StubHub Beyond Shows Importance Of Creating The Right Loyalty Plan  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      StubHub announced a new customer loyalty program earlier this week called  StubHub Beyond  which offers its highest revenue customers several new benefits. These include a dedicated support team, access to VIP events, and the ability to secure refunds up to seven days before an event. StubHub Beyond will initially only be available to customers that spend over $10,000 per year with the company and only in the U.S. for now, with the company looking to expand globally in the near future.   There are several interesting insights that come from the launch of StubHub Beyond. The first is that the loyalty  program  “is a first within the ticketing industry” and the company is using this as a way to “stand out among its competitors in the secondary market.”  That may seem counterintuitive because we have discussed in past blog posts, for example our post from last  week , that many companies use access to live events as a way to better engage with their customers and differentiate themselves from their competition. The apparent fact that the ticketing companies that provide access to these events have not had this type of loyalty program for their own customers is interesting.  This is all the more surprising in that this is not the first time that StubHub has had a loyalty program. From 2011-2016, StubHub Fan Rewards was a point-based program that was similar to credit card reward programs. More  specifically , “members accrue rewards based on a percentage of eligible purchases, and for every $10 earned member receive a $10 FanCode (sic) to apply toward future StubHub purchases.”     There are several studies that  show  that loyalty programs “are effective in increasing consumer purchase behaviors over time, but their impact differs across consumer segments and markets.” StubHub realized that the impact on their consumer segment to receive discounts on future purchases did not generate the results it wanted. Instead, the company wanted to create a reward program starting with what was valuable to its most-valued customers.   The events that seem to be most valuable to StubHub customers are sports-related events. The first StubHub loyalty offerings will  occur  this Thursday with a private tour of Yankee Stadium including batting cage practice. A similar event is scheduled for September at Citi Field. While StubHub is a secondary marketplace for both sports and non-sporting events, the focus on sports for the launch of the loyalty program reveals that this is where its highest-value clients can or want to spend their money.  The fact that StubHub, a company built on analytics and data, is using these events specifically targeting high-revenue clients is a good indication that other sports organizations should follow suit. More specifically, tickets to unique sporting events (e.g., access to batting cages at Yankee Stadium) is something that high-revenue customers will value. This type of experience helps partners of sports teams to differentiate themselves in crowded competitive environments.   The ability to attract and retain these clients through unique events, particularly for companies operating in a business-to-business environment, using these types of non-media assets has been difficult for buyers and sellers of sports sponsorship to value in the past. Our  Corporate Asset Valuation Model  (CAV) can do this more accurately because it prioritizes fit which maximizes the probability of driving tangible business outcomes for each company.    Loyalty programs are similar to sponsorship activation in that the most successful programs consider audience fit. StubHub Beyond also shows the importance of providing access to sporting events as way to maximize audience engagement particularly for high-value demographics.

BY ADAM GROSSMAN

StubHub Beyond Shows Importance Of Creating The Right Loyalty Plan

StubHub announced a new customer loyalty program earlier this week called StubHub Beyond which offers its highest revenue customers several new benefits. These include a dedicated support team, access to VIP events, and the ability to secure refunds up to seven days before an event. StubHub Beyond will initially only be available to customers that spend over $10,000 per year with the company and only in the U.S. for now, with the company looking to expand globally in the near future. There are several interesting insights that come from the launch of StubHub Beyond.

      How To Value The New World Of Sports Sponsorship  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Facebook Head of Industry for Financial Services Deepanjan De expressed a key insight in “The New World of Sports Sponsorship” in an article the company sponsored recently in  AdWeek . De focuses on four core activation opportunities - Pre-Event, On Site, In Venue, and From The Couch. The  thesis  of the piece is that “It’s all about engagement” and engagement primarily occurs through differentiated experiences.   It is not surprising that an article by someone who works at Facebook examines engagement in all of these activation opportunities through a technology lens. De  asserts  that “many of the old tried-and-true activations are still standard issue for sponsors—hospitality tents, product demonstrations and swag giveaways still have their place. But for a lot of sponsors, those have been supplanted by tech-enabled executions that really get at the passion that fans feel.”  There are several points of contention that sponsorship industry veterans could make with De’s claims. In particular, De’s seemingly negative connotation of “standard issue” items and the idea that tech-enable executions “really” stir passion and / or are necessary to have great experiences could be criticized particularly in the context of the first principles for “The New World Of Sports Sponsorship.”   However, De’s thesis is one that needs to be examined carefully whether one is a sponsorship buyer, seller, or agency. More specifically, De is right in that everyone needs to be able to determine if and how new technologies are good fits for a sponsorship portfolio. Yet, measurement has always been the essential challenge for new sponsorship assets.   In particular, most sponsorship models are built around quantity and reach. Yet, the primary goal has shifted to engagement with targeted audiences that can drive specific business outcomes for companies. De articulates how sports can uniquely create the experiences that generate the engagement opportunities that brands are looking for in a sponsorship.  The next step is to be able to quantify the tangible business impact of engagement and experiences in non-traditional channels and platforms. Our  Corporate Asset Valuation Model  (CAV) accomplishes this goal in a clear and concise way.   The essential CAV insight is that all sponsorship assets can be broken down into specific attributes that can be measured for their impact on the specific revenue and brand goals of the company. In particular, the CAV breaks out fit, sentiment, and engagement to determine the value of a partnership in addition to overall reach. We then can determine the value for virtually any sponsorship opportunity by using the same approach for both “standard issue” and “tech-enabled” sponsorship activations.   For example, De spotlights the American Express interactive gaming experience  that  “fused augmented reality with actual tennis play” through Fan Experience at the U.S. Open . This was the way the company  could  “up its presence with innovative benefits for both its Card Members and all tennis fans.”  It is likely that the augmented reality activation did reach a larger audience than the card members that attended the U.S. Open. De’s featuring of this sponsorship in the AdWeek article is an example of the earned media that has been generated by this tech-enabled activation. This is one way that the in-venue experience has a reach outside of the venue.  However, the larger benefit comes from differentiation in the crowded markets of both credit issuers and credit processors. American Express has built its business in large part based on its ability to provide unique experiences to its card holders and use those to command a higher willingness-to-pay for access to these product offerings.   More specifically, card holders saw significant value through the unique experiences provided by American Express. This also enabled American Express to charge merchants a higher fee for processing transactions because it had lucrative customers for stores that accepted American Express.  In the “standard issue” world of the past, the unique experiences often meant providing items such as travel perks and high-touch concierge service. Other credit card companies now have the capability to offer a comparable experience to American Express. In the “tech-enabled” world of the future, the American Express augmented and virtual reality experiences create the opportunity to attract and retain customers. American Express can use its U.S. Open sponsorship to show how it is creating differentiated experiences at the events that most resonate with its card holders.   This type of analysis is at the heart of the CAV. We can break down an augmented reality partnership into its component attributes. Augmented reality will maximize the probability that American Express’s target customer (fit) will spend a longer period of time interacting (engagement) with the brand in ways that drive lifts (perception in the probabilities of customer acquisition and customer retention)  and revenue.   The impact of fit and engagement on brand perception and driving revenue become the framework for measuring value. More specifically, virtually every tech-enabled and standard-issue sponsorship activation can be broken into component parts and tangible business metrics. The decision then becomes which type of activation is right for the company.   The “New World of Sponsorship” is not what is ushering in the change in understanding of sponsorship value. Tech-enabled activations are the Trojan Horses for a shift in focus to fit and engagement rather than myopically examining reach when it comes to sponsorship. Having the tools to understand how value is created in the “New World” will be the key to success for sponsorship buyers, sellers, and agencies.

BY ADAM GROSSMAN

How To Value The New World Of Sports Sponsorship

Facebook Head of Industry for Financial Services Deepanjan De expressed a key insight in “The New World of Sports Sponsorship” in an article the company sponsored recently in AdWeek. De focuses on four core activation opportunities - Pre-Event, On Site, In Venue, and From The Couch. The thesis of the piece is that “It’s all about engagement” and engagement primarily occurs through differentiated experiences. De’s thesis is one that needs to be examined carefully whether one is a sponsorship buyer, seller, or agency.

