The lower economy over the past few years has had an interesting effect on endorsement opportunities for athletes. There are actually more endorsement deals and sponsorship activation taking place. While the economy has lowered the price on larger endorsement deals, the type a Peyton Manning might receive, the change in demand price has created extra funds for companies to supply more endorsements at a lower cost. Overall, more athletes are receiving endorsements.
In a recent issue of The Sports Business Journal John Slusher, Vice President of Nike Sports Marketing says, “Our strategy hasn’t changed [due the the economy]. We are buying as many athletes, if not more, but at a better price.” While this might mean less endorsement dollars for an individual athlete, it also means more athletes have endorsement opportunities. Although there was a slight decline from 2009 to 2010, Nike shows over a 100% increase in endorsements commitments over the last five years (1.6 billion in 2006 to 3.8 billion in 2010).
This brings me to my point that it is important to have an agent who takes a pro-active approach to securing endorsements. This begins with a solid marketing and public relations strategy. You will hear me say this more than once, but many times endorsements get lumped together with marketing and PR, but they are different. The marketing department of a business doesn’t sell the product, rather marketing efforts promote the product. If an agent is pro-active in developing the image and brand of the athlete, then the athlete will be that much more appealing to a companies offering endorsement opportunities.
So, it is both a pro-active approach in marketing/PR and securing endorsements that makes a good agent. Any agent can sit around the phone and wait for endorsement deals to come, and maybe they will, but you want an agent who is going to work for you.
The statistics show that it is no longer only the high tier athletes and superstars who are receiving endorsements. Some deals have to be found. Keep in mind, every backup quarterback is a hero in his hometown.
Nike Source: Lefton, T. (2010). Endorsements remain buyers market. Street & Smith’s Sports Business Journal, 13(21), 25-32.
Sunday, July 31, 2011
Sunday, July 17, 2011
Financing a Sports Agency
On the theme of agency start up, I want to talk about financing. The truth is the sports agent business can be one of the most risky due to high competition and up-front costs, which also means that the financial investment can be risky.
Darren Heitner (sportsagentblog.com) says $100,000 is a good solid number of start-up capital necessary for a new agent. Most agents I have talked to agree. In addition to normal start up costs such as office supplies and technology purchases, the majority of the money will go towards travel and training for players. Training can range anywhere between $10,000-$20,000 (Bechta). Before training even happens, agents have to recruit and spend a lot of time and money pursuing potential clients, and maintaining relationships with current clients.
So lets dig further into financing an agency start up. The more traditional approach would be like any other business start up; try to invest as much capital yourself and look for investors or a loan to cover the rest. Personally, I would not recommend a loan that has to be paid back. Debt equity can be a killer to agents trying to start out because you end up investing a lot of money up front without a guarantee of return. If you blow a loan on a few athletes that don't pan out, how will you pay back the loan? The best direction to go here would be with an investment in return for giving a piece of your agency to the investor. You can even structure it creatively in a way that offers a certain percentage of revenue until the loan is paid back, which then after the investor receives a smaller percentage as a stakeholder in the business.
An alternative rout would be through a partnership with an experienced agent or agency or any third party that is willing to fund on a per-athlete basis in exchange for a 50/50 share of income generated from a particular athlete-client. You would find investors or an agent ahead of time that agrees to fund you if you can sign an athlete-client. The value of this is that there is no financial risk to you and your funded depending on how many athletes you can sign, and the talent level of the athlete. This route would take a lot of preparation, due diligence and relationship building ahead of time, but also provides the least amount of risk.
Darren Heitner (sportsagentblog.com) says $100,000 is a good solid number of start-up capital necessary for a new agent. Most agents I have talked to agree. In addition to normal start up costs such as office supplies and technology purchases, the majority of the money will go towards travel and training for players. Training can range anywhere between $10,000-$20,000 (Bechta). Before training even happens, agents have to recruit and spend a lot of time and money pursuing potential clients, and maintaining relationships with current clients.
So lets dig further into financing an agency start up. The more traditional approach would be like any other business start up; try to invest as much capital yourself and look for investors or a loan to cover the rest. Personally, I would not recommend a loan that has to be paid back. Debt equity can be a killer to agents trying to start out because you end up investing a lot of money up front without a guarantee of return. If you blow a loan on a few athletes that don't pan out, how will you pay back the loan? The best direction to go here would be with an investment in return for giving a piece of your agency to the investor. You can even structure it creatively in a way that offers a certain percentage of revenue until the loan is paid back, which then after the investor receives a smaller percentage as a stakeholder in the business.
An alternative rout would be through a partnership with an experienced agent or agency or any third party that is willing to fund on a per-athlete basis in exchange for a 50/50 share of income generated from a particular athlete-client. You would find investors or an agent ahead of time that agrees to fund you if you can sign an athlete-client. The value of this is that there is no financial risk to you and your funded depending on how many athletes you can sign, and the talent level of the athlete. This route would take a lot of preparation, due diligence and relationship building ahead of time, but also provides the least amount of risk.
