Buffy Filippell's Speech
to Harvard Business School

March 1999

My 9-year-old son watched his friend play a munchkin in a high school performance of the "Wizard of Oz." MGM is bringing back the movie to theatres, did you hear? Is Oz just a dream? Or did Dorothy and all of us really visit -- somewhere over the rainbow? It's in color over there, did you notice? It's the yellow brick road and the ruby red slippers. Wasn't she really there? Didn't we all feel her terror as winged monkeys descended upon her beloved scarecrow and beat the stuffing out of him? Didn't we feel her heart break to leave the tin man? I nearly fell asleep to poppies, didn't you? Do you really experience a dream?

Another movie, "Z" played by Woody Allen in the movie, "AntZ", opens with a dialogue with his therapist. Z, a worker ant, struggles inside with his need to be an individual versus his role as being a worker ant, a one in a cast of thousands. The consoling words of the therapist, "Z, you just have to accept the fact that you are insignificant," gives him no comfort. Similarly, a newsletter sent out by psychologists say that people want to have a sense of purpose; they want to be connected to other people.

With the acceptance of e-mailing among so many of us, have you ever thought that Bill Gates, perhaps unaccepted, felt so separated from his peers, he created his way of connecting himself to people -- through the computer -- so that it would allow him to come together with other people without regard to looks or sociability? Do you suppose he yearned for the interaction, but felt socially awkward? Is that why Bill set up his own social protocol system in cyberspace. Is this his way he could connect to us?

Steven Spielberg and George Lucas in their movie making show us how to spiritually connect, don't they? Is "Star Wars" really a futuristic western -- the good guys versus the bad guys? Or is it meant to remind us how we come together with our higher power? Remember the voice of Obi-Wan Kenobi inside of Luke. We are self-assured then standing as a Jedi warrior. We are all drawn together by the phrase, "May the Force be with you."

Ever wondered if going to a NASCAR event has replaced the need to congregate in a place of worship? Has it ever occurred to you that the infield at the Charlotte 500 resembles Woodstock? Isn't the screeching of the tires reminiscent of high pitched electric guitars?

Inappropriate sexual harassment has made us all more careful to give each other a hug. So we do it at a sports event. The ivy league executive jumps up and down and hugs a tattooed factory worker when their team scores a touchdown, a home run or a game winning three-pointer!

A plumber took his family to a playoff baseball game in Cleveland last fall. His family budget didn't truly afford him the luxury of spending the $340.00 he did at a ball game for tickets, drinks, t-shirts, hats, banners. But it was a family thing he had to do, he contended. It was one of the best experiences in his life. 40,000 cheering fans in 58-degree temperature, exploded at the sound of the fireworks. The screams you could hear for miles. "It's magical," said one of the players of his first post season. The Indians won.

This decision you are about to make now, the career path you will create, and will continue to make throughout various transitions in your life is predicated on giving your life a sense of purpose; you don't want to feel insignificant. You want to feel connected. You want to make others feel connected. We, in the sports business, do just that. To us, our jobs are a dream. We live our lives in color, not black and white.

You see in the sport business, not only do we connect people to one another, our industry is connected to each other. Corporate sponsors aren't just over here, television over there, athletes somewhere way out yonder and facilities off in the distance. One part is dependent upon the other part. And one job in one place is not dissimilar from a job in another place. It doesn't matter where you start. You have an opportunity to experience the whole place, wherever you start. It is all connected. We're all connected.

Let's look at these connections: think of Disney as our model

Walt Disney starts drawing cartoon characters. We'll call them talent. They are like athletes. They are the star attraction. They need a place to play, to showcase their skills : Disneyland. Once they have a place to play, and not enough people can see them there, we need radio and television; some form of broadcast to allow more people to be connected to the attraction. Thus Disney created and telecast the "Wonderful World of Disney" show then created and produced the Disney Channel then purchased ABC. And all of this is funded by corporate sponsors and consumers. Look, it's all connected.

