SBJ/June 30-July 6, 2014/Opinion

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  • At year’s halfway point, stories we’ll be watching

    Cleaning out the notebook as we head into a midsummer break and the second half of 2014: 

    > FULL COOPERATION: The concept of a team’s business and player-personnel operations working in full cooperation is one of the issues I’m most frequently asked about: Who works well together, who doesn’t, and do they have to? Does an organization have to have a strong working relationship between player-personnel and business to be successful? “You don’t have to run it that way,” said Golden State Warriors President and COO Rick Welts. “There are very successful organizations where the two never meet.” But Welts stressed that he’s a proponent of a healthy working relationship between the units and said, “It’s one of the reasons that I’m here [at Golden State], because that’s our ownership philosophy.” He went on to add, “I love trying to have this argument with those teams [where it’s more split], but if you’re really trying to maximize the opportunities for your franchise, that’s not the right way to run the organization. The type of cooperation … comes right from the top, comes from ownership. You can do it without it, but it’s limiting in terms of the opportunities you can create. … You can be successful [keeping the groups separate] if you’re winning. If you have an absolutely superior product you can be successful. I think if you’re middle of the pack or on your way up, it becomes much more difficult.”  

    Brian Basloe, senior vice president of suite and ticket sales for Barclays Center and the Brooklyn Nets, said recently that an NBA meeting this year stressed cooperation from team operations. “The buy-in from team ops is very important,” he said. “Pat Riley spoke at an NBA TMBO event recently. When Pat Riley is heading panels on how team ops can help new business, we’ve entered a new frontier.” 

    Welts also suggested a new element to the tug between business and player-personnel. “The other subset of competition is the players themselves,” he said. “We’re also competing a little bit with our own players as they become more visible spokespeople in terms of the associations that they create, too. It’s an additional layer that we don’t often talk about. We have to manage that, as well, as your team becomes more successful and your individual players actually are their own brands and can go out and market, sometimes even in competition with the teams.”

    > THE FIRST DAYS ARE THE HARDEST DAYS: In speaking with new NHL Coyotes co-owner Anthony LeBlanc, you fully understand that he’s eager to have more time under his belt as he and his partners look to make hockey work in Arizona. I’ve heard good things about the 44-year-old LeBlanc, who I’m told is very engaged and is spending hours and energy to get it right in Glendale. It’s refreshing that he isn’t afraid to say what he has to learn and what he doesn’t know. He concedes the organization is playing catch-up. He’s got his sights set on increasing per game attendance by 1,000 from nearly 14,000 this past season.

    “We also have a significant opportunity to increase our overall corporate sponsorships,” he said. “The fact that we closed when we did last year [Aug. 5] meant our ability to impact corporate last season was minimal. We anticipate a substantial increase this season.” 

    The team held a town hall meeting June 5 and about 400 fans attended, far more than the organization had expected. With general manager Don Maloney and coach Dave Tippett on the same panel, LeBlanc said he didn’t expect many questions to come his way. “In fact, over half of the questions asked were centered on the business side,” he said, and ranged from improvements to food and beverage offerings, to cellphone coverage in the building, to the potential for a Stadium Series game in Arizona. 

    Not surprisingly, he said the biggest adjustment of ownership is that he’s a public face who is recognized and sought out for answers and ideas along the concourses and outside the venue. The biggest lessons: Change doesn’t happen overnight and “how much the fan base wants to interact with us and the vested interest they have in seeing the franchise succeed.” 

    One of his latest big moves is the rebranding of the team to the “Arizona” Coyotes, a move that was set to take effect with this past weekend’s NHL draft. “We don’t want to be just a Phoenix team,” he said. “We were the Phoenix Coyotes when we’ve played in Glendale. We want to be more than Phoenix and expand our footprint throughout the entire state. The [NFL] Cardinals have done it. The [MLB] Diamondbacks have done it. It just makes sense.”

    > STORIES I’M WATCHING FOR THE REST OF 2014: One of the biggest stories for me will be who replaces MLB Commissioner Bud Selig. We’ve heard about the palace intrigue regarding efforts to succeed Selig after his 22-year run atop the game is set to end in January. But MLB team officials now seem to be on the same page publicly on the issue, confidently stating Selig will ride off after his declared departure date early next year. 

    Earlier this year, there was plenty of speculation that suggested that owners, with no succession plan in place, would have no choice but to go back to Selig and ask him to stay on and that he’d remain. That tone has shifted since MLB established a search committee, with owners now discussing a path to new leadership and executives publicly confident about a successful succession plan. At a recent conference, Pittsburgh Pirates President Frank Coonelly said the steps are in place to find the game’s next leader and predicted Selig would not be in office at this time next year. Pirates owner Bob Nutting, who serves on the search committee, also believes Selig’s tenure will end in January. “Absolutely,” Nutting said. “He is committed to stepping down on a high note.”

