Padres Hit Home Run With Machado   BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Multiple sources have reported that  Manny Machado  has agreed to a 10-year, $300 million deal with the San Diego Padres. The four time All-Star and two-time Gold Glove winner is now one of the highest paid  players  in MLB (and American sports more generally) both in terms of total amount and average annual value of a contract with a team.   A deal of this size and time length may make it difficult to think that the Padres could have obtained a good “deal” with this deal. However, the Block Six Analytics (B6A)  Revenue Above Replacement  (RAR) model projects that the Padres are very likely to have a significant positive return on investment (ROI) by signing Machado. In the first half (or 50%) of Machado’s deal alone, the Padres will have “recouped” 83.4% of the cost.      

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     RAR examines how a player’s on-field and off-field performance contributes to a team’s top-line revenue growth. From an on-field perspective, we examine how winning impacts revenue generation and how each player contributes to winning using a metric we developed called B6AWins. From an off-field perspective, we examine how a player’s star power impacts revenue generation.   We have identified five factors that best describe how an MLB team wins games. Those are derivations of advance analytics for hitting, pitching, fielding, baserunning, and age (for more information about B6AWins contact  B6A ). We found that a three-year rolling average that accounted for these factors was the best way to project future performance.  For baseball, we have identified three factors that best enable us to determine an individual player’s star power. Those are apparel sales, social media value, and earned media value. We leverage B6A’s  machine learning platforms  and data partners to analyze the social media and earned media of hundreds of MLB players. We found that examining the past year’s results was the best way to project future star power.   There are two key elements to RAR that differentiate this approach from more traditional valuation approaches. The first is that it is player and team specific. This means that different players will have different values to different teams. In particular, a player’s overall impact on winning is dependent on how the other players on that team perform. In addition, winning does not have the same economic impact for each team.   The second is that off-field performance can have an equally important impact on a team’s ability to generate revenue. In addition, we often find that off-field performance is a more consistent variable than on-field performance when projecting a player’s future value. From a purely economic perspective, this means that teams should rely more heavily on a player’s star power in determining value.  Both of these elements play a critical role in determining that Machado’s contract should be a good deal for the Padres. From an on-field perspective, winning is very important to the team’s ability to generate revenue. One B6AWin is worth $8.0 million dollars to the Padres in 2019, the highest for any team in MLB. While the Padres won fewer games (64) than B6AWins would predict (77) in 2018, the team’s hitting and defensive statistics (two areas where Machado has excelled in the past) were among the lowest in MLB. This makes Machado particularly valuable to the Padres from an on-field perspective.  From an off-field perspective, Machado should be far and away the biggest star on the Padres roster. The next biggest star on the roster should be Eric Hosmer and his projected 2019 off-field value is $11.8 million. Machado’s projected off-field value is $30.2 million for the Padres in 2019. This includes a bump in value in his first year on the Padres as RAR finds that players typically see increases in star power when changing teams.  The Padres are not the only team that would have likely generated a positive ROI from this type of deal. Other teams linked to Machado in free agency including the Chicago White Sox and Philadelphia Phillies would have received a similar (but slightly lower) value while the Toronto Blue Jays would have received a similar (but slightly higher) value as the Padres.    However, Machado would not likely be as valuable to other teams for similar reasons that make him valuable to the Padres. For context, we will examine Machado’s projected value to the Yankees.      

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     From an on-field perspective, the Yankees are the least dependent on winning of any team in MLB. One B6AWin is worth $2.7 million to the Yankees in 2019. In addition, the Yankees roster outperformed the Padres roster by substantial margins in hitting and defensive statistics in 2018 where Machado excels making his contributions relatively less important to projected team performance in 2019. Finally, the Yankees do not lack for star power with both Aaron Judge and Giancarlo Stanton exceeding and Gary Sanchez slightly below Machado’s value.  The RAR model does have limitations when it comes to projecting future value. It is currently only constructed to examine performance through the 2023 season. It is also virtually impossible to account for all future player movements particularly in seasons beyond 2019.   Even with these constraints, Machado’s new deal demonstrates the importance of using RAR to understand a player’s on-field and off-field value to a specific team. While Machado’s contract would not necessarily be a good deal for every team, B6A found that multiple teams would likely generate a positive ROI from Machado’s deal given his overall ability to generate revenue.

BY ADAM GROSSMAN

Padres Hit Home Run With Machado

Multiple sources have reported that Manny Machado has agreed to a 10-year, $300 million deal with the San Diego Padres. The four time All-Star and two-time Gold Glove winner is now one of the highest paid players in MLB (and American sports more generally) both in terms of total amount and average annual value of a contract with a team. A deal of this size and time length may make it difficult to think that the Padres could have obtained a good “deal” with this deal. However, the Block Six Analytics (B6A) Revenue Above Replacement (RAR) model projects that the Padres are very likely to have a significant positive return on investment (ROI) by signing Machado. In the first half (or 50%) of Machado’s deal alone, the Padres will have “recouped” 83.4% of the cost.

      New Leagues Bank On Investment Capital  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Major professional sports valuations seem to increase on a yearly basis as indicated in the latest  Forbes NBA Team Valuations  article released last week. One of the “concerns” about sports organizations, however, is that these increases are decreasing. More specifically, while teams are increasing in value overall the average annual increase seems to be declining over time.  Why is that the case? Many argue that many sports properties operate in mature markets where the assets have already priced in the value. That is in large part because the value of new media rights deals (both at a league and team level) have been “priced in” to the valuation. A good example is our most recent post on the Los Angeles Clippers valuation at the time Steve Ballmer  bought  the team. Using a discounted cash flow and relative valuation analysis (two techniques common in asset valuation) we found that the team was worth between $2.02 billion and $2.36 billion in 2014. Ballmer paid $2 billion for the team.   Buying assets for a potential 18% return on investment (making $360 million on a $2 billion investment for Ballmer’s Clippers investment) is not an attractive proposition for a venture capitalist (VC). In fact, even a 180% return on investment is not that attractive for VCs because it does not fully compensate for the risky nature of their investments.   Venture Capital funds typically invest in companies with high-risk / high-reward profiles. The goal is to generate outsized returns by identifying companies that can grow and become valuable quickly. This often requires investing in younger companies that have a higher risk of going bankrupt than more mature organizations. As demonstrated with the Clippers, investing in sports leagues or teams does not seem to fit the profile of a VC investment.   Yet, VCs and early-stage investors seemingly lining up to fund new sports leagues. The Alliance of American Football (AAF) kicked off its inaugural season last weekend with  millions  of dollars in VC backing. The Professional Lacrosse League (PLL) announced yesterday it just  closed  its Series A funding round led by Alibaba Group Holding Ltd. billionaire Joe Tsai.   Greg Bibb, chief executive of Capital Sports Ventures, summarized why VCs may now see sports properties as more attractive investments when he  said , “There’s a huge marketplace out there for underserved properties and sports, and investors are now seeing that and actively working to grow those areas.” Are football or lacrosse really “underserved” in the ways that Bibb describes?   The initial answer appears to be yes. The AAF is specifically positioning itself as a developmental league for the NFL. In particular, that goal serves to create connections with fans that lack professional football when the NFL enters its offseason. The AAF debuted with a 2.1 overnight rating on Saturday night tying its first broadcasts with the overnight rating of Oklahoma City Thunder vs. Houston Rockets game and just behind the Duke vs. Virginia 2.3 rating. This is one of the first proof-points validating the “underserved” large-market VC thesis for the AAF.  Meanwhile, the PLL  already  “has a multiyear broadcast agreement with NBC Sports Group, which will show games across its platforms. NBC will show three, while another 19 will be broadcast on NBCSN. Games will also be shown on the network’s website, mobile app and NBC Gold, a subscription streaming service.” NBC likely would not have agreed to this expansive of a deal for a league that had not yet played a game if it did not think there was an untapped audience for professional lacrosse.  Underserved certainly does not mean that there will not be direct and indirect competition. AAF and PLL face competition between the “new” XFL and Major League Lacrosse (MLL) leagues, respectively (let alone the major professional sports leagues). While the AAF may have experienced early ratings success, the original XFL could not sustain a high-enough in-venue or television audience while the MLL has struggled to attract fans or secure the same level of  media rights distribution  as the PLL appears to have.  The struggles of the XFL and MLL actually make an investment in the AAF and PLL more attractive. More specifically, VCs like to enter markets where companies can learn from “failures” in their space. One of the most famous examples of this is how both Google and Facebook learned from companies that entered their markets before them that no longer exist to become the dominant search and social media companies respectively.   This does not mean that the AAF or PLL will be successes since even most VC-backed  companies fail . It does show, however, that looking at inherent asset valuation can identify opportunities that on the surface do not appear to exist. More specifically, the AAF and PLL demonstrate that there are potential ways for new sports properties to grow in value significantly in a “mature” industry.   This is also the type of approach that should be used with partnership asset valuation and is a central element of B6A’s  Corporate Asset Valuation Model  (CAV). More specifically, sports sponsorship buyers are potentially missing out on opportunities because they may not be examining a seller’s sponsorship assets for how they can deliver value for that specific company given a specific activation. Completing a deeper analysis of both new and existing partnership inventory to understand its full potential value will enable buyers and sellers of sports sponsorship to obtain VC-like potential returns.

