Exploring Growth Opportunities for Sports Businesses and Their Partners
In his sixth season as President of the 49ers, Al is responsible for all strategic initiatives, day-to-day business operations, and community engagement for the five-time Super Bowl-winning NFL franchise and its award-winning management of Levi’s Stadium.
Al concurrently serves as Chairman and CEO of Elevate Sports Ventures, a multi-faceted sports consultancy bringing comprehensive business solutions to more than 70 clients in the sports and entertainment industry. Elevate delivers best-in-class insights, sales, and brand services informed by data-based analysis that has been identifying new revenue opportunities and bringing innovative ideas to market since launching in 2018.
Al joined the All Access podcast and host Jim Andrews to share his takes on trends and developments in sports business, including crypto partnerships, where local revenue growth will come from and why properties should be more like agencies. Below are edited highlights of the conversation.
Jim: With your involvement across a wide spectrum of sports properties through your roles with both the 49ers and Elevate, I’d like to get your perspective on some of the latest developments and trends we’re seeing in the business, starting with cryptocurrency and all the partnership deals happening in that space. Clearly it’s a new source of partnership revenue for properties, but is there a risk of a bubble as well?
Al: I would say all of the emergency categories are here, whether it’s crypto, NFTs, legalized sports betting, etc. A few years ago we had the emergence of the daily fantasy spend inside professional, collegiate and international sports as it relates to sponsorship dollars. We all remember what an arms race it was to lock up deals across leagues and teams. We’re seeing the same inside the crypto space.
You certainly need to educate yourself on the players in the category. Every team and league is at a different stage, whether it’s partnering on rights and marks, actually accepting crypto on the financial side, etc. At Elevate, we were fortunate enough to be part of the Portland Trailblazers deal with StormX, but every league is different. In the NFL, we’re not necessarily allowed to do deals in this space, but the NBA has been a little more progressive on that front.
All of these categories are fantastic, there is a good amount of players, a good amount of cash. And truthfully, the name recognition for all of them is not there as it relates to the general public. And sports is a great way to garner name recognition.
I think you are going to see a convergence of emerging categories and new assets coming to life. You already have the NBA jersey patch, now you have the NHL. Soon to have MLB. You have helmet decals and new on-ice positions in the NHL. You have new on-field positions in MLB due to the pandemic. You saw this acceleration of emerging categories alongside this acceleration of new assets. You have a good amount of supply in the market and a number of companies jockeying for name recognition and market share, so I think you’ll see them spending similarly to how the daily fantasy players spent a few years back.
Jim: It puts me in mind also of the dot-coms a couple of decades ago and all the spending they did. But that was part of a bubble that burst and resulted in names being taken off buildings, etc. When putting together deals are there conversations about ways to protect against something like that happening?
Al: There’s definitely a conversation but there’s not a one-size-fits all approach to this. Depending on what asset these companies are tying themselves to, it’s either a very short conversation with ownership or a long one. If we’re talking about naming rights and a ten-year deal, then the conversation about the financial viability of the firm might be a long one. If we’re talking about a gate entitlement on a three-to-five-year deal, maybe it’s not so long because the average annual value of that deal might make everyone comfortable that the company can continue to make its payments and that it has enough cash in its business. It all depends on the asset, the team, the league and the partner.
Jim: Looking at the larger spectrum of local, non-media revenues for properties, including partnerships and ticket sales, the challenge has always been how do you grow those when there are certain limits, whether it’s number of seats, signs, etc. Where do you see growth coming from in the next few years? Is it new players like crypto? New inventory? Higher prices?
Al: There’s your finite inventory and your infinite pieces of inventory. Finite is your tickets and your suites. The reality is maybe you can add some more, do some renovations, add some new products over time, but to some degree it is finite and you have to find the right price point to meet your supply/demand curve. One would hope that will continue to go up because live sports is fantastic. We’ve seen record demand coming out of the pandemic related to those finite pieces of inventory.
I consider the sponsorship category infinite. It is “air” to a degree. There are some physical elements in terms of entitlement spaces inside of a building that you can argue could be finite, and you can only sell so much LED signage in a game, but with the advent of social and digital fandom and the long tail of an organization, brands are not only interested in the 70,000 people in the stadium, but the 10 million fans we have around the world. As the NFL gets to the point where they open up the ability for teams to go outside of the local DMA and bring in international brands, that gives us an opportunity to monetize our assets in a way we haven’t done before.
There is also a host of things that don’t fit inside the traditional revenue buckets. Things like training centers and other property. People don’t think about it because it doesn’t show up on gameday, but what we’re seeing is a sophistication at the team level to expand outside the walls of their stadium footprint. That might mean building additional physical footprint. It might mean getting into the venture space and taking an approach similar to what the leagues have done in terms of doing deals and taking equity in them.
So we have these local buckets: sponsorships, ticketing and suites, and we have to generate significant revenue from those. But how we generate revenue in those is changing. It’s not just spots and dots and physical signs anymore. Teams are doing a good job now of thinking short-, mid- and long-term as it relates to the monetization of their brand
Jim: When we spoke recently, you mentioned the need for teams to take partnership activation to the next level and develop agency-like capabilities to deliver value to brands. Can you talk more about that and especially where data plays a role there?
