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Strategic Business Proposal 1 of 34

Strategic Business Proposal for

Los Angeles Club

For: Football Club https://www.lafc.com

Prepared On: April 1, 2018

Prepared By: Asia McMillan – Manuel DeLeon Will Lyznicki – Kaitlyn Kariman – Lexi Musico

Instructor Name: Harry Lewis Strategic Business Proposal Page 2 of 34

Contents Introduction ...... 3 Executive Summary ...... 3 1. Organizational Challenges & Proposed Solution ...... 5 Organizational Challenges ...... 5 Proposed Solution ...... 5 2. Environmental Scanning ...... 6 Internal Analysis ...... 6 External Analysis ...... 10 3. Strategy Formulation ...... 13 Operations ...... 13 Sales, Marketing, & Distribution ...... 13 Legal & Ethical ...... 15 4. Proposal Budget & Projections ...... 16 Sales Projections ...... 16 Project Budget ...... 17 5. Strategy Implementation ...... 17 Timeline and Key Milestones ...... 17 6. Future Plans ...... 18 Long-Term Opportunity and Development Plans ...... 18 7. Appendices and References ...... 20 References ...... 20 Appendices ...... 24 Appendix 1:Competitive Analysis ...... 21 Appendix 2: Sales Projections ...... 30 Appendix 3: Expense Assumptions ...... 31 Appendix 4: Income Statement Summary ...... 32

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Introduction

Executive Summary With over six years of combined digital marketing, product marketing, and personal branding experience, Kaitlyn Kariman, Will Lyznicki, Lexi Musico, Asia McMillan and Manuel DeLeon comprise a marketing team of the most skilled entertainment business and marketing professionals. Their work includes digital marketing campaigns for such as Nike, and Under Armour; along with revenue-generating projects for the Cubs, Rooster Teeth Media, and MGM Grand.

Los Angeles Football Club (LAFC) is a newly developing American soccer franchise located in Los Angeles, . LAFC prides itself on bridging the gap between the traditional soccer generation and the millennial generation. LAFC has an ownership team comprised of over 30 sports industry leaders, philanthropist, best-selling authors, entrepreneurs, and entertainers.

To accurately assess the business needs of LAFC and provide a strategic business proposal and plan that best suits the objective of the organization, it is essential to outline their organizational challenges. LAFC is a new team that needs to place its mark on the culture and community of a saturated Los Angeles sports market. In conducting our research and exploring the best option for LAFC, we have developed a marketing strategy and plan that implements the first program of its kind in the MLS, the LAFC Ambassador Program.

The LAFC Ambassador Program will target influencers within the Los Angeles area, working with these influencers on a macro scale to build long-term relationships that sustain loyalty and keep the authentic.

An evaluation of the strengths, weaknesses, opportunities, and threats (SWOT Analysis) of LAFC, confirmed strengths and opportunities in the areas of ownership, finance, and community support. Conducting further research within the SWOT Analysis, proved that being a new organization, LAFC lacks history and faces threats from competing organization and entertainment venues.

Utilizing findings from the internal and external analysis, we were able to identify industry trends to support our position for implementing the LAFC Ambassador Program. With offers tailored to LAFC’s customers through the newly implemented LAFC Ambassador Program, LAFC will be using various marketing materials to increase brand awareness and media value by promoting their brand, on-field product, and merchandise to their target customers and through incentivizing their ambassadors to promote on the team's behalf. With an online marketing strategy in place, LAFC will use digital content creation, paid advertising, and social media marketing to place their mission and their product where it effectively reaches consumers. Strategic Business Proposal Page 4 of 34

This business proposal focuses on the organization’s growth strategy and business objectives surrounding brand awareness and additional streams of revenue. This proposal also suggests a way in which LAFC can build on existing customer relationships, and on the development of new strategies, products, and services targeted to specific customers, community organizations and potential partnerships with national and international corporations.

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1: Challenges & Solutions

Organizational Challenges

As a newly-developing organization, the Los Angeles Football Club (LAFC) has stepped into the second largest sports market in the United States. Although LAFC is having great success as a newcomer within this market, the challenge to maintain this success, with loyal fans and supporters, may come earlier than expected.

One of the main trends within the sports industry is engagement through the fan journey. Fans are looking to be engaged in different ways, and teams are always looking for ways to not only engage their fans but to also reward them for their loyalty. According to Deloitte's Sports Industry, organizations can drive higher engagement by enabling the participation of their fans and even leveraging their most loyal fans' following (Deloitte, 2018).

Additionally, social activism within sports and the rise of video and video on demand content has shaped the landscape of from the perspective of the organization and the consumer. Although impacting the bottom line of many sports leagues, activism is a positive light versus a negative one. Showing interest in a definite cause can lead to a positive return on investment and influence (ROI) for and leagues. Also, with the short attention span of the millennial generation, video content is becoming the go-to source of digital and creative marketing content for many sports organizations (Deloitte, 2018).

In the words of , LAFC co-owner, “You fail if they are passengers, they have to be participants.” To sustain fan loyalty and engagement across supporters and customers, LAFC must meet the challenge to maintain their current success with forward-thinking initiatives, programs, or campaigns that actively engage their fans through emotional connections before monetization.

