Down the Rabbit Hole

Three weeks ago, we first visited the topic of how different CEO’s and potential investors may choose to focus on separate aspects of a business plan as a matter of individual style.  Having now completed the bulk of a first draft of my own business plan, I have a better understanding of how, why and under what circumstances some of these focuses are best applied, and why and under what conditions investors or analysts will choose to focus on certain areas of a business plan.

We first looked at ethnographer and motivational speaker Simon Shinek, who in his book, “Start With Why”, discusses the importance of a company and a leader being able to identify its core value.  The notion is that by defining its core values, the company can operate from the inside out and thus create loyal customers.

Having now written a business plan, it is easy to see how and why the person who leads the company and implements the plan is every bit as important as the numbers and the strategy behind the plan itself.  Even if the numbers add up, even if the plan seems flawless, it means nothing if the proposed leaders of the plan don’t have the ability to excite investors to help fund the initiative.  It means nothing if the leaders don’t have the ability to create a company culture that allows people within the company to complete plans at the granular level.  It means nothing if the leaders of the company don’t have the ability to execute the entire strategy of the company.

As I wrote my plan, I took care to identify and emphasize the strengths of the two principals, with special attention towards how our two skill sets work together.  Additionally, I have incorporated our professional values into descriptions about our various strategies.  For example, as we describe our competitive position within our industry analysis, it is clear that the values and skills of the principals reflect the core competencies of the company.  In short, the leaders’ strengths become the company strengths.  This is outlined at the beginning, repeated ad infinitum, and thus ingrained into the daily operations of the company.

My first blog also profiled Paul Ferris, founder and General Partner of the highly selective technology venture capital fund, Azure Capital.  Azure Capital is focused far less on the spiritual than the analytical.  On the front end, Ferris looks for data and research.  On the back end, Ferris wants to fund companies that acknowledge an exit strategy within the very beginnings of their business plan.

The above paragraph feels like the kind of philosophy we can all appreciate on its surface because it makes such simple, logical sense.  Obviously, we want some evidence that the plan is feasible.  We want statistics.  We want others in the industry to back what we believe.  And we want to have some sense of where the business is going to end up. 

That said, one has a much more tactile understanding of this concept on the other side of finishing a business plan.  One can see the gears all mesh together, and how things one writes in a certain section of the plan get reinforced in another written section of the plan and then reinforced again within the financial data. 

Three weeks ago, I wrote,”Sinek and Ferris stress different aspects of business plans, though both are important to the successful outcome.  Writers of business plans should heed the advice of both, and keep both elements in mind when self-evaluating their proposals.”  Though I have only written a first complete draft of the business plan, I think I have at least incorporated some of these values, and I will continue to do so in future drafts of the plan as I refine it towards something even more executable.

REFERENCES

1. CAA speakers: Simon Sinek, author of "Start with Why". (2009). Retrieved from www.caaspeakers.com/simon-sinek/bio

2. Ferris, P. (2012). Azure capital :: Paul ferris. Retrieved from http://www.azurecap.com/team/team-member/Paul_Ferris

3. Lester, C. (2009, July 27). Another view: A golden age for dcs. New York Times. Retrieved from http://dealbook.nytimes.com/2009/07/27/another-view-a-golden-age-for-venture-capital/

4. Locke, L. (2011, September 29). Twitter video-sharing service nabs $6.5 million. CNet News, DOI: news.cnet.com

5. Simon Sinek. (2009, September). [Video Tape Recording]. Simon Sinek: How great leaders inspire action., Retrieved from http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html

Business Plan Expert Advice

Different CEO’s will focus on different aspects of a business plan.  Simon Sinek is all about passion and leadership.  Sinek is a trained ethnographer and motivational business speaker who studies why people and organizations behave the way that they do.  From his studies, Sinek consults with leaders and their companies about how to make their businesses better by understanding both consumer and managerial behaviors and by creating inspiration.  He is active in arts and not-for-profit organizations, and his book “Start With Why” was published by Penguin Books in 2009.

In a “Ted Talk” delivered in support of his book, Shinek discusses the importance of identifying a core value for a leader and a company.  The notion is that most companies operate outside in.  That is, they define themselves first by what they produce, then by how they produce it and then by why they are producing it in the first place.  That approach touches the customer first, and can (and often does) produce loyalty to an individual product.  But if the company can define itself first by its core value – by the why it operates – then it operates from the inside out, and creates not just consumers, but loyal consumers that will follow the company or the leaders just about wherever it goes.

Sinek talks about instilling this in every aspect of a business plan, as well as in business operation and workflow.  The primary notion: if a company can convey its sense of mission to itself, then it can convey that sense of mission to its investors in its business plan, which will secure funding and approval.  Eventually, it will secure followers as consumers.  This is a creative take on business plan writing, and it emphasizes the importance of establishing trust and confidence in those leading the project.

Paul Ferris is the co-founder and General Partner of Azure Capital, a venture capital firm that invests in early stage technology companies that operate in sectors from cloud services to healthcare technology to gaming platforms to financial services.  His background is in investment banking.

