Harvard Case - Oakland Athletics: Reinventing the Fan Experience and Business Model
"Oakland Athletics: Reinventing the Fan Experience and Business Model" Harvard business case study is written by Dave Rochlin. It deals with the challenges in the field of Strategy. The case study is 17 page(s) long and it was first published on : Nov 1, 2019
At Fern Fort University, we recommend the Oakland Athletics adopt a multi-pronged strategy focused on business model innovation, digital transformation, and community engagement to revitalize fan engagement and secure long-term financial stability. This strategy will leverage the team's unique strengths, including its data-driven approach, innovative spirit, and strong community ties, to create a sustainable competitive advantage in the evolving sports landscape.
2. Background
The Oakland Athletics, known for their 'Moneyball' approach, face a critical juncture. Despite their consistent on-field success, declining attendance, limited revenue streams, and the looming threat of relocation highlight the need for a strategic overhaul. The case study explores the team's efforts to enhance fan engagement through technology, community outreach, and innovative pricing strategies.
The main protagonists are Billy Beane, the Athletics' General Manager, known for his data-driven approach to player acquisition, and David Kaval, the team's President, who is leading the charge to modernize the fan experience and explore new revenue streams.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Data-driven approach: The Athletics have a long history of using data analytics to identify undervalued players and build competitive teams.
- Innovative spirit: The team is known for its willingness to embrace new technologies and approaches to improve operations and fan engagement.
- Strong community ties: The Athletics have a loyal fan base and a deep connection to the Oakland community.
- Cost-effective operations: The team has a history of operating efficiently and effectively, despite limited resources.
Weaknesses:
- Declining attendance: The Athletics have struggled to attract fans to games in recent years.
- Limited revenue streams: The team relies heavily on ticket sales, which are declining, and lacks significant sponsorship deals.
- Outdated stadium: The Oakland Coliseum is considered outdated and lacks the amenities found in modern stadiums.
- Uncertainty about future location: The team's long-term future in Oakland is uncertain.
Opportunities:
- Growing popularity of baseball: Baseball continues to be a popular sport, with a large and diverse fan base.
- Emerging technologies: New technologies, such as virtual reality and augmented reality, can enhance fan engagement and create new revenue streams.
- Globalization of sports: The global reach of sports offers opportunities for international expansion and fan engagement.
- Increased focus on fan experience: Fans are demanding more than just a game; they want a complete entertainment experience.
Threats:
- Competition from other sports: The Athletics compete with other professional sports teams for fans and revenue.
- Economic downturn: A recession could negatively impact ticket sales and sponsorship revenue.
- Rising player salaries: The increasing cost of acquiring and retaining top players can strain the team's budget.
- Changing media landscape: The rise of streaming services and digital media is challenging traditional broadcast models.
Porter's Five Forces:
- Threat of new entrants: High, due to the relatively low barrier to entry for new teams in minor leagues.
- Bargaining power of buyers: Moderate, as fans have limited options for attending major league games in the Bay Area.
- Bargaining power of suppliers: High, due to the limited supply of high-quality players and the increasing cost of player salaries.
- Threat of substitute products: Moderate, as fans can choose to watch games on television or attend other sporting events.
- Rivalry among existing competitors: High, as the Athletics compete with other major league teams for fans, talent, and resources.
Value Chain Analysis:
The Athletics' value chain can be analyzed in terms of primary and support activities:
Primary Activities:
- Inbound logistics: Acquiring and managing players, equipment, and supplies.
- Operations: Training players, playing games, and maintaining the stadium.
- Outbound logistics: Distributing tickets, merchandise, and other products to fans.
- Marketing and sales: Promoting games, selling tickets, and engaging with fans.
- Service: Providing a positive fan experience through entertainment, concessions, and customer service.
Support Activities:
- Infrastructure: Maintaining the stadium, offices, and other facilities.
- Human resource management: Recruiting, hiring, and developing players and staff.
- Technology development: Implementing new technologies to enhance fan engagement and operations.
- Procurement: Sourcing equipment, supplies, and services.
Business Model Innovation:
The Athletics can leverage their data-driven approach and innovative spirit to create a new business model that focuses on:
- Personalized fan experiences: Utilizing data to tailor fan experiences based on individual preferences.
- Dynamic pricing strategies: Adjusting ticket prices based on demand and other factors.
- Digital content and engagement: Creating engaging digital content and platforms to connect with fans.
- Community partnerships: Collaborating with local businesses and organizations to create a strong sense of community.
4. Recommendations
1. Digital Transformation Strategy:
- Develop a comprehensive digital strategy: Invest in a robust digital platform that integrates ticketing, merchandise sales, fan engagement, and data analytics. This platform should be user-friendly, personalized, and accessible across multiple devices.
- Leverage social media and digital marketing: Utilize social media platforms to connect with fans, promote games, and build a strong online community. Employ targeted digital marketing campaigns to reach new audiences and segment fans based on interests and demographics.
- Implement a data-driven approach to fan engagement: Use data analytics to understand fan preferences, predict behavior, and personalize experiences. This data can inform pricing strategies, content creation, and marketing efforts.
2. Community Engagement and Brand Building:
- Strengthen ties with the Oakland community: Invest in community outreach programs, partnerships with local businesses, and initiatives that support local causes. This will build goodwill and create a sense of ownership among fans.
- Develop a strong brand identity: Focus on building a brand that resonates with the Oakland community and celebrates the team's history, values, and innovative spirit. This can be achieved through storytelling, community engagement, and consistent brand messaging.
- Embrace the 'Moneyball' legacy: Use the team's data-driven approach as a unique selling proposition to attract fans who appreciate innