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Volume 20 No. 41

Opinion

Members of the Pro Football Writers of America read with interest the article outlining how the NFL public relations department has a new “forceful communications approach” when dealing with the media and league issues.

Of particular interest was the comment from Joe Lockhart, the league’s executive vice president of communications since January 2016, who was quoted as saying: “We have pushed to be transparent. There is a strong sense that the game, and the platform and the NFL, is a very strong uniting force in this country and we have an obligation to be open and honest. That is what we try to do every day.”

Unfortunately, the league’s actions have not consistently matched Lockhart’s words. For example:

The league has yet to invite ALL national media to participate in the weekly conference calls with Lockhart that were referenced in the story. In fact, only select reporters have received emails inviting them to join in. How can there be transparency if only select reporters are told about them ahead of time?

Zeke Elliott was suspended six games by the league for alleged domestic violence, yet in the notification letter that was made public the league failed to mention that Kia Roberts — the NFL’s lead investigator and the only person to interview the accuser — recommended no suspension for Elliott because of credibility issues with the accuser. The league also refused to make the commissioner available for cross examination in the appeals hearing. Is that transparency?

Reporters on multiple occasions have reached out to Lockhart on serious league issues, yet failed each time to receive a response. Is that transparency?

Our membership believes true transparency requires access to the key decision-makers, something that has decreased in recent years, not increased. For instance, commissioner Roger Goodell attended the Chargers’ first preseason game in Los Angeles following the franchise’s controversial move from San Diego. Local reporters were interested in hearing his views on the success of the move to that point, but he did not make himself available. Is that transparency?

As Lockhart stated, improved transparency can’t be measured in a sample size of a few weeks. But the narrative that the league is being more open and transparent (and accessible) is disingenuous at best and inaccurate at worst. Even on the lower end of the food chain, PFWA members continue to fight for issues like accurate injury reports and access to assistant coaches, not to mention strict enforcement of the media policy.

Michael Signora, the league’s liaison with the PFWA, always has handled our discussions with professionalism and integrity. We thank the league for his assistance. But to allow Lockhart to say that his office and, by extension, the commissioner’s office is more transparent because of a few conference calls is thin at best — particularly when transparency is measured over the long haul and, most importantly, when it limits access to key decision-makers in situations the league may not be comfortable with.

Jim Trotter
President, PFWA

H urricanes Harvey and Irma hit the bottom line of numerous professional sports teams, university athletic programs, and their business partners in Texas and Florida. Among the major events across both states affected: the Houston Texans canceled their fourth preseason game, and the Miami Dolphins and Tampa Bay Buccaneers’ rescheduled their season opener to week 11; the Houston Astros and Tampa Bay Rays relocated three-game homestands to neutral, out-of-state ballparks; the Houston Dynamo and Dash of MLS and NWSL, respectively, postponed and relocated several home games; ESPN’s AdvoCare Kickoff Classic between LSU and BYU moved from Houston to New Orleans; and the University of Florida, Florida State University and University of Miami canceled home games.

The financial impact extended beyond franchises and universities, affecting businesses — from food and apparel vendors in and around stadiums, to television networks and licensing partners — that contract with these teams and service their fans.

The storms are a dramatic reminder to leagues, franchises, college programs and other sports businesses that they remain financially vulnerable to damage and disruptions from severe weather. Planning for such contingencies is crucial, and ought to include securing appropriate commercial insurance — particularly event-cancellation and time element coverage for interruptions of business — to mitigate any losses. Toward that end, a few tips bear mention:

Property Insurance: Virtually everyone is familiar with property insurance covering physical damage to buildings; commercial property policies often also include coverage for flood loss (sometimes subject to lower coverage amounts). Fewer people may know of certain key enhancements to such coverage. Civil Authority coverage concerns actual loss of business income caused by the actions of local or state government (e.g., mandatory evacuation orders) that prohibit access to the policyholder’s premises due to direct physical damage to property resulting from a covered event. Ingress/Egress coverage provides similar protection even absent civil authorities issuing such orders.

Time Element Coverage: Enhancements to commercial property policies to cover “Business Interruption” and “Contingent Business Interruption” losses offer protections against what often are the most financially severe losses sustained by policyholders. Business Interruption (BI) coverage typically covers a policyholder’s loss of net income and continuing fixed expenses (such as payroll and taxes) when damage to the policyholder’s property forces operations to slow or stop. Contingent Business Interruption (CBI) coverage provides similar protection should property of suppliers or customers sustain damage, even if the same event spared the policyholder’s property. Suitable CBI coverage may, for example, cover significant business income losses of a major catering or merchandising vendor due to storm damage to a sports arena that it services.

Event Cancellation Insurance, similar to Business Interruption coverage, helps protect policyholders who produce live events and competitions and sustain lost revenue (such as ticket refunds) or losses via commitment of expenses (such as non-refundable payments to food or merchandise vendors) due to “necessary” or “unavoidable” rescheduling, delay or cancellation of games due to causes beyond the policyholder’s control. Some EC policies even cover reduced attendance due to unplanned contingencies like severe weather.

