EBM Assignment 3: Last Five Elements of Business Model - Portfolio ILast Five Elements of a Business ModelOBJECTIVE:To apply the core concepts of the nine elements of the business model, the last fiv
EBM Assignment 1
New Jersey Devils
Dylan Betz
8/5/17
Carol Wonsavage, Entertainment Business Models
Why I Chose This Company
Being from New Jersey, the Devils are the last “hometown” team in the state. All the other teams have either moved away or are branded as New York teams. So, there is a sense of pride when I support this team. I became a fan of hockey in 2012 when the Devils made it to the Stanley Cup Finals, but ended up losing. But, that was enough to get me hooked. Year after year, I got more and more into the sport, until I became a self-proclaimed expert. I am now at the point where I am the go-to person that for people who have a question about anything to do with the sport. So, when I saw the option to do a sport for this assignment, I had to jump on it. I rarely miss an opportunity to talk about my team.
I have always been hard headed about moving back to New Jersey. I like being close to my family, but it is just not my place. The only way I would move back there, as far as I know, is to work for the Devils. My goal is to work for a company that I care about, rather than hunting for a larger paycheck. The Devils made that list. I have been in contact with them over the past few years because of the history I have with planning events with them. If I could use that experience to get a job there, I couldn’t be happier.
Background
The New Jersey Devils are a professional hockey team that plays out of Newark, NJ. Brought over from Colorado in 1982 by John McMullen, the Devils have had a storied history of hall of famers, championships, and game changing tactics (New Jersey Devils Team History, 2017). Their first championship came back in 1995 by sweeping the fan-favorite Detroit Red Wings in a best of 7 series. This championship was led by future Hall of Famers Martin Brodeur, Scott Niedermeyer, and Scott Stevens (Dater, 2017). The team followed suit in 2000 by winning again against the Dallas Stars, led by a similar roster, but adding talent such as Patrik Elias and Scott Gomez.
Their final Cup came in 2003, when the Devils beat the Anaheim Mighty Ducks in seven games. Again, led by the same roster with a few notable additions in Brian Gionta and Jamie Langenbrunner (New Jersey Devils Team History, 2017). The team’s most recent success came in 2012, when they lost to the LA Kings in the finals. Ever since then, the Devils missed the playoffs every season. All of their star players from that year have either retired or signed to another team (Fischer, 2012).
As of 2016, the New Jersey Devils are valued at $320 million, which is #22 out of 30 teams. Their revenue in 2016 was around $126 million dollars, coming from ticket and merchandise sales along with multiple sponsorship deals. Two of their largest costs come from player costs and operation costs. The largest out of the two is the player salaries at $66 million, which is among the lowest in the league. The team plays out of the Pudential Center in Newark, which was opened in 2007. The Prudential Center, also known as “The Rock,” holds around 17,500 people and is known as one of the better concert venues in the United States (New Jersey Devils on the Forbes Hockey List, 2017). When it comes to Devils games, the average tickets sold per game was around 14,500 and each person spent an average of $15 while inside the arena (NHL Attendance, 2017).
Customer Segments
18-35 Male: The target market in the New Jersey Devils, among the rest of the NHL, are males aged from 18-35. Currently, the division of the genders of the fans is a 60% leaning towards the males. The target is expected to shift in the next coming years towards a younger, female crowd. Another shift in the target is aiming towards more casual fans, rather than the hardcore fans (Bruell, 2017).
Sponsors: Hockey teams have a lot of opportunities to include a sponsor in the game There are sponsors for pre-game shows, post-game shows, power plays, intermissions, overtime, Zambonis, and even the people who clean the ice during commercial breaks. Some of the more notable sponsors are American Express, Prudential, and PSE&G. All of these follow a simple trend that the brands that are being used are very recognizable to people who live in the state. Also, different sponsors are used for different events. For example, power companies are shown during the power plays, and landscaping companies are used when cleaning the ice (New Jersey Devils on the Forbes Hockey List, 2017).
