Category Archives: Sports Business

Jerry Jones’ 1995 Risk Allows The Dallas Cowboys To Become Leaders In The Growing Women’s Sports Apparel Market

Risk taking is necessary for a business to grow.  For Dallas Cowboys owner Jerry Jones, a risk that he took in 1995 has had a significant payoff in his team’s ability to enter into the growing business of women’s sports apparel.

Seven years before Jones became the Cowboys’ owner, NFL owners voted to create the NFL Trust.  This resulted in each team transferring the exclusive right to use its club marks for commercial purposes to the NFL Trust.  The NFL Trust then entered into license agreements with NFL Properties to provide NFL Properties the exclusive right to license the trust’s property.  The motivation behind creating the NFL Trust was the thought that when placed into the market together, the value of all NFL team marks would be higher than if teams attempted to negotiate licensing deals on their own.

In 1993, NFL owners began capitalizing upon their decision to create the NFL Trust.  That year, Coca-Cola signed a five-year contract worth a reported $250 million to become the official soft-drink of the NFL.  In 1995, Visa USA would sign the then second-largest partnership agreement with the NFL, a five-year deal worth $50 million, to become the NFL’s exclusive payment card sponsor.

In the background of these deals, though, was Jones.  Not a team owner when NFL owners voted to create the NFL Trust, Jones realized that he and the Cowboys were in a situation unique from most other NFL teams:  The Cowboys didn’t need a stable of teams to secure lucrative endorsement deals.

With the business savvy cured from his education, which includes a Master’s degree in business, and successfully running his own Jones Oil and Land Lease, Jones set out to capitalize upon the brand recognized as “America’s Team.”  The owner of not only the Dallas Cowboys, but also their stadium, Texas Stadium Corporation, Jones entered into multi-million dollar sponsorship agreements with American Express, Pepsi and Nike through Texas Stadium Corporation.

While arguably not directly contravening the terms of the NFL Trust, since only teams and not stadiums were part of the trust, Jones nonetheless secured the ire of the NFL.  At an owners meeting in Atlanta in 1995, Jones was served with a $300 million lawsuit filed by NFL Properties.  The lawsuit raised claims including violations of the Lanham Act, breach of contract, breach of the implied covenant of good faith, unjust enrichment and tortious interference with contractual rights.

In response to the lawsuit, Jones and the Cowboys filed a motion to dismiss.  This motion was granted in part.  Then, Jones took a big risk:  He filed a $750 million antitrust lawsuit against the league.  It was this legal maneuver that put the Cowboys on the ground to becoming the most valuable NFL franchise.  In 2013, Forbes valued the team at a league-wide high of $2,300 million.

With portions of its lawsuit dismissed, Jones’ antitrust lawsuit motivated the NFL to do one thing:  Settle.  The settlement agreement Jones reached with the NFL allowed Texas Stadium Corporation to maintain its contracts with American Express, Pepsi and Nike.  It also provided every other NFL team the opportunity to sign their own stadium sponsorship agreements.  Arguably, though, Jones was the big winner of the settlement agreement, as he also retained the right for the Cowboys to enter into their own licensing agreements.  It is this right that allows the Cowboys to create merchandise apart from the NFL’s licensing agreements.

Today, the Dallas Cowboys are using the footing they gained through the contentious litigation to further build the value of their brand.  With the NFL identifying 44-percent of its fans as being female, in recent years, the league has taken a proactive approach to providing women with apparel choices that better suit their fashion sense.  Leading the league in this effort, are the Dallas Cowboys.

In recent years, the Cowboys have utilized their licensing capabilities to enter into team-exclusive partnership agreements with women’s apparel designers, including PINK by Victoria’s Secret and Peace Love World.  The partnership with PINK was born six years ago. According to Cowboys executive vice president and chief brand officer, Charlotte Jones Anderson, “Sales of PINK merchandise in our pro shops was so successful, that PINK wanted to create a stand-alone store in our stadium.  We are the only team to have our own stand-alone store and the first team to enter into a licensing agreement with PINK to produce Cowboys-only apparel.”

Seeing how female fans flocked to the team’s PINK merchandise, Jones Anderson set out to find other licensees to partner with to create Cowboys women’s apparel lines.  ”Seeing how successful our PINK line was really inspired us to go out again and find another partner to do something similar,” Jones Anderson said.  Earlier this year, the Cowboys partnered with Peace Love World to create a line of women’s apparel featuring tops, tanks, hoodies and pants with phrases including, “I Love Sundays” and “I am Dallas.”

For Peace Love World founder Alina Villasante, the growing trend of teams and leagues investing in women’s apparel opportunities has been good for business.  Launched in 2007, Peace Love World was born as a brand focused upon “spreading peace and love all over the world,” according to Villasante.  In wasn’t until 2013 when that the spreading of that message reached the sports space.

During the Miami Heat’s 2013 NBA Finals run, Villasante, a Miami resident, was contacted by Heat executives to begin producing women’s apparel for fans.  Through promotion solely on social media streams, Villasante’s creations, featuring phrases like, “I am Champion” and “I am Miami,” sold out in seven minutes.  ”The clothes got to the AmericanAirlines Arena and within seven minutes, they were sold out.  The team called me and told me to take the pictures of the items off of Instagram, because they had already sold out.  It was a great introduction for what I was going to be facing in the future in partnering with sports teams,” Villasante recalled.

The taste of success in the sports marketplace that Peace Love World experienced during the NBA Finals allowed Villasante to recognize that sports could provide a unique opportunity for her company to grow.  ”Women have been hungry to show up to games looking like we are ready to go out with our friends and to be very fashionable.  I wanted to provide women with clothing that gives them the feelings of femininity and loyalty, while also looking like a sports fan,” Villasante said.

Seeing the success that Villasante and Peace Love World achieved in their partnership with the Miami Heat, the Cowboys contacted her to build a line for the team.  Throughout the season, Peace Love World merchandise has been promoted not only in the Cowboys’ team store and online storefront, but in pop-up shops and at an NFL style lounge event.  For someone whose business plan did not initially include entering the sports marketplace, Villasante calls her sports partnerships with the Heat and Cowboys “the best thing that’s happened to me in the four-and-a-half years since I’ve launched Peace Love World.”