Is it a surprise to any of us that Fox purchased the Dodgers? With broadcast rights fees for sports programming creeping higher and higher, it was less costly to own the Dodgers than to merely have a rights fee that a competitor could purchase in a few years. And Fox then purchased an interest in Staples Center, too. They, the broadcast company, own the players by contract, Dodger Stadium and Staples arena, and have it all paid for by corporate sponsors and consumer ticket sales.

Certainly Mark McCormack, founder of International Management Group, had to have learned from Harvard Business School teachers that a successful business executive wants to not only control the product but also to control the distribution channels as well. Hence, not only does IMG represent athletes, Mark created a television production business, Trans World International, bought or created several golf and tennis tournaments to showcase this talent, and also bought Nick Bolletteri's tennis academy and Skip Barber's Racing School.

The beer companies in Canada figured this maze out long ago. Molson's didn't want to pay soaring sponsorship rights, and advertising buys forever, so they just bought the Montreal Canadiens hockey team and facility. If hockey meant Molson's and Molson's meant hockey, then Molson's decided to tell the country what that meant. They secured the rights and produced the entire Canadian television hockey shows. "Hockey Night in Canada" was their production. They created a television production company. Thus, a corporate sponsor, owns a team, a building, a broadcast company and they, too, have it funded by corporate partners and consumer ticket sales.

I think you're getting the picture now. You understand how we're all connected, don't you? So, let's go into the park. Come with me. Let's join the people in the park, your forefathers, the connectors, in the sports and event industry. If this is your career path, they will be familiar to you. You will be attracted to them. They are people who want to bring people together. They are colorful. They may be leaders and followers at the same time. They are participants and spectators concurrently. They use their minds to create the currency of day to be measured by, trade it, sell it, spend it, and give it back. Come with me to the land of "Ahh's."

It's just behind me, can't you see. The rod iron gates topped with gleaming golden inlays of your favorite sports heros. You can see the four areas of the land, can't you. Right there to my left is the corporate tower. That's where all the money is. Everyday products from cereal to cigarettes, from tampons to shaving cream. They are the sponsors. Your support encourages them to support you.

Right behind them you can see the stadium. This houses the people who run the teams and the leagues. They sell you the tickets, pour you the beer, give you logoed backpacks stuffed with hologramic trading cards of your favorite stars as incentives to lure you inside.

Next to that is the television district. These are the guys desperately trying to make you feel what everyone else is feeling being there. So you don't feel left out, alone. And last, over here on the right are the agencies. They are the creators and the implementors. They nuzzle their way in and out of the business and fill in the gaps. They bring the talent and set the currency value of the sports experience.

So come with me. Follow this yellow brick road. I'd like to introduce you to these Wizards, my friends, your forefathers, the conductors and connectors of experiences in the sports industry.

The corporate tower is our first stop. Philip Morris had been one of the larger spenders in our field. They don't advertise. So, they co-brand. Under the brand Virginia Slims, Philip Morris sponsored sports such as the Legends of women's tennis so the product would be accepted among the physically active crowd? Their products mingle with the international, thrill-seeking, sexy, gorgeous and expensive crowd and provide the needed money to team owners and drivers in CART racing and Formula One who in turn showcase the Marlboro brand name.

Our first Wizard is Ina Broeman. She's the Director of Event Marketing. She and her staff of event managers, publicists, and hospitality coordinators have been responsible for turning a brand image into an event and vica versa. If the product is expensive and many of Philip Morris' products are, so too is the event. She negotiates with a team owner on how much money Philip Morris will pay to sponsor his race team.

Ina's stunning, tan, fit and 50-years-old. Ina is Philip Morris. Even before Philip Morris, like the company she works for, Ina's been connected with influential leaders. She's charitable. She looks like a million bucks. She holds court, flanked by a staff of about 10 -12. Her staff is young, attractive, and committed to perfect execution. They implement the programs she sets up from working with the media to trade customers and consumers. Ina manages a large budget. She and her group work with the brand manager teams and are responsible for creating and implementing events to match the product's positioning of each Philip Morris brand of cigarettes.

