How to deal with legal setbacks in the sports industry

Legal issues arise everywhere and in  the sports industry the notoriety of such issues can be expanded given the media coverage leagues, teams and athletes receive on a daily basis. Sometimes these issues become so high profile it ends up as being dentrimental for the industry because it casts a negative image of the league/team/athlete. In PASSIONIS SPORTS we’ve mentioned before our aim of become a trusted allied for sports organizations so we are going to discuss some recent legal controversies and how to deal with them.

1. The first one is related to ambush marketing and its negative effect on high profile sporting events and their sponsors.  Ambush marketing is a marketing technique were brands which are not official sponsors of a high profile sporting event benefit from the media coverage of the event to get free publicity by associating their brand to the event. In the last two editions of the FIFA World Cup their have been several cases of ambush marketing, this issue not only affects soccer but other sports and even the Olympic Games. The main issue here is that brands that pay an enormous fee to gain exclusive access and association to the sporting event lose that exclusive right to be the only brand visible. For last year’s World Cup FIFA issued warnings to brands looking to engage in these techniques, before the World Cup automaker Peugeot launched a marketing campaign to benefit from the World Cup, with such warnings (as well as regulation against this technique) brands stopped.

 But how can an official sponsor or a sporting event handle this besides regulation which sometimes can create a negative image? We believe the answer is more marketing, more content, more engagement, if a competing brand is trying to take your spot create a unique campaign that shows why you have been “chosen” as the official sponsor. Nowadays, we need to constantly wow, connect and engage customers because loyalty is really hard to achieve, so instead of complaining, why not take it a step further making a unique campaign out of the other brand’s “lack of originality” or something in this line! If customers see that an official sponsor is willing to take it to the limit to “win” the results will be extremely positive, besides the association of “winning” with the actual victory in sports is just to cool!

2. The second legal controversy is with the right of publicity of athletes. These case deals with several legal issues, first we are talking about a licensingdeal the NCAA had with a EA Sports to license their trademarks and use the likeness of student athletes. NCAA regulations didn’t allow student athletes to earn revenue from their image, even though this is a right they have because it is their image being used. In this case EA sports was sued for using among other the likeness of the players, their names, hometown, eligilibity and several other traits that clearly distinguished them in the video game. A group of former student athletes found this to be an abuse and decided to sue, in the end what happened is that they reached a settlement where they would have to pay $40 million to these athletes. This case is particularly interesting because it can change how student athletes’ right of publicity is handled in the future for further licensing deals!

How can a lincensee avoid this issue? Well, besides negotiation as in this case, a proper due diligence, find out who owns the trademarks, the rights of the athletes and which parties need to be involved in the deal to avoid these type of issues. Other aspect is be guided by professional ethic and if you think you should contact an athlete/organization because their image or trademark is part of the deal, it is better to procede this way! In the end handling these issues  correctly from the beginning will guarantee a prosperous relationship free of conflict!

3. The last case deals with trade secrets inside one of the biggest sportswear company in the world, Nike! In recent years Nike has been leading the sportswear market with innovation after innovation in many different sports such as running, soccer, basketball and now fitness!  Recently several of Nike’s top designers resigned from the company  they were quickly hunted by rival Adidas. Nike decided to sue the group of designers claiming they would provide Adidas with valuable information based on those secrets! The group of designers counter-sued, among their claims they say Nike didn’t allege trade secrets or discoslure agreements on such information. This dispute has yet to be solved, but it looks it willl turn into a nasty legal battle.

How can a company working in the sports industry avoid this issue? First of all understanding what can be a trade secret is essential in order to know how to protect it.  A trade secret can be a process, design, formula, among others and it can’t be easily identified by others. A company with a trade secret uses it to gain a competitive advantage and eventually an economic benefit. For example Nike’s “flyknit” shoe making process can be a trade secret, also an exclusive training method devised by a coach within a sports organization can be a trade secret as well. So how do we protect them, it is really important to have clear communication within your organization as well as Non-Disclosure Agreements with specific clauses that refer to the protection of the trade secrets as well as non-compete clauses that will prevent former employees from utilizing such information if they no longer work in the organization. With these two steps you can facilitate the protection of the trade secrets, besides open and clear communication in a positive manner with former employees will also serve your cause!

In PASSIONIS SPORTS legal issues are not our specialty but we sure understand them and know how to handle them, our objective is to allow anyone within the sports industry to keep on with their job as role models for society and if we can help with legal assitance so be it!

Who creates an Unforgettable Sports Experience?!

The world of sports is amazing! Full of passion, full of emotion, full of excitement, full of cheering! An incredible atmosphere is created regardless of the sport! However we often forget that a huge amount of these emotions and atmosphere are brought by one of the most if not the MOST IMPORTANT actor in this story and that is YOU, THE FAN.

Sports organizations and teams have slowly started to realize this and now loyalty programs and fan engagement are a top priority for marketing executives in the sports industry! Why? The reason behind this is simple; branding is an integral part of the success of any business! Even more for a sports business, without a brand that stands for a unique identity, culture, values and guiding principles, which are tangible as well as easy to communicate, the value of the business is most likely not going to be huge. Fans and essentially loyal fans are an integral part of such strategy because they make the brand come ALIVE! They represent the brand! This in turn generates more success from the business side. So, how does loyalty and fan engagement come into play to help the brand?

