Posts Tagged ‘ ESPN ’

ACC, ESPN, and Raycom Deal is Evidence of the Importance of Relationship Building in Business

Raycom Sports has covered ACC sporting events since 1979 and both entities have helped one another prosper over time.

In the 4-10 October 2010 issue of Sports Business Journal, an article by Michael Smith and John Ourand titled, “History with ACC secures future for Raycom,” covered how the long-term relationship between the ACC and Raycom saved the latter from possibly losing its biggest media contract and main revenue stream.  Their article is the basis of today’s post and a starting point for my conclusions.

Basically, North Carolina-based Raycom simply could not match bids with networks like ESPN and Fox – who were both vying for the conference’s rights – nor survived negotiations without CEO Ken Haines or his staff’s efforts to underscore the role Raycom has played in the ACC’s history over the past thirty years.  Nevertheless, talks between ESPN and the ACC would eventually end with a $1.86 billion contract that goes into effect at the beginning of the 2011-2012 season, according to Smith and Ourand’s article.  Where does that leave Raycom?

I Remember the Time You Helped Me when I Needed it Most… Thank You (And You Have Been Here for Me all of these Years… Thanks)

When ESPN launched in 1979, it faced the challenges all start-ups face, not to mention the level of competition found in the sports industry.  Raycom sold the rights to some of its ACC basketball games to ESPN in the early 80s, giving ESPN a chance to establish itself.  Later, in 1993, Raycom sold the rights to a Duke-North Carolina basketball game that allowed ESPN2 (the network’s new channel) to enter the scene with a fair degree of credibility, according to Smith and Ourand.  As the decades came and went, ESPN grew and became the premier sports network in the US.  As for Raycom, it remained in its market and built on its relationship with the ACC.

Raycom CEO Ken Haines (right, with Charlotte Regional Visitors Authority CEO Tim Newman) says, “We really are the marketing and corporate relationship arm of the conference.” (caption taken from 4-10 October issue of Sports Business Journal)

Through the Summer of 2010, Raycom was in the fight of its life to secure a deal with the ACC that would guarantee its survival.  “Everyone involved in the negotiations cited Raycom’s 31-year history as the main reason it was able to strike a deal,” wrote Smith and Ourand of the negotiations between the ACC, ESPN, and eventually Raycom.  According to Smith and Ourand’s article, ACC Commissioner John Swofford said, “It tugged at me… We wanted to keep Raycom as a partner, but we had to do what was in the ACC’s best interests.  That we got the deal we got and kept Raycom involved was icing on the cake.”  Indeed, Haines used Raycom’s history with both the ACC and ESPN as a major talking point during negotiations.  The product: a $50 million a year sub-licensing contract between ESPN and Raycom that secured at least 50 North Carolina jobs for the next twelve years.  If you look in either Smith and Ourand’s article or Raycom’s website, you will find some of the particulars of that deal.  Essentially, Raycom keeps “ACC football and basketball, [remains as] holder of regional cable rights, administration of ACC Properties and management of all ACC digital platforms including operation of theacc.com, and the official conference web site,” according the Raycom.com.

Conclusions

While the bottom line influences all smart business deals, it is not the only path to follow during negotiations.  There is a popular misconception that business is simply cold and harsh, and defined by cliches in popular culture such as the great “Wall Street” villain Gordon Gekko when he famously states that “greed is good.”  Indeed, management and leadership must act with the company’s/stakeholders’ interests in mind, but managers who lead both prosperous and honorable careers and leaders who earn the respect of their peers do not forget those who helped them along the way.

Without Raycom’s willingness to sell rights to some of its hottest properties to a new competitor also struggling for credibility (ESPN and ESPN2) so long ago, or its loyalty to the ACC over 31 years, ESPN and the ACC would have spent more time and resources searching elsewhere for rights to quality programming and securing media service for its properties and events.  Whether in business or life itself, one always appreciates another’s efforts to make life a little bit easier.  Sure, one cannot dismiss the fact that Raycom has profited from these relationships over the past thirty years in one way or another, but so have ESPN and the ACC.  In fact, all parties must benefit if a relationship is expected to function well and last a long time (Raycom, ESPN, and the ACC prove this concept).

