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29/01/2018 14:59 Page 48 Page PROMOTION AND PROMOTION IN MLS RELEGATION THE CASE FOR THE CASE FOR Page 40 Page HIS PREFERENCE FOR FOR HIS PREFERENCE GIANNI INFANTINO ON GIANNI INFANTINO JOINT HOSTING [ PAGE 18] A COMMERCIAL SUCCESS? A COMMERCIAL WILL PYEONGCHANG 2018 BE 2018 WILL PYEONGCHANG JANUARY/FEBRUARY 2018 NO.238 2018 JANUARY/FEBRUARY Page 28 Page EXPERTS MAKE THEIR EXPERTS PREDICTIONS DIGITAL 2018 FOR Korea opportunities Page 23 Page RULING DILUTES RULING DILUTES RULE 40 GERMAN CARTEL GERMAN CARTEL

SportBusiness International • Issue number 238 • January/February 2018 01_238_cover.indd A4 V

N o . 238 : JANUARY/FEBRUARY 2018 3 CONTRIBUTORS 40 FRANK DUNNE Chief sports writer Contents/1FEATURES Frank Dunne is a specialist in media rights having formerly edited sister publication TV Sports Markets. He also regularly covers the subject of sports sponsorship for stablemate Sports Sponsorship Insider. @frankdunneTVSM

10 KEVIN ROBERTS THE GREAT MURDOCH Founding editor, MYSTERY SportBusiness International Kevin Roberts is the founding editor of What the Disney-Fox deal means 10 SportBusiness International and has worked for sport for the publication since its inception in 1996. Before working for the magazine, he was the communications director for the 18 London-based CPMA agency. DOWNHILL STRUGGLE @krobsportbiz A commercial preview of the Winter 23 ROBIN JELLIS RULE YOURSELF Editor, TV Sports Markets Robin Jellis joined SportBusiness Group in IOC’s athlete marketing restrictions February 2013 as a reporter for TV Sports risk death by a thousand cuts Markets and Sports Sponsorship Insider. He began writing solely for TV Sports Markets in December 2013 and became editor of the 28 publication in June 2015. THE DIGITAL YEAR AHEAD @robinjellis Experts make their 2018 predictions for sport 32 18 MATTHEW GLENDINNING CASE STUDY Editor, Sports Sponsorship Insider Matthew Glendinning has been writing on the Newcastle Falcons follow analytical business of sport since 1996. He joined the approach to revive attendances SportBusiness Group full-time in 2007 and now edits sister title Sports Sponsorship Insider. @mattglen 40 HEADLINER Fifa president Gianni Infantino speaks exclusively to SportBusiness

RICHARD CLARKE 44 Digital correspondent UP-AND-DOWN 58 Richard Clarke is a digital and social media ROLAND-GARROS consultant. He has run the social media MLS promotion-relegation debate 23 accounts at major football clubs in the UK and makes a comeback New roof brings benefi ts USA having worked for EPL club Arsenal and MLS club the Colorado Rapids. @MrRichardClarke 48 62 GROWING UP MONEY CAN’T BUY Why and Nashville fi t The sports teams putting a MLS's expansion plans premium on hospitality

MARK DREYER China correspondent 52 66 Mark Dreyer is a specialist in the growing SAUDI ARABIA NBA 2K LEAGUE sports sector in China. He is based in Beijing Why the NBA and its teams are and founded and edits China Sports Insider. Prince extends reforms to sport Before working for this publication, he worked going all-in on as a football reporter for Sky Sports. @DreyerChina

01/02.18 : SportBusiness International

03-04_contents.indd 3 26/01/2018 16:58 4 N o. 238 : JANUARY/FEBRUARY 2018

Editor Ben Cronin [email protected]

Contents/2REGULARS 68 Commissioning Editor Adam Nelson

Chief Sports Writer Frank Dunne

Founding Editor Kevin Roberts

US Correspondent Bob Williams

25 Head of Product DIGITAL COMMENT Matthew Horsford Richard Clarke on the latest in digital Creative Director 8 and social media Andy Medley Production and Design 39 Squires Media PEOPLE Production and Distribution Manager Industry moves Craig Young Media sales [email protected] 57 Robin Hume VENUES & FACILITIES Information sales The latest news on sports stadia, [email protected] venues & facilities Max Frew Laurence Burton Scott Longhurst 65 Patrick Odling ESPORTS NEWS Director of Sales Tom McMullen Gamer and influencer Liam Thompson’s regular round-up Head of Group Business Development Paul Santos

Head of SportBusiness Group 68 Ben Speight CHINA NEWS www.sportbusiness.com/sportbusiness- Mark Dreyer’s update on the international 8 emerging sports sector in China MEDIA NEWS AND ANALYSIS Published by: SportBusiness, a of SBG Companies The best of TV Sports Markets 16 Ltd, 133 Whitechapel High St, London E1 7QA 69 T: +44 (0) 20 7265 4100 CONFERENCES & EVENTS F: +44 (0) 20 7265 4220

15 Sports industry event calendar Registered address: COMMENT Park House, 116 Park Street, London, W1K 6AF

Kevin Roberts, founding editor, Printed in the UK by Pensord Press SportBusiness International 70 BEING BRILLIANT www.pensord.co.uk The paper used within this publication has Our new columnist, behavioural been sourced from a Chain-of-Custody 16 scientist Kevin Brilliant, on the secret certified manufacturer, operating within SPONSORSHIP & MARKETING of a good loyalty card scheme international environmental standards such as ISO14001 and EMAS. This is to ensure The best of Sports Sponsorship sustainable sourcing of the materials, Insider sustainable production and to minimise our carbon footprint. 22 SportBusiness International is published monthly © SBG Companies Ltd 2017. All rights reserved. No part of this COMMENT publication may be reproduced or transmitted in any form or by any means, or stored in any retrieval system Ex-Synergy CEO Tim Crow on of any nature without prior written permission, except why it's time for a stripped-back for permitted fair dealing under the Copyright Designs and Patents Act 1988. Application for permission for use Olympics of copyright material including permission to reproduce extracts in other published works shall be made to the publishers. Full acknowledgement of author, publisher and 57 source must be given. ISSN 1757-5346.

01/02.18 : SportBusiness International

03-04_contents.indd 4 26/01/2018 16:59

6 SNAPSHOT

Snapshot Off -fi eld and left-fi eld stats, stories and soundbites from of sport

TATTOO INCENTIVE OVERWATCH V TNF NUMBER CRUNCHER MLS team Philadelphia Union have hit on a The backers of the way to use their fans as billboards: sign up city-based esports competition claim its for a tattoo of the team’s logo and they will viewership figures represent a victory over knock the price of the new ink off the cost of traditional sports. OWL’s opening day drew a ticket. Showing meticulous attention an average per-minute audience of 408,000, to detail, the club says the offer will only apply while more than 10 million viewers tuned in 600,000 to fans who chose pre-approved designs by over the four-day period via (OWL’s Predicted attendances across the the team’s ‘Chief Tattoo Officers’ – local firm exclusive third-party digital broadcast 3 weeks of the French Open tennis Bonedaddys. That the team has an approved partner), MLG, and Chinese streaming once a new roof is added tattoo parlour reveals all you’ll need to know partners ZhanQi TV, NetEase and Panda to the centre court allowing for day/ about the way it’s trying to re-position itself TV. A press release said this compared night sessions of tennis. The current in the Philadelphia region. It says it has been favourably with the average viewership of fi gure for the 3 weeks is 472,000. inspired by urban culture in the city and fan- 372,000 for NFL Thursday Night Football on (see page 58) centred focus groups to come up with three Amazon Prime. But the comparison is hardly brand pillars: ‘young, fearless and challenger’. fair. TNF averages 525,000 viewers across One wonders where fans who take the team other online platforms and on each of its GOOD MONTH: up their offer stand on the MLS promotion- television partners - CBS and NBC - averages BEIJING 2022 WINTER relegation debate (page 44). over 14 million viewers. OLYMPICS Organisers of the Beijing 2022 Winter TWEET OF THE MONTH Olympics have passed their marketing revenue target of $880m (€719.6m), taking advantage of fierce rivalry between China Darren Rovell @darrenrovell Mengniu Dairy and the Yili Group to drive The Simpsons has now predicted Disney buying Fox, a sponsorship five times the size of other the FIFA scandal, Greece’s economic collapse & deals. Dairy wars contributed one of the stories of Rio 2016 when the Mengniu- President Trump sponsored Chinese team dropped 4:26 AM - 14 DEC 2017 524 27K 45K swimmer Ning Zetao after he signed for Yili. The swimmer only made the plane to Rio after an 11th hour compromise. Expect more yoghurt-related intrigue at Beijing.

BAD MONTH: FORMULA 1

Formula 1 is facing questions after it emerged its new logo bears a striking resemblance to a pan-European trademark registered by US conglomerate 3M. It’s hard to know whether the Forget the trade press. If you really want to know what’s going to happen in the sports series will be more annoyed about the business – or media or politics for that matter – watch The Simpsons. The cartoon, as this potential legal dispute or the fact its tweet from ESPN’s Darren Rovell points out, correctly anticipated the Fifa scandal and attempts to create a more youth-oriented more recently the Fox-Disney merger. So what do the latest editions of the series tell us? identity were so easily confused with Junior is going to be massive in the US, apparently. In There Will be Buds, an episode the branding on a range of compression that aired at the end of 2016, the children of Springfield switch to the sport after a spate of tights. 3M says the tights are designed to concussions make Pee-Wee Football too violent for the tastes of their parents. You heard it “improve circulation, minimise swelling there first. and relieve tired, achy legs”.

12.17/1.1801/02.18 : SportBusiness International

06-07_Snapshot.indd 6 26/01/2018 16:35 SNAPSHOT 7

OVERALL ATTENDANCES IN UK IOC SAYS NO TO SPORT IN 2017 (M) GIGANTOMANIA Ben Cronin, Editor Paid attendances at events in the UK reached 74.5m in 2017, according to research by Deloitte. It is a seven-per-cent increase on 69.8m in 2016, When the alpine speed events of the men and and the largest total for the UK since London hosted the Olympic and Paralympic women’s downhill, Super-G and combined take Games in 2012. Numbers were boosted by the UK hosting the IAAF place at the Pyeongchang Winter Olympics, take Championships, the Uefa Champions League Final and the ICC Women’s . a moment to enjoy the scenery. Football attendances accounted for 60 per cent of the figure, as 47.6m fans paid to see The Jeongseon Alpine Centre and ski slopes their clubs and national teams live – a 5-per-cent increase on 2016. Horse racing came a where the Games’ blue-riband skiing events will take distant second with 7.5m attendees over the course of the year. Z place are situated in a 500-year-old forest on the steep declivities of the resort’s Gariwang mountain. Overall paid sporting attendance in 2017 (m) The mountain was the only location in the host city that could meet Olympic requirements for a

Football 47.6 vertical descent of 800 metres, so the organisers Horseracing and 7.5 removed the protection order on the ancient Equestrian 5.5 woodland and bulldozed a path through the trees. 2.7 You’d struggle to find a more powerful symbol 2.3 of the prescriptive excesses of the Olympics and 2.0 the unreasonable demands it has often placed Greyhound Racing on cities than the scar cut through the Korean Motorsport 1.5 countryside. Tennis 0.9 But to give Thomas Bach and the IOC their due, Golf 0.8 TOTAL: 74.5m Other sports 3.7 it is the type of story they’d like to consign to the 0 5 10 15 20 25 30 35 40 45 50 past. Reforms to the bidding process for the 2026 Winter Games, pushed through at the last IOC Source: Deloitte Session in Lima, aim to make the event a more sustainable proposition that pays closer to Source: Deloitte attention to the needs of its prospective hosts. 473 TOP 10 PAID- Realising the folly of trying to shoehorn a mega- ATTENDANCE EVENTS Duration (days) event into one overburdened location, the IOC has IN 2017 (000S) Note: the above been consulting with potential candidates to elicit 321 excludes free more regionally-distributed bids that put existing sporting events 294 infrastructure to use. Deloitte’s research revealed the top 10 260 254 paid events received 2.5m attendees. 235 Even though the race to host the 2026 event is 179 in its infancy, the signs are the message is getting Wimbledon was again the best-attended 164 150 annual sporting event with 473,000 140 through. people visiting the All Club Calgary is mulling a bid that could bring the over the 13 days of the tournament. famous ice-hockey of Edmonton and the wider Alberta region into use. Sion proposes Over half of the top ten attended annual a version of the event that would span five events in 2017 involved equestrian sport. 150 Swiss cantons. A report into the feasibility of a The IAAF World Championships were 13 3 5 4 5 4 3 winter Games in Salt Lake City reckons it could the best attended one-off event with 8 8 2 host the 2026 Games for less than the $1.389bn 700,000 spectators across 10 days. In (£995m/€1.13bn) it cost to host the 2002 edition, by boxing, Anthony Joshua’s world title fight The Open Wimbledon Royal Ascot re-using the venues from the same event. against Wladimir Klitschko was the most In an age where a skittish public can express Cheltenham Festival lucrative single event of the year. BurghleyEpsom Horse DerbyTrials Festival ATP World Tour FinalsBadminton Horse Trials Aintree Grand National their reservations on social media and are Formula 1 British Grand Prix increasingly scuppering bids at the ballot box, the IOC and its city stakeholders clearly realise they QUOTES OF THE MONTH need to play down the burden of the Games. Isn’t it an anachronism, then, that Olympic rules dictate “He has decided you can’t be “I have the best contact list a bid must still be anchored by and named after a single city? a platform business and a in global sports, I have this Alberta 2026 might lack the specificity of a content business, you are either ability to call on any expert Calgary-branded event, but if it persuaded the province’s electorate that they could soak up the one or the other.” at any time.” financial and environmental impact, and benefit AN UN-NAMED FOX SOURCE EXPLAINS TOM PENN, PRESIDENT OF MLS EXPANSION more broadly from the Games, it might be the RUPERT MURDOCH’S RATIONALE FOR SELLING TEAM LA FC, FEELS CONFIDENT ABOUT HIS change the IOC needs. Z $66BN OF ASSETS TO DISNEY TEAM’S CHANCES OF COMMERCIAL SUCCESS [email protected] (PAGES 10-13) (PAGES 48-51) @CroninBenjamin

01/02.1812.17/1.18 : SportBusiness International

06-07_Snapshot.indd 7 26/01/2018 16:36 8 NEWS ROUND-UP

Media THE MOST POPULAR NEWS STORIES ON TV SPORTS MARKETS

DEAL OF THE MONTH by Robin Jellis

Commercial broadcaster Mediaset acquired rights in Italy to the 2018 Fifa World Cup in a deal worth just over €70m ($87m).

Why has Mediaset bought these rights? Despite the failure of the Italian national team to qualify for the tournament, it is confident it can still comfortably profit on the deal. Giorgio Giovetti, the broadcaster’s head of sports rights acquisitions, told TV Sports Markets that all 64 matches would be shown on free-to-air channels. “World Cup games on free-to-air channels always have high ratings,” he said. “There is little or no 1. MOVISTAR PLUS EXTENDS F1 RIGHTS IN SPAIN football in June and July, so there is huge interest, Movistar Plus, the pay-television platform of Spanish telco Telefónica, has and other broadcasters don’t want to programme renewed rights in the country for the motor-racing world against it. It makes it easier to sell advertising. championship. The extension will cover three seasons, from 2018 to 2020. There is little risk in the deal for us.” The deal, reached with the series’ operator, Liberty Media, was confirmed following 10 months of negotiations. Movistar Plus will continue to offer Did Mediaset face much competition? the coverage on a dedicated channel that is part of its Movistar Plus Motor Public-service broadcaster Rai is said to have package, which also offers coverage of MotoGP. bid slightly less than Mediaset: about €65m. Pay-television operator Sky Italia is thought to 2. AMAZON PLANS ENGLISH RIGHTS BID have made a very low offer of about €15m. The Tech company Amazon plans to table a bid for domestic rights to football’s deal looks to be a good one for Mediaset – it will English Premier League, according to the Bloomberg news agency. The save about €15m on the programming it would report said that the bid will be part of a broader strategy to offer more otherwise have delivered in the same slots, so it sports content to customers. Media analyst Richard Broughton of Ampere needs to earn about €55m in advertising to break Analysis said that Amazon is “very likely” to bid for one or two of the even against the forecast value of the airtime. smaller packages of streaming rights covering three seasons, from 2019-20 to 2021-22. What about the rights-holder? It’s not great news for the MP & Silva agency 3. BT, SKY AGREE TO CROSS-SUPPLY OF CHANNELS which, in October 2013, agreed to act as Fifa’s Rival UK pay-television operators BT and Sky have sealed a multi-year deal exclusive sales representative for the 2018 and to make channels available on each other’s platforms. BT TV customers 2022 World Cup rights in Italy. Fifa had already will be able to sign up for all content available via Sky’s Now TV platform, tried and failed to get market value for the rights including Sky Sports channels. BT will also sell subscriptions to Now TV from local broadcasters. The Fifa/MP & Silva deal directly to BT customers. BT has agreed to wholesale its BT Sport channels was based on a soft guarantee of €380m: €185m to Sky, allowing Sky to sell these channels directly to its satellite customers. for 2018 and €195m for 2022. Needless to say, the Mediaset deal is a long way short of that 2018 4. DISNEY SEALS 21ST CENTURY FOX MERGER DEAL guarantee. Walt Disney has sealed a $52.4bn (€44bn) deal to acquire a significant share of rival media company 21st Century Fox. Under the agreement, Disney is What does it mean for their deal? set to ultimately secure control of European pay-television group Sky and According to the terms of their deal, the agency media company Star India, both of which are major sports broadcasters. is liable for the €115m shortfall on its 2018 Disney will acquire Regional Networks, but Fox’s US sports guarantee. MP & Silva tried to renegotiate with channels and some other assets will be separated into a new company that Fifa following Italy’s failure to qualify for the will be spun off to shareholders (see pages 10-13). tournament but Fifa has thus far refused to compromise. Some observers believe the most 5. NETFLIX REJECTS REPORTS OF SPORTS-RIGHTS MOVE likely outcome will be some form of arbitration, Ted Sarandos, chief content officer at Netflix, has said that the online rather than an expensive legal battle. Given the streaming service has no intention of expanding into live sports. Netflix, agreement still has four years to run, neither side which has been linked with a move into the live sports sector, has recently is in a hurry to resolve the matter. Z signed a number of content partnerships with major football clubs. According to the Hollywood Reporter, Sarandos said it is unlikely that Netflix To access more detailed analysis of Fifa’s World will expand its sports-focused content into live streaming as leagues will Cup deal in Italy, and other territories, subscribe to eventually offer coverage directly to fans. Z TV Sports Markets.

01/02.18 : SportBusiness International

08-09_Media_News.indd 8 26/01/2018 10:30 MEDIA : DATA 9

OLYMPICS MEDIA RIGHTS FOCUS, POWERED BY RIGHTS TRACKER

Games deal prices in key markets (per event), IOC v Discovery, 2014 to 2024

AUSTRIA GERMANY UK Sold by Sold by Sold by Sold by Sold by Sold by Sportfive Discovery IOC Discovery IOC Discovery

€75.5m

€64.5m €62.5m

€41.5m

Per-Games value of the Olympics in Europe, €12m 2014 to 2024 €9m

Multiple buyers

Discovery Communications 2014-2016 ORF 2018-2020 ORF 2014-2020 BBC 2022-2024 BBC €385.75m 2014-2016 ARD/ZDF2018-2024 ARD/ZDF Since acquiring Olympic rights from the IOC in June 2015, Discovery €325m has been negotiating sublicensing deals in individual markets. The IOC requires it to make at least 200 hours of the summer Games and 100 hours of the winter Games available on free-to-air television. Though Discovery has sublicensed rights in many territories, this chart focuses on three key Olympic countries: Austria, Germany and the UK.

UK: Discovery recouped more than 10 per cent of its €1.3bn ($1.6bn) total investment via a single sublicensing deal with public-service broad- caster the BBC. The deal gives the BBC rights to show extensive cover- 2014-2016 2018-2024 age of the 2022 winter Games and the 2024 summer Games, in return for giving Discovery UK pay-television rights for the 2018 winter Games The pan-European deal with US media company Discovery and the 2020 summer Games – and £115m (€151m at time of deal). Communications was the first time the International Olympic Committee had agreed a deal with a company which would exploit Germany: Public-service broadcasters ARD and ZDF will pay Discovery the Games on pay-television across Europe. The Committee had a combined fee of about €250m in rights fee and production commit- previously turned down a $2bn (€1.6bn) offer from 21st Century Fox ment. The deal covers all four Games from 2018 to 2024. Negotiations for the rights to the three Games from 2004 to 2008. Discovery between the three parties were protracted. Discovery first broke is paying less on a per-Games basis than in the previous cycle. The off talks in November 2016, when ARD/ZDF’s bid was €50m short of 2014-2016 Games were worth €771.5m in deals with the Sportfive Discovery’s asking price. At the last meeting of the three parties the agency and individual broadcasters in six markets – , Germany, difference had narrowed to an offer of just over €120m and a request of Italy, Spain, Turkey and the UK. The pan-European value for 2014-16 about €130m. ARD/ZDF returned to the negotiating table in July 2017. Its was a strong one, up almost 15 per cent on the €680m earned from change in stance came following ZDF’s failure to renew Uefa Champions the same region for 2010-12. Maintaining the per-Games value of League rights in Germany from 2018-19 onwards. No deal in Germany the 2014-16 cycle would have been an above-expectations outcome would have left a big gap in Discovery’s sublicensing revenue projections. for the IOC. Discovery’s deal covers four Games: the 2018 winter Games in Pyeongchang, ; the 2020 summer Games in Austria: ORF is paying Discovery more than the valuation it gave to the Tokyo, ; the Beijing winter Games in 2022, and the 2024 summer 2018-20 rights as part of the unsuccessful bid by the European Broad- Olympics in Paris. The deal covers 50 European territories – only casting Union, the consortium of public-service broadcasters. Its 2014-16 Russia is excluded. Rights in France and the UK to the 2018 and 2020 rights were acquired from the Sportfive agency, now Lagardère Sports. Games had already been sold by the IOC, so Discovery only has rights Discovery managed to increase the value in the new cycle, while also in these territories for 2022 and 2024. decreasing the amount of content available to the broadcaster.

To subscribe to TV Sports Markets or Rights Tracker call Tom McMullen on +44 (0) 207 265 4223 or email: [email protected]

01/02.18 : SportBusiness International

08-09_Media_News.indd 9 26/01/2018 10:29 10 DISNEY-FOX DEAL

News analysis THE GREAT MURDOCH MYSTERY | WHAT THE DISNEY-FOX DEAL MEANS FOR SPORT

F Rupert Murdoch’s $66bn sale of Fox assets to Disney casts a long shadow over sports-rights market F Disney will be stronger sports player in US but doubts remain about its appetite for risk elsewhere F In the UK, Sky-BT truce a tangible sign of Murdoch’s softening on sports-rights acquisitions

Baltimore Ravens quarterback Joe Flacco rides with Mickey Mouse at Walt Disney World Resort (Getty Images)

01/02.18 : SportBusiness International

10-13 News Analysis_FoxDisney.indd 10 26/01/2018 09:37 NEWS ANALYSIS : DISNEY-FOX DEAL 11

“For Murdoch, this is a retrenchment back to live, not just in sports. It’s how he built his business in the first place. It’s how he disrupted the entire industry.”