Is there any better co-branding example than Virginia Slims and women's tennis. When Billie Jean King, Rosie Casals and others wanted to split away from the men's tour, wasn't it fortunate they found a brand that positioned itself as, "You've come a long way, baby, to get where you got to today.?" Wasn't that exactly what the women tennis players wanted to tell the world about their product, themselves. Co-branding. Corporate partnerships. Connecting athletes, events to corporate sponsors.

A junior executive on Ina's staff could make in the mid five figures, be asked to travel and entertain, be skilled in event management and public relations. Everyone works long hours. A Philip Morris Director makes about a six figure salary plus stock options -- which can add up. Ina's staff is hired from internal Philip Morris executives or event managers and public relations experts from outside. Three former Philip Morris brand managers have segued into the sports business -- Tom Worchester and David Ball who both sell sponsorship for Major League Baseball and Carl Cohen, Executive Vice President Marketing for CART. Carl has an MBA. It is because he understood this co-branding effectiveness that Carl was chosen to head the marketing for CART.

Another corporate sponsor Wizard, I see is Bill Nielsen, the former Associate General Counsel, for Kellogg's down the hall. Since we only have a short time in the corporate tower, I will quickly give you Bill's story. After getting his law degree, Bill was working in labor relations and the government. Gerber hired him as a Labor Relations Corporate Attorney and three years later Kellogg's in Battle Creek recruited him. Although hired as a Labor lawyer, Bill was asked to review Kellogg's Olympic sponsorship contract and became the Marketing Attorney. The marketing department was entering into agreements with NBC, Olympics and other sports ventures. With Corn Flakes boxes in more households than network television shows, Kellogg's suggested to NBC to feature their fall line up on their cereal boxes. Sienfield was showcased on the back of the cereal box. The show's audience was the highest ever. Bill realized that cereal boxes were another form of advertising space. The company could sell off its cereal box space. Give the consumer something of value on the cereal box and Kellogg's could maintain its higher cereal prices against the generic cereal brands.

As the NASCAR craze heated up, Bill asked Dale Ernhardt to provide him a special edition artists drawing of himself to feature on Kellogg's Corn Flakes' cereal box. Rightly so, Dale wanted a fee. Bill provided another alternative, convincing Dale that in lieu of the money upfront Kellogg's would feature 3 Ernhardt souvenir-logoed items on the back of its cereal box -- a catalog, per se -- and give the money to Dale. The end result was: $1 million in Ernhardt product sales and Kellogg's recorded its best sales of Corn Flakes boxes ever. In fact, Kellogg's had so many requests for this box, that they had to go back and reprint the box and ship it out without the cereal to meet the frantic retailer demands. The brand managers at Kellogg's guide the sponsorships. The marketing attorney negotiates them.

We've got to get moving along now. Follow the yellow brick road. Our next stop is the team, league and stadium section of this Land of Ahh's. Here's our next guest. Truly a wizard; it's Jon Spoelstra. He greets us as the former President of the New Jersey Nets. He's an author now. Wrote a book, "How to sell Ice to Eskimos."

Jon is tall, lean, not someone you would think resembles a salesman. He's shy, almost embarrassed. Unless he's on show, giving a pitch, he seems kind of uncomfortable with himself. His vision of reality is so different from most of us. He sees the obvious.

Jon went to Notre Dame and secured the cable television rights to Notre Dame football in the early 70's. Unfortunately, the country was not yet wired for cable. When his rights deal expired, he joined the Los Angeles Clippers. That made sense, didn't it? Attracted to the "unappreciated" crowd as he was, Jon spent a year trying to sell a poor basketball team, but yearned to go even further amongst the unwanted and joined a minor league hockey team in Buffalo, New York, no less. After a year in sales there, the NBA's Portland Trail Blazers, asked him in 1979 to head up sales and marketing. The team had never won a championship. And no one was coming to the games. A Senior Vice President of Sales and Marketing is responsible for bringing in the customers and in turn, the money. He typically is flanked by a Vice President of Corporate Sponsor Sales, Director of Communications, Director of Marketing, and Vice President of Ticket Sales, the latter is Jon's specialty.

