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Volume 24 No. 156

Events and Attractions

The scandals, suits and scrutiny facing intercollegiate athletics are likely to force changes in the way the system operates, said ESPN’s Jeremy Schaap yesterday during the opening panel of the '12 IMG World Congress of Sports hosted by SBJ/SBD in Dana Point, Calif. “The way that college sports operates is under threat,” he said. “There is a groundswell right now. We’re getting to the tipping point where the model in place now, which is great for the colleges -- give a scholarship to a kid to play football for you, give a scholarship to a kid who plays basketball for you, particularly on the men’s side, and you get to reap all the benefits -- I think that’s coming to an end.” Change is being fomented on multiple fronts, Schaap said. “There’s congressional interest right now, there are state legislatures and there are aggrieved athletes.” Several panelists said the onus of correcting the ills besetting college athletics falls on the university presidents that oversee the system. “It’s really up to the university presidents to take an active role in college athletics instead of just seeing it as a line item, usually on the P side in their P&Ls, and as a way to market the school,” said MLB Exec VP/Business Tim Brosnan. University presidents feel that among the important requirements of being a great university is having a major football program or a major basketball program, Brosnan said. "Unless and until the guys or ladies who are in charge of the business look at it as part of their business, they don’t want to know how the sausage is getting made.” 

SPORTS AND THE STATE: The specter of congressional intervention is a fearsome one for college athletics, said Proskauer Rose Chair Joe Leccese. “I always worry about the same people who destroyed the United States sort of getting involved in this. When we talk about legislation, the reaction of a lot of people in the private sector is, ‘Oh my God, everybody stay out.’ … The beauty of college sports is that every congressman roots for a different team or has a different constituency, so the notion of any of them coming to enough consensus to actually pass a piece of legislation seems unlikely to me.” But IMG Sports & Entertainment President George Pyne reminded the audience and fellow panelists that they should not forget the benefits of college athletics. “In fairness, there are 300 Division-I schools, and from time to time you’re going to have things you’re not proud of,” he said. “And, I think, colleges and college athletics provide a great service to a lot of kids, and give people who didn’t have an opportunity an opportunity.”

Guber said with fans it is important to build
relationships, not transactions

THE FAN EXPERIENCE: Warriors co-Owner Peter Guber challenged teams to pay more attention to the fan’s experience. “You have to think of yourself as a steward,” Guber said. "If you recognize that and you think of it in terms of that, which is different than other businesses, you really have to think of it differently. You have to look at these people as guests, and you’ve got to get these guests to come back one time, two times, 10 times, 12 times. You have to build relationships with them, not transactions. Most of these owners aim for people’s wallets instead of their hearts." Brosnan said, “The fans, at the very end of the day, they’re interested in the competition, they’re interested in the makeup of the ball club, they’re interested in April of their chances of going to October.”

THE THING ABOUT TICKETS: Brosnan said ticketing “could be our biggest issue right now because of a confluence of factors. Ticketing, how people get ticketed, is changing dramatically. Secondary market forces coming in and changing the pricing structure has reached a crescendo.” For baseball, the goal is to see who the actual ticket user is, as the buyer and the user are not always the same person. “We as an industry are at a kind of revolution in how we deal with ticketing and how we bring our customers into the ballparks.”

Pyne said of the possible sale of IMG, “At IMG, we don’t worry about the sale of the company. What we focus on is trying to create value and create a great company. There are no plans to sell right now any more or less than when I first took the job.”

Guber, who is part of a group bidding for the Dodgers, said of the progress of the sale: “I can’t really comment too much about that. It’s a process that you know about as much as I do what’s going on there. It’s a storied franchise. If I can be a part of that it would be great.” Guber did not respond to a question on what he thought the sale price would be.

On what the sale of the Dodgers means to baseball, Boras Corp. President Scott Boras: “I think it means a lot to sports in general. I think the Yankees and the Dodgers, being a baseball person, there aren’t too many franchises in sports that can exceed what those franchises mean to the sporting world. I think the location of the Dodgers, the time zone they’re in, the evolution of the Pacific Rim, the true linkage of modern technology in Hollywood, L.A., to baseball, I think it has a chance to be one of the most successful franchises in sports history.”

On whether the fans care about whom the new Dodgers owner will be, Brosnan: “I think the fans care that the person who owns the Dodgers is committed to put a competitive and winning team on the field.”

When Bob McKnight began working with Quiksilver in 1976, he was selling hand-made boardshorts out of the back of his car at beaches around the U.S. It was a very simple “hand to mouth beginning,” but one that he enjoyed, said McKnight during a keynote speech yesterday at the IMG World Congress of Sports hosted by SBJ/SBD in Dana Point, Calif. He was a surfer himself, selling a desirable product to other surfers. Today, Quiksilver is a $2B worldwide business with a diversified product portfolio for a range of action sports (surfing, snowboarding, skateboarding, kite surfing, sailboarding, etc.) geared toward men, women, boys and girls. For McKnight, the co-Founder, President, CEO & Chair of Quiksilver, and his team of employees, the primary challenge is reaching and continuing to understand its target market: kids. 

