Matthew D. Shank, Sports Marketing: A Strategic Perspective, Fourth Edition. Part 1 of 2

SECTION 1 SAMPLE COURSE SYLLABUS COLLEGE OF BUSINESS DEPARTMENT OF MARKETING NORTHERN KENTUCKY UNIVERSITY FALL 2007 COURSE NUMBER: SPB 305 COURSE TITLE: SPORTS MARKETING CLASS MEETINGS: 6:15 – 9:00 TUES, 331 BEP INSTRUCTOR: Roberto Clemente, Ph.D. OFFICE LOCATION: 488 BEP OFFICE PHONE: 572-6642 E-MAIL : _Clemente@NKU_.EDU OFFICE HOURS: By appointment REQUIRED TEXT: Matthew D. Shank, Sports Marketing: A Strategic Perspective, Fourth Edition. Upper Saddle River: Prentice Hall, 2009. PREREQUISITES: The successful completion of ‘Introduction to Marketing’ and junior standing are required prerequisites and will be strictly enforced. COURSE DESCRIPTION: Sports Marketing will build upon the marketing knowledge base and provide an overview of all the issues faced by marketing managers within the sports industry and outside the industry who market through sports. Students will be introduced to the unique qualities of the sports product and also examine the promotion mix, pricing and distribution issues as they relate to the sports industry. TEACHING METHOD: Given the nature of the course, a lecture format with class discussion will be utilized. OBJECTIVES: Students should: understand the impact of the external environment on sports business decisions. understand basic concepts in building a strategic sports marketing plan. conceptualize a complex sports business issue into coherent written statements and oral presentations. understand sponsorship concepts. apply sports marketing concepts in the context of “real-world” examples. EXPECTED OUTCOMES: By the end of the semester, students should be able to: define sports marketing and sponsorship concepts. link real-world issues to class concepts. analyze sports marketing problems and offer recommendations. prepare sports marketing plans. give professional presentations. EXAMS: There will be three examinations based on assigned readings, class presentations and class lectures. Exam format will be essay questions. PROJECT: Each student will participate, as part of a group, in constructing a strategic marketing plan for a sports marketing project using outside clients. Guidelines for this marketing planning document will be discussed in class. PRESENTATION: Each student will be required to deliver an oral presentation regarding some topic relating to sports/events marketing. Presentations will be based on secondary research and will relate the sports/events articles to core marketing concepts. Depending on class size, the presentations will be approximately 10-15 minutes in length. GRADING SCALE: Grades based on the aforementioned exams, case, and presentation will be weighted as follows: EXAMS 300 points 540 – 600 A PROJECT 200 points 480 – 539 B PRESENTATION 100 points 420 – 479 C 360 – 419 D Below 360 F ACADEMIC DISHONESTY: Any form of cheating will be handled in the manner described by the policies in the Student Handbook under the “code of student rights and responsibilities.” TENTATIVE COURSE SCHEDULE WEEK OF TOPICS COVERED SEPT 1 Introduction to Class Review of Core Marketing Concepts & INTRO TO SPORTS INDUSTRY ch1 SEPT 8 Contingency Framework for Strategic Sports Marketing ch2 SEPT15 RESEARCH TOOLS FOR UNDERSTANDING SPORTS CONSUMERS CH3 SEPT22 UNDERSTANDING PARTICIPANTS AS CONSUMERS CH4 SEPT29 UNDERSTANDING SPECTATORS AS CONSUMERS CH5 OCT 6 EXAM 1 OCT13 SEGMENTATION, TARGETING AND POSITIONING CH6 OCT20 Sports Product Concepts CH7 OCT27 Managing Sports Products CH8 NOV3 Promotion Concepts CH9 NOV10 EXAM 2 NOV17 Promotion Mix Elements CH10 NOV24 Sponsorship Programs CH11 DEC 1 Pricing ConcepTS AND STRATEGIES CH12 Dec 8 IMPLEMENTING AND CONTROLLING THE STRATEGIC SPORTS MARKETING PROCESS CH13 MARKETING PLANS DUE Dec 15 FINAL EXAM/EXAM 3 ** Please note that October 20 is the last day to drop with a grade of W SECTION 2 presentations, Project, experiential learning exercises, and CASE Studies A major aspect of the course should be to bring the sports marketing experience to life. This can be achieved through a major term project, class presentations, and by using the experiential learning exercises/Internet exercise found at the end of each chapter. You may wish to assign one, all, or any combination of these exercises throughout the course. Additionally, some of the projects lend themselves very nicely to groups (e.g. designing a marketing plan), while others are generally individual (e.g., presentation) in nature. If you have never taught sports marketing, these exercises are strongly recommended. Students seem to enjoy them and they truly engage the student in active learning. The following sections describe some of these exercises in greater detail and provide a sample of student work. Presentations: As stated in the sample syllabus, require students to deliver an oral presentation regarding some topic relating to sports marketing. Depending on class size, the presentations will be approximately 10-15 minutes in length. Presentations will be based on secondary research and will relate the sports articles to core marketing concepts. To assist the students provide a list of potential sources such as the Sports Business News, Marketing News, Sport Marketing Quarterly, AdWeek, Business Week, etc. To maintain the currency of the presentations, the articles chosen for the presentation must have been published within the past two years. Typically, there is a wealth of potential articles, so students are instructed to try to find an article relating to a sport or issue in which they are most interested. Past presentations have included articles on everything from squash to motocross. During the presentations, students are first asked to provide an overview/summary of the article (~5minutes). Next, and most importantly, the students are asked to describe the marketing/sports marketing implications of the article. Here’s a sample of a student’s presentation. As you can see, this article allowed the presenter to consider the following: SWOT analysis as it relates to the NHL; the NHL’s use of marketing research and secondary data; the stages of the product life cycle and how the NHL is forced to be innovative; the match-up hypothesis and how it applies to NHL endorsers; and the nature of new products or innovation categories. Overall, the advantages of this assignment seem to far outweigh the negatives. Here are just a few things to consider. Advantages Allows students to practice presentation skills Provides forum to discuss sports that might not otherwise be considered Gives us the ability to keep current with sports marketing topics of the day Allows the student a chance to synthesize current articles with core sports marketing concepts Disadvantages Takes valuable class time Students may be less attentive (as such, presentations could be incorporated into class material) Students may be unwilling to ask questions of other students Major Term Project: The Strategic Marketing Process Another extremely beneficial assignment is to have each student participate, as part of a group, in constructing a strategic marketing plan for an outside client. Depending on class size, student groups may vary from 3 to 4 students. Clients may be local high school athletic programs, your college or university athletic programs, local sporting events or festivals, or local sports businesses. Although there are hundreds of different marketing planning outlines, it would be optimal to follow the contingency framework for strategic sports as presented in the text. Depending on your personal preferences and the needs of the client, you may want to highlight or eliminate parts of the contingency framework. For example, have the students write a mission statement if the sports organization does not currently have one in place. If the organization already has a well-developed