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FROM THE TOP WITH TODD MERRY

What were Delaware North’s goals in undertak-ing this research exercise?

It first came about a year and a half ago. We were nearing our 100th anniversary at the company. Our Chairman Jeremy Jacobs was talking one day about our brand and the industry. He said we should talk to some fu-turists. And so we went to some really smart people and had a great discussion about some emerging technologies.

After the fact, our Chairman said, that’s great, but we should look very specifically at how those technologies might affect our industry of sports. The initial idea from our Chairman was to do that research and share it with some of our clients and some of our

In the wake of the launch event this fall for the second edition of The Future of Sports, Delaware North Chief Marketing Officer Todd Merry spoke with SEAT about the company’s latest research itera-tion. He explained that the themes in The Future of Sports have little

to do with food and beverage or retail specifically, but serve as thought leadership that can inspire the imagination of the entire industry, from chefs to ticket salespeople to team owners. Merry also spoke expansively on the role of accelerating technology in leading change and addressing opportunities, both in venues and around the world, brought about by Millennials, Gen Z, non-traditional sports, and emerging markets.

By Jared Frank, ALSD

friends, our Chairman also being the Chair-man of the Board of Governors for the NHL and obviously team owner of the Boston Bruins.

We did it last year for the first time. We had modest expectations. We thought people would appreciate it, but the reaction that we got was extremely positive. People found it very useful which is very encouraging. So our Chairman asked us to do it again this year.

How is the 2016 version different from or simi-lar to the 2015 edition?

What we found both the first time around and then this time was how fast everything is moving. I’ll give you one example. In the

first issue we did last year, we took a relatively modest view at eSports. And in the course of 12 months, eSports has moved on and is rel-evant to the sports industry and to venues. It’s experienced a massive change in the course of 12 months. It underscores that the world is moving so quickly. Technology is moving so quickly that doing regular updates to [this research] is important.

So do you forecast that there will be a version 3.0 at some point?

We had our launch of the second edition, which almost worked my team to death, two weeks ago. And the first question we got was, “Are you going to do a third one?”

Why not? We love it. It’s become a labor of love for our Chairman and our CEOs and the whole team here that works on it. I hope there’s a third one. I love all of this stuff. I’m a fanatic about some of the technology. I fully expect that we’ll do a third one.

I find this research to be a tool to take cues from and inform decision making for your company. So why share it? Why not just use it internally as a competitive advantage?

We did first imagine it as something to share with our clients. But our Chairman loves sports. It really was his gift to the in-dustry in many ways.

Ted Leonsis was someone in the first edi-tion that we ran a lot of stuff by. He’s a very smart guy and very much on the cutting-edge. So of course, we sent him a copy. Then the list started to get pretty long, so finally, we just decided to share it with everyone. It seems very altruistic in a relatively competi-tive business. But that’s been the direction of our Chairman – to share it far and wide.

I hope people see that we’re a 100-year-old brand, but we’re also very much looking into the future. All we can hope for is that we get into the consideration set, and I think this does that to a certain extent. At the end of the day, what’s going to win a bid is some of the financials, the product, and your people. But again, if it gets our foot in the door and allows us to present, that’s a good result.

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How did you select the research team?Since day one, we’ve worked with an out-

side agency called Attention Span Media. They are a bunch of real smart guys. A bunch of them have worked in journalism before.

Josh McHugh and the team from Atten-tion Span, they had connections at places like Singularity University and a number of think tanks on the west coast. They were smart enough to know who the smart guys were. One of the most gratifying parts of this whole project is getting to know some of these guys. It’s been fascinating.

In general, sports teams have not been early adopters of new technologies. Is that mindset changing?

Sports has been an early adopter on some stuff and not on others. I think you’re right that there is some sort of inertia on a number of issues, broadcast being one of them. If you look at the regional sports networks, and you look at cable, and you look at ESPN, you re-alize there’s actually no reason on the surface for sports teams or franchises to innovate be-cause they’ve got a pretty sweet deal.

On the other hand, if you look at the audi-ence and where it’s headed, there has to be changes made. The reality is that inertia is going to run smack into the immovable force of the Millennials and Gen Z, who are more than willing to pay for stuff, but they don’t want to buy a [bundled] cable package for $119 a month.

Is there inertia in other areas of the industry?There is an inertia on a number of subjects.

It’s just like the old phone company and the long distance model. They held onto charg-ing people a lot of money for long distance up until the last second before that business went away.

If you saw in the current edition of The Future of Sports, we looked at Millennials. There’s an impression that they want every-thing for free. But the reality is they will pay for stuff. It’s just in a different model.

We had a conversation early on about Millennials. Again, there’s this impression

FROM THE TOP WITH TODD MERRY

KEY EXCERPTS FROM THE 2016 EDITION OF THE FUTURE OF SPORTS

“The kids now coming of age are actually the most informed young sports fans in history. They are cord cutters, but they have not cut themselves off from sports. Sports programming and data are such a deep part of their culture that they feel a sense of ownership. And that’s the trick to reaching them – empowering them to take sports media as we know it, mash it up, and distribute it as they see fit.”

“Migration, tourism, and near-universal access to broadcasts and social media have unlocked billions of potential fans – but they don’t live in your city, and don’t neces-sarily speak your language. The next ten years will be a gold rush, as professional teams and leagues race to claim this emerging audience.”

