The biggest story heading into the 2014-15 National Hockey League (NHL) season appears to not be what is happening with players on the ice. Rather, it is the people working off the ice who evaluate players’ performance on the ice that have a leading role in the NHL’s narrative. The analytics movement has come full force to professional hockey. Teams all across the NHL have hired people with expertise in analytics that can develop proprietary statistical analysis to give their teams a competitive edge. The Toronto Maple Leafs alone hired three analysts this past offseason.
The NHL is the latest league to make a significant investment in analytics. Major League Baseball (MLB) is well-known for its use of sabermetrics, as most famously deployed by general manager Billy Beane and the Oakland Athletics. The National Basketball Association (NBA) has spent the last decade hiring people for senior level positions with strong analytics backgrounds, as exemplified by the Houston Rockets selecting Daryl Morey for their General Manager role.
The rise of analytics to evaluate player performance raises a natural question. If teams and leagues increasingly believe analytics can provide a competitive advantage during competitions, then why not make more use of use analytics to help their businesses as well? In fact, sports teams and leagues should take advantage of the opportunities to hire quantitatively-savvy managers and analysts focused primarily on growing an organization’s revenue.
What value does this provide to an organization? In a recent article in Forbes, I showed how combining analysis of a quarterback’s on-field and off-field performance can provide a more holistic view of his value to an organization. However, focusing on individual athletes’ economic impacts is only the start of how quantitative analysis can impact sports organizations’ businesses. The most common example is with pricing tickets. Dynamic pricing has changed the way that teams, fans, media, and sponsors think about how they purchase tickets. Secondary market ticket sites, such as StubHub, and new dynamic ticket pricing models, such as Purple Pricing, have provided sports organizations with the opportunity to make more money while giving fans better options for buying tickets to games.
Ticket pricing is not the only revenue stream where analytics can be applied. For example, sponsorship revenue can use a more analytical approach to demonstrate how sports organizations often generate a significant return on investment for their partners. Sports organizations have traditionally used qualitative approaches to demonstrate a return on investment for their corporate partners in sponsorship deals. This includes developing recaps that have pictures of sponsorship activation elements during the course of the season such as a picture of a brand’s logo on signage at a sports venue.
However, corporate partners should be presented with a dollar amount for the return on investment that they are receiving by sponsoring an organization. Teams can use analytical models to show how the impressions they generate with lucrative sports audiences creates new customers, helps retain current customers, increases brand awareness, or enhances brand perception. Employing analytics in sports sponsorship provides sponsors with clear reasons why they are getting value by working with a sports organization.
Employing business analytics also helps to specifically address issues when a team or athlete is not successful in competition. Relying on winning is a losing strategy. Teams that rely on winning do not always achieve financial success. In addition, winning is still difficult to predict or control – even as teams hire more people to analyze their competitive performance. Deploying business analytics helps to address these issues. It can show what strategies, marketing campaigns, and promotions work best to generate revenue regardless of a team’s performance. With the influx of new technology into the sports industry impacting ticket purchases, in-game concession sales, digital and mobile streaming, social media engagement, and many others, there is a wealth of new data available to sports organizations. The next Moneyball will be the teams that can find insights from this data to generate money for their organizations.
Headline image credit: Ice hockey stadium. CC0 via Pixaby.
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By Irving Rein and Adam Grossman
Stunning upsets. Dramatic finishes. Individual brilliance. Goals galore. The 2014 World Cup has started off with a bang. Yet, not as many people as expected are on hand to hear and see the excitement in venues throughout Brazil. Outside of the home country’s matches, there have been thousands of empty seats in stadiums throughout the tournament. Even marquee matchups, such as the Netherlands-Spain game, have failed to fill their venues. The Italian and English football associations each had 2,500 tickets allocated for their recent game. While England sold their entire allotment, Italy was reported to have returned hundreds of tickets back to FIFA.
