Using Numbers As The Language of Sports Sponsorship      

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  In a recent  conversation  with  RadioLab  co-hots Robert Krulwich, astrophysicist Neil Degrasse Tyson discussed how he broke down many challenging concepts in his new book   Astrophysics for People in a Hurry  . While understanding dark matter, quantum gravity, and electromagnetism may not happen “in a hurry” for most people, Tyson shares a critical insight that is potentially more digestible. He states how humans did not evolve to comprehend much of how the world works particularly on the macroscopic scale of the galaxy or the microscopic scale of subatomic particles. Humans evolved to comprehend things they can observe with their five senses. More bluntly, much of human history has been focused on survival rather than  worrying  about the cosmos.    Tyson explains that math is the language that allows us to explore and understand, which is the reason we use mathematical theories and models is to explain reality. By using the universal language of mathematics, scientists from across the globe can and do share insights that lead to discoveries about the fundamentals of nature. We can than test empirically whether theories we develop actually do “model” or explain reality using data generated from experiments.  Without math and the open sharing of ideas, humans would have a much more challenging time understanding how the world really works.  What does this have to do with sports sponsorship? It is not that sports sponsorship is as complex astrophysics (thankfully). However, the complexity of sports sponsorship is growing at a rapid rate. In particular, new technologies are developing so quickly that it is difficult for sports industry professionals to keep track. This includes developments in virtual reality, augmented reality, geo-fencing, iBeacon technology, and new social platforms, among many others. At the same time, more traditional elements such as in-arena signage, television commercials, digital banner ads, intellectual property rights, and events remain crucial parts of most integrated marketing packages.  The concepts of applying math, facilitating dialogue through transparency, and tracking allowed Tyson to better describe and more effectively facilitate understanding of astrophysics and can be applied to the sports industry. In particular, developing models to predict the outcomes of sports sponsorship spend should be an integral part of a partnership analysis. The best way to build these models is to share exactly how sponsorships are measured and evaluated between buyers and sellers of corporate partnerships. This enables both sides to have shared language using data and formulate insights to create better, more comprehensive models. By having a digital platform that can track results throughout the course of season, buyers and sellers of sports sponsorship can measure whether predicted outcomes reflect the actual results. More importantly, adjustments can then be made to the sponsorship to ensure that the most value is being generated in a relationship.  In an increasingly complex sports sponsorship environment, data driven decision making can help industry professionals understand the value of their partnerships in a hurry. Applying principles of rocket science and astrophysics to the data science of sports should help make that happen.
BY ADAM GROSSMAN

Using Numbers As The Language of Sports Sponsorship

In a recent conversation with RadioLab co-hots Robert Krulwich, astrophysicist Neil Degrasse Tyson discussed how he broke down many challenging concepts in his new book Astrophysics for People in a Hurry. While understanding dark matter, quantum gravity, and electromagnetism may not happen “in a hurry” for most people, Tyson shares a critical insight that is potentially more digestible.

       How Collaboration Leads To Innovation      

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  Last week, FC Barcelona signed a “ collaboration agreement ” with Georgetown University to “explore possible avenues of cooperation within the framework of the Barça Innovation Hub.” Barcelona’s decision to explore this partnership provides an interesting new dynamic to a sports industry focused on innovation.  More specifically, teams in the United States including the Los Angeles Dodgers, Philadelphia 76ers, Dallas Cowboys, and Minnesota Vikings have established sports accelerators to spur innovation from startup companies. Barcelona, however, is one of the first teams to establish an innovation presence outside of its homemarket. In addition, the team decided to focus on an academic rather than commercial relationship to establish this presence.  The strategy behind establishing an innovation presence is clear. Barcelona has specifically been looking to grow its fan base and revenues in the United States. The team already has an  office  in New York City, has received approval for an expansion team in the National Women’s Soccer League for the 2018 season, and has developed six soccer academies in the U.S. Its new relationship with Georgetown will also further increase the visibility of its International Champions Cup match versus Manchester United in July in Washington D.C., where Georgetown is located.  The collaboration through Georgetown and its master's in Sports Industry Management program is potentially more interesting. Students in Masters of Sports Administration (MSA) programs are becoming increasingly interested in entrepreneurship. In particular, innovation in technology, including machine learning, artificial intelligence, virtual / augmented reality, wearable devices, and analytics provide many exciting opportunities for new companies. This is one reason I developed the “Entrepreneurship In Sports” class for  Northwestern University ; American University has a similar course.  At the same time, starting a company has significant risk. Some of the challenges include finding clients, developing products, securing financing, and hiring talent (among the many challenges). For many students in MSA programs, these hurdles make pursuing a new venture extremely difficult. Even the prospect of entering an accelerator program, where young companies exchange equity in exchange for financial capital and mentorship, does not always mitigate the opportunity cost of finding a more stable job. This means that teams could miss out on the benefits from the new products and services developed by emerging companies.  Barcelona’s relationship with Georgetown reduces this risk because it enables students to develop new ventures through its innovation while still in school. Because most MSA programs operate in a school of professional / continuing studies, students can keep their current jobs while pursuing new ventures. Students then have access to Barça Innovation Hub resources to help deal with the challenges of starting a company and potentially can turn one of the biggest sports organization into one of its first clients. In turn, the club is able  to  “innovate, generate, attract, manage and share knowledge.”  More specifically, Barcelona can incubate new ventures started by future industry leaders at a top MSA program and make investments in the most promising companies without having to commit financial capital.  Win-win is an overused cliché, particularly when applying it to a relationship in the sports industry. The collaboration between Barcelona and Georgetown, however, does perfectly represent a relationship in which both sides should generate significant value.
BY ADAM GROSSMAN

How Collaboration Leads To Innovation

Last week, FC Barcelona signed a “collaboration agreement” with Georgetown University to “explore possible avenues of cooperation within the framework of the Barça Innovation Hub.” Barcelona’s decision to explore this partnership provides an interesting new dynamic to a sports industry focused on innovation.

