In light of yesterday’s trade/non-trade of Chris Paul from the Hornets to the Lakers, I feel the need to re-publish my take on the inherent conflicts of interest that arise from having a franchise owned and operated by a league. I’ve heard and read several different arguments over the merits of this trade and why it should have been allowed, including:

• The Hornets got back a lot of talent and it was a fair package for Paul.
• The Hornets have a GM in place that is keeping the best interests of the team in mind.
• Paul wasn’t going to sign an extension with the team, so it’s best for them to make a trade.

The actual reason why the trade wasn’t allowed to go through is unclear. The “official” statement was that the Hornets decided against it, but in reality, there has to have been a decision at the league level, which makes sense because…THE LEAGUE OWNS THE TEAM! General managers have to report up to the team owner, and in this case, the team owner is the group of all 29 other team owners. If those team owners do not want the trade to go through, whether or not the reasons are justified or completely selfish in nature, then the trade cannot go through.

Update: For all those people who feel that David Stern either made this decision himself or shouldn’t have “allowed” this veto to happen (cough, cough, Bill Simmons), his bosses are the other 29 team owners. For all of his authority, he still has to listen to them, even if he disagrees with them.

Clearly, this is a gigantic conflict of interest, and it’s a big reason why situations like this should be prevented at all costs. It affects both team decisions (trades, signings, contracts) and business decisions (television contracts, relocations, sponsorships). I wrote about this earlier this year with regards to the Los Angeles Dodgers, and I also include other examples with the Texas Rangers, Montreal Expos, and funny enough, the New Orleans Hornets.

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By now, you’ve probably already seen the news that Major League Baseball has taken control of  day to day operations of the Los Angeles Dodgers away from current team owner Frank McCourt. Instead of trying to weigh in on whether MLB’s decision in this case was right or wrong and what McCourt should or shouldn’t do, I’d like to take a philosophical look at the concept of a league-owned or league-operated franchise. This situation has come up a few times in professional sports over the past decade, including the Texas Rangers, the Montreal Expos/Washington Nationals, the New Orleans Hornets, the Phoenix Coyotes and now the Dodgers. While the circumstance behind each situation is different, there are some fundamental issues at hand any time a league steps in to manage an individual franchise.

If a league owns or operates an individual franchise, in essence the other 30+ owners within that league are now in charge of that team, since the league itself is owned equally by all of the separate team owners. While each owner is primarily concerned with their own franchise, even having a 1/30th stake in another team is a significant investment. This additional “ownership” can represent a unique conflict of interest for those put in charge of the team’s operations.

The owners want this franchise to be run profitably, but what is the best way to do that? Often times, the best way to generate a short-term profit is through reducing costs, whereas long term profit is more sustainable via investing in the team’s operations. If the other owners care more about the short-term, which could easily be the case since they theoretically won’t own the team for long, then those in charge may be forced to cut costs. In addition, the specific approaches the team takes in their operations could be dictated by that league’s revenue sharing system. If more revenue is shared from ticket sales that local media, will those in charge be forced to focus more on that specific revenue stream to the detriment of the other.

This problem is even more significant when looking at the on-field operations of the team. Those in charge should theoretically continue to do what they can to help the team win, since that will in turn lead to more revenue. However, if that team wins more games, logic dictates that other teams will lose more games, which can decrease revenue for those team owners. This question came up last year with the Texas Rangers. The team was doing well, but until new ownership was in place, the team seemed unlikely to make any roster changes. A more recent example took place this year with the Hornets, when those in charge of the team did make a significant trade in an attempt to improve the team. Mark Cuban spoke out vehemently against this trade in particular because the team took on additional salary, which mean as a partial owner of the Hornets, Cuban could end up losing more money. He didn’t seem upset about the team’s attempt to improve (he said that he wouldn’t mind the trade if they hadn’t taken on additional salary), but I wouldn’t be surprised if behind the scenes, other owners were angry about this aspect as well.

Finally, you also need to look at the context under which the league steps in. One of the most unusual arrangements was when MLB decided not only to “purchase” the Expos, but also arrange for the sale of the Marlins to former Expos owner Jeffrey Loria, and in turn the sale of the Red Sox to former Marlins owner John Henry. While I will not attempt to analyze the various motivating factors behind these deals (how often do you see owners “trade” their team?), there’s no doubt that Henry and Loria benefited greatly from the situation, while the “rest” of the league ends up owning the orphaned Expos, which surely had a negative cash flow until the time they were sold as the Nationals. Again, there does seem to be some conflict of interest when other owners end up having to support the operations of an additional team as part of another owner’s franchise purchase and sale.

Even putting that unique situation aside, other events will continue to arise where a league has no choice but to step in and own or operate a franchise. It is clearly in the best interest of any professional sports league to make sure all of its teams can operate successfully. The conflicts that these situations present are real, and must be delicately managed by all parties involved until operations can be turned back over to the team, hopefully as quickly as possible.

Thanks to Brett Pharis for sending me this colorful timeline of the NBA Lockout through the end of October. I’m sure everyone is paying attention to how things go this week with the league’s Wednesday deadline on their current offer. Will the players agree? Will they decertify? We’ll all find out soon enough!

Via: Designed by USDirect.com

The NBA is clearly going through a rough period because of the lockout, and with every passing day, more damage is being done between the league and its fans. However, even when an organization has to deal with something as stressful and problematic as a work stoppage, teams must continue to communicate to their fans, keeping them abreast of the situation and offering up as much damage control as possible.

I’m signed up for several team email lists, and I have to say, I’ve been most impressed by the Lakers messages over the past few weeks. Here are a few snippets to show how they’ve stayed in touch with their fans in an honest and direct manner. Each of these messages was “signed” from Tim Harris, Senior Vice President, Operations/CMO.

September 23:

We appreciate your continued patience as the NBA and the NBA Players Association negotiate a new collective bargaining agreement. Since no such agreement has been reached at this time, the league has postponed player training camps and cancelled preseason games scheduled through October 15th.

Please know that you are a vital part of the Lakers, and we value your support.

We want to assure you that the league’s efforts are focused on reaching an agreement that benefits all parties involved. The NBA’s goal is to secure a sustainable business model that enables all 30 teams to compete for a championship, fairly compensates players, and ensures a world-class experience for our fans.

We recognize that without our fans, there would be no NBA. Your passion for the game is what motivates us, and we do not take your support for granted. The league will continue to work toward a new collective bargaining agreement so that we can get back to enjoying the excitement of NBA basketball.

Thank you again for your support and your continued loyalty to the Lakers.

October 4:

We appreciate your patience as the NBA and the NBA Players Association negotiate a new collective bargaining agreement. Since an agreement has not been reached at this time, the league has canceled all preseason games.

The league will continue to work toward a new collective bargaining agreement so that we can get back to enjoying the excitement of NBA basketball.

Lakers fans are the passion that drives the team and we appreciate your support and your continued loyalty to the Lakers.

October 12:

We’re sorry to share that the NBA and the NBA Players Association have yet to negotiate a new collective bargaining agreement. Unfortunately this means the league has had to cancel all regular season games scheduled through November 14th.

Rest assured both sides are working hard to get a deal done so that we can get back to what we all want most, the excitement of NBA basketball. In the meantime, we’ll continue to keep you informed with updates as they become available.

We share your frustration and sincerely appreciate both your support and continued loyalty to the Lakers.

There’s really no way to sugar coat the labor situation that the NBA is going through, so I think the Lakers’ sincere approach and expression of gratitude is a very effective way to communicate to their fans as the lockout moves along. Sending out bad news can be quite challenging from a marketing and PR perspective, but its much better to take this approach than to ignore the situation and not say anything.

A lockout is never a good thing for an organization. The stress it creates can have a long-lasting impact on the relationship between the team and its fans. As such, it’s very important to find a way to foster that relationship as much as possible while the labor issues are addressed.

The Denver Nuggets have taken the approach during this time to create Fan Features on Nuggets.com. According to the team, they will feature a different fan each week for at least three months, and maybe longer. The features will cover a mix of long-term season ticket holders, top group leaders, and even new buyers, highlighting their experiences being Nuggets fans.

The first profile went up about a month ago and featured 36-year season ticket holder Brian Dyet. You can read his profile here, or check out the most recent profile of Cheryl Burger (seen on the right), and scroll down for links to all their fan features to date. All fan features are also promoted on the Nuggets Facebook page and other social media outlets.

These features serve multiple important functions, including:

• Rewarding the team’s most valuable customers
• Building goodwill during a tenuous time
• Create some that other customers can aspire to be a part of
• Generate positive content to drive visitors back to the team website
• Potentially generate sales interest from fans that relate to the fan features

Content like this is a great tactic to use not just during a lockout, but year-round. I wouldn’t be surprised to see the Nuggets continue this feature once the lockout is resolved. This type of fan-focused content can also extend beyond the website to things like yearbooks, programs, dedicated social media content, in-stadium features and even the physical tickets (several teams in the NFL used fan images on tickets this year).

This is an excerpt from an interview with Carol Sawdye, CFO of the NBA, conducted by Peter Alpern from BusinessFinance (businessfinancemag.com).

From the pure power of LeBron James, to the artistry of Dwayne Wade and understated stardom of Dirk Nowitzki, the NBA Finals represents a climactic two weeks of fan interest to celebrate a staggeringly successful year.

With viewership of all four rounds of the playoffs up double digits, along with sharp upswings in attendance and merchandise sales, the NBA is enjoying a cultural boom not seen since its Golden Age of Michael, Magic and Larry.

But Carol Sawdye, who was hired as the new CFO for the NBA a year ago, recognizes the harsh realities facing the $4 billion industry. There is a rapidly approaching labor war between players and owners on tap this summer, along with alarming growth in the percentage of expenses. According to league commissioner David Stern, 22 of 30 clubs are losing money.

In an exclusive interview with Business Finance, Sawdye shared the fiscal perspective of the NBA as a business, the managing of risk amid bustling gate receipts and the role finance plays in creating a winning product.

Business Finance: As the 65th season of the NBA wraps up, how does the landscape from a financial perspective compare to what you saw earlier in the decade?

Carol Sawdye: Despite the state of the economy, the 2010/11 season has been very successful in terms of fan response to our teams, players and the game.

Overall revenues are at the highest they have ever been with gate receipts up significantly and team sponsorship sales at an all time high. We are on pace to have our most-watched season ever on TV. Subscriber growth has increased dramatically on NBA TV to 55 million homes in the U.S. We are experiencing double-digit revenue growth this year both in the digital business and internationally.

However, in order to achieve the revenue growth that we have experienced over the last decade, we have had to spend much more to generate the same $1 of revenue than we had to in decades past. As a result, the league overall has been experiencing significant net losses now, which wasn’t the case back in the mid 1990s.

BF: What does the office of finance do to contribute to the success of the league as a product?

CS: Finance is responsible to the commissioner and the owners for assisting business units in maximizing the financial results of the league and managing the financial risks associated with running this business.

The Finance department is involved in the financial aspects of all transactions, including ensuring league-wide financing is available at competitive rates and supporting financial analysis for significant business agreements and team sales transactions. Although much of these activities are invisible to the fans, they are all critical to delivering a consistently successful product for them.

BF: What were some of the steps you’ve initiated since you came onboard as CFO?

CS: My principal area of focus has been on expanding our capabilities in connection with financial reporting on and analysis of the results of our teams and the league as a whole.

We also have a growing business to support. Much of that growth is coming internationally and has required a lot of my focus on planning for profitable growth and managing the financial risks of operating in so many different tax, regulatory and labor environments.