    The question remains, Who emerges to lead the game in a new era? And, from what sector? And who plays the role as kingmaker?

    > OTHER STORIES TO WATCH: What else is on my watch list? The consolidation in the pay-TV marketplace and what it means for sports … How the Clippers’ transition plays out and Steve Ballmer’s vision for the organization … How the International Olympic Committee handles the stigma that so many cities don’t want anything to do with the 2022 Winter Games: Whether it’s the staggering cost, political opposition or public indifference in democratic markets, this has to be a concern to the IOC and brands connected to the Olympic movement. … The sales, marketing and operations around the inaugural College Football Playoff: How will ESPN manage corporate sales? Which companies are paying up? What is the team selection process? And how much will fans travel in late December and early January to multiple “big” games? …The continued integration of IMG within WME’s corporate culture … Is there a real, positive World Cup bounce affecting soccer in the U.S.? … The launch of the SEC Network … While we’re on college issues: What will the framework for a new governance structure under the Division I umbrella look like if it’s approved in August? And how will that change affect athletic directors? … O’Bannon v. NCAA in addition to the two antitrust suits brought against the NCAA and unionization efforts before the NLRB … Ad support and viewer numbers around the NFL’s new “Thursday Night Football” package: I’m bullish on it, but some people I speak to are far less so. Thursdays do have a competitive prime-time schedule, and homes-using-television levels rank fifth over a seven-day week. But CBS has a pretty favorable schedule and its commitment to top talent and production will put a bigger spotlight on the games. Whether that’s enough to out-rate ESPN’s “Monday Night Football” remains to be seen. … The over-the-top launches of “NFL Now” and 120 Sports: I’ll be watching the programming mix, ad support, and consumer discovery and adoption. … How will NASCAR’s new format for the Chase be received and play out? NASCAR made a bold move to juice up interest in its playoffs. Will it pay off in TV viewership and in fan and sponsor engagement? … The announcement of a World Cup of Hockey for 2016, and the NHL and NHLPA plans for the 2018 Winter Olympics … Finally, will Tiger Woods’ return pump up interest around men’s golf or will this year be a wash?

    SportsBusiness Journal is going dark next week. Our next issue will be available Monday, July 14 — but get your fix through our daily updates at SportsBusiness Daily. And enjoy your Fourth of July.

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

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  • What’s the hangup? How teams can put social in social media

    Social media in sports is hardly new anymore. These days, every team, venue, athlete and your mother has embraced social media and its explosive power to connect and promote.

    Digital sports content abounds and has gotten much better, more “likeable” and “shareable.” Fans are eating it up in greater servings than ever before. Sports continues to fuel the explosion of social TV as well, connecting fans far beyond our in-venue audiences. In fact, sports events account for only 1.2 percent of all TV programs, but 49.7 percent of all Twitter chatter about TV, according to a recent Nielsen study.

    However, despite all of the progress that has been made in social sports marketing, old habits continue to die hard. The vast majority of team and executive social accounts are still mired in the traditional mold of controlled (aka safe and stale) one-way communications. Everyone has jumped on board the media part of social media, but most still completely miss the social part of the equation.

    I reached out to Mark Cuban, one of the most opinionated and socially savvy owners in all of sports, on Twitter (@mcuban) recently with a request to direct message him a quick question related to sports and social media. Given his high profile and 2 million-plus followers, I wasn’t really expecting a response, so I was surprised when he followed back within 12 minutes. A pro team owner (or someone actively monitoring his account) responded in 12 minutes. Impressive.

    Several days later, we engaged in a brief chat via Cuban’s new Snapchat-like app, CyberDust. I asked him why he thought it was that teams and their C-suite do not seem to get the social aspect of social media.

    “I think they get it,” Cuban pinged back. “Social media is pretty easy.”

    When pressed again on why so few teams or executives actually engage in two-way fan communications like he does, Cuban responded, “All do.”

    What? All do?!

    The next morning, I reached out to Cuban’s own NBA team via Twitter (@DallasMavs) with a request to direct message about a ticket-related question. I did not receive a response in 12 minutes, or even 12 days. No follow-back. No response. No engagement of any kind.

    If I had dialed the Mavs’ front office, I assume someone would have answered the phone and directed me to the appropriate person. But fans no longer call in to compliment, complain, inquire or purchase. Facebook, Twitter and Google are the new phones, and too few teams are manning the digital reception desk.

    The problem is not the new idea or the new social platform, it’s about doing more to escape old mindsets and traditional ways of doing business. Senior executives still seem more focused on what’s on the front page of the sports section than they do the real-time fan conversations about their brand on social channels.

    Many appear clinging to the previous era of sports marketing, when they could tightly control the PR messages, run hard-sell ads across mainstream media, encourage fans to call 1-800-TEAM-XYZ to buy tickets, hire larger inside sales teams, make more outbound phone calls and blast out more emails.

    However, we’re in the era of “inbound sports marketing,” where those old tactics are less and less effective …

    Where the new dynamic requires faster adaptation to emerging platforms and ideas.

    Where fans have more control, a louder voice, and demand to feel more connected.

    Where unlocking the true power of social media requires actually being social.

    Where it is no longer acceptable to have 25-plus sales execs calling during dinnertime to fill those 18,000 seats, while a meager 1.5 staffers attempt to grow, promote, engage, sell and respond to your social audience of 3 million fans.

    The proactive Seahawks answered a fan’s digital call for help. Not all teams are as nimble.
    Photo by: GETTY IMAGES

    But what’s the ROI of a follow-back, retweet, @response, digital handshake or social high-five? In the case of my personal social experience with the Seattle Seahawks, the answer was $335.84.

    I may now live 3,000 miles away from my favorite team, but the Seahawks were incredibly proactive in engaging with their fans on social channels during the team’s Super Bowl run. During the playoffs, I was tweeting to a friend at the Seattle Mariners, inquiring where I might find a No. 12 banner to proudly wave in my small corner of Patriots Nation.

    My tweet was not directed to the Seahawks, but the team’s social media hawks were listening nonetheless. A direct message soon appeared from @Seahawks, asking for my address, and the next week a huge No. 12 banner arrived at my home to shrieks from my three children. Wow … surprise and delight. Delivered. The following week, I went online and ordered three new youth jerseys to keep pace with my family’s deepening brand loyalty.

    The final score of the Super Bowl may have been 42-8, but the Seahawks outscored the Broncos 3,177-8 in the number of @replies to fans on Twitter. The team notched a whopping 167,500 proactive engagements (retweets, favorites, @replies).

    If just 5 percent of the Seahawks’ social audience of 2.6 million could be swayed to spend half of what I did on a new jersey or tickets, that’s nearly $20 million in revenue.

    Your digital phones are ringing off the hook. Are you prepared to answer the call?

    Jim Delaney (jdelaney@activatesports.com) is president of Boston-based Activate Sports & Entertainment. Engage with him on Twitter @activate.

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  • Will official sponsorships surrender to ambushers?

    During broadcasts of the 2014 FIFA World Cup matches aired in the U.S. we see commercials designed to ambush current FIFA sponsors. Volkswagen commercials, for example, show fans dressed in their country colors singing “Olé, Olé, Olé” on their way to a soccer stadium. These commercials are running during the broadcast despite Hyundai’s role as the official partner of FIFA World Cup Brazil. Volkswagen also is a sponsor of segments of the broadcast, which just adds to the confusion.

    Coca-Cola has been a FIFA partner for many years, but World Cup viewers are being entertained by Pepsi commercials starring young Brazilians and soccer stars kicking soccer balls, Lionel Messi reading a newspaper and a whole cast of Brazilian fans singing “We can be heroes — just for one day.” The title of the commercial: Now Is What You Make It – Pepsi 2014 #FutbolNow.

    Ambushes are not unique to FIFA and its sponsors. During my many years at the International Olympic Committee, we had to confront similarly clever ambush marketing efforts designed to confuse consumers while staying on just the right side of the legal boundary line. One great example of ambush in the Olympic world is Subway’s efforts during recent Olympics using commercials starring past Olympic athletes promoting Subway as the “official training restaurant of athletes everywhere” even though McDonald’s is the official restaurant of the national Olympic committees and their teams.

    While we may hold varying opinions regarding the ethics of ambush efforts, we all know that ambush marketing confuses consumers as to who is the official sponsor. We also know that significant increases in broadcast rights fees put pressure on broadcasters to sell inventory at high levels. After paying substantial rights fees to be an official sponsor, many commercial partners are not willing, or in some cases unable, to buy exclusivity on a broadcast in their respective categories. The result is a broadcast for many large events filled with commercials by both sponsors and ambushers, and it is hard to see the difference between the two.

    Deep down many of us in the sports marketing industry wonder when the ambushing will become so effective that sponsorships will no longer be valuable. Watching this World Cup, I wonder if it would be better for current official sponsors to spend their funds creating great advertising campaigns making them look just like partners as opposed to becoming official sponsors at great cost. It is easy to create effective hospitality programs for events without being a sponsor. The funds saved on sponsorship fees could be used to create amazing event hospitality experiences in Brazil, to buy broadcast time and to create links to soccer in general. All of that would be less expensive than being an official sponsor and much less frustrating for corporate partners.

    Personally, I hope that day never comes, but I can see it just around the corner.

