W. P. Carey alumni are moving the business of sports forward
Finding plus-minus players is one way sports teams are winning games without a roster of high-priced superstars, and such in-game analytics can make a big difference in a team’s win ratio. Likewise, sports analytics on the business side can dramatically raise team profits, as well as fan loyalty. On-field and off, data delivers much more than winning performance and eye-popping box scores.
Calculated wins
One well-known example of how sports analytics proved to be a game changer appears in author Michael Lewis’ book titled “Moneyball: The Art of Winning an Unfair Game.” Bradley Fay, a W. P. Carey School marketing doctoral candidate, explains the book’s main takeaway: realizing the statistics such as batting average and stolen bases may not tell the most compelling story. Billy Beane, general manager of the Oakland Athletics baseball team, changed the data points he was examining and questions he was asking in player evaluation.
“Instead of going out and looking for players with a batting average of .300, Beane came to realize that someone who hits .299 was undervalued in the market, and people batting at .300 or more were overvalued,” Fay says. “So, the A’s changed what they were looking for to get more production per dollar.”
Fay says the Oakland leaders also started looking differently at what a baseball player should do for the game. The team quit looking only at hits and started looking at outs — or the lack of them. “They started using a statistic called on-base percentage, or how many times you avoid getting an out every time you’re at bat,” he explains. “In baseball, as long as your team doesn’t get out, you’re still in the game. That added value to batters who were willing to take walks or get hit by pitches.”
What started as a closer look at hitters evolved into a more scientific examination of pitchers. All the major baseball stadiums now have Doppler radar watching the wind-up and release, Fay notes.
These devices monitor how fast a ball comes out of a pitcher’s hand, how fast it is when it’s going over the plate, at what angle it left the hand, the rotational velocity — or how fast it’s spinning — and in what direction it’s spinning. “This allows coaches to evaluate curve balls and other tricky moves,” Fay says.
The game within the game
Baseball isn’t the only sport where players come under intense scrutiny and numbers guide personnel decisions. Amin Elhassan (B.S. Management and Marketing ’05, MBA Sports Business ’07), an ESPN Insider, has been in the front-row seats throughout the past decade, and he’s seen similar trends on the basketball court.
“Now, at a click of a button, I can find out unequivocally which team has the best offense when their center touches the ball at the free throw line.”
“When I was interning with the New York Knicks 10 years ago, I’m not sure anybody in the organization understood what offensive efficiency was; we just used points per game,” Elhassan said. “Nowadays if you just use points per game, people will scoff at you because it’s a very primitive way of evaluating an offense. There is great value in being able to uncover hidden efficiencies using analytics.”
As an example, Elhassan describes optical data tracking cameras, which are now in use in every NBA arena. They track every player on the court, their movements and speed, and the position and movements of the ball. “Now, at a click of a button, I can find out unequivocally which team has the best offense when their center touches the ball at the free throw line,” he said. “We didn’t have that information available five years ago. Now, the answers are all out there; it’s on us to come up with creative questions.”
And, it’s not only the coaches who need to be asking those questions. Analytics is every bit as important to a team’s business office.
Pricing it right
“In all major sports in the U.S., 10 percent of the tickets sell for double their face value on the secondary market, and 50 percent of tickets go unsold,” says AJ Maestas (MBA Sports Business ’05). Now founder and president of Navigate Research, a company he started with fellow W. P. Carey graduate Stefanie Francis (MBA Sports Business ’05), Maestas explains that, “maximizing revenue is a common problem in athletics.”
His company addresses this problem in several ways. For organizations looking at stadium-naming rights, he offers what he calls a Kelly Blue Book of sponsorship value. “Before you walk onto a car lot, you have a reference guide that tells you what people pay, on average, for a given car,” Maestas explains. His company creates a similar reference guide, then does research on top of it to ferret out the proper price a company should pay for the benefit of having fans walk into the stadium under a door sporting the company name.
“Sports used to be seen as a recession-proof industry. No matter what happened, every year teams would put out their invoices and people would pay.”
How much are stadium-naming rights going for in the marketplace? How many people will see or recognize the sponsorship? How passionate are the fans, and will that passion transfer to the brand name on the stadium? These are the types of questions Maestas considers. His organization also surveys the fans themselves to discover that sponsorship value. Working with partner Stefanie Francis, Maestas has uncovered some interesting findings.
“What we’ve learned from research into sponsorship activation is that there has to be an emotional tie,” says Francis. “It can’t be only about business.”