BF: When you stepped into this role as CFO, what have been some of the organizational changes that you made to help finance become more effective?

CS: The single biggest change I have made is to expand our resources and interaction with the teams. This allows us to provide better combined financial information for use in all aspects of our business, ensuring that we are running a more effective and efficient business in general.

BF: What is your philosophy of finance and what kind of job have you wanted to create?

CS: The CFO should be a trusted adviser to the CEO and all business leaders and a critical member of the senior management team of any business enterprise.

In the NBA’s case, this extends to the owners and team management as well. The entire finance department should view itself as a critical service provider to all departments throughout the organization and, in our case, to all of the teams as well. The league office and our 30 teams are only as strong as our weakest link so we always have to serve with a view that support to any one team or department will raise the bar for all of us.

To continue reading the full interview, visit www.businessfinancemag.com. Thanks again to Peter Alpern for sharing this interview with us!

Today’s post is courtesy of guest blooger Jamie Acks.

It’s playoff time in the NBA and the buzz is stronger than ever. Will “The Big Three” be victorious or will a long shot steal the crown?

For the past five years Clevelanders had the pleasure of rooting on their beloved Cavaliers. But, this year was different and Cavaliers fans have now taken on a very different role. The role became to root for whomever “El Heat” faced in each round. Throughout the 2011 NBA Playoffs, the 76ers, Celtics, Bulls and Mavericks have become something to all Cleveland fans.

Recently, I was sent a website that asked me to become a “Cavs for Mavs” fan. Cavs for Mavs (@CavsforMavs) and it’s creator have sparked some hype and the emotions of NBA fans across the U.S. Within just hours the Twitter handle had over 1,000 followers and as of this morning has reached over 5,900.

The moniker is coupled with a logo and even “Cavs for Mavs” limited edition t-shirts. Cleveland fans have tagged the team with the names Cavericks and Mavaliers and over the past few days the chatter has been something else – even The Heat are talking about it.

The platform brings a new component to the 2011 Playoffs. Without the campaign an entire region of fans may have dropped off from watching or listening to the games and news.

In my mind, this is innovative and has caught the attention from a wide audience, so “what’s not to like?”

Jamie Acks recently graduated from the Ohio University MBA / Master of Sports Administration program. She accepted a position with Genesco Sports Enterprises, based in Dallas, TX.

As you can see from the image below, I’m probably about 90 minutes early in writing this post, but even though the Wizards haven’t “officially” announce their new look, I think it’s ok to start discussing it now.

This morning, the Wizards are going to officially change their colors back to the traditional red, white and blue that the old Washington Bullets used to use. This color change will also go along with new marks, logos and jerseys. Personally, I think this is a great idea – any team in the nation’s capital would do well to feature red, white and blue as their primary colors. It should provide a strong fit to their regional brand (the name “Wizards” might not fit, but that’s a discussion for a different time).

This choice to return to a “classic” theme is quite emblematic of an approach that several teams have taken over the past few years. Both the Philadelphia 76ers and Detroit Pistons had recently reverted back to traditional colors and logos after a period of time with a more modern look. The Cleveland Cavaliers also seem to feature their vintage uniforms quite often.

In the 1990′s, it seemed like the popular thing to do was to modernize a team’s look, but just a decade later, these teams are going back to their original style. I wonder if this is because the more traditional color and logo theme was a better brand fit, or is the idea of a vintage look just as much of a trend as the modern look was 10-15 years ago? It is very costly for a team to change their brand in this way – everything in the team facilities must be changed, all merchandise must be turned over and any other materials with the old colors become instantly useless. Considering these costs, I think its safe to say that these teams have decided that their classic branding offers the best long-term strategic approach.

For a bit of record-keeping, here is a screen shot from the Wizards website before and after today’s announcement, so you can see the instant change in look that the team is pursuing:

This is a big time of year for the NBA when it comes to season ticket sales. Most teams are finishing up their current season ticket holder renewals and ramping up for new business. Last week, I wrote a bit about a unique positioning the Golden State Warriors were using to help sell and renew season tickets, but every team has their own approach to season ticket sales. So here are a few more fun examples from other NBA teams:

Minnesota Timberwolves and Houston Rockets – Pay the Pick Pricing Plans:

Detroit Pistons – Renewal Website, featuring benefits based on tenure and payment date, including:

• Free Parking and Piston jersey (potentially with autograph)
• $50 to $150 in Palace Gift Cards
• Complimentary club passes and a suite for a game
• Referral rewards equal to 3% of the new season ticket holder’s purchase

Charlotte Bobcats – Buy 2 Get 2 Free

Memphis Grizzlies – Playoff Access for This Season

• While playoff access is always a benefit for season ticket holders, the Grizzlies are capitalizing on this year’s surprise run by limiting access to this year’s playoff tickets to current or future season ticket holders (30% deposit required).
• This type of offer was used by the New Orleans Hornets (and most likely other playoff teams as well).

Toronto Raptors – Raptors Plus You

• The Raptors build an interactive microsite tied to their “Raptors + You” marketing campaign, complete with video highlights, letter from the GM, benefits, payment plans, and information on new dynamic pricing for next season.
• In addition, they are guaranteeing their ticket prices for the 2012-13 season as well.

Early Bird Programs – Many teams’ early-bird programs have probably ended by now, but a few teams still have them going, including:

• New Jersey Nets (features additional 10% savings for early renewal and matrix of additional benefits)
• Sacramento Kings (features the chance to get free parking, team store vouchers and extra free tickets)
• Washington Wizards (features a 3 year price freeze, replica jersey and 12-month payment plan)

Last week, my good friend Isaac sent me a very interesting season ticket sales promotion that the Golden State Warriors are offering. They are calling it the “first official contract between a professional sports team and its fans.” While that may or may not be true, the “contract” itself is quite interesting. Take a look at the image below from their website (or click to visit the site).

The first thing you notice are their four main promises: reaching the playoffs, having an all-star on the team, winning 25+ games at home and a risk-free renewal with 5% interest (this relates to the risk of games being cancelled because of labor issues). Of course, there’s fine print on this agreement, but in this case, the team wants their fans to read the fine print, which reviews a series of incentives that all season ticket holders would receive if the team fails to meet any of their promises. These incentives would be in addition to the other incentives that they are offering regardless of team performance.

If you break this down, it is a pretty standard set of benefits to offer your season ticket holders (a potential price freeze, drawing for a free trip and private autograph session). However, combining these potential benefits with a “guarantee” of team performance is an interesting way to position it. They can simultaneously sell on-court success and unique season ticket holder experiences in one platform.

By now, you’ve probably already seen the news that Major League Baseball has taken control of  day to day operations of the Los Angeles Dodgers away from current team owner Frank McCourt. If not, you can read more about it over at ESPN.com and on Darren Rovell’s SportsBiz blog.

Instead of trying to weigh in on whether MLB’s decision in this case was right or wrong and what McCourt should or shouldn’t do, I’d like to take a philosophical look at the concept of a league-owned or league-operated franchise. This situation has come up a few times in professional sports over the past decade, including the Texas Rangers, the Montreal Expos/Washington Nationals, the New Orleans Hornets, the Phoenix Coyotes and now the Dodgers. While the circumstance behind each situation is different, there are some fundamental issues at hand any time a league steps in to manage an individual franchise.

If a league owns or operates an individual franchise, in essence the other 30+ owners within that league are now in charge of that team, since the league itself is owned equally by all of the separate team owners. While each owner is primarily concerned with their own franchise, even having a 1/30th stake in another team is a significant investment. This additional “ownership” can represent a unique conflict of interest for those put in charge of the team’s operations.

The owners want this franchise to be run profitably, but what is the best way to do that? Often times, the best way to generate a short-term profit is through reducing costs, whereas long term profit is more sustainable via investing in the team’s operations. If the other owners care more about the short-term, which could easily be the case since they theoretically won’t own the team for long, then those in charge may be forced to cut costs. In addition, the specific approaches the team takes in their operations could be dictated by that league’s revenue sharing system. If more revenue is shared from ticket sales that local media, will those in charge be forced to focus more on that specific revenue stream to the detriment of the other.

This problem is even more significant when looking at the on-field operations of the team. Those in charge should theoretically continue to do what they can to help the team win, since that will in turn lead to more revenue. However, if that team wins more games, logic dictates that other teams will lose more games, which can decrease revenue for those team owners. This question came up last year with the Texas Rangers. The team was doing well, but until new ownership was in place, the team seemed unlikely to make any roster changes. A more recent example took place this year with the Hornets, when those in charge of the team did make a significant trade in an attempt to improve the team. Mark Cuban spoke out vehemently against this trade in particular because the team took on additional salary, which mean as a partial owner of the Hornets, Cuban could end up losing more money. He didn’t seem upset about the team’s attempt to improve (he said that he wouldn’t mind the trade if they hadn’t taken on additional salary), but I wouldn’t be surprised if behind the scenes, other owners were angry about this aspect as well.

Finally, you also need to look at the context under which the league steps in. One of the most unusual arrangements was when MLB decided not only to “purchase” the Expos, but also arrange for the sale of the Marlins to former Expos owner Jeffrey Loria, and in turn the sale of the Red Sox to former Marlins owner John Henry. While I will not attempt to analyze the various motivating factors behind these deals (how often do you see owners “trade” their team?), there’s no doubt that Henry and Loria benefited greatly from the situation, while the “rest” of the league ends up owning the orphaned Expos, which surely had a negative cash flow until the time they were sold as the Nationals. Again, there does seem to be some conflict of interest when other owners end up having to support the operations of an additional team as part of another owner’s franchise purchase and sale.

Even putting that unique situation aside, other events will continue to arise where a league has no choice but to step in and own or operate a franchise. It is clearly in the best interest of any professional sports league to make sure all of its teams can operate successfully. The conflicts that these situations present are real, and must be delicately managed by all parties involved until operations can be turned back over to the team, hopefully as quickly as possible.

With the NHL Playoffs starting today, it’s a great time to look at how the NHL differs from other major American sports leagues in crowning their champion.

National Football League (NFL)

Only 12 of 32 NFL teams make the playoffs each year. At 37.5%, the NFL has one of the lowest percentages of teams allowed into the postseason. Four division winners from each conference automatically qualify, plus two Wild Card teams (non-division winners with the best record). At times, this can make for interesting seeding. In 2011, for example, the Seattle Seahawks won the NFC West with a 7-9 record. They were slated to host the first round matchup against the 11-5 New Orleans Saints, the non-division winner Wild Card out of the NFC South. There was quite an uproar about whether Seattle deserved to host that game, but they quieted  (most of) the critics when they pulled out a 41-36 win.

National Basketball Association (NBA)

In the NBA, 16 out of 30 teams (a whopping 53.3%), make the playoffs. Once those 16 teams are seeded, the bracket will never change, regardless of any upsets that occur.

Major League Baseball (MLB)

MLB doesn’t refer to their tournament as the ‘playoffs.’ For baseball, it’s the ‘postseason’ that determines the champion. Only 8 of the 30 MLB teams (the lowest of all major American sports leagues at 26.7%), make the postseason, often coming down to the very last game, and occasionally needing an extra game as a tiebreaker.

Major League Soccer (MLS)

The youngest of the major American leagues, MLS advances 10 of their current 18 teams (55.5%) to the playoffs. Five teams from each conference are seeded, and while the first three seeds get byes, the #4 and #5 seeds play each other for the right to face the #1 seed. Once the bracket is set, no changes are made to account for upsets.

