Transcript Lesson 1.2 - Slides

Lesson 1.2
Factors Contributing to
Industry Growth
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LESSON 1.2
Factors Influencing Industry Growth
 Increase in participation
 More people following sports and entertainment
 Increase in sports/entertainment offerings
 Attendance boom
 Media coverage
 Global products
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LESSON 1.2
Evidence of Increased Participation Rates
The U.S. Youth Soccer Association reports that
there were 100,000 registered players in 1974.
Today the organization has grown to 3.2 million
registered players and over 800,000 coaches
and volunteers
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LESSON 1.2
Evidence of Increased Participation Rates
The number of U.S. golfers has risen to 12.6%
of the population vs. 3.5% 50 years ago
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LESSON 1.2
Evidence of Increased Participation Rates
According to the National
Federation of State High School
Associations, the sport of
lacrosse has seen a 280%
increase in participation in the
last decade
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LESSON 1.2
Evidence of Increased Participation Rates
Among sports and recreation
activities that grew more than 15%
the past 10 years, skateboarding
led the way with a 74.1% growth,
according to the National Sporting
Goods Association (NSGA)
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History of SEM
LESSON 1.2
Factors Influencing Industry Growth
 Increase in participation
 More people following sports and entertainment
 Increase in sports/entertainment offerings
 Attendance boom
 Media coverage
 Global products
 Emergence of Internet and new technologies
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LESSON 1.2
Increase in Those Following Sports & Entertainment
U.S. television broadcast 800 hours of sports in
1971
NBC streamed the entire 2014 Winter Olympics in
Sochi, Russia, marking the first time that fans had a
chance to watch every Winter Olympic event live
(compared with a total of 14 total hours of coverage
from the 1964 Tokyo games)
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History of SEM
LESSON 1.2
Factors Influencing Industry Growth
 Increase in participation
 More people following sports and entertainment
 Increase in sports/entertainment offerings
 Attendance boom
 Media coverage
 Global products
 Emergence of Internet and new technologies
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LESSON 1.2
Increase in Sports/Entertainment Offerings
More options for sports as
participants:
Disc golf the sport spread to 560 courses
nationwide by 1995 and doubled that
number by 2000. Today, the Professional
Disc Golf Association boasts more than
4,000 courses globally and the game is
played in more than 40 countries
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LESSON 1.2
Increase in Sports/Entertainment Offerings
More options for sports
as participants:
In 2013, Hawaii became the
first state to sanction surfing
as an officially recognized
high school sport
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LESSON 1.2
Increase in Sports/Entertainment Offerings
More options for sports as
participants:
Also in 2013, the state of Missouri bass fishing
became an officially sanctioned high school
sport (joining the states of Illinois, Kentucky
and Tennessee as states sanctioning fishing
as a recognized sport)
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LESSON 1.2
Increase in Sports/Entertainment Offerings
More options for sports
as participants:
One school in Florida is attempting
to legitimize Go Kart racing as an
official varsity sport
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LESSON 1.2
Increase in Sports/Entertainment Offerings
More options for sports as
participants:
A new sport called Spikeball burst on the
scene two years ago, and according to
its governing body already boasts
125,000 participants, and is the fastest
growing sport in the U.S.
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LESSON 1.2
Increase in Sports/Entertainment Offerings
ESPN’s coverage features more than 65
sports including MLB, NBA, NFL’s
Monday Night Football, NASCAR, MLS,
FIFA World Cup, WNBA, college football,
men's and women's college basketball,
golf, Little League World Series, fishing,
spelling, billiards, poker, arena football,
eating championships, and the X Games
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LESSON 1.2
Factors Influencing Industry Growth
 Increase in participation
 More people following sports and entertainment
 Increase in sports/entertainment offerings
 Attendance boom
 Media coverage
 Global products
 Emergence of Internet and new technologies
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LESSON 1.2
Attendance Increases
To put the league’s growth into perspective,
the NHL’s attendance was 7,758,05 in the
1978-79 season
2012-13 NHL season attendance (lockout shortened season)
21,470,155
1978-79 NHL season total attendance
7,758,05
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LESSON 1.2
Attendance Increases
Over 75 percent of movies in the top 50 all-time
highest-grossing films (before inflation) were
released after the year 2000. The highest grossing
film in the 70s was Star Wars, at just under $800
million and in the 80s was E.T., at just $750 million.