Francis came to this conclusion after examining four sponsorships up for renewal with an NBA team. One was from a car company that had a splashy million-dollar deal. Another was from a furniture retailer spending $150,000 annually on a welcome-home salute to a local soldier, who would be featured prominently on the jumbotron. The other two sponsorships were for amounts in between these values.
After using analytics and research to evaluate the corporate value of these sponsorships, Francis says that the impact of the sponsorships was inversely correlated to the spending on them. “From brand metrics to ROI, the soldier salute trumped the other sponsorship opportunities,” she notes. “That welcome home for soldiers is what this particular fan base really cared about.”
That’s the ticket
Of course, all fans care to one degree or another about ticket prices. Now that dynamic pricing has hit stadium and arena seating, prices aren’t nearly as predictable as they used to be.
The San Francisco Giants pioneered dynamic pricing, notes Fay. Instead of “setting prices a year and a half in advance and trying to guess what a ticket is going to be worth,” the team began experimenting with a couple thousand seats and found those seats increased revenues by around $500,000, he recalls.
Andy Rentmeester (MBA Sports Business ’05) knows there’s plenty of room for pricing fluctuations. He is vice president of sales planning and analytics for Madison Square Garden Sports, owners of the New York Knicks (NBA), New York Rangers (NHL), New York Liberty (WNBA) and Westchester Knicks (NBADL). According to Rentmeester, “For each game, we may change the prices five or six times.” The payoff can be substantial. “Depending on the game, we can see a 200 percent increase in yield.”
The Anschultz Entertainment Group, owners of the Los Angeles Kings and the Los Angeles Galaxy, among others, also uses analytics heavily in ticket pricing, says the company’s digital strategy and analytics vice president Aaron LeValley (MBA Sports Business ’07). He uses multiple types of analysis before the organization even begins to set initial prices. Among them are regression analysis and visualization exercises, such as a heat map showing where fans most want to sit.
“We create a visualization of how the arena is built and overlay color to show what seats get sold and for how much,” LeValley explains. Sometimes, he and his team drive analysis down to each row and even each seat. The group factors in all the possible reasons one seat may be more attractive to fans than the next, including which seats are likely to see more action or where concessions and bathrooms are in relation to a seat. According to LeValley, the process is a combination of “gut feel and market research.”
Rentmeester says his organization also looks at trends — what happened year-over-year for particular games with specific opponents. And, ticket pricing is only half the equation: “We’re always balancing two things,” Rentmeester says. “Revenue maximization based on current market conditions while maintaining our sell-out streak.”
Take your seats, please
Unlike the Knicks, most teams aren’t defending a sell-out streak.
“Sports used to be seen as a recession-proof industry,” says Russell Scibetti (MBA Sports Business ’08). “No matter what happened, every year teams would put out their invoices and people would pay.”
As vice president of KORE Software, a company that makes customer relationship management software for sports, media and entertainment companies, Scibetti helps teams combat disturbing trends: the exodus of fans from the stadium to the living room.
“In football, almost every team used to sell more than 90 percent of their tickets to full season ticket-holders,” he continues. To demonstrate the change, Scibetti points to shifts in the NFL’s blackout rules. Up until 2012, games would only be televised if the stadium was 100 percent sold out 48 hours before the game. Now, teams have the option to drop that threshold down to 85 percent.
One reason teams are fighting for on-site spectators is technology. Fans can sit at home and watch the game on big-screen TVs with movie theater-caliber sound systems, Fay says. “There’s good food and beer in my fridge, and I don’t have to wait in lines, fight traffic or listen to someone who doesn’t know what he’s talking about yelling in my ear.”
So, the challenge is moving folks from sofa to stadium. “They call it de-couching,” Scibetti says. It’s driving huge investments in research and in-park perks.
De-couching the fans
Karina Forbes Bohn (MBA Sports Business ’05) is the vice president of marketing for the Arizona Diamondbacks and focused squarely on ticket sales.
“One way we’ve used analytics is through traditional regression modeling,” she says. “We take all the factors known going into the season: who opponents are, days of the week, promotional items we’re giving away, add-on concerts and anything else we can include to drive attendance. Then, based on our regression model, we project out single-game ticket sales and measure success based on how far we exceed those ticket sales.”
Bohn reports that, overall, the team has come within tenths of a percent in forecasting accuracy for specific games. So, she’s working now with the team’s business analytics group to uncover more precise details to drive sales success.