DAN COHEN, SENIOR VICE PRESIDENT, OCTAGON

BY FRANK DUNNE used to be for a long time.” David Murray, formerly the BBC’s head of hat is Rupert Murdoch up sports rights, points out that the so-called to? This question is vexing FAANGs (, Apple, Amazon, Netflix sport right now and it’s hardly and Google) are not the only threat on the surprising. Money from horizon. “Why was Murdoch prepared to sell WMurdoch’s pay-television operations has so many prime assets? The long-term threat transformed the fortunes of sports leagues is not just from Amazon, but the fact that around the world over the last 30 years and sports bodies will be able to put out their suddenly it looks like the tap is about to be own OTT premium services. As sports go turned off. more direct-to-home, it is the pay-television Murdoch’s sale of 21st Century Fox assets providers that will suffer. It is curious that to The Walt Disney Company this month he is walking away from sports, yet hanging was not just a sports deal. It’s as much, if not on to newspaper assets, which arguably will more, about Hollywood movies and hit TV JUST THE FACTS decline quicker than pay-TV.” series. But sport is a vital element. Of the $66bn (€55.7bn) value of the deal, the 22 Fox The Walt Disney Company paid Content, not platforms regional sports networks (RSNs) Disney is Not surprisingly, from within the Murdoch buying are valued at $20bn. empire there is a desire to see this as one On top of that, Disney also picks up Sky’s for the bulk$66bn of 21st Century Fox assets more brilliant roll of the dice from the European pay-television business, Fox Sports 86-year-old. The hope is that the $40bn cash channels around the world (including the pile he walks away with will fund a sports league channel in the Netherlands Fox’s regional sports networks are and news empire that can hold its own in a but excluding , where they are valued at world where digital natives are cutting cords owned by News Corp) and Star in India. and generally playing havoc with traditional The assets Murdoch has kept are all in business models. the US: the main Fox national network, Fox $20bn As one Fox source says: “Never News, Fox Business, the Fox cable sports underestimate [Murdoch’s] ability to channels and the college sports Big Ten Disney plans to make surprise. He is still absolutely on top of his Network. game and still sees where things are going The official line is that the old newsman is before anyone else. He has decided you going back to his roots in news and sport in $2bn can’t be a platform business and a content the smaller, nimbler New Fox – “pivoting at a in cost savings business, you are either one or the other. He pivotal moment”, in his own words. has got rid of all the hard infrastructure the The alternative, more worrying, narrative ESPN’s subscriber base is now below Facebooks, Amazons and the OTT players do is that the biggest gambler on the value of not have. live sport the media industry has ever seen “The focus is on content – news and sport, has just cashed in his chips and left the table. 88m what he was always good at. I think there He has seen the writing (specifically, the will be an increased focus on sport, but it acronym FAANG) on the wall and quit while 120m might be more selective. It’s about being 2011 2017 he is ahead. There is no shortage of industry 100.13m 87.22m able to deliver the best content to drive the operatives inclined toward this view. 100m highest prices from the platforms, which still As sports media rights consultant Phil need content. And they still don’t have the Lines puts it: “The move came from them 80m expertise in producing it.” [Fox] to sell. Why do you normally sell? It’s 60m In the offices of the Octagon hard to argue that you are doing that because agency, an optimistic you think the future is bright. 40m reading of the sale prevails. Daniel Cohen, “I think the future is far from certain and senior vice president of the agency’s I don’t think they are confident they have 20m media rights consulting division, says: “For Murdoch, this is a retrenchment back to found a way they can play in it. But they have 0 not been that bold entrepreneurial thing they 1980 1990 2000 2010 2017 live, not just in sports. It’s how he built

01/02.18 : SportBusiness International

10-13 News Analysis_FoxDisney.indd 11 26/01/2018 09:37 12 NEWS ANALYSIS : DISNEY-FOX DEAL

Continued from previous page...

his business in the first place. It’s how he different matter. If you can make them all row disrupted the entire industry. in one direction, it’s powerful. But their track “You are going to see Fox at the table for all record suggests they won’t. My experience up major properties. They tried to pivot to more to now is that Americans find it difficult to talking heads stuff, but it didn’t really work. grasp the differences between the US and all I think you will see them acquiring more live the other markets.” premium content. Premium rights fees are And it remains questionable, in a going to continue to soar because Fox is going fragmented sports-rights market, just how to bring a big wallet.” much scale matters. William Field, founder of the Prospero Strategy consultancy, says: “It’s Disney’s US powerhouse not that scale doesn’t matter in sport, but While some analysts question whether you cannot take the model of the movie and doubling down on legacy media assets is entertainment industry and transfer that into really the smartest way for Disney to prepare sport. They are completely different markets. for the upcoming global content battle with Just buying scale doesn’t buy you a lot. the likes of Amazon and Facebook, there is “We’ve talked for years about the little doubt that the Disney which emerges possibility of Sky buying pan-European will be a stronger player in the US sports- rights, or rights across the UK, Germany and rights market. The RSNs are critical to this. Rupert Murdoch (Getty Images) Italy, and we haven’t seen very much of it. If As Cohen points out: “They have deals of you are a smart rights owner, you sell your 10, 15 and 20 years with the local sports teams content territory by territory and rely on the in those markets, typically the NBA, NHL “First, they have to fix what is broken in the competitive dynamics within each territory to and MLB teams. It’s an incredibly profitable US and figure out the future direction. That drive maximum value.” business. And a lot of them are joint ventures, will be a 12- to 18-month process. Then they Other informed sources are not expecting where the team takes either real equity or can look outwards. By acquiring Sky and Star an aggressive global roll-out of the ESPN synthetic equity in the network. they have great rights. The last time ESPN brand. One source close to ESPN points “What Fox has done well – and which it tried to go international they didn’t have the to a small but significant detail of the deal: now hands off to ESPN/Disney – is position right kind of aggressive, Fox-style mentality. Disney’s reference to $2bn of cost savings. themselves as almost inseparable from the And they didn’t have the scale. “There could be a full-on retrenchment team. Disney will now have the opportunity “Now they are armed with a lot of [outside the US]”, he says. “I think there will to layer in national content, with ESPN rights be a lot of rationalisation and they won’t look and shows. It will be a fascinating blend of to compete head-on in territories where there local and national sports news and coverage “I think the future is far from is a lot of competition. Do they really need a that has never really existed before.” Fox channel in Africa? The view at Disney will As ESPN’s subscriber base has from certain and I don’t think they be: if it doesn’t wash its face, let it run down. 100m to 87m in just over a decade profits are confident they have found “Disney has always been obsessed with have been trimmed, but this deal could halt head count. If, with the same number of the slide, Cohen argues. “If you look at what a way they can play in it. But people working in Europe, Asia or Africa, they drives revenues for Disney, it’s ESPN. they have not been that bold could be making a slightly higher margin in “It’s been struggling with affiliate fees and the US, they will focus on the US. I expect carriage deals, but the next lot of carriage entrepreneurial thing they used them to really consolidate in the areas that deal renewals are coming up now and it will to be for a long time.” are driving revenues and look to cut costs in be hard for the carriers to say no. the ones that aren’t.” “If I’m Comcast or Time Warner and I PHIL LINES, CONSULTANT have to sit across the table from this library Disney’s British inheritance of content, it will be really hard to tell my Disney will inherit Fox’s planned acquisition consumers I’m not going to be carrying it.” premium rights, a significant market share in of the 61 per cent of the Sky UK operation the UK and India and the technology to build that Fox doesn’t already own, subject to Back to the future out from that, through the acquisition of approval by the UK competition regulator. If Murdoch’s true intentions for sport are the [streaming service] Bamtech, which will help Within hours of the Disney-Fox deal being enigma at the heart of the deal, the second the direct-to-consumer roll-out.” announced, Sky and rival pay-television most difficult aspect to read is Disney’s long- Lines can see the potential but still has operator BT Sport unveiled a cross-carriage term strategy for sport outside the US. his doubts. “One weakness for Disney has agreement in which the two platforms will The company’s previous failures in Asia been distribution. They have bought a lot of retail each other’s channels. and Europe are well documented. How will distribution and a lot of data [with this deal]. To what extent the impending Disney going back to these territories a decade later Potentially, if you align Disney, ESPN, Star takeover of Sky drove this is unclear, but both with the same Disney culture work out? and the Fox channels around the world, that’s deals have the same defensive mindset. For Cohen, this is not likely to be the a very powerful group to put together. Murray argues that this new, less aggressive number one priority at Disney’s Burbank HQ. “But quite how together it will be is a approach from Sky will sit well within the

01/02.18 : SportBusiness International

10-13 News Analysis_FoxDisney.indd 12 26/01/2018 09:39 NEWS ANALYSIS : DISNEY-FOX DEAL 13

Premier League executive chairman Richard Scudamore announces the Premier League’s current domestic media-rights deals in 2015 (Getty Images)

culture of the Disney organisation: “From UK rights freeze auction. Neither can now surprise the other being a high-growth business, Sky now feels Lines, who was formerly responsible for the with a knock-out blow for Premier League a much more mature business. And what international sales of Premier League rights, rights, or at least it reduces the commercial Disney is very good at is milking mature agrees the deal will put a brake on sports- rationale for trying to do so. It removes the assets – look at what they have done with the rights inflation in the UK. Having spent risk of losing a lot of Premier League rights Star Wars franchise. most of the year working as an adviser to the and therefore not having the best football to “Sky is more like a utility business now on its renewal with put on their platforms. than a growth business. It no longer needs Sky, he has sensed it coming for a while. “They will undoubtedly still compete that approach of ‘death to all comers’ by “The truce has only just been announced for the rights to some degree, as there outspending them, which has been its but the mindset has been like that for some will be money to be made from having strategy up to now. If I were the Premier time”, he says. “They don’t need more matches on their own channels but they are League I would be more than a bit worried.” content; they need to pay less for what they effectively accepting a period of competitive The league has just announced the tender have. They’re both happy with what they’ve coexistence. The Sky/BT platform battle process for its domestic rights for the three got. The value of the Premier League rights needs to be over so that they can marshal seasons from 2019-2020. Until the BT-Sky going down has to be a possibility. their forces against a new potential , announcement, analyst consensus was of an “Sky has found it painful at this level of Amazon.” uplift of at least 40 per cent on the current rights fee. The broadband war [which drove He concludes: “While the main strategic £5.14bn for live games. competition between the two platforms] is logic for the merger is not about sport, the Now, the bear case is for a reduction in largely over. These are mature businesses; it’s Premier League auction is so important to value; the bull case for flat growth or a small all about share price now.” Sky’s business that I’m sure that there will increase. Other rights-holders will face the Field, who has also been an adviser to the have been conversations with Disney about same problem in the coming years unless the Premier League on new technologies, sees it. Disney certainly doesn’t want to read news tech giants step up in a way they haven’t so the hand of Disney already at work. “This stories that Sky has screwed up by either far. immediately de-risks the Premier League over-bidding or losing all the rights.” Z

01/02.18 : SportBusiness International

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Sport Business_February_210x265_EN.indd 1 22.01.18 14:46 COMMENT : KEVIN ROBERTS 15

FIFA NEEDS HEALTHY 2026 BIDDING RACE TO TURN THE PAGE ON PAST CONTROVERSIES

Kevin Roberts argues Fifa needs a strong bid from Morocco to create a competitive race for the 2026 World Cup

ack in December, Fifa president than leaving it to the 24 man executive our stadiums and our hotels and all that – Gianni Infantino told a full house committee – that Morocco’s vision of a it’s about perceptions of America, and it’s a at the Globe Soccer Conference welcoming, passionate and authentic World difficult time in the world. So, there’s only in Dubai of his support for the Cup is a better bet than the well-backed certain things we can control. We can’t Bprinciple of joint bids to host the World alternative where the majority of games control what happens at the 38th parallel in Cup and his excitement that the United will be played in the . The Korea, we can’t control what happens with States, Canada and Mexico had joined latter remains the world’s biggest consumer embassies in Tel Aviv, and we can’t control forces and thrown their collective hat market, and the sport there needs a spur to what happens with climate change accords.” into the ring for the right to host the 2026 regain some of the momentum built after the Though most of us would love things to edition. competition was played there in 1994. be different, sport and politics have always Although Infantino is well schooled in been inextricably linked and so long as they the diplomatic art of making statements involve government funding or support of and delivering answers designed to placate any kind it is likely they always will be. But rather than offend, he made it clear that “The presidential predilection it’s difficult to remember a sports leader previous World Cups had resulted in too referencing his own government’s policies as much waste in terms of underused stadiums for joint hosting might make life a potential obstacle in this way. and infrastructure and that the decision to even more difficult than it already It remains to be seen whether Morocco award the hosting rights for two World Cups will even attempt to surf this wave of – 2018 and 2022 – at the same time had been is for the bid from Morocco, which negativity towards America, as even a a mistake. plans to go it alone and seems relatively successful campaign is likely to fall Sustainability and transparency are the way short of delivering the numbers needed central pillars of World Cup bidding under to be starting the race way to win the Big Prize. Infantino, whose election was fuelled in part Perhaps the surprise is that, given the behind its rivals.” by a commitment to extend the World Cup prevailing sentiment towards joint bids for to 48 nations, creating a competition whose the 48 team World Cup, Morocco is going it scale would test the infrastructure of all but a alone. Couldn’t the African Confederation tiny handful of nations. Morocco is a late starter. At the time of (CAF) come up with a joint bid which would But while that may be the reality, it was writing it was difficult to access any details help meet some of the new sustainability still something of a surprise that Infantino of its plans although that will clearly change criteria? At least this would quell suspicions the diplomat was so openly supportive of in the weeks and months ahead. But it has that Morocco – which has failed in the past joint bidding in public. The point is that the been reported that Moroccan officials have – is simply going through the motions as a joint North and Central American bid is not not been so tardy in the essential work of placeholder for future CAF bids. the only one on the table and its rival is from meeting with voting members to put their In little more than five months, Fifa will a single nation, claiming – as is inevitably the case directly. The big question is exactly have to decide whether either of the two way – to represent the dreams of a continent what can they say to persuade the world that current bids make the grade. – Africa. Morocco’s solo enterprise is worth a shot If – and this is extremely unlikely – neither The presidential predilection for joint ahead of North America’s big guns. hits the sweet spot, the process can be hosting might make life even more difficult Maybe the answer comes, unexpectedly, re-opened, offering potential hosts from than it already is for the bid from Morocco, from outgoing US Soccer president Sunil confederations not included in the original which plans to go it alone and seems to be Gulati, who recently flagged a Gallup Poll contest to come into play. starting the race way behind its rivals. showing the United States’ global standing That, of course, would be something of In January, the Moroccan bid announced has taken a pounding in many parts of the an embarrassment for the governing body, it had hired Vero Communications – the world with its approval rating plummeting which has worked hard to create a process consultancy which helped Qatar win hosting from 48 per cent during the Obama designed to avoid past issues and attract and rights for 2022 World Cup, and Infantino administration to 30 per cent today. The reward the best bids to ensure the best host in his bid for the presidency – as its lead downturn was evident in Canada and Mexico, environment for the new-look World Cup. consultant on international communications its partners in the World Cup adventure. After Qatar 2022, this represents a chance to and strategy. They will help persuade Fifa Speaking at the United Soccer Coaches turn a page. It’s a chance Fifa can’t afford to members – who will vote en masse rather Convention he said: “This is not only about miss. Z

01/02.18 : SportBusiness International

15_Kevin Roberts.indd 15 26/01/2018 09:41 16 NEWS ROUND-UP

Sponsorship & marketing THE MOST POPULAR NEWS STORIES ON SPORTS SPONSORSHIP INSIDER

DEAL OF THE MONTH MATTHEW GLENDINNING

China Unicom has signed up as the Official Telecommunication Services Partner of the Beijing 2022 Olympic and Paralympic winter Games. It is the fifth tier-one Official Partner deal contracted by the local organisers. The company will supply smart technology to the Games.

Was there competition for the rights? The organisers invited an open tender and were “keen to ensure equality of access and a level playing field for interested parties,” Timo Lumme, managing director of IOC 1. MILAN SEALS FIRST REGIONAL PARTNER IN ASIA television and marketing services, told Sports Italian football club AC Milan has signed its first official regional Sponsorship Insider. Like all the open tenders partnership in Asia, with online betting company Vwin. As part of the multi- so far, he said, there was good competition year deal, Vwin will work with Milan on customised marketing campaigns among state-owned Chinese companies. It in a number of countries across the continent. Milan’s brand and image will is understood that China’s number one and be used to promote Vwin’s service, with the partnership set to be activated two telecom brands, China Mobile and China across various digital media channels. Telecom, were underbidders in the tender. 2. SIGNS UP ABB, JULIUS BAER What other sector rivalries has Beijing The Formula E electric car-racing series has signed a title-sponsorship 2022 highlighted? agreement with Swiss industrial technology company ABB while Swiss It’s no secret there was fierce competition in private banking group Julius Baer has been unveiled as the naming-rights the dairy sector between the Yili Group and sponsor of the inaugural Zurich ePrix. UK broadcaster Sky News said the ABB agreement could be worth up to $15m (€12.5m) per year. Julius Baer, a global China Mengniu Dairy, resulting in a deal with partner of Formula E, has expanded its backing to cover the series’ first Swiss Yili worth at least five times the other sector event on June 10. (For more on the ABB deal, go to sportbusiness.com). deals. Defeated Mengniu subsequently signed an Official Sponsor agreement with Fifa for the 3. CHINESE PARTNER JOINS FIFA WORLD CUP ROSTER 2018 World Cup (see news, right). Chinese dairy producer China Mengniu Dairy has signed up as an official sponsor of football’s 2018 Fifa World Cup in Russia. The company was How have the first five deals impacted unveiled as the fifth official sponsor of the event alongside Budweiser, on Beijing’s marketing projections? Hisense, McDonald’s and Vivo. World Cup sponsors represent the The organisers have already passed their second-tier of Fifa’s commercial portfolio, below Fifa Partners. As part marketing revenue target of $880m (€719.6m) of the agreement, Mengniu’s branding will appear on all key promotional and look set to more than double that figure. platforms, such as Fifa’s digital channels, LED boards and match tickets. Since the launch of its programme in February 2017, Beijing 2022 has also signed up Bank of 4. IRANIAN TELCO SCORES WITH LALIGA AGREEMENT China, Air China, and sports apparel brand LaLiga, which operates the top two divisions of Spanish football, has agreed Anta. a sponsorship deal with Iranian telco Irancell, which is part of the MTN group. The length and terms of the regional agreement were not disclosed, How does this compare with but LaLiga said the deal would allow the organisation to introduce Pyeongchang 2018 and Tokyo 2020? innovative content initiatives to engage fans. LaLiga’s corporate managing Organisers of the 2018 Pyeongchang winter director, Javier Gómez, told the Palco23 news website: “This agreement Games reached its revenue target of $830m further amplifies the global recognition of the LaLiga brand.” late last year, finishing above $900m in 5. MICROSOFT SECURES NFL PARTNERSHIP EXTENSION November. The final top-tier partner, Korea The NFL has signed a one-season extension to its partnership with US Electric Power Corporation, paid about $71m to tech company Microsoft. The new agreement will cover the 2018-19 NFL become the final tier-one sponsor in October. campaign, according to the Associated Press news agency. NFL referees will Domestic sponsorship for the Tokyo 2020 continue to use Microsoft’s Surface tablets for video review decisions. The summer Games has so far reached a record tablets will also be used by coaches and players during games. Microsoft $2.8bn – almost three times as much as any first linked up with the NFL in 2013 in a deal worth a reported $400m over previous summer Games. Z five years. Z

01/02.18 : SportBusines s International

16-17 Sponsorship News & Deals Tracker.indd 16 26/01/2018 10:08 SPONSORSHIP : DATA 17

EUROPEAN FOOTBALL SPONSORSHIP DATA FROM SPORTS SPONSORSHIP INSIDER

Pyeongchang 2018 Tier One Partners

Of the three Asian cities hosting the next three Olympic and Paralympic Games, Pyeongchang – South Korean host city of next month’s 2018 Winter Olympics – has earned the least from tier-one sponsorship deals and, by extension, the lowest aggregate marketing revenue of around $918m, from a revised target of $800m. The 11 Tier One deals are valued between $50m and $70m, with one outlier: the $91m-per-year deal Median with Olympic Worldwide Partner Samsung signed in 2015 – a deal which kick-started the domestic value ($m) programme after a slow initial sales period. Pyeongchang’s fi nal total of 66 sponsors should 50 to 70 be viewed as a weakness not a strength, since 33 are tier-four partners that are eff ectively donating each funds to the local organisers.

Tier One Partners Tokyo 2020

The corporate sector in Japan has backed Tokyo 2020 with enthusiasm, smashing the initial revenue target of $932m with sponsor commitments of around $2.8bn as of September 2017. Tokyo’s 15 top-tier Gold Partner deals – the organisers initially budgeted for 10 – are worth about $135m each. The local organisers required two IT infrastructure Median partners – Fujitsu and NEC – because of the level of services required for Tokyo 2020. value ($m) The banking sector is shared between two banks – Mizuho and SMBC – who have given up exclusivity to guarantee their place at 135 the Games. Tokyo-based advertising agency Dentsu is responsible for selling all domestic each sponsorship positions.

Beijing 2022 Tier One Partners

Like Tokyo 2020, early indicators are that Beijing 2022 could more than double its marketing revenue target of $880m. Yili Group’s deal in the Dairy Products category alone is understood to be worth between $500m and $600m, while the other four Tier One partners have each paid sums well into eight fi gures. While Beijing’s domestic programme for the 2008 Summer Games made $1.2bn, Timo Lumme told Sports Sponsorship Insider: “In how Median the Chinese economy has grown and also the knowledge and sophistication regarding sports, it value ($m) bears no relation to the 2008 Summer Games in Beijing, which was very much at the putative stages. 60 to 90 In that sense it’s no surprise that it’s successful. They have already comfortably passed their target each number for the marketing side.”

To subscribe to Sports Sponsorship Insider or Deals Tracker call Tom McMullen on +44 (0) 20 7265 4223 or email [email protected]

01/02.18 : SportBusiness International

16-17 Sponsorship News & Deals Tracker.indd 17 26/01/2018 10:09 18 SPONSORSHIP : PYEONGCHANG 2018

DOWNHILL STRUGGLE | A COMMERCIAL PREVIEW OF THE WINTER OLYMPIC GAMES

F Local organising committee has signed significant number of deals after sluggish start, but concerns remain over total value F Tech sponsors expected to be most visible as IOC targets greater Millennial audience, with virtual reality playing a vital role F Agreement bringing a North Korean delegation to Pyeongchang helps relieve political tensions

A luge athlete trains at the Alpensia Sliding Centre in Pyeongchang (Getty Images)

01/02.18 : SportBusiness International

18-21_Winter_olympics.indd 18 26/01/2018 15:30 SPONSORSHIP : PYEONGCHANG 2018 19

“Everything’s very positive and, in a general sense, everything’s on track for the event. It’s fair to say that it was a slow-burn, but it’s got going now.”

TIMO LUMME, IOC TELEVISION AND MARKETING DIRECTOR

BY ADAM NELSON the event,” Timo Lumme, television and He believes South Korea has “overdosed marketing director of the IOC and head of on hosting major events”, citing the Asian f 2016’s Olympic Games in Rio the body’s global sponsorship programme, Games in Busan and the World Athletics represented a calculated risk on the part tells SportBusiness International. “It’s fair to Championships in Daegu as examples. of the International Olympic Committee say that it was a slow-burn, but it’s got going “Time and again they would run the – albeit one which ultimately came off – now. I think what’s happened has been a toughest bid campaign of anybody, and then Ithen hosting the 2018 Winter Olympics in little bit of a hockey stick-type phenomenon once they got the event the government Pyeongchang, South Korea was supposed to that has really accelerated in the last two and would disengage, it gets tangled up in local be a safer bet. a half years, and they’re in good shape now.” politics, and nobody would care,” he says. While may be an economic “It’s 110 per cent issues local to Korea. powerhouse, it remains a developing Commercial criticism It’s nothing to do with Russia, nothing to marketplace, with the attendant mass Not everyone is so convinced. Many of do with the situation over 2024 and 2028. inequality and vulnerability to unexpected the deals signed in late 2017 were smaller This is Korea, whether it’s the problems with headwinds. South Korea looked a more partnerships with regional companies, ticketing in the build-up, or the problems stable choice that would, if nothing else, be leading some to suggest a last-minute panic with international PR and communication.” sheltered from the political and financial has set in, with Pocog attempting to bolster a Other observers have been less downcast issues that plagued the build-up to the Rio faltering commercial programme with under- about Pyeongchang’s commercial potential. Games. sold sponsorship packages, devaluing the Tim Crow, former chief executive of Instead, the sense of déjà vu has been Olympic brand in the process. sponsorship agency Synergy, cautions that palpable. A president impeached on any assessments carried out at this point are corruption charges in the months before merely “guesswork” until the final profit and the Games; a commercial programme that “I think it’s very important for loss statements are issued, and notes that lagged behind target so severely it required “the only thing we can say with certainty is IOC intervention; a seemingly never-ending [the IOC] that this is a good that they’ve got a lot of partners in”. doping scandal rumbling in the background; Games and is perceived as and “One doesn’t know how much [the slow ticket sales and an at-best uninspired partners] have paid, how much is cash and local populace: history repeating itself, remembered as a good Games.” how much is VIK [value-in-kind]”, Crow though whether as tragedy or farce is says. “One of the things that is continually perhaps up to the observer. TIM CROW, misunderstood about the Olympics is that To compound matters, sabre-rattling FORMER SYNERGY CHIEF EXECUTIVE about 50 to 60 per cent of each deal is VIK between the United States and South Korea’s rather than cash, because the Olympics is neighbours to the north ramped up in late a giant joint venture and every organising 2017. With Pyeongchang situated just 50 Michael Payne, former IOC marketing committee goes out there and procures miles from the border with North Korea, the director and consultant, has been most services and products that they would Winter Olympic Games came to represent a prominent among the naysayers, tweeting normally buy but, because they don’t have potential flashpoint in the long-running war in December that Pyeongchang had run “by any money, they have to go out and offer of words between President Trump and Kim far the weakest marketing programme in them as a mixture of cash and VIK.” Jong-un. Worries of open conflict threatened living memory” and that “[a large] number Lumme concurs, elaborating that while to overshadow the Games entirely. of sponsors, with small donations, does not external observers tend to dismiss VIK deals Yet for all the malaise that appears to equate to marketing!”. as less significant than cash sponsorships, be hanging over the event, the last few Speaking to SportBusiness International in “VIK is by definition budget-relieving, and months have seen a flurry of commercial the days after that broadside, Payne traced then it’s up to the local organising committee activity, with the Pyeongchang Organising the issues back to the bidding process, how they define ‘value.’ Even if a sponsor is Committee (Pocog) signing deals to take the during which “various big Korean companies purely providing services, if they’re budget- total number of domestic partners to 77 and all [supported] the bid, and the moment relieving services it’s something we’re surpassing the purported budget-meeting they got the Games they said, ‘mission ultimately very happy with.” target of KRW870bn (€530m/$650m) with accomplished, we don’t need to do any Pocog may have succeeded in turning weeks to spare. more.’” around an initially slow sponsorship From the IOC’s perspective, after a Payne is dismissive of suggestions that programme, but more important than the challenging beginning, things are starting to wider economic and political issues have volume of brands will be how those partners fall into place. affected the programme, pointing to the support the Games once they’re underway, “Everything’s very positive and, in a “crazy numbers” Beijing is already pulling says Crow. general sense, everything’s on track for in for its own Winter Olympics in 2022. “The other side of it now, and the real

01/02.18 : SportBusiness International

18-21_Winter_olympics.indd 19 26/01/2018 15:31 20 SPONSORSHIP : PYEONGCHANG 2018

Continued from previous page...