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LESSON 1.2
Attendance Increases
Later in 2013, Disney’s holiday blockbuster Frozen
would become the highest grossing animated film
of all-time and pass Iron Man 3 as the 5th highest
grossing film ever
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History of SEM
LESSON 1.2
Factors Influencing Industry Growth
 Increase in participation
 More people following sports and entertainment
 Increase in sports/entertainment offerings
 Attendance boom
 Media coverage
 Global products
 Emergence of Internet and new technologies
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LESSON 1.2
Media Coverage
Introduction of Internet makes information
available “on demand” with increased
frequency and accessibility
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History of SEM
LESSON 1.2
Factors Influencing Industry Growth
 Increase in participation
 More people following sports and entertainment
 Increase in sports/entertainment offerings
 Attendance boom
 Media coverage
 Global products
 Emergence of Internet and new technologies
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LESSON 1.2
Global Marketplace
The international marketplace continues to
provide a platform for driving sales of sports
and entertainment products and services
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LESSON 1.2
Global Marketplace
Global events like Wimbledon, the Tour de France,
FIFA World Cup, Olympic Games, the Iditarod and
Cannes Film Festival attract world-wide attention,
providing an exceptional marketing opportunity for
ticket sales, sponsorship sales, licensing and
merchandise opportunities and provide a major
economic impact for host cities
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LESSON 1.2
Global Marketplace
The global demand for footwear and sports apparel
continues to grow with international brands like
China’s Li Ning and Germany’s Adidas and Puma
fiercely competing with American brands like Nike
and Under Armour for market share
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LESSON 1.2
Global Marketplace
NBA All-Stars left American brands to pursue deals with
Chinese sportswear brands:
• Dwyane Wade who left Jordan Brand for Li-Ning
• Steve Nash who left Nike to sign with Luyou
• Kevin Garnett left Adidas to sign with Anta
• Kevin Love wears a new Chinese shoe brand, 361
Degrees.
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LESSON 1.2
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LESSON 1.2
Global Marketplace
Prominent american sport are making a push to
expand their presence overseas by hosting regular
season games (not exhibition games) outside of the
United States
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Global Marketplace
Major League Baseball continued its recent history
of internationally hosting season openers when
the Arizona Diamondbacks and Los Angeles
Dodgers played in Sydney, Australia to kick off
the 2014 MLB regular season
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LESSON 1.2
Signs of Continued Industry Growth
The worldwide video game industry is poised
to reach $70.1 billion by 2015, thanks to the
combined growth of console, portable, PC,
and online video games, according to market
researcher DFC Intelligence
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Signs of Continued Industry Growth
Global total digital recorded music revenue will exceed
physical recorded music revenue for the first time in
2014, according to analysts at PWC
Pandora radio now
boasts over 250 million
users
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LESSON 1.2
Signs of Continued Industry Growth
The global theme parks market is projected to
reach $29.5 billion by 2015, according to a
report by Global Industry Analysts, Inc.
Also according to Global Industry Analysts,
Inc., the global footwear market is expected to
reach $195 billion by 2015
For the first time in history, ebook sales
generated more revenue than hardcover
books in 2012 while overall ebook sales have
increased 4,456% since 2008
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Signs of Continued Industry Growth
Centerplate, the leading hospitality partner to North
America's premier sports, convention and
entertainment venues, is now also the fastest
growing restaurant chain in America, according to
Nation's Restaurant News.
Centerplate serves over 115 million guests per year.
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LESSON 1.2
Signs of Continued Industry Growth
In 2013, Forbes
suggested that ESPN
had grown to a
valuation of $40 billion
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LESSON 1.2
Signs of Continued Industry Growth
Television audiences continue to grow in
size while sports and entertainment
properties expand the various means for
distributing content (social media,
streaming etc)
The 2014 NBA Finals on ABC between
the Miami Heat and San Antonio
Spurs was broadcast in 215 countries
and 47 languages
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LESSON 1.2
Signs of Continued Industry Growth
The value of major league sport franchises
continues to grow at a furious pace.
New York Yankees:
1973- $9 million
2014- $2.5 billion
Dallas Cowboys franchise was the most
valuable in the NFL at $2.3 billion.