Azure Capital is a highly selective firm.  The company receives thousands of pitches for angel investment funding every year.  The company will interview dozens of early stage businesspersons, but will only invest in four to six projects every year.

Ferris and his partners have a strategy within Azure that is essentially two-fold (with many subtopics), but unlike Sinek their strategy is far less emotional than it is analytical.  Ferris and his partners are looking for data to formulate a plan from the beginning of a journey to its very last step.  Up front, the primary focus is on research.  The research in technology subsectors helps Azure create its investment roadmap, increase their knowledge of any particular tech area, and identify whether or not a company has a real opportunity worth pursuing.

         On the back end, Azure operates with an understanding that the business plan needs an exit strategy.  In their industry, they attempt to fund little fish that they believe will become medium-sized fish that in turn pose a creative and market share threat to the biggest fish.  Thus, the strategy for most of their investments is that they will eventually sell to strategic competitors or partners.  As such, Ferris likes to see plans that acknowledge this outcome and that incorporate that as a strategy in the very early stages of company planning.  In short, under Ferris’ direction, Azure needs plans that will be clinical in their execution.

          Sinek and Ferris stress different aspects of business plans, though both are important to the successful outcome.  Writers of business plans should heed the advice of both, and keep both elements in mind when self-evaluating their proposals.

REFERENCES

1. CAA speakers: Simon Sinek, author of "Start with Why". (2009). Retrieved from www.caaspeakers.com/simon-sinek/bio
2. Ferris, P. (2012). Azure capital :: Paul ferris. Retrieved from http://www.azurecap.com/team/team-member/Paul_Ferris
3. Lester, C. (2009, July 27). Another view: A golden age for dcs. New York Times. Retrieved from http://dealbook.nytimes.com/2009/07/27/another-view-a-golden-age-for-venture-capital/
4. Locke, L. (2011, September 29). Twitter video-sharing service nabs $6.5 million. CNet News, DOI: news.cnet.com
5. Simon Sinek. (2009, September). [Video Tape Recording]. Simon Sinek: How great leaders inspire action., Retrieved from http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html

Who Makes Connections in Sports Team Sponsorships?

The world of sports team sponsorships is growing ever more complex.  In the old business model, going back 30 and 40 years, companies simply bought advertising time on television and radio stations that broadcast games and sent one message through one or two distribution channels in order to align their company and product with the team, or the sport, and its' customers.  Today, there are more and more opportunities for companies to reach potential customers, because there are more products available with which to associate through sports team sponsorships, and more opportunities to be able to reach to targeted audiences.  This offers companies the chance to be more efficient in their sponsorships, but it becomes increasingly difficult and labor-intensive for the companies and the teams to negotiate this new minefield themselves.

So with more and more frequency, both sides of these types of transactions are reaching out to middlemen for assistance.  From the team side, this is in part because they are working hard to create new revenue streams through products, merchandise, ticket sales, new media rights and more.  As an example, the NBA is in the process of becoming the first major American Professional sports league to allow jersey sponsorships (following in the path of MLS Soccer teams and European leagues of all sports).  The teams and the league have yet to figure out who controls the inventory, the potential value of the sponsorships or what kinds of companies and products would be interested in the sponsorships (Lombardo and Lefton, 2012).  This kind of uncertainty causes confusion, even though it is borne of opportunity.

Similarly, companies that wish to advertise through sports also have difficulty understanding all of the possibilities that are now available for them within sports team sponsorships, even as the technology to track the data can give them complete analytics about fan behavior and how fans interact with various parts of the sports viewing experience both in stadiums and at home.  Companies that are big spenders in title sponsorships, traditional and digital media strategy and more, such as Met Life for example, as well as smaller spenders like AAA Automobile Club that are slightly more selective about which properties they sponsor, all have vested interest in working these sponsorships efficiently, where they can get the best value for their money by targeting their audiences in areas and through products where they know those audiences are going to congregate (Ourand, 2012).

With more and more options available, and with more and more data available, the technology and opportunity is there to decrease the waste in the system, and to make all sides increase their winning percentages in these kinds of deals.  So it is little surprise that there is a business opportunity for agencies that can align companies not only with properties but also individual strategies within properties that can deliver business to them.  These agencies may be small, relatively new companies that employ no more than a dozen people and concentrate on a handful of clients on each side.  They may be design firms which have now incorporated their own brand activation departments, because stadium activation has become such an important revenue stream that it needs to be built into the design process.  Or they may be established marketing and media agencies that have simply recognized the opportunity and increased resources in this area.

Though a handful of metaphorical predators have entered this ocean, it is still very much a blue ocean because so much of it is unexplored and undiscovered.  In the next few years, those who follow sports business and sports team sponsorships are going to hear a lot from the big fish who spout their triumphs, but they should know there will be plenty of other fish under the surface getting fat on all the opportunities that exist.