Proposed Solution

To maintain their level of success within this saturated sports market, LAFC must separate itself from its competitors. The best way to implement separation is to do something no one else in the market is doing. Our solution is to enter a new market with a mixed target audience of our current customers and new customers. We propose that LAFC implements an ambassador program (the LAFC Ambassador Program) that not only builds fan loyalty but also sustains that loyalty over time.

In a statement from Colin Kelly, Director of Digital at LAFC, “We are trying to be more inclusive and more about community and the spirit of what we are doing…” The LAFC Ambassador Program gives loyal fans the opportunity to be more than fans; it transitions fans, customers, and supporters into a Strategic Business Proposal Page 6 of 34 community and makes LAFC more than just another sports organization in Los Angeles; it builds a relationship with the community and makes LAFC and its ambassadors a family.

The LAFC Ambassador Program will target social media influencers within the Los Angeles area. Through the ambassador program, LAFC will work with influencers on a macro scale to build long-term relationships that sustain loyalty and keep the brand authentic. The of the ambassador program is to move beyond the numbers and transactions into creating meaningful relationships with the community. According to Jeff Pearson, SVP of Marketing and E-commerce for Lids, “The individuality that influencers have is tremendously powerful, and they are obviously very relatable to consumers, which is why they are valuable."

For LAFC to begin the ambassador program, the organization will have to assemble a first class of ambassadors who model the mission and vision of the organization through creative and appealing content and diversity. When an individual becomes a part of the first class of ambassadors, LAFC will send them a welcome kit that includes a letter from the owners, a brief that details what it means to be a LAFC Ambassador, and three merchandise items (a hat, scarf, and shirt). The welcome kit enables the first class of ambassadors to create content and push engagement on their platforms.

2: Environmental Scanning

Internal Analysis

Company Overview The Los Angeles Football Club (LAFC) is the newest MLS soccer club serving the area. With an ownership group comprised of local leaders and innovators of the industry with intellectual capital and financial prowess, the goal of LAFC is to develop a world-class, forward-thinking sports organization. LAFC is committed to using the latest in technology and innovative and creative marketing to bring the fastest growing professional in America to one of the largest and most diverse markets in the world (LAFC, 2018).

LAFC not only markets and merchandise, but they also market players, the overall brand of the organization, and most importantly the unique experience that you can only receive at a LAFC match.

LAFC operates under a premium and penetrating pricing position in the market that is a reflection of the club’s ticket prices. The average ticket price for an MLS match is $46.22. According to Forbes, the average price of LAFC’s direct competitors’ tickets is an average of $388 (Rosano, 2016). LAFC has priced their tickets to compete with the direct market and also compete across the league without price skimming ($20 supporter tickets and memberships plans starting at $105 respectively).

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LAFC's product offering starts with the fans and extends through digital media, licensing rights, and community and local organizations.

Financial Standings

While LAFC does not have public financial statements, research lends many findings on the start of an MLS soccer team. The following economic analysis is completed using data and public reports from the club’s high-profile ownership group. Looking at the real data, we can see that LAFC’s $350 million stadium is being built using private funds from the owners and their partners. , an investment banking company that has been cashing in on MLS teams such as Orlando city donated $180+ million last year to LAFC’s stadium and club (Kaplan, 2018).

Keeping this investment in mind, along with the sold-out memberships, LAFC expects more investments from partners in the future. Staying on this topic, and city, MLS shared its annual top 5 most valuable teams report with LA Galaxy in the lead with $315 million (LA, 2017). With the market in Los Angeles, it is not impossible to think of the possibility of a multi-million-dollar rivalry in its early stages.

In a 2014 article from SB Nation, the ownership group of LAFC equaled an estimated net worth around $4.5 billion. With the addition of new owners, we expect that the net worth of LAFC and its owner has reached well-over $5.5-$6 billion (Rodriguez, 2014).

Organizational Strengths The strengths within the LAFC stem directly from its owners and the fan-base. Shared ownership is between 30+ individuals ranging from actors like to sports legends like . These big-name executives vary in their backgrounds, giving the LAFC an advantage over similar teams with a sports-oriented ownership group (Los, 2018).

While it is a relatively new team, LAFC was able to sell out of 17,500 full season memberships for its new $350 million Banc of California Stadium (Associated, 2018). The dedication to this MLS team even in pre-stadium stages is something to be noted, as soccer is on the rise to be in the top three favorite sports for Americans.

Organizational Weaknesses In any organization, weaknesses are inevitable, and the LAFC is not immune to this. About the proposed Ambassador Program, the mix of their lack of budget, low social media presence, and building a team for a new project can be a substantial toll on this organization. The LAFC has not proposed an actual budget for a program of this type, giving a team set on building this from the ground up some difficulty.

In an article presented by American Express, they share reasons why paying for ambassadors can be a -move, something LAFC is not able to accomplish just yet (Why, 2015). Social media is vital for any company, organization, or influencer that is trying to reach a massive fan-base. Mac Collier, who was recognized by Forbes for social media strategy, also expressed the importance of brand Strategic Business Proposal Page 8 of 34 ambassador programs and since they are on-going programs, they do tend to be more expensive to start and maintain (Collier, 2017).