BY ADAM GROSSMAN

New Leagues Bank On Investment Capital

Major professional sports valuations seem to increase on a yearly basis as indicated in the latest Forbes NBA Team Valuations article released last week. One of the “concerns” about sports organizations, however, is that these increases are decreasing. More specifically, while teams are increasing in value overall the average annual increase seems to be declining over time So why are VCs and early-stage investors seemingly lining up to fund new sports leagues?

      Rays, Partners Can Benefit By Team Going Cashless  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      The Tampa Bay Rays recently became the first  North American  sports team to go cashless at its venue. Rays fans will now be able to buy items at Tropicana field with “major credit cards, official club gift cards, Apple Pay and Samsung Pay, as well as Rays Cards, which are provided to season-ticket holders.”  The Rays have the opportunity to do well by doing good. More specifically, the Rays goal by going cashless is to have “faster moving lines and increased fan satisfaction.” While fans definitely want to make purchases more quickly, faster moving lines also means that team can likely sell a higher volume of goods and increase overall revenues.  The Rays also can use the electronic transaction information to send targeted promotions for in venue purchases including tickets, concessions, and merchandise. In particular, potentially sending a promotion for an in-venue seat upgrade to fans already at Tropicana Field presents a new way for the Rays to increase ticketing revenues for a team that has  struggled  with ticket sales.    Top-line revenue growth from in-stadium purchases is only one benefit of the new cashless approach. Cashless purchasing  provides , “a rich source of data that can be used to better understand consumer behavior, which helps companies sell in a way that is more targeted to the unique needs of individual.”   Going cashless for in-stadium purchases should help teams increase corporate partnership revenue as well.  More specifically, understanding customer behavior using purchasing data is one of the most important priorities for corporate of sports teams.   Teams have already moved in this direction by going cashless for tickets. Many teams have turned to digital and / or mobile ticketing in part so that they can have a more robust picture of fan behavior including with whom fans share their tickets and when they arrive at a venue. Ticketing behavior, however, is only part of a fan’s overall experience. Moving to a completely cashless approach means that the Rays will have information on what, when, and how much fans purchase at their venue.   Having robust purchasing data can then also be combined with demographic information from other sources to create the most robust fan profiles possible. For example, the Block Six Analytics  Partnership Scoreboard  can combine purchasing data with demographic data from our  Social Sentiment Analysis Platform (SAP)  to understand fans from a spend, education, ethnicity, gender, and annual income perspective. Teams can then find partners whose customers either now or in the future best fit different fan profiles.   Before teams or partners leverage the data that can be made available from a cashless venue, it is critical to understand the privacy and legal issues associated with data collection. In particular, it is important to understand the laws and issues around personally identifiable information (PII) and how to take steps to employ “ anonymization  techniques to encrypt and obfuscate the PII so it is received in a non-personally identifiable form.” PII laws can  differ  from General Data Protection Regulation GDPR and should be examined as well.    Many of the payment providers working with the Rays mentioned earlier in this post, however, are fully aware of these privacy issues and can work with organizations to help ensure compliance. That is important because the more that teams can incorporate aggregated anonymized data sets in their analysis, the better they will be able to communicate value delivered to current and potential corporate partners.

BY ADAM GROSSMAN

Rays, Partners Can Benefit By Team Going Cashless

The Tampa Bay Rays recently became the first North American sports team to go cashless at its venue. Top-line revenue growth from in-stadium purchases is only one benefit of the new cashless approach. Cashless purchasing provides, “a rich source of data that can be used to better understand consumer behavior, which helps companies sell in a way that is more targeted to the unique needs of individual.”

      Analyzing Anheuser-Busch’s Super Bowl Spend  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Last year Anheuser-Busch announced a “ revolutionary incentive-based sponsorship model .” One of the biggest questions became how would the company’s enhanced focus on tangible ROI and ROO metrics potentially change its spending on sports assets.  This year’s Super Bowl provides new answers to these questions. One of the dominant narratives around this year’s events is that television ad prices have “ stalled .” More specifically, 30-second commercials for this year’s Super Bowl are priced at or near the same level as last year’s Super Bowl. The $5.2 million average price point is the first time the spots have not increased in year-over-year price since at least 2010.   The primary reason for the ad prices remaining the same is that the television audience of 103.4 million viewers was also the lowest number since 2010. It therefore may be surprising to see that  Anheuser-Busch is making “ its biggest media spend for the event to date .” This includes buying five-and-a-half minutes of airtime during the Super Bowl which equates to an estimated $28.6 million.   Why is the company increasing its spend at a time when it seems like viewership has declined? The answer likely comes from the company’s reliance on tangible ROI metrics. In particular, Block Six Analytics (B6A) has featured  research  in a past post that has shown that the company has generated  $45 million  in direct revenue from the Super Bowl with increases occurring before, during, and after the event.   Anheuser-Busch is a leader in sports sponsorship and its strategic decisions reverberate throughout the industry. One of the “fears” about Anheuser-Busch’s new approach was that an incentive-based model would drive a decrease in its overall spend. More specifically, conventional wisdom is that companies have spent sponsorship dollars in the past because they have a “gut feeling” that these activations work. Actually measuring the impact of sponsorship would directly challenge this assumption and may lead to companies finding that they were not receiving the expected ROI.   Anheuser-Busch’s approach shows the benefits of measuring sponsorship ROI and why spending can increase through its new approach. More specifically, the company chose to increase its Super Bowl spend because it had clear evidence that this spend should have a direct impact on its top-line  revenue growth before, during and after the event . The company will generate a higher than expected ROI because the cost of commercials will remain flat so it can buy more ads for less money. This year’s Anheuser-Busch Super Bowl strategy of buying more commercials even if viewership has declined appears to be in direct alignment with an incentive-based sponsorship model.      Anheuser-Busch’s approach also shows that ROI does not mean that a sponsorship asset necessarily needs to generate the highest number of impressions. The reach of a sponsorship is an important metric and Anheuser-Busch is still benefiting from advertising during what should the most widely viewed television program this year. The key for buyers in the future should be the quality or value of the audience to their company (not just the size of the audience) and how an increased spend can lead to an increase in ROI or ROO.   Anheuser-Busch also shows that it is critical to evaluate the impact of sponsorship outside of the initial activation and across multiple channels. More specifically, Budweiser sales increased in the eight weeks following the Super Bowl and around the NCAA tournament only when it was the  sole or primary advertiser  during the Super Bowl. That is likely because Anheuser-Busch customers were seeing content about the advertisements before, during, and after the game across multiple channels including traditional, digital, and social media.    Evaluating tangible ROI and ROO in multiple channels is at the core of B6A’s  Partnership Scoreboard . Our cross-channel dashboard provides buyers and sellers of sports sponsorship with specific ROI and ROO insights before, during, and after events by leveraging our Corporate Asset Valuation Model (CAV). This model is built to tell specific companies the impact that specific activations should have based on how the company generates revenue and on realizing its brand goals. Our  machine learning  platforms enable us to track the impact of these activations in owned and earned channels to provide our clients with near real-time analysis.    The key insights generated from the Partnership Scoreboard highlight to buyers and sellers of sports sponsorship what works. It is critical to note that companies should and likely will spend fewer dollars on sponsorship activations where they do not see or cannot determine how ROI and ROO are being generated. However, the converse should also be true in that companies can and should spend more money on activations that clearly work for their business. Anheuser-Busch’s spend during the Super Bowl is a clear demonstration of how a new incentive-based model for sports can help all parties generate revenue growth.    

