Falcons, United F.C. Announce Attendance of 70K+ 16x in ’18, Fail to Clear Benchmark Single Time

Falcons

The Atlanta Falcons and Atlanta United F.C. publicly reported that more than 70,000 fans attended 16 home game at Mercedes Benz Stadium in 2018, but gate attendance records obtained by the Atlanta Journal-Constitution from the Georgia World Congress Center Authority (GWCCA) show the teams failed to clear that benchmark a single time. The Falcons announced an average attendance of 72,898 fans across their 8 home games last season, but the “actual attendance verification” figures submitted by the team show it scanned nearly 9,000 fewer tickets/game (64,022); United FC was slightly more transparent with their attendance claims, posting an average just 6,000 fans greater (53,002) than the actual number passing through the stadium turnstiles (47,123). The records obtained from the state agency also indicated variances in the attendance figures announced for a pair of high-profile college football games played at the venue; the 2018 SEC Championship game (77,141 vs. 69,614) and 2018 Chick-fil-A Peach Bowl (68,413 vs. 74,006). The SEC explained that it counts all tickets distributed + “credentialed VIPs, participating team bands and credentialed media” in their announced attendance figures.

Howie Long-Short: The discrepancies found by the AJC stem from the leagues’ (NFL & MLS) use of “tickets distributed” – as opposed to “tickets scanned” – as its method of measuring official game attendance. The marketing ploy enables teams within those leagues to announce inflated attendance figures as tickets issued on a complimentary basis – regardless of if they’re used (i.e. tickets scanned) – are counted in the total (complimentary seats issued + tickets sold = tickets distributed).

Teams don’t just give away every unsold seat though, because as Russell Scibetti, President of KORE Planning and Insights, told me “too many comps can actually be worse than unsold tickets. Comping seats devalues the ticket itself. The more comps that get out, the more ways people can get free tickets and the less likely they are to buy – even at a discount. Teams no longer paper the building just to get a show rate because that tactic does far too much damage to any future sales.”

NFL, NBA, NHL and MLS franchises are putting forth the attendance figures that make them look the strongest (MLB requires that teams announce the number of tickets sold), but they’re not using that incorrect data to measure internal KPIs. Russell said, for logistical and operational purposes – like how much staffing is needed at the venue, how many items they plan to give away or to calculate customer show rates – teams are using the real scan counts.” That data isn’t necessarily 100% accurate though. There’s always going to be some variance between the attendance figures tracked and the number of people in the building. Every team has had issues with scanners getting disconnected, which throws off their counts. There are people coming in early for pregame hospitality and others that are on credentials – rather than tickets – that are not being counted.”

Technically speaking, there’s nothing wrong with what either club is doing. As Falcons CEO Rich McKay noted, “the league doesn’t ask us for the other number”, but it bares wondering why marketers/sponsors don’t demand accurate information; how can they accurately measure ROI if the benchmark data they’re getting is inaccurate? Russell said there is no reason to assume they’re working off the announced numbers, “teams could very likely be sharing their internal metrics with their partners.”

Fan Marino: The Falcons claim that they averaged 73,000 fans/game last season is laughable when you consider that the team drew less than 62,500 fans for half the home games – including the home finale which was attended by just 56,470 people (announced at 72,000+). Does this look like a sold-out building?

United F.C. didn’t draw 50,000+ fans/game, but no team in the league scanned more duckets than Atlanta did last season (901,000) and the 47,321 that the team did average was still nearly 21,000 more than any MLS team (besides Seattle, 40,641) even distributed. United F.C. also set a league record for game attendance when 69,004 attended (over 73,000 distributed) the MLS Cup game between United FC and Portland Timbers back in December.

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Early Entrants: Vol. VI – NFL Leaning In To Amazon’s Pitch

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Early Entrantsa bi-weekly series of sports business “rumblings” before the news breaks.

NFL Leaning In To Amazon’s Pitch

The NFL appears ready to split its out of market broadcast rights package between a satellite provider (DirecTV) and an online streaming service. Commissioner Roger Goodell recently told Bloomberg that the league plans to deliver its NFL Sunday Ticket “on several different platforms.” While it’s reasonable to assume DirectTV Now would be the front-runner to acquire the streaming rights, multiple sources tell JohnWallStreet that the NFL “is leaning in to Amazon’s pitch.” Prime Video can provide the league with the widest reach (relative to DirecTV Now, DAZN) and the NFL sees value in the e-commerce giant’s ability to facilitate merchandise and ticket sales.

