SBJ/March 31-April 6, 2014/Opinion

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  • Time is the most valuable resource to give, receive

    In the world of pro sports, the predominant colors brought home by athletes from their daily trips to the office are black and blue.

    In the front offices of sports franchises and organizations, the fluid that flows through the sports deal pipeline is green.

     Every day we are inundated, informed, involved and amazed by sports business deals that shatter what we thought were unreachable standards. Records on the playing fields may stand the test of time, but monetary records relating to team value, league broadcast agreements, premium ticket costs, stadium construction and costs of all manner of sports inventory might as well be signed in disappearing ink.

     The business engine of global sports is a financial sprint within a marathon driven by an ROI, wrapped in EBITDA, driven by metrics, defined by analytics, predominated by borrowed money and, with hope, leading to yearly profits and stratospheric asset appreciation.

    For all the focus on competitive commerce, time is the most valuable and precious resource in the ever-growing world of sports business.

     As I look at where many organizations and their executives are falling short, it is in the area of time. It’s not about time management, but the use of time as a commodity for mentoring, relationship-building, networking, management by walking around, and simple human-to-human, face-to-face conversation.

    In many instances, executives, managers and team leaders are having to run a 24-hour steeplechase and are falling by the wayside. They are increasingly waylaid by the daily pressures of the job, which is complicated by league mandates, ownership pressures and media responsibilities, and a Bermuda Triangle of endless meetings and interactions with fans and sponsors while also trying to wedge in some family activity. The ongoing tidal wave of nanosecond mobile communication is putting greater pressure on the ability of managers and their staffs to spend quality team-building time together.

    A few days ago, I received a call from a team executive who was questioning how he should work on allocation of precious minutes in the midst of a crucial time-eating project. I told him that even the featured high-wire star at Cirque du Soleil is going to have a difficult time balancing the demands of the job and his everyday life when the spotlight is turned off. “You might want to think about time as the most valuable gift you have both to give and receive,” I said.

    From time to time, it might be valuable for team leaders to push the race for the almighty dollar to the side and realize that a hen is only an egg’s way of making another egg.

     It takes time, but it’s worth it.

    Andy Dolich (andy.dolich@gmail.com) is managing director of U.S. sports practice for Odgers Berndtson and has held team executive posts in the NFL, NBA, MLB and NASL.


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  • Cartoon: It's complicated

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  • Back to front: Pieces from World Congress

    Among the thoughts and comments that stood out to me at the recent World Congress of Sports in Dana Point, Calif.:

    > MOVING PICTURES: Legendary Entertainment CEO and Pittsburgh Steelers minority partner Thomas Tull connected the dots between sports and Hollywood when he talked about bringing data analytics to his entertainment business. He recently purchased software analysis company StratBridge, which has worked for years with dozens of sports teams. He believes the company’s expertise will add efficiency in targeting film audiences, where marketing costs can exceed $120 million around major releases. He called such spending misguided when it could be far more targeted and said StratBridge will give him an advantage because Hollywood hasn’t used big data to its advantage the way sports has. “People are willing to put their lives, their likes, their dislikes, their social conversations online in a way that you can take a look at,” he said. “For us, it’s about not targeting people who have absolutely no interest in our product. It’s about taking people who are persuadable — that if they had the information and you engage with them in a way that’s compelling to them — they would want to buy the movie ticket, go to the game, whatever it is that you’re selling.”
       

    Legendary Entertainment’s Thomas Tull said the purchase of analytics firm StratBridge gives him an advantage in Hollywood.
    Photo by: TONY FLOREZ PHOTOGRAPHY

    Tull’s low-key, humble demeanor — raised in upstate New York, a former baseball scout made good — played well with the audience. “I’m literally the luckiest guy on the planet, because when I was a kid I was a movie geek,” he said. “I loved Batman, Superman and Godzilla, and, it turns out, I get to make [a movie on each of those characters], which is crazy. And the Steelers … I don’t know where the leprechaun is, or whatever, but it’s been a pretty crazy ride.”

