Sports Marketing on November 24,

Sports Marketing

On November 24, 2009, the Vancouver Whitecaps announced the hiring of Tottenham Hotspur executive Paul Barber to run their new franchise in Major League Soccer (MLS) (Walker, 2009). The move from the world's 11th most valuable football club to a club that is set to make a move to what is only the fifth-largest pro-sports league in America represents an interesting transition for Barber. England's major clubs, including the London-based Spurs, are marketed globally, while North America's clubs toil away in relative obscurity. Yet the potential in the North American market is huge, and the Pacific Northwest is one of soccer's epicenters on the continent. The challenging facing Barber is how to market the club not only in the local market, but beyond.

Background

The Vancouver Whitecaps soccer club has its roots in the old Whitecaps club in the North American Soccer League (NASL) that operated through the 1970s and early 1980s. The club was one of the most successful franchises in that league and was forced to fold when the league folded, in contrast to many other NASL clubs that lost money and folded voluntarily.

In the wake of the NASL's demise, the Canadian Soccer League was founded and in 1986 the modern club was founded as the Vancouver 86 ers. The club continued in minor league form, playing in a number of leagues until Major League Soccer awarded the club an expansion franchise to begin play in the 2011 season. This came on the heels of the awarding of a club to Seattle and a few days after the Vancouver announcement, Portland was also awarded a club, setting up a natural three-way rivalry. Vancouver also has a natural rivalry with the Toronto FC club in MLS, being the only major league soccer clubs in Canada.

Marketing Strategy -- Environment

The Whitecaps club faces a number of significant marketing challenges in order to launch its MLS club. The current minor league club plays in a small suburban stadium with a capacity in the 6000 range. While the stadium is accessible by transit, it is too small to generate the revenues needed to sustain an MLS club. The only other workable stadium is the aging BC Place Stadium, which holds 60,000. This stadium was used for the original Whitecaps and is still used by the Canadian Football League (CFL)'s BC Lions. This stadium is transit accessible and is scheduled to undergo renovations to make the roof retractable, a key advantage in a city with sunny summers but very rainy springs and autumns. However, the club has attempted to build a custom stadium, much like BMO Field in Toronto, on the city's waterfront. This plan has thus far run into strong political opposition. The political environment in general is not favorable to the Whitecaps, in large part due to the stadium issue. The place issue is therefore one that the club will need to find a long-term solution for.

The second main challenge with respect to the launch of the MLS Whitecaps is the scaling-up of operations. The minor league club operates on a slender budget. It has small sponsorship deals, low player salaries and limited exposure in the local market, much less outside. MLS clubs, however, are expected to draw much larger crowds, receive substantially more media attention and sell more merchandise. The entire operation needs to be scaled up, including the marketing. The fan base needs to grow significantly, and the amount of money fans are willing to spend on tickets and merchandise also needs to grow. This represents a significant marketing challenge for the club.

The competitive environment is relatively favorable, however, compared to other MLS launches. Unlike the successful launches of teams in Toronto and Seattle -- the nearest corollaries -- Vancouver's club will not face direct competition from a baseball team. The number one sports club in terms of fans and revenue is by far the Vancouver Canucks hockey club, and the MLS team cannot expect to match that organization's levels of wealth and fan devotion for the foreseeable future. The number two position is currently held by the Canadian Football League's BC Lions, who draw between 20,000 and 35,000 per game and have a history dating back to 1954. The CFL season largely overlaps that of the MLS, making the Lions the most direct competitive threat to the MLS club. There is also a minor league baseball team, but they are not a significant competitive threat. There are no significant basketball or college clubs of any type in the Vancouver market.

The market is known to be a favorable market for soccer. The Whitecaps drew sellout crowds at the dilapidated Empire Stadium until they moved into BC Place and drew as high as 60,000 for Pacific Northwest "derby" matches against Seattle, the clubs closest rival. The urban core of Vancouver is approximately 600,000 and the metropolitan area is approximately 2.1 million people, according to Statistics Canada estimates. The television market, a truer indicator of the full marketing potential of the club, consists of the entire province of British Columbia and the Yukon Territory, a total population of 4.2 million. The demographics of the city and province are highly mixed. The bulk of the soccer-loving population is believed to come from Anglo-Canadian communities, which account for approximately 78% of the total population, with the remainder being of Asian or Native American descent. The proportion of Anglo-Canadians is lower in the city of Vancouver than in the province.