BY ADAM GROSSMAN

Analyzing Anheuser-Busch’s Super Bowl Spend

Last year Anheuser-Busch announced a “revolutionary incentive-based sponsorship model.” One of the biggest questions became how would the company’s enhanced focus on tangible ROI and ROO metrics potentially change its spending on sports assets. This year’s Super Bowl provides new answers to these questions. One of the dominant narratives around this year’s events is that television ad prices have “stalled.” Why is the company increasing its spend at a time when it seems like viewership has declined?

      Unique Experiences Can Be Built For Universal Appeal  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      The NFL and Lowe’s announced a new partnership earlier this week that made the company the “Official Home Improvement Retail Sponsor” of the league. A key component of the new agreement is providing Lowe’s with the  opportunity  to “provide unique NFL experiences for customers and associates both during the regular season and off-season, and will become the presenting sponsor of Super Bowl Experience beginning at Super Bowl LIV in 2020 in Miami.”  This focus on experiences may seem counterintuitive for Lowe’s particularly when it comes to an NFL partnership. The NFL’s primary appeal has been its ability to reach large audiences, with the NFL’s popularity appearing to  increase this year . The Super Bowl specifically has been a large  revenue generator  because it provides companies with arguably the best opportunity to reach the largest audience during the sports year.    Creating unique experiences has typically not been a way to reach large audiences. For example, past  Super Bowl Experiences  have been in the specific city hosting the event and required tickets for entry. That does not seem to be the best way to reach  Lowe’s  many “typical do-it-yourself shoppers.”  Lowe’s understands this and believes that the NFL sponsorship is geared to specific audiences with experiences appearing to be a central role. In particular, Lowe’s is looking to target professional contractors  because  “pro customers, such as contractors, spend an average of five times as much as the typical do-it-yourself shopper.” In addition, Lowe’s emphasizes its “ 300,000 associates ” as another key part of the NFL deal.  This makes the focus on experiences make more sense from a dollars and cents perspective. Creating unique opportunities through sports for customers that drive a larger portion of a company’s revenue is one of the best ways to generate direct ROI from a  partnership . More specifically, these experiences create  competitive differentiation  to the point where a customer may make a decision based at least in part on having access to these opportunities.   In addition, having engaged employees that have direct interaction with customers has  been shown  to drive revenue growth. Providing employees with opportunities to have unique experiences with the sports they love typically increases their level of engagement and in ways that should directly translate to the customer interactions.   Reaching specific audiences that can maximize revenue growth appears to be a clear aim for Lowe’s with its NFL partnership. However, one less obvious outcome of unique experiences is their ability to reach large audiences. More specifically, these types of opportunities can drive earned media conversation in ways that more traditional sponsorship may not be able to achieve.  Citi’s Private Pass is a good example of this dynamic (full disclosure Citi is a B6A client but we currently do not evaluate Private Pass). Private Pass enables Citi’s card members to gain exclusive access to specific events including music, sports, dining, and theater. Events are limited to a certain number of “private passes” that can be accessed by card members.  Private Pass events, however, can be some of Citi’s most visible partnership activations. In particular, Private Pass events resonate with their card customers and can be (and often are) shared easily in earned media channels particularly in social media. This includes text, video and images from events where customers can showcase a clear benefit to having a Citi card to other current and potential customers. These types of organic demonstrations of competitive differentiation through unique experiences is one reason these partnerships should drive significant ROI for Citi.   Lowe’s and Citi illustrate the benefits of the B6A  Partnership Scoreboard  which aggregates and analyses data from multiple sources to provide our clients with a full cross-channel analysis of a partnership. Even on-site unique experiences can have universal impact in digital and social media channels and should be tracked to really understand the full ROI of a partnership.

BY ADAM GROSSMAN

Unique Experiences Can Be Built For Universal Appeal

The NFL and Lowe’s announced a new partnership earlier this week that made the company the “Official Home Improvement Retail Sponsor” of the league. . A key component of the new agreement is providing Lowe’s with the opportunity to “provide unique NFL experiences for customers and associates both during the regular season and off-season, and will become the presenting sponsor of Super Bowl Experience beginning at Super Bowl LIV in 2020 in Miami.” This focus on experiences may seem counterintuitive for Lowe’s particularly when it comes to an NFL partnership.

      Cause Marketing’s Impact On The Sports Industry  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      One the most common reasons that companies want to partner with sports properties is to leverage their brand equity with leagues, teams, athletes, and events. As more companies pursue cause marketing, however, sports properties now will have to examine these partnerships with these companies in new ways.  The most recent example is Gillette’s “ Short Film ” posted on YouTube as part of the company’s Super Bowl “the best a man can be” campaign. Derived from the company’s famous tagline “the best a man can get” and as a response to the #MeToo movement, Gillette’s goal is focused on “promoting positive, attainable, inclusive and healthy versions of what it means to be a man.” The film includes tangible examples of what this means and how men can change past stereotypical behavior to something more “positive.”  When evaluating the impact of sports sponsorship, Block Six Analytics’ (B6A’s)  Corporate Asset Valuation  examines the return on investment (ROI) and return on objective (ROO) of a partnership. Gillette appears to be focused on both with this campaign. Even though it has been the dominant player in the razor market for decades, Gillette is now facing increasing competition (Harry’s and Dollar Shave Club are examples of relatively new, well-funded competitors) with a core product that customers can find difficult to differentiate.   Brand sentiment and engagement are important for competing in this type of environment. Increasingly companies have turned to cause marketing to help differentiate themselves from their competition while also increasing revenue and profits. Cause marketing has traditionally been defined as companies identifying charitable organizations, donating money and / or product to these charities, and then marketing that the company had made these efforts.   Recent research has shown the impact of “doing well by doing good” for companies. A  study  published in 2017 examined yogurt company Yoplait’s partnership with the Susan G. Komen foundation. The authors found that not only did Yoplait increase its profitability but also that Dannon (its biggest competitor) saw profitability decrease during the same time period.     Ironically companies in the past did not necessarily want to directly invest in the “cause” of cause marketing. More specifically, companies want to avoid becoming associated with controversial causes because taking any point-of-view on an issue could potentially alienate customers and depress revenues.  This has started to change with sports playing a central role. Both Nike’s endorsement deal with Colin Kaepernick and Dick’s Sporting Goods’ decision to remove assault rifles from stores after the shooting at Marjory Stoneman Douglas High School in Parkland were clear examples of companies openly and substantively supporting controversial “causes.” Nike has seen an estimated  31% increase  in online sales since the beginning of the deal. Dick’s saw its stock increase 21% in the  immediate time period  after making the decision so that the financial impact “wasn’t nearly as severe as feared.”  Both Nike and Dick’s operate in a similar competitive consumer products environment as Gillette where brand perception plays an important role in customer purchasing behavior. Not only are women an increasingly a large portion of the shaving market but also women have traditionally been significant purchasers of men’s razors as part of their families’ larger household spend. These factors are key reasons why  Gillette  has targeted women for years even if the company’s tagline has been “the best a man can get.”  Gillette’s Super Bowl film creates an interesting challenge for sports organizations. Gillette is a well-known sports sponsor, most famously for its Gillette Stadium naming rights partnership with the New England Patriots. The connection between the film’s timing and the Patriots has been discussed throughout social media channels. Yet, the Patriots have little (if any) control over Gillette’s choices for its marketing campaigns while still having to understand its impact. For example, Gillette’s film has generated over 11 million views and almost 400 thousand more down votes than up votes even though it has only been on YouTube for three days at the time of this post being published.   Cause marketing campaigns will not always have this type of response. In fact, this should also be a positive development for sports organizations. Companies increasingly want to invest in causes that their customers are passionate to increase engagement and differentiate themselves from the competition. As we have shown in  previous posts , many companies’ customers are passionate about sports. This enables sports properties to be likely recipients of new cause marketing dollars.  The overall takeaway, however, is companies are likely  increasingly  going to put more resources into cause marketing because it has a tangible ROI and ROO impact. While corporate partners will always want to have a strong partnership with sports properties, companies will likely continue to put leagues, teams, and athletes at the center of conversations around controversial issues.  This requires properties to take a proactive approach in monitoring the conversation around their partners because they will be directly impacted. B6A’s  Social Sentiment Analysis Platform (SAP)  is designed to evaluate conversation in social media in both owned and earned accounts. In particular, SAP uses natural language processing (NLP) to “read” posts to determine positive or negative lifts while also examining the value of overall post engagement. By being proactive, sports properties will be best prepared to deal with the different impacts of cause marketing campaigns.