Other References

Lombardo, J. & Lefton, T. (2012, September 24). NBA clubs hire firms to help sell patches. Sports Business Journal, DOI: sportsbusinessdaily.com

Ourand, J. (2012, May 28). What's worked. Sports Business Journal, DOI: sportsbusinessdaily.com

Photos:
1. From Sportsnetworker.com
2. From Freshnessmag.com

The Great Wide Open: A Primer on the Sports Digital Marketing

In February of 2010, I was recruited by Full Sail University to create a program for educating prospective graduates to have success in the sports industry.  We had to determine whether that degree program would involve sports management, sports business, sports production or something else.  We conducted a four month marketing campaign in which we talked to hundreds of people from the industry, who with near unanimity indicated that they were having all kinds of difficulty negotiating the digital landscape.  Similarly, they reported that they were having difficulty connecting their Generation X sales and sponsorship teams with the need to engage both their Millennial-aged fan base and their clients who want to engage that fan base.  Those businesses obviously include sports franchises, but also merchandisers, networks, agencies and their brethren.

The move into the digital arena, for nebulous topics like branding and engagement, as well as for specific initiatives like sales, is at once a thrilling opportunity and an enormous undertaking which is both inconvenient and expensive.  In the most broad definition of digital marketing, the topic covers an incredibly wide swath of areas for any sports businesses.  For businesses like a franchise, this is an intimidating gamut of possibilities to entertain.  It is problematic because the very idea of digital marketing runs counter to how their most experienced sales people have been trained.  And it is additionally problematic because any dollar wasted on a failed marketing campaign is one dollar less than that franchise can spend on improving the quality of its on-field organization.  It is more so when we think beyond the front line of major professional sports teams and start looking into minor league teams and less popular circuits that often operate with even tighter margins.

These kinds of businesses need counseling both for strategy and for specific activations, which is why some larger agencies have developed divisions exclusively dedicated to digital marketing and why other smaller agencies have popped up to fill different niches within the larger topic.  That said, there should be openings for new businesses to consult and connect sports properties with products -- and vice versa -- to help create strategies specifically designed to maximize exposure and revenue generation.  Those revenue generation opportunities could include traditional marketing options and modern online marketing techniques including "social media, blogging, SEO, PPC, branding, content marketing, video marketing and app creation." (Perrin, 2012).

Larger companies have faced similar quandaries, but have had better success entering the digital arena, in part because they have larger margins of error.  It is interesting, because so often when there are technological evolutions and revolutions, innovation comes from the ground up.  In the digital media landscape, market leaders like ESPN and Nike are leading the way, from different parts of the business.  Nike has reduced its famous television ad campaigns to reach customers through a variety of digital products that track analytics and communicate directly with users. (Image from Cendrowski, 2012).

ESPN is trying to lead the way in digital application of technology, and finding new ways to connect with fans through advances in production and collaboration, many of which give fans opportunities to have direct P2P feedback with the network.  (Videos from Lynch, 2012)

These ESPN innovations may not be digital marketing, per se, in that we aren't creating quantifiable metrics based on clicks and generated leads, but if we are considering digital marketing for sports in its broadest possible terms -- all of the ways in which sports businesses interact with fans and clients -- than we absolutely need to understand the importance of connecting with those consumers in this way.

What this tells us, as observers of the industry, is that there is little limit to what may lie ahead concerning the role of digital application for sports and sports marketing.  As the creator of a program which proposes to graduate future members of the labor force for this industry, my job is to continue to monitor and receive feedback from the industry, to make sure that the students who leave this program understand -- in the academic sense -- what matters in the industry and what skill sets are going to matter in the future of the industry.  Today's students need exposure to as many of these areas as possible, with the hope that they will discover their own particular passions and niches in which they can be successful.



REFERENCES

Cendrowski, S. (2012, February 13). Nike's new marketing mojo. Fortune, Retrieved from http://management.fortune.cnn.com/2012/02/13/nike-digital-marketing/

Lynch, C. (2012, June 11). Learn how ESPN tackles tech problems, fosters innovation. Retrieved from http://frontrow.espn.go.com/tag/espn-emerging-technology/

Perrin, J. (2012, July 23). How digital marketing is changing the sports industry. Retrieved from http://www.koozai.com/blog/branding/how-digital-marketing-is-changing-the-sports-industry/

The Perils of New Media: Who counts?

Issuing season-long credentials for sporting events used to be a relatively simple task.  Public Relations managers passed out press box, locker room and/or limited access badges for a handful of regular beat writers, reporters, television stations and radio stations.  Occasionally, they would hand out one-time passes to smaller publications from outlying communities, student magazines and newspapers and national outlets.  Without going into excess detail as to how this worked, the news outlets would submit written requests to the team or organization, which, if completed correctly and with the authority of station and newsroom management, would be rubber-stamped by the team.

That has changed over the last five to ten years, with the mainstreaming of blogs, internet columnists, and various other types of self-publishers who write, comment and consider themselves to be experts about a broad range of individual topics, including sports.  This has presented a dilemma for sports franchises and organizations.  On the one hand, the dilemma is philosophical: what is now considered to be an acceptable news organization?  Is a new blogger with a large following any less legitimate than a small suburban newspaper that may be long established but has a diminishing and older readership?  If the team considers the blogger to be simply an uninformed commentator taking cheap shots from the laptop in his basement, aren’t they doing their team a disservice by NOT granting access so that blogger can be MORE informed? 