Jones Anderson credits the Cowboys’ capabilities to license their own merchandise for providing the team with an opportunity to take risks in the women’s apparel arena.  ”We are the only team that can produce, license and sell our own merchandise as a complete business,” Jones Anderson noted.  This ability has allowed the Cowboys to test the marketplace in ways that other teams are unable to.  ”For the longest time, people in retail believed that jerseys, hats and plain t-shirts were driving sales in the industry.  Taking a step into a market that is more luxury-oriented, like women’s apparel, was thought to have more risk behind it.  People didn’t have the cojones to jump in and try something if it wasn’t going to work,” Jones Anderson said.

With their own merchandising entity, Dallas Cowboys Merchandising, Ltd., the Cowboys had the flexibility to take risks when entering the women’s apparel marketplace.  ”For us, since we are able to do it just for us, we can run a test to see if there’s real traction in the brand.  It’s been incredible.  Our fans have been very receptive and they love that we are thinking of them differently,” Jones Anderson said.

Like business, success in fashion involves taking risks.  With the NFL finding that its women’s apparel sales have tripled in recent years, taking risks to meet the wants of fashion-forward female sports fans is likely to pay off for teams like the Cowboys and women’s sports apparel creators like Peace Love World.

1 Comment

Filed under Civil Lawsuits, NFL, Sports Business, Trademark Law

A Look At NASCAR’s Unique Approach To Increasing Official Partners’ Return On Investment

On the Thursday before the NASCAR Sprint Cup Series Championship at Homestead-Miami Speedway, decision makers from a who’s who list of Fortune 500 companies gathered in a meeting space at the trendy Fontainebleau Miami Beach.  Sipping Coca-Cola around tables as salsa music beat over the room’s speakers, the Fortune 500 movers and shakers brokering deals were in the room for one reason:  NASCAR brought them.

When it comes to sports properties, NASCAR boasts one of the most extensive lists of corporate sponsors.  This racing season, the number of official NASCAR partners neared 60.  The value a corporation reaps in partnering with NASCAR is vast in the sense that every Sunday, their logo travels around a race track in front of millions of eyes.  Yet, in an economic age where corporations have limited budgets to spend on sports marketing, NASCAR recognized that it must provide a greater return on investment for its official partners.  “So many partners are looking for return on investment,” said NASCAR’s vice president of partnership marketing, Norris Scott.

Wanting to provide its corporate sponsors with more return on their investment, NASCAR created its Fuel For Business Council.  The council provides NASCAR’s official partners the opportunity to engage in quarterly business-to-business meetings where they can buy and sell goods, forge marketing partnerships and network.  “Nine years ago, NASCAR had a group of partners get together to talk about more ways they could drive value out of their sponsorship.  Naturally, one of the options was to create a platform for our partners to get business back from their sponsorship investment,” Scott said.

Today, the NASCAR Fuel For Business Council allows NASCAR’s official partners to meet quarterly at NASCAR-hosted events to buy and sell products from one another.  In the business-to-business environment facilitated by NASCAR, official partners not only buy and sell products, but also learn from one another how to best benefit from their partnership with NASCAR.  “It makes good business sense to give our partners a platform to grow their businesses.  Nobody is immune to the economy.  That fact plays an even more important role, because marketers are scrutinizing their overall budgets.  Sports marketing isn’t immune to that scrutiny.  The opportunities the NASCAR Fuel For Business Council provides allows our official partners more of a measure of the return on their investment,” Scott explained.

Ford Motor Company is one official NASCAR partner that has benefited from the opportunities that the NASCAR Fuel For Business Council provides.  A participant in the council since its creation, Ford Motor Company has utilized the council to drive its “Partner Recognition Program.”  Through this program, Ford Motor Company offers other official NASCAR partners’ employees the opportunity to purchase its vehicles at discounted costs, and also works with official partners to supply their fleet vehicle needs.

The return on investment Ford Motor Company has seen in taking its business to NASCAR’s Fuel For Business Council meetings is vast.  In 2012, Ford Motor Company sold over 5,500 vehicles to NASCAR official partners.  One of its largest vehicle sales resulting from the partnership in 2012 was worth over $5 million.

For Ford Motor Company, the value garnered through the NASCAR Fuel For Business council’s business-to-business meetings brings an extra layer of worth to its NASCAR investment.  “It’s a real big win-win for us, because it allows us to measure some of our investment into the sport.  With what Ford and the auto industry have been through, it’s been a challenge from an investment standpoint to decide where to use marketing dollars.  You want to be able to measure a return on any of your expenditures when you are reaching out to customers in an advertising marketing way.  For the dollars we spend in the sport, we want to calculate a return on investment.  One of the best ways to do that in NASCAR, is to not only calculate it based upon what’s going on on the track and the impressions made through the media, but also behind the scenes from a business-to-business standpoint,” said Ford Racing’s motorsports marketing manager, Tim Duerr.

While the opportunity to engage with other official partners in a business-to-business environment is valuable, perhaps the best thing NASCAR provides to support its Fuel For Business council is a layer of accountability.  Each NASCAR official partner is assigned to a NASCAR account manager.  That account manager ensures that official partners meet with the corporations they want to engage with at council meetings.  Furthermore, after the meetings, the account manager follows up with all parties to help facilitate the conclusion of transactions.  “With the way NASCAR has structured the program and how they bring people together to build relationships and follow up to hold you accountable, it really gives you a second level of coverage to make sure that the thoroughness is there,” Duerr commented.

The commitment to the council’s success is one not only held by Duerr and NASCAR, but shared by all official partners who participate.  “A couple of things make the council special.  For one, it’s all about exclusivity in the room.  Even though the partners in the room may be competitors in the sport, they know that when they enter the room to do business, they have the advantage of their competitors not being in the room.  The other piece that makes this successful is the commitment the partners have.  They are all trying to find that return on investment,” NASCAR’s Scott noted.

Going into its tenth year of existence, NASCAR’s Fuel For Business council is only getting fired up.  When it comes to future plans of how the council can benefit NASCAR’s official partners, Scott notes, “We want to continue to be innovative.”  For a sports entity that provides its sponsors with a business-to-business opportunity unlike that of any other sports entity, innovation should not be hard to find moving forward.