Loyalty programs and fan engagement are essentially a tool to guarantee three aspects: first, customer retention, because you need to make sure fans keep coming back, otherwise who else is going to buy tickets, merchandise and other stuff! Second, brand awareness and value, with fans present, making a unique atmosphere, living the identity of the team and continually representing your brand, the overall presence of the organization will have a broader reach, as well as gaining more value, because others will notice the great atmosphere and unique experience (a great example of this is European soccer team BorussiaDortmund).  Third, and I believe this is the MOST important aspect, showing appreciation for the fans! Fans make everything happen, they go to the games, they buy in the concessions, they buy merchandise, they cheer, they bring emotion, and if a sports team or organization doesn’t recognize this and actually works proactively to show their fans they care for them, then something is not working and the unique experience will just not be there! Now that we understand this, we can talk about two great examples of loyalty and fan engagement! One incorporating technology, the other one through interaction/involvement/ownership with the fans!

The first one and this is something every sports team/organization needs to be doing is using technology, analytics and data to understand more about their customers, how to engage with them and how to reward them. Soccer is growing fast in the United States, and technology has played a big role! MLS and the teams have incorporated technology to their stadiums to benefit thefan! Improvements done to engage fans and enhance their experience include the use of apps where fans can watch replays, know where concessions stands are, and even reward point for purchasing merchandise. A great example is Sporting Kansas City, through their app Uphoria they let the fan watch replays, find special deals for the teams memorabilia and so on! What is best about this is that all this data is then utilized to understand the profile of the fan, what he likes, what he buys, what he eats, and so all this information is then used for loyalty programs. For example if a user bought a jersey, and his birthday is coming up, a discount for other item will be received! This way of using data is the way to follow to connect with fans, and data needs to be used to generate a true relationship with the fan!

The other example, is from the NBA, coming from Miami, the HEAT have turned a T-Shirt giveaway, into a unique engagement tool with a huge return on investment! Whenever the team makes it to the playoffs, in order to create a unique atmosphere, the Heat marketing team creates campaigns where everyone at the arena has to use a specific t-shirt color. In the beginning they started giving away, shirts, now the emotional connection, engagement and ownership the fans have taken is so big, that they don’t give away shirts, fan can either come dressed from home or purchase a shirt at the official stores. One of the slogans of the campaign was called “White Hot”, everyone at the stadium was completely dressed in white, and this created a unique atmosphere, fans now understand and BELIEVE, that they play a huge part in the success of the team!

This example demonstrates how you can incorporate fans and make them feel part of the success, because in fact they are! This level of engagement ensures that fans (customers) return because they not only get great entertainment, but an experience they get to be part of!

In PASSIONIS SPORTS, we look to innovate using our creative power and be trendsetters in developing alongside sports organizations of any kind, unique loyalty and engagement tools as well as campaigns.  In soccer a difficult market to engage with, given that there is little to no pauses, we could do a complete campaign to engage with fans and convert them into loyal fans before, during and after the game!

BEFORE: We are going to create a unique zone, called the SoccerZone, where fans can have fun, including, setting up small courts to play 3 vs. 3, and earn prizes from the team, have unique foods, that are not normally available at the stadium. Prices for kids who come in the teams uniform from head to toe, games for kids with the mascot, and a unique campaign using a photo booth, fans who purchase ANYTHING from the store can go and participate in the photo booth, replicating a goal from the team, then they will share the picture using a hashtag and the picture with more likes, will win a unique experience with the team for their next home game!

DURING: Just like the NBA has “hype-teams” during pauses, in soccer we will incorporate this idea, with a twist, each section of the stadium will have a hype team, and they will make sure that fans during crucial moments in the game cheer for the team, showing them chants, giving small merch and so on! Also for preparation, we will work with our main goal scorer/star, to come up with a celebration that involves the crowd, sharing a video with the explanation through social media; when he scores he will engage with the audience to celebrate the goal with him!

AFTER: we will enable our SoccerZone, for 30 minutes post-game, with special offers, discounts, prices, in every store, concessions and more! Also we will giveaway different prices signed by the team as well as having a unique autograph session, with a player!

This is just a little bit of the ideas we can help develop, craft and execute at PASSIONIS SPORTS for any given sports! We are revolution in sports; we have a unique passion for sports, because it is what moves us! And our mission is to share that PASSION with others! As our name says PASSION IS SPORTS!

Negotiation in the Sports Industry

The sports industry is filled with negotiations, a team will negotiate contracts with players, sponsors, suppliers, partners and so on! So it is a great place to learn and develop negotiation skills. For this reason I chose to interview Ms. Andrea Atala, Executive Director of a first division soccer team in Honduras, named Motagua, recently the team got crowned as champions of Honduras First Division. Besides being the executive director of Motagua, Ms. Atala has just launched a website called  “Acceso Directo” (Direct Access), dedicated to the promotion and expansion of sports in Honduras. I talked to her about her different negotiation strategies and projects and her answers provided insights I will incorporate into future negotiations.

