Five Key Trends That Are Driving the Business of Sports
Some of the sports world’s top business leaders shared their insights at Stanford GSB’s inaugural Sports Innovation Conference.
“What’s the difference between a customer
and a fan?” asked Vivek Ranadivé, leader of the ownership group of the
NBA’s Sacramento Kings, during the keynote kickoff to Stanford GSB’s
inaugural Sports Innovation Conference,
held in early April. “Fans will paint their face purple, fans will
evangelize. … Every other CEO in every business is dying to be in our
position — they’re dying to have fans.”
While fan passion is as old as sport
itself, leagues and franchises are now using cutting-edge technology not
just to build winning teams but also to capitalize on the ardor of
their customer base to grow another revenue source — corporate
sponsorships. Here are a few of the business trends that emerged from
the April conference.
Big data is changing basketball management — and the game itself
More than a decade ago, the Oakland A’s Major League Baseball team (and the book and movie Moneyball)
popularized the notion of using statistics with predictive modeling to
build a winning team. Teams in the NBA, such as the San Antonio Spurs,
have similarly used big data sets to help owners and coaches recruit
players and execute game plans. But the 2013-2014 NBA season is the
first for all teams to have SportVU tracking, a system of six cameras in
each arena that measures the movements of the ball and every player on
the court, generating an entire database of performance information.
“This is the first year we have more data than we can analyze,” said
Ranadivé, noting that more data had been generated this season than in
the league’s previous 67-year history.
The data are changing the way the game is
played, shifting emphasis from how many total points a player scores to
measures of player efficiency, productivity per touch, and defensive
effectiveness. “It has been hard, historically, to quantify defense,”
said Brian Kopp, senior vice president of STATS, the company that
developed SportVU player tracking. “Now we have four camera views
helping you do that.” In addition, the data have influenced the types of
shots players take on the court.
Golden State Warriors forward Andre
Iguodala said he uses the data to assess opponents via scouting reports,
but most players don’t pay much attention to it. “Some players aren’t
as productive if they’re thinking too much,” he said. Instead, the
data's greatest impact is in helping management build a team of
effective and compatible players.
Analytics alone won’t win you a title,
said Philadelphia 76ers general manager and president of basketball
operations Sam Hinkie, an early advocate of basketball big data when he
was with the Houston Rockets. “Fundamentally, success is still about the
judgment of the people you put in place,” he said, and analytics is a
tool to help those decision makers. With every team having the same deep
information, he said, the way to gain competitive advantage in the
future will be finding an analytics technique or technology from another
industry that can be applied to basketball in an innovative way. “The
interesting things are happening here, on Sand Hill Road [the location
of Silicon Valley venture capitalists] or with DARPA [Defense Advanced
Research Projects Agency] funding, or health care analytics. What’s key
is to beg, borrow, and steal from other contexts.”
Data analysis is also likely to contribute
to better biomechanics in sports as wearable devices determine how much
physical stress players have endured and may even eventually predict
the likelihood of injury so a player can be rested before he’s hurt,
said Kopp. “Right now, coaches and trainers are guessing a lot.”
The rise of “smart arenas”
Franchises are looking for ways to
capitalize on mobile technology to enhance the fan experience in their
homes and as spectators in stadiums and arenas. Mobile devices are
popular as “second screens” in home viewing of televised sports, but 70%
of fans bring a mobile device to the stadium or arena and expect to use
it during a game there as well, said Mark Craig of Cisco Systems Sports
& Entertainment Group, who has been involved with creating arena
Wi-Fi systems that will function with a dense population of users. The
new Sacramento Kings arena, set to open in 2016, will have mobile
applications for check-in, ushering you to your seat, indicating
shortest bathroom and concession lines, seat upgrade options (much like
what has been done in the airline industry), cashless commerce, and
in-seat wireless charging. The Kings are exploring the use of drone
technology to survey available parking spaces and even provide unique
in-arena camera angles, said team senior vice president of marketing and
strategy Ben Gumpert.
“Sports is a people business, so we’re
looking for ways to use technology to further engage with people,” said
John Abbamondi, vice president of the NBA’s Team Marketing &
Business Operations division. This could mean one day scanning a ticket
on your phone to enter the arena, which sends an alert to a service
representative to let them know it’s your birthday, so your favorite
cocktail can be delivered to your seat. “Each arena is like a lab,” he
said, trying out new programs to find what's successful in deepening
engagement and building new revenue.
