creative team to feed us the information, to say we're coming up with this big opportunity.
Taylor: It's one of the areas that's evolved greatly for us over the past 24 months. Previously, we would not, from an IT perspective, work with our sponsorship group in going out and doing technology deals. Now it's a part of our day-to-day. And really a good portion of our sponsorship deals have actually driven the technology that we're implementing in our stadium and in our venues. Overall, it's working in our benefit in that as technology is evolving with us from a core infrastructure perspective to more of enhancing the fan experience, it's a little bit easier when you have that sponsorship support behind you and we're delivering a product that will enhance the fan experience, to get the budgets necessary to do what we need to do. I think that traditionally when you're trying to replace servers and hardware, getting a budget when you're competing against everyone else trying to get a budget that's going to actually change how the fan interacts with us, we're definitely going to come at the bottom of the list. So for the past 24 months, a whole education process has happened within our company and the sponsors we work with. We really understand how each other works. Our sponsorship group understands a good portion of technology. They can go out there and represent IT and really bring in those key sponsors to assist us.
Is there a technology you can point to that is bringing the biggest return on investment? Is there one that stands out?
Brickman: Yes, it's signage. It's virtual signage.
Hunter: I'd like to ask a question to the folks from Cisco. How do you see it from a Cisco standpoint? What is your specific interest and/or targeted return?
David Holland, Cisco: We actually have approached this market, candidly, differently than I think has been by technology firms in the past … which has been much more along the lines of technology firms are approached and say, "Look if you're willing to pay us a sponsorship we'll let you put technology in our venue." And candidly we see that as one of the major impediments to the pace of innovation in this sector. So our approach has been that we will sponsor only selectively, and typically at a league level, so that we can drive the overarching messaging, but at the local, property level, we need to demonstrate an ROI that is compelling enough that the technology will persist. So to Peter's point about signage and the economics of StadiumVision, we think that's such a compelling story that those investments should be made regardless of a sponsorship discussion, and yet this is the nature of the industry. We talk about it as almost a 12-step program to get away from that initial discussion about "pay me to have a discussion." In fact in many cases people would rather receive a check today for a couple of hundred thousand dollars as opposed to having Cisco help them make tens of millions of dollars over a case of a few years.
Andy Elder, Cisco: This is no longer about IT supporting the business. This is about IT being the business. As we try to think about attracting that next generation of fan into that experience, we know that somebody dressed as a rubber sausage running across a field won't entertain the next generation below us for very long. We have to transform that experience. I think what Larry said is about how IT has an opportunity to lead from the front in terms of being the next business for a lot of companies. And that transition is happening. There are different appetites for it; we see it in all of the conversations that we have. … But also, is it better to get $1 for nothing or better to spend $1 and get 10? And that's a transformation in the thinking.
You have seen the transformation in the thinking, in not just taking the check, but investing in the culture or the changes. But properties are reluctant to do that. They would rather take the money.
Elder: There's no question about the reluctance, and I think that for many people, this is a tipping point that we'll see in the industry, which is around people's appetite to go and invest in order to make money. And that's a cultural shift that is occurring. What we're noticing on a global basis is there's a different appetite to take that risk around the world, depending on where they are. … Understanding that if you are going to be a future player in a space, you need to leapfrog tradition. You need to get ahead of the game. And so different country leaders are coming to us with an appetite to deploy technology very fast to take the experience from day one to the fans in those countries. And I think what you'll see is some forward-looking people here in North America who are jumping on this and moving aggressively and will be ready for this tipping point, and there will be some people … who are stuck in the old way of doing business.
What have you tried technology-wise that did not work?
Neeb: We tried to get into RFID (radio frequency identification), five years ago I guess it was. The concept was an RFID wristband that would be leveraged so that the consumer could use that for payment processing. They would link their credit card to it and everything. It wasn't so much that technology failed in the case. It was more of an implementation failure. … There is so much technology out there that you can try to adopt and innovate into your business, [but] you have to make sure there's a business purpose around it as well and a plan and an objective on how it is going to be measurable and really benefit your business. I would say the failure we experienced there is that we lacked that part of it. We jumped right into the gee-whiz technology because we thought it was cool. Then it was viewed as a technology failure when in fact that wasn't the case. There wasn't enough business planning.