The Alpensia Ski Jumping Centre stands ready for the opening of the Games on February 9 (Getty Images)

challenge, is how they activate, how they – Chinese ecommerce giant Alibaba and own Extreme Masters global series and respond to any issues that are going to crop Silicon Valley veteran Intel – became Ubisoft’s Steep, the official video game of the up, and ultimately what image is presented of the newest members of the IOC’s TOP Winter Olympics, to fan zones and venues Pyeongchang, because every Olympics is very sponsorship programme. Both are aiming to across Pyeongchang. different,” he says. The Winter Olympics leave their mark in various ways on their first While the possibility of esports joining offers a radically different proposition to Olympics. the Olympic programme remains distant, sponsors than their summer counterpart, “Sport has to go where the people are, the emerging sector is likely to play an and not just in terms of scale. and many people – in particular many young increasingly large role in the Games through While the IOC is attempting to engage people – are living a digital life,” said IOC the IOC’s official partners, as the body a younger audience by introducing more president Thomas Bach in a statement. “So continues to lean on the likes of Intel and its youth-oriented sports such as and we have to go with sports to where they are other TOP sponsors to engage a Millennial skateboarding to the summer programme, living, in their digital world, in their virtual audience. the Winter Games have long been its point reality.” “The role of IT at the Olympic Games is of contact with the more extreme side of the Intel, which has big plans for changing significantly,” says Erice sporting world. The likes of snowboarding Pyeongchang, will use its Intel True VR Alonso, marketing and communications and ski jumping already have some crossover system to that very end, taking the Olympics officer for major events at long-standing with the X-Games market, bring a Millennial into viewers’ virtual realities. NBC, the TOP sponsor and major IT services firm fanbase and, crucially, lend themselves very IOC’s US broadcast partner, has confirmed Atos, adding that the IOC now has “new well to clipping and sharing online. it will show at least 50 hours of coverage expectations about its organisation, delivery How partners activate in response to this using Intel’s technology, while much more and experience”, with increased demand on will have a crucial bearing on the overall of the footage will be available online and its supporting partners. commercial success of the Games. After through the Olympic Channel, the official While Atos will continue to provide the arguably resting on its laurels for the first broadcasting arm of the IOC. technological infrastructure for the Games decade or so of the new millennium, the Intel will activate on the ground in South themselves, and Intel and Samsung will IOC’s recent sponsors suggest a change of Korea by delivering two distinct esports contribute the visible, public-facing aspects, direction. In 2017, two new tech companies experiences to the Games, bringing both its Alibaba is perhaps the most interesting of

01/02.18 : SportBusiness International

18-21_Winter_olympics.indd 20 26/01/2018 15:31 SPONSORSHIP : PYEONGCHANG 2018 21

“Various big Korean companies all [supported] the bid, and the moment they got the Games they said, ‘mission accomplished, we don’t need to do any more.’”

MICHAEL PAYNE, FORMER IOC MARKETING DIRECTOR

the tech-oriented partners. Having been via television broadcasts represents the US-based sponsor in McDonalds, and the appointed to transform the IOC’s global greater challenge, but physical ticket sales are doping scandal that ultimately led to Russia’s digital framework and official merchandising frequently cited as a reliable bellwether for exclusion from Pyeongchang. platforms, Alibaba – 75 per cent of whose wider public interest in an Olympic Games. The IOC is in desperate need of a positive worldwide business currently takes place in The easing of tensions between North story to restore potential sponsors’ faith in China – is hoping to use the Olympics as a and South Korea – if not between North its brand; an indication that for all the noise, platform to increase its global visibility. Korea and the US – in the early stages of the Olympics remains unparalleled as a “Alibaba is extremely excited for our 2018, beginning with the announcement global communications platform. inaugural Olympic Games in Pyeongchang,” that North Korea will send a delegation to “I think it’s very important for them that says Jennifer Kuperman, head of Pyeongchang, may have contributed to the this is a good Games and is perceived as and international corporate affairs at Alibaba uptick in sales. remembered as a good Games,” says Crow. Group. Despite Lumme’s assertion that “it was “So I think how well the sponsors activate Despite coming in as a sponsor ahead always the aim of the IOC to have North and the stories that come out around the of a run of three Olympics in East Asia – Korean involvement” in Pyeongchang, sponsorships are very important to the IOC Pyeongchang is followed by Tokyo in 2020 the possibility looked increasingly remote this time. They will want to see some great and Beijing in 2022 – Kuperman believes as 2017 wore on and Trump and Kim’s activations and some good case studies.” the international profile of the Games can continued boasts about the size of their The best thing the IOC can do at this nevertheless help to “showcase our brand on red buttons were setting the international stage, he says, is to take a step back. “The a global stage and show how we’ll leverage community on edge. most important thing that they can do is Alibaba technology and innovations – from The presence of a North Korean team to give their sponsors room to activate cloud to e-commerce – to help transform the – 22 athletes, competing in three sports, creatively as possible. future of the Olympics”. including a pan-Korean women’s “Anyone who’s worked with the Olympics team, joined by 24 officials and 21 media knows that it can be quite difficult and that Political tensions easing representatives – is a significant step in the the attitude, more often than not, is: ‘No. For all this, a sponsorship programme only right direction, and if nothing else will help What’s the question?’. They need to give succeeds if the brands manage to engage with to assuage fears that the Games themselves brands as much creative license as possible.” an audience. When reports in November last could become a spark for conflict. From out of the fog, a clearer picture year claimed only five per cent of total seats Nowhere will the news have been more has emerged and what seemed like shaky had been sold, these concerns started to welcome than at the Olympic headquarters foundations have settled. Just weeks ago, dominate the narrative. in . As Crow notes, 2018 is arguably hope was in short supply. But by the end of the following January, “the most important Olympics for some Now, with all the moving parts in place Pocog announced this figure had reached time”, falling at a time the IOC has barely and preparations almost complete, there is almost 70 per cent, a similar rapid uptake been able to move for negative news stories: renewed promise that Pyeongchang might just a month from the opening ceremony its inability to attract bids to host future yet deliver the success the IOC and the wider as seen in Rio. Capturing a global audience Olympics, the loss of a major and long-term Olympic movement so desperately needs. Z

Figure skater Ashley Wagner at Team USA’s 100 Days Out from Pyeongchang event (Getty Images)

01/02.18 : SportBusiness International

18-21_Winter_olympics.indd 21 26/01/2018 15:31 22 COMMENT : TIM CROW

WHY IT’S TIME FOR A STRIPPED-BACK OLYMPICS IN 2032 The IOC has everything to gain by taking on the financial burden of a smaller, smarter Olympics, says Tim Crow

he point of Big Sport is, naturally, I think it should. In fact, I can’t think of refurbishment. But I stress, refurbishment. to be Big. anything that the IOC could do to better A 35,000 capacity is fine. Remember, we’re Big stars. Big events. Big safeguard its future. Starting with the 2032 scaling everything down: no more white audiences. Big TV deals. Big Games. elephant Olympic Stadiums. Tsponsorships. Big money. But to make that possible two radical And while we’re at it, let’s make ticket The bigger the better. things need to happen. pricing affordable – really affordable – for And they don’t come any bigger than the The first is that the Games needs to the local population. Every event would be summer Olympics, which is appreciably become smaller. packed out. bigger than its biggest Big Sport rival, the Which opens the second, which is that the Yes, we’d need to build an Athletes’ FIFA World Cup. IOC should pay for it. Village and a Media Centre. Bring it on. But this is now a Big Problem, because for So where should the IOC start? Which New, affordable housing in a nation that the IOC and the Olympics, bigger is no longer potential candidate could it – should it – in desperately needs it. What a legacy. better. its own words, ‘invite...to present a project And yes, there’d be some infrastructure The IOC’s most important customer isn’t that fits their sporting, economic, social and work needed too. big media companies or big sponsors. It’s environmental long-term planning needs.’? But nowhere near as much as usual. cities. Big cities. Beijing, London, Rio, Tokyo, Welcome to Jamaica 2032. Remember, we’re scaling everything down. Paris, Los Angeles. Nowhere could be more appropriate. Let’s say it all costs $2 billion. That would But the pipeline of big cities who want The birthplace of Usain Bolt, the athlete go a very, very long way, if not all the way. to stage the Games is almost empty, as who above all others in the modern era – That’s pretty much what the IOC has in the recent 2024/2028 dual Paris/LA award maybe any era – has defined the Olympics. reserve right now. It’s only double what they highlighted. contributed to Rio 2016 – a much, much Even big cities don’t want to stage the bigger project. Olympics, because it’s become Too Big. “It would be impossible to criticise. And based on their current TV and For Too Big, read Too Expensive. sponsorship rights trajectory it’s highly likely “A taxpayer bill running into billions of And it would leave a sporting, that they’ll have double that in reserve by the dollars? Thanks, but no thanks.” economic and social legacy the like time we get to the other side of LA 2028. “Legacy? We’re not convinced.” Very do-able. When you have a product which your most of which the Olympics has never And a small price to pay for what would, at important customer doesn’t want to buy, you seen...the media, the sponsors and a stroke, transform the image of the IOC and have a Big Problem. the Games. No host city, no Games. the fans would love it” It would be impossible to criticise. The IOC, naturally, knows this. It would leave a sporting, economic and Hence the dual award, which bought it social legacy the like of which the Olympics time to work on the Big Problem and, it The nation that is above all the beating has never seen in a country that couldn’t need clearly hopes, two new Big City Games that heart of sprinting, the Games’ most iconic it, or deserve it more. will rejuvenate its Big City pipeline. discipline. The media, the sponsors and the fans And hence Agenda 2020, the IOC’s And yet despite this, it’s a nation that would love it. strategic roadmap for the future which, currently couldn’t dream of staging the And making the Olympics smaller couldn’t in the IOC’s own words, will ‘[change] Olympics, because it’s too big, too expensive. be more Olympian. the candidature procedure, with a new But not if you scale the Games down. As de Coubertin said, “The Olympic Games philosophy to invite potential candidate cities Kingston has Independence Park, the are a pilgrimage to the past and an act of faith to present a project that fits their sporting, national sports and cultural centre which in the future.” economic, social and environmental long- includes the National , home of Back to the future. term planning needs.’ Jamaican football and athletics (capacity The Olympics shouldn’t be about the But what constitutes a ‘potential candidate 35,000), a velodrome, and a range of indoor bigger, the better. city’ if big cities continue to say “Thanks, but and outdoor arenas that can stage multiple It should be about the best in human spirit, no thanks”? sports including swimming. about purpose beyond profit. Does that include all the other cities and A readymade Olympic Park. Not bigger is better, but less is more. Z countries in the world that currently couldn’t And on top of that there’s no Olympic dream of staging the Olympics, because it’s event that Jamaica couldn’t stage. Tim Crow is the former chief executive of way too big – too expensive – for them? Yes, Independence Park would need some Synergy. Follow him on @shaymantim

01/02.18 : SportBusiness International

22_Tim_Crow_EventBidding.indd 22 26/01/2018 09:35 SPONSORSHIP : IOC RULE 40 23

RULE YOURSELF | HOW THE IOC’S ATHLETE MARKETING RESTRICTIONS RISK DEATH BY A THOUSAND CUTS

F IOC and German Confederation forced to relax the implementation of Rule 40 governing athlete endorsements in Germany F Dilution of athlete endorsement control threatens TOP sponsor programme F Legal experts say IOC’s handling of the issue has been adept so far

Under Armour’s 2016 campaign with Michael Phelps was made possible by the relaxation of the IOC’s Rule 40 (Getty Images)

BY BEN CRONIN conversation that the agency behind it, Rule 40 is the controversial clause written Droga5, went on to win a Cannes Lions into the Olympic Charter to protect the t the 2016 Summer Olympics in award for the campaign. exclusivity of those TOP partner rights. Rio, the garland for the best piece Reflecting on its success, the company’s It once prevented non-sanctioned brands of marketing arguably went to co-head of strategy Harry Román-Torres said from associating with the Games at all and Under Armour for a short-form he liked to think that the stirring music and prohibited athletes from crediting non- Avideo featuring Michael Phelps. imagery from the video would have been Olympic sponsors during a blackout period The 90-second spot – released on social playing in the back of people’s minds as that spanned the event. media just seconds after the swimmer won Phelps stepped up onto the podium. But as the latest edition of the Olympics his 20th gold medal at the Games – employed Unfortunately for the IOC, Under Armour in Pyeongchang approaches, there are plenty moody cinematography and an elegiac achieved all of this without paying a penny of experts who think the rule is in danger of soundtrack to tell the story of the sacrifice towards the Olympics’ TOP marketing being diluted to the point of irrelevance. behind the American’s record-breaking programme. “My personal view is that it’s become so achievement. For a fraction of the hundreds of millions easy to ambush things without breaching “It’s what you do in the dark that puts you of dollars that it would have cost to sponsor anything,” says Tim Crow, a consultant who in the light,” read the tagline, before Under the Games, the sports equipment company in his previous guise as CEO of Synergy Armour’s ‘Rule yourself’ slogan flashed up had taken advantage of a relaxation in the Sponsorship used to design campaigns for on screen. IOC’s Rule 40 marketing restrictions to give clients that cleverly circumvented the statute. The video was so successful in putting itself almost as much prominence as the “I wouldn’t call it ambush marketing but Under Armour at the heart of the Olympic IOC’s official roster of partners. I’ve worked on lots of campaigns where

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23-24_Rule40.indd 23 26/01/2018 14:52 24 SPONSORSHIP : IOC RULE 40

Continued from previous page...

brands have had a good reason to want to use WHAT DOES THE RULING MEAN the Olympics as a marketing platform, but for Extra: FOR GERMAN ATHLETES? whatever reason they couldn’t be a sponsor.” Crow traces the erosion of Rule 40 to the dawn of social media and the London 2012 • Athletes will be able to link social media to athletes will also be permitted during the Olympics, when athletes became increasingly content from the IOC, local organising “frozen period” under certain conditions. vocal about having to break ties with their committee, DOSB or Team Germany with • The rules for the approval of applications long-term partners during the Games. He greetings or acknowledgments to sponsors. will be amended, with the deadline says the IOC has subsequently been forced • Generic advertising, as well as greetings or significantly reduced and not constituting a to try to strike a balance in recognising the congratulatory messages from the sponsors cut-off period. important support that personal sponsors provide to athletes while at the same time protecting Olympic partner rights. Although the case does not represent a TOP sponsorship programme at the start “To be fair to the IOC they have a lot of legal precedent, Matthew Pryke, a partner of the 1980s, says the negotiated position athletes on the commission now and the with specialist sports legal firm Hamlins LLP, reminds him of the “messy” days before the bottom line is it was not very attractive to argues that it does represents a threat to the rights were packaged together. sponsor an Olympic athlete because of the Olympic movement’s ability to make money. Although he understands why athletes regulations, so they did need to relax them,” “This has come about as a result of, in want a bigger share of Olympic revenues, he he says. “If nobody wants to become an effect, a negotiated position between them,” says they already benefit from the money Olympic athlete they’ve got no Olympics.” he says. “It’s not an actual ruling that has set that trickles down from the TOP programme The upshot was a loosening of restrictions a precedent, but what I think it does show to fund their federations and sports. at London, followed by a further relaxation of is a general trend, towards a dilution or “It won’t achieve anything because it will the rules in the build-up to Rio. At the latter narrowing of these exclusive arrangements be cutting everyone’s nose off to spite their Games, the IOC lifted the advertising blackout that sport has traditionally relied upon.” face,” he says. “You can’t expect companies to on non-Olympic partners meaning athletes More alarmingly for the IOC, he describes continue to feed substantial sums of money could appear in advertising campaigns with the negotiated position as a ‘moveable feast’ to support the Olympics if the competitors long-term sponsors during the Games. This that could still be subject to change. Because can be very clever and sign up 20 to 30 well- was subject to special dispensation from their competition law elsewhere in the EU is the selected athletes who would give a good level National Olympic Committees and a series of same, he adds that there is no reason why a of exposure. Giving rights back to athletes, convoluted restrictions that prohibited those British or French competition authority, for getting other sponsors that are competing sponsors from using Olympic-related words example, couldn’t choose to take exactly the with official sponsors, really is going to send like ‘Rio’, ‘Gold’, ‘Olympian’ and ‘Medal’. same position within their jurisdictions. it backwards again and rather than creating Aside from leaving the IOC vulnerable to “As I understand it, these rules are going more revenue it will create less.” satire, the restrictions also created the gap to apply for the winter Olympics that are Nally suspects that the current IOC that Under Armour exploited so expertly with forthcoming,” he says. “The IOC have leadership has been protected from the the Phelps campaign. proposed this position and they [the German worst impact of the erosion of Rule 40 by the Cartel Office] are currently carrying out lucrative sponsorship deals it has recently German challenge market tests to see whether the position signed with Asian firms as the next three The IOC might have hoped things would stop the IOC has proposed is considered within editions of the Games swing through the there. In March 2017, it elected to maintain Germany to go far enough.” region. Beyond that, he thinks the IOC will the approach to Rule 40 employed at the Rio Patrick Nally, the man who advised the have to think about directing a greater share Games for the Pyeongchang Winter Olympics IOC to centralise its sponsorship rights and of revenues to athletes to better dispose this year. But an action against it from the who was instrumental in the creation of the them to the TOP programme. German Federal Cartel office in October But, given the difficult circumstances, stymied those ambitions. Pryke thinks the IOC has been adept in its Following up on a complaint by the handling of the dispute with the German Federal Association of the German Sports “You can’t expect companies to cartel office so far. Goods Industry, the cartel office argued that continue to feed substantial sums “If I was in their position, the last thing even the Rule 40 approach employed in 2016 I would want this to do is go to a formal represented a monopolisation of marketing of money to support the Olympics hearing because the risk for them is so rights that was harmful to the earning if the competitors can be very massive in terms of both the sanctions which abilities of athletes. you have under breaches of competition law In December it claimed a win against clever and sign up 20 to 30 well- and monopolistic positions,” he says. “The the IOC and German Olympic Sports worst sanction would be that the regulation Confederation (DOSB) when both parties selected athletes who would give is void – then in effect it becomes open offered to loosen the previous restrictions on a good level of exposure” season for people. So this sort of negotiated advertising activities by athletes exclusively position is absolutely the right way to go targeted at Germany (see above). PATRICK NALLY, FORMER IOC CONSULTANT about it.” Z

01/02.18 : SportBusiness International

23-24_Rule40.indd 24 26/01/2018 14:53 COMMENT : RICHARD CLARKE 25

WINTER OLYMPICS WILL PUSH SPORTS SOCIAL MEDIA FORWARD

The ‘greatest show on Earth’ is an opportunity to demonstrate the state of the art in digital media, says Richard Clarke

n digital terms, looking back on Olympics specifically to create short-form clips; there are no NHL players in the ice hockey. gone by is akin to leafing through a photo animations, maps and statistics that go down That said, Sochi in 2014 did have a certain album from your teenage years. well on social. virality on social media. That is if you count Some things may be unchanged but a lot Elsewhere, the Olympics’ two biggest #SochiProblems, the popular hashtag for logging Ilooks, at best, embarrassingly quaint. broadcasters, NBC and Eurosport, have inked a issues in Russia. Back in 2010, the Olympics’ Facebook page content deal with Snapchat. The US broadcaster Then there was the extremely short-lived and was proud to have reached a million followers will be producing live VR content from an highly destructive #Quinning meme, thanks to during the Winter Games in Vancouver. Four Olympics for the first time. Korean TV stations USA bobsleigh athlete Johnny Quinn. A toilet years later, over two million signed up during the are even trialing 8K cameras. door locked fast on him and, with no help at two-week Sochi event. Right now, the main page This is also the first Games for Eurosport hand, he “used his training” to burst through the reaches over 19 million. owner Discovery, which paid €1.3bn for the wood panelling. London 2012 went down as the “Twitter European rights to Summer and Winter The serious media aspect of Pyeongchang was Olympics” but, by Rio in 2016, Facebook Olympics up to 2024. They have announced a summed up by JB Perrette, Discovery’s president had stolen the inside lane, logging 1.5 billion desire to reach “more people on more screens” and chief executive when he said: “The Olympics interactions and persuading 15.2 million people during the Games and, to that end, brought in is the best laboratory for understanding of to use profile frames (remember them?) to show Ralph Rivera as managing director of Digital in consumer consumption of media.” their support. late 2016. He led the BBC’s every-minute-of- It is a point where extraordinary demand Of course, four years is a lifetime in social every-event coverage of London 2012. for specific sports content collides with media and the “greatest show on earth” is an extraordinary breadth of availability. And that opportunity to demonstrate the state of the art, can tell us a lot. and then attempt to nudge it a little further. “[The Olympics are] a point Even since Sochi, we have many more These factors combine to make each Olympics a accessible, reliable and ubiquitous means of staging post in sports social media. where extraordinary demand for watching sport. Four years ago would you have For some, the winter Games will always be the specific sports content collides been considering downloading a catch-up show slightly gawky cousin of the summer event but it on your phone over breakfast and watching it on still captures the attention to such an extent that with extraordinary the way to work, viewing an entire event through some of us will suddenly feel a compulsion to social media or streaming through your TV via stay up till 2am to watch curling. For a few weeks breadth of availability. an OTT network? it is an obsession then, for four years, it is largely And that can tell us a lot.” We might have had the option, but our forgotten. mindsets were stuck on the traditional treadmill The introduction of the Olympic Channel was of consuming content. aimed to counteract that. Set up in 2015, based Eurosport will be the main outlet for Eight years ago in Vancouver, the obvious in and launched during the Rio games Discovery’s deal and they will seek to localise options seemed little more than the BBC’s linear the following year, its motto proclaims it as their coverage in different countries using the channels, red button and website. “where the Games never end”. The channel will channel’s long history in winter sports. They Next month, if that strange compulsion for be flexing its muscles for the first time during a have sub-licensed to the BBC in the UK and ZDF curling strikes, you can satisfy via a variety of full event when the Winter Olympics starts in in Germany. In addition, they have agreed a deal screens and platforms. Pyeongchang, South Korea on February 9. to put the Eurosport Player on Amazon Prime, That is why each Olympics Games or World Olympic Broadcast Services, the long- with the potential for 20 concurrent live streams. Cup is a line in the sand for digital and social established host broadcaster for the Public broadcasters with a sublicence will only media. International Olympic Committee, is estimating be allowed to stream their own live broadcasts Or in the case of Pyeongchang, a line in the 4000 hours of coverage will be produced during on their website and apps. snow. Z the games. Pyeongchang is nine hours ahead of London Innovations include cameras on bobsleighs and 14 hours ahead of New York, so this may be Richard Clarke is a digital and social media and graphics of “ghost skiers” acting as pacers an Olympics viewed on catch-up in key markets. consultant. He holds the distinction of having run to the live competitor as he hurtles down the The North American audience might not watch the social media accounts at major football clubs mountain. Very visual, very Millennial, very at all: the last three Winter Olympics have had in the Premier League and MLS, having worked Tweetable. the lowest TV ratings among 18-49-year-olds of for EPL club Arsenal and MLS club the Colorado OBS have also developed “Content+”, any games in the past 30 years. And this time Rapids. @MrRichardClarke

01/02.18 : SportBusiness International

25_Richard_Clarke.indd 25 26/01/2018 09:41 FIFA Master ranked Europe’s No.1 course for a record 5th time by SportBusiness

CAS/DAS in Sports Law

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One of a kind in Switzerland Launched in 2017 www.cies.ch Angelo Rigopoulos, Head of National Associations Governance at UEFA ADVERTISING FEATURE and FIFA Master Alumni

Angelo Rigopoulos is another FIFA Master alumni with an outstanding career in deal with all governance related matters and sports. The Italian-Greek lawyer – currently the Head of National Associations assist on problems within the NAs, especially Governance at UEFA - has been in love with the game of football from as early in cases of undue state/political/governmental as he can remember, but it was an unfortunate event that actually steered his interference in football affairs. Furthermore, professional career towards the sports arena. “I started being interested in I am the administrator of the UEFA National football from a professional point of view when I suffered a knee injury that did Associations Committee, which reports directly not allow me to continue playing football. As I was studying law at that time, to the UEFA Executive Committee. Another I decided to focus on Sports Law in order to be able to help football players. interesting project in which I am heavily involved This led me to founding a private sport law consultancy fi rm in 2007, aimed at in is the implementation at national level of advising football clubs and young athletes on labour contracts”, Angelo recalls. the Autonomous Agreement on minimum After a couple of years, he entered the 10th edition of the FIFA Master in 2009 requirements for standard professional football – and graduated in July 2010. At graduation day, he received an invitation from player contracts as agreed in 2012 by UEFA, ECA, EPFL and FIFPro Division Union of European Football Associations (UEFA) to work as a lawyer in FIFA’s Europe. Finally, on a yearly basis, my unit is also responsible for the distribution Players’ Status Department, in Zurich, in order to deal with transfer related of solidarity payments to the NAs from UEFA Club Competitions. and employment related disputes (i.e. clubs vs clubs, players’ vs clubs) of an European dimension. He continues: “After having spent almost 3 years in this What is the thing that you love about your job? And what is its biggest position, I moved to UEFA’s headquarters in Nyon and joined the Sports Legal challenge? Services unit, within the legal division working as legal counsel for all regulatory I love everything! From the days when you struggle to fi nd a solution to a and statutory matters. In February 2017, I was promoted to Head of National problem affecting one of our National Associations to the day when you are Associations Governance within the National Associations Division”. sitting in the stands to watch the UEFA Champions League fi nal! The biggest challenge is, probably, similar for all those who love their jobs: fi nding the right Angelo believes that doing the FIFA Master was the right decision, and very balance between professional and private life. much worthwhile. He explains: “I had a clear plan before entering the FIFA Master. A specifi c timeline of what I wanted to achieve within a specifi c period How important was the FIFA Master for your career? of time. Considering that I got a job the same day of the graduation, I would say I think the FIFA Master was key in my career since it gave me the opportunity to the plan was well executed!” come closer to the football industry, which was ultimately my aim.