BY ADAM GROSSMAN

Cause Marketing’s Impact On The Sports Industry

One the most common reasons that companies want to partner with sports properties is to leverage their brand equity with leagues, teams, athletes, and events. As more companies pursue cause marketing, however, sports properties now will have to examine these partnerships with these companies in new ways. The most recent example is Gillette’s “Short Film” posted on YouTube as part of the company’s Super Bowl “the best a man can be” campaign.

      How In-Game Betting Broadcasts Impact Sponsorship  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      NBC Sports Washington Plus will  carry  an “interactive, alternate telecast of the Wizards-Bucks game” on January 11th. This will be the first of eight broadcasts that will have “statistics, odds and point spreads that run alongside game action.”  The goal of these  broadcasts  is “to give fans a little taste of what they can expect and maybe explain to them what predictive gaming is,” said Mark Friedman, director of creative services and advanced technology for NBC Sports Washington. To accomplish this goal, NBC Sports has set up a promotion where fans can make a “bet” for free for the chance to win $500.   NBC Sports’ primary motivation is aligned with that of sports organizations more generally when it comes to legalization of sports gambling. More specifically, fans that make bets are more likely to be engaged in sports content. In NBC Sports’ case, the more fans that watch games, the higher the carriage fees are that teams can charge cable, satellite, and / or streaming providers.  The potential increase in media rights deals is one reason that  Mark Cuban  said that many professional sports organizations values should double with the legalization of sports gambling. This can occur even if sports leagues cannot charge an  integrity fee  on betting transactions.   For example, media rights agreements are currently one of the (if not the) largest sources of revenue for leagues and teams. Even though sporting events have been consistently some of the most popular content on television, one concern was that ratings in “ traditional sports ” had been declining.  One way to continue to maximize the growth of this revenue stream is to continue to maximize audience growth.   Legal sports gambling provides the catalyst for this potential audience growth. The thesis is that fans will be figuratively more invested in sports content if they literally have an investment in a game or event.  Some  have even attributed the NFL’s increase in ratings in 2018 in part to sports gambling although it is likely too early to make a definitive statement on the matter.  Higher ratings, however, is only one reason that legalized gambling with have an increasingly important impact on sports sponsorship. Fan engagement is a key driver of sports sponsorship spend and is one of the critical reasons that companies partner with leagues, teams, athletes, and events. The question is what does engagement mean from both a quantitative and qualitative perspective and how does that impact sponsorship metrics when it comes to sports gambling.  The NBC Sports in-game promotion is a good example of the evolving definition. NBC Sports is not only trying to maximize the size of its live broadcast audience but also looking to connect with fans as much possible in social and digital channels via owned and earned accounts. NBC Sports can now leverage sports gambling to generate new content that will increase the quantity of conversation before, during, and after a game for its owned accounts / platforms.   This enables fans and the media to talk about NBC Sports and its partners from their accounts / platforms even when the game is not happening because the new storylines that come from sports betting outcomes. Tracking these types of increases in conversation from a volume, sentiment, engagement, and awareness perspective is one reason why Block Six Analytics (B6A) examines owned and earned media conversation through our  Social Sentiment Analysis Platform (SAP) .   However, sports organizations should not only bet on an increase in the quantity of sports fans because companies will not only be interested in the number of newly engaged sports fans. In our  Corporate Asset Valuation  model (CAV), B6A shows the importance of both quality and quantity in sports sponsorship.   Legalized sports betting will provide an increase in the types of demographics that companies are looking to target to increase revenue and achieve their brand goals. In particular, studies have shown that legalized sports betting will  bring  “increased fan engagement from younger, more affluent adults.” Higher engagement with these types of fans should have a tangible impact on the top-line revenue of companies that are or should be looking at sports sponsorship.   Having the unique ability to engage with lucrative demographics should be at the heart of what buyers and sellers of sports sponsorship should be looking for in a partnership. The ability of legalized gambling to increase fan engagement maximizes the probability for sports rights holders and partners to achieve this goal.

BY ADAM GROSSMAN

How In-Game Betting Broadcasts Impact Sponsorship

NBC Sports Washington Plus will carry an “interactive, alternate telecast of the Wizards-Bucks game” on January 11th. This will be the first of eight broadcasts that will have “statistics, odds and point spreads that run alongside game action.” Higher ratings, however, is only one reason that legalized gambling with have an increasingly important impact on sports sponsorship.

      The Importance Of Proactive Purchasing Analysis In Sponsorship  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      In a  post  earlier this week in his  The Sports Biz  blog, industry thought-leader Darren Heitner analyzed ROKiT’s growing investment in sports sponsorship. For example, the company is already the current jersey patch partner of the Houston Rockets and is the official wireless partner of the Los Angeles Chargers (full disclosure: the Chargers are a B6A partner).   One critical reason Heitner featured ROKiT is that the  company  “partnered with the Rockets and Chargers before it even had a product to sell, and justifies the spend based on the fact that those opportunities may not have been present if it waited until true launch.”  Why would a company spend money on a partnership before it had a product to sell? For context, ROKiT is part of ROK Bands its core product will be mobile devices selling at lower price points than competitors with unique features that  include , “NASA patented technology, life services like roadside assistance and telemedicine, and a 3D screen.” ROKiT will begin selling its phone to customers in 2019.   ROKiT is pursuing a strategy that is becoming more common for companies that partner with sports organization where companies want to target potential customers before they make a purchasing decision. ROKiT’s Chief Marketing Officer specifically sees alignment between the company’s target demographic and the sports audience and is seeking deals to maximize brand awareness with fans.   ROKiT understands that for its mobile device buyers to consider its new line of phones they first need to be aware that the company has entered this space. In our Block Six Analytics (B6A)  Corporate Asset Valuation Model  (CAV), we show how maximizing brand awareness, engagement, and sentiment increases the likelihood of purchase intent and a purchasing decision. ROKiT’s deals with the Rockets and the Chargers are designed to increase the probability that its target customer will interact with the brand because its target customer is a sports fan.  ROKiT is not the only company employing this proactive strategic approach to sports sponsorship. In a recent post for  AdAge , Turner Sports vice president of property marketing and corporate partnerships, Will Funk, focused on Geico’s relationship with esports. As Funk states, “For example, car insurance may not come to mind when thinking about competitive esports. Yet, GEICO has had a multiyear investment as one of the largest brand proponents of the sport, adopting the tone and culture of the community from early on. The young millennial esports  fan is likely in, or soon to be in, the market for a car . It's actually a perfect fit. [emphasis added].” Geico’s goal is similar to ROKiT’s goal of engaging with customers before they make a purchasing decision.  Companies will always be looking for ways to leverage sports partnerships to drive current top-line revenue growth and maximize their brand goals. Increasingly, however, these companies realize that they need to be proactive today to drive a future purchase. Sports rights holders have the unique ability to help companies achieve this goal given their demographic profile and ability to connect with their fans with sponsorship inventor that can maximize the likelihood of a future purchasing decision.  

BY ADAM GROSSMAN

The Importance Of Proactive Purchasing Analysis In Sponsorship

In a post earlier this week in his The Sports Biz blog, industry thought-leader Darren Heitner analyzed ROKiT’s growing investment in sports sponsorship. For example, the company is already the current jersey patch partner of the Houston Rockets and is the official wireless partner of the Los Angeles Chargers (full disclosure: the Chargers are a B6A partner). One critical reason Heitner featured ROKiT is that the company “partnered with the Rockets and Chargers before it even had a product to sell, and justifies the spend based on the fact that those opportunities may not have been present if it waited until true launch.” Why would a company spend money on a partnership before it had a product to sell?

