international negotiations: wnba

Kyiakhalid Ruiz, MBA 2014-2015 Hult International Business School International Marketing, Module B

Is time running out on this womens basketball league?

Diana Taurasi's Russian Team Is Paying Her To Skip The WNBA Season

The year-round nature of women's basketball takes its toll and the financial opportunity with my team in Russia would have been irresponsible to turn down. They offered to pay me to rest and I've decided to take them up on it. I want to be able to take care of myself and my family when I am done playing.

http://deadspin.com/diana-taurasis-russian-team-is-paying-her-to-skip-the-w-1683643165

In a world with numerous entertainment options, is domestic demand strong enough to fully financially support a womens basketball league?

Brittney Griner Makes 12 Times More Playing In China Than In The United States

While the Mercury could only pay Griner $49,440 in 2013, the WCBA's Zhejiang Golden Bulls signed her for approximately $600,000, according to ESPN The Magazine. Even with a $1 million endorsement contract from Nike, that type of money is hard to turn down. That's roughly six times more than the maximum salary in the WNBA.

http://www.thepostgame.com/blog/dish/201404/brittney-griner-made-12-times-more-playing-china-us

How much money has the WNBA lost (or cost the NBA) since it's inception?

So far the WNBA has not mirrored the monetary success of the NBA, though it is targeting profitability in 2007. The NBA has provided annual subsidies of approximately $12 million dollars to cover operating losses. The average attendance of WNBA games, league-wide, is roughly half the average attendance of NBA games. As of the agreement signed in 2003, WNBA players who had up to three years of experience were capped at $42,000. By comparison, $385,277 was the minimum salary of an NBA rookie. WNBA rookies earned $30,000 per year. The maximum salary for a WNBA player in 2007 was $100,000. Many WNBA players choose to supplement their salaries by playing in European or Australian women's basketball leagues during the WNBA off-season.

https://ph.answers.yahoo.com/question/index?qid=20080522090322AAhvfqx

Executive SummaryStrategic Problem is twofold: 1. the WNBA is losing revenue annually 2. the WNBA is losing talent to other global womens basketball leagues.

Strategic Opportunity is for the WNBA to grow domestic interest & demand by expanding their league internationally to parlay nationalistic sympathies.

Strategic Insight is that low domestic American demand is threatening the leagues survival.

Strategic Implication is that without a strategic repositioning, the league will wither within 5 years.

Strategic Alternatives are: 1. Do nothing drastic. 2. Create an annual global championship to entice new domestic American consumers.

Strategic Recommendation is to create an annual global championship to entice new domestic American consumers.

Category Company Competition Customers/Consumers Collaborators Centers of Influence Context

WNBA competes against other live sports entertainment (NBA, NFL, MLB,), other live entertainment (movies, television, video games,)

The WNBA struggles in a crowded entertainment landscape.

The WNBA is in danger of folding within 5 years.

Category Company Competition Customers/Consumers Collaborators Centers of Influence ContextThe WNBA struggles in a crowded entertainment landscape.

The WNBA is in danger of folding within 5 years.

DemandConsumer demand is not strong enough to support the WNBAs basic operating costs (attendance averaging 30+% cannot cover stadium costs,)

(see Exhibit 3)

RiskWithout creating value, the WNBA is at risk of further contraction and/or folding altogether. WNBA on brink of losing another cornerstone franchise

The Los Angeles Sparks were given up by their ownership and now the franchise's future is in flux with the season just months away. (AP)

http://www.mercurynews.com/national-sports-news/ci_24846524/wnba-brink-losing-another-cornerstone-franchise

WNBA: Founded in 1996, headquartered in New York City 12 current teams/franchise partners (see Exhibit 1)

Not the first U.S. womens basketball league

Womens Pro Basketball League (1978-1981) Also, American Basketball League (1996-1998)

WNBA was created despite low demand.

Did the WNBA learn the lessons from the defunct WBL & ABL fiascoes?


Atlanta Dream New York Liberty Phoenix Mercury

Chicago Sky Washington Mystics San Antonio Stars

Connecticut Sun Los Angeles Sparks Seattle Storm

Indiana Fever Minnesota Lynx Tulsa Shock

WNBA popularity is constrained by numerous alternate entertainment options.

Three High threats? Congratulations! Youve entered a crowded market!


Threat of Substitutes Enhance value of the purity of the womens game.

Bargaining Power of Suppliers Create alternate viewing networks that specialize to delivering WNBA content.

