Define marketing myopia give three examples in the sport industry

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Sport Marketing

Fourth Edition

Bernard J. Mullin, PhD

Aspire Group

Stephen Hardy, PhD

University of New Hampshire

William A. Sutton, EdD

University of South Florida

Human Kinetics

3

Library of Congress Cataloging-in-Publication Data

Mullin, Bernard James.

Sport marketing / Bernard J. Mullin, Stephen Hardy, William A. Sutton. -- Fourth edition.

pages cm

Includes bibliographical references and index.

1. Sports--Marketing. I. Hardy, Stephen, 1948- II. Sutton, William Anthony, 1951- III. Title.

GV716.M85 2014

338.4'3796--dc23

2013031098

ISBN-10: 1-4504-2498-8 (print)

ISBN-13: 978-1-4504-2498-1 (print)

Copyright © 2014, 2007, 2000, 1993 by Bernard J. Mullin, Stephen Hardy, and William A. Sutton

All rights reserved. Except for use in a review, the reproduction or utilization of this work in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including xerography, photocopying, and recording, and in any information storage and retrieval system, is forbidden without the written permission of the publisher.

The web addresses cited in this text were current as of December 2013, unless otherwise noted.

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Check Out the Web Study Guide! You will notice a reference throughout this version of Sport Marketing, Fourth Edition, to a web study guide. This resource is available to supplement your e-book.

The web study guide features exclusive video interviews with leaders in the sport industry, offering insight into how they incorporate marketing strategies into their daily work. Activities built around these clips guide you in using core concepts from the text to answer questions about the applied situations in the interviews. Web search activities also provide opportunities for you to compare strategies found on sport organization websites, YouTube, and other online locations.

Follow these steps to purchase access to the web study guide:

1. Visit www.tinyurl.com/BuySportMarketing4EWSG. 2. Click the Add to Cart button and complete the purchase process. 3. After you have successfully completed your purchase, visit the book’s

website at www.HumanKinetics.com/SportMarketing. 4. Click the fourth edition link next to the corresponding fourth edition

book cover. 5. Click the Sign In link on the left or top of the page and enter the e-

mail address and password that you used during the purchase process. Once you sign in, your online product will appear in the Ancillary Items box. Click on the title of the web study guide to access it.

6. Once purchased, a link to your product will permanently appear in the menu on the left. All you need to do to access your web study guide on subsequent visits is sign in to www.HumanKinetics.com/SportMarketing and follow the link!

Click the Need Help? button on the book’s website if you need assistance along the way.

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Guy Maxton Lewis, 1926-2013

Photo courtesy of Special Collections and Archives, University of Massachusetts, Amherst.

We dedicate this book to the memory and legacy of Professor Guy M. Lewis, a true genius and visionary. Guy was a key founder and builder of undergraduate and graduate programs in sport studies and sport management at both the University of Massachusetts and the University of South Carolina. Throughout his long and active career, he constantly searched for ways to integrate the theoretical with the practical, scholars with practitioners. His professional contributions include the North American Society for Sport History, the Sport Management Arts and Sciences Conferences at UMass, and the International Sports Business Conferences at South Carolina. We happily consider ourselves among the many students, colleagues, and professional associates who have benefitted from his wisdom and counsel. He will be missed. His contributions will endure.

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Contents Contributors

Foreword

Preface Web Study Guide Instructor Resources

Acknowledgments

Chapter 1: The Special Nature of Sport Marketing The NBA and Global Marketing Strategy Weathering Recessions The Competitive Marketplace Sport Marketing Defined Marketing Myopia in Sport Change in the Profession Uniqueness of Sport Marketing Wrap-Up

Chapter 2: Strategic Marketing Management Sport Strategy Is More Than Locker Room Talk Marketing Planning Process Strategic Step 1: Develop Vision, Position, and Purpose Strategic Step 2: Develop Strategic Goals and Objectives Strategic Step 3: Develop a Ticket Marketing, Sales, and Service Plan Strategic Step 4: Integrate the Marketing Plan Into a Broader, Strategic

Resource Allocation Strategic Step 5: Control and Evaluate Implementation of the Plan Eight-Point Ticket Marketing, Sales, and Service Plan Model Wrap-Up

Chapter 3: Understanding the Sport Consumer Socialization, Involvement, and Commitment Environmental Factors Individual Factors

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Decision Making Wrap-Up

Chapter 4: Market Research in the Sport Industry Sources of Information Users of Market Research in Sport and Entertainment Application of Market Research in the Sport Industry Performing the Right Research Wrap-Up

Chapter 5: Market Segmentation What Is Market Segmentation? Four Bases of Segmentation Integrated Segmentation Strategies and Tactics Wrap-Up

Chapter 6: The Sport Product What Is the Sport Product? The Sport Product: Its Core and Extensions Grassroots Ideas Key Issues in Sport Product Strategy Wrap-Up

Chapter 7: Managing Sport Brands What Is Branding? Importance of Brand Equity Benefits of Brand Equity How Brand Equity Is Developed Wrap-Up

Chapter 8: Sales and Service Relationship Between Media, Sponsors, and Fans and the Sales Process What Is Sales? Direct Data-Based Sport Marketing and Sales Typical Sales Approaches Used in Sport Pricing Basics Secondary Ticket Market Aftermarketing, Lifetime Value, and the Importance of Retaining

Customers Wrap-Up

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Chapter 9: Sponsorship, Corporate Partnerships, and the Role of Activation

What Is Sponsorship? Sponsorship in the Marketing Mix Growth of Sponsorship What Does Sport Sponsorship Have to Offer? Corporate Objectives Sponsor Activation Selling Sponsorships Ethical Issues in Sponsorship Wrap-Up

Chapter 10: Promotion and Paid Media The Catchall P: Promotion Advertising Advertising Media for Sport Promotional Concepts and Practices Promotional Components Ultimate Goal: Keeping Consumers on the Escalator and Moving Them

Up Putting It All Together: An Integrated Promotional Model Wrap-Up

Chapter 11: Public Relations What Is Public Relations? Public Relations in the Sport Marketing Mix Sport Public Relations in the Digital Age Public Relations Functions Sport, Television, and Entertainment Influence on Sport Public

Relations Wrap-Up

Chapter 12: Social Media in Sport What Is Social Media? Building an Audience Engaging Fans Driving Behavior Social Media Platforms Avoiding Pitfalls Leveraging Players and Talent

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Wrap-Up

Chapter 13: Delivering and Distributing Core Products and Extensions

Placing Core Products and Their Extensions Theory of Sport and Place Facility Marketing Channels Product-Place Matrix Wrap-Up

Chapter 14: Legal Aspects of Sport Marketing Intellectual Property Trademark Infringement Copyright Law and Sport Marketing Patents Sport Marketing Communications Issues Ambush Marketing Right of Publicity and Invasion of Privacy Contractual Issues Involving Consumers Promotion Law Issues Emerging Issues Wrap-Up

Chapter 15: Putting It All Together Cross-Effects Among the Five Ps Controlling the Marketing Function Wrap-Up

Chapter 16: The Shape of Things to Come From Our Crystal Ball From Our Crystal Ball Redux: By the Year 2020 Wrap-Up

About the Authors

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Contributors Leigh Buwen

Manager of Consumer Research

Turnkey Intelligence

Kathy Connors

Principal and Founder

KMC Consulting, LLC

Kirsten Corio

Vice President, Team Marketing and Business Operations

NBA

Jaclyn Cranston

Senior Manager of Sales and Service

Turnkey Intelligence

Evelyn Dwyer

Manager of Consumer Research

Turnkey Intelligence

Jay Gladden

Dean and Professor

School of Physical Education and Tourism Management

Indiana University–Purdue University Indianapolis

John Grady

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Associate Professor

University of South Carolina

Haynes Hendrickson

President

Turnkey Intelligence

Steve McKelvey, JD

Associate Professor

University of Massachusetts Amherst

Nikolay Panchev

Vice President of Consumer Research

Turnkey Intelligence

Steve Seiferheld

Senior Vice President of Consumer Research

Turnkey Intelligence

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Foreword As my 30 years as NBA commissioner comes to an end, I can’t help but reminisce about just how far the sport industry has come during this period. Perhaps nowhere is this growth more evident than in sport marketing. It is hard to believe that just 30 years ago when the authors of Sport Marketing, Fourth Edition, wrote their original manuscript, the term sport marketing was rarely used. Now, the term is common and regularly used to encompass all of the activities in this book—activities that accurately depict the evolution of the sport industry as I have experienced it during my tenure at the NBA. I have had the good fortune of working with many of the most talented executives in the industry. As the industry has evolved, so have the leadership and business capabilities of the teams. Now, most of our teams have more than 100 employees who sell tickets and sponsorships; provide great customer service; develop marketing, advertising, and branding strategies; activate platforms for marketing partners and sponsors to drive their businesses; produce TV and radio broadcasts locally; service the media and place proactive messages; develop and produce the shows; and do meaningful work in the community through innovative and socially responsible programs. This latest edition continues to place those activities in a comprehensive framework, showing how the moving parts work together to develop the sport business locally, nationally, and globally; and it refreshingly illustrates where the use of new technologies now play their essential part. Particularly insightful are the data collection, aggregation, delivery, and targeting technologies used in ticket marketing and sales and for increasing fan engagement using content delivered predominantly via mobile devices.