      Making the Most of Media Rights     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Ross Chumsky and Adam Grossman  Over-the-top distribution of sports content has dominated industry news over the past few weeks.  Amazon’s new NFL deal to stream Thursday Night Football,  Twitter’s new agreements  to stream live content from various leagues, and  ESPN ’s decision to lay off approximately 100 employees all have arguably been focused on the changing consumption patterns of sports fans.  The reason that distribution channels, rather than the sports content itself, have taken center stage is that most sports leagues already have long-term media rights deals in place in traditional channels.  For example, the NFL, NBA, and NHL all have television deals that extend into the 2020s.  There is one significant exception to this situation.  Last summer, the sports media agency, WME-IMG, purchased the UFC and its parent company Zuffa, LLC. for approximately $4 billion, the largest ever figure for the sale of a major sports franchise, by a significant margin (about $2 billion).  Much of the impetus for WME-IMGs massive investment stemmed from their expectation that they will be able to broaden the scope the UFCs media rights, both domestically and abroad.  With media rights fees skyrocketing throughout the sports world, WME-IMG is looking for the UFC to be the latest sports franchise to capitalize on this trend.  The UFC current media rights deal, signed in 2011 and expiring in 2018, has Fox Sports paying the UFC an annual average of $115 million. Since the deal was signed, the UFC has grown significantly in popularity.  In addition, the UFC “[is] appealing to media companies looking to grow their audience with the UFC’s fans, who are coveted by all networks because of their youth and passion.”  Prior to the UFC-Fox Sports deal’s 2018 expiration, Fox has an exclusive window, beginning in late 2017, for negotiation of a new deal.  In its next media rights deal, WME-IMG  reportedly  intends to set the price point at $450 million per year for ten years. While the $450 million per year figure would represent a 219% overall increase in annual media rights fees, it is below MLB’s current media rights deals with ESPN ($700 million annually) and Turner Sports/Fox ($850 million annually combined).  With more and more people eschewing traditional television in favor of digital streaming services such as Netflix and Hulu, media companies are searching for unique content to attract viewership and buck this trend. Live sports content continues to draw large viewership numbers facilitated the recent increase in sports media rights fees. WME-IMG is in a prime spot to negotiate a higher fee price because media rights for other major sports leagues being under contract and unavailable for the foreseeable future. Couple the increase in sports media rights fees of late with the UFCs building popularity, and the result is enviable negotiation leverage for WME-IMG. 
BY ROSS CHUMSKY AND ADAM GROSSMAN

Making the Most of Media Rights

Over-the-top distribution of sports content has dominated industry news over the past few weeks.  Amazon’s new NFL deal to stream Thursday Night Football, Twitter’s new agreements to stream live content from various leagues, and ESPN’s decision to lay off approximately 100 employees all have arguably been focused on the changing consumption patterns of sports fans.

       Tweaking Twitter Creates New Channel for Sports Content      

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  Twitter  recently announced  new or expanded content distribution deals with the NFL, WNBA, MLB, PGA Tour, and The Players Tribune. This includes having live games, highlights, pre / post game analysis, and Ask Me Anythings (AMAs) with athletes.  The deal with Twitter has been generating significant interest in the sports industry for two reasons. First, these deals continue to demonstrate the increasing importance of over-the-top (OTT) platforms in sports. Rather than focus solely on working with broadcast networks and / or cable / satellite providers, sports rights holders are placing increasing emphasis on distributing content through digital channels such as Twitter that go directly to consumers. Yet, these same leagues still generate the majority or at least a significant portion of their overall revenue through media rights deals with more traditional channels. The fact that these leagues are signing deals with Twitter given these dynamics demonstrates the changes that could be coming for sports content distribution in the near future.  Second, it is clear that Twitter is making a big bet on sports. The success of its original deal with the NFL (where it was able to stream 10 Thursday night games on the platform) has shown Twitter that having live sports content resonates with its users. In particular, younger demographics who spend significant amounts of time on the site tend to engage with Twitter during NFL games. Having content that can target younger, more lucrative demographics means that Twitter has more opportunities to grow its revenue at a time when the company has been struggling to monetize its audience.  Twitter’s investment in sports shows how sports sits at the intersection of two of the most important trends impacting media and entertainment. Finding unique content and using OTT platforms is something that the largest media companies in the world are encountering as some of their biggest strategic challenges.  The solution to this problem continues to be sports. Facebook, Amazon, Twitter, and more have continued to make significant investments in acquiring sports content for their platforms. This shows that, even as distribution channels continue to change, sports content will likely remain one of the most valuable assets companies can have.  
BY ADAM GROSSMAN

Tweaking Twitter Creates New Channel for Sports Content

Twitter recently announced new or expanded content distribution deals with the NFL, WNBA, MLB, PGA Tour, and The Players Tribune. This includes having live games, highlights, pre / post game analysis, and Ask Me Anythings (AMAs) with athletes.

