Sports Marketing. For the Love of the Business of the Game. North American Sports Market, A Special Report from THE MEDIACENTER
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1 A Special Report from THE MEDIACENTER For the Love of the Business of the Game Quite likely, the dominance of sports in modern American culture is only exceeded by the biggest non-athletic competition, politics. Kantar Media s report on total US advertising expenditures for 2014 a 0.7-percent increase to $141.2 billion supports this conclusion, as it stated the increase was attributable to the Winter Olympics, World Cup and the mid-term elections. According to Kantar, the Winter Olympics alone was responsible for 80 percent of the 2.5-percent increase in network TV ad expenditures: Sports 2, Politics 1. PwC reported in Sports Outlook 2014 that the four sources of revenues for North American sports gate receipts, media rights, sponsorships and merchandising totaled $60.6 billion for 2014, and will increase 5.1 percent for 2015, to $63.7 billion. As much as sporting events and teams generate frenzied support from fans across the globe, it s the broadcast media that deliver the games to billion of homes and prime audiences for advertisers products and services. ESPN, #3, and SkySports, #4, are among the top 5 sports brands in the world, each with approximately $8 billion in annual revenues. The other three are Nike, #1 and $25 billion; Adidas, #2 and $19.2 billion; and Under Armour, #5 and $3.08 billion. Whether it s the biggest sports brands, teams and leagues or local collegiate or semi-professional teams, the marketing of sports is a huge, global enterprise. With the information and insights in this Special Report from THE MEDIACENTER, you ll be in the best competitive position to convince more of your clients that they can profit from their love of the business of the game. North American Sports Market, Segment Gate revenues Media rights Sponsorship Merchandising Total 2014 $17.8 B $14.8 B $14.6 B $13.3 B $60.6 B 2015 $18.3 B $16.6 B $15.3 B $13.5 B $63.7 B 2016 $18.7 B $17.3 B $16.3 B $13.7 B $65.9 B PwC, Sports Outlook, October 2014 * Compound Annual Growth Rate 2017 $19.3 B $18.7 B $16.9 B $13.9 B $68.7 B 2018 $19.7 B $19.3 B $17.6 B $14.1 B $70.7 B CAGR* +2.6% +9.1% +4.8% +1.4% +4.5%
2 The Big Four Traditionally, the Big Four US professional sports leagues are the National Football League (NFL), Major League Baseball (MLB), National Basketball Association (NBA) and National Hockey League (NHL). The average revenues and valuation per franchise in all four leagues are at their highest ever. Average Valuation and Revenues Per Big-Four Franchise, Average Valuation National Football League $400 M $790 M $1 B $1.4 B Major League Baseball $220 M $290 M $420 M $1.25 B National Basketball Association $200 M $280 M $310 M $1.15 B National Hockey League $150 M $140 M $170 M $500 M Average Revenue National Football League $115 M $175 M $270 M $310 M Major League Baseball $85 M $125 M $180 M $275 M National Basketball Association $70 M $80 M $95 M $125 M National Hockey League $52 M $55 M $80 M $100 M Deloitte University Press, August 2015 Cheering and Jeering in Front of the Big Screen image: Ken Durden / Shutterstock.com Using attendance numbers to compare the North American professional leagues is a bit misleading, since each team in each league plays a different number of games. In terms of total attendance, MLB s is more than three times the NBA s and NHL s, at 73.7, 21.9 and 21.5, respectively, for their seasons. MLB teams play 162 games, however, compared to 82 for the NBA and the NHL. The NFL is actually fourth in this metric, at 17.6, but its regular season schedule is just 16 games. TV viewership is another metric that reveals a different correlation of the relative strength of each league. Of the top 50 viewed games on TV for the first half of 2015 (through 7/14/15), the NFL had 13; NBA, 9; NHL, 1; and MLB, 1. In fact, the top six viewed sporting events and nine of the top 10 was NFL games. The next US professional league game was #16, game #6 of the NBA finals with the San Francisco Warriors and Cleveland Cavaliers. Of course, the Super Bowl is the biggest sporting event of the year and transcends the world of sports to be one of the biggest American cultural events. The 2015 game between the New England Patriots and Seattle Seahawks attracted viewers, with the NFC Championship game between the Green Bay Packers and Seahawks a distant second, with viewers. Change the metric to average attendance per game and the NFL is more than twice MLB, at 68,776 and 30,346, respectively, with NBA fourth at 17,809 and NHL fifth at 17,503.