Another major weakness is the focus on the stability of the team and signing players such as the recent situation with Andre Horta with the postponing of his arrival until summer (Edwards, 2018). This ambassador program will need a strict focus on growth, vetting, and maintenance that LAFC will have to find the funds, support, and team for. Customers LAFC Ambassador Program will target an audience of social media influencers both males and females within the Los Angeles metropolitan area who are between the ages of 17 and 45; are tech savvy, and heavy user of social media platforms. This target segments will have a combined network of at least 7,000 to 10,000 individuals. The influencer market was estimated to be worth $2 billion in 2017 and is set to reach $10 billion by 2020 and will continue to see more growth in the industry while becoming an efficient marketplace (Contestabile, 2018). Due to research on demographics surrounding social media use in 2018 (Smith & Anderson, 2018), this audience is the perfect fit for the LAFC Ambassador Program.

While focusing on the core audience of potential ambassadors, the LAFC Ambassador Program will also target the current audience of the organization which will lend a hand in the selection process of its ambassadors. This existing customer of LAFC includes males and female between the ages of 18 and 35 who are family-oriented and enjoy entertainment and activities centered around community awareness and family involvement.

When making purchase decisions, both target segments focus on brand loyalty while also being open to trying new and exciting products. Engagement from both target segments revolves around the customer’s desire to make purchases that reflect family, lifestyle, personal finances, media and technology preferences, and their love for soccer. This level of engagement is indicative of the market profile that suggests purchases of food, transportation, apparel, personal care products and entertainment are among the highest of value for these segments (Esri, 2018).

The social media influencer segment uses distribution channels that include: direct/, consultant, wholesale/distributor, retail, and sales agent. LAFC's existing target segment uses distribution methods that include: direct/internet, retail, direct/catalog and direct/sales team (Marketing MO, 2016).

The most suitable forms of advertisement for both target segments would be digital, social media, mobile, word of mouth, print, guerrilla, broadcast, public service (PSA), and product placement (Suggett, 2011). Collaborators awarded Los Angeles a second soccer team on October 30, 2014. The Los Angeles Football Club is an MLS team and plays against other MLS teams including LA Galaxy, New England Strategic Business Proposal Page 9 of 34

Revolution, and Orlando City SC to name a few. The MLS regulates all of the teams in this division, and the MLS is governed by the United States Soccer Federation (USSF). Some of the most significant collaborators and contributors to the LAFC are Adidas, YouTube TV, Banc of California, Heineken, , and Delta Air Lines/Aeromexico.

Adidas is the official supplier for MLS, its clubs, MLS youth academies and affiliated youth clubs. Adidas signed a six-year contract to make sure each team and their affiliates will wear Adidas uniforms, footwear, training gear, and sideline apparel. The official match ball will also be Adidas. Adidas has been the official supplier since the league debut in 1996 (Spain, 2017).

YouTube TV is the jersey sponsor of LAFC and struck a local broadcast deal with the team. Chad Hurley, co-owner of LAFC, is one of the co-founders and former CEO of YouTube (Ownership, 2018). The multi- year deal marks the first time North American pro sports will have all locally televised matches on a live TV streaming provider. YouTube TV will be the exclusive home for all locally televised English-language LAFC matches and will also carry all LAFC’s nationally-televised matches aired on ESPN, FOX, and FS1. All locally broadcast LAFC games will be shown on a designated YouTube TV channel. The deal also includes an original 30-minute pre- and post- shows from the YouTube TV set at Banc of California Stadium (Stejskal, 2018).

Banc of California has the naming rights to the Banc of California Stadium where the LAFC play. Not only will the bank have a branch on site, but it will serve as the bank for the team and its affiliated nonprofit foundation. They have also already given a $180-million syndicated loan with other banks funding stadium construction, and it plans to lend to the project's minority subcontractors (Koren, 2016).

Heineken is a league-level sponsor of MLS, as well as an individual team sponsor with eight other MLS clubs, including the likes of New York City FC, Orlando City SC, and D.C. United. Los Angeles was the league's last primary market without local representation from Heineken. They found that the LAFC gave Heineken a way to connect better with the local market as well as seen as more involved with the LA community (Smith, 2017).

Toyota joined LAFC’s Golden Boot Club Founding Partners. The Golden Boot Club provides exclusive access, visibility and experiences for LAFC’s elite level of partnership. Toyota acts as the “Official Import Automobile of LAFC,” providing fans with an immersive brand experience within the Northwest Entrance at Banc of California Stadium. (LAFC, 2018).

Delta will serve not only as the team’s official airline but also as a founding-level original supporter and member of the Golden-Boot Club. The partnership also includes sponsorship of pre-game player walkouts; both interior and exterior rotational digital LED signage at the new stadium and airline transportation for LAFC both to and from away matches. They also flew 100 fans to LAFC’s first match as part of the LAFC fans take flight event (Savadelis, 2017). Strategic Business Proposal Page 10 of 34

Banc of California, Heineken, Delta Airlines/Aeromexico also are sponsors of the LAFC Youth Leadership Academy which works with Bresee Youth . This program empowers and trains at-risk high school students to organize and year-round youth soccer programs in the community, providing them with a , life skills, and developing their leadership skills as mentors and role models (LAFC, 2018).

External Analysis

Competitors Los Angeles, while typically thought of as a city to live out your wildest dreams, can be the most competitive atmosphere for new ideas, companies, and soccer teams. The LAFC directly competes with the LA Galaxy, the City of Angel’s other MLS team. As stated previously, the Galaxy was the most valuable team at $315 million, meaning LAFC is stepping into a huge market (LA, 2017). Indirectly, the includes other major sports teams in Los Angeles. These include the NBA and WNBA, NFL, NHL, MLB and MiLB, and NCAA sports (Los Angeles, 2018). By having other sports as options, that means the LAFC will have to work harder on their branding and marketing to show that they rise above all else for soccer fans, sports fanatics, and casual attendees.