The dilemma is also practical: press boxes and locker rooms have limited space, and especially when teams garner lots of attention, such as in the playoffs, how do the teams decide who has access and who does not?  There is then a third question, which is about the ethics of credential distribution: does a team that issues credentials have the right to bar members of the press, especially those that communicate through new and social media, if they write or report items unfavorable to the team?

There are several instances that involved this kind of ethical questions between organizations and journalists, including a highly publicized incident between a team and a mainstream traditional media outlet that occurred in the 2004 MLB playoffs.  But two even more recent examples highlight the difficulty inherent in these kinds of conflicts, and an industry that has been slow to respond effectively and efficiently to a new media world.

The first such example started promisingly.  The National Hockey League’s Los Angeles Kings have been among the most creative and aggressive early adopters of new and social media.  On their way to the Stanley Cup Championship this past June, the Kings’ often outrageous and snarky twitter feed gained rave reviews for its personality and its willingness to challenge the voice and tone of typical in-house communication mechanisms.  They mix that tone with a more traditional offering of game updates, collateral offerings and more.  In 2009, recognizing that that they had the ability to create their own messaging through their team-owned portals, they hired the former Kings’ beat reporter for the Los Angeles Times, Rich Hammond, to provide written content for their team website, essentially creating their own beat reporter.  Hammond told the regional webzine insidesocal.com that he was not pressured to follow a party line, and that the Kings had always told him “to report and write as normal”.

This past summer, however, Hammond felt he needed to part ways with his role.  Hammond wrote critically about the ongoing NHL lockout in a Q and A with Kings’ forward Kevin Westgarth that has since been removed from the Kings’ website.  The league itself said the post needed to be removed because as a team employee, he had to abide by the league’s rules of not discussing the lockout publicly.  Hammond stressed to insidesocal.com that the Kings did not pressure him at all.  Still, Hammond felt he needed to resign because he couldn’t do the job the way he felt was necessary.  The Kings, to their credit, thanked Hammond in a statement and said his performance "a partner in building a new platform for LAKings.com epitomized integrity, work ethic and vision, and at no time did he waver from his goals and commitment to his readership." (Hoffarth, 2012).  The team also put up a video tribute to Hammond on their website.

Contrast that with what happened a few months after the Kings hired Hammond.  In 2008, the New York Islanders and their Public Relations manager Chris Botta parted ways after he had served the team for 15 years.  With the Islanders blessing and financing, Botta started up a blog called NYIpointblank.com.  The team, which had been in dire competitive straits, benefitted from the additional attention and from the media void filled by Botta’s blog.  In 2009, the team stopped financing the blog, but Botta kept writing.  In November of 2010, the Islanders revoked Botta’s media credentials, for reasons that remain unclear.  Botta believes he lost his credentials because he had criticized General Manager Garth Snow.  He quoted the Islanders’ new Communications Manager, Kimber Auerbach, telling Botta that the team was concerned that Botta had gone from “publicizing the news, to making the news.”  (Sandomir, 2010).  The league declined to investigate or intervene, incurring the wrath of the Professional Hockey Writers Association.  Botta’s media brethren that follow the New York Rangers and New Jersey Devils joined the Islanders’ beat reporting crew in boycotting the league’s 2011 Awards Ceremony and in refusing to vote for the league’s awards.

What’s interesting in both cases is that the NHL, far more than the other major professional leagues in the United States, has been at the forefront of exploring new media and in trying to find different streams to engage their partners and fans.  But their policies regarding media and how they operate in this stream is particularly draconian.  Award-winning writer and historian Terry Frei, columnist for the Denver Post and Vice-President of the PHWA, articulately wrote in a blog post (Frei, 2011):

Our concern is that this decision, if allowed to stand and become precedent, signals an end to the league’s agreement that independent and objective coverage not only benefits its fan base, but the NHL itself.

The PHWA’s position is absolute. The splitting of hairs about the circumstances of the Islanders’ decision is an irrelevant waste of time. We ask that the NHL disavow the Islanders’ capricious decision in this specific instance, but even more important, reaffirm that -– barring egregious actions that would cause the PHWA to expel a member, anyway -- PHWA members will be granted access to cover its teams.

Admittedly, the media world has become far more complicated.  We can only hope that the NHL and others who control media access can learn quickly from their mistakes.

RESOURCES

1.  Cohen, D. (2009, September 28). Los Angeles Kings hire former beat writer to cover team. Social Times, DOI: socialtimes.com

2. Frei, T. (2011, April 4). New twist in Islanders' decision to revoke credential from reporter. Retrieved from thepostgame.com

3.Hoffarth, T. (2012, October 11). Was the NHL about to compromise the integrity of Kings' "insider" Hammond. Inside Socal, DOI: insidesocal.com

4.Sandomir, R. (2010, November 18). Struggling Islanders revoke blogger's credentials. New York Times. Retrieved from nytimes.com

LINKS

http://www.thepostgame.com/blog/daily-take/201104/new-twist-islanders-decision-revoke-credential-reporter

http://socialtimes.com/los-angeles-kings-hire-former-beat-writer-to-cover-team_b50694

http://www.insidesocal.com/tomhoffarth/archives/2012/10/more-on-why-the.html

http://www.nytimes.com/2010/11/19/sports/hockey/19botta.html?_r=0

They Fought the Law

As a sports fan, I’m interested in the pure motivation of sport and sport stories – and I’m talking here about the victorious struggle of athletes as they overcome external obstacles and internal limitations.  I love the big games and the big moments, and when athletes rise to their greatest level of performance on their sport’s biggest stage. There is beauty that lies within. 

