Sports Revenue Final
What is considered the basic stage of sponsorship objective?
Attention/ Awareness
A television program's "rating" represents / defined as ________________
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As discussed in class, the gap between the "Haves" and "Have Lesses" is a serious concern across all four major leagues (in terms of revenue generation) - Here study issues related to %age of ticket sales in the 'Big' 4, stadium capacity, # of home games, reliance on ticket revenue, etc.)
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In class, several reasons for declining or flat attendance trends were discussed. What are the most serious challenges to live sporting event attendance?
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Today, a number of teams are offering successful "mini-season" ticket plans. What are the common features of mini plans?
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Understand the percentage of seat capacities sold in the four big sport leagues
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Understand variances in ticket prices within the four-major league sport teams in North America
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What are the benefits/ offers typically provided to a corporate sponsor?
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What are the factors that influence (in revenue generation) the choices individuals and organizations make regarding financial management?
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What are the two forms of sponsorship investments?
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What benefits does sponsorship provides to a sponsorship company?
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What is PSL and what are its features?
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What is one of the most serious concerns about the use of dynamic pricing?
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The five ways of financing the operation of sport organizations are ____________?
- Debt Financing (the ones in italics are the most commonly used by sport organizers) - Equity Financing - Reinvestment of retained earnings - Government Financing - Gift Financing
Three Divisions of Economic Impact
- Direct Impact - Indirect Impact - Induced Impact (Multiplier Effect)
Direct Spending Analysis
- Incremental Visitors Spending - Organizational Spending
Economic Impact Studies can be done on
- Sporting Events - Sporting Team - Sporting Facility - Sport - Sport Organization
The three commonly used techniques in naming right valuation are________ ________
- The cost - The income - The market share methods
Discuss some common facts related to naming rights (e.g., terms usually range from three to 20 years,longer terms are more common)
- Usually, properties like a multi-purpose arena, performing arts venue or stadiums, as per industry convention, the terms ranges from 3 to 20 years - Longer terms are more common for higher profile venues such as a professional sports facility.
Identify, at least, four concepts that are included in the definition of naming rights?
1. Form of title sponsorship 2. Where a corporation or other entity purchases 3. The right to name a facility 4. In exchange for monetary payments
The average royalty rate charged by major sports leagues generally fall into a range of ______
4%(For Toys and Games) to 20% (for trading cards and video games) Royalty rates for teams and leagues vary, ranging from 8% to 20%, with the majority at around 12%
Steps in an Economic Impact Analysis
1.Defining relevant market/geographic area of impact 2.Identifying incremental visitors 3.Identifying direct spending 4.Identifying indirect and induced spending 5.Multiplier effect
The first nationwide sport radio broadcast was in the year:
1926
According to the industry convention, what should be the sponsorship activation budget Ratio?
1:5 / 1:10 Ratio
In year 2017, North American sponsorship spending on average is estimated to Be___________
23.1 billion
Licensing-
A contractual agreement whereby a company may use another company's trademark in exchange for a royalty or fee Example: sports apparel, sports footwear (outdoor), sports accessories and toys and videogames or software, domestic and house wares among others. .... products like tailgating supplies, home décor, home goods, and other accessories
celebrity License and celebrity endorsement.
A number of celebrity athletes, such as Cristiano Ronaldo, Roger Federer, and LeBron James are using their names and image in the advertising world in two forms
What is the state of ticket revenue in sport in the recent years?
A: $16 Billion spent in U.S. yearly on sporting event tickets B: key source of revenue for many organizations 30% of total income of Division I college sports C: Prices doubled over past decade D: Internet's ability to facilitate distribution process (sale,resale, etc.)
What are the different stages of sponsorship (SponsorMap Model) - in the right order?
A: Attention B: Understanding C: Engagement D: Appreciation E: Commitment
What are the advancements in ticketing operations technology at sporting venues in the past decade?
A: Computerized tickets, electronics turnstiles and smartcards B: Changed focus from audit control to dynamic CRM
Define activation
A: Efforts to support one's sponsorship with additional strategic initiatives (Event oriented advertising) 1:5/ 1:10 ratio. B: Includes digital, mobile and online media
What are the sources of revenue in sport?
