Sunday, February 25, 2007

Image Makeovers: Marketing Sports Heroes

Professional athletes are paid enormous amounts of money to provide entertainment and excitement to the fans. The accompanying stress and stardom provides an environment ripe for inappropriate behavior. It seems like every week some athlete commits a crime or makes some careless remark about minority groups. This week I comment on two other blogs how athlete’s behavior off the field affects their public image and marketing potential. The first blog post focuses on Muhammad Ali’s commitment to personal values at the expense of his career. Although always outspoken and controversial, he has become a sport’s icon for his unbending support of human rights. The second blog post follows the rise, fall, and reinvention of Kobe Bryant’s image among his fans. Unlike most members of professional sports, Kobe received a second chance to rebuild his shattered image and now guards it meticulously. My comments on these posts can be read below.

In response to the blog “To the greatest of all time,” I agree that Muhammad Ali is a true sport’s hero recognized by many fans and athletes today. Back in the 1960’s it was rare for a celebrity sport’s star to voice his opinion on any political subject. Not only was Ali labeled a loudmouth and irreverent poet by newspapers and sports-casters, he directly challenged the military industrial complex. During this dark era of American history, he stood firm and became a popular anti-hero with those opposed to the Vietnam War. Today, popular athletes rarely take positions on anything except non-controversial subjects like clothing and food choices. The blogger states that athletes are “image conscious and seemingly bend over backwards to avoid taking stands that may jeopardize endorsement deals.” Athletes now consult their lawyers and public relations staff before commenting on sensitive subjects. Just last week, Tim Hardaway, in photo to the right, permanently tarnished his popularity by speaking out against gays and lesbians. He immediately tried to retract his statement by saying, “I shouldn't have said I hate gay people or anything like that. That was my mistake.” More importantly, publicly stating he hates gay people will only endanger his own popularity and paycheck. NBA Commissioner Stern’s quick and decisive action to distance Hardaway’s views from the league can only lower his respect from his peers, fans, and employers. Muhammad Ali was forever outspoken and outrageous but never publicly criticized any individual groups. In contrast, Hardaway casually revealed his feelings on gay people during a radio interview and will never be able to achieve Ali’s status as a true hero.

I find this blog an excellent example of how to reinvent a superstar. Kobe Bryant was the prima donna of the championship Lakers during the 2000-04 seasons. Immediately after his acquittal for rape charges, Nike released a commercial with Kobe saying, “Love me or hate me…I hate that I am loved for the exact same reason.” Kobe was frustrated with his love-hate relationship among NBA fans. Los Angeles fans loved him while almost everyone else despised him. Eventually, many LA fans began to blame him for everything wrong with the Lakers, including the firing of Phil Jackson and the trading of Shaquille O'Neal to the Miami Heat. This time period was the nadir of Kobe’s career. They even made a bobble head doll to celebrate his fall from grace (see picture to the left). Fortunately, owner Jerry Buss kept faith in Kobe and used his public relations team to reinvent Kobe’s image. The blogger refers to Kobe as the “Black Mamba” named after a reformed female criminal in DC comics. The choice of a woman character reflects Kobe’s new respect for female values as evidence by his public apology to his wife after committing adultery. This description fits Kobe as perfect as his customized shoes. The “KB824” transformation from reclusive chauvinist to unselfish team player took place over the last few seasons. This year completes the recast as he changed jersey numbers from 8 to 24. The number change had two purposes: (1) boost jersey sales and (2) distance himself from his sordid past. Kobe hopefully has learned his lessons well and will be rewarded “symbolically by his placement adjacent to LeBron at the center of Nike’s basketball future.” Not many people get second chances in recovering stardom. Hopefully Kobe will not pass up this opportunity.

Tuesday, February 20, 2007

The Latest Sport’s Experience: Games Go 3D-HD to Keep Customers

With the increasing popularity and affordability of home entertainment systems, Nielsen Entertainment/NRG reports ticket sales at local theaters have dropped 9 nine percent in 2005. Although data for 2006 haves not yet been compiled, the results do not look any more optimistic. In an attempt to reverse this declining trend in movie ticket sales, Shari Redstone, president of the National Amusements theater chain said, “We want to transition our theaters from being traditional movie theaters to being community entertainment destinations, and what better way to do this than sports?” The sports entertainment industry must be listening to Redstone because this week two major sporting events, the NBA All-Star game and the NASCAR Daytona 500, are providing 3D-HD programming for select customers. If these business ventures are successful, we should expect to see live sports telecasts in 3D-HD at local theaters soon.