There is similar beauty that appeals to my sports business sense, and that beauty lies in the well-executed deal, which includes really well articulated legal constructs that give protections and benefits to all sides in a contract.  The public often doesn’t hear that much about these kinds of structures because those conflicts don’t become news unless one party or another oversteps their bounds without relief. 

            On the flip side, there are all kinds of legal issues that do make it into the public consciousness, whether those are criminal issues, or issues of fraud or breach of contract, or other tortuous issues.  Those issues underscore how freakishly large the business of sports has become, and in one recent instance it shows how an individual case can shake an organization down to its core – even it that organization is the biggest, and seemingly most bulletproof organization in sports.

            Over this past summer, an NFL investigation uncovered that the New Orleans Saints conducted a bounty system in which the team gave financial rewards to roughly two dozen players for hard hits and hits that caused injuries to opposing players.  That investigation led to unparalleled suspensions for coaches and players who organized and carried out these bounties over the course of three years. (Holder, 2012).  Goodell’s justification for the suspensions is that he would be putting the league at risk if he didn’t punish a team for running a bounty program, particularly at a time when the league is facing a barrage of lawsuits from former players regarding concussion injuries.

            That’s just the opening hint of how numerous the legal issues could be, and we could break down a lot of those legal aspects on an individual basis.  But the overriding issue is that of the fairness of the NFL’s judicial process, and whether or not NFL Commissioner Roger Goodell has overstepped his bounds, even if he believes he is acting in the best interest of both the league and all of the players. 

            According to the Collective Bargaining Agreement between the players and the league, the players have given permission for Goodell to act as investigator, judge and jury in these kinds of cases.  That means that the players do have rights to appeal findings in cases like these, but the appeal is to Goodell himself. 

(In actuality, the way this played out was that the players were first suspended in May.  An arbitration panel then overturned the suspensions, but allowed Goodell to reinstate them if he could prove that the Saints had created a culture where there was an intent to injure.  This past week, Goodell did just that, though he reduced the length of two of the suspensions.  The players have now appealed the suspensions, which allows them to play, or at least to get paid, while they await a final verdict).

Though they agreed to the process, the NFLPA continues to gripe that the content and context of the evidence is insufficient, which it may very well be for a court of law.  But it is worth pointing out that this is not a court of law, but rather a court of the Commissioner.  (Brandt, 2012)

Here is where it gets really interesting – the player facing the longest and most harsh suspension, Jonathan Vilma, has asked Commissioner Goodell to recuse himself of the NFL’s appeal process.  It’s a fascinating gambit with no real legal basis other than in the court of public opinion.  In the meantime, all four players have sued the league in federal court.  (Brandt, 2009). U.S. District Court Judge Ginger Berrigan has said that she believes that the NFL’s judiciary structure does not allow due process, though she adds that she wants the sides to work through that structure before she hears the case in its entirety. (N.D., 2012).

So now that the players have appealed, the NFL has said it will respond within ten days.  If those appeals are denied, as is expected, the process will continue in the courtroom.  At that point, not too many good things can happen, but the most likely is that the process continues with no resolution all the way to the league’s biggest showpiece, the Super Bowl, which won’t be pretty for the league.

That’s especially true this year, because the Super Bowl is in New Orleans.

ADDITIONAL RESOURCES

1. Brandt, A. (2012, October 9). Is bounty scandal far from finished?. Retrieved from ESPN.com

2. Chadiha, J. (2012, October 5). Saints were snared by their own words. Retrieved from ESPN.com

3. Cherry, G. (2012, October 12). NFL-bounty scandal players appeal latest suspensions. Retrieved from Chicagotribune.com

4. Holder, L. (2012, October 12). 4 suspended players connected to Saints bounty scandal to file appeals, source says. Retrieved from NOLA.com

5. N.D., Appeal seeks roger goodell recusal. (2012, October 12). Retrieved from ESPN.com

6. Yaskinsas, P. (2012, October 9. Saints players should take punishment, move on. Retrieved from ESPN.com

When the Rules Get in the Way

            In 2009, the Chicago Blackhawks emerged from a long slumber, advancing to the NHL’s Western Conference Finals and filling their home at the United Center.  Only a year before, the United Center had often been more than half-empty – the ‘Hawks had announced crowds of as little as 8,000, with the actual headcount of fans in seats totaling a much smaller number.  In 2009, as they simultaneously returned to competitiveness and changed ownership, a long sellout streak that remains active.  But at that point, their fan base was still mostly their hard-core loyalists returning after a long time wandering in the metaphorical desert.