Value Proposition
Star Players: The Devils, over the past few years, have been acquiring and building star players for their roster. Players like Taylor Hall, Kyle Palmieri, and Corey Schneider have all been acquired from other teams and have flourished in New Jersey. The Devils have also had success in the draft by picking Damon Severson, Pavel Zacha, and Nico Hichier (Devils Issues and Analysis, 2017).
Last Team in New Jersey: The Devils are the last team in New Jersey to brand themselves and a New Jersey team. 3 other teams play in the state (NY Jets, NY Giants, and NY Red Bulls), but they are all “New York” teams. The New Jersey Nets were the last pro team to move out of the state, becoming the Brooklyn Nets (Chung, 2017).
82 games per season: 82 games is tied for 2nd most games per season in the top 4 pro leagues in the US. It shares the total games with the NBA, and both are behind the MLB. Both teams follow the same playoff schedule, with best of 7 series’. This means that there could be a max of 100 games played in a season (Bonner 2011).
Customer Relationships
Social Media: The Devils have accounts on just about every large site that is available. They have accounts on Facebook, Instagram, Twitter, YouTube, and Snapchat, among others. Their two largest followings are on Facebook and Twitter. Facebook has 480k likes and Twitter has 553k followers (Social Media, 2017).
Merchandise: Merchandise can be found on an online store, at the arena, or at sports apparel stores.
Off Site Events: The Devils have always been active when it comes to off-site events. Recently, they have had the Rookie Development Camp, the Newark Pride Parade, and the Devils Beach Bash (New Jeresy Devils, 2017).
Radio: The Devils have recently partnered with iHeart Radio to form the One Jersey Network to talk about the team. It has included interviews and features Devils Alumni, formally including Scott Gomez (Fischer, 2016).
Channels
Live Games: Tickets for home games can be bought through Ticketmaster or through the box office at the Prudential Center. They can range from $25 to up to $500 for normal seats. They also offer season tickets along with multi game plans (Devils Tickets, 2017).
Cable: Devils games are on a few television channels during the regular season. These channels are MSG for most games and one game will be on NBCSN in the 2017-18 season(New Jersey Devils on the Forbes Hockey List, 2017).
Online Streaming: The NHL Gamecenter Service is a service where you can stream any out of market NHL game. Games that will be broadcasted on NBCSN can be streamed on the NBCSN website with any cable account (NBC Sports, 2017).
Key Activities
Scout Players: Scouting is a huge part of developing a good hockey team. Each team will usually have between 10 and 30 scouts scattered across the world looking for the best players for their team. The Devils, as of 2014, have 20 scouts. They have 1 pro scout, who watches professional leagues, 2 head scouts, who manage the other scouts, and 17 amateur scouts, who look for younger players to develop (NHL Scouting Departments, 2014).
Produce Games: This is all about how the fans experience the games. Everything that happens at a hockey game need to be thought out and planned before anything happens. There is no winging it in professional sports. On the experience of professional sports, the Devils have the second highest ranked game experience in the New York area, behind the Red Bulls (Breska, 2017).
Train Players: Training players to be an effective piece to your team is a never ending process. Training lasts all year long and can range from things like endurance and strength to communication and mental toughness (Schucker, 2015).
Marketing and Promotion: If a hockey team is having a rough season, they usually won’t try to advertise tickets. Advertising is usually done towards previous customers, or through local ice rinks. A team will usually “claim” an arena and will advertise through there. Most advertising comes during the offseason where a team can advertise changes that are coming to the team. The Devils heavily advertised their first overall pick, Nico Hischier, following the 2017 entry draft (Mills, 2017).
Develop Partnerships: Developing partnerships is extremely important if you are looking to move forward in your business. Even if the connection isn’t monetary, it can lead to some heavy cross promotion. For example, there is a strong connection between the Devils, Red Bulls, and Yankees. The Devils and Red Bulls play extremely close to each other and the Yankees GM is a big Devils fan. So, every time something happens with the Devils, these two organizations will usually say something about it (Millis, 2017).
