Wednesday, June 12, 2013

Nets/arena CEO Yormark: "modest" increase in cheap seats (from $15 to $25!) still means "we're all about the fan"; also, players' ability (always?) trumps marketability

Nets/Barclays Center CEO Brett Yormark has a good story to tell, and he won't let inconvenient facts get in the way. So it's instructive to watch his best-in-class p.r. skills, as he tells an interviewer that raising the cheap seats for Nets games from $15 to $25--a price he didn't mention--counts as a "modest" increase, and that "we're all about the fan."

At about 6:15 in the video below, with RT (formerly Russia Today, an English-language channel with a Russian perspective), Yormark's interlocutor throws a softball: "It does seem like you're making more of an effort that I'm used to seeing... to try and cater for the average fan, and perhaps the lower-income fan... You're putting some reasonably priced tickets out there."

"We made a commitment," Yormark responded easily. "Michael [sic] Prokhorov and his team, obviously wanting to do right by Brooklyn. So when we moved to Brooklyn, we put aside 2000 seats every night and we priced them at $15 and under. So that anyone in Brooklyn that wanted to root on the home team, Brooklyn Nets, had the wherewithal to do that. Now we've modestly increased that $15 price for next year, but for that inaugural season, which we just concluded, anyone that wanted to see the Brooklyn Nets, regardless of their economic situation, had the wherewithal to do so. And we were very happy about that that, because obviously, we're all about the fan, and we're about the community."

Note that Yormark's current bio has excised any mention, as in his 2012 bio (below), of those $15 seats.

Also note how, even with a Russian channel, Yormark, who surely could be instructed to pronounce "Mikhail," sticks with "Michael."

A great first year

"I'm a huge sport fanatic," said the (British) interviewer, leading off the full interview and indicating it won't exactly be a tough encounter.

"It's been a great first year in Brooklyn," responded Yormark. " It was a nine-year journey, but I think we arrived in grand fashion." He cited leaps in merchandise and ticket sales.

Branding the Islanders?

Yormark cited plans to "Brooklynize" the New York Islanders. What about a uniform change, using the Nets' template of black and white?

"It's something that we're considering," Yormark responded. "We've engaged in some meaningful research--focus groups both in Brooklyn and Long Island, to understand the desires of the hardcore fan, the fan that's been with Islanders for many many years, but we also need to understand what the new fan base for the Islanders would like to see in Brooklyn. My job is to make sure we can marry the hard-care fan base and the new fan base and to do appropriate branding that speaks to both. So we haven't made any decisions yet, but I think it's fair to say that black and white are the colors of Brooklyn. So, the extent to which we can weave those colors into the current color scheme of the Islanders, I think that might make some sense."

Some Islanders fans don't buy it--see this satire.

The full interview

Creating synergies

"I think we aspire to be a sports entertainment company so we will not look at the Islanders or the Barclays Center or the Nets as separate and apart from each other," Yormark said. "The question is how do we create synergies, how do we create scale, how do we establish some influence in the marketplace that's different from today. So we're going to look at it from one big lens versus three different lenses and I think that's the best way to approach it."

Fan loyalty

"As a fan myself, I've become quite cynical," the interviewer stated. "That relationship has deteriorated. Is loyalty a significant thing to you?"

"Absolutely," responded Yormark. "Fan loyalty is critical. You can, I think, especially when you open up a new building like the Barclays Center, it's not difficult to get anyone to come once. The question is how you keep getting them to come back... Obviously you have to have great content, whether the team, like the Nets, or... other concerts and events... Another big component is the guest experience... we invested a lot into the guest experience. One, the food and beverage experience is very premium, it speaks to Brooklyn... More importantly than that, we engaged Disney. When anyone goes to a Disney park... they're treated like a celebrity. Our goal was to treat anyone who comes into the building like a celebrity... Disney... does all of our employee training... the feedback we're getting from our fans. The feedback we're getting is they've never been treated as well as they've been treated."

What about fans from the former home?

"The goal is to encourage them, and give them a reason to make that commute," Yormark responded. "I think we've done that... our product is much improved... the building's very accessible... and once they get there, everyone's treated like a celebrity... So it's a challenge for sure, but it's a challenge that we accept, and I think we've been able to make the most of it."

That of course comes with much more expensive seats.

Loyalty to the Nets

"I've been in the sports business since I graduated from college," Yormark explained. "I started my career with the Nets selling tickets... when I had the opportunity to rejoin the Nets, and I was given the job of getting the team ready for a move to Brooklyn, I embraced that challenge, not only because I knew it was right for the team, for Brooklyn and in my heart, I wanted to do something that was transformative, for the franchise... It's been a dream come true."

"I've seen a lot in the last nine years," he said, citing "an eroding fan base in New Jersey, which unfortunately was the result of saying we're moving to Brooklyn. Prior to that, in my first couple of years back with the Nets, we were a playoff contender... As you know, sports is volatile. You have good days, you have bad days and thankfully, we're on the uptick right now. I certainly do empathize with the fans and those fans that were with us during those last couple of years in New Jersey, and hopefully they have found a reason to follow us, not only to a great market like Brooklyn, but they experience the Barclays Center, which in my mind is the finest venue in the world, but also to a team that's much improved."

Note his statement about "a great market in Brooklyn," which segues nicely to the next question.

Teams as businesses?

Are sports organizations businesses or are they still sports teams first and foremost?

"I think they're businesses," Yormark responded. "We certainly run our team like a business. and I think most teams look at it like a business. It's a major operation. We employ over 200 people when you think about the basketball team also. The asset value of these franchises has a chance to truly grow, and it's up to me to help us get there, and to realize our potential. Revenue generation is key, and running it like a real business, being mindful of expenses, and just operating it no different than the way IBM operates their business is something that's critical today."

