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35th NACDA Convention
Orlando, Florida
June 11-14, 2000

All NACDA Members
Internet Facts and Fiction
Monday, June 12, 8:45 - 9:45 a.m.

Dave Hart, Jr.

At this time, I'd like to bring to the podium and introduce Betsy Stephenson, the associate athletics director at UCLA and a member of NACDA's Executive Committee. Betsy will begin our next session.

Betsy Stephenson

Thank you Dave. First, we will open with some background on each of our four speakers. Our first speaker will be John Kosner, vice president of programming and broadband development for the ESPN Internet Group. John oversees all programming, league relationships, business and broadband development for ESPN.com. John had previously been vice president of programming development for ESPN, Inc., where he was involved in the acquisition of ESPN and ABC's exclusive prime time NFL football rights and the network's exclusive NHL package, as well as ESPN.com's renewal of it's exclusive NFL, NBA and NASCAR agreements. John oversaw ESPN's day-to-day programming relationships with the NBA, WNBA and the Walt Disney Company. Prior to ESPN, John worked for Sports Illustrated.

Dan Mannix is president of the Lee Dog Marketing Group, a full-service and event marketing and promotion and production company, that is involved in the overall management and operation of the NFL Experience On Tour event that will be visiting 25 cities starting in August. Dan directs the marketing and communication efforts and develops strategic partnerships for the company's Internet clients. He was previously director of special events at the NBA where he managed the NBA's largest domestic and international events. In 1996, he managed both the men's and women's Olympic basketball competition, then helped launch the Women's National Basketball Association where he directed the implementation of national sponsorship programs in all team markets and worked closely with teams on their promotions.

He has worked closely with major television networks, including NBC, ESPN and TNT, on the production of events and on-line resources. In 1998, he served as executive producer of the Spectator Entertainment Program for the Goodwill Games.

Our final speaker is Jeff Cravens, vice president and general manager of the FANSOnly Network. He has been with the company since June of 1997 and assumed his current position in May of 1999. Jeff is responsible for the overall management of the entire network. He negotiates all business development and agreements, including distribution arrangements that generate traffic and revenue for official athletics sites. Jeff has more than 13 years of professional experience in various roles of athletics administration in mass communication. Before joining the FANSOnly Network team, he worked for Turner Sports, the Atlanta Committee on the Olympic Games, the U.S. Olympic Committee and the University of Kansas.

Dan Mannix

Hello and thank you. My name is Dan Mannix and, as Betsy said, I'm president of Lee Dog Marketing Group based in New York. I think everybody knows that the Internet is changing the way we do business and changing the way we look at traditional marketing, advertising and promotion. The big question is really how to take advantage of our existing resources and tap into all of the new opportunities that are out there with the Internet and the new opportunities to present content to the people you're trying to reach.

When I worked on the Olympics in 1996, the Internet, while obviously going strong at that point, was not really integrated into everything we were doing and not something on a daily basis that was tied into meetings and things that you were hearing about all of the time. After the Olympics, when I went back to the WNBA, everything we did seemed to have some association with the Internet. Every meeting we had related to sponsors and promotions and how we could use the players to promote the league through the Internet.

One of the important things to look at when you look at the content you have is to see how you can take advantage of those resources, not necessarily completely change how you do things, but make the Internet and your marketing strategy for the Internet a big part of everything you do. Look to ways that you can take those resources you have and try and drive people to the Internet through the strategies you want to push. Whether it's new revenue opportunities or introducing your athletics programs to new customers, there are so many opportunities for the Internet to give people your information.

There are a number of different areas where the Internet can tap into, from traditional sponsorship, marketing and promotions to advertising. With all of those areas, it's very important to consider the Internet, but also consider what is successful for you right now. While it's important to include the Internet into the mix of everything you do, you shouldn't throw away everything that's been happening in the past. One thing that is true with the Internet and with all of the companies who are approaching you, there are things out there. Corporations who will be successful are the ones who can sift through all of those opportunities and decide which ones can help maximize what your core goals are through the Internet. That may not be putting up www.com on a banner along the sides of fields, but doing promotions that will actually be primary promotions through the Internet and then supported through other means.

While the Internet is growing and changing the way we do business, not everybody uses the Internet as his or her primary vehicle for information. That needs to be a part of the marketing mix. Thank you.