1) How do you manage the human aspect at negotiations? What strategies do you use?

It is very difficult to separate the human aspect of the negotiation to the problem. Negotiating is an emotional process where your ego comes into play quite often. From your own part, try to be as objective as possible and approach the negotiation as mechanically as possible, and as for your counterpart try to appeal to their emotional side to reach your objective. In any negotiation, having a strategy is integral to your success. More often than not you are not alone in whatever business you are dealing with, so discuss beforehand with your peers, map out the key points of your negotiation, establish caps and floors and once you begin the negotiation stick to your game plan, If you have a game plan in place your risk of falling out because of your ego or emotions is reduced.

2) How do you prepare your position and prepare to understand the other party’s position when dealing with a supplier?

 Negotiation is all about managing expectations. When haggling for price it is easy to get to the price by doing detailed research beforehand on what it is you’re buying or selling. Use facts and be straightforward and assertive on what your limits are. You can manage these expectations by being an informed negotiator, you will know if someone is going too low or too high. 

3) What is your position at Motagua, and are negotiating any deal as of this moment for the team?

 I work as Executive Director of a First division soccer team in Honduras. I am working right now in the construction of a new stadium for our team in an extremely rural area plagued by extreme poverty. I have been in constant negotiations with the municipalities of the region, NGO's and various other community organizations. Our goal is to build and operate a hydroelectric power plant near our stadium, which we are sure, will help the community as well; their goal is to further socially and economically develop their communities. This is a win-win situation for everyone involved, as the construction is bringing many jobs to the community, directly and indirectly and have also negotiated many other benefits to the community, like the construction and maintenance of roads, classrooms and materials for their schools, electrification and a profit sharing plan as well. As they develop their community, we have a safer place to manage and operate our stadium and power plant; it is in our interest that the community develops for the good of our project and country.

4) How do you recognize what people really want to get out of the negotiation and how do you work to achieve a common ground where both you and the other party are satisfied?

 Very difficult to know exactly what your counterpart wants, but their natural human response is usually a very good indicator. Once you reach a critical point to their negotiation, if you are paying attention, you will see their body language change i.e. they will sit up on their seat or raise their voice or something of the sort.  If you are dealing with normal human beings of sound mind, reaching a common ground usually happens organically, but understand that in any negotiation its not about what you deserve to get, it is about what you have the LEVERAGE to negotiate. 

Contact:

Andrea Atala

Email: avatala@gmail.com

References:

Club Deportivo Motagua (2015). Club Deportivo Motagua. Retrieved from: http://www.motagua.com

Andrea Atala (2015). Acceso Directo. Retrieved from: http://andreaatala.escuelauniversitariarealmadrid.com

Sports Myth 101: Sports Teams can't be profitable

We often hear that sports teams are not profitable; all they do is either generate expenses or just earn theright amount of money to continue existing.  I believe this is not true and actual profits can be made from professional sports teams in any kind of sport. For this post I will closely analyze soccer teams, as they are notorious for their inability to generate profits. So, the question is how do we make a sports team profitable? The answer is in fact simpler than you think! All we need to do is follow these two steps:

1.     Business Model:

We need to choose a business model for our team, this will determine how we will run  & manage our team.  Before we do that we need to understand that professional sports is a form of entertainment, people watch sports because they want to be amused and entertained.

-With this in mind, the basic model for any business in the entertainment industry is to generate content that customers consider valuable and are willing to pay for it. This is the model Real Madrid utilizes and other big soccer teams do as well. All of their efforts are directed in attracting the best talent in the world to play for their team, this in turn will generate more revenue, from tickets, merchandise, TV rights and other ventures. They create pure entertainment for their fans.

-The other model is based on developing talent, creating meaningful content (although not as valuable as the premier sports content big teams can create), enough to generate some revenues from tickets, merchandise and TV, but most of the revenue will come from selling the talent you are able to develop. This means developing a player that becomes so good that other teams are interested in acquiring his services.

When executed properly both models can be hugely profitable, examples are Real Madrid and Udinese.

2.     Set Up strong financials systems:

Just like any other business, a sports teams need to have proper accounting systems to manage their finances. They need to have a balance sheet, income statement and most important of all cash flow statements, the entertainment industry has big expenses and sports is no exception, some of the biggest expenses for sports teams are wages for soccer players. Understanding and controlling these expenses, and other financial information will make the difference between earning a profit or not. Another great tool is the use of ratios, to measure amongst others, liquidity, profitability, efficiency, and any other ratio a particular team might want to incorporate. For example for both of the models, talent= soccer player and it has to be viewed as an asset, so using a ratio such as the return on asset, or even the net return on assets, to take into consideration the payment of both interest and taxes will help maximise the earning potential of the player. Such ratios can help the management in the development of a profitable sports team.  There are several examples of profitable teams already in a wide variety of sports! 

Our aim at PASSIONIS is to assist in the development of successful sports teams, no matter the sport or level. We understand the importance of sports in the world and most of all we understand that teams are special organizations that can inspire others as well, so we want to be an essential partner in the universe of sports! Our success is the success of the team!