mission, it is not necessary to redesign this mission statement. However, the students should use this mission in guiding the strategic sports marketing process. Here is an outline of the component parts of the plan given to the students. STRATEGIC SPORTS MARKETING PROCESS WRITTEN REPORT TITLE PAGE EXECUTIVE SUMMARY INTRODUCTION ORGANIZATIONAL MISSION ORGANIZATIONAL OBJECTIVES SWOT ANALYSIS PLANNING PROCESS UNDERSTANDING CONSUMER NEEDS MARKETING RESEARCH PROPOSAL Problem Statement Research Objectives Methodology Data Collection Instrument 2. MARKET SELECTION DECISIONS SEGMENTATION TARGET MARKETING POSITIONING 3. MARKETING MIX DECISIONS a. PRODUCT ISSUES (beginning with marketing goals for this element) b. PROMOTION ISSUES (beginning with marketing goals for this element) c. PRICING ISSUES (beginning with marketing goals for this element) d. PLACE ISSUES (beginning with marketing goals for this element) IMPLEMENTATION PROCESS In this section, include a description of implementation and the types of things that would be considered at this stage. In other words, tell me what implementation means. CONTROL PROCESS In this section, provide some suggested means of evaluating the strategic plan. In other words, tell me how you would determine whether organizational objectives and marketing goals are being achieved. Although some students groan about the amount of work required, this is the foundation of my course. The strategic marketing process is the basis of the text and this project allows the student a chance to gain valuable skills in sports marketing (and marketing, in general). Let’s look at some of the pros and cons of this assignment. Advantages of the Strategic Marketing Assignment Allows students to develop strategic marketing planning skills Provides an example that can be carried throughout the class, giving students a common frame of reference Gives the instructor/department/university an opportunity to serve and interact with the community Allows the student a chance to synthesize core sports marketing concepts Gives student a chance to develop and practice client relations skills Disadvantages of the Strategic Marketing Assignment Has all the traditional problems of group work Project emphasis is so great that it can sometimes overwhelm the additional concepts that should be covered Additional Experiential Exercises In addition to (or instead of) the presentation and marketing plan, there are a number of other term projects that can be assigned to individuals or groups. Each of these exercises is designed to provide an active learning experience that can be discussed in class and supplement the text and lecture. Here is a sampling of possible assignments (a more exhaustive list can be found at the end of each chapter). Choose any professional/collegiate sports team and describe how it puts the basic sports marketing functions into practice. Choose three teams in the same sport (Braves, Indians, Yankees) or three sports products in the same product category (e.g. Titleist, Cobra, and Ping golf clubs) and discuss how each makes market selection decisions. Comment specifically on similarities and differences in segmentation, targeting, and positioning. Describe the marketing mix for the following sports products and services: • Wilson Sporting Goods Tennis Equipment • University of Notre Dame Football Program • Golf lessons at a local country club • Local High School basketball program • Air Jordans from Nike Describe all of the ways that the changing marketing environment will have an impact on NASCAR racing. How should NASCAR prepare for the future? Using secondary data sources on the Internet, find the following and indicate the appropriate URL (Internet address): -Number of women who participated in high school basketball last year -Attendance at NFL games last year -The sponsors for the New York City Marathon -Universities that offer graduate programs in sports marketing Interview 5 adult sports participants and ask them to describe the sports socialization process as it relates to their personal experience. Attempt to interview people with different sports interest to determine whether the socialization process differs. Ask 10 consumers about the value that they feel a professional sports team would (or does) bring to the community. Then ask the same people about the value of college athletics to the community. Comment on how these values differ by level of competition. Using the Internet, find the demographic profile for fans attending LPGA (women’s tour) versus PGA (men’s tour). Are there differences? Use this information to comment on the market selection decisions for the LPGA. Construct a survey to measure consumers' perceptions of service quality at a sporting event on campus. Administer the survey to 10 people and summarize the findings. What recommendations might you make to the sports marketing department based on your findings? Find an example of a “new sports product.” Then, develop a survey, using the critical success factors for new sports products and ask ten consumers to complete the instrument. Summarize your findings and indicate whether you think the new product will be successful based on your research. Conduct an interview with the Marketing Department of a local sports organization and discuss the role of each of the promotion tools in the organization’s promotion mix. In addition, ask about their promotional budgeting process. Design a creative advertising strategy to increase participation in Little League Baseball. Contact an organization that sponsors any sport or sporting event and discuss how sponsorship decisions are made and by whom. Also, ask about how the organization evaluates sponsorship. Design a survey to determine the influence of NASCAR sponsorships on consumers' purchase behaviors. Ask ten consumers to complete the survey and summarize the findings. Suggest how NASCAR might use these findings. Visit a local sporting goods retailer and comment on how the outlet targets its marketing efforts towards women. Is the emphasis placed on women more or less than you expected? Interview five consumers and ask them to describe a sports product that they consider to be of extremely high value and one they consider to be an extremely poor value. Why do they feel this way? Material to use: Fan Cost Index (FCI) information (by Team Marketing Reports) for the four major professional sports leagues; available on the Internet at _http://www.teammarketing.com/fci.cfm_. (Please note that this exercise was developed and provided by Professor Vassilis Dalakas of Northern Kentucky University.) Break the class into groups of 2-3 people; hand each group the FCI information on one of the four leagues. Ideally, you want the students to work on the league about which they have the most knowledge. Depending on the class size, more than one group may work on the same league. Ask each group to focus on specific aspects of the report: Look at the top 5 and bottom 5 teams in terms of average ticket prices. Given your knowledge on each of these teams, does it make sense that their tickets are so expensive or so cheap? Why? [You will notice some important factors that come up in terms of setting a price include: tradition of team/sport in the city, winning/losing performances the previous seasons, anticipation for the season, new facility, star players on the team (especially new ones), competition (direct or indirect) in the area] What is the amount for the highest ticket price, average ticket price, and lowest ticket price in each of the leagues? Compare and evaluate affordability of each league (after information on all leagues has been presented to the class). How do those prices compare with other entertainment options? What teams have the highest and lowest FCI? Is it expected or are there any surprises? Use the FCI to see how much