SBJ/June 18-24, 2012/Opinion

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  • Deighton balances economic realities with legacy expectations

    If you were offered the opportunity to serve as CEO for a Summer Olympic Games and could choose any six-year period in the past century to fundraise for those Games, it’s quite possible 2006-12 would sit squarely at the bottom of your list. Maybe then and during the Great Depression of 1929-35.

    Unfortunately for London 2012 CEO Paul Deighton, that luxury of choice wasn’t available. London won the right to host the ’12 Olympic Games in July 2005, and less than a year later, Deighton made the decision to leave his post as Goldman Sachs’ European COO to tackle Europe’s third Olympiad in eight years (following Athens in 2004 and Turin in 2006).

    Flash forward six years. London’s Games start next month, and while the North American economy is gaining traction, the past half-decade has been characterized by a global recession with many European countries and businesses hit hard.

    Despite these conditions, London (with the 2012 Games, The Queen’s Diamond Jubilee and the English Premier League) might be Europe’s shining star. In fact, a July 2011 research study by Visa Europe
    suggested London should see an extra $3.3 billion worth of economic activity from the Games, drawn from direct consumer spending, associated activities meeting demands created by that spending and increased residential income.

    Still, a few financial and legacy concerns, most notably a skyrocketing security tab of more than $1.5 billion, have been steadily arising in advance of the opening ceremony on July 27.

    Deighton concedes to challenges of the recession but is confident London’s Games will succeed.
    Photo by: GETTY IMAGES
    “Taking into account costs outside the package, the full cost to the public of the Games and legacy projects is already heading for around £11 billion [$17 billion],” said Margaret Hodge, chair of Britain’s Public Accounts Committee, in March. “The venues and infrastructure of the London Olympic Games are on track to be delivered on time and within budget. However, the £9.3 billion [$14.4 billion] public sector funding package is close to being used up, and we’re concerned whether the running of the Games will be held within budget.”

    For Deighton, pre-Games announcements by government officials showing the Games are, for the moment, financially under control is gratifying. But constant hinting that doom awaits or security spending is out of control probably weighs heavily on his mind.

    “We are exactly where we want to be,” Deighton said while praising his team’s ability to raise almost $3 billion in sponsorships. “We’re in a great place. That’s not to say there haven’t been challenges along the way and not to say there isn’t much still to be done.”

    Deighton emphasized it was not just corporate support that was holding up, but ticket buying as well. Revenue in that space has exceeded expectations on most fronts, and with less than 45 days to go, tickets for 25 of the 26 sports had sold out in the first wave of ticket sales (although new release ticket purchases this month have reportedly been sluggish). Further, merchandise guarantees have been in place with more than 50 licensees since just after the Games were awarded.

    On the labor front, the London Organizing Committee for the Olympic Games has more than 6,000 employees on staff and more than 70,000 volunteers getting ready, all 76,000 of them presumably pumping revenue into London’s various pubs and shops. Even better, Deighton suggested all of the Olympic Park venues and other new infrastructure investments have been delivered on time, meeting all requirements for a successful Olympic and Paralympic Games.

    That’s impressive, but what about the legacies the London bidders promised the International Olympic Committee when they won the right to host the Games? Could a sluggish economy and tighter government budgets curtail the Games’ final legacy?

    In a February report by the House of Commons reviewing preparations to date, numerous elements related to the Games and the British government’s management of taxpayer investments were raised. With an investment from government approaching $17 billion for legacies and the facilities promised, projecting overages (which the government guaranteed to cover) already feels like a full-contact sport.

    Most obvious target? Security costs are skyrocketing and seemingly costing new millions each day. In light of London’s 2011 riots, Deighton has been forced to address not only international terrorism but also domestic order. “There are a number of different threats that you get with any event of this scale and prominence,” he said. “Our plan is very comprehensive, very detailed and has components, for example, that were already very focused on any potential public-order threats — though, consistent with any security plan, you’re focused on making it risk-based.”

    Parliament’s report also makes clear that only 109,000 British citizens are new regular sport participants, well below the original goal of 1 million new sport participants (by March 2013) — this despite a nearly $700 million investment in participation legacy via the national governing bodies.

    It also discusses issues related to legacy (e.g., socio-economic regeneration of East London) and notes clearly “this rings alarm bells about the effective integration of the various legacy plans and about clear accountability to us [Parliament] and the taxpayer. When we return to the examination of the Olympic legacy we expect clarity over precisely who will be accountable to Parliament for delivering the benefits to taxpayers from their significant spending on this program.”

    When we asked Deighton about this concept of legacy, he noted the most important driver was to have staged a great Olympiad. In his mind, delivering great Games becomes the catalyst for opportunity. He also emphasized non-sport legacies, like new skills gained, and sustainable jobs in particular are already emerging with strong results. In addition, the plan, which includes breaking even financially, is to keep facility construction to a minimum while maximizing temporary facilities.