      NFL Draft Turns Players’ Dreams Into Clear Financial Realities     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman and Ross Chumsky  For virtually every player not named Myles Garrett, tomorrow’s NFL Draft will be filled with uncertainty.  It is not clear what number draft pick he will be or which team will select him.  There is one thing, however, that these future NFL players do have virtual certainty about – they will know exactly how much they will be getting paid once they are drafted.  The document that governs relations between the NFL, teams, and players, as well as sets the basic ground rules for NFL business and conduct, the NFL Collective Bargaining Agreement (CBA). The 2011 CBA radically altered the way rookie contracts are both structured and negotiated.    The new rookie salary cap effectively created a set wage structure for all rookies entering the league, each draft position with a specific slotted salary based on a league-wide rookie compensation pool that is largely non-negotiable. Another significant change was rookie contract length, which with the institution of the 2011 CBA was capped at four years, with a fifth-year team option for first round picks, versus contacts that could span as long as six seasons under previous iterations of the CBA.     Since each draft position has a predetermined salary value, salary cap considerations in draft trades are diminished since there is no risk of inflated and unreasonable contract demands from top picks.  With fewer monetary limitations, teams are able to more freely move around within the draft order to position themselves to be able to select the player they want without fear that they will be taking on a likely high salary or using significant cap space with a player who has yet to play a single down at the NFL-level.  A prime example of the impact of the rookie salary cap on rookie compensation can be observed by comparing two contracts: Sam Bradford’s 2010 contract and Cam Newton’s 2011 contract.  Drafted just one year apart, Bradford and Newton were both number one overall picks, however both their first-year and overall compensation differed greatly.  According to Jason Fitzgerald and Vijay Natarajan, authors of  Crunching the Numbers: An Inside Look At The Salary Cap And Negotiating Player Contracts , Sam Bradford originally signed a 6-year, $78 million contract, with $51 million in guarantees and the potential for the deal to escalate to $86 million with the inclusion of Likely to Be Earned Incentives (LTBE) in the deal, while just one year later Cam Newton signed a 4-year, $22,025,498 fully guaranteed deal (i.e. guaranteed for skill, injury, and cap), with the opportunity to earn a fifth-year team option with a salary substantially larger than in the first four seasons of the contract. The difference between the overall compensation and general contract structure between Bradford and Newton’s deals clearly illustrates the change in rookie compensation that the 2011 CBA implemented.  Paying millions to first-year players meant that teams had to set aside huge amounts of salary cap space to accommodate these deals.  This effectively limited the amount of money and salary cap space available for teams to sign veteran free agents. Creating more predictability for teams of the salaries of their newly drafted players resulted in cap space becoming available for free agent veteran players.  With simplified rookie contract negotiations, teams are better able to avoid lengthy holdouts that stretch into the summer and possibly even training camp.  Rookies signing their deals soon after the draft means rookies arrive at team facilities earlier in the offseason and they can begin learning their teams’ playbooks sooner. More offseason practice time for rookies is one major reason why more and more rookies are making immediate impacts for their new NFL franchises at a lower cost than before the new CBA was put into place.  These factors make early round picks an extremely valuable asset that are difficult to acquire. The more early picks a team has, the more likely a team will be able to draft a young player that can have an immediate impact on its roster.  Through a series of trades and personnel decisions over multiple seasons, the Cleveland Browns have amassed an additional pick in the second round in 2016, extra first and second round picks in 2017, and two additional second round picks in 2018.  That means for the three-year period between 2016 and 2018, the Browns have amassed fifteen picks that fall within the top 100 selections. This has put the Browns in a position to maximize their probability of adding impactful talent to its roster over the next few seasons.  The Chicago Bears have been and will continue to build through the draft as well.  Young players such as Kyle Long, Leonard Floyd, and Jordan Howard have become integral parts of the team’s future plans for success. In addition, the injuries to 2015 first round pick Kevin White have been less detrimental to the team than in past years because of his relatively low salary cap number.  By no means is the current version of the NFL’s CBA perfect.  For example, players may feel they are being undercompensated as compared to the previous CBA, in which teams still were required to make significant investments in players that had yet to play a snap of professional football. However, for the players drafted on Thursday and throughout the entire weekend, they will have little doubt about how much they can expect to be paid when their names are called to be drafted.   Adam Grossman is the CEO and Founder of the sports sponsorship technology and analytics firm Block Six Analytics (B6A). In addition, he is a lecturer for Northwestern University’s Masters of Sports Administration where he teaches classes focused on develop and communicate strategic insights through data.     Ross Chumsky is a Senior Partnership Analyst at B6A.
BY ADAM GROSSMAN AND ROSS CHUMSKY

NFL Draft Brings Turns Players’ Dreams Into Clear Financial Realities

For virtually every player not named Myles Garrett, tomorrow’s NFL Draft will be filled with uncertainty.  It is not clear what number draft pick he will be or which team will select him.  There is one thing, however, that these future NFL players do have virtual certainty about – they will know exactly how much they will be getting paid once they are drafted.

 