The principal authors have a combination of academic and professional experience that is extraordinary. Their education and experience as university professors provide them with unique perspectives. Their research and analytical skills lead to objectivity and an ability to identify key industry needs. The theoretical framework they have created into which every marketing strategy is set—the marketing planning process— leads to a consistency in all branding, sales, and marketing strategies. Better yet, the authors have practical experience in the field in senior executive capacities covering several segments of the sport industry, which has given them a wealth of knowledge on best practices and the understanding of what actually works and what doesn’t. Collectively, they

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have implemented just about all of the best practices firsthand for leagues, sport conferences, and the most challenging of all situations, start-up teams and turnarounds.

I have observed the work of the authors for almost fifteen years as they contributed to the way NBA teams conduct their business. Clearly the most significant contributions were the substantial increase in the sharing of best practices and real data, increased adoption of direct marketing techniques, focus on the customer "driveway to driveway" experience, and the basis of teams’ business strategies on the authors’ landmark work—the attendance frequency escalator. As a result, most NBA teams today have much more sophisticated database-building and customer relationship management (CRM) capabilities. The teams more effectively use proactive outbound fan relationship management centers or telemarketing sales and intelligently targeted e-marketing programs that are designed to increase trial, improve retention, and drive attendance. These successful teams focus on the stepping-stone approach to fan development: Encourage more people (particularly youth) to play the game, connect players and coaches more favorably with the community, get more fans to watch or listen to broadcasts, progressively encourage fans to get off the couch or off the computer or mobile device and sample the NBA game in person, and offer a full menu of full- and partial-season ticket plans designed to move fans up the attendance frequency escalator. The greatest benefit of this approach has been a significant increase in the lifetime value (LTV) of fans in the respective team markets, and ultimately, the league itself.

Mixing in their unique intellect and personalities, the authors use their vast academic and practical experience to make this book a must-read for future generations of sport marketers, managers, and perhaps even commissioners in their “retirement.”

David J. Stern

Commissioner, National Basketball Association

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Preface There is only one way to describe the massive changes in the sport world since the first edition of Sport Marketing came out in 1993: “Holy cow!” as the late Harry Caray always put it. In 1993 most people would have thought that the Internet was a spy ring and that a web page was something in a newsletter of Ducks Unlimited. When our second edition appeared in 2000, the Internet was old hat, but it was still the most innovative medium of the age. File sharing was just beginning in 2000. And what of the concept of social media? In 2000 Internet nerds would have thought that YouTube was a phrase deriding old media. Hardly. By 2007 YouTube.com had become the hottest site on the Internet. More than a million video clips were viewed each day, many of them sporting events. In 2014 we can add Facebook, Twitter, Instagram, and other social media as both products and experiences that have transformed the way that consumers engage sport. And just about everything has gone wireless, especially with the explosive growth of smartphones. Marketers have adapted. Executives throughout the sport world get their industry news and data through online services such as SportsBusinessDaily.com and SBRnet.com, and trade publications, such as Street & Smith’s SportsBusiness Journal and Athletic Business, have online versions. But they all employ social media and wireless technologies to gather and dispense information. We have incorporated many of the latest marketing ideas in this edition, but new products and services are emerging daily.

Some things haven’t changed much. The competition for the sport and entertainment dollar is as heavy as ever. Sport marketing is a competitive business involving as much front-office strategy, risk, discipline, and energy as that shown by the players and coaches who figure so prominently in the public’s imagination. The fourth edition of Sport Marketing offers abundant examples of the latest issues in the competitive marketplace.

As academics, we have been studying changes in the sport industry for over 40 years, long before Forbes and Fortune began to take sport seriously with regular coverage. When we started out as graduate students in the early 1970s, few scholars were willing to accept sport as a serious topic of study. Now leading academics in marketing, management, law, and economics (to name only a few disciplines) are rushing headlong for

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book contracts on sport. We have both followed and helped build this growing body of literature. More important, each of us has also worked inside the industry, trying to make sense of the ways that fans, players, coaches, the media, equipment companies, and others interact to make the game tick. We have planned, administered, or consulted on literally thousands of events across just about every sport considered mainstream and at just about every level. This book emanates from our own fusion of experience as academics and practitioners. We have written a survey that we hope is as useful for the classroom student as it is for the athletics director of a college or high school or the marketer of a professional franchise.

We have tried to balance theoretical models with case studies from the rinks, fields, courts, slopes, gyms, tracks, and other venues that make up the sport marketplace. If theory is the skeleton that gives structure to thinking, then case studies put meat on the bones. Although most of our examples are from the United States, we have added considerable material from sports in other countries and cultures.

\INSERT bookstore e-book icon here\

Readers of past editions will find both continuity and change in this book. Chapters 1 through 3 provide an overview of the sport market and sport marketing as an area of study and as a process. Chapters 4 (by Haynes Hendrickson, Steve Seiferheld, Nikolay Panchev, Jaclyn Cranston, Leigh Buwen, and Evelyn Dwyer of Turnkey) and 5 consider conceptual tools and steps of preliminary market research and market segmentation, which are critical to overcoming a tendency to equate promotions with marketing. Chapters 6 through 13 explore the nuts and bolts of marketing plans—the five Ps of sport marketing: product, price, promotion, place, and public relations. But these Ps are conceptually robust, so readers will note special chapters or chapter sections on branding (Jay Gladden), sales and service, engagement and activation, community relations (Kathy Connors), and social media (Kirsten Corio). The last three chapters offer some important elements on legal issues (Steve McKelvey and John Grady), control, evaluation, and projecting the future. The book is filled with sidebars written by other industry and academic leaders. We thank them all for their contributions.

The world of sport marketing continues to challenge and excite us. We only hope that this edition is as enjoyable to read as it was to write.

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Web Study Guide

A new and exciting addition to the fourth edition is the web study guide (WSG), which gives students the opportunity to listen to sport industry leaders talk about how they incorporate marketing strategies into their daily work through exclusive video clips produced by David Perricone, who has experience as an academic and practitioner. Activities are built around these video clips, asking students to do what these industry experts already do: integrate core concepts and strategies from the textbook into applied situations.

Besides the video-based exercises, the web study guide has web search activities in which students will assess and compare strategies that can be found on sport organization websites, YouTube, and other online locations. These two activity types ensure that students will have even more opportunity to engage in the material found in these pages. Throughout the book, students are directed to the web study guide with cross-references like this:

Activity 1.2 The Global Marketing Strategy

College sport marketing has traditionally been centered in the United States. In this WSG activity, you will learn how a globalized marketplace is changing college sports.

The web study guide is available at www.HumanKinetics.com/SportMarketing.

Instructor Resources

A full array of instructor resources are available:

Presentation package plus image bank: The presentation package includes more than 400 slides that cover the key points from the text, including 30 select figures and tables. Instructors can easily add new slides to the presentation package to suit their needs. The image bank

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includes all the figures and tables from the book, separated by chapter. These items can be added to the presentation package, student handouts, and so on. Instructor guide: The instructor guide includes a sample syllabus and ideas for semester-long activities and case studies. Individual chapter-by-chapter files include a chapter summary, chapter objectives, chapter outline, and classroom ideas, which include the suggestion of case studies from the online journal Case Studies in Sport Management. Test package: The test package includes more than 200 questions in true–false, multiple-choice, fill-in-the-blank, and short-answer formats. These questions are available in multiple formats for a variety of instructor uses and can be used to create tests and quizzes to measure student understanding. Chapter quizzes: New to the fourth edition are chapter quizzes. These LMS-compatible, ready-made quizzes can be used to measure student learning of the most important concepts for each chapter. More than 150 questions (8 to 10 questions per chapter) are included in true–false, multiple-choice, fill-in-the-blank, and short-answer formats.

Instructors can access these ancillaries by visiting www.HumanKinetics.com/SportMarketing.