    Deighton already knows London’s sporting legacy will take longer to ascertain and U.K. residents may bring their traditional skepticism to bear. But at a time when many nearby countries are struggling, London 2012 should deliver one of the most basic Olympian quests: hope for a brighter tomorrow.n

    Rick Burton (rhburton@syr.edu) is the David B. Falk Professor of Sport Management at Syracuse University and was chief marketing officer of the U.S. Olympic Committee for the Beijing 2008 Olympics. Norm O’Reilly (norman.oreilly@uottawa.ca) is an associate professor of sport business at the University of Ottawa.


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  • GM’s ManU deal seen as confirmation of soccer’s global reach

    One story we’ve covered in SportsBusiness Daily but haven’t given enough mention of in SportsBusiness Journal is the sponsorship deal that General Motors signed with Manchester United earlier this month. The announcement came days after GM said it was forgoing advertising on CBS’s broadcast of Super Bowl XLVII.

    The deal’s architect, GM Global CMO Joel Ewanick, is a true believer in the power of sports as an advertising platform, and he was credited by many on the sales side as being one of the key forces that brought big auto back to the domestic sports ad marketplace during the recession. So for him to move some of his marketing dollars from a U.S. mainstay to a U.K.-based — but global — property is significant. There is obviously a play for the Asian market, and in announcing the deal in Shanghai, GM said it plans to create the Chevrolet China Cup that will feature ManU exhibition games in many Chinese cities.

    Executives say U.S.-based companies and properties can learn from GM’s move to go global in its sponsorship.
    But what’s the broad significance of the deal or key takeaways? Four executives who understand the global market but also have keen intuition about soccer (as well as being diehard Premier League fans) noted a company recognizing the worldwide reach of the sport and the Premier League.

    “It’s a huge deal,” said Darren Marshall, executive vice president of consulting and research at rEvolution and himself a diehard Arsenal fan. “A few U.S. companies in consumer packaged goods have been aware of the power of global soccer for a long time — Coke, Gillette’s long-term investment in World Cup. But this marks the first time a sponsor from autos — one of the largest advertising sectors in America — has driven a global deal with a foreign soccer club from its U.S. headquarters.”

    Mark Noonan, president of Connecticut-based sports consultancy FocalSport and former executive vice president of MLS and CMO of U.S. Soccer, also credited GM with looking outside its U.S. base. “An iconic American brand is waking up to the fact that the world is getting smaller and soccer is the universal language — outside of this country,” said Noonan, also a longtime Arsenal fan. “It’s clear that with this deal, Chevrolet is looking well beyond Detroit and the U.S. for its growth.”

    He said one shouldn’t overlook where GM announced its deal, signaling a key area for the brand’s activation. “They have some key markets in mind when doing this deal, especially when you notice they made the announcement in China and are developing a tournament with Manchester United in China,” he said. “Almost half of Manchester United’s 650-million-plus fans are based in Asia. So it makes sense to focus on this major market where there is such a developed fan base.”

    Danny Townsend, who has lived all over the world in helping to build the brand analysis consultancy Repucom International, believes the deal fully complements what GM is doing already in the U.K. with its Vauxhall brand’s sponsorship of the home nations (England, Scotland, Wales and Northern Ireland football associations). “The fact that GM has now this deal for its Chevrolet brand strengthens their commitment to football and positions themselves around the world as a brand well aligned with football fans,” said the rabid Fulham follower.

    Simon Wardle, Octagon Worldwide’s chief strategy officer and who has researched the global marketplace for years, said, “It’s significant in the sense that it serves notice that traditional American brands like GM now recognize that Manchester United and the major EPL teams are global properties.”

    But should U.S. sports entities be concerned that they aren’t delivering proper value when such a recognized U.S. brand goes global? Noonan didn’t see it that way, saying, “It’s more about Chevy’s ambition about being a global player outside the U.S. more than it reflects anything on the U.S. sports.”

    Wardle, a mad supporter of West Bromwich Albion, sees GM’s decisions independently. “Super Bowl advertising delivers 100-plus million U.S. viewers on one day. The ManU deal potentially aggregates that many global viewers every week for nine-plus months of the year,” he said. “But I am not sure that you can make any connection to this sending a signal to U.S. sports, other than to remind them that they do not have as big a global footprint as the EPL.”

    As someone who consults with a number of corporate brands, Marshall thinks U.S.-based companies should take notice of the broad reach of the deal and focus less on the U.K. base of the United. “This is a truly global deal and sends a signal to U.S.-based brands that they need to wake up and realize what their Asian competitors have long realized — soccer clubs can be truly powerful global marketing platforms,” he said. He offered an internal example to prove the worldwide returns to a deal like this, “When we measure ROI for Chelsea for Samsung, only a fraction of value comes from the U.K. itself.”

    The takeaway — and lesson for U.S. sports — is simple for Townsend. Don’t underestimate the power of the Premier League, and learn from it. “To me, it really demonstrates the strength of the Premier League as an international media proposition,” he said from London. “It’s all about distribution and positioning yourself as an international sports proposition, and that is what the U.S. leagues should learn from this deal. Many of the leagues, the NBA and MLB, for example, have significant international broadcast platforms, but given their scale domestically, they often downplay their international proposition. I think if the U.S. sports better understood their international proposition and communicated that as a valuable asset to potential global brands, they too would represent an interesting opportunity.”

    Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.

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  • How new media marketing can freshen an established brand

    The Harlem Globetrotters’ formula for success is no secret. For 86 years, we have put smiles on faces worldwide. To compete now in a marketplace of escalating change, we look to deliver those smiles in multiple channels on multiple platforms. By producing unforgettable experiences — TV shows, social videos, skills clinics, merchandise … and a World Tour — we strive to grab onto our fans’ emotional lapels and not let go. This is how we stay true to that formula.

    Allow fans to own their relationship with you — then don’t let them out of your sight.

    In the pre-Web 2.0 era of brand management, our goal as IP owners was to ensure consistency: controlling brand touch points to keep the brand hermetically sealed so fans could “see but don’t touch.” The rise of digital platforms has enabled us to switch from brand veneration to fan participation. Ironically, giving fans the opportunity to share and personalize our content however it suits them has strengthened their personal relationship with us. Research shows that content shared by friends is more compelling than advertising distributed by brands, so creating shareable content is one of our key brand-energizing tactics.

    We have one-click social sharing across digital platforms. We produce more non-game video (social, instructional, even improv) than ever. And we run multiple easy-to-enter social contests, from captioning to user-generated art.

    Results:
    More than 900 percent Facebook community growth in 18 months and more than 150 percent growth for our tour presale.

    Understand what your fans expect and want from you, over-deliver, and they’ll help you amplify.

    Today, a brand’s job is to foster an ongoing and consistent relationship with the consumer in a mutually beneficial way. We work hard to understand what content our fans expect in terms of touch points and interactions, and they decide when and how to pull our content. Our fans told us they love the comedy and tricks that we add
    on to great basketball play, and they gave us permission to go way over the top in our delivery.

    Our videos show off the most over-the-top basketball action: Bull Bullard hanging upside down from the hoop with the ball between his legs, or Tiny Sturgess, our 7-foot-8 rookie, dunking without his feet leaving the ground to the roars of the crowd, etc.

    The Harlem Globetrotters have expanded their fan base through social media, the team’s website and viral video efforts on YouTube.
    Results:
    YouTube channel views just topped 14 million. We have earned more views in the last four months than the previous four years. Sturgess’ “no jump dunk” video has earned 3.5 million views in four weeks, with growth coming from fan sharing.

    Innovate with your fans and act on their feedback, in-market and in real time.

    Brand relationships are personal. Fans want to be heard and treated with honesty. Monitoring feedback and sentiment is a good start. Changing brand activity based on the insights fans give, when asked, is the big win.

    In creating both the ’12 World Tour and our new Summer Skills Clinics, we solicited fan advice on content, pricing, and targeting, and implemented their feedback. Focus groups, online and on-site surveys, and thousands of tour reviews on Ticketmaster all illuminate what fans enjoy most about our show, enabling us to make continuous improvements throughout all our activities.

    Results: The ’12 tour has sold a record number of tickets, with 91 percent of Ticketmaster fans saying they “would recommend to a friend,” and strong early sales for the clinics, as well.

    Take concepts familiar to your audience and own them for your brand, with a modern twist.

    There is a barrage of pundits saying “innovate or die” at every juncture. Yet while innovation is the key to a brand’s long-term success, innovation can mean simply placing a new spin on a familiar idea. The old adage “There are no new ideas” has some merit, so take a proven idea that resonates with your fans and own it.

    BRAND ENERGIZING
    CHECKLIST


    Are you:

    • Enabling easy social sharing of all your content?

    • Creating enough diversity and volume of content for your fans to share and create ongoing conversations?

    • Understanding your fans’ needs and then exceeding your fans’ expectations?

    • Making on-the-fly improvements to your brand experiences based on fan feedback?

    • Building momentum through branding familiar concepts as your own?

    • Staying true to what your fans really love?

    To meet our objective of gaining traction among male tweens, we took the classic driveway game H-O-R-S-E and reinvented it as a Facebook video rebuttal contest, thereby turning it into the world’s biggest game of H-O-R-S-E. We gave them an easy and comfortable way to interact anew with our brand.

    Results: The numbers of our Facebook community, Globetrotter Nation, doubled during H-O-R-S-E, and engagement levels have remained elevated ever since. They came — and stayed.

    Don’t throw the baby out with the bathwater.

    As IP owners, we are frequently bored with our ideas, tag lines, promotions, etc. way before our fans are, so remember, “If it ain’t broke, don’t fix it.” Our brand has succeeded over time because of intrinsic value it gives our fans, so we highlight and embrace well-loved elements.

    Our current fan research revealed that our perennial activities remain highly loved: the confetti bucket, spinning a ball on a kid’s finger, etc. We listened and showcase them on our current tour.

    Results: 240 box office sales records in the last four domestic Globetrotters tours.

    By staying true to our original formula of success and embracing today’s changing marketplace, the Harlem Globetrotters will continue to deliver smile after smile for another 86 years.

    Kurt Schneider is CEO of the Harlem Globetrotters.


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