The city is wealthy, with a robust, diversified economy based on resources (mining, fishing, forestry), tourism, film production and services. The investment climate is generally favorable, despite the stadium challenges that the Whitecaps have faced. The city is hosting the 2010 Winter Olympics, which is expected to bring a further boost to the local economy and to the sporting infrastructure. The economic downturn has hurt Vancouver's sports marketing economy somewhat, and there are few sports marketing dollars available other than for the Olympics and the Vancouver Canucks.

Marketing Objectives

The objectives of the marketing plan should be achievable, measurable and congruent with the strategic objectives of the organization as a whole. At this stage, a year and a half until launch, the organization's marketing strategy should have three distinct sections for pre-launch, launch and post-launch. This market report for focus on the first two, on the understanding that the parameters of the post-launch objectives and tactics will be set after the response to the initial marketing strategies has been evaluated.

The objectives for the launch should be based on the experience of the Seattle Sounders, who moved from the minor leagues to the MLS in 2009 and was a success. The club sold out every home game and led the league in attendance. This was the most successful launch in MLS history and given the similarities between the two markets it is reasonable that Vancouver use the Seattle experience as their launch benchmark.

The second set of objectives should be with respect to the Vancouver market. The soccer club has little chance over overtaking the Canucks, who are one of the wealthiest and most prestigious hockey clubs in the world, but it is not unreasonable that a major league Whitecaps can overtake the Lions to become the number two sports club in the Vancouver market. This is especially feasible in light of the fact that there is little overlap between fans of Canadian football and fans of soccer -- the Seattle Sounders indicate that only around 10% of the Sounders fan-based comes from the NFL's Seahawks base (Gilchrist, 2009). Overtaking the Lions would give the Whitecaps a competitive advantage in terms of merchandise sales, media coverage and fan loyalty during the summer season.

Marketing Strategy -- Price

To help achieve these objectives, the marketing mix needs to be carefully considered. Pricing is the first consideration. Prices points need to be set for both tickets and for merchandise. The ticket prices need to be set at the optimal point on the demand curve. This is the point where the price of the tickets results in the highest amount of revenues, not the highest amount of fans. If prices are too low, the stadium will sell out but the team will not make enough money. If the prices are too high, the revenue per fan will be high but the team will not have enough fans. Current average ticket prices for the Canucks are $63 (Forbes, 2009). The BC Lions average just over $35 for playoff games, with regular seasons prices being even lower. The Lions have 9 home games during the regular season, compared with around 16 for MLS clubs. The average MLS ticket price was $22.47 in 2007. It is recommended that the Whitecaps average in the upper $20s for a ticket.

This price point serves multiple purposes. It signals to the market that the new club is a premium product, a significant improvement over the previous minor league club. The price point is higher than the MLS average, which signals not only that Vancouver is a stronger soccer market than many MLS markets, but also hedges somewhat against currency exchange rate fluctuation. The Canadian dollar currently trades around $0.95 U.S. dollars, but this has fluctuated significantly in recent years. Should the Canadian dollar drop to the $0.80 or $0.85, the team still needs revenues sufficient to cover players' salaries and other U.S.-denominated expenses. The price point is lower than that of the BC Lions, which reflects that the club wishes to have strong attendance and be competitively priced against their main market rivals in order to capture a significant share of the local sports market.

Merchandise pricing should be in line with league averages. Competitors in the Vancouver market do not discount merchandise, so there is no need to dramatically undercut those clubs. Moreover, merchandise sales are typically to the most enthusiastic fans, so demand is relatively price inelastic, much more so than ticket prices which must attract casual fans in addition to the hardcore fans.