Leave a comment

Filed under NASCAR, Sports Business

Fantasy Basketball Camps Provide Millionaire Businessmen The Opportunity To Live The Life Of College Basketball Players

On a sunny autumn day, the University of Miami Field House was buzzing with the sounds of basketballs dribbling and whistles blowing.  Inside, playersran the length of the court, as their coaches paced alongside it chiding them to compete harder.  Training tables ran the length of the room, ready to assist players should they tweak something while playing.  On this sunny autumn day, it wasn’t the 2013 ACC Men’s Basketball Champions, University of Miami, pacing the court under the guidance of head coach Jim Larrañaga.  Rather, it was a group of 35-year-old to 70-year-old men with net worth’s over $1 million seeking to live out the fantasy of being a college basketball player.

Founded in 1998 to provide summer sports camps for children and assist professional athletes in hosting camps, in 2012 Pro Camps entered the fantasy camp market.  Fantasy camp attendees are told they can “live their ultimate fantasy” at the five fantasy camps Pro Camps hosts:  the Bill Self Basketball Fantasy Experience at the University of Kansas, the John Calipari Fantasy Experience at the University of Kentucky, the Tom Crean Fantasy Basketball Experience at the Indiana University, the Jim Larrañaga Fantasy Basketball Experience at the University of Miami and the USA Basketball Fantasy Basketball Experience in Las Vegas.

At each experience, the camp’s adult participants are treated to a fantasy version of what being a student-athlete is like.  For starters, there aren’t any classroom activities.  Rather, there are hotel stays at places like the Ritz Carlton and dinners at steakhouses like Ruth’s Chris.  There are swag bags filled with items including t-shirts to jerseys from basketball’s biggest merchandisers.  There are team meetings, film review sessions and personal coaching opportunities by each school’s head coach and his staff.  No fantasy camp would be complete without behind-the-scenes access to each team’s locker rooms, training facilities and offices, with the ability to compete in the arena that each team calls home.

What the promotional material for each fantasy camp fails to advertise, though, is what each camper is the most willing to spend big dollars on to receive:  high-level basketball competition and camaraderie.  For these men who work high-stress jobs, those two factors justify the $2,995-to-$10,995 price tag Pro Camps charges for its fantasy basketball camps.  “Participants of our fantasy camps will tell you that the best thing about them are the friendships and relationships they build.  It’s not about the gear.  It’s not about the good food, hotels and events we provide them.  It’s about the relationships they build.  When they first started going, guys didn’t know each other and now they’re building relationships with them.  Guys are recruiting other guys to go to different camps with them,” Pro Camps’ chief operation officer, Andy Danner said.

The enjoyment the camp’s participants receive from participating in the camps has led to the creation of a businessman basketball counterculture of sorts.  Fantasy camp participants traverse the country throughout the year participating in Pro Camps’ fantasy camps and other fantasy camps organized by individual coaches or other entities, like Jim Boeheim’s at Syracuse or Mike Krzyzewski’s at Duke.  Many of the men have built basketball training facilities into their homes, with some adding facilities to their offices.  Most have personal trainers and some have shooting coaches.

Even after the camp ends, the fantasy lives on.  Throughout the fantasy camp “off-season,” they email each other talking smack and scouting to see who has improved the most away from camp.  One camper at the recent Jim Larrañaga Fantasy Basketball Experience who wished to remain anonymous for fear over how investors in his business may react to what he called his “$100,000-per-year basketball habit” noted,  “There’s a bunch of type-A personalities who are unbelievably successful here.  There are 50 millionaires, multimillionaires and more, who are competing at the highest level and they share a passion for basketball.  It’s an amazing experience to suspend reality and come into an environment, have coaches come and work with us, and come together with a common goal in this very temporary bubble of fantasy.  You can’t get this in other facets of life.”

Pro Camps notes that the market for fantasy basketball camps is niche and as such, growth must be slow, steady and intentional.  The number of men with net worth’s over $1 million limits the pool of participants from the outset.  Add to that the fact that not every man with that net worth wants to spend his money traveling to play basketball.  On top of that, realize that there are only a handful of coaches in America who could draw a large enough crowd committed to paying thousands-of-dollars to learn under them.  Quickly, one realizes the market for fantasy basketball camps is small.  “What’s unique about fantasy basketball camps, is we feel there’s only a certain number of camps we can do.  The camps have to be tied to very elite programs–the Camelots of college basketball,” Danner explained.

That fact hasn’t dissuaded Pro Camps, however, from entering the market.  In fact, the company is looking for ways to expand its fantasy camp experience, through the addition of other sports that may be more attractive to a wider audience, like golf and tennis.  If its fantasy basketball camps are any indicator, it’s likely that if Pro Camps makes the move, it’ll have golf courses and tennis courts filled with millionaire businessmen eager to live the life of their favorite golf and tennis stars.

Leave a comment

Filed under Sports Business

Texas Christian University’s Move To The Big 12 Brings More Money And Applicants To The University

The biggest story in college athletics over the last three years didn’t take place on the field, nor was it an NCAA investigation into a sensationalized scandal.  Rather, the biggest story in college athletics from 2010-13 revolved around the business of college sports.  Over the last three years, conference realignment not only reshaped the playing landscape of college athletics, but brought home the point that college sports is about more than winning.  Today, while winning serves its purpose, alignment with the right conference provides the added bonus of access to greater revenue streams and increased exposure.

One athletics program that traveled a tenuous route during conference realignment was Texas Christian University.  The story of how TCU ultimately landed in its current conference resting spot, the Big 12, is one punctuated by the athletics department seeking to achieve two goals through realignment:  Access to bowl game revenue and generation of more exposure.

Initially an independent athletics program, TCU joined the Southwest Conference in 1923.  There, it developed in-state rivalries with competitors including Texas, Texas A&M, Texas Tech and Baylor.  Those rivalries would come to an end, however, in 1995-96, when the four schools departed the Southwest Conference to join what would become the Big 12.  As the Southwest Conference met its fate, TCU found itself conference hopping for nearly twenty years, making stops in the Western Athletic Conference, Conference USA and Mountain West Conference.