Turner Sports Can’t Get Enough of the AAF

Back on March 5th, Turner Sports announced that TNT would exclusively televise 2 additional regular season Alliance of American Football games – they’d initially agreed to place just a single regular season game and one playoff game on the cable network (B/R Live carries 1 game/week). But the AT&T/WarnerMedia subsidiary was pleased with viewership for its March 9th contest – it was the 2nd most watched show on the network that day – and sources tell JohnWallStreet that the company is looking to add additional broadcasts as the league’s season winds down (3 regular season, 2 post-season games remain). It’s worth mentioning that CBS has also decided to move 2 games from the CBS Sports Network to the CBS broadcast network; a regular season contest on April 6th and one of the Conference Championship games on April 27th.

Digital-Only Service Set to Buy Linear Network

There are rumors floating that DAZN is “set to buy” Fox Sports (Brazil), an acquisition that would accelerate the company’s rise in the country given the “premium rights” that would come along with it. The purchase would certainly run contrary to the company’s digital-only strategy, but in a market where TV is the preferred viewing platform and digital consumption remains an afterthought (particularly relative to the U.S. or Japan) it makes sense.

Vivid Seats Sniffing Around StubHub Acquisition

We mentioned in Early Entrants Vol. V that eBay was exploring the sale or spinoff of StubHub. Questions surrounding inclusion of the company’s foreign offices (via Ticketbis) had insiders doubting within the last week whether the company would move forward with the split, but we’re hearing separation of the 2 companies is now considered “almost a near certainty”; the “eBay elite” have tired of the fluctuations caused by StubHub in their quarterly earnings reports. Vivid Seats is said to be sniffing around a potential acquisition.

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Second Spectrum Trying to Revolutionize First Screen Viewing Experience

SecondSpectrum

Back on March 1st, ESPN presented an alternative broadcast of the Los Angeles Lakers and Milwaukee Bucks game “featuring live visualizations from the computer intelligence company Second Spectrum.” The graphic overlays were placed on top of the game telecast augmenting the viewing experience. The data centric broadcast – meant to be “more engaging and more informative” – alternated between 3 viewing modes (coach, player and mascot), giving fans a taste of what the personalized viewing experience will look like in the years come. The Lakers-Bucks game was the first time that the technology was used in real-time during an NBA broadcast (it had previously been used in highlights and replays), but the frequency of these “experimental broadcasts” is expected to increase dramatically in the coming years as pro sports leagues continue to work towards figuring out how to appeal to the next generation of fans.

Howie Long-Short: There’s been little to no innovation in the broadcast of sporting events since the 1970s, but it’s a pretty safe bet to assume that game presentation will look “dramatically different” (Adam Silver’s words, not mine) within the next 5 years. As the NBA Commissioner explained, young fans have an “infinitesimal number of opportunities to do other things with their time.” The league hopes that by offering young fans a more personalized experience and by using data to better tell stories, they can grow game viewership.

Many people who watched the Second Spectrum broadcast referred to it as a second screen experience, but David Anderson, one of the company’s earliest employees (currently with Gains Group) says that’s not the correct way to describe it. “If the goal is to use this data to tell a better story to fans, then I would argue what ESPN did with Second Spectrum was not second screen at all; if you were watching it, it was your first screen. I think that’s where the technology is headed.”

Pro sports leagues are using Second Spectrum technology on a trial basis at this point, looking for feedback and market fit, which helps to explain why 3 viewing modes were featured during a single Full Court Press broadcast. Ideally fans would have the ability to select the viewing mode of their choice as it’s unlikely hardcore fans want “NBA Jam” style graphics (mascot mode), nor does the casual fan want a “number heavy” analysis of the game (player mode). For informational purposes, coaching mode diagrams plays as they happen, identifies defensive switches and “points your eyes to” where the open player is.

Fan Marino: If there’s one feature I’m certain will stick, it’s the green-screen technology that enabled ESPN to display the heads of the broadcasters calling the game (and speaking at a given moment). The functionality isn’t new – it’s been used by gamers on Twitch for some time – but for sports fans often confused by a 3-man (in this case 4-man) broadcast booth it’s a welcomed addition.