A: Gate revenue/ Ticket sales B: Stadium Revenue (Concession sales/ food and beverage/ Luxury suites / club seats / Parking. C: Licensed merchandises (4 'Bigs' - $698m in royalty revenue on retail sales of $12.8n, 2014) D: Sponsorship E: Venue/Naming rights F: Gov't finding/ stadium building G: Donations H: Membership fees
In the discussion of sport events sponsorship, what are the different platforms of sponsorship (and their brief description)?
A: Governing body sponsorship: Entails securing "official sponsor" status B: Team sponsorship: Appropriate platform for local and regional companies or companies with smaller marketing budget C: Athlete sponsorship: Involved some type of endorsement for the sponsors product or service D: Sport media channel sponsorship: companies that purchase advertising or programming during sport related broadcasts E: Facility sponsorship: enables companies to tie directly to the event atmosphere F: Event sponsorship: the directly to event atmosphere G: Sport specific sponsorship: enables company to direct its sponsorship efforts to a specific sport.
What are the three unique features/aspects of sport business?
A: Its product has unique features B: Its unconventional sources of finance C: It distinctiveness as a social institution
What are the two types of owners' objectives within the sport industry (Hint: short-and long-term)?
A: Not necessarily a sound business investment B: Many owners are in it for win Maximization or egotistical reasons C: Want to develop a good SPORTS organization, not a good company (give back to community)
In preparing a sponsorship proposal, what are the things that most sponsorship proposals get it wrong?
A: Only discuss what the sponsor can do for them, not what they can do for the sponor B: Include Logos C: Don't offer creative benefits
Understanding the historical background of ticket sales
A: Preprinted tickets made managing inventory difficult. Tickets were counted by hand and paid for in cash. B: Labor intensive (lots of hand counting and emphasis on audit control) C: Changed dramatically since then
What are the different ticket customer types (and their brief description)?
A: Season Ticket: Ticket holders who purchase tickets for an entire season B: Premium seating: Refers to luxury suits and club seats. Both suites and club seats may be sold on a season or individual games basis. C: Individual game ticket: refers to any seat locations that remain after completion to season ticket sales. D: Mini plans: referred to as multi game plans are offered since many fans either cannot attend all games or cannot afford ticket s for the entire season. E: Group tickets: refers to individual game tickets that have been packages to attract groups of people such as youth sport leagues, churches and local businesses.
- What makes a sport offering (e.g. a basketball game) different from those offerings sold by the likes of car manufacturers, airline companies, banks, hotels, grocery stores, etc.?
A: Simultaneously produced & consumed, & perishable B: A fixed supply schedule.
What is the difference between sponsee, property owner/holder, and activity (e.g., sport), or are they all the same?
A: Sponsor = party seeking association (ex Coke) B: Sponsee = Sponsored party/property owner (e.g FIFA) C: Sponsorship is about placing a sponsor in an emotional relationship between a consumer(a fan) and a sponsored activity (sport event or team) D: A three way relationship (sponsor-property-consumer)
Understand the state and future of revenue generation/ sources in sport
A: Sponsorship has been increasing for past few years B: Attendance is declining for events C: Media Rights is expected to become main source of revenue D: Licensing becoming more and more important
Why is sport financing considered as a unique aspect of the sport industry/business?
A: Sports enterprises earn a significant portion of revenue not only from sale of a product. → Sponsorship sales, merchandise sales, broadcasting contracts, naming rights deals, licensing fee, donations, membership fee, Parking, Venue rental B: Fans often spend more money outside the sport arena (travel, food, drink, souvenirs than on their ticket.
What revenue source generally produces the greatest amount of annual income for NHL?
A: Ticket Sales contributes to at least 50% of their annual earnings.
What are the types of contents that need to be included (and not to be included) in a sponsorship proposal?
A: Title page, how will you benefit the sponsoring company? B: Don't use their logo anywhere on proposal C: Offer more than just hygienic benefits
What is the difference between variable and dynamic ticket pricing?
A: Variable pricing regime combined with tiering. The primary market ticket prices set by a rights owner does not have the same price for the same seat at each and every regular season game or even. There is typically one pricing round for a season so that the initial price set for each seat at each game is unchanged during the season. B: Dynamic pricing regime: changes in the listen ticket prices can occur multiple times due to shifts in the demand for or supply of tickets for a game or event. After the initial round of prices are set, subsequent prices of tickets per game can change based on factors such as recent record of two teams playing, likely individual player appearing, and likely weather for the game. Supply and demand factors are allowed to drive potentially large shifts in prices set for individual games.