      Raptors Maximize Partnership Revenue By Listening  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      While the Toronto Raptors almost secured their first NBA Championship in team history on Monday night, the team has already secured a championship-level approach to partnership sales strategy. Even though the Raptors play in a different country from every other NBA team, the approach the team employs has  caused  “everyone [to think] we’re on a different planet.”   What does Jeff Deline, chief revenue officer for Maple Leaf Sports and Entertainment (MLSE), mean when he says that the NBA team that MLSE owns operates on a different planet? The two more tactical approaches the team has employed are  eliminating  “sales commission for selling a corporate partnership and a draft process that determines which executives are authorized to sell specific sponsor categories.”    However, the more strategic approach that the Raptors  employ  is “listening and understanding a brand’s problems before actually pitching their plans.” The Raptors will now wait until the “fifth or sixth” meeting before crafting a pitch for a potential partner in a process that is “almost like you’re not even selling.”   The Raptors are employing a form of behavioral economics  developed  in large part by Kurt Lewin and Daniel Kahneman that both seems obvious and is counter-intuitive. The most effective way to incentivize someone to change or employ a certain behavior is by removing obstacles or barriers that prevent that behavior from occurring.   One the biggest obstacles from a company perspective is to be able to answer the question: “does this partnership fit my business needs from an economic or brand perspective?” Companies can receive hundreds of pitches from sports properties containing assets ranging from more traditional activations such as signage or television commercials to more experimental activations such as augmented or virtual reality. The question becomes which activations will best help the company achieve that goal?   Answering this question has been a challenge for sports properties. Unfortunately, a sales commission structure typically incentivizes sales teams to speak to as many companies as possible, spend less time with each potential partner, and create similar proposal templates to determine prices and values. While this may seem like an optimal strategy, it is often inefficient because the sales team will frequently be speaking to companies that are uncertain if they are a good fit for a partnership and unlikely to work with a property.   The Raptors solution to this problem is to ask partners what they need rather than “telling” them what they need. If a company knows up front that the Raptors are developing a solution tailored to their needs, it removes the uncertainty barrier. This enables a brand to make a purchasing decision more quickly and / or at a higher dollar amount because it is significantly more confident that its partnership is built for its specific business and brand goals.    Listening does not always require speaking directly to companies. Social media listening tools, such as our  Social Sentiment Analysis Platform  (SAP), enable teams to determine potential partners’ customer demographics and what they are saying about the brands. These insights provide sports properties with ability to better identify companies potential partners based on their ability to reach and influence these companies’ target demographics. Proactively identifying fit also reduces uncertainty during the new partnerships sales process because companies will know they are more likely to reach the right audience to achieve their revenue and brand goals.         The Raptors approach should not be limited to the new sales process. Our  Corporate Asset Valuation Model  (CAV) and  Partnership Scoreboard  enable both companies and properties to understand the value of specific activations to specific companies across multiple different activation types. The CAV is focused on demonstrating the fit of a partner for each company based on its specific revenue and brand goals. The Partnership Scoreboard aggregates data from different sources and displays insights for buyers and sellers of corporate partnerships in one location. This enables what is communicated in a sales process to be tracked in a clear and concise way in the account management and renewal phases of an agreement, further eliminating the uncertainty barrier.   This strategy may not work for every team or company. Deline  recognizes  that the Raptors on-court success has had a positive impact on partnership revenue. In addition, commissions are often critical for retaining sales talent even though the Raptors claim to have few problems with employee retention with their new strategy. This likely stems from increased employee satisfaction that comes from the ability for the partnership team to have more meaningful conversations with a fewer number of companies to generate increased revenue.  The Raptors are not living on another planet with this approach. In fact, the team appears to be applying frequently researched behavioral economics concepts to corporate partnerships. Eliminating as much uncertainty as possible from the sales, account management, and renewal process should incentivize the behaviors that maximize value for buyers and sellers of corporate partnerships.

BY ADAM GROSSMAN

Raptors Maximize Partnership Revenue By Listening

While the Toronto Raptors almost secured their first NBA Championship in team history on Monday night, the team has already secured a championship-level approach to partnership sales strategy. Even though the Raptors play in a different country from every other NBA team, the approach the team employs has caused “everyone [to think] we’re on a different planet.” What does Jeff Deline, chief revenue officer for Maple Leaf Sports and Entertainment (MLSE), mean when he says that the NBA team that MLSE owns operates on a different planet?

      Salah Shows Athletes Can Be Superheroes In Influencing Behavior  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Fighting crime is typically a central component of the superhero narrative that appeals to fans of movies, comics, and graphic novels. While athletes are often portrayed as superheroes, it is typically for their “super human” on-field accomplishments rather than any ability to fight crime.  Liverpool F.C. forward Mo Salah, however, could be one of the first athletes to change that narrative. A   study   from Stanford University’s Immigration Policy Lab found that “hate crimes fell 18.9 percent in Merseyside County relative to a synthetic control” since 2017 when Salah was signed by Liverpool.   As the authors of the study wrote, ”This decline was more extreme than we would expect based on chance alone, and the decrease in hate crimes was more pronounced than the decrease in any other crime category. Taken together, the evidence points to Salah’s rise in prominence causing a decrease in hate crimes in Liverpool F.C.’s home county.”  The authors of this study were looking to see if a “ celebrity ” could potentially reduce hate crimes in the area against a prejudiced group. In Salah’s case the impact is specifically focused on the reduction of hate crimes against Muslims in Merseyside County in England by  looking  at “police data, 15 million tweets from soccer fans and took a survey of more than 8,000 Liverpool fans.”  Salah was selected because he has arguably been a superhero on the field for Liverpool having won two consecutive Golden Boots for scoring the most goals in each of the past two seasons in the English Premiere League. This included helping to lead Liverpool to a UEFA Champions League Final victory on June 1st.   However, Salah’s ability to be a more “traditional” superhero in helping to fight crime is really extraordinary. B6A’s  Social Sentiment Analysis Platform  (SAP) can provide some insight into why this is the case.     

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


    

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      A recent study commissioned by the Welsh Government  found  that “the majority of hate crime offenders in the UK are white, male and under 25.” Our SAP demographic analysis demonstrates that Salah is able to disproportionately reach this audience by looking at his 8.9 million Twitter followers. In particular, 30.1% of his followers are under 25 years-old and 82.8% are male. Salah also reaches a significant portion of both Caucasian and non-Caucasian audiences.    This combination puts Salah in the position of reaching a large audience that is the right fit to target with positive, engaging content in ways that could have at least some impact in reducing hate crimes. The Stanford study  found  that “Liverpool fans halved their rate of anti-Muslim tweets compared with other top-flight English clubs — a drop from 7.2 percent of all tweets about Muslims to 3.4 percent.”  The “ Salah effect ” does provide new evidence on the extraordinary ability for athletes to influence behavior as we have highlighted in past B6A blog  posts . While definitely less important from a moral / social perspective, influencing the behaviors of target audiences is one of the most important attributes in successful partnerships. In fact, fit and lift are central components of our  Corporate Asset Valuation (CAV) Model .    We understand that even athletes with comparable profiles to Salah are not always necessarily going to be able to single-handedly reduce crime like a superhero. However, it is clear that athletes can have tangible impacts on important outcomes and need to be considered as an important part of any influencer marketing or partnership campaign strategy.

BY ADAM GROSSMAN

Salah Shows Athletes Can Be Superheroes In Influencing Behavior

Fighting crime is typically a central component of the superhero narrative that appeals to fans of movies, comics, and graphic novels. While athletes are often portrayed as superheroes, it is typically for their “super human” on-field accomplishments rather than any ability to fight crime. Liverpool F.C. forward Mo Salah, however, could be one of the first athletes to change that narrative.