            In the off-season, the Blackhawks came up with an ingenious way to reach other fans.  They would market themselves by creating initiatives through some of Chicago’s other sports teams.  They started a “Blackhawks Day” with the Cubs at Wrigley Field, and a yearlong partnership with the American League’s White Sox.

            But the big move was to try to partner with the NFL’s Bears.  The Blackhawks’ then-Vice President of Business Operations said the idea was borne from a meeting of NHL executives in May, when someone noted that 92% of NHL fans are also fans of the NHL.  “I remember writing the word ‘Bears’ and circling it,” Blunk told the Chicago Tribune in October of 2009.  “The Blackhawks are an up and coming brand on the move.  But the Chicago Bears are an iconic international brand.  So when it came to attaching our brand to something with great credibility and great reach, there was no bigger fish than the Chicago Bears.” (Rosenthal, 2009).

            The Blackhawks paid to make the ads and buy ad time.  The Bears arranged for some of that ad time to be made available at no cost through programs that they owned, both on line and over the air.  The Bears also loaned their star athletes to shoot promos with Blackhawks stars, so linebacker Lance Briggs teamed with defenseman Brent Seabrook to compare how hard hits cause turnovers.  Hawks’ sniper Patrick Sharp helped Bears’ kicker Robbie Gould take target practice at a net strung from between the NFL goalposts.  The spots were more clever than funny, but it gave the Blackhawks additional credibility to be seen with the more established brand in town.

            Except, the spots were never seen at all.  The National Football League stepped in and put the campaign on ice.  The NFL requires a three-fourths vote of approval from the league’s 32 teams to allow the use of its’ teams’ marks to promote another sport.  The Bears believed their support of the Blackhawks was “within the framework of the spirit of what the rule was,” according to Bears’ senior director of corporate communications Scott Hagel.  “They felt differently, and we have to respect their decision.”  (Rosenthal, 2009).

            The result here is, on the surface, somewhat disappointing.  Clearly, there was no malice aforethought here.  The Blackhawks needed to expand their fan base into the reach of more general sports fans and casual hockey fans (they would accomplish this the next summer, when they won the Stanley Cup for the first time in 49 years, and drew some two million fans to their parade).  The Bears sought to be supportive of a like brand with which they didn’t really compete head-to-head, to jump onto the rising bandwagon of the Blackhawks’ popularity, and to promote Chicago sports in general.

But one can also see the other side.  Just because the Blackhawks have friendly relations with the other sports teams in Chicago, doesn’t mean that similar relationships exist in other cities.  Sometimes teams in the same cities become enemies because they are competing for limited public dollars to finance projects, or consumer spending dollars to buy tickets and merchandise.  Sometimes ownership groups in the same cities simply don’t like each other.  Were the NFL to allow this kind of agreement, it could open a Pandora’s box of issues which could lead to misuse or misrepresentation of their marks.

Ultimately, leagues and teams need to be vigilant about protecting their brands and safeguarding their reputations.  The overall long-term credibility and integrity of any league, franchise or governing body is larger than any single issue.  In a league as powerful as the NFL, they are better off erring on the side of caution.

RESOURCES

1.     Brennan, E. (2009, October 15). Bears, Blackhawks team up for ad campaign. Retrieved from nbcchicago.com

2.     Fisher, E. (2008, April 7). White Sox, Blackhawks form far reaching marketing sponsorship. Retrieved from sportsbusinessdaily.com

3.     Ourand, J. (2009, October 14). Bears, Blackhawks partnering on rare joint ad campaign. Retrieved from sportsbusinessdaily.com

4.     Rosenthal, P. (2009, December 04). NFL intercepts Bears-Blackhawks ad. Chicago Tribune. Retrieved from www.chicagotribune.com

What's So Funny 'Bout Peace Love and Understanding

2011 was a transformative year for sports.  The big three of the four major professional sports leagues all signed new Collective Bargaining Agreements.  One of them went smoothly, one went poorly, and the biggest, baddest one of all got done just in the nick of time.  In 2012, the NHL appears headed to a similar brink with its players' union (again), but as of this writing those two sides appeared to be progressing in the direction of a settlement.  Fans of all sports are hopeful that they may be entering a new era where long-term labor peace reigns over the teams, sports and stars they love.

But the biggest two sports stories in 2011 came from college football and both, to different degrees and in different directions, concerned power in sports -- the abuse of power in one case, and the consolidation of power in the other.

In the latter, the power football conferences finally cracked and scrambled like so many eggs at a tailgate brunch.  Missouri and Texas A and M bolted the Big 12 for the SEC.  Pittsburgh and Syracuse, a founding member of the Big East, both ditched that stalwart conference for the ACC.  Colorado and Utah left their homes to turn the Pac-10 into the Pac-12.  And other teams left lesser conferences to fill in the gaps.

These transitions, of course, were all about media rights, networks and bowl games, and how all of those factors blaze a trail to new revenue streams.  Following in the lead of conference networks like the Big-10 Network, and of school specific networks such as ESPN's Longhorn Network, which supports sports at the University of Texas, conferences and individual schools sought new ways to maximize revenues.  Ultimately, this would lead in 2012 to the biggest game-changer of all, the dismantling of the Bowl Championship Series after 15 years, and the commitment to a 4-team playoff from 2013-2025.