While each of those conferences provided TCU with a home, beginning in 1998, none provided TCU with one thing that matters the most monetarily in college football:  The opportunity to become an automatic qualifier for a BCS bowl game.  The BCS set-up provided six conferences with automatic bids to one of five BCS bowl games:  ACC, Big Ten, Big 12, Big East, Pac-12 and SEC.  Automatic qualification, in turn, guaranteed teams in those conferences the opportunity to compete for the big revenues distributed to participants, ranging most recently between $17-$18 million.

Teams who were not members of the automatic qualifier conferences ultimately succumbed to a free-for-all to gain a spot in a BCS bowl game.  In turn, that free-for-all oftentimes left many said teams on the sidelines when it came to BCS bowl game participation.  As such, these schools were not getting their hands on as much BCS revenue as their automatic qualifier conference member counterparts.  Thus, it’s no surprise that when the Big East came knocking with an invitation to join the conference in 2010, TCU jumped at the opportunity.

Under the offer from the Big East, it was expected that TCU would join the conference in all sports beginning in 2012.  However, one thing that TCU likely did not foresee when it entered into its agreement with the Big East, was that many of the conference’s members would be poached during the course of conference realignment.  With a strong roster of member institutions, the Big East arguably fell victim to the conference realignment carousel due to the fact that it was the only BCS automatic qualifier conference that did not have an exclusive contract with any BCS bowl.  Ultimately, the poaching of the Big East would leave the landscape of the conference looking much different–and less competitive–in 2012 than in 2010.

As the Big East continued to lose members, late in 2011 TCU received an offer it had been waiting for since 1995:  The opportunity to become a member of the Big 12.  TCU informed the Big East of its decision to not enter the conference, was hit with a lawsuit by the conference and ultimately joined the Big 12 in 2012.  “Joining the Big East was an access move for BCS purposes.  Getting into the Big 12 is where we always wanted to be.  We wanted to be playing regionally, but in 2010, that opportunity wasn’t there, because the Big 12 wasn’t pursuing new members.  When the second shift of conference realignment happened, though, the Big East was no longer the same–with schools like Syracuse and Pittsburgh announcing their departures.  Then, Missouri and Texas A&M announced their departures from the Big 12, and that opened up the opportunity for us to join,” said TCU’s athletics director, Chris Del Conte.

Since joining the Big 12, TCU has seen success beyond the football field.  Increased fan interest in the athletics department was sparked as a result of rivalries between former Southwest Conference members being renewed.  This spark in fan interest has caused season ticket sales for TCU’s football program to increase by 275-percent over the last five years.  This year, TCU sold nearly 33,000 season tickets for its football games.  In 2010, when TCU announced its move to the Big East, that number was 19,000.  In 2011 when it announced it would join the Big 12, the number jumped to 24,000.  In 2012, its first year of Big 12 membership, TCU sold 32,000 season tickets for its football program.

Del Conte argues that access to BCS bowl games is not only important from a revenue generation standpoint, but also because of the national exposure teams receive from competing in BCS bowls.  A Navigate Marketing study found that Stanford received $11 million worth of television exposure value from playing in last year’s Rose Bowl.  The exposure TCU received from participation in the 2010 Fiesta Bowl and 2011 Rose Bowl generated interest from two important groups:  alumni and potential TCU students.

From an alumni standpoint, TCU used its appearance in back-to-back BCS bowl games to fund-raise for a $164 million renovation of Amon G. Carter Stadium, where TCU’s football team plays.  Funding for the stadium renovation was driven by 140 donors, six of whom donated $15 million.  Del Conte says that the donor’s gifts were not motivated by conference affiliation, but by the overall success of the university, which he largely attributes to the university’s chancellor, Dr. Victor J. Boschini, Jr.  “People were motivated to give, because they saw how successful TCU was becoming–not just in football, but also academically,” Del Conte noted.  Similarly, that motivation was likely the reason for TCU seeing its most successful fund-raising effort in the school’s history, which raised $434.1 million over the seven years leading up to May 31, 2012.

When it comes to potential TCU students, the exposure TCU has gleaned from its football program’s success is helping drive applications to the university.  Since 2009, freshman applications to TCU have increased by 155-percent.  The greatest number of applicants in the last five years came in 2012, the year TCU joined the Big 12.

While TCU’s applicant numbers are notable, perhaps what is more interesting is the number of out-of-state undergraduate students attending the institution.  In 2009, Texas residents made up 74.2-percent of TCU’s student body.  This year, that number has decreased by 16.2-percent, as Texas residents currently account for 58-percent of TCU’s student body.  Arizona, where TCU played the Fiesta Bowl in 2010, is sending 215-percent more students to the school in 2013 than it was in 2009.  California, where TCU played the Rose Bowl in 2011, is sending 358-percent more students to the school in 2013 than it was in 2009.

When it comes to the future of TCU, Del Conte is hopeful for continued success both on the field and in the classroom.  “Ten years ago, we were a really good institution.  Today, we are ranked 82nd in the country.  This has happened because our board of trustees and chancellor have transformed the university to be great both academically and athletically,” Del Conte remarked.

Leave a comment

Filed under NCAA, Sports Business

How The NFL Built A 25 Million Person Hispanic Fan Base

When it comes to assessing market trends and identifying growing contingencies of potential fans, the NFL is on top of its game.  From September 15 through October 15, the NFL will recognize Hispanic Heritage Month by engaging in league-wide and team-sponsored initiatives focused upon the Hispanic community.

The month-long celebration comes in the wake of significant research depicting the fast and significant growth of the Hispanic population–and associated spending power–in the United States.  According to 2010 Census data, between 2000 and 2010, the United States’ Hispanic population increased by 15.2 million.  This number represents over half of the United States’ total population growth during the decade.  The 2010 Census found that 50.5 million of the 308.7 million people living in the United States on April 1, 2010 were of Hispanic or Latino origin.

Internal research likewise demonstrated to the NFL the growing presence of the Hispanic population.  However, for the NFL, the realization of the role the Hispanic community could play in expanding its fan base began years before the 2010 Census data confirmed the growing importance of the Hispanic population in the American economy.

In 2002, former NFL commissioner Paul Tagliabue launched an internal task force for the NFL to begin researching and learning about the Hispanic fan base.  By 2005, that group’s efforts culminated in the NFL hosting a game in Mexico City.  “The 2005 game in Mexico City was a galvanizing moment.  It was a great springboard for bringing the commitment to the Hispanic population across the league.  From there, it really started to institutionalize the notion of designating a time period in our  year to celebrate Hispanic fans and in a consistent way that is really visible,” said the NFL’s vice president of fan strategy and marketing, Peter O’Reilly.