I'm sure Jon will be remembered for undoing the "hot dog sell" in sports. Until Jon Spoelstra corrected our methods, we used to sell people a little bit of good and wrapped it around a little bit of bad. We'd grind up a little bit of beef and pork and wrap it in some chemically-treated, stomach-destroying, Saran Wrap-like casing, and call it a hot - dog! Is that an oxymoron? We would sell people tickets to 4 good games, throw in a bad game and convince them they got a deal of 5 games for the price of 4. Really, the fifth game and ticket was a dog...worth nothing...so why did we disguise it?

Jon, surprisingly, wanted to give the consumers what they wanted. He wanted an honest connection between the customer and the team. If a customer wanted to go to five good games, sell them a five-game pack. But that would hurt season ticket sales, lamented the owners. Location, location, location -- was Jon's response. The people who spend the most money, sit in the best seats. Those who want fewer games, get tickets, but not the best seats. It was breakthrough.

Create sell-outs, he urged. It's a typical economic theory of supply versus demand. Create the demand by selling out your big games. Those who get shut out will spill into the other games. Is it no wonder that more people buy tickets to another game at a sell-out than they do at a game where few attend? We all stand in line at a concessions stand when there are too many people there...we fear they will run out of food. We all want to be around a crowd, feel connected...we wonder what fun they're having that we're not.

Jon was fortunate to be granted a "piece" of the Trail Blazers when it was sold to Paul Allen of Microsoft. Other heads of sales and marketing have been fortunate, as well, to make a bit of extra money when their team was sold. Jon joined the Denver Nuggets as President for a short stint, and after consulting to the New Jersey Nets for 1 year, they asked him to become their President. Talk about unwanted! The Nets were terrible at that time.

As President of the team reporting to the owners, Jon managed the business side, not the players. The General Manager who oversaw the head coach, assistant coaches, trainers, scouts, equipment staff, video crew and of course the players, unloads millions of dollars. It's the business side that generates money not only for itself but also for everyone else.

First, the President had to convince Joe Public and Corporate USA to give to and become connected to the Nets. A President is flanked by a Director of Marketing who works with an advertising agency to create the image. The Director of Marketing often oversees game day entertainment to continue to enhance the branded experience. Then, there are two Vice Presidents of Sales -- one for tickets and one for corporate sales. Tickets have to generate about $20 million for an NBA team, while sponsorships tend to draw about $10 million. Television rights fees are sold or held onto. They can be worth up to $50 million in New York city, yet significantly less in a minor market.

To get to $20 million in ticket revenue, you have to not only find thousands of customers, but service them, too. $10 million in sponsorship can often come from as little as 20 corporate partners, wanting to brand their brand with your brand. So, the ticket department may have up to 30 people selling smaller packages of suites and seats. That's not counting the ticket operations, computer and customer service representatives needed to handle and computerize the financial transactions. The corporate sponsorship department typically has only six or seven account executives, Directors, or whatever high title the President can provide so that these sales representatives are accepted among Vice Presidents of Corporate Sponsor USA.

Presidents earn the wage of a 3rd string player unless they are also the General Manager. Stock options or phantom stock, if the team is privately held, is often a perk that can also increase their salaries. Commissioners earn over $1 million or more. More teams are placing business executives, however, on top of their teams. Senior Vice Presidents can earn anywhere from $150,000 - $300,000, and experienced Corporate Sponsor Sales executives typically earn over $100,000 with base plus a bonus. Ticket Sales executives are the entry post. They generate about $200,000/year in ticket sales revenue and which unfortunately warrants only $20,000 in salary. Vice Presidents of Ticket Sales often earn over $100,000.

It was helpful that Ron Minegar, one of our candidates, had an MBA when interviewing for the Vice President of Marketing & Sales for the Anaheim Angels. He could write a business plan and comfortably decipher an operating budget. Disney demands that from its senior officers.