      Shared Customers, Strategy Key to Allegiant, MiLB Partnership  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
         One way that sports sponsorships differ from traditional advertising is that they can create a two-way beneficial relationship where shared customers can lead to a shared strategy from which both the buyer and seller directly benefit through a partnership. Allegiant’s new credit card partnership with Minor League Baseball (MiLB) is an example of how this occurs.  Allegiant was an airline founded in 1997 that struggled at first to gain traction. In the early 2000s its senior leadership team recognized that the  company  “needed to be more than a 'me too' competitor” and used a form of judo strategy to achieve this goal. The core idea of judo strategy is to take a competitor’s strength and turn it into a weakness that can be used to your advantage.    That is exactly what Allegiant airlines has done to be successful. The core strategy of many larger airlines is to  focus  on the business traveler, to provide as many direct flights as possible from big cities, and to use hubs to connect to smaller markets. This approach enables airlines to achieve success targeting the customers and routes that can provide the most profits. Business travelers typically are less price sensitive (i.e. the priority is to get to a specific destination at a specific time over a specific price) and there are more business customers in large cities.     This is also the approach that attracts the most competition and is most replicated in the industry. Allegiant realized that it could not compete with larger, well-funded competitors using this strategy. Instead, it recognized that targeting leisure travelers in underserved cities looking for direct flights could be a profitable approach for the company even with low-cost tickets. It also realized that larger airlines would not compete for this demographic because they had committed their capital and strategic resources specifically to not target this customer. Allegiant’s positioning became a catalyst for the company to quickly become a market leader with this customer segment and to make it one of the fastest growing airlines.  This positioning has also enabled Allegiant to  sell  “third-party travel products, such as hotel rooms, rental cars and hotel shuttle products and  show/park tickets  bundled with the purchase of air transportation [emphasis added]” to this customer base. Airlines as a whole are trying to increase revenue by selling third-party products to customers. Selling these products has helped to fuel Allegiant’s rise, as the company has seen a 23.8% compound annual growth rate (CAGR) from 2005-2017 from these offerings.   Selling third-party products, however, is not unique to Allegiant. Most, if not all, of the company’s larger competitors offer these types of products, including credit cards. To continue with a comparable growth rate in the future, Allegiant needed to develop third-party products that would specifically resonate with its core customers. That is exactly where the credit card partnership with MiLB comes into play. MiLB teams’ customers are similar to Allegiant’s customers and MiLB teams’ strategies often look similar to Allegiant’s strategy.   More specifically, MiLB teams often are located in “underserved” cities and employ judo strategy to achieve to achieve their goals. In our book   The Sports Strategist: Developing Leaders for a High-Performance Industry  , my co-authors and I highlight the Dayton Dragons MiLB team and its approach to selling season tickets. Many major professional sports teams are focused on selling full-season ticket packages to lock-in as much revenue as possible. Dayton used a form of judo strategy by determining what games fans could attend and developing season ticket packages that fit its fans’ needs. Dayton could use this strategy in large part because it had a smaller venue and a smaller target market than major professional teams. Its positioning played a critical role in the Dragons having a 1,000+ game sellout streak that  continued into the 2018 season.    This example creates the foundation for the strategic fit for an expansion of the Allegiant / MiLB partnership. The new  Allegiant World Mastercard ® “will enable fans to gain rewards specific to their favorite MiLB teams and local communities.” These rewards should uniquely resonate with Allegiant’s customer base of leisure travelers that want direct flights and entertainment options for underserved cities. This is not a specific reward that necessarily makes sense for larger airlines or larger sports leagues to offer because it will not resonate as well with their customers.  MiLB can potentially increase its fan base by providing a credit card with travel options that are specifically designed for the needs of its core customers in smaller cities. The easier it is for leisure fliers to get to MiLB ballparks through Allegiant, the more likely its fans will value its rewards (potentially including tickets, merchandise, and concessions) and increase engagement with its teams. Both Allegiant and MiLB can work together as partners to leverage each other’s assets to grow revenue with a shared customer base and strategy.   Recognizing fit to maximize partnership success is at the core of B6A’s  Corporate Asset Valuation Model (CAV)  analysis. In particular, we focus on how specific relationships can generate revenue growth for specific companies given their specific needs. The Allegiant / MiLB example highlights why we take this approach and recommend that buyers and sellers of sports sponsorship should use a similar form of analysis.    

BY ADAM GROSSMAN

Shared Customers, Strategy Key to Allegiant, MiLB Partnership

One way that sports sponsorships differ from traditional advertising is that they can create a two-way beneficial relationship where shared customers can lead to a shared strategy from which both the buyer and seller directly benefit through a partnership. Allegiant’s new credit card partnership with Minor League Baseball (MiLB) is an example of how this occurs.

      WHICH OF THE COLLEGE FOOTBALL PLAYOFF TEAMS IS THE MOST LIKABLE, ACCORDING TO TWITTER?  BY USA TODAY     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
       Block Six Analytics    Social Sentiment Analysis Platform    examined the favorability of Twitter conversation for schools competing to make the College Football Playoff for    USA Today   . A sample of this analysis is included below. The full post can be seen on the USA Today Sports    site   .   Twitter users and members of the College Football Playoff committee share positive feelings about the national semifinalists.  An analysis by Block Six Analytics of 75,000 tweets from Sunday until Tuesday based on percentage of positive posts ranks the top four teams in the exact order as the playoff committee: Alabama with 65.57 percent positive tweets, followed by Clemson (65.22), Notre Dame (60.31) and Oklahoma (46.77). Those numbers also mirror expectations for the semifinals with Alabama and Clemson expected to advance to the national title game.  “The number of impressions is only one component in evaluating social media conversation,” said Adam Robbins, B6A’s head of corporate sales. “Understanding sentiment and engagement is crucial in measuring social media value, especially related to sports. It allows teams, leagues and brands the ability to identify topics, trends and people that are generating the most interest and value for their organization.” 

BY USA TODAY

Which of the College Football Playoff teams is the most likable, according to Twitter?

Twitter users and members of the College Football Playoff committee share positive feelings about the national semifinalists. An analysis by Block Six Analytics of 75,000 tweets from Sunday until Tuesday based on percentage of positive posts ranks the top four teams in the exact order as the playoff committee: Alabama with 65.57 percent positive tweets, followed by Clemson (65.22), Notre Dame (60.31) and Oklahoma (46.77). Those numbers also mirror expectations for the semifinals with Alabama and Clemson expected to advance to the national title game.

      The Brooklyn Nets, Juventus F.C. Cross-Over   BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      For the  first time  ever, a Serie A soccer team will collaborate with an NBA team when the Brooklyn Nets will have a “special themed” Juventus F.C. night as part of its December 7th game against the Toronto Raptors. More specifically, “a watch party will be held for Juventus’ domestic fixture against rivals Inter Milan, with the match shown on screens in the New York venue” before the game against the Raptors. In addition, the Barclays Center will be adorned with Juventus “branding” that night as well including that “the stadium’s outside lighting will also promote the Juventus brand.”    Why would the Nets and Juventus agree to do this, besides the fact that they share similar team colors? The answer likely focuses on increasing revenue through better targeting of the U.S. fan base. In particular, European teams appear to see an advantage in targeting specific cities and regions rather than relying on national activations.   It is true that the European leagues have been successfully making inroads into the U.S. for years through television broadcasts like the Premier League now on NBC Sports. In addition, European sides have played exhibition games in the U.S. for years with La Liga taking the step of scheduling a regular season match in Miami for the first time in January 2019 featuring  Barcelona , “as part of a 15-year deal struck between La Liga and entertainment company Relevent to play one Spanish regular-season game in the U.S. every year.”    Arguably all of these activations, however, are focused on a league building a national or larger audience in the United States. Teams are looking at taking a different approach. While this may be the first time a Serie A team and an NBA team have worked together it is not the first time this type of collaboration has occurred in the U.S. In November 2017, Schalke 04 and the St. Louis Blues partnered together for  activations  in the city for the match against rival Borussia Dortmund.   In last week’s post we talked about the importance of the marginal fan as  central component  of the Ticketmaster, Fanatics deal. These are fans that can be persuaded to make a purchasing decision or increase brand engagement through marketing or advertising. It is likely that both Juventus and Schalke have identified Brooklyn and St. Louis, respectively, as specific areas in the U.S. where they can increase their fan bases. Each time they have or will create unique experiences with local teams to target these fans.   How could Juventus or Schalke identify these areas / teams as good partners for this type of collaboration? One possible way is through social media account analysis. Our  Social Sentiment Analysis Platform  (SAP) can use Twitter to analyze the followers of specific accounts for demographic information including age and gender. We then compare the demographics of the followers from each account to determine overlap.    In the table below you can see a comparison of the Nets and Juventus and why this partnership is a good fit from our SAP results. Brand means a company or business that follows an account rather than an individual person.        