The Second Spectrum digital feed encountered an error during the Lakers-Bucks broadcast that resulted in ESPN3 viewers losing sight of the game for several minutes. David says that’s going to happen with the burgeoning technology “because Second Spectrum broadcasts are tied to the NBA schedule. The company just doesn’t get a lot of reps. Each stadium’s unique configurations also create their own sets of difficulties in extracting data. It’s early on. We still see issues with streaming and broadcasters have been using that technology for a long time. The augmented reality in-game viewership experience will get exponentially better as the technology continues to improve.” 

David says that the experience will get better as broadcasters hone their ability to use the data to tell the game’s story. “Data is soul-less. It has no personality. You can’t just throw it up on a screen and hope people understand it. It needs some flair, which is why they use graphics like the classic cartoon boom/pow/bang. Fans see the technology being used by ESPN and there’s this perception that Second Spectrum is a mature business – it’s not; it remains a nascent technology. Remember, data and the storytelling coming out of it is going through an evolution. Artificial intelligence research professors and data scientists originally collected this information for a small group of people (like teams). It’s first being adapted to fit consumer needs.”

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March Madness “Single Most Important Sports Deal” in CBS History

March Madness

CBS Sports has held the broadcast rights to the NCAA tournament since 1982. Neal Pilson, the former president of CBS Sports (currently the head of the consultancy Pilson Communications), negotiated the deal and called the network’s decision to take the risk and spend nearly $50 million on a collegiate basketball tournament – at a time when the NIT still maintained some prestige – “the single most important sports deal” made in the company’s history (except for possibly the decision to get back into the NFL in ’98). It’s hard to argue against the point. The tournament enables the network to dominate 3 weeks every winter (in aggregate, the 67 games draw more viewers than the Super Bowl) and CBS has finished as the “most watched network” 15 of the last 16 years.

Howie Long-Short: The value of the March Madness television package has grown exponentially since CBS first landed the broadcast rights to college basketball’s post-season tournament in 1981 for $48 million (for 3 years). Since 1986, the cost of carrying the NCAA tournament has risen 4,535% – which explains why the company eventually sought out a partner capable of picking up half the tab. In 2011, CBS and Turner Broadcasting agreed to a 14-year, $10.8 billion deal with the NCAA that gives them the exclusive rights (includes streaming) to the tournament through April ’24. That deal has since been extended through 2032 for an additional $1.1 billion/year.

While March Madness is the “most profitable” post-season entity (it does not generate more revenue than the NFL post-season), one should not be evaluating billion dollar TV rights deals based on the profit and losses of a single event. CBS’ deal with the NCAA needs to be looked at in its totality. The network’s regular season package is more valuable to advertisers because they own the rights to the tournament and the prestige the network gains from its association with college basketball makes the remainder of their programming more appealing to potential sponsors. Remember, CBS bought back into the NFL in ’98 because it cost them more to pass on carrying games (in the loss of sponsors) than the $2 billion they paid to re-acquire the rights.

Television viewership is declining, but advertising revenues for the annual basketball tournament continue to rise (+3-5% YoY since ’14). Kantar media reported March Madness ad revenues climbed from $1.285 billion in ’17 to $1.32 billion in 2018 and TV News Check stated the networks were able to command a 5-6% increase on ad inventory rates this year (spots are 95% sold). The NCAA tournament remains a hot property for advertisers – even with fewer people watching and rising CPMs – because of its ability to capture an engaged, attractive demo (see: young, college educated, spending power) en mass.

Fan Marino: Bracket pools have transfixed how sports fans watch and engage with March Madness. While it’s been said that the first bracket pool was held in ’77 (on Staten Island), when CBS first acquired the rights to annual tournament a few years later, “bracketology” had yet to make its way into the public lexicon; in fact, CBS held the first televised selection show in 1982. It wasn’t until the tournament expanded to 64 teams in 1985 – thus increasing the possibility of upsets – that fan interest in the tournament truly exploded. By the early 1990s – coinciding with the rise of ESPN – filling out a bracket became commonplace. This year more than 40 million people will fill out 119 million+ brackets.