A long time ago, I learned an important lesson from the greatest people I have ever known (my parents, grandmother, and brother – and am reminded of it every day by theirs and my fiancee’s unyielding example) and would like to emphasize today.  Remember that as long as one dutifully conducts oneself with honor, integrity, and can walk in and out of an establishment with his or her head held high, there is no failure to fret about nor any outcome to fear.  In fact, it is one of the best methods of achieving success and fueling confidence in any endeavor.  This is an irrefutable truth that we must exemplify throughout our lives in order to be truly successful and thoroughly satisfied at the end of the day.

Cam Suarez-Bitar.

Thanks, as always, for your readership.  This article is a tribute to all of who have played a positive role in my life.  From friends and instructors who have provided both wisdom and support, to my family and future wife who have not only helped make me the man I am today, but indeed make this world a better place through their words, actions, and love.

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Should College Athletes Be Paid?

As private enterprises capitalize on their use of student/athletes as marketing symbols, the question of whether or not they should receive royalties lingers.

Public and private universities are non-profit organizations.  Only about 10 athletic departments in the NCAA actually generate revenue for their respective universities and the rest operate at a loss.  The benefits are that university athletic departments attract national and international attention through the media (“increased brand recognition,” in marketing terms), complement a university’s reputation and prestige, and both enhance and reinforce the student experience.  Meanwhile, there are numerous tangible benefits for a company like Electronic Arts (EA Sports) that profits from its creation of exciting and realistic video games, such as “EA Sports NCAA Football.”

Amateurism in American college sports dates back to the early 19th century and keeps a higher degree of romance in sports.  Today, endorsements and co-branding – among other marketing tactics – have changed the way college athletics function and amateurism is no longer as prevalent as it was 200 years ago.  We certainly cannot argue against the old paradigm that holds that “times change.”  Yet, as cultural norms change, so must the systems that unite the interests of those who make them work.  In this case, the current system that allows the NCAA and companies like EA Sports to develop products featuring the likenesses of student athletes that add marketability and thus generate sales must be adjusted to ensure that no stakeholder – least of all college student/athletes who are in the midst of shaping their seemingly uncertain futures – is left at a relative disadvantage.

(see http://www.google.com/images?hl=en&q=ncaa%20football%20covers&um=1&ie=UTF-8&source=og&sa=N&tab=wi&biw=1200&bih=680 for a long list of examples of how important cover art is to the game’s identity… though some are not official releases, you can see how student/athletes are used to sell games such as EA Sports NCAA Football)

They look exactly like the real players, don't they? (except for the numbers on the jersey nameplates that replace their real names)

The solution – on the surface, at least – is not too complex.  As it stands, the NCAA prohibits student/athletes from receiving consideration of any kind from third parties such as agents, scouts, or others (see the recent Reggie Bush scandal at USC and current investigations of the University of Florida, University of North Carolina, and University of South Carolina by the NCAA for more examples.)  While the student/athlete attends his respective institution, it makes sense for the NCAA and the university to shun a world that has nothing to do either with a formal college education or amateur sports.  A student/athlete’s uncertain future after college, however, is not at all eased by the tiresome job search that follows years of preparation.  Indeed, wallets are usually light after graduation.

