FanPost

The MSG EXP or The MSG State of the Union

"He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you."

- Frederick Nietzsche

 

Take the jump to read something that has nothing to do with this quote

 

 In 2007, NBA commissioner David Stern responded to the Knicks tumultuous summer, in which team GM and coach Isiah Thomas was found guilty of sexually harassing a former MSG employer, with a simple yet harsh summary of the team: “[These events] demonstrate that they’re not the model of intelligent management.”  After Thomas landed the Knicks at the bottom of the standings by executing several head scratching personnel and team decisions, the Knicks, once one of the league’s cornerstone franchises, were faced with a last place team who had just lost nearly $12 million in a harassment case pressed against their boss.  In sports, it is commonplace for the commissioner’s office to protect against foul play or mismanagement; according to author Andrew Zimbalist, “the [baseball] industry claimed that its ‘independent’ commissioner would guard against abuses of baseball’s market power and privilege.”1  However, if the commissioner publicly calls out a team, generally major steps are soon to be taken by the organization.  Sure enough, in 2008, the Knicks fired Mr. Thomas from his position, and appointed Donnie Walsh president of the Knicks, Scott O’neil President of Sports Operations, and Mike D’Antoni as the newest coach of the team.  These moves became the foundation of the New York Knicks revival, the first stepping-stone toward relevancy as a team, and respect as an organization.  Such moves became necessary, as Madison Square Garden began to lose money on its largest product, the Knicks.  The organization had to transform itself both on the court, as well as off.  However, as any CEO of a multi-million dollar asset will attest, a complete turnover, both in attitude and practice, is never easy.  Factor in that the organization is one of the top NBA franchises in the world, as well as that “the control of spectator sport…[is] increasingly [moving] away from sports administration and toward media executives,”2 and the ascent back to success is a long and arduous journey.

 

      Sponsorships are the lifeblood of any major media organization.  A quick look around Madison Square Garden during a game will reveal over 50 different sponsors being featured in every way imaginable; in fact, one of Branden Templeton’s, a sales coordinator in the marketing partnership division, main responsibilities is to create ways in which to feature sponsors, be it an in game promotions, signage, or any other ad campaign a company wishes to integrate.  Since the Knicks overhaul in 2008, the sponsorship game has changed.  According to Forbes, the business of advertising with a sports product has become so fine-tuned, that, “That logo that you paid $1 million for on race-car driver Ricky Rudd's front bumper? You can hire a firm to tell you how many people saw it in person or on television and what kind of people they were. Then you can compare that sponsorship, in cost per thousand viewers, with an online banner or a Google search ad. The sponsorship may not look so smart.”3  Madison Square Garden has a myriad of documents from which potential business partners can peruse statistics about how many individuals will see a certain ad, as well as even every imaginable demographic.  Given many major company’s financial struggles in the past few years, it has become more important than ever to carefully analyze the product in which a company is investing. 

      Scott O’Neil’s hiring in 2008 marked a significant change in direction for the New York Knicks.  Mr. O’Neil’s background lies heavily in marketing.  Before his time at MSG, Mr. O’Neil worked as the Senior Vice President in charge of marketing, where he advised teams in marketing, branding, and ticket sales.  Adding him to the MSG organization was analogous, from a business standpoint, to signing Lebron James.  However, despite Mr. O’Neil’s hiring, he entered the industry in a rather difficult time for team sponsorships.  According to Forbes, after years of sports sponsorships rising yearly by about 10%, “in 2009 spending on sports sponsorships shrank by $100 million to $11.3 billion.”4  In order to turn a profit, as well as produce a successful product on the court, Mr. O’Neil was forced to adhere to what Phillips and Hutchins have coined “the media sports cultural complex.”5  According to Phillips and Hutchins, “sports and the media have come to adhere to the ideologies, structures, and practices of corporate capitalism as they have satisfied each other’s commercial needs.  This integration has reduced the economic and social autonomy of sport over the past half a century of more as the media, and in particular television, has come to dominate its transmission and exposure, thereby regulating both audience and sponsor appeal.”6  Therefore, as the Knicks went, so to did sponsorships.

      In 2009, despite Mr. O’Neil beginning to revamp the manner with which the organization carried itself, the Knicks only hit 94% of their sponsorship budget, leaving them (in a marketing sense) well short of what the revenue they had expected to generate via sponsorships and business partnerships.  However, the tides had begun to change.  Within the Marketing Partnership division of the organization, the division that is in charge of acquiring team sponsorships, Mr. O’Neil elected to revamp the entire office.  The division (in which I worked this summer) was comprised of 25 individuals, with titles ranging from Sales Coordinator, Sales Manager, Creative Sales Assistant, and Administrative assistant.  Mr. O’Neil worked Senior Vice President Greg Elliott, as well as hired John Clark and Mark Foxton to be the division’s other two vice presidents, in an attempt to increase the accountability and success of the upper management.  Additionally, the entire organization altered and improved the process by which deal proposals were written and deal memos were passed, in an attempt to avoid a repeat of the division’s failure to reach its 2009 projections. Also, Mr. O’Neil began demanding more accountability and cohesiveness from his employees, similar to the NSWRL’s illustrated reconfiguration in the 1970s, where “professional administrators replaced volunteers, positions and roles were created that exhibited high degrees of specialization and formalization, and decisions were increasingly made via a centralized administrative body.”7 

      However, the most important addition to the team was not a player, but rather the $800 million renovation project that was announced between 2008 and 2009 that will help restore the Garden’s image as the world’s greatest arena.  Additionally, the Knicks offered something that no other basketball team in the world could: they called New York City home.  To understand just how significant an asset the Big Apple it, it helps to consider what the New York Knicks told Lebron James during their free agency meetings during the 2010 offseason: the Knicks explained to the star forward that if he signed with the Knicks, he would generate over $2 billion in sponsorships, nearly tripling the next highest estimate of $700 million in sponsorships if he elected to stay in Cleveland.8  Those are the types of numbers that, while not always reflected on the court, cause those in major company’s marketing division s to salivate at the opportunity to work within such a revenue-generating city.