THE KIDS ARE ALL RIGHT: Social media has served as an advantage and a means to reach this “fickle” market directly, but it also comes with potential landmines. “Marketing today is much cheaper and it’s much more targeted,” said McKnight. “You can really pinpoint your audience, but it’s a lot more dangerous. It’s a real rifle shot right into the teen action sports girl or guy, but if it’s the wrong image, if it’s in the wrong font, the wrong humor, the wrong message, these kids are used to years and years of just hits in their minds, and they have a real easy filter that filters out anything that’s incorrect and is not spot on, so you have to be really, really careful.” A couple of years ago, Quiksilver introduced a campaign with miniature, three-dimensional, cardboard figurines of its sponsored athletes. While the ill-received effort didn’t result in any financial blowback for the company, it did cause “backlashed humor (within the industry) that gets networked behind the scenes,” McKnight said, and was the type of campaign that can “come back to haunt you” in an industry where a company’s “core” image matters.

McKnight said of Nike stepping into the action sports industry, “Well, we have an 800-pound gorilla in the room now. Nike’s a great company. I’ve always studied them, I know Phil (Knight), and I’ve sort of mentored how I run the company off of them, in terms of their focus and attention to detail.”

On knowing and understanding the youth market: “We have to follow them: visit high schools, go to rock concerts, read all the magazines, listen to the language … For me, I have my kids, so it’s any way you can to stay relevant, and it starts with the product being good and the marketing being correct.”

Deftly negotiating the rapidly changing world of social media and staying up-to-date with new technology and trends is crucial to the success, or failure, of marketing campaigns. And integrating brands, rightsholders, tech and media is the endgame. This was the consensus that emerged from yesterday's panel discussion titled "Redefining Consumer Engagement: The Role of Social Media and Emerging Marketing Platforms" at the IMG World Congress of Sports hosted by SBJ/SBD in Dana Point, Calif. “We think the evolution will happen over the next two or three years as really everybody in this room works together,” said Bill Webster, VP/Brand Management at Sun Life Financial, U.S. “We’ll sort out that new experience, where you are not just watching an awesome sporting event on TV in a very rich way, but we bring the engagement and passion of sports with all your friends, your alums, or maybe just people who are passionate about the same teams you are for the same reasons.” There is some concern for marketers, though, as the Federal Trade Commission begins to more closely regulate some aspects of social media. “It’s a very interesting space right now, you have to be a little careful,” said Skechers Fitness Group President & CMO Leonard Armato. “The whole idea of social curation is exciting. The way that this is evolving is sort of a new frontier. ... A lot of brands are trying to influence the influencers with either money or products. If you give influencers something of value, they have to disclose they are getting something of value from you if they give you a positive review.”

BUDGET GAP: On average, 25-30% of media time in the U.S. is spent on the Internet, while 10% of media budgets are spent on the Internet. Armato sees that equation changing as marketers address the social media environment. “It’s happening every single day,” Armato said. “In fact, last week the CMO of P&G said they are shifting massive amounts into digital. They think it’s more efficient and they also believe it can be more effective at times.” “I think it will take a while to catch up,” said Silver Chalice President John Burris. “There’s no question … that the movement is happening online, but it will take some time. Part is that it’s not as easy to spend big amounts of dollars online.” In addition, the fluid nature of the technology makes some marketers skittish about the new social world. “It’s our job to sort that out, though, and help folks figure out where they should be spending their money,” Burris said.

On what drives consumption, Armato: “We kind of stumbled on the fact that consumers believe each other more than they do advertisers. So testimonials can be very, very effective.”

On social media as an instrument of change, Armato: “The new-school method is like KONY. I think it’s had something like 125 millions views (in the last 10 days), but it’s not just the views, it’s a call to action for all kinds of things you want consumers to do. So social really gets you to not only like something, enjoy something, engage something, but it also gets you to do something. It’s kind of genius whether you like it or you don’t like it.”

On the staying power of early adopters, Burris: “What will happen in a lot of these spaces is that there will be an over-investment, people will want to share 50 Duke videos in a day, and then they’ll find a balance and they’ll back off. Same thing with Twitter, a little bit. I find that early adopters of Twitter just go nuts for a couple of days and then they start to back off and decide who do they want to follow and what do they want to do.”