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AAC Inks $1 Billion Media Rights Pact with ESPN

AAC

Sports Business Journal reported that ESPN has agreed to pay the American Athletic Conference $1 billion over the next 12 years for the broadcast rights to nearly all its live sports programming – save a “small package” of men’s basketball games that air on CBS and Navy football games controlled by CBS Sports Network. The new deal, which goes into effect prior to the ’20 college football season, will pay the schools $83.3 million/year ($6.94 million/per); more than 4x the amount they currently collect annually under the terms of the expiring agreement with the company (7 years, $126 million). The conference has yet to begin renewal talks on its package with CBS – also set to expire in ’20.

Howie Long-Short: ESPN’s decision to tie up big money, long-term in the AAC is risky business considering the conference’s member schools aren’t tied to a grant-of-rights restricting their ability to leave the conference should greener pastures arise, but the network did manage to negotiate a “conference composition clause” that hedges against financial losses should the conference’s top brands leave before the expiration of the deal. It’s safe to assume that the AAC’s existing membership base will remain intact through the ’22-’23 school year, but with every existing power 5 conference broadcast deal expiring between ’23-’25, another round of conference realignment remains a threat. The belief remains that conferences can command larger media rights deals if they expand their geographical footprint.

The AAC’s decision to ink a 12-year agreement can also be questioned – particularly if the logic behind signing a deal that long was so that the conference could claim it had a billion-dollar TV partnership. William Mao, VP Media Rights Division at Octagon, explained “in the context of a lot of these national conference TV deals, 12 years may not seem out of the norm. But given that this deal starts today and that the time horizon for the introduction of new content delivery platforms, new formats and new technologies has gotten shorter, you would think that conferences would start to look to sign shorter deals; or agreements that provided for the flexibility to entertain additional distribution opportunities as they arrive over the next five to 10 years.”

Growing media rights revenues by nearly $5 million/year will gives AAC member schools some much needed financial support – as recently noted, the UConn athletic department fell $42 million short of its $89 million budget last year. The deal should also help to raise the profile of the AAC schools (assuming the volume of games on ESPN’s linear outlets remains unchanged). In addition to football and basketball games remaining on the ESPN family of networks (ESPN, ESPN2, ESPNU), the new deal guarantees the broadcast of select Saturday football telecasts on network television (ABC).

ESPN plans to air the “majority of [conference] basketball games” and “about half of the football games” on ESPN+ (along with baseball, softball and soccer), so much like the recently announced UFC deal, the network’s agreement with the AAC is about getting subscribers “into the big tent.” Jimmy Pitaro & co. figure that they can get alumni of the American Athletic Conference schools to sign-up for the service with football and basketball and then keep them as subscribers with high-profile UFC bouts, original content (think: 30 for 30, Kobe: Detail) and a collective of tier 2 and 3 live sports (think: MLS, Top Rank Boxing).

Even with the rights fee increase, the disparity in media rights revenues generated by AAC schools and those in the P5 conferences remains great. The Pac-12, which desperately needs to grow its annual payouts, still pays its member schools more than $31 million/year; the Big Ten leads the way with annual payouts exceeding $50 million/school.

The AAC has been marketing itself as the 6th power conference, but this deal indicates they’re not there just yet. Aside from the financial component, “4/5 power conferences have a linear network of some sort. The American just inked a deal for the next 12 years that does not include a linear conference network. It’s difficult to claim you’re one of the power conferences when you lack the one thing that almost all of them have.”

Fan Marino: The deal gives ESPN valuable college football/basketball programming for the ESPN+ ecosystem and the schools receive a significant increase in annual media rights revenue, so it makes sense on both sides. If there’s a loser, it’s the AAC fan that will experience an increase in the monthly cost (+$4.99) to watch their favorite team(s) play. But fans willing to pay $4.99 are invested in the outcome of their alma mater’s games and the deal with ESPN/ESPN+ gives AAC schools the financial resources (think: better coaches, facilities) to improve the quality of their athletic programs. One could argue that while it’s going to cost AAC fans more to watch every game on the schedule under the terms of the new media agreement, their teams are better positioned to compete in the NCAA Tournament or a big 6 bowl game because of the move to ESPN+.

