Red Thread

Five things we’re interested in in 2011

1. Player wages and labour unrest

The economic indicators may be turning positive but 2011 is going to be a marquee year for sports labour disputes. The NFL and NFL players have entered negotiations and started litigating, likely to be just the first salvo in a long summer of owner/player discord across multiple sports. Between now and September we’re likely to see as many articles dealing with labour issues with the NFL, NBA, and the UEFA debt plans as those dealing with actual sports.

The themes are fairly common and are likely to become boringly predictable. Owner profits are down, stadium costs rising; local governments are less willing to bail out local teams with favourable stadium deals. Now NFL / NBA owners are looking to share the pain with the players; harder caps, reduced player compensation, longer seasons. The arguments are going to continue to be ugly; both leagues just have to hope they don’t do irreparable damage to their long-term future in their desire to preserve the short-term bottom line.
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For your consideration

Are you getting a Return on Evaluation?

Return of engagement’s a seductive little phrase, isn’t it? It holds the promise of customers and public alike interacting with – and caring about – your brand. As such, it’s far more engaging in itself than classic terms like consideration or preference.

The first time we heard it used was by Saatchi & Saatchi CEO Kevin Roberts, who threw down the challenge: how does sponsorship move beyond media exposure to demonstrate emotional connectivity and predict involvement?
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Olympic Organizers Turn to $7,280 Tickets to Boost Revenue

March 15 (Bloomberg) — The organizers of next year’s London Olympics are widening access to corporate hospitality tickets for the first time to tap into the market for companies and wealthy individuals.

About 8.8 million tickets go on sale today, with 75 percent sold to the public through a six-week lottery on the London 2012 website. The only way for individuals and non-sponsors to get guaranteed tickets is through the official hospitality programs. On-site hospitality had traditionally been limited to backers and Olympics officials. The Games start July 27.

The London organizing committee, or Locog, is counting on selling packages worth as much as 4,500 pounds ($7,280) a person to companies in London’s financial district and the wealthy at the same time the U.K. government is implementing the deepest spending cuts since World War II. The committee is breaking with Olympic tradition because the market for corporate hospitality is “enormous,” Paul Deighton, chief executive officer of the London organizing committee said in an interview.

“That’s why we decided it was better to make it an official program,” said Deighton, a former Goldman Sachs Group Inc. banker. “It’s better than corporate hospitality cropping up unofficially.”

Ticket sales are expected to generate 500 million pounds, Locog spokesman Adrian Bassett said in an interview. He declined to say how much of the proceeds would come from public sales and how much by selling luxury hospitality packages.

Empty Seats

To be sure, South Africa hosted 62 World Cup soccer matches last year, and 97 percent of tickets were sold, generating $300 million. Still, many matches were played in stadiums with empty seats. U.K. newspapers including the Daily Mail have criticized Locog for selling “the most expensive ever” tickets in sport amid faltering economic growth.

“We’ve seen criticism in the media about sponsorship since the financial crisis, and corporate hospitality is probably at the cutting edge of that criticism because it can be portrayed as a jolly,” Shaun Whatling, CEO of London-based independent sponsorship adviser Redmandarin Ltd., said in an interview.

Entertaining important contacts is “absolutely” necessary to maintain relationships with clients, said Whatling, whose clients include Bank of Scotland, Credit Suisse and Virgin Media.

Hospitality packages, which are also being sold by the U.K.’s Thomas Cook Group Plc and Far Hills, New Jersey-based Jet Set Sports, will be sold on a “first come, first served” basis, and account for less than 5 percent of the 8.8 million total.

Ballot

The majority of Olympics tickets will be sold in a ballot, giving every applicant an equal chance of attending an Olympic event. Prices range from 20 pounds a seat for preliminary rounds to 2,012 pounds for the opening and closing ceremonies. Both sets go on sale today.

A ticket will be guaranteed in the luxury on-site hospitality packages sold by Prestige Ticketing Ltd., which has been allocated less than 1 percent of the seats. Its prices range from 225 pounds for the Olympic soccer tournament at London’s Wembley Stadium to 4,500 pounds for the opening and closing ceremonies, athletics, track cycling or swimming.

Some 5,000 companies have already approached Prestige about buying the top-end packages, the company said. Wealthy individuals from the U.S. have expressed an interest in the basketball event, while affluent Chinese have made enquiries about the table tennis, Prestige said.

In order to ensure the London organizing committee that there won’t be any empty seats at less-attractive sessions, Prestige is selling its top events in combination with other sessions. That means buyers won’t be able to cherry-pick high-profile events, Prestige marketing director Tony Barnard said.

Package Deal

For example, anyone who wants to buy a table for a minimum of ten people for the opening ceremony also has to purchase two tables of ten for a cheaper category sport such as the handball, hockey or water polo that averages at around 500 pounds. So the total cost of entertaining 30 guests over three days would come 55,000 pounds, or 1,833 pounds a guest.

“We want to make sure we sell out the hospitality program, we don’t want any empty seats,” Barnard said.

Yet, that’s exactly what may happen, Joe Cohen, founder and CEO of fan-to-fan ticket exchange website Seatwave said in an interview.

Cohen said there is a “a real risk” of empty stands at some of the stadiums because holders of a ticket won’t be able to sell any unwanted tickets on a floating-price exchange. Instead, Locog allows ticket holders to sell back unwanted tickets at face value.

A fixed price isn’t an “accurate reflection of the market and therefore there will be very little liquidity and very little trading on that exchange,” Cohen said.

“So if anyone has a 100 meter final ticket to sell, they are going to sell it on the black market,” Cohen said. “They are not going to sell it for 750 pounds if it’s worth 5,000 pounds. The tickets will find a buyer who is willing to pay the market price, regardless of what Locog wishes to do.”

EBay Inc., the owner of the largest e-commerce market, is cooperating with the London organizing committee to prevent the unauthorized resale of tickets.

“The resale of Olympic tickets is illegal and we are working closely with the organizers of the games to ensure tough and effective filters are in place to identify and remove such tickets if anyone attempts to sell them,” EBay said in an e-mailed statement today.

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