ESPN and FOX Entertainment will introduce pay-per-view packages with 3D instant replay at this year’s NASCAR Daytona 500. By installing GPS trackers on race cars, FOX will be able to use computers to recreate video versions of exciting race situations such as car wrecks and near collisions. Just like XBox’s NASCAR 06 game shown to the right, the broadcasters can select multiple views to show exactly how the accidents occurred and simulate evasive maneuvers that could have prevented the collision. These visual enhancements can only make the viewer feel closer to the action and more connected with the entertainment experience. From a business perspective, increasing the fan’s enjoyment will help increase sales and minimize any initial objections for paying premiums to view the sport. By enhancing the sport’s actions through 3D-HD technology, the sports industry hopes to hold onto the loyal fans that cannot afford to attend the actual sport events but still are willing to pay for the video entertainment.

On the same day that the Daytona 500 is being piped into viewer’s homes on pay TV, the NBA All-Star game is being staged in Las Vegas, Nevada. Almost 3,500 lucky viewers will be selected to witness the first live 3D-HD telecast of an NBA game from the Mandalay Bay Resort & Casino. PACE Technologies, a leader in digital video equipment has specifically designed a Sports Fusion 3D-HD camera system to capture all the actions on the court. The PACE double-lensed camera system is shown in the picture to the left. Michael Rokosa, vice president of engineering for NBA Entertainment said, “Our hopes are to understand the emerging technology and where our world of entertainment is going.” If this event is successful, it will accelerate the transfer of live sport’s arena experiences to local theaters across the nation.

Just like the Daytona 500 event, ticket prices to professional basketball games are slowly becoming unafforable for ordinary fans. But basketball promoters may follow the lead of their counterparts in major league baseball. During the 2004 baseball season, the National Amusements theater chain began screening HD broadcasts of Boston Red Sox games in their Showcase Cinemas throughout New England because of the scarcity of tickets. To help simulate the game-like experience, vendors strolled through the theater aisles hawking popcorn, peanuts, and beer. As Redstone, a diehard Red Sox fan said, “The experience is more important, really, than what you are showing.” Building on this successful model, NBA Entertainment will add 3D effects to giant theater screens to make the fans feel like they can almost touch the ball. With the rapid advancement of technology over the last decade, the possibilities are endless how far the promoters of sporting events can actually involve the fans. Emerging technology holds the promise of satisfying the fan’s ultimate fantasy of playing on his favorite professional team. Some rabid basketball fans would pay a small fortune to be given the opportunity to hit a three point shot over Kobe Bryant and beat the Lakers just before time expired on the game clock. Rokosa told reporters at the pre-game events in Las Vegas, “You know the saying a picture is worth a thousand words? This one is worth two-thousand." Maybe Rokosa really meant a thousand dollars!

Monday, February 12, 2007

Sports Stories: A Look at How Shoes and Rules Change the Competition of Sports

This week’s post connects to two other blogs on Sports and Business. Both posts provide pros and cons on the other author’s viewpoint. My first set of comments are linked to the Sports Business News blog regarding the release of the Marbury One shoe line. I chose this blog because of my personal interest in athletic shoes and Marbury’s attempt to make his shoes affordable for the ordinary guy. My second set of comments are posted on the BBT: The Magazine blog and focus on changing the way sports are played in order to maintain fan interest and team revenues. As a business student, I am always amazed how sports are becoming more exciting to make the fans convinced they are getting their money’s worth. You can either read my comments posted at the other two blogs or just continue reading below.

As an athletic shoe collector I find this article fascinating if not unbelievable. While many high profile athletes make fortunes selling $150+ basketball shoes, Stephon Marbury has discovered a way to sell his own brand of shoes for a ridiculously low price of $15 a pair. I salute him for reaching out and making sure that all kids have the opportunity to achieve greatness regardless of their own economic barriers. In addition to giving back to his community, I feel that the launch of Marbury’s shoe campaign will help get more kids off the streets and onto the basketball courts. Similar to after school programs which help kids stay in school and go to college, Marbury’s shoe program will encourage kids to stay physically fit, avoid drugs, and join athletic teams. All of these actions will help promote health awareness among our youth. To satisfy my curiosity, I checked out the nearest Steve & Barry’s Athletic Store in Culver City last Saturday at 10 AM. It is located next to Macy’s department store in the Fox Hills Mall and the insides resemble a K-Mart or Target environment. I found a huge inventory of Marbury’s shoes available and not that many customers. According to Andy Todd, president of Steve & Barry’s, the shoes were sold out throughout the United States. Instead, I would tend to agree with Bob Basche that “Marbury didn’t have the cache to sell shoes nationally like LeBron James, Michael Jordan, or Dwayne Wade.” As a lifelong Laker fan, I have seen plenty of people wearing Kobe and Jordan jerseys but no one in LA wearing Marbury clothing. If Steve & Barry can make sports shoes affordable to everyone, they will clearly have revolutionized the sports apparel industry.