      Norway Benefits From Empiricism In Youth Sports  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      On the May 21st episode of   Real Sports  , correspondent John Frankel explores “The Norwegian Way”. Frankel’s focus is to explore the question of how a country of 5.3 million people is becoming a global sports powerhouse. This includes everything from winning the most medals in the 2018 Winter Olympics to having   top-ranked  beach volleyball teams.   The answer from the segment is based on Norway’s empirical approach to youth sports. More specifically, Norway has changed or eliminated many of the standard practices used to develop top athletes in many other countries by looking at actual performance. The most stunning finding appears to be that the approach used by these other countries is fundamentally the wrong strategy to take with youth sports.   Central to Norway’s approach is essentially that children younger than the age of 12 should have as much fun playing as many sports as possible. There is frequently no score kept during games and every child has to participate. Norway also does not allow for rankings to be kept with athletes under the age of 12.  Only after the age of 12 does Norway allow for athletes to “specialize” in a sport. The country provides the coaching, training, and equipment resources comparable to top sports programs in other countries.   “The Norwegian Way” defies the conventional wisdom on specialization in youth sports. Throughout the world, children are increasingly encouraged to focus on one sport, often chosen by their parents. The archetype for this approach is Tiger and Eldrick Woods where Tiger started playing golf as a toddler and focused solely on the sport to become the most dominant player in the world.   This is also at the heart of the 10,000-Hour Rule made famous by Malcolm Gladwell. The rule’s underpinning comes from a study that purportedly showed that the most successful violinists were the ones that practiced for the most time. The takeaway was that it essentially would take 10,000 hours to become an expert in something with the best performers practicing even more than that length of time.  The only problem with the 10,000-Hour Rule is that the exact opposite appears to be true. In the book   The Sports Gene: Inside the Science of Extraordinary Athletic Performance  , author David Epstein shows that the actual finding of the violinist study is that people that are better at something practice more often because they receive positive feedback. In a sports context, Epstein shows that there are athletes that are naturally better than other people. These athletes will become better at their sport at a faster pace with practice. This positive feedback makes them want to practice more so they can keep getting better.   Norway found that using this approach was the most successful way to create world-class athletes particularly in a country with a small population. Parents and / or the state should not make children practice as much as possible on one sport as early as possible. The best thing the state can do is let children figure out what sports they are good at by experimenting with as many sports as possible. Then athletes are more likely to participate in more rigorous training sessions in their teenage / early adult years which leads to the development of world-class athletes.  Challenging conventional wisdom is not an easy thing to do. As the  Real Sports  piece demonstrates, Norway has taken a significant amount of criticism for employing this new approach. It is also early in the process where the outsized rewards like winning the most Olympic medals or having one of the best beach volleyball teams has come to fruition.   However, Norway also shows the importance of leveraging data and empiricism when operating in an environment with competitors who have structural advantages. More specifically, Norway does not have the population size or the resources that the larger countries it competes against have on a global scale. The country needed to find ways where it could create a competitive advantage and experiment with new approaches to see if they could work.   The same type of logic can be applied to other parts of the sports industry, particularly when it comes to sponsorship valuation. In particular, conventional wisdom is that sponsorship assets are valuable because of their ability to generate the highest number of impressions. This is comparable to the conventional wisdom that population size is the best way to determine if a country will be successful in sports.  B6A’s  Corporate Asset Valuation  Model (CAV) helps to show why size should not be the only thing that matters. In particular, corporate partners are looking for the assets that can help them reach the right people with the right message in the right channels. The right people are typically the ones that can help drive revenue growth based on a company’s specific products or services. The right message is the one that can create authentic engagement with these customers. It is not the size of the asset that should solely drive value but the fit of the asset to the company.   This is the approach that enables the “Norways” of the sports industry to compete with larger teams, leagues, athletes or events. It also shows that larger organizations should not rely on the “10,000-Hour” rule approach when valuing sponsorships by focusing solely on quantity metrics. All sports organizations can benefit from an approach that understands the drivers of sponsorship ROI just like all countries can benefit from the “The Norwegian Way.”

BY ADAM GROSSMAN

Norway Benefits From Empiricism In Youth Sports

On the May 21st episode of Real Sports, correspondent John Frankel explores “The Norwegian Way”. Frankel’s focus is to explore the question of how a country of 5.3 million people is becoming a global sports powerhouse. This includes everything from winning the most medals in the 2018 Winter Olympics to having  top-ranked beach volleyball teams. The answer from the segment is based on Norway’s empirical approach to youth sports. More specifically, Norway has changed or eliminated many of the standard practices used to develop top athletes in many other countries by looking at actual performance.

      The Potential Limits To Growing Sponsorship Revenue From Gambling, Cannabis  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      If you were to say that there were organizations that would benefit from sports gambling and cannabis even a few years ago, you would more likely be thinking of organized crime rather than state governments. Not only are both achieving legalization throughout the U.S., but also governments are making them important parts of their strategies for how to generate new  tax revenues . For example, two of the primary components of new Illinois governor J.B. Pritzker’s  budget  proposal to help address budget deficit and pension liabilities are legalizing sports betting and adult recreational use of marijuana.  The increasing number of states approving one or both of these items should be a boon for sports partnership revenues. We have documented the impact of gambling on  sports sponsorships  that include that new companies that can partner with sports organizations for the first time and the overall increased fan engagement with lucrative demographics for corporate partners.  Cannabis oriented products (including marijuana) would seem to be following a similar path. More specifically, sports organizations often compete where a cannabis-based product is legal and athletes often use these products. As of  March 2019 , “a whopping 82 percent of [MLB, NBA, NHL, and NFL] teams (101 of 123) are playing in areas where their employees can legally purchase either medicinal or recreational marijuana.”   The Toronto Wolfpack  became  the “first pro sports team to launch a line of cannabis products.” The rugby team launched CBD aka cannabidiol products in part because its chairman  claims  “Rugby is a gladiatorial sport. You have your fair share of bumps and bruises and for recovery and inflammatory pain management CBD products are very, very effective.” The UFC also recently announced a  new  “exclusive, multi-year, multi-million dollar, global partnership to advance CBD research” with Aurora Cannabis Inc.  Authenticity is critical to successful partnerships. There are a growing number of  current and former players  that use cannabis-based products for pain management and are willing to publicly talk about these real and/or perceived benefits even though these products are still largely considered banned substances by most major professional sports leagues. It is difficult to think of a more authentic endorsement for a product or company than continuing to support something that could get you banned from playing the sport you love.    Yet, gambling also demonstrates one of the potential hurdles to cannabis-based products becoming ubiquitous to sponsorship. The primary goal of B6A’s  Corporate Asset Valuation Model (CAV)  is to determine the fit of partnerships between sports organizations and sponsors based on the specific return on investment (ROI) for these companies.   Both gambling and cannabis-based products could be “too good” of a fit with sports fans and deliver “too high” (pun not intended) of an ROI to these companies. More specifically, gambling companies became one of the largest sponsors of European sports teams because this is one of the best ways to target fans and increase use of their products. This can increase the probability of fans becoming addicted to gambling particularly younger audiences that are attracted to teams and athletes.   The United Kingdom, Belgium, Italy, and Austria all  instituted or are considering laws  to restrict gambling sponsorships in large part to address this concern. Even before sports gambling is officially legalized in most of the U.S., the American Gaming Association (AGA) has already  issued  its “Responsible Marketing Code for Sports Wagering” to provide guidelines for “marketing content” to proactively address these issues.   Many people both inside and outside of the sports industry, including  NFL Commissioner Roger Goodell,  believe  that marijuana also has an “addictive nature.” He also stated, “I want to make sure that the negative consequences aren't something that is going to be something that we'll be held accountable for some years down the road.” While CBD products appear to  differ  from marijuana in that “CBD is purported to provide certain health-related benefits, such as pain relief, while lacking the psychoactive properties of THC,” they are still on the banned lists of most major sports leagues’ products lists because many perceive them to also be addictive.   This does not mean that both gambling and cannabis will not have a long-term significant impact on domestic sports sponsorship. However, the efforts to restrict gambling partnerships abroad have already had and will continue to have an impact on gambling partnerships domestically as demonstrated by the AGA report. Similar types of efforts will potentially be applied to cannabis-based products as well. It is important to note that increasing legalization of both items does not mean instant or unlimited new partnership revenues.

BY ADAM GROSSMAN

The Potential Limits To Growing Sponsorship Revenue From Gambling, Cannabis

If you were to say that there were organizations that would benefit from sports gambling and cannabis even a few years ago, you would more likely be thinking of organized crime rather than state governments. Not only are both achieving legalization throughout the U.S., but also governments are making them important parts of their strategies for how to generate new tax revenues. Yet, gambling demonstrates one of the potential hurdles to cannabis-based products becoming ubiquitous to sponsorship.

      NHL Scores With Cup Confidential Campaign  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      What content works best on social media? This is a question we receive frequently from current and potential clients particularly as social media becomes an increasingly important component of sports properties and their partners’ marketing strategies.    The NHL’s Cup Confidential campaign is an example of an effective answer to this question.  Cup Confidential  is a video series where players from the NHL teams in the playoffs shoot videos of their daily lives to share on social media. This campaign “is part of the NHL’s efforts to elevate and highlight the personalities of its on-ice stars.”   One reason to emphasize the players’ personalities is that the NHL can then maximize the value of its social media content. Social media is not unlike other types of activations that B6A evaluates with our  Corporate Asset Valuation Model  (CAV). More specifically, the goal of social media is to maximize the quantity, quality, and engagement of a targeted audience through video, image, and text content.   What the NHL as well as other teams and leagues have discovered is that athletes are good at maximizing all three levers to drive value. From a quantity perspective, the 100+ videos of the Cup Confidential campaign have generated  58 million impressions  across multiple different social media platforms.  While this is a significant number of impressions, where focusing on players can really help the NHL drive value is on the quality and engagement side. For example, our  Social Sentiment Analysis Platform (SAP)  found that the NHL can often more effectively target high income demographics than its partners can on their own.   However, individual players can be even more effective at targeting than the NHL. Our SAP platform examined Twitter follower demographics for the Boston Bruins’ Brad Marchand versus the NHL and versus the Twitter population overall because Marchand was featured in one of the Cup Confidential videos.     