“We’re not just saying that if we do a bobble head giveaway, it will sell an extra 6,000 tickets,” she explains. “We’re getting down to saying, ‘If we run a promotion on a Saturday and support it with an advertising plan of 400 TRP (Target Rating Points — how many people within a target segment saw the ad based on purchased airtime) and 2 million online impressions, we’ll see these results.’ We’re trying to get better at combining the science and the art of selling baseball tickets.”
Part of that art includes improving the overall fan experience. “You can’t control the game outcome, you can’t control the individual player performances, but you can control fan experiences. We never want to underdeliver,” Bohn says, adding that her department helps generate fan desire to attend games in person by communicating effectively through advertising, Web content and email, as well as by creating excitement beyond the game itself through giveaways, fireworks, concerts, theme nights and other promotions.
Plus, the Diamondbacks survey fans regularly … and creatively. Working with former classmate Stefanie Francis, the Diamondbacks recently took a focus group out of that traditional, sterile white room with the two-way mirror and video as fuzzy as an ATM surveillance camera. “I grew up watching shows like Wild Kingdom, where you get to see animals in their natural environment,” says Francis, the research lead. “I asked myself, ‘What’s the natural environment of a sports fan?’ A sports bar!”
Francis and Bohn brought nearly three-dozen fans to a Phoenix watering hole, had a local sportscaster lead the group discussion and let the fans grab beers to enjoy with a buffet of finger foods. The venue brought out more fan passion and honesty. “As much as I love focus groups, you can’t help but notice you’re in a room with a bunch of strangers and some other stranger is asking questions. The bar put people in a setting much more appropriate for watching and talking about sports,” Bohn says.
Better than the jumbotron
Navigate Research also is taking a closer look at fan experience with an 8,000-fan survey plus a handful of event attendees who will be fitted with the same type of biometric sensors NBA basketball players use. The one-ounce sensors will give researchers insight into fan heart rates, distance traveled in the stadium, as well as fatigue and cardiovascular changes that might signal excitement, Francis explains.
Meanwhile AEG is looking at proximity marketing, says LeValley, who sees this technology as a way to “surprise and delight” the fans that support his company’s teams.
“It’s software that you put in your arena, and it transmits a signal to a mobile application,” he says. “So, if I had the Kings’ app on my phone, the software might send me a message letting me know the concession lines in my section are empty right now. Or, it may say where the shortest bathroom line is.”
Other teams are looking at loyalty card programs, according to Scibetti. “Teams are investing in systems to incentivize people to share information and track spending,” and the incentives themselves are often enhanced fan experiences, such as “meet-and-greet visits with players and coaches or autographed memorabilia,” he notes.
Improving fan experience is a winning move, not only for increasing ticket sales but also for making sure teams get the greatest possible revenue from each ticket sold. Maestas says that premium seats have dramatically risen in price in the last decade to reflect demand. “In the U.S. today, 4 percent of seats account for 50 percent of revenue,” he says.
From the locker room to the classroom
Increasingly sophisticated, global and lucrative, the sports world is now about so much more than who wins the game. W. P. Carey students can get closer to the action through a number of sports-related majors and other opportunities.
BA in Business with a concentration in sports and media studies
Students learn the business fundamentals and explore the unique relationship between sports organizations and their communities, sponsors, the media and more.
BS in Business Data Analytics
Throughout the sports world, the demand for business analytics skills is strong and growing. A data analytics major delivers the knowledge, skills and experience you need to create and manage big data infrastructure and large-scale business data analytics in organizations.
Undergraduate Certificate in Sports Business
Through a real-world project, thesis or internship, students build skills necessary to implement marketing and business strategies in the sports industry.
Master of Science in Business Analytics (MS-BA)
Available on ASU’s Tempe campus or online, the MS-BA trains students to derive value from data, lead data-driven analyses and create a business advantage across markets and industries.
Sports Law and Business
Through additional instruction from the W. P. Carey School, ASU’s Sandra Day O’Connor College of Law offers three degrees with an emphasis in sports law and business: Master of Laws (LLM), Master of Legal Studies (MLS) and Juris Doctor (JD).
Sports Business Association
An undergraduate student organization, the SBA taps into local and national connections to give students an inside look at the sports business industry through speaking engagements, networking opportunities and more.
Learn more about the W. P. Carey School of Business at http://wpcarey.asu.edu.
This article first appeared in the Spring 2015 issue of the
W. P. Carey magazine.