Thursday, June 23, 2011
Creating My Business Plan
Previously, I blogged about a few different perspectives on business plans provided from successful businessmen. In developing my own business plan I have and will further incorporate their advice.
Mark Cuban, owner of the recent NBA World Champion Dallas Mavericks, had two big points that stuck with me for business plans. First, Cuban says that the business plan must demonstrate that the product sells for more than it costs to produce (2009). This is not an easy thing to illustrate in a sports agency business plan. Not only are returns on investments always in question, but they also can vary considerably per athlete-client. The best way to represent this in my business plan will be through statistics and averages--showing the expected amount of clients and the average return from contracts, marketing and endorsements combined per client. This information would show potential investors that my agency has a solid grasp on the amount of clients it needs to attain to be successful, as well as how many athletes must be solicited to be able to sign the needed amount of clients.
The other point Cuban makes is that the service or product has to be something people need, and that your business plan must show it (2009). For my agency these needs include contract negotiation, marketing, social media management, career counseling and our niche in personal development. The best way for us to represent these needs is through both statistics and industry insight. Statistics include showing how many athletes retain agents as well as the market for endorsements. Industry insight explains the need on a more intellectual level. For example, the plan will explain how social media management will not only create endorsement opportunities, but also a strong brand presence leading to post- career opportunities.
The other expert that provided a good point was Tim Berry, President of Palo Alto Software. In a nutshell, Tim said not to get caught up in the formality and structure of a business plan, but at the same time to make sure it is thorough and covers the important information (2007). As I have been creating my business plan, I have kept Tim’s point in mind. As I see templates, I make sure not to make my plan look like other templates, with all the same topics and headings, but rather that it covers the same areas and my own structure.
Lastly, the most important section of my business plan is the Executive Summary. MasterPlans.com agrees, and says “The important thing to understand is the business plan executive summary is an overall business description, thus it should briefly touch on every core element of the business.” For my agency, this section will be key to grabbing the interest of the reader, and briefly but effectively let them know what I do, how I do it, and why I will be successful at it. This is especially important for such a competitive industry. It will be key throughout the business plan to highlight what makes my agency unique, and how that will contribute to its success.
Berry, Tim (2007) - http://timberry.bplans.com/2007/06/use_a_wordpress.html
Cuban, Mark (2009) - http://blogmaverick.com/2009/02/09/the-mark-cuban-stimulus-plan-open-source-funding/
MasterPlans - http://www.masterplans.com/help/business-plan-section-executive-summary.php
Mark Cuban, owner of the recent NBA World Champion Dallas Mavericks, had two big points that stuck with me for business plans. First, Cuban says that the business plan must demonstrate that the product sells for more than it costs to produce (2009). This is not an easy thing to illustrate in a sports agency business plan. Not only are returns on investments always in question, but they also can vary considerably per athlete-client. The best way to represent this in my business plan will be through statistics and averages--showing the expected amount of clients and the average return from contracts, marketing and endorsements combined per client. This information would show potential investors that my agency has a solid grasp on the amount of clients it needs to attain to be successful, as well as how many athletes must be solicited to be able to sign the needed amount of clients.
The other point Cuban makes is that the service or product has to be something people need, and that your business plan must show it (2009). For my agency these needs include contract negotiation, marketing, social media management, career counseling and our niche in personal development. The best way for us to represent these needs is through both statistics and industry insight. Statistics include showing how many athletes retain agents as well as the market for endorsements. Industry insight explains the need on a more intellectual level. For example, the plan will explain how social media management will not only create endorsement opportunities, but also a strong brand presence leading to post- career opportunities.
The other expert that provided a good point was Tim Berry, President of Palo Alto Software. In a nutshell, Tim said not to get caught up in the formality and structure of a business plan, but at the same time to make sure it is thorough and covers the important information (2007). As I have been creating my business plan, I have kept Tim’s point in mind. As I see templates, I make sure not to make my plan look like other templates, with all the same topics and headings, but rather that it covers the same areas and my own structure.
Lastly, the most important section of my business plan is the Executive Summary. MasterPlans.com agrees, and says “The important thing to understand is the business plan executive summary is an overall business description, thus it should briefly touch on every core element of the business.” For my agency, this section will be key to grabbing the interest of the reader, and briefly but effectively let them know what I do, how I do it, and why I will be successful at it. This is especially important for such a competitive industry. It will be key throughout the business plan to highlight what makes my agency unique, and how that will contribute to its success.
Berry, Tim (2007) - http://timberry.bplans.com/2007/06/use_a_wordpress.html
Cuban, Mark (2009) - http://blogmaverick.com/2009/02/09/the-mark-cuban-stimulus-plan-open-source-funding/
MasterPlans - http://www.masterplans.com/help/business-plan-section-executive-summary.php
Sunday, June 5, 2011
Business Plans
In this post I want to take a look at business plans. For every athlete I represent, we essentially have a business plan to make him or her successful. That being said, there is much to learn from experts in all areas of business. Being that this is a sports blog, the first business expert I want to look at is Mark Cuban.