      Yet even with both assets in the organization’s front pocket, sponsors simply did not want to associate with a team that had become known for its losing and off court problems like the Knicks.  While the Knicks had, unknowingly, mirrored the NSWRL, in that they “displayed many similar features to corporate and bureaucratic organizations,” they still were unable to hold up the sports end of the media cultural complex.  Understandably, the financial side of the organization was still not achieving at the levels of which it was capable.  Additionally, generating fan enthusiasm became more and more difficult, as “teams that perform poorly year after year and have few prospects for becoming competitive risk losing fans for good.”9  And on the court, the team was still reeling from the large and often overpriced contracts given to players in during Isiah Thomas’ regime. The Knicks, despite having the largest payroll from 2006-2009, never finished anywhere near playoff contention, in a sense, the antithesis of Zimbalist’s description of the Oakland Athletics’ organization, who “created a first-class competitive team on a shoe string budget.”10  What had been born out of the team’s lack of success was the general notion that, despite the attractiveness of the city, venue, or organization, if the Knicks did not win, those who were looking to invest as a sponsor for the team would not win either. 

So, what you've all been waiting for: what the pitch truly was.  Having seen the entire thing, I've got to say, it's highly impressive.  It began with two videos, the first focusing upon the city, its celebrities (it starts off with a highly cheesy Sopranos joke, which I of course laughed at).  Chris Rock, Trump, etc all hyped the city up.  What I found most interesting was the inclusion of former Mets and Yankees to describe the feeling of winning a championship in NYC.  Gave me chills.  The next video was about the Knicks history (eerily similar to what is shown at MSG orientation to new hires, for the record).  There was some general discussion about the team and city by Donnie and Jim, and then Coach D'antoni stepped in. The next part of the proposal was my favorite.  We gave each free agent a fully customized iTampon, which detailed various defensive and offensive metrics of Coach D'antoni, and predicted how each individual player would look as a Knick.  At this point, Coach and said player went into a room alone for about an hour (no joke) and discussed Mike's theory on the game.  Mike pitched various ideas, such as wanting to run a team with no starter shorter than 6'10'' (this was pitched to Lebron).  Imagine that: Lebron, Gallo, Randolph, Stoudemire, and either Turiaf or Ronny.  I'd be happy to elaborate more on this if you guys want, so ask questions!  Now, back to the original essay.

      If one looks at the Knicks in the present day, the on court issue seems to be at least in the process of being resolved.  In the 2010 offseason, the Knicks acquired All-NBA power forward Amar’e Stoudemire, as well as a mixture of solid veterans and young, upside-filled players.  The team has been projected by most major publications to make the playoffs this season, which would be the first time the Knicks made the post season since the 2003-2004 season.  Additionally, if the Knicks finish with a record above .500, the 2010-2011 season will be the Knicks first winning season of the millennium.  What is most fascinating, however, is the globalization of the team.  On the roster, the Knicks have a representative of Italy, Russia, the United Kingdom, Germany, Israel, and France. In a sport that has become highly urbanized, a team with a core as diverse as the Knicks is, in the NBA, a veritable United Nations.  This is a fact that is not lost on the organization, both from a player personnel standpoint, as well as from a monetary standpoint.  The international component that has become a part of Knicks basketball is part of “a globalization of business practices that contain growth functions dependent on ‘synergies’ derived through cross-promotion of commodities and achievable through corporate integration,”11 one which will open an international door of demand for the Knicks.  Consider that the Knicks drafted Danilo Gallinari, a native Italian, in the 2008 draft, which directly led to the team creating a partnership with Italy-based company Buon Italia, as well as spawning an Italian Heritage Night, which was presented by T-mobile.  Both instances are examples of where “corporate integration enables ‘product lines’ to promote each other through mutual association.”12  While Gallinari thrives on the court, the organization is well aware that his success makes him a product upon their “product line,” that can be promoted both for his heritage, as well as his affiliation with the Knicks.

            With the Knicks already over their projected revenue for 2010, the question that must now be asked is, where does the organization go from here?  Despite losing out on signing superstar Lebron James this offseason, the Knicks significantly have improved every facet of their organization in the past two years.  Additionally, the team was able to maintain a significant amount of salary cap space for next offseason, which can be used to sign other additions to assist the team.  For the first time in a decade, the Knicks have created a positive business model, and the results are highly apparent in the Marketing Partnership division.  Instead of the division calling potential clients in hopes of piquing their interest in a potential investment, now, the office has been flooded with calls from various companies in hopes of finding room to fit their product into the Madison Square Garden sponsorship lineup.  For now, it appears that the organization has finally struck a successful balance within the media sports cultural complex, and thus, are on the right track toward returning the organization to its rightful place within the upper echelon of sports organizations.

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