The Business of Sports


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The Business of Sports

  1. 1. The Business of Sports<br />Holly Grenvicz<br />Principal/ Chief Strategist<br />Werkshop Marketing<br />
  2. 2. Our Special Guest<br />
  3. 3. The Business of Sports<br />The organization<br />How they make money<br />Athletes as an industry<br />Rob’s story<br />Rob’s Top 10 List for Businesses<br />
  4. 4. Defining a Professional Athlete<br />How they see it:<br />I viewed it as a business, but I always viewed it as a game. An opportunity to show my skills, my basketball skills, amongst the best in the world.Michael Jordan<br />
  5. 5. The Org Chart<br />NFL<br />32 Teams<br />NFLPA<br />Agent<br />15 Coaches<br />per team<br />Players<br />58+8+IR<br />
  6. 6. How They Make Money<br />Primary contract<br />Appearances – speaking <br />Endorsements<br />External business dealings during and post-play<br />
  7. 7. Primary Contract<br />Agent negotiates<br />Guaranteed payment<br />Signing bonus<br />Structure<br /><ul><li>How it’s written – front or back loaded
  8. 8. Escalators</li></ul>Bonuses<br /><ul><li>Roster by time of year,
  9. 9. Work out bonuses – by percentage
  10. 10. Performance</li></li></ul><li>Example<br />Albert Haynesworth’s Deal: Redskins<br />Signed: February 18, 2009<br />$100M deal<br />$41M guaranteed<br />$32M over past 14 months<br />
  11. 11. Motivation<br />CBS Interview with Tom Brady, Nov 2005<br />KROFT:You signed a $60 million contract. And a lot of people think you've left a lot of money on the table.<br />BRADY:Wow. (LAUGHTER)<br />KROFT:I mean Peyton Manning, of the Colts, is getting 98 million and a $34 million signing bonus. Michael Vick of the Falcons, 130 million. None of them of them has won even one Super Bowl, let alone three. Why didn't you hold out for more?<br />BRADY:Well, everybody makes different decisions, and everybody has their reasons. Peyton and Michael decided they wanted to, whatever they want to play for is up to them. I used to get $600 dorm checks and go eat Subway, and use pizza cards to get my way through college. And eat baked potatoes and make pancakes every night. So I don't think that's ever been a big thing for me. I mean I'm making more money now than I ever thought I could ever make playing football. I'm very lucky to be here. Why would I go screw this up? I mean where else would I want to be? Where I want to get paid more money? I mean I'm not gonna be able to spend this money.<br />KROFT: It's been reported that one of the reasons why you signed the contract was that you wanted the franchise to have money to go out and hire great players. Was that a factor?<br />BRADY: Yeah. I mean that's always a factor. The way the NFL works, the more you take, the less money other guys have. And I decided, hey, this is what I think I deserve. And it's very fair. And it is a business, and I make those decisions. It's not like I'm, you know, non-profit here. I'm not working for free, and I'm getting paid a lot of money. Other people need to get paid a lot of money too, because a lot of other people contribute. But it's not like the grass is greener anywhere else. I mean, I'm a part of three championships here. And I've got a great relationship with the coach, the ownership and the players. <br />
  12. 12. Endorsements<br />Tiger Woods, $100M, 5 years Nike<br />Venus Williams, $40M, Reebok<br />Tom Brady, Stetson<br /><ul><li>Watch Video</li></ul>Brett Favre, Sears, Wrangler<br />Jacob Ellsbury, Taco Bell<br />LeBron James, $90M, 7 years, Nike<br />
  13. 13. Endorsements<br />The most recognized way that agencies evaluate a celebrity's ability to be an endorser or spokesperson is source credibility.<br />That is why over 75% of endorsement contracts today contain a moral clause that allows companies to exit without penalty in the event of an incident by the celebrity that greatly damages the company's reputation. Often the "incident" is limited to criminal activity and previously it was not uncommon for the legal language within the clause to even mandate that an actual conviction of a crime be present before the deal is terminated. However, this is quickly changing. <br />
  14. 14. Nike releases Tiger commercial, his first TV ad since break<br />Apr. 7, 2010<br />NEW YORK (AP) -- Nike aired a new TV commercial Wednesday featuring Tiger Woods and the voice of his late father on the eve of his return to competitive golf. The ad aired on ESPN and the Golf Channel just one day before the Masters begins.<br />In the stark, black-and-white ad, a solemn Woods looks directly into the camera without speaking while a recording of his late father is heard, speaking about taking responsibility.<br />"Did you learn anything?" Earl Woods says.<br />Woods is returning to golf after a four-month leave. The ad marks the first TV ad for Woods, who had been the face of many companies, since his problems surfaced in late November. Nike Inc. is one of the few sponsors to stand by Woods during his troubles. Woods is the face of the company's golf line and will be using its products when he plays in Augusta, Ga. on Thursday.<br />"We support Tiger and his family. As he returns to competitive golf, the ad addresses his time away from the game using the powerful words of his father," Nike said in a statement.<br />Nike typically doesn't shy away from mentioning athletes' troubles in its ads, experts say. The company has stuck by other athletes with personal problems, such as basketball star Charles Barkley, who famously said in one ad he shouldn't be a role model. Some may question using Woods' father or mentioning the golfer's personal problems, but it makes sense from Nike's perspective.<br />