John Kosner

I'd like to thank Betsy and Dan for saving me the career-ending experience of following J.C. Watts. The subject this morning is "Fact and Fiction." As we know, there is so much fiction in this business, I'd like to deal with what we think some of the facts are going forward and provide a context for some of this discussion. Where this is all headed is a subject that you think about a lot every day. I'll share some thoughts from the ESPN perspective.

One, we think consumers are going to get content going forward from a variety of devices, often simultaneously. It used to be that you got information on television. Now, there are products like Web TV that allow you take a look at web pages while you're watching television. It's all beginning to evolve and change. Increasingly, we're finding that sports fans will take their PCs and have them in the same room as the television. On campus, you have more broadband connections than the public is going to happen. You'll see it more and more this fall. In addition, the next set of more powerful set top boxes from cable operations will have a cable modem embedded. It will provide many more opportunities for some interesting commerce and interesting content opportunities. They will be merged with the broadcast of your sporting events.

As ESPN, we think we're an early pioneer. We have a product called Enhanced TV, which, basically, provides a synchronous experience. You fire up your PC and watch Sunday night football game or Monday Night Football. It's something we provide separately for the PC. We also did this for the national championship game in college football. You're going to see more and more of this going forward, especially at ESPN, where we combine four analogue television networks with deleting multi-sports sites.

One fascinating thing about our business is that you're getting into multiple numbers of devices. I don't how many people here have Palm Pilots, but the new system has a wireless Internet feature that allows you to get headlines. That's just a start. Almost everybody here has a cell phone. The function of the cell phones over the next years will be completely mind blowing.

One of the enjoyable experiences of my job is that I get to see a lot of very interesting things.

In Japan, the main phone company, NTT, has a separate company called Docomo, which is the leading provider for wireless services in Japan. When you see their presentation, it's like being able to see the future two years ahead. The cell phones all have Internet access. They are all full color. They have tremendous adoption among college age and younger consumers. There are already built-in subscription packages on a model going forward there. The cell phone technology in Japan and Europe is far ahead of where it is here, but it's going to catch up here and it's going to impact your business.

For ESPN, it's all about surrounding the sports fan with the content he or she wants. We look at the world a little differently in that, it's for analogue television networks, it's a leading sports Internet site, and it's a magazine, a radio network. Our goal is to provide the sort of content our consumers want any place they might want it. We've also made a deal with the Palm Seven for headlines. You're going to see more and more attempts on our part to reach consumers every place they might be.

We believe that, in going forward, content is going to get increasingly specialized, personalized, and the consumers are going to pay for it. My alma mater is Stanford University and right now there's not a business model where you can watch Stanford water polo or men's tennis. We think it may take three to five years, but that's going to change. For the audience that cares, we believe they will pay for that content. When we think about our business, we see the .com fading away. It's all going to converge in some form and the lines are going to blow.

I don't know how many people here saw the coverage of the last NFL draft, but if you watched it, you couldn't come away not observing that convergence was here. The screen included persistent promotion for content on ESPN.com and NFL.com and invited the viewer to really participate in the sporting event. This delivered, not only great ratings, it drove Internet traffic up 80 percent in one year. This is pretty amazing considering the traffic for the NFL draft has always been huge for us.

We think that breakthroughs in video over time will be breathtaking. Not just the ability and time to stream more and more events, but personalized nature of what's coming. The camcorder is basically going to come to the Internet. Kids are going to edit their own highlight packages and e-mail them to friends. There are tremendous developments. College students are going to be leaders here because they are going to have the high speed connections sooner than most other consumers.

To quote David Stern, the NBA commissioner, "It's about brand, content and community." At ESPN, we're pretty good on numbers one and two. We spend a lot of time thinking about communities of sports fans. I would say to those of you in this room, you have the true communities. You should cultivate them increasingly over time because that's what advertisers want to reach, that's what consumers want and you have authentic brands, powerful history and the ability to go forward and use the technology.

The last thing I would say is that in our 20-year history in ESPN, we have never erred giving sports fans more of what they want. People will ask, do people really want that? The answer is, to the extent that we can give people what they want when they want it, they do want it and in time, they'll pay for it. There will be many interesting business models to come. It's a fascinating time. I would encourage you to take a look at these smaller wireless devices and not be intimidated by the change in technology, but try to embrace it. If you find it frightening, I would say, join the party. I think we all feel the same way. It is embedded in what you do. It's here to stay and I think it will be terrific for college athletics. Thank you.

