SBJ/June 17-23, 2013/Opinion

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  • Has experience trumped sports in sponsorship market?

    Editor’s note: This is the second of a two-part column about sports sponsorship.

    In our last column (May 27-June 2, SportsBusiness Journal), we wrote about North American sponsorship trends and how the partnership landscape is evolving — both in general and for sports, specifically. Our findings suggested notable growth for sponsorship overall but areas of concern for the sports sector.

    Our sponsorship and endorsement research led us to another series of questions:

    1. Why is sponsorship still growing and continuing to work in a strained economy when marketing budgets are so scrutinized and volatile?

    We believe the answer lies very much in the way sports properties view image transfer and its transformative power to benefit non-sports brands. This transfer concept is intuitive to most executives in sports marketing, almost a subliminal given, but much about it is misunderstood, and the concept of true fiscal balance is rarely explored in depth.

    Let’s create a simplistic example to showcase this. Forgetting for a moment all existing deals, let’s suppose the New York Yankees want to sell their soft drink sponsorship rights. We all know they’ll want this high-profile category to go for as much money as possible. They’ll want a bidding war to break out between Pepsi (which has held the team’s rights) and Coke, and anyone else willing to pay the highest premium.

    Intuitively, these beverage companies know a deal with the Yankees will connect them to one of the most valuable and recognized sports brands in the world and provide brand-benefiting images of “prestige,” “leader,” “winner,” “high performance” and “superstar.” These are adjectives most consumer brands want their positioning to portray, and if product exclusivity comes with the deal, they’ll pay a premium. In return for a massive fee (and value-in-kind product), the beverage companies will expect the Yankees to feature the company’s signage and pour its products in every team-controlled setting (the stadium, the clubhouse, the VIP boxes, the spring training ballpark, the fantasy camps, etc.).
     
    Does a music festival provide a better consumer touch point for a sponsor than sports?
    Photo by: GETTY IMAGES
    Let’s say that Coke wins. Coke’s money will buy brand visibility and exclusive consumption. But what of the aforementioned image transfer? Will the Yankees logo on a Coke bottle drive sales? Will a sign on the center-field scoreboard truly drive awareness, trial, or usage by key targets? Will sales of product along the stadium’s concourses make this deal truly self-liquidating? Will a luxury box (as part of the deal) facilitate business-to-business initiatives? Even if the answers to those questions (and others) are yes, will the image transfer have better helped the Yankees or Coke?

    Will both parties benefit equally in the equation of overall dollars secured vs. ultimate gallons consumed? Perhaps they will, but more often than not, one party will not get as much as they should have. And strangely, often unnoticed in the deal-making, it is the consumer who manages (in his or her subconscious) the actual image transfer.

    What we’ve consistently witnessed is that the real image transfer happens when people experience products firsthand in social environments, and their passion is more connected to their experiential engagement. Said another way: Does a Coke music festival provide a different and more encompassing relationship with the consumer than a Yankees baseball game? If it does, it may explain why sports sponsorship’s percentage of the overall partnership pie is slipping.

    2. Why are other property types like arts, causes and festivals giving sports a run for its money in sponsorship investments?

    We arrived quickly at the issues of servicing (Who does it better?), experiential variability (Are other groups offering better in-sponsorship experiences?) and easier usage of intellectual property. Almost everyone in sports knows how aggressively the NFL and NBA protect their respective brand logos and how difficult it can be to use a sports logo on anything. We fully understand the need for those leagues (and their teams) to take this approach. But in doing so, have they become more difficult than a local festival or charity that is far more relaxed about how the image transfer is facilitated and how sponsors are allowed to activate?

    We understand leagues and teams can’t go backward in their trademark protection, but if they are stodgy and if non-sport competitors make life easier for the Pepsis of the world, don’t for a moment think these “efficiencies” aren’t noticed by the entry-level and mid-level manager types who manage sponsorships. They may not negotiate contracts or speak at sponsorship conferences, but they construct frequent reports to bosses on which properties make life easiest.