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     We have not worked directly with any of the teams mentioned in the post, so we do not know exactly what analysis they did to determine why these cities would be a good fit. However, it is likely that both Juventus and Schalke did something similar to an SAP analysis to determine that Brooklyn and St. Louis, respectively, were good cities to target. Leveraging the relationship that one team has with its fans is a similar approach that other teams can use to target new fans in a different market. 

BY ADAM GROSSMAN

The Brooklyn Nets, Juventus F.C. Cross-Over

For the first time ever, a Serie A soccer team will collaborate with an NBA team when the Brooklyn Nets will have a “special themed” Juventus F.C. night as part of its December 7th game against the Toronto Raptors. Why would the Nets and Juventus agree to do this, besides the fact that they share similar team colors? The answer likely focuses on increasing revenue through better targeting of the U.S. fan base. In particular, European teams appear to see an advantage in targeting specific cities and regions rather than relying on national activations.

      Fanatics, Ticketmaster Find Insights Through Data Analysis  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Fanatics and Ticketmaster agreed to  sell  verified tickets and merchandise on each other’s sites earlier this week. While there are many interesting components to this deal, one driving factor for the new partnership is using data to drive incremental revenue growth.    In the book   The Sports Strategist: Developing Leaders for a High-Performance Industry  , my co-authors and I talk about how data mining can be used for sports organizations to target the marginal fan. This often means examining data to identify current or potential customers that are likely to make a purchasing decision in the near-term if targeted at the right time with the right message to drive the right call-to-action.    Fanatics and Ticketmaster have identified a clear opportunity to identify and monetize the marginal fan. More specifically, it is easy to see that fans looking to buy a team’s merchandise on the Fanatics site should be more likely to purchase a ticket to a game or sporting event on the Ticketmaster site than the average person and vice versa. Having more granular data on what and how frequently customers buy merchandise can help Ticketmaster both identify customers to target and what messaging will specifically resonate with those customers.    Fanatics and Ticketmaster’s new relationship is a good example of the importance of data-driven sports partnerships that should be applied outside of ticketing and merchandise. In particular, one key reason to partner with a sports property is to generate lift from an economic and engagement perspective. Both Ticketmaster and Fanatics are driving tangible lift in both areas by partnering with each other because they are increasing the probability of reaching their target demographics.     Using data to drive  incremental growth  is at the heart of Block Six Analytics’ (B6A’s) product offerings. Buyers and sellers of sports sponsorship use B6A’s Corporate Asset Valuation Model (CAV) within our  Partnership Scoreboard  platform to identify fit between partnership activations and a company’s business and brand goals. The CAV examines how effectively a partnership with a sports property enables a company to better reach its customers in the right channel with the ability to drive tangible business results.    One of the new ways B6A can use data to identify these opportunities is using our  Social Sentiment Analysis Platform  (SAP) to determine the demographics of partners and properties by looking at Twitter accounts. More specifically, B6A can look at the follower activity on Twitter to predict the age and gender breakdowns of those accounts.    We completed a sample of analysis of AT&T and Notre Dame to illustrate how this information can be applied to a sponsorship analysis. The  average wireless customer  is between 43-49 years old with AT&T's average wireless customer being 46.6 years old. SAP found that Notre Dame Football Twitter followers are 45.4% more likely to be ages 44+ than AT&T’s current followers. Therefore, AT&T can potentially leverage a relationship with Notre Dame to better target and engage its wireless customers through a Twitter campaign.     The key to this example is that a potential Notre Dame sponsorship is a particularly good fit for AT&T given its customer base that drives current top-line revenue for the company in its Entertainment Group and Consumer Mobility business units. Having specific insights for specific companies about specific partnerships is really where data-driven analysis provides significant benefits to both partners and properties. This is the type of information should be at the heart of any conversation about sponsorship ROI.    

BY ADAM GROSSMAN

Fanatics, Ticketmaster Find Insights Through Data Analysis

Fanatics and Ticketmaster agreed to sell verified tickets and merchandise on each other’s sites earlier this week. While there are many interesting components to this deal, one driving factor for the new partnership is using data to drive incremental revenue growth. In the book The Sports Strategist: Developing Leaders for a High-Performance Industry, we talk about how data mining can be used for sports organizations to target the marginal fan. This often means examining data to identify current or potential customers that are likely to make a purchasing decision in the near-term if targeted at the right time with the right message to drive the right call-to-action. Fanatics and Ticketmaster have identified a clear opportunity to identify and monetize the marginal fan.

      Warriors Sell More By Selling Out  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      One well-known strategic challenge sports organizations face is monetizing their venue throughout the year. More specifically, the MLB, NBA, NHL, and NFL play 81, 41, 41, and 8 regular season home games respectively where the teams have maximum seating (and sometime standing room only) capacity that limits the number of tickets they can sell.   One lesser-known challenge is that sports organizations do not fully utilize much of their venues even on game days. More specifically, most fans spend much of their time in venues watching games from their seats. That means locations throughout the arena are often unused for much of the game because fans are understandably focused on game action.  The Golden State Warriors have discovered a potential solution to this problem. The team is now offering an " In The Building " pass for $100 per month. Pass holders can enter Oracle Arena to access to the arena's bars and restaurants but the pass does not grant seating access or a view of the court.     Teams have been working with their partners to create unique experiences within their venues. In a  recent post , we talked about how the Devils in particular have already sold to both William Hill U.S. and Caesars Entertainment branded betting hospitality locations in the Prudential Center. The Detroit Lions have created the  Miller Lite Taproom  as unique social space at Ford Field.   A potential problem with these new locations is that it requires fans to make a choice to leave their seats to enjoy the experience of these locations. The In The Building pass should solve this problem by selling passes to fans that are specifically interested in going to these hospitality areas. This enables teams to better monetize their fan base on game days while also helping partners maximize foot traffic at their hospitality locations.  The Warriors created the In The Building pass in large part because the team had  sold out  for 300 consecutive games and has a 44,000 person season-ticket waiting list. However, this monthly pass could actually increase ticket sales for teams that implement this idea without being in the Warriors enviable position.  The proliferation of mobile devices has enabled teams to create new ticket offerings to customers. In particular, teams have offered fans ticket upgrades often through their  mobile app  for fans to purchase better/upgraded seats when they are at the venue.   One of the original reasons to do this was to increase season-ticket purchases. More specifically, fans would be more willing to buy season tickets if they knew they could relatively easily sell the tickets for games they could not attend. Exchanging these tickets directly with a team through an app provided teams with more direct control over the secondary (i.e. resale) ticket market while also increasing their revenue from their primary distribution channel (i.e. season tickets).  A problem was that teams would often be limited in their potential addressable market to current ticket holders (i.e. to upgrade a seat for which a fan needed a ticket in the first place). The monthly pass increases the potential audience size that can purchase ticket upgrades. The fact that the fans are already at the venue means it is likely that they would be much more willing to buy a seat upgrade (since they do not have a seat already). If the venue has no seats available then they can still enjoy all of the hospitality locations they were planning to attend anyway.   It is ironic that a solution that was designed because no season tickets were available to Warriors games could help other teams sell season tickets. Yet, this is exactly the type of solution that can work for teams, fans, and partners because sports organizations are experts at creating unique experiences. By maximizing the number of people in the building, teams can better monetize venue assets in ways that work for all sports audiences.

BY ADAM GROSSMAN

Warriors Sell More By Selling Out

One well-known strategic challenge sports organizations face is monetizing their venue throughout the year. More specifically, the MLB, NBA, NHL, and NFL play 81, 41, 41, and 8 regular season home games respectively where the teams have maximum seating (and sometime standing room only) capacity that limits the number of tickets they can sell. One lesser-known challenge is that sports organizations do not fully utilize much of their venues even on game days. More specifically, most fans spend much of their time in venues watching games from their seats. That means locations throughout the arena are often unused for much of the game because fans are understandably focused on game action. The Golden State Warriors have discovered a potential solution to this problem.