    > SPORT MOST BUZZED ABOUT: You’ve heard it before, but soccer drew plenty of buzz over the two days, most noticeably for its youthful demos. In one session, both Peter McLoughlin (who oversaw the Seattle Sounders until earlier this month) and Toronto FC’s Tim Leiweke pointed to their clubs’ younger fan base compared to those of their other franchises. On another panel, Yahoo Sports’ Ken Fuchs noted the growth of younger demos around soccer for his business: “We look at soccer, and it’s the second biggest fan sport … among 12- to 24-year-olds [for site users]. It’s just behind the NFL and ahead of NBA and MLB. Here is a game that is about as simplistic as you can get. I have an 8-year-old son and I sit there having to explain all the rules of baseball and technical rules of football. Soccer is so simple. … The simplicity of that is a draw.” Later, in presenting an IMG Fan Engagement Study from March 2014, Catalyst PR’s Bret Werner noted that MLS and NBA fans were the “most digitally connected,” with heavy use of platforms Facebook, YouTube, Twitter and Google Plus, and stronger numbers than other leagues around Instagram.

    > ARE YOU READY FOR THE COUNTRY? OR RIO?: In a panel on preparations for the Rio World Cup, Ernesto Bruce, Adidas North America director of soccer, was blunt when he talked about the hospitality challenges presented by the location. “We tell our clients, you may get stuck on a bus for two hours getting around the city. We also tell them don’t expect the Ritz-Carlton,” he said.

    > DUNCAN TIME: U.S. Secretary of Education Arne Duncan was outspoken, with a couple of remarks that may have raised a few eyebrows from the sports audience. First, he shared sobering anecdotes and statistics about how other countries are working harder at child education than the United States. Second, he challenged teams and leagues to move beyond window dressing when it comes to education programs.
      
    “What I frankly am going to challenge people to do is to get beyond the one-offs, to get beyond the photo ops and to get beyond the few tickets for a few kids and the autograph sessions,” Duncan said. “Those are all nice, but for me, that’s not meaningful change.” He outlined deeper examples of engagement around after-school programs and community groups that help schools. Finally, he called out the NCAA for not penalizing college coaches — instead, penalizing the institutions — when it comes to infractions. “The idea that penalties don’t get attached to coaches instead of institutions makes no sense to me,” he said. “The fact that a coach can run a program in the ground, and then leave and double his salary at the next institution — and the university he left is decimated and loses scholarships: If I commit a crime, my wife shouldn’t pay for it and the person next to me shouldn’t pay for it; I should pay for it.”

    > LONG MAY YOU RUN: It’s clear the Phoenix Coyotes have a long way to go for economic stability, and I’m not thoroughly convinced the NHL will have long-term viability in Glendale, Ariz. But the team’s new owners have made strides on the business side, and have up-sold certain sponsorship categories. Daryl Jones, general partner of Ice Arizona and team co-owner, said: “We can probably get to break-even in the next couple of years, which is a big route for a franchise that had been losing $30 million plus per year.”

    > WE CAN SHARE WHAT WE’VE GOT OF YOURS: Josh Harris has owned the Philadelphia 76ers for 2 1/2 years and he is likely one of the wealthier owners in the league. One issue about team ownership has stood out to him: revenue sharing. “It’s amazing to see some of the richest people in the world argue over revenue share in the NBA,” Harris said during a panel of new team owners. “I won’t name names. There are so many issues that come up that if the league can get the ownership groups to take off their individual city hats and team hats [it can improve the game]. … The league does a very good job in focusing the ownership group on the greater good, whether that be sponsorship deals, media contracts or tricky issues like revenue share. … You can’t have a league [of] five big-market teams. You need to work out how the small-market teams are going to be able to survive. That’s a tricky issue.”