additional money a team makes above and beyond simply ticket prices. [This ties in nicely with the notion of “captive pricing”] Have students from each league present their findings to the rest of the class so that everyone in class has a good understanding of actual pricing practices in each of the 4 big leagues. Conduct a simple study of odd-even pricing by producing a rough (mock up) ad for a sports product. Produce two versions of the ad – one using odd pricing for the sports product and an identical version using even pricing of the sports product. Then measure demand for the product (potential sales) by assessing purchase intent and also consumer perceptions of quality. Which product will sell the best (odd priced or even priced)? Which product is perceived to be of higher quality (odd priced or even priced)? Interview the organizer of a local/neighborhood road race (e.g. 5K or 10K) and determine the costs of staging such an event. Categorize the costs as either fixed or variable. Assess the role of cost in the price of the entry fee for participants. Interview three marketing managers who are responsible for sponsorship decisions in their organization. Determine how each evaluates the effectiveness of their sponsorship. Discuss the last three major ‘crises’ in sport (at any level). How did the organizations or individual handle these crises? Case Studies A nice alternative to the aforementioned experiential exercises and “real world” strategic marketing plan is to use the case studies that appear throughout the text. CASE 1: M K Timer William Shelburn, University of South Carolina at Aiken Jim Kauffman gazed out the window of his office and thought again about his dilemma. Jim was the Dean of Students at a small southeastern college. He knew he should be concerning himself with the matters of student life at the college but his mind kept coming back to the product he and a partner had developed. They had reached a critical point in regard to the development and sale of that product and he was thoroughly confused as to what he should do. The product that he and Rocky Ferron, his partner, had developed was a timing device that could be used as a teaching aid in baseball. The product, which they had named the MK Timer, was not a new concept but rather an improvement on an already existing product. Another company had developed a timing device under the trade name of the Jugg Gun. It measured the speed at which a baseball pitcher threw a ball. The MK Timer did that but it could also be used to measure the time required by a catcher to throw a ball to second base to catch a baserunner attempting to steal a base or the time it took a pitcher to throw to first base to hold a baserunner at that base. The product could do all this and Jim thought it could be sold for less than the existing products in the market. Jim’s invention, as so many inventions often do, came about by accident. Shortly after assuming his role as Dean of Students at the college, the baseball coach had resigned. The Chancellor of the school, aware that Jim had played some baseball in college, asked him to take over the position until a new coach could be hired. Jim accepted the role with some hesitation but found once he started coaching that he really enjoyed it. He became totally absorbed in the job and searched for ways to improve his players' performances. There is an old adage in baseball which states that eighty percent of the game is pitching. Jim believed strongly in that adage and he searched desperately for ways to improve the performance of his pitchers. In an effort to help his pitchers become more effective at changing the speed of their pitches he developed the MK Timer. Successful pitchers are able to throw with speed and control and vary the speed of their pitches. The key to hitting a baseball is the timing of the batter. If a pitcher can disrupt a hitter’s timing by varying the speed of his pitches, he can be very successful. Jim was aware of this and he searched for a method he could use to train his pitchers to change the speed of the pitches they threw. He videotaped his pitchers to improve their throwing motions and in the process of reviewing the tapes, he discovered the importance of the release point of the throwing motion. He decided that timing a pitch from this point until the pitch reached the catcher’s glove could be a more effective way to teach how to change a pitch's speed than the Jugg Gun. Through experimentation, Jim developed the idea of a timing device that had three major elements. The first was a small pad which was placed on the pitcher’s rubber. The pitcher placed one foot on the pad and an electronic signal was sent when the pitcher released the ball from his hand. From observation, Jim had discovered that a pitcher’s foot came off the rubber at the same instant that the ball left his hand. The two motions were simultaneous. Therefore, if a timing device was attached to the rubber which could detect when all pressure was removed from it, an accurate measurement could be made. The second element was a digital meter. It gave a reading of the speed at which the ball was thrown. The third element was a type of watch worn on the catcher’s wrist. It was a timing device that sent a signal to the digital meter. It recorded the time required for a pitch to travel from the pitcher’s hand to the catcher’s glove. The impact of the ball entering the catcher’s glove sent an impulse to the timing meter, which displayed the speed of the pitch. This three part system was quite simple and, Jim believed, just as effective as the existing technology being used to measure the speed of pitches. When Jim and Rocky, an assistant coach, first developed the idea for the M K Timer they knew they had to have help in building it. Neither of them had any experience in electronics. The solution was to hire an engineering firm to construct a prototype for them. Jim and Rocky made an initial trip to an engineering office in Alabama to explain what they wanted and in a few months they returned to examine what had been developed. They tested the timer on the college’s baseball field and after their pitchers got used to the pressure pad on the pitching rubber, there were no problems. Jim was elated. He had developed a device that could help his players. His pitchers could now see immediately how fast they were throwing their fastballs, curves and, most important, their off speed pitches. Jim knew that varying the speed of two consecutive pitches by as little as five to seven miles per hour would make his pitchers much more difficult to hit. An additional application for the timer was to record the time required for a catcher to throw to second or third base to keep an opposing baserunner from stealing a base. An accurate measure of the time required for the catcher to rise out of his crouch behind home plate and throw to a base would make it possible to compare times and see if the catcher could improve his speed. The device had a third application. This was to record the time required of a pitcher to throw to first base to keep a baserunner from stealing. Once timed properly, the pitcher could work on different aspects of this motion to improve his quickness and to make it more difficult for the baserunner to determine if the pitcher was throwing to first base or to home plate. As Jim continued to work with the device, he began to realize that he might have a marketable product. If the device worked for his team, why not for other college baseball teams and also for women’s softball teams? There might even be a market for the product among high school teams and American Legion or other amateur teams. The technology was applicable to different types of baseball and softball teams and significantly less expensive than the existing product in the marketplace. COMPETITIVE PRODUCTS The most