3 The Fandom Kingdom Billionaires may own the major professional sports franchises; national and local media may pay s, even billions, for the rights to broadcast the games; and global brands spend equally large sums to advertise during those broadcasts, but it s the billions of fans that make it all possible. The strength of local fandom is evident in 2014 data from Scarborough that revealed at least 50 percent of the local population of 24 NFL franchises was team fans. The NFL dominates this statistical category, as only 48 percent of MLB teams, 17 percent of NHL franchises and 10 percent of NBA teams can claim so many local fans. The Sports Analytics Blog posts serious academic research on what the two professors contributing to the site call the sports marketing assets of the various sports leagues and teams. One of the metrics they use is fan equity ranking, which attempts to determine what team has the best fans. The professors measure both fan behavior and how loyal they remain when their team has bad seasons. Based on their research, they ve determined the top 5 teams with the best fans in these leagues: NFL Dallas Cowboys, New England Patriots, New York Giants, Baltimore Ravens and New York Jets (2015) MLB Boston Red Sox and Los Angeles Dodgers, tied for first; St. Louis Cardinals, San Francisco Giants and Chicago Cubs (2013) NBA New York Knicks, Los Angeles Lakers, Boston Celtics, Chicago Bulls and Miami Heat (2014) NHL Toronto Maple Leafs, Montreal Canadiens, Edmonton Oilers, Winnipeg Jets and Vancouver Canucks (2014) The Cycle Professional and non-professional sports teams succeed at generating so much revenue because of the well-oiled machinery of the sports marketing cycle: Owners invest in teams and players, which attract fans (whether the team is winning or losing), which attract advertisers, which pay broadcast media billions of dollars to sponsor and/or promote their products and services during games, which allows leagues to demand and broadcast media to pay billions for exclusive rights. For the 2014 season, each of the 32 NFL teams received an even split of the $7.24 billion various networks paid to broadcast the games, or $226.4, BEFORE they sold a ticket, charged a parking fee or took a cut of the stadium concessions. The eight-year MLB TV contract ( ) will result in each of the 30 teams receiving $50 per year. The NBA s latest TV contract for nine years will funnel $89 to each team per year. Top 5 Advertisers for Major Sports, 2014 Sport NFL MLB NBA NHL NASCAR Golf Top 5 Advertisers Bud Light, Chevy Silverado, Verizon Wireless, McDonald s, State Farm Insurance Chevy Silverado, Budweiser, Taco Bell, Geico, T-Mobile State Farm Insurance, Sprint Wireless, Taco Bell, Kia Motors, Samsung Galaxy S5 Discover, Geico, MyCleanPC.com, Verizon Wireless, Bud Light Sprint, KFC, Nationwide Insurance, Cialis, Budweiser FedEx, Mastercard, TaylorMade SLDR Golf Clubs, Cialis, AFLAC
4 Soccer Scores! Football (or what Americans call soccer) is the most popular sport across the globe, with an estimated 3.5 billion fans, which is almost half of the total human population. For years (even decades) US sports analysts gave soccer little or no chance of becoming popular in the US, but the probability of that chance has increased significantly. MLS, or Major League Soccer, may have had attendance of only 6.2 for the season, but it was third in per game attendance, or 19,148, which was more than the NBA and NHL. The first factor that is most likely responsible for a growing interest in soccer in the US is the recent broadcasts of many of the World Cup and Women s World Cup matches. The United States/Japan final was #15 on the list of mostviewed sporting events during the first half of With the proliferation of cable TV sports networks, Americans can now watch many of the matches of the English Premier League and Liga MX, the Mexican league. Top 5 Matches by US TV Viewership of 2014 World Cup Match Germany vs. Argentina (Final) US vs. Portugal (Group) US vs. Belgium (Round of 16) Mexico vs. Netherlands (Round of 16) US vs. Ghana (Group) TV Networks