The NFL’s efforts to attract the Hispanic population to its product have not gone unnoticed.  A 2012 ESPN Sports Poll found that 25 million Hispanics in the United States identify themselves as NFL fans.  The popularity of the league amongst the Hispanic population allowed Super Bowls XLVI and XLVII to become the most-watched TV programs (English or Spanish) on record among U.S. Hispanics.  The growth of the NFL’s Hispanic fan base has yet to plateau.  This is demonstrated in part by a Nielsen Media 2012 NFL Season Reach study, which found that 2012 was the most-viewed NFL regular season on record among U.S. Hispanics.

Today, as the NFL continues to work to grow its Hispanic fan base, it has created an internal steering committee.  That committee serves as a conduit for the league and teams to share research on attracting the Hispanic fan base.  “We have regular calls and meetings where we share what is working and what is resonating,” O’Reilly explained.

What then, is resonating amongst Hispanic NFL fans?  What is driving the growth of the NFL’s Hispanic fan base?

As it turns out, the biggest factor driving growth of the NFL’s Hispanic fan base is the media access the NFL gives to its Hispanic fans.  “We have spent a lot of time really working with and asking Hispanic fans how they want to consume the NFL.  For us, it is about making sure that we are delivering the game in customized and unique ways to serve the Hispanic population’s needs,” O’Reilly noted.

One thing unique about the NFL’s distribution of its games to its Hispanic fan base, is that the NFL is the only major league in the United States to televise all of its games in Spanish.  That the number of games it hosts each season pales in comparison to the other three leagues in the United States, gives the NFL a leg up in winning over the Hispanic market.  It is much more financially feasible to televise a 16-game regular season in Spanish, than it is to say, televise an 82-game regular season.  “There is a media piece that’s bringing the NFL to places it hasn’t been.  Some of this is tied to the number of games the NFL has each season, as we are the only sports league that delivers all of its games in Spanish,” O’Reilly pointed out.

In addition to televising all of its games in Spanish, the NFL has utilized other innovative media endeavors across a wide variety of channels to send the message about its product to the Hispanic population.  These endeavors include programming with ESPN Deportes, Telemundo, Univision, and the NFL Network.  Additionally, the NFL has utilized its own website to attract Hispanic fans.  “A lot of what we continue to do, is make sure we can teach the basics of the game in fun and accessible ways in Spanish.  There is a section of our website that allows fans to go in and get answers to basic questions about the game in Spanish.  We recognize that for some, understanding the game is a barrier to enjoying it,” O’Reilly said.

NFL teams have fallen in step behind the league’s efforts to attract a wider Hispanic fan base.  One team leading the charge is the Chicago Bears, who recently spent over two years researching Hispanic consumers in Chicago before launching the team’s “Vamos Bears” engagement platform.  Realizing that ticket sales would not be the team’s priority when it came to attracting a Hispanic fan base, as Bears tickets have been sold out for 28 seasons, the team looked to building a wider Spanish media presence.

In 2012, the Bears partnered with Chicago Spanish radio station, La Ley 107.9, to air the team’s games in Spanish on the radio for the first time.  Initially a one-year test deal, the team quickly realized that partnering with a well-respected Spanish station could not only increase their reach amongst Hispanic fans, but could also help the team gain insight into the Hispanic community.  “We saw that La Ley was a group living and breathing in the Hispanic community.  We rely upon them not only as our radio partner, but as our community guide,” said the Chicago Bears’ vice president of sales and marketing, Chris Hibbs.

Going forward, the Bears plan to expand into other media markets to grow the team’s Hispanic fan base.  “We are working right now on digital content.  What should our web presence be for Vamos Bears?  How much of that presence is in Spanish and how much is in English?” Hibbs remarked.

For teams, spending money on research and campaigns to engage Hispanic fans is a smart business strategy.  “On our side, it’s a vehicle to drive advertising revenue. Brands are looking for ways to engage this very important demographic of Hispanic consumers,” Hibbs noted.

Yet, for all that teams gain monetarily by attracting a wider Hispanic fan base, they are also quick to note that they have a responsibility to serve the demographic.  “We had two to three business meetings with the NFL to talk about future development and growth where we were hearing a ton about Hispanic consumers and seeing lots of great data and trends about the predominance of this consumer in the country and how thirsty they were for sports.  We had to listen.  There was an opportunity for us to really engage this consumer.  We’ve under-served them.  The Bears have been around for 93 years, and we have done very little with this community,” Hibbs explained.

Likewise, while the NFL is focused upon growing fans of its product, it is cognizant of the role that its product plays in building the future of American culture.  “Without overstating our role, there is a role the NFL can serve in terms of being a bridge to American culture.  The NFL is such a strong American passion and a badge of our culture.  In a lot of American communities, football is a glue.  Hispanic fans tell us it’s a connection point.  It’s certainly about making sure our fan base grows, but beyond that, we believe that given the unifying nature of the NFL, there’s a role we can play beyond that,” the NFL’s O’Reilly remarked.

Leave a comment

Filed under NFL, Sports Business

An In-Depth Look Into Keurig’s College Sports Marketing Plan

Coffee: It’s a staple on any college campus.  With late nights of studying–or partying–followed by early morning classes and tests, coeds across America rely upon coffee’s caffeine to make it through the best four years of their lives.

Recognizing this, earlier this week Green Mountain Coffee Roasters, Inc.–the makers of the Keurig brewing system–partnered with IMG College to become the Official Coffee/Tea System of 25 university athletic programs across the country.  The partnership marks Green Mountain Coffee Roasters’ largest sports marketing initiative to date.

Introduced in 1998, the Keurig brewing system has since become the leading single cup brewing system in North America.  Green Mountain Coffee Roasters plans to further Keurig’s lead in that market by infiltrating college campuses with its products.