Read more about Angelo and his career in this exclusive interview. Are you still in touch with classmates or other alumni? How important is that network for you? What is your job like, as Head of National Associations Governance at UEFA? The FIFA Master Network is very important. Of course I’m in touch with My unit (National Associations Governance) is responsible for dealing with classmates and other alumni; it is also normal that with some you have only all matters relating to governance within all of UEFA’s National Associations business relations, whereas with some others you establish true and long-lasting (NAs). In particular, we provide assistance with internal affairs and review – in friendships. No matter what, if you are working in the sports industry, you will cooperation with the legal division – the statutes of the NAs. In addition, we also always fi nd FIFA Master alumni around the world in front of you!

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FIFA Master ranked Europe’s No.1 course for a record 5th time by SportBusiness

CAS/DAS in Sports Law

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One of a kind in Switzerland Launched in 2017 www.cies.ch 28 ROUND TABLE

Digital

THE DIGITAL YEAR AHEAD | EXPERTS MAKE THEIR PREDICTIONS FOR SPORT IN 2018

F Facebook will continue to be the dominant revenue generator F Rate of growth in English Premier League domestic TV deal expected to slow F Esports predicted to strike greater number of exclusive media deals

Will NFL digital viewership make up for declining TV ratings in 2018? (Getty Images)

BY RICHARD CLARKE interested in Dota, Counter-Strike and Rocket important for rights-holders in 2018 and League than Dybala, Cristiano and Robert which, if any, will fall down the pecking he development of digital and social Lewandowski. order? media in sport has always been We asked experts from across the sports Massaro: If we’re talking about revenue swift but 2018 could see the start of industry to discuss their expectations and generation, then you can’t look further than an even more rapid acceleration. predictions for next 2018 in terms of digital, Facebook. It has the largest audience, the TWithin 12 months we could see the Premier social media and esports. leading advertising platform and has the League, the most important competition in the As it turned out, even their terminology trophy for last click attribution, meaning that world’s most important sport, take its first real smacked of straightforward urgency. This was Facebook users click and convert through ads steps away from linear television. Meanwhile, a “disruption” and “pivot”-free zone. Pure and – a lot! Facebook et al continue to dominate the simple, “change” is upon us. If the objective is simply to reach current narrative and monetise their content in a way and new fans, then it’s also Facebook. It has that printed media can only lament. Then there Let’s start with sports and social media. done a fantastic job at reinventing itself to is the growing generation of ‘sports’ fans more Which platforms will be the most become the dominant platform for brands to

01/02.18 : SportBusiness International

28-31_digital_Roundtable.indd 28 26/01/2018 11:16 DIGITAL : ROUND TABLE 29

communicate with consumers. themselves, but their respective content “By the end of 2018, I expect If the objective is fan engagement, then strategies have been built around sport and there to be a negative story or Twitter still has the mantle of being a defined whilst neither are dependent on football there ‘sports social media channel’, with its real-time would be a massive gap in the programming debacle around esports” nature and hordes of hardcore sports fans. and a likely drop off in subscribers, advertising Instagram has made the most progress in inventory and higher churn rates away from MICHAEL BROUGHTON, CO-FOUNDER, recent years. Building in features that ensure the content part of the business should either SPORTS INVESTMENT PARTNERS the younger audience adopt the platform have lose out. allowed it to grow rapidly, whilst maintaining The new wrinkle in this cycle is the ability to leading engagement rates across the timeline show multiple games in a single slot. In part, it’s and Stories. simply to comply with regulatory pressure but EXPERT PANEL Twitter’s advertising capabilities don’t it also opens the door for one of the tech giants compare to that of Facebook or Google. As or OTT providers to have a go at a package. To anticipate the major trends of 2018 the world leans further towards paid media They are intentionally set up to deliver multiple Richard Clarke gathered five thought and data analysis, the requirement is for the streams simultaneously so this caters to their leaders in the field of interaction platforms to offer similar levels of audience capabilities. It’s unlikely one of them will win a between sport and digital. targeting, analytics and conversion tracking. So slot in the domestic rights though I wouldn’t be if any platform is to fall down the pecking order, surprised if the EPL grants one of these sets to it will be Twitter. a tech company if they are reasonably close in Professor Simon the bids so as to allow them to give it a test run. Chadwick, What is your prediction for the new The international side is where the ‘FANG’ professor of sports Premier League TV deal and what role will (Facebook, Amazon, Netflix, Google) group and enterprise & co- digital and OTT platforms play? OTT providers may get their teeth into EPL director of Centre Broughton: The overall value of the domestic rights. The Amazon/NFL deal, which included for Sports Business, and international rights cycle is likely to go international rights in 200 countries, is an Salford University up. The increased content, even if in the same interesting barometer of how they may look at number of packages, offers to maintain tension things, as with Facebook and their efforts with Michael in the bidding process whilst increasing the the IPL rights. Broughton, amount of inventory. If Amazon feel that owning EPL rights co-founder, Sports The rate of growth is likely to slow at least in certain markets may open up the Prime Investment Partners in the domestic market. Sky and BT will subscription network, then they may challenge both want to maintain their position whilst some incumbents. It will also be in the not putting too much at risk. Their recent international sphere that DAZN, Deltatre and announcements on working together are a Eleven, amongst others, will come to the fore. clear effort to reduce the competition between Chadwick: It is very easy to say more of the Luca Massaro, founder and chief executive of WePlay

Sam Cooke, editor-in-chief, Esports Insider

Anthony Caponiti, co-founder, Hashtag Sports

Will the announcement of the Premier League’s new rights deal have the impact of the last, pictured? (Getty Images)

01/02.18 : SportBusiness International

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Continued from previous page...

The opening for the ELEAGUE: Counter-Strike: Global Offensive Major Championship finals (Getty Images)

same – onwards and upwards. However, the “We’ll also continue to see more argue that compared to other programming on Premier League would be unwise to approach TV, the NFL is actually stronger year-on-year the next round of rights deals in the same way crossover between the worlds of than industry averages elsewhere. it has in the past. Figures already suggest that ‘traditional sports’ and esports” Keep in mind that the NFL, like all traditional patterns of consumption – and, for sports leagues, will show improved digital that matter, delivery – are changing. It would SAM COOKE, EDITOR-IN-CHIEF, performance as long-term linear media rights be remiss of the league not to address the ESPORTS INSIDER deals catch up with the current consumption change that has seen us move from a culture of habits. Also, another reason the NFL’s digital 90-minute to 90-second consumption. numbers may be negatively skewed right We already know that more packages will factors at the macro level as well as those now is piracy of live streams on channels like be included in the new deal, with new slots specific to the NFL including temporal issues Periscope. available to bidders. With such a proliferating like the USA anthem protests. Then there are bundle of opportunities, it seems the Premier the shifting media consumption habits and Which of the FANG companies (Facebook, League has tried to craft an offer that will movement to OTT/streaming digital platforms. Amazon, Netflix, Google) will have the enable it to retain long-time partners Sky With this in mind, I predict that the NFL’s greatest influence on the business of sport while generating potential opportunities for TV ratings will continue to decline while the in 2018 and why? newcomers. digital figures will slowly rise but not at an Broughton: Firstly, let’s rule out Netflix. Their equal rate. The digital growth will come under strategy is about evergreen content and they The TV/digital figures for NFL have been fire by some as not good enough and/or act as have built a war chest in that space. Any move under scrutiny for some time, where will classic fodder for theories that the NFL’s sky is into sport would require either more funding they be at the end of 2018? falling. to be available or for the company to remove Caponiti: The NFL’s viewership success, Nonetheless, it’s likely that the TV/digital budget from its original content strategy. or lack thereof, is a complex one to unwrap growth discrepancy is deceptive. For one, there Amazon are clearly serious about sport because of many contributing and competing are some league and media executives who and despite Facebook saying they don’t want

01/02.18 : SportBusiness International

28-31_digital_Roundtable.indd 30 26/01/2018 11:18 DIGITAL : ROUND TABLE 31

“The Premier League would be unwise to approach the next round of rights deals in the same way it has in the past”

PROFESSOR SIMON CHADWICK, PROFESSOR OF SPORTS ENTERPRISE & CO-DIRECTOR OF CENTRE FOR SPORTS BUSINESS, SALFORD UNIVERSITY

to be buying big rights and would rather be a complementary platform, their strategy of recruiting people with big rights deal experience is some way off what they are saying publicly. Without that executive in place it will be tricky – though certainly not impossible – for them to be a big player this time around, but they will continue to grow in sports regardless. With both these companies there are interesting developments to come and we can expect them to become more entrenched in the sector. In all probability, we can expect more deals like the NFL/Amazon deal or the ATP/ Amazon deal and Crossfit’s deal with Facebook – that is, the major tech companies trialling or running beta tests with live sport, among small but highly active and engaged consumers or in non-core markets. These make the tests relatively cheap and enable the companies to fine tune their services and understand how sports broadcast works. It seems the EPL has crafted a media package that will appeal to digital newcomers “If we’re talking about revenue generation, then you can’t look structures being established. space right now with Formula 1 having just What interests me is where smaller, leaner, concluded their first F1 Esports Series and the further than Facebook” more innovative companies fit into the new likes of World’s Fastest Gamer which was run world order. With younger audiences often in partnership with the McLaren F1 team. FOUNDER AND CHIEF LUCA MASSARO, suffering from FANG fatigue, as well as being Finally, we can expect to see more exclusive EXECUTIVE OF WEPLAY predisposed towards exciting developments, it media rights deals between tournament will be worth looking out for new challengers organisers and broadcasters, and more titles All of this will be with a view to being well- just as much it is anticipating what FANG will will emerge too. placed to make educated decisions about the do. Broughton: Esports will continue to grow and next round of rights deals in the US. What we will garner more and more media attention. are seeing now will be some interesting beta How will the esports industry have evolved It’s a fun story, especially when pitted against tests. by the end of 2018? lower numbers for mainstream sports (on Chadwick: At least one of the four will have Cooke: In 2018 we’ll see the how the first TV at least). There will likely be some crazy a breakthrough moment in 2018, although it seasons of the franchised North American valuations attributed to teams and that seems inevitable that all of them will capture Series and Overwatch juggernaut will likely continue for some time. the rights to content being generated by the League (OWL) fare. With slots that have cost By the end of 2018, I expect there to be a world’s biggest sports properties. millions of dollars, the assumption is that these negative story/debacle around esports. The Everyone expects this, and it seems will generate a lot of attention, especially with media love to build something up to then almost inevitable; hence, the more significant stakeholders from the NBA, and NFL among break it down again and this nascent industry questions would seem to be: with whom, in investors in the OWL. is growing very quickly but has many potential what form, and for how long? We’ll also continue to see more crossover missteps to make. Examine the integrity The dynamic between FANG and between the worlds of ‘traditional sports’ and construct and there isn’t really one as yet – so established broadcasters will be interesting esports, as sports clubs and stakeholders look maybe the story is about fixed bets taking to observe, especially as the latter’s business to secure their part of the esports pie. The place or something around drug use. With this models come under threat. In the new NBA 2K League is set to kick off in early 2018 many eyes now starting to watch the space media battle, 2018 will see the new rules of and that alone has 17 NBA teams taking part in it will be no surprise if a wheel comes off engagement being defined and new market its first season. Sim racing is also an exciting momentarily. Z

01/02.18 : SportBusiness International

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Data CASE STUDY | NEWCASTLE FALCONS FOLLOW ANALYTICAL APPROACH TO REVIVE WEAKENING ATTENDANCES

F Rugby Union’s Newcastle Falcons deployed a new CRM system to take a more data-driven approach to marketing communications F Data analysis identified eyk customer segments for marketing campaigns to target – but also revealed some significant holes in customer profile information F The club achieved a 10% increase in attendances during its first season of data-driven marketing and a 29% increase in average ticketing spend

Newcastle Falcons captain is held up short in an Anglo-Welsh Cup match against Newport Gwent (Getty Images)

BY DAVID WALMSLEY star of the world game, an 18-year-old Jonny Over that period, attendances have Wilkinson. inevitably risen and fallen correspondingly. t is almost exactly 20 years ago that The two decades since have been During the first half of the 2000s, the Falcons’ Newcastle Falcons were English rugby considerably tougher for a side whose rivals gates increased in line with those of the rest union’s champion club, as they took first- were quickly up to speed in both spending of the league as the rising tides of broadening mover advantage of the sport’s switch to and strategy, and which must scrap for public interest in the domestic game and England’s Iprofessionalism in 1995 to sweep through attention in the long black-and-white shadow winning of the 2003 the and power on to the of the North East’s obsession with football combined to lift all Premiership boats. Premiership title in 1997/98. and the dramas of the city’s football team. In later years, however, the club started to Bankrolled by then Newcastle United Ten years in the bottom half of the spring a leak and attendances bottomed out Football Club chairman and local businessman Premiership eventually led to relegation in during its exile in the Championship at an Sir John Hall, the Falcons assembled an 2011/12 and although the Falcons escaped average 4,416. all-star cast of internationals led by England from the Championship at the initial attempt, Back in the top flight, as Newcastle fly-half and All Blacks wing they finished last but one in the first three of achieved the initial objective of all promoted Va’aiga Tuigamala, as well as the rapidly-rising their four seasons back in the top flight. clubs in holding on to their regained status,

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“We made a big effort to communicate better with our staff to ensure that they understood the value of the wider CRM and data project and how important their role is within it.” MICK HOGAN, MANAGING DIRECTOR, NEWCASTLE FALCONS

attendances revived – albeit only to the level Falcons average Premiership ticketing purchases, email engagement, of the years preceding the final slide into attendances 1999/00-2011/12 corporate sales et cetera. relegation, and still about half the average of “Achieving a 360-degree view of each fan the Premiership as a whole. Premiership average Newcastle Falcons by holding all data in onePremiership system average enabled usNewcastle Falcons When the attendance growth achieved 16,000 to get a better14,000 understanding of our fans and between 2013/14 and 2014/15 failed to their interaction with the club.” 14,000 continue into the Falcons’ third season back 12,000 in the Premiership, the club carried out a 12,000 Data acquisition root-cause analysis that identified a link The Falcons 10,000began by drawing all data from 10,000 between sluggish attendance growth and fan existing systems into the new CRM and data engagement issues, which it then traced back 8,000 management 8,000service operated for the club to a lack of consistency and focus in the way 6,000 by Green 4 Solutions to produce a single the team communicated with supporters. customer view6,000 covering every identifiable Managing director Mick Hogan says of 4,000 individual’s known interactions with the club. 4,000 the situation: “We found we had a lack of 2,000 The profiles produced as a result sought co-ordinated communication channels to our to categorise the incoming information 2,000 supporters, leading to some disengagement 0 under three headings: contact, ticketing and within the fanbase. communication. 2010/112011/12 0 2000/012001/022002/032003/042004/052005/062006/072007/082008/092009/10 “Our annual Premiership-wide supporters’ 1999/2000 Contact information2013/14 comprised basic 2014/15 2015/16 survey indicated that although engagement identification details. with fans was improving year-on-year, that Falcons average Premiership Ticketing information sought to build up a was largely because it was coming from picture of attendance history. quite a low base – the main indicator of attendance 2013/14-2016/17 Communication auditing focused on disengagement was that attendance growth responses to email and SMS messages. on matchdays was slower than we believed it 8,000 As well as amalgamating and classifying could have been.” existing data from legacy systems, the club To tackle the problem, the Falcons turned 7,000 also sought to accumulate new layers of to data as both a means of quantifying information from across the business and the primary issues they faced and then in 6,000 impress the importance of this new focus identifying the best responses to them, upon all staff groups. and decided they needed to rebuild their 5,000 Hogan explains: “We made a big effort to customer relationship management (CRM) communicate better with our staff to ensure system to do so. 4,000 that they understood the value of the wider Hogan explains: “We knew that we wanted CRM and data project and how important 3,000 to improve the fan experience and the their role is within it. best way to do this would be to use data to “Data collection methods had been 2,000 understand fans better. lacking previously, so the ticket office staff “Initially this would manifest itself were trained to effectively collect data, and 1,000 through better communication and we started using fan matchday experience eventually through much stronger insight 0 surveys to collect further insight we could to help make better customer-driven 2013/14 2014/15 2015/16 2016/17 aggregate from fans who attended certain decisions.” games. And he adds: “We had tried to use data “We also created a new role within before, but it wasn’t effective because the “We knew that we wanted to our club to manage our CRM project and tools we used were fragmented. We had marketing communications. This role many disparate systems holding fan data, improve the fan experience drives the CRM strategy throughout the which meant it was difficult to understand and the best way to do this organisation and is the single point of and communicate with them. contact for our third-party providers.” “So we selected a new CRM and fan would be to use data to engagement solution, Green 4 Go, and understand fans better.” Analysis and insight brought all the disparate data sources Once the data-acquisition phase of the into one system – including contact data, MICK HOGAN project had been completed, Newcastle’s

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marketing team worked with Green 4’s CRM analysts to assess what they had – but quickly found it was what they didn’t have that stood out the most. “Initially, the most basic insight was the lack of quantity and quality of our email addresses,” Hogan reveals. “When we combined the data from our disparate systems, we found that some contacts had two different emails, so we didn’t know which of the emails was the valid one for that contact. “We also had duplicate email addresses across a number of contacts, incorrectly- formatted email addresses and we still had email address of contacts who had unsubscribed from receiving marketing communications.” In total, 73,829 contacts in the club’s database of 129,194 names had no email address listed. Some 23,000 of these had a postal address only, 2,300 just a phone number and almost 32,000 had both, but that still left more than 16,000 with no contact information whatsoever. Newcastle celebrate after beating Bath in the Premiership (Getty Images) Quality issues were just as significant as those of quantity. When the club moved on to examining the 55,000 email addresses they Hogan explains: “We wanted to • What was the primary motivating factor did have, the more layers of accuracy and understand the different ways that we to come to our game? detail they applied to the scrape the more could segment our audience, so that we • How easy did you find ticket they reduced the pool of valuable entries. could better target the fans with offers and purchasing? Stripping out duplicates removed nearly particular campaigns, and the new CRM • How easy did you find ticket collection/ 2,500 entries, ignoring those that were system enabled us to do that. delivery? not subscribed to official communications Once we had the data in place and were • Did you use any of our special ticket knocked off over 15,000, and other errors, happy with the quality, we carried out some offers when purchasing your ticket? bounces et cetera, ruled out 5,000 more. basic segmentation and analytical work Aggregating responses identified several The condition of the email list had based on a variety of measures – including matchday and media of the significant implications for the Falcons’ location and age profiling – which identified business that could be tweaked to both communication strategy – and was also the fan segments for our marketing improve fan experience and create new or likely contributing to the fan disengagement campaigns. enhanced points of appeal to focus on in identified at the outset of the process – For example, using age profiling, it was marketing. Key recommendations emerging but it did not impact so heavily on the found that there is a larger percentage of 18 from the survey data included: demographic and purchasing data required to 40-year-old fans attending Friday fixtures • Creating longer, more in-depth videos to identify key target groups for future compared to other days of the week.” on Falcons TV, such as behind-the-scenes campaigns. The matchday fan experience surveys clips. undertaken after specified matches also • Reviewing processes and efficiencies at began adding another important layer of stand bar outlets, where poor service, low insight to the system: while segmentation and slowness were all cited. “Achieving a 360-degree view analysis identified who to target and which • Reviewing the PA system’s consistency of each fan by holding all data pieces of inventory to sell to them, the and sound quality across the stadium. survey data provided more valuable direction The final and most complex piece of data in one system enabled us to in terms of identifying the elements of the analysis that the new CRM system and data get a better understanding of offer to which they were most likely to capture processes enabled – but potentially respond. the most valuable – was in determining the our fans and their interaction Questions put to supporters included: communication preferences of supporters with the club.” • How did you hear about the game? in terms of whether they were more likely • Which games are you most likely to to respond positively to an email or text MICK HOGAN, MANAGING DIRECTOR, attend? message (SMS), or whether both could be NEWCASTLE FALCONS • Were you aware of game day extras? used in tandem.

01/02.18 : SportBusiness International

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Hogan explains: “We see SMS as a Contact status of registered your details’ email campaign to help re- complementary method to reach fans who supporters with no email address engage fans and a new sign-up portal on our don’t engage with email at all, or who do so website and social media channels.” very little. listed in club database, 2016 The club therefore focused heavily on “Our CRM system allows us to be incentivising fans to provide their current extremely targeted in who we send our SMS email address (and other information), campaigns to. In it we can see roll-up figures using competitions to win match tickets or such as number of tickets purchased, total 16,538 offering access to premium team content, for ticket spend, average spend per event, latest 23,179 example – something it continues to do as an purchases and other useful transactional ongoing means of promoting data hygiene. data for each fan. Hogan says: “We update our content “We use this RFM [recency, frequency, and campaigns to make sure that our fans monetary] modelling to identify groups of remained engaged with our email marketing. fans to send an SMS to. Therefore, SMS 2,307 “For example, we send exclusive news campaigns can be targeted at fans who have to our email subscribers before it is shared for example, a total ticket spend above £500 31,805 on our website – such as team news for the (€569/$699), have bought tickets for two upcoming match. These emails perform well or more home games, who have attended in terms of their click-through rate, which is a match on a Friday night in the last three Contactable by post only currently running at 4.4%.” seasons. Contactable by phone only The success of the campaign can be seen “This enables us to be very targeted in Contactable by post or phone in the growth of its email database during both who we are sending the message to No email, postal address or 2016/17, which increased by 16,000, or 73 per and the content of the message that we phone number cent, over the season. are sending – so our marketing can be very There is also plenty of headroom for personalised.” further acquisition, as the proportion of Attendance at Friday night home database members with a unique contactable Actions and outcomes fi xtures by age group, 2015/16 email address still stood at only 29 per cent Analysing and segmenting the data drawn of the overall total in May 2017. together in the Green 4 Go system, 0 Mobile phone numbers were attached supplemented by insights from the fan 8 7 to only 24 per25 cent of records, making this experience surveys, enabled Newcastle information another potential target for £ 20 to identify a range of actions designed to 18 acquisition. achieve their original objectives of improving 23 While the club was building a larger and communication with fans as a means of more reliable15 database of fans to reach, it raising levels of engagement with the team % 0-9 was also segmenting the customer base into and ultimately selling more match tickets. 10-17 key target groups10 for offers to which they These were primarily focused on three key 18-30 were considered most likely to be receptive. areas: 31-40 Hogan says:5 “The new CRM system meant 24 20 • Higher-quality email lists 41-50 we were better able to segment and target 0 • Targeted marketing within key audience 51-60 specific groups of fans for more targeted 60+ No contactable Engaging email segments marketing to increase fanemail engagement. contact • Email v SMS “For example, promotions and offers Obtaining cleaner and more detailed Average spend per fan, by contact can go to fans based on their data and their contact information – primarily around information, September 2017 profile – for example, their age, how close email addresses – was not just a pre- they live to the stadium etc.” requisite for making progress on the other So, for example, the higher propensity communications0 objectives by maximising identified among 18-40-year-olds to attend 7 their8 reach and efficiency, but had a direct 25 matches on Fridays over other days of financial value in itself. £ the week enabled Newcastle to target 20 18 CRM analysis by the club identified that promotions for these games at that group. the average spend of23 a fan with a contactable Other key segments were identified 15 email address who engages with0-9 email around residence, enabling the club to build marketing% communications is £17.84 more focused campaigns with highly specific aims. 10-17 10 than a fan who doesn’t have an email address Hogan says: “We undertook location 18-30 within the database. analysis to find out how close fans lived to 31-40 5 24 Hogan says: “As email had been identified the ground and then used this information 20 41-50 as our key direct communication channel, to send fans that lived close to the ground an 51-60 0 we had a priority to quickly improve this offer of a free ticket for a friendly match to 60+ No contactable Engaging email through various initiatives such as an ‘update email contact re-engage them in attending.

