Business Plans: A Road to Success

As a sports agent leaning towards starting up my own agency, finding funds to do so is at the top of my list. There are numerous ways to do this but it is important to look at how many successful investors look at startup businesses to help lay out a business plan that will attract investors. Mark Cuban and Daymond John are two successful investors that are worth looking at. Although they are likely not going to invest in a sports agency, their insight into business plans will prove helpful.

Both Cuban and John are investors on ABC’s Shark Tank. Cuban is the owner of the NBA’s Dallas Mavericks, Landmark Theatres and chairman of AXS TV. He is heavily invested and knowledgeable on Internet related companies. John, on the other hand, is a fashion icon that is best known for the urban clothing brand FUBU.

Cuban says he has four criteria he looks at when deciding to invest in a startup company: a unique product, a motivated and educated team, knowledge of the market, and a demonstration that the big dream can work in practice. A unique product is considered key to help give a company a unique advantage over its competitors. A motivated and educated team will help raise awareness of a product and ensure that the company will be run in an efficient and effective manner. Knowledge of a market will help a company market its product to consumers in the correct markets and compete with competitors. Finally, demonstrating the big dream can work in practice will help investors put a reasonable dollar return on their investment which is what they are most concerned with.

John believes that a well-created business plan is the key to a successful business. He believes a key component to a plan that investors are looking for is a road map for the business. As an investor, he wants to be able to visualize where the business is going and how it will get there. A road map will show a firm visualization of where the company is going and what will be needed to get there. It will also show investors that a business is going to be successful and profitable. He mentions that an idea is only a dream until it is in writing with a detailed plan on a pathway to success.

After watching Shark Tank a few times on ABC, it's clear that both of these men demand these components of a business plan and will be unwilling to invest in a company until all of these are demonstrated. While their confidence levels in companies they invest in are important, a business’s written plan is ultimately the key to its success.

Digital Marketing Management for Athletes

Although digital marketing has been around for some time now, many athletes and their agents have failed to utilize all the available digital marketing tools. The numerous digital marketing tools that are available allow athletes and their agents to engage fans, decrease popularity of negative stories on search engines, create and grow a brand and reach out to potential sponsors. While many athletes use social media to engage fans, very few are using digital marketing’s many tools to do things such as decrease the digital footprint of negative stories.

While it’s hard for superstar athletes to hide from the media, they can still help control the damage in the long run from some scandals. Athletes like Tiger Woods may not be able to eliminate his scandalous affairs from the Internet but he can at least eliminate those stories from the first several results pages of a Google search. Athletes like John Terry will be able to accomplish something similar of his affair with a teammate’s girlfriend or stories of his racial comments towards a fellow player.

Image by James Perrin via Koozai

During a Google search of John Terry, many negative stories appear on the first page of results about him making potential racist comments. However, on the bottom of the page, an article clearing Terry of racism can be viewed. While this article’s placement on the first page is ideal, being at the bottom of a page with five articles insinuating that he is racist is not ideal. A better digital marketing strategy would likely help the desired articles to be featured on the front page while the less desirable articles are relegated to later pages.

Obviously, the best way to avoid bad press is to avoid scandals entirely but agents have no control over their clients or the media. However, once the damage is done, athletes and their agents now have the ability to lessen the negative affects of a scandal or bad press. A digital marketing strategy can also have the opposite effect by making positive stories more likely to appear on the first page of a Google search such as a player’s outstanding off-the-field undertakings. While most agents focus their time on negotiating contracts and seeking endorsement deals, it is becoming more and more advantageous for agents to manage athletes’ digital marketing. Digital marketing management is likely to become a key role of a sports agent in this continually growing digital age.

Diminishing Endorsement Deals

With companies spending more and more each year on sponsorships and endorsements, why is it still so difficult for veteran athletes to land endorsement deals? Sure, all-star caliber athletes in major markets ink new deals every year but veteran athletes who aren’t quite star players or who are in smaller markets fail to sign any sort of endorsement deal.

As I have address in a previous blog post, companies are becoming more and more afraid of aligning their brands with an athlete who could end up damaging their brand. For this reason, and perhaps others, companies are forgoing endorsing athletes and instead sponsoring teams, venues and events. It is much less likely a venue or event will damage its brand.

While this can be demonstrated in every major sport, the arena this has become most evident in is NASCAR. In 2004, Dale Earnhardt Jr. was quoted saying that he was currently making more in endorsements than he was driving. Earnhardt’s sponsors included Wrangler, Gillette, Drakkar, Nabisco, Polaris, and Nextel. At this early point in his career, he was reportedly making $5 million a year in endorsements and it seemed that number was continuing to climb.