What are the main differences between advertising and sponsorship?
Advertising is just putting a name out there and you are not tied to a specific event Sponsorship is subtle, covert, emotional connection, goodwill Advertising is forceful, overt, selfish Overt and Covert
Leagues such as the NFL, NBA, and MLB all maintain "credit facilities" because____?
Because individual teams can borrow from the loan pools at better interest rates.
Why does Major League Baseball sell the lowest percentage of its available seating inventory than any other major professional sports league?
Because they have the most home games throughout the season and they are one of the largest arenas.
Discuss the benefits and risks associated with athletes endorsement deals.
Benefits - Brand stands out from the clutter - Generate brand awareness - Increase sales / enhance purchase behavior - Positively impact stock - Athlete involvement with employees and events Risks - Athlete's decline in ability - Athlete reduced commitment to staying at elite level - Athlete injury - Athlete off-the-field misconduct (assault, weapons, DUI, etc.) - Athlete sports related misconduct (doping, fixing games, bounties)
In 2000s, the first highest paid fee for naming rights belongs to________________?
New York Mets
The first commercial radio broadcast was in the year:
November 1920
Licensor
Leagues or teams paid for the right to manufacture products bearing team and school names, nicknames, colors and logos
Measuring Indirect and Induced Spending
Multiplier Effect
Which league has the highest credit rating in sports?
NFL has highest credit rating = lowest credit risk (they can borrow at lowest interest rate.)
Which major league sport is most dependent on ticket sales?
NHL
Economic Impact
Net economic change in a host community resulting from spending attributed to a focal project (e.g., an event, a sport, or facility).
Aftermarking-
Retaining customers by providing continued satisfaction through after market assessment.
Benefit Selling-
Promotion and creation of new benefits to offset existing perception of the sport product or service
Measuring Direct Impact
Spectator Surveys Corporate Spending Surveys Secondary Research (market demand analysis, spending at previous games, attendance estimates)
What is sponsorship triangle?
Sponsor -Party seeking association (e.g., Coke)- Sponsee -sponsored party/Property owner (e.g. FIFA) Agents -Companies who work on behalf of a sponsor/sponsee
What is the definition of sponsorship?
Sponsorship is defined as "an investment, in cash or in kind, in an activity, in return for access to the exploitable commercial potential associated with that activity"
Understand the definition of sport
Sport is an organized, competitive, and skillful physical activity which includes physical sport, mind sport, eSport, motorised sport, coordination sport, or animal-supported sport.
Up-Selling:
Sport organizations strive to move customers up the ladder from purchasing single-game tickets To Miniticket Plans to season ticket packages.
What sponsorship category takes 70% share of the global sponsorship spending?
Sports is 70% of global sponsorship
What are the three media rights revenue generation models?
Three models of delivering sports content a.) Model 1: Direct to Consumer Model• b.) Model 2: Partner with Broadcasting Channel• c.) Model 3: Via a 'Double Set of Partnerships'
What is referred to as a "time-buy" media broadcast deal?
Time buy (the right holder taking care of all the production and adverts sales)
The most important principle in evaluating EI
To measure new economic benefits that come to the region that would not occur, or have occurred, without the project or the event or the sport .
How is trademark defined?
Trademark is defined under the Federal Trademark Act of 1946 (Lanham Act), as "any word, name, symbol, or device or combination thereof adopted and used by a manufacturer or merchant to identify his goods and distnguish them from those manufactured or sold by others"
In early days (pre-1980s), sponsorship was viewed as ____? What about in 1980s and early 90s, and today?
Viewed as philanthropy As an individual interest of corporate managers rather than a sensible evaluation of the benefits of sponsorship. In the 1980s & early 1990s sponsorship viewed primarily as an alternative to advertising and as a way of obtaining media exposure. •Today, sponsorship has exceeded both media advertising and promotions in terms of year-to-year growth in expenditure.