That story will ultimately be more important for business, but the shocking story of Jerry Sandusky's child sex abuse revelations at Penn State, and how they dismantled a legendary coach and the storied program he led, was certainly more salacious.  Ultimately, given the sanctions leveled at the University, this story too will have a shelf-life beyond its headlines, and will have a lasting impact on college sports.  In this case, the NCAA found ways to extend its authority beyond its previous borders, and took a proactive stance both in making a statement about the current case (in that it was all about the abuse of power, and the de facto dictatorship that existed in that State College culture), and in making certain that all schools understand the lengths the NCAA is willing to go to make sure no other case like it can ever happen again.

The effect of these two stories combined is that at the dawn of the college football season in 2012, the sport's landscape is unlike anything we have ever seen before.  When the season kicks off in full, new rivalries will be borne at the expense of historic ones.  Traditional powers will have been rendered impotent.  The governing body of the sport has used right to make might.  And the cool flow of money will eventually rinse everything clean.

Negotiations

In sports, there is little left unclear.  There is a final score.  There are winners and there are losers.  There is the thrill of victory, and there is the agony of defeat.

In the business of sports the latest evolution, at least at the corporate level, is to find win-win partnerships that are about mutual gain, as opposed to the older models of spending to purchase assets.   There are ways to create partnerships where everyone benefits from the associations and initiatives.

Ideally, the contract negotiations between athletes and the teams the play for would find similar common ground, but according to Ian Greengross, NFL Player Agent and Partner at Ultimate Sports Agency, that’s not always the case.  When it comes to applying the notion of principled negotiations to contract negotiations, Greengross says that “even those negotiations that are principled are still about leverage.  In the National Football League, teams almost always have the ability to force certain restrictions, like a franchise tag, so our negotiations are always about position and much less about principle.”

One of the primary issues that hampers principled negotiations in sports projects is that it is very difficulty to find objective criteria that can help create common ground.  Some positions, like offensive line, have few statistics.  Other positions can create players who are statistically poor but who provide other important pieces to victory.  In other words, objective stats don’t always provide the whole picture.  That said, the general spread of a contract is principled almost by definition.  As Greengross says, “It’s rare that we have a 7-million dollar difference between what a team thinks my player is worth, and what we think he’s worth.  Principle will set the range, but it’s the leverage that ultimately determines the final number.

Another big difference in athlete conference negotiations is there is a limited amount of supply and demand, and there is always a deadline.  There are various mechanisms in place that create a kind of artificial clock.  These instruments are designed to help players get under contract to the teams that first held their rights.  A player ultimately has a limited number of places in which he can sell his abilities.  This leads to difficulty for both sides as they attempt to create a BATNA.  Greengross says, “We HAVE to get to a resolution. There’s only two choices if we can’t agree – either I take their position or they take mine.”

All this being said, the way these deals get discussed in the media, fans might assume that player contracts are always contentious, difficult and full of dirty tricks.  Greengross says that’s not really the case.  He says most teams are “just trying to achieve their objectives.  They always want the player at the lowest reasonable price the team can accept.  My job is the converse, because it’s the highest dollar the team will reasonably accept.  Somewhere in between the competing forces we get a deal done.”

In the end, there’s simply too much at stake for men to behave badly.  If a team lies about giving a player an opportunity, or if a team rescinds an offer without giving a player and his agent fair warning, that bad acting will have residual effects.   To the agent, that indicates that the team, or that particular representative of the team, is untrustworthy going forward.  Ultimately, Greengross says,  “In a limited supply pool, I control some of the supply, and it not only affects future negotiations with this particular player, but of all of my future players because I can’t trust them.”

So in the cutthroat world of professional sports contract negotiations, the point is that the theory of principled negotiation can be effective, but only to a point.  The structure of the system ensures that principled negotiations will set the parameters of almost all contract discussions.  There’s too much at stake to do otherwise.  But when it comes down to the final completion of the deal, outside forces often cause sides to take up hard positions.  Ultimately, the leverage inherent in the market will determine which side wins out.