popular product presently in the market was the Jugg Gun, an electronic device held in the hand to measure the speed of a thrown pitch. All major league baseball teams owned at least one and often several of these devices. The minor league teams affiliated with the major league clubs typically have at least one Jugg Gun each also. There were 30 major league teams and approximately four minor league teams associated with each major league team. This represented a total professional market of 150 teams. Jim did not expect to be able to sell his device to this market segment. He believed the primary market for the M K Timer was the college market and a portion of the high school market. There were two other competitors in the marketplace besides the Jugg Gun, but they had experienced very limited success. The strategy that Jim and Rocky developed for their product was to sell it for less than the existing products and to appeal primarily to colleges and high schools. Based on their discussions with the engineers who built the prototype, the MK Timer could be mass produced for a cost of less than $200.00. Jim and Rocky thought they could sell the device for $500.00. This would cover the initial marketing and distribution costs. This price was quite attractive when compared to price of $1500.00 which was be charged by the manufacturers of the Jugg Gun. Jim decided that before he went any further with the development and marketing of this product he needed to do two things. First he needed to determine if he could patent the device so that he would have exclusive rights to its sales. Second, he needed to develop at least a rough estimate of the number of potential customers for the timer. He estimated that it could be sold to at least half of all colleges in the U.S. having baseball or softball teams. He had no idea, however, how many schools actually had teams. Many of the smaller schools with limited budgets might not be able to afford his product but certainly the Division I schools and many of the Division II schools could afford the timer. Also, if the men’s and women’s teams shared the device as a teaching tool, this would make it more affordable for the school. Jim contacted a patent lawyer in the area. The attorney told him it would cost a minimum of $2500.00 to secure a patent for the timer. Jim was a bit shocked at this cost and settled for a limited search which cost approximately $750.00. After some analysis the attorney determined that Jim had a good chance of receiving a patent on the timer if he were willing to incur the expense. At this point Jim was starting to realize the extent of the commitment he would have to make if he was going to try to market this device himself. He and his partner had already invested over $2,500.00 in this product and he estimated it would require an additional $5,000 to $7,000 to introduce the product into the marketplace. He had no real training in business. His academic background was in student affairs and not in management or marketing. His partner owned a small business but he had no experience in manufacturing or distribution. Also, Rocky was less committed to the timer than Jim. He now realized there was more to making this product a success then he had first thought and that he needed some additional guidance. ENDORSEMENT Jim and his partner discussed what their next step should be. They decided that attending the college baseball coaches’ national meeting would allow them to determine if there was actually interest among coaches for the device. Also, Jim hoped to enlist the aid of his college coach in endorsing the product. Jim’s coach while he attended Florida State University had been a major league outfielder for the St. Louis Cardinals and the Philadelphia Phillies. After retirement from major league baseball he became a college coach and had become quite successful at the Florida school. He was well known among college coaches and if he were to endorse this product it could be a real boost to sales. If the coach liked the product then Jim planned to use his name in the sales efforts for the timer. He left for the conference with the M K Timer and with high hopes. This was the first time that Jim had ever attended the national coaching conference and he felt a bit out of place. He was a baseball coach but only an interim one and at a very small school. He knew the coaches of the large schools by reputation only or as a result of watching the College World Series on television. Upon his arrival at the conference hotel, he contacted his old coach and asked if he might meet with him to discuss the timer. Coach Litwhiler was hesitant at first but when Jim explained to him how much time and effort he had invested in the product, he agreed to a demonstration. Jim was a bit nervous as he rode the elevator up to the twelfth floor to Coach Litwhiler’s room. He knew this product had helped the players on his team but the trick was to convince his old coach in one evening that this was a viable product and one with which he should want to be associated. After spending several minutes discussing the old college days with the coach and his new coaching position, Jim brought the conversation around to the timer. Coach Litwhiler wanted to know what made this product better than the existing timing devices in the market. Jim explained the multiple uses of the timer and how it could be sold for much less than the Jugg Gun. Litwhiler listened intently but did not say much. Finally, Jim asked if he would like to see a demonstration. The coach agreed but said he did not have time to go outside to see it demonstrated. Jim was a bit surprised by this but realized this was his one chance to demonstrate the product to Litwhiler, so he agreed. He suggested they move out into the hall where there would be enough space to throw pitches. The pressure pad and electronic clock were set up and Jim had a friend serve as a catcher as he threw several pitches. To Jim’s amazement the clock would not register the speed of the pitches. He tried repeated throws and adjustments of all three elements of the system and nothing he did produced a proper reading. Jim was flabbergasted and could not understand why the timer did not work. Litwhiler said he was sorry but he could not possibly endorse a product that did not perform any better than this had. Jim took the timer back to his room and checked it for any loose parts or connections. He found none and was still baffled by the lack of performance. The next day he took it outside to test it and it worked properly. It was not until two weeks later that Jim discovered why the timer had not worked in the hotel. He contacted the engineers who had built the prototype. After some tests they explained to him that the electronic impulse sent from the pressure pad was affected by the steel girders used to construct the multistory hotel. When used outside, as the product was designed to do, there was no problem. Unfortunately, Coach Litwhiler had only seen the feeble attempts inside the hotel. Jim returned home deeply disappointed. He had failed to secure Litwhiler’s endorsement. Without it or some other well known coach or player’s endorsement, he knew it would be difficult to sell the timer. If he were to go forward with the device he would have to invest money to do a complete patent search. Also, he had to draw up a contract with a manufacturer to produce the product and he needed to determine where and to whom he would sell it. He knew he and his partner would have to invest an additional $5,000 to $7,000 to bring the product to market with no guarantee of success. Jim believed strongly in the product and he had even contemplated the possibility of taking a leave of absence from his job to devote all his time to the manufacture and sale of the MK Timer. This option involved the greatest risk. Jim still