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     This example demonstrates another reason why featuring players as social media influencers can be an effective strategy for league or team campaigns. In particular, Marchand’s ability to reach more high-income demographics that are a particularly in-demand audience for companies increases the value of a potential partnership with the league.  Marchand is also an example of how the NHL can more effectively engage this audience through social media than other channels. Engagement is increasingly becoming important to companies because it can drive tangible business outcomes.   A recent study published by professors at Stanford University, University of Pennsylvania, and Carnegie Mellon University of 782 companies found  that  “inclusion of widely used content related to brand personality—like humor and emotion—is associated with higher levels of consumer engagement (Likes, comments, shares)…[There] are benefits to content engineering that combines informative characteristics that help in obtaining immediate leads (via improved click-throughs) with brand personality–related content that helps in maintaining future reach and branding on the social media site (via improved engagement).”  The Marchand post specifically and the NHL Cup Confidential campaign more generally are examples of this type of content that could fit within this type of “content engineering.” For example, the Marchand post on the NHL’s Facebook channel generated over 8,900 likes, shares, and comments with an engagement rate that is both  higher  than the media average specifically and the industry average overall.      The Cup Confidential campaign helps validate the NHL’s decision to focus on players particularly as relates to maximizing social media value. Partners should also examine the value of athletes in this influencer marketing context. While players can often help teams and leagues maximize the number of impressions to a lucrative audience with engaging content, they can accomplish many of the same goals for companies as well. Having athlete activations, particularly within social media, should be an important consideration for companies as part of a larger partnership with a league or team.

BY ADAM GROSSMAN

NHL Scores With Cup Confidential Campaign

What content works best on social media? This is a question we receive frequently from current and potential clients particularly as social media becomes an increasingly important component of sports properties and their partners’ marketing strategies. The NHL’s Cup Confidential campaign is an example of an effective answer to this question. Cup Confidential is a video series where players from the NHL teams in the playoffs shoot videos of their daily lives to share on social media. This campaign “is part of the NHL’s efforts to elevate and highlight the personalities of its on-ice stars.”

      NASCAR Bets On Fan Engagement With Genius Sports  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      NASCAR recently  announced  a new partnership with Genius Sports to be the official provider of racing data to licensed sportsbooks. This enables Genius Sports to provide the NASCAR official data necessary to for sportsbooks to provide, “up-to-the-minute odds and a slew of traditional wagers and prop bets.”  This partnership deal may seem like NASCAR is putting the cart before the horsepower. For example, only  one-tenth  of one percent of all sports bets ($208.1 thousand out of $154.8 million) has been wagered on auto racing from June 5, 2018 through April 28, 2019. NASCAR could rightfully counter that this deal provides the necessary fuel (last racing pun we promise) to increase the number of bets given that Genius Sports can provide the information sports bettors need to get more involved with the sport.   However, NASCAR’s deal is not only about increasing the number of sports bets by current sports bettors. As Genius spokesman Chris Dougan  said , "What could happen in the next five seconds? What could happen in the next lap? It opens the door to a massively exciting new market. NASCAR is now starting to recognize this is a huge fan engagement tool. We give them that distribution and that reach."  When the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), many thought that this would be a  boon  for sports leagues and teams. While leagues have been unable to charge the integrity fees to monitor sports bets that they originally would have preferred,  leagues and teams  are signing on new partners endemic to gambling.   Yet, the NASCAR and Genius Sports partnership highlights the bigger opportunity which is potentially for sports right holders to sign more non-endemic sponsors because of gambling. One of the most common questions that Block Six Analytics (B6A) hears from current and potential clients is how do we demonstrate to non-endemic partners or companies unfamiliar with our sport how they will generate value through a new relationship.  Gambling and non-endemic partnerships demonstrate one of the benefits of using B6A’s  Corporate Asset Valuation  (CAV) model. One critical reason that companies want to partner with sports organizations is the level of fan engagement. In particular, fans have a figurative investment in their favorite leagues, teams, athletes, and / or events.   Making it easier for people to gamble on NASCAR makes it easier to change figurative investments into literal ones. This makes it more likely that the exact people companies want to reach are now more likely to be involved with a sport. These  fans  are often disproportionately more diverse, higher-income, and / or more highly educated audiences that companies want to target.   The CAV model translates increased engagement into tangible return on investment (ROI) and return on objective (ROO) metrics. In essence, no partner is “non-endemic” if the company can understand the specific economic and brand impact that having increased fan engagement has for each company given its business goals. The CAV enables our team to develop the insights within the  Partnership Scoreboard  that enables our clients to communicate this value to non-endemic partners.   While sponsorship plays arguably as big role in NASCAR as in any other sport, connecting with non-endemic partners is a challenge not unique to NASCAR.  Betting enables having an increasing number of these demographics to have an increased likelihood of engaging with a game, contest, or event because they are literally invested in the outcome. Companies of all types can be the beneficiaries of this engaging content by activating partnerships with sports organizations in ways that maximize the likelihood of connecting with their audiences.

BY ADAM GROSSMAN

NASCAR Bets On Fan Engagement With Genius Sports

NASCAR recently announced a new partnership with Genius Sports to be the official provider of racing data to licensed sportsbooks. This enables Genius Sports to provide the NASCAR official data necessary to for sportsbooks to provide, “up-to-the-minute odds and a slew of traditional wagers and prop bets.” NASCAR’s deal is not only about increasing the number of sports bets by current sports bettors. As Genius spokesman Chris Dougan said, "What could happen in the next five seconds? What could happen in the next lap? It opens the door to a massively exciting new market. NASCAR is now starting to recognize this is a huge fan engagement tool. We give them that distribution and that reach."

      New Partnerships Highlight The Increasing Value Of Women’s Sports  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Over the past three months,  companies  including Barclays, Budweiser, and AT&T have announced new sponsorship relationships across a variety of women’s sports. Nike hosted the 2019 WNBA draft as part of its partnership with the WNBA to be the league’s exclusive on-court uniform and clothing retailer. The WNBA also announced a new multi-year agreement significantly increasing the number of league games that will be broadcast annually.   The relatively recent influx of sponsorship dollars into women’s sports is a significant reversal of  historical  trends. A 2018 Statista  report  found that women’s sports receive only 0.4% of total sports sponsorships. More specifically, sports sponsorships are a $106.8 billion global market and only $427 million was spent on women’s sports. The lack of investment was in part due to the lack of exposure. In 2014  only  3.2% of “broadcast time” was dedicated to women’s athletics.    There have been two factors driving the increasing interest in women’s sports partnerships. The first reason is that investments in women’s sports at both the youth and professional levels are paying dividends especially since the passage of Title IX. Over 3.3 million girls are now participating in youth sports in the U.S., which is an all-time high.   This increase in youth participation has come in large part because successes of female athletes at the highest levels including professional sports leagues, the Olympics, and the Women’s World Cup. For example, the 25.4 million viewers for the 2015 Women’s World Cup final  made  it “the most-viewed soccer game ever in the United States–men’s or women’s–by a giant margin” at the time.  More specifically, girls now have role models that demonstrate the achievement in their sports both on and off the field. Not only can women compete professionally but they can also become brand ambassadors for global companies. As former WNBA superstar Sheryl Swoopes  said , “When I was 16, I didn’t have that dream because I had no idea that [it] was even possible. Now these girls see it as a possibility to be part of brands like Nike.”  Nike is an important company to highlight when looking for the second main reason for the increase in partnership spend in women’s sports. Companies with significant business-to-consumer (B2C) revenue streams like Nike want to be able to reach women to drive revenue to their businesses. Nike’s CEO Mark Parker has specifically stated that female consumers  represent  a “tremendous opportunity moving forward… [in part because] the women’s business is over-indexing our men’s growth.” The company is launching new products including yoga pants and sports bras in an increasing number of sizes in part after seeing double digit growth in the Air Jordan business for women.    It’s not just Nike that is looking at women to fuel growth. Companies with significant consumer revenue streams including Barclays, Budweiser, and AT&T represent a larger push by businesses to more aggressively target female consumers to fuel growth. According to a report in 2017 by the Women’s Foodservice Forum, McKinsey & Co. and LeanIn.org, women make  85%  of all consumer purchasing decisions. A 2013  report  by Ernst & Young stated women would have an effect “at least as significant as that of China and India” on the global economy over the next ten years.  It is not a coincidence that Nike, Barclays, Budweiser, and AT&T are some of the earlier movers in increasing their women’s sports investment. A key element in the Block Six Analytics  Corporate Asset Valuation Model  (CAV) is examining the fit of partnership activations to a company’s ROI and ROO goals. These companies have already made multi-million dollar commitments in sports partnerships because of their belief that these investments will help them generate revenue and better engage with new or existing customers. In fact, Budweiser has publicly moved to a  performance-based  model when evaluating sponsorships to measure performance in a similar way that the CAV does (Budweiser is not a B6A client).    These companies likely see the unique opportunity that exists in women’s sports. Women’s sports partnerships have historically been underinvested, are relatively inexpensive compared to many men’s sports investments, and can help these companies reach female consumers. More specifically, many companies are looking to more aggressively target female customers at the same time that women’s sports popularity is achieving record numbers. This dynamic demonstrates why these recent deals should be the start of growing investment in women’s sports partnerships.  