When I first read your article I couldn’t stop laughing. The suggested new playing rules seem absurd and could never be accepted in our traditional sport’s society. But reflecting on the changes in sports over the last couple of decades, one thing remains constant: the rules will change in order to hold the interests of the fans and make a profit for the owners. The following changes come to mind: (1) adding the designated hitter rule in baseball to eliminate a weak hitting pitcher; (2) decreasing the shot clock interval in basketball to force teams to take more shots; and (3) adding the shootout rule in hockey to eliminate tie games. In each case, the rules were changed to make the sport more entertaining and draw bigger crowds. Let’s take a look at two of your suggestions. If we eliminate football salaries and make players solely dependent on endorsements and fan donations, no one can accuse them of inflated paychecks. On the other hand, only the high profile superstars will command mega level endorsements and force the other players to create their own businesses to generate revenue. Even worse, many of the top players will flock to the giant media centers, such as Los Angeles and New York, to solicit major endorsement contracts. Your other suggestion to add a “Zero G” environment to basketball could add a whole new dimension to how the games are played. Just imagine the score for dunking the ball could be based on the difficulty of the acrobatic maneuver, just like gymnastics. And with today’s technology, creating a Zero G environment is feasible although costly. Who really can predict what the game will look like 10 years from now?

Monday, February 5, 2007

Deep Pockets: Determining the Real Value of Athletes

Two weeks ago I watched the New Orleans Saints play the Chicago Bears in an NFC Playoffs game. Although the Saints lost, 39-14, AOL sports describes the thrill watching “in a bit of dash and daring Reggie Bush took a short pass from Drew Brees in the third quarter and rocked, rolled and dismembered 88 yards for a touchdown." Adding insult to injury, Bush "turned and pointed at the nearest Bears defender as he neared the goal line and executed a perfect somersault into the end zone." Unfortunately, this type of bad behavior has become commonplace in professional sports today and is reminiscent of similar theatrics Bush performed when he led the USC Trojans to the national championship in 2005. Looking for bigger challenges and rewards, Bush passed up his senior season at USC and signed "a six-year contract with the Saints in 2006 that guarantees $26.3 million with a $51 million total." Shocked at these figures and Bush’s lackluster regular season statistics, sport critics proclaimed, "Saints and Madison Avenue have already made Bush a star and a millionaire many times over, it's time for him to earn it." But just like their counterparts in the entertainment fields, athletes’ salaries are determined by their unique skills, agents’ ingenuities, and values to their teams. Despite his detractors, Bush shows that extraordinary skills can command an expensive price tag that fans are more than willing to pay.

A professional athlete’s value is directly related to his ability to generate revenue for the team. It is completely unfair to compare an athlete’s salary to someone in the normal work force such as a teacher, engineer, or small businessman. All these jobs are essential for the welfare of the local community but they do not demand the extraordinary physical skills nor place the participants under the ever present scrutiny of the public eye as professional athletes. A popular career website notes “athletes continually push themselves, training year-round to perfect their game. Their careers are constantly in jeopardy as the probability of injury is high.” Besides the uncertainty in their jobs, the playing season robs players of a normal family life as they devote off playing times to constantly honing their physical skills and studying opponents. Even worse, they wind up spending more than half their time away from home as their team schedule requires periodically touring across the country. With this in mind, “all these factors, coupled with the very public nature of the job can quickly wear down an athlete's psyche and damage his or her personal life.”