UFC signed its seven-year deal with Fox because the network offered so many platforms on which to promote the mixed-martial arts organization, said Lorenzo Fertitta, Chair & CEO of UFC parent company Zuffa during a panel discussion at the IMG World Congress of Sports hosted by SBJ/SBD in Dana Point, Calif. Fertitta said the appeal of being able to spread 400 hours of UFC programming across Fox,, Fox-owned RSNs, Fuel TV, FX, Fox Deportes and News Corp.’s international sports channels far outweighed the benefit of buying and rebranding the cable channel G4 or going with other suitors, such as HBO. Having UFC featured across all of those channels would help drive viewers to UFC’s PPV fights, which remain its biggest revenue stream. “At the end of the day, we are a sports and entertainment media company,” Fertitta said. “Being out there as a single channel, trying to get distributed, we felt we had the brand to get us there but thought it would be an uphill battle. What I was concerned about was that we needed to have that broad platform to promote our athletes and drive people to pay-per-view.” Another key piece of the puzzle was Fox’ willingness to let UFC continue to produce its own fights. HBO wanted to take over production, Fertitta said. “We felt like we developed this core brand that catered to young men,” Fertitta said. “We were afraid to hand off our brand to someone else.”

CONTROL PANEL: Fox was okay with letting UFC control production, said Fox co-President & COO Eric Shanks. “You wouldn’t have given up control if you don’t trust the guys,” Shanks said. “You want the authenticity that made the sport what it is. Part of what made it authentic was the production.” The result is broadcasts that are different from a traditional sports production. Fertitta: “When we come on air and the announcers are doing introductions, music is blasting in the background. Joe Rogan is yelling at the top of his lungs and the veins in his neck are popping out.” There were some things Fox asked UFC to do before the first fight, such as shortening the fighter walk-ins and changing the mat so that it is clean when the Fox broadcast begins. “I don’t want it to look like someone just sacrificed a goat before Fox comes on the air,” Shanks said he told Fertitta. “(UFC) spent a month trying to figure out how to clean the mat or change the mat.” But Shanks said that ceding production control hasn’t been an issue. “It is a back and forth,” Shanks said. “Those guys have the reins during the event and after the event we sit and talk through what needs to change, if anything.”

Shanks said Fox had been courting UFC for
almost a decade before offering a deal

FOX FIGHT CLUB: Shanks said that Fox had been courting UFC for almost a decade before offering it a seven-year, $100M-a-year broadcast deal. The deal was driven largely by the opportunity Fox saw in using UFC to grow distribution of its channel Fuel TV. “We ran the numbers and the numbers looked right,” Shanks said. “Everything they wanted to accomplish matched up with what we wanted to accomplish. We wanted a new driver for Fuel TV. We wanted great content for Fox Deportes. Bringing real fights back to Saturday nights was a big goal of ours.” Fox is “edgier” than other broadcasters, Shanks said, and that made the decision easier. Plus, he saw an opportunity to use UFC fights on News Corp.’s global channels. “We believe there’s no more universal language than two guys getting in an octagon,” Shanks said. “From a sports perspective, it’s a great chance for Fox to plant its flag and UFC to be global.” The success of the UFC will be measured in both its ratings on Fox and the distribution growth of Fuel TV, which currently is available in 36 million homes, Shanks said.

GONE IN 64 SECONDS: The first UFC fight that Fox broadcast last November was over in 64 seconds. Shanks said that the outcome wasn’t ideal but it was as good as they could hope. “We thought it was exciting,” Shanks said. “It was a knockout. It was a style of a knockout people were used to seeing. It could have gone a lot of other different directions.” But the takeaway from that fight will influence Fox’ future programming plans with UFC. It now plans to show four fights over two hours in its next broadcast, scheduled for May 5. "We learned people want more fighting," Shanks said. “We’re jamming more action in. There’s a little less warm and fuzzy stuff. Less talking. That’s the format we like in a two-hour block.”

FINDING ADVERTISERS: The UFC and Fox are concentrating on expanding the number of advertisers supporting the sport. They have had success in the auto category and soft drink category, where Dr. Pepper signed on, but they still are looking for support in the financial services, insurance and other areas. “It’s still early,” Shanks said. “I think you’ll see additional blue chip advertising acceptance. There’s no more efficient place to buy men 18-49 and definitely 18-34 than a live UFC fight on Fox. Obviously there still needs to be some acceptance of top sponsors.” Fertitta believes that more advertisers will sign on for commercials as they understand the UFC audience better. “We have a very, very affluent fanbase,” Fertitta said. “We have the highest average ticket price in sports at $275. We actually sell our tickets. The core demographic, the average income is around $80,000. I think there are maybe a lot of misnomers as far as who really is the fan.”

AGE OF EMPIRE? MMA still is not sanctioned in the state of New York, and Fertitta said that it has nothing to do with the state legislature. Fertitta: “We know we have the votes. The speaker has not allowed the votes to get to the floor.” Fertitta said the speaker is preventing that from happening because of opposition from New York’s culinary workers' union, which represents restaurant and hotel employees. He and his brother, Frank, own Station Casinos, the largest non-union gaming company in the U.S., and he believes the Nevada culinary workers union is getting its partner in New York to oppose the UFC’s effort to get licensed there because the Fertittas' company is not unionized. He believes the UFC eventually will overcome it and the upside will be huge. “It’s not going to make or break us,” Fertitta said. “But when an event does come to New York it’s going to elevate the brand.” Shanks agreed, saying, “It will be good when it happens but I don’t think there’s a negative to it if it’s not there.”