    > THE ONLY CONSTANT I AM SURE OF …: Having trouble keeping up with the accelerating pace of change? No one capsulized this better than Callaway’s Harry Arnett, who spoke about the frustratingly fast pace of distribution changes and how that makes his brand focus on creative messaging first. “The more that you invest in something you think is going to have a year or two life cycle for younger demos, the more you realize it’s going to have a one-week life cycle,” he said. “It’s really following the consumption habits of hippies back 35 years ago. So what Callaway has done is invest more in an ability to communicate to them from the creative side knowing that dissemination of that content is likely to change daily.”

    > TRANSITION GAME: News that Phil Jackson has joined the New York Knicks could remove some of the distracting noise around leadership of the Los Angeles Lakers. While the Lakers have come under some criticism over fissures in management between Jeanie Buss and her brother Jim, NBA Commissioner Adam Silver called it a symptom of an organization in transition. He noted he spent time with team Governor Jeanie Buss prior to World Congress, and when pressed about the state of the franchise, he got fired up. “Give her a break,” he stressed. “I would just say there has been a transition from her father, who was one of the greatest owners … in modern sports history. Jeanie grew up in the business, she knows it as well as anyone. I think in some ways, her job may be made a little bit easier in terms of some finality with Phil. I think that was always hanging out there, because of her and Phil’s relationships. Was Phil going to step into the organization? I think the fact that there is clarity now with Phil joining the Knicks will make it easier for Jeanie to do her job. And I have enormous confidence in her, and her brother, who is running the basketball side, and her whole family.”

    Bill Schmidt, Joan Cronan and Wayne Embry share their stories at the Champions panel.
    Photo by: TONY FLOREZ PHOTOGRAPHY


    > LOOSE BALLS: One of my favorite sessions of any event we do is our Champions discussion at the World Congress, and this year’s session didn’t disappoint. The heartfelt humility of those being recognized resonates, and their stories and dedication to their craft truly move the audience. Hearing stories like Bill Schmidt’s pursuit of Michael Jordan, Joan Cronan’s long partnership with Pat Summitt, and Wayne Embry’s battles against hate-filled racism and death threats are stories that stick with you. … A great deal of talk, questions and interest in two major digital initiatives that I’m keeping an eye on: NFL Now and 120 Sports. … When asked what the sports industry can do better, a group of panelists generally praised the industry and said it was in a good place. But a few in attendance later voiced surprise and frustration to me that more isn’t being done to make sports business more diverse, both ethnically and by gender.

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


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  • Understanding your counsel’s concerns with creative marketing

    Sponsorship and endorsement agreements once focused on defined, quantified marketing products: specific logo placements on specific assets for a specific number of events, a specific number of personal appearances and content production days, and a specific number of tickets and hospitality events. However, as sponsors look for fresh ways to maximize their returns and engage consumers, they seem to be increasingly focused on creative marketing benefits beyond the traditional elements.

    I recently worked on a creative marketing relationship intended to engage fans through interactive social media content related to a promotional sweepstakes. The platform was somewhat new to both parties, and at times the negotiation got bogged down by questions regarding the logistics of the execution, the structure of the sweepstakes, and the ownership of intellectual property used in the program. Throughout the process, it occurred to me that marketing professionals might appreciate a better understanding of some of the issues raised by creative marketing in order to ensure the smooth documentation and activation of a campaign.

    Sweepstakes

    The law applicable to sweepstakes is multifaceted, with compliance issues arising from numerous federal and state statutes, case law, and regulatory agencies. The starting assumption for structuring a sweepstakes is that Prize+Chance+Consideration=Illegal Lottery. One element must be removed to make it legal, and it’s unlikely that it will be the prize.

    What impact could Kyrie Irving’s “Uncle Drew” series of ads have after his association with Pepsi ends?

    The element of chance generally can be eliminated if there is a contest of skill with clear criteria for selecting a winner. Consideration essentially means that participation requires anything more than free and easy, and this element generally can be eliminated by offering a free alternate method of entry. Adequate disclosure is critical. In 2008, H&R Block settled with the New York state attorney general for $245,000 after claims that it had failed to adequately disclose the official rules, including alternate methods of entry, for two sweepstakes.

