Chicago Bears versus Casino Sponsorships

Hello Everyone!

Welcome to the RyanWolf49 Blog!  Its been a while since my last post, so give me a minute and let me gather myself together and figure out how this works again.

Okay, I think I got it.  Let me update you on myself first!  I am in the first week of my third semester as I continue to pursue my MBA from the University of North Carolina at Charlotte.  This is an exciting semester for me because I am taking another Sports Related class, Sports Marketing. I am especially excited for the class because it is going to focus on the business of sports, whether it is about Sports Marketing, Sports Management or even Sports Sponsorship.

Speaking of Sports Sponsorship, do you remember a previous post of mine when I talked about how the NFL was going to allow teams to form business relationships and sponsorships with Casinos.  If not, check it out here.  Well, as the preseason is underway, there has been an update on the stance that some teams have made in regard to this.  In particular, the Chicago Bears, according to their vice president of sales and marketing, Chriss Hibbs, are “choosing not to participate” in doing ad deals with casinos, who called it a decision based on “values.” (article)  This is quite interesting, and coincides with an article I read for my Human Behavior Class that I just started this week.  The article talks about the unethical decision Ford made in rushing the production of the Ford Pinto which caused death or injury to more than two dozen people.  In this case, the executives of Ford thought of this decision as purely business based, rather than an ethical one.  Ford probably thought that the costs of paying lawyers and public scrutiny was less costly than restarting production.  The Chicago Bears, however, do not agree with approach, and are leaving over $2 million dollars on the table annually by holding its stance against advertising with casinos.  They are making this decision because they think it is the ethical decision to make, and I respect that.

What do you think?  Are the Chicago Bears making the right decision?

The Future of Nike in Technology

Yesterday, I had the privilege of attending a Nike Plus Conference where I was educated on some new technology that will be released soon and sold in the Dick’s Sporting Goods where I work.  This new technology is revolutionary and is an example of Nike changing the world of sports again.

The new technology is an extension of the Nike Plus system that they currently sell for runners, only this takes it to a whole another level.  The new technology is called Nike Plus Basketball/Training and will be used in training shoes and basketball shoes.  With these shoes, athletes will be able to measure everything they are doing while playing and working out, to see just how hard they are playing.  Measurements will include the athlete’s vertical, reaction speed and Nike Fuel, which is a Nike measurement for how hard you are working out or playing.  Beyond that, the shoes will connect with your ipod or iphone, so you can see visually exactly what you are doing.  You will be able to compare with friends and competitors and climb the leader boards so you can talk trash to whomever you want.  Could you imagine a High School Basketball Team where everyone had the shoes and you could see who had the highest vertical or who was slacking in the fourth quarter.  I’m sure coaches will love that part.  You will be able to post your fifteen inch vertical to Facebook or Twitter (although that’s a pretty sad vertical, you might want to keep that to yourself) and create an entire social media experience around the shoes.  This new technology is going to raise the competition of pickup games and allow coaches and trainers to see just how hard you are playing in the fourth quarter when the game is on the line.  Check out this video to see a preview of what the shoes look like and what the experience will be like.

Nike Plus Basketball Commercial

At the conference, we got to see the shoes in person and we got to demo some of them while they were connected to the iphones.  I was amazed on how much you could do with this technology.  It wasn’t just that you were getting these shoes that tracked your vertical or told you hard you were playing.  There are what’s called drill packs that will take the place of a trainer.  They put you through workouts and then tell you how many reps you are doing, how much Nike Fuel you are using and how well you are doing the workout.  You then get to see how you did compared to your friends, which creates a fun and competitive experience.  When you buy these shoes, you aren’t just getting a pair of shoes, you are getting an experience where the iphones lead you and track your game.  Nike is ahead of the game here when it comes to creating an entire social media, technology and sport experience, all in one.  Here is a video of a another Dick’s Sporting Goods associate testing out the shoes at the conference.