Jeff Cravens

I'm just happy to be up here with two people from the NBA and two people from the great state of Kansas, which is truly a wired state. We have the privilege of working with partners in the collegiate community and have learned a lot about this business in the four years that we've been in business. One of the facts is that the Internet is a great communication tool for your constituents. Everybody in this room has various constituencies and the Internet has proven to be a great communication tool for many of those and will continue to be so. We did a survey of our schools and about 10 percent of their constituents have e-mail addresses. That figure is already up to about 70 or 80 percent. It's become the preferred way for a lot of people to get their communication.

Another fact is that several Internet companies who have very significant capital will go out of business in this calendar year. This is a scary thing when you're working for an Internet company. It also shows everybody the challenges of the business. As the market continues to change, it's moved back to a more traditional way to evaluate businesses and an Internet company has to have a good business plan to succeed.

You need to look for the same thing in business partners that you see on the Internet, the same way you would evaluate business partners in various other aspects of your business. Believe me, we get hit with three to four proposals from various companies per week and it's mind boggling how many are out there.

Another fact is that the Internet is very measurable in terms of your audience and the effect you're having, whether it's your ability to merchandise sales when your teams are very successful or whether it's your ability to reach and activate your overall fan base. It is very measurable and your can see how you're doing. As people in the Internet industry have found, this is both a blessing and a curse, but it is true.

I believe like John alluded to, that a specialized content in a broadband environment will be valuable. I do believe, at the university level, there's a lot of specialized content and a lot of people looking to get that content. It is also a one-stop shop for consumers. It's not just content, it's how can I communicate, whether it's season ticket renewals, buying my merchandise, activating new donors. One of the interesting things we found across our network is that our demographic for the people who visit our sites is very heavy in the 25 to 34 demographic. I didn't realize how significant this was until I talked to about 10 of our partners who said they had the hardest time reaching that demographic. Those people are the people coming to your official athletics site.

Some of the fiction is that the .com business is very different. Actually, the Internet is not a different business, but it's a way for you to facilitate part of your business. Anybody who comes and tells you they have the Internet business figured out, I'd be very leery of them. You need to use the Internet as a tool to help your business and it can do so in numerous ways.

There is so much terminology in this business -- heads, page views, visits and unique visitors. The bottom line is how many people are you reaching of your core constituents and what kind of experience are they having.

A lot of people have gone through the business thinking that if you build it, they will come. We've got this great site, we're going to get people to come there. That's one of the most difficult things. The environment you work in has a lot of marketing channels to tell people build your own brand, have it be consistent with the brand message that you're out there. Communicate with those people who are interacting with you on a one-to-one basis.

Thank you.

Betsy Stephenson

You all know a lot more about this topic than anyone else in this room. John, could you explain to the group exactly what broadband means?

John Kosner

Broadband is the connection into your house, your dorm room or office and that will get faster over time from the traditional dial-up that many of us have. The speed of which is determined by the modem that's in your computer. It was 14.4, 28.8. Now, people who buy computers have a 56K modem. There's going to give faster delivery into your home. That's going to make several things possible. One, your computer or your Internet will be more like a utility, where it's always on. That will enable you to interact with it more. Over time, we all believe there's the Holy Grail of better delivery of video into your home. That's going to make possible more video offerings, more subscription possibilities, ability to watch a game over your PC or then connect it to your television set and watch any movie you want. Realistically, I'd agree with Jeff, none of us really know exactly when this is coming or what the model is going to be. I think it's a good three to five years out. It makes sense to think about planning now, but it's not here today. It's going to exist quicker on college campuses than in the mainstream.

Betsy Stephenson

In your industry, as quick as the technology is changing, ticket sales revenue being a huge revenue stream for our athletics departments, is our fan base going to sit at home and listen to the game? We still need them to buy tickets.

