St. Louis recently became the latest city to lose a major sports franchise as the NFL announced the Rams will be returning to Los Angeles in 2016, 21 years after the team left California for Missouri.
Second Time’s a Charm?
The departure of the Rams will be felt heavily by the city of St. Louis, particularly given Missouri taxpayers still owe $100m towards the construction of the Edward Jones Dome, but the move makes sense for the NFL in pure business terms. Despite being the second largest sports market in the United States, Los Angeles has been without a professional football franchise since the Raiders and the Rams left the city in 1995. By voting to relocate the Rams, the NFL owners have given the league a second chance at success in L.A. They will be confident of overcoming the attendance issues of the past to build a state-of-the-art arena and create a stable presence in the city this time around.
The 18th largest city in the world, Los Angeles’ 18.3 million inhabitants earn a combined annual income of $823 billion and give the city the economic bandwidth required to support another major sports team. Already with a pair of franchises in each of the MLB, NBA and NHL, Los Angeles is second only to New York in terms of the size of its sports market. The city’s two basketball teams – the Clippers and the Lakers – both rank in the top five most valuable NBA teams according to Forbes and the Los Angeles Dodgers is estimated to be worth around $2.4 billion, making it the world’s second most valuable baseball franchise after the New York Yankees.
Engaging a Fan Base
Although the Rams struggled to consistently attract big crowds during the franchise’s first stint in Los Angeles, the evolving nature of sports viewing in the digital age means that teams are now far less reliant on ticket sales as a revenue stream. New technologies are enabling leagues and teams to better engage with fans inside and outside the stadium, helping organizations to improve the fan experience and monetize their brands through new media and additional advertising revenues.
The arrival of new technologies and improved streaming platforms is giving teams worldwide visibility, with international broadcasts and online access making it easier for teams to build and sustain a global following. Yahoo’s streaming of the Jacksonville/Buffalo game at Wembley Stadium in October 2015 exceeded all expectations, with 33.6 million users watching the game via the stream despite a conservative pre-game estimate of 3.5 million.
Social media companies have been at the center of these changes that the way sports are consumed. For example, Snapchat has agreed to media rights deals with sports leagues in order to feed its Live Story feature, the system which collates content for specific sporting events via the Geofilter function. Snapchat has also partnered with STATS to enable users to add real-time score updates to their photos and videos to express the excitement of the game to a truly global audience.
All of these technologies are giving franchises such as the Rams the opportunity to better understand the profile and motivations of their fans, helping teams to lead the digital conversation and enhance their brands. Given Los Angeles’ status as one of the most digitally engaged cities in the world, the potential for the Rams to interact with highly connected local and global audiences is huge. In fact, it has been predicted that the move to L.A. – taking into account all possible sources of revenue – is likely to be worth around $500m a year to the Rams.
By the time the Los Angeles Entertainment Center is completed in Inglewood in 2019, the Rams will likely be one of the most modern and innovative sports franchises in the world. Seating 70,000 fans and designed to host a wide variety of sporting events, the state-of-the-art arena is projected to cost in the region of $2.5 billion and will enable the Rams to diversify and generate multiple revenue streams.
By taking advantage of the many sponsorship, event and brand activation opportunities that will come with a new location and, in time, a new stadium, the Rams are set to become a multi-faceted organization. Combining intelligent partnerships with a strong digital engagement strategy, the Rams are set to become a focal point of the North American sporting landscape.
The Rams have already received over 45,000 season ticket deposits ahead of their return to Los Angeles, a strong indication that the city’s appetite for football is strong. The relocation of the Rams may have abruptly stripped the city of St. Louis of a major sporting asset, but the opportunities presented by Los Angeles were ultimately too great for the NFL and the franchise’s ownership to resist.