So why is the world’s most popular sporting event playing to empty seats? Hosting the event in Brazil does create unique structural challenges that likely have and will prevent more sellouts. Because of the billions of dollars of public funds spent on the World Cup by Brazil, FIFA allocated a large number of tickets for exclusive purchase by fans from the host nation that are paying the bill. In a country where a 10-cent price increase in bus fare caused a nation-wide protest last year, paying $135-$188 dollars per match is likely too expensive for many Brazilian soccer fans.
However, the World Cup is not alone in having difficulty filling empty seats for major sporting events. For example, the National Football League (NFL) and the Southeastern Conference (SEC) are two of the most popular sports leagues in the United States. Yet, both organizations have seen declines in attendance over the past years and are spending significant resources in addressing this venue challenge. With ticket prices continually increasing and technology making it easing than ever to watch games on your television, laptop, or phone, how do sports organizations get people to come to venues?
Arena da Amazônia – Amazon Arena (Quando ainda em construçao – When still under construction.) Photo by Gabriel Smith. CC BY 2.0 via gabriel_srsmith Flickr.
The 2014 World Cup in Brazil demonstrates many of these issues. One of the biggest place marketing challenges is the location of the stadiums. Both FIFA and Brazil essentially used the Field of Dreams “if you build it they will come” strategy. Brazil decided to build or renovate 12 stadiums in many different parts of the country, including venues in remote locations throughout the country. For example, the United States’ second game will be held in Manaus in the Amazonian jungle. The city can only be reached by boat or plane as no highways connect the city to the rest of Brazil.
Brazil could have focused on eight venues — the minimum required by FIFA to host a World Cup — in locations closer to metropolitan areas. We have found that many of the most successful venues already take advantage of existing infrastructure rather than depending on new development. It is likely that more people would attend World Cup matches if they did not have to rely on new roads, bridges, and rail lines to get there.
Brazil and FIFA have also suffered from the lack of an integrated place marketing strategy. The most forward thinking sports organizations have extended their footprints beyond their venues. FIFA deserves significant credit for extending the World Cup’s footprint beyond the stadiums. For example, FIFA Fan Fests in Brazil are often held on gorgeous beaches in cities where games take place. They are filled with music, television, food, and drink to celebrate the 32 days of the World Cup. This encourages fans from both inside and outside of Brazil to have a World Cup experience without having to attend the games. Millions of people are expected to attend these Fan Fests as they have done in every World Cup since 2002.
However, these place extensions work best when they also encourage people to actually attend the games. In Brazil, the Fan Fests can provide a better overall experience than going to the stadiums. Because many of the stadiums were completed only days before the World Cup started, they lack many of the amenities that are found at the Fan Fest. For example, Arena Amazonia in Manuas will only feature “restaurants and underground parking.” That hardly compares to the festive experience at a Fan Fest. Attending a Fan Fest also does not require buying a ticket or dealing with the traffic problems that occur when traveling to stadiums, and people can still see the game on large television monitors with thousands of other fans. Why attend a game when you can have a better and cheaper experience at a Fan Fest?
The World Cup in Brazil shows that thrilling competitions alone do not fill empty seats. Creating an integrated strategy requires a complete analysis of all factors that would prevent a fan from coming to a venue. This includes examining transportation, accessibility, and technology issues – and making certain that game attendance is not negatively impacted by efforts to engage fans through place extensions.
Adam Grossman is the Founder and President of Block Six Analytics (B6A). He has worked with a number of sports organizations, including the Minnesota Timberwolves, Washington Capitals, and SMG @ Solider Field, to enhance their corporate sponsorship and enterprise marketing capabilities. Irving Rein is Professor of Communication Studies at Northwestern University. He is the author of many books, including The Elusive Fan, High Visibility, and Marketing Places. He has consulted for Major League Baseball, the United States Olympic Committee, the National Aeronautics and Space Administration, and numerous corporations. They are the co-authors of The Sports Strategist: Developing Leaders for a High-Performance Industry with Ben Shields. Read previous blog posts on the sports business.
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