Website Management: Each NHL team has their own website. On this page, you can see the schedule, buy tickets, buy merchandise, see stats, and many other things. This page should be easy to navigate and provide the info that the fan is looking for (Official New Jersey Devils Website, 2017).
Licensing: Licensing for the Devils goes both ways. They first license out their intellectual properties to manufacturers for different products like jerseys, cups, and clothes, amongst other things. They then have to get licenses to use music in their arena and for promotional content (Gaines, 2017).
Travel Arrangements: Each NHL team will have to travel to at least 30 other cities at least once next season. Each time a team travels, there are a lot of things to take into consideration. Not only do the players have to get there, but the coaches, trainers, doctors, scouts, equipment staff, and all of the players’ equipment have to be there at the same time prior to the game (Abell, 2015).
Key Resources
Arena: The Devils play their home games at the Prudential Center in Newark. The arena was built in 2007 and can hold 17,625. The team moved there in 2008 and has played there every season. The interior is heavily Devils focused with giant murals and team history scattered across the complex (Forbes, 2017).
Team Equipment: A team must have equipment in order to succeed on the ice. Per player, a team will spend between $10,000 and $50,000 on maintaining equipment. Sometimes, a manufacturer will provide the star players with a supply of their own equipment, but that is not often the case (Granger, 2017).
Arena and Sales Staff: These are the people running the show every night. This can range from ushers to ticket sales. These people are the backbone to any successful franchise and they are just as important as the players. You can’t have a production without these staff member doing the dirty work (Forbes, 2017).
Players: Players are the people who will put fans in the seats. It is important for a team to have players that they can advertise to the fans. These players can be ones who put up points, have an electric personality, or are new to the team. Some examples on the Devils would be Taylor Hall, Miles Wood, and Nico Hischier (CapFriendly, 2017).
Team Management: Team management are the artists behind the build of a hockey team. They coach, draft, and acquire players that fit their vision of a hockey team. The two most important pieces of hockey team management are the General Manager and the Head Coach. The GM of the Devils is Ray Shero and the Head Coach is John Hynes (CapFriendly, 2017)
Lawyers: Lawyers are necessary in any large business. For a hockey team, they can arrange contracts, acquire licensing, and build partnerships.
Trainers and Doctors: Hockey is an intense contact sport, so it is very important to keep your players fit and healthy. Trainers and doctors travel with the team and they will keep tabs on the players’ health. The Devils currently have a total of 8 doctors and trainers who work for the team (Staff Directory, 2017).
Key Partners
NHL: Probably the most important partner to the team is the league that host them. That is the relationship between the Devils and the NHL. The organization joined the league in 1974 as the Kansas City Scouts, later becoming the Colorado Rockies. Finally, the team was moved to New Jersey in 1982, becoming the Devils (New Jersey Devils History, 2017).
Sponsors: The Devils have multiple reoccurring sponsors that show up frequently. These include MSG Networks (cable distribution), PSE&G (Power Play), and Prudential (Arena) (Forbes, 2017).
Arena: The Prudential Center has hosted the Devils since 2008 and has gone under multiple remodels to further promote the team. They have decorated the interior to be a hockey focused arena, rather than just a general arena for all events, even though the Prudential Center is mainly known as a concert venue. There is also Championship Plaza, which hosts a 20ft tall statue of a hockey player and the ground is made up of bricks, creating the Devils’ logo (Forbes, 2017).
Newark: It is important for a professional sports team to have a good relation with the city that they are playing in. The Devils have made an effort to make this an extremely positive relationship by doing things like city clean ups, hospital visits, and parades (Zeigler, 2017).
Cable Distributors: Devils games can be seen on MSG Networks for most of the season. MSG Networks is a chain of channels that are shown locally around the New York City area. Occasionally, a Devils game will be shown on NBCSN, but there is only around one per year (Forbes, 2017).
