Hi Everyone,
Welcome to this week's edition of Extra Innings. This was the last week that all four major sports leagues played at the same time. The NHL crowned its champion and the NBA is wrapping up their season in the next few days. The past two months have been a roller coaster for sports fans who wanted to catch all four leagues’ games, however, as we approach a more typical fall schedule we will see a smattering of other sports events tossed in, like Saturday’s running of The Preakness.
Since airlines pay millions of dollars to be official partners of leagues and teams, the loss of funding from various airlines like Delta, who spent $400 million with LA2028 and Team USA in early 2020, will be huge. While these kinds of deals used to feel secure, due to longevity and magnitude, it is expected that this segment of sponsorship will plummet by 61% toward the end of 2020. Qantas has already cut their 30-year deal with Rugby Australia, with their Chief Customer Officer explaining, "While we’re dealing with this crisis and its aftermath, the cash cost of our sponsorships has to be zero."
We know that the airline industry is severely struggling during the pandemic as air travel almost completely halted in March and has yet to recover to pre-pandemic levels. As the US economic stimulus program has ended, the airlines are set to furlough and lay off tens of thousands of employees across the board.
Each generation has its preferences in the sports world and there is rarely cross over from one to another. This generally makes it difficult for companies to reach all age demographics. The sports industry is similar to the fashion, retail, and insurance industries because they need to engage new generations of customers in order to continue driving profits and increasing customer and fan bases.
Millennials grew up consuming sports’ highlights and attending or watching games, while the generation below has grown up with smartphones that create an insatiable appetite for immediate results that don’t have to be attained by seeing an entire play or game. When polled, 69% of Millenials identify as sports fans. Compared to Millennials, roughly 53% of the Gen Z population polled by Morning Consult considered themselves to be sports fans. The one league that Gen Z seemed to enjoy more than the older generations is Esports (35% v. 19%).
Gen Z identifies with athletes and leagues who leverage social media, like the NBA. The MLB and NHL need to adapt their social media outreach to compete with leagues who connect via this medium. If these leagues can deliver relatable content on a platform that Gen Z uses, they may be able to stay relevant among this younger demographic.
The MLB has just begun its month-long playoffs, but that doesn’t mean that MLB Commissioner, Rob Manfred, isn’t looking ahead to the 2021 season. He is on the record as explaining that the 2021 season could be “economically devastating” without some sort of fan inclusion. The truncated 2020 season will most likely cost the league approximately $3 billion and that number could multiply if the league plays 162 games without fans in the 2021 season. Since fans’ spending accounts for about 40% of the MLB’s revenue throughout a given season, the league will need to find a way to include them moving forward.
All is not lost, however, as the MLB plans to have fans return to the ballpark to enjoy two separate series this postseason, and the NFL has had some success with their fans during this unusual season as well. The MLB also has the added good fortune of time, about six months before the start of their next season, during which they can observe how other leagues manage their “new normal.”
Notable Information From the Sports World:
MLB (Continued): Major League Baseball Commissioner Rob Manfred announced this week that there will be fans at the National League Championship Series and World Series. Both of these series will be hosted at Globe Life Field in Arlington, Texas. The plan is for there to be 10,550 tickets sold throughout the ballpark and 950 tickets reserved for fans in suites. Interestingly, the American League Championship Series played in Los Angeles, California will not have fans due to local restrictions.
Minor League Baseball: The Minor League contraction has begun with the Appalachian League being converted into a college summer league for rising freshman and sophomore players. The MLB has repeatedly said that it wants to reduce the total number of Minor League teams from 160 to 120, or four affiliates per MLB team. Other leagues that are in jeopardy of being converted to college baseball leagues are the Pioneer League and New York-Penn League.
MAC Football Returns: The Mid-American Conference, the first conference to postpone play in August, is the final Division I conference to announce its return. MAC football will start on November 4th and run for six weeks, giving the conference little room for error. 127 of the 130 college football teams will be playing this fall. As many teams are playing a different number of games the NCAA is considering eliminating the win requirement for teams looking for a bid to a postseason bowl.
Air Jordan x Bitmoji: Nike's Air Jordan Brand has been at the intersection of sports and fashion since Michael Jordan played in the NBA. Now, Nike is taking its clothing line virtual by partnering with the popular video messaging platform Snapchat. Users will be able to purchase shirts, pants, jackets, and the new Air Jordan XXXV sneakers for their Bitmoji. The Jordan Brand joins Ralph Lauren as the only two apparel companies using this marketing tactic.
Finally, as fall rolls into winter and the weather turns colder, some sports fans may head to the slopes to get some fresh air, especially as working from home is still so prevalent and for some, tedious. Vail Resorts, a company that owns and operates 37 ski resorts across the west, is bracing for a heavy ski season. Already, their 2020 ski season sales have outpaced the 2019 season by 18%, equating to 850,000 passes sold. Vail Resorts’ challenge will be to create pathways keeping people physically distant and safe as they congregate at lifts, cafes, restaurants, and hotel lobbies. Vail plans to have a predetermined capacity for each mountain and will turn away skiers.
Best,
Nick Goss
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