National Hockey League (NHL)

The NHL may just be the most fair when it comes to their playoff system. While they do allow a large percentage of their teams in (16 out of 30 – 53.3%), teams are re-seeded after each round. What this takes into account, that no other major American league does, is the regular season. A lower-seeded team that didn’t perform as well over the course of the 82-game season, doesn’t get an easier path to the Stanley Cup Finals just because they upset the higher seed. Kudos to the NHL for keeping the regular season more relevant than the other four leagues.

What is your favorite playoff system? Do any of these five leagues get it right? Should MLS consider going to the European-style of crowning the regular-season champion and forgoing any regular season?

Image courtesy of NHL.com

During the Global Sports Forum, I had the chance to sit down with former NBA player John Amaechi to get his thoughts on several current topics, including:

• The NBA’s efforts to expand their footprint in Europe and how the league compares to existing European professional leagues
• The way athletes use Twitter, both good and bad, to engage with their fans
• What CSR (corporate social responsibility) really means, and how some programs are more marketing than CSR
• His work at the Amaechi Basketball Centre

I hope you enjoy the interview!

www.youtube.com/watch?v=uWwYnQzf0bI

Thanks to the Sports Business Daily’s Closing Bell for sharing this new video from the New York Knicks, featuring viral video sensation Keenan Cahill. You should also check out the behind-the-scenes “making of” video. This is a clever move from the Knicks to partner up with Keenan, who’s lip-sync videos on YouTube have been viewed millions of times. Enjoy!

www.youtube.com/watch?v=MKKFwl4PM2c

www.youtube.com/watch?v=B-NoxL4dw2M

Last week, the Sacramento Kings announced that they signed a new naming rights deal. On March 1, the building’s name will officially change from Arco Arena to Power Balance Pavilion. It is a five year deal, and the financial details have not been released, although it supposed to be worth much more than the $750,000 per year they had been getting from Arco. You can read about the deal over at the Sports Business Daily.

For those of you that might not be familiar with Power Balance, they produce bracelets designed to, well, improve your balance.  Here is a quick description from their website:

What is Power Balance?
Power Balance is Performance Technology designed to work with your body’s natural energy field. Founded by athletes, Power Balance is a favorite among elite athletes for whom balance, strength and flexibility are important.

How Does the Hologram Work?
Power Balance is based on the idea of optimizing the body’s natural energy flow, similar to concepts behind many Eastern philosophies. The hologram in Power Balance is designed to resonate with and respond to the natural energy field of the body.

What makes this deal interesting to me is that Power Balance is quite a controversial brand right now. Because of complaints from Australian consumers, Power Balance has stated that there is no “credible scientific evidence” behind their product, and they are currently facing three false advertising lawsuits in the U.S (Sporting News, 1/14/11). Based on this information, I don’t think it’s a stretch to say that Power Balance doesn’t represent a particularly stable brand.

If you only look at the financial value of the deal over the five-year period, I’m sure that this is a profitable deal for the Kings, and probably does a lot for the credibility and visibility of the Power Balance brand. However, if the company faces further legal problems or consumers decide to abandon their product, what happens to the Kings and the value of their naming rights moving forward? If anything happens that leads to the deal ending prematurely, the market value for those rights could easily be diminished. Is that worth the risk of the short-term dollars that Power Balance was willing to pay over any second or third options (if there were other options, of course).

On the other hand, Sports Business Daily also highlighted that Sacramento is a small market, which has its own long-term challenges for stability of a professional sports franchise. If there’s a chance the Kings are unable to stay in Sacramento more than a few more years, this deal could end up making much more sense.

What do you think of the risk vs. reward of a deal like this?

My friend just sent me a link to a news story about the Golden State Warriors, and I need to share the story with all of you. The Warriors have just hired a new Director of Basketball Operations, which is generally an important position for the team-side of the business. An announcement like this wouldn’t normally be an unusual story…except in this case, the owner’s son Kirk Lacob got the job.

OK, well maybe he has a lot of relevant experience. After all, it’s pretty common to see the children of sports owners and executives also work in sports, so he might be qualified for the position. Well, you can see his LinkedIn profile here, but the highlights are:

• Stanford Men’s Club Basketball President and Co-Founder (Just graduated this year)
• Intern positions with Chegg Inc, Fortinet, Evolvence Capital, Ithmar Capital and the Boston Celtics
• Coach for Matt Lottich Life Skills, LLC.
• Founder and Director of Woodside Sports Camp for Boys

Now, I’m not writing this post to criticize the Warriors or their owner. One of the benefits of owning a team is being able to make decisions like this, and he must have felt that this hiring was in the best interest of his team and his family. In addition, I’d imagine that there are other senior executives in basketball operations that will keep things moving and train Kirk as he goes.

To me, one of the biggest takeaways from this is how it highlights the challenges associated with working for a professional sports organization, especially for those recent graduates dreaming of working on the team operations side of the house. We constantly see organizations hire friends, family and former players for these positions, creating even more obstacles for “outsiders” regardless of their qualifications. I don’t expect this to change, but I also don’t want to see “favors” replace the process of hiring passionate and qualified candidates.

In addition, I think most would agree that we’ve seen the industry become so much more advanced over the past ten years, in both the business and on-field aspects of running a team. Reading about a hiring like this does make me wonder about how other aspects of their organization are being run. Too many organizations still operate in the mode of “that’s how we used to do it, so let’s do it again.”

I still wish Kirk Lacob nothing but success in his new position with the team. I just hope it’s the right decision for both him and the team.

Update: Here’s a quote from owner Joe Lacob on the hiring: “Is this a good thing to do? It’s a complicated question. But I intend to be in this business for a long time, and I intend to have him involved if he wants to be involved.” (SFGate.com, 11/16/10)

By now, I’m sure most of you have seen the latest LeBron James commercial from Nike, but just in case you haven’t, take a look now:

www.youtube.com/watch?v=xQDHG-P6yg0

Most of the comments I have seen about this video on Twitter have been pretty positive, and I tend to agree. After “The Decision,” there was an obvious PR backlash, and his Q Score took a big hit. ESPN’s Outside the Lines recently did a nice job breaking down the impact on his reputation and image.

However, he’s still LeBron James, arguably the most talented player in the NBA. He’s still an incredibly charismatic figure, and he’s never done anything scandalous to create permanent brand damage. So acknowledging that the process leading up to his “decision” may have been flawed, I love how this video embraces all of the different reactions in an engaging and often humorous way (the Miami Vice part might have been a bit over the top), and then ending with the focus back on basketball. Also, naming the video “Rise” is an appropriate way to shape the idea of how he is going to move forward.  Finally, I like that Nike is doing this video first to help overcome any brand damage before going back to more direct sneaker-sales focused commercials with LeBron.

What do you think of the video? Does it effect how your view of LeBron James? Was this a good move by Nike?

Last week, LeBron James filled us in on “The Decision.” Well today, I’m filling you in on “My Decision.” Before I reveal “My Decision” let me tell you about the remarkable parallels in our stories:

• Young boy/girl growing up in a challenging, snowy climate (LBJ: Akron, Ohio, Me: Rochester, NY)
• Athletic talent obvious from an early age (LBJ: averaged 21ppg/6rpg in his freshman year of high school basketball. Me: was told by my coach as a junior ‘You can be on the varsity volleyball team, but you’ll never play.’ Decided to stick it out. Never played. [Note: please excuse the horrible eyebrows and braces in the picture at right])
• Made a ton of money soon after graduating from high school (LBJ: millions in the NBA. Me: waitress at Cracker Barrel during the ’96 Summer Olympics = an average tip of $1 per person PER TABLE!)
• Finding themselves at a crossroads in the summer of 2010 (LBJ: which team do I sign for? Me: which industry do I work in?)

Which brings us to “My Decision.” Well, we’ve got a few minutes here, so let me hold off on that and revisit LeBron’s decision. Did he handle the revealing of that decision well? In a word, no. LeBron was one of the few athletes who had escaped (until now) the stereotype of being snobby, pretentious, and an overcoddled baby. He had a great smile, and people looked at him as a friendly teddy bear, albeit one with a paycheck that had three more zeros than the average Joe.

But in one fell swoop, LeBron showed us he is just like 99% of other athletes… it’s all about him. It wasn’t enough to issue a press release and say ‘I’m going to play for the Miami Heat.’ It wasn’t enough even to have a press conference that would have been held live across the country to announce his new team. No, LeBron had to have a one-hour long special dedicated to he, himself and his majesty. It took him approximately five seconds to utter the words “This fall…I’m going to take my talents to South Beach and join the Miami Heat” so it seems the other 59 minutes and 55 seconds were just a glorified ego boost.

It will take awhile to assess the damage he has done to his reputation and brand. He dragged his former team and home town through unspeakable torture, making his announcement in Ohio even though he was heading to Florida. Last night at the ESPYs, the crowd boo’ed every time his name was mentioned. His best bet to clean up his tarnished image? Win a championship for the Heat. Better yet, win two or three. With LeBron, Dwyane Wade and Chris Bosh essentially playing 3-on-5, it may be more difficult than it seems.

So finally, we’ve come to “My Decision.” My crossroads was not a choice between taking $20.83 million to play for the Cleveland Cavaliers vs. $19 million to play for someone else. It was a choice between almost ‘starting over’ again in the sports industry or advancing my career in another industry. You can quote me here… “This summer… I have chosen to take my talents to Tempe, Arizona, and join the staff of Arizona State University.” Ok, maybe not as dramatic, but it’s big news in my world!

I am leaving the sports industry for several reasons. To get to where I want to be, I need more traditional marketing experience, I need more managerial experience, and I want to feel respected and appreciated. ASU is giving me the opportunity to do all three of those things. Don’t worry TheBusinessOfSports.com fans, I’ll be back from time-to-time, but for for the foreseeable future, that will be as a ‘guest poster.’ I’ve appreciated all your encouragement over the last 1+ years. I’ll leave you with a quote, and wish you many happy ‘accidents.’

All great work is preparing yourself for the accident to happen.  ~Sidney Lumet

Editor’s note: I want to take a moment to thank Amanda for all of her valuable contributions to this website over the past few months. Her knowledge, opinions and expertise have been a tremendous asset for all of the readers, including myself. I wish her nothing but the best in her career, both in and out of sports. Thanks again!  ~RS

Rather than just presenting my individual opinion on Dan Gilbert’s letter to Cavaliers fans (I’m actually quite torn on it), I decided to go to some of the sports business and PR professionals on Twitter for their take. Here’s what they had to say on the subject:

From SternalPR: I get why Gilbert wrote the letter, but you can defend your city and instill confidence in a more tactful way & avoid silly promises

From ChrisFreet: Agree or disagree with Dan Gilbert’s open letter, there is no disagreeing with his honesty. It’s interesting that some media are bashing Gilbert. Media want honesty, not PR spun letter, yet they are still hammering him

From KyleJudah: A little petulant move but so was Lebron’s. Cavs fans I know seem to use it as a rallying point, so got the job done. Very ballsy.

From MarcusAHall: Whether or not you agree with his comments is one thing but I commend him for taking a stance and making a statement.

From PUBLISIDE: Gilbert should have slept on the language. Even if he was still that angry in the a.m., he may have rethought and crafted the letter with less venom. He will likely regret the tone for fans’ sake.

From mmahoney13: Gilbert’s passion was the right tone for partners and season ticket holders but he went a little over the top with cowardly.

From MarcIsenberg: Way to take the high road, Dan Gilbert. Abe Lincoln waited 48 hrs before sending because he didn’t want to write emotionally.

From Aharris101: I understand Gilbert was upset, but still think he should have handle it more in a professional way….he should’ve slept through

From AmandaRykoff: If I didn’t know that letter from Dan Gilbert was real, I’d think it was a joke. Of epic proportions.

From IsaacBearg: Cavs fans were pissed and I imagine wanted their owner to show he knows how they feel… it was a bit much but I don’t mind it

I’ll continue to update this with additional tweets as they come in. In the meantime, please share your own take on the letter in the comments!

It started with one, small, under-140-character sentence…

“Hello World, the Real King James is in the Building “Finally”. My Brother @oneandonlycp3 gas’d me up to jump on board so I’m here. Haaaa”

Well, actually it started several hours before that, when the word got out that twitter.com/KingJames was the official Twitter account for LeBron James. News spread of this account like wildfire, both through traditional and social media outlets. As a result, the account had close to 100,000 followers before anything was ever posted. As of 9:45PM Tuesday, that number was up to over 170,000 with still just the one tweet on the record (Update: Two tweets and 222,292 followers as of 10AM Wednesday). Darren Rovell tweeted several updates throughout the day, highlighting the account’s incredible growth rate. So now that this account exists, there are two big questions (besides what team will he sign with).

1. What will LeBron do with his Twitter account?
2. What should LeBron do with his Twitter account?

Here are a couple of Dos and Don’ts to help him with his new-found interest in tweeting:

• Do update multiple times per day, even if that means getting some help from your camp. With all the buzz right now, there is no better time to really leverage your social media presence.
• Don’t tweet just for the sake of tweeting. We’re all tuned in, but if it becomes noise, we’ll also tune out.
• Do have some fun surrounding the pending contract announcement. Feel free to tweet and joke with other players and build the suspense.
• Don’t actually give any of the real news away or announce your decision on Twitter first (although with the TV special announcement, you seem to already know this)
• Do be personal! Let your charisma shine through. This was a great approach for Shaq and Ocho Cinco.
• Don’t go over the line. Shaq and Ocho Cinco can also go too far (being critical of others, being honest to a fault). You want to be the Global Icon, so nothing that can damage the brand.
• Do reply to fans occasionally. The impact you’ll make on those fans cannot be measured.
• Don’t feel obligated to reply too much. It will take the fun out of Twitter, and we want to make sure you hang around.

While we’re talking LeBron, here are some other interesting links to read through:

• What the Knicks Told LeBron: Come to New York and Make $1 Billion from Forbes.com SportsMoney (in particular, make sure to check out the presentation from Interbrand – interesting stuff. I’d really like to see more of how they calculated those numbers!)
• LeBron James is Twitter’s Latest Sponsored Trending Topic from Mashable.com
• LeBron Decision Thursday on ESPN.com

For the record, I think they’re going with the scheduled TV announcement for two reasons. The fun reason is that he recognizes the level of interest in this decision and found a way to go something positive with it (raising money for the Boys and Girls Club of America). The business reason is (and this is pure speculation), I think it’s down to the Cavaliers and one other team, but he’s waiting for some action from one of those two clubs. What better way to take control of the situation than through the pressure of a public time deadline. I bet there’s a lot of moving and shaking going on behind the scenes today!

We are days away from arguably the most important and historic free agency period in NBA history. The biggest question is, where will LeBron James sign? Stay at home in Cleveland? Hit the Big Apple? What about Chicago? The sports media cannot stop talking about this question, with everyone spouting their own theories and “insider” information. The same story goes for Wade, Bosh, Stoudemire, Johnson and others, although not quite on the same scale.

While all NBA teams need to wait until July 1 to start officially pursuing these free agents and July 8 to actually sign any of them, there is an incredible “signing” opportunity sitting out there right now that no one has taken advantage of yet. No need to wait until July!

Why hasn’t a single company stepped up and “signed” LeBron to a new endorsement deal during this pre-free agency buzz? Why haven’t we seen articles, press releases, tweets and more with the huge headline of “LeBron James Signs New Deal”? This seems like such a no-brainer for any company looking to make a big endorsement splash during a period of huge offseason media attention.

Remember how much buzz State Farm got for the fake LeBron James / Cleveland Browns signing campaign that they ran in 2009? That seemed to have been a very effective campaign for them in an industry that doesn’t generally sign athletes to endorsement deals (most insurance companies concentrate on team and league sponsorships). Imagine how big a LeBron James signing campaign could have been…and could still be?

I know companies want to know what team and market an athlete will be playing in before committing a large amount of money to an athlete, but seriously, we’re talking about LeBron James, currently the most iconic figure in professional basketball. The team almost doesn’t matter, so why hasn’t this happened?

Attention Corporate America – time is running out! Have your people call his people right away. And if LeBron’s people are reading this right now, I’d be happy to sign him right now, as long as he’d do it for free! The buzz would be huge…call me (973-498-TBOS)!

After a hectic couple of weeks, I need to ramp up my writing again. So let’s get it started today with some links and recaps of some interesting sports business stories from the past couple of days.

Brits May Challenge Visa’s 2010 Olympics Exclusivity – Marc Perton, The Consumerist (thanks to @khuda1 for the link)

As one the highest level sponsors of the Olympics, Visa has benefited not only from the traditional sponsorship elements, but also complete exclusivity for any credit card purchases made at the Games. The Office of Fair Trading in Great Britain has some issues with this, as it restricts commerce and hinders open competition in the marketplace. This reminds me a bit of beer and beverage sponsorships here in the United States. In order to not restrict competition, the pouring rights for a particular stadium cannot be directly tied to a sponsorship for that company. This is definitely a story to watch for the 2010 (and future) Olympics. If this aspect of the sponsorship is overturned, does the sponsorship hold the same value to Visa? And would they still be required to pay the full cost of their deal?

How Much Will Hayward Cost the Pacers? – Darren Rovell, CNBC

It was almost the “perfect” scenario for the Indiana Pacers. They were one pick away from being able to take their hometown hero Gordon Hayward in the 2010 NBA Draft, until the Jazz swooped in and selected him. This could have been one of those unique opportunities where a team could have made a draft decision (outside of the top 2-3 picks) that fits the team on the court and would provide an immediate lift to ticket sales off the court. Darren Rovell reminds us of other past situations where some teams have made picks with too much focus on the revenue side (the Charlotte Bobcats picking two UNC players in 2005) and where other teams looked past the short-term revenue lift and stuck to their on-field preferences (Houston Texans passing over Vince Young and the same Pacers selecting Reggie Miller over Steve Alford).

Old Navy co-sponsors Coney Island hot-dog contest – Adrianne Pasquarelli, Crain’s New York

Hot dog eating may not be viewed as a sport, but competitive eating has grown in popularity over the past few years, with more media coverage, attendees, and revenue. The Coney Island competition is the biggest event that Major League Eating runs, and through their partnership with Old Navy, they have created two new revenue streams: the sponsorship itself and jersey sales. That’s right, you can buy an official jersey for a hot-dog eating competition. But don’t laugh – as the article points out, over  1 million people tuned in to watch last year’s event, with another 35,000 people attending it live.

A couple of weeks back, I wrote a post about how teams can take advantage of sponsor relationships to sell “discounted” playoff tickets without directly discounting their seats and in the process, devaluing their product. Well, the Suns’ Amar’e Stoudemire has found an even more creative approach that brings the athletes themselves into the equation through their social media outlets.

In case you haven’t seen it yet, you can find the full article over on Mashable.com. The short version of the story is that Amar’e partnered with RazorGator and AtCost.com to offer “group” discounted tickets through the store tab on his Facebook page. I call them group tickets, because the more people that took advantage of the offer, the better discount everyone received, similar to how Groupon.com and AtCost.com are able to provide great discount offers by selling their offers to a large number of consumers. By the time the offer expired, two tickets that normally go for $600 total sold for more than 50% off, and the entire allotment of tickets for both games 3 and 4 sold out (the offer was posted separately for each game). In fact, there is now an offer up on his page directed towards Amar’e/Suns fans for game 5 in Los Angeles (as of writing this, the price for a pair of tickets was down to $435.97).

This may be one of the most effective social media sales tools that teams (or athletes) have implemented to date. Now in this situation, they were selling a fairly high-demand/high-value item, but the tactic should translate to all different types of ticket inventory and beyond – maybe we’ll see a merchandise offer next. Very cool promotion from Amar’e and all of his partners.

Geolocation is definitely a hot topic in social media, and as such, is starting to make its ways into the sports marketing landscape. The idea that you can proactively target and communicate with people based on their exact or relative location is a very appealing thought. Right now, all sports organizations practice based forms of geo-targeting in their marketing campaigns. This can take several shape, such as:

• Delivering web advertisements only to visitors from within your DMA (designated market area)
• Sending direct mail pieces to certain towns and zip codes within your DMA
• Purchasing prospect lists based on a combination of zip and area code
• Placing billboards and running grassroots events locally

All of these measures are taken to another level when you break down your existing customer base to find out what zip codes you have the most success in and focus these campaigns to the areas with the best fan penetration.

VaynerMedia and the New Jersey Nets have taken the idea of geo-targeting in another direction with geolocation through social media. This live, interactive form of geo-targeting has some great potential for teams and leagues to interact with local fan segments in ways that can drive fan affinity and revenue. Take a look at the case study to see what they did with their recent promotion through Gowalla.

The guys at the Row Show also discussed this case study live with Sam Taggart from VaynerMedia. Check our their discussion below.

Today’s post is courtesy of guest blogger Deandra Duggans and was originally published on her blog at sportsandalatte.wordpress.com.

You may or may not have seen “Logorama,” the short film that took home an Oscar earlier this year for “Best Animated Short Film.”  It’s a film that explores the way that logos are increasingly embedded in our existence.  While the movie discusses the ubiquity of branding and leaves one to ask is it too much?  Well I don’t think so.  Plus, that’s not my call and I think it’s completely subjective. What it did make me observe more carefully is the logo placement and corporate alignment as it relates to sports.

Of course corporate sponsorship runs rampant in the NBA and there’s no better time than now for presenting sponsors to align themselves with one of the most premier stages in all of sports: The NBA Playoffs.

Check out the presenting sponsors for some of the playoff contenders (note: most of these were splash page elements on the teams’ websites, so obviously there are some teams that are missing):

(Atlanta Hawks Playoffs Presented by Aarons)

(Cleveland Cavaliers Playoffs Presented by Cub Cadet)
Side note: I like that one athlete isn’t singled out…great concept of “teamwork”

(Boston Celtics Playoffs presented by Arbella Insurance)
Side note: this is my favorite piece of creative out of all of them. I appreciate how clean, yet intense it is.

(Charlotte Bobcats Playoffs “powered by” Budweiser, Kobalt, Presbyterian Hospital and McDonalds)

(Denver Nuggets Playoffs presented by KeyBank)

(Miami Heat Playoffs presented by Miccosukee Resort & Gaming)

(Phoenix Suns Playoffs presented by Casino Arizona)

(Spurs playoffs presented by HEB and Toyota)

Of course many of the presenting sponsors are also presenting sponsors of the team as a whole.  It’s just really interesting to see the amount of involvement by corporations and the partnerships they have with sports entities and how sports is a great platform to enhance brand awareness and brand image.