       Embiid Is Early Candidate For NBA MVP   BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      One of the biggest debates every year in the NBA is which player should win the most valuable player (MVP) award. In particular, the media and fans alike often have heated arguments based on their own unique definition of what the term “valuable” means. For example, does value mean the best player on the best team or can a player on a bad team still win the award given his performance?   Trying to make the intangible more tangible is one of the key priorities for Block Six Analytics. With our  Corporate Asset Valuation  Model (CAV), we determine a specific value for a specific sponsorship by applying how a company makes money and what a company’s marketing / brand goals are to a specific partnership. In essence, we look at how what is most important to the company translates to each sponsorship activation.   We wanted to apply the same logic to players as we use for partners. More specifically, what is most important to teams is how does each player help that team win and generate revenue. Our  Revenue Above Replacement  (RAR) model specifically answers these questions by looking at an athlete’s on-court and off-court performance.   For this post, we are going to specifically look at our on-court metrics called B6A Wins. We use multi-factor regression analysis to determine which factors contribute to winning and how much each factor contributes using advanced analytics from  Basketball Reference  as a baseline. For the NBA, we found that these factors best determined the number of team wins:    True Shooting Percentage    Total Rebound Percentage    Assist Percentage    Steal Percentage    Usage Percentage    Defensive Plus / Minus       

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     Joel Embiid came out on top of the early season 2018-19 rankings. 2019 B6A Wins shows our projection for each player’s performance for the entire year. 2018 B6A Wins YTD shows the player’s impact on the number of team wins so far in the season. While Russell Westbrook is behind Kevin Durant in B6A Wins YTD, Westbrook is projected to surpass Durant by the season’s end.   To provide context to these numbers, the table below shows the final results for the 2017-18 season.      

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     While James Harden won the MVP award last year, he was only fifth in B6A Wins. LeBron James should have been the MVP last year if you define value by the player that contributed the most wins to his team. In addition, the 2018 B6A Wins tally shows that Embiid and Nicola Jokic are projected to have far better performances this year than anyone had last year.   This piece of analysis leads to an important point. RAR can not only project a player’s B6A Wins through the end of the 2018-19 season, but it can also project a player’s performance through the 2023-24 season. However, there are factors that are difficult to account for in this or any model for player performance including injuries, coaching changes, trades, and more. Therefore, this analysis requires a margin of error when evaluating the results.    What is arguably more important, however, is the process of determining what value means. From B6A’s perspective, creating clear metrics with tangible factors for analysis that can be examined and communicated is critical to answering some of the toughest questions in sports such as determining the NBA MVP. 

BY ADAM GROSSMAN

Embiid Is Early Candidate For NBA MVP

Trying to make the intangible more tangible is one of the key priorities for Block Six Analytics. With our Corporate Asset Valuation Model (CAV), we determine a specific value for a specific sponsorship by applying how a company makes money and what a company’s marketing / brand goals are to a specific partnership. In essence, we look at how what is most important to the company translates to each sponsorship activation. We wanted to apply the same logic to players as we use for partners. More specifically, what is most important to teams is how does each player help that team win and generate revenue. Our Revenue Above Replacement (RAR) model specifically answers these questions by looking at an athlete’s on-court and off-court performance.

      Gambling Is A Safe Bet For Sponsorship But Not For The Reasons You May Think  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Arguably the best bet to make on the legalization of sports gambling in the U.S. was its impact on the growth of sports sponsorship revenue. In the past week alone, the  NHL ,  New York Jets ,  New Jersey Devils , and Philadelphia  76ers  have all signed new betting partnerships.  What is more surprising is the structure of these deals and what they do not include. In particular, many of these new deals are not exclusive to a particular company, not exclusively focused on sports, and not exclusively focused on the U.S.   The NHL’s deal announced this week with MGM Resorts is similar in structure to the deal the company struck with the  NBA  from a data perspective. The company will have non-exclusive  rights  to “NHL's proprietary game data generated by the league's state-of-the-art tracking systems.” Data is required for sports gambling to exist with both sides of a betting transaction needing to rely on information to determine the winner and loser for the transaction. This enables MGM to credibly say to sports bettors that it has access to the most accurate NHL information.     However, MGM is not the only company that will have this opportunity because of a non-exclusive agreement. This relationship enables the NHL to maximize its partnership revenue by potentially selling the same data to multiple gambling companies.   This non-exclusive approach is also being used at the team level. Both the Devils and Jets have multiple relationships with gambling partners. The Devils in particular have already sold to both William Hill U.S. and Caesars Entertainment and both will have branded betting hospitality locations in the Prudential Center. The hospitality activations are particularly interesting because on-site gambling at the arena is not legal. Both William Hill and Caesars are using the hospitality locations to facilitate betting on their mobile applications.   MGM is taking a non-sports specific approach when it comes to its mobile strategy in its new relationship with the Jets. The company is sponsoring a game within the Jets official team app that only allows players to win prizes (and not money). As MGM's president of interactive gaming Scott Butera  said , "We can promote our app and our casino, which is valuable to us because it could lead to a sports betting customer, even though the NFL won't allow us to have a specific call to action. We love the demographic that Jets fans provide.”  It is atypical for a partner to agree to a sponsorship where it admits that its stated intention (i.e. potentially increasing sports gambling revenue) only “could” result in action because the rights holder does not allow for “a specific call to action.” However, MGM recognizes that its relationship with the Jets can help the company reach its target customer for its non-sports businesses.   More specifically, MGM can leverage a sports betting opportunity to better engage with its demographics for its non-sports businesses. This is a crucial point that gambling companies currently (and likely in the future) make the vast majority of their revenues from non-sports betting. Prior to the legalization of sports gambling, it was very difficult for gambling companies to activate partnerships outside of daily fantasy sports. Sports audiences are lucrative gambling, and not just sports betting, customers. Now gambling companies have better access to these customers.     The 76ers relationship with Caesars requires that it have activations solely focused on “non-sportsbook” activities because sports gambling is still not legal in Pennsylvania at this time. The 76ers arrangement also shows another interesting twist to legalization of sports gambling in the U.S. The team demonstrates that gambling companies do not need to solely focus domestically when it comes to these relationships. Caesars Entertainment Chief Experience Officer Michael  Marino  “emphasized the global reach of the 76ers as an appealing aspect of the deal. The 76ers, he said, have a large fanbase in China where the team competed in two preseason games earlier this month.”  It may seem counterintuitive that companies would focus on reaching international markets because of the legalization of sports gambling in the U.S. While gambling is illegal in much of China, Macau is the  largest gaming hub  in the world, generating $3.3 billion in revenue in August alone. Companies have used NBA teams to promote products in China for years with the  Houston Rockets  being one of the teams most well-known for these partnerships. The legalization of sports gambling in the U.S. and the change in rules by domestic leagues to allow sports gambling partners should continue to enable sponsorships with international reach.    The legalization of sports gambling will continue to have a big impact on sports. The reason that sports gambling sponsorships can be non-exclusive to a specific company, non-exclusive to sports, and non-exclusive to the U.S. is that companies see new ways to generate incremental revenue growth. The organizations that see the scope of the opportunity will be the ones that can best benefit from the growth of sports gambling.  

BY ADAM GROSSMAN

Gambling Is A Safe Bet For Sponsorship But Not For The Reasons You May Think

Arguably the best bet to make on the legalization of sports gambling in the U.S. was its impact on the growth of sports sponsorship revenue. In the past week alone, the NHL, New York Jets, New Jersey Devils, and Philadelphia 76ers have all signed new betting partnerships. What is more surprising is the structure of these deals and what they do not include. In particular, many of these new deals are not exclusive to a particular company, not exclusively focused on sports, and not exclusively focused on the U.S.

      WHY DAVID FALK JOINED B6A  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Learn why David Falk decided to join Block Six Analytics (B6A) as an advisory board member and investor. Falk, the founder of FAME, has long been recognized as one of the sports industry’s leading figures and most talented innovators. During a 40 year career, he has represented the top players in NBA history and has negotiated record-breaking contracts for his clients, both on and off the court. His vision and ability to read the changing landscape helped to shape the evolution of the business of sports over the past 30 years.          </iframe>" data-provider-name="YouTube"

BY ADAM GROSSMAN

WHY DAVID FALK JOINED B6A

Learn why David Falk decided to join Block Six Analytics (B6A) as an advisory board member and investor. Falk, the founder of FAME, has long been recognized as one of the sports industry’s leading figures and most talented innovators. During a 40 year career, he has represented the top players in NBA history and has negotiated record-breaking contracts for his clients, both on and off the court. His vision and ability to read the changing landscape helped to shape the evolution of the business of sports over the past 30 years.