Place

There are two critical aspects to place that the marketing team must address. The two main revenue streams for MLS clubs are ticket sales and merchandise, so each must be addressed individually with respect to place. The stadium location is the most significant challenge, one that must be met at the highest levels of the club, not just the marketing department. The role of the latter will be to find ways to alleviate any difficulties caused by not having the club's preferred choice of location. BC Place is centrally-located, transit-accessible and well-known in the market. The main concern is the game experience there, something that the club has sought to alleviate with the installation of a retractable roof. For the first year, however, the stadium will be a temporary facility on the grounds of the now-demolished Empire Stadium. While the site is known to long-time soccer fans and has ample parking, it is not centrally located, has poor transit accessibility and its temporary nature will likely confuse many members of the public.

The marketing plan for the pre-launch phase needs to highlight in the message that the club will start its life in this temporary stadium, to alleviate any confusion with regard to location. Communications about the stadium, its location and the best ways to get there should be highlighted more prominently during this phase of the club's launch and within its launch marketing strategy than at later points when the club moves to the familiar BC Place.

The place aspect of the merchandise is important because the club cannot rely solely on merchandise sales at the stadium to generate sufficient revenues. Nor can the club afford the dedicated proprietary merchandise outlets typical of major European football clubs. The club will need to develop distribution networks with select retailers around the city and province in order to bring its merchandise to the people. The club should emphasize stores with a strong history of athletic sales and are willing to give the merchandise high visibility. It is recommended that the feature partner for merchandise sales be through official MLS partner Adidas. The company has a flagship store in Vancouver and extensive distribution through the area.

Product

Merchandise should be a key element of the marketing plan, since a considerable amount of MLS revenues come from merchandise. The club can choose from a variety of benchmarks for merchandise, including major European football clubs to the Vancouver Canucks. Essentially, any product can receive Whitecaps branding. The most successful sports franchises leave no stone unturned for merchandise opportunities. There is no risk of market saturation for a new product, and more merchandise equates to better exposure for the club.

People

The use of fans has been instrumental in launching the Seattle club. Fans have been engaged by that club in a number of ways, including marching bands, tailgates at local pubs and uniform promotions. It is recommended that the Whitecaps should utilize their most avid supporters to create goodwill throughout the city and build the fan base. This will be essential because the organization needs to scale up its fan base by five or six times from its current level in order to be successful at the MLS level.

The current set of rabid fans can be considered the early adopters. Fan engagement during the pre-launch marketing process should focus on these early adopters. The club should use a multi-pronged engagement strategy. The first component should be with respect to season tickets and merchandise discounts. The club will benefit significantly from a surge in interest during the months before their MLS launch. Getting merchandise out to the public during this run-up phase will help the club to gain exposure during the winter months when the city is obsessed with hockey and not thinking about outdoor sports. Merchandise discounts for early seasons' ticket holder signups not only achieves this goal, but it also helps attract more early season ticket holders, which give the club some degree of revenue security.

Fan engagement tactics should be escalated during the launch phase. This should include a multitude of game-day activities, including several tactics adopted from existing successful clubs. Marching bands, tailgates, and other activities should be promoted. There should be a strong family component as well, with pre-game entertainment options for all ages near the stadium site.

The club should also engage the fans through active use of social media. This is an important aspect of the pre-launch phase to build buzz about the team ahead of its inaugural season. The campaign should make use of the major social networking sites including Facebook, Twitter and YouTube. All club announcements should be promoted via social media, as this will help the club to gain exposure beyond the reach of traditional media outlets. During the pre-launch phase, the NHL season will be in full swing so it is essentially that the Whitecaps use social media during this time as the regular media is unlikely to give their efforts front page coverage.

In addition to the fans, the other key components of the club's marketing efforts should focus on the players. The market is considered relatively soccer savvy, so big name players are not required to sell the club to fans, unlike the experience of some other MLS clubs like the LA Galaxy. However, the bigger signings and players held over from the minor league club, along with Canadian nationals on the side, should all be utilized in promotions. Bringing the players closer to the fans will give the club a more intimate relationship with the fan base.

Promotion

Although interest in the club is high in Vancouver, the club's launch will take place during the hockey season, so getting attention from Vancouver sports fans will be difficult despite the high level of interest. Therefore, the club's marketing strategy should include a wide variety of promotions. The club does not have a high level of promotion at present, due to their minor league status and budget, so scaling up the promotional efforts will be amongst the biggest challenges for the marketing department as the MLS launch approaches.