Give examples of the first few stadiums that were named after a company name?
a.) Busch Stadium → St. Louis Cardinals (Anheuser-Busch head guy owned cards) → 1953 b.) Wrigley Field → Chicago Cubs (William Wrigley was the chewing gum magnate and owner of the Cubs) c.) Fenway Park → Boston Red Socks(owner had a real estate company called Fenway Realty"
Government Financing
a.) Common for private organizations to receive funding from government in various forms. b.) It can be provided by federal, provincial or municipal sources c.) Sources may include land use, tax reduction, direct stadium financing and infrastructure improvements d.) Giants Stadium → tax backing
Reinvestment of retained earnings
a.) Finance operations through reinvestment of prior earnings b.) The portion of earnings that a firm saves in order to fund operations or acquire assets is termed "retained earnings" c.) It is a reinvesting of earning rather than paying them to shareholders as dividends. d.) Most sport organizations are privately held and retained earnings is a common way of financing: acquiring player → improving operation
Equity Financing
a.) In contrast to debt financing, Equity financing a sport organization exchanges a share or portion of ownership for money. b.) Funds obtained without incurring debt or without an obligation to repay the money after a given time. c.) Miami Dolphins used equity finance after purchasing the team in 2009 sold minority interest to marc anthony, gloria estefan.
Gift Financing
a.) Includes charitable donations -- cash and in kind -- made to organization b.) Gifts are primary sources of operating and investing income for major collegiate sports programs c.) NCAA D1 FOOTBALL subdivision schools amounted to $1.1billion
Discuss the public views of / reaction towards some of the naming right deals.
a.) Public view is mixed b.) If the sponsorship company is local company then received better than a company's coming from the outside c.) Selling naming rights after a stadium is already named is hard.
What are the elements that are included in a typical media rights agreement?
a.) Rights and production deal b.) Rights only agreement (production expense covered by rightsholder) c.) Time buy (the right holder taking care of all the production and adverts sales)
What are the three sport business structures discussed in class.
a.) Single owner/private investor model b.) Multiple owners/private investment syndicate model c.) Multiple owners/publicly traded corporation model.
What are some of the reasons why many professional sports teams are struggling to sell the naming rights to their venues?
a.) Stadium has been named after a company for 20 years if a new company tried to take it over people may still use the former names b.) Companies won't be willing to pay large sums of money to buy a stadium with a name already
Debt Financing
a.) When an organization borrows money that must be repaid over a period of time, usually with interest. b.) The sport organizations issue bonds or borrow from lending institutions to finance operation through debt finance. c.) Key point is lender does not gain ownership interest in organization and the sport organization and the sport organization obligation is limited to repayment of debt. d.) Debt: The amount of money an organization borrows from banks of other lenders in the market e.) Bonds: Financial instruments that allow the borrower to both borrow large dollar amounts over an extended period of time (20 or more years) → issued by the government f.) Credit: some professional leagues maintain credit facilities (loan pools) backed by league revenues. Individual teams can borrow from the loan pools at better i rates.
Some of the baseball stadiums built during the 40s were named after the names of team owners. Give three examples.
a.)Comiskey Park → Charles Comiskey (home of Chicago White Soxs) b.) Ebbets Field → Charles Ebbets (home of the Brooklyn Dodger) c.) Shibe Park → Baseball park located in Philadelphia
Naming rights deals usually contain provisions such as_________________?
a.)Contractual clauses. b.)Term (length of deal) c.)Consideration (payment) d.)Expenses (who pays for signage) e.)Signage (how much? Where placed? What kind? What size?) f.)Promotional Rights (use of team marks/players)
Skill
demands training, knowledge and experience that is needed to do something well.
Competitive
an individual or team competes against another or others.
Celebrity Endorser
an individual who enjoys public recognition and uses the recognition on behalf of a consumer good by appearing with it in an advertisement.
Celebrity
an individual whose name has attention-getting, interest-riveting and profit generating value, such as an athlete, an artist, a politician , or a businessperson.
In spectator sports, stadium construction projects are often financed with
bonds
McCracken's (1989) meaning transfer model
contends that celebrities carry a culturally constructed individualized meaning (signified by class, gender, age, personality & lifestyle), and when they endorse a brand they are, in fact, transferring a culturally acquired meaning onto a brand.
Organized
governed by a set of rules
Celebrity License
long-term co branding commitment between a brand and celebrity athlete (Nike & Tiger, Nike & Jordan)
Licensee
manufacturers of licensed products
Incremental Visitors
visitors who came to town because of the event and would not have come to town otherwise.
Casual Visitor
visitors who were already in town for another reason and decided to attend the event. (Only Count spending above and beyond what they would have spent)
time-Switcher
visitors who would have come to town another time, but opted to come to town during this time instead, to attend the event. ((Only Count spending above and beyond what they would have spent))
Three types of Visitors
•Casual •Time-switcher •Incremental