Green Mountain Coffee Roasters identified IMG College as the conduit necessary to get its products into the hands of as many collegians as possible.  Through partnerships with nearly 80 BCS-level athletic departments, IMG College is in the unique position to reach a large number of the 27 million Americans between the ages of 18 to 24 that identify themselves as college sports fans.  “There is a tremendous opportunity to build brewing habits in this growing population. . . By reaching students in the dorm, Keurig is able to help shape and build the next generation of our consumer base by establishing the Keurig system as an essential part of the college experience,” said Keurig’s vice president of core systems, Dwight Brown.

IMG College echoed the market growth that the Keurig brewing system can see by entering into the partnership.  “Green Mountain Coffee Roasters and Keurig are going through a dynamic change and evolution.  They are trying to build the next generation of coffee consumers who will brew and consume coffee one cup at a time, versus one pot at a time.  They want to reach that really hard to reach demographic of 18-to-24-year-olds.  We illustrated the unique proposition we’ve built here at IMG College, which is an aggregation of nearly 80 BCS-level schools, through which we can deliver a turnkey marketing connections at national, local and hyper-local levels,” said IMG College’s senior vice president of U.S. business development, Andrew Judelson.

What is so attractive about the college-aged market?  Simply put:  Spending power.  Studies indicate that college students have $117 billion in annual discretionary spending.  “Green Mountain Coffee Roasters is keenly interested in reaching college students for a number of reasons.  There are 11.2 million undergraduate students in the United States, aged 18-24, and 57 percent of young adults ages 18-24, drink coffee.  Keurig is building the next generation of our consumer base by establishing the Keurig system as an essential part of not only the college experience, but in everyday life,” Brown explained.

By partnering with IMG College, Green Mountain Coffee Roasters is put in the unique position to not only reach this target audience, but to begin educating college sports fans of all ages about its products.  With its Keurig machines headed to university athletic departments at campuses like UCLA, Arizona, Florida, Nebraska and Texas, the company’s products will be introduced to a wide-spectrum of beverage consumers.  “The unique thing about the college proposition, is that you have a built-in, new, loyal fan base every year of 10 to 12 million people called college freshmen.  Our partners have a strategy to target the student fan, but also the ability to target an older demographic of fans and alumnus of the school,” explained Judelson.

IMG College plans to assist Green Mountain Coffee Roasters in its endeavors by launching carefully tailored and strategic activation plans across the 25 campuses.  It is expected that Keurig will design customized Keurig system machines for 11 of the 25 university partners.  Additionally, Green Mountain Coffee Roasters will head to college football games this fall and basketball games in the winter to do experiential marketing through sampling opportunities.  IMG College also plans on installing signage in various university facilities to advertise the products.  A digital component exists in the structure of the deal, through IMG College’s new online digital media platform, Campus Insiders.

What IMG College found in Green Mountain Coffee Roasters was a “white space”–an untapped partnership opportunity in the world of college sports in the realm of the coffee and tea beverage industry.  Going forward, it will be interesting to see whether IMG College struck gold by locating the white space and responding to it by partnering with Green Mountain Coffee Roasters.  In the alternative, the possibility exists that the white space existed in the market for a reason, and college sports fans cannot be swayed to buy coffee beverages or brewing systems through strategic partnerships.  Given, though, the late nights of college students, it’s likely that the former is true, and IMG College and Green Mountain Coffee Roasters have struck gold with this partnership.

Leave a comment

Filed under Sports Business

Women’s College Sports Apparel Sees Triple-Digit Growth

To say that the business of college sports is huge, would be an understatement.  From television contracts to ticket sales, the amount of money that funnels through the economy as a result of college sports is astronomical.  One of the greatest segments of the college sports economy is the licensed products retail market, where fans can buy anything from t-shirts and hats to cowboy boots and aprons bearing their favorite team’s logo.  That licensed college sports products retail market accounts for $4.6 billion in sales annually.

While licensed products have been a source of revenue generation for universities for some time, one area that has seen significant growth recently is women’s apparel sales.  According to IMG College, the women’s apparel retail category has grown by 148 percent over the last five years and by 53 percent in the last three years.  This growth has made women’s apparel the second-largest apparel category in IMG College’s licensing business, second only to men’s/unisex t-shirts.  Given that IMG College’s licensing affiliate, Collegiate Licensing Company, represents nearly 80-percent of the collegiate sports retail market, it is likely that these numbers are consistent across the collegiate sports retail landscape.

What then, is driving this growth of college sports women’s apparel sales?  As it turns out, it is a number of factors.

For starters, the number of women identifying themselves as college sports fans has surged.  According to an ESPN Sports Poll, 89 million females self-identify as college sports fans.  This number is the highest of all sports, topping even the NFL, of which 84.3 million females self-identify as fans.  Add to the number of females identifying themselves as college sports fans the fact that tied with football, college sports has the most fans earning over $100,000 annually, and you realize the power of college sports when it comes to female consumers’ spending dollars.  Collegiate Licensing Company estimates that women’s apparel retail sales for the schools and institutions it partners with exceed $350 million during the 2012-13 fiscal year.

While the number of women identifying themselves as college sports fans has impacted apparel sales growth, the biggest factor has been the industry’s own renaissance.  In recent years, apparel providers have overhauled their women’s apparel lines to create designs that fit women’s bodies and appeal to their tastes.  Gone are the days of the “shrink it and pink it” mentality of women’s sports apparel.  “We have always known that women like to shop; that is nothing new.  What we are trying to do, though, and where our focus lies, is that the right products haven’t been available to women.  If you go back years ago, a men’s size small t-shirt is what was available to women in sports licensed products.  We realized that wasn’t going to cut it, and that we needed to seek out companies that had the proper styles, fits and everything else a woman looks for to create products,” Collegiate Licensing Company’s senior vice president and managing director, Cory Moss, explained.

One tool that has driven growth of women’s college sports apparel is niche products.  Take for instance, western boots company Nocona Boots.  Founded in 1925 in the home of one of college sports’ greatest rivalries–the Red River Valley along the Texas-Oklahoma border–the company entered the collegiate sports licensing realm in 2009 with its College Boots line.  The line, which began with three schools, has since grown to represent over fifty university’s logos.  With the growth in schools represented, has come growth in sales.  According to Monte Nelson, Nocona Boots’ brand manager, the company has quadrupled its sales figures for its College Boots line since 2009.