       It is Personal Because It is Analytics      

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  The captain of a basketball team took a look at the game video and saw his squad getting dominated on the boards. He also saw his backup point guard turn over the ball too frequently for his team to win games consistently. The team decided to both add a new frontcourt player to help with the glass and to reduce the point guard’s minutes.  This situation occurs commonly in the NBA when teams review video to diagnose their weaknesses and make personnel moves based on what they see in the video. What makes this situation unique is that it did not happen in the NBA. This captain leads a squad called the X-Men, a team in the Equinox Basketball League in New York. Captain Keith Howard was able to evaluate his squad quickly because of the footage he received courtesy of a service called Krossover the day after a game occurred.    What is Krossover? According to a recent profile in   The New Yorker   ,  “Krossover compiles game film and breaks the video down to a seemingly infinite variety of plays and data points. The service only requires a tripod, a camera, and a videographer—often a coach—to film each game and upload the footage; by the next morning, the videos, which are dissected and tagged by analysts contracted by Krossover, are ready to be viewed.”  Is it a bit much to watch game film of your rec league basketball team on a daily basis? Maybe. However, anyone that has played pickup or rec league basketball knows that determining who should play and not play is really difficult. In particular, telling your friend or teammate he / she is hurting the team is not a pleasant conversation to have at the gym. Krossover virtually eliminates the issue because the video and stats can show how a player is performing and potentially hurting his / her team. It’s not personal, it’s analytics.  There is, however, a personal coda to this story that stretches beyond courts in Equinox gyms throughout the country. One thing sports teams and leagues are afraid of with analytics is that many fans will not embrace data. The conventional wisdom is that while some fans love analytics, most fans want to watch the players compete and not be inundated with numbers. That is why many sports leagues and broadcasters are hesitant to use analytics during games.  This example with Krossover shows that this may no longer be the case. In fact, this article shows that Equinox invested $50,000 in Krossover in several locations around the country to help ensure its athletes get their data.  Equinox gym members are not representative of all sports fans around the country (  The New Yorker   says, “The games have the feel of a Rucker League for the one per cent” ) . If rec league basketball players are starting to look at their own video breakdowns and stats then it is not a stretch to think that they would want similar data for their favorite NBA or college players. After year-over-year ratings for the NBA decreased in  2016-17 , using data and analytics to increase viewership is a conversation the industry should be having. 
BY ADAM GROSSMAN

It is Personal Because It is Analytics

The captain of a basketball team took a look at the game video and saw his squad getting dominated on the boards. He also saw his backup point guard turn over the ball too frequently for his team to win games consistently. The team decided to both add a new frontcourt player to help with the glass and to reduce the point guard’s minutes.

      Modernizing Tradition at The Masters     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman   “A tradition unlike any other” is now  literally  the trademark phrase of the Masters golf tournament teeing off this weekend in Augusta, Georgia. Fans from around the world enjoy seeing staples like Amen Corner, the azaleas that bloom around the greens, and the green jacket presentation at Butler Cabin during the unofficial start of spring at the Masters.  Despite being steeped in tradition, the Masters is actually one of the leaders in sports technology. Its relationship with IBM has created innovative ideas that have changed how fans consume content during the tournament. As my co-authors and I discussed in  The Sports Strategist: Developing Leaders for a High Performance Industry , IBM enabled the Masters to become one of the first events to have 360-degree views of each hole, a historical video timeline, and up-to-date leaderboard information directly on the tournament’s website starting in 2013.  This year’s tournament is no different. IBM’s Watson platform will be used at the Masters to solve one of the most difficult challenges for covering any golf event on television. In this year’s event, there will be 94 players competing to become the Masters champion. How will CBS (or any television network) know which holes to broadcast and where highlights may emerge during the thousands of potential hours of tournament television coverage? In the past, networks had to review this footage manually or rely on a cameraman to hopefully capture the right shot.  IBM Watson, however, can solve this problem using artificial intelligence (AI) and machine learning.  More specifically , “For the first time at a sporting event, IBM is harnessing Watson’s ability to see, hear, and learn to identify great shots based on crowd noise, player gestures, and other indicators. IBM Watson will create its own highlight reels.” The Masters and IBM have put into place a solution that could help all PGA Tournaments by leveraging its corporate partnership to use new technology to improve its “traditional” product.  The Masters and IBM’s relationship brings up a larger point about AI. In the past, we have talked about teaching machines how to see, hear, learn, and read through Block Six Analytics’ (B6A’s) Media Analysis Platform (MAP) and Social Sentiment Analysis Platform (SSAP). Both IBM and B6A are focusing on using AI to complete tasks that are both repetitive and for which machines can do a better job than humans. With MAP, for example, B6A is using machine learning to automatically identify logos or objects on screen during a broadcast to determine the value for a corporate partner. IBM is using Watson to identify, aggregate, and produce highlights in an automated fashion. Both companies are using machines to maximize the work people are doing in and around sporting events. That is likely the role that AI will play in the sports industry for the foreseeable future.
BY ADAM GROSSMAN

Modernizing Tradition at The Masters

“A tradition unlike any other” is now literally the trademark phrase of the Masters golf tournament teeing off this weekend in Augusta, Georgia. Fans from around the world enjoy seeing staples like Amen Corner, the azaleas that bloom around the greens, and the green jacket presentation at Butler Cabin during the unofficial start of spring at the Masters.