Radio Stations: The Devils are partnered with two radio stations, The One Jersey Network and WFAN. The One Jersey Network is focused more on the Devils specifically, rather than the rest of the New York market. WFAN does all of the play-by-play for the team during the season and will occasionally talk about Devils’ news (Forbes, 2017).
Merchandisers: There are many companies that produce Devils products. Two of the main ones are Adidas and Mitchell & Ness. Adidas is the official provider of NHL jerseys as of 2017 and they have just discontinued the Reebok brand of NHL jerseys. Mitchell & Ness are one of the top providers of NHL hats (Gaines, 2017).
Cost Structures
Travel and Board: Each team will have a minimum of 41 away games per season in the NHL. A team will have to find plane tickets and hotel rooms for both their players and staff. The team would also have to pay for transportation to and from the arena as well as food for the players and staff (Abell, 2017).
Talent Salaries: As of August 20, 2017, the Devils are paying their players a total of $56 million. Their largest contracts come from Taylor Hall ($6 million), Travis Zajac ($5.75 million, and Corey Schneider ($6 million). The Devils have the 2nd lowest cap hit in the NHL (CapFriendly, 2017).
Arena Upkeep: After having nearly 18,000 people coming in and out of your building every night, it can wear down your building pretty quickly. So, in order to keep the experience at a professional level, you have to keep your arena at the highest level. Maintaining an arena this size can cost millions of dollars per year. Plus, you have to pay the people who are in charge of maintaining it (Forbes, 2017).
Staff Salaries: Each arena in the NHL will have a different sized staff for each event, so it is very difficult to say how many work for a hockey game. But, these are the people who run the show behind the show. There is security, concessions, ushers, janitors, sales teams, ice cleaners, and many other positions that go into producing a professional event (Forbes, 2017)
Team Equipment: Teams will spend upwards of $500 thousand a year on only equipment, which is an incentive for teams to push for star players. Star players bring with them a lot of deals, which can include equipment deals. So, bringing in a big name, which usually comes with a big contract, might pay off in equipment savings and ticket sales (Granger, 2017).
Insurance: NHL teams have to pay for injury insurance on all of their players. Even though that the cost is not public, it is estimated at 5% of the player’s contract (NHL Insurance Plan, 2008).
Revenue Streams
Sponsors: The Devils have a multitude of sponsors from multiple different fields. Sponsors can be featured during a powerplay, during intermission, after a game, or just about any time during a game. Some of the Devils’ sponsors include Prudential, PSE&G, Jeep, and MARS (Forbes, 2017).
Ticket Sales: Ticket sales make up for the largest income for a team. The team brought in around $33 million last year in tickets. A ticket can range from $15 to $10,000 for a single game. The average price per ticket is $52. There are also plans like season tickets, 4 game plans, 11 game plans, and many more options (Forbes, 2017).
Merchandise: Merchandise can be bought online or at the stores in the Prudential Center. The stores, named the Devil’s Den, sell products like authentic jerseys, pucks, autographs, hats, and many other things that are associated with the team. Merchandise is the second largest revenue stream for the team. (Devils Store, 2017).
Intellectual Property: The Devils have one of the most recognizable logos in professional sports. The red and black NJ is the team’s identity and it hasn’t been altered from its original design in 1982 (Dater, 2017).
Conclusion
As a whole, the Devils have a decently solid business model. To begin, they have a dedicated fan base that was build off adversity back in the 80’s. The team is a part of the community of Newark and the state as a whole. An important thing to note is that business in the entertainment industry is about establishing emotional connections. By introducing the team as a part of the community, rather than a big business. One thing that the Devils have struggled with is brand consistency. They have switched between different branding strategies on a yearly basis, so finding the one that sticks should be on the forefront of their minds for the upcoming seasons. Another thing that they could work on is their ticket selling strategy. They need into that “why not” section of night outs. That means that they need to make a hockey game a night activity like seeing a movie.
References
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