Schwalb: The risk is that if you come around to perhaps RFID again, there might be a bigger roadblock. Whereas it might be the right answer to implement … but you've got to overcome the fact that people will say that RFID failed, when in fact it was just implementation.
Brickman: One of my mantras has always been as a technologist, I always go with leading edge, not bleeding edge. I would very much shy away from products that were not to market yet in any way, shape or form, or trying to motivate vendors or manufacturers to go into areas that were not in their road maps because you can only set yourself up for disaster.
Hunter: What we look for, and I suspect you guys do too, is innovation that scales. The idea that the businesses we're in that we can afford to take risks with innovation that doesn't scale, there's also no payoff to that. Even if you succeed, it doesn't go anywhere. We're all such large customer-facing entities in terms of the number of people and the number of customer interactions we have to support, that if it works in a universe of 2, 5, 10, 200, that doesn't count. It needs to be something we can practically say is going to scale every night, 300 nights a year, or it's going to have to work 3,000 broadcasts a year. That's our decision point when we consider whether we're going to make a significant investment. If we're successful, can it scale. And if the answer to that isn't yes, then we have a relatively limited interest, even though it may be extraordinarily inventive.
Taylor: For me, one of the things that's exciting is that today we're challenged with Wi-Fi and wireless. I guarantee you that in three to five years we'll have it solved, and at that point we'll be talking about ways to offer even more services over it so that we can then make the fan experience go all the way out from when they wake up in the morning, to their coming into our parking lots, to when they're walking through our stadiums, and extending that day with them.
Schwalb: I think to your point about the connectivity being continuous and ubiquitous, and the ability to engage at any level with NASCAR with your favorite driver, and communicate and build a relationship, I think [that] will be interesting. Also, looking for the ability to experience the sport in a more visceral way through 3-D modeling technologies or virtualization technologies to the extent that I can participate in this sport either at home or at the track, in a way that maybe helps me draw a closer relationship to what's actually going out on the track, I think are interesting things that I'll keep my eye on.
Neeb: From the venue side, it's that year-round, personalized experience. The ability to intimately know our fans and to be able to proactively communicate with them and be able to create dynamic itineraries, if you will, personalized itineraries, and giving that really special purpose. … We want them to have that intimate relationship with us and want to come back and plan their year around coming back to one of our facilities to live the experience of that event.
Bonfante: Engaging our fans more interactively and having the kind of infrastructure in place to provide the kind of experience and the kind of information to them that we currently can for our media and broadcast partners.
Brickman: I'm a very strong supporter of Wi-Fi and the ability of it to offer new content experiences to our fan base. The other thing I wanted to add on was more of a back-office environment, was the use of [cloud computing] to reduce the size of our data centers and offer up these experiences in a cloud-based environment.
Hunter: More. Simply put, more. I don't think in five years we're going to tolerate video streams that you can't tell the numbers of the players. I think we're going to have better video. I think we're going to have more video. I think we're going to have more data. I think we're going to have better tools for personalizing that data. But it really comes down to more. Fans want more, not less. For the last 10 years, we've been sneaking up on more. But I think five years from now, we'll have been there. And it's pretty exciting.
Elder: I think we're going to create the traditions of the future. By that, I mean the things that created the fan connection on day one in the olden days when you'd go with your family and you'd have that most tribal experience, I think that's what carries fans through generations and through their lives. I think what we'll do now with technology is create that new tradition, that experiential thing that brings together how you feel when that engine starts on the racetrack, how you feel when the players run out of the tunnel, and we'll combine that with the comfort you have of watching up close and seeing and being aware of all of the information that's available to you when you're at home. And how do you bring those two things together. And I think what we'll see is that transformation.
Holland: We're going to be talking about a new concept of networks, around fan-experience networks, which is part broadcast, which is part social media platform, which is part commerce platform, and these things coming together around a brand and an affinity group in a way that is really transformational at the user experience level. The pieces are all there. They're kind of vibrating around in this universe we all see, but they're not all coming together in a very unified way yet, but I think the future of broadcast will be very different in three to five years than it is today because of what our kids, and kids yet to be born, are going to be demanding.
For additional highlights from our discussion, visit sister publication SportsBusiness Daily at www.sportsbusinessdaily.com.