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Acknowledgments Our chapter notes acknowledge the sources that we have used. In addition, we offer special acknowledgments to a number of people. The first is David Stern, one of the premier sport marketing minds in the world. We thank David for giving two of us the opportunity to work in the NBA as well as for sharing his insights and providing daily inspiration through his strategic marketing initiatives. We also recognize the contributions and value of the late Bill Veeck, whose writings and innovations continually remind us of the importance of the fans and sport consumer behavior. Likewise, we appreciate Mike Veeck because he has done the same and has forced us to examine our own practices and approaches when we forget about the fans. On the academic side, we are indebted to Philip Kotler for his numerous contributions to the field of marketing, which have influenced our thinking in terms of sport marketing. We have dedicated this edition to Dr. Guy Lewis, who has been instrumental in shaping the academic coursework and program content for many of the undergraduate and graduate programs in sport management. Matt Levine of SourceUSA, one of the original and leading sport marketing consultants who helped shape the study of sport consumer behavior, has also continued to inspire our thinking. We acknowledge the many academics who contribute to Sport Marketing Quarterly and are members of the Sport Marketing Association (SMA). The research of our academic colleagues and their tireless preparation of the sport marketers of tomorrow provide constant inspiration and motivation to us.

We also offer special thanks to our chapter and sidebar contributors: Melissa Rosenthal Brenner, Leigh Buwen, Ward Bullard, William Carafello, Catherine Carlson, Leigh Castergine, Kathy Connors, Kirsten Corio, Jaclyn Cranston, Lou DePaoli, Ari de Wilde, Evelyn Dwyer, Jay Gladden, John Grady, Shane Harmon, Adam Haukap, Chris Heck, Haynes Hendrickson, Jeff Ianello, Dae Hee Kwak, Amber Lilyestrom, Jordan Maleh, Amy Jo Martin, Steve McKelvey, Brian Norman, Nikolay Panchev, Dave Perricone, Sarah Sceery, Jared Schoenfeld, Susan Schroeder, Steve Seiferheld, Chad Seifried, Dr. Alan Seymour, Peter Stringer, Jennifer Tobias, and Eric Woolworth.

Many other people helped us obtain, organize, and develop materials for the book. Mia Ramer, Madison Southerlin, and Ben Holmes at the Aspire

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Group did research work to update data on participation, demographics, and other sidebar facts. University of South Florida graduate students Kristine Carcione, Kayla Chesanek, Katie Hatch and Amanda Puccinell also contributed their expertise. Abe Madkour and the staff at SportsBusiness Daily (now an essential resource for anyone trying to make sense of the sport industry) have been ever gracious with their help and permissions. Abe also contributed his views on the future in our last chapter. Others who have given constant support and inspiration include Dot Sheehan, Steve Metcalf, and Marty Scarano of the University of New Hampshire and Roger Godin of the Minnesota Wild. Thanks also to Kirstin Kay and Tanya Downey at the University of Massachusetts, Amherst for providing us with the picture of Guy Lewis on the dedication page.

This book could not have been done without the help and dedication of our editors from Human Kinetics—Myles Schrag and Amanda Ewing. They whipped us, encouraged us, and coddled us as the time and case required. They are outstanding professionals.

In our capacities as sport administrators and consultants, we have worked with hundreds of dedicated executives, marketers, coaches, salespersons, customer service professionals, public and community relations personnel, and sports information directors who have inspired us with their energy, dedication, and passion. As academics, we thank and salute our colleagues and students over the years at the University of Washington, Robert Morris University, Ohio State University, the University of Massachusetts, the University of New Hampshire, the University of Central Florida, and the University of South Florida. These colleagues and students have challenged, stretched, reshaped, and indulged our thinking on all the topics in this book. We hope that we can convey to our readers their wisdom, their enthusiasm, their wonder for learning, and their passion for moving the field forward.

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Chapter 1 The Special Nature of Sport

Marketing

© Human Kinetics

Objectives To understand the market forces that create the need for enlightened marketing strategies in the sport industry To understand marketing myopia and other obstacles to successful marketing strategy To recognize the components of the sport product and the sport industry To recognize the factors that demand a different approach to the marketing of sport

Linsanity and the Global Sport Marketplace

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Sports Illustrated was clear in its assessment: “Nothing, anywhere, has ever resembled the ascendance of Jeremy Shu-How Lin, a legend seemingly pulled from the imagination of a goose-fleshed David Stern, if not Disney’s most hyperbolic global marketing exec.” And this was only five games into Linsanity or Linmania or . . . Linmarketing. Overlooked out of Palo Alto High School, taunted with racial slurs while playing at Harvard, undrafted and twice cast off by NBA teams, Lin made the most of his February 2012 chance with the New York Knicks. He was an early Valentine gift for his team, for Madison Square Garden, for the NBA, for the world of basketball, and for sports fans everywhere. Oh, and don’t forget marketers. Nine games into the drama, Lin had led the Knicks to an 8-1 record as he threw up all-star numbers by averaging 25 points, 9.2 assists, and 3.8 rebounds per game. Both Lin and the Knicks cooled off a tad by the All-Star break at month’s end. By mid-March they had suffered a losing streak that mirrored the earlier run of wins. The team changed coaches. And then Lin went down with a season- ending injury, fueling an equally strong conversation with a long lineage in sport. Would he last in the league, or would he flame out? In July 2012 the Houston Rockets ensured the story’s extension when they signed free agent Lin to a three-year, $25.1 million deal.1

Time would tell whether Jeremy Lin endured in the NBA. But action on the court was only half the story. Linsanity, regardless of how long or short the run, offered a miniseries on the world of sport marketing in the early 21st century. Jeremy Lin was both a player and a product to be branded, monetized, and distributed in a global system. He embodied key ingredients of the successful sport brands of the era.2

Stickiness

Jeremy Lin and his performance held the public’s imagination because they contained all the elements that Chip and Dan Heath claimed were crucial to the “stickiness” of any product or idea:

Simplicity—Basketball statistics are simple. Unlike the economy or the political landscape, basketball did not require observers to unravel or parse complicated formulas or polls in considering Lin’s performance. Unexpectedness—Few basketball experts predicted that Lin

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would even play in the NBA, let alone be a phenomenon. Concreteness—No conceptual fuzziness was involved in watching a YouTube clip of Lin highlights. Credibility—This question would loom large over time, as it does with every player in every sport, at every level. Jeremy Lin was the real deal in February 2012. Would he hold up? Emotion—One look at the way Lin played or the way that fans responded in Madison Square Garden revealed great depth of emotion. Narrativity—Lin’s background, his struggle to succeed, and his triumph (however brief) were the fodder for endless stories.

International Reach

As with David Beckham in world football and Alex Ovechkin in ice hockey, stories about Jeremy Lin played up his following across continents, in this case to China. One mid-February report from China noted that “The clearest sign that Jeremy Lin’s appeal has spanned the Pacific to mainland China may lie not in the 1.4 million Chinese microblog [Twitter-like] messages mentioning him in recent days, but in a rare failure to meet demand here in the heart of one of the world’s largest centers of pirated garment manufacturing.” As one store clerk near Shanghai noted tellingly, “His jerseys have sold out, even including the counterfeit ones.” A Chinese friend of Lin reported that Lin highlights were streaming out of mounted video monitors along the Beijing subway. “Everyone thinks it’s crazy in the U.S.,” said Cheng Ho, “but it’s a much bigger storm here in China.” For two decades, sport properties (players, teams, leagues, events, venues) had expanded their market horizons from the national to the global. China was on everyone’s mind, especially in basketball. After all, 65 million Chinese viewers had watched their national team play a preliminary match against Greece in the 2010 FIBA World Championships held in Istanbul. That figure far exceeded the 24 million who watched Butler versus Duke in the 2010 NCAA Men’s Basketball Championship. Jeremy Lin might not solve America’s trade imbalance with China, but he was surely contributing.3

Link to Social Identity

Lin was a symbol of many things to many people. He was hope to

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underdogs of any nationality, especially those of Chinese heritage, and especially on the Chinese mainland, where a Communist party chief posted a microblog focusing on Jiaxing—the home of Lin’s maternal grandmother. Xi Jinping, vice president of the People’s Republic, happened to be visiting Barack Obama when Linsanity was at an apex. He told the Washington Post, “I do watch NBA games on television when I have time.” Only four months earlier, party leaders had announced a new initiative to promote “spiritual affluence” and “creativity” so that Chinese culture—with “core socialist values”— might match other Chinese products on the export market. With the great Yao Ming in retirement, apparently the capitalist NBA’s Jeremy Lin would do in the short run. But if Chinese Communists wanted to claim him, so did Chinese Christians, who emphasized his great grandfather’s conversion and hoped that young Jeremy’s success and faith would help their cause. So did Taiwanese, because Jeremy’s family had fled the mainland. Like most popular players and teams, Jeremy Lin could symbolize many things to many people.4