Nike Plus Demo

While this is going to be an expensive product, I believe it is worth it if you are a serious athlete.  This technology will hold you accountable for your workouts and will allow you to set goals and track your progress and see just how much of an effect your workouts are having on your game.  Lucky me, I am getting a pair to demo for people at work, so come by Dick’s Sporting Goods in Pineville, North Carolina to see just how much you can do with these new shoes.  You will be amazed!  Here’s a sneak preview of one of the boxes!

The “Buzz” in Charlotte?

Charlotte takes the “Hornets” name back!

Well, not yet, but it could happen in the future!  There are so many people in the Charlotte area that want the Bobcats to go away.  Well, not literally go away.  They want to get rid of the Bobcats name and become the “Charlotte Hornets” again!  But, who can blame them.  The  Bobcats had the worst record in the league last season, which ended up being the worst winning percentage in league history.  That is definitely not something to be proud of and doesn’t make the future look too bright.  However, fans were excited for the chance to have the #1 overall draft pick, but they lost in that too, when the New Orleans Hornets stole the first overall pick in the draft lottery.  Isn’t it funny that the team with the name Charlotte fans want, would take the pick from Charlotte that could ignite the future.  Unfortunately, that is the way the NBA works.  Just because you may have been the worst team in the league the previous season, or the worst team in league history, doesn’t mean you get the first overall pick.  The NBA does this to eliminate losing on purpose at the end of a season.

So, would it be beneficial to Charlotte if they could take the “Hornets” name back.  Absolutely!  The Bobcats need to re-brand their team in any way possible, because they are struggling on and off the court.  The team is playing poorly and the stands are empty for just about any game you would have gone to last season.  The team struggles to sell season tickets and has been pushing extra hard lately to basically give away season tickets with various promotions.  With the excitement of potentially getting the #1 overall pick, they ran a promotion where you could buy season tickets where the price per game was equal to the draft pick number.  People could have paid $1 per game, but of course, the Bobcats didn’t win and fands ended up paying $2 per game.  Still a pretty good deal I think.  I think this promotion was probably fairly effective.  It was  a good idea of a way to take advantage of some excitement during the off-season, and turn the Draft Lottery into a season ticket sales event.  What I thought was an even more wilder promotion, was the promotion started the day after the Draft Lottery.  Season tickets for specific seat locations were “Buy this season, get next season free”!  That’s insane.  I’ve heard of “Buy one pair of shoes, get your second free”, but not season tickets.  That’s 82 games for the price of 41.  But wait, there is some logic behind this.  You think you may be getting a great deal, but the Bobcats may be trying their best to get you to the arena so you can buy all of the merchandise and food and drinks.  The Bobcats might figure that if they can’t get you to buy tickets, they might get you to buy 43 dinners at the arena.  It’s all about the money, and the Bobcats need to find any way possible to get your money.  These promotions are a good start, but re-branding to the Hornets would be a even better idea to create long term fans!  Think “Lifetime Value of the Customer”.

While the Bobcats can’t talk about whether they would like to take the “Hornets” name back publicly, since the name is owned by New Orleans, I do believe there is one sign that points to that direction.  Recently. the Bobcats announced that they would change their colors slightly.  The orange is still going to be one of the accent colors, but they are going to more of a lighter blue to go with the current blue.  Take a look at the hats released with the new colors, and then look at an old Charlotte Hornets Hat.  While the colors are not exactly the same, they are strikingly similar.

This is just one sign that I think points to the demise of the Bobcats, and the revival of the Buzz in Charlotte.  The Cable Box will be no longer and the Hive will take its rightful place in uptown Charlotte!  This change will be fairly easy to make and some of the dominoes are already falling into place.  When the New Orleans Hornets were bought by Tom Benson of the Saints, he mentioned that one of the first things he wants to do when the deal is complete, is to get rid of the Hornet’s name.  This is exactly what Charlotte needs to happen if they really want to become the Charlotte Hornets again.  And, the NBA already owns the “Charlotte Hornets” name, so that is another obstacle that they won’t have to face.  The pieces are in place for this change to happen and I think it is in the best interest of Charlotte, especially if they want to create a buzz around professional basketball in Charlotte!