Bargaining Power of Buyers Create relationships with consumers to enhance value.

Why is the market entered? The WNBA was created with major backing from the NBA as an avenue for professional women basketball players and to provide inspiration for women & girls.

What the entrant brings to the new market? The WNBA hoped to bring stability to the womens basketball market.

What the entrant meets unto the new market? The WNBA met higher demand initially, but has declined in recent years. During its launch, the WNBA competed directly with another new womens basketball league (the ABL, 1996-1998).

How is the market entered? The live sports entertainment market for women was entered into by the WNBA with lots of economic backing by the mens basketball league, the NBA.

The WNBA was initiated as a venture by the deep-pocketed mens league, the NBA.

Without the NBAs money, the WNBA is dead-on-arrival.


Relative Strengths

Dominant existing mindshare (older forms of entertainment)

Relative Weaknesses

Not much entertainment caters positively to women & girls (excepting chick flicks, childrens toys,)

Relative Opportunities

Opportunity to create entertainment that gives positive role-models to women & girls

Relative Threats

The threat of other forms of entertainment that will cater to women & girls, enter and achieve dominant mindshare/walletshare position.

The role-model for women & girls market is crying out for positive entertainment.Category Company Competition Customers/Consumers Collaborators Centers of Influence Context

The competitor who can accurately provide role-model entertainment, wins.

Protect Position Invest to build Build Selectively

Build Selectively Manage for Earnings Expand or Harvest

Protect position & refocus Manage for Earnings Divest

Competitive Strength of Business UnitLow

Low

High

High

Indu

stry A

ttrac

tiven

ess

Strategic Alternative 1 Strategic Alternative 2

Consumers allowance for entertainment is a small sliver of their budgets.

The WNBA needs to create value in their product to grab more walletshare.


Consumer entertainment expenditures are a critical portion of their annual budgets.

Entertainment budgets shrink during tough economic times.

(see Exhibit 4)

Consumers derive greater perceived value from WNBAs competitors.

WNBA needs to offer greater value for their product to compete for consumer walletshare.


Perceived Performance

Relat

ive P

rice

Thrifty

Average

Premium

Category Company Competition Customers/Consumers Collaborators Centers of Influence ContextWNBA needs the support of powerful allies to survive.

WNBA Strategic Collaborators

Proctor & Gamble ($83.6 billion in sales and more than $10 billion in net earnings. Its beauty, grooming, and healthcare household names, such as Secret, Tampax, Cover Girl, and My Black is Beautiful, are focal points of the multi-brand partnership.) http://www.forbes.com/sites/alanaglass/2013/07/26/in-its-17th-season-the-wnba-continues-to-defy-odds/

Boost Mobile

NBA ($12 million/year subsidies to WNBA)

Economic: Consumers budgets shrink during tough economic times.

Sociological: WNBA exists to provide role-model leadership to women & girls as well as job opportunities for American women professional basketball players.

Technological: WNBA among leaders of second-screen viewing, social media fan interactivity.

Category Company Competition Customers/Consumers Collaborators Centers of Influence ContextWNBA exists in an attempt to equalize opportunities for women.

Strategic Problem is twofold: 1. the WNBA is losing revenue annually 2. the WNBA is losing talent to other global womens basketball leagues.

Strategic Opportunity is for the WNBA to grow domestic interest & demand by expanding their league internationally to parlay nationalistic sympathies.

Strategic Insight is that low domestic American demand is threatening the leagues survival.

Strategic Implication is that without a strategic repositioning, the league will wither within 5 years.

Strategic Alternatives are: 1. Do nothing drastic. 2. Create an annual global championship to entice new domestic American consumers.

Strategic Recommendation is to create an annual global championship to entice new domestic American consumers.

Summary Recap

Pros

Easy to maintain the status quo.

Cons

Missing the opportunity to grab critical mindshare.

Costs

Opportunity cost of doing nothing to create & increase value. Potential loss of sponsorships if ratings & attendance continue to slip. Have to survive on continued NBA subsidies.

($12+ million/year)

Benefits

Money savings from not having to spend to realign.

Easier to maintain the status quo than to invest in something new.

Strategic Alternative 1: Do nothing drastic

Strategic Alternative 2: Create an annual global championship to entice new American consumers.