  15. 15. "You've stayed with the man, how do you re-engage?" said John Sweeney, director of sports communication at the University of North Carolina at Chapel Hill's School of Journalism and Mass Communication. "It's not a question of what we would like to do under perfect circumstances, it's like we've stayed the course, he's back, how do we address it?"<br />The ad also plays off Woods' prodigy aura by using his father, who is partly credited with Woods' early success. Woods has repeatedly said since re-emerging into public life that he strayed from the values instilled in him by his parents.<br />In the commercial, Woods stands outside, on what appears to be a golf course, with the trademark Nike "swoosh" visible on his dark hat and sweater vest. He barely blinks, while Earl Woods is heard saying in the background:<br />"Tiger, I am more prone to be inquisitive to promote discussion. I want to find out what your thinking was. I want to find out what your feelings are, and did you learn anything?" the elder Woods is heard saying while his son looks solemnly into the camera.<br />Nike, based in Beaverton, Ore., said the ad was created by Wieden+Kennedy, an advertising agency based in nearby Portland, that the company has partnered with for years.<br />Woods had been the sports world's biggest moneymaker and was the first $1 billion earner.<br />But he lost top endorsements from companies such as Accenture LLP and AT&T Inc. Other companies like Procter & Gamble Co.'s Gillette unit, didn't drop him outright, although it stopped featuring him in advertisements.<br />But companies more closely linked to his golf ability, such as Nike, memorabilia maker Upper Deck Co. and video game maker Electronic Arts Inc. stuck by him.<br />Experts say it will be a year or more before any major new companies sign Woods. Even then, it will depend on whether he can return to his winning ways.<br />Watch Video<br />
  16. 16. Athletes as a Niche<br />Companies have been created to serve the active and retired athlete community.<br />Locker 2 Locker (logo)<br /><ul><li>Watch intro video</li></ul>Pro<br />
  17. 17. RB2 Facts<br />
  18. 18. RB2 Facts<br />Holds NFL Record for Most Fieldgoals in a single Game, 8, vs. Houston, 2006. Game shoe is in Football Hall of Fame. <br />Among kickers with at least 100 career field goals, ranks 6th at 84%<br />Ranks 3rd on the Titans/Oilers all-time scoring list with 565 points<br />Selected 2008 Pro Bowl <br />
  19. 19. Rob’s Story<br />
  20. 20. 2001-2004<br />Green Bay ‘02<br />Charleston Swampfoxes (AF2) ‘03<br />Tampa Bay ‘03<br />Carolina Cobras (AFL) ‘04<br />Pittsburgh ‘04<br />New York Dragons (AFL) ’05<br />
  21. 21. 2006<br />December 3, 2006 vs. Colts at LP Field: Nailed a game-winning 60-yard field goal against Indianapolis. The 60-yarder tied him for the 3rd longest GW field goal in the NFL. <br /><ul><li>Watch Video</li></ul>With 98 points, led the Titans in scoring for the second consecutive season. Completed a perfect 32 of 32 extra points and made 22 of 28 field goals.<br />Set a franchise record with four game-winning field goals in a single season.<br />
  22. 22. 2007<br />Selected as the AFC Kicker for the 2008 Pro Bowl. Also selected as All-Pro Kicker.<br />Earned a career-high 133 points, the third highest in the NFL and second highest in the AFC. <br />With 35 field goals, Rob led the NFL with the most in-season field goals<br />
  23. 23. 8<br />52, 43, 25, 21, 30, 28, 29, 29<br />Watch Video<br /><ul><li>Kicked eight field goals against Houston to break the NFL and franchise record for most field goals in one game. </li></li></ul><li>Building a Brand<br />It all starts with a plan.<br />
  24. 24. Web<br /><ul><li>Blog and newsletters
  25. 25. Fan club
  26. 26. Photo gallery
  27. 27. Event calendar</li></li></ul><li>Fan Interaction<br />Twitter<br /><ul><li>Created account in April of 2009. Now has 3,388 followers.</li></ul>Facebook<br /><ul><li>Created account in April of 2009. Now has 1,382 friends.</li></ul>Fan mail<br />
  28. 28. Appearances and Endorsements<br />RJ Young<br /><ul><li>Watch Video</li></ul>Appearances<br />
  29. 29. Accolade<br />Nashville Business Journal 40 Under 40, 2009<br />Golden Toe Award, 2008<br />One of the top 10 blogs in the NFL<br />
  30. 30. Rob’s Top 10 List<br />#1 Start small.<br />Live in a hotel.<br />Keep it simple.<br />Earn street cred.<br />
  31. 31. Rob’s Top 10 List<br />#2 Plan for opportunity.<br />I went to business school. I know that there is life after football. <br />
  32. 32. Rob’s Top 10 List<br />#3 Perfect practice makes perfect performance.<br />Consistency. <br />Accuracy.<br />Will power.<br />Watch Video <br />
  33. 33. Rob’s Top 10 List<br />#4 Ask for help. <br />Agent.<br />Marketing.<br />Finance.<br />Retirement.<br />
  34. 34. Rob’s Top 10 List<br />#5 Plan the work. Work the plan.<br />Marketing plan.<br />Hire the bully.<br />
  35. 35. Rob’s Top 10 List<br />#6 Build the brand.<br />Logo<br />Web<br />Blogging<br />Fan interaction<br />Have a song written about you <br />
  36. 36. Rob’s Top 10 List<br />#7 Build your fans.<br />Answer emails.<br />Answer Facebookmessages.<br />Fan club.<br />Communicate.<br />
  37. 37. Rob’s Top 10 List<br />#8 Keep your nose clean.<br />Don’t drink and drive. <br />Don’t date crazies. <br />If you do, have a crisis plan. (Holly)<br />
  38. 38. Rob’s Top 10 List<br />#9 Spend time in the community.<br />School visits. <br />Hospital visits.<br />
  39. 39. Rob’s Top 10 List<br />#10 Give back.<br />The Rob Bironas Fund<br />Other charities<br />
  40. 40. Questions<br />