Media Squabbles

For many in the New York metro area, Linsanity was the condition caused by an inability to watch the Knicks on television. At the height of the mania in mid-February, some 2.5 million New York state Time Warner cable customers could not watch the Knicks because of a squabble over carriage costs demanded by the MSG network, which televised Knicks games. One Chinatown resident summed up the frustration. “It doesn’t make sense,” he complained, “for a New Yorker to not be able to watch their home teams.” Welcome to the dollars and cents world of sport product distribution, where teams and leagues have formed television networks (e.g., Big Ten, Pac 12, University of Texas) that require carriage on a cable system, preferably on a standard platform that reaches all customers, and returns a hefty per-customer fee. In other words, every new sports network wants the deal that ESPN has. Negotiations in New York turned bitter and led to a 48-day blackout. In this case Linsanity won the day. Governor Andrew Cuomo and public pressure corralled the two firms to reach a deal, in time to watch Lin and the Knicks cool off. Given the ever-rising rights fees that networks have paid to teams and leagues, however, we may expect more squabbles and more blackouts for sports fans.5

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Valuation, Monetization, and Marketing Metrics

Just a few decades ago, a meteor like Jeremy Lin would have been measured solely by playing stats and salary. Although Lin’s numbers were closely followed, the media circulated an equal amount of information on his value as a commodity. As Sports Illustrated’s Pablo Torre reported, three weeks of Linsanity had spiked stock in the MSG Corporation (owner of the Knicks) by 11 percent. The Knicks online store had seen traffic and sales skyrocket by over 4,000 percent. The MSG cable channel had seen its metro ratings rise 70 percent. An area sporting goods chain had sold over 50,000 items of Lin merchandise. Over the first week of the run, Lin got more social media buzz than President Barack Obama. Even after the cool-down, fan interest kept rising. Two late February games drew ratings over 7.3 for the MSG Network, both higher than the regular-season record set in 1995 for a game that featured Michael Jordan redux. On the other hand, when Lin injured his knee, sales of Lin merchandise suffered. The Modell’s sporting goods chain was stuck with 40,000 items to sell. His July free-agent departure to Houston cut T-shirt prices from $20 to $5; replica jerseys sank from $60 to $20, and that was the day after the Knicks announced that they would not match the Houston offer. 6

In 2012 Jeremy Lin was a product that captured attention, emotion, and sales on an international stage. Despite sport scandals of all stripes—racism in the English Premier League, endless doping sagas in cycling, match fixing in cricket, a cover-up of pedophilia at Penn State—fans around the world remained eager to embrace someone like Jeremy Lin, who combined hard work with inherent talent and made the most out of his chance, no matter how long it lasted. In many respects, he was simply repeating a fundamental sports story, only he was living and playing in a rapidly changing marketplace.

Although entrepreneurs have been selling sport for centuries, rational systems of marketing sport are relatively new. In this chapter, we discuss the need to employ modern marketing principles in the sport domain. We examine sport industry trends in growth and competition that heighten the need for scientific, professional approaches to sport marketing. We consider examples of lingering marketing myopia in sport, as well as

26

significant progress. Next, we consider the components of the sport product and the sport industry. Finally, we outline the numerous features that in combination make sport marketing unique.

Activity 1.1 Recent History of Sport Marketing

In this WSG activity, you will consider how sport marketing has changed in the past 30 years, why sport is unique to marketing compared to traditional products, and how sport marketing professionals can be more successful in their work.

The NBA and Global Marketing Strategy Jeremy Lin is a marketing parable, but so is the NBA. Over the last three decades, David Stern emerged as lord of a far-flung, international empire inappropriately called the National Basketball Association. When Stern became commissioner in 1984 (he had been NBA general counsel since 1978), the NBA was a struggling enterprise, despite having stars such as Magic Johnson and Larry Bird. Teams were playing in arenas filled to less than two-thirds capacity, NBA merchandise sales were only about $15 million, and network television coverage was limited—the finals were shown on tape delay. Worse yet, corporate sponsors were scared off, in large part because of a poor public image resulting from drug scandals and labor strife. As one NBA executive recalled in a 1991 profile of Stern, “If you had 30 minutes with a prospective sponsor, your first 20 minutes were spent trying to convince him that the players weren’t all on drugs.”7

Even before his elevation to the commissionership, Stern had laid the foundation for the NBA to become one of the most successful brand names in sport. He did it by recognizing and using standard tools of marketing. He knew, among other things, that product recognition required a more expansive television package. In turn, the broadcast networks demanded a more stable product with a cleaner image. That meant getting owners and players to agree on several fundamental issues, including revenue sharing, salary caps, and tougher drug testing. As a Spalding executive concluded,

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“A good marketing guy knows that he has to get the product right before marketing it. That’s what Stern did with basketball.”8

If Stern spent the 1980s getting his product right, he focused the next decades on worldwide product distribution. More than anything, Stern believed in going global. The NBA could create an empire along the lines of British mercantilism—with fine, finished products moving from North America to distant centers of exchange like Moscow, Buenos Aires, Cape Town, and Beijing—especially Beijing. Some surveys conducted in 2003 suggested that among China’s more than 1 billion people, basketball had supplanted soccer in popularity. In the first four years of the new millennium, the Chinese edition of the NBA’s Time and Space magazine had boomed to a circulation of over 200,000. NBA games were a regular Sunday feature on China Central Television. NBA logos adorned the apparel worn by the coolest kids on China’s hoop courts, which now drew the crowds once reserved for Ping-Pong tables.9

By 2004 the NBA finals were broadcasted to 205 countries in 42 languages. The international traffic on NBA.com was well over 40 percent of the total; the league had nine foreign-language websites. Yao Ming was only the tallest of the internationals on NBA rosters; the total number had expanded from 65 in 2002–2003 to 84. The synergy was obvious. For instance, Dirk Nowitzki’s success with the Dallas Mavericks translated into five television outlets in Germany. And every new foreign star meant more foreign exposure. By October 2004 the NBA had 212 international television deals.10

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David Stern (center, holding trophy) has helped to turn the NBA into a global empire.

Zuma Press/Icon SMI

Much of the NBA’s success stemmed from what might be called an open- architecture strategy in its global expansion. That is, the focus of effort was as much to promote basketball as it was to promote the NBA brand of basketball. The NBA did not initially look to enter markets with total product control. In 1987 David Stern visited Beijing with the simple notion that Chinese national television, CCTV, might be interested in showing weekly NBA highlights for a share of advertising revenues. That arrangement slowly grew to include live games broadcast on provincial and local television stations during Michael Jordan’s heyday. When Yao Ming joined the NBA in 2002, the stream of distribution and revenues turned into a torrent. Run-of-the-mill games drew up to 15 million viewers for morning broadcasts and triple that number for a game with Yao. Stern was hardly alone in his China strategy. In 2009 alone foreign enterprises invested $572 million on 34 sport projects. From 2000 through 20009, total foreign sport investment increased 12-fold. The NBA learned by hard experience that the Chinese wanted partners to build their own talent and their own league, the CBA, and Chinese Central Television could be a hard-nosed negotiator. Stern and his associates have suspended their notions of an NBA China, instead planning for exchanges for Chinese referees and coaches to obtain advanced training in the United States and for a player’s academy in southern China. Working with China as a partner fits with David Stern’s long view that what is good for the global game

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will be good for the NBA.11

Stern’s “soft power” approach to global presence has paid off in many ways, not least of which is a good working relationship with FIBA, the game’s international governing body. In early 2011 FIBA secretary general Patrick Baumann, a Swiss, told the international SportsPro Magazine that David Stern ranked among the three most influential people in the history of basketball. “The NBA is probably the very best at marketing its league,” he emphasized. Although not conceding on the level of organization or growing the game, he noted that on “the exploitation of the rights and making this property a valuable property from a commercial standpoint, I think there is no other league than the NBA.”12

The global economy also boosted prospects for other sport leagues. The National Hockey League and Major League Baseball, for instance, both attracted top talent from overseas, such as Europeans to the NHL and Asians to MLB. But the flows of commerce worked along multiple currents. Russia’s Kontinental Hockey League and Japan’s Nippon Professional Baseball have attracted top players and coaches from North America. Expanding sports networks deliver televised events across countries and continents. Americans have ESPN, Canadians have TSN, and Europeans have Eurosport. The Middle East has Al Jazeera Sport; Australians have TVN. And this is only a short list. The most pronounced consequences of such circulation occurred in world football, the globe’s number one game. FIFA, the international governing body, reported that television coverage of the 2010 World Cup in South Africa “reached over 3.2 billion people ‘in-home’ around the world, or 46.4 per cent of the global population, based on viewers watching a minimum of over one minute of coverage.” Every country and territory on the globe had viewers. Staggering though the number is, it did not even include “people watching out-of-home at the FIFA Fan Fests and other public viewing venues, as well as in pubs, bars, restaurants, clubs, hotels, or even online and via mobile handsets.”13

In football’s global market, the world’s talent moved to European leagues, especially England’s Premiership, Italy’s Serie A, and Spain’s La Liga. If the NBA looked to Europe and China for expansion markets, the Europeans saw America as ripe for the picking. A steady swell of youth soccer players, “soccer moms,” and their families had provided a strong base for the United States’ successful hosting of World Cups in 1994 (men’s) and 1999 (women’s). Major League Soccer, hatched after the

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1994 World Cup, was averaging crowds over 15,000 by 2004, better than those in Argentine and Dutch leagues. By 2011 the MLS average had increased to 17,872, a respectable size when compared with other leagues, as shown in table 1.1. North America appeared to have arrived as a market for world football.