Sports Economics Study – The Results

Reggie Wayne, Marvin Harrison, Corey Simon and Peyton Manning all deserved to be paid over $10 million dollars during the 2006-2007 NFL Season!  Some of you are probably thinking that this statement is a little over the top.  You might be saying “There is no way they should be paid that much money”!  Well, if you are an owner who’s primary goal is to win games, then paying these players was worth it.  The Colts won the Super Bowl that year and I can guarantee you that these players had a lot to do with it.  I came to this conclusion through a study I recently did in my Sports Economics Class while pursuing my MBA.  I will summarize (the final paper is actually around 10 pages long) for you what I did for the study and the results.  First, I want to share the results of the poll that I did in my previous post in which I asked:

What effect does Salary Dispersion within a team in the NFL have on winning percentage? Do you get the best players?  Do role players get jealous?  Choose one of the following.

• The higher the dispersion between the highest and lowest salaries on the team, the higher the winning percentage.
• The higher the dispersion between the highest and lowest salaries on the team, the lower the winning percentage.

As of 2 PM on May 2, 2012, the results were split right down the middle, 9 to 9!  As I began to talk to some of the people who took the pool question, I got the feeling that some people were a little confused on the question and what “dispersion between the highest and lowest salaries on the team” actually meant.  It is not nearly the range between the highest and lowest salary, it is how the size of the salaries are spread across the entire team.  In Economics, there is a measurement called the Herfindahl–Hirschman Index (HHI).  According to the United States Department of Justice, “The Herfindahl–Hirschman Index is a commonly accepted measure of market concentration. The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers” (USDOJ: Antitrust Division). I can use this measurement to look at each player as part of a market (the team) and use the salary to determine how much of the market they have.  In this study, the higher the HHI, the more disparity there is between the highest salaries and the lower salaries.  If the HHI is really high, then there are one or a couple players on the team who have really high salaries.  If the HHI is relatively low, then the salaries are more evenly dispersed and everyone has a relatively average salary.

To test the effects of the HHI on the winning percentage, I collected the salaries of each player for each team during the 2000-2009 NFL Seasons.  This was a lot of data!  I then calculated the HHI of each team and compared it to their winning percentage by conducting a regression analysis.  I was interested to see whether paying a couple of players a huge amount of money was really worth it, or did these players begin playing worse now that they had the money.  There was also the possibility that role players would get jealous of these superstars.  After seeing the results, it showed that on average, THE HIGHER THE TEAM HHI, THE HIGHER THE TEAM WINNING PERCENTAGE.   The following chart shows visual confirmation.  From the chart, you can see the estimated linear regression line that shows on average, a higher Team HHI results in a higher Team Winning Percentage.

While this study showed that paying for the best players in the NFL can help your winning percentage, further studies could be done to prove which positions, or which side of the ball (offense or defense), are worth spending the big bucks for.  Overall, this was an interesting result for me because my teacher did a similar study in Major League Baseball and found the opposite result.  He found that a higher Team HHI actually resulted in a smaller Team Winning Percentage.  When I started thinking about it, it actually made sense when you started looking at the differences between MLB and the NFL.  The NFL is more of an individual sport where star players, especially ones that play Quarterback or Running Back, can have a significant impact on the game.  Quarterbacks touch the ball on almost every single offensive play and running backs can touch the ball 20 to 30 times a game.  Whereas, in MLB, it is more of a team sport where players only get 3 to 5 at bats per game, only get 2 to 4 balls hit to them while playing defense, or only pitch 1 in 5 games.  In conclusion, I believe it makes sense to have more of a balanced team in MLB, so you have more players who can impact the game.  However, in the NFL, it is okay to have a superstar QB and a superstar Linebacker who are paid a lot of money to dominate their side of the ball and help win you games.

I hope you enjoyed reading this post and if you would like to see the full paper discussing the study, go to my LinkedIn Profile and check it out under my files.  Connect with me while you’re there too!