Sis-Boom-Barbie

Just because an idea or an initiative doesn’t work doesn’t necessarily mean that the idea itself is a bad idea.  This week, Mattel and Wal-Mart announced they have a partnership to sell four “University Barbies” exclusively at Wal-Mart stores in the markets of four Southeastern Conference Schools.  This isn’t a new idea for the toy company.  Mattel tried to market University Barbies 16 years ago, in an ill-fated promotion that lasted barely a year.
So why does Mattel think this initiative will work now, fifteen years removed from its initial, spectacular failure?  Well first, let’s look at why the initiative failed in the first place.  The initial problem was one of distribution – Mattel didn’t distribute much of its product on a regional basis in the 1990’s.  The product line consisted mostly of dolls clad in the gear of schools in the Southeast and on the East Coast.  But because the products were distributed nationally, Barbies affiliated with those schools ended up scattered about the country.
While there may have been some interest for girls playing with a cheerleader Barbie, they seemed less inclined to do so with a generic outfit than one branded with a specific school thousands of miles away.  In retrospect, it seems obvious that Mattel should have realized this would be a problem.
But perhaps the idea was just ahead of its time.  One reason that Mattel is optimistic about this newest incarnation of University Barbie is that they now have the ability to distribute their products regionally and in a cost effective way.  Now, Arkansas-branded Barbies aren’t likely to end up in Ohio or worse, gasp, in Texas.  Mattel is on record saying that if this program is successful, they plan to launch at other schools in 2013.
If we go outside of the Mattel example, we can expand this discussion to the notion of market research versus intuition.  Former Apple CEO Steve Jobs once said, “It’s not the consumers’ job to know what they want…we figure out what we want. And I think we’re pretty good at having the right discipline think through whether a lot of other people are going to want it, too.”  (Sara, 2011).  Jobs gets a lot of credit for this statement and this philosophy because this line of thinking led to the creation of the IIe, the Mac and the ipad among others.  It also led to a lot of business disasters and internal business conflict.  Such is the roller coaster companies experience when their executives rely on intuition – the hits can be bigger, but the misses can be more frequent.
My own thought is that there has to be a balance between intuition and market research.  Market research can tell you what has happened in the past.  Market research and financial analysis can tell you the fundamentals of what is happening to a company or a business in the moment that you conduct that analysis.  It can’t tell you what is going to happen in the future.  It can’t tell a decision-maker what is coming next.  If the decision-maker can divorce himself from ego, trust what he sees and feels, and then is able to place those feelings into the business at hand, then that decision-maker can combine the best skills of intuition with the hard numbers of market research to create a successful activation.
Perhaps, fifteen years ago, the executive at Mattel was ahead of his time as well.  Perhaps the idea simply outpaced Mattel’s ability to execute it.  Perhaps the real genius comes from the executive who was willing to revisit the idea because he or she believed in the guts of it and recognized some of the issues that derailed it the first time around.  Perhaps Mattel will have a big hit with University Barbie in the second half of the game.
Go Team Go!

Additional Resources:

Sara. (2011, November 1). [Web log message]. Retrieved from http://blog.lab42.com

A Platinum Anniversary

NHL Commissioner Gary Bettman is every bit as arrogant and even more smug than he appears.  He is one of those people who smirks at his own jokes even as they fall horribly flat, and he always thinks he is the smartest person in the room.  But the little secret is that Bettman might just actually be the smartest person in the room, and he’s got a nearly 20 year record to prove it.

That’s right.  Difficult as it is to believe, Bettman will celebrate his 20^th anniversary is the NHL’s commissioner in the coming season, and it’s hard to argue that the league has ever been in better financial position, at least not if we measure it in a modern way.

(As an aside, I know the man.  We had several interactions when I was on the media side of the business, the most unpleasant of which was when I broke a story that contradicted the NHL’s public relations stance.  He publicly scolded me, by name even, and fairly trashed me in official statements.  Two days later, when my story turned out to be 100% right, he apologized in a private phone call and admitted that he knew I was right, but I had information before the league was ready to release it.  He never apologized publicly).

First, there’s the league’s position regarding media.  They spurned – or depending on your point of view, were spurned by – ESPN, and that allowed them to take an aggressive strategy.  The NHL wanted to be the feature product on a network and so branched out to low-rated, hard-to-find Versus, a network that was best known for airing bicycle races.  While they had some stumbling blocks in the early years of that deal, the NHL has been perhaps the single biggest beneficiary of the NBC/Comcast merger because they are the primary tenant of that air space, with every single playoff game now airing on that family of sports networks.  Similarly, they have done the best job of activating in digital spaces.  Of the major professional American leagues, they have been the best at creating two-way conversations through their website, mobile pages, exclusive TV packages, Facebook pages and twitter accounts on both a league and individual team level. 

Yes, TV ratings were down for the playoffs (and way down for the Stanley Cup Finals), but the positioning is strong, especially when you consider one of Bettman’s other accomplishments, which is the creation of tent pole items around which the league can build sponsorships, such as the Winter Classic, the Premiere Games, the All-Star Weekend and the Playoffs.  Big brands want to associate with the NHL, in part because its audience is young, affluent and media-adept in ways in which the fans of other leagues maybe are not.  The league has locked up its broadcast partner for 10 years, and other sponsors like Pepsi, MillerCoors and Geico to long-term deals as well.  Smaller business and brands are getting involved in NHL activation as well, at a national and market level, enthralled by the alternative positioning of the league.

Most importantly, revenues are up.  WAY up.  In the first year after the lost season of the NHL lockout, the NHL brought in 2.2 billion dollars in revenue.  Last year, even amidst the recession, the league had increased that by half, bringing in 3.3 billion dollars.  More than one-third of that comes from straight ticket sales, and the growth occurred in a recession.

It’s not all wine and roses.   The league is a distant fourth among the American power sports.   There are still too many unstable franchises.  And the CBA expires in September, raising the specter that there could be a third work stoppage under Bettman’s tenure.  But the health of the league has put a positive tone on the early negotiations.  It’s taken 20 years, but almost all of the indicators are pointing in the right direction.

I may end up having to like the guy.