The Los Angeles sports market is deeply rooted in the history of its teams and organizations. With the Galaxy being five-time champions and the historic Lakers having won 16 NBA titles, the competition surrounding LAFC is substantial. However, as (LAFC’s Executive VP of Soccer Operations) stated, "When you look at teams, successful teams in our league, there's a lot of continuity there. And that's what we, by definition, cannot have… Our goal here is not to be good Year One, for sure, we want to competitive Year One. But our goal is to be sustainably successful, which is much harder in MLS." (Baxter, 2017).

*See a detailed list of competitor’s strengths and weaknesses in Appendix 1.

Business Climate Political & Regulatory

For our current industry (the sports industry), LAFC is regulated by Major League Soccer where the overall governing body is the United States Soccer Federation. The new industry that we are tapping into (influencer marketing), is regulated by the Federal Commission, the Children’s Online Privacy Protection Act, and the Payment Card Industry. The FTC is investigating for the misuse of data along with the issues that the industry is facing with the threat of Net Neutrality (Steimle, 2016). These issues might impact the way we sell our products and how we use the information of our customers and target audience.

Economic Strategic Business Proposal Page 11 of 34

The economic status of the sports industry is growing. According to Forbes contributor, Darren Heitner, in 2014 the North American sports market was worth $60.5 billion. By 2019, the North American sports market is projected to be worth $73.5 billion. Within our new industry (influencer marketing) the economic status is also growing. In 2017, influencer marketing was estimated to reach $2 billion. By 2020, influencer marketing is set to reach $10 billion. The economics of LAFC’s customer-base is growing at a slow rate. As the cost of living rises the wages stay the same. Since 2010 the L.A. population has grown by just over 3%. In 2016 the area saw growth by 0.69% which has been a slight bit slower than previous years. The only changes expected in these statuses are the estimated economic growth and population.

Social & Cultural

Social-related and cultural trends in our industry depend heavily on live events, whether they be in person or live streamed. By buying tickets, buying programming, and buying merchandise, fans are constantly engaged with the sport (Director, 2018). In our new industry, trends include influencer marketing through Instagram, Facebook, and are prevalent today for many businesses. Typically, advertisements are posted on these social media sites from big name YouTubers and Instagram users (those with 1 million+ subscribers). In exchange for PR packages and experiences, they share with their audience about the company’s product (Talbot, 2017). We have a very social audience that typically enjoys watching and participating in groups. They attend events with friends or family and have discussions with others on social media and other platforms. Social trends that are observed in general are parades and celebrations for sports, lifestyles, and other events.

Technological

The advancements in technology and the use of technology in sports has vastly increased of the last five to ten years. Common technological trends in the sports industry fall along the lines of electronic ticketing, integration of fantasy leagues into live games, streaming live sports, virtual reality, and augmented reality (Cohen, 2017). The uses of social media and content streaming have a significant impact on the audience of the sports industry (Agrawal, 2015). These days, consumers like everything to be on demand when it is convenient for them to watch rather than to tune in live on television. Sometimes they will only watch the highlights because it suits their busy lifestyles and short attention.

Industry Trends The International Federation of (FIFA) oversees 209 national associations worldwide. It had revenues of $1.15 billion in 2015, in which almost half of that came from television broadcasting rights. The 2014 FIFA World Cup broadcasting rights topped $600 million and had a viewership of 3.4 million spectators during the live games. This viewership rating was the highest total spectatorship since the 1994 World Cup held in the United States. Estimations project that FIFA has invested $1.9 billion into the 2018 World Cup (Fuller, 2018). Strategic Business Proposal Page 12 of 34

Major League Soccer (MLS) has a total of 20 teams between the US and Canada, the US with 17 teams and Canada with 3. Both the attendance and viewership of MLS games have increased dramatically since 2008. In spring of 2015, the of people who attended an MLS game within the last 12 months reached 3.09 million. The team with the highest attendance average is the Sounders with an attendance of 44,000 spectators (Fuller, 2018).

The increase in soccer can be seen throughout the nation as the rate of amateur players is also on the rise. The number of students in high school who play has increased from about 782,000 in the 2012/13 season to nearly 810,000 in the 2014/15 season. Also, the total number of outdoor soccer players in the US has reached 11.93 million players (Fuller, 2018).

The sports industry is a large and growing market, and brands and organizations need to differentiate themselves from the competition (Kinsky, 2017). The most effective way of becoming a unique brand in the sports industry in to develop a grand social media strategy that presents the target audience with a brand identity and a sense of community (Kinsky, 2017).

Consumers want content from legitimate source or source that they deem as trustworthy. The rise of social media influencers and thought leaders in the sports industry gives way to a new marketing focus (influencer marketing) (Kinsky, 2017).

Business Opportunities

Significant opportunities lie ahead for soccer teams in America. A Forbes article shares the findings of a survey that notes 7% of Americans naming soccer as their favorite sport, a significant jump from past years (Smith, 2017). This jump in engagement, in addition to the popularity of influencers in social media, has created an almost alternative lifestyle for young fans. Influencers have created a market for themselves and are quickly becoming “the next ‘it’ endorser” (Schwab, 2016). Due to the relatability, content, and analyzed audience metrics, these influencers can pull in millions of viewers, and when they begin to sponsor products, their fans flock to those over the competition.

Business Threats

Threats to LAFC are in their backyard. The LA Galaxy noted as MLS’s most valuable team in the last annual report is a soccer team whose home is also in Los Angeles (LA, 2017). This rivalry can cause a tear in the opportunity found in this soccer club. In addition to threats in the MLS community, are becoming more and more prevalent in similar audiences. Back in 2016, Newzoo predicted the audience was set to grow from 148 million to 215 million in 2019 with the revenue following a similar trend from $493 million to $1.1 billion (Lacy, 2016). In their most recent report, however, eSports viewers are now over 360 million, showing the incredible growth of this market (Pannekeet). While indirect, it is important to note the tremendous following this has in the “sports” community and the impact that could have on the LAFC. Strategic Business Proposal Page 13 of 34

3: Strategy Formulation

Operations Implementing a new department in any company will affect each division in a number of ways. With the addition of an Ambassador program, LAFC will have to have an overhead training of the influencers and their job within the company. While they are affiliates, it’s important that each department recognize the strategy and benefit this program leads to. The two departments that will have the most responsibility added will be Human Resources and Research and Development. These will have their own responsibility to understand and answer questions that will arise in the company. LAFC’s plan is to outsource many of the operations that this program will require, taking the majority of responsibility off of the company’s shoulders. While this is a plus, it is still imperative that each department has a mutual understanding of all changes of the company structure. Communication between the ambassadors and internal strategists would happen in-house and a new team would need to be formed within the R&D department. They in turn will work alongside our outsourced team and the ambassadors to ensure all marketing, promotions, and any discrepancies are handled accordingly.

Sales, Marketing, & Distribution

Marketing Mix Price

The LAFC has decided to explore three avenues for their products; meaning price varies for each. For our cost, the Ambassador program will be given to 15 big-name influencers for no charge to them, the affiliate discount links will be 10% off of products purchased by fans of the ambassadors, and finally, the first-year Ambassador Celebration will have a $275 price tag for 75 lucky fans. On our , it is important to note that 76% of publishers have indicated that using affiliate links make their sites more profitable and up their daily visits, which allow for more advertising and profit (Brown, 2017).

Product

Our Ambassador program is a partnership between the LAFC and 15 top influencers. They will receive their affiliate kit which will include gear and a certificate of partnership signed by the team and partners. The affiliate kit will consist of LAFC merchandise from Fanatics that they will be able to wear in photos and videos to market the team. In addition to this, they will receive an affiliate link which is the second stream of revenue for LAFC. This will be a 10% discount on official merchandise that fans will be able to use, giving us access to a demographic that may not organically shop LAFC’s collection. Our Ambassadors will receive their kits at the first Affiliate Event that will be held at the Banc of California stadium. These will be during off days and will be the most profitable of each product area. Strategic Business Proposal Page 14 of 34

Distribution

Our product is unique in that our distribution is not its entity. Separately, the Ambassador Kits will be distributed at their celebration event, which is its product in of itself. The affiliate code purchases will be sent out with all other merchandise by the team’s partner Fanatic.

Promotion

With the Ambassador program being our product, and the idea being unique and new to the sports market, LAFC has decided to create untraditional categories for advertising. The first is YouTube for multiple reasons: one LAFC owner’s involvement, the platform for the ambassadors, and the ability for fan engagement. Through YouTube, our ambassadors will be able to create videos sponsored by LAFC that will route fans to buy merchandise, attend games, and interact with the team.

Another strategy for promotion is integrating other social media platforms and asking for the best “fan-made” videos posted to YouTube that will be featured on LAFC accounts. This will give more personal testimonies and a connection to new viewers. Another category will be a twist on traditional advertising that ties into social media. One strategy for this is leaving the LAFC emblem in key spots in LA. Geocaching is a popular activity in many cities, so having sports-themed, city-wide games would increase the conversation and popularity of the team (Makenzie, 2018).

Along with the above-mentioned strategy, LAFC can reach out to willing restaurants and local businesses to support a theme where in return for advertising, they will get business from fans that differ from their usual demographic. Our final category will be promoting the team and ambassadors during games. The traditional hashtags and social media handle sharing will be on screens throughout the games to encourage social media interaction. Also, fans attending will have the chance to scan QR codes placed around the stadium that will unlock promo codes and other opportunities to win contests or gear. Each of these strategies encourages social media engagement that will lead to LAFC gaining more interaction from those outside the traditional demographic.

Sales Strategy Our strategy for reaching and selling to our “customers” is unique to the ambassador realm. The program is marketed and sent out to an exclusive group for their approval. Desirable affiliates receive an invitation to be inducted at our Ambassador Celebration at the Banc of California stadium. They will receive their Ambassador Kit containing LAFC branded Fanatics gear, as well as the affiliation with the team.

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Legal & Ethical

Legal Factors

Regulations

The Age of Social Media and Social Media Influencers has caused a change in the way consumers are engaging with advertising. Under the Endorsements Guides of the FTC Act, Ambassadors must now visibly and clearly state that the post is a sponsored advertisement with either a hashtag or a disclosure stating the piece of content is a sponsored advertisement. Just stating a disclosure on a profile page is not sufficient enough because most of the audience will not see it so it does not adequately inform consumers. Until the relationship between the Ambassadors and LAFC is known by a significant number of the Ambassadors followers, all sponsored content must be disclosed (FTC, 2017).