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“We found that this re-engagement was Newcastle Falcons’ email and For example, the club identified 7,375 a great success: of the fans who claimed SMS database volumes, August fans who purchased tickets for three or the free ticket offer for the 2016/17 friendly fewer matches during 2015/16 and used its against Doncaster, 212 then purchased tickets 2016-May 2017 segmentation and targeting methodologies for that season, and their total spend across to incentivise this group to buy more often. the season was £18,707.” August 2016 May 2017 During 2016/17, 444 members of this Campaigns are also refined by medium, 40 group bought more tickets than they did with data analysis again determining whether the previous year, 85 of whom purchased a a recipient is more likely to respond to 35 season ticket (a figure that rose again, to 119, an email or text message, based on their for the current campaign). 30 previous engagement habits and/or the Although that pool of more frequent typical behaviours of the fan segments to visitors represented only 6 per cent of the 25 which they belong. three-games-or-fewer segment, the change The club has consequently found that in behaviour achieved translated into more 20

SMS marketing is particularly effective as a 000s than £46,000 of additional revenue, or about follow-up to initial email activity, working 15 £100 per person. well as a reminder service that can create Key learning points a sense of urgency through direct calls to 10 action. Newcastle Falcons’ experience in using data Hogan says of the complementary role of 5 and CRM to grow attendances and matchday SMS: “We monitor, for example, the level of revenues by driving up fan engagement ticket sales we are achieving via our email 0 through targeted communications has campaigns. We analyse which areas of the Unique contactable email Mobile number highlighted three important points to stadium are not selling well for a particular consider for other sports organisations with fixture. similar ambitions: “We will then use our CRM system to Newcastle Falcons’ email and • The importance of clean and find out who has bought a ticket in this area SMS database volumes, August comprehensive data sets. of the stadium for a previous fixture. Once • Even relatively simple segmentation we know the number of fans this includes, can be a powerful tool for creating strongly- excluding those who have already bought a defined target groups. ticket for the current fixture, we undertake • Choosing the right communications a cost-benefit analysis to decide if we should channels is essential to ensuring the right send a targeted SMS campaign. messages reach the right people at the right “If we go ahead, the SMS is sent to the time, in the right way. targeted group of fans with a specific ticket Alongside these, Hogan’s view is that offer for the fixture.” the adoption of data-driven processes and Evidence to date suggests this tightly- strategy is not guaranteed to get an easy defined, data-driven approach to strategy ride in all areas of the organisation but is paying off: “We have seen a 400-per-cent is increasingly a ‘must-do’ rather than a return from our targeted SMS campaigns,” ‘nice to have’ in a sports market in which says Hogan. competition for spectators and sponsors is as The combined headline effect of the tough as it has ever been. Falcons’ new approach to CRM and data- He says: “The biggest difficulty we faced in driven communications strategy was an implementing this new strategy was getting important contribution to the 10-per-cent the buy-in from staff across the business, increase in matchday attendances the club so one of the most important things we had achieved during 2016/17. to do was train and communicate with staff But as well as increasing the number of to ensure they understood the value of the people passing through the turnstiles at project. , the campaign also had some “That is crucial because the other main positive effects on the habits of existing thing we have learned is how important data spectators, particularly around frequency is becoming to new and potential partners, of purchasing and, consequently, average and how important knowing more about our ticketing spend, which rose 29 per cent year- fans is to provide them with the experience on-year from £68.92 to £88.61. they want. That increase was helped significantly by “How we measure their reactions to the data-based targeting of specific spectator things like our email communications is segments with potential to attend (and what is now shaping the way in which we spend) more often. communicate with them.” Z

01/02.18 : SportBusiness International

32-36_Newcastle_Falcons.indd 36 26/01/2018 11:07 IN ASSOCIATIONHEADLINER WITH: JEROME GENIUS CHAMPAGNE SPORTS 37 37

HIT WHERE IT HURTS | THE FINANCIAL IMPACT OF MATCH-FIXING ON SPORTS The repercussions of match-fixing scandals for sports are seen as largely reputational. But, asksKevin Carpenter, group special counsel for sports integrity at Genius Sports, what are the commercial impacts of match-fixing and what are the latest measures rights-holders can adopt to safeguard their competitions?

atch-fixing is a threat to all and ended its highly lucrative relationship sports at every level and the with bookmaker William Hill. colossal damage it causes is Though William Hill was not in any way clear. For governing bodies, involved, the allegations of match-fixing Mfans and everyone in between, this form of across all levels of tennis led one of tennis’ corruption is a poison with no place in sport. largest tournaments to deprive itself of a Yet sadly, it continues to exist and, within record-breaking commercial agreement some sports, grow in prevalence. reportedly worth $3.8m. A number of leagues and federations have learned the hard way that by failing to A proactive approach put the necessary safeguards in place, they scrapped a sponsorship deal with the South African national Losing commercial partnerships at the become vulnerable to incidents which can team over concerns about match-fixing highest level can deprive sports of millions irreparably harm their public reputation, each year, not to mention the longer-term damage their relationships with fans and brand from scandals such as doping and reputational risks. Sports have a growing threaten their right to rule without state or match-fixing. number of key responsibilities, however government intervention. In October 2013, PepsiCo terminated these factors are only possible with adequate Yet the reality is that with match-fixing, its title sponsorship of the Indian Premier revenue and conversely, sports who fail to these reputational risks go hand-in-hand League just two years into a five-year prioritise the integrity of their competitions, with very real financial consequences. And at contract reportedly worth $71m (€59m). above driving revenue elsewhere, can a time when the traditional TV broadcasting Pepsi executives did not specifically cite actually face severe financial consequences. model, which has driven the financial success match-fixing incidents in their decision to In combatting this financial threat, sports of a number of sports for decades, is under cut short the agreement. However, it was have more sophisticated safeguards available serious threat, maintaining integrity to widely reported at the time that the drinks to them than ever before. Bet monitoring help secure and retain long-term deals with giant was alarmed that the 2013 scandal systems, operated by specialists like Genius sponsors and other commercial partners is which saw the Chennai Super Kings and Sports, have provided invaluable, round- more important than ever. Rajasthan Royals suspended for two years the-clock protection to a number of sports had hampered the competition’s integrity. against betting-related corruption. Under the spotlight Cricket has not been alone in experiencing Such technology is only one tool available Sport has become the vehicle of choice the damaging financial implications of to governing bodies. Sports can also employ for brands of every type wanting to grow match-fixing. While not a straightforward educational modules or add proactive awareness. The global obsession with sponsorship arrangement, Puma’s deal to be measures to accompany real-time detection. sport creates an invaluable emotional the shirt manufacturer and key partner of Rights-holders such as the PGA Tour are affinity between consumers and brands, the South African national football team was harnessing e-learning to educate players, with sponsors willing to pay a premium in reportedly scrapped just two years into an officials and all other stakeholders located order to tap into a passionate and engaged eight-year deal as a direct response to a Fifa around the world on the consequences, audience on a local, regional or global level. report which cited serious concern around approaches and vulnerabilities linked to And yet while title, shirt and pitch-side the authenticity of the side’s warm up games betting-related corruption. sponsorship provides valuable income in the run-up to its own World Cup in 2010. Never has sport been under such attack sources to leagues, federations and clubs ’s revenue fell from globally for failings of integrity, leaving across the world, the brands themselves are $80m in 2010 to just $20m by 2013. public confidence in the sector at an all-time taking on a degree of risk. Their association And it’s not just the sponsors who are low. And in a world where sports’ reliance with the sport must be underpinned by the willing to take action. In 2016, after a torrid on the commercial viability of their product integrity of the competition and recent cases year for tennis characterised by a spate of is greater than ever, there is simply no room have shown sponsors will not hesitate to match-fixing scandals, the Australian Open for complacency when it comes to protection sever ties if they fear damage to their own felt compelled to distance itself from betting from match-fixing. Z

01/02.18 : SportBusiness International

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ROUND-UP 39

People THIS MONTH’S INDUSTRY MOVES

US sports technology, data and content company Stats has appointed Carl Mergele as MOVE OF THE MONTH its new chief executive. Mergele, a former software executive for printer and imaging products manufacturer Lexmark International, will replace Ken Fuchs in the role. Mergele has previously served as chief executive at a range of software companies, and as a board Étienne Thobois, member at more than 20 corporate entities. Stats provides teams, leagues and brands with chief executive, data, intelligence and technology services. Paris 2024 Olympic US broadcaster Fox Sports has appointed Mark Silverman to the position Games organising of president of national networks. Silverman has worked for Fox Sports for committee more than 11 years and currently serves as president of the Big Ten Network, a joint venture between Fox Sports and the Big Ten Conference. Silverman will oversee programming, production, marketing and digital for live events and studio shows. He will retain his current responsibilities at BTN. Étienne Thobois, who spearheaded Paris’ successful bid to host the 2024 Olympics, has been appointed as chief marketing officer of the . He Will Chignell has secured the role of chief executive of will oversee global marketing, social media, public relations and communications. Chignell the organising committee for the summer previously served as the chief marketing and communications officer for the America’s Olympic and Paralympic Games. Cup sailing event and also worked with WSL chief executive Sophie Goldschmidt at Thobois served as chief executive of the England’s . Prior to these roles, Chignell ran his own marketing and French capital’s bid committee but had to go communications consultancy and also worked for UK pay-television broadcaster Sky Sports. through a recruitment process to land the Masanori Kawana has been appointed as the managing director of the new role for the delivery of the Games – the first Fanatics Japan office in Tokyo. Kawana will lead an initial team of about Olympics in the French capital since 1924. 30 employees, many of whom have links to the Japanese sports landscape The recruitment process began in through apparel brand Majestic, which was acquired by Fanatics in May November and was overseen by independent 2017. Kawana – who recently founded the start-up FanForward – will report firm Odgers Berndtson, which also helped directly to Fanatics International president Steve Davis. place the chief executive for London 2012, Sir Keith Mills. A shortlist of four candidates Pay-television broadcaster Star India has appointed Gautam Thakar as the new chief were selected for interview from a pool of 61 executive of its Star Sports division. Thakar will fill a role left vacant following the departure applications. of Nitin Kukreja in March. He joins Star Sports after working for US venture capital firm Thobois was chosen by Paris 2024 Revolution. Star is preparing for its first season as major broadcast partner of the Indian president Tony Estanguet following a Premier League Twenty20 cricket competition after ousting Sony last September. discussion with members of a Committee The Spring Media agency has appointed Tobias Osmund as its new chief that included French International executive. Osmund has worked in the media industry for more than 20 Olympic Committee member Guy Drut years, most recently for the Associated Press news agency. Spring Media, and representatives from the city, the distributes rights to various sports events, including the Olympic Games in government, the Île-de-France region, the Central Asia, the International Gymnastics Federation’s World Cup series National Olympic Committee (CNOSF) and and World Taekwondo’s and Grand Prix series. National Paralympic Committee (CPSF). A former French badminton champion The Infront agency has appointed Julien Ternisien as director of its reorganised summer and Olympic athlete, Thobois’ previous sports division after splitting the unit from football operations. Stephan Herth will now experience also includes working as the focus exclusively on football. Ternisien will take up his new role by May 1 after leaving the finance director of the 2003 World Athletics European Broadcasting Union, where he has been serving as the head of sports-rights for its Championships in Paris, serving as the summer sports portfolio. chief executive of Rugby World Cup 2007 Nigel Wood has been unveiled as the new chief executive of the Rugby in France, launching the Keneo International Federation. Wood recently stepped down from the consultancy and working as the former IOC same position at the , the sport’s governing body in expert on venues and finance and technical England. Wood will take up his new role later this year, succeeding David expert for the Tokyo 2020 summer Olympics. Collier. Wood will step down from his position as RLIF chairman as a result. Estanguet said: “Etienne stood out The RLIF board will consider nominations for its next chair in February. amongst a field of very high-calibre applicants. His leadership and experience Dan Halem and Tony Petitti have been appointed Major League ’s new deputy were crucial to our victory in Lima and will commissioners. Halem will serve as deputy commissioner of business administration and prove invaluable over the next seven years will also continue in his role as chief legal officer. Petitti, MLB’s chief operating officer, has as we work together to build our exciting been appointed deputy commissioner of business and media. Chris Park has been named project for the 2024 Games.” executive vice-president of product and marketing while Noah Garden will be executive Paris 2024 is due to finalise its plans for vice-president of commerce. Chris Marinak will serve as executive vice-president of the Games’ organising committee early this strategy, technology and innovation. year. Z

01/02.18 : SportBusiness International

39_people_moves.indd 39 26/01/2018 10:55 40 PEOPLE : HEADLINER

‘It is not right to impose such a huge burden on a single country’ GIANNI INFANTINO, FIFA PRESIDENT

F Awarding two World Cup hosts simultaneously was a mistake F Club World Cup should be enlarged and played on a 4-year cycle F Women’s national-team world league on the horizon

BY KEVIN ROBERTS Japan and South Korea shared the honours. sports it is a question of us doing the work The first test comes in the contest for 2026 there,” he said. “I believe in co-hosting,” said Fifa president where, to date, a bid from Morocco is up One of the ways in which the US differs Gianni Infantino as part of a wide-ranging against a tri-nation submission from Canada, from other nations with longer established closing address and interview at the 12th Mexico and the United States. The latter was football cultures lies in the league Globe Soccer conference and awards in of course selected to host the 1994 edition infrastructure. US sport has been built Dubai. in a bid to give the game a launchpad in the around a closed but, while the Returning to the stage where he effectively world’s biggest consumer market. absence of relegation might encourage some launched his leadership campaign two years “The rules for bidding for 2026 are clear investors, there is a growing lobby to bring ago, Infantino said he would encourage more and voting will be clear and open. It will only the country in line with the rest of the world. joint World Cup bids in the years ahead. be for 2026 as the mistake was already made It’s an issue which Infantino has been “There have been too many instances of to organise two World Cups at once. quizzed on before and his answers are, as stadiums being built for a World Cup and not “It is good to have the US, Canada and ever, diplomatic. being used again. It is not right to impose Mexico working together on a joint project. “I always believe in dialogue to find a way such a huge burden on a single country.” Given some of the things which have been forward depending on the market,” he said. While his time in office has been a difficult said in the last year it sends out a positive “We should be able to discuss how things one for an organisation whose reputation message,” he said. should be to find the best structure for the has been tarnished by scandals on his The possible return of the World Cup to development of football in the United States.” predecessor’s watch, Infantino said he was the United States inevitably raises questions determined to invest to rebuild Fifa’s image, about the progress of football in the country Gulf highlights role of football embrace technology to connect with fans since the 1994 competition – a process His appearance at Globe Soccer marked a worldwide, embrace social responsibility and unlikely to have been helped by the national swift return to the Gulf following his visits protect the future of the game. team’s failure to qualify for Russia 2018. for the Fifa Club World Cup – won by Real Even Eric Wynalda, one of the candidates Madrid in Abu Dhabi – and the opening Co-hosting is the future in the upcoming election for the presidency match of the 23rd Gulf Cup. One of the key planks of Infantino’s election of the US Football federation, believes the Speaking to SportBusiness campaign was an increase in the number of country remains insular in its approach International after his set-piece presentation teams qualifying for the World Cup finals, to to the global game, something which, says to the Globe Soccer audience, he said the 48 – a move designed to bring more nations Infantino, “has to change”. Gulf Cup experience had reaffirmed his view into Fifa’s big tent and ramp-up commercial “Football has grown a lot in the US. The of the importance of football around the opportunities. But increasing the number of MLS is an interesting competition, the world. teams also increases the demands on hosts stadiums are often full and football culture The event had been due to take place and limits the number of nations which could is growing. We have to work with the US in in Qatar but was threatened by boycotts feasibly host the tournament alone. the way that we have to in China and India following the country’s diplomatic isolation. The inevitable consequence will be a surge where we want to develop, and we know that, Kuwait stepped in the host the competition of interest in co-hosting, as in 2002 when although soccer is behind other major US after Qatar agreed to relinquish hosting

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Fifa president Gianni Infantino attends the 2017 Globe Soccer Awards in Dubai (Getty Images)

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GIANNI INFANTINO continued...

SportBusiness’s Kevin Roberts speaks with Gianni Infantino at the Globe Soccer Awards in Dubai (Globe Soccer)

rights and all eight teams took part. defensive over its ban from the upcoming to succeed. But the fact is that the general “I was particularly pleased to attend the Olympic Winter Games after findings quality of football around the world is high Gulf Cup opening match because it showed of institutional doping. Shortly before and it is difficult to predict who will do well,” that while there may be issues [between Globe Soccer, chairman of the World he said. countries] football is football and is beyond Cup organising Committee Vitaly Mutko them. Everybody enjoys and loves football,” announced he was temporarily stepping Global development initiatives Infantino said. down in order to fight his own ban from the The emphasis on putting in place a football “It was great to be in a stadium with 65,000 Olympics for his alleged role in the scandal. culture is, says Infantino, driving the growth spectators with many children and women, Asked whether Mutko’s exit would ease of the game in China. many wearing the national team jersey. It a potentially rough ride for FIFA from the “You would have thought that with such was a great experience.” media in the build-up to the World Cup, a big population they would have enough to But after a year in which Fifa’s reputation Infantino was, unsurprisingly, anxious to be successful [in competitions] but it is not has been repeatedly been dragged through accentuate only the positive. as easy as it might look. You have to grow the mud, does the man who has become the “We thank Vitaly Mutko for his the talent and that is what is happening in figurehead for a tarnished brand still love the contribution, but his decision was nothing China and it is very positive. President Xi game? to do with the World Cup. The doping story is committed to the sport and he wants to “Sure I love it – in fact, perhaps even more went on for years but had nothing to do with develop the culture first and [build] strength than before, because I see now there is more football or the World Cup,” he said. for the future.” than I realised to what it means in many “I think the World Cup in Russia will be One of the ways of driving growth and parts of the world. spectacular. There are 150 million people raising the standard of the game worldwide “When I was at Uefa I was involved with living there and they are waiting to welcome is, Infantino believes, to revise the Fifa Club the Euros and the Champions league and everybody. For the first time there is no need World Cup. everything worked well. Then I joined for visiting fans to get a visa because that Although no detailed plans have been Fifa and, although I am the same person, I comes with their ticket, while there will be published he told the audience in Dubai somehow became a figure of suspicion. free train travel between cities.” that thought would be given to creating an “I think in the last year we have shown But while he is happy to predict a enlarged competition played on a four-year that we are serious about reform and I am successful tournament, he wouldn’t be drawn cycle. That melds with reports last year inspired when I see what football means on the chances of the host team, currently which suggested a club competition to around the world and its potential to make ranked 65th in the world. replace the Confederations Cup. life a little better.” “Of course, it is always positive when the Whatever the outcome of Fifa’s Looming large on his agenda is the 2018 host team does well and being the host seems deliberations, Infantino is determined that World Cup in Russia, a nation scarred and to give the home team an additional impetus Fifa should work to promote the game in a

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“Football is something which brings happiness and joy and other people are in far more difficult situations. We should remember that we are lucky.”

way that avoids top-level football being the exclusive preserve of a handful of nations. “It is important that we think about the fans and give as many as possible the chance to see their stars in action. We have to continue to look at the international calendar and find the right balance between clubs and national teams,” he said. Infantino’s focus on football’s role in society is at the core of the decision, taken last year, to launch the Fifa Foundation, due to become operational in the first quarter of this year to provide a legal and institutional basis for the organisation’s The USA’s Abby Wambach celebrates scoring in the 5-2 victory against Japan in the 2015 Fifa Women’s World Cup final (Getty Images) social responsibility activities. It will, in effect, be the body for delivering CSR programmes, often working with Fifa WOMEN’S WORLD LEAGUE Legends – leading ex-players with huge influence in their homelands and beyond. Infantino is determined its work will go well Infantino’s – albeit vague – announcement of plans for a Fifa Women’s World League beyond organising football matches and appear designed to give a further boost to a sport growing dramatically in some parts of relate events. world but gaining less traction in others. “The idea is to work with the legends Since its first edition in 1991, the Fifa Women’s World Cup has become a barometer for the on-site in countries which are suffering as a strength of the women’s game. For the last edition – Canada 2015 – 1.3 million tickets were sold, and result, for example, of natural disasters. We the tournament’s 52 matches pulled in an average attendance of over 26,000. want to invest in projects which provide the The United States, fuelled by talent from its well-established college programme, has been things that countries need at these times. crowned world champions three times, ahead of Germany with two triumphs and Norway and Japan There are desperate needs in some countries with one apiece. and we have a responsibility to respond. Each successive edition of the event has seen TV and online audiences grow and there are great “We will look to our sponsors for hopes that this year’s World Cup in France will see record levels of engagement worldwide. investment and find new sponsors. I think In Europe there are 1.2 million registered players and the number of professional and semi-pro some will be attracted by the ability to join players has increased by some 80 per cent, to 2,083, in the past four years. Big-name clubs including us to make a difference. We will do it because Paris Saint-Germain, Bayern Munich, City, Chelsea and Barcelona have successfully used it is our job, our responsibility and it is a their powerful brands to drive women’s football forward. responsibility we take seriously.” But here’s the reality check. The United States and Canada account for nearly half of the 4.8 Infantino occupies one of the hottest seats million female players registered worldwide (Fifa Big Count) with Uefa member associations in sport. Because of what has gone before, providing a further 44 per cent. Elsewhere the picture is far less rosy. In Fifa’s African and Asian and the trail of detritus left by the previous Conferences only 71 per cent of member associations had national women’s leagues two years ago regime, his every move is scrutinised, every while in South America the figure was just 60 per cent. decision analysed, dissected and often The ability to deliver strong, meaningful and compelling competition in order to attract audiences criticised. and encourage new players is a critical component of a successful development strategy. Fifa’s But despite – in fact, perhaps because – of Women’s Football Survey recognised as much: all this, he manages to retain a refreshing “The existence of consistent competitions at various levels is closely related to the higher number sense of perspective. of female players registered in the most successful member associations than that found in the “We should always remember that we are least successful. This shows the need to organise more competitions at different levels (youth and [working] in football,” he said. senior).” “It is something which brings happiness While we don’t know the timescale or what shape it will take, Fifa’s new world league for national and joy and other people are in far more teams will certainly help provide exposure and generate interest in nations which can’t rely on leading difficult situations. We should remember club brands and rich National Associations to do the job. Z that we are lucky.” Z

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League focus UP-AND-DOWN | MLS PRO-REL DEBATE RETURNS

F CAS expected to rule on demand from two lower-league clubs that USSF adopt F Miami FC and Kingston Stockade may force Fifa to clarify its position on MLS ‘exemption’ F Australia and India – the other big countries with closed football leagues – exploring options to adopt promotion and relegation

Not for teams the joy of promotion, nor the pain of relegation (Getty Images)

BY FRANK DUNNE minutes. The Huddersfield fans behind October elimination from 2018 World Cup the goal go bananas. Hugging strangers, qualification by Trinidad and Tobago (Fifa tadium of Light, Sunderland, 5pm jumping up and down, barking celebratory world ranking: 87). April 29, 2017. An elderly man sits nonsense, temples throbbing from a mixture alone, surrounded by empty seats. of disbelief and orgiastic joy – the usual ‘ soccer’ He is decked out from head to toe stuff when team reaches Supporters of ‘pro-rel’ argue that never Sin red and white: track suit, scarf, baseball the promised land of the Premier League, facing the threat of relegation means cap. His head is bowed, his hands joined, as sweetened by an absence of 45 years from the franchise operators are under no real if in silent prayer. He is crying. He has just top flight. competitive pressure – the type of pressure seen Sunderland lose 1-0 to Bournemouth, These are the extreme emotions produced which makes owners elsewhere in the world condemning the team he loves to the drop by relegation and promotion. Heaven and invest in the best playing talent and develop into the Championship. hell for fans all around the world. But they elite youth academies. As a result, the quality , London, 5.53pm May are emotions fans of Major League Soccer of MLS players will never match that in other 29, 2017. Huddersfield Town’s Christopher teams have never felt. top leagues. Schindler tucks a low shot past keeper The closed nature of MLS – its lack of As economist Stefan Szymanski says in Ali Al-Habsi to win the English Football relegation and promotion – was one of the his book Money and Football: “The fact is that League play-off final against Reading 4-3 issues which came back into the forum of the American organization model works on penalties, after a goalless draw over 120 debate in the US following the country’s well when there is limited competition from

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“Under no circumstance could relegation and promotion have worked for soccer in the USA over the past 25 years. It would have killed investment dead and still would.”

