SBJ/August 15-21, 2011/Opinion

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  • Sports must bring in digital innovation, experience from outside

    During the past year, I have come to the conclusion that many sports organizations have some sort of social media platform, but the majority has no integrated strategy that drives the platform to achieve organizational rather than just departmental agendas.

    Sure there are Facebook pages, Groupon offers, tweeting and a number of other activities, but many organizations have different departments doing their own things. Sometimes one department is unaware what the other departments are doing, and usually they are unaware about why they are doing it, other than the fact everyone is doing it, so we need to do it as well.

    If 2,387 people “like” you, what does it mean? Why do they like you? How much do they like you? What about the 986 people who don’t like you? Why don’t they like you? What would it take to get them to like you? What was it about the Groupon offer that they liked? Have they come back without an offer, or are they just butterflies looking for the next bright flower? Do we know if there is a place for a “toll booth” to monetize our efforts, and do we know the best location for the toll booth?

    I pose these questions to you, Dear Reader (one of my favorite Stephen King terms), because it is essential that we find the answers to these and many more questions, as well. In my opinion, this can only be accomplished by recruiting experienced executives and innovators from the digital media space and asking them to be space invaders, or perhaps space innovators, in the sports industry.

    Lack of talent

    In formulating this column, I talked with a number of people, including Jason Slattery of Daversa Partners, an executive recruiting firm. He took the time to share some of his thoughts with me and gave me even more to think about.

    “Sports teams and brands need to develop a comprehensive and sweeping digital media strategy that takes advantage of inherent team affinity and builds a steady and irrevocable revenue stream independent of television rights and ticket sales,” Slattery said. “Companies like Gilt Groupe and Groupon have grown from unknown websites to multibillion-dollar companies because they developed a digital media strategy and adjusted, corrected and expanded that strategy as the market responded.”

    Asked why sports teams and other organizations have not achieved these same levels of success, Slattery responded that it was lack of talent. In his assessment, “they [sports teams] don’t have the internal talent to develop, nurture and tweak their digital media strategy because very few teams have a true digital media expert on staff — because they have yet to make a significant investment in talent to push the envelope to invest, create and evaluate new ideas.”

    For example, the growth of business analytics in professional sports, especially the NBA, can be traced to the efforts and successes of Houston Rockets general manager Daryl Morey, who served in a business analytics role with the Boston Celtics and was instrumental in creating the Sloan Sports Analytics Conference at MIT. It, of course, can be traced in part to the success and popularity of Michael Lewis’ “Moneyball.”

    The Phoenix Suns, always early adopters, are in the final stages of hiring a social media specialist. According to Jeramie McPeek, Suns vice president of digital, “We believe that having one person completely dedicated to social media will allow us to make significant strides in engaging our existing fan base, connecting with and developing a new generation of fans, and ultimately creating new revenue opportunities.”

    Reaching the community

    The concept of a chief digital officer would be based upon recruiting a talented and experienced visionary from the digital media space to join a sports organization. The next step is to elevate the thinking, planning, development, execution and growth at the team level, which, based upon the sharing (and copying) of best practice modes, would elevate that particular league and, in time, other leagues as well. Slattery estimates that a well conceived, designed and executed digital media strategy could generate $7 million to $10 million in new net revenue annually.

    We talk incessantly about online communities and the benefits and potential of reaching those participants. That’s interesting, because sports fans are also a community, and much more passionate about interests and preferences than most of the online communities and followers that have “liked” Groupon, Gilt Groupe, Rue La La, Zynga, Twitter and Facebook and helped them become (or about to become) billion-dollar businesses. It could be argued that none of the companies I mentioned puts forth a tangible
    Companies like Gilt Groupe (top) and Rue La La grew by being able to reach online communities.
    product that it has produced or generated from some type of raw materials and processing. They are effective mediums and conduits for moving other people’s products and services. Thus, they began as unrecognizable entities lacking a brand or a presence in their initial phase and entry into the market.

    Contrast that with the much-hyped, anticipated and hoped-for NFL team in Los Angeles. If that team becomes a reality, it will have a brand, perception, expectation and following within 30 seconds of its birth. Unlike the digital media brands I mentioned, it also will have an initial cost north of $750 million at birth. The number of “likes” that could be converted into buyers with such an opportunity could be staggering both in terms of number and the speed of achieving that number.