Walk with me a little further. Here's the television district. Fox, NBC, CBS, ESPN, ESPN2, the Golf Channel, you know all the guys. Another Wizard. I see Keith Allo. He's skinny and cute. He's kind of quiet. Our firm recruited Keith out of PASS Sports, a regional television network which was purchased by Fox, to head up CART's television affairs. ABC/ESPN hold the rights to telecast CART events. Keith is responsible for working with them to insure that the telecasts of CART racing equates to the image set forth by CART's marketing department. "SPEED" It's really speed, money, and international. It's no surprise that those labels match the image of FedEx, CART's overall sponsor. FedEx wanted to tell the world it was not going to be the cheapest, but it would be the fastest and it services the world. CART uses FedEx to co-brand itself and vica versa.

Keith is also responsible for developing more ways to increase revenues via the use of broadcast video. He is developing new shows to air on other networks. He is developing motivational video clips for corporate employee incentive lessons.

CART needed someone from the television industry who had both experience in programming and production. Those two do not often come together. Programming executives are constantly looking for programs to air on their stations. They negotiate with producers for those shows and they hope the 30-second ads sold for more than it cost to buy the program. Producers oversee directors and create a theme for each show. They develop a show's image. They are more technically inclined. They rarely get into negotiations. Producers and programming executives are well paid. One of many producers for an Olympics can earn in $200,000/year.

Broadcast sales executives are also well compensated. Most work on commission. Many earn over $200,000 depending upon the network. A top network sales executive can earn well over $500,000. People who sell for firms that sell spot sports broadcast time often earn more than corporate sponsor sales executives at either the league or at the teams.

Our last stop in the land is the agencies. Agencies are the middlemen. Sometimes they are even the middlemen between themselves! Agencies represent athletes or teams or broadcasters or sponsors or all of the above, say in the case of IMG.

IMG, you've all heard of that firm. They are one of the largest sports marketing agencies in the world. Competitive agencies such as Advantage and ProServ have been bought by large advertising agencies, and their stock is now publically traded. IMG is privately-held.

IMG was started by lawyer, Mark McCormack, who foresaw that athletes, like other talent such as Mickey Mouse, could be marketed. Athletes are brands. They are winners. If you want your product to be a winner then align yourself with a winner. A winning athlete. To give Reebok a name in golf, Reebok selected to align with Greg Norman. The response by Nike was signing Tiger Woods. To present Rolex watches as the best, Rolex connected with Dennis Conner after he won the America's Cup. Co-branding a winning athlete to position the brand as a winner.

As the companies started building their advertising stories around the athletes, the agencies suggested creating events or sites; like little Disneylands -- so the consumer could "touch the brand", get close to the endorser. The agencies developed and created special events -- the Skins Game. The agency sold the title sponsorship to their clients' sponsor. They sold the broadcast rights to a network, and sold off local sponsorship to companies in the area who wanted to entertain their customers or to co-brand with these same athletes. The agencies made more money selling tickets. Hence, the agencies started running special events and professional tour stops in tennis and golf. Not only were agency executives athlete representatives, but also event promoters.

Again as relationships grew between agent and athlete, athlete and corporation, the agencies were able, for a fee, to provide this same corporation a consulting service on not only what athletes match their brand but also what events match that brand's marketing strategy. For more fees, the agency would coach their corporate client on how to negotiate against other agencies. It gets confusing.

IMG was initially stocked with MBA's and lawyers, who doubled as entrepreneurs. To many of us around him, truly Peter's a wizard. Peter Johnson is our agency host. He joined IMG fresh out of business school to serve as an assistant to the President, Mark McCormack in the mid-70's. Peter is an ivy-leaguer. He wears Gucci shoes, Rolex watches and drives around in an expensive car. Rolex was a corporate consulting client of IMG. Many of the IMG executives wear Rolex's. I think it was part of the contract.