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UFC Cuts Cords (and Satellite Providers), Now Exclusive to ESPN+

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The UFC, cognizant of the “amount of [linear television] subs dropping every year”, have agreed to a deal with ESPN that will make the company’s OTT service the exclusive broadcast partner of the promotion’s PPV events. The agreement will give (effective April 13) ESPN+ the rights (in the U.S.) to carry the promotions 12 annual tentpole cards through 2025 – in addition to the 20 Fight Night shows they’re already contracted to air. Moving forward, fans who wish to watch the UFC’s biggest stars (ESPN and Fight Pass will continue to show prelims and early prelims, respectively) will need to subscribe to ESPN+. That monthly subscription won’t include access to the actual PPV shows – fans will still need to purchase each of the 12 events individually, but ESPN plans to discount UFC PPV’s from $64.99 (current price) to $59.99 to offset the monthly fee ($4.99). Financial terms of the deal between the UFC and ESPN have not been disclosed.

Howie Long-Short: Just 3 months after getting into the UFC business, ESPN/ESPN+ is now the exclusive home for the mixed martial arts promotion. It didn’t take long for the company to realize “that it can use the UFC to bring ESPN+ subscribers into the big tent.” ESPN+ drew 568,000 new subscribers within 48 hours of its first UFC event.

The OTT service’s total audience is now “closer to 3 million”, but former HBO Sports President Ross Greenburg (Ross Greenburg Productions) believes that upcoming UFC PPV events will continue to drive new subs. “You can’t assume that every single UFC fan bought that first fight and those that did remain subscribers (fans could cancel within 30 days without charge). Plus, there are different fan bases for different fighters, often tied to ethnicity; the ESPN+ subscriber base will continue to grow every time they have a UFC card.” Of course, getting fans into the tent is just half the battle; once there, ESPN+ must work to retain them. 12 tentpole events and quality ancillary content should help.

The deal with ESPN relinquishes much of the upside that the UFC would experience “if another Rousey or McGregor, a big PPV draw, arrived”, but I think taking the guaranteed pay day – one likely “worth hundreds of millions of dollars” – is a wise decision. Selling UFC PPV’s is a risky business proposition. Every fighter is just one fight away from losing their invincibility (see: Rousey) and the biggest stars now make enough money that they don’t “need” (i.e. getting punched in the face becomes less attractive) to fight once they achieve superstar status (see: Lesnar). The promotion can also get “stuck” with a fighter who continues to win, but fails to move the needle with fans (see: Stipe Miocic), which can crush PPV sales figures for multiple events.

From a cost standpoint, the move to ESPN+ is a wash for fans and subscribers will get a host of additional content for their inconvenience, so it’s clear deal’s only real loser is are the cable, satellite and telco TV operators. Ross told me that the UFC’s move away from the “normal distribution channels” is going to have a major impact on iN DEMAND and DirecTV. PPV is an important part of their yearly revenue streams”; “it could be” the death knull to those businesses.

Fan Marino: UFC President Dana White has attributed 2018’s disappointing PPV buy figures to cord cutting saying, “it’s scary the amount of subs dropping every year” – so the move away from linear distribution to a digital platform aligns with his narrative. The move is also logical for the purpose of driving interest in the promotion. By partnering with ESPN+, White and Co. pick up the support of the ESPN marketing machine. The UFC has drawn twice as many viewers to ESPN as it did for comparable programming on FS1 last year. With the help of the ESPN megaphone, it’s not unreasonable to believe the promotion could regularly post events with 1 million PPV buys in 2019.

One might assume the UFC’s decision to abandon the traditional PPV model for an OTT streaming service would hurt PPV sales figures in the short-term (i.e. until OTT becomes more prevalent), but Ross says fight fans “don’t care where they watch the fight” and those that would have bought from a linear or satellite distributor will buy from ESPN+.

Promotion: ESPN+ is offering a one-year subscription (worth $50) + 1 PPV event (worth $60) for just $80 (valid only for new subs).

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Juventus’ On Field Performance has “Significant Financial Implications” for Shareholders

Juventus

Cristiano Ronaldo’s hat-trick (last Tues. night) gave Juventus Football Club S.p.A. a 3-0 victory over Atlético Madrid (in the 2nd leg of their round of 16 matchup) and pushed the club through to the UEFA Champions League quarterfinal round on aggregate (3-2). CR7’s performance also had “significant financial implications” for the publicly traded Italian football club. Participation in the next round guarantees “The Old Lady” another $18 million in UEFA prize money and ticket sales (team sold a record $6.2 million worth in last round), and should Juventus go on to win the tournament for the 1st time since ’96, the team would stand to take in at least $57 million more ($39 million from UEFA, +/- $18 million in gate receipts & hospitality). JUVE shares climbed by as much as +30% on Wednesday (3.13.19), before closing the day +18%; they’re up +23% ($1.70) since Tuesday morning’s open.