Like the rest of the collegiate sports apparel landscape, Nocona Boots has noticed that much of its growth is spurred by female consumers.  Nocona Boots estimates that women’s purchases account for 55-percent of sales for its College Boots line.  “The female category has been a large part of our sales,” Nelson noted.

While Collegiate Licensing Company says that the growth of women’s college apparel sales is outpacing men’s, the fact of the matter is that men’s apparel sales still make up the greatest percentage of the company’s overall apparel business.  As such, retailers continue to develop innovative apparel lines related to men’s favorite college teams.  Take for instance this fall, when Dockers launched its new Game Day Program line, with two khaki variations in ten different school’s colors.  Similarly, Carhartt recently signed its first co-branded licensing deal with Collegiate Licensing Company to begin selling outerwear with 14 different schools’ colors and logos.

With women’s licensed college apparel sales surging and men’s licensed college apparel sales continuing to grow, one thing is certain:  College sports fans can continue to expect to see innovative and stylish apparel products enter the market.

Leave a comment

Filed under NCAA, Sports Business

Johnny Manziel’s Role In The Unprecedented Growth of Texas A&M Merchandise Sales

Will he play or won’t he play?  As questions linger ahead of Texas A&M’s first football game of the 2013 season over whether Johnny Manziel will take the field for the Aggies, other things appear more clear.  In particular, when it comes to Texas A&M, one thing is certain:  The school is in the midst of a licensing renaissance, where its royalties earned from licensed products have surged in recent years.  The question, though, is what is driving this increase in sales of Texas A&M’s licensed products?  Is it Johhny Manziel’s performance last season as quarterback which led him to the history books as the first freshman to win the Heisman Trophy?  Is it the school’s recent move to the SEC?  Or, is there an unspoken factor in the mix?

In the fiscal year before Texas A&M announced that it was leaving the Big 12 Conference for the SEC, the school brought in $2,626,925 in gross royalty revenues for its licensed products.  The following fiscal year, that number jumped to $3,229,811, which marked a 23 percent increase.  What notable event took place during that time period that could have caused such a jump?  Simply, an announcement that the school was moving to the SEC.

In terms of factors that have played a role in the increased sales of Texas A&M licensed merchandise, it is clear that the school’s move to the SEC has played the most monumental role.  The nature of this role is shown in several anecdotes.  Shane Hinckley, Texas A&M’s interim vice president of marketing and communications notes that last season, Texas A&M brought in $102,000 in SEC royalties.  Those royalties were obtained from co-branded Texas A&M and SEC merchandise (for instance, a t-shirt bearing both Texas A&M and SEC logos).  The royalty rate that Texas A&M receives for such merchandise is ten percent, which demonstrates just how much Texas A&M gear the SEC was able to sell in the Aggies’ first year as a conference member.  In fact, Hinckley estimates that the royalties Texas A&M received from SEC co-branded merchandise equates to the SEC selling over $2 million worth of Texas A&M/SEC co-branded goods at retail.

While the SEC has dominated the gridiron in recent years, it also dominates the licensed merchandise game.  “If you look at the biggest number of co-branded royalties we brought in as a member of the Big 12 over the prior five years, that amount was $4,500 in royalties,” Hinckley said.  Thus, in its first year as an SEC member, Texas A&M was able to bring in conference royalties nearly twenty-three-times as great as what it brought in as a Big 12 member.

So, then, what factor does Manziel play in the merchandise sales growth Texas A&M has seen?  The Heisman winner clearly plays a role, but some would be surprised to learn how much of one it is.

In the last fiscal  year, Texas A&M’s licensed merchandise royalties were $3,939,374.  This marked a 22 percent increase over the 2011-12 fiscal year.  Although this number is the highest amount of royalties Texas A&M has pulled in over the last five years, the amount of growth the school saw was less this year than last year.  Thus, an argument can be made that Manziel’s Heisman Trophy winning season and the football team’s unprecedented success were not as big of a role in the increased royalties as the school’s transition to the SEC was.

 

“If you go back to the 2011-12 fiscal year when licensing revenue was up by 23 percent and we had a record year, nobody had ever heard of Johnny Manziel.  Our football team went 6-7 that year.  We had announced our move to the SEC in September 2011.  If you fast forward to the 2012-13 fiscal year, our rate of growth is coming down.  The growth of our program is much more associated with the move to the SEC than it is necessarily with one individual or team,” Hinckley said.

Finally, there is a third–albeit less known–factor at play.  That factor is a campus-wide approach to branding that the university instituted five years ago, when it hired Hinckley and the school’s former vice president of marketing and communications, Jason Cook, developed a concept of “One Brand.”  That concept allowed the school to become one of the only universities in the United States that utilizes the same logo for its athletics and academic departments.  “By using our licensing program to create another touch point for the Texas A&M brand, we have successfully elevated our brand onto the national stage.  We coordinate everything we do on multiple levels to increases our leverage,” Hinckley said.

This leverage has led to interesting licensing endeavors for the Aggies.  Notably, Mattel MAT +1.05% recently released a line of Ken dolls modeled after the Aggies’ yell leaders.  Hinckley notes of the eight universities that Ken dolls were designed for, the Aggies were the only line to sell out.  Other notable items include FTD roses in Texas A&M colors and a new line of perfume and cologne.

The Aggies have also seen their gear enter into more stores over the last five years.  Most notable, perhaps, is the number of Walmart stores that the brand’s products can be found in.  Five years ago, Texas A&M products could only be found in 32 Walmart stores across the state of Texas.  Today that number is up to 90.  “We have a lot of competition from professional teams and other colleges.  We are seeing a lot of growth in the number of stores we are in statewide which fuels the number of touch points people have with our brand.  We still have a lot of room to grow, though,” Hinckley said.

While there is still room to grow, the Aggies have achieved tremendous success in growing their national brand in the last five years.  Five years ago, Collegiate Licensing Company, who Texas A&M partners with, ranked Texas A&M 24th in royalties received amongst all college programs.  Most recently, Texas A&M was ranked 12th.  “We had a five-year plan to break into the top-15.  We have a ten-year play to break into the top-10.  We think we will break into it next year and accomplish that goal early,” Hinckley noted.

Leave a comment

Filed under NCAA, Sports Business

Should The Military Sponsor Sports Franchises?