BY ADAM GROSSMAN

New Partnerships Highlight The Increasing Value Of Women’s Sports

Over the past three months, companies including Barclays, Budweiser, and AT&T have announced new sponsorship relationships across a variety of women’s sports. Nike hosted the 2019 WNBA draft as part of its partnership with the WNBA to be the league’s exclusive on-court uniform and clothing retailer. The WNBA also announced a new multi-year agreement significantly increasing the number of league games that will be broadcast annually. There have been two factors driving the increasing interest in women’s sports partnerships.

      Moneyball Has Come To Jeopardy!  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Jeopardy! and sports competitions seem to have little in common. Outside of the occasional sports category or a celebrity Jeopardy! episode featuring athletes, brains and brawn rarely intersect on the popular answer and question game show.  However, that seems to have changed with the  recent run of victories  by contestant James Holzhauer since early April. Not only is Holzhauer a professional sports bettor but he has also brought a Moneyball approach to the gameshow. In addition, Holzhauer reinforces the notion that fans appear to like dominant champions rather than competitive parity when watching competitions.   For those unfamiliar with or do not fully remember the conceit of Jeopardy!, host Alex Trebek reads clues from different categories to three contestants with each contestant having the ability to buzz-in with the correct response (which occurs in the form of a question). The contestant that buzzes in the fastest and responds correctly earns cash, with more difficult questions having higher dollar values over the course of two rounds and Final Jeopardy!. The contestant with the most money at the end of the show wins and can come back for the next episode to compete as the champion.   Can you really apply Moneyball to Jeopardy!? Even though it appears that “Moneyball of…” has been applied in every possible situation, very few contestants have actually used the optimal strategy to win as much money as possible. Past multiple-show champions have won primarily because their intellect, memory, and recall speed outpaced their competition.     Holzhauer is strong in all of these areas but what differentiates him from other competitors is the optimal selection of clues through a strategy of Daily Double “hunting.” All clues have specific dollar amounts except for Daily Doubles. Contestants can bet their entire earnings up to that point for these questions but there is only one Daily Double in the first round and two in the second round.   Most people think that finding a Daily Double happens by chance because contestants do not know in advance where they are placed and they are seemingly placed at random throughout the board. Therefore, many contestants pick clues from the same category of questions before moving on to the next one starting with easiest (least valuable) and then moving to the hardest (most valuable) questions. The show actually pauses so audiences can applaud when only one contestant responds with the correct question for every clue in a category.   What Holzhauer has shown is that this strategy does not maximize expected value because finding Daily Doubles is not completely random. Contestants should concentrate on finding Daily Doubles as soon as they have enough money to make large enough bets. “Hunting” around the board with specific dollar values across multiple categories to find Daily Doubles is the most likely way to earn the most money. As described by  Slate’s  Jeremy Faust:   In the first round, he starts with the most valuable clues ($1,000). That way, if he does not hit the Daily Double early, he is accumulating cash fast so that when he does find one, he has more money to wager. However, in Double Jeopardy!, James takes a slightly different approach, starting at the third clue in each category, worth $1,200. (Daily Doubles usually appear in the third, fourth, or fifth row, and the clues become harder the lower on the board and are more valuable, maxing out at $2,000.) This improves his chance at landing on easier Daily Doubles in the second round, in which the clues are significantly harder. Also, once he has found a Daily Double, he usually abandons the category it appeared in, because two Daily Doubles never occur in the same category.     This strategy that has been the key driver in Holzhauer’s ability to earn by far the single  highest  one-day total winnings ($131,127) and the overall highest average per-show winnings ($75,825) as of April 24th).   What is interesting about Holzhauer’s success is that it is driving Jeopardy!’s success as well. The show is generating the  highest ratings  it has achieved in years. As of yesterday, B6A’s  Partnership Scoreboard  platform has identified over 2,700 articles generating an estimated 331.5 million impressions highlighting Holzhauer’s success on the show.    That could seem counterintuitive as the best Jeopardy! episodes should be the ones when the games are the most competitive and the show hinges on the result of Final Jeopardy!. With Holzhauer that has rarely been the case. In nine of his first 11 shows, Holzhauer had the episode won prior to Final Jeopardy! because his competitors were too far behind to wager enough money to pass him. In fact, it is Holzhauer’s ability to eliminate competitive balance (in a similar manner to what past champion Ken Jennings had done) that has driven interest in the show.   We have seen similar results in sports where dominance can attract higher levels of interest from fans, media, and partners than times where there is competitive balance. In a past post for   Forbes  , I highlighted how Kevin Durant heading to the Warriors to play a Lebron James-led Cleveland team in the NBA Finals seems to have driven increased interest in the NBA at the time with other sports seeing similar results with dominant teams and players.   Not every team, athlete, or person will be capable of employing the optimal strategy, and my co-authors and I articulate that winning should not be a requirement for revenue generation in the sports industry in our book,   The Sports Strategist: Developing Leaders for a High-Performance Industry  . There has, however, been a concern about the converse scenario: The “Moneyball” of competition to find the optimal strategy will eliminate the need to watch sports because why watch if everyone knows who is going to win. Jeopardy! builds on past evidence that “knowing” who is going to win actually can be the winning strategy to increase audience engagement.

BY ADAM GROSSMAN

Moneyball Has Come To Jeopardy!

Jeopardy! and sports competitions seem to have little in common. Outside of the occasional sports category or a celebrity Jeopardy! episode featuring athletes, brains and brawn rarely intersect on the popular answer and question game show. However, that seems to have changed with the recent run of victories by contestant James Holzhauer since early April. Not only is Holzhauer a professional sports bettor but he has also brought a Moneyball approach to the gameshow. In addition, Holzhauer reinforces the notion that fans appear to like dominant champions rather than competitive parity when watching competitions.

      The Impact of Authenticity In Corporate Partnerships  BY LESLIE CERVANTES & ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      While Tiger Woods’ return to golf major championship winner grabbed many of the recent headlines, Dwayne Wade’s departure from the NBA may have been the more compelling corporate partnership activation. More specifically, Anheuser-Busch’s #ThisBudsFor3 campaign featuring Wade demonstrates the power of authenticity in connecting with audiences through corporate partnerships.  The most visible element of this campaign is a video produced by VaynerMedia and best described by Budweiser. From the company’s Twitter  account , “To celebrate his  #OneLastDance ,  @DwyaneWade  has been swapping jerseys with NBA legends. Before his final season ended, we surprised him with three more. Watch how it all unfolds.  #ThisBudsFor3 .”   The video then proceeds to show people that Wade has had significant impacts upon off the court ranging from the sister of a victim of the Parkland school shooting to someone that received a scholarship funded by Wade to his own mother. In the end, Wade’s mother talks about the impact her son had on her life, particularly after she was released from prison by  stating , “I am more proud of the man you have become than the basketball player. You are bigger than basketball.”  We used B6A’s  Media Analysis Platform  and  Social Sentiment Analysis  Platform to evaluate the effectiveness of the campaign by examining the most valuable posts across Twitter, Instagram, Facebook, and YouTube. We specifically looked at owned and earned accounts for value, reach, and sentiment for video, image, and text content to understand the wholistic value of the campaign and are displaying the results from our Partnership Scoreboard below.       