Howie Long-Short: There is a volatility to the share prices of publicly traded European football teams that you won’t find in U.S. sports. Troy Brazell, CEO of Optima Sports Group, explained “while U.S. investors are looking for long-term capital gains, the shareholders of these thinly traded penny stocks are emotional fans looking to capture the excitement associated with being a part of a winner.” 

Publicly traded European football teams are also owned by fewer individuals than a common stock like MSG (Knicks/Rangers) or RCI (Maple Leafs/Raptors), so their shares are going to be more susceptive to the whims of the irrational emotional investor. JUVE’s strong rally has been super-charged by the low expectations investors had heading into the 2nd leg last week, but historically speaking the biggest fluctuations in the market come after a bad loss; investors simply become more risk adverse after losing.

Juventus’ value has increased by more than $225 million since the Borsa Italiana opened on Wednesday, +/- 150% more than Juventus would claim in prize money if it were to win the tournament, but that doesn’t mean the share price is now overvalued. Troy says that winning the Champions League would boost sponsorship revenues and positively “impact everything from ticket sales to merchandising and television revenues moving forward.”

Winning on the field isn’t the only way for a publicly traded European football team to move the share price. “The introduction of a new stadium, signing of a star player or the announcement of a high-profile match against a team that would not normally appear on the schedule can all excite the masses; and remember, these are global fan bases.” JUVE shares are +140% since the team acquired Ronaldo.

Round of 16 results also impacted the share prices of the other publicly traded teams participating in the Champions League. AFC Ajax (AJAX) and Manchester United (MANU) shares climbed +8% and +2% respectively, as both teams advanced to the quarterfinal round. Borussia Dortmund (BVB) shareholders weren’t as lucky. The stock price has fallen -10% since the club was bounced by Tottenham Hotspur.

Fan Marino: Some Champions League team executives are said to be meeting with UEFA officials tomorrow to discuss “radical changes” to the league format – including the introduction of a promotion/relegation system (4 teams/year) that would benefit the “biggest and richest clubs and make it harder for smaller teams to qualify.” As it currently stands, participation is based on where clubs finish within their respective domestic leagues during the prior season; a format that has resulted in Arsenal, Manchester United and AC Milan all failing to qualify in recent seasons. The league is also said to be considering moving games from mid-week to weekends, a move that would encroach on the territory of the national leagues. Needless to say, Richard Scudamore (EPL) and Javier Tebas (La Liga) are not supportive of the ideas. No changes are expected to be implemented before the 2024 season – last month the ECA and UEFA agreed to extend the league’s Memorandum of Understanding for 5 years.

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The Rise of the Athlete Influencer

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Millennials and Gen-Z’s have proven more likely to “pledge unwavering loyalty” to a superstar than a team, so brands interested in reaching the 18-34 sports fan demo have begun to shift sponsorship dollars from team or event driven campaigns to athlete-centric ones. The rise of social media, the increasing ease in which one can self-publish and the introduction of daily fantasy sports have all helped to shape the new normal. In recent weeks, Nick Foles (Lululemon) and Colin Kaepernick (Nike) have inked deals that reflect the influence athletes hold – unrelated to a team – and the “noticeable shift towards athletes playing an increasingly pivotal role in the value and activation of sponsorships.”

Howie Long-Short: Rick Horrow (The Sports Professor) – author of The Sport Business Handbook – explained that there are 3 fundamental truths driving the changing sports sponsorship landscape. “Financial agreements with the league’s superstars have become so compelling and so long-term, that the players involved almost become de facto faces of the franchise. Brand and endorsement involvement with a star athlete now transcends his value and endures on to an association with the team.

Superstar players are taking a more business-like approach to their personal brands. They now have professionals handling their social media accounts and booking appearances for them – it’s almost like they’re pre-packaged corporations; that makes it easier for branding purposes and helps corporations to see the value in a sponsorship.  

