Nets Sports & Entertainment and Brooklyn Sports & Entertainment CEO Brett Yormark: Hoop Dreams

Nets Sports & Entertainment and Brooklyn Sports & Entertainment CEO Brett Yormark Talks about The Big Moves Ahead for both his Team and its New Home

March 8 2010 by Jennifer Pellet


 

While things may look disastrous on the basketball court for the New Jersey Nets this season, the stars are aligning for it everywhere else. Despite a won-lost record that’s well within striking distance of the worst single-season team performance in NBA history, New Jersey-born-and-raised Brett Yormark has the team, its fans and a host of corporate sponsors literally and figuratively buying into a much brighter future just around the corner…in Brooklyn, N.Y.

If everything goes according to plan, the Nets – who currently play at the Izod Center within the Meadowlands Sports Complex in East Rutherford, N.J. – will open the 2011–12 season in Brooklyn’s Barclays Center, an $800 million arena at the center of the Atlantic Yards business and residential complex being proposed by the team’s current owner, real estate developer Bruce Ratner.

With a top pick in the upcoming draft all but certain, the most salary cap flexibility of any team heading into the most promising free agent market in years, and well-heeled Russian businessman Mikhail Prokhorov about to come on board as the principal owner of the Nets and an investor in the arena, future expectations for an eventual turnaround are more than justified. But while waiting for the future to unfold, Yormark is keeping his organization in a full-court press, using innovative marketing strategies to build emotional equity with the team’s fan base and attract an impressive roster of corporate sponsors.

It must be a real challenge to sell tickets and sponsorships for a team that’s in last place. Is the success of your marketing totally divorced from the team’s actual performance?

In theory, the off-season is when we sell – we generate 70 to 80 percent of our revenue from the last game of the season to preseason. So we’re all effectively in first place during those months, because you’re selling hope and dreams. And because of the go-forward story being so different than the current state of affairs, I’m selling the future. But you can’t ever sell on wins. You’ve got to sell fun and entertainment. Fans expect a lot more than just the game itself.  Today, it’s got to be truly an experience. That’s why people are building arenas.

How will the new arena change your revenue model?

The lifeblood of our franchise – of whether you make it or not – come down to ticket sales, sponsorships and suite sales.  Those are the big moneymakers. Then there are ancillary revenue streams, dollars you generate from the arena that come back to the team. It’s common knowledge that we lose money in New Jersey. I don’t expect that to be the case from a team perspective in Brooklyn. And from an arena perspective we’ll generate some real positive cash flow off of the arena.

What is the thinking behind selling founding sponsorships to companies [including ADT, Anheuser- Busch, Cushman  &Wakefield, Emblem Health, High Point Solutions, MGM Grand at Foxwoods, Metro PCS Communications, Jones Soda, Phillips-Van  Heusen and Haier], who are buying into not only the team, but the whole complex that you will have in two years’ time?

As part of selling the dream, we told people we were going to be “less is more” in Brooklyn, meaning fewer partners, more ownership for each of those partners. Obviously, Barclays is our biggest partner, but we sell by category, and we’ve broken up the building into different neighborhoods, and different partners get to own those neighborhoods. You’re exclusive to the building, and you’re exclusive on the team.

What does an anchor sponsor get?

They get retail inventory in the building, the neighborhood strategy that I mentioned, they get to brand the name of their company, and then they also become an exclusive partner with the Nets, which can include signage and promotion for Internet, print, radio, TV and hospitality. It’s a 360-degree deal that enables you to interface with our fans at all touch points.

In addition to a new home turf, the team has a new owner. How will Mikhail Prokhorov change the way you operate?

He brings a wealth of resources to the table. He will own 80 percent of the team and 45 percent of the arena, with Bruce Ratner owning 20 percent of the team and 55 percent of the arena. We’re playing to both gentlemen’s strengths. Building the arena in Brooklyn is a dream of Bruce’s, and Mikhail Prokhorov is a competitive guy who loves basketball. When he owned the Red Army [CSKA Moscow] basketball team in Europe for four years, they won the European Championship two of those years. It’s a personal challenge for him to come in and apply his competitive spirit to the NBA. And for us, having a Russian owner plays into the evolution of our franchise as we look to go global. We already have Chinese player – Yi Jialing -  and all of our games are televised in China. Soon we’ll be in New York, a global market. And now we’ve got this Russian owner who has a vision, wants to win and has an incredible trading area in Europe to tap into.

You’ve had players and coaches host parties and visit fans’ homes and offices. What are those unusual marketing initiatives about?

We’re in the event business. We feel that selling tickets in the conventional way – putting an ad in the paper or a spot on TV – doesn’t work anymore. Obviously, social media has become a big part of how you reach that active fan base. But taking the message into fans’ homes by having players host a barbecue or visiting a party is a unique way to connect with longtime season ticketholders and hardcore fans. And the players love it. It humanizes them.

You have talked about the need for sports franchises to be “value creators.” Can you give an example?

Business-to-business [relationships have become] a critical component in sports more than ever before. This offseason, we developed a chamber of commerce that includes season ticket holders, key stakeholders, vendors and sponsors from about 500 companies. Every month we have networking sessions, and my direct report team and I guarantee each member 10 qualified meetings. We don’t guarantee you the business with those other companies, but we facilitate those introductions.  So, now, when people think of Nets basketball, it’s not just about fun, entertainment, or wins and losses – it’s about helping the Nets drive your business forward, helping you be part of this trading area where you can interface with other companies and use the Nets as that common thread. And it’s driving big-time results for us.

So, this really isn’t a basketball play. You’re really a marketing platform.

Absolutely. We’re in the entertainment business, and basketball is a part of it. When you think about the 200-plus events at the Barclays Center, only 41 are Nets basketball games. And if we make the playoffs, hopefully a little bit more. But it’s truly about entertainment and developing a marketing platform for these companies.

Once everything is in place, what are your expectations?

Well, we fast-forward to opening night and I think it will be historic. We’ll be sold out in our suites. Our sponsorships will be sold. It’ll be a packed house. Ticket sales will be done. And then, I’m hoping that what we’ve been able to accomplish at the Barclays Center becomes a bit of a platform for us to grow into truly being a very diverse sports entertainment company. Different opportunities will be presented to us, and those are things that we’re obviously going to want to take advantage of. I want us to be much more than a building, much more than a team.