    3. Is there anything sports sponsorship-selling organizations should do differently?

    This is a billion-dollar question because sponsorship, according to IEG, is now a $50 billion business worldwide, with sports taking about 50 percent of that pot. That $50 billion is more than double what it was a decade ago, although sports back then was 75 percent of the pie. If sports had kept its share during the past decade, it would have meant billions more poured into our industry.

    Does that suggest it’s time for sports properties to up the ante on servicing, evaluation, post-sales activations, partner relations and more? Probably. Otherwise, if certain trends continue, future sponsorship numbers may transfer more than a few people out of this image-conscious sports industry.

    Rick Burton (rhburton@syr.edu) is the David B. Falk Professor of Sport Management at Syracuse University and former chief marketing officer for the U.S. Olympic Committee. Norm O’Reilly (norman.oreilly@ottawa.com.ca) is a professor of sport management at Ottawa University.


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  • Cartoon: On the hunt

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  • RSE Ventures’ test lab; SBD Global on to Vol. II

    I recently went to New York City to meet with two NFL team owners, discussing quite different topics.

    First, I met with Jacksonville Jaguars owner Shad Khan over breakfast at The Plaza Hotel. We talked a great deal about what he’s learned in his 17 months of team ownership and about his leadership style. We started talking casually in the lobby, while he was sitting for photos, and I brought up the commencement address he delivered last month at his alma mater, the University of Illinois. He talked about the effort he put into writing the 16- to 18-minute speech, where he called on graduates to avoid the easy road. “Whenever I faced an easy way or a hard way, invariably, the hard way turned out to be the right way,” he told the students. He also laughed as he recalled pushing the concept of “cold calling” to the students, something he did consistently in his young career. “I said, ‘Take a chance and respect the power and effectiveness of making a cold call,’” adding, “I told them technology is eroding our social skills. … Somebody with a marketing degree, please rebrand the term ‘cold call’ to make it cool!” Look for more of my conversation with Khan in a coming issue.

    > ENERGIZED AT RSE: After meeting with Khan, I went over to West 55th Street, where Stephen Ross’ RSE Ventures is situated in an open, airy 11th-floor space. While sitting with Ross, owner of the Miami Dolphins; his RSE co-founder and CEO, Matt Higgins, and roughly 12 of the top executives of the various companies and entities RSE Ventures is investing in, a few words came to mind: builders, innovators and, by design, focused on disruptive technology.  Over the past year, Ross and Higgins have invested in a mix of technology, digital content, marketing and sales, ticketing, events, and PR companies. “We’re dreamers at heart,” Higgins told me, and that was evident by the youthful ambition that pervaded the office, like any startup.

    Over lunch, unit leaders shared their stories and business strategies that make up RSE Ventures. There was Peter Murray’s sports and entertainment company, Insignia, which combines marketing and consulting with content creation and sales. Charlie Stillitano and Jon Sheiman are reinventing their soccer event expertise, with the first step being the Guinness International Champions Cup. Ross and Higgins also are out front with new technologies, such as Kelsey Falter’s Poptip, which offers social feedback and analysis; Andrew Daines’ predictive gaming business, PrePlay; and the online booking/appearance platform connecting public with professional athletes, Thuzio. There’s also ticketing, PR and even the well-traveled company FanVision, which despite its uneven history is on the verge of two new deals that have company officials bullish about its future.
     
    It’s been a year since Ross and Higgins formed RSE Ventures, and Ross noted how his NFL team has served as a laboratory for many of the company’s platforms and innovations. “I never thought it would grow quite this fast, but it’s how I built my real estate company [Related Cos.],” he said. “As opposed to buying things, I’m always looking to connect the dots of what we currently have, and look for the synergies.” It’s part incubator, part test lab, and Ross and Higgins clearly don’t see themselves as passive investors. “Passive investment isn’t fun for us,” Higgins said. “These are sustainable businesses with growth.” Ross chimed in, “I’m not a VC company; I am a builder. I can take advantage of that and build things a lot quicker.”
     