Mark Cuban is the billionaire owner of he NBA’s Dallas Mavericks, who are currently in the NBA Finals. Cuban has made his money through business investments, and in addition to the Mavericks he owns Landmark Theaters, Magnolia Pictures, and is the chairman of the HDTV cable network (Wikipedia).
Over the past few years, Cuban has worked with other business tycoons on the TV show Shark Tank, on which they listen to business proposals from entrepreneurs and decide whether or not to invest in them.
Cuban seems to be a go getter, and looks for business plans that are sharp, thorough, and show a quick return. At least that is what he was looking for a few years ago with his Mark Cuban Stimulus Plan, in which he was personally listening to and investing in business plans (2009). In his blogs, he points out a few items that are important for business plans:
-Demonstrate in the plan that your product sells for more than it costs you to produce it (2009)
-It needs to be something people need, show that in your business plan (2009)
-If people say “no,” ask for feedback about the plan (good business people learn and grow) (2011)
The other expert I want to talk about briefly is Tim Berry, president and founder of Palo Alto Software. Tim offers what I think is great advice about not getting caught up in the formality of a business plan. Tim says a business plan format does not have to be “set in stone....It better have good market analysis, good focus, good cash flow, and it better have concrete dates, deadlines, budgets, and assigned responsibilities.” I think what Tim is saying is that a good business plan has everything it needs, but don’t “get lost in the document.” Be creative in the structure! (2007)
Tim Berry (2007) - http://timberry.bplans.com/2007/06/use_a_wordpress.html
Mark Cuban (2011)- http://blogmaverick.com/2011/03/30/taking-no-for-an-answer-and-other-business-mistakes/
Mark Cuban (2009) - http://blogmaverick.com/2009/02/09/the-mark-cuban-stimulus-plan-open-source-funding/
Wikipedia - http://en.wikipedia.org/wiki/Mark_Cuban
Mark Cuban is the billionaire owner of he NBA’s Dallas Mavericks, who are currently in the NBA Finals. Cuban has made his money through business investments, and in addition to the Mavericks he owns Landmark Theaters, Magnolia Pictures, and is the chairman of the HDTV cable network (Wikipedia).
Over the past few years, Cuban has worked with other business tycoons on the TV show Shark Tank, on which they listen to business proposals from entrepreneurs and decide whether or not to invest in them.
Cuban seems to be a go getter, and looks for business plans that are sharp, thorough, and show a quick return. At least that is what he was looking for a few years ago with his Mark Cuban Stimulus Plan, in which he was personally listening to and investing in business plans (2009). In his blogs, he points out a few items that are important for business plans:
-Demonstrate in the plan that your product sells for more than it costs you to produce it (2009)
-It needs to be something people need, show that in your business plan (2009)
-If people say “no,” ask for feedback about the plan (good business people learn and grow) (2011)
The other expert I want to talk about briefly is Tim Berry, president and founder of Palo Alto Software. Tim offers what I think is great advice about not getting caught up in the formality of a business plan. Tim says a business plan format does not have to be “set in stone....It better have good market analysis, good focus, good cash flow, and it better have concrete dates, deadlines, budgets, and assigned responsibilities.” I think what Tim is saying is that a good business plan has everything it needs, but don’t “get lost in the document.” Be creative in the structure! (2007)
Tim Berry (2007) - http://timberry.bplans.com/2007/06/use_a_wordpress.html
Mark Cuban (2011)- http://blogmaverick.com/2011/03/30/taking-no-for-an-answer-and-other-business-mistakes/
Mark Cuban (2009) - http://blogmaverick.com/2009/02/09/the-mark-cuban-stimulus-plan-open-source-funding/
Wikipedia - http://en.wikipedia.org/wiki/Mark_Cuban
Saturday, May 7, 2011
The Athlete and Social Media
Why It Matters
As the world has entered into a new age of digital media, athletes have followed suit. Twitter, Facebook, blogs and other social media avenues have created new ways for athletes to express themselves, connect with fans, and even create additional income.
The popularity of athletes continues to grow, and with that comes a platform of social influence and expression. Many times the only part of an athlete we know is the player on the court or with a helmet on. Understandably, some desire to keep it that way, but many want to use this new digital landscape of social media to communicate who they are, and share themselves with the world. Some even see these tools as a way to have an impact, and use their popularity and platform to have a positive influence.
In terms of marketing, expression through social media provides a chance to build brand identity, but also brand equity. Perhaps one of the best features of all social media is that you know how many “followers” you have; you can know how many your message will reach. Overall, these avenues of digital communication allow athletes to connect with fans in ways that were once not possible. A simple tweet can reach thousands of fans in seconds, and they can even reply to their favorite player!