      Seeing How Payments Turn Into Dollars     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  Could your glasses pay for themselves? In a manner of speaking, the World Surf League (WSL) and Visa would say yes. As part of the credit card company’s  new official partnership  with WSL’s Quiksilver and Roxy Pro Gold Coast (the first stop on the WSL Championship Tour), Visa is piloting payment-enabled sun glasses that “feature contactless payment capability and [eliminate] the need to carry cash or cards on the beach.”  This partnership is beneficial to both the WSL and Visa in several ways. First, it does potentially solve a problem that any beach goer (this author included) has faced when going to the beach. It can be difficult to carry around a wallet in a bathing suit without worrying about it getting it wet and / or possibly damaging one’s credit card(s). Eliminating much of the need for a wallet with something most people need on the beach anyway (sunglasses) elegantly solves this problem.  Second, this partnership does generate positive brand awareness and brand perception for both WSL and Visa. For the WSL, increasing brand awareness in an incredibly crowded sports marketplace is critical. This differentiated partnership demonstrates to companies and fans the unique ways the WSL activates its corporate partnerships. As an increasing number of younger consumers test out novel payment methods (think Venmo or Bitcoin), the use of more traditional credit cards could decline in the future. Visa partnering with the WSL and using novel technology should attract significant interest from the sport’s core demographic to the company.  What is arguably the most interesting part about this partnership, however, is how it effectively leverages new technology to drive new revenue for a corporate partner. It is clear that the growth of sports technology has been massive, particularly over the last five years. What is less clear is how to monetize technology, particularly when it comes to wearables. Technology-enabled glasses have been a focus for companies both inside and outside of the sports industry. Google Glass became an infamous flop for the search engine giant while Snap Inc. has made a bet that its potential new glasses will entice advertisers using its unique filters.  The WSL and Visa, however, have a sure thing when it comes to their glasses partnership and revenue generation. The WSL has provided a way for Visa to either attract new, younger customers or retain customers it already has. Visa makes money by charging a processing payment fee to merchants every time someone uses its products. Glasses make it as easy as possible for someone, particularly younger demographics, to make a payment. A customer just needs to have his / her glasses on when purchasing products. This also creates a switching cost for customers to move to a new payment provider. Why switch to a MasterCard, Venmo, Paypal, or Bitcoin if Visa makes my life easier, particularly when I am at the beach and / or on vacation?  In   The Sports Strategist: Developing Leaders for a High Performance Industry  , my co-authors discuss how the best possible corporate partnerships deliver value for both the buyer and seller. The WSL and Visa show how new technology can generate new dollars for both sides of a partnership.  See more content like this at  Blog Six  by  Block Six Analytics .
BY ADAM GROSSMAN

Seeing How Payments Turn Into Dollars

Could your glasses pay for themselves? In a manner of speaking, the World Surf League (WSL) and Visa would say yes. As part of the credit card company’s new official partnership with WSL’s Quiksilver and Roxy Pro Gold Coast (the first stop on the WSL Championship Tour), Visa is piloting payment-enabled sun glasses that “feature contactless payment capability  and [eliminate] the need to carry cash or cards on the beach.”

      Quantity and Quality for the NFL     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  The fact that the National Football League (NFL) generated $1.25 billion in sponsorship revenue this year is both impressive and surprising. The NFL’s revenue was 4.3% higher during the 2016 season than it was during the 2015 season even though the year-over-year regular season television ratings  dropped  by 9%, while the playoff ratings fell by 6%. How is it possible that the NFL generated more money from sponsorships when it seemingly has less interest from fans (at least from television broadcasts)?  The first reason was the NFL was still able to generate many of the highest rated single telecasts for all television programming (not just sports). In 2016 alone, five of the year’s  top 10 telecasts  featured NFL games or content. So while NFL ratings may have been down by the league’s high standards, the NFL was still able to attract very large audiences.  As I wrote about in the book   Sports Business Analytics: Using Data to Increase Revenue and Improve Operational Efficiency  , there are typically six channels in which sports sponsorship are activated. These are: in-venue, traditional media (television, radio, newspaper), digital media, social media, event marketing, and intellectual property (naming rights deals, jersey rights deals, logos). The NFL in particular has made a big push into digital streaming and social media as demonstrated by its  partnership with Twitter  this past season to stream live games on the platform. Evaluating the level of fan interest / engagement with a league by only examining a single channel misses the larger picture and does not make sense in this context.  However, the larger point here is that discussion about sponsorship revenue and sponsorship value should not only rely merely on quantity of impressions generated. While the size of the audience is still important, corporate sponsors are increasingly looking at the quality of the sports fans demographics. In particular, corporate partners are looking for how a league can help them generate more money and achieve their overall brand / marketing goals. Not only does the average football fan make $66,300 in annual revenue, but also the NFL attracts the greatest percentage of female fans of any major professional American sports league according to SBRnet.  Relying solely on the number of impressions on television is not the best measure of a league’s overall fan engagement. Taking a cross-channel and qualitative approach to evaluating corporate partnerships shows why the NFL was able to increase its overall revenue in 2016 despite decreased television viewership.
BY ADAM GROSSMAN

Quantity and Quality for the NFL

The fact that the National Football League (NFL) generated $1.25 billion in sponsorship revenue this year is both impressive and surprising. The NFL’s revenue was 4.3% higher during the 2016 season than it was during the 2015 season even though the year-over-year regular season television ratings dropped by 9%, while the playoff ratings by 6%.

      From Commissioner To Investor     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  David Stern has moved from commissioner to investor. The former NBA commissioner is no longer focused on growing the business of basketball, but rather looking at the growth that sports technology can have on the entire industry. His latest investment is in a company called  Overtime , “a smartphone app that allows for users to record, edit and share short-form sports video content,” which recently completed a $2.5 million seed round announced on Wednesday.  Stern is joining a growing number of sports owners, executives, and current and former players in making investments in everything from virtual reality and mobile apps to  eSports and software as a service (SaaS) platforms. This revolution comes at a time when the number of sports-based accelerators looking to help new companies build new technology products or service offerings are increasing. In the past three years alone the Los Angeles Dodgers, Philadelphia 76ers, Minnesota Vikings, and Dallas Cowboys have all created accelerators to make strategic investments in new, growing companies.  What has caused the rise in these types of investments? It is difficult to think of an industry more affected by technology than sports. This includes (but is certainly not limited to) the live digital streaming of games to different devices, the growth of social media to reach fans, the impact of mobile ticketing apps, the use of virtual reality to help players train and improve performance, the implementation of cameras around venues to track player movements, the rise of wearable technologies, and so much more. Success in nearly any position in the sports industry requires staying aware of technological developments and seeing how they directly impact a team, league, event, player, or agency.  This makes these former executives such as Stern ideal investors in rapidly-growing companies for three main reasons: first, these industry experts have been at the forefront of this sports technology wave. They often understand the customer types new companies are trying to target because they either were the customer themselves or have been interacting with fans, media, sponsors, and employees on a daily basis. Therefore, these investors can be critical in product development and can aid in making enhancements that improve the product in a timely manner. Second, these executives have often interacted with people that can become future employees of these growing organizations. Identifying top talent is crucial to the growth of young companies and is often difficult to complete. Third, the network that these executives have developed introduces these young companies to customers that most growing companies would never have access to otherwise.        Sports is often a zero-sum game because there is usually a clear winner and a loser. Investment in sports by industry leaders, however, is a win-win proposition. Young companies benefit from the industry expertise that investors provide, which can immediately impact these growing organizations.   Adam is the CEO and Founder of the sports sponsorship technology and analytics firm Block Six Analytics (B6A,) whose clients include Pepsi, Gatorade, Cleveland Browns, Philadelphia 76ers, and Comcast SportsNet. In addition, he is a lecturer for Northwestern University’s Masters of Sports Administration where he teaches classes focused on developing and communicating strategic insights through data. He has written for Forbes, The Washington Post, The Chicago Tribune, and Comcast SportsNet Chicago and has been featured as industry expert on CNN, Marketplace, SB Nation Radio, and ThePostGame.
BY ADAM GROSSMAN