Has it always been that way?

"I think the stakes are bigger today," Yormark responded. "and my owner, Michael Prokhorov, expects us to run it like a business, and that's what we do. And we've been able to hire some great business professionals... many of which worked outside of sports and are bringing best practices to the sports world."

"I don't really compare ourselves to any other franchises," he added. "I wake up every morning, and whether it be for the arena or the team, I run it from the perspective of what can I do better today. How can I drive more revenue. How can I contain costs. How can I make this into the most viable business? How can I make this asset... appreciate over time?"

Players: skill vs. marketability

The interviewer cited soccer star David Beckham, who represents marketability more than ability: "In the NBA, would the Nets have any cases of that?"

"We have these discussions internally often when there is an opportunity to sign a player, but what I think what trumps all of that is making sure that we are most successful successful team on the court as possible," Yormark responded. "So, it really starts and stops with talent. If that is the most talented player possible, then I think it's fair to say that our general manager, Billy King, is going to go after that player. If someone is less talented but more marketable, I'm not sure the conversation lasts that long. It truly is who is the best fit for our team and who gives us a chance to win."

What about huge markets in Asia like China?

"Yes, at the end of the day, winning as a team drives success off the court," Yormark responded. "So yes, there might be a particular player that's very marketable, but if you don't win, it's going to be short-lived. Our goal is to be successful on the court, and to win and win the right way with the right players. And then what we think happens, certainly, is that success off the court follows."

Given the New Jersey Nets' history with mediocre Chinese forward Yi Jianlian, I challenged "Net Income," (aka Bob Windrem), the main editor of NetsDaily, who highlighted the talent vs. marketability thread in his post. Yormark himself chimed in.
That response was a non sequitur. The issue isn't whether, as stated in the headline, the Nets increased profit--they surely sought more revenue--but whether Yormark was choosing marketability over talent. At the time, it sure looked that way.

Yormark on Yi

That 6/13/09 Daily News article, Nets increase profit and Chinese fanbase by keeping Yi Jianlian, stated:
But even though Nets CEO Brett Yormark wouldn't be the one to pull the trigger on any such deal, he is not ready to give up on the 21-year-old. In fact, regardless of Yi's lack of production in his only season as a Net, Yormark is still looking to cash in on the 7-footer's enormous popularity in his homeland.
After brokering four sponsorship deals with Chinese companies last October, just before the start of Yi's first season in New Jersey, Yormark will be looking to add to that number when he meets with executives from 33 companies in China this week. He and a member of his sales team started a 10-day trip Saturday.
Though Yi averaged just 8.6 points and 5.3 rebounds last season, Yormark left for Asia feeling confident that his mission of signing "four or five" more deals will be a success. Finalizing a deal with a Chinese company that would be the 10th founding partner in the proposed Barclays Center in Brooklyn is also on Yormark's agenda.
"(Chinese companies) have been so receptive to us," said Yormark. "Obviously Yi didn't perform as well as he would have liked to last year. Regardless of that, his star power is growing in China."
I also referenced the interview Yormark gave in October 2010 in China regarding the 7-footer Yi Jianlian, who’d helped leverage the Nets first big sponsorship from China but had been traded in June for salary cap space after an undistinguished two years.

After citing Yi’s marketing boost locally and in China, Yormark, added, “From a player perspective, y’know, we loved Yi, The basketball folks decided it was time for a bit of a change.” Of course, had Yi truly been “terrific”--rather than a major bust--he would have stayed.

About the owner

Back to the RT interview. Is Prokhorov a win-at-all-costs owner?

"I think Michael is very fiscally responsible but he wants to see the team win and wants us to the run the team like a business," Yormark responded. "So I think we look at from both perspectives. Billy King, who runs the basketball operations side of our business, and I meet often. And we want to make sure that we are very much in sync, both business and basketball. And Michael has made sure that he's established a culture inside our franchise where we're always communicating, basketball and business, and we're doing what's right for the franchise."

Will we see more connections between Russia and America?

"I think one of the goals of buying the franchise that Michael Prokhorov had was that the opportunity to advance this sport of basketball here in Russia, and to help develop best practices here," Yormark responded. "He was always fond of the NBA and realizes that the NBA is the best form of basketball in the world. Our coaches have been here running clinics. Our players have been here. I'm looking, hopefully, in the future for that to happen more often. So, to the extent that we can advance basketball here in Russia, by the Nets having a greater presence here in Russia, that's certainly is a goal. Beyond that, certainly being the most successful franchise possible is goal number two."

Paying the freight

Is there a limit on salaries and costs?

"I think from a business perspective, there's tremendous upside," Yormark responded. "The Brooklyn Nets, the NBA, we're a viable property to help drive someone's business and their brand. I think there's always going to be interested sponsors. Thankfully, we've got a lot of interest in what we do from a business building and brand building proposition. As it relates to salaries, obviously that's a decision that ownership and our basketball folk have to make. You want a return on that investment, right? So, to the extent that we can see a return, I'm sure we'll keep making that investment."

At the moment, though, they're good value?

"Yeah, absolutely, to the extent that we don't see the return any more, think I think it drives potentially different decisions," Yormark responded.

So it all gets back to the fans, and who's spending the money to see a good team, observed the interviewer.

"Absolutely," responded Yormark. "You're absolutely right. It does come back to the fan. You've got give the fan a great product, and then if you do, they're going to vote yes with their wallet. That hopefully is the case for us in Brooklyn. It certainly was this year, and hopefully that'll be the case moving forward."

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