Therefore, the NCAA would serve its student/athletes who appear in video games well by allocating a modest percentage of the royalties received from the sale of EA Sports NCAA Football to a trust.  All featured universities would be entitled to an equal share of the trust fund and would disburse their share to former student/athletes who appeared in the game version sold that year and either graduated, or used up their eligibility and are no longer students.  Each athlete would receive an equal amount that they could use as financial support during the job search that follows graduation or separation from the university.  Though final distributions to student/athletes would not be very large, questions regarding the ethicality of use of player likenesses in video games would lead to less controversy since all stakeholders (i.e. the video game distributor, promotional partners, NCAA, universities, and student/athletes) would benefit from the popularity of products like EA Sports NCAA Football.  Even from a marketing standpoint, EA Sports and the NCAA would benefit from aligning the sale of NCAA Football with a greater purpose (an increasingly effective marketing tactic): helping student/athletes who are not offered professional contracts get a head start on life after college.

If such a program existed, it would give me a reason to answer “yes” to the question at hand.  Amateurism ought to

Looks like Tim Tebow, doesn't it?

be respected by sports properties, participants, and brands who contribute to a sport’s existence.  This does not mean that all parties but one involved in a business relationship should profit, though.  The arrangement I propose would not involve giving current or former student/athletes Hummers, houses, or excessive amounts of money; rather, it would grant reasonable and modest financial assistance to the student/athletes who added value to a video game when the time comes to look for a job and make their professional dreams come true.

Conclusion

Number 4 looks like Damien Williams, doesn't he?

Without player likenesses or even random generic characters who resemble the real players in every way but in name, EA Sports NCAA Football would not be nearly as popular nor would it offer the same high quality medium for direct fan engagement that university marketing departments and sponsors/partners like ESPN appreciate.  As lawsuits generate unwanted publicity for the NCAA and developers who create college sports-themed video games, the controversy worsens over a growing crisis in collegiate athletics.

In the August 2-9 2010 issue of Sports Illustrated (p.86-87), former Green Bay Packers offensive lineman Ken Ruettgers talked to writer Phil Bencomo about some of the difficulties in transitioning to a post-NFL career.  It may be inferred that student/athletes face similar challenges after they leave the playing field for the last time.  From a marketing, public relations, and altruistic perspective, it makes sense for the NCAA to create a small trust fund for student/athletes featured in video games that would help with the transition from college to professional life.  Without much financial security, a trust fund set up by the NCAA would go a long way toward helping former student/athletes featured in EA Sports NCAA Football adjust to life after classes and games.

Cam Suarez-Bitar.

One last note on an unrelated topic.  Just a day ago, a pregnant Florida Panther was struck by an automobile in South Florida and recovered by the US Fish and Wildlife Service.  She is being nursed back to health, but her three cubs did not survive.  As a species, the Florida Panther is fading fast, with roughly 80 left in the wild.  Please drive carefully and contact your local authorities if you see an injured animal by the side of the road in need of help.

Thank you for your readership.

Former Green Bay Packer Ken Ruettgers, creator of "Game's Over," a non-profit organization that helps athletes transition from life on the field to new careers.

Will Technology Be the Best Way to Improve the Fan Experience?

Last night, I began typing this article and after an hour or so scrapped the entire project.  Originally, I was going to argue that sports and technology truly came together in the closing decades of the 20th century, but that would have been false.  The 1932 Olympic Games held at Lake Placid were broadcast over radio and – arguably – marks the first great kiss between sports and technology.  The romance has continued for nearly 80 years and produced many industry-changing innovations (read my article on Roone Arledge and Mark McCormack to familiarize yourself with just a few).  So, I focused instead on the details of that remarkable love story and pondered the issue of how technology will shape the fan experience in the 21st century.

I read an excellent article in Volume 12, Issue 49 of The Sports Business Journal authored by Eric Fisher titled “Looking to the Future” that helped me arrive at my conclusions.  In it, Fisher includes a transcript of the Virtual Technology Leaders Summit that he and Richard Weiss, Abraham Madkour, and Don Muret from the journal presided over.  They spoke with Michael Gliedman, CIO and Senior Vice President of the NBA; Tery Howard, CTO and Senior Vice President of the Miami Dolphins and Sun Life Stadium; Jonathan Pannaman, Senior Director of Engineering and Technology for ESPN; Bill Schlough, Senior Vice President and CIO of the San Francisco Giants; and Lorraine Spadaro, Vice President of Technology and eBusiness at Delaware North.  Along with the executives, the journal staff also invited from Cisco Systems Stuart Hamilton, Senior Director of the Sports and Entertainment Solutions Group; David Holland, Senior Vice President of the Sports and Entertainment Solutions Group; and David Hsieh, Vice President of Marketing, Emerging Technologies.  Now that’s a mouthful!