Al: It starts with how you build your staffing infrastructure. Everyone is different in their needs, but with the 49ers, I felt we had to have someone in our marketing department who had sat on the agency or brand side and not just the team side. Someone who could understand the decision tree at brands, how they decide to spend money and, more importantly, how they evaluate the deal in an ongoing way.
We hired Alex Chang, who worked for Samsung and Wasserman and oversaw AmEx’s spend. He’s been here two-and-a-half years and he’s transformed the way we think about marketing, social and digital as it relates to how we activate brands not just on gameday, but throughout the entire calendar year. Brent Schoeb, our Chief Revenue Officer, has always been very progressive as it relates to where brands stand.
Every brand is different. Some are coming into sports for the first time and maybe they need a lot of ideation about how they want to bring their brand to life. Others are more sophisticated—perhaps they have agencies behind them—and have a thought as to how they want to activate. Measurement is the hot topic. There is a lot of inventory a brand can buy. They can buy at the national level, the local level, the local media level, etc.
Measurement continues to evolve. There was linear measurement, such as Nielsen’s measurement of broadcast television. Then there were the social and digital measurements, which are also changing and evolving over time. In the past you would be able to have a recap that said, “Here is the money that was spent, here are the assets, here is the rate card. Did the team deliver on the assets? Were the impressions we thought we were going to get actually there?”
That continues on, but how much further we go outside of eyeballs and impressions is really important. The tools are there to become more sophisticated. Brands are either using those tools through their agencies, or at least they are more knowledgeable that those tools exist, so the back-and-forth is now more data-driven than just checking the box on did the property deliver on these 40 elements of my package.
It’s all part of this broader ecosystem of technology and its adoption. The more devices in market and in venue, the more data you’re receiving. Mobile ticketing allows a team and brand partners to know exactly who is in the building outside of just the season ticketholder, and at a demographic level you’ve never had before, all of which gives you a tremendous opportunity to market to those individuals.
Jim: A new area for you and for Elevate is the collegiate sports space through the partnership with Learfield IMG. What are you seeing there that drove your interest?
Al: Every partnership we’ve done starts with people and I have a tremendous amount of respect for Cole Gahagen, the president/CEO of Leafield IMG. We’ve been friends for a long time dating back to his days with Ticketmaster and then with Fanatics.
Elevate was already supporting a number of collegiate properties as it relates to strategy, consulting, feasibility and renovation plans. College sports is facing some of the same things that pro sports are and some things that are completely different. For the revenue components, it’s pretty much the same. You have media, sponsorship, tickets and suites, facilities, etc.
Elevate was doing a lot of that work already, although we weren’t in the multimedia rights space. When I sat down with Cole, we felt that the MMR space was evolving, NIL was coming online, etc. Elevate felt that we had assets that could be complementary to Learfield, which is the market leader in terms of the size of its portfolio, and our interests were adjacent to Learfield’s desire to provide better services and tools to its schools so they can make efficient decisions.
We’ve already done a number of deals with them and have more in the pipeline. The way I would frame it is that if you think about what has happened inside of pro sports given the carnage of Covid, it’s no different, if not worse, inside of collegiate sports and it’s led to looking at modernizing the collegiate sports revenue bucket. There are conversations happening about should alcohol sales be allowed in collegiate facilities, are naming rights the way to go rather than putting donor names on those buildings, is there an opportunity to think about the entire university campus beyond the athletic program as a place for brands to be.
Jim: Elevate has grown rapidly in its three years, organically and through acquisition. You acquired Dynamic Pricing Partners in the ticketing space this spring and launched a brand consulting division this summer. What is the goal of the company in terms of what it wants to be in the sports industry?
Al: We’re trying to be the best sports and entertainment agency on behalf of properties, teams, leagues and brands—defined as we would define it! In terms of what we will be when we grow up, I’ll use the analogy of if you asked Amazon that question in the beginning, the answer would have been about selling books. I don’t have a crystal ball to see Elevate in 10 years. You have to be a subject matter expert in the things you do currently and do them very well before you try to expand your portfolio.
We have taken a “build, buy, partner” approach. We organically built our partnership business and our ticketing business. In the brand space, we organically started a consulting business, hiring Cameron Wagner, formerly of GMR to launch that. In the partner space, we’ve mentioned Learfield. OVG is an equity partner, but we also represent them for the premium side of their buildings. As for the “buy” approach, we’ve acquired Infinite Scale, we’ve acquired Dynamic Pricing Partners.
We’ve tried to build synergies inside of what we do and ensure we provide a holistic offering to the constituencies I mentioned. For example, Dynamic Pricing Partners has probably the market-leading share of inventory in college sports on the secondary and primary market. We’re providing data back to the schools to help them price their inventory better, while also providing them the ability to distribute on a wider network. We’re taking our Infinite Scale design and package work and building out experiences on those campuses. So we can see a world where we can be a turnkey solution for leagues, teams, properties and brands.