Major sports leagues in the United States
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Just a quick outlook on the existing leagues (NFL, MLB, NBA, NHL, NASCAR) with basic information about their revenues and, subscribers, major problems and things management should be looking at
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Major sports leagues in the United States
- 2. Industry Outlook Revenue, $bn Annual growth, 09-14 Annual growth, 14-19 Profit, $bn Wages, $bn 24.8 1.8 2.5 1.7 15.3 Life cycle stage Mature Regulation Level Heavy Capital Intensity Low Barriers to Entry High Concentration Level Low Industry Globalization Low Competition Level High Major Challenges: •Recession and changes in disposable income •Decrease in time spent on leisure and sports •External competition with other entertainment venues •Internal cannibalization: online vs. visiting events •Gender disproportion: overwhelmingly male attendance of sporting events
- 3. Breakdown by leagues NFL 39% MLB 29% NBA 16% NHL 14% Other 2% Major leagues' share of revenues NFL MLB NBA NHL Other
- 4. Segmentation of Market Ticket sales 38% Broadcasting an other media rights 31% Advertising 12% Other 11% Concessions 4% Merchandise Sales 2% Licensing of rights to use property 2% Products segmentation Ticket sales Broadcasting an other media rights Advertising Other Concessions Merchandise Sales Licensing of rights to use property
- 5. Major Players NFL MLB NBA NHL NASCAR League revenue, $bn 8.8 6.8 3.7 3.4 0.612 Operating Income, $M 1300 394 357 250 78.692 Number of Teams 32 30 30 30 21 Average Attendance 67,579 30,884 17,273 17,455 97,772 Average Team value, $M 1110 744 509 282 84
- 6. NFL Channel # of users Facebook 10,131,344 Instagram 1,358,345 Youtube 2,860 Twitter 6,350,000 •Around $20.4bn paid in total to broadcast NFL games •The broadcasting deal with DirecTV cost $4.0bn in 2009 •$4M – 30 sec. commercial during Super Bowl •Development league was disbanded •Female audience more than doubled in last five years
- 7. NFL Challenges: •High ratings but decreasing attendance •Health issues •Commoditization of product •Thursday nights – questionable quality •Not easy to adjust product for mobile consumption due to nature of game •$765 settlement in action What to do next: •Go to England, but nourish game understanding in Europe first •Make stadiums more user-friendly (kids zones, Wi-Fi) •Sell games online a la carte
- 8. MLB Channel # of users Facebook 5,407,947 Instagram 807,955 Youtube 253,085 Twitter 3,570,000 •MLB TV – one of the best services of that kind •MLB Academy – still underdeveloped asset •Uniformed penetration rate across country •Los Angeles Dodgers: $8bn deal with Time Warner Cable •Hit in Asia and Dominican Republic
- 9. Challenges: •Numerous issues with MLB TV •Slowly but constantly decreasing ratings •Games too long for average attention span of millennials •Weak cultural ties outside US and Japan/Korea What to do next: •Make MLB TV work •Try delivering games in smaller chunks •Squeeze senior fan base more and reach out to them: see Twitter growth rates among seniors
- 10. NBA Channel # of users Facebook 21,964,880 Instagram 2,404,363 Youtube 5,529,233 Twitter 9,930,000 •Strongest digital presence •Youngest fan base •Spacious product offering: NBA, NBDL, WNBA w/o cannibalization •Nature of game fits to modern consumer demands •High popularity among urban audience •Visible growth opportunities across globe •NBA China worth over $2bn by 2020
- 11. Challenges: •Collective bargaining agreement and teams’ economics •Racial issues •Audience is always too young? •Gap between teams from primary and secondary markets •Players as media vs. traditional media channels What to do next: •Virtual in-game presence: see MU-FrontRow Google+ case •Marketing partnerships in big cities: Sao Paulo, Seoul, Moscow, Istanbul, London; 1bn people in Chinese cities by 2030 •Give out content in special venues (playgrounds)?? •Nourish game in emerging markets •Add flexibility in game offering in emerged markets: see ITunes in Russia •More of around-the-game content •Online interaction: polls, stats by demand •Experiment with form: longreads & rich media
- 12. NHL Channel # of users Facebook 3,200,683 Instagram 446,432 Youtube 450,622 Twitter 2,410,000 The most international sport in this list and popular in Europe In US strong presence only in Northern states Strong inflow of talents from overseas Combines basketball visual appeal and football masculine scale
- 13. Challenges: Weak support from ethnic minorities Difficult to engage children to play hockey Only 3 teams make operating profit Limited broadcasting on major channels (NBC) and no ESPN coverage What to do next: Fewer teams of greater quality Match-ups with European counterparts in pre-season
- 14. NASCAR Channel # of users Facebook 4,138,848 Instagram 141,932 Youtube 60,702 Twitter 1,450,000 •Concentrated on South and West (except 2 arenas in IL and MI) •Long races •High CapEx
- 15. Challenges: •Dependence on weather conditions •Fierce competition – same product •Pricey packages: tickets, hotels, food •Almost impossible to import What to do next: •Add entertainment: contests, live shows over weekend •Make races shorter and more robust •Try target younger “nerdish” audience: cars, technologies, mechanisms •More of from-the-car content
- 17. Play sports And GO BLUE Michael Kareev, 2014