We’ve also become more adept at measuring the value that athletes offer to corporations. MVP Index ties analytics to an athlete’s social media presence – we were never able to measure that kind of impact before. Of course, the advancements in technology have also allowed these athletes to expand their reach.”

Teams and leagues have always had to compete with players over sponsorship dollars – “it’s simply more significant now because the metrics are higher and the risks are larger.” That doesn’t mean that the teams or leagues employing marketable stars need to be fearful of losing a sponsor to one. Rick says, “athletes in team sports sign endorsement deals defined to certain competitive situations or certain categories”; collectively bargained bylaws protect team and league interests.

Athletes can offer brands the ability to deliver a more authentic message, but with greater power comes greater responsibility and “there are certainly increased opportunities for a devastating mistake with social media. The reputation of the athlete and by proxy the brand is just a single bad tweet away. While corporations used to worry that a sponsored athlete would get injured or encounter morality problems, it’s nowhere near the level of the risk today – even for the highest performing and most well liked athletes.” (see: Cristiano Ronaldo)

The authenticity of the athlete endorsement is crucial to the campaign’s success – which explains why Lamar Odom’s perfume business never managed to get off the ground. Rick explained that “successful corporate relationships or marketing partnerships need to effectively incorporate the athlete as part of the brand –  the relationship needs to be more authentic than it’s ever been. If the consumer believes that the athlete is only endorsing a brand because they’re being paid, it becomes counterproductive.

Fan Marino: Speaking of lacking authenticity, Apex Legends managed to amass 50 million players within a month, after paying “top streamers to promote” the game on Twitch (and other gaming platforms) en masse on February 5th. On the surface, there’s nothing wrong with paying guys like Ninja $1 million for a single stream, but because most gaming “influencers still don’t disclose sponsored deals” the “media blitz” gave off the impression that Apex Legends was the new “it” game – when in fact its rise in popularity was a coordinated effort. The game might not have honestly captivated “top streamers”, but it certainly seems to have captured the attention of gamers since – Apex has been the most watched game during the month of March by more than 15 million hours (League of Legends is 2nd).

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Lottery Tournament Among Solutions Proposed to Replace NBA’s ASG Format

ASG

NBA Commissioner Adam Silver – in a wide-ranging discussion with Bill Simmons, at the MIT Sloan Sports Analytics Conference earlier this month – admitted that the 2019 NBA All-Star Game “didn’t work.” Silver acknowledged that the league’s solution to making the game more competitive/watchable – a player draft – simply “put an earring on a pig” and wondered if a pre-season tournament (in place of the current pre-season schedule) or mid-season tournament (think: English football, college basketball around Thanksgiving) would capture fan interests. The suggestion came about as part of a larger discussion pertaining to a shortening of the league schedule (from 82 to 70 games) and the subsequent theoretical need to offset revenue losses under that scenario.

Howie Long-Short: NBA All-Star Weekend is the league’s “showcase” event (see: host big $ sponsors), so one can understand why the Commissioner is determined to make the ASG more competitive. Terry Lyons, a 26-year veteran of the NBA league office (and current sports marketing/communications professional), explained “the NBA finals are much different than the NFL’s Super Bowl. They’re largely an event for the fans and season ticket holders of the home teams. The NBA uses the ASG much in the way the NFL uses their championship game – as a 3 or 4-day celebration of the sport.”

Terry is intrigued by the possibility of a “mid-season tournament” replacing the annual ASG and All-Star Saturday Night (think: 8 teams with a winners/losers bracket in a neutral location like Las Vegas, New Orleans or even London) and believes that a single elimination tournament “could potentially change the 2nd half fortunes of a team” (see: Knicks Gaming), but maintains that “the idea most logistically feasible is to run a lottery tournament at the end of the season, parallel to the playoffs.” Teams that fail to qualify for the playoffs would compete in a single-elimination tournament, with the winner earning the top seed in the draft; the runner up would get the 2nd pick, etc. It’s not difficult to envision fans, who would otherwise be gearing up for the NBA’s draft lottery selection show – a televised opening of envelopes, embracing games that would give their team a chance to “win” the top pick.

Those that support the idea of a mid-season tournament cite the success of The Champions League – both from a fan interest and revenue generation standpoint – but the Champions League consists of the top teams from various European leagues that would not otherwise compete against each other. I’m not convinced that the NBA can generate that same interest in a tournament without real stakes (remember, you won’t know who isn’t going to make the playoffs during the preseason or at midseason), when you consider that all 30 teams are already scheduled to play games against one other multiple times.