    Apart from law, some social media platforms have their own rules and guidelines for conducting promotions. Facebook’s rules were recently softened to allow easier use of promotions, and while Twitter doesn’t impose rules, it does offer guidelines to curb behavior likely to discourage other participants. Along those lines, official rules should be written to grant the advertiser latitude on enforcement, and advertisers should closely monitor participation for suspicious activity, including the use of multiple accounts and “vote farming,” a coordinated effort to solicit votes online. In 2013, a Boston radio station had to disqualify the winner of a promotion for a meet-and-greet with Taylor Swift after a group coordinated an effort to vote for a middle-aged man who wanted to take photographs of himself smelling the singer’s hair.

    Social media


    Rooney’s Nike tweet ran afoul of British regulators in 2012.
    Photo by: GETTY IMAGES

    Ownership and control of social media content (e.g., slogans, hashtags, videos and user-generated content) can also raise concerns. Sports promotions typically result in joint branding, so the sports property, advertiser and any agencies involved should think through the ownership and allowed uses of the produced content. Who owns the content? How can they use it? And how long do those rights last (aka, “The Internet is forever”)? Viral videos like Pepsi’s “Uncle Drew” series with NBA player Kyrie Irving could appeal to viewers long after the endorsement relationship has ended, and consideration should be given to the impact of a continued association in the future.
       
    There are also various Federal Trade Commission rules that may apply to social media promotions, including the Guides Concerning the Use of Endorsements and Testimonials in Advertising, which require the disclosure of
    material connections and the avoidance of false claims. As to disclosure, paid endorser relationships may be apparent in some cases but may not be in others, and this rule is not limited to celebrity endorsements. Other countries have similar rules. A 2012 Nike Twitter campaign was banned by the U.K.’s Advertising Standards Authority, comparable to the FTC, because it determined that soccer player Wayne Rooney failed to clearly indicate that his tweets for the campaign were paid advertisements, despite the inclusion of a link to a Nike site at the end of the tweets. The FTC has indicated that disclosure of endorsement relations in social media, particularly Twitter, is a focus, and the use of hastags such as #paid, #ad, and #spon to disclose a paid endorsement relationship seems to be gaining prevalence.

    The FTC’s loss to Steve Garvey helped lead to changes in
    endorsement rules in 2009. 
    Photo by: GETTY IMAGES

    As for false claims, advertisers should provide guidance to endorsers regarding approved claims and claims to be avoided, particularly if the advertiser operates in a heavily regulated industry. In the early 2000s, the FTC alleged that former MLB player Steve Garvey made false claims in infomercials for a weight loss supplement. A long legal battle ended in 2004, when after a win by Garvey in the lower courts, the 9th U.S. Circuit Court of Appeals agreed that there was insufficient proof that Garvey was aware that the claims were false, in part because he had anecdotal evidence of the product’s abilities based on his own weight loss. Many feel that the FTC’s loss to Garvey, together with an appreciation of the changing methods of communicating endorsements, is what led the FTC to revise the Guides to their current form in 2009.

    Reduced control

    Creative activation is generally more difficult to control and can result in accidental ambush marketing or unintended brand associations. For example, Samsung was an official sponsor of this year’s Academy Awards and was reported to have paid specifically for “selfies” during the broadcast (including the infamous group selfie that reportedly broke a record for retweets), but off-camera, host Ellen DeGeneres was tweeting from her iPhone, and each tweet bore the tag “via Twitter for iPhone.”

    Hopefully, keeping these issues in mind will help marketing professionals anticipate potential legal concerns as they structure marketing campaigns, keeping attorneys like myself where we belong — far away from creative marketing.

    Matt Efird (MEfird@rbh.com) is a corporate attorney at Robinson, Bradshaw & Hinson, P.A. in Charlotte, with a focus on sports and entertainment law, specifically in NASCAR and other motorsports series. The 7th annual The Racing Attorney Conference in Charlotte on April 8-9 (www.racingattorneys.com) will include discussion of legal issues in creative marketing, sponsorship and other areas relating particularly to motorsports.


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