Endorsements for athletes have grown tremendously over the past few decades, and now the use of digital and social media has opened doors further. Not only do these tools provide a quantifiable assessment to businesses of an athletes popularity, but if an athlete chooses to market through their social media, it provides a quantifiable return on investment. Now, an athlete does not need to be a superstar to create additional sources of revenue--a strong social media presence can do the trick.
Caution with Teams, Coaches & Owners
All of this being said, it is important for an athlete to be cautious with how and what he or she expresses on social media. In his blog, NFL Agent Jack Bechta says that that team management and ownership are continually becoming more weary of their players using these social media. He explains that teams are worried about multiple circumstances: a player sharing inside information from a practice (unintentionally compromising the team), saying something about an opponent that becomes bulletin board material, and/or saying anything that causes a public stir, like Rashard Mendenhall’s recent tweet, because the player represents the team.
Examples of Success
While I understand the hesitation of team management, I think it is important for athletes to use the digital platform for the reasons previously stated, while keeping in mind the concerns of their employer. Management also needs to keep in mind that more fan engagement creates a better product on the field or court, and that many athletes still need careers after they are done playing, so maximizing exposure is key during an athletes career.
An example of this is Washington Redskins Tight End, Chris Cooley, who blogs at ChrisCooley47.com. While Cooley is not a perennial pro bowler or superstar, he has done a great job of connecting with the Washington fans through is blog. Because of this, Bechta says, “He has solidified his future as a personality in his local market. The day he retires, he will have at least 3 to 5 offers to do radio, TV or to keep on blogging.”
Another example is Kirk Morrison, Linebacker for the Jacksonville Jaguars. Morrison is not a nationally known star at his position, but he has been able to amass over 350,000 Twitter followers.
Overall, the new age of digital and social media has created ways for just about any athlete to share him or herself with the world. Whether it be for marketing purposes, or just desiring to have an impact, these tools if used correctly can actually benefit sports, the fans, and the athlete.
Bechta - Social Media and the NFL
Bechta - Outside the Box
As the world has entered into a new age of digital media, athletes have followed suit. Twitter, Facebook, blogs and other social media avenues have created new ways for athletes to express themselves, connect with fans, and even create additional income.
The popularity of athletes continues to grow, and with that comes a platform of social influence and expression. Many times the only part of an athlete we know is the player on the court or with a helmet on. Understandably, some desire to keep it that way, but many want to use this new digital landscape of social media to communicate who they are, and share themselves with the world. Some even see these tools as a way to have an impact, and use their popularity and platform to have a positive influence.
In terms of marketing, expression through social media provides a chance to build brand identity, but also brand equity. Perhaps one of the best features of all social media is that you know how many “followers” you have; you can know how many your message will reach. Overall, these avenues of digital communication allow athletes to connect with fans in ways that were once not possible. A simple tweet can reach thousands of fans in seconds, and they can even reply to their favorite player!
Endorsements for athletes have grown tremendously over the past few decades, and now the use of digital and social media has opened doors further. Not only do these tools provide a quantifiable assessment to businesses of an athletes popularity, but if an athlete chooses to market through their social media, it provides a quantifiable return on investment. Now, an athlete does not need to be a superstar to create additional sources of revenue--a strong social media presence can do the trick.
Caution with Teams, Coaches & Owners
All of this being said, it is important for an athlete to be cautious with how and what he or she expresses on social media. In his blog, NFL Agent Jack Bechta says that that team management and ownership are continually becoming more weary of their players using these social media. He explains that teams are worried about multiple circumstances: a player sharing inside information from a practice (unintentionally compromising the team), saying something about an opponent that becomes bulletin board material, and/or saying anything that causes a public stir, like Rashard Mendenhall’s recent tweet, because the player represents the team.
Examples of Success
While I understand the hesitation of team management, I think it is important for athletes to use the digital platform for the reasons previously stated, while keeping in mind the concerns of their employer. Management also needs to keep in mind that more fan engagement creates a better product on the field or court, and that many athletes still need careers after they are done playing, so maximizing exposure is key during an athletes career.
An example of this is Washington Redskins Tight End, Chris Cooley, who blogs at ChrisCooley47.com. While Cooley is not a perennial pro bowler or superstar, he has done a great job of connecting with the Washington fans through is blog. Because of this, Bechta says, “He has solidified his future as a personality in his local market. The day he retires, he will have at least 3 to 5 offers to do radio, TV or to keep on blogging.”
Another example is Kirk Morrison, Linebacker for the Jacksonville Jaguars. Morrison is not a nationally known star at his position, but he has been able to amass over 350,000 Twitter followers.
Overall, the new age of digital and social media has created ways for just about any athlete to share him or herself with the world. Whether it be for marketing purposes, or just desiring to have an impact, these tools if used correctly can actually benefit sports, the fans, and the athlete.
Bechta - Social Media and the NFL
Bechta - Outside the Box
Sunday, April 24, 2011
Making Money as an Agent
For agents and athletes the rise in NFL salaries means more money to be negotiated for, and managed. Research shows increases in the NFL salary cap over the past decade. The NFL salary cap is the total amount of money one team is able to pay its players in one year. The data shows a 50% increase over the past five years, and more than 100% over the decade.