Deandra is currently working in the sports business industry as a Media & Marketing Specialist.  She is a graduate of Georgia State University’s M.S. Sports Business Management program and attended undergrad at NC State. Her previous work experience includes time spent with Philips Arena, the Georgia Dome, GSU Athletics, NC State Athletics and the Women’s Sports Foundation. In her spare time, she does freelance graphic design (www.deandraduggans.com) and shares her talents with grassroots sports organizations. You can reach her via email at deandra@deandraduggans.com or on Twitter at twitter.com/SportsandaLatte.

An interesting article from flipcollective.com by Paul Shirley (former NBA player) that I read earlier this week got me thinking about the differences between men’s and women’s basketball. Paul focused on the differences in athleticism and how enjoyable the games are, but I’ve been thinking more about the cold hard cash.

The men’s championship game drew 71,298 fans in an NFL stadium, while the women’s game (UConn over Stanford) drew ‘just’ 22,936 in the Alamodome. Beyond that, over 48 million people saw at least some part of Duke squeaking by Butler for their fourth national championship. According to an analysis of the 2008-09 championships, men’s basketball netted the NCAA $32 million, while the women’s championship cost over $7.5 million.

Geno Auriemma (UConn’s coach) hasn’t gotten a call from a men’s program about an open head coaching position in four years. He’s obviously coaching at a very high level: his team hasn’t lost in two years, and they are just 10 wins away from tying the hallowed wins record in all of college basketball – UCLA’s 88 in a row, yet for some reason, ADs aren’t looking at him as a candidate for their men’s teams.

So what does this mean from a business standpoint? There are obviously more fans for the men’s product then there are for the women’s, but are they all equally as invested? My gut tells me women’s fans have a stronger connection to their team… maybe not just the name on the front of the jerseys, but to the players wearing them.

This gives teams and their sponsors a unique opportunity to connect with fans. A sincere, distinctive ‘voice’ in social media goes a long way towards building a rapport with fans. Passionate fans are happy to provide feedback and ideas to those brands that ask. I wasn’t able to find an obvious Twitter account for either of the Stanford or UConn women’s basketball teams, so I’d suggest to them to capitalize on their recent success and get that started. Use players to guest tweet, guest blog, tape short videos, thank fans, and maybe show some behind the scenes footage of their trip to the Final Four.

Don’t get me wrong, the men’s teams can do these kinds of things too, but a lot of men’s Division I teams are doing just fine without those initiatives. Does anyone really think Duke’s team lost $2 million last year? Social media is an avenue where sponsors can utilize the popularity AND gender of the team they sponsor to make a better connection with fans. Better than that 3′ x 8′ banner hanging in the concourse, and better than the flyer they hand fans as they are walking out the door.

The Phoenix Mercury drew a lot of attention when they signed LifeLock as their front-of-jersey sponsor. They are the first major professional league to monetize that ad space, not counting soccer, where the practice is standard. The men’s leagues aren’t quite ready to go there… yet.

So, what do you think is the biggest opportunity out there for women’s sports? Am I wrong? Do men and women have the same opportunities here? Do their fans react to the same messages?

On Saturday night, I hosted a live sports business chat during NBA All-Star Saturday with two special guests joining us to take your questions. Darren Heitner, CEO of Dynasty Athlete Representation was with us for the first hour and Drew Cloud, Vice President of Sales and Service for the New York Knicks took questions during the 2nd hour. You can see a full replay of the chat below.

This Sunday, the Dallas Mavericks will host the 2010 NBA All-Star game at Cowboys Stadium in Arlington, Texas. Admittedly, I’m not a huge NBA fan. I hear a lot about the Phoenix Suns on sports talk radio because of where I live, and I follow the Denver Nuggets because they have my favorite player, Carmelo Anthony. So normally, the All-Star Game might slip by me relatively unnoticed, especially since I’m running a half-marathon that day, and it’s every woman’s favorite holiday - Valentine’s Day!

But today I received a press release from a large PR firm. It’s not clear who exactly commissioned the press release, but I’m guessing it is a group called ‘the Coalition to Advance the Protection of Sports logos.’ After reading the press release, it really made me wonder if sports fans care about this age-old question: Are they real, or are they fake? (Merchandise, that is).

The press release attempts to ‘separate facts from fiction.’ Some of the fictions include statements like ‘counterfeiting isn’t that big of a problem’ and ‘people don’t sell counterfeits in North Texas.’ The facts given are that businesses lose $600-700 billion (yes, billion) annually due to counterfeiting and that innocent buyers get scammed by this inaccurate and often poorly made merchandise.

So my questions for all of you are:

• If you went to an event like the All-Star Game, are you concerned with whether the merchandise is official or not?
• Do you look for the hologram on the tag?
• Do you double-check the spelling of all the names and logos?
• Are you concerned with the exact colors of the logos?
• Or does the lure of 2 shirts for $15 override any of those issues?

At times I’ve been worried only about getting a good deal. Other times, the event or team involved has been important enough to me to make sure I have the official merchandise. What do you think?

I saw a great story the other day about a failed promotion by the NBADL Utah Flash. Back in September, team owner Brandt Anderson had talked about hosting a game of 1-on-1 between Michael Jordan and Byron Russell at halftime of a Utah Flash game. The match would be flashback to their famous confrontation at the end of Game 6 of the 1998 NBA Finals, where Jordan hit the series-clinching shot over Russell. Anderson was going to offer $100,000 that the winner could donate to a charity of their choosing, and Russell was on board. However, Jordan declined the challenge so that seemed to be the end of it…at least temporarily.

Anderson ultimately decided to continue with this event.  He still promoted that the 1-on-1 match would occur at halftime of Monday’s game and there were “Jordan sightings” around town that day. This led to over 7,500 fans attending that night’s game, expecting to see this halftime match, but instead they ended up seeing Russell take on a Jordan lookalike. The crowd was outraged, and the team experienced a very vocal backlash. Anderson now regrets his decision to move forward with this stunt, and is trying to repair the damage with refunds and free tickets to future Flash games.

So what do we learn from an incident like this?

• Viral and word-of-mouth marketing is very powerful! Anderson had all the makings of a great viral campaign, even “leaking” a video of “Jordan” eating at a local restaurant. However, his campaign came with a very specific expectation that he could not meet. If you build up that much buzz, you have to deliver on customer expectations.
• Teams need to be more transparent when using publicity stunts to sell tickets. For example, last year the Philadelphia Phantoms hosted a game where David Akers and Andy Reid were going to do the ceremonial puck drop and sign autographs. However, through the language of the press release and marketing materials, it was pretty clear that instead of the Eagles’ player and coach, it was going to be a fake Akers and Reid in attendance. The team ended up with the desired effect of generating buzz, but they also managed the fans’ expectations and still had a successful promotion with a boost in attendance.
• When customer expectations are not met, immediate action must be taken to try and resolve the problem. Anderson is doing just that through his immediate apology and offer of refunds and free tickets. The only question will be whether fans feel that this service recovery is enough to compensate them for their failed promise. There may be some lingering skepticism for casual fans that were in attendance to purchase tickets to a future game.

The New Jersey Nets are currently suffering through a historically bad start to their season. Seventeen games, seventeen losses and a fired head coach is a tough stretch to say the least. While the goal of the business side of the franchise is to generate a profit regardless of the product on the court, there is no doubt that this type of situation can be very damaging to the organization. In particular, the Nets have several factors they must overcome:

1. A very poor product on the court, arguably the worst in the league
2. Operating in a very crowded market with many sports and entertainment alternatives
3. A weak mass transit system that doesn’t let them tap into the New York audience
4. The fact that the team is moving to a new building in a new city in the near future
5. A complete shift in management as Bruce Ratner sells the team to Mikhail Prokhorov

With these hurdles standing in their way, what can the Nets do to keep the business moving forward while the team performance does not cooperate?  Here are a few ideas, some of which the team has already implemented.

• Market basketball and the NBA without focusing on the Nets – The team has already done this with one of their earlier ticket package incentives that gave buyers reversible jerseys featuring players on the other teams. They can take this further by openly promoting the best opponents that are coming in to town over the coming weeks.
• Focus on specific games instead of the entire season – If you think about trying to sell all of the remaining games, it can be quite an overwhelming tasks. So focus on specific games and opponents that give you the best chance to succeed and concentrate your sales efforts on those dates.
• Discounted pricing – While cutting prices doesn’t fix the underlying problems, it does open the product up to a wider audience. Since the team isn’t a draw, the buying decision for consumers comes down to what form of entertainment they want to see. In order to compete with options like going to the movies, the price need to be comparable. This approach can also be achieved through special “family packs” that combine tickets with food and merchandise for a fixed low price.
• Connect with season ticket holders – The worst potential impact of the team performance is the eventual loss of season ticket holders. Every effort needs to be made to maintain relationships with these customers through this tough time, as they are still the biggest source of ticket revenue. Give them additional free tickets to share with friends, reward them for referrals and let them take part in game experiences so that they still get the most value and enjoyment out of their season tickets.

If you were in charge of sales and marketing for the Nets, what would you do right now?

It looks like Mikhail Prokhorov, the richest man in Russia, is going to buy an 80% stake in the New Jersey Nets from current owner Bruce Ratner.  He will be the first team owner from outside North America for the NBA, and the first “Russian billionaire” to take hold of a team in a big-four U.S. league. So what does this actually mean for the Nets? Here are three of my takeaways:

1. Any doubts about this team moving to Brooklyn should probably end. Yes, the team has continued to run into multiple roadblocks, but Prokhorov is also purchasing a large percentage of the Barclays Center and the Atlantic Yards project as part of the team purchase. The potential value of this team is really based on their ability to get into the new facility in the better NY market, and he would not be spending the money without being confident in that future value. You’re going to see this project move quickly now, especially with a three month deadline to break ground (otherwise they’d lose their tax-exempt bond financing arrangement with New York and Barclays could back out of the naming rights deal).

2.  The previously thrifty Nets will probably start spending more on players, and I doubt they will care about the luxury tax threshold. I’m saying this based on the behavior of other Russian team owners from other sports, particular European soccer and Russian women’s basketball. Roman Abramovich owns the Chelsea soccer club and Alisher Usmanov has a large stake in Arsenal F.C., and both have shown a willingness to spend money on players, particularly Abramovich. Owners from Russian women’s basketball teams have been willing to spend a lot of money to bring over the best players from the U.S. and other countries. The common trend is spending money on top talent to do everything they can to win. I’d expect the same strategy from Prokhorov.

3.  Prokhorov believes that this will increase the popularity of the NBA in Russia, and I agree with him. The game has been growing there over the past few years, and now the fans in one of the largest international markets will have a team they may identify with more. U.S. teams have gains popularity in foreign markets via foreign players (Seattle Mariners, Houston Texans, etc), so maybe an owner can have a similar effect.

By now, everyone knows the story, but let’s do a quick recap anyway.

• Jordan Crawford, a college basketball player from Xavier, attended a Nike basketball camp that LeBron James was at.
• During a game at this camp, Crawford dunked over LeBron.
• Employees from Nike confiscated all video footage of said dunk, possibly at the request of LeBron.

I know that I’m skipping over the details of the story, but that’s a nice quick summary.  The news of this generated a lotof buzz in the sports media, both traditional outlets like television and radio, as well as new media outlets like blogs and social networking sites.  The big questions were:

1. Did LeBron and Nike make the right or wrong decision in confiscating the footage?
2. Will we ever get to see this dunk?

Well today, the 2nd question was answered, as two different video clips of said dunk have been released on TMZ.com and eBaumNation.com.  Here’s some of the footage (Note – I am operating under the assumption that this is legitimate. There is always the chance this is fake.)