       Abbott Demonstrates The Value of Experiential Marketing At The Chicago Marathon   BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Can you keep up with Eliud Kipchoge? That was the question that Abbott Health posed at the recent 2018 Chicago Marathon expo. Attendees of the 2018  Chicago Marathon  expo were asked to try to maintain Kipchoge’s 2:01:39 marathon pace for “only” 200 meters. Some were successful while many others unfortunately achieved “ hilarious results .”  Abbott Health’s goal clearly was not to make attendees, even marathon runners, potentially look foolish by trying to keep up with Kipchoge even for a short time. Instead, the company was likely trying to create an authentic connection with an audience likely to contain its target demographic in a way that would encourage people to engage with the brand.  That is the promise of experiential marketing with sports. More specifically, sports create unique environments where companies can reach their customers in novel ways not available to other rights holders.   Abbott is a good example. Abbott’s primary  mission  is to “[help] the people who use our products achieve better health.” The Chicago Marathon enabled Abbott Health to create a novel activation to reach this audience. Many marathon runners complete races knowing that they are not going to set a world record pace like Kipchoge. They run marathons to achieve better health and look for companies that can help achieve these goals.  It is not just the runners themselves. The marathon is one of the biggest events annually attracting thousands of spectators and hundreds of companies all focused on health. This audience is clearly a good fit for Abbott so it makes sense that the company would want to sponsor this event.  While audience fit is critical, engaging with a company’s target demographic is arguably more important. Most marathon runners and their families understand they will never really have the opportunity to run against a world-record holder. Top runners often  start  earlier than other participants and can be 30 minutes into a race before the average runner even begins.    The Chicago Marathon expo provided Abbott Health with an opportunity to create this experience via the expo. Its customers could not only literally see Abbott’s commitment to better health, but it is also enabled the company to showcase the  Abbott World Marathon Majors  series to an audience that is naturally interested in these events. More specifically, this activation creates an opportunity for Abbott to have a longer impact with this demographic beyond the Chicago Marathon itself.     The challenge with experiential marketing in the past has been quantifying the ROI of this type of sponsorship. More specifically, experiential marketing activations usually only reach a relatively small audience. Around 45,000 runners compete in the Chicago Marathon and have to attend the expo to pick up their raceday information. Even accounting for their families, corporate attendees, and  social  /  earned media  exposure, Abbott’s activation at the marathon reaches a smaller audience as compared with other larger sporting events.    The size of the audience should definitely be a consideration when factoring in the ROI of a sponsorship. However, the quality of the audience to the company and level of engagement is equally, if not more, important. As demonstrated in previous B6A  blog posts , companies are looking for ways to have deeper interactions with audiences that will drive significant business results. Abbott’s activation at the Chicago Marathon expo demonstrates a great way for a company to leverage a rights holder’s assets to achieve this goal.    This type of activation should and likely does deliver a significant ROI to Abbott. Yet, standard impression-based metrics (i.e., CPM) would not account for the full value because the quantity of people at the expo is relatively low. That is one of the core reasons why we built B6A’s  Corporate Asset Valuation  Model (CAV) to focus on both quality and engagement. Looking at fit and level of interaction an audience has with a sponsorship activation are central components to how we calculate value. Abbott’s Chicago Marathon expo activation is a good example of why we took this approach

BY ADAM GROSSMAN

Abbott Demonstrates The Value of Experiential Marketing At The Chicago Marathon

Can you keep up with Eliud Kipchoge? That was the question that Abbott Health posed at the recent 2018 Chicago Marathon expo. Attendees of the 2018 Chicago Marathon expo were asked to try to maintain Kipchoge’s 2:01:39 marathon pace for “only” 200 meters. Abbott Health’s goal clearly was not to make attendees, even marathon runners, potentially look foolish by trying to keep up with Kipchoge even for a short time. Instead, the company was likely trying to create an authentic connection with an audience likely to contain its target demographic in a way that would encourage people to engage with the brand.

      The Challenge Of Not Measuring Company-Specific Sponsorship ROI  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      When looking at the quality of sponsorship activations, the Block Six Analytics (B6A)  Corporate Asset Valuation  model examines three factors:    Initiatives – What is a company trying to accomplish?    Demographics – Who is a company trying to target?    Channels – What is the best way to reach those demographics?     Using this framework is a good approach to analyzing a recent  CNBC  post with the headline, “Sponsorship spending to hit $66 billion worldwide, but most firms don't know if it really works.” This post focuses on research by agency MKTG and data from the World Advertising Research Center (WARC) which resulted in a central finding that “only 19 percent of sponsorship professionals say they can measure return on investment.”  What is CNBC trying to accomplish with this post? The answer is likely to bring awareness to the idea that companies can spend millions of dollars in sponsorship and not understand if it is driving tangible business results. It is difficult to think of another advertising or marketing channel with this level of spend that to date has not often required a detailed ROI analysis.  Whom is CNBC trying to target? CNBC’s target  demographic  is an “audience of business professionals and affluent investors.” This includes CEOs, CFOs, CMOs, and senior decision makers at companies that are traditionally large sports sponsorship spenders. This audience is used to using detailed quantitative analysis to determine the effectiveness of advertising and marketing spend.   What is the best way to reach these demographics? Business professionals and affluent investors often turn to companies like CNBC, Fox Business Network, and Bloomberg for news. In particular, these professionals and investors are looking for insights that can improve their job performance. Sports business content typically is not something that resonates with the audience as much as content focused on how sponsorship, advertising, and marketing impact a company’s performance.   CNBC could create this type of content because this post reaches its target demographics and contains insights that will attract them to its site. This article would not resonate with all audiences nor is CNBC’s goal to always reach a large audience. In fact, CNBC would have a difficult time competing with other news websites on audience size. CNBC can primarily monetize its website by offering advertisers the ability to reach an attractive target demographic through content.   Understanding a company’s business is not always a key component of sponsorship analysis. MKTG and WARC  found  that “37 percent of people have a standard way to measure the impact of sponsorship, with digital and social media analysis popular methods…[with] 73 percent of those surveyed by MKTG saying ‘brand awareness’ is the main point of sponsorship.”  Brand awareness and digital / social metrics scored so highly because they are relatively easy to track. In particular, standard metrics such as cost per thousand impressions (CPM), cost per click (CPC), and cost per engagement (CPE) will tell companies if they are reaching a large audience in an effective way. Reaching a large audience is often the most effective away to build brand awareness.  Is reaching a large audience actually important to a company in generating a positive ROI? The answer is not really for many of the companies that are the largest spenders for sports sponsorship. Many companies like  McDonald’s  and  Anheuser-Busch  have near ubiquitous brand awareness with their customers. Increasing that is less likely to drive sales growth or engage with their customer. This is the primary reason that both companies have changed their approach to sponsorship spend recently to be focused on driving revenue.       For some companies, increasing awareness is critical because many members of its target demographic did not previously know who the company is or what products it sells. Our analysis of FirstEnergy’s relationship with the Cleveland Browns in a previous blog post shows when this can be  effective .     However, it is not effective for everyone. Senior business leaders are asking how a sponsorship is going to maximize a company’s ability to directly generate revenue growth and better engage with their target customers. Only nineteen percent of sponsorship professionals having an answer to this question is a fundamental issue for the $66 billion sponsorship industry.     B6A tools do directly address this issue. Our  Partnership Scoreboard  examines how specific companies generate ROI from specific activations with specific properties. It enables both buyers and sellers of sports sponsorship to see how ROI is generated in near real-time using our technology and analytics. Our approach enables sponsorship industry professionals to communicate directly with business leaders in ways that will clearly answer the ROI question.

BY ADAM GROSSMAN

The Challenge Of Not Measuring Company-Specific Sponsorship ROI

Senior business leaders are asking how a sponsorship is going to maximize a company’s ability to directly generate revenue growth and better engage with their target customers. Only nineteen percent of sponsorship professionals having an answer to this question is a fundamental issue for the $66 billion sponsorship industry.