John Kosner

I spend a lot of time listening to the gospel of Jane Kleinberger on the subject of ticketing. I think you may see the opposite happening. You may begin to see people react to all of this and crave the real experience. That goes to the kind of event that college athletics continues to be and how it's priced. Dan and I come from pro basketball where the ticket prices have gone completely out of site. You really can't take your family to a game without making a major commitment. By that standard, college athletics continues to be set at a reasonable price. I prefer to view the glass half full which is that these media provides you better opportunities to provide game schedules and making it easier to get tickets. The old days of going to the box office will not be necessary. The Internet will take that over in a good way. The schools that are thoughtful about this will move more tickets and make that experience better, being a real community, which is what college athletics is. Make them feel that they have to be there on Saturday afternoon to get that experience.

Dan Minnix

Nothing will ever replace the experience of going to an event. Hopefully, the Internet will add to that. When you go to a game and get home, you've seen, through marketing, that you can get on-line and check out the media interviews that just took place at the stadium. Maybe there's a promotion that you saw with a ticket number, someone wins a university sweatshirt or tickets to the next game. You can tie all of this into the Internet.

On the flip side, there's the opportunity when they come to the games to have special set ups where they can have computers and get on-line to see the features you have on your Internet site. One of the big things is getting people to register for the site and this will ultimately increase the value propositions for sponsors and advertisers.

Jeff Cravens

Our experience has been that a lot of consumers that go to the official athletics site are not from the general market area of the school. There's a lot within the market area, but there are also a lot of people who have a real thirst for experience. A school can control what they want in a remote location and that's the real value in a broadband environment. I still think that if people have a chance to go to a game, they will do that, because it's much more than you can ever get from sitting in front of a computer.

Betsy Stephenson

That's good news. I have another questions. We hear everyday about Internet gambling and how gambling on our college campuses has escalated and the Internet is making it that much easier for betting to be done on sports. What is your impression? Is that a reality or is it just fiction?

John Kosner

No, I don't think it's fiction. I don't think the Internet is the reason kids are gambling in school, that's a bigger problem. At ESPN, we try to be very careful about anything we would do that would cultivate or encourage that behavior. It's a tremendous concern, not only for college athletics, but pro athletics as well. It's something the government will continue to look at. Most of the gambling opportunities are offshore and that will have to be policed, but I think it's a huge concern.

From the Floor

This addresses an earlier question about ticket sales. Do you think with broadband services or such, that we will have pay-per-view viewing, that we can still leverage that and the whole concept of ticket sales? Will we be still selling tickets for our live, in-person events and could we actually still retain that relationship with our customers within college athletics by selling virtual tickets to our pay-per-view events?

John Kosner

The question is, would you buy the pay-per-view event as a ticket? Would you use the software to enable that pay-per-view distribution?

From the Floor

I guess the question has to do with, in college athletics, the one-to-one relationship and the exclusive relationship they have with their consumer, that they probably don't want to lose that as we have some of our fans who have been travelling to our stadiums, that are now enjoying the same brand from their sofa. It seems as though we still want to track that kind of data within the systems. Do you believe there are ways to begin selling virtual tickets to these events?

John Kosnar

I think the answer is yes. The colleges will make judgements as to whether they're going to be the entities selling it directly to the consumer. Whether they're going to sell it to a third party, like an ESPN or a FANSOnly or, are they going to have their conference broker those rights to the extent that those colleges and universities retain those rights. I think the answer is yes. I don't think we're there today in terms of meaningful pay-per-view offerings coming right off universities. I'm not positive that it's going to represent a substitute for the actual live experience. Over time, if you're an Iowa-wrestling fan and you live in New York, there is an ability to get those matches. It's just a supplemental revenue opportunity because you're in New York and you're not able to get there live. As to whether that gets done as a ticket, I don't know. Schools are well advised to keep their relationship with their consumers, build that list and do everything they can so that the pay-per-view is not an isolated transaction and make it part of everything you're doing.

From the Panel

I would like to add there's a lot of revenue streams associated with live events. It's going to be very important to understand the dynamics of that as you move forward, how you present your product and what you really want your fans to do. The students who attended games have a much stronger affinity for their school moving forward and are more likely to become donors. That affinity of going to the live action is very important to cultivate and keep. It's one of the magical things to keep.

Betsy Stephenson

On behalf of NACDA, I would like to thank our speakers. We appreciate your time. The respective breakout sessions will begin at 10:00 a.m. and we'll see you there.