    While I am a firm believer in promoting from within, I am also a firm believer in bringing in catalysts and big thinkers from the outside who have the necessary skills, experience and vision to examine a particular space, assess the strengths and weaknesses, and create opportunities and possibilities to expand not only that space, but also the world view of the organization in reaching, communicating and monetizing the inhabitants of that space.

    Remember, there are a lot of navigators but very few explorers. A chief digital officer is Columbus, not MapQuest.

    Bill Sutton (wsutton@bus.ucf.edu) is a professor and associate director of the DeVos Sport Business Management Program at the University of Central Florida and principal of Bill Sutton & Associates. Follow him on Twitter @Sutton_Impact.

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  • Timing sank Islanders; Props to Scott, Leiweke

    Abe Madkour
    Charles Wang had the worst possible timing for a voter referendum on public financing of a new arena for the New York Islanders. The vote was Aug. 1, one day before the debt ceiling deadline, a time when Congress was displaying its worst form. The bid to borrow up to $400 million for a new Isles arena and minor league ballpark was defeated soundly, 56 percent to 43 percent. With Nassau County residents already paying among the highest taxes in the country, this was a tough sell in the first place. It had no chance amid the current political environment.

    Rarely does ESPN leave itself open to questions on its business deals, but the Longhorn Network, its joint venture with the University of Texas, hasn’t been the worldwide leader’s best moment. I was struck by well-respected Houston Chronicle writer Richard Justice’s surprising tweet: “Sure there have been worse ideas than The Longhorn Network. Give me a week, and I’ll come up with one.” The effort just doesn’t feel right, and it makes me wonder if ESPN underestimated the divisiveness this would foster.

    I continue to be impressed by the job that Larry Scott is doing at the Pac-12. He is easily one of the most progressive and innovative sports executives today. … The Tampa Bay Lightning have sold more than 10,000 full-season tickets for the coming season, doubling last season’s total of 5,000. Yes, the team’s first playoff appearance in four years was crucial, but it’s been just over a year, and CEO Tod Leiweke has completely changed the culture and environment in Tampa. Does anyone doubt that he is possibly the most effective team operator in sports? … Finally, congratulations to longtime NBA PR czar Brian McIntrye, who has spent 33 years in marketing and media relations for the league. Last week, McIntrye was to receive the John W. Bunn Lifetime Achievement Award from the Basketball Hall of Fame in Springfield, Mass. Well deserved honor to a good man.
    Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.


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  • Contract issues for NBA expatriates

    FIBA announced recently that NBA players can take their talents overseas, and it’s clear that advisers to NBA players now have some big issues to consider.

    Most players’ contracts technically prohibit playing overseas. With FIBA’s announcement, however, it now seems impossible (and maybe even a violation of federal labor law) for a team to claim breach of contract for mere overseas play. This is especially true given that the Uniform Player Contract provides only for discipline for a violation of this provision, not termination, and Commissioner David Stern has already publicly stated that players are free “to do what they want to do.”

    What if a player is injured overseas? FIBA has stated that players are at their own risk and that each NBA team may determine how to deal with an injured player. In all reality, however, a highly valued player is likely at little practical risk of his team’s trying to void his contract if he comes back with a short-term injury. In truth, termination may be welcome by some players who would love the opportunity to be free agents. But about those players who are less valued, can their teams void their contracts? While there is some risk for these players, it is limited.

    The Uniform Player Contract provides that passing a physical is a precondition to the contract’s validity. If a player fails his physical, his team can either suspend him without pay or terminate his contract for “lack of skill.” The risk to a player of being suspended can be substantially limited by insurance. Where the real risk lies is in the team’s right to terminate based upon “lack of skill.” Normally, such a player would still receive his guaranteed compensation, but for an injury sustained in play overseas during the lockout, the collective-bargaining agreement provides that a player’s contract guarantee is not available in the event of a termination.

    While this sounds risky, remember that highly valued players aren’t likely at substantial risk of termination, and players with disability insurance can guard against long-term injury. Thus, it would seem that the only players that are truly at risk are those without insurance, or those unlucky enough to have a short-term injury at the time the lockout ends and whose teams want to use it against them. However, even for those players, one would hope that that protection will be built into the new CBA by the National Basketball Players Association.