So now we all must return to the first question – was the original decision to confiscate the video of the dunk a good or bad move by Nike and LeBron?  I heard a lot of people saying that in the age of YouTube, it was a good thing to take the video, otherwise the “embarrassing” footage would be out there for the world to see for years to come.  By taking the video away, you’d get a short-term negative reaction, but ultimately the story would fade and LeBron’s reputation wouldn’t take a hit.

However, I completely disagree, and I think that so far, the evidence is in my favor.  By taking away the video, Nike turned this into a much bigger story, unintentionally creating a viral conversation that most companies would pay big money to generate. Everyone wanted to see this dunk, and taking the footage away only intensified our collective desire.  When the clips leaking out today, Twitter was buzzing with people sharing the link and talking about the dunk. If the video made its way around naturally the day or so after it happened, people would have reacted and then the story would end.  Instead, the story has lasted for several days and will probably continue for several more.

So back to the question one more time – was confiscating the video the right decision?  If they wanted to “protect” LeBron and try to make this a non-story, then no.  However, in an odd way, Nike has generated a lot of buzz and publicity, so maybe it ended up being the right decision but for the wrong reasons!

UPDATE – 7/24/09: News came out today that Nike will now return the confiscated video footage. Of course, this was decided only after other video footage had already leaked.  And according to their statement, their decision to take the video “…was never about the play or the player, it was always about our media policy.” If it was really about policy, why did it occur after the dunk, and why decide to release it now? I don’t know how these decisions have been made throughout this story, but they did either strategically or accidentally manage to sustain quite a buzz surrounding all of this, regardless of what their actual intentions might have been.

Today’s post is courtesy of guest blogger Joshua Duboff of The Sports Business Exchange.

The day after the NBA Draft is usually devoted to commentaries on which teams end up as winners and losers from the night before. This Draft offered plenty of opportunities for discussions. However, what rarely gets discussed is the Draft’s sponsors. I attended last night’s draft as a mere spectator, but as many in the sports business encounter, I could not stop myself from looking around for sponsors and analyzing their activation. From what I could gather, there were four sponsors: EA Sports, Adidas, Kia, and Hewlett Packard. Here are last night’s sponsor winner and losers for on-site activation.

Winner – EA Sports:  EA Sports had the best sponsorship package of the evening. Not only was their logo everywhere, including the back side of some of the tickets, but they had an activation kiosk in the main lobby of WaMu Theater as well. At the station, fans could pose with a basketball and have their picture superimposed onto the cover of NBA Live ’10. The photo printed out and was a great take away from the evening. There were also gaming stations where fans were playing Playstation. While I couldn’t get confirmation, I assume the fans were playing NBA Live ’09, since the 2010 version doesn’t come out until October 6th (I only know the release date because of last night’s sponsorship). According to a Sports Business Journal article from June 22, EA Sports also gave away branded Dwight Howard Fathead Tradeables to fans as they left the event. I stayed until the very end of the Draft and was then ushered out a side door so I did not get a promo. If this promo is true, that’s a good take away item, although I’m not sure how a Dwight Howard Fathead was embraced in the New York market. At my desk, I still have my green Sprite cup from the 2007 NBA Draft.

Losers – Kia & Hewlett Packard:  Kia and HP took different routes. Kia handed out reusable bags with car information pamphlets inside. Many fans grabbed a bag, but many bags eventually found their way to the ground as well. The color of the bags (redish brown) left something to be desired and lacked distinguishable marks to recognize the 2009 Draft. Inside the theater, the video boards rotated between sponsor logos (EA Sports, Kia, HP). This was the only sponsorship I could see for Hewlett Packard. There was no activation, simply signage (note: most of HP’s sponsorship was behind the scenes with printers and scanners).

Undecided – Adidas:  I had to be reminded that Adidas was a sponsor because there was no activation outside of selling NBA Draft merchandise. Had I been in the market for a new hat, I probably would have more easily identified Adidas as a sponsor. That being said, there was a long line at the merchandise table all night. With both local teams only having on relevant pick and assuming most fans are from the Tri-State Area (in other words, few people should be there buying Clippers or Grizzlies gear), I suspect Adidas was pretty happy with the crowds at their table.

Like I mentioned earlier, I may have missed some activation points. However, if I as a sports business professional couldn’t find these points, I can’t imagine the rest of the fans could either. EA Sports wins.

Here are three quick thoughts on sports business storylines for the 2009 NBA Finals.

• What happens to the Kobe/LeBron ads?  Whether it’s Vitamin Water, Nike or the NBA itself, there was a lot of hype focused on Kobe vs. LeBron.  Now that the Magic have eliminated the Cavaliers, will these ads disappear?  Maybe Nike can add a puppet for Dwight Howard, since those commercials had done so well.
• Speaking of Mr. Howard, how will he be used in the NBA’s marketing efforts, or in the marketing from league partners?  Off the top of my head, I’ve only seen him in the T-Mobile ads where he plays second fiddle to Wade and Barkley.  Howard is a funny, charismatic athlete and should be easy to promote.  When I asked people on Twitter what stories they were following, this was definitely the most common response.
• The ratings for both conference finals were excellent, but will any disappointment about the match-up impact the rating for the finals?  I think there will be a small hit, but they still have the power of the L.A. market.  I think one early win from the Magic would reassure people that it will be a good series and keep the viewers tuned in

And of course, I cannot forget the NHL Stanley Cup Finals, even if I’m two games late!

• How will the declining auto industry and specifically the recent bankruptcy filing by GM affect ticket sales for the games in Detroit.  The Red Wings do a great job drawing fans in, especially in the playoffs, but the fans still need money to buy the tickets.
• Is the rematch from last year’s finals a good thing or a bad thing for the league? Since we’re two games in, we already know some of this answer.  The ratings are upfrom games 1 and 2 last year (which were on Versus) and from NBC’s first two games last year (games 3 and 4).  I would think the league is happy to see the Penguins come out of the East, but it might have been a great opportunity to strengthen the NHL’s presence in Chicago (top 5 media market) if they had advanced over Detroit.
• Does the NHL need to worry about over-marketing Crosby?  Clearly he’s one of the most talented players in the game (arguably #1), but his team is already down 2-0.  Is there a risk to pushing Crosby if his team fails to win again this year?  Maybe there is too much pressure on him to succeed.

Finally, here are the results of the poll that I’ve been running the past two weeks:

While more readers said they were paying closer attention to the NBA playoffs, the numbers are pretty close!  

So what other stories are you following?  Leave your thoughts in the comments!

UPDATE:  Well, it didn’t take Vitamin Water long to get their Dwight Howard ad together! Check out this post from Darren Rovell of CNBC, complete with the commercial video clip.

Vitamin Water has recently come out with a new advertising campaign, based around the argument of “Who is better – Kobe or LeBron?” I’ve seen these ads both on TV and online (ESPN.com had this campaign on their frontpage yesterday). You can view the most recent television commercial below:

www.youtube.com/watch?v=JaO5lmXpSxI

Now, if you’re going to pick a couple of NBA players to promote your product, you really can’t go wrong with Kobe and LeBron.  However, I wonder if they planned this campaign weeks or months ago, based on the thought that the Lakers and Cavaliers would face each other in the NBA Finals.  Both teams were considered almost locks to make the finals when the playoffs started, but now some people believe that the Lakers (and maybe even the Cavaliers) could be upset in the conference finals. 

My question now is, looking at this campaign as an example, is it too risky to focus on certain players during the playoffs since their visibility will drop if their team is eliminated?  Will Vitamin Water continue to use the campaign during the finals if either team is eliminated?  Or maybe, are Kobe and LeBron such powerful icons that it doesn’t matter if one of them loses before the finals?  I have to believe that an early elimination of the Lakers or Cavaliers would have some negative impact on this campaign.  What are your thoughts?

Remember to check out TheBusinessOfSports YouTube Video Library for more sports commercials, viral videos, and other valuable content.

Everyone here has most likely seen this classic sports commercial, featuring a very intense game of HORSE between Michael Jordan and Larry Bird:

Why doesn’t the NHL (or one of the NHL’s top sponsors) create a similar commercial featuring Sidney Crosby and Alex Ovechkin?  These two are clearly the most marketable players in the league, and on top of that, they have quite the individual rivalry brewing.  How hard would it be to put the two of them together in a hockey-style HORSE match? 

If I was creating this commercial, I’d even try to make it as close to the commercial above as possible.  In fact, isn’t McDonald’s a league sponsor?  They should be the company to recreate it.  Combining the nostalgia of the original commercial with the top two emerging stars of the NHL would be an instant hit!  Someone get McDonald’s and the NHL on the line!

If you are a fan of ESPN and the Sports Guy, then you’ve probably seen something lately about his interest in being the new general manager for the Minnesota Timberwolves.  This isn’t the first time that he’s asked to be considered for an open GM position (last year, he wanted an interview for the Bucks’ GM opening). 

Just to have a little fun, I’d like to take a few minutes to list some of the pros and cons of actually making Simmons the team’s GM.

Pros:

• The Timberwolves become an instant story this year, regardless of the on-court performance.  The amount of media coverage the team would receive would be enormous, and would easily help drive ratings and ticket sales. 
• Even without the media aspect, Simmons could be the one front-office signing that by itself could sell tickets.  How often does that happen?
• Team have made unorthodox hiring decisions before.  We’ve seen TV announcers without playing experience become managers, so maybe this isn’t as much of a stretch as we think.
• Surprisingly, if you read Simmons’ columns and listen to his podcasts, he does seem to have a fairly impressive depth of knowledge about the game.  This is even validated by current Rockets’ GM Daryl Morey.
• He has offered to work for no salary, which in this economic climate, is not a bad offer.  His only requirement is permission to write a book, which I’m sure the team would be entitled to some of the revenue from.
• If the team is open to taking a chance like this, what better time than now? The team is not poised to win right away, and their best player will probably miss the first part of the season, so they don’t have much to lose.

Cons:

• While he likes to think he knows enough about basketball, that can easily be overconfidence, and a lack of knowledge would quickly be exposed in any decisions that he makes.  In particular, he admits that he doesn’t follow college basketball closely, making him a liability in the draft process. Also, considering he’s never worked for a team before, he’s going to need a lot of time to catch up on the basic elements of working with a franchise.
• A hiring like this might easily create a circus atmosphere, which could ultimately end up having a negative affect on sales, driving away some of the core fan base.  It can also hurt the morale of the franchise, both on the employee side and from the players.  This type of impact could have long-term effects on the team culture.
• Coaches and GMs need to have a very close, positive relationship. So would the coach be willing to work with Simmons?  Or from another perspectives, would other GMs not take him seriously and in turn be less willing to work with him?
• Who would he hire as his staff?  While the GM makes the final decision, there are a lot of people who help on the basketball operations side, and most GMs hire their own staff.  He’d be very dependent on the decisions of others in building up a staff, or worst case, he’d want to hire his friends!

Could “Simmons as GM” turn into a business success, or would it disintegrate into a complete failure and make the team the laughingstock of the league.  The problem for Simmons is that this could swing to either end of the spectrum, and I don’t think any franchise would risk being on the negative end of that one.  However, I don’t think there’s any downside to at least giving him an interview.  You’d get a nice spike in media attention for the team, and they might be surprised to find out he’s more qualified than any of us realize.

So what do you think?  What other pros and cons need to be added to the list?