viewed himself as a college administrator and not an entrepreneur. There must be some way for him and his partner to introduce the timer into the market without changing careers. DISCUSSION QUESTIONS Does Jim have a product that can be sold successfully to colleges and universities or has he simply gotten carried away with this idea? What can Jim do to determine the potential sales for this product? How important is it for Jim to have a well known coach or player endorse this product? Should Jim try to manufacture this product himself or contract for a separate firm to perform this task? What other options are available to Jim if he does not want to pursue manufacturing or marketing the timer? CASE 2: The Georgia Alley Cats Tim Mosser stood up from his desk and walked to the window in his office. He stared for a moment at the parking lot outside that served as the main parking area for the civic center where the Alley Cats, the professional hockey team he worked for, played their games. It was six-thirty on a Thursday evening, only a hour before a home match for the Alley Cats. He wondered whether there would be any more cars in the lot tonight then there had been for the team's last home game. Tim was the director of sales and promotions for the Alley Cats, a franchise in the East Coast Hockey League. The Alley Cats had been in the league for four years and Tim had been with the team from its inception. The team was located in a central Georgia city with a population of 50,000 residents and the surrounding metropolitan area had a population of 170,000 residents. A minor league baseball team was the only other professional sports franchise in the city at the time the Alley Cats started operation. Two major investors, Ron Sharpson and Steve Bouton, owned the franchise. Sharpson was the owner of two successful auto dealerships and had always wanted to own a professional sports franchise. Football was his favorite sport, but he enjoyed the contact in hockey. Although he had not played the sport, he liked to watch it and to entertain his friends and business clients at the games. Steve Bouton, his co-owner, had grown up in Michigan with hockey in his blood. He had played hockey in youth leagues and high school. After college he had moved south and enjoyed great success in the construction business. He never lost his love of the sport and had convinced Sharpson to join his efforts to bring professional hockey to his new home town. Major league franchises in baseball, basketball, football, and hockey had all enjoyed large increases in attendance during the sports boom of the 1990's. Minor league hockey was no exception to this success and included the East Coast Hockey League, of which the Alley Cats were a member. Minor league baseball had grown the fastest of all these sports, with new leagues in medium sized and even small cities once considered too small to support a professional team. The success of these leagues encouraged other investors to attempt the same strategy with hockey. Minor league hockey already existed in the colder regions of the country, but the southeast was an untapped market. There had been little interest in the cold weather sport among sports fans in the southeast. Football was the favorite sport of this region, particularly college football. The state of Georgia had two highly successful Division I college teams and a Division I AA team that had won several national championships. The league had to educate fans about the nuances of the game of hockey and they had to promote it as more than simply a sport. Professional hockey had to be sold as a form of entertainment. In New England and the upper Midwest, the winters were cold enough that hockey could be played outdoors. Boys had grown up playing hockey and it was a popular sport in the colleges. The southeast did not have that tradition and the Alley Cats could not draw from that fan base. Promotions and the concept of offering an evening of entertainment for the family and not just for avid hockey fans were keys to the success of the franchise, despite the fact it was far removed from its Canadian origins. These factors made Tim's position more important to the financial success of the team than in a northern city of similar size. This fact had actually been appealing to Tim when he had taken the position. He viewed it as a challenge. He felt that if he was successful in a small city in the southeast then he would certainly be able to move to a larger minor league franchise in the northern portion of the country and eventually to his ultimate goal of a general manager's position with a National Hockey League team. When he was first approached about the position by a representative of the owners, he was reluctant but had eventually recognized the opportunity. Also, the challenge of working at a brand new franchise appealed to him. Tim had met the challenge of providing entertainment for the casual hockey fans. He had a special promotion for every home game and had actually been voted the best promotions manager in the league by his peers for the first two years he was with the Alley Cats. Attendance, however, started to fall after the second year and Tim felt it was due to several factors. CIVIC CENTER A critical factor in the franchise's success was the lease arrangement the Alley Cats had with the city's civic center. The first year of the team's existence saw them play their home games in the Berk Auditorium. This building was over twenty-five years old and better suited to concerts and plays than to hosting hockey matches. It was not built with hockey in mind and had a poor ice making system. It also had a capacity of only 5,000, which was considered too small by the East Coast Hockey League officials. City officials had promised Sharpson and Bouton that they could move their team into the new downtown civic center which was being built. It was designed to accommodate hockey and had a seating capacity of over 8,300. In their second year of existence the Alley Cats moved into their new home. Initially they were quite happy with the facility. They paid only a nominal rental fee, had total control of all food and beverage concessions at games and received half of all parking fees. Unfortunately, the city council, which supervised the facility, quickly realized it had vastly underestimated the cost of maintaining it. In their eagerness to attract a professional hockey franchise to the city, they made a far too generous arrangement with Alley Cats management. The lease arrangement was tied to game attendance. The Alley Cats were required to pay the city only a nominal fee for rent. Any ticket revenue above an attendance figure of 2,500 patrons per game was to be divided equally between the Alley Cats and the civic center management. For the first two years of the team's existence, attendance averaged over 4,200 patrons per game. In the past two years, however, attendance at games rarely exceeded 3,000 fans. This figure was enough to barely cover the city's cost of maintaining the facility. The decline in attendance for the past two years had placed a financial strain on the city. Also, to worsen matters, the situation had become a public relations nightmare for city officials. The local newspaper had given the financial problems extensive coverage. There had been a bitter fight to win approval for the construction of the civic center. Many people, including a portion of the city council, had not been in favor of the construction of the facility. They felt that the bond issue required to finance it placed the city under too heavy a debt load. Several members felt the city had been too eager to get the team as a tenant at the facility. When the financial problems surfaced, one of the members contacted the local newspaper, which was more than willing to provide detailed coverage of the problems to