To Manage a Successful Sports Team, Focus on Data
The mantra of youth sports where “everyone gets a trophy” is permeating professional leagues. These days every team can claim some semblance of winning. In the bygone era of the NFL, two teams made the playoffs and that consisted of one game, the Super Bowl. Today six teams from each conference advance, and there is talk of adding more. In MLB, it used to be that the league leaders won the pennant and then went to the World Series; now, five teams in each league make the playoffs. In the NBA and the NHL, meanwhile, more than half of all teams make the post-season.
As the definition of post-season success broadens and winning becomes a commodity, a team’s performance isn’t enough to stand out in the $750 billion sports industry. And at a time where traditional revenue streams are under pressure and the competition for money, media, and sponsors remains stiff, sports organizations have to be more innovative.
So, what should they be doing to drive revenue? How can they use technology to attract and interact with fans? And, in the Age of Big Data, what’s the best use of analytics to increase ticket sales? These are some of the questions on the table at the 2015 MIT Sloan Sports Analytics Conference.
There are a variety of ways the sports industry is using data analytics to solve problems and make better decisions. Many are familiar with how general managers and coaches on the player personnel side of teams have increasingly used data to gain a competitive edge on the field or court. (Think Moneyball.) Their goal, of course, is to boost team performance. In layman’s terms: win more.
Successful leaders on the business side of sports teams are also capitalizing on data analytics. Their goal—counterintuitive as it sounds—is to build stable businesses that do not depend too much on winning to grow. Here is what the most inventive teams are doing from a business perspective:
Using data analytics to power ticket sales. I am moderating a panel that will examine how teams and ticketing agencies use Big Data and social media to find fans online. We will look at which avenues present the best ways of finding and interacting with fans, as well as what these digital activities mean in terms of ticket sales.
Some teams, of course, already use data to analyze fan behavior and spending to drive revenue. The New England Patriots and the Red Sox, for instance, use dynamic ticket pricing—similar to what the airlines do—to charge differently for games based on supply and demand. Mobile technology also opens up additional revenue opportunities. The Golden State Warriors’ mobile application offers “proximity-based” deals on seat upgrades and merchandise that are tailored to where fans are located in the arena. As more fans interact with teams through mobile platforms, the amount of consumer data will only increase, incentivizing teams to create better products and services for fans.
Maximizing social media to connect with fans. Successful sports organizations have become media companies themselves. The L.A. Lakers are a prime example. The franchise employs an in-house digital team charged with creating and distributing content in a reality show format through Facebook, Twitter, Instagram, and Vine. The content streams even in the off-season, which allows fans to feel like they’re with the team up close and personal all year round. Meanwhile, the advent of Snapchat’s “Our Story” feature has opened up new possibilities for the sports industry. Whether at the Grove in Oxford, Mississippi, or the 16th hole at the PGA Tour’s Phoenix Open, fans at the event create “snaps” of the experience from their perspective, and Snapchat curates the best for all users to see. The result is a first-person, often entertaining account of what it’s like to be there in person. Social media in this case enhances the allure of attending a live event—which could drive an increase in ticket tales.
Forging a strong identity to enhance sponsorships. Today’s most successful teams have distinct personalities. The Dallas Cowboys, for example, are widely known as “America’s team,” a nickname coined in 1979 that has endured. And while the team has not been particularly successful on the field in recent years—its record over the past 20 seasons is 158-146—the Cowboys are the most valuable franchise in the NFL at $3.2 billion, according to Forbes. One reason is the Cowboys’ home field, AT&T Stadium, a national landmark befitting of the team’s assumed status as a cultural institution. Beyond the ten Cowboys home games each year, AT&T Stadium also hosts other major sports and entertainment events. Hundreds of thousands of people journey there each year just to tour the venue, which also includes a contemporary art collection. Couple this year-round activity with enhancements to the in-venue mobile experience, and the Cowboys now have more quality sponsorship inventory to sell and the tools to demonstrate return on investment. An estimated 200 sponsors pay to associate their brands with the team, resulting in more than $100 million in annual revenue for the Cowboys, the highest in the NFL.
Winning is still important, of course. If your team isn’t competitive, these strategies will be more difficult to implement successfully. But on the other hand, teams focused on winning at the expense of the business often run into trouble.
The successful sports organization of the future must be able to win as a business without necessarily winning on the field. Leaders across the industry are already using data and technology to position their organizations for success over the long term. As the business of sports evolves, following the creative and innovative solutions to off-the-field challenges will be a fascinating spectator sport unto itself.