    A player needs to secure disability insurance. Both temporary (for short-term injury) and permanent (for career-ending injury) disability policies are available. While a permanent policy is three to five times cheaper than a temporary one, it’s more likely that a player will suffer a short-term injury, making a temporary policy the first stop. That said, a temporary policy will cover only the value of a player’s current NBA contract, so certain players may want to consider both temporary and permanent insurance. Temporary policies cost $50,000 to $100,000 to cover short-term play in the FIBA World Championships, to well over $1 million to cover an entire season. Foreign teams will likely deduct the cost of insurance from the value of a player’s overall deal.

    Temporary policies will cover injuries for each NBA game a player misses and end when he starts playing (and getting paid by his NBA team) again. Payouts are equal to a prorated share of the player’s overall NBA contract. There’s no payout in the event of death.

    The standard player temporary policy likely contains a host of exclusions. Depending on a player’s health, his medical records and/or the outcome of a physical, his adviser may be able to have these exclusions waived.

    Deron Williams’ contract with Turkish club Besiktas reportedly contains a clause that will allow him to return to the NBA when the lockout ends. FIBA has said that such a clause is a prerequisite to any player’s overseas deal. But not every player is Williams, and not every team will be willing to grant such an option. Most overseas teams likely can’t invest heavily in a player if there’s a big risk of him leaving as soon as the lockout is over.

    Despite the reports that Williams’ contract with Besiktas is worth up to $300,000 a month, it seems highly questionable that overseas teams will find the cash to pay a number of players, especially given the weakness of the European economy. And regardless of the money, playing overseas isn’t right for everyone.

    David Falk recently described Danny Ferry’s experience of playing in Europe: “[T]he floors were hard, the medical situation wasn’t very great, the guys smoked and drank after the games, practices were four hours a day, and he really hurt his knees. I’m not sure he ever became the player he could have been had he started in the NBA.”

    So while it may make financial sense for some, those looking just to entertain themselves or keep in shape during the lockout may be doing themselves a disservice in the long run.

    Brian Heidelberger (bheidelberger@winston.com) is a partner and chairman of the advertising, marketing, and entertainment law practice at Winston & Strawn LLP.

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  • NASCAR Kinetics helps put marketing careers in motion

    The key to success for sport management students at universities across the country is simple: Soak up as much knowledge as you can in your coursework, find an internship and build on that foundation with hands-on experience outside the classroom. However, few opportunities allow aspiring sports marketers the chance to fully develop concepts and present them to high-level executives.

    NASCAR Kinetics: Marketing in Motion is a semi-annual national collegiate competition that hinges on real-world experience through an academic focus. Students in the program get unmatched hands-on marketing experience, and have the opportunity to work directly with representatives from the sanctioning body by presenting innovative concepts for NASCAR’s consideration.

    NASCAR Kinetics started with four universities in 2009, and will expand to 20 in the fall. Teams vie for an expenses-paid trip to a NASCAR event weekend featuring opportunities to meet with representatives and official partners.

    As the winner of this spring’s competition, our undergraduate sport administration program at the University of Miami’s School of Education topped 11 NASCAR-selected host schools, including Oklahoma State University, the University of Central Florida and Virginia State University.

    In January, our team of Ethan Alpern (Encino, Calif.), Alex Bryant (Durham, N.C.), Matt Small (Rutherford, N.J.), Lucas Schutt (Trumansburg, N.Y.), and myself (Clearwater, Fla.), signed up, strapped in and set out to contend in the national competition. Each team was assigned two case studies and challenged to devise unique activation concepts to help meet the program objectives of a NASCAR official partner. Each team also executed an official NASCAR viewing party sponsored by M&M’s.

    The first case study featured Growth Energy, the ethanol advocacy group and NASCAR’s newest partner behind American Ethanol and the Sunoco Green E15 racing fuel used in NASCAR’s three top series. The study challenged teams to present creative solutions to reach casual and avid fans at the track and at retail locations while creating strong connect points between NASCAR and ethanol production.