its readers. Several council members were quite sensitive to the criticism they had received from citizens over the matter. The major argument voiced by these members against the center was that it was a huge financial obligation to incur for a city which with a declining population. The latest census confirmed this fact. It showed that the population within the city limits had fallen by over 7,000 residents since the previous census was taken. Council members pointed to a decline in the services provided by the city as the primary factor for this decrease in residents. Residents who had the income to do so had fled to the suburbs. It was the opinion of these council members that the city had more pressing problems than constructing a sports and entertainment facility to further the economic and political interests of a few individuals. More pressing problems such as adequate housing for the poor, funding for schools and improvements in the highway system needed to be addressed first. They contended that the mayor had pushed through the bond issue because it would be good for his political career. These council members claimed he had aspirations to, at some point, run for the governor's office and it would be beneficial for him to state that during his administration the city built a civic center and brought professional hockey to it. City council had gone back to Alley Cat ownership and asked to renegotiate the terms of the lease. Sharpson and Bouton stated that they had entered into the agreement in good faith and they were not interested in discussing any changes until the end of the agreement, which would not occur for another four years. Tensions had only increased between the two owners and the city council. The newspaper coverage of this strife served only to add to these tensions. COMPETITION The first two years of the franchise's existence had been successful. With no other professional sports competition during the fall and winter months, the Alley Cats had the city to themselves. In any city there is a core of individuals who are willing to pay to see professional or college sports. Since there was no Division I college team in the city or even within a fifty mile radius, the Alley Cats' only competition was the class A minor league baseball team. That team was affiliated with an American League team and since most of the fans in the area were National League fans, the local team enjoyed only a moderate following. . The Alley Cats had been able to appeal to the businesses in the city who were interested in using the team's matches as a means of entertaining business clients. Also, they appealed to the sports-minded segment of the population who wanted to view a professional sporting event in the fall and winter months. These two market segments were large enough to sustain the Cats for their first two years of operation. In the third year of their existence a major change occurred. An indoor professional football team established operations in the city and also played their games in the civic center. This football league was attempting to cash in on the same fan euphoria and economic prosperity that fueled the expansion of professional sports in the 1990's. Very quickly, it became clear that the city could not adequately support another professional franchise. Though the Stallions, the new football franchise, played their games in the spring, they proved to be a major competitor for the sports entertainment dollar in the city. Almost overnight, Tim saw season ticket sales for the Alley Cats start to decline. This was particularly true among businesses which had previously supported the team. Though this was indoor football, with its shortened field and unique rules, it was still football, the game which most of the city's sports fans had grown up with and was their first love. Economic analysts of sports are aware that there is a finite amount of sports dollars in a city. Only a fraction of the total population is willing to spend discretionary income to attend sporting events. Tim had done a good job of appealing to that segment of the population by actively promoting the Alley Cats and attempting to educate sports-minded consumers about hockey. When the Stallions arrived, many of these fans shifted their loyalty to the new team. They wanted to support professional sports, but when faced with a choice between the new sport of hockey and the sport they had grown up with, football, they chose the familiar one. Another factor that contributed to the decline in attendance was the novelty of the Alley Cats had worn off for many. It had been a new product when it first came to the city with exciting game promotions. After a point, however, it was difficult to come up with new promotions and fans had looked elsewhere to spend their sports dollars. Added to that was a decline in the team's on-ice performance. The team had been reasonably successful their first two years, making the playoffs each year. The last two years, however, had seen the team post a poor winning percentage and fail to make the playoffs. DEMOGRAPHICS One other factor that Tim had to deal with was the demographic makeup of the area's population. The city that the Alley Cats were located in had a large African American population. Within the city, this ethnic group represented almost seventy percent of the total population. In the surrounding metropolitan area, that percentage declined to less than forty percent. Hockey was not a popular sport among African Americans. Very few actually played the game and only a few African Americans had ever played in the National Hockey League. Only a handful of this minority group attended any of the Cats games. When population figures were evaluated in terms of the size of a metropolitan area needed to support a professional hockey team, total population for the city and metropolitan area had been used. In reality, these figures should have been reduced drastically. Instead of a metropolitan area of 220,000 potential customers, the franchise was really located in a market of under 120,000 individuals, a small population base from which to draw. LOCAL ECONOMY One final factor that presented problems for the Alley Cats was the local economy. The unemployment rate had been below 4 percent when the franchise had started operation in the late 1990's. By 2001, that figure had ballooned to over 7 percent. Several large textile firms had closed their doors or severely reduced their workforces. The local economy felt a ripple effect. A large military base, one of the linchpins of the local economy, had reduced its military personnel by more than 30 percent with a subsequent loss of civilian jobs. As a result, the Alley Cats were faced with less discretionary income among its customer base. With these problems in mind, Tim Mosser needed to develop a marketing strategy to bring fans back to the civic center to support the Cats. He knew he could not have any influence on the local economy and he could not just hope that the Stallions football team would go away. He also knew a mistake had been made by the owners in determining the size of the fan base, but he could not change these conditions. His bosses, Ron Sharpson and Steve Bouton expected an increase in attendance very soon. Tim knew that his position with the team was in jeopardy if he could not produce this increase and few alternatives were available to him given the present environment. DISCUSSION QUESTIONS Discuss the alternatives available to Tim Mosser to reverse the trend of declining attendance. What influence does the level of discretionary income among consumers in a community have on the success of a professional sports franchise? What factors contributed to the success of professional sports franchises during the second half of the nineteen nineties? What changes could be made with the city council