If we watch TV or listen to the radio for just a few minutes and wager that not one commercial by a communications firm would appear, then we would be out a few dollars.  Taking our loss with us as we go back home and lament the fact that we made such a terrible bet, we should not even consider betting that we will not walk past someone either talking on their cellular phones, watching movies on a handheld device, or checking their “Facebook” accounts.  That would be a terrible move.  Only 10 years ago, however, either one could have been a moderately safe bet.  Today, leagues and teams are betting on the growth of technology – such as social media – and investing heavily in developing their wireless infrastructure at their venues.  But is technology the best bet?

As you have probably noticed by now, technology changes and “evolves” quickly.  The feature a sports entity may have spent top-dollar on that gave them an advantage one year easily becomes commonplace in the industry the next time around as quickly as star pitcher of the San Francisco Giants Tim Lincecum smokes a sizzling fastball past a blinking batter and into Bengie Molina’s distressed catcher’s mitt.  It’s a gamble.  Bill Schlough of the San Francisco Giants argues that to compete in technology with other teams will give you that momentary advantage should you offer a new feature at games that fans cannot experience elsewhere, but as the tide of technological advancement rises it will bring all others in search of the next big thing in fan experience enhancement.  Indeed, when the Giants built their new stadium 10 years ago or so, they installed modem connections in all of their suites.  However, they did not place terminals in the stands.  When you have tens of thousands of fans communicating wirelessly at games sending digital photos to their friends who could not weasel their way out of work that day or posting them on Facebook as the game wears on, bandwidth becomes an issue for stadiums with integrated 3G networks and costly reinvestment in modernized infrastructure is the only solution in an industry that progressively depends more on technology as time goes by.

But the ROI is there: those photos of the game laden with images of a myriad of sponsors who purchase signage or related items and even the team’s logo helps promote those brands and add value to the investment.  That is an example of an intangible benefit when it comes to sponsorship valuation when you are negotiating from the brand side.  That added exposure is something you want… and the property knows it.  Depending on the league, though, either the team or the league would benefit most since some leagues – like the NBA – centralize their digital content.  It’s all about who owns the rights to the digital content and how it is leveraged.

Now, that is just the content that fans share.  When you consider that the stadium’s bandwidth is also being shared with photographers who could stream content directly from their cameras and send large files almost simultaneously, that could, as Lorraine Spadaro puts it, “take your wireless to its knees.”  All of the iPhones and future iPhones of the world only complicate the challenge.  But the benefits are there.  Spadaro makes a critical observation that helps answer the question on whether or not all of this is worth the trouble.  She points out that younger generations are less likely to be content with a simple outfield display and an organ since they are growing up in a world with digital cartoons and television programs that allow the viewer to have a direct effect on the outcome of televised events, such as “American Idol” and even “Dancing With the Stars.”  They (the younger generation) view programs and experience events differently, and though older generations do not as often see the value of a giant screen suspended from the roof that could project 3D images with the help of passive lenses, the former almost expect it.  In sports like baseball, a significant amount of time lapses between actions on the field and digital content provided by the property helps keep the fan engaged.  As budgets tighten and competition from other sports and entertainment outlets increases, properties must find ways to enhance the fan experience and forums like the “Virtual Technology Leaders Summit” are held daily around the world as the industry undergoes an inevitable paradigm shift that embraces the ever-increasing presence of technology in our lives.