    From our experience as sports marketing consumers, we agreed the best way to connect to a new product was to let consumers touch, feel and experience it. After researching how the sport’s major players, such as Sprint, Coca-Cola and the car manufacturers, activate in the sport, we concluded that the most productive idea to accomplish this at the track was a mobile marketing unit with interactive displays, video presentations and giveaways designed to immerse fans in the story behind ethanol production and NASCAR.

    We also discussed the sports-related promotions that the five of us had recently participated in and researched articles from SportsBusiness Journal that cited successful NASCAR retail programs such as Kroger’s Daytona 500 program and Sunoco’s Free Fuel 5000 Sweepstakes. We adapted a similar retail promotion that activated around the American Ethanol rings seen around the fuel port on all NASCAR national series race cars and trucks. We presented that our concept provided an important connection point between E15 ethanol and NASCAR while rewarding advocacy for the American Ethanol partnership, and creating an enticing promotion for casual and avid NASCAR fans.

    The second case study featured the NASCAR Nationwide Series Dash 4 Cash, a competition initiative that awards a cash bonus to eligible drivers in the Nationwide Series. Each team was assigned to come up with an idea for a unique consumer program that would promote the on-track competition and connect consumers to Nationwide Insurance’s messaging, as well as a promotion plan for the new program. We drew our core concept from a variety of similar fan-related competition promotions from Major League Baseball and the NBA, as well as NASCAR. We presented the idea for a fan-driver pairing program that allowed fans to register to win a VIP experience to one of the four Dash 4 Cash races and be eligible for a matching cash bonus should their driver win the race. Our concept integrated the core values of the Dash 4 Cash program by directly paralleling the program, while enhancing the competition with an added incentive for drivers to win cash for their paired fan.

    TODD LEISER
    The University of Miami team threw a successful race-day viewing party sponsored by M&M’s.
    The crescendo to the program was the execution of the M&M’s Makes Race Day Fun viewing party at a restaurant across from the University of Miami campus. Our objectives for the event surrounding the NASCAR Sprint Cup Series race at Texas Motor Speedway were simple and correlated directly to those of a track promoter: gain a lot of media coverage, get as many people in the doors as possible, engage them with activities that enhanced the NASCAR experience, and activate our event partners all at the same time.

    We blanketed the campus with messaging in social media, email blasts, campus media advertising and plenty of word-of-mouth, just as a track would do for an upcoming race weekend.

    Our goal for the party was to create activities that were engaging and directly relayed the NASCAR experience to the guests. A perfect example was our M&M’s NASCAR Trivia, where guests spelled out the answers to trivia questions using M&M’s. The offer of free food, tailgate activities, the “NASCAR 2011” video game and prizes ranging from tickets to Ford Championship Weekend at Homestead-Miami Speedway to gift bags from Coca-Cola made our party a smashing success.

    This program is unlike any other learning experience in sports and in marketing. Students are empowered by NASCAR and get rich hands-on experience in public relations, consumer marketing, event management and partnership marketing. The chance to work as team was great practice for the most important lessons in business, and the ability to brainstorm and fully bake a marketing concept and then receive feedback from industry professionals was an amazing opportunity. As the five of us look ahead to our careers in the sports and entertainment industry, we know the experience we gained from NASCAR Kinetics is what will help us accomplish our career goals and those of our employers. In other words: hire us!

    Justin Leiser (jleiser@nascar.com) was hired on full time by NASCAR in June, joining the industry services team as marketing services support and an event operations liaison for NASCAR’s three national series.

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  • Cartoon: Been there, done that

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  • Seven points for success

    Here is my advice for someone wanting to start a sports-related business (“Advice to entrepreneurs,” July 11-17 issue). It is a credo that I have presented at the scores of speaking engagements that I have had over the years and in the launch of several minor league sports franchises.

    1. Passion without a plan won’t work.
    2. Do one thing and do it better than anyone else.
    3. Create a business for someone else’s passion.
    4. Can it be profitable? You are not in the business to break even.
    5. If you give your customers great entertainment, at a great price, in a clean environment, and say thank you and mean it, they will come back.
    6. Great ideas come from everywhere, but you must look and listen for them.
    7. Believe in the power of prayer.

    Roy Englebrecht
    Newport Beach, Calif.
    Englebrecht is founder and owner of Fight Club OC.


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