Players' salaries soar ever skyward and owners may fork out ever-higher sums to purchase teams, but sports as an industry is still a small, insular world. That means it is full of inefficiencies, so for savvy entrepreneurs it's a wide-open playing field.
That was the message of five sports business experts—four recent HBS alumni and one former NFL player turned entrepreneur—who shared their experiences at the HBS Business of Sports Club's inaugural "spring training" panel series on April 7.
Your starting salary in the sports business may not rival your friend the investment banker's, but as long as you enjoy what you're doing you will do well and will probably enjoy an exciting and fun career, said panel moderator Dan Shanoff (HBS MBA '02), who writes the "The Daily Quickie" column for ESPN.com.
On the minus side, however, the popularity of sports and the passion of fans can actually make it tricky to break through the pack and get a toehold, suggested panelists. Just as every moviegoer fancies him- or herself a critic, many people who watch lots of games consider themselves experts; so how will you distinguish yourself?
Relationships, networking, and persistence are key, said panelists.
According to Taggart "Tagg" Romney (HBS MBA '98), who handles long-term branding for Reebok as VP of league marketing and brand strategy, "There are lots of people willing to work for free." Unpaid internships abound but real jobs take real effort to acquire. Despite his MBA degree and some serious credentials as a fan—Romney was a longtime season-ticket holder for the Boston Celtics and the Boston Red Sox, and a fan of the New England Patriots—it was tough to get started, he admitted, because he didn't know anyone in sports. People in the industry "have a thousand people calling them," he said.
"It's very hard to cold call," added Shanoff. It is essential to develop networking skills and become an insider, continued Dan Burns (HBS MBA '03), the chief operating officer of Athlete's Performance: "In sports that's how it works."
| Inefficiency creates opportunity, and sports is an inefficient place. |
| — Dan Burns, Athlete's Performance |
Trace Armstrong of Go Fit was the panel's ultimate insider by virtue of his former career in the NFL playing for the Chicago Bears, Miami Dolphins, and Oakland Raiders. He quit pro ball in 2003. Armstrong said he "got bit" by the entrepreneurial bug while working in his family's business from the age of nine; his dad eventually owned a chain of sixty convenience stores and Armstrong learned a lot from him about managing a business. Later as a player he helped out a friend on a sales call and realized that he still enjoyed business. The idea for Go Fit seized him one evening, and he jotted some notes on a legal pad. Go Fit sells to big-box retailers and handles products such as ankle weights, exercise balls, weighted ropes, and weighted vests.
"This [sports] industry has grown a lot," Armstrong observed. "It's been rapidly modernized, but there are still lots of untapped opportunities."
"Inefficiency creates opportunity," echoed Burns, "and sports is an inefficient place."
Burns outlined opportunities as well as potential obstacles in his area, athletic training. Athlete's Performance offers training, therapy, and nutrition services to players during their off-season or before they turn pro. Its clients include teams, agents, and athletes; it hopes to extend the knowledge to recreational athletes.
"Athletes have one asset. If you can extend their playing life, it's wonderful for their careers and income," he said. But trainers could feel nervous about the competition posed by a private firm such as his, and players who are used to getting trained for free might balk at the expense. "Our CEO says of any problem, 'Let's find a solution.' When we hit an inefficiency, it is frustrating. It's not easy," Burns said. He advised future entrepreneurs in the audience to deal with a business problem by being persistent and by attacking it from many different angles.
Sell inside too
An often-overlooked aspect of sports business is the necessity of internal sales, said Jessica Gelman (HBS MBA '02). Gelman was a college basketball star as a Harvard undergraduate and later played professionally in the Euro-league. She first honed some of her management skills by launching a girls' basketball camp in her hometown in Connecticut.
The internal sales component is vital in any company, Gelman said, "because the truth is that by bringing new ideas you are potentially creating extra work for people." To avoid pushback, she suggested trying to explain your idea's benefits to your colleagues. By asking them to help you with your project, for instance, you could gather demographic data that would give them a boost doing their own job, she said.
As director of new business development for the New England Patriots, she acknowledged that her team is more fortunate than many others because its games sell out. On the other hand, it's still important for the viability of the business to create new revenue streams. She oversees a loyalty rewards program with MBNA called Extra Points, which rolled out in the National Football League last summer, and a program for fans called Red Zone, which guarantees a pre-assigned parking spot with permission for tailgating on game days. (The Red Zone sold out in its first year, she said.)
Gelman advised members of the audience to try to get the ear of most senior management in whatever sports organization they work with. Campaign for your concept, she said.
"Don't be discouraged if you're ignored," she said; senior managers are usually very busy. Try at least four times before admitting defeat, and "don't feel that you're being pushy."
Added moderator Shanoff of the Daily Quickie, "Entrepreneurship is an opportunity to be creative. . . . Figure out what an organization is not doing and offer it to them."
In the panel session on Sports Finance, led by HBS professor Joshua Coval, four experts shared the challenges and satisfactions of their field. As a finance specialist, you would spend a lot of time with team owners, many of whom are "captains of industry" in other fields, said Randel E. Vataha, president of Game Plan LLC investment bankers. Yet sports is a business that can humble even very successful people, he continued. "We wrestle a lot with the meaning of success. For some [owners] it may mean winning a championship, but everyone's definition is different."
"This business is a tremendous amount of fun," added John A. Moag Jr., chairman and CEO of Moag & Company investment bankers and advisors. Sports has a huge impact on communities, not just on individual fans, he said. The stock market crash and subsequent fallout may have done the industry a favor by eliminating some fools, he said, and now "the industry is getting more logical and rational."
Potential obstacles on the horizon include ticket price increases and stadium deals. "Is it good for the city or good for the billionaire [owner]? The fans are the customers," said Brad Katcher, managing director of Galatioto Sports Partners LLC. Another obstacle could be changing demographics, warned Moag. Kids today are raised on the speed and power of electronic products and don't get out to the ballpark as much as previous generations, he observed. It will be interesting to see how the stands look ten years from now—and fascinating from a business perspective as well.
According to club co-president John Harper, the panel series was designed to inspire the HBS community to develop future leaders within the business of sports. "We really hope this will be a platform to build on in years to come," he said. Students attended from HBS, Harvard College (undergraduates), Harvard Law School, Boston College Law School, and Suffolk Law School. NFL players on campus for an executive education program also joined in.
In addition to the session on entrepreneurship, the panel series also included discussions on careers in sports finance and as legal advisors or agents. 