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Activity 1.2 The Global Marketing Strategy

College sport marketing has traditionally been centered in the United States. In this WSG activity, you will learn how a globalized marketplace is changing college sports.

Weathering Recessions Global competition was shifting the realities of the sport marketplace at the turn of the 20th century. So were the economic booms and busts. As early as 1998, Street & Smith’s SportsBusiness Journal asked the headline question “Is Sports Business Recession-Proof?” The answers were mixed. Most industry insiders said yes (no surprise). But some bankers and economists were less certain. Randy Vataha, an investment banker (and an NFL alum), worried about the 1990s buildup of luxury seats that would likely be threatened by a recession. As the stock market bubble reached its peak, the ESPN Chilton poll announced that the last half of the 1990s had seen a decrease in the percentage of Americans who considered themselves fans of the NFL (–3.06 percent), the NBA (–11.38 percent), the NHL (–8.57 percent), college basketball (–8.45 percent), and college football (–6.37 percent), all this despite general increases in aggregate attendance.14

The next decade saw both dot-com and real estate bubbles burst—the first in 2000, the second in 2008—unleashing recessions to wreak havoc on

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economies at the national and household levels. The effects on sport were palpable, as a few examples suggest:

Sport-related construction slipped 7.9 percent in the United States between 1999 and 2001. This decrease was in contrast to the 22.3 percent increase in overall construction spending during the same period.15 Overall attendance in Major League Baseball went significantly down and up twice over the decade, in tune with the economy. The downturn in 2009 was an aggregate 5,220,345 (6.64 percent), the highest overall decline in history and the fourth largest percentage decline. Only slightly behind was the 2002 decline of 4,448,769 (6.30 percent). League attendance bounced back in both cases, but it was a tense roller coaster ride.16 Franchises, especially in the minor leagues, were stressed to their limits. In early 2009 the Southern Professional Hockey League lost two franchises. Richmond (VA) Renegades GM Allan B. Harvie Jr. repeated the obvious and painful reality: “The economy has driven a spike into the heart of the leisure-time market and fans have very hard choices to make with their money.” Successful teams were not spared. Although the EPL’s Chelsea sold out all 24,000 season tickets in 2011, they had softness in sales of premium seats that went for $1,000 per game and with luxury boxes.17 Corporate sponsors, especially in the financial sector, were forced to rethink their expensive partnerships with sport properties. Many reduced or dropped their deals. The Royal Bank of Scotland was a good example. In February 2009 the venerable institution, which faced nearly £30 billion in losses, announced that it was cutting its sport funding by half.18 In 2012 the Football League, the English association of 72 professional clubs playing in tiers below the Premier League, saw a 26 percent decline in its three-year television broadcast package with the Sky network, from $420.5 million to $316.6 million.19 Sport wasn’t the only sector affected. The wider entertainment industry was also reeling. Rolling Stone reported that attendance at North American music shows dropped an “astonishing” 24.4 percent in 2010 compared with 2009. Gross sales were down 26 percent, in part because the number of concerts was down 16 percent. Promoters weren’t taking chances.20

Teams and leagues responded in emergency fashion. In the fall of 2008,

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the New Jersey Nets gave season-ticket holders an extension on payment until January 2009. The Indiana Pacers didn’t even charge their season- ticket holders for preseason games, a loss they estimated at $2 million. That same year, English Premier League clubs started to slash ticket prices; for example, Newcastle cut prices by 9 percent on average, and Manchester City reduced prices by 7 percent.21

Even the NFL, about as close to bulletproof as a sport league can be, had to respond to soft demand. Ticket sales were way off for the 2009 Super Bowl, held in Tampa. Only days before kickoff, StubHub could not unload 3,000 tickets. A spokesman quipped, “In terms of pricing, this game has become the Limbo Bowl—how low can it go?” SportsBusiness Journal surveyed the league’s 32 teams in late summer 2009 as the national and world economy kept sagging. The basic question was this: How have you responded to the recession? All but three franchises reported either a ticket price freeze or new initiatives in sales closer to those used in the NBA or MLB. Only four teams had raised prices across the board—almost a given in the good old days. Many teams rolled out new group-ticket packages, staged special meetings between coaches or executives and season-ticket holders, or offered miniplans. All these tactics have been outlined in earlier editions of Sport Marketing. The recession had prompted NFL action. As the St. Louis Rams COO put it, “The days of rolling out the football and expecting to sell out are done.”22

Longtime pollster Rich Luker remained gloomy about the American market in late 2010 after two solid years of surveys indicated nagging consumer concerns about the ability to spend on sport. He said, “Let’s face it: We are not getting past this any time soon.” That same fall a reader’s survey by SSSBJ found that 28.9 percent of respondents, the largest segment of respondents by a wide margin, ranked rising ticket prices as the biggest threat to sport. The next top threat was disconnect with fan base, a reason chosen by 19.8 percent of respondents. Luker’s pessimism seemed confirmed by some striking attendance drops among college basketball powers. In early 2012 the Chronicle of Higher Education analyzed NCAA Division I men’s basketball attendance. Although overall numbers had held steady, some significant drops had occurred at local and regional levels. Between 2009 and 2012, Arizona State dropped over 40 percent in attendance. The Pac-12 overall dropped 14 percent. Missouri dropped by 21 percent, and Indiana declined by 15 percent. The Atlantic Coast Conference slid 7 percent overall.23

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The Competitive Marketplace

Economists and journalists have occasionally cobbled together estimates on the size of America’s sport industry. Unfortunately, each study has employed different methods and different assumptions. Consequently, we have no longitudinal data tracking sport industry growth over time, using generally agreed-upon methods. In any case, one must recognize that the sport industry, by any calculation, is a small piece of the economic pie. For instance, one study pegged the 1995 gross domestic sport product at $152 billion, claiming that sport was the 11th largest industry in the American economy. That figure would equal $229 billion in 2012 dollars. The overall 1995 GDP, however, was $7.4 trillion (in 2012 dollars), meaning that despite widespread media attention, sport accounted for just 3 percent of overall GDP. A more recent, and more conservative, approach found that the aggregate demand and aggregate supply of the 2005 sport industry ranged between $44 and $73 billion. Given that year’s $12.6 trillion GDP, even the higher number ($73 billion) amounted to a paltry .6 percent of overall GDP.24

Other data suggest that the American sport market is growing only slightly. For instance, past Census Bureau figures have shown that in 1970, recreation accounted for 4.3 percent of total personal consumption. By 1980 recreation had grown to 5.3 percent of total personal consumption. As table 1.2 illustrates, recreation’s piece of the consumption pie continued to expand until it plateaued in the 9 percent range in the last two decades. The statistics were mixed, however, for spectator sports. In 1970, Census figures suggested that spectator sports admissions accounted for 3.9 percent of the total recreation consumption pie. That number shrank over the next decade to 2.8 percent in 1980. Table 1.2 shows that spectator sports continued the slump to a mere 1.52 percent in 1990 before seeing a small but steady increase. And where is the recreation dollar going? As table 1.2 suggests, the video, audio, computer, and musical goods segment has grown more steadily in the last decade as a percentage of all recreation expenditures. One might argue that spectator sports events simply can’t expand like DVRs or iPods or smartphones. Sport requires an infrastructure of fields and stadiums, which are slow to develop. And some argue that many people are using their smartphones or tablets to view sport. All this is true. At the same time, competition for the discretionary dollar is heated. This competition is especially fierce inside the sport industry.