Pros

Opportunity to expand exposure to American audiences of womens basketball Opportunity to acquire additional sponsors

Cons

Difficult scheduling dilemma to accommodate players commitments to WNBA season and/or overseas teams Difficult to obtain required buy-in from the WNBA stakeholders

Costs

Initial cost of coordinating and administrating annual global womens basketball championship (est. $5 million) Cost of marketing annual global womens basketball championship (est. $50 million)

Benefits

Increased exposure of womens professional basketball Increased opportunity to create new positive role models for women & girls

Strategic Recommendation

To create and manage an annual global women's basketball championship to compete against other basketball playing counties.

Doing so has the opportunity to increase exposure of women's basketball to American audiences, create more positive role-models for women & girls, and to acquire more sponsors to support the WNBA.

Tactical Marketing PlanSolutions: Market the global womens basketball championship, relying on nationalistic tendencies to increase demand among American consumers.

Benefits: To increase exposure of women's basketball to American audiences, create more positive role-models for women & girls, and to acquire more sponsors to support the WNBA.

Information/Incentive: The incentive for new audience attention will grease the wheels of opposition both among WNBA and other concerned stakeholders.

Value: Having a nationalistic stake in the champion will enhance the value of womens basketball in the U.S.

Access: Increased exposure to new consumers will create opportunities for advertisers.

Relationships: Playing an annual womens basketball championship and/or creating positive role-models for women and girls will create lasting relationships with affected consumers.

Digital Marketing Plan

2015 GLOBAL WOMENS BASKETBALL CHAMPIONSHIP

Barcelona, Spain Win an exclusive, all-expenses VIP package to the 2015 Global Womens Basketball Championship in Barcelona, Spain for you and 3 of your family! Meet your favorite players!

All you have to do is retweet #iheartwnba for your chance to win! Good luck!

31JULYLeveraging the power of social media will

go a long way toward creating the buzz around the 2015 Global Womens Basketball Championship.

A digital marketing campaign using social media could conceivably use the popularity of retweeting and hashtags along with the incentive of winning an all-expenses trip for 4 to the site of the Global Womens Basketball Championship to increase mindshare among interested consumers.

Exhibit 1: Map of WNBA teams, customer demographics

Seattle population(2013): 652,405Average Salary: $62,000Seattle Storm attendance: 6,717 (17,072 capacity)

Los Angeles population estimate(2013): 3,884,307Average Salary: $62,000Los Angeles Sparks attendance: 8,288 (19,079 capacity)

Minneapolis population(2013): 400,070Average Salary: $51,000Minnesota Lynx attendance: 9,333 (19,356 capacity)

Phoenix population(2013): 1,513,367Average Salary: $48,000Phoenix Mercury attendance: 9,557 (18,422 capacity)

San Antonio population(2013): 1,409,019Average Salary: $52,000San Antonio Stars attendance: 7.719 (18,581 capacity)

Tulsa population(2013): 398,121Average Salary: $51,000Tulsa Shock attendance: 5,566 (17,839 capacity)

Atlanta population(2013): 447,841Average Salary: $72,000Atlanta Dream attendance: 5,864 (18,729 capacity)

Washington D.C. population (2014): 658,893Average Salary: $72,000Washington Mystics attendance: 8,377 (20,674 capacity)

Uncasville population(2010): 19,571Average Salary: $58,000Connecticut Sun attendance: 5,980 (9,323 capacity)

New York population(2013): 8,405,837Average Salary: $70,000New York Liberty attendance: 8,949 (19,563 capacity)

Indianapolis population(2013): 843,393Average Salary: $50,000Indiana Fever attendance: 7,900 (18,165 capacity)

Chicago population(2013): 2,718,782Average Salary: $69,000Chicago Sky attendance: 6,685 (17,500 capacity)

Exhibit 2: Map of the global womens professional leagues

Europe Asia Australia

Womens basketball enjoys global success.

Exhibit 3: Attendance Relative MindshareWNBA Teams Attendance Stadium Capacity Attendance Percentage Average WNBA Attendance (2014) Relative Attendance Share

Atlanta Dream 5,864 18,729 31.31% 7,578 0.77

Chicago Sky 6,685 17,500 38.20% 7,578 0.88

Connecticut Sun 5,980 9,323 64.14% 7,578 0.79

Indiana Fever 7,900 18,165 43.49% 7,578 1.04

Los Angeles Sparks 8,288 19,079 43.44% 7,578 1.09

Minnesota Lynx 9,333 19,356 48.22% 7,578 1.23

New York Liberty 8,949 19,563 45.74% 7,578 1.18

Phoenix Mercury 9,557 18,422 51.88% 7,578 1.26

San Antonio Stars 7,719 18,581 41.54% 7,578 1.02

Seattle Storm 6,717 17,072 39.35% 7,578 0.89

Tulsa Shock 5,566 17,839 31.20% 7,578 0.73

Washington Mystics 8,377 20,674 40.52% 7,578 1.11

WNBA Teams Average WNBA Ticket PriceTeam City

Average SalaryAverage US

Entertainment Budget

WNBA Average City Salary Entertainment

Family Night (4 tickets, parking, concessions,)

Percentage of Annual Entertainment Budget

How many visits per year?