Peter is broad shouldered and thick. He was a varsity football player. Peter apprenticed under Mark and learned to negotiate endorsement deals for John Newcombe and Arnold Palmer. Charitable organizations would call for these athletes' attendance at a fund-raisers, and Peter would create a dollar amount, with Mark's guidance, and term it an appearance fee. Mark and Peter would delight in creating bidding wars between competitive companies wishing to have these athletes endorse their products. This is the way the agents elevated the value of the sports business. Pit Wilson against Spalding; Nike against Reebok; owner of the 49ers versus owner of the Chiefs. The person that lost would be assured to get another chance at another bidding war.

Peter attends the golf tournaments. He meets with parents of prospective clients who are in awe of the sacks of money IMG could extract from corporate sponsors Wilson, Nike, Reebok, Footjoy and sports team owners. Peter was handed Nancy Lopez to manage and market, then Martina Navratilova. He convinced Joe Montana to become a client then served him up for a large price tag to the Kansas City Chiefs when the 49er's appointed Steve Young as their #1 quarterback. Do you think Peter grew up playing Monopoly? Buy a house for Baltic Avenue and everyone who lands there pays a stiffer rent. Put Joe Montana in your starting line-up, and you can increase your ticket prices? Did you ever wonder why so many real estate developers own sports teams?

As a player becomes more popular, more companies inquire about how they can co-brand with that popularity. Japanese car maker, Toyota, asked how it could get accepted by the U.S. consumer. Peter proposed they sponsor the Women's Tennis Association Tour. To protect Toyota's investment, IMG would be paid to serve as the tour advisor. Then, to further protect Toyota's investment, IMG would promote WTA tournaments, then ATP Tour stops and PGA Tour events. IMG even represented the entire U.S. Volleyball Team.

These are the agents, the wizards, the deal-makers, the brokers. They've found a way to make sports a booming business. They've created bidding wars to attract more money. They work off the same "you-don't-want-to-be-left-out" story presented to buyers by investment bankers and real estate brokers. In sports as in buying a business or a house, what do you mean you can't afford it ? Aren't you in the game?

At IMG, agents create ways to make themselves money enhancing the experience by providing one-of-a-kind type products. A Skins Event, An Arnold Palmer, A World Couples Tennis Event, Pete Sampras. Agency executives work on commission, and many directly pocket the percentage of the money they bring in for their client. They typically earn more money than league or team executives in comparision to the amount of money they generate. They don't have large overhead. They have no player costs.

They are smart and can manipulate budgets. Many of them come from a privileged, prep school, athletic upbringing and learn how to comfortably network in high dollar figures. They are agents. They are passionate, connected, well-educated MBA's or lawyers with street smarts. They move easily around any country club. They are deal-makers.

Senior agency executives at IMG and other large agencies can earn anywhere from $250,000 to $500,000 or more. Owners of agencies that have "hot" properties have lately been selling off their companies. SFX bought the firm of David Falk, the agent for Michael Jordan, for a reported $120 million. Frank Craighill and Lee Fentress who founded Advantage sold out to InterPublic Group for millions. Frank Vuono sold his agency ISI to SFX for a reported $16 million.

Will you be a wizard in the Land of Ahh's? Do you see yourself as an Ina Broeman, Bill Nielsen, Jon Spoelstra, Keith Allo or a Peter Johnson? Are these your forefathers. Are you a conductor of the experience?

We in the sports business are creators of the dream-like moments in which we come together as one. We connect you to someone else. We are connected to each other. It doesn't matter where you start. It's the circle of life; the circle of our life.

We may appear to confuse our spiritual feelings with those human faults of greed. But don't be misled. True wizards are not in this for money. True wizards see this as just a game. Just an experience. We have a sense of purpose. We are the directors and apprenticing stagehands, not the actors. Think of this: In the land of Oz, real wizards are behind the curtain -- aren't they &endash; not really out front.

We are all divided by our human bodies. We, in the sports business, bring us all together to fulfill the need for oneness. "Take me out to the ballgame. Take me out to the crowd." You and me together. Our spirits feel lifted. Lifted above our human form. We rejoice. We cheer. We're on the other side of the rainbow, aren't we? We're not in black and white. This is no dream. We're in color. I hope you come back to the Land of Ahh's? You're always welcome to join me.