One surprisingly underexplored avenue for
engagement is enhanced fan access to athletes during events, said Ward
Bullard, formerly head of sports for Google+ and now with SAP
Technology. These may include special fan invitations to pre-game
warm-ups or post-game press conferences, or standing next to a player
during the national anthem.
Such enhancements are possible because the
collection of personal data about fans would help teams “match the
experience that matters most with the right fans,” Gumpert said.
Cracking the code of even deeper fan engagement
Fans want to be connected to sports teams
and content anytime, anywhere in a continued migration to mobile, said
ESPN executive vice president John Kosner, noting that 43% of ESPN.com’s
audience came to them exclusively through mobile devices the previous
month.
One critical point of access is video,
added Bullard, noting that savvy leagues such as MLB and the NBA created
early partnerships with YouTube to host highlight compilations and
recaps of recent games to let fans watch on demand.
Ranadivé of the Kings said he approaches
the organization as, “much bigger than a sports team; it’s a social
network.” This includes the team’s development of ways to connect with
fans watching at home and engaging on their second screens, such as
Google+ Hangouts during games, and a “virtual T-shirt toss,” in which
registered fans are selected randomly to win a T-shirt through the
team’s app.
Clearly the social media connection is
vital across all leagues: NASCAR is developing a “digital cockpit” that
includes onboard telemetry and in-race social media interaction between
fans and drivers.
Social media has enabled direct
connections between fans and the athletes. Some players do weekly
Google+ Hangouts, giving their own first person perspective, said
Bullard, while others use video and social media to document their
experience from the NFL pre-draft scouting tryouts through the draft,
for example. On the lighter side, NBA players have done music parody
videos that are a hit with younger fans on YouTube.
It’s too soon to tell, though, whether so
much engagement will distract athletes, and hurt their performance or
increase their value. “If you have two athletes really close in talent,
would you choose the one who has a bigger social following?” Bullard
asked, suggesting that some in management are starting to indicate the
answer will be “yes.”
Using tech for sponsorship and integration
Sport sponsorship no longer means simply
attaching a corporate name to a stadium. Rather, it has become a
triangle of association between the team, the sponsor, and the
passionate fan.
It involves “taking two equivalent
products and creating some affinity between them through social
currency, not hard currency,” said Steve Pamon, head of sports and
entertainment marketing for JP Morgan Chase. Fans tend to be quite
active in liking or following a brand on social media because of its
association with a team, and 30% of fans who use social media to connect
with a sponsor later make a purchase because of the brand’s association
with the team. However, if the association doesn’t feel authentic or
comes on too strong, it can just as easily be a turnoff to fans.
Teams now have professionals on staff to
assemble marketing data, but intuition still plays a part in selling
sponsorships, said Mike Golub, president of business operations for the
MLS Portland Timbers. His team recently signed a deal with a local
chocolate company not because data showed chocolate lovers to be the
most passionate soccer fans, but because they felt helping the local
brand would also help theirs.
Globalization of the hometown team
With so much fan access occurring via
mobile technology and social media, leagues and teams are accelerating
global programs, including expanding to new markets. As just one
example, Kings owner Ranadivé, who is Indian American, discussed
raising the Kings’ profile in India by creating a team website in Hindi,
hosting international Google+ Hangouts during games, and sending some
team personnel on outreach trips to India. “It’s not an overnight
process, but progress is steady,” he said, noting that basketball has
become the fastest-growing sport in India, and fan interest in the Kings
is seven times higher than that of any other NBA team. “I wouldn't be
surprised if, in the next five years, we have a player of Indian origin
in the NBA,” he said. A home-country player would of course increase
Indian fan interest even more, just as it has done for the NBA with
players from France, China, and other countries over the past two
decades.
Stanford graduates cited in this story
are: John Abbamondi, MBA ‘04; Ward Bullard, BA ‘00; Mike Golub, MBA
‘88; Ben Gumpert, MBA ‘07; Sam Hinkie, MBA ‘05; and Steve Pamon, MBA
‘96.
No comments:
Post a Comment