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The Chargers Are Moving To LA, But….

We are about 2 weeks into the new area of the Los Angeles Chargers, which brings the number of teams in LA to 2. From the zero about a year ago.

At the same time, the Raiders potential move to Las Vegas is working its way through an approval process as well.

If you are counting, that makes 3 teams potentially moving in about a year.

WHOA!

I don’t think you have to be a sports marketing expert to know that this isn’t a good look for the league and when you add it on top of all of the other challenges the NFL has faced the last few years, a harbinger of potential challenges ahead.

We keep hearing about Commissioner Roger Goodell’s vision for the NFL to reach $25B by 2025, which at the time he set that goal would have meant the league needed to add $1B of revenue every year.

Since he has made this goal public, the NFL has found itself getting larger TV revenues and a lot of bad news: concussions, declining ratings, empty seats, Deflategate, and more.

Which brings us back to the idea that 3 teams could move in 1 year!

Wow!

From a straight revenue standpoint, this is probably a great deal in the short term.

Let’s count the ways, team values will go up for the Rams and Chargers just from benefit of being in LA market as opposed to San Diego or St Louis.

Team revenues may rise due to the initial rush of fans coming out for the novelty of a game in LA or Las Vegas for that matter.

Or, you might have fans that make a rush to buy their new home teams merchandise at the outset, maybe. That’s going to drive some improved revenues immediately.

And, I can go down the list.

New stadiums mean we can justify higher food and beverage costs in the short term. We can drive a tough bargain for higher ticket prices. We can likely wedge people into bad suite lease deals.

But what is the long term play?

As we saw in San Francisco with the Levi Stadium, people will just walk away from the PSLs.

As we have seen in NY/NJ with the new Giants Stadium, hiking the prices in a way that makes a new stadium viable also has the unintended effect of driving out some of your most rabid fans, causing the in-game stadium experience to be beautiful and antiseptic. Which drives down long term demand, unless you are on a Super Bowl run…

Which we have seen in a number of sports doesn’t guarantee success either, during or after the fact.

You also have the challenge of who is your market?

If you are the Rams, you likely have a chance.

Why?

Because you were there before. You are LA’s original football team, though the people that remember that are older now and maybe don’t care. So with your long term demographic, you are starting over from scratch.

If you are the Chargers, there isn’t any logical reason to move.

Sure, you had an old and worn down stadium in San Diego. But you had a fan base that was yours and pretty much yours alone.

In LA, you don’t have any inbound fan base. You are going to be playing second fiddle to the Rams.

Not just second fiddle, but second fiddle and you are the roommate of the landlord.

The ruse to move the Raiders is a little more understandable.

Somehow Mark Davis has the opportunity to milk the city of Las Vegas and a billionaire partner out of a new stadium.

Great deal if you can get it.

But the question becomes, who is your audience in Las Vegas?

Again, you are going to have some lookie loos…the same with the NHL team.

But long term, where is your fan base coming from?

Are they coming in from out of town to see their team play the Raiders?

That’s a tough sell because many potential fans are going to more drawn to the glitz and glamour of the strip.

And, if you’ve ever been to Vegas, you know that once you get sucked into the casinos and hotels…they are tough to leave.

So right away your competition is the Strip. Which conventional wisdom would tell you would be some of your best customers.

But my primary question to you is: “If you’ve invested billions of dollars in creating these mega entertainment centers, why exactly are you going to take them to someone else’s to entertain?”

Sure, for the Raiders…great deal.

For the NFL, another good deal because they now have a footprint in another market without really losing anything because the 49ers are still in the Bay Area.

For the NFL, moving to LA from St Louis is a decent swap on the ratings landscape…second largest market, no brainer.

Even moving up from San Diego isn’t too bad on that front because I am sure that the SD TV market has a lot of overlap with the LA market.

But when you get past these obvious things, that’s where the iceberg gets big and substantial because we’ve talked about a lot of stuff that is great for the teams making the moves and the league itself, but what about the group of people we have left out so far?