The average MLS franchise is now worth over
$100 million, an increase of more than 175%
over the last five years
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LESSON 1.2
Signs of Continued Industry Growth
Fandom is a term used to refer to a
subculture composed of fans characterized
by a feeling of sympathy and camaraderie
with others who share a common interest
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LESSON 1.2
Signs of Continued Industry Growth
The term fandom can be used to describe
all types of fan groupings or “subcultures”
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LESSON 1.2
Signs of Continued Industry Growth
ESPN’s annual “SportsNation Survey” found that a
whopping 90% of male respondents claimed to be
sports fans on some level
Over 50% of respondents claimed to more of a
sports fan than they were five years ago
58% of respondents would prefer to receive free
season tickets to their favorite sports team than be
promoted at work. 40% of those participating in the
2012 SportsNation Survey said they had traveled
250 miles or more to attend a sporting event
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LESSON 1.2
Signs of Continued Industry Growth
Fans have, in a limited number of occasions,
successfully organized on behalf of a cancelled
television series to lobby networks to bring back
their favorite show (examples include Chuck in
2010 and Community in 2012 while prompting
Netflix to resurrect cult hit series Arrested
Development)
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Signs of Continued Industry Growth
The intensity levels of
fandom vary, ranging
from a casual sports fan
who might take in one
NBA game per year to
those fans that put the
“fan” in “fanatic” (and
otherwise engage in
behavior that other fans
might otherwise find to
be irrational)
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LESSON 1.2
Signs of Continued Industry Growth
Fans who go to extremes
to show their loyalty to
their favorite team, band,
actor or other celebrity
are often referred to as
“superfans”
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LESSON 1.2
Signs of Continued Industry Growth
In 2013, an Alabama football superfan passed
away at the age of 91 but had attended 781
straight games
Also in 2013, a lifelong Cleveland Browns
superfan passed away (his family even
encouraged everyone attending his funeral wear
clothes supporting the team) but requested that
the pallbearers be Cleveland Browns players,
stating: "He respectfully requests six Cleveland
Browns pall bearers so the Browns can let him
down one last time."
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Signs of Continued Industry Growth
On opening night, Activision says that approximately
1.5 million gamers lined up outside 13,000 stores to
buy a copy of Modern Warfare 3 at midnight
USA Today published a story suggesting the number
of people calling in to work sick the day after Call of
Duty is release results in a significant increase
University of Kentucky fans paid between $7,500 to
$12,500 for the opportunity to attend a basketball
camp (called John Calipari Basketball Fantasy
Experience) and “essentially experience what it’s like
to be a Kentucky basketball player”
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LESSON 1.2
Signs of Continued Industry Growth
While many media pundits publicly chastised LeBron
James’ decision to announce which team he would be
joining in a one hour ESPN special, the show (aptly
named “The Decision”) drew very high ratings as
nearly 10 million people tuned in to watch
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Signs of Continued Industry Growth
Despite all the scrutiny surrounding singer Chris
Brown (including his widely publicized assault of
then-girlfriend Rihanna, a disturbance in a nightclub
with rapper Drake, and poor album reviews), his
2013 release of “Fortune” managed to debut at the
top of the Billboard 200 chart
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LESSON 1.2
Signs of Continued Industry Growth
Because of the strong
emotional connection
fans maintain with their
favorite sports teams,
wins and losses on the
grandest of stages can
yield incredible influence
(both positive and
negative) on a
community at large
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Lesson 1.3
Media Impact on Industry Growth
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LESSON 1.3
Media Impact on Industry Growth
Media refers to a means of
communicating a message to large
numbers of people
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LESSON 1.3
Media Impact on Industry Growth
It was not until the 1936
Olympics (broadcast by ABC
radio) that Americans were
truly exposed to the amazing
talents of Jesse Owens, one of
America’s greatest athletes of
all time
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LESSON 1.3
Media Impact on Industry Growth
Now, fans can follow athlete
performances live through
television, radio, Internet as
well getting information
through national papers,
local papers, magazines, and
industry specific journals
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LESSON 1.3
Media Impact on Industry Growth
Media rights (or broadcast rights) are fees
paid by broadcast companies to sports or
entertainment properties for the opportunity to
provide live coverage of the property’s games
and events on television, the radio or the
Internet
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LESSON 1.3
Media Rights
Many media rights deals provide exclusive
coverage rights
Because of the NFL’s deal with
DirecTV, no other television
network can broadcast out of
market games in their respective
geographic markets. In other
words, if you are a Green Bay
Packers fan living in Virginia, you
would need to order DirecTV for
the opportunity to watch Packers
games in your home each week.