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     The metrics for the campaign are impressive, but the one that stands out the most is likely the least surprising. B6A’s sentiment scores range from -100.0% to 100.0%. Earned media posts (i.e. posts not from Budweiser accounts) had an average sentiment score of 69.6%. As context, most brands typically have sentiment scores ranging from 0.0-15.0%.   Now it could be easy to say that the campaign’s content is driving the sentiment score. More specifically, that empathetic people talking about the impact that Wade has had on their lives is the biggest driver of such a positive response.   However, the content was not guaranteed to drive positive sentiment. One of the most common criticisms of influencer marketing or athlete partnerships is that campaigns lack authenticity. More specifically, that athletes are promoting something because they are receiving compensation and not necessarily because the values of the company align with the values of the athlete. Conversely, corporate partners also often try to fit an influencer within what the company is trying to say in a campaign rather than looking at what athlete has said or done that is important to him / her.   The reason that this campaign resonates so positively with such a large audience is likely because it is authentic both to Wade and to Budweiser. As the text of Budweiser’s Twitter post states, Wade has been swapping jerseys with NBA players that are meaningful to him throughout the season. While this is more common in soccer, it is rare that NBA players engage in this activity to the point where the jersey swap has become synonymous with Wade’s final season.  While Budweiser has a number of different campaigns running at the moment, the one it is likely most well known for is “This Bud’s For You.” Budweiser more recently has used this  campaign  and ones like it to connect to Millennials by focusing on how a large company can create unique experiences. Budweiser wants its current and potential customers to associate the moments that are most valued by them with one of its alcoholic beverages.  The #ThisBudsFor3 campaign makes this concept tangible by creating an experience for Wade that is clearly memorable for him. More importantly, it focuses on what Wade finds to be personally important rather than solely focusing on athletic achievement. This enables Budweiser to create a unique experience for Wade that everyone can relate to in their own lives.   In many of our blog posts, we focus on the importance of examining data to drive the decision-making process. However, we also understand that corporate partnerships in sports can and should be different than other advertising channels. Athletes, teams, competitions, and events create unique narratives that facilitate connections with audiences in deeply emotional and personal ways. The #ThisBudsFor3 campaign demonstrates the value associated with instances when rights holders and partners understand what makes sports special and why this should be the focus of a partnership whenever possible.         

BY LESLIE CERVANTES & ADAM GROSSMAN

The Impact of Authenticity In Corporate Partnerships

While Tiger Woods’ return to golf major championship winner grabbed many of the recent headlines, Dwayne Wade’s departure from the NBA may have been the more compelling corporate partnership activation. More specifically, Anheuser-Busch’s #ThisBudsFor3 campaign featuring Wade demonstrates the power of authenticity in connecting with audiences through corporate partnerships.

      Going For The Green: Who Is The Most Likely To Win The Masters  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      One of the first things that strikes golf fans when seeing Augusta National is the color. The azaleas that permeate the golf course provide a chromatic backdrop unparalleled in golf. Yet, green is the color that matters most to golfers, sponsors and fans of The Masters. More specifically, everyone wants to see who will put on the Masters Green Jacket at the end of the first major tournament of the golfing season.   Is there a way to predict who is most likely to be wearing golf’s most famous apparel? While the term Moneyball was first coined for baseball analytics, golf is the sport that best fits the moniker. The golf ball is at the center of how players make money from their tournaments and how much partners gain exposure for their brands. Perhaps nothing better symbolizes the importance of Moneyball in golf then Tiger Woods’ famous chip on the 16th hole that dropped into the hole only after “pausing” for the Nike logo to get its closeup on screen at the 2005 Masters.   So who would Moneyball-style analytics predict is the most likely to win the 2019 Masters and how much value would be generated for that win? The Block Six Analytics (B6A) Revenue Above Replacement (RAR) model can help answer this question. The RAR is designed to look at the economic impact of both on-course and off-course performance by leveraging B6A’s proprietary machine learning technology and analytics.  For on-course performance, B6A examined several different factors using a multiple regression analysis to determine which best determine which golfers perform the best over the course of a season based on distance, accuracy, risk, and number of strokes on driving, approach, rough, sand, and putting strokes. The factors we found to best determine winning were:    Putting strokes  – how many putts per round does the golfer take as compared to other golfers    Strokes gained – how many fewer strokes a golfer takes as compared to other golfers on every shot (see this  explainer  by the PGA Tour for more details)     Driving distance  – how far does the golfer hit the ball as compared to other golfers    Performing well (or poorly) on these factors strongly correlated with the weighted average winnings a player earned per tournament per season. We used a weighted average to control for the fact that players participate in different numbers of tournaments per year.    The Masters slightly deviated from the formula used to calculate full-season earnings in that driving distance did not have a statistically significant impact on performance. To determine who is most likely to win The Masters, we examined the full season results versus how players finished for the 2015-2018 Masters. The results from B6A’s  Partnership Scoreboard  below show whom we would expect to perform the best at the 2019 Masters and their win probabilities given their performance in the 2018-19 season.     

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     Does our analysis mean that Justin Thomas should get his measurements ready for his first Green Jacket? That is probably premature. Win Probability (WinProb) is calculated by comparing Justin Thomas’ Total to the total of the entire field. While Thomas is expected to perform the best, his WinProb is 5.35% both only 0.27% greater than Xander Schauffele and 1.78% greater than the 10th ranked Tony Finau.  If Thomas does win The Masters, however, his sponsors will be the biggest beneficiaries. While Thomas would earn at least $1.98 million for winning The Masters, his apparel sponsors would generate more overall value.   We focused on apparel sponsors as they are the most visible brands associated with players during golf tournaments. We used B6A’s  Media Analysis Platform (MAP)  to programmatically identify which logo activations generated the most value for the top three players in the 2018 Masters and applied those values to our 2019 projected results. Value is determined by how long the logos appear on screen, how much of the screen the logo takes up, how close the logos are to the center of the screen, and how clear the logos are on screen.   The last part of the MAP calculation is based on how many people are watching the tournament. For this analysis, we are focused solely on linear television viewers. Winning disproportionately impacts viewership numbers in golf. Not only do broadcasts focus on the leaders of the tournament in later rounds of the tournament but viewership spikes for later rounds. For example, the second round of the 2018 masters had 4.96 million viewers while the final round had 17.63 million viewers. This means that the winners will gain the most exposure when the most people are watching the broadcast.   Going for the green has a slightly different meaning when it comes to The Masters as compared to other tournaments. While the players are going for the Green Jacket, sponsors are going for the players that can generate the most value. The B6A RAR model can help predict both outcomes. 

BY ADAM GROSSMAN

Going For The Green: Who Is The Most Likely To Win The Masters

One of the first things that strikes golf fans when seeing Augusta National is the color. The azaleas that permeate the golf course provide a chromatic backdrop unparalleled in golf. Yet, green is the color that matters most to golfers, sponsors and fans of The Masters. More specifically, everyone wants to see who will put on the Masters Green Jacket at the end of the first major tournament of the golfing season.

      LUNA Bar Scores With Equal Pay Partnership  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Arguably the biggest news coming from national Equal Pay Day on Tuesday was LUNA Bar decision to pay each of the 23 players that made the final 2019 United States Women’s National Team (USWNT) World Cup roster $31,250. This enables the USWNT players to be paid an equal amount to their counterparts on the United States Men’s National Team for participating in the World Cup.   LUNA Bar’s decision is another example of how the increase in cause marketing continues to impact the sports industry. We examined Gillette’s “the best a man can be” campaign and how companies are more frequently taking positions on social, political, and / or moral issues they have usually shied away from in the past in a  previous post . Companies were afraid that taking “sides” on an issue could alienate large swaths of current / potential customers who may not agree with their position.    More recently, companies such as LUNA have seen these issues as ways to differentiate themselves from the competition particularly in competitive categories where brand differentiation is difficult to achieve. For example, LUNA  competes  in the “bar market” where “a casual observer…may conclude that these brands seem pretty interchangeable.”   Cause marketing enables these companies to achieve becoming not “interchangeable” by taking tangible actions on an issue important to their core customers. As Clif Bar & Company (makers of LUNA Bars) Owner and Co-CEO Kit Crawford  said , “We are big fans of the U.S. Women’s National Team and were inspired to take action and make a difference that matters. LUNA Bar is honored to give these women, and women everywhere, our support. It’s what is right, but more importantly, it’s what they deserve.”  Sports provides unique opportunities for companies looking for cause marketing to develop partnerships because of the spotlight it can bring to issues. One piece of evidence supporting USWNT players’ claims that they deserve equal pay relative to the USMNT are the television ratings during the event. More specifically, the 25.4 million viewers for the  2015 Women’s World Cup final  made it “the most-viewed soccer game ever in the United States–men’s or women’s–by a giant margin” at the time.    Recognizing that the USWNT are the “ firm favorites ” to win again this year means that the team is likely to attract to similar attention. By being a partner of the USWNT, LUNA Bar has a direct platform to reach a large portion of its target audience in ways its competitors cannot. While Block Six Analytics (B6A) obviously does not endorse having a gender pay gap to create a partnership opportunity, this is a clear example of the unique value proposition that sports can provide for companies looking to use cause marketing as a brand differentiator.   How did LUNA’s customers respond? B6A does see direct lifts in sentiment, engagement and overall value. We used our  Social Sentiment Analysis Platform (SAP)  to understand LUNA Bar’s and the USWNT’s core demographics and listen to the conversation about the announcement. The results from our  Partnership Scoreboard  are below.     