GARY HOPKINS, AUTHOR OF STAR SPANGLED SOCCER

elsewhere (as in , baseball, legal and financial considerations. Licensing and ), but it’s not designed for a decisions must be able to be examined by the competitive market. Unless their business member association’s body of appeal.” model changes, MLS may always be minor Whether or not the two clubs are league soccer.” successful, the case may push Fifa to spell Supporters of the status quo say without out unambiguously what its statute means a closed model there would be no league in with regards to MLS and the USSF, and, more the country. Gary Hopkins, author of Star generally, whether it is merely a guideline or Spangled Soccer: The Selling, Marketing, and should be considered mandatory for national Management of Soccer in the USA is of this associations. view. He tells SportBusiness International: Josh Levy, an associate at law firm CMS “Under no circumstance could relegation Cameron McKenna Nabarro Olswang, says and promotion have worked for soccer that in applying Swiss law, CAS is likely in the USA over the past 25 years. It would to take into account the original purpose have killed investment dead and still would. of the statute. This was to ensure that a The price of entry into MLS is now $150m situation which arose in Spain in 2007 (€124m) and building a required new stadium FC celebrates winning the 2017 MLS Cup (Getty Images) could not be repeated. The wealthy owner $200m, so a $350m investment. of fourth-division club Granada bought “No one is going to risk this if relegation second-division Ciudad Murcia and moved to USL [second-tier United Soccer League] relationship with Uefa, European football’s the club to Granada, renaming it Granada 74, or NASL is a possibility. Major League governing body, since their 1998 discussions thus giving the city a second-division team Soccer, indeed soccer as a whole, is not with sports marketing company Media without it having to be promoted. strong enough financially or as far down its Partners (now Infront Italy) about creating a Levy tells SportBusiness International: “It evolutionary path as necessary to support breakaway super league. all comes down to the interpretation of such a development. In 30 years’ time, when Article 9. Does it require all leagues to have a MLS has a billion-dollar TV contract and the Article 9 promotion and relegation system, or does it USL or NASL has 20 teams with 20,000-seat Miami and Stockade lodged the case with the give Fifa room to manoeuvre, depending on soccer stadiums and a major TV contract, CAS in August 2017. They are represented by the individual circumstances of the league maybe. But even then…” Jean-Louis Dupont, who led the legal team and the country, of how football is going The debate will be given fresh stimulus in which forced the landmark Bosman ruling on in that country and of all sorts of issues? If the coming months from two quarters. In player transfers in December 1995, defeating you go back to the history of Article 9, the February’s elections for the presidency of Fifa and Uefa in the process. They claim that purpose of the statute was never to make the US Soccer Federation, two of the eight by not requiring the USSF to respect Fifa promotion and relegation mandatory, but official candidates – former players Eric statutes on promotion and relegation, the to prevent the Murcia/Granada situation Wynalda and Kyle Martino – are advocates of governing body is in breach of Swiss law on occurring again. But if CAS says that Article relegation and promotion. associations and Swiss competition law. 9 is not mandatory, that could open a can of Then, in March or April, the Court of At the heart of the case is Article 9 of worms politically.” Arbitration for Sport in Lausanne is expected Fifa’s statutes, which states: “A club’s to rule on the case brought last year against entitlement to take part in a domestic league ‘The very essence of football’ Fifa by Miami FC of the North American championship shall depend principally on In March 2008, in the wake of the Murcia/ Soccer League and Kingston Stockade FC sporting merit. A club shall qualify for a Granada case, Fifa issued a statement that of the National Premier Soccer League domestic league championship by remaining the system of promotion and relegation of to attempt to force the USSF to adopt in a certain division or by being promoted or clubs was “the very essence of football”. It promotion and relegation. relegated to another at the end of a season. explained the thinking behind what was to Professional clubs in the US and Canada “In addition to qualification on sporting become Article 9. are not the only interested observers. Any merit, a club’s participation in a domestic “Concept: Results on the pitch decide argument from Fifa that closed, franchise league championship may be subject to other whether a club goes up or down a level leagues are a part of modern football will not criteria within the scope of the licensing in every championship around the world go unnoticed among the richest European procedure, whereby the emphasis is on except in the United States and Australia, clubs. Europe’s elite have had a fractious sporting, infrastructural, administrative, where there are ‘closed’ leagues. Recently

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it has been possible to achieve promotion “The approach of MLS is a teams is up from $40m just five years ago. artificially by buying or moving a club. Fifa Soccer United Marketing, which handles the wishes to make sure that this cannot happen wealth-maximisation model commercial rights to MLS and the national again. and not a utilitarian model, teams of the US and Mexico, is valued at “Objective: To protect the traditional $2bn following the $400m sale of private promotion and relegation system for clubs where the club belongs to the equity company Providence’s 20-per-cent based purely on sporting criteria – which community. This is a critical stake last year. is Application: The decision was taken at Rick Burton, professor of sport the Fifa Executive Committee meeting difference to a lot of other management at Syracuse University in New on 15 December in Tokyo. The article will York, says that MLS commissioner Don now be submitted to the Congress next countries.” Garber has done “a brilliant job” of wealth May for approval and implementation as a maximisation and helping owners to increase RICK BURTON, PROFESSOR OF SPORT ‘new article’ within the rules governing the MANAGEMENT AT SYRACUSE UNIVERSITY the value of their assets. He doubts there will application of the Statutes. ever be a groundswell of opinion pushing to “Example: In Spain, the president of fourth abandon the current model. division club Granada bought second-flight “The fact that we are not generating Murcia then moved the club near to Granada, Australia, however, talks are under way to enough competitive countries on this side of allowing Granada 74 to move up artificially move towards a system of relegation and the pond has to be the larger issue for Fifa. into the second tier.” promotion. Plans in both countries face You have a World Cup largely dominated by Levy points out that after the major obstacles but if successful would two continents – Europe and South America. incorporation of Article 9, Fifa had provided isolate MLS. Fifa has got to look at whether that is a clarification on how it should be interpreted. In October, the Australian Association sustainable model for the worldwide growth On May 30, 2016, in a response to a query of Football Clubs unveiled a plan to create of football. But if Italy didn’t make the World from the Football Federation Victoria in a national second division from 2019 with Cup, the USA’s failure to do so can’t be laid Australia about the closed nature of the a view to creating an integrated league off on relegation. country’s A-League, Fifa wrote: “We would structure with promotion and relegation to “The approach of MLS is a wealth- like to reiterate our position communicated the A-League by 2024. The club association maximisation model and not a utilitarian to you in correspondence dated 10 March, said it was in talks with the FFA and model, where the club belongs to the 2014, that the principle of promotion and A-League clubs about the plan. community. This is a critical difference relegation is of fundamental importance to The Asian Football Confederation, in to a lot of other countries, although it has Fifa, as provided in Article 9. We understand collaboration with Fifa, is working with been changing in places like England, with and are sympathetic about the benefits the private, franchise-based Indian Super the arrival of people like the Fenway Sports promotion and relegation can bring in terms League and the national association-backed Group [owners of ] and [Roman] of incentivising clubs in the A-League and I-League to create a unitary structure for Abramovich at Chelsea. It is to get in at X the National Premier League to perform the professional game which would involve and to get out at 10 times X. On that level, both on an off the field. relegation and promotion. One source close MLS has been enormously successful. It is “However, the principle of promotion to the process says that “when and how profitable, sustainable, growing. I am not and relegation needs to be implemented promotion and relegation will happen is surprised that Eric [Wynalda] has considered at the right time and needs to take into not certain”. The earliest it could happen is [promotion and relegation] or put it into consideration the specific nature of club probably 2019 or 2020. his portfolio as to why he should be selected football in each country. Given that the There is little question that when MLS but there is no undercurrent bubbling to the Football Federation of Australia is already was born, as part of the process of bringing surface that relegation would create better committed to the introduction of this the 1994 Fifa World Cup to the US, special players.” principle at the appropriate time, any measures to ringfence investments were “What is joy without sorrow, what is licences granted to A-League clubs expressly justified given the troubled track record of success without failure?” said Mark Twain. provide that participation in the A-League the sport in the country. The question for “You have to experience each if you are to is subject to any promotion and relegation Fifa in 2018 is whether it accepts a closed, appreciate the other.” system implemented by the FFA. We shall franchise league as a permanent situation or But the thousands of Toronto FC fans not intervene in this matter at this point in still views MLS as a temporary exemption to who crammed into the city’s Nathan Phillips time.” Article 9. And if so, how temporary. Square in December to celebrate the team’s MLS’s success since its 1996 launch may first ever MLS Cup victory would no doubt Success story undermine the argument for its privileged tell you that their joy was every bit as real Of the 202 professional leagues in the world, status. According to Forbes, the average and profound as that of Huddersfield’s 85 per cent have promotion and relegation. MLS team in 2017 was worth $223m, up 20 supporters. And unless the Court of In most of the cases where it doesn’t exist, per cent on 2016. LA Galaxy, at $315m –with Arbitration for Sport delivers a massive it is because the country is too small or too annual revenues of $63m – is the most surprise, images of Atlanta United, Portland poor to sustain more than one professional valuable despite finishing last in the 2017 Timbers or Montreal Impact fans crying as league. The main exceptions to this are MLS overall table. their team gets relegated to the USL or NASL the US, India and Australia. In India and The $150m entry price for expansion are still a long way off. Z

01/02.18 : SportBusiness International

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SPORTBUSINESS_210x265.indd 1 18/01/2018 11:26 48 LEAGUE FOCUS : MLS EXPANSION

GROWING UP | MAJOR LEAGUE SOCCER’S EXPANSION PLANS

F Choosing the right expansion cities vital to MLS’s future success F Los Angeles FC pursue an ‘authentic’ brand and want to become antithesis of LA Galaxy F Soccer-specific stadium plan drives Nashville’s surprise selection

BY BOB WILLIAMS

ajor League Soccer is expanding in a major way. After growing at a steady pace since 2004, four new franchises will Mjoin the league in the coming years. Los Angeles Football Club, or LA FC, enter in March to become MLS’s 23rd team while Nashville was announced as an expansion city last December. By spring 2018, two new cities – most likely Cincinnati and Miami – will also be named as the homes of expansion franchises. Two more are expected to be revealed by the end of 2018, taking MLS to 28 teams by the mid-2020s. Don Garber, the MLS commissioner, has long said that expansion will stop at 28 but with entrance fees reaching $150m (€124m) – up from $10m a decade ago – one cannot completely rule out further entrants down the line. That 12 cities have competed for the last four expansion places would have been unthinkable even five years ago. Expansion helps solidify MLS’s footprint across the United States, with three teams also in Canada, and gives the league a firmer foothold with which to challenge the traditional ‘big four’ in North America. By most metrics – TV viewership, club David Beckham’s arrival helped grow Major League Soccer exposure; the league is still waiting for him to drive expansion (Getty Images) value, sponsorship and advertising deals – MLS has a long way to go to dislodge the ‘big four’ leagues but the long-term prospects the New York Red Bulls. appear promising given the decision to Despite the struggles of David Beckham’s LOS ANGELES FC target Millennials: a cosmopolitan, social- ownership group to get their franchise off Two MLS teams in LA is nothing new: media savvy group keener about soccer than the ground, glamorous Miami offers a large for nine years from 2005 to 2014 LA baseball. Latino community with links to various Galaxy had a local rival in Chivas USA. Caribbean and Latin American countries. But it is already clear that LA FC can Location, location, location The team ought to be in MLS already, not only avoid the pitfalls of its defunct Expansion decisions will go a long way to having been announced as far back as predecessor but may even come to improving MLS’s standing, and location is February 2014. It is hoped the Beckham effect overshadow LA Galaxy, the most famous key. will make up for the embarrassing delays over and successful club in MLS history. Multi-cultural Nashville gives MLS a firm his team’s entry. Chivas USA – a sister club to Mexican place in the South East alongside Atlanta and The league’s new entrants will aim to side CD Guadalajara – was the product Orlando. LA FC will hopefully form a rivalry follow in the footsteps of Atlanta United – of a vanished train of thought in MLS with LA Galaxy as compelling as the one that which made a huge splash in its first MLS development – an experiment to cater has grown between New York City FC and season last year – to take the league forward. entirely to the LA-area Latino community.

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“I think LA FC’s more urban and hip type of appeal – being almost the antithesis of the LA Galaxy and its bright, starlike motif – can be used to their advantage.

ALEXI LALAS, FORMER LA GALAXY GENERAL MANAGER AND US INTERNATIONAL

Despite a brief run of play-off success its early years, Chivas struggled on and off the field and was no match for the Galaxy, with whom it shared the then-Home Depot Center. Just three days after Chivas USA was dissolved in 2014, MLS announced a new in LA. Having had over three years to prepare for their entry this season, LA FC looks the part. The LA FC ownership group is different from any other in MLS. Alongside heavyweights such as Mandalay Entertainment chief executive , co-owner of the LA Dodgers and the NBA’s Golden State Warriors, and Henry Nguyen, a Vietnamese-American venture capitalist, are the likes of NBA legend , comedian , former women’s soccer player Mia Hamm and self-help author Tony Robbins. Tom Penn, the LA FC president, tells SportBusiness International: “We wanted LA FC will pose Galaxy a greater threat than Chivas (Getty Images) a group that authentically represented Los Angeles – the city, the ideal, the idea. And we assembled a group that has so much world- “When we work on entertainment we have California agreed to pay $100m over 15 years class experience in their respective areas. It the executives of Dick Clark Productions, for the naming rights to the LA FC stadium was assemblage of talent – it wasn’t about we’ve got experts from the LA Dodgers at Exposition Park, which is also the home capital, it was about intellectual capital, and the Golden State Warriors, two of the of the Los Angeles Memorial Coliseum and reputational capital and experiential capital, premier sports franchises in America, we many other attractions. not just financial capital. have Chad Hurley who founded YouTube, With plans to construct their own training “The advantage for me is that I have the we have Brandon Beck and Marc Merrill facility, and season tickets and premium best contact list in global sports, I have this who are world leaders in eSports... we have packages virtually sold out, it is so far so ability to call on any expert at any time in the Tony Robbins who is a coach to the greatest good. various areas of interest and that has been leaders in the world. I could just keep going “LA is a massive market, over 13 million huge advantage as we’ve created everything down the list.” people. The GDP of this city would be the from nothing. According to Bloomberg, the Banc of 16th largest country in the world. This place is plenty big for as many teams as there are,” Penn adds. “The challenge is you have to be first class in everything you do to be WHO’S NEXT? relevant – this is why we invested so much in Extra: our stadium, which is the best of its kind in the world of its size and it’s really captured the attention of the market place. Following the announcement of Nashville’s While there is some concern over a “We did not try to appeal to any certain MLS entry, one of Sacramento, Detroit and stadium location and funding for the arena, FC demographic or ethnicity or any other sector Cincinnati will be named as an expansion Cincinnati already have a reported $50m deal of LA – we just wanted to be authentically LA team early this year, Cincinnati is clear with Ohio-based Mercy Health to become team in everything we did.” favourites. jersey sponsors if MLS entry is granted. What have LA FC learned from the Chivas Backed by the wealthy Lindner family, FC The likely relocation of Ohio neighbours the USA experience? “We learned a ton of what Cincinnati has regularly attracted crowds over Columbus Crew to Austin, Texas, also plays to not to do,” says Penn. “There really isn’t 20,000 since their entry into the USL in 2016. their advantage. Z a comparison other than this team was in

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MIAMI BOUND false rivalry that existed with Chivas USA.” Extra: Lalas adds: “I think LA FC’s more urban and hip type of appeal – and being almost the antithesis of the LA Galaxy and its It has been four long years since David There are still difficulties to overcome. bright, starlike motif – can be used to their Beckham announced his plans for an MLS The proposed 25,000-seater stadium site is advantage. There is an undercurrent of being team in Miami but it now appears entry in the less-than-salubrious neighbourhood of like the Oakland Raiders and being truer to into the league is finally around the corner. Overtown, and is subject to at least one lawsuit the city of Los Angeles. With an ownership group including and a battle over zoning approval. “A lot of these things I think will serve entertainment guru Simon Fuller, Sprint CEO Negative press from these issues and the them well in targeting either a segment of Marcelo Claure and, recently, Miami executives long delay has raised concerns over the club’s the soccer market that is looking for an Jorge and Jose Mas and Japanese billionaire potential. But neither this nor the failure of the alternative or a segment that has never Masayoshi Son, ‘Miami Beckham United’ have Miami Fusion, an early MLS team, has put off embraced the Galaxy for whatever reason.” the financial backing to make a splash. league executives. Z

NASHVILLE SC this market. Such a completely different manager, USA defender, and now Fox Sports Music City has become a serious sports approach, starting with the stadium – we pundit – is for the club to differentiate town in the past few decades. have our own venue in the heart of the city themselves from the Galaxy, which he The Tennessee Titans, who moved to and they were second tenants in a different believes it will do with “alternative, urban” Nashville from in 1997, reached the building.” branding. NFL play-offs for the first time in nine years On the commercial side, Penn reveals, LA Lalas tells SportBusiness International: “The this season. Last summer the NHL Nashville FC have a multi-year marketing deal with Galaxy quickly dispatched their rivals Chivas Predators reached the Stanley Cup finals. Heineken USA (a league-level MLS sponsor), USA, on and off the field. So much so that And in December the city was awarded a as well as a partnership with Toyota. they went out of business. But Los Angeles coveted MLS expansion slot. Pattie Falch, Heineken USA director of is notorious for liking a shiny new toy so this Nashville came from out of nowhere to events and partnerships, tells us: “From stadium and this team is, I think, going to gain an MLS place – the city only won a place the very beginning when we partnered with turn a lot of heads and be that shiny new toy. in the second-tier United Soccer League MLS we were looking for a team in the LA “If they can establish a brand that’s cool just over a year ago – but its expansion market and obviously the Galaxy was not and alternative, and I think they have already application was head and shoulders above the available for us in our sponsorship category done a good job of that so far with their other applicants. [the Galaxy has a deal with Corona]. When it colour scheme and marketing concept, they Led by billionaire local businessman John was clear that MLS was expanding in the LA can have some real success off the field. Ingram, and accompanied by the Wilf family market we made it clear from the outset that “On the field they have to compete and – owners of the NFL’s Minnesota Vikings – we wanted to be a part of it. I think they will challenge the Galaxy to the ownership group ticked all the boxes. Just “One of the benefits of being there from compete, which they need, and they will both as significantly, the local council voted to day one is that we have been able to build the benefit from a true rivalry rather than the support a $275m soccer-specific stadium at relationship from the ground up, which is the city’s fairgrounds site. something we’ve not been able to do with any There is an element of risk in choosing other team in the league.” Nashville, a city with no history of support Activation includes a Heineken bar in the for a professional soccer team. But healthy Banc of California Stadium that has been crowds last summer for an International designed following discussions with LA FC Champions Cup match between Manchester supporter groups. City and Tottenham Hotspur, as well as a Heineken, a long-standing Uefa Gold Cup match between USA and Panama Champions League sponsor, is a major at Nissan Stadium, the home of the Titans, player in the global soccer market and its show promise. involvement with LA FC is an extension of Nissan, one of the biggest employers that. in Tennessee, recently signed a deal with Rob Ryder, a Heineken USA brand Nashville SC as primary jersey sponsors in manager, explains: “When we looked at our the USL and the manufacturer believes that target consumers they hugely over-indexed soccer, as a rising sport in the US, ties in well on soccer interests and when we asked what with its brand. they associate with Heineken one thing that Robert Cross, director of marketing media pops up more than with other brands is that and activation at Nissan, says: “Soccer is they associate it with soccer.” definitely up and coming as a sport in the As for cracking the crowded Los Angeles US and there is a real appeal to be part of sports market, the key for LA FC, according something like that – outside the big four to Alexi Lalas – former LA Galaxy general President Barack Obama shows off his skills (Getty Images) sports. There is also a desire as a mid-table

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“There is a lot of migration to Nashville from many places in the country and even around the globe, and with soccer being a popular sport on an international level, having an MLS team in Nashville really fits into the desires of the people living here and moving here.”

RALPH SCHULZ, NASHVILLE AREA CHAMBER OF COMMERCE CHIEF EXECUTIVE

The huge crowds that watched Manchester City play Tottenham in Nashville indicate the latent soccer fandom in the city (Getty Images)

auto manufacturer in terms of our market There is exciting potential down the path but on an international level, having an MLS share to find the growing, less established we have to see how this grows over the next team in Nashville really fits into the desires opportunities and grow our brand alongside two years. We are looking to see how we can of the people living here and moving here. them. develop that relationship in the USL and that “Nashville is an entertainment centre – “It is also more accessible from a cost has been the focus.” music is what we are known for – and MLS point of view to invest there and with large, According to a study conducted by the complements the entertainment industry long-term programmes it’s about investing University of Tennessee, Knoxville, the here. The MLS team creates job, revenue and and building relationships over time.” economic benefits of having an MLS team in economic activity but it also makes Nashville To improve its branding, Nissan is in Nashville are significant. The study estimates a popular place to live. discussions to display some of its models on that construction of the stadium alone “Moreover, MLS appeals to a really diverse match days at First Tennessee Park, Nashville will generate $139.2m in income, $18.3m group and it creates an awareness of the SC’s USL stadium – which is primarily the in state and local tax revenues and 3,572 diverse cultures in Nashville that a lot of home of minor league baseball team the temporary full-time jobs to the city. Long people are not aware of.” Nashville Sounds. term, the study estimates an additional 1,886 As Lalas adds: “Nashville has been around Nissan is not yet confirmed to be permanent full-time jobs and $15.1m in tax for a long time but the modern-day Nashville a MLS partner of Nashville SC, Cross revenues once the team plays in MLS. is much more than Music City. Prospective tells SportBusiness International. “There is Ralph Schulz, Nashville Area Chamber of MLS owners recognize that the league wants definite potential with the MLS piece and Commerce chief executive, said: “There is to be in places that are progressive, diverse we will evaluate that as we move forwards,” a lot of migration to Nashville from many and attract business and industry – a lot he adds. “We have not had conversations places in the country and even around the of that appeals to the generation that likes about [MLS]. It’s a very nascent partnership. globe, and with soccer being a popular sport soccer.” Z

01/02.18 : SportBusiness International

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Country focus SAUDI ARABIA | PRINCE EXTENDS SWEEPING ECONOMIC AND POLITICAL REFORMS TO SPORT

F Crown Prince Mohammed bin Salman sees sport as a part of his vision to overhaul the Saudi Arabian society F Grassroots participation in sport is extremely small in the country F Experts suggest a new sporting infrastructure must be built around football, the most popular sport

Saudi footballers Hazazi Naif and Nawaf Alabid of Saudi Arabia after scoring in the 2015 Asian Cup (Getty Images)

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BY KEVIN MCCULLAGH channels according to Forbes. Saudi Arabia has good general port in Saudi Arabia is on the cusp infrastructure and a baseline sporting of enormous change. Crown Prince infrastructure including modern multi-sport Mohammed bin Salman – the heir to stadiums in around a dozen ‘sports city’ the kingdom’s throne and one of the complexes dotted around the country. But Stwo most powerful men in the country along grassroots facilities are few. with his father, King Salman bin Abdulaziz – Of course, the state has access to has targeted sport as one of the vehicles of unparalleled wealth to fund its policies, his ambitious plan to transform the country. despite the collapse in oil prices since 2014. Under Vision 2030, Prince Mohammed’s The Public Investment Fund, charged with national transformation plan that kicked investing the country’s oil revenues, plans to off last year, grassroots and professional become the world’s biggest sovereign wealth sports will be developed to accomplish an fund, controlling $2tn (€1.6tn) – another goal ambitious set of goals including: Crown Prince Mohammed bin Salman of Vision 2030. • Diversifying the economy. In a dramatic illustration of Saudi • Tackling massive public health problems. ambition and spending power, the most eye- • Providing a young, restless population sector expected to develop from here? And catching Vision 2030 project to date is Neom, with more entertainment and leisure what are the opportunities for the rest of the a 26,500-square-kilometre futuristic city to opportunities. sports world to become part of the story? be built from scratch on the north-west Red • Getting Saudi athletes to perform at a Those excited by the prospect of Saudi Sea coast at an expected cost of $500bn. level commensurate with the country’s Arabia’s sports industry point to an standing as a regional power. abundance of raw materials. Political backing • Weaning loss-making football clubs off “Saudis are outgoing and physically strong, Perhaps the critical raw material is Prince state funding. but decades without facilities and leadership Mohammed’s interest in sport as a tool degraded participation levels,” says one for change. The crown prince is near the Vision 2030 states: “We intend to industry executive with strong experience in pinnacle of a royal family that has ruled encourage widespread and regular the market. Saudi Arabia as a strict autocracy since the participation in sports and athletic activities, Forty-five per cent of the country’s 32m middle of the 20th century. Any serious working in partnership with the private inhabitants are under the age of 25. Young development in sport can only happen with sector to establish additional dedicated Saudis are restless for the leisure pursuits impetus from the top. facilities and programs. This will enable and freedoms enjoyed by their counterparts This situation, some analysts say, appears citizens and residents to engage in a wide in other countries, but curtailed by Saudi unlikely to change despite the reform. “This variety of sports and leisure pursuits. We Arabia’s strict religious laws. Cinemas is a regime that is tightening control in aspire to excel in sport and be among the are banned, music concerts are rare, and general,” says James Dorsey, an academic leaders in selected sports regionally and mingling between men and women in public and journalist covering sport and politics globally.” is highly restricted. in the Middle East. “What Vision 2030 is The ambition is clear. Yet it may not be Evidence of the youthful population’s about first and foremost is reforming the realised. Prince Mohammed’s bold plans and restless energy is seen in the vibrant Saudi economy, the diversification of the economy. methods are rocking Saudi Arabia and the YouTube scene. With few options available It is certainly not about any form of political Middle East. for entertaining or expressing themselves, reform.” He wants to fundamentally change the Saudis have become the Arab world’s top Still, in sport there is new optimism that Saudi economy and society. He has arranged publishers on the platform, accounting Saudi Arabia can build a significant sports for the arrest of scores of influential royals for eight of the region’s top 10 YouTube economy. “If you’d asked me a year ago, I’d and businessmen in an anti-corruption drive. have said it was going to take a lot of time,” He has adopted a confrontational posture one local sports industry executive says of towards Saudi Arabia’s arch-rival Iran. the sector’s prospects for development. And Vision 2030’s sports elements face “What Vision 2030 is about first His mind has been changed by recent major challenges. They seek to create a and foremost is reforming the initiatives pushed through by the prince, modern sports ecosystem virtually from including allowing women to drive, allowing scratch and the bureaucratic machinery economy, the diversification women into sports stadiums, and Neom. “If needed to execute the government’s plan is of the economy. It is certainly there is a time, now is the time. There is a lot not in place. As one sports executive in the of shifting in perception and mentality [in region puts it, “They don’t just have to climb not about any form of political the country].” Mount Everest, they have to build Mount reform.” It’s important to grasp that sport in Everest and then climb it.” Saudi Arabia is starting from a low base. Taking all this into account, what actually JAMES DORSEY, SENIOR FELLOW, During decades of austere religious rule, is the outlook for sport in Saudi Arabia? S. RAJARATNAM SCHOOL OF participation in sport has been neglected or What has happened so far and how is the INTERNATIONAL STUDIES discouraged, particularly for women. Saudi

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right people around him, with the right skillsets, appropriately motivated, and get everyone working under a universal approach...the outcome can be exponential [development].” There have been some signs of progress at the government body in charge of sport. Once the General Presidency of Youth Welfare but known since last year as the General Sports Authority, it has a new chairman, Turki bin Abdul-Mohsen, appointed this September. In the past few months it has agreed some eye-catching deals, including: • Memoranda of understanding with Manchester United and the Spanish football league, LaLiga, for joint work on football academies in Saudi Arabia. • Agreements to host a Race of Champions motorsport event in Riyadh, and the Drone Racing League World Championship, both in 2018.