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LESSON 1.3
Media Rights
According to ESPN.com, Time Warner Cable (which
operates SportsNet LA, the team-owned all-Dodgers
station that launched in February of 2014), has not
come to agreements with many of the area broadcast
companies, making televised games available to less
than 40% of Los Angeles residents.
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LESSON 1.3
Media Rights
Media rights contracts are not reserved for national
broadcasting companies as sports franchises work to
maximize revenues by selling regional broadcasting
rights
Time Warner Cable paid a reported $3 billion for
exclusive rights to broadcasts Los Angeles Lakers
games in the L.A. market for the next twenty years,
starting with the 2012-13 season
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LESSON 1.3
Media Rights
Rights fees are growing at a rapid rate
Media rights fees for the Rose Bowl (per year) were
$2 million in 1974. By 2015, they are expected
command $80 million per year.
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LESSON 1.3
Media Rights
Why are media rights
important to sports and
entertainment properties?
In a word…
REVENUE!
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LESSON 1.3
Media Rights
NASCAR generates a reported $820 million
annually in media rights for television broadcasts
from Fox, a 46% increase from the previous
deal.
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LESSON 1.3
Media Rights
According to the Chicago Tribune, a
dispute over the value of the
Chicago Cubs’ broadcast contracts
complicated efforts to sell the
iconic franchise.
Because media rights are such an
important piece to any major
league sports organization’s bottom
line, negotiations to sell the
franchise momentarily fell apart
until the issue could be resolved.
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LESSON 1.3
Media Rights
According to Nielsen (a company who measures
ratings): "Ratings are used like currency in the
marketplace of advertiser-supported TV. When
advertisers want a commercial to reach an audience,
they need to place it in TV programs which deliver an
audience. The more audience a program delivers, the
more the commercial time is worth to advertisers."
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LESSON 1.3
Media Rights
Why are media rights important to
broadcast companies?
Companies want to invest in advertising
that will reach as many consumers as
possible and sports and entertainment
events provide an effective platform for
advertisers to do that
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LESSON 1.3
Media Rights
In 2014, the Super Bowl set a record for American television
viewing when the Nielsen Co. estimated 111.5 million people
watched the Seattle Seahawks’ 43-8 blowout of the Denver
Broncos (the 2013 Super Bowl between the Baltimore Ravens
and San Francisco 49ers clocks in as the third most watched
program in US history)
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LESSON 1.3
Media Rights
According to figures released by FIFA in 2011,
the 2010 FIFA Men’s World Cup Final in South
Africa was broadcast in every single country and
territory on Earth, including Antarctica and the
Arctic Circle, generating record-breaking viewing
figures in many TV markets around the world.
The in-home television coverage of the
competition reached over 3.2 billion people
around the world, or an astonishing 46.4
percent of the global population.
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LESSON 1.3
Media Rights
According to the research firm Kantar Media,
advertisers have spent $4.55B during CBS'
coverage of the men's NCAA basketball
tournament over the past decade
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LESSON 1.3
Media rights examples
Network/Cable TV
In 2007 the NBA extended its
deals with TNT, ESPN and ABC
through the 2015-16 season,
generating over $930 million
per year in revenue for
television broadcast rights
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Media rights examples
Network/Cable TV
In 2011, NBC won a bidding war to
retain its rights to broadcast the
Olympic Games through 2020 for
$4.38 billion
Also in 2011, ESPN signed a deal
reportedly worth nearly $500
million over the next 12 years for
the exclusive broadcast rights of
Wimbledon
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Media rights examples
Satellite TV
DirecTV’s exclusive agreement
for broadcast rights for out of
market NFL games was
extended in 2010 for four years
at a reported $1 billion per year
(a 43% increase on an annual
basis over the previous deal)
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LESSON 1.3
Media rights examples
Satellite Radio
XM radio’s deal for MLB
broadcast rights was signed in
2005 for $650 million
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Media rights examples
Network Radio
In 2009, the NFL extended its
deal with Westwood One as its
exclusive network radio partner
in a deal worth over $30 million
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Media rights examples
Multimedia rights
Within the 17 months of acquiring Host
Communications and folding it into its college
division, IMG invested more than $700 million in
multimedia rights fees
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LESSON 1.3
Media Impact on Industry Growth
Radio, cable and broadcast television
programming measure their effectiveness
through ratings, which are expressed as a
percentage of the potential TV audience
viewing at any given time
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Media Rights
Basically, a rating refers to the number of
households or people tuned into a particular radio
or television program at a specific time
ESPN’s telecast of the United States’ 2-2 tie against Portugal
in the 2014 FIFA World Cup on Sunday, June 22, was the
most-viewed soccer match in the United States ever, across
all networks, averaging 18,220,000 viewers based on a 9.6
HH US rating. It surpassed the previous high of 17,975,000
viewers for the 1999 Women’s World Cup final (USA vs.