    Davis Butler (dbutler@encompassinternational.com) is president of Encompass International and former senior vice president, marketing development, for IOC Television & Marketing Services.

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  • Stage set for U.S. city to bid on Games

    Oct. 2, 2009, is a day that will last in my memory for a long time.

    It had been almost four years earlier when an initial group of six of us had met consistently in the Chicago McKinsey office to determine whether Chicago was a viable candidate to host the 2016 Olympic Games.

    The journey had taken us from that small office (with the internal windows covered so no one could see what we were doing), to California to pitch the U.S. Olympic Committee initially, to a shootout with Los Angeles in Washington, D.C., for the right to be the U.S. candidate city.

    Now, sitting in Copenhagen, representatives from all walks of Chicago life waited to see if indeed our journey would be rewarded.

    With one brief statement at 4:25 p.m. from International Olympic Committee President Jacques Rogge, it was declared that not only had we not won, but we had come in last, being eliminated first amongst all of the candidate cities (Rio, Madrid and Tokyo).

    Now, five years later it looks like another U.S. city is about to pick up the mantle. At the most recent board meeting the USOC met to determine if they want to bid, and which four cities will continue to discuss being the U.S. candidate city moving forward to the international competition in 2017, when the 2024 host city will be selected.

    The USOC has made key changes since Chicago’s defeat.
    Photo by: GETTY IMAGES

    Is there any reason to believe that the U.S. bid this time will do better than New York (last in the competition for 2012) and Chicago (last in the decision for 2016)? So poor had been the U.S. bid efforts that the USOC decided to not even put forward a city for 2020. Why the change of heart now?

    Since the humiliation of the 2016 loss (a phrase it has taken me several years to be able to say out loud), the USOC has taken to task a systematic approach to determine what can, and should, be done to merit another run at this global competition.

    The approach focused on three key areas:

    1. Leadership: President Scott Blackmun and Chairman Larry Probst have made a long-term commitment to make the USOC a better and stronger partner within the Olympic family.

    2. Revenue: Between a renegotiation of the contentious revenue-sharing agreement (how monies generated by the Olympic movement are distributed) and the recent long-term agreement by NBC (U.S. broadcast partner for $7.65 billion through 2032), the USOC is now well-positioned as a strong contributor to the long-term viability of the Olympic brand.

    3. Partnership: Members of the USOC, U.S. sports and others with expertise in specific areas (such as Scott McCune, who ran Olympic marketing at Coca-Cola) are now fully engaged in IOC working groups helping determine how to develop and execute best practices across several key areas.

    None of this means a U.S. bid will win, but it leads one to believe that the playing field is now level and that a U.S. city is well-positioned to make a run at the role of host city.

    There will certainly be a backlash and a hesitation in each market around a U.S. bid, and it will undoubtedly focus on the potential financial burden. This is understandable as we now see the deserted and decayed venues in markets such as Athens and Beijing. Couple that with the ridiculous numbers being thrown around for the overall cost of Games such as Sochi (if they stated $51 billion, you can be fairly certain it was more). Surely this is a case for buyer beware?

    However, a longer-term view of the real costs and benefits of hosting may well be warranted. It was not until Los Angeles (1984) actually turned a significant profit ($233 million) that cities determined there may be financial benefit to hosting the Games. In 1992, Barcelona took its investment to a new level by changing the overall landscape of its harbor and going from a city of relative obscurity to the 12th most popular city in the world. This led to increased tourism, business development, and the unintended consequence of an investment in sports infrastructure that resulted in the development of a successful and profitable Spanish sports market.

    More recently a report just released states that Homebush Bay (the Olympic Park for Sydney during the 2000 Games) is now generating $5.2 billion in annual revenue, making it the 20th biggest local economy in Australia. London is certainly hoping to replicate this model with the creation of Queen Elizabeth Park and the legacy of one of the largest urban shopping centers in Europe, all in the previously blighted area around Stratford.

    With this mixed set of results, are the Games a boom or bust for host cities? It depends. One advantage that U.S. cities have is a sizable existing transportation system and a significant investment already in sports facilities. All four of the cities focused on 2024 hold a strong cost advantage over places such as Beijing, which basically started from scratch. However, it will still be critical to develop a long-term legacy that will ensure that any incremental costs taken on by the host city can be justified as either a needed enhancement for the city or region, or one that leads to future measurable, justifiable revenue streams.

    So, many U.S. cities have contemplated the opportunity to host the world. Some have actually had the chance. A U.S. candidate city for 2024, if selected, is in for a ride unlike anything else it has ever encountered. And there is no guarantee that the story ends well. But, done correctly, it can be a catalyst for future growth. I believe the time is right for a U.S. city to bid, and fortune favors the bold.

    Gordon Kane (victorysm@comcast.net) is an Olympic marketing consultant who works with Olympic sponsors and bid cities.

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