The Phoenix Suns are one of the most proactive teams when it comes to using Twitter in creative ways.  Here are some  highlights of what they’ve done so far:

• They have multiple staff members all using Twitter, which allows them to be very interactive with fans and give their accounts distinct personalities while still promoting the team.  You can view a complete list of their staff Twitter accounts here on Suns.com.
• They have three players also using Twitter – @the_real_shaq, @the_real_nash, and @jrich23, and Shaq is arguably the most popular user on Twitter today.
• Recently when Shaq was out at a mall, he tweeted that the next person to come up to him and mention his “tweet” would receive free tickets to a  game.  They’ve also had Twitter trivia contests on the main Suns twitter account (@PhoenixSuns) to give away free tickets.
• They hosted a Tweet-up, where people following the Suns Twitter accounts were able to buy discounted group tickets and get access to a very unique Suns experience.  Check out this video about the event:

• They just celebrated Shaq Day – a virtual birthday for Shaq, where they encouraged other Twitter users to create Happy Birthday videos for Shaq and share the links on Twitter.  Each tweet was marked with the tag ”#shaqday” so that people could easily find them.  You can watch the video that spawned the contest here, and one winner was chosen by Shaq himself to win a special prize.  We don’t know the prize yet, but I bet that it will get a lot of follow-up exposure on Twitter.  You can see all of the participation in this virtual event by going to search.twitter.comand searching for #shaqday.
• Yesterday during the Suns/Spurs game, they participated in a “virtual chant challenge” between themselves and the San Antonio Spurs Twitter account (@SpursDotCom). Followers of the two teams were encouraged to tweet about the game and include either “#GoSuns” or “#GoSpursGo” in their messages, while the official accounts kept track of the number of chants. I believe the Spurs technically won the contest, but both sides won by generating fan conversation about their teams.

Most teams are still trying to figure out the best way to use Twitter, and the Suns are definitely leading the way.  Their ideas might not work for all teams, but their work should help teams come up with their own creative ways to reach their fans through Twitter and social media in general.

In a few days, the NBA will introduce HORSE as a new part of the All-Star Weekend festivities.  This could be a very entertaining event for fans, with the players attempting to one-up each other on their best trick shots.  The lineup of players might not be particularly impressive (Durant, Mayo, and Johnson), but I still think this new event will be very successful.

The most interesting thing from a business perspective is the sponsorship deal that goes with it.  Rather than the typical presenting sponsorship deal, the NBA has renamed the actual game after the sponsor GEICO (click here for the recent press release).  Some people might balk at this, but I think its a very creative deal by both parties.  Fans have gotten used to tuning out many sponsorship deals, but it will be impossible not to connect this new event with GEICO.  If HORSE turns into a fan favorite, then GEICO has a great platform to build a long-term NBA relationship off of and the league could get a long-term sponsorship deal in a high-value category.

The only way I think this deal fails is if the game itself is boring and uneventful, and the NBA decides not to bring it back next year.  If that happens, part of the blame could fall back on GEICO, even if it has nothing to do with their involvement.  Both the NBA and GEICO need to go above and beyond to make this event a success.  They both have a lot of money riding on it!

It’s been a busy week in sports business, which is a little unexpected since things tend to die down a bit after the Super Bowl.  I’ve already written about the potential Ticketmaster/Live Nation merger, but here are some quick thoughts on other news items from the past few days:

- Michael Phelps:  So the golden one was caught on film with a bong, not exactly a good PR move.  If this was his first “offense,” then I think it would be less of a story, but he also had a DUI incident a couple of years back.  Some people are sticking by him, most notably the USOC and Speedo, while others like Kellogg are ending their relationship with Phelps.  USA Swimming is withholding their training money, which for some Olympic athletes would be significant, but this will have little impact on Phelps. 

To me, this story is pretty straight-forward.  Some brands are much more sensitive about any potential negative PR, so they will decide to stray away from Phelps.  He’ll still make plenty of money from other partnerships.  The best thing for him to do is simply stay out of the news for a while and concentrate on a strong performance in July’s world championships.  Nothing helps blow away bad PR like championship performances.

- Spurs Sit Their Stars:  Imagine being a Spurs fan living in Colorado, and buying tickets to see your team when they come to town to face the Nuggets.  The game starts without Duncan, Ginobli, Parker or Finley in the lineup.  No big deal at first, maybe Popovich is trying something out.  But then the quarter, half, and entire game ends without them ever stepping on the floor.  I know this was a strategic decision by the team, but those fans have to be ticked off.  This is an example of a unique conflict between the business side and the team side.  Since the game took place away from San Antonio, the implications are not as significant, but what if “Pop” wanted to do this at a home game against a weak opponent?  What do you tell your fans that expect to see the stars play?  I don’t have the answer to this, but it is an interesting dilemma. 

Also, a friend of mine asked me about the gambling implications of this event.  Think about how much money was wagered on this game in advance, and then the best players for one team just don’t play.  Clearly Popovich is a well-respected and ethical coach, so no one is questioning him along these lines  But imagine if this was a Pete Rose type of character making this decision.  Then what would you think?

- Who Needs $25M?  Apparently Manny doesn’t need it, or at least feels he’s worth more.  For the public, it is hard to imagine someone turning down $20-25 million per year in this economy.  I believe that Boras is overestimating what the teams are willing to commit to, considering the teams don’t know how the recession is really going to impact ticket sales and other revenue streams.  I would not be surprised for Manny to come back to the original two years, $45M offer that the Dodgers started with (or something close to it).  Boras has caved before when deadlines get close (Matsuzaka’s negotiation comes to mind).

- How About $18M?  Bud Selig might not hit like Manny, but he gets paid almost as well.  News came out about Bud’s salary from last year, which I don’t feel is inappropriate considering he’s the senior leader for a company that generated over $6 billion in revenue last year.  The unfortunate thing is the timing – it looks bad for MLB for this salary to come out when others are losing their jobs.  I think this story blows over pretty quickly, and maybe Bud could generate some good PR by donating a part of his salary next year to charity.  Maybe he could start a league-wide initiative that other owners and players could support.  That would make for some positive PR.

Jason Peck also has a good weekly recap on his sports business and social media blog.  His site is a great resource for social media content in sports.

Adidas has put together a very interesting and interactive campaign called “Me, Myself” to support the launch of their new women’s apparel website.  Visitors have the opportunity tobe the new “face of adidas” by entering a special contest, either through the website or in select stores.  Participants can upload their picture and share a personal, inspirational story that other visitors can view and vote on.  The site also allows for voting via an integration with Facebook and other social networking applications.  At the end of the contest, three winners will be chosen to be in a photo shoot with Candace Parker of the WNBA, and these photos will be the basis of many online and in-store marketing elements. 

This campaign looks like it has a lot of potential for several reasons:

• A close partnership with Candace Parker, who is one of the most recognizable and successful female professional athletes
• Combining online and in-store elements to reach consumers through multiple channels
• Creating multiple interactive elements (entering the contest, voting, and making winners part of the campaign itself), which will better engage their consumers and website visitors
• Connecting with successful social networking platforms to reach a wider audience
• Using personal stories to build a deep and lasting connection to their brand

The campaign officially launched on February 1, and you can see the contest for yourself at www.adidas.com/women.

First Kobe said he would make a great NFL wide receiver:  “I’d be a wide receiver. I’d be a bad (man) too. No more red zone issue…just throw it over the top. I’m Mossin’ it.”

Now he says that he could play left field for the Dodgers: “Put me in left field and I’d run it all down. I’m faster than Manny.”  He’d also bat third, of course: “I want the clutch situations. Put me in that pressure spot.”

What’s next…Kobe strapping on some skates and playing on the front line with Crosby or Ovechkin?  In all seriousness, through these quotes Kobe has created another opportunity to virally market himself.  Perhaps Nike could use these ideas as the basis for a new commercial along the lines of what LeBron James recently did with State Farm, where he announced he would play for the Cleveland Browns (you can watch that commercial below).  Besides LeBron, we’ve seen other one-sport crossover commercials that were well received – Vitamin Water’s commercials with Shaq, Ortiz and Urlacher come to mind.  Can’t you see a montage of Kobe playing and excelling in the different sports (football, baseball, maybe ping pong!) working well as a fun video campaign?  Kobe has definitely created the opportunity with his quotes!

Kobe Bryant has done it again.  Earlier this season, we had “Kobe jumping over an Aston Martin.”

That video has been viewed over 7 million times on YouTube.  Then we had “Kobe jumping over a pool of snakes.”

That video went well over 4 million views.  Now, we have the latest video of “Kobe selling ankle insurance!”

This video is already over 300,000 views in less than a week.  Nike and Kobe have really dedicated a lot of attention to the idea of viral videos and the response has been overwhelming.  I think we can expect to see many more brands and athletes use this type of approach to promote their events and products in the near future.  Thanks to Darren Rovell of CNBC for pointing out this latest viral campaign.

Are there other examples of viral sports videos that you really liked or that you thought were very effective?  Share your thoughts in the comments!

With 2008 winding to a close, I want to countdown the top sports business stories of the year. 

#5 – The Sonics Say Farewell to Seattle

The Seattle SuperSonics joined the NBA in 1967 and won an NBA title in 1979.  The team had a tremendous following in the Washington area and incredibly loyal fans.  They also had a local government that did not want to spend money on a new stadium, and in this day and age, franchises all want new stadiums and the new revenue streams that come with them.  But the team had a lease with KeyArena, so even without a new stadium, there shouldn’t be any threat of them leaving, right?

Enter Clay Bennett and his desire to bring a team to his hometown of Oklahoma City.  He said all the right things about wanting to keep the team local, but most people believe that this was just a little “misleading.”  Negotiations commenced and they were able to buy their way out of the lease (the small sum of $45 million), and with the full blessing of the NBA, they were off to Oklahoma City.  A fan base is devastated as a team flees for the promise of more money elsewhere.

What’s the worst part of this story?  The refusal of the city to approve a new facility?  The lies from Bennett?  The NBA’s cooperation?  You can blame everyone for what happened, and it sets an awful precedent for future negotiations between cities and teams that want new stadiums.  I hope that we don’t see a repeat of this story in the future, but I would not be surprised if it happens.

Note: I will continue to countdown the top five stories after the new year!  Happy New Year everyone!

I will admit right up front that I am biased, since I was part of the marching and pep bands while in college, but having a live marching band and pep band at college sporting events is a valuable part of the gameday experience.  This includes pregame shows (think of the tuba player dotting the “i” in the Ohio State pregame), halftime shows (some southern schools have very elaborate and impressive performances), and timeout performances during both football and basketball games.  I am a firm believer that a live band can generate as much if not more enthusiasm from the fans than any canned music can.

On that note, I wanted to mention two professional teams that make use of a live band, the Washington Redskins and the Baltimore Ravens.  Here are a couple of clips (note – the audio quality is not that great, since these are fan recordings):

The band is part of a long-standing tradition for both of these teams, but I think that other teams in both football (marching bands) and basketball (pep bands) could benefit from adding a live band to their game experience.  The only downside would be a small drop in ticket inventory for the band’s seating area, but this should not be a very significant issue for most teams.  What do you think?

Update:  TheTicketSalesCoach just told me that the Orlando Magic use both a pep band and a drum line as part of their game experience.  If you know of other examples (good or bad), please leave a comment!