China) on ABC (according to espnmediazone.com).
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Media Rights
Nielsen can identify peak hours in which the most
people are tuned in to watch or listen
Nielsen can identify peak hours in which the most
people are tuned in to watch or listen; viewing of
the US vs. Portugal World Cup match peaked from
7:30 to 8 p.m. ET with an average of 22,961,000
viewers and an 11.9 HH US rating.
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Media Rights
Nielsen can also identify specific markets in which
ratings were the highest
Nielsen can also identify specific markets in which
ratings were the highest; Washington, D.C., led all
markets for ESPN’s USA vs. Portugal telecast with
a 13.3 rating, followed by Columbus (12.6), New
York (12.5), Boston (11.5), Hartford/New Haven
(11.3), Providence (11.2), Atlanta (11.1),
Baltimore (11.0), Norfolk (10.5), Orlando (10.5)
and Sacramento (10.5).
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LESSON 1.3
Media Rights
Why are ratings important?
Without ratings, broadcast companies would have a
difficult time selling advertising and
sports/entertainment programs would not be able to
command million dollar rights fees
Ratings will fluctuate from year to year, but a ratings
increase or decrease will have an impact on the
sports property and broadcast company
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LESSON 1.3
Media Rights
NBC renewed hockey deal in 2011
(worth nearly triple the previous
rights deal) largely because
overall NHL television ratings in
the United States increased by 84
percent over the last four years
(the 2011 Winter Classic was the
most-watched regular season
hockey game in the U.S. in 36
years)
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LESSON 1.3
Media Rights
According to Nielsen, the 2014 FIFA Men’s
World Cup match between the United States
and Portugal was the most-watched and
highest-rated soccer telecast on an ESPN
network and was seen by an estimated 23
million viewers, providing more incentive for
ESPN to spend more on World Cup rights when
it is time to negotiate a new deal
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LESSON 1.3
Media Rights
After the previous year’s July 4th telecast of the
Nathan’s Famous Fourth of July International Hot Dog
Eating Contest set a viewership record with nearly 2
million live viewers, ESPN announced in the summer
of 2012 that they extended the broadcast rights deal
through 2017
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LESSON 1.3
Media Milestones in Sports
1921 -
First ever baseball game broadcast
on radio
1935 -
First full season baseball broadcast
on radio (Chicago Cubs)
1946 -
First major sports event on TV
(Joe Louis Boxing Match)
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LESSON 1.3
Media Milestones in Sports
1954 - Sports Illustrated introduced
1970 - First Monday Night Football TV broadcast
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LESSON 1.3
Media Milestones in Sports
1995 – DirecTV and the NFL offer first subscriber
based pay-per-view programming
(NFL Sunday Ticket)
1999 – Major League Baseball broadcasts the World
Series on the Internet
2002 – The pay-per-view boxing match between Mike
Tyson and Lennox Lewis generates a record
$103 million in sales
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LESSON 1.3
Media Milestones in Sports
2009 – CBS’ free online broadcast of the 2009 Men’s
NCAA Tournament reaches an audience of 7.5
million
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LESSON 1.3
Media Milestones in Sports
2012 – NBC provides unprecedented LIVE coverage of
EVERY Olympic event by streaming content
online in addition to its traditional television
coverage
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LESSON 1.3
Media Impact on Industry Growth
In the early days of team
sports, revenue came from:
Ticket Sales
Concessions
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LESSON 1.3
Media Impact on Industry Growth
Today, media provides alternate
revenue sources
National Television Contracts
Local Television Contracts
Cable Television Contracts
Sale of Radio Rights
Streaming Internet Audio
Online Revenue
Team Specific Publications
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LESSON 1.3
Media Impact on Industry Growth
Sports and entertainment business coverage
has become widespread and easily accessible
National publications devote consistent coverage to
the business of sports
In 2004, a Portland, Oregon radio station launched
a weekly, hour-long sports business talk show
Today, local newspapers all around the country offer
readers sports business related coverage on a
regular basis on their websites
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