In addition, each social media platform has different requirements for placements of sponsored advertising disclosure. Because of Twitter’s low character limit, tweets do not need to be expanded to see more, so a simple hashtag (i.e. #ad, #sponsored, etc.) suffices. Instagram the hashtag must be visible and not hidden beneath the “…more” so the consumer knows at a quick glance whether or not the content is sponsored. YouTube requires creators to show a disclosure at the top of the description below the video, state out loud in the video, and show on screen that it is a paid for sponsored advertisement (FTC, 2017).

It is also crucial to protect children from exploitation online. Under the Children’s Online Privacy Protection Act (COPPA), websites are not allowed to collect information or target marketing towards children under the age of 13. Sites must require parental consent to collect or use any personal information of a person who is 13 years or younger. COPPA also specifies what must be included in the privacy policy as well (Children’s Online Privacy Protection Rule, 2018).

Contracts

In order to protect LAFC, affiliates, and its Ambassadors, there are some contracts that need to be put in place. LAFC and Fanatics would both need to sign a memorandum of understanding which described both the roles and responsibilities of LAFC and Fanatics in order to make the Ambassador Recruitment packages. In addition, LAFC would need to allow Fanatics access to their trademarked materials in order to create clothing items through a licensing agreement. This would allow Fanatics to place the LAFC emblem on hats to send to Ambassadors.

Ambassadors would be asked to sign a non-disclosure agreement (NDA) to protect the information that LAFC shares with them. LAFC would provide the Ambassadors with information in order for them to promote events, news, and the team. Ambassadors would also need to follow the rules and terms of use in order to remain an ambassador. They would need to understand compliance of working for LAFC including but not limited to only speaking and promoting LAFC in a positive light, refraining from Strategic Business Proposal Page 16 of 34 making promises on behalf of LAFC, and refraining from doing anything that would hurt the reputation of LAFC. Not complying with the terms of use would lead to termination of the Ambassador in question (Types of Contracts, 2018).

Insurance

LAFC would need professional liability insurance, business interruption insurance, and workers’ compensation insurance in order to protect itself and its Ambassadors. The professional liability insurance would cover LAFC from negligence claims. Business interruption insurance would compensate LAFC if there were to be some type of disaster or catastrophic event and the Ambassadors would be unable to work and promote the team. Worker’s compensation would protect our Ambassadors if anything were to happen to them while they are working or promoting the team. This covers any medical treatment, disability, and death benefits (Boitnott, 2014).

Intellectual Property

LAFC has the trademark on the LAFC name and team emblem. They also have the rights of publicity of its team members and Ambassadors. Fanatics would also get access to producing products for our Ambassadors using the trademarked Emblem.

Ethical Considerations LAFC Ambassadors will be a diverse group of social media influencers who will promote the team and team related events such as the LAFC Youth Leadership Academy. They would act as the bridge between the team and the community. The focus is on the diversity of the group. Los Angeles is known for its acceptance of culture and people from all walks of life, and the Ambassadors should represent that. In addition, due to COPPA, LAFC must also make sure all of the social media influencers brought on as Ambassadors are over the age of 13. This would prevent any privacy lawsuits and exploitation of children.

4: Proposal Budget & Projections

Sales Projections According to Convince and Convert, many businesses are making a significant return from influencer marketing, generating $6.50 in revenue for each $1 spent (Foster, 2018). With the LAFC Ambassador Program, we plan to exceed that ratio. The LAFC Ambassador program will be the first of its kind in the MLS and will not only bring influencers into the organization, but it will also open many doors for partnerships, merchandise sales, and event revenue.

Extending our partnership with Fanatics, we chose to bring them on as the official provider of the LAFC Strategic Business Proposal Page 17 of 34

Ambassador program. The extended collaboration holds a value of $12M over three years.

Merchandise sales are an excellent source of revenue for any sports team. With affiliate links provided to our ambassadors, we project sales of at least 5,000 units at $34 each, equaling $153,000 in year one.

Hosting special events surrounding the LAFC Ambassador Program is also an area LAFC can capitalize on. By selling a limited amount of tickets to these events, during year one, we project total net sales of $18,125. This number represents the total amount of tickets sold (75 tickets representing five sold for each ambassador) multiplied by fair market price for special/influencer events in Los Angeles, CA.

At the end of year one, we project total net sales to be $4,171,125. Refer to Appendix 2.

Project Budget The total budget for the LAFC Ambassador Program is $8M dollars for three years. Instead of building the LAFC Ambassador program entirely from the ground up, using internal resources, we decided to outsource the development and maintenance of the program to Zimmerman Advertising (Weaver, 2018). Partnering with Zimmerman Advertising significantly cuts our cost and allows us to better manage our internal resources regarding the ambassador program.

The budget includes marketing, employees, payroll taxes, and professional services. Marketing will consist of digital content creation; online advertising such as Instagram, Snapchat, YouTube, Twitter and Facebook ads; public relations tactics such as press releases, mobile ad placement, and digital flyers; and distribution will consist of shipping and handling, pick-up availability and the logistics for the ambassador kit event.

Zimmerman advertising will handle the development of the ambassador program from the website and landing pages to the maintenance and future development of add-on features. Refer to Appendix 3 and 4 for a more in-depth look at our budget and income statement.

