Sport marketing 4th edition pdf

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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

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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.

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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

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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