By:  Richard Braun, Ruling Sports Intern (Twitter:  @RicBraun)

Last week, Congress voted to continue military sponsorship of professional sports such as NASCAR, UFC, and bass fishing. By a 216-202 vote, Congress rejected a proposal that would have cut $72.3 million from the military budget for sports sponsorships.

The main target of this advertising money is NASCAR driver Dale Earnhardt. Jr., whose primary sponsor is the National Guard. In addition, the Marines sponsor the UFC and bass fishing, while the Army sponsors NHRA dragsters driven by Tony Schumacher and Antron Brown. The idea behind the sports sponsorships is to help with military recruiting, since sports tend to appeal to men aged 18-34.

The theory has not worked as well in practice, however. In fact, the Army has independently already decided that it will end its sponsorship of Ryan Newman’s #39 car after this year. The Army has been a NASCAR sponsor for the past 10 years, but has determined that the benefit they get from this is no longer worth the cost. NASCAR claims that the Army collected 46,000 leads for potential recruits as a result of their car sponsorship. But nonetheless, the Army will no longer be sponsoring Newman’s car, so the amount of enlistments that resulted from those leads must not have been worth it. Additionally, the Marine Corps ended their NASCAR sponsorships in 2006, with the Navy following suit in 2008.

Considering the significant cost of sponsoring a car such as Earnhardt Jr’s or Newman’s, the Government is certainly justified in taking a closer look at the effectiveness. A primary sponsorship of a car ranges from $10-20 million. Congress is taking a look at every aspect of the budget, and it is reasonable for them to examine whether or not that money provides any material benefit.

Looking into the demographics of NASCAR fans gives us a glimpse as to why the Army determined that the sponsorship did not result in higher enlistments. NASCAR has a huge fan base, 77 million strong, but only 5% of that falls within the military’s key demo: men 18-34. Spending in excess of $10 million to reach such a small percentage of potential enlistees would strike many as a misappropriation of funds. If the military aims to reach younger viewers, NASCAR might not be the way to go.

Dale Earnhardt Jr. is one of NASCAR’s most visible drivers, and the National Guard argues that they get great value on their branding opportunities. However, the National Guard should concern itself more with recruitment efforts than branding. Other sports would better allow the military to reach its target audience, and at a more affordable price. For example, at an NHRA event last year, the Army had the opportunity to speak with nearly 13,000 students regarding careers in the military. On top of this, advertising NHRA cars is three times cheaper than NASCAR.

Government sponsorship of sports leagues is not inherently a bad thing. Military enlistment has been declining steadily across the board for some time. Spending a relatively small part of the military budget on advertising could possibly yield positive results. Like any business, however, the advertising dollars have to be spent wisely. As popular as Dale Earnhardt Jr. is, his celebrity does not appear to be aiding National Guard recruitment. Spending the $72.3 million more wisely would not include Dale Earnhardt Jr. in the future.

Leave a comment

Filed under NASCAR, Sports Business

Denver Bars Benefit From Opening Day

The Colorado Rockies home, Coors Field is nestled in an area of Denver, Colorado surrounded by bars and restaurants.  Within the one-mile radius of Lower Downtown Denver (“LoDo”) between Coors Field and the Pepsi Center (where the Denver Nuggets and Colorado Avalanche play), there are an estimated 90 bars.  With the Rockies playing their 2012 home opener today, how will the business of those surrounding bars be affected?  RulingSports.com reached out to three of the largest sports bars within blocks of Coors Field–Tavern Downtown, Sports Column and Lodo’s–to find out how their business will be affected on Opening Day.

Tavern Downtown

While the spokesman from the Tavern Downtown said that he was unable to provide specific details as to how many beers the bar is expecting to sell on opening day, he did provide insight as to the increase in patrons the Tavern Downtown is expecting for Opening Day.

On a typical Monday, the Tavern Downtown serves 200-300 guests.  However, for opening day, the bar expects to serve 4,000 to 5,000 guests.  Thus, the Tavern Downtown expects to do twenty-times as much business on Opening Day as opposed to what it does on any other Monday.

Sports Column

Sports Column is located one block away from Coors Field and on the block adjacent to the Tavern Downtown.  When asked how Opening Day compares to any other Monday, Sports Column’s spokesman said there is, “No comparison.”  On a typical Monday, Sports Column has eight employees that work throughout the day.  On Opening Day, the bar will have 24 employees scheduled to work.  An increase in employees is necessary, as a line will form to enter the bar two to three hours before game time, and will not cease until three hours after the game.

Sports Column expects to sell 100 kegs of beer on Opening Day.  Its spokesman said that a keg holds 124 beers.    Thus, Sports Column expects to sell 12,400 beers on Opening Day.  Remember, this is only keg beer and does not account for bottled beer sales.

Lodo’s

Lodo’s is located directly across the street from the Tavern Downtown and two blocks away from Coors Field.  A highlight of both Lodo’s and Tavern Downtown is both bar’s large rooftop patio.  The spokesman for Lodo’s indicated that on an ordinary Monday, the bar hosts 150-200 patrons.  However, for Opening Day, Lodo’s is expecting to serve 3,500 to 5,000 patrons.  This amounts to a 23 to 25 percent increase in patronage.

On a typical Monday, Lodo’s staffs two bartenders and three to four servers.  However, on Opening Day, Lodo’s will staff 20 bartenders and 16 servers.

Like Sports Column, Lodo’s expects to sell 100 kegs of beer on Opening Day (meaning just two blocks away from Sports Column, another 12,400 beers will be consumed by patrons).  Additionally, Lodo’s spokesman indicated that the bar will sell at least 100 cases of bottled beer.  As there are 24 bottles of beer in a case, this amounts to an additional 2,400 beers being sold by Lodo’s.

Lodo’s spokesman was also able to provide some estimates related to how much food the bar will sale.  When asked how many chicken wings Lodo’s will serve patrons, its spokesman estimated that 250 orders of chicken wings will be sold.  As there are ten chicken wings per order, this amounts to 2,500 chicken wings.

For anyone keeping tally, between two of the 90 bars within one mile of Coors Field, 27,200 beers will be sold on Opening Day.

For Denver bar owners, only one thing can be said for Opening Day:  It’s great that baseball is back.

Leave a comment

Filed under MLB, Sports Business