    Save for a few industry veterans, one is struck by the youthful vitality at RSE Ventures, where Higgins has placed a premium on ideation, even developing an area where young people sit around a table and are tasked with generating new ideas. In showing me around, he said office organization was key to his plan. “Culture matters, and how you organize an office reinforces your culture,” he said. “I wanted to create a sweeping, open environment that fosters creativity and forces cross-pollination. You can’t walk five steps here without bumping into a colleague in another company baking a new idea. And that’s the point: What matters most here is not what you’ve done before but what you are about to do.”
     
    But it’s also about business, and Ross is pleased with year one. “It’s shocking to me how quickly it’s grown, where they are all self-sustaining operations,” he said. Ross got excited when talking about a round of new deals but insisted future success is all rooted in the company’s creativity. “We’re looking for people who want to be in a group that stresses innovation,” he said. “Too many companies erect barriers to innovations. Here, ideas and dreamers are welcome. In addition, I’ve always sought to attract the best people, and they never leave.” Pushed further on his vision for RSE Ventures, Ross added, “We are like a lifestyle brand: Best in class, with super growth in social, mobile, content and events — all supported by big data.”
     
    Where it goes, how it develops and the future business viability all remain to be seen. Ross and Higgins are placing a number of different bets, all while building, and that’s obviously fun for them — and for their colleagues. Staff talked of leaving the office some afternoons to go to an early happy hour, which they do once a month, while praising the enthusiastic culture. “Here, it’s small, nimble and we have freedom,” one of the more veteran sports business staffers said to me as I walked out of the conference room. “It’s like a think tank that actually does something.”

    > WHO WILL BE MAYOR?: Last week featured a big planning session around presenting Super Bowl XLVIII, including meetings with government and business leaders to discuss the Super Bowl Boulevard, which will run along Broadway from 34th to 44th streets and serve as a key public hub during the event. Even before the meetings in New York, Subway Global Chief Marketing Officer Tony Pace mentioned that one of the most underreported stories about the event in New York/New Jersey is that New York City will have a new mayor. Right now, there are 11 candidates running for the post, and the election will be held Nov. 5.


    Members of SBD Global’s edit team discuss that day’s news budget.
    Photo by: TIFFIN WARNOCK / STAFF
    “You are going to have a change in mayor, and the mayor won’t be [Michael] Bloomberg,” Pace said. “And the [Super Bowl] is happening about 30 days after a change in the administration and a new mayor being sworn in. I think, ‘Oh my God, please be aligned on all these events,’ because there could be a real challenge with a new administration, especially if they are not up to speed on everything.”

    > ON TO YEAR TWO: Congratulations to
    our SportsBusiness Daily Global, which last week completed a successful first year of publishing and moved on to Volume II. Kudos to Managing Editor Dave Morgan, who has put together a strong editorial team that tirelessly aggregates news and information from all over the world. We appreciate the positive feedback and support, and it’s been gratifying to see its readership base grow in every region of the world. In just one year, SBD Global has become appointment reading, a la SBD and SBJ.  Look for even better things from the news and information service in the days ahead.

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

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  • How to integrate ballpark, arena with city’s urban personality

    For years, we as American sports architects have approached facility design with the goal of creating iconic, recognizable structures, the result of both client directive and the culture within our industry.

    “Iconic” has become a buzzword of team owners and client-side leaders as well as sports architects, and it’s easy to see why. Elected leaders set out to deliver eye-popping buildings to visibly assure and remind citizens that their significant public dollars went toward something that appears meaningful. Deep-pocketed team owners who go it alone without public subsidies often strive to be the biggest and/or most outrageous. Similar sentiment prevails on university campuses. We’re all guilty of having strived for iconic when it comes to sports facilities.

    At the same time, many designers tout the urban integration of their facility designs. But can we achieve both?

    Consider the most recent crop of design solutions: Minnesota Vikings, Atlanta Falcons, Golden State Warriors, even Basra, Iraq (security issues aside). The Chris Hansen-led Seattle arena proposal looked to be the brightest opportunity for a well-integrated urban design solution in years. Yet all too often, our “iconic” building goal overrides all and results in facilities that look more like UFO landings with little connection to the surrounding urban fabric.