Television networks like ESPN also help fans connect with properties in ways we could not imagine just 20 years ago.  It was beyond my imagination to even consider that I would end up watching the NFL Draft or follow a baseball game over the internet, but ESPN has made that and more a reality as a result of technology and continues to push forth.  In fact, ESPN has a staff of coders that creates applications that make a sporting event and its related data more interactive, according to Michael Gliedman.  As they develop new outlets for the increasing amounts of information they receive from properties, ESPN works closely with them to ensure that the entire industry is moving forward at a similar pace.  With the right device fans can watch an ESPN feed of the game they are attending and enjoy analysts’ feedback and watch the game in-person all at once.  This is a sign of what’s to come.  Properties that either do not have the proper infrastructure or leaders to make the best decisions regarding technology strategy and information outlets (like TV networks) that are not adapting to changes in technology will be left behind and possibly suffer in the new decade.  The pace is only increasing and the pressure on front offices mounting.

In Major League Baseball, there are less than 10 teams with executives that represent information technology at the highest decision-making levels in their respective front offices, leaving over 20 teams that have yet to fully commit to the fact that properties must interweave their technology strategy with their business strategy.  TV’s capable of projecting 3D images are coming as Samsung, Sony, and Panasonic design and manufacture the screens capable of delivering this new experience to viewers.  One intangible benefit for properties from the upcoming 3D revolution is the fact that if their events are held in facilities that accommodate the additional number of cameras needed to broadcast in 3D, they can compete on a whole new level with other options on the dial that transmit in 2D and could otherwise make a far-from-die-hard sports fan who would usually opt out of watching the game tune in and possibly make him or her the newest fan of that property or sport because the idea of watching a 3D program was too exciting to pass up.

For fans who buy tickets and sit in the stands or are served in the suites, digital content adds value to their decision to pay to watch a game at the venue itself.  Leagues and teams are challenged to somehow embrace both the advantages of implementing a technology strategy and solve the problem of obsolescence that changes in every way every year.  By creating a position at the executive level that focuses on these issues, a general manager or president could count on having an expert at the most senior level who understands the problems with technology and can focus on how to exploit the benefits.  Properties cannot fear failure.  Even though ideas like “smart seats” (stadium seats equipped with televisions) failed when they were implemented a few years ago in Boston, experts found that the market simply was not ready for them – people still felt that such devices were intrusive.  Interestingly enough, though, Tery Howard of the Miami Dolphins and Sun Life Stadium mentioned that “we did a pilot project last season where we deployed about 2,700 devices… The surveys came back overwhelmingly positive with respect to having all of this information in their [the fans’] hands and they’re not missing out on any other out-of-town game that they could be watching from home.”  In case you did not know, the devices Howard referred to are similar to handheld televisions.

Conclusion

So, just like properties have experimented with ideas that have not always worked like “smart seats” and in-game player tracking similar to that used by the NBA on a few occasions over the last 10 years, trial-and-error is a necessary part of invention and development.  The Miami Dolphins and Sun Life Stadium were not afraid to fail and – as a result – may be on the brink of both enhancing the fan experience and activating sponsorships in a whole new way.  A senior executive who specializes in technology and understands the market could help the property make similar or better decisions regarding technology and business strategy that could generate more sponsorship revenue, expand marketing strategies, and enhance the fan experience (and even bring all three closer together.)  Technology is one of the best ways to enhance the fan experience, but without the proper support, it could also be one of the most expensive methods for the front office.  To me, the only thing better would be to actually mingle with the players and coaches themselves… but if you use technology to bridge the gap or facilitate that communication, then that experience can be monetized and even be used to gather vital market data with the proper tactics in place.

Cam Suarez-Bitar.

If you enjoyed this article and appreciate in-depth analysis of the sports industry, visit http://www.sportsbusinessjournal.com for information on how to subscribe.  I do not work for them nor am I affiliated with the journal in any way, but I feel that anyone who wants to learn more about how sports function, grow, and survive would be well-advised to familiarize themselves with their content.

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