Since the dawn of free agency 30 years ago, owners of professional sports teams have struggled with a serious competitive conundrum: the need to attract star players with gold-plated compensation deals while keeping ticket prices affordable for fans who are considerably less compensated than the players they root for. As a result, teams have signed deals to name stadiums after corporate sponsors, created more advertising space within their stadiums, added sports brand logos to their team jerseys, and generated more profit from concessions that now feature upscale menus that include more than hot dogs, peanuts and beer.
Now, pro sports leagues are tapping into a whole new revenue stream—their web sites, where they sell team jerseys and hats, an ever widening array of team-branded apparel and accessory items, and, of course, tickets to events. The model is simple: the league operates a central online store which sells team-branded merchandise and all team owners share in the revenue of the league web store. At this week’s e-Tail 2003 East Conference in Boston, executives charged with operating the web sites of three leagues (Major League Baseball, the National Basketball Association and the National Hockey League) participated in a Q&A panel session where they explained their league’s e-commerce strategies.
While the league web sites are based on a similar centralized organization and revenue-sharing scheme, they differ considerably in their approaches to the web. Here are how they responded to questions put to them.
What is the role of content? All panelists agree that fans are drawn to a site for content—reports on game results, player stats and the like—and the content leads them to the merchandise. “We take content very seriously,” said Noah Garden, senior vice president of MLB Advanced Media, which operates not only the league’s central online store but also the separate web sites of all 29 teams in the league. “We try to localize content as much as possible and we make sure to feature content on the home page. We aren’t the voice of the league and we take an independent perspective when it comes to content.”
The same is not true for professional hockey and basketball. “We don’t portray ourselves to be neutral,” remarked Keith Ritter, president of NHL ICE, the league’s web business. “We’re a mouthpiece for the league. We believe that hockey is underserved in traditional sports media.” Added Linda Choong, vice president of the Retail Group of the NBA: “We take a league perspective with our content, but the local teams can also enter their own content on our site. All merchandising at the site is centralized, but 75% of the people who visit the online store come through the content pages.”
The panelists stressed that the merchandising philosophy of their store sites is to offer loyal fans the ability to purchase team apparel and related items that cannot easily be found elsewhere. “We cater mostly to displaced fans,” said MLB’s Garden. “We offer the Boston Red Sox fan who lives out of town a place to purchase merchandise from his favorite team.” Added the NHL’s Ritter: “The hockey fan is underserved at the local retail store level, but we offer a veritable Wal-Mart of hockey team paraphernalia. The products themselves are not unique; it’s their availability that’s unique. The Sports Authority in New York might be well stocked in Rangers (New York), Devils (New Jersey) and Islanders (Long Island) uniforms, but the same is not true of the other teams.”
Similarly, all the league sites stress customized products, whether that be a jersey with the name of a favorite player or a jersey personalized by the buyer with his name, logo or monogram. “Customized products are a very important part of our business, accounting for 20-30% of our revenue,” said MLB’s Garden.
And all three sites bend over backwards to make sure they capitalize on the major events in their sport, particularly championships. “If we didn’t have (San Antonio) Spurs championship jerseys and caps online right after they won the NBA title, we’d lose all credibility with our fans,” said NBA’s Choong, noting that title teams’ jerseys were available on line a month before they hit the stores. MLB’s Garden agreed: “Everyone had Angels (Anaheim’s baseball team) products in stock last fall, but not the day after they won the championship.” And even before the Stanley Cup was claimed by the New Jersey Devils at the conclusion of their championship series against the Anaheim Mighty Ducks, the NHL web site had prepared champion web pages for both clubs.
Their web sites also help the North American-based pro sports leagues to expand their appeal overseas. Major League Baseball’s site sells subscriptions for content it offers on its site, including real-time webcasts of American baseball games not broadcast overseas. “We have a tremendous adoption of our subscription products overseas,” said Garden. He added that while it’s not close to being cost effective to ship relatively low-ticket jerseys and caps abroad, “I’m surprised and shocked at how much of our merchandise is purchased online and shipped overseas.”
The NBA, which participates in the most international of the pro sports represented on the panel, also serves an international market on its web site. “We’ll ship product anywhere in the world, because it’s something we have to do,” said the NBA’s Choong, noting that so many of the league’s new stars come from Europe and Asia. Editorial content on the site, she said, is already translated into six languages, and next year the translation program will be extended to the merchandising pages as well. In fact, Choong explained that the next major international expansion for the NBA’s site will be the sourcing of merchandising fulfillment to local foreign suppliers. “We’d like to be there tomorrow if not yesterday,” she said.
The NHL has a similar related experience. For reasons no one quite knows, fully 10% of participants in Senior League Hockey, a subscription-based fantasy hockey game carried on the NHL’s site, come from England, hardly considered a haven for winter sports much less hockey expertise. “We’ve had to explain to some of these participants what a power play is,” Ritter said.
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