Research Proposal on "Sports Marketing on November 24, 2009"

Research Proposal 15 pages (4451 words) Sources: 1+ Style: APA

[EXCERPT] . . . .

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… READ MORE

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