EC insurance typically covers lost business income without any “waiting period deductible” typical in Business Interruption coverage, which relieves insurers from covering a loss suffered during a specified period (often 72 hours) immediately following a covered event.

EC insurance may also cover loss of income even absent physical damage to property of the insured or third parties resulting from a covered event.

Forewarned is forearmed. With many observers predicting that the ferocity of the 2017 hurricane season is a “new normal,” now more than ever leagues, franchises and others in the sports industry ought to secure suitable Property, Business Interruption, and Event Cancellation insurance products. Together, they can provide critical protection to your bottom line from severe weather and other unexpected disruptions.

Evan T. Knott and Noel C. Paul are Chicago-based attorneys at global law firm Reed Smith LLP.

After reading a column by Darren Rovell several years ago called the Death of the Season Ticket, I have firmly believed that to be the case. Very few season tickets are used by one consumer to attend all of the games, and in fact, the overwhelming number of season-ticket buyers become ticket re-sellers or brokers. Not in the sense that it is their full-time occupation, but more in the sense that after determining the games that they personally would like to attend, they need to liquidate the tickets that they do not anticipate using. Multiple proprietary studies have shown that utilization of tickets — personally, sharing them with partners or being able to sell or give them away — is a big factor in whether these season tickets are renewed or not. In other words, the biggest barrier to someone becoming a long-term buyer is unused tickets.

So if teams want to concentrate on selling full-season tickets they should begin focusing on developing programs that assist the buyer in turning unused tickets into cash, credits or other assets that are controlled by the team and not encouraging them to go to vendors outside of the team to re-sell their tickets. Why is this important? Because it is in the best interest of the team to maintain the relationship with their consumers rather than sharing that interest which could be minimized or ultimately transferred to a third party. While the secondary market began that way, it is hard to argue that because of their ability to offer a lower price that they haven’t evolved to become the primary market.

Thus I was very intrigued at the Ticketmaster Summit this past summer when the Orlando Magic unveiled a concept they named Magic Money to address the very issues I have presented here.

As an organization that has always valued business intelligence, certain research insights led to the creation of Magic Money and the ability of season-ticket members to return tickets. The Magic determined:

Ticket Upgrades: Season-ticket members consistently ranked ticket upgrades as the most preferable way to improve the game-day experience.

Resale Challenges: Despite efforts from the Magic to educate season-ticket members on how to most effectively resell their seats on the secondary market, successful ticket reselling continued to be a challenge for many fans due to the changing nature of the ticket marketplace.

Schedule Conflicts: Even for the most avid season-ticket members, the intensity of the NBA schedule can be a challenge. Members have tickets to all 44 Magic home games between October and April. Given these schedule demands, it can be hard for season-ticket members to use all of their tickets. Even those planning to come to games often encounter last-minute conflicts that prevent them from attending. In focus groups, season-ticket members often vocalized this challenge and were concerned about losing value from their investment when unable to attend games.

Orlando Magic mascot Stuff will visit your seat through an app transaction with Magic Money.
Photo by: GETTY IMAGES

The Magic looked for ways to use technology and their new mobile platform as a solution to remedy these key challenges uncovered by the team’s research. Predictive modeling efforts also identified that overall ticket usage was one of the most predictive variables in determining the season-ticket member’s likelihood to renew. Therefore, the Magic’s aim was to alleviate the burden of the demanding NBA schedule while also allowing members a way to customize and improve their experience by making their investment flexible across all of the team’s offerings.

The concept of Magic Money began to form back in 2014 as a benefit within the Orlando Magic App. Members were able to use a feature within their app to return tickets for Magic games they were unable to attend. Members received a credit for the face value amount of the returned tickets for all returns completed prior to the day of the game and received 50 percent of face value for returns completed on game day, all the way up to game time. This encouraged members to return tickets as early as possible to receive the maximum return and provide the Magic with additional time to resell the tickets. This credit, called “Magic Money,” became a digital currency stored within the app that could be used to upgrade seats at future games.

In its three-year existence, the number of season-ticket members using the option of returning tickets for Magic Money increased from 50 percent in year one to 80 percent in year two and then to 90 percent last season. Fifty percent of season-ticket members returned tickets to games and used Magic Money to customize their game-day experience. This customization provided members the opportunity to use their Magic Money to upgrade seats, add additional tickets to future games, purchase concessions and merchandise items, and access team events such as press conferences and player autograph sessions — all through the mobile app.

What I love about the program is that it works for both parties. The Magic benefit from reselling the tickets at a higher rate; increased spending on the app and the fact that members using the app are 50 percent more likely to renew their tickets than those members not using the app. While the member is able to dispose of tickets for games they do not wish to attend and to sit in better seats when they do choose to attend and also enhance that experience of attending.