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Of course, competition is the nature of sport. For well over a century, entrepreneurs and investors have jostled for market space, particularly in professional team sports. Sport in America offers several examples. The troubles of professional baseball are internal these days, but the history of the game is punctuated by a number of wars among rival leagues, the last threat being the Continental League in the early 1960s. Football took center stage in the 1960s with the rivalry between the American and National Football Leagues. The World Football League and the U.S. Football League followed in the 1970s and 1980s. In 2000 two sport magnates—Dick Ebersol of NBC and Vince McMahon of the World Wrestling Federation—announced a new competitor, the XFL. Like many of its predecessors, however, the XFL died after its inaugural 2001 season. Another interesting market battle was in women’s pro basketball, in which the Women’s National Basketball Association (WNBA) and the American Basketball League (ABL) offered consumers alternative visions of a “big league” until the ABL dissolved in early 1999. The successful Women’s World Cup of 1999 spawned the first women’s professional soccer league (WUSA), which opened in 2001 with eight teams. By September 2003 the league had collapsed. Another attempt (WPS) in 2009 lasted three seasons, but was shut down in 2012.25

In December 2011 SportsBusiness Daily published Harris Poll data from 1985 to 2011 that tracked the favorite sports among U.S. fans (defined as adults who follow at least one sport). The results are suggestive. Baseball had been the favorite of 23 percent in 1985, a close second to pro football (24 percent). By 2011, however, baseball had slipped steadily to be a favorite of only 13 percent of American adults—tied with college football. Meanwhile pro football had grown to be the heads-on favorite at 36 percent. Auto racing had grown slightly—from 5 percent to 8 percent, as had hockey—from 2 percent to 5 percent. Tennis had dropped from 5

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percent to 2 percent. Other sports had been flat or shifted 1 or 2 percent in a very low range. Of course, a fan might avidly follow more than one sport. But the data clearly suggested that pro football had grown in the public’s imagination, while baseball had slipped.26

Action sports had been an industry darling in the late 1990s and beyond, but something ominous was happening. Data from the National Sporting Goods Association and the Sporting Goods Manufacturers Association indicated significant downward participation trends in skateboarding and BMX biking since 2000. Snowboarding had flattened. Ratings for the X Games and the Dew Tour had declined. Worse yet, polls indicated that the cohort of avid action sports fans among 12- to 17-year-olds had been declining for nine years. Action sports had been the hot ticket for access to youth. What was happening? Consumers were shifting their sports allegiance, as they had been doing for decades.27

Consumers had many choices, and these options were only multiplying. But polls don’t stop the entrepreneurs, especially in the global marketplace. Take cricket, which had moved into the top echelon with the arrival of the Indian Premier League (IPL) in 2007. Cricket had always been popular among countries of the British Commonwealth, and its robust markets included India, which has the world’s second largest population. The IPL looked to be a cross between NBA showtime and MLS salary restraint. And yes, throw in celebrity owners like Bollywood actor Shah Rukh Khan. In 2007, 13 bidders vied for one of eight franchises that cost $90 million each. By 2008 matches were averaging 58,000 in attendance. In 2010 the television audience was an estimated 67 million per match. By 2011 one franchise had sold for $370 million, and the league had snagged a $1.69 billion, 10-year television deal.28

Media Challenges

For over two centuries, sporting events have benefited from innovations in media technology. A big boxing match or horse race attracted a big audience. Newspapers and magazines wanted to write those stories and circulate them widely and quickly. All this depended on technology. One of the first breakthroughs was the electrical telegraph, developed commercially in 1840s America by Samuel Morse and Alfred Vail. As telegraph lines slowly connected the nation’s cities and regions, newspaper magnates like James Gordon Bennett (New York Herald) jumped on the

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value of instant reports of sporting events. The telegraph enabled, as one historian has written, “instantaneous reporting of ball games, horse races, prize fights, yachting regattas . . . box scores, betting odds, and all kinds of messages.” When John L. Sullivan fought Jake Kilrain in New Orleans in 1889, Western Union employed some 50 operators to handle over 200,000 words of special reports on the bout. By this time, sports news was filling whole pages of major daily newspapers like the Herald, the New York Sun, and the New York World. Hence the rise of the sports section, which has provided abundant and free publicity for sport properties ever since— as long as the sport property knew how to work with the press. It is no wonder that smart athletes like Jack Dempsey hired press agents like “Doc” Kearns or that universities like Knute Rockne’s Notre Dame developed offices of sports information.29

Each decade has seemed to bring a new media technology with new opportunities and new challenges—silent movie newsreels, radio, broadcast television, cable and satellite television, the Internet, and the World Wide Web. All have required adjustment and action by media and sport properties. Those with the skills and the drive could build market share at the expense of technological laggards. The last decade has been no different. Perhaps the biggest change has been in the newspaper business. Newspapers thrived in the ages of radio and television. A synergy that seemed to be present has disappeared with the advent of the Internet and the World Wide Web. As newspapers fiddled with an online presence, they could not stop the bleeding of subscribers and advertisers. Total circulations of American weekday and Sunday papers slid from the 60 millions in 1990 to the low 40 millions in 2011. Ad revenues were surprisingly stable because the ads moved to online versions, at least until 2007. The standard response was to cut staff. Sports reporting suffered, at all levels. A 2009 SportsBusiness Journal survey revealed that 50 major dailies had cut sports staffs by 20 percent in the previous 16 months. Fewer beat writers were making road trips. A fan survey reinforced editors’ worse nightmares; 42 percent of respondents said they preferred a team website for information. Coverage of college and high school teams was even worse; no beat writers, or even correspondents, attended games.30

The Internet started on cable. Wireless technology both spawned and fed the rise of cell phones, smartphones, and tablets, all of which changed the game of reporting and consuming sports news. Blogs, podcasts, YouTube, Facebook, Twitter, Tumblr—the list of new forms and new formats for

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delivering, sharing, and reading information will continue to lengthen. And every sport property at every level, from the top professional team to the local recreation league, must learn how to use them. New sports media technology is always developing. The need to adapt is not new.31

Jacksonville Jaguars CFO Bill Prescott said in 2010, “Our biggest competitor, everyone’s biggest competitor, is HDTV. There’s no doubt, to view a game in your own living room, the beer is colder and cheaper, the restroom is closer, and there’s no line.” In May 2012 executives at YouTube and Google (which had purchased YouTube) announced plans to develop over 100 new channels of original programming, including a Team USA channel focused on the Olympics. World Wrestling Entertainment already had a Google channel that drew over a million views per week. Google executive chairman Eric E. Schmidt predicted, “We’re about to see another large explosion in the use of video.” By his estimation this was part of a third wave of media change for properties and sponsors to address. The first was broadcast TV to cable, the second was cable to Internet, and the third was everything to smartphones and tablets.32

New media were just part of a squeeze on modern lifestyles. As Seattle Seahawks COO John Rizzardini put it in 2010, NFL clubs, like all sport properties, were pressured by a tight economy that simultaneously pinched consumers in several ways—be it the need for multiple incomes, intrusive media and communications, or overscheduled kids’ activities. “People’s time is that much more precious these days. . . . People are more cautious about how they spend their time and money.” And in the end, a consumer has only a finite amount of time to spend. An evening spent watching a Netflix video could not be redeemed for a sport event. Steve Hank, associate athletics director for revenue at Arizona State summed up the reality: “Honestly, time is the greatest commodity someone has.”33

Activity 1.3 The Competitive Marketplace

In this WSG activity, you will propose marketing approaches for the Brooklyn Cyclones Baseball Club, a minor league baseball team in the short-season New York Penn League. The Cyclones are located in Brooklyn, New York and are affiliated

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with the New York Mets, who also are located in Brooklyn. The Cyclones are in a competitive marketplace. They not only have two Major League Baseball teams to compete against but also face additional competition from sport programming on TV and other forms of entertainment.

Grassroots Stress

Times were especially tough for high school athletics, long the great talent developer in American sport. In the heartland of American basketball, 40 miles (65 km) outside Indianapolis, Anderson High School was a case study in grassroots struggle. The Wigwam—the nearly 9,000-seat field house—had once packed in crowds that included 5,000 season-ticket holders. Fifty years ago, nothing was bigger than high school basketball. The state high school boys’ tournament—the stuff of Hoosiers legend— drew 1.5 million fans in 1965. As late as the 1980s the Anderson High School Indians outdrew the NBA’s Pacers. But that was yesterday. State tournament attendance was down 50 percent in the early 1990s. By 2012 Anderson High School had closed the Wigwam and was playing in a gym with a 2,800-seat capacity. As the New York Times’ Craig Fehrman wrote in a poignant story, many reasons contributed to the attendance collapse. General Motors had once run more than 20 factories in the area. By 1999 they had left town and with them 14,000 people, triggering school closings, consolidations, and identity crises. Top that with expanded sports coverage on television and the Internet, as well as students and adults being forced to work more part-time jobs, and the recipe for low ticket sales is in place. In 2012 the Indians sold only 450 season tickets.34

Cities and towns around the country faced tighter budgets, often restricted by tax caps. If pension systems were under stress, everything was up for grabs and cuts. Local athletics directors had to be nimble. They had been revving up their local sponsor deals for some time. They had also established user fees. By fall 2010, programs in at least 43 states were dependent on such fees, which normally ran from $100 to $150 per athlete per sport. School boards played chicken with athletics directors, voters, and city councils by saying, “Find more money or we will cut these sports.” In Lowell, Massachusetts, the cut list included freshmen and middle school teams, as well as 37 assistant coaches. In Greenville, Mississippi, tennis, golf, soccer, and baseball were among the sports that

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went on the chopping block. The Los Angeles district ripped $650,000 from transportation, effectively cutting a host of away games or forcing players to find their own ways to travel.35