Sports Economic Study – Salary Dispersion in the NFL

Hey guys, I’m interested in your thoughts on an issue I have been spending the semester studying.  In my Sports Economics class, I have been studying the effects of Salary Dispersion within a team on their winning percentage.  Do teams that pay for the best players end up winning more games?  Do players relax and not play as hard once they have signed the mega deal?  Or, do role players get jealous when teammates are making so much more money than they are?

For short, a team with higher dispersion will look like this:

Player 1 Salary – 9,000,000

Player 2 – 500,000

Player 3 – 300,000

Player 4 – 200,000

A team with lower dispersion will look like this:

Player 1 – 2,250,000

Player 2 – 2,250,000

Player 3 – 2,250,000

Player 4 – 2,250,000

Fill out this poll and my next post will summarize the results that I found while gathering data and running a regression analysis.  Select one answer below and thanks in advance!

NFL and Casinos Can Now Talk Sponsorship

Sponsorships in sports is an important aspect to the business and can be a big money maker for teams.  In the NFL, news was released today that the NFL will now be able to partner with gambling halls in advertising.  That being said, there are restrictions to what and where the casinos can advertise.  They are allowed to advertise on signs in the stadiums, in game programs and brochures and on local radio broadcasts.  However, these ads are not allowed to advertise for a particular game, such as blackjack or for tournaments.  There are also rules that forbid casinos from using team logos in ads and they may not become official team sponsors.  The teams are not allowed to sell stadium naming rights or sections seating to casinos.  Also, any casino that uses sports books where gambling on sporting outcomes occurs are not allowed in this advertising at all.  With all of these limitations, it is obvious that the NFL is unsure about this move and wants to take every precaution before it dives completely in.

One team that is excited about this move is the Eagles, whose Lincoln Financial Field is surrounded by various casinos.  There are four in Philadelphia, one in Bethlehem, three in Delaware and and a dozen more 60 miles away in Atlantic City.  The following article talks about why the Eagles are excited about this rule change in sponsorhip.

http://bit.ly/HIihpP

I can see why casinos would want to advertise in NFL stadiums with the type of market that would be available to them.  Think about all of the fans that attend games and play fantasy and enjoy gambling.  These types of people would fall right into the target market of the Casinos and the NFL stadiums would provide the perfect medium to advertise to them all at the same time.  I can see a group of guys spending a day tailgating before the game, going zonkers during the game, and then heading to a casino afterwards while they are all hyped up, especially if their team won.  These people might be feeling very good about their chances after experiencing the rush of cheering on a team to victory.

The part that I am extremely curious about is how many NFL franchises are going to be willing to advertise for gambling and casinos at a venue where there are families  attending too.  How will this advertising affect the image of the teams individually.  I am almost certain that some people will have a negative view on this type of advertising and will either ignore it or avoid it. Even with this change, NFL spokesman Brian McCarthy is quoted saying that one thing that hasn’t changed is “Our position on sports gambling. We have a long-held, unwavering opposition to gambling on NFL games.”  This is where I agree with some people who believe that their new policy might be counter to that quote.  If they are 100% against gambling on sporting events, then they should be against gambling period.  Looking into the future, I am curious to see which teams will advertise casinos and the effects it has on their image.  What do you think, positive or negative effect on their image?

Bubba! The Unusually Normal Guy!

Hey guys and gals!  I hope everyone has enjoyed reading my blog so far.  I am getting pretty busy right now, but wanted to write something on the Master’s golf tournament from this past weekend and that Pink Golf Club.  Here are some articles to read if you didn’t watch this past weekend.

http://www.cnbc.com/id/47008456

http://www.businessweek.com/news/2012-04-11/bubba-watson-s-pink-driver-to-go-on-limited-sale-for-charity

If you didn’t watch the Masters this weekend, or just plain hate golf, that’s okay because this is still an interesting story.  This past weekend at the Master’s, a guy by the name of Bubba won the Master’s tournament and broke down into tears right after he finished his final putt.  It’s amazing in golf how much the image of a player can drive fan support up or down.  How’s Tiger’s image doing right now?  Has he recovered yet?  I don’t think so!  A lot of people didn’t know much about Bubba before this weekend.  Maybe they had heard of the name (what a great name), but they didn’t know much about him.  After watching it this weekend, especially Sunday when he was making his move up the leaderboard, I learned that Bubba had just adopted a kid a few weeks before, he had never had golf lessons in his entire life and he had never watched his golf swing on television.  I think that is pretty amazing for a professional golfer and I think it makes him seem like a normal guy.  Being a normal guy is what made the image of this guy so likeable.  I mean, he had narrowed “Dinner at the Masters next year to the Waffle House, Chipotle, Lexington Barbecue or In-N-Out.”  I don’t think all the other golfers are going to want pancakes from the Waffle House.  But, this is just who Bubba is and why fans can relate to him so well.  Phil Mickelson tends to be the same kind of person and he’s a lefty too.  Is it a lefty thing? Just a random thought…

Now, let’s talk about that pink golf club.  During the Master’s, Bubba used a pink driver throughout the entire tournament.  Bubba used this pink driver in support of breast cancer research and helps with donations depending on drive distances and so on.  The amazing part about this driver is to think how many people now want a pink driver.  Can you imagine the demand for these pink drivers, only because Bubba won the Master’s using it. Ping, one of the sponsors of Bubba was pushed to make pink drivers after the Master’s win.  In the article above it is mentioned that “Ping will produce 5,000 G20 drivers with pink shafts and heads. The company said in a statement on its website it will give 5 percent of the proceeds to a fundraising effort by the golfer, without specifying if the amount would come from the retail price. G20s sell for $299 on the Golf Galaxy website. The pink drivers will cost $430, ESPN said.”

Wow!  So who wants to get one of these drivers now.  Well, sorry, they don’t go on sell until JUNE 1!  This part is kind of surprising to me.  Will people still be demanding pink golf clubs two months from now?  I don’t know?  They could be synchronizing this release with the next Major Tournament, the US Open, which is scheduled to begin on June 10.  I just don’t think that they will be able to capitalize on the rush for pink golf clubs two months from now.  They should be on sale now!  Let me know if you agree with me by commenting below!  Would love to know what other people think of this!

Living the Brand! It works!

Have you ever gone into a store and looked at something you wanted to buy and wanted to know what someone else thought about it. That’s when you go to the employee and ask what they thought of the product and if they used it. If they told you they didn’t use it, you stopped right there and didn’t listen to anything else they had to say. They could tell you how great the product is and how much people love it, but in the back of your mind, you don’t believe them because they don’t use it. This doesn’t mean you don’t buy the product, especially if you are someone who doesn’t really care what other people think. But, for a lot of people, knowing that other people are using the product is a big selling point for them. In this blog post, I am going to tell you about an example where seeing the product in action turned an average visit at a store into a monster sale!

If you’ve been into Dick’s Sporting Goods lately (depending on the location), you may have noticed that the employees are no longer wearing the green shirt and khakis that they are normally seen in. This is because Dick’s has continued their program of “Living the Brand”! The athletic sports associates are dressed in athletic gear from brands sold in the store, the lodge associates are dressed in various forms of camo, and the golf associates are in their daily golf outfits. Now, why are they doing this? Let me tell you about that average visit, turned monster sale!