Over the last decade, the league has made a conscious effort to manage wear and tear on players, so the addition of any interleague tournaments would likely accompany a cut down on the number of regular season games. “Ultimately, the number of games might not change that much – just the order in which they’re played.” Don’t expect anything to happen before the end of the ’22-’23 season – the next time the league or players’ union can opt out of the CBA.

Fan Marino: The ONLY argument against shortening the NBA season is that neither the players nor the owners are willing to give up the revenue that would be lost by cutting 12 games from the schedule. I happen to believe that the league should cut the schedule down to 70 games – which would make each game more meaningful – and simply markup pricing on everything 10-15%. Terry says that’s a risky proposition. Raising the cost of attendance “might push the price past buyers’ breaking points.” He added “with labor peace and such a positive vibe between league and players, I’m not sure I’d mess with the success the NBA is currently enjoying.”

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Baseball/Softball Youth Participation on Rise as Football, Hockey, Soccer Experience Decline

PlayBall

The Sports & Fitness Industry Association (SFIA) reported (in Q4 ’18) that youth sports participation – children between the ages of 6-12 – has declined by “almost -8% over the last decade”, but by increasing access to the game through its Play Ball initiative, Major League Baseball has managed to buck the trend. SFIA reported that participation in the sport – “from a 6-year-old swinging a bat in the backyard to a starter in the College World Series” – has grown +5% since the grassroots program was introduced in 2015. In 2018, Major League Baseball and USA Baseball took another step towards ensuring the sport’s long-term viability with the roll-out of the Fun at Bat program – an educational program designed for K-4 grade gym classes (since adopted by schools in all 50 states and Puerto Rico). The league and governing body hopes to enroll 1 million students in the program this year.

Howie Long-Short: MLB’s decision to “dramatically increase” funding on youth initiatives (includes grassroots efforts like: Play Ball, Youth Academies, RBI Program, the DREAM series, Breakthrough series, and the Hank Aaron Invitational through the MLB-MLBPA Youth Development Foundation) was driven by “the 10-year period prior to 2015, when participation had been either flat or declining.” It’s been reported that since that time, the league has spent upwards of $20 million annually on growing the game at the grassroots level.

The +5% figure cited represents kids playing regularly, but baseball has experienced even greater growth amongst casual participants – those playing just 1-12x/year; more than 2.3 million children (+53%) have joined the youth baseball/softball ecosystem since Play Ball started in ‘15. That makes sense when you consider that the premise of the Play Ball program is as EVP of baseball and softball development Tony Reagins put it, “to get kids to get out and play. Whether it’s playing catch, home run derby or pickle. It doesn’t have to be 18 players on a nice field with umpires.”

To truly grasp the success of MLB’s grassroots programs, one must consider the respective declines in regular participation across other youth sports – tackle football (-3.4% since ’14), hockey (-3.8% YoY) and soccer (-4.3% YoY).

It’s worth mentioning that while there is some conflicting data out there about the level of youth baseball/softball participation, Tony said, “SFIA data has been credible over the last several years and it’s the information that we’ve relied on over time; they’re considered the most credible outlet measuring youth sports participation. We use that data as a real measuring stick when evaluating the success – or the lack thereof – of our youth participation initiatives.”

Fan Marino: MLB’s decision to start Fun at Bat with kindergarten students is rooted in data. Tony said that the “research indicates there is a direct correlation between the age at which one first engages with the sport and the likelihood they’ll remain connected to the game long-term.” The younger MLB can get a bat/ball into a child’s hands, the more likely it is they’ll become a lifelong fan. Perhaps it’s not a coincidence that every child who participates in Play Ball is sent home with a plastic bat/ball.

Unlike Play Ball which is promoted by the league, its teams, USA baseball, USA softball, the U.S. Conference of Mayors, Minor League Baseball and Little League International, Fun at Bat is a part of the school curriculum. Reagins explained that “there are really 3 prongs to the program: a basic introduction to the fundamental skills of the game, character building (think: responsibility, accountability, fair play) and the promotion of healthy fun physical activity. We’re trying to create that connectivity by giving kids the chance to engage with the sport during the school day.”

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