Chief financial officer, Baltimore Ravens
In the NFL, the general manager generally gets credit for building the team. What does the CFO of an NFL franchise do?
NFL teams are usually divided between the football operations and the business operations. The general manager handles all the football operations – acquiring players, hiring coaches, purchasing equipment and training staff. The CFO helps administer business operations, which includes interactions with the ticketholders, the sponsors, the suite holders and the stadium management group. The CFO is also charged with paying the players according to their contracts and compiling all financial information that’s sent to the league to determine the salary cap for the following year.
The Ravens were one of the first NFL teams to hire a director of football analytics. Who made that call and what has the organization learned so far?
Ravens owner Steve Bisciotti really pushed for it. Football generates a volume of statistical information that he felt could be applied to building a winning team. It’s the Moneyball concept. We hired our director of football analytics in 2012 to build a database of all of the college players we’ve scouted. A rating is assigned to each player based mainly on on-field performance, but also on some off-the-field performance indicators, too. We are in the very early stages of what will be a multi-year project, so it’s really too soon to know how valuable it will become. You might say we’re still in beta.
How do the veteran scouts and coaches feel about using a talent-evaluation algorithm?
It’s not unlike what was depicted in Moneyball. We face a similar hesitancy or even reluctance to buy into statistical analysis. That’s why we’re running it in beta first, to draw some conclusions about whether the data can be trusted by scouts and personnel evaluators who typically have relied on their eyes and on their gut—the physical analysis as opposed to a data analysis.
Can you see applying data-informed forecasting to the business side of the Ravens?
Our director of football analytics right now focuses on the football side, but once that model is figured out, the idea is that then we’ll slide him over to perform analytics for us, too. With the help of the league, we’ve already used data analytics to help with ticket pricing. We’ve looked at historic ticket renewal rates by section to determine ticketholder response to price increases. We found that in certain sections of the stadium there’s a very inelastic scenario. For example, if we raise ticket prices in sections around the 50-yard line, there’s still a 100 percent renewal rate. In other areas, where ticket buyers tend to be more price conscious, we found that the renewal rates will drop fairly dramatically if there’s an increase. So we tend to be a little more careful there. This type of analysis has helped us devise a system of 13 different price codes across the stadium.
Do you monitor fan reactions to price hikes?
Oh yes, we listen. We’re tremendously sensitive to the issue of price increases and the league has studied this, too. League research showed that one of the biggest determining factors for season ticket renewal rates is the fans’ faith in the direction of the team. The fans need to believe that management has committed to building a winning team. If they’ve lost faith in management, season ticketholders are less likely to come back the following season—and they will let you know how they feel. They’re not shy. We try to stay ahead of feedback before it becomes criticism.
How has the flow of consumer data changed your job?
One of the biggest changes I’ve witnessed over the past five years is the greater emphasis on social media. We are putting more resources into our digital media group, which is probably one of biggest in the league. We have eight to 10 people who manage content and site functionality plus monitor conversations across all social media platforms. And, they manage our communities on Facebook, Twitter, Instagram, Pinterest and the Ravens Reps online forum, a kind of ambassador program where fans earn points for sharing our content. We also have a tablet app in the works to go along with our mobile app. All this activity around listening and engagement is key to improving the game-day experience, a big focus of mine.
An interesting facet of sports leagues is that while the teams compete on the field, the franchises aren’t really at odds because each is focused on dominating its home market. Do the teams share best practices to help insure the vitality of the league?
The NFL definitely works with clubs on the business side to help each team grow revenue and to build the most appealing product for fans. One example is with sponsorships. Each sponsorship is classified into one of, say, 40 industry categories. For example, our stadium naming rights partner is M&T Bank, which falls into financial services. M&T pays us $5 million a year. That goes toward naming rights, game-day suites and TV advertising. We enter all that information into a database that was created by a sponsorship management software company and gets shared with the NFL division dedicated to club business. The league compiles similar data from all teams and produces a benchmark report so we can see how we stack up to our peers, giving us insight into the most effective methods of generating revenue.
It must be an incredible advantage to go into a negotiation armed with the data from all 32 teams. Has it changed the art of negotiation?
It has been helpful, and here’s how: it provides sound information, separating hard facts from typical negotiating conversation. The information shared through the NFL database includes peer club and league-wide averages, which means I’m able to see specific benchmark data in a particular sponsorship category, like, say, financial services. That level of data sharing helps us frame our discussion with the sponsor. It moves the discussion quickly from a feeling-out stage to the factual stage. That helps me make better business decisions, and better deals.