I was listening to the Cubs game yesterday afternoon in the car and heard something concerning ‘The New Economy Experiment’. Pat Hughes asked listeners to go to cubs.com and vote for who you think should sing the 7th inning stretch on Sept. 1st. Prior to the NEE, this announcement probably would have been completely tuned out amid driving and listening for any changes in the score.
There’s a ton of relevance in that short announcement that I never would have caught prior to the NEE. That announcement is a great marketing effort by the Cubs to further ‘monetize’ the radio audience by getting them to visit their site. Once on the site, they might not only vote but buy Cubs tickets on Stubhub.com, sign up for the newsletter, check out Mark DeRosa’s blog, watch video from yesterday’s game, buy merchandise or click on an ad. There are several ways the Cubs can make more money by you doing any of these things. Just by simply visiting the site, you become a ‘unique user’ and add to the site’s value. Unique users are new visitors to a site and are tracked by advertisers, typically measured on a monthly basis. It becomes a way for the Cubs to further capture your attention past the old economy radio broadcast.
The Cubs did an excellent job with the concept of this contest because the 7th inning stretch song is a religion within a religion for Cubs fans. Who sings the 7th inning stretch is often newsworthy, further adding to the Cubs exposure in the local news media, on TV, in the papers and online. When Mike Ditka butchered it a few years ago, it became a separate news story from the game. Was he drunk? If not, what’s wrong with him? It set off a debate among Chicago sports fans for the next couple of days. Check out the You Tube video of Iron Mike posted earlier this year titled, ‘Mike Ditka sings 7th inn. stretch at Wrigley’ Evanston native, Jeremy Piven left his mark another way. Check out this link for the full story from answers.com .
The new economy allows the Cubs or any other sports team to capture the ‘back-end’ of the fan in a whole new way and at a whole new level. The front-end of the business is old economy. For the Cubs its you buying a ticket, going to the game, overpaying for beer and food, buying a couple of Cubs foam fingers(Can you have too many foam fingers?) or any other licensed merchandise, and catching the game on TV or radio. The definition of the back-end of a business is the repeat business from existing customers as they make another purchase of the same thing, something different, or any form of repeat business. The art of the back-end is to get your attention again and to keep it longer next time.
Another relevant aspect to all this is that the Cubs are up for sale right now and there’s a bidding war going on. I read earlier this year at Forbes.com that the Cubs were estimated to be worth $682 million.
That number’s long gone as the Cubs value is in the ten figures now. Mark Cuban may pay $1.2 billion or more. Why would he apparently overpay by so much when a lot of smart money has dropped out? Is it any coincidence that he made his money in the new economy? Could he see a value beyond Wrigley Field, ticket sales, merchandise sales etc? What’s the dollar value of getting radio listeners to pull up Cubs.com and vote online and then explore the site? What’s the value of the Cubs website? Despite being a lifelong Cubs fan, I’ve never been to the website prior to today. I signed up for the newsletter giving my age and zip code as well as e-mail address as part of the experiment. What’s the dollar value of the Cubs knowing the age and socio-economic demographic of their fans? If anything’s interesting in the newsletter, I’ll post it. I also signed up for the mobile phone text alerts earlier this year. If you have unlimited texting, its free. Text ‘cubs’ to 44636. Somebody told me about it at the beginning of the season but I saw it on the website at cubs.com as well. What’s the dollar value of a mobile phone list as well as an e-mail list?
There are metrics for buying a business like the Cubs, for example it could be X times earnings, X times cash flow or X times sales. There’s always the comparables. What did the last team sell for, how long ago and what’s the difference in size of market? There are metrics in the new economy as well such as monthly visitors, monthly number of page views and their corresponding dollar values. But a big question is what’s the new economy back-end of the Cubs business worth? Is the new Cubs owner just buying a huge customer list along with the team that he’ll attempt to better monetize? Its hard to say because we’re at the frontier of the new economy. The Cubs could be a bargain, fairly priced or grossly over-priced. We’ll have to wait and find out.
What’s the best way to get a Cubs fan’s attention? Its the same in the old or new economy, just win. Winning increases interest at every level. Pretty simple.
Do you think $1.2 billion sounds like a lot for the Cubs? Check out this new economy metric. Google’s profit last quarter was $1.25 billion, more than the Cubs will possibly be sold for. Google’s PE as of today’s close was 31.5 so that makes ten year old Google worth approximately $157.5 BILLION(($1.25 billion x 4)x 31.5). That’s the value of about 126 Cubs teams. How many Lou Piniellas is that?
Check out the amazing amount of content on these sites: blogs, podcasts, video, live Wrigley Field web cam, ads, photos, mobile alerts, contests and regular content. Its mind-boggling.
Cubs team website:
WGN TV’s Cubs pages:
WGN radio’s Cubs pages: http://www.wgnradio.com/index.php?option=com_content&task=blogcategory&id=107&Itemid=182