Fast-forward to 2012 and Earnhardt make an estimated $25.9 million dollars. While numerous sources argue the breakdown of his revenues, the most generous source estimates that only $13 million (50%) of his income came from endorsements although most insiders believe few endorsements exceed $500,000 a year. Some estimate his endorsements to be closer to $5 million. The remaining part of his 2012 earnings came from his race team salary as well as winnings and bonuses. As the most popular driver in NASCAR, the most endorsed, and the highest paid, its safe to assume Earnhardt’s generous 50% endorsement income to be much greater than his fellow drivers.

So where is all of this endorsement money going? It’s going to the race teams as sponsorships, baseball stadiums for signage, and title sponsorships for golf or tennis events. Companies have discovered that they can gain the demographics they need, the activation it takes to market a brand, and avoid any potential damage to their brands by partnering with leagues, events, teams and venues as opposed to athletes. Of course, athletes will always be making millions of dollars but now, the money must pass through the teams as sponsorships and then to the players as salary. Companies will still be able to market their products and athletes will still get their share as well.

Personal Branding and Endorsements

Marketing athletes is one of the most appealing aspects of being a sports agent. As a young agent progressing through the business, the realization that sponsors and endorsements do not come easily is becoming evident. While convincing companies to spend large sums of money to have athletes endorse their products is difficult enough, a new hurdle has made things even more difficult.

Over the last few years, numerous athletes have created bad publicity from scandals and off-the-field behavior. Lance Armstrong, Barry Bonds, Ryan Braun, Aaron Hernandez, Michael Phelps, and Tiger Woods were all endorsing major brands when their scandals became public knowledge. Most of the companies endorsing these athletes immediately terminated their contracts while a few others gave these athletes the benefit of the doubt. In both cases, these companies and their brands were damaged in the public’s view. This has created a lot of hesitation amongst companies to further endorse athletes in fear that their brands may be weaken instead of strengthened.

Nowadays, nearly every endorsement contract contains a morals clause, which allows a company to terminate or take corrective action against an endorser who is damaging the company’s name due to inappropriate or immoral behavior. Even though companies have this clause to fall back on, the potential damage is often too great for the company to tolerate.

The good news is that some sports agencies are beginning to offer training programs to help athletes create personal brands. While some athletes may not actively think about their personal brand, these training programs will most likely force athletes to think about their personal brands. Although this training doesn’t create or change an athlete’s character, forcing them to think about their personal brands may greatly diminish some of this poor off-the-field behavior. In turn, companies may regain the trust in athletes and the endorsement deals will become a great source of athletes’ incomes once again.

Press Credentials for Bloggers?

The sports industry has always been a very difficult industry for many to break into. With very few opportunities and numerous job hunters willing to work for less, it is nearly impossible for many to even dream of having a job in sports. While most want to become sports agents or front office personnel, others are seeking to enter the media realm of sports. Photographers, writers, and even bloggers are beginning to seek press credentials with very little experience in the field. Who wouldn’t want access to pregame activities, locker-rooms or their favorite athletes while the rest of sports fans have to wait in long lines, pay expensive ticket prices, and never get to see their favorite athletes up close? Recently, bloggers have been getting press credentials, which now makes it seem like almost anyone can get them.

Recently, Peter Robert Casey has received press credentials as a micro-blogger. Casey has one of the top ten most followed basketball-related Twitter accounts. He is also the most followed user in the basketball field that isn’t a professional player, coach, or team. As a micro-blogger, Casey’s works are less than 140 characters long. Will this type of micro-blogger become the new fad and will even more micro-bloggers gain press credentials?

While Casey’s credentials may seem acceptable to most, many other bloggers and micro-bloggers seek press credentials without nearly the following Casey has. Where should teams, leagues, and sports venues draw the line? In the past, the NHL has issued press credentials to over one hundred bloggers. Some teams welcome bloggers into their locker rooms while others shun them. Should a visiting team that doesn’t allow bloggers into their home locker rooms be forced to allow credentialed bloggers into their locker rooms on the road? Some cities that are traditional sports cities such as Chicago, St. Louis, New York, Boston, and Los Angeles will find it very difficult to accommodate bloggers in addition to their already sizable media personnel. Other non-traditional sports cities such as San Antonio, San Diego, and Washington may find it advantageous to provide popular bloggers and micro-bloggers with press credentials.

As the popularity of blogs continues to grow, so will the number of bloggers seeking press credentials. Leagues may try to set rules to prohibit or accommodate bloggers but I believe it should be left up to each individual team. Smaller market teams or teams in non-traditional markets such as the Phoenix Coyotes can benefit greatly from bloggers while big market teams have no room to further accommodate these same bloggers.