A new wrinkle is that the Magic have also begun incentivizing members to return their seats for certain games, by offering members greater than 100 percent face value in Magic Money, where the team recognizes the member’s seats are under-monetized and can be sold at a significantly higher value on the single-game market.

Magic Money is a program that encourages renewal, provides opportunities to sample higher-priced inventory, provides incremental revenue sales opportunities and contributes to growing the Lifetime Value Asset of membership. Maybe it’s more than Magic Money — maybe it’s that elusive Magic bullet?

Bill Sutton (wsutton1@usf.edu) is the founding director of the sport and entertainment business management MBA at the University of South Florida and principal of Bill Sutton & Associates. Follow him on Twitter @Sutton_ImpactU.

As I took off from JFK last month to attend sport and sustainability meetings in Europe, I reflected on the contrast between the meaningful social progress that sport is advancing throughout the world and the unfortunate attacks recently levied against some athletes by the president of the United States. Why are attempts by athletes to address social and ecological issues so often viewed as controversial or inappropriate? Must society’s cultural interaction with sport be limited to advertisers selling cars, sugared water, beer and sexual attractiveness? As policy makers and people of goodwill throughout the world seek tools to help reduce cultural polarization around race, gender equality and ecological challenges, why should the visible platform that sport offers to address these issues be ignored? Shouldn’t all of us involved with sport try to “Do more,” as Pope Francis urged sports leaders to do one year ago at a papal audience in the Vatican titled “Sport At the Service of Humanity”?

Indeed, consider how culturally influential sports can be: Jesse Owens in 1936, debunking the Aryan supremacy myth. Billie Jean King beating Bobby Riggs in one of the first female versus male professional tennis matches, a big step toward pay equality, and the passage of Title IX. Muhammad Ali’s conscientious objection to the Vietnam War and his role as a spokesman for civil rights. Magic Johnson’s openness about his HIV/AIDS infection, which helped to destigmatize public discussion about that illness, and, of course, Jackie Robinson breaking the race barrier in Major League Baseball. And now, Colin Kaepernick …

Although recent headlines might divert our attention, the amount of progressive social work being carried out by sports organizations to this day is nothing less than astounding. The good social work of sport is arguably unmatched by any other economic sector.

Jesse Owens’ 1936 Olympics performance is one example of the cultural relevance of sports.
Photo by: GETTY IMAGES

For example, I was in Paris attending a press conference at Stade Charlety to announce next year’s Gay Games, the 10th international event of its kind focused on combating homophobia, which is partnering with the nonprofit group Sport and Sustainability International (SandSI) to promote sustainability. From there I traveled to Switzerland for an international meeting hosted by the Swiss government titled “Achieving the United Nations’ Sustainable Development Goals Through Sport.” That sport and environmental meeting included representatives from the IOC, FIFA, Futbol Barcelona, International Gender Champions, SandSI, IUCN and other environmental and human rights advocates. I also joined environmentalists, business and sports industry leaders gathered in Zurich for a meeting focused on collaborating with the Pan American Games — the largest international sport event after the Olympics — to advance the Paris Agreement’s goal of reducing the threat posed by climate change. Later this month I will attend a meeting titled “Dialogue on Sport and Climate Action,” being held in Bonn, Germany, hosted by the United Nations Framework Convention on Climate Change (UNFCCC). All of this good work has followed meetings hosted during the UN’s Climate Week held three weeks ago in New York City, where attendees included representatives from Formula E, NASCAR, the NHL, NBA and New York Yankees. And the UN’s Climate Week itself was preceded by the U.S. Open Tennis Championships, which this year celebrated 10 years of path-breaking sustainability work initiated by Billie Jean King.

This incomplete list of ecologically valuable work by the sports sector reflects an astounding amount of important, socially progressive work by sport and underscores how sport can help to heal divisive social issues and protect our environment.

As readers of SportsBusiness Journal know, one of the great beauties of sport is that it is a unifying, non-political experience. In skilled political hands, professional athletes taking a knee to protest racial injustice and other social challenges would provide an opportunity for an important and necessary conversation. As former CIA Director John Brennan recently stated, “Taking a knee during the national anthem shows respect for the flag and for all those who fought and died for it and, at the same time, [shows] concern about problems within American society that need to be addressed.” Indeed, contrary to what some view as disrespect, bowing on one’s knee is viewed in virtually all religions as a sign of respect. Instead, some have used Colin Kaepernick’s action to divide us and blast new wounds into our polity. How far away such condemnation of Kaepernick’s humble action is from acknowledging all the good work sport has engendered and is engaged in at this very moment.

It is well known that Nelson Mandela famously used sport to help heal entrenched cultural divisions in South Africa related to apartheid: “Sport” he said, “has the power to unite people in a way that little else does.” I agree, and I believe that if Mandela were alive today he would encourage athletes and other leaders in sport to speak up and help address the many social and ecological challenges we confront.

Allen Hershkowitz is a founding director of Sport and Sustainability International. Follow him on Twitter: @drhershkowitz

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