to make the lease arrangement of the civic center a more agreeable one for both parties? CASE 3: The EOB Alignment Putting System Bob Botsch was elated. After several attempts to develop his own putting aid, he had succeeded. Bob taught political science at a small liberal arts college in South Carolina. He was also an avid golfer who constantly tried to improve his golf scores. Bob was a very analytical person and he had become extremely frustrated by his lack of putting skill. He had first started playing golf in college and, through years of practice, he had improved his skills in every aspect of the game except one, his putting. When he stood over any putt of ten feet or less he lost all confidence in his abilities. He had tried many different cures for this problem in the past two years but none seemed to work. Finally, after reading several books about putting, he developed the idea of placing a training device on his putter. From reading Dave Pelz’s book about better putting he determined that he was not visualizing the proper line for his putts. He needed some device to provide him with a directional guide when he putted. He tried several different devices before he discovered that if he placed a plastic golf ball on top of his putter with a direction line painted on the top, it permitted him to putt much more accurately. He determined that this simple device enabled him to focus his eyes over the golf ball. This improved his alignment and made it much easier for him to stroke the ball on the proper putting line. The first device that Bob tried had a red line drawn on top of the ball which he glued to the top of a cavity backed putter. After some modifications he was able to glue the plastic ball, now cut in half, to a flat base which could slide into the slot on the top of the head of a cavity backed putter. This allowed the golfer to remove the device or add it whenever he or she desired. The only limitation was that the putter had to have a flat area on the top of the putter blade. The success that Bob had experienced with his device encouraged him to explore the possibility of selling this product. Although he had no previous experience in producing or selling any type of product he did have one factor in his favor. Bob had a good friend who was an importer and toy manufacturer. His friend Maury had started a successful toy company which imported its products from China. Bob and Maury had become good friends while they were both in graduate school. Bob had taken a year off from his graduate studies to help Maury build a warehouse for the storage of imported products. Maury became so involved with his business venture that he never completed graduate school. He continued to expand his business and had become quite successful. Bob thought that Maury would help him in his efforts to market the putting device. He made a trip to North Carolina to visit him and seek his advice. Maury was a bit hesitant at first when Bob described the device to him. He told Bob he would check with his supplier in China and see what type of information he could get about manufacturing and shipping costs and he would then contact Bob. As Bob made the drive back to his home in South Carolina he wondered if he was willing to go through all the effort he now realized was required to make his device a commercial success. A few weeks later Bob received a call from Maury, who told him that he had found a company in China which would manufacture the plastic device that Bob had shown him. Maury explained to him, however, that he was not interested in going any further in this endeavor until Bob had obtained a patent on his putting device. Without a patent, he explained, there was too much risk of someone else copying it. Maury had experienced this problem himself in his own business and he did not want Bob to have the same problem. Also, since he would be importing the product and storing it in his warehouse he did not want to take the risk of having several thousand of these devices in stock and no customers. If another company was able to produce a “knock off” it could steal a large portion of the potential sales. Bob had been so focused on developing the device he had not given much thought about the need to patent it. He knew that it often took several years to obtain a patent and he wanted to get started on the manufacturing and sale of the product immediately. After his initial feelings of frustration, however, he realized that his friend was right. Bob also realized that he needed to determine if his putting aid would be considered a legal device by the United States Golf Association. This was the governing body for golf. If it deemed a golf club or ball to be illegal it would ban its use in its events. Without the approval of the U.S.G.A. very few golfers would consider using Bob’s putting aid. He knew that if he hoped to sell his product to serious golfers it had to be declared legal by that organization. He hoped at some point to possibly have a professional golfer endorse this product and he knew without the U.S.G.A.’s approval they would not consider it. Also it could not be used by golfers in any amateur competitions without U.S.G.A. approval. Before he went through the expense of obtaining a patent Bob decided to seek approval from the U.S.G.A. He wrote a letter of inquiry to U.S.G.A. headquarters in New Jersey and shipped a copy of the putting device to them. He waited for two months and when he received no response he contacted them by telephone. They told him they had received the product but they had not made a decision. Two more months passed and he had still not received any word from the U.S.G.A. At this point Bob decided to contact another old friend. Jack Marsh was another friend from college. He had graduated from the University of North Carolina School of Law and had specialized in patent law. Bob had visited him the year before and had mentioned his device to him. Jack, who was also an avid golfer, had said he might be able to help Bob if he became serious about trying to obtain a patent for his product. Bob had laughed and said that as simple as the device was he didn’t think a patent was necessary. Jack assured him that if he wanted to sell the product to anyone other than immediate friends he needed to have it patented. Bob told his friend about his efforts to get a response from the U.S.G.A. Jack suggested that he would compose a letter and send it to the sanctioning organization. He explained that an organization like the U.S.G.A. received thousands of inquiries about new products every year. It was Jack’s opinion that they ignored most of these inquiries unless they were pursued vigorously. When the U.S.G.A. received a letter from Jack they finally responded. Their ruling was that the putting device could be used as a training device and for casual play but that it would have to be removed from the putter during any round of golf that was U.S.G.A. sanctioned. This meant it could not be used in any professional tournament or any amateur tournament that was an official U.S.G.A. event. This ruling at first disappointed Bob. He knew that sales to this group of golfers would be very limited. However, he had hoped that he might convince one of these professional golfers to use and then endorse the product. The vast majority of the approximately 26 million golfers in the U.S. were weekend and recreational golfers only. He was aware that many of these golfers took their cues in terms of equipment selection from tour professionals. An endorsement from just one of these professionals, if he was well known, could be a powerful marketing tool. After his initial disappointment Bob decided that he would concentrate his efforts to sell the device as a training tool. This did not exclude PGA or LPGA tour members from using it in practice situations and it still