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     This analysis shows that the USWNT audience overlaps significantly with LUNA Bar’s audience and was clearly engaged in the conversation surrounding this announcement. Moreover, the USWNT now has tangible, quantifiable evidence of how it helped LUNA Bar create brand differentiation to a higher number of its target customers in a highly competitive market through its partnership.    While seemingly entirely positive, LUNA Bar’s decision to close the gender pay gap for the USWNT does not come without risk. As  The Daily Beast’s  Lizzie Crocker said after the USWNT won the 2015 Women’s World Cup, “Women deserve to be treated equally in all fields. But the sports pay gap isn’t a big, sexist conspiracy. In the current economic environment, it’s not at all unfair that female athletes make less than their male counterparts. It’s simply a matter of supply and demand.”    This market-based approach to addressing these types of issues is similar to the criticism Gillette received for its cause marketing campaign. Regardless of one’s position on the gender pay gap or other issue issues, it is clear that companies are going to continue to invest in cause marketing to create brand differentiation and stronger relationships with their customers. The data shows that the sports industry is well positioned to be a primary channel for this type of investment.

BY ADAM GROSSMAN

LUNA Bar Scores With Equal Pay Partnership

Arguably the biggest news coming from national Equal Pay Day on Tuesday was LUNA Bar decision to pay each of the 23 players that made the final 2019 United States Women’s National Team (USWNT) World Cup roster $31,250. This enables the USWNT players to be paid an equal amount to their counterparts on the United States Men’s National Team for participating in the World Cup. LUNA Bar’s decision is another example of how the increase in cause marketing continues to impact the sports industry.

      Sports Invests In Live Experiences In The Age Of Streaming  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      This week’s announcement of  Apple TV+  is a show the sports industry has seen before. Not only does Apple join the ranks of Disney, Amazon, Google, and Facebook in owning streaming video platforms that can feature sports content but it also enters a space of sports-focused platforms that includes ESPN+, B/R Live, DAZN, and FloSports.   Apple’s entry into streaming video also seems like another blow to the live experience for the entertainment industry. The prevailing wisdom in content creation is that consumers want to consume content how, when, and where they want. Why go to a venue to see a performance, movie, or sporting event when the content can be delivered directly to a television or mobile device.   Apple’s launch of iTunes was arguably the turning point in the content delivery story. The iTunes Store and the ability of millions of people to legally download the specific songs they want directly to an iPod, iPhone, or iPad seemingly made both the live concert and CD obsolete. This had devastating results for the music industry with revenues  shrinking  from $38 billion in 2003 to $16.5 billion in 2013.   This revenue decline is largely attributed to the belief that the music industry failed to react to the change in audience preferences for consuming music. The “Luddites” had built a physical infrastructure around concerts and CDS that did not belong in a digital era and were not making investments in ways that could best monetize the future of music.   This made the announcement of multiple major sports venue projects around the same time that the company arguably most responsible for changes in audience consumption is launching a new streaming platform all the more surprising. This ranges from  three  venues spending millions of dollar to “replace their existing scoreboards with larger, flashier entertainment systems” to the San Diego Padres announcing a new concert  venue  at Petco Park. The announcement of a new,  $50 million  esports arena being built for the Philadelphia Fusion team is even more unexpected given that esports popularity originated from fans watching their favorite athletes and competition on streaming platforms.   Why would sports organizations be making these types of investments in live experiences in the age of streaming video and digital distribution? The music industry can serve as a guide for this rationale.  Last year  was a “record-setting year in the concert business, with more than $10.4 billion in sales, representing 152.1 million tickets.” The top-ten music tours in 2018 grossed 10% more in revenue 2018 than in 2017.   This does not necessarily mean that more people are coming to concerts than before. Concert revenues continue to increase because  ticket prices  continue to increase. This is evidence that shows that people who want to attend concerts are willing to pay an increasing amount to have the unique experience of seeing their favorite bands in person. This is occurring at the same time that iTunes and streaming services such as Spotify and Pandora continue to build  audiences .   That is a bet that the sports industry appears to be making via these venue investments. Fans that want unique experiences will pay more to attend live competitions even in the face of or because of the growth of streaming services with sports content. This should be welcome news for the teams and leagues that have struggled with the  attendance issues  in recent years.  This is also good news from a corporate partnership perspective. More specifically, the fans attending venues for games or competitions are more likely to be the fans that companies want to target. Coming to an event when they do not “have to” (i.e. they could watch the event on a streaming platform) while also potentially paying more for the experience is a clear sign of a fan’s interest in teams or athletes.   The growing importance of live events demonstrates why B6A’s  Corporate Asset Valuation Model  (CAV) examines both the quality and quantity of engagement when it comes to sports partnerships, in particular when it comes to non-media assets. More specifically, declining attendance would mean declining partnership ROI using more traditional metrics. However, companies are looking for the ability to reach an engaged, lucrative audience. Live events such as games, competitions, and concerts provide unique opportunities to achieve this goal and the CAV demonstrates that value as part of our overall partnership analysis.  That does not mean that sports industry leaders should follow the “if you build it they will come” mantra. Fans will still need to have compelling reasons to leave their homes and have a great experience while in a venue. However, the continued growth of streaming platforms may signal the renewal rather than the end of the live sports experience.    

BY ADAM GROSSMAN

Sports Invests In Live Experiences In The Age Of Streaming

This week’s announcement of Apple TV+ is a show the sports industry has seen before. Not only does Apple join the ranks of Disney, Amazon, Google, and Facebook in owning streaming video platforms that can feature sports content but it also enters a space of sports-focused platforms that includes ESPN+, B/R Live, DAZN, and FloSports. This made the announcement of multiple major sports venue projects around the same time that the company arguably most responsible for changes in audience consumption is launching a new streaming platform all the more surprising.

      Examining The New UFC, ESPN Pay-Per-View Relationship Using Data-Driven Analysis  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      UFC announced yesterday that all of its Pay-Per-View (PPV) events will be available only on ESPN+ in the United States through 2025. UFC will receive a guaranteed revenue stream worth a  reported  “hundreds of millions of dollars” while ESPN+ will sell the PPV events at $59.99 per event on top of its $4.99 monthly subscriber fee. Why is UFC making this change away from a traditional pay TV model to work with ESPN?  Data appears to be at the heart of UFC’s decision-making process for two reasons. First, UFC wanted to obtain more data about who was watching events. As UFC chief operating officer Lawrence Epstein  stated , “It’s really unlike anything we’ve had with legacy distributors like Comcast and DirecTV. The amount of data we were getting on buys from the cable industry was pretty much zero.” Second, the only data that the UFC had was bad data about its traditional model. As UFC President Dana White  said , ““Why is it  not  the right move? Cord-cutting is real. It’s scary the amount of subs dropping every year.”   The UFC’s decision to make a fundamental change its distribution model by examining data is at the heart of what is happening in the sports industry today. More specifically, sports properties, content rights holders, and corporate partners are all using data to drive strategy. In addition, White articulates the challenges that have occurred with traditional revenue streams where sports teams, leagues, and events of all sizes have seen declines in ratings, subscribers, and tickets.   This new UFC, ESPN deal demonstrates how data can be used to drive revenue to new platforms where audiences consume content. We can use the Block Six Analytics (B6A)  Social Sentiment Analysis  Platform (SAP) within our  Partnership Scoreboard  platform to show why this deal should be a beneficial partnership for both the UFC and ESPN.   Our SAP platform enables B6A to analyze social media to determine the demographic profile of specific accounts for six factors. For this post, we analyzed UFC’s and ESPN’s accounts on Twitter for ethnicity and age and compared that to the overall demographic profile of Twitter users. We found that both the UFC and ESPN disproportionally attract a younger, more diverse audience and that the UFC and ESPN audiences overlap significantly on both factors.       

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     The first table in our UFC / ESPN Partnership Scoreboard shows the SAP analysis for age and demonstrates that both the UFC audience and the ESPN audience are composed of a higher percentage of 24 year old and younger followers than the Twitter base audience. It also shows that the UFC and ESPN age profiles are very similar to each other across all demographics.       