Atlanta Dream $49.25 $72,000 5.4% $3888 252 6.48% 15.43

Chicago Sky $49.25 $69,000 5.4% $3726 252 6.76% 14.79

Connecticut Sun $49.25 $58,000 5.4% $3132 252 8.05% 12.43

Indiana Fever $49.25 $50,000 5.4% $2700 252 9.33% 10.71

Los Angeles Sparks $49.25 $62,000 5.4% $3348 252 7.53% 13.29

Minnesota Lynx $49.25 $51,000 5.4% $2754 252 9.15% 10.93

New York Liberty $49.25 $70,000 5.4% $3780 252 6.67% 15.00

Phoenix Mercury $49.25 $48,000 5.4% $2592 252 9.72% 10.29

San Antonio Stars $49.25 $52,000 5.4% $2808 252 8.97% 11.14

Seattle Storm $49.25 $62,000 5.4% $3348 252 7.53% 13.29

Tulsa Shock $49.25 $51,000 5.4% $2754 252 9.15% 10.93

Washington Mystics $49.25 $72,000 5.4% $3888 252 6.48% 15.43

Exhibit 4: American Entertainment Walletshare

Exhibit 5: Works Cited Impact of WNBA losing Taurasi, Pardon the Interruption, ESPN, February 4, 2015 How Much the Average American Spends on Entertainment, http://visualeconomics.creditloan.com/average-american-spends-on-entertainment/ Womens National Basketball Association: https://en.wikipedia.org/wiki/Women's_National_Basketball_Association American Basketball League: https://en.wikipedia.org/wiki/American_Basketball_League_(199698) Womens Pro Basketball League: https://en.wikipedia.org/wiki/Women%27s_Professional_Basketball_League Atlanta Dream: https://en.wikipedia.org/wiki/Atlanta_Dream Chicago Sky: https://en.wikipedia.org/wiki/Chicago_Sky Connecticut Sun: https://en.wikipedia.org/wiki/Connecticut_Sun Indiana Fever: https://en.wikipedia.org/wiki/Indiana_Fever Los Angeles Sparks: https://en.wikipedia.org/wiki/Los_Angeles_Sparks Minnesota Lynx: https://en.wikipedia.org/wiki/Minnesota_Lynx New York Liberty: https://en.wikipedia.org/wiki/New_York_Liberty Phoenix Mercury: https://en.wikipedia.org/wiki/Phoenix_Mercury San Antonio Stars: https://en.wikipedia.org/wiki/San_Antonio_Stars Seattle Storm: https://en.wikipedia.org/wiki/Seattle_Storm Tulsa Shock: https://en.wikipedia.org/wiki/Tulsa_Shock Washington Mystics: https://en.wikipedia.org/wiki/Washington_Mystics

Rosner, Scott R. and Kenneth L. Shropshire, Basketball and the Womens National Basketball Association, The Business of Sports, edited by Scott R. Rosner and, Jones and Bartlett Publishers, Sudbury, MA, Print. WNBA on the Brink of Losing Another Cornerstone Franchise, http://www.mercurynews.com/national-sports-news/ci_24846524/wnba-brink-losing-another-cornerstone-franchise Editorial: Women Face Disparity, http://baylorlariat.com/2013/02/05/editorial-women-face-disparity/ Diana Taurasi's Russian Team Is Paying Her To Skip The WNBA Season, http://deadspin.com/diana-taurasis-russian-team-is-paying-her-to-skip-the-w-1683643165 Brittney Griner Makes 12 Times More Playing In China Than In The United States, http://www.thepostgame.com/blog/dish/201404/brittney-griner-made-12-times-more-playing-china-us How much money has the WNBA lost (or cost the NBA) since it's inception?, https://ph.answers.yahoo.com/question/index?qid=20080522090322AAhvfqx In its 17th Season, the WNBA continues to defy odds, http://www.forbes.com/sites/alanaglass/2013/07/26/in-its-17th-season-the-wnba-continues-to-defy-odds/

international negotiations: wnba

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