From Commissioner To Investor

David Stern has moved from commissioner to investor. The former NBA commissioner is no longer focused on growing the business of basketball, but rather looking at the growth that sports technology can have on the entire industry.

        
  
 
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   Transparency Is The New Game In Town      

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  The Super Bowl is not just the most important game of each NFL season; it is typically considered the championship for advertising with the culmination of campaigns that have been months in the making. The fact that companies will pay at least  $5 million  for 30-second television advertising spots shows just how important the Super Bowl is to advertisers.  The most important advertising news this week, however, may have little to do with the Super Bowl. Marc Pritchard, Procter and Gamble’s (P&G) Chief Marketing Officer, this week authored a scathing critique of the advertising industry, which has arguably overshadowing any news of any upcoming Super Bowl commercials. As  CNBC  explains:  Procter & Gamble, one of the world's highest-spending advertisers, has called on the media buying and selling industry to become transparent in the face of ‘crappy advertising accompanied by even crappier viewing experiences.’ P&G has given agencies a year to get to ‘a transparent, clean and productive media supply chain,’ or risk losing its business, according to Pritchard.…’Better advertising and media transparency are closely related. Why? Because better advertising requires time and money, yet we're all wasting way too much time and money on a media supply chain with poor standards adoption, too many players grading their own homework, too many hidden touches, and too many holes to allow criminals to rip us off.’  Even if Pritchard’s comments reflected only P&G’s perspective then this would still be significant since the company spends $2.8 billion per year on advertising. However, Pritchard articulates something that has long been a problem for advertising buyers; it is very difficult for even the largest companies in the world to secure ROI metrics that are transparent, easily understood, and that fit their business.  Block Six Analytics’ (B6A) solutions are specifically designed to address these issues for both buyers and sellers of advertising and sponsorships. In particular, our Corporate Asset Valuation Model is completely transparent. A company can see exactly how a relationship with a seller impacts its specific business from both a brand and revenue perspective using best practice valuation approaches. This model is consistently updated throughout a campaign or year in our proprietary Partnership Scoreboard software as a service (SaaS) platform so that buyers and sellers can see the value of their advertising and sponsorship at any time.  Pritchard’s comments demonstrate that advertisers no longer think that having these types of clear metrics are just “nice to have.” Instead, companies like P&G are going to require that sellers and agencies clearly demonstrate and communicate the value that is being delivered by advertising before making a purchasing decision. The companies and agencies that cannot provide this information risk losing significant advertising revenue.
BY ADAM GROSSMAN

Transparency Is The New Game In Town

The Super Bowl is not just the most important game of each NFL season; it is typically considered the championship for advertising with the culmination of campaigns that have been months in the making. The fact that companies will pay at least $5 million for 30-second television advertising spots shows just how important the Super Bowl is to advertisers.

      CEO Adam Grossman Discusses Opportunities and Trends Headed into 2017 in  the Sponsorship Space      

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  Question: How has sponsorship changed the past few years and what are some trends to look out for headed into 2017?  How do you teach a computer to see? This idea still may seem far-fetched to many in the sports industry. Computer Vision, however, is a field of machine learning that already exists, where programmers can train computers to recognize images, logos, and people in videos or images. Teaching a computer to “see” enables the machine to collect more data more quickly and more accurately than ever before to determine when, where, and how long a sports sponsor’s logo was on screen during a broadcast. Computer Vision is a good example of the biggest change that has and will continue to impact sports sponsorship. New technology allows sports sponsorship buyers and sellers to collect more data than ever before. This has caused buyers to want to use that data to enhance their decision-making process. More specifically, sponsors now expect that big data can generate big insights and maximize the benefits of their relationship with a team, league, event, or athlete across different channels, based on the sponsor company’s strategic goals. The proliferation of new technology to create and collect data will necessitate that sports properties quickly and effectively analyze data and highlight value created by a sponsorship. Communicating using a language based on data will be at the heart of conversations around sports sponsorship in 2017.  Read more from industry experts on sponsorship trends via  The Sponsorship Space  and check out  Block Six Analytics  for ways that sports properties, brands, and agencies can take advantage of these trends.
BY ADAM GROSSMAN / ORIGINALLY POSTED ON THE SPONSORSHIP SPACE

CEO Adam Grossman Discusses Opportunities and Trends Headed into 2017 in the Sponsorship Space

How do you teach a computer to see? This idea still may seem far-fetched to many in the sports industry. Computer Vision, however, is a field of machine learning that already exists where programmers can train computers to recognize images, logos, and people in videos or images.