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     The second table in our UFC / ESPN Partnership Scoreboard shows the SAP analysis for ethnicity and demonstrates that both the UFC audience and the ESPN audience are composed of a higher percentage of Hispanic, African American, and Asian followers than the Twitter base audience. Once again, it also shows that the UFC and ESPN ethnicity profiles are very similar across all demographics.   The early results from UFC’s initial deal with ESPN already reflect the benefits of this new partnership. When UFC  debuted  on ESPN+ on January 19, 2019, ESPN signed up 568,000 new subscribers in its first two days while the total number of ESPN+ subscribers was 2 million at the time (that number today appears to be closer to  3 million ). Critics of this success say that this number is still far lower than the  86 million  ESPN subscribers the company had last year while ESPN has offered discounts to encourage UFC fans to sign up for  the platform .   The final data point that can be used for this audience is scale. As seen in both tables, UFC has 6.9 million followers while ESPN has 33.8 million followers on Twitter. ESPN enables UFC to target the audience of its current follower profile at a much greater scale than the UFC can do on its own. Conversely, the UFC follower is also more likely to be ESPN’s watcher and subscriber than the average population. Having UFC content also should lead to an increase in ESPN viewership.   The critics demonstrate why it is important to analyze both the quality and quantity of an audience. As seen in both tables, UFC has 6.9 million followers while ESPN has 33.8 million followers on Twitter. ESPN enables UFC to target the audience of its current follower profile at a much greater scale than the UFC can do on its own (or through other Pay TV platforms as White alluded to in his earlier quote).   Conversely, the UFC follower is also more likely to be ESPN’s watcher and subscriber than the average population. Having the exclusive rights to UFC content will enable ESPN to monetize a new audience both in terms of monthly fees and PPV events making these 568,000 (and likely now more) UFC subscribers far more lucrative to ESPN than cable subscribers paying monthly fees. In addition, the UFC audience fit to ESPN makes it more likely that UFC fans will find value in other ESPN+ content while current ESPN+ subscribers obtain access to new content that likely will resonate with their preference.   ESPN, UFC demonstrates what a new partnership can look like as new distribution channels emerge for the sports industry. Organizations need to know and understand this to facilitate their decision-making process in ways that maximize new revenue growth.

BY ADAM GROSSMAN

Examining The New UFC, ESPN Pay-Per-View Relationship Using Data-Driven Analysis

UFC announced yesterday that all of its Pay-Per-View (PPV) events will be available only on ESPN+ in the United States through 2025. UFC will receive a guaranteed revenue stream worth a reported “hundreds of millions of dollars” while ESPN+ will sell the PPV events at $59.99 per event on top of its $4.99 monthly subscriber fee. Why is UFC making this change away from a traditional pay TV model to work with ESPN?

      Nike, AT&T Make Major Investments Into New Esports Partnerships  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      Two major esports sponsorship deals were announced earlier this week that demonstrate the growing investment that companies are making in the industry. The first was Nike’s announcement that it would “ supply  clothes and shoes to players on all 16 teams” for the League of Legends Pro League in China via a new partnership with Riot Games. The second was the announcement of AT&T’s  first esports team partnership  with Cloud9 that includes sponsorship of a new weekly video series and communications hub.  Esports has been one of the fastest growing components of the sports industry over the past few years. One of the potential challenges to its continued expansion, however, is the ability for publishers, leagues, and teams to attract large partners. More specifically, rights holders and properties needed to communicate value to companies like Nike and AT&T for competitions, events, and players they had never really considered before.  These new relationships demonstrate the importance of quality and engagement when it comes to presenting and evaluating novel partnerships. Block Six Analytics (B6A) defines quality in our  Corporate Asset Valuation Model  (CAV) by how a partnership activation enables a company to better achieve its revenue and brand goals.   One key element of determining quality is the fit of different properties’ or rights holders’ audiences to the demographic companies are looking to target in a sponsorship. B6A’s  Social Sentiment Analysis Platform  (SAP) enables our clients to leverage machine learning to determine demographic breakouts across multiple dimensions. An example of this analysis is detailed below.       

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     Our SAP demographic analysis shows that both AT&T and Nike are able to target a younger and more diverse audience by partnering with Cloud9 and League of Legends, respectively. Both companies have made targeting younger, diverse demographics an important strategic priority. For example, Senior Executive Vice President of Digital, Retail and Care in AT&T’s Entertainment Group Rasesh Patel recently  said , ““AT&T does extremely well with more established customers, but we’re trying to attract a younger demographic.”   Engagement with this audience was also a critical factor for both companies in these partnerships. As AT&T Assistant VP/Sponsorships & Experiential Marketing Shiz Suzuki  said  “Cloud9 stood out among their options among teams for its large, engaged group of supporters. We wanted the team with the crazy passionate fan base, the real folks that just love their team.”   Our clients can use our SAP tool to examine engagement rates, and that is what we do for this post. That analysis is below and demonstrates why both AT&T and Nike were looking at esports to find this “crazy passionate fan base.”     

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     For this type of analysis, it is important to look at both owned and operated accounts as well as earned media conversation. Both League of Legends and Cloud9 have significantly higher levels of engagement than Nike and AT&T in both owned and earned channels. This is tangible evidence that both companies are likely to receive engagement lifts from the “crazy passionate fan base” they are looking to target.     CAV also examines the quantity of impressions in a partnership. Both Nike and AT&T indicated that audience size was important to them in these partnerships. For example, Cloud9’s  17.4 million followers  across social platforms appeared to be a significant factor in AT&T’s decision to work with the team.   However, the audience size of Cloud9 is of similar size or smaller than the follower counts of teams in other major professional sports. It is the audience quantity combined with audience quality and engagement that likely drove both Nike and AT&T to these new partnerships. More specifically, the companies have enhanced ability to have impactful interactions with their target audiences at scale.   Understanding this value equation and communicating the results to potential and current partners will be a critical component in an increasingly competitive sports sponsorship industry. The properties that seek out this approach to valuing sports sponsorship are the most likely to maximize revenue growth because they can clearly communicate how their partners can reach the right audience with the right message in the right channel to drive success.

BY ADAM GROSSMAN

Nike, AT&T Make Major Investments Into New Esports Partnerships

Esports has been one of the fastest growing components of the sports industry over the past few years. One of the potential challenges to its continued expansion, however, is the ability for publishers, leagues, and teams to attract large partners. More specifically, rights holders and properties needed to communicate value to companies like Nike and AT&T for competitions, events, and players they had never really considered before.

       Mark French Joins B6A Advisory Board   BY BLOCK SIX ANALYTICS     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
     

  

    
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     Block Six Analytics (B6A) is pleased to announce that Mark French is joining the company’s Advisory Board. B6A will leverage French’s experience creating and operating disruptive business innovations in the media, technology, sports and consumer goods industries to expedite the company’s growth both inside and outside of the sports industry.    "Valuing partnership and influencer marketing is a challenge that I've encountered in the businesses I've started, advised and led," French said. “Through its differentiated product offerings and thought leadership B6A established itself as a leader in providing buyers and sellers of corporate partnerships with the answers that they need to drive strategic decision-making. "   French’s current portfolio includes The Players' Tribune, Ad Age, MISSION, K Plus Organics Sports Drinks, Twenty, AthleticDirectorU, Bunim / Murray Productions, Athleta-Ed, and B6A. French has also worked closely with NBA players Dwyane Wade, Carmelo Anthony, Dwight Howard, Brandon Jennings, etc. in addition to other world class athletes including Serena Williams, Drew Brees, Reggie Bush, Georges St-Pierre, etc. to develop and market new companies and products. Mark’s entrepreneurial story has been featured on FOX Business News, Forbes, ESPN and various other media outlets.   “Mark’s vast experience and network within the sports and media industry made him an ideal fit for the company’s Advisory Board,” B6A CEO / Founder Adam Grossman said. “My conversations with Mark make it clear how he can have an immediate and tangible impact on our business.”    French becomes the latest industry leader to become part of the B6A Advisory Board. French joins experts in sports, entrepreneurship, law, and finance that include David Falk, Chuck Baker, Ron Pillar, and Tai Hsia.    About B6A   B6A's analytics-fueled technology enables companies to maximize revenue generation on their sports sponsorship spend across all advertising channels. Companies, agencies and properties are using B6A's Partnership Scoreboard technology and analytics to generate incremental revenue growth and reduce reporting costs by determining the value of television viewable billboards, signage, and calls-to-action, and social media conversation. Contact  B6A  or visit  https://www.blocksixanalytics.com/  to learn more.

BY BLOCK SIX ANALYTICS

Mark French Joins B6A Advisory Board

Block Six Analytics (B6A) is pleased to announce that Mark French is joining the company’s Advisory Board. B6A will leverage French’s experience creating and operating disruptive business innovations in the media, technology, sports and consumer goods industries to expedite the company’s growth both inside and outside of the sports industry.

       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?