Source-(NFL Player Salaries, 2009)
Agents receive a maximum of three percent of a player's contract. At first, it seems like the agent business can be a gold mine. Help sign a player to a 5 year deal worth $3 Million per year, and receive $90K each year of that contract--for work already done! However, that player only receives the majority of that money if he stays on the team and plays. Injuries and being cut from the team can ruin a deal. Additionally, many NFL players get paid less than that example. The average salaries are thrown off by the large superstar deals.
Where a lot of agents make money is doing player marketing. The market for athlete endorsements has also increased. In a recent issue of The Sports Business Journal, John Slusher, VP of Nike Sports Marketing says, “Our strategy hasn’t changed [due the the economy]. We are buying as many athletes, if not more, but at a better price” (as cited in Lefton, 2010, p. 25). While this might mean less endorsement dollars for an individual athlete, it also means more athletes have endorsement opportunities. Although there was a slight decline from 2009 to 2010, Nike shows over a 100% increase in endorsements commitments over the last five years (1.6 billion in 2006 to 3.8 billion in 2010) (Lefton, p. 32). This means there are endorsements to be had for players of all caliber. The days of superstars being the only ones with marketing ability have passed.
Agents make a much larger percentage on endorsements. Between 15% and 25% is the industry norm. To make money as an agent it is beneficial to offer both services, contract negotiation and marketing.
Lefton, T. (2010). Endorsements remain buyers market. Street & Smith’s Sports Business Journal, 13(21), 25-32.
NFL Player Salaries. (2009). Xomba. Retrieved from www.xomba.com/nfl_player_salaries_list_and_discussion
Agents receive a maximum of three percent of a player's contract. At first, it seems like the agent business can be a gold mine. Help sign a player to a 5 year deal worth $3 Million per year, and receive $90K each year of that contract--for work already done! However, that player only receives the majority of that money if he stays on the team and plays. Injuries and being cut from the team can ruin a deal. Additionally, many NFL players get paid less than that example. The average salaries are thrown off by the large superstar deals.
Where a lot of agents make money is doing player marketing. The market for athlete endorsements has also increased. In a recent issue of The Sports Business Journal, John Slusher, VP of Nike Sports Marketing says, “Our strategy hasn’t changed [due the the economy]. We are buying as many athletes, if not more, but at a better price” (as cited in Lefton, 2010, p. 25). While this might mean less endorsement dollars for an individual athlete, it also means more athletes have endorsement opportunities. Although there was a slight decline from 2009 to 2010, Nike shows over a 100% increase in endorsements commitments over the last five years (1.6 billion in 2006 to 3.8 billion in 2010) (Lefton, p. 32). This means there are endorsements to be had for players of all caliber. The days of superstars being the only ones with marketing ability have passed.
Agents make a much larger percentage on endorsements. Between 15% and 25% is the industry norm. To make money as an agent it is beneficial to offer both services, contract negotiation and marketing.
Lefton, T. (2010). Endorsements remain buyers market. Street & Smith’s Sports Business Journal, 13(21), 25-32.
NFL Player Salaries. (2009). Xomba. Retrieved from www.xomba.com/nfl_player_salaries_list_and_discussion
Sunday, March 27, 2011
NFL Lockout and Media Rights
Last year the NFL earned over $9 billion in revenue, half of witch was from television rights. Prior to this month, the NFL was set to receive their share of television revenue next season, even if there was no football season. Because of the way the contracts were structured, networks such as CBS, FOX, NBC and ESPN were still going to have to shell out over $4 billion combined, without receiving a football season in return to broadcast. However, this past month judge David Doty ruled in court that the terms of the television contract violated rules of the CBA between the NFL and NFL Player's Union. The ruling said an agreement for networks to pay the NFL in the case of a lockout violated the CBA agreement to negotiate broadcasting terms "in good faith." The television networks will not have to pay the NFL if the lockout continues and games are lost.
This dilemma raises other questions. How will this affect the television networks as well as advertisers? For most of the television networks that air football, it is their biggest draw for both ratings and advertising dollars. Most networks already have advertising campaigns in place, so it will be interesting to see how already agreed to commercial deals play out in the event of no football season. Being that sports themselves bring in some of the biggest television revenue, stations such as FOX and ESPN who have a number of other sports should be able to weather the storm. NBC, however, could take a larger hit. Their Sunday Night Football received tremendous ratings, but was also one of the very few large draws for the network.
Another question that is being raised is the possibility of replacement players. Although a little early for serious speculation, the NFL did have three weeks of replacement player games in 1987. This would give the networks football to show, however I am not sure the revenue would be the same for a sub par product.
For the businesses who have media and advertising rights with the NFL, their advertising campaigns are typically the most well funded and most integral to their overall marketing strategy. Advertisers are also set to take a major hit if there is no football. Just as the television networks are trying to figure out what to air incase of no football, businesses are also trying to find other outlets to invest in for their advertising campaigns.