Times were tough. In January 2012 Robert B. Gardner, executive director of the National Federation of State High School Associations, wrote an open letter to the American sport industry. He believed that high school sports were being overlooked in the industry press; its leaders were never included among lists of the most influential people. He noted, “19,000 high schools provide nearly 8 million young people opportunities to play high school sports. More people attend high school sporting events than college and professional sports events combined. The growth of web streaming will widen the gap.” Given this reach, he urged industry and business leaders to “recognize the key role of high school sports in developing the next generation of employees and entrepreneurs, not to mention the current generation of consumers.” Gardner had a point. At the same time, local athletics directors were probably more interested in funding than in making a list of the most influential leaders.36

Local businesses, some national corporations, and numerous professional leagues and teams have generously put money back into high school sports. The investment has been wise. As Rich Luker noted in 2011, ESPN Sports Poll data revealed that “more Americans are avid fans of high school sports than are avid fans of NASCAR, the NBA, or the NHL. Fifty- five percent of all Americans are fans of high school sports, making it the sixth-largest fan base in sports.” More important were avidity rates. Although young males aged 12 to 17 have been expressing less interest in sport, 85.8 percent of that age cohort were high school sports fans, and 48.3 percent were avid fans. Adult fans were not just parents of competing athletes. As Luker added, “Seventy percent of high school sports fans don’t have kids at home between the ages of 12 and 17, nor do 57 percent of those who are avid fans.” Clearly, there is both great potential and great need for more sustained and more effective marketing of grassroots sports.37

Sport Marketing Defined As the needs and demographic makeup of sport consumers have become more complex and as competition for the spectator and participant dollar has increased, the demand for professional marketing has also grown.

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Professional teams, small colleges, high schools, sport clubs, and youth programs have all looked for a better way to attract and maintain consumers. Among other things, they know that they compete for time and money with a host of rivals, including malls, mega movie complexes, Internet providers, concerts, and museums. Today’s marketers clearly need a rational, coherent system that can match sport consumers with sport products. We may call this sport marketing. The term sports marketing was coined by Advertising Age in 1979 to describe the activities of consumer and industrial product and service marketers who were increasingly using sport as a promotional vehicle. Even a casual television viewer cannot help noticing the use of sport images and personalities to sell beer, cars, and a whole range of other products.38

This text recognizes two components in sport marketing: marketing of sport and marketing through sport. A professional team engages in the former; a brewery or an auto dealer employs the latter. Although most of this book addresses the marketing of sport, we also consider (especially in chapter 9) the corporate sponsor, who markets through sport. We will also use the singular sport marketing rather than sports marketing. We do this because we see a need to conceptualize sport industry segments (e.g., pro, college, and club leagues; various media) as a homogeneous entity. In the chapters that follow, we hope first to provide a general theory of sport marketing across all segments.

Given these notions about the sport industry and marketing, we offer the following definition of sport marketing, adapted from standard definitions of general marketing:

Sport marketing consists of all activities designed to meet the needs and wants of sport consumers through exchange processes. Sport

marketing has developed two major thrusts: the marketing of sport products and services directly to consumers of sport and the

marketing of other consumer and industrial products or services using partnerships and promotions with sport properties.

As we will see, the terms sport consumers and sport consumption entail many types of involvement with sport, including playing (both real and virtual games), officiating, watching, listening, reading, blogging, and collecting memorabilia.

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Marketing Myopia in Sport

If sport marketing ideally consists of activities designed to meet the wants and needs of sport consumers, then historically the industry has been guilty of what Theodore Levitt called marketing myopia, or “a lack of foresight in marketing ventures.” We like to call it the vision thing.39

Following are some of the standard symptoms of sport marketing myopia:

A focus on producing and selling goods and services rather than identifying and satisfying the needs and wants of consumers and their markets. Spencer Garrett, part owner and general manager of the successful Pierpont Racquet Club, recognized a problem that plagues many sport teams: “There are industry people who still focus on closing the sale. Membership retention [we can add fan retention] is where the future of the industry lies, so selling has to focus on benefits to the potential member.” Selling is a critical component of marketing, but it is not the end all.40 The belief that winning absolves all other sins. Longtime Buffalo Bills owner Ralph Wilson expressed this sentiment when he questioned some expenditures. “You go about marketing by winning,” he insisted. “That’s how you do it. A couple years ago we spent $700,000 on television, advertising the Bills, and we didn’t sell five tickets. . . . This is sort of an anomaly, this marketing. Everybody gets carried away with it.” Unfortunately, winning does not guarantee a rise in attendance. Take the case of the New Jersey Devils. Under the leadership and genius of Lou Lamoriello, the franchise has enjoyed extended excellence on the NHL ice. Their record between 1988 and 2012 included 17 straight winning seasons; playoff berths almost every year; nine Atlantic Division championships; and Stanley Cups in 1995, 2000, and 2003. Few professional franchises in any sport can match that record. Nonetheless, despite the record and concerted marketing efforts, the Devils’ average attendance record was a downward staircase from 1998 to 2007. It had peaked above 17,000 in 1998, but by 2007, when the Devils moved to a new arena, it was barely above 14,000. Attendance is a constant challenge.41 Confusion between promotions and marketing. Promotion— including advertising and special events—is only one part of a marketing mix, or strategy. Many fail to see the difference between promotion and marketing. Not long ago, NCAA News ran a feature

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story titled “Professional Marketing Finds Its Way into College Basketball.” The article hardly described professional marketing— only the influx of promotional tactics such as NBA-style laser shows, cheerleaders, and halftime shows. Said Jim Harrick, UCLA coach at the time: “In the past, UCLA has had a history of its game being its main attraction. Marketing has become a great asset.” Good promotions can certainly be the “sizzle that sells the steak,” but promotions must be part of an integrated strategy that begins with knowing consumer wants and needs.42 Ignorance of competition inside and outside sport. Not enough teams are smart enough to recognize competitive trends and use them to advantage. For instance, the Atlanta Hawks had data that showed that their fans were 30 percent more likely than the general population to attend movies four or more times in the last three months. What did they do? They began to use ticket promo ads on the big screen before the movies. Research found that moviegoers have an 80 percent recall the next day, compared with a 15 to 20 percent recall rate from television ads. The Hawks made good use of competition.43 A shortsighted focus on quick-return price hikes or sponsorships rather than long-term investments in research and in relationship marketing. This predisposition is especially true at the professional level, where escalating salaries have prompted front offices to focus resources on selling corporate signage, often at the expense of building a large database around small groups, families, and individual ticket buyers. Worse yet, too many teams gouge their fans whenever they sense that demand is greater than supply. In the new millennium, some NFL teams began to charge fans to see preseason practice. In the enlightened opposite camp was Robert Kraft, owner of the New England Patriots, whose Super Bowl champs have enjoyed a long train of sellouts. Rather than alienate preseason fans, Kraft understood that they represent future generations of Patriots Nation. To this end, New England’s preseason camp had free admission, free parking, free rosters, and players lingering to sign free autographs. Said well-known Boston Globe columnist Dan Shaughnessy, “It’s the best sports deal in New England.”44 Poor-quality research. When Matt Levine, who we consider the father of modern sport marketing, broke into the NBA in 1974, the cutting edge of market research belonged to the L.A. Lakers, who collected patron names and addresses on raffle entries available at Forum ticket gates. Levine’s boss, Golden State Warriors GM Dick

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Vertlieb, posed a simple question to Levine: “Isn’t there more we could learn than their names and addresses?” Since our first edition in 1993, the sport industry has come a long way with research. But common problems remain. For instance, as we discuss in chapter 4, the sport venue requires special considerations of sampling. Simply handing out surveys at the front door will not always do the trick. Further, questions on sport participation require much more clarity than we see in an average survey. Does playing one round of golf per year, with someone else’s clubs, make a person a golfer? Some surveys have suggested this sort of thing. Quick, sloppy surveys will not suffice. The authors of this book have experienced firsthand some of the frustrations in selling research to executives. A few years ago we developed a machine-readable fan survey for a big-league team. A few weeks after the surveys were administered, a team employee brought us the completed surveys—dumped and mangled in four Hefty trash bags! Myopia can’t get much worse. Professional teams and major universities are now investing hundreds of thousands of dollars in developing, maintaining, and using databases. Managers at the youth club, high school, and small-college levels obviously lack the resources for sophisticated systems. But research can begin with simple Excel files or even paper files.45 Poor sales and service. Although many sport firms have equated sales and promotions with marketing, until the last decade few even invested in the sales effort. Historically, sales have been driven by quota and commissions mentalities, and little emphasis has been placed on training, tactics, or sales as part of the larger marketing strategy. We should not conflate the notion of sales with boiler-room operations using untrained and exploited staff and interns. The philosophy there seems to be this: If they can’t do it, we’ll just fire them and bring in more from the hundreds who have sent in resumes. In all this, no thought is given to the value of training and incentives, both of which might improve the interaction between the sport organization and its consumers. Arrogance and laziness. Simon Kuper, a well-known world football writer, recently recalled his attempts to reach the chairman of an English club. The press officer kept asking for fax requests, which Kuper called “a 1980s technology revered by soccer clubs.” Kuper sent them, but the press officer claimed that none were received. Only after a month of this did Kuper get permission to send an e-mail request. His frustration grew: “Because soccer clubs are the only businesses that get daily publicity without trying to, they treat

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journalists as humble supplicants instead of as unpaid marketers of the clubs’ brands. The media often retaliate by being mean. This is not very clever of the clubs, because almost all their fans follow them through the media rather than by going to the stadiums.”46 Failure to adapt to industry, market, and consumer change. As we noted earlier, adapting to new technology has been a constant necessity for sport executives and their media counterparts. Something new is always shaking up the status quo, and calling an innovation a fad or a waste of time is easy. People said that about the telephone and the cell phone, video games, and Facebook. But each of these innovations changed the way that many people lived their everyday lives. The business world, in and out of sport, it littered with the carcasses of firms that failed to adapt.