5: Strategy Implementation

Timeline & Key Milestones Below is a three-year timeline for the implementation of the LAFC Ambassador Program. During year one, our goal is to develop the program and increase awareness of LAFC through hour ambassadors and the use of digital content creation. During the second year we plan to host more events and provide our ambassadors with opportunities to create content surrounding the ambassador program, LAFC and our partners at Fanatics. Year three will be a mixture of year one and two, while placing emphasis on the collaboration of our partners and ambassadors.

Strategic Business Proposal Page 18 of 34

Pre-Launch and Year One Date/Timeframe Event/Milestone April 27, 2018 Proposal to LAFC Executives May 25, 2018 Sponsorship Proposal to Fanatics July 2018 LAFC/Zimmerman Advertising Announce Partnership September 17, 2018 LAFC/Zimmerman Advertising Announce Ambassador Program October 2018 Ambassador Welcome Event December 2018 YouTube Commercial with Ambassadors February 2019 LAFC Ambassador Program Objective Meeting March 2019 Ambassadors Touring Fanatics HQ

Year Two Date/Timeframe Event/Milestone April 2019 Social Media Commercial May 2019 Ambassador host special event September 2019 Program celebration event/scrimmage game October 2019 Objective and Revenue Meeting December 2019 Ambassador Meet and Greet

Year Three Date/Timeframe Event/Milestone May 2020 Community Outreach Events July 2020 Partnership Activation Meeting September 2020 Program celebration event October 2020 Re-design and development by Zimmerman Advertising

6: Future Plans

Long-term Opportunity & Development Plans After the first few years of our plan, we are still expecting the Ambassadors program to be thriving. After three to five years we plan to have a much broader audience not only in our stadium but also a much more substantial following worldwide. After targeting influencers and ambassadors in the Los Angeles area for the first three years, and gaining a broader audience and building our brand awareness in L.A., we are hoping to extend our program from 15 to 30 ambassadors. We also plan to target influencers who have a much more massive following on social platforms, such as Twitter and Instagram, which allows for more brand awareness worldwide. With our second addition of ambassadors, we also want to branch out to other areas and not limit our ambassadors to be located Strategic Business Proposal Page 19 of 34 in the Los Angeles area. We are hoping to maintain a significant presence not only in Los Angeles but also other states in the U.S.

Beyond the first three years of the LAFC Ambassador Program, we plan to incorporate more social campaigns, bring on other sponsors and host more community events and events surrounding the ambassador program. With the current sales projections, we feel that the LAFC Ambassador Program can generate enough revenue to divide among itself and other community initiatives within the organization. Strategic Business Proposal Page 20 of 34

7: Appendices and References

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Appendices

Appendix 1: Competitive Analysis

Competitor Strength Weakness

Los Angeles Galaxy (Direct/MLS) Major strengths when it Major weaknesses of the Los comes to their history and Angeles Galaxy come within the amount of success they their market position have had since being in the regarding barriers of new MLS. The Galaxy have entrants. Although being one proven their worth within of the top MLS teams in Strategic Business Proposal Page 26 of 34

the Los Angeles market by terms of value, the Galaxy acquiring some of the most have allowed other entrants talented players in the MLS to the market which poses a and developing a strong fan- threat to their overall value base within the market. and market share over the next few years.

Los Angeles Lakers (NBA) Historic staple within the Los The Los Angeles Lakers face Angeles market. Not only are weaknesses in their roster. they known for the The Lakers rely heavily on championship history, they very few players. The are also known for drawing power that the Lakers had some of the biggest names during the Magic and Kobe in entertainment and sports era has since dwindled down to the for into prospective talent. The every game. Major strengths Los Angeles market flocks to in the Lakers’ franchise is winning teams and with the their connection to global Lakers seeing the losing end superstars (, of sports over the last few Magic Johnson, , years, their fans may be , Kareem Abdul- inclined to seek other sports Jabbar). The Lakers also have in the area for a great deal of market share entertainment. and a loyal fan-base to capitalize on within the market. Los Angeles Clippers (NBA) Have grown over the years, A major weakness for the picking up where the Lakers Los Angeles Clippers are have fallen short. The their season ticket prices. Clippers have strengths in Trading two of their biggest major star power with stars ( and Blake Deondre Jordan. The Griffin), while also adding Clippers also have strength “Star Courtside” seats in their loyal fan-base, probably was not the best despite being in direct move by the organization. competition with the Los Reported costs for 43 home Angeles Lakers. games is $175,000.

Los Angeles Sparks (WNBA) One of the top teams in the The Los Angeles Sparks WNBA. Having gone to the biggest weakness is WNBA Finals in 2016 and profitability. Although the 2017 and being three-time Sparks have an impressive Strategic Business Proposal Page 27 of 34

WNBA champions, the roster and an impressive Sparks have a lot of history leadership group under behind them. Having some Magic Johnson, the Sparks of the top talent in the have had trouble making WNBA helps, while also substantial profit over the having a front office that is last five years. filled with star power. In the WNBA, the Sparks are the team to play for and their fan-base is one of the largest in the WNBA.