If the lockout goes into next football season, many more than just the NFL teams and its fans are affected. All of the networks, advertisers, and those who have bought into the NFL in some form of media rights will have to look elsewhere. Currently, it is a waiting game for everyone.
Sources
NFL Lockout Hits Media Giants
http://www.cnbc.com/id/42074000/
What Will the Networks Show if Their is No Football
http://www.dailyfinance.com/story/media/what-will-the-networks-show-if-theres-no-football/19880281/
Networks, Advertisers Call New Plays Amid NFL Strife
http://online.wsj.com/article/SB10001424052748703576204576226562745064154.html
This dilemma raises other questions. How will this affect the television networks as well as advertisers? For most of the television networks that air football, it is their biggest draw for both ratings and advertising dollars. Most networks already have advertising campaigns in place, so it will be interesting to see how already agreed to commercial deals play out in the event of no football season. Being that sports themselves bring in some of the biggest television revenue, stations such as FOX and ESPN who have a number of other sports should be able to weather the storm. NBC, however, could take a larger hit. Their Sunday Night Football received tremendous ratings, but was also one of the very few large draws for the network.
Another question that is being raised is the possibility of replacement players. Although a little early for serious speculation, the NFL did have three weeks of replacement player games in 1987. This would give the networks football to show, however I am not sure the revenue would be the same for a sub par product.
For the businesses who have media and advertising rights with the NFL, their advertising campaigns are typically the most well funded and most integral to their overall marketing strategy. Advertisers are also set to take a major hit if there is no football. Just as the television networks are trying to figure out what to air incase of no football, businesses are also trying to find other outlets to invest in for their advertising campaigns.
If the lockout goes into next football season, many more than just the NFL teams and its fans are affected. All of the networks, advertisers, and those who have bought into the NFL in some form of media rights will have to look elsewhere. Currently, it is a waiting game for everyone.
Sources
NFL Lockout Hits Media Giants
http://www.cnbc.com/id/42074000/
What Will the Networks Show if Their is No Football
http://www.dailyfinance.com/story/media/what-will-the-networks-show-if-theres-no-football/19880281/
Networks, Advertisers Call New Plays Amid NFL Strife
http://online.wsj.com/article/SB10001424052748703576204576226562745064154.html
Sunday, March 20, 2011
NFL Wars
With the NFL at the peak of its popularity, the current NFL lockout is quickly becoming one of the most famous sports law and labor related issues. Collective Bargaining Agreements, more commonly known as a CBA, are what govern the relationship between athletes and the sport they play. Just as employees of another job may have a union, NFL players have the NFL Players Association, also known as the NFLPA or Player’s Union. The NFLPA acts as the representing body for the players in negotiations with the League, which consists of all team owners and the NFL Commissioner. The CBA is the agreement between the two parties on topics of wages and structure, such as games and practices.
Just like any contract, the CBA between the Player’s Union and the League has a set duration. The current agreement was set to last through the 2011-12 season, but the owners decided to opt out of the final year per an opt out clause in the agreement. With no new agreement in place, the NFL and its players are on the verge of not having a 2011 football season, also known as a lockout. For the NFL to go on, the two sides must come to an agreement on such issues as how much revenue goes to player salaries, which is currently around 50% (“NFLPA Lockout,” 2011). The main issues include revenue and salaries, a potential 18-game season (currently 16), a rookie wage scale, and pensions for former players (“NFLPA Files,” 2011).
Still nowhere close to a deal, the NFLPA has decertified and NFL players are preparing to sue to the NFL for antitrust violations. The player’s are hoping a federal ruling could force a 2011 season, but even if so what would happen after that time? What about a CBA past 2012?
The players seem to be most frustrated with the NFL for wanting to change anything when the sports seems to be doing so well; “The players haven’t asked for anything more and literally don’t want anything more. They have asked simply to play under the existing agreement,” said NFLPA Spokesmen Gorge Atallah (2011). One thing is for sure, this topic is only getting hotter as star NFL players are about to sue their bosses!
Resources
Atallah, George. (2011). Players Case For Football in 2011. ESPN. Retrieved from sports.espn.go.com/espn/commentary/news/story?id=5995362
“NFLPA Files Collusion Claim.” (2011, January 18). Associated Press. Retrieved from sports.espn.go.com/nfl/news/story?id=6033492
“NFLPA Lockout Central.” (2011). NFL Players Association. Retrieved from www.nflplayers.com/about-us/2011-Lockout-Central/
Just like any contract, the CBA between the Player’s Union and the League has a set duration. The current agreement was set to last through the 2011-12 season, but the owners decided to opt out of the final year per an opt out clause in the agreement. With no new agreement in place, the NFL and its players are on the verge of not having a 2011 football season, also known as a lockout. For the NFL to go on, the two sides must come to an agreement on such issues as how much revenue goes to player salaries, which is currently around 50% (“NFLPA Lockout,” 2011). The main issues include revenue and salaries, a potential 18-game season (currently 16), a rookie wage scale, and pensions for former players (“NFLPA Files,” 2011).