Change in the Profession Sport marketing has a long history, dating back to spectacle promoters in ancient Greece and Rome. Many golden ages and growth spurts have occurred. David Stern has hundreds of predecessors, including the legendary Bill Veeck, one of the most imaginative sport entrepreneurs and marketers of the past century (see the sidebar about Veeck). Boxing had Tex Rickard, who made a name in the first quarter of the 20th century promoting boxing matches with the likes of Jack Johnson and Jack Dempsey. He later ran sports at Madison Square Garden, where the press referred to his young hockey franchise as Tex’s Rangers. In 1928 he was asked by a pundit, “What do you regard as the secret to your success as a promoter—what psychological impulse guides you?” Rickard answered quickly: “It’s no secret. By merely reading the newspapers most anybody can tell what the public wants to see.”47

Bill Veeck: Sport Marketing’s Foremost Prophet

Bill Veeck (b. 1914) was bred to sport marketing. His father, William Veeck Sr., was a Chicago sportswriter who switched fields to become president of the Cubs. In the cozy confines of Wrigley Field, young Bill Jr. learned the trade of the baseball magnate, from the bottom up —working with the grounds and concessions crews or with the ticket office, like any good intern today. The short biography on his plaque

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in the National Baseball Hall of Fame sums up his rich and varied sports life:

Bill Veeck, owner of Indians, Browns and White Sox. Created heightened fan interest at every stop with ingenious promotional schemes, fan participation, exploding scoreboard, outrageous door prizes, names on uniforms. Set M.L. attendance record with pennant-winner at Cleveland in 1948; won again with “go- go” Sox in 1959. Signed A.L.’s first black player, Larry Doby, in 1947 and oldest rookie, 42-year-old Satchel Paige in 1948. Champion of the little guy.

He was a champion of the little guy not because he once used a midget as a pinch hitter, but because he believed that everyday fans were baseball’s true royalty. His two classic books, Veeck as in Wreck and The Hustler’s Handbook, still hold up as invaluable guides for any would-be sport marketer or executive. He happily considered himself a hustler, but here was his definition: “An advertiser pays for his space. A promoter works out a quid pro quo. A hustler gets a free ride and makes it seem like he’s doing you a favor.” For high school and small college athletics directors or youth program administrators who need to cut deals on slim budgets, Veeck’s hustler should be a prototype.

Bill Veeck also left a legacy of 12 commandments that capture an enduring vision for successful sport marketing:

1. Take your work very seriously. Go for broke and give it your all. 2. Never ever take yourself seriously. 3. Find yourself an alter ego and bond with him for the rest of your

professional life. 4. Surround yourself with similarly dedicated soul mates, free

spirits of whom you can ask why and why not. And who can ask the same thing of you.

5. In your hiring, be color blind, gender blind, age and experience blind. You never work for Bill Veeck. You work with him.

6. If you’re a president, owner, or operator, attend every home game and never leave until the last out.

7. Answer all of your mail; you might learn something. 8. Listen and be available to your fans. 9. Enjoy and respect the members of the media, the stimulation,

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and the challenge. The “them against us” mentality should only exist between the two teams on the field.

10. Create an aura in your city. Make people understand that unless they come to the ballpark, they will miss something.

11. If you don’t think a promotion is fun, don’t do it. Never insult your fans.

12. Don’t miss the essence of what is happening at the moment. Let it happen. Cherish the moment and commit it to your memory.

Bill Veeck’s 12 commandments offer an effective antidote to marketing myopia.48

12 commandments reprinted, by permission, from P. Williams, 2000, Marketing your dreams: Business and life lessons, In Baseball’s marketing genius, edited by Bill Veeck

(Champaign, IL: Sports Publishing), xiv.

The field was not much farther along in 1975 when Sports Illustrated’s Frank Deford wrote a brilliant profile of Michigan’s athletics director, Don Canham, a man widely recognized for leading college athletics into a new age of marketing. Deford focused on Canham’s frenetic pace and his hustling personality. He was way ahead of his time in the use of direct mail and aggressive advertising (including using airplane banners over nearby Detroit’s Tiger Stadium), and in recognizing the need for commercial sponsorship. More than anything, Canham saw the need to sell the overall experience of big-time college football or basketball. As he said to Deford: “We’ve got to promote what we have. We’ve got to ballyhoo the pageantry. . . . We’ve got to sell the spectacle.” To many fellow athletics directors (ADs), Canham’s approach threatened the purity of “amateur” sport. Deford recognized this, but he also recognized the key to Canham’s success: “There is very little that Don Canham does not take into consideration, and that, indeed, is the first mark of a promoter: concern for the tiniest detail while retaining the broadest vision.” We would make only one correction in Deford’s description. Canham was more than a promoter. He was a marketer. It is all in the vision thing.49

The authors of this book have interviewed thousands of young people who want to work in sport marketing because they “love sports.” Like millions of others among the ESPN generation, they are deluded by visions of mingling with Robbie Cano, LeBron James, Maria Sharapova, or Lionel Messi. Reality is much more of a grind—heavy competition for entry-level jobs (the XFL reportedly had over 50,000 people apply online for 112

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positions), low salaries, and long hours. A 2012 survey of pro franchises showed that the median income of workers in marketing, broadcast, and communications departments was $79,510. Still, those with strong sales skills (where salaries are higher) and an equally strong work ethic have a chance to be discovered by a team or by an executive recruiter such as Buffy Filippell, whose TeamWork Online LLC (www.teamworkonline.com) is highly respected and widely known inside the industry.50

Despite lingering myopia, the last 15 years have seen many encouraging signs of professional approaches to sport marketing. Among them are the following.

Robust Improvements in Sales

Few sport properties have the luxury of waiting to take ticket orders— what is now called an inbound sales approach. To succeed in a competitive environment, organizations need to use a proactive outbound sales approach. Yet until recently the industry did little to train a sales force. That circumstance has changed rapidly, of necessity, because a strong sales program depends on having people who understand and can implement activities that integrate database development, prospect identification, dynamic pricing, primary and secondary market sales, and (ultimately) customer satisfaction. Professional teams and Division I universities have led the trend, either building an in-house staff or outsourcing to companies like IMG, Learfield Ticketing, Get Real Sports Sales, or the Aspire Group.51 For instance, faced with a steep decline in men’s basketball attendance, Arizona State hired the Aspire Group, led by coauthor Bernie Mullin, to boost sales in four ticketed sports. As part of the deal ASU also hired 30 full-time sales and service representatives. The goal was to build relationships. Aspire implemented tactics that included “occasional conference calls between coaches and season-ticket holders, giving supporters a chance to dial in with questions,” as well as a young alum ticket package.52

Institutionalization of Knowledge and Training

When we started this book in the 1980s, some two dozen universities in the United States and Canada offered programs in sport management. Now

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there are hundreds around the world. On the professional side, Ron Seaver’s National Sports Forum has served the industry since 1996, bringing the top marketing executives together for keynotes, roundtables, and workshops (www.sports-forum.com). Along similar lines, the National Association of Collegiate Directors of Athletics (NACDA) sponsors professional groups such as the National Association of Collegiate Marketing Administrators (NACMA). Many other formal organizations and consultants like IMG and NASCAR are providing information, training, and professional identity to men and women in the field. Universities are developing more structured internship programs (see the sidebar about the ’Cat Crew). A number of journals and magazines, such as Street & Smith’s SportsBusiness Journal, Sports Business Daily, SportsPro Media, Sport Marketing Quarterly, and the International Journal of Sports Marketing & Sponsorship provide forums for sharing the latest best practices, research reports, and convention calendars.