        
  
 
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         Artificial Intelligence Drives Real Insights in Sports     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman and Alberto Rios  How do you teach a computer to see? For a large part of the twentieth century, leading scientists and mathematicians thought this was impossible. In the late 1980s, however, the first computer neural network was created that programmers could train to recognize images, logos, and people in videos or images. Today, consumer grade graphics processing units (GPU) have become powerful enough to enable computers to deliver near real-time results. Teaching a computer to “see” enables the machine to collect more data more quickly and more accurately than ever before to answer when, where, and how long a sports sponsor’s logo was on screen during a game broadcast or press conference.  Within the last 30 years, the concept of machine learning has transformed from being a near-impossible task to now being an integral part of the sports industry’s future. A good example of the use of machine learning on the field is PitchF/X in baseball.  PitchF/X  “tracks the position, speed, and  break  of a ball, outcomes like hits, strikes, foul balls, and so on, and uses a  machine learning algorithm  to categorize the pitch type (e.g.: four-seam fastball, changeup, curveball, slider)”. PitchF/X removes the need for humans to watch videos and document every at-bat. Instead, teams can collect information about both hitters and pitchers more quickly and more accurately than ever before. This information then can be provided to hitters as insights on what pitch is more likely to be thrown by a player during a certain pitch count. In addition, this information can be provided to pitchers on what pitches a hitter will be more likely to swing at during an at-bat.  How exactly does a computer learn to see? At our company, Block Six Analytics (B6A), we have developed a neural network for object identification using computer vision software we call our Media Analysis Platform (MAP). One can think of a neural network as the brain of a computer. The human brain learns through repetitive practice to acquire knowledge and by storing said knowledge in neurons, or brain cells. Each neuron collects a tiny bit of information and combines it via neural pathways in the brain to create an output. For example, students can learn algebra or how to speak in Spanish by practicing tasks repeatedly. Each neuron in the brain learns a bit of information about the subject and the combines so that one becomes fluent in algebra or Spanish. Our neural network takes a similar approach to learning how to identify a specific object. We teach our system by showing it hundreds pictures of that object and it “practices” on how to classify that object based on features such as shape and color. Each practice session enables our neural network to learn how to become better at object recognition until it masters the concept.  Machine learning enables everyone in the sports industry to collect and analyze more data than ever before. The challenge is how to communicate the insights using this data to improve decision-making on important strategic challenges. In the Pitch F/X example, baseball players have fractions of seconds to determine whether to swing or not swing at a pitch. Giving players all of the data that PitchF/X provides may slow down their decision-making processes and make them worse hitters. As Travis Sawchik described in his book   Big Data Baseball: Math, Miracles, and the End of a 20-Year Losing Streak  , the Pittsburgh Pirates’ data analysts spent hours talking with coaches and players talking about machine learning. In addition, their data analytics team created spray charts, heat maps, and other data visualizations tools that made as easy as possible for players and coaches to understand the data.  Artificial intelligence is easier to leverage than ever before and creates real insights that impacts strategic decision-making. Big data analysis, however, requires a communication strategy to translate machine learning into actionable intelligence that can be used by everyone in a sports organization. 
BY ADAM GROSSMAN AND ALBERTO RIOS

Artificial Intelligence Drives Real Insights in Sports

How do you teach a computer to see? For a large part of the twentieth century, leading scientists and mathematicians thought this was impossible. In late 1980s, however, the first neural network was created that programmers could train computers to recognize images, logos, and people in videos or images.

      Check Out CEO Adam Grossman's Newly Published Book Chapter     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      CEO Adam Grossman has published a new book chapter detailing the inner workings of sports sponsorships in the book  Sport Business Analytics: Using Data to Increase Revenue and Improve Operational Efficiency .  For more information about Adam's new book chapter (Chapter 10), check out  CRC Press  or  Amazon .
PRESS RELEASE

Check Out CEO Adam Grossman's Newly Published Book Chapter

CEO Adam Grossman has published a new book chapter detailing the inner workings of sports sponsorships in the book Sport Business Analytics: Using Data to Increase Revenue and Improve Operational Efficiency.  For more information about Adam's new book chapter (Chapter 10), check out CRC Press or Amazon.

        
  
 
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     Meetings Should Not Only Happen In The Winter      

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      By Adam Grossman  Major League Baseball (MLB) Winter Meetings are currently taking place and will last through December 8th in National Harbor, Maryland. MLB news will be focused on player transactions, including star pitcher Chris Sale being traded from the White Sox to the Red Sox. Numerous big free agent signings and player trades should occur throughout the course of the week.  MLB is not alone in having these types of gatherings; all major professional sports leagues having a similar meeting. However, the focus is on team operations. What is less typical, however, is for leagues to host events for the business operations side of the business. More specifically, teams within a league often do not meet in person to discuss and share best practices.  As my co-authors and I discuss in our book   The Sports Strategist: Developing Leaders For a High-Performance Industry  , we think this could be a mistake. Sports organizations are in a unique competitive position in two particular ways. First, sports organizations in a professional league have at least one or more teams in direct competition within the same league. Second, teams within a league usually have some form of revenue sharing on items ranging from ticket sales, media rights deals, sponsorships, and merchandise.  Yet, teams within a league still do face stiff competition. This includes competition from other domestic professional and college sports leagues, the rise of new sports such as drone racing and eSports, and the influx of international sports leagues trying to secure a larger American audience such as the English Premiere League.  What this means is that teams within a league should be focusing on sharing best practices as much as possible. This would enable business leaders to explore best practices in an open, collaborative environment that would facilitate the growth of each team and the league as a whole. For example, big data is a challenge faced by many sports teams. Team are receiving so much data from ticket sales, digital media, merchandise, concession, and mobile platforms than ever before. The question exists of how to turn all of this unstructured data into meaningful insights that drive results. Relatively few teams, one notable example being the  Cleveland Browns , have created a data warehouse. In addition, many teams do not have time or resources to determine what is the best way to construct a data warehouse. Determining what the best way is to aggregate, analyze, and communicate data, and sharing those successful practices, would make it easier for each team to build a data warehouse.  This not to say that leagues are not taking steps to encourage collaboration. The NBA and NFL each have an annual technology summit for league members to attend. The NBA has created  TMBO  as a group “responsible for developing, compiling, analyzing, and sharing among teams.” As a way to drive franchise profitability, the MLB created MLB Advanced Media (MLBAM) to centralize development and share insights across the league. In addition, leagues frequently have conference calls to discuss best practices.   
  