Total Audience* * Total of Englishlanguage and Spanish-language audiences The Latino Market The growing Latino population and market has also had a major and positive effect on soccer match attendance and TV viewership. Actually, more non- Hispanic fans watched the 2014 World Cup than Hispanic fans; however, the Hispanic viewers were the consumers advertisers craved. Of all Hispanic viewers, 46 percent were younger than 35 and 42 percent were women, compared to 39 percent and 34 percent, respectively, for non-hispanic viewers. When measuring average minutes watched of the 2014 World Cup, Hispanic males were first at 1,048; followed by Hispanic females, 814 minutes; non-hispanic males, 502 minutes; and non-hispanic females, 320 minutes. Another interesting comparison is the top five advertisers for the English and Spanish broadcasts. English Microsoft, Adidas, Hyundai, Kia and PepsiCo Spanish McDonalds, Anheuser-Busch, T-Mobile, Coca-Cola and Verizon What has many advertisers salivating is that soccer fans are 20 percent more likely than the average American to have household incomes of more than $100,000, which means they spend more in major retail categories, and technology, specifically. Spending Comparison of Affluent Latino and Average US Households, 2015 Latino Household Spending Categories Average Past 12 Months More Than Average Groceries $7, % Men s business clothing $ % Costume jewelry $ % Women s shoes $ % Home improvements $3, % Online purchases $ % Latino Technology Spending Intent Categories Next 6 Months Soccer Fans General Population Smart TV 37% 23% Video game system 29% 18% Computer 24% 18% Tablet (non ipad) 23% 16% Personal fitness tracker 20% 11% Smartwatch 20% 8%
5 The Collegiate Crowns College football and men s basketball are the two primary sports that fund coaches multi--dollar salaries; the construction and maintenance of huge stadiums, arenas and other athletic facilities; and the long list of men s and women s minor sports at most US universities and colleges. Among the top 50 viewed sporting events of the first half of 2015, college basketball had 12, second only to the NFL at 13, and college football had four, or fourth, with the NBA third with nine. The Ohio State/Oregon final of the 2015 National Championship Game was #7 on the list, with an 18.6 rating and viewers. For college basketball, the 2015 NCAA men s championship game during March Madness between Duke and Wisconsin was #12 with a 16.0 rating and viewers. Men s basketball generated $7.5 billion in TV ad spending from 2005 through 2014, including $1.13 billion for 2014, second only to the NFL s $1.23 billion during the January/February 2014 playoffs. Major Conference Payouts for Football Championship, vs Conference Bowl Championship Series Advertisers Want Action College Football Playoffs Change SEC $34,197,751 $65,598, % Big 12 $34,197,751 $64,700, % Big 10 $34,197,751 $63,978, % Pac-12 $27,897,751 $69,328, % Atlantic Coast $34,197,751 $58,260, % The Business of College Sports, 2015 College football s change from the Bowl Championship Series (BCS) to the first four-team College Football Playoff Series for the season was not just a boon to the sport and fans, but also advertisers. The two semi-final games, Rose Bowl (Oregon vs. Florida State) and Sugar Bowl, (Ohio State vs. Alabama) recorded huge increases in average viewers, compared to the previous year when they hosted BCS games. Average TV Viewers for College Football Bowl Games, vs Bowl Bowl Championship Series College Football Playoffs Change Rose Bowl 18,636,000 28,164, % Sugar Bowl 16,339,000 28,271, % CFP Championship 25,572,000 33,395, % The top five advertisers of college football during the season were AT&T, Taco Bell, Geico, Capital One and Home Depot. For college basketball, they were Capital One, Bud Light, Southwest Airlines, AT&T and All- State Insurance. Although relatively similar and with some duplicates, Home Depot may suggest that more college football fans are homeowners, compared to basketball fans, while Southwest Airlines suggests that more basketball fans are travelers. Consumer Insights of College Football and Basketball Fans, 2014 College Football Fans More likely to have visited a quick service restaurant at least 10 times during the past 30 days More likely to have consumed an energy drink during the past 7 days More likely to have requested overnight delivery services during the past 12 months College Basketball Fans More likely to have purchased computer hardware/software during the past 12 months 34% 32% 42% 31% More likely to own stocks/stock options 32% More likely to have drunk whiskey during the past 30 days 41%