In addition to the promotions listed above with respect to fan engagement and social media, the club needs to engage in conventional promotions as well. There are two types of promotional types that should make up the focus of the marketing efforts. The first is conventional marketing efforts in traditional media.

There are two important aspects to this type of marketing effort. The first is with respect to media coverage; the second is with respect to advertising. Media coverage should be cultivated in two ways. The first is that the club needs to have dedicated reporters from the daily newspapers. Both dailies are well-read and both have dedicated reporters for the CFL and the NHL (several reporters each in the case of the latter). The Whitecaps need to work with the papers to ensure that they receive coverage on a par at least with the Lions and preferably superior to that level. Part of the media strategy will be to feed information to the reporters, make players and coaches accessible to the media, be free with the issuance of press passes and ensure that there is room on the team airplane for reporters when the club travels to away games. In addition, the club needs to leverage the radio. There is one all sports radio station in Vancouver, with a heavy accent on hockey coverage. During the summer months, coverage is split between hockey, football and baseball. The soccer club needs to have a higher profile on the radio in addition to newspaper coverage. The sports media is one of the most powerful promotional tools for sports clubs, so it is essential that the Whitecaps develop stronger relations with the local sports media that will see their coverage increase in proportion to the club's attendance and profile increase when they move to MLS.

The second aspect of mainstream media relations is the decisions with respect to the major distribution channels for their product -- television and radio. The club is free to select a radio partner of its choosing. The current all-sports station hosts the Canucks and the Lions. It has high visibility among sports fans, and if the Whitecaps become one of its content properties they will receive better coverage from the station's reporters and talk show hosts. There is a risk in going with the station that the soccer club will receive third-tier priority for its games, however, in the event of conflict with either hockey or football games. However, securing rights at another station would reduce exposure of the Whitecaps product, which is a strong negative during the pre-launch and launch phases. It is recommended therefore that the club secure a deal with the all sports radio station, and attempt to both negotiate preferential treatment over football and simultaneously try to have MLS schedule games to avoid conflict with football or hockey games.

The MLS does not have a national television contract in Canada. The owners of Toronto FC own the cable GolTV network, and were thought by observers to have the inside track on national MLS rights when the Vancouver team joins. The Vancouver club's arrival will likely result in a national deal being put into place, but the club will also need to secure a regional deal for the remaining non-televised games. There are multiple options, including local Vancouver networks, the regional branch of the national Sportsnet franchise, the national sports networks TSN and the Score, or national mainstream networks CTV and CBC. The Whitecaps have the opportunity to build their brand not only for Vancouver but for Western Canada, so they should sign a television deal that allows them to broaden their scope. A deal, for example, with Sportsnet for its Pacific and Western franchises will double the population of the Whitecaps' catchment area, allowing the club to improve its potential merchandise sales. A national deal could help generate sales even into eastern Canada, an option that would see the club sign a deal with a national carrier like TSN. Broadening the broadcast and merchandising scope has been a successful strategy for a number of European clubs -- Bayern Munich merchandise, for example, is widely sold in Nurnberg despite that city having its own Bundesliga club.

While the mainstream and sports media are the greatest sources of promotion and exposure for the fledgling club, they will be more useful during the course of the season when there are games to broadcast. During the pre-launch, it is recommended that the club place more emphasis on conventional media promotions. The club will have much more money to spend on such promotions than it has during its minor league years, but still must spend wisely, reaching and engaging the most fans with limited dollars.

The first option is radio, which should be focused on sports programming. While there is little overlap with football fans, there is strong overlap with hockey fans, since most Vancouver sports fans are hockey fans. Broadcasting during Canucks coverage will be a good way to reach a large audience. Packages for these broadcasts, however, are often sold on a season-long basis. The second option would be sell programming on sports talk radio. This comes with lower rates, and to an extent it merely reaches avid sports fans, but can gain the club exposure at a time when exposure can be difficult to come by.

The second option is television. Television spots are more expensive to produce and the advertising rates are more expensive than for radio. Exposure can be greater, but the audience may not be as well targeted, outside of sports programming. Television advertising can also be geared towards soccer programming, such as English Premier League matches, which draw solid ratings and appeal to the same core audience.