 
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     While often fierce competitors on the field, teams within the same league function more like partners off the field. Growing these partnerships by placing more emphasis on meetings (whether in-person or virtually), collaboration, and dialogue between teams in the same league should help everyone generate more money.
BY ADAM GROSSMAN

Meetings Should Not Only Happen In The Winter

Major League Baseball (MLB) Winter Meetings are currently taking place and will last through December 8th in National Harbor, Maryland. MLB news will be focused on player transactions, including star pitcher Chris Sale being traded from the White Sox to the Red Sox. Numerous big free agent signings and player trades should occur throughout the course of the week.

      DirecTV's NFL Relationship Creates Winning Formula For Sports Partnerships     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
        
  
 
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    By Adam Grossman  One of the most commented-on stories this year in sports business is that NFL year-over-year ratings have declined during the 2016 season. Some have wondered if this a long-term problem or a short-term issue caused by one-time events, including the 2016 presidential election the and the Chicago Cubs run to a World Series championship.  While there are likely long-term challenges facing the NFL’s broadcast success, DirecTV’s success indicates that this could be more of a short-term problem. As Mike Snider of  U.S. Today  explains, “DirecTV added 323,000 net new subscribers in the July-September period, according to research firm the Leichtman Group. That brings its subscriber numbers to 20.8 million, the firm estimates. Overall, the pay-TV industry lost more than 255,500 subscribers during the quarter.”  The success of DirecTV in this adding subscribers leads to two important potential insights. The first is that having relationships with major sports leagues can be an extremely valuable asset. Arguably the biggest differentiator between DirectTV and other pay-TV providers (think other cable or satellite companies) is the NFL Sunday Ticket package. DirecTV provides a unique service offering that enables fans to stream out-of-market games through different channels including television sets, computers, Apple TV, Amazon Fire, Xbox One and Samsung smart TVs. Having the NLF Sunday Ticket has given DirecTV a competitive advantage that appears to be driving subscriber growth.  In our book   The Sports Strategist: Developing Leaders for a High-Performance Industry  , my co-authors and I show that sponsors are looking for direct ways to monetize their partnerships with sports organizations. DirecTV is an example of how partners work with sports organizations to achieve this goal. One could argue that DirecTV’s, which was purchased this year by AT&T for $48.5 billion, value comes almost entirely from the NLF Sunday Ticket because of the competitive differentiation is provides from other pay-TV providers. While not every partnership will be able to provide this level of result, successful sports organizations will be the ones that able to clearly deliver direct business benefits to their sponsors.   The second insight is that sports content is valuable in particular when it can be accessed across multiple different devices. Over the past five years, the fees for sports media rights deals have increased substantially for many large sports organizations. Critics have argued that sports content is actually  not that valuable  and these deals will not drive tangible results. In particular, these deals will become increasing difficult to profit from as more people move away from traditional television.  DirectTV’s deal with the NFL shows that this is likely not the case. There is still a significant demand for sports content, especially when it can be consumed through different channels. DirecTV has worked hard to make NLF Sunday Ticket available on multiple different platforms. Combining a comprehensive channel strategy with unique sports content has played a significant role in expanding DirecTV’s subscriber base.  This is not to say that all sports content will keep increasing in value or that criticism of media rights deals is without merit. ESPN and FS1 have lost millions  subscribers  over the past few years even with several new media right deals being signed. In addition, rights fees for some smaller sports properties have  declined in 2016  because they have not achieved their subscriber / revenue goals. These are not small problems and will need to be addressed in the future.    However, it is clear that premium sports content can deliver premium results. This is the reason that companies such as Amazon, Netflix, Twitter, and Yahoo have or are exploring  media rights deals  with large sports organizations. As John Ourand of Sports Business Journal  states , “Live sports rights still are critically important to television networks. Live sports is the most advertiser-friendly genre on television. The programming is DVR-proof, meaning that viewers can’t fast-forward through the commercials.”   
  
 
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     While media rights deals create a clear business case for media partners, it is only one asset that sports organizations have to generate incremental growth. Sports organizations should (and  often do ) look for more opportunity using its intellectual property to create a win-win relationships for the team and its sponsors. 
BY ADAM GROSSMAN / ORIGINALLY POSTED ON FORBES

DirecTV's NFL Relationship Creates Winning Formula For Sports Partnerships

One of the most commented-on stories this year in sports business is that NFL year-over-year ratings have declined during the 2016 season. Some have wondered if this a long-term problem or a short-term issue caused by one-time events, including the 2016 presidential election the and the Chicago Cubs run to a World Series championship.