THE FANS!

My big concern about all of this moving around of teams, of all this push to rapidly and constantly extract another billion dollars per year out of viewers and fans, is that no one is looking out for the fans.

If we get back up to the issues that the NFL has been dealing with, specifically the ones like declining ratings and empty seats, this is an issue where your fans are sending you a clear message that something isn’t right.

Is it “peak football” as I have heard the term called?

I’m not sold on that because I have seen the NFL’s popularity be down before, where the NFL wasn’t the big dog before.

But I do think that if you don’t pay attention to your fans and to increasing their engagement and connection to the teams and the games in a meaningful way, besides just producing more content…you can have an issue and it can be one that sneaks up on you pretty quickly.

So what do you do, if you are the NFL?

First, I think you might want to put some pressure on the Chargers to reconsider moving to LA. I’ve pretty much seen unanimous consent that the market is apathetic to the team.

What’s the opposite of love?

Apathy…and that is a tough one to overcome.

Sure, winning can help.

But look how long it took the Clippers to ever become relevant in the LA market.

Second, Oakland is a historic market and one that the NFL has already toyed with before.

I’d agree with anyone that said, a replacement stadium in Oakland is probably necessary. There have been multiple occasions when sewage has run into the dugouts or concourses. Its a concern for public safety.

What I don’t think is a good idea is moving the team to Las Vegas.

I mean, Vegas is going from no teams to two teams in a year as well.

We have no idea if the market can bear one team.

If I am the NFL, I don’t want my team to be guinea pig, especially when we know how powerful the site of empty seats is when driving fan and TV viewer perception of the health of the game.

Finally, I’d look at some ways that drive revenue while improving the fan experience.

To this point, every way of improving revenue has been add more game days, build new stadiums that allow us to charge higher prices, raise prices on all licensed merchandise.

That’s going to cause fans to feel gouged.

And, it doesn’t do anything for adding new fans or improving the fan experience so you can drive them to more games.

To keep it simple, I would start with 3 ideas to improve the live experience.

First, I would revisit the fan or customer lifecycle to better help drive fans to the content, merchandise, and interactions I want.

Right now, too many viewers ingest the game passively, through watching it on TV, while more concerned with the health of their fantasy football teams.

We need to create a virtuous cycle that drives fans back into our stadiums and make the in-game experience the center piece of NFL viewing.

This is going to likely mean more and more stadiums will take on a lot of the attributes of the redesigned and rebuilt Hard Rock Stadium in Miami. With experiences for fans at all levels of the stadium. With more local food and beverage options. And, better options for ingress and egress.

Second, I think as an industry live entertainment has gotten infatuated with the idea that if we can get away with charging outrageous prices for crappy F&B and some people will buy it, let’s do it.

I think as much as anything, this has driven a wedge between fans going to live experiences and fans choosing to do something else.

What the Falcons are doing in Atlanta at Mercedes Benz Stadium is a start.

I think if you combine fan friendlier pricing with better options, you can win over a lot of people that are looking to share a night at a game or a concert that might not other wise choose you because they don’t want to mortgage their house to have a date night.

Trust me on this one, after having opened nightclubs, bars, and restaurants all over the country, I know two things. One, if you can get them into the building that’s win number one. Second, if you are smart about pricing, merchandising, and experience, you can drive tons more revenue and they will happily come back.

Finally, you need to focus on building communities around the teams.

Sure, the ultimate brand is football or the NFL.

You know what, I think that does a disservice to the teams at the local level. And, one of the big issues that could throw a wrench into the long term growth of the NFL.

Why?

Because you don’t build a fan base from the top down, you build it from the ground up.

Look at any really successful political campaign, they are built from the ground up…people talking to people, people sharing, people, people people.

The NFL needs to get back to that.

Put the teams at the center of a community in each of the markets and even have teams be the center of fandom in markets without a team.

Because without community, you won’t have a business that is sustainable…and that’s why 3 teams moving in 1 year is a bad sign for the NFL.

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