Forbes.com lists the highest wage earner during 2006 as film mogul Steven Spielberg. At $322 million income, he “made the bulk of his cash from the sale of DreamWorks SKG's live-action business to Paramount." In comparison, sport’s top money maker was Tiger Woods, who "earned $58 million in career tournament winnings, $12 million more than his closest competitor. Add to that lucrative deals with blue chips like Nike, Accenture, General Motors and American Express, and it's no wonder golf's crown prince can afford playthings like his recent purchase of 155-foot yachts and a ten-acre oceanfront estate." While not many athletes can even hope of reaching the payroll heights of Tiger Woods, a dramatic shift in high end salaries from individual sports to team sports has occurred during the last decade. Forbes’s Kurt Badenhausen reports "the salary explosion in team sports means that basketball (14 entries) and baseball (13 entries) players now dominate the list of highest priced players. Overall, the 50 highest earners pulled in a combined $1.1 billion, 40% of which came from endorsements. The minimum to make the list was $15 million versus less than $5 million in 1994." Thus, if we compare the highest salaries of professional baseball and basketball players to entertainment and business leaders, sports salaries are not necessarily inflated. For example, USA Today lists the richest baseball franchise, New York Yankees, paying out more than $20 million apiece to Alex Rodriguez, Derek Jeter, and Jason Giambi. It is only a matter of time until the entire Yankee lineup will all be millionaires!

Michael Rice, a weblog baseball editor notes “it is impossible to pick up a newspaper sports section these days without reading how the New York Yankees are paying too much money for players and such deep pockets is bad for baseball." But he disagrees with these Yankee critics by showing that “ in 1977 the New York Yankees had a payroll of $3,474,325 out of a total league payroll of $23,854,375 (14.56%) while in 2003 the percentage had only risen to 15.71%." While one could claim the Yankees have historically overpaid their players, on a percentage basis the Yankees are simply keeping pace financially with opposing teams. A recent Harris Poll of 874 U.S. adults "found New York Yankees again on top as the country's favorite baseball team." Not surprisingly, MLB.com lists the three Yankee sluggers as leaders in statistical performance metrics (hits, RBIs, and home-runs). Due in a large part to their outstanding skills and fan popularity, Forbes magazine reports “The New York Yankees' value increased 17 percent in the past year to $1.2 billion." From this business perspective, their salaries are commensurate with other leaders in the entertainment industries who also are paid on performance. In a similar fashion, Forbes.com shows NBA’s former Lakers teammates Shaquille O’Neal and Kobe Bryant “commanding salaries of $31 million and $30 million respectively." With humor almost as large as his size, O’Neal accepted a salary cut this year so he could “address all of my family's long-term financial goals while allowing the Heat the ability to acquire those players that we need to win a championship." One can only wonder what kinds of children’s goals would require this much cash?

Even if sport salaries are in line with the entertainment and business industries, the general public is still alarmed that ticket prices are quickly becoming unaffordable to the general public. Sport’s commentator Mike Simmons warns that "corporations are scooping up tickets at high prices and writing off the costs as business expenses." These inflated priced tickets are hoarded as enticements to select customers and rewards for high performing employees. In addition, “they are simultaneously paying premium dollars to get stadium naming rights and advertising spots." Soon only the rich can afford to attend professional sports events while the rest of us watch the games on cable television.

One of the key reasons for professional athletes salary jumps with subsequent rises in ticket prices is the bidding war over free agents by wealthy owners. In this year’s most publicized international baseball bidding contest, CBS Sports reports "The Boston Red Sox emerged Tuesday night as winners of the bidding for Daisuke Matsuzaka with a $51.1-million US offer." When Boston season ticket holders receive their new price lists they may question who exactly is the winner from this bidding war? Football forecaster Neil Warner points out that over in the NFL the owners finally acceded to the players’ demand for free agency as long as they could "protect themselves from each other as a result of the bidding wars for players that they feared would follow." Today, MLB, NBA and NFL all have salary caps but ticket prices still seem to be rising without limit. Warner warns that “the salary cap has been shot full of holes, almost as many holes as the NBA’s cap." Clever club lawyers and unscrupulous owners make “the amount of money each club spends on player salaries bears little resemblance to the salary cap." Almost as tragic as the added burden on fans’ wallets is the impact on “above-average NFL veterans who have gradually worked their way into the middle of the salary range but are sacrificed in favor of cheaper, marginal players.” This financial solution appears to be a winner takes all approach.

For the 2006-07 season, InsideHoops.com states “The NBA salary cap for 2006-07 is officially $53.135 million, up $3.6 million from the previous season." In addition, the NBA has instituted a luxury tax threshold of $65.4 million and ESPN reports "Teams with payrolls over that will have to pay a dollar-for-dollar tax on the amount of their payroll that exceeds the $65 million. The resulting tax revenues will be handed over to poorer teams to financially balance the league and maintain parity in personnel. What ultimate affect this tax will have on future ticket prices and player salaries is unclear but the good news is that “it seems to be working. As it stands right now, only one team, the Knicks, are way over the luxury tax threshold." We can only hope that professional sports will not become a pastime for only the rich and famous.