A man comes into Dick’s Sporting Goods looking for a new pair shoes that just came out that he really wants. He enters the store and heads directly to the Footwear Department. He finds the shoe that he wants and searches for his size, but can’t find them. Bummer! He finds an associate and asks if they have more in the back, but they don’t! Bigger Bummer! The associate tells him that he can order them online for them, but he wants them NOW! The associate then tells the customer he can get another store near by that might have them to hold a pair for him and the customer is intrigued. The associate finds the shoes and spends a few minutes on the phone getting that shoe tucked away in a safe place. While he is on the phone, the customer is sitting there waiting patiently, and then begins looking at the clothes the associate is wearing. He is wearing a new Nike Outfit, complete with shirt and shorts that are matching in color and style. Once the associate gets off the phone, the customer tells him that he likes the clothes he’s wearing, and wants to know where he got them. Well, of course he got them at Dick’s Sporting Goods, and they just so happen to be at the front of the store right when you walk in. The customer quickly goes to the front and picks out a pair of shorts that he thinks are the same as the ones the associate is wearing, only a different color. Now that he has the shorts, he decides he must get some matching shoes! He searches and searches, and finally finds a pair of shoes that match and is excited that he has found a pair of shorts and shoes that match! But wait, the associate is not done with him yet! Why? He doesn’t have any of the shirts to match them! The associate shows him three different styles that match directly with the shorts, and he loves them all, so he gets them all!

Let’s recap! A man came in looking for one pair of shoes. Unfortunately he doesn’t get them, but will pick them up from another location. But, before he leaves, he ends up getting another pair of shoes, a pair of shorts to match them, and three shirts to match the shoes and shorts! All of this because he liked what the associate was wearing. That is what is called “Living the brand” and why seeing the product in action can help make the sale. So, the next time you’re trying to increase sales of a product, put it in action. Think about it. Would those remote control helicopters sell as much if there wasn’t some guy flying them around in the mall? I don’t think so!

Wondering what the product looked like or who the associate was. Well, of course the associate was me and here were the clothes that made the sale!

Can Magic Johnson Turn the Dodgers Around?

http://sports.yahoo.com/mlb/news?slug=ti-brown_dodgers_sale_magic_johnson_mccourt_032712

From most people’s point of view, buying the Dodgers for $2.15 billion dollars might sound like a lot!  After going through half a semester of Sports Economics Class so far, it is not as far fetched as some people might think.  The amount of money that a Sports Franchise brings in year after year is a lot.  But that is not the point of this blog post!

What I want to talk about is how Magic Johnson, a Hall of Fame Basketball player can and will not only turn around a Baseball team, but turn around the image of the Dodgers.  The Dodgers have been under ownership of Frank McCourt, who has put the Dodgers name in a bad place, through his divorce with his wife, who was CEO of the Dodgers and through the eventual bankruptcy of the Dodgers.  Having an owner with a good public image is something that I think is of the utmost importance.  Take a look at the Panthers who are owned by Jerry Richardson.  Richardson is someone who is respected by everyone in the Panthers’ organization and everyone around the league.  This is why I agree with why the future is bright for the Dodgers, “As long as he leaves”, Frank McCourt that is.

With Frank McCourt gone,

“The Dodgers are dignified again. Or, at least, hold the promise for dignity. They’ve come a long way in a few hours. They are a bunch of guys with money that no one outside the country club set or film industry has ever heard of. They are Stan Kasten, who helped build and maintain the Atlanta Braves, when the Braves won often. But, first, they are Magic, a man’s man, a champion’s champion, and an L.A. guy who happened to front the largest price tag ever for a professional sports team. First, they are hope.”

With Magic at the forefront of the Dodgers ownership, he is providing Dodgers’ fans someone they can trust.  Ever since “The Announcement” (http://www.youtube.com/watch?v=iSfy4AhDDnw), Magic Johnson has thrived when people put him down and smiled when people praised him.  It is his character and the smile on his face that has made him the respected man he is today.

Although Magic may not know much about Baseball, considering he was a Basketball Star, he knows about winning.  Magic said he plans to have an office at the Dodger’s Stadium, where he will be significantly involved.  Now, what will he be involved in?  Magic will be the guy who convinces that free agent every one wants on their team, that the Dodgers are the place to be.  Magic will put his experiences in winning championships (he won 5 in the NBA) in the minds of those players, and the players will respond by joining him!  I think Magic will be putting his Marketing efforts to work in making the Dodgers the hot topic!

Although the deal is not complete yet, I hope it goes through.  What do you think?  Is Magic the right man for the job?  I think so!  I think it gives the Dodgers a face for the franchise that everyone will respect!