Los Angeles Rams (NFL) Have history and star power The Los Angeles Rams have as their major strengths. The one major weakness and it Rams are not new to the Los comes with the move to L.A. Angeles metropolitan area. The Rams have had trouble The Rams were a major team selling season tickets to their in L.A. in 1946 until moving games and their inaugural in 1994. Therefore, the Rams losing season in L.A. did not are trying to capitalize on help their cause. In addition, their former history as a the Rams have weaknesses strength for their latest in the areas of fan move back to L.A. In experience and accounting addition, having just signed for the fact that their two of the top corners in the temporary stadium at the NFL, and Marcus Los Angeles Memorial Peters, boosting their Coliseum is a 94-year-old entertainment value with facility, it puts a damper on the city of L.A. The Rams will their attendance numbers use the talents, star power until they move into their and notoriety of these new home in 2019. players along with a winning 2017 season (11-5, and top team in the NFC West) as leverage in the upcoming season.

Los Angeles Chargers (NFL) Their strengths come in the While also having history in form of their roster. The Los Angeles (played Chargers have a decent inaugural season in L.A. in roster with a list of notable 1960), the Chargers have players. Another issues facing the output of strength of the newly-based their earnings. With their L.A. Chargers is their arena move to L.A. from , Strategic Business Proposal Page 28 of 34

partnership with the L.A. the Chargers owed the city Rams. In 2019 the Chargers of San Diego $12 million to will be joining the Rams in a buyout their lease. The $2.6 billion-dollar stadium in Charger will also have to pay Inglewood, CA. The chargers $650 million in relocations will be the renters of this fees over 10 years starting in stadium and will not incur 2019. any construction costs.

Los Angeles Kings (NHL) A young team with a lot of The Los Angeles Kings depth. The Kings also make weaknesses are few. Their up a large portion of the L.A. only major weakness comes market in terms of value and in their ability to keep brand. The Kings have a loyal winning games. In 2016 the fan-base and also have a Kings winning percentage winning history, which dropped to 0.524 after makes it easier for L.A. having a great 2016 season sports consumers to rally at a 0.622 winning behind them. percentage. If they fail to win games, they could see a drop in ticket sales.

Los Angeles Dodgers (MLB) Have many strengths in the The Los Angeles Dodgers L.A. market. Being one of the weaknesses are also located biggest franchise in the within its finances. The metropolitan area, the L.A. Dodgers have a high payroll Dodgers are a fan favorite of and significant debt among America’s greatest pastime. one of the highest in team in Having 49.3% of their value the MLB in terms of debt coming from market share allocation. 15% of their alone, the Dodgers have set overall value is attributed themselves up to be an L.A. toward debt. favorite for years to come. Although the MLB is seeing some of its roughest times in terms of television ratings and overcoming hurdles in attracting new fans, the Dodgers are one team that has a strong front office and Strategic Business Proposal Page 29 of 34

a strong on-field presence to leans on.

Los Angeles Minor League has The weaknesses of Minor Baseball (MiLB) strength in its small League Baseball in the Los numbers. Unlike the MLB, Angeles area are in the lack MiLB teams operate out of of community support. smaller stadiums and charge While ticket prices are under $10 a ticket for each attracting, MiLB in the L.A. game. MiLB teams are metropolitan area sees very growing in popularity and little market share in terms many team pull in major of community relations. revenue from naming rights Minor League Baseball in and ticket sales. L.A. fails to establish an emotional connection with its fans and the community surrounding baseball.

NCAA Sports (UCLA and USC) The college sports market in The college sports market in Los Angeles is by far one of Los Angeles has the usual the top in the nation. Having weak points of many college two powerhouse Division 1 programs, the lack of star schools like UCLA and USC power. With the Ball Family account for a large portion uprooting their youngest of market share in the L.A. stars from L.A. to the area. overseas market, the power of entertainment surrounding college sports in L.A. has dwindled. Yet, the market surrounding college sports is trying to regain its footing as one of the top markets for and basketball.

Los Angeles Marathon The Los Angeles Marathon The Los Angeles Marathon has taken place for 30 years does not have many weak and draws over 21,000 points. However, there are Strategic Business Proposal Page 30 of 34

participants from all around some areas for improvement world. The Los Angeles when it comes to brand Marathon is the go-to event identity. The Los Angeles during the spring in L.A. The Marathon falls short when it marathon is also host to comes to creating their own many innovative race identity within their home management solutions and market. Branding and sparks trends that are taken positioning are major areas on by other prominent foot where the Los Angeles races across the country. Marathon show weakness within the market.

Hollywood/Entertainment and Los Angeles is home to the Hollywood and other events one and only Hollywood. entertainment venues and Majority of the L.A. events in the Los Angeles metropolitan market, is area, have weaknesses in comprised of activities in branding, ethics and barriers Hollywood ranging from red of entry. Many historical carpet events and premiere entertainment events that movie screenings to locally call Los Angeles their home hosted events by famous have started to move their actors and . The events to other areas of the strength of Hollywood and country (The 2018 Grammys the entertainment scene of were hosted in New York). Los Angeles speaks to the Among other issues facing overall strengths of the Los Hollywood, one of the Angeles market and what it biggest is the ethical issues has to offer outside of surrounding major sports. Hollywood actors, producers, and investors. Issues such and discrimination and sexual harassment, have place a black cloud over the industry and has turned away many supporters and consumers.

Strategic Business Proposal Page 31 of 34

Appendix 2: Sales Projections

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Appendix 3: Expense Assumptions

Strategic Business Proposal Page 33 of 34

Appendix 4: Income Statement Summary

Strategic Business Proposal Page 34 of 34