6 Sending Tech Into the Game Although digital media continues to increase its share of time spent by Americans and ad spending, television is still the major medium for US sports fans. The Consumer Electronics Association released a January 2015 study that revealed 90 percent of them viewed sports events and newscasts on TV during the past year, and most of it was live content. In comparison, 16 percent of US sports fans viewed content on a mobile device, 12 percent streamed video on a smartphone and 9 percent via a tablet. What Sports Content Fans Intended to Access Via Mobile Devices, 2015 Content Watch short highlight clips of your favorite team via phone Watch a game or event on a tablet or smartphone Download a sports-related app to a smartphone or tablet Pay to watch streaming video of a sporting event not available on TV emarketer (Consumer Electronics Association), April % 22% 21% 12% The number of US sports fans using mobile devices to access and view sports has been increasing significantly. During October 2014, 72.3 Americans spent an average of 99 minutes during the month with sports content on smartphones, a 42-percent increase in the number of Americans and a 35.6-percent increase in minutes since October Teams/Facilities Game-Day Apps Features, June 2015 Feature Team stats 88.6% Live game information updates 88.6% Stadium maps 60.0% Live play-by-play audio 54.3% Seat upgrades 54.3% Digital ticketing 45.7% Live video 42.9% Instant replays 37.1% Loyalty program 25.7% In-seat or express pickup food ordering 20.0% Digital parking 11.4% Interactive directions 11.4% emarketer, August 2015 The Stadium Mobile Experience The owners/operators of US sports stadiums and arenas have certainly seen the future, as 80 percent of them had a distributed antenna system (DAS) and 67 percent had highquality Wi-Fi, according to a June 2015 study. In addition, 75.6 percent of team and/or facility owners said they had a game-day app, and with the features in the following chart. These apps have the potential to be affordable advertising platforms for local advertisers in conjunction with television to reach local sports fans and cross-promote products and services matching their demographics as well as those related to before- and after-game activities. A myriad of sports in the US and across the globe is certainly a primary source of entertainment for everyone and is one of the largest and most reliable channels for advertisers to reach high-value consumers in various demographics. Although not all local advertisers can afford sponsorship packages or spot buys, they can easily recognize the value of advertising during the broadcasts of sports events and newscasts because of the significant amount of sports marketing to which we are all exposed. This can make it easier for you, as a TV account executive, to convince the right clients to allocate a portion of their budget for sports, but you must also think of creative ideas to help more clients take advantage of this valuable opportunity. Sources: Kantar Media Website, 8/15; PwC Website, 8/15; Total Sportek Website, 8/15; EY Website, 8/15; Under Armour Investor Relations Website, 8/15; Deloitte University Press Website, 8/15; Business Insider Website, 8/15; Sports Media Watch Website, 8/15; Sports Analytics Research Blog Site, 8/15; SB Nation Website, 8/15; Upper Deck Chatter Website, 8/15; Top End Sports Website, 8/15; The Business of College Sports Website, 8/15; emarketer Website, 8/15. Updated: August 2015
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