One of the factors that impacts the demand for a product is the availability and price of substitute products.  In sports, substitute products are any alternative products or activities that provide entertainment to the consumer, such as watching television, going to an amusement park, or seeing a movie.  One way to reduce the threat of substitutes is to directly compare yourself to the substitute product and show why your product is the superior option.  The Orlando Magic have taken this direct approach with a recent email campaign:

The Magic have realized that movie tickets are a more affordable entertainment option that games, especially with the current economic conditions.  Rather than ignore the issue, they went right to their fans with an option that counters the ticket price issue, and highlighting the better entertainment value that the Magic games offer over going to the movies.  Teams are sometimes afraid to take such a direct comparison approach, but I think it can be very effective in acknowledging, addressing, and overcoming the competition. 

My only negative comment about how the Magic did this, was that the email takes you directly to their Ticketmaster purchasing page.  I understand that they want to convert a sale from this message, but the email alone is probably not enough.  A landing page that can go into some more detail on this comparison, tauting the benefits of tickets, maybe with an engaging flash video would probably lead to a higher conversion rate.  You have to engage the fans interest before you can monetize, and while the email message is great, its not engaging enough.

Yesterday the Seattle Mariners named Don Wakamatsu as their new manager, the first Asian-American manager in MLB history.  This is a great story for MLB, as the league has really tried to enhance their international presence over the past few years.  The number of foreign-born players continues to increase, including from outside of North and Central America.  The World Baseball Classic was viewed as a big success and the next WBC is coming up in March.  The league also ran the China Series in Beijing this preseason and actually started the regular season in Japan.

MLB is not the only league making large strides in reaching an international audience.  The NHL started their regular season in Prague and Stockholm this year.  The NFL has had a regular season game in England each of the last two seasons.  The NBA had preseason games in China and Europe this year, and has an international department dedicated to developing the game and leagues in Europe and Asia.  I’m not even going to talk about soccer, which is the most international game of all (although I do believe that there were more international exhibitions with MLS teams this year than ever before).  Clearly the U.S. sports leagues have a global focus.  My question is, for which sport(s) does it make the most sense, and are the leagues doing it the right way?

I think that the NBA has the best international plans of four major leagues, at least at this point in time.  Their dedicated global offices have done a great job in promoting and developing the game internationally, and the increase in popularity has been tremendous.  We are not too far away from seeing NBA-managed leagues in other countries.   The NHL has more work to do, but they took a good first step this year with the Prague and Stockholm games.  The U.S. audience has not embraced hockey as much the last couple of seasons, but the game is very popular in Europe and Russia, so tapping into this audience is very important.  MLB has done a pretty good job with the first WBC, but there are still some kinks to work out logistically.  They also haven’t been able to really spread the game much beyond Asia and Central America. 

The NFL has probably done the worst job of the four, and the game just might not translate well internationally.  After all, every other country has their own game of “football.”  The regular season game in London is just a novelty at this point, and the NFL Europe was a complete failure.  The more interesting markets for the NFL to look at might be Mexico and Canada.  They had a great audience with their preseason game in Mexico City, and Canada has a long track record in football with the CFL. 

What do you think of the various international efforts the leagues have made recently?  Which sport has done the best/worst job?  What sport has the biggest needs internationally?  Let me know what you think in the comments, and please answer the poll question on the right.  Thanks!

Normally when the SEC comes up in a sports conversation, it’s in reference to the Southeastern Conference.  Not so this week, as Mark Cuban has gotten himself into some potential trouble with the U.S. Securities and Exchange Commission.  You can hit Google News to find all the formal details, but in summary, it seems that back in 2004, Cuban sold off his shares in the search engine company Mamma.com the day before the company was going to offer a public sale of low-price shares.  This decision saved him about $750,000, as the stock value dropped the next day with the public sale announcement.  This would appear to be a case of insider-trading, but Cuban is denying it.  Here are some of my thoughts on the situation:

• Some people are not believing the story is true because, after all, it’s only $750L, which is nothing for Cuban.  However, history tells us that people in positions of power and authority get overconfident in determination of what they can and cannot get away with (e.g. Martha Stewart).  Cuban strikes me (and everyone else) as the type of person who does not like to lose at anything, so the story seems very believable to me.  The truth will ultimately come out in the investigation.
• I’ve been asked how similar this is to the Martha Stewart case, where she did end up in jail.  The stories start out similar, but the key difference as of now is that Martha lied and falsified information, which pushed it over the top.  If she had been honest about everything, she would have simply been fined by the SEC.  If Cuban is wrong and doesn’t do anything else to complicate the situation, he’ll just be facing a steep fine without jail time.  Of course, if he didn’t do anything wrong, this will eventually become a non-issue.
• There is no way that Cuban will be able to purchase the Cubs.  Baseball did not want to see him as an owner, but the league didn’t necessarily have a good reason to reject his bid.  Now they have a very good reason.

The most interesting situation from a sports perspective is, what happens with his ownership of and involvement with the Mavericks?  There is precedent for an owner to be suspended from his own team in situations like this.  George Steinbrenner was suspended for 15 months for illegal campaign contributions, and even more recently, Ducks co-owner Henry Samueli was suspended indefinitely after pleading guilty to lying to the SEC in an options backdating investigation.  Stern has never been hesitant to take quick, decisive actions regarding any negative issues, so he might not wait for the investigations to get resolved.  On the other hand, if he does suspend Cuban now and he’s innocent, I wouldn’t be surprised to see a counter-suit of some kind.  Stern’s best bet is to wait-and-see for now, and if Cuban is guilty, I think we’ll ultimately see something along the lines of a 12-18 month suspension.

Earlier today, I wrote about the economy’s impact on sports, and noted that the impact really hurts on the ticket side more than anything (so some teams/leagues are trying to offset that via media revenue).  Well, the New Jersey Nets have come up with a creative way to try and help their fans get through this tough time, while also helping drive ticket sales (reported by ESPN.com, 11/12/08).

Right now, if you are unemployed and submit your resume to the Nets’ job bank, you can get two complimentary tickets to an upcoming game (click here for the actual promotion details on the Nets website).  The Nets will distribute the resumes to their corporate partners as well as participating season ticket holders’ businesses.  They are also hosting a career fair at the Izod Center, and anyone attending will get tickets to that night’s game.  This is a great promotion for multiple reasons.  They are going to generate tremendous good will from their fans and partners.  They found a good way to leverage their open inventory.  they are offering a new benefit to their season ticket holders and corporate partners.  And of course, if they do help some of their fans find jobs, you can believe that those fans will be ticket buyers for life!  Nice job all around by the Nets!

Tomorrow (or today, depending on when you read this) is Election Day, and in case you didn’t notice, it’s a Presidential election year.  So lets take a look and see some ways that Election Day and sports are overlapping:

• Kevin Garnett and Tracy McGrady have Adidas sneakers that encourage people to “Vote ’08″
• Both Barack Obama and John McCain will be interviewed at halftime of tonight’s Monday Night Football game
• The New Jersey Nets are encouraging fans to buy tickets and “Vote Nets” – they will also provide live election updates during the game
• The Dallas Mavericks have partnered with a local radio station, 1200 WOAI, for a $12 Election Night ticket offer
• The Los Angeles Kings are offering 44% off of tickets and select merchandise in honor of electing our 44th President

Ironically (or maybe by design), four of the seven NHL games tomorrow are hosted by Canadian teams, avoiding a conflict with the election.  On a league level, I know the NHL is going to start their all-star balloting soon.  Election Day would have been a great marketing platform to launch the balloting and drive “voters.”

Here are my recommendations and quick picks for this week:

Book: License to Deal by Jerry Crasnick - This book is more of a fun read than anything else, but it does give the reader a unique look at the world of being a sports agent.  Crasnick follows around Matt Sosnick, who runs a small agency with one marquis client (Dontrelle Willis).  I can’t believe that all agents are as genuine and interesting as Sosnick, but Crasnick does write about other notable agents in the business as well.

Website: BNET – The Great American Business Model – BNET is a business and management resource site, and they put together a special feature on the business of baseball.  The site includes some good content on baseball’s monopoly status, stadium and media revenue, and player salaries.

Team: Oklahoma City Thunder - We are just a couple of weeks away from the start on the NBA season, and with it, the official first games of the Oklahoma City Thunder.  Following the creation/transition of a new team or a team relocation is very interesting.  How does the team build its brand?  How do they build a relationship with a new fan base (which is particularly unique in this case, with the Hornets having played their temporarily)?  What is the relationship like with the new city and arena?  Combine this with the backdrop of how the team left Seattle, and you have a great story to follow this season.

Other: The New York Jets Coaches Club - The Jets have rolled out a huge campaign to auction off what they’re calling the best 2,000 seats in the stadium.  They are using the web, television, and direct mail to promote this seat auction, which is being run through StubHub.  You can see their commercial with Donald Trump on YouTube, and just today I received a beautiful direct mail piece (it looks almost like a wedding invitation).  I like their initiative, but the timing is unfortunate considering the current market conditions.  I doubt they’ll generate the revenue they were hoping for.

Do you have a good “pick of the week?” Use the Contact Us link at the top of the page and send me your picks!

On October 2nd, Business Week will release their “Power 100″ rankings of the top 100 influential people in sports.  This is always a good read – you can click here to see their 2007 list.  The list contains players, owners, executives, and more.  Last year’s #1 selection was Roger Goodell, which I think was a pretty good decision considering all the attention on the NFL after his transition to the Commissioner’s office (Pacman Jones and other off-field incidents, the Patriots, NFL Network problems) and how he quickly became more publicly visible compared to his predecessor. 

This year, I think the favorites would have to be David Stern (esp. after the Donaghy issues), George Bodenheimer, or possibly LeBron James (I would think he’d be the top player on the list, only because Tiger has been out of the spotlight lately).  In the meantime, BusinessWeek has a nice profile of Stan Kroenke, owner of the Denver Nuggets, Colorado Avalanche and the Pepsi Center (9/20/08).  There’s no doubt that marrying into the Walton (Walmart) family helped his pre-sports career, but since then, he has quietly turned into one of the most successful sports owners in the business.

I learned from today’s Sports Business Dailythat the Minnesota Timberwolves have launched a season ticket promotion called “Pay the Pick.”  You can see the details on it at the Timberwolves’ 2008 Draft Central webpage, but in summary, if you put down a $43 deposit for season tickets now, you can lock in a low price based on what pick the Timberwolves end up with.  A season ticket would cost $1 a game if they get the #1 pick, $2 a game if they get the #2 pick, all the way up to $5 a game for the #5 pick (the highest pick they could end up with).

Personally, I think this is a great promotion for a team that desperately needs some excitement after dealing away Kevin Garnett last offseason.  Before last year’s draft, there was a lot of excitement from awful teams about the chance of landing either Greg Oden or Kevin Durant, and many teams were hoping to take advantage of a spike in season ticket sales if their team landed the #1 or #2 pick.  This spike did happen for the Trailblazers after the won the draft lottery.  However, for teams like the Celtics, Bucks, and Grizzlies that lost out on a top-2 pick, there was no significant increase in season ticket sales (at least not before the Celtics made other moves).

This promotion by the T-Wolves has the potential to build up excitement and interest in season ticket purchase, without the dependence on actually getting a top pick.  This is even more important this offseason when there is no consensus superstar top pick (some say Beasley, some say Rose, etc.).  The more that a team can generate interest without depending on results (especially in this case where they have no ability to influence the results), the more control they will have on increasing their potential revenue.  The only thing that the T-Wolves need to prepare for is how to handle those customers that make the $43 deposit if the team does end up with the #4 or #5 pick.  A well-trained outbound sales force should be able to convert these deposits into sales without significant losses.