Still nowhere close to a deal, the NFLPA has decertified and NFL players are preparing to sue to the NFL for antitrust violations. The player’s are hoping a federal ruling could force a 2011 season, but even if so what would happen after that time? What about a CBA past 2012?
The players seem to be most frustrated with the NFL for wanting to change anything when the sports seems to be doing so well; “The players haven’t asked for anything more and literally don’t want anything more. They have asked simply to play under the existing agreement,” said NFLPA Spokesmen Gorge Atallah (2011). One thing is for sure, this topic is only getting hotter as star NFL players are about to sue their bosses!
Resources
Atallah, George. (2011). Players Case For Football in 2011. ESPN. Retrieved from sports.espn.go.com/espn/commentary/news/story?id=5995362
“NFLPA Files Collusion Claim.” (2011, January 18). Associated Press. Retrieved from sports.espn.go.com/nfl/news/story?id=6033492
“NFLPA Lockout Central.” (2011). NFL Players Association. Retrieved from www.nflplayers.com/about-us/2011-Lockout-Central/
Sunday, March 6, 2011
No CBA Could Change NFL Endorsement Landscape
For Athletes and their agents the most important form of intellectual property is the athlete. His or her name, likeness and brand is extremely valuable. Publicity and performance for athletes results in endorsement opportunities. From pitching a product in a television commercial or endorsing an event by being present, athletes allow companies to use their name and likeness in advertising. The NFL in particular negotiates league wide deals with sponsors such as Verizon and Pepsi. These deals offer both exclusivity and the ability to use NFL players in advertising campaigns.
While these deals are negotiated between businesses and the NFL, the NFLPA is the representing body of NFL players. If the current NFL collective bargaining agreement (CBA) expires, so will the current endorsement deals agreed to by the NFL and its corporate sponsors. No relationship between the NFL and NFLPA means no relationship between the NFL’s sponsors and NFL players, at least not within the current agreements.
“In the absence of a CBA, players will have total freedom to endorse any company or product” (Carpenter, 2010). For example, the NFL has an exclusive deal with Pepsi, but with no collective bargaining agreement, a player could do a commercial ad for Coca-Cola if he wanted too. Also, if Pepsi wants to continue using NFL players outside of a CBA, it will have to negotiate a new and separate deal with the players themselves.
According to AOL News, the NFLPA has attempted to reach an agreement with the NFL that would extend the current sponsorship agreement outside of a CBA (2011). So far they have been denied. For NFL sponsors this whole process is coming as unwelcome news. Many sponsors have current deals with the NFL that go up until 2014, such as Proctor & Gamble, whom witch uses the NFL and its players to help pitch as many as 13 of its own products (Business Courrier). Some have already paid the NFL for these rights, and will be understandably upset if they do not receive their return in the form of NFL and player advertising.
In terms of intellectual property, what this boils down to is that with no agreement between the NFL and NFLPA, the player’s have complete freedom to do what they choose with their name and likeness. Many players could take advantage of this opportunity to create income in the case of a lockout and no football season.
AOL News, 2011 - http://www.aolnews.com/2011/02/16/nflpa-could-deal-directly-with-sponsors-in-event-of-lockout
Business Courrier - http://www.bizjournals.com/cincinnati/stories/2009/08/03/daily27.html
Carpenter, 2010 - http://www.examiner.com/human-resources-in-jackson/the-upcoming-labor-dispute-the-nfl
While these deals are negotiated between businesses and the NFL, the NFLPA is the representing body of NFL players. If the current NFL collective bargaining agreement (CBA) expires, so will the current endorsement deals agreed to by the NFL and its corporate sponsors. No relationship between the NFL and NFLPA means no relationship between the NFL’s sponsors and NFL players, at least not within the current agreements.
“In the absence of a CBA, players will have total freedom to endorse any company or product” (Carpenter, 2010). For example, the NFL has an exclusive deal with Pepsi, but with no collective bargaining agreement, a player could do a commercial ad for Coca-Cola if he wanted too. Also, if Pepsi wants to continue using NFL players outside of a CBA, it will have to negotiate a new and separate deal with the players themselves.
According to AOL News, the NFLPA has attempted to reach an agreement with the NFL that would extend the current sponsorship agreement outside of a CBA (2011). So far they have been denied. For NFL sponsors this whole process is coming as unwelcome news. Many sponsors have current deals with the NFL that go up until 2014, such as Proctor & Gamble, whom witch uses the NFL and its players to help pitch as many as 13 of its own products (Business Courrier). Some have already paid the NFL for these rights, and will be understandably upset if they do not receive their return in the form of NFL and player advertising.
In terms of intellectual property, what this boils down to is that with no agreement between the NFL and NFLPA, the player’s have complete freedom to do what they choose with their name and likeness. Many players could take advantage of this opportunity to create income in the case of a lockout and no football season.