    In our new, reset economy, there’s simply far too much money invested in these buildings to suggest a mere 30-year life span. Think Metrodome, or Edward Jones Dome. Setting aside the failed multipurpose aspect, these stadiums were icons at the time, but their relevancy wasn’t as lasting as it could have been. Today, taxpayers demand far more. Likewise, donors and private investors will demand more from their investments.

    So what to do? We design architects hold significant power to shape opinions and tastes of society at large while allocating millions of dollars with each pen stroke. We also must remind ourselves of our obligation to help repair cities and communities. To that end, we should apply pressure and influence elected officials and team owners to integrate their facilities into the urban fabric rather than separating it with a standoffish, “look-at-me” presence. As designers, we need to demand more of ourselves.

    Consider this alternative: Given the substantial footprint of sports facilities, often one end is literally in a different neighborhood than the opposite end. Instead of a single, massive architectural gesture that spans multiple neighborhoods, think of organizing the exterior to relate to these unique neighborhoods, each with its own entry, food, amenities and overall experience. As fans traverse the building, the experience of different neighborhoods is directly reflected inside, lending a continuous experience all the way to their seats that feels authentic over showy. As for concerns about staffing multiple entries, advancements in ticketing technologies can alleviate these issues.

    Another solution is to take program elements and make them work in two directions. During event time, a concession or toilet supports the concourses. During pre-event or potentially non-event times, those same toilets, concessions and restaurants shutter the concourse access and open to the street. True and real integration into the urban fabric.

    When we make fundamental shifts in executing the program, the building’s success is not in being an often unapproachable sculptural object surrounded by windswept plazas and subject to ever-changing taste. Rather, it becomes a blur of seamless architectural experiences — from local pubs to pedestrian-oriented streets to retail, team store and seating bowl.

    Each side of San Francisco’s AT&T Park responds to its unique urban environment.
    Photo by: GETTY IMAGES
    This is how we create authentic architecture unique to its time and place. Start with designing user experiences rather than forcing large, iconic architectural gestures that will date the building “2013” for the rest of its life span.

    AT&T Park in San Francisco is a great example of a facility integrating seamlessly into its environment. On the urban, street side, restaurants and a team store line the street. On the bay side, promenades, parks and, of course, the ability to catch a home run while in a boat make it pretty special. Each side of the stadium responds to its unique environment.

    Likewise, when considering a renovation, observe how the facility can relate to the neighborhood, integrating the local culture and business community. For example, the inside action was extended to the street in the renovation of Jeld-Wen Field for the Portland Timbers. Passers-by can see into the stadium right at the location of an integrated light rail stop. Regionally sourced materials were designed into the project in a community that fully embraces sustainability. Elsewhere, in designing the Minnesota Wild’s new Bud Light Top Shelf Lounge, we used a classic wooden boat theme unique to the Minnesota lifestyle that integrates a slew of architectural products from 3M, a familiar Twin Cities corporate citizen. Fans relate and connect because the design is local, authentic and meaningful.

    Framing it another way, consider the purchasing decisions of current and future season-ticket holders and corporate decision-makers — the millennials. These adults, currently ages 18-35, do not strive for showy purchases or buy big-ticket items like cars, homes and appliances. They engage in collaborative consumption, sharing with peers, and place enormous value on authenticity. Luxury is about experience, not stuff, and home is a place to live out of, not live in. They time-share everything (including cars and housing), focusing on the holistic experience rather than the prestige of showiness or status. How does your facility relate to this?

    Less focus on iconic design solutions and more time spent integrating the local urban fabric and business community will result in a greater return on investment for stakeholders; authentic experiences for users; and neighborhood stabilization for the community, ultimately creating those elusive jobs we promise to create. When the facility becomes ingrained in the hearts of community members by delivering a real, local experience, the cradle-to-grave pro forma goes from 30 years to 100 years.
     
    Want an example? Look no further than Fenway Park.

    Tom Proebstle (tom@generatorstudio.com) is founder and design director of Generator Studio, a Kansas City-based architecture firm. His previous work includes a 2003 master plan for Fenway Park.


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