Saudi football fans (Getty Images) One of the historic challenges of doing business in Saudi Arabia has been frequent changes of officials leading government Arabia only began fielding women’s athletes commercially and many require state departments. “We’ve been working in the in the Olympics for the first time in 2012, subsidies, a situation the government country three years. In that time there have under pressure from the IOC. is trying to change via a privatisation been three different heads of the football Inactivity has contributed to major public programme. association,” one local sports executive says. health problems. Only 13 per cent of Saudis Outside football, the most popular sports Each new appointment brings a change over the age of 15 exercise at least once a are motorsport, basketball and athletics. But of staff and policies in that branch of the week, according to government figures. performances by Saudi athletes and public government. The same executive says: “It’s Studies put the obesity rate at about a third interest pale in comparison to football. Saudi always short- to medium-term thinking. It’s of the adult population. Over 17 per cent of Arabia has won only three medals at the hard to invest in a long-term strategy when adults have diabetes. Summer Olympics since it began fielding you don’t know if your partners will be there One of the tasks for sports officials is teams in 1972. At Rio 2016, the country in three years.” to create a sporting culture from zero. As fielded only 11 competitors, in five sports. Sports industry insiders are crossing their one sports executive says: “There needs to fingers that Prince Mohammed’s reforms will be education for parents. The government Minor progress put an end to this. needs to promote the value of an active Work on Vision 2030 began last year, but the lifestyle”. sports projects are still at a very early stage. Targeted development At the elite end, football is far and away Local industry experts say the government Several industry experts suggested Saudi the number one sport, and is the exception must next create detailed plans for the broad Arabia should focus on developing a small in the otherwise barren Saudi sports aims of Vision 2030 and appoint the right number of sports, a strategy that has worked landscape. As one local industry executive people with sufficient power to execute for other emerging nations. says: “In Saudi, football is not just king, it’s them. The government is currently working Abu Dhabi’s targeted development of the only sport.” with overseas consultants to that end. jiu-jitsu was highlighted as a potentially The national team recently qualified for Andy Oldknow, a Mena sports marketing suitable model. Seeing the martial art as the 2018 Fifa World Cup. The domestic expert that runs his own agency in the a field in which the small emirate could Saudi Professional League is one of the best region, AND Sports, says: “With all major excel internationally and which encouraged in the Mena region. Its top clubs compete change programmes, leadership, strategic physical and mental development, Abu strongly on the continental stage in the AFC planning and governance are fundamental. Dhabi’s Crown Prince Sheikh Mohamed bin Asian Champions League. It has a $1bn, Leadership has clearly been applied – the Zayed made jiu-jitsu training mandatory in 10-year media-rights deal with commercial challenge now is how the various public and schools and the army, and funded training broadcaster MBC, and one local executive private stakeholders can be activated under schools across the country. As with the Saudi said it also generates tens of millions of one universal strategy”. reforms, this wasn’t just about sport – Abu dollars per year from its title sponsorship. Another sports executive in the region Dhabi approached jiu-jitsu as something But the clubs are underdeveloped says: “If [Prince Mohammed] can get the which could “equip kids with tools so that

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VISION 2030’S SPORTING GOALS they can succeed outside sport in future”, one local industry expert says. Extra: Another expert suggested that any development of sport in the country must be built around football, due to its existing In the first wave of Vision 2030 reforms, structure and fanbase: “To develop any launched last year and running until 2020, sport in Saudi, it has to be in parallel with the body charged with developing sport, football...you need football to drive the the General Sport Authority, has four interest in other sports up.” The country’s strategic aims. football clubs are often multi-sport clubs – many have teams in basketball and other • Increase the percentage of Saudis over the sports. age of 15 that exercise at least once a week Others note that, if elite success is the from 13 per cent to 20 per cent. goal, football is one of the more difficult • Increase the percentage of young people sports to target. “They need to move fast, participating in sport authority programmes and focus on a small number of sports,” says from 0.67 per cent to 15 per cent. Lars-Haue Pedersen of sports consultancy • Improve investment of sports and youth TSE, which has previously been an advisor to facilities. the Saudi Olympic committee. “It’s all about • Enable and ensure the sustainability of elite football, but this is the toughest sport in athletes to achieve high-level performance which to progress.” in the international arena to win medals in There have been efforts to develop several different games, including achieving 10th place sports simultaneously. In 2015, the agency for the Saudi team at the 2018 Asian Games. Two massive infrastructure projects under CSM Strategic was appointed by the Saudi Vision 2030 will include development of Arabia Olympic Committee to develop elite These aims are broken down into 22 projects modern sports facilities: athlete programmes for the Rio 2016 and for which $2.06bn has been allocated. Tokyo 2020 Olympics, and the Jakarta 2018 • Qiddiya, a 334-square-kilometre Asian Games. Other goals of Vision 2030 that have a bearing entertainment district being built near the on the sports sector include: capital city Riyadh to include “theme parks, Overseas expertise • Increasing household spending on cultural motorsport and thrill activities, a sports Saudi Arabia will be heavily dependent on and entertainment activities inside the Kingdom city, events and cultural activities, and outside help to build its sports industry, so from 2.9 per cent to six per cent. opportunities to enjoy natural beauty and there should be plenty of opportunity for • Developing the high-speed broadband wildlife”, according to documents charting the sports companies and organisations around network to exceed 90 per cent penetration Public Investment Fund Program 2018-2020. the world to play a part. in major cities and 66 per cent in other urban Oldknow says: “Developing a dynamic areas. • Neom, the extraordinary futuristic city to sports eco-system will bring many • Expanding the role of women in society: be built in the north-west of Saudi Arabia, challenges, some of which will require “invest in their productive capabilities and (see picture, above) will “create the world’s international insight and expertise which, enable them to strengthen their future and best place to live in, by adopting best given the maturity of the sector, makes a lot contribute to the development of our society standards of living based on best global of sense. Ideally, such engagements should and economy.” practices in the fields of public transportation, be structured in a manner that builds, • Reforming the education system by green spaces, environmental sustainability, operates and transfers both knowledge and promoting “cultural, social, volunteering work-life balance, health care, education, capability.” and athletic activities through empowering high-quality sport and leisure activities, state- Saudis will be somewhat cautious about our educational, cultural and entertainment of-the-art sports facilities, and world-class overseas assistance, some industry insiders institutions”. sporting event hosting”. say. “Arabs have been burnt by people coming in for a quick buck,” one says, so overseas firms “might have to invest a bit up front to reap rewards later on”. the biggest economic power and population in its favour – the reforms will only happen if Another executive says overseas in the Middle East [is developing its sports Prince Mohammed can see out Vision 2030. companies “should be charged with not ecosystem] can be nothing but good.” And there is plenty of work to do yet to get only taking fees, but leaving structure, The ambition is there. The raw materials various arms of the state working effectively protocol, policy, people… creating models are there. The structures and people are on the sports-related reforms. the Saudis can adopt on their own terms.” being put in place, if slowly. The right noises Sport being used as a vehicle of national If that can be achieved then, as he put are being made about stability and strategic transformation and rebranding is nothing it, “For stadium operators, stadium planning. Sport in Saudi Arabia is on the new. But if the Saudis manage it, their story builders, sports consultants, sports bodies, brink of turbo-charged development. will be a genuinely remarkable addition to commercial brands, federations...[the fact] It needs big, moving political parts to work the pantheon. Z

01/02.18 : SportBusiness International

52-55_SaudiArabia.indd 55 26/01/2018 15:28 DEALS TRACKER A new business intelligence tool for sports sponsorship executives

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Sports Sponsorship Insider, part of SportBusiness Group NEWS ROUND-UP 57

Venues & facilities

EVERTON CHIEF REVEALS RISING STADIUM COSTS Robert Elstone, the chief executive of Everton, has revealed that the cost of building a new stadium for the English Premier League football club has risen “significantly”. Last March the club agreed a deal to acquire land at Bramley Moore Dock on which it plans to build a new state-of-the- art facility. At the time it was stated that the stadium would cost in excess of £300m (€337m/$407m) with the development being fully funded by the club. The project is now set to cost much more. Elstone cited factors such as costs associated with acquiring the Bramley Moore Dock site, a targeted capacity of about 50,000, a complex design and inflation as reasons for the rise. Everton is hoping that the new stadium will open in time for the 2022-23 season.

ROMA SECURES APPROVAL FOR NEW STADIUM PROJECT Italian Serie A football club AS Roma has secured approval from four local governing bodies to proceed with its long-running plans Costs for Everton’s new stadium – replacing Goodison Park (pictured) – continue to rise (Getty Images) to build a new stadium. Roma Capitale, the Metropolitan City, the Region of Lazio and the Italian government Jacksonville Jaguars and – a homage to the club’s early days when have cleared the 55,000-seat Stadio della NFL American football teams, respectively. it played in the shadows of the original Roma project. In the UK, SMG’s portfolio includes the Crystal Palace structure, which hosted the The Stadio della Roma proposal dates back Manchester Arena. Great Exhibition of 1851 in Hyde Park before to February 2012, when the club launched a SMG offers a variety of services, allowing relocating to Sydenham Hill. search for a suitable site for its new home. In venue owners to outsource day-to-day Design firm KSS will support the project. December of the same year, the club selected operations such as facility staffing and a location in the Tor di Valle area of . training, catering, event booking and TOKYO 2020 VENUES SET FOR CAPACITY Last August Roma struck a deal to remain management, event promotion, exhibitor REDUCTIONS at its current Stadio Olimpico home until at services, financial management and Tokyo 2020 is set to reduce the capacity of least the end of the 2019-20 campaign, prior maintenance services. its sporting venues by more than 30,000 as to a planned move to the Stadio della Roma part of cost-cutting efforts for the summer ahead of the 2020-21 season. CRYSTAL PALACE UNVEILS PLANS FOR Olympic Games. NEW STAND According to the Kyodo news agency, PRIVATE EQUITY FIRM ACQUIRES English Premier League football club Crystal the new National Stadium will be one of 12 STADIUM MANAGEMENT GROUP Palace has unveiled plans to build a new venues that are set to have smaller capacities Canadian private equity firm Onex has 13,500-seat stand that will increase the than originally planned. sealed a deal to acquire leading sports venue capacity at its stadium to more than 34,000. Organisers had previously reached an operator SMG. The club has played at , which agreement to reduce the National Stadium The transaction – terms of which were currently has a capacity of just over 26,000, to 68,000 seats, from the 80,000 earmarked not disclosed – is expected to close early this since 1924. when Tokyo was bidding for the Games. year, subject to customary conditions and The redevelopment project, which is Kyodo said nearly 5,000 seats are likely regulatory approval. expected to cost between £75m and £100m, to be cut from the equestrian sports venue, SMG, which is headquartered in aims to transform the match-day experience which will have a capacity of 9,300. Philadelphia, operates 240 venues worldwide. for supporters and provide new facilities for The boxing and archery venues are set to Its management team is expected to remain the community while retaining the ground’s lose about 2,000 seats each, while in place following the takeover. current atmosphere. and cycling are among the other sports SMG’s US venues include EverBank The centrepiece will be a new five- whose facilities are proposed for cuts in Field and NRG Stadium, the homes of the storey stand featuring a transparent front capacity. Z

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OPEN INVITATION | CHANGE FINALLY TO BE SERVED AT ROLAND-GARROS

F Authorities finally gave the green light to the redevelopment of Roland-Garros in February following years of false starts F After the roof is added to Philippe-Chatrier in 2020, French Open in-stadium attendances are set to increase from 472,000 to over 600,000 F FFT expecting double-digit increase in TV audiences for evening matches under roof

Roland-Garros will be able to welcome thousands more fans following the redevelopment (French Tennis Federation)

BY RORY SQUIRES in which the governing body has attempted With that in mind, the aim is to inject to respect the tennis grounds’ historic more breathing space into a cluttered ew major sports facility projects have surroundings and appease local residents at complex, featuring new spaces and been as frustratingly protracted as every turn. establishing tree-lined walkways, with the long-awaited redevelopment of The project developers have had to tread renowned landscaper Michel Corajoud Roland-Garros, the Parisian home of carefully to satisfy the demands of local having spearheaded the plans before his Fthe French Open tennis grand slam. planning authorities who have been keen to death in October 2014. However, after years of false starts, the avoid Roland-Garros trampling crudely over Whilst the overall capacity of the site light finally flickered from red to green the historic gardens. will increase by a relatively modest 2,500 back in February 2017 when the Paris The layout of the French Open has to 40,000, the actual number of courts will Administrative Tribunal upheld an earlier changed relatively little since the inaugural reduce from 20 to 18, amplifying four main decision by the Paris High Court in favour of tournament at Roland-Garros in 1928 and, show courts in the process. the French Tennis Federation (FFT) in a legal as any visitor to the grounds will testify, The Philippe-Chatrier and Suzanne- battle with the heirs of architect Jean-Camille the spectator experience has been one Lenglen courts will retain unchanged Formige, who designed the neighbouring of charming chaos at times – more akin respective capacities of 15,000 and 10,000 Serres d’Auteuil botanical gardens. to visiting the Eiffel Tower at peak hours following the redevelopment work, but there The FFT greeted the news by declaring during the tourist season than entering will also be a 5,000-capacity Serres d’Auteuil it was “game, set and match” – but such a one of tennis’ four major tournaments of Greenhouse Court and a 2,200-seat Fonds triumphant tone has been rare in a project the year. des Princes court – both of which will be

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“One option was to follow the lead of other tournaments and increase the capacity of the Philippe-Chatrier court, but that’s not the Roland-Garros way.”

MICHAEL TONGE, SPONSORSHIP DIRECTOR, FRENCH TENNIS FEDERATION

semi-sunken to make them less conspicuous in Paris will be 18 metres, with the exception “One option was to follow the lead of on the landscape. of the centre court, which will reach a other tournaments and increase the capacity By extending a pathway into the Serres maximum height of 31 metres, including its of the Philippe-Chatrier court, but that’s d’Auteuil gardens alongside the Florist new six-metre-high roof made from steel and not the Roland-Garros way,” Tonge tells and Orangery buildings, creating a new canvas. SportBusiness International. landscaped pathway crossing the stadium The roof, which will be added in time “Rather than simply squeezing in from north to south, and by creating for the 2020 tournament, a year after the additional seats to increase overall capacity, spacious new relaxation areas such as the redeveloped Chatrier court reopens, will have we want to ensure the Roland-Garros DNA Place des Mousquetaires, Roland-Garros huge implications for the tournament from a is maintained and protected which means will have a much more relaxed feel when commercial perspective. providing greater comfort for spectators the redevelopment work, led by VINCI Not only will the roof ensure that, on all courts and ensuring a premium Construction France, is completed in 2020. regardless of the weather, play is client experience across the Roland-Garros The Place des Mousquetaires, which will uninterrupted on at least one court; it will campus and throughout the Roland-Garros be extended onto the site of the former also allow evening sessions to be introduced. experience.” Court No.1, will serve as a main thoroughfare, According to FFT sponsorship director further improving the flow of spectators Michael Tonge, the developments and the Connected around the stadium, while a giant screen will introduction of the evening sessions will Bottom-line commercial revenues may not show matches to fans outside the venue. increase the in-stadia attendance across the have been the central, driving motivation The Place des Mousquetaires will back on three weeks of the competition from 472,000 behind the redevelopment, in the short term to the nearby Serres d’Auteuil gardens, with to over 600,000, with 10 new evening at least, but return on investment is clearly Court No.1 being replaced by the Greenhouse sessions offering 15,000 additional tickets for important for a national federation that is Court, which will take inspiration from the each session. coughing up 95 per cent of the project’s total adjacent Formige greenhouses. As a result of the introduction of evening cost of €350m ($416m). Although the surface area of Roland- sessions, the FFT is anticipating a double- Therefore, the rustic charm of Garros will increase from the current 8.5 digit increase in television audiences for Roland-Garros will be maintained, but hectares to 11.16 hectares for nine weeks primetime evening matches – expected to simultaneously it will be underpinned by every year – before, during and after the start at approximately 7pm – with the higher state-of-the-art technological advancements French Open – for the rest of the year the in-stadium audience also giving partners an both within and outside the courts. size of the complex will be scaled back to opportunity to connect with 150,000 more Roland-Garros will be a connected 9.6 hectares, with the Florist and Orangery fans than is currently the case. stadium complex with Wi-Fi available burrstone buildings and the area around the new Greenhouse Court once again becoming part of the gardens following the removal of a sturdy temporary fence, which will allow PROJECT TIMELINE 20,000 square metres of Serres d’Auteuil to be open to the public at all times. February 2011: The FFT announces plans November 2014: Following a public inquiry, to keep the French Open at a redeveloped the investigating commission rules in favour of New roof, new opportunities Roland-Garros the project Arguably the most significant enhancement October 2011-January 2012: A public June 2015: Planning permission is granted will be the complete renovation of the consultation is held October 2015: Preliminary work begins on Philippe-Chatrier centre court, including a December 2011: The French High Commission the site retractable roof and redeveloped stands to for Sites, Perspectives and Landscapes November 2016: The Paris High Court improve visibility for spectators with new approves the project outline rules in favour of the FFT following protests areas underneath the stands for the players July 2012: A simplified revision of the local by Laurence and Virginia Formige, the great and members of the media. urbanisation plan is approved Roland-Garros is currently the only grand May 2013: The FFT signs a new Convention for grandchildren of architect Jean-Camille slam without a covered court after the US the Occupation of Public Land with the city’s Formige, who designed Serres d’Auteuil Open unveiled its retractable roof over authorities for a duration of 50 years February 2017: The FFT declares “Game, the huge Arthur Ashe Stadium for the 2016 December 2013: The Paris Department set and match” after an appeal by Formige’s tournament. Commission for Nature, Landscapes and Sites heirs is dismissed by the Paris Administrative The maximum height authorised for the approves the project Tribunal different buildings across the whole complex

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Continued from previous page...

throughout, data gathering and analysis spacious layout at Roland-Garros will also systems and various technological give partners more opportunities to engage innovations enabling information to be with the public. provided to visitors via various platforms, “All of our sponsors are challenging including the official mobile app, which is us – and we are challenging them – to being enhanced every year. differentiate and come up with new ways to “Our aim is to allow fans to personalise engage with fans and to create innovative their Roland-Garros experience by concepts that set the Roland-Garros implementing relevant, value adding, experience apart from other sporting technological enhancements year on year,” events,” Tonge says. Tonge explains. “We want to make sure our partners are “As well as being able to communicate integrated into the client roadmap and not practical information such as queuing times just part of a branding exercise. for cafes, offers at the in-stadium retail points “Partners need to be able to express or the latest partner animations – which will themselves within the new stadium which improve efficiency and the customer journey will result in a more positive consumer – the technological developments will also A roof will be added to the Philippe-Chatrier centre court in time experience and which will in turn drive value help us gather data before, during and post for the 2020 French Open (Getty Images) for us and for our partners.” tournament. “Whether the data is retrieved through Hands-on approach social platforms, bracelets or via the official option for the tournament in the future. The redevelopment of Roland-Garros is app, our aim is to provide fans with the “It is an interesting technology with part of a wider ecosystem that includes an content they are interested in, via the obvious advantages compared to a static international strategy. platforms they choose at times adapted to system, but we need to be sure where the Media partners will take footage of the their schedules. benefits are for our partners, for the FFT French Open worldwide, but the FFT itself is “We understand the power of data but we as the organiser of Roland-Garros, for the taking a hands-on approach to promoting the also understand that it needs to be exploited fan experience and for the image of the Roland-Garros name across the globe via its in a customer friendly way so the client tournament before we take a decision,” international strategy in key target markets, experience is enhanced and so it allows Tonge says. including Brazil, China, India, Japan, South us and our partners to create a tailored, “Currently we have 20 official partners Korea and the US. seamless, engaging experience.” of which seven have court-side visibility. “We will take Roland-Garros outside of The FFT is currently considering the We feel we can add one or two partners to Paris in order to develop clay court tennis, best future pathway for data gathering and those with court-side visibility, but we’re just to develop the Roland-Garros brand and management and is in discussions with a as interested in enhancing the partner and to provide partners with an opportunity to number of parties following the expiration of prospect packages via digital activation, fan activate their tennis strategy in multiple its deal with IBM this year. engagement and in-stadia concepts rather markets all year round,” Tonge adds. “We’re talking to different companies than risking the dilution of the value of “We know from our research and from which will be able to help us to enrich our partner packages by having too many global television and digital audiences that there is data-gathering, analysis and communication or regional partners.” an appetite for clay-court tennis, for Roland- for fans, for players, for sponsors and for our A state-of-the-art new sponsor village is Garros and its brand in these countries and media partners,” Tonge adds. being built ahead of Roland-Garros 2018, we believe there is huge potential in these “As well as moving ahead with targeted where catering partner Potel & Chabot will markets, which is why intend to be visible prospects for 2018, we are also looking at continue to provide services. via a number of local and national events which services we can bring in-house to take “When creating the new village concept, and activations aimed at developing tennis back a little more control of certain elements it was important not to lose the soul and and offering touch points and marketing of the client experience and touch points and energy of the existing Roland-Garros Village platforms for us and for our partners which are the right suppliers and partners we as partners and VIPs love the ambiance throughout the year,” Tonge says. need to deliver our long-term objectives. and the proximity to the tennis and to each “Our approach will be based on “We remain open to different partnerships other,” Tonge adds. 360 activation involving local clubs, if we are sure they enhance the Roland- “The new village will be closer to a local federations, digital platforms and Garros experience and, given the nature of five-star hotel experience at the heart of promotional events, for example, selected our digital transformation requirements, it is Roland-Garros and we are confident it tennis clubs will have the possibility to likely we will need a number of ‘technology’ will set a benchmark for hospitality in the become ‘Roland-Garros approved’ clubs partners.” world of sport by combining a first-class provided they fulfil certain criteria in terms guest experience, a Parisian touch of style, of coaching, facilities, clay court quality Courting exposure the charm of Roland-Garros and a view of etcetera. Court-side LED advertising has already certain courts which, for us, is the perfect “Creating these touchpoints around the been tested at the French Open, and the positioning.” world – whether it is sporting or marketing – FFT is considering whether it is the right Outside the new sponsor village, the more is a crucial part of our long-term strategy.” Z

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62 VENUES & FACILITIES : PREMIUM EXPERIENCES

MONEY-CAN’T-BUY EXPERIENCES | THE SPORTS TEAMS PUTTING A PREMIUM ON HOSPITALITY

F Tottenham Hotspur and Manchester City offering glass tunnel ‘clubs’ F Definition of a ‘premium purchaser’ has broadened F Jacksonville Jaguars offer ‘spa cabana’ experience

Premium visitors to Manchester City matches can watch the players walk out as they dine in style (Manchester City)

BY GREG PITCHER Meanwhile Tixstar offered cricket fans the premium experiences from glass tunnels and opportunity to walk on the famous WACA microbreweries to heated seats with USB ith three generations of the pitch in Perth and meet “prominent cricket ports. celebrated Roux family lined personalities” alongside a VIP visit to the “Secondly they are looking to up to cook for some lucky third Test of the Ashes series in Australia this commercialise their stadiums better. If you Tottenham Hotspur fans next winter. The one-day package was marketed spend hundreds of millions on a stadium you Wseason, it is clear sports club owners are for A$990 (€644/$759). need to charge more money – at Spurs they thinking far beyond the traditional pie-and-a- are adding a revenue stream by effectively pint when it comes to matchday hospitality. Revenue or marketing? turning the stadium into an exclusive private For the trifling matter of £60,000 plus VAT Premium sport experiences are big business members club.” for two seats, members of Spurs’ H Club can around the world. The elevated status of certain sports in choose to eat this Michelin Star food at a “There are two ways this kind of thing modern society has led club owners to realise table with the famous chefs themselves – or can happen – driven by the brand, to reward the value of their tickets to a wider group at an alternative with club legends. customers or get the cameras in – or by the than the traditional die-hard supporters. They can visit man-of-the-match stadium,” says Chris Allen, head of PR at “The target market is now much broader ceremonies and meet first-team players as sports marketing firm Pitch. given the wide range of varied premium well as attending the training ground and He says there are two main reasons why packages we have on offer,” says Andy board events. If so inclined, they can watch a sports clubs themselves want to promote O’Sullivan, Tottenham Hotspur director of game of football while they’re at it. exclusive opportunities to watch their hospitality. Soccer is not the only sport where this is product. “We feel there is something for everyone happening. Jacksonville Jaguars offers fans “Firstly broadcasters such as BT Sport and this opens us up to a much larger sports the chance to watch NFL fixtures from ‘spa are doing such an excellent job that people audience. There is no ‘typical’ premium cabanas’ featuring all-inclusive food and have to be pulled away from their sofas to purchaser – all visitors want something drink, sofas, televisions, music and, naturally, spend money to watch live. So clubs are different and we feel this is reflected by the swimming pools. saying they need to lure people in with range of premium packages we offer.”