AOL News, 2011 - http://www.aolnews.com/2011/02/16/nflpa-could-deal-directly-with-sponsors-in-event-of-lockout
Business Courrier - http://www.bizjournals.com/cincinnati/stories/2009/08/03/daily27.html
Carpenter, 2010 - http://www.examiner.com/human-resources-in-jackson/the-upcoming-labor-dispute-the-nfl
Sunday, February 6, 2011
Fantasy Football & Sports Biz
Fantasy Football has arguably been the most significant sports business development over the past decade. At the end of the day, there is not sports business without the fans. The fans attend the games, watch on television, and buy merchandise. The fans are the reason companies place advertisements in stadiums or have players pitch their products in commercials. Without the fans there are no profits, and without profits there is no business.
Fantasy Football has gotten more fans involved at a deeper level than ever before. There are now 30 million fantasy players in the United States and Canada alone, a 54% increases over the past two years (Spitznagel, 2010). More fantasy owners means more people intensely watching games. As stated in the video below, “Fantasy Football is the reason a fan watches a meaningless game on DirecTV.” DirecTV recently renewed their contract with the NFL to pay $1 Billion annually through the 2014 season (NFLplayers.com, 2011). In terms of television ratings, the 2010 season was the most watched in NFL history (2011). Before fantasy football, the only interest most fans had was in how their own team performed, but now a fantasy owner has more reason to be interested in all games each Sunday.
It is not just about the TV ratings, it is also about the affinity created between the fans and players. Not only do fans now have a reason to watch other teams and players, but also they have more reason to like other players (for helping win their fantasy league). Apparel companies and other third party sponsors are interested in how far a player’s brand and reach will extend. With more notoriety for players, business opportunities can also increase. The average American fantasy owner makes $92,750 (Spitznagel, 2010). This is a decent salary, in which disposable income can be spent on merchandise and products endorsed by players. Is it really a stretch to imagine a fantasy owner buying the jersey of the player who helped him win his league, or that a player’s face is that much more recognizable in a TV ad because of his fantasy presence? I don’t think so!
Fantasy football has not only created a deeper interest in the game overall, but has also raised player affinity amongst fans. Both have had a tremendous impact on the business of the game, unsurpassed by any other story from the past decade.
NFLpalyers.com. (2011). The State of the Game: A Current Look at the Success of the League. NFL Players Association. Retrieved from http://www.nflplayers.com/Articles/CBA-News/The-State-of-the-Game-A-Current-Look-at-the-Success-of-the-League
Spitznagel, Eric. (2010). Fantasy Football: The New Internet Porn. Businessweek. Retrieved from http://www.businessweek.com/magazine/content/10_38/b4195081511463.htm
Sunday, January 23, 2011
Negotiation Strategy
I recently talked with NFL sports agent Jonathan Kline about negotiating contracts. Jonathan is the head agent of Sports Capital Group, and has been a lawyer-agent for almost a decade.
Most of Jonathan’s experience is in negotiating rookie contracts. Objective criteria is very important in this type of negotiating. Jonathan says that the agent has to look at other rookies contract’s from previous years, analyzing player’s drafted in the same spot or playing the same position as your client. “What did they get paid? How many players were drafted ahead of them at their position?” These are some of the questions that help an agent come up with realistic requests to propose to a team’s general manager.
Another agent, Jack Bechta, who writes for the National Football Post says that some of the most important things in negotiation are “leverage” and “mutual respect,” or mutual benefit (2010). These are things that also came up during my time with Jonathan. In addition to using past deals for leverage, Jonathan touched on the option of waiting on other rookie deals from the current draft. He explained that one of the games agents play is trying to wait on other agents to complete their deals first. Depending on the deal, this can create leverage between the agent and general manager. For example, if the player drafted after your client has already signed his deal, it is easy to request a higher contract because your client was drafted higher.
As for mutual benefit, Jonathan reminded me that you will most likely deal with the same general manager and/or team more than once in negotiation. Bad deals can create strife between agents and teams that could harm future deals with that agent’s clients.
Another side of negotiation in the business is simply trying to secure clients themselves. Before an agent can negotiate a player’s contract with a team, he has to get that player to agree to a representation agreement. Both Jonathan Kline and Jack Bectha believe this is where the most dirty tricks and tactics come into play. Jonathan mentioned a few times in our conversations that agents will do whatever is needed to secure a player, including paying them while they are still in college (which is illegal). In one of Bechta’s articles he recounts how an agent told a player that he could get him drafted by his hometown team (no agent has that power), and that agents will tell a player “anything to get the deal done” (2010).
Overall, it is a tough and competitive industry. Always being on your tows and conducting extensive research will be crucial to successful negotiating.
2010-Interview-Jonathan Kline-Sports Captial Group
2010-Jack Bechta-www.nationalfootballpost.com/Leverage-respect-and-style.html
2010-Jack Bechta-www.nationalfootballpost.com/Let-the-agent-wars-begin.html
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