meant that he could sell it to the millions of nonprofessional golfers. Also, he decided to include a training booklet with the EOB device. He had read a great deal about putting in an attempt to improve his own putting. He had also done a great deal of experimentation and analysis. In addition, he was an educator who had authored a book and numerous academic papers. He felt he was qualified to write about this subject and the instructional booklet would be part of the product offering. Now that he had a ruling from the U.S.G.A. which clarified how his putting device could be used he could proceed with the process of securing a patent. The patent approval took much longer than Bob thought it would. Because of Bob’s limited capital, Jack handled all the legal work and charged him only a portion of what the cost would have been if he had used another attorney. It took almost three years and $1,000 but Bob now had his patent and a name for his device. He called it the EOB (Eyes Over the Ball) Alignment and Putting System. While Bob had been waiting for the approval of the patent he had tried to determine what distribution methods would be most effective for the EOB System. He had virtually no knowledge about marketing but he was aware of the various methods used to sell golf equipment. Because he considered this a personal challenge he did not want to approach a major equipment company such as Titleist or Calloway and simply sell the idea to them. Part of the appeal of developing this device was the idea that he could make this product a success on his own. Also he did not have any experience with these companies and he felt they might take advantage of him. If his product did prove to be successful and he sold the rights to it at a low price to an equipment manufacture he would always regret it. The first marketing outlet that he decided to try was golf catalogs. Bob received several of these publications on a regular basis. He had ordered various products from them and he thought they were a perfect vehicle to sell his product. He contacted Golfsmith and Nevada Bob’s, two of the biggest catalog houses. He sent both of them a sample of his device and waited for their response. To his surprise neither of these companies showed much interest. Golfsmith rejected the product. They informed him they did not think the device would sell well enough to justify the space it would require to list it in their catalog. Nevada Bob’s, which also has multiple retail sales locations across the country, was more encouraging. They stated they would buy one thousand putting aids from him if he agreed to spend several thousand dollars on advertising. This offer presented a dilemma for Bob. He had decided that he could spend a total of $10,000 on his product. Half of this amount he had targeted for the cost of his inventory. That left him with $5,000 to spend on marketing and distribution. He wanted to try to succeed with his device but he was not going to quit his teaching position to pursue this fulltime. He viewed it as a sideline and therefore he could only devote limited resources of money and time to it. With this limited budget he did not think he could afford to spend the amount Nevada Bob’s asked for advertising. Bob was now becoming aware of the costs associated with introducing a new product into the marketplace. A second alternative that he considered was the sale of the product at trade shows. Each year two major golf equipment shows took place. One occurred in Orlando, Florida and the other in Las Vegas. At these two shows the major golf equipment manufacturers and many smaller ones presented products they had developed. Golf club professionals and retailers from all over the country attended these shows to evaluate new lines of golf clubs, apparel and accessories. They purchased much of the merchandise they placed in their pro shops or stores for the upcoming golf season. In addition, there were numerous regional shows across the country at various times of the year. Once again Bob found that the capital he had available would not go very far. The cost of renting even a small display area at either the Orlando or Las Vegas show would be between $5,000 and $10,000. This would consume almost his entire budget. If he went to some of the smaller shows he would have to spend less but he could not reach as many potential customers. Also Bob did not see himself as a salesperson. He was not at ease standing in a booth all day long trying to convince people to buy his device. A third alternative that he considered was to have independent sales representatives carry his product as part of their product line. Bob was aware that sales representatives called on pro shops and retail golf stores. These individuals already had established relationships with part of the target market Bob was trying to reach. If they would carry the product and take a commission on the putting devices they sold he would incur very little financial risk. Once again he had no luck. Several representatives looked at his product but none expressed any interest. They all reached the same conclusion. The product was a low priced item with the potential of a one time sale. Unlike golf balls or gloves they could not continue to sell it to golfers time after time. They did not think the product had enough profit potential to warrant adding it to their merchandise lines. Bob had reached a pivotal point with the development of his product. He believed in the product and its ability to improve a golfer’s putting. He was convinced the EOB Alignment Putting System could be successful if he could just find the right way to get it into the hands of the consumer. He also realized that just having a good product was not enough. He did not have enough capital to market his device aggressively but he wanted to retain control of his product rather than sell the rights to a golf equipment company or a catalog distributor. All his efforts to distribute the product had been met with failure. He was not sure what to do next. DISCUSSION QUESTIONS What market segment or segments of golfers are most likely to buy Bob’s product? Did the lack of an endorsement by a professional golfer seriously hinder the marketing of this product? Can you identify any other means of distribution, other than those mentioned in the case, which could be used to get the product to consumers? Did Bob make a serious mistake by deciding to market the product on his own rather than use a well known golf equipment company? What type of retail outlets are best suited for Bob’s product and why? SECTION 3 USING VIDEO IN THE CLASSROOM Showing video clips in the classroom can be a powerful tool to capture students' attention and illustrate key sports marketing concepts. The following ideas may be a good starting point. “Outside the Lines” on ESPN addresses current topics in sports every week; many of these issues are relevant to sports business and can be used in class to stimulate discussion. Illustrate the principles of sports marketing by showing selected scenes or footage from movies that are based on sports themes. Some that I have used in the past include: Hoop Dreams, Days of Thunder, Blue Chips, I Am the Greatest, etc. Videotape several press conferences focusing on the sports industry and discuss the public relations principles involved. Consider videotaping HBO/PBS documentaries that can be shown in class. For example, an HBO special called "Long Shots: The History of the ABA" is rich with marketing examples and implications for the students to discuss. Videotape commercials during halftime of the Super Bowl (or any major sporting event) and discuss the promotional planning implications Videotape portions of national and international sporting events at various levels and discuss the use of stadium signage, sponsorship and other forms of communication. 27