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“If you spend hundreds of millions on a stadium you need to charge more money – at Spurs they are adding a revenue stream by effectively turning the stadium into an exclusive private members club.” CHRIS ALLEN, HEAD OF PR, PITCH MARKETING GROUP

Allen thinks UK sport is moving towards to the games, the shop, a stadium tour, a the American model where sport has become legends dinner. The remit was how can we part of the entertainment industry. provide more things for fans to do?” “From a corporate perspective, people see One challenge with such events is ensuring the benefits of taking clients to matches, and supporters do not feel milked. Last year film stars and people at the top of their game thousands of Liverpool fans walked out of a around the world will want to come to the UK game in protest against increased matchday to watch one of the greatest sports leagues in ticket prices. the planet. “Locally based fans who are scraping “The growth of the Premier League has together £500 for a season ticket may not increased its appeal to people who want to go Artist’s impression of premium hospitality at Tottenham Hotspur’s want to see an email asking them to come not because they’re Spurs fans, for example, new stadium, which opens this year (Tottenham Hotspur) to something for £3,500 – there may be a but because it’s something to do while you’re backlash,” says Mahoney. in the UK.” Although four Brits attended the event – As well as carving out a new customer base, feature at its stadium in 2017. titled The Dream – the target audience was creating a premium area such as a dining Members of the Manchester team’s Tunnel largely overseas, with nationals from Norway, lounge or a cabana – the choice depending Club also get a pre-match presentation and Kuwait, the US and Australia. on climate, presumably – can bring new performance analysis from manager Pep The event was seen as a success and commercial opportunities. Guardiola’s backroom staff. Liverpool FC still puts on a range of events “It adds opportunities for corporates to “Our guests can expect the most that include training at The Academy, a get involved, new areas they can sponsor,” immersive matchday experience that they stadium tour and meals with club legends. says Allen. “A brand can integrate itself have ever had – unlike anything they have Access is always going to be key to any into the event better by taking media and ever experienced in football before,” says the premium sport project’s success, Mahoney commentators to the experience, as well as club’s chief operating officer Omar Berrada. says. “Exclusivity makes the events fans.” marketable. People are after experiences not For brands wishing to project a high-end Authenticity just more stuff. People of means have bought image, the chance to sponsor a luxury dining This brings us to a second strand of premium all the stuff they need, and supporters go to experience at a major sport club loved by experiences, which rather than focusing on games all the time. What’s left is to get closer millions of people is a clear opportunity. luxury, revolve chiefly around authenticity. to the club.” O’Sullivan explains that in addition to Where a pool party at the NFL may be He says there is room for fresh thinking. housing the Michelin Star eateries, the ‘On looking to bring in those at the margins of a “Clubs could make better use of their Four’ hospitality section situated on the club’s fan base, these alternatives are seeking facilities, some are doing a better job than fourth floor of the new stadium will offer the most passionate individuals. others. Most get as much commercially out sponsors the opportunity to call on the Canadian native Michael Mahoney moved of their players as they can but the physical services of an interior designer to customise to London five years ago and set up FC Sport facilities such as the stadiums and training the premium suites. Experiences to tap into exactly this market – grounds are probably not being used as much Perhaps the best thing about the club’s people who live and die their favourite sport as they can – with some creativity they could premium hospitality experience, however, club and want to get closer to it. be used more.” will be the levels of access it will give to those “In Canada and the US, sports fantasy Mahoney adds that premium experiences who are willing to pay. camps give people a ‘live the dream’ behind- can be even more important for smaller clubs “The first purpose-built glass-walled the-scenes experience,” he explains. where they make up a greater proportion of Tunnel Club in the UK will allow lounge Mahoney designs multi-day events that can revenue. guests to see the inner sanctum with a include the chance to train at club facilities Allen warns that any premium experience behind-the-scenes view of the players’ tunnel, under the guidance of team coaches; have has to be well thought through. “It has to while also enjoying the action from player- dinners with club legends and executives; VIP be credible and enhancing to the sport spec ‘Recaro-style’ seats, located behind the hospitality to a game; and even the chance to entertainment – I heard about a plan for First Team technical area,” says O’Sullivan. play on the senior pitch. vibrating seats at an NFL stadium and it felt Tottenham might lay claim to having the He helped Liverpool Football Club put gimmicky, like it might annoy you. first ‘purpose-built’ glass tunnel in the league on such an event in 2014, which he says was “There is also a balance between attracting but it’s certainly not the first. Fellow English attended by 40 people paying £3,500 each for big spending fans and keeping the die-hards Premier League outfit Manchester City is hotel rooms, tickets, kit and food. that create the atmosphere. With too many already bringing fans up-close-and-personal “People who live in the city or nearby have corporate customers it could move too far with their heroes, having retrofitted a similar probably done everything they can do – been from being a sporting event.” Z

01/02.18 : SportBusiness International

62-63_venues_hospitality.indd 63 26/01/2018 15:29 NEED FAN DATA?

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Esports

Liam Thompson, gaming and influencer executive with brand agency Cake, picks out the most interesting recent stories from the esports sector

Houston Outlaws beat 4-0 in Week 2 of the Overwatch League (Blizzard)

TWITCH & OVERWATCH SIGN $90M The League finals will be held in July. definition and virtual reality. It will also use BROADCASTING DEAL Facebook’s advertising tools to monetize The highly anticipated Overwatch League FACEBOOK ACQUIRES NEW STREAMING viewers and drive ticket sales to events. (OWL) finally launched in January, supported RIGHTS WITH ESL The content programming deal signed by a huge broadcasting deal with Twitch.tv. While Twitch and YouTube are the between Facebook and ESL last year has The deal includes regular-season, playoff acknowledged leaders in esports streaming, already had positive effects – Facebook now and championship matches which will be Facebook and Twitter continue to contend drives 45 per cent of ESL’s ticket sales. streamed in three different languages across for eyeballs. Twitter has signed several Twitch. The League has been planned over partnerships with organiser ESL in recent FOOTBALL LEGEND LAUNCHES HIS OWN several years since the game was released in years, and now Facebook has announced ESPORTS ACADEMY May 2016. two streaming deals that will make it Dutch football legend Ruud Gullit has Twitch’s exclusive third-party streaming the exclusive partner for two of ESL’s launched ‘Team Gullit’, an academy for deal will run for two years and has been competitive leagues. up-and-coming young Fifa players. Three valued at $90m (€72m). The social media platform will have players have already signed for Team Gullit’s OWL is a new format for esports, made up exclusive rights to the ESL Pro League training, coaching, social media management of 12 city-based franchises around the world. for two years and the ESL One circuit for and brand building school as they look to Many were created out of existing esports one year. Both deals cover English and become one of the next Fifa esports stars. organisations: OpTic Gaming plays as the Portuguese rights. It’s a blow for YouTube, Gullit was won over by esports when he ; as . which previously had English-language rights attended last year’s Fifa Interactive World Its first night of streaming on Twitch hit to the Pro League. Cup. He said: “The strategy and the choices peak viewership of 415,000 viewers, a great ESL will utilise Facebook’s huge audience that the Fifa players make have a strong reception that shows the league’s potential. and stream its competitions live in high resemblance to real-life sport”. Z

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NBA 2K | LEAGUE LOOKS TO HIT THE RIGHT NOTES WITH ESPORTS VENTURE

F League borrows heavily from traditional NBA format F Seventeen NBA teams have signed up, but three are missing

F Commercial opportunities include in-game branding, e-commerce and sponsorship

BY JOHN REYNOLDS

he technology wunderkinds at the NBA likely subscribed to one mantra when dreaming up the new esports NBA 2K League: if it ain’t Tbroke don’t fix it. The NBA 2K League, which begins this month year, borrows so heavily from the NBA itself that it’s almost a replica. This has not stopped it being hyped as a game changer for the esports industry, particularly as it marks the first time esports teams have been owned by US professional teams. “We believe we have a unique opportunity to develop something truly special for our fans and the young and growing esports community,” said NBA commissioner Adam Silver at the announcement of the launch of the league. For the sponsorship industry, the new league, which has been created with Take- Two Interactive, the developer of the popular NBA 2K video game, presents a raft Take-Two chief executive Strauss Zelnick, right, and NBA commissioner Adam Silver launch the NBA 2K League (Premier Communications) of opportunities from in-game branding, to e-commerce opportunities, to sponsorship of chatter of fans. There’s all kinds of other $750,000 (€640,000) for a three-year deal to teams and individual players. The league will information appearing on the screen. participate in the league. target the sought-after Millennial audience. “I think to older consumers used to Missing from the list, though, are the It is inarguable that esports is hot right looking at sports it might look incredibly Bulls, LA Lakers and San Antonio now, particularly in the US, with a slew of cluttered, but as Facebook and other services Spurs, three of the most celebrated teams in investment from sports luminaries into the experiment with live sports rights, and I’m the league, though it is unclear why they are sector. sure Amazon’s going to be doing the same not participating. At the same time, fans have been packing thing, I think they don’t have the same “I think anything where you have brands out some of the world’s most iconic sporting limitations cable and satellite historically that big who aren’t partaking, that is going to arenas to watch high-profile gamers, who have had.” have an impact on the league to an extent,” are stars in their own right, battle it out for Amid the fanfare heralding the arrival of says Malph Minns, managing director at success. the league, questions remain about whether Strive Sponsorship. The NBA is leading the esports charge, it will be an out-and-out success: sceptics Chad Biggs, senior vice president of spearheaded by Silver, who believes it to be a point out that less than 1 per cent of gaming marketing partnerships at magnet to capture younger fans, particularly is in professional esports and fans could be – one of the teams that is participating – in China. turned off by one or two differences to the disagrees: “I don’t believe it undermines the He also argues that Amazon-owned traditional NBA game. league. We have some very strong teams. It Twitch, the platform used to watch NBA 2K, will make a very competitive league and more which features a flurry of stats and chatter, Seventeen in, three out teams will follow.” represents the future of NBA broadcasting. Seventeen teams – including stellar names Players, who can be male or female but Silver says: “If you go on Twitch, for like the and must be over 18, will likely be existing NBA example, and see what it’s like to follow Celtics – have signed up to the inaugural 2K gamers or top players of other esports. those competitions, it’s sort of constant season, each reportedly paying around They will be scouted by teams and, if signed,

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will have the opportunity to ink individual Biggs believes the NBA 2K League sponsorship deals. will offer similar types of monetisation In a presentation about the league, NBA 2K opportunities. League managing director Brendan Donohue He says: “We will integrate our team says: “We are going to find the best 85 on the players into much of our marketing and planet and bring them together and get them promotion of the team. And we will work to compete at the highest level.” with sponsors to integrate the players. We Unlike the existing NBA 2K game, players have already been talking to them about the will not replicate NBA superstars but create 2K League.” new avatars. He also thinks the 76ers could have a Manny Anekal, who runs several esports headstart on the court, pointing to a better companies, says: “This is by far the biggest understanding of the mindset of gamers and question for me and I’m sure many others. how esports operates. With sports titles and esports, there is the He says: “I think our experience with Team inherent question of whether there is an over the past year has provided us audience that wants to watch someone play “We expect this to be around with some valuable insights, knowledge and as their favourite virtual athlete. tools.” “Now instead of watching a digital Durant, for decades, so the primary goal you’re watching a Don from Detroit. The is building an audience and Popularity stories behind the players is what the NBA Donohue thinks the NBA is on to a and league will need to solve.” creating an environment where winner with the new league, driven by the The NBA argues that these players will be our players can be successful.” recognition of the NBA brand coupled with able to build their own fanbases over time. the popularity of the NBA 2K game. NBA 2K LEAGUE MANAGING DIRECTOR “This is a massive industry and we Advantages BRENDAN DONOHUE think we have a place in it,” he tells Donohue says the NBA 2K League has a GamesIndustry.biz. handful of advantages for advertisers vis-à- “There’s a significant appetite for the game vis other video games. Conceivably, the NBA could strike a deal in the US, but more importantly globally. We He says: “League of Legends? Incredible with Twitch to showcase the league while have a free version of the game in China that game. But to be honest if you don’t play the broadcasters like ESPN or NBC, which have has 34 million registered users. That suggests game, it can be quite intimidating. The 2K shown an interest in esports, could be in the there’s a global appetite for the game; in fact, game is a more globally recognised game.” mix. Alternatively, the NBA could use its own I don’t think people understand how big the That said, League of Legends is much network, NBA TV. 2K game is globally. more popular, with around 27m daily users, Minns says: “There is such a proliferation “This is a long-term play for us. We expect dwarfing the 1.6m daily NBA 2K users. of esports content that it can be a struggle this to be around for decades, so the primary Minns also points out that Twitch does to get paid for broadcast coverage in the goal is building an audience, doing that in not even consider NBA 2K and other short term. However, it’s the NBA, and their the right way, and creating an environment sports games as esports, so small are their existing relationships with broadcasters where our players can be successful. We’re audiences. mean that it’s perceivable that a deal can be confident the revenues will follow if we do Commercial advantages the NBA 2K done.” that right.” League has, Donohue argues, are that fans But Anekal says the power of the NBA The league will need to not only convince expect to see brands showcasing their ads brand means the NBA 2K league will be able fans of its appeal, but also market the hell out during games, just like in the NBA, and to land a paid-for broadcast deal. of it to make it visible on people’s radar. unlike other video games where it appears Anekal says: “I’d venture that initially, the “inorganic”. Cross-promotion opportunities league will be attractive to and played by Donohue also says that advertisers could Last year, the Philadelphia 76ers became existing NBA and NBA2K fans. tap into the “coolness” of the NBA brand, the first North American professional “However, I can imagine the long-term hinting that brands could perhaps tie up not sports team to own an esports team, when goal for the NBA would be to draw in a only with teams and players but also celebrity it reportedly invested up to $15m in Team new, younger audience via the NBA 2K fans of the NBA. Dignitas, an esports team which came with League who eventually become fans of the “We think there is a unique opportunity to a prized slot in the League of Legends traditional sport.” create incredible content around the cultural Championships. Interest in esports in the US and the rest piece of the game. We are not just buying owner Mark Cuban and of the world is growing but the NBA will need signage; we want fully integrated activation,” Washington Wizards owner Ted Leonsis have to break new ground and attract legions of he says. also moved into the esports space. fans to its league, not just gamers, if it’s to be Details of the media rights have yet to be An appealing aspect of the deal was cross- seen as a success. finalised while it’s also yet to be determined promotion opportunities between the 76ers Powered by the NBA brand, and its whether games will be played on Xbox, and their esports teams, such as the mass financial muscle, it has a chance of achieving PlayStation or PC. merchandising of esports player jerseys. this over time. Z

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China : News

Mark Dreyer, editor of China Sports Insider, takes a look at the most significant stories from the Chinese sports sector

SHENZHEN TO HOST WTA FINALS FROM 2019 The Women’s Tennis Association has signed a ten-year deal with the southern Chinese city of Shenzhen that will see the season- ending Finals event held there from 2019 to 2028. Shenzhen saw off competition from Manchester, Prague and St. Petersburg, but existing host Singapore, whose deal will expire after the 2018 tournament, was known to have considered an extension. The prize money will double to a new high of $14m (€11.5m) per tournament from 2019, with Chinese real estate developer Gemdale the chief backer of the city’s bid, which also includes the promise of a new state-of-the- art 12,000-seat venue.

CHINA OPEN BECOMES THE SECOND £1M SNOOKER PRIZE Snooker is another sport being reshaped by Chinese funds. Seven tournaments on Carolina Garcia serves at the WTA Finals, which will move to Shenzhen in 2019 (Getty Images) World Snooker’s calendar are now held in China, with Beijing’s China Open this revenues for 2017 dropped by almost 11 per skiers have been allowed to compete in week becoming the second tournament after cent, due in large part to its sale of hotels a largely symbolic move, given that none the World Championship to offer £1m and theme parks in China last year. It also are expected to challenge for medals. All (€1.1m/$1.4m) in prize money. The new said that seven per cent of the company’s athletes from the two Koreas will march four-year deal, effective from this April’s total assets were offshore, an unusual at the Opening and Closing Ceremonies tournament, comes after organizers signed a disclosure likely made because it had been behind the Korean Unification Flag, which new hosting agreement with promoters Star criticized on several occasions by authorities was designed ahead of the 1990 Asian Xing Pai and Beijing Fuhua Culture Tourism for accumulating debt overseas. It also said Games in Beijing – though first officially Development. The total money on offer proceeds from its sports segment totalled used in international competition a year has almost doubled from last year, with the RMB 32.1bn (€4.1bn/$5.1b) last year, 14 per later – and has since been employed at three winner’s cheque of £225,000 up from £85,000 cent of the group’s total revenues. Olympic Games. in 2017. Eighteen-year-old Ding Junhui pocketed £30,000 for winning the inaugural IOC APPROVES NORTH KOREAN LEBRON BACK ON TOP IN CHINA China Open in 2005. Such has been Ding’s PARTICIPATION AT PYEONGCHANG LeBron James may be going through a torrid popularity over the past decade that interest The International Olympic Committee has time in the US given the struggles of his in snooker has soared, sparking a new wave allowed 22 athletes from North Korea to Cleveland Cavaliers, but he has some good of players that now sees 20 Chinese ranked compete at the 2018 Winter Olympics news from China, where he has reclaimed in the world’s Top 100. in Pyeongchang next month, 12 of whom top spot in NBA jersey sales from Stephen will form part of a historic joint women’s Curry of the Golden State Warriors. Curry WANDA REVEALS FINANCIAL, IPO ice hockey team with South Korea. The was top last year in China, but fell to second DETAILS agreement, ratified in Lausanne, states that behind James, with James Harden (Houston More details have been revealed about at least three of the 22 players selected for Rockets), Kevin Durant (Golden State) and Wanda Sports’ potential IPO, including the each game from the newly-expanded squad Kyrie Irving (Boston Celtics) completing three banks – Citigroup, UBS and Hong of 35 must be from North Korea. However, the top five. Harden is only at number 10 Kong-based CLSA – set to handle the offering. Switzerland, who will face the joint team in in the US rankings, but the Rockets have Meanwhile, parent company Wanda Group their Group B clash, has already expressed long been known as “China’s team” thanks says it plans to clear all of its overseas debt, reservations, saying the move is “not fair to Yao Ming’s success there, while Chinese claiming that 93 per cent of its assets are and distorts competition”. Elsewhere, two youngster Zhou Qi has played parts of 14 still within China. A statement posted to its figure skaters, two short track speed skaters, games for the Rockets this season as he bids website this weekend revealed that operating three cross-country skiers and three alpine to establish himself in the NBA full-time. Z

01/02.18 : SportBusiness International

68_china_digest.indd 68 26/01/2018 11:37 ROUND-UP 69

Conferences

MIT SLOAN SPORTS ANALYTICS CONFERENCE When: 23-24 February, 2018 Where: Boston, Massachusetts What: Sports analytics, business and technology conference. Who: 2018 speakers include Adam Silver, commissioner, NBA; Rob Manfred, commissioner, MLB; Gary Bettman, commissioner, NHL; John Collins, CEO NFL On Location; Steve Ballmer, owner of the Los Angeles Clippers and Laura Froelich, global head of sports partnerships, Twitter. Tickets & more info: sloansportsconference.com

NATIONAL SPORTS FORUM SPORTEL ASIA When: 11-13 February, 2018 When: 13-15 March Where: Frisco, Texas Where: Singapore What: Cross-gathering of business professionals in the sports industry focusing on sponsorship What: The Asia edition of the sports media sales and partner activation, marketing and fan engagement, ticket sales and service and and marketing conference business development. Who: Companies registered for the event Who: The speaker line-up includes Chad Estis, executive, business operations for the Dallas include Eurosport, facebook and beIN Sports Cowboys and AT&T Stadium; Dan Hunt, president FC Dallas and vice president, Hunt Sports

Group and Keisha Taylor, SVP, integrated marketing, Learfield. Tickets & more info: sportelasia.com Tickets & more info: sports-forum.com

THE BUSINESS OF SPORT SUMMIT SXSW When: 9-11 March Where: Austin, Texas What: “This three-day track tackles the future of sport – in all its forms – from a cultural and technological perspective, while exploring a diverse range of topics encompassing all sports across all levels of play.” Who: Speakers include Christina Alejandre, GM, ELeague; Lara Avisov, data science sourcer, Uber; Matt Apfel, director of VR video, Google. Tickets & more info: sxsw.com/conference/sports

When: 14 -15 March Where: Sydney, Australia CALENDAR FEBRUARY-MARCH 2018 What: Conference looking at consumer engagement, sports-entertainment, Date Event Location Website sponsorship and broadcasting 11-13 February National Sports Forum Texas sports-forum.com Who: Speakers include Ricardo Fort, vice MIT Sloan Sports Analytics president global sports partnerships, the 23-24 February Conference Boston sloansportsconference.com Coca-Cola Company; David Gallop, chief executive officer, Football Federation 9-11 March SXSW Texas sxsw.com/conference/sports Australia; and Jack Elkins, director of 13-15 March Sportel Asia Singapore sportelasia.com innovation, Orlando Magic.

14-15 March Business of Sport Summit Sydney sportsleaders.com.au Tickets & more info: sportsleaders.com.au

01/02.18 : SportBusiness International

69_conferences.indd 69 26/01/2018 11:15 70 COMMENT : KEVIN BRILLIANT

THE SECRET TO A SUCCESSFUL LOYALTY CARD PROMOTION Kevin Brilliant, the Chicago Bulls’ senior manager of business strategy & analytics and a behavioral scientist, explains the psychology behind an effective loyalty card marketing campaign

oyalty cards are a complicated From a rational standpoint, this is comical; business. The last time someone your profile is less-than-one-per cent tried to hand you a loyalty card, you complete. But imagine people’s reaction probably thought, “I don’t want this, if they arrived to find a message that said: Lit’s one more thing to carry around in my “Congratulations, your profile is less-than- wallet.” one-percent complete!” How many people Maybe you said a quick “No thank you,” or would immediately think: “Forget this!” politely accepted the hand-off only to find a The psychology behind this is simple: permanent home for it in the nearest waste Nobody likes to feel like they are starting basket. from the bottom of the mountain. Endow us Probe deeper, and it turns out that two with a sense of progress toward a goal – no primary behavioral barriers present the matter how arbitrary – and our motivation to biggest obstacles to running successful achieve it rises exponentially. loyalty campaigns: In a classic experiment, researchers used • Most people don’t keep discount cards. a variation on the “Buy ten, get the eleventh • Most people don’t redeem discount offers. free” punch cards to illustrate this behavioral It also turns out that this classic and time- principle. honored marketing tactic provides a perfect In one condition, subjects received “Buy canvas for exploring the hidden forces that Picture cleaning out your wallet. You eight car washes to get the ninth free” cards. shape our decisions. come across a discount card for 20 percent In the second condition, researchers gave off a $10 item. Maybe you keep it, maybe participants “Buy ten car washes to get the The Endowment Effect you don’t. What happens, though, when you eleventh free” cards, but in that condition In behavioral terms, the endowment effect is find a gift card that still has $2 left on it? By two of the markers had already been punched. the principle that we value something more comparison, getting rid of the gift card is a lot Psychology aside, the two research when it’s ours than we do when that same more painful! conditions were functionally equivalent: thing could be ours. The psychological basis Why? Throwing out a card endowed with both cards required eight purchases to earn for this effect comes from “loss aversion” – percent savings means foregoing a potential a free car wash. And yet, while the first group we experience losses far more significantly future gain. Throwing out a card endowed completed their cards 19 per cent of the than we experience equivalent gains. with value means giving up something that time, the group that received the endowed In terms of framing discounts, research belongs to us. progress completed theirs at a rate of 34 per suggests that $100 represents a sort of In other words, it’s a loss. And we hate cent – equating to an 80 per cent increase in psychological line-of-demarcation: For losing. completion – and the average time between transactions more than $100, framing the car washes dropped (improved) by three discount in dollars carries more weight, while Endowed Progress days. expressing the savings as a percentage feels Built on the endowment effect is another more significant on purchases less than $100 behavioral economics principle known as A loyalty solution – a $2 discount on a $10 purchase doesn’t feel endowed progress. Not surprisingly, the more While there is no one best way to create as substantive as a 20 percent discount. aware we are of our own progress, the more discount offers, the design of any effective When the offer requires people to hang on motivated we are to continue toward a goal. loyalty program should seek to solve for to a physical card, however, the tables turn. What is surprising, however, is when that your customers’ existing behavioral barriers. motivation is based on progress that didn’t Want people to hold on to loyalty cards? Try ever take place. endowing value. Want customers to use the “Endow us with a sense of Have you ever created an online profile loyalty cards? Try endowing progress. that required you to input a few basic Whatever you do, start by understanding progress toward a goal – no pieces of information, only to arrive at your your consumers’ psychology. In the long run, matter how arbitrary – and our profile page to find a message that says: it can create real loyalty for your brand. “Congratulations, your profile is 35 per cent And isn’t that the point of a loyalty motivation rises exponentially.” complete!”? program in the first place? Z

01/02.18 : SportBusiness International

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