“By 2025, the distinctions between AR and VR will be insignificant; the devices will converge and be multifunctional. Their vast capabilities to blend natural and synthetic vision will cause us to rethink everything – from the social norms of hu-man interaction to how private and public spaces are designed and navigated. New sports will inevitably emerge that will be designed to test athletes’ performance across the spectrum of mixed reality.”

“32% of all American teens have played fantasy (versus 18% of adults). American teens have long stamped their print on world trends. Then consider that even where sports betting is legal, you have to be 18 years old to bet. So most teens will start with free fantasy, then at age 18 start paying entry fees rather than switch to traditional sportsbook betting.”

“Make no mistake: traditional professional sports are at risk of losing a significant portion of their future audience. Millions of post-Millennials around the world are growing up idolizing eSports champions.”

“While the Alt-Athlete may not be clearly identifiable by the team logo they wear on a jersey or hat, they are the fastest-growing market – 76% of all regular exercis-ers are Millennials – with a thirst for new products and technological advances that help them reach that next goal.”

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that they’re freeloading. But in reality, they’re the first generation, particularly Gen Z, who has been raised in primarily a pay-per-view model.

Let’s pivot to the Millennial Generation since it’s come up. As an industry, do you think we’re doing enough to change the way we sell, market, and program, in response to documented Millen-nial behaviors and preferences?

If you look at the changing fan in the ven-ue, there’s a lot of things that have been done and will be done. Bolstering the technology backbone of any of these venues is incredibly important when it comes to sponsors, when it comes to the fan experience.

I think there’s two things as we look at venues this year. One is looking at how tech-nology is going to change the experience. We spent a lot of time on VR and AR. Partly my own opinion and partly what the futur-ists said, VR is going to be an at-home ex-perience, meaning it will be me on my couch with my VR headset, experiencing the game in three dimensions. But really, it’s AR that’s going to change the experience of the fan in-venue, being able to use your phone as your AR instrument to overlay data, stats, and replays as you’re able to pan around a venue.

The other thing is looking at content com-ing into these venues that isn’t the traditional sports. Again, I’ve somehow woven my way back to eSports here. I’ve attended a num-ber of eSports events in the past 12 months, both here and in Europe. And I can tell you, it’s a different crowd with different expecta-tions, all of it good. All of this is content for these buildings, and content that’s not going away, and content where people spend a ton of money and eight or ten hours in a building across a Saturday and a Sunday. A lot of the concessionaires, retailers, and building own-ers have to adjust to this new audience and new experiences.

How are growing middle classes with Internet connections in emerging market economies going to shape the future of sports?

FROM THE TOP WITH TODD MERRY

You just can’t ignore the size of these mar-kets – China, Brazil, India. There’s a lot of value in these markets.

We’ve all been exposed to the global na-ture of sports through the Olympics and the World Cup becoming incredibly popular. But what you realize is there are other sports out there.

I know as Americans, we often think base-ball, football, basketball, and hockey, plus the rest of the world plays soccer. But it’s not as easy as that. I was to Germany last year and went to the team handball finals, where you had 18,000 people packed into the SAP Arena.

Our Chairman often points out that the most popular spectator sport in 1970 was horse racing. And of course, horse racing has all but disappeared in the U.S. now. The les-son to be learned from that is no one has a right to exist. The leagues and sports have to change and have to adapt, and frankly may see a rise and fall of popularity depending [on whether or not they change].

How will teams and venues in North America reach their remote fan bases around the world that are never going to step foot in their venues?

Some of the technology helps with that. I’ve mentioned VR. Although there’s noth-ing like the in-venue experience.

The storytelling of some of these brands helps. Those sports narratives are a universal language. You gravitate towards these amaz-ing brands and these amazing stories. And that’s a huge opportunity to connect with fans. All fans appreciate a story and a narra-tive. Technology allows us to bring that in-game experience that much closer to those people. There is a huge opportunity.

Is there part of this research that stands out as most impactful for foodservice or retail in the future?

There isn’t a ton in here that directly re-lates to our business. It’s about understand-ing the changing fan base and the changing expectations of the Millennials and Gen Z,

the hard-to-understand next group of con-sumers, understanding them, understanding their experiences, and understanding what they expect. This is a new audience and a new group of people who expect different things in their F&B experiences.

For us, the biggest outcome of the latest edition is a reminder that our audience is changing and expects new things. And that does help us when we go in and come up with new concepts. Our Sportservice group has caught the bug.

This type of innovative approach has in-fused all of Delaware North. Not just our sports or venue business, but our travel busi-ness and resorts and gaming business. They’re all taking something away from this as well. We’re now setting up a whole innovation lab as part of Delaware North. So it’s pushed us forward on the innovation front across all of our businesses.

Back to the point of brand. It doesn’t spe-cifically help our business, but we like being able to put these really smart people in front of our clients and share what they know.

This research is a little overwhelming at first. So what advice do you have for a reader of The Fu-ture of Sports? How can they best consume and use the information?

It’s taking small sips. There are so many different and daunting subjects in here. You have to take them one at a time. There’s so much to be gathered here. I think it’s a jump-off point. There’s a lot more out there.

We are not predicting the future. We have no idea where the future is ultimately going to go. All we’re doing is raising some interest-ing questions and hoping it spurs some sort of discussion. I encourage everyone to read it, ask questions, and participate in it.

To obtain copies of the 2015 and 2016 editions of The Fu-ture of Sports, visit futureof.org.

“If you look at the audience and where it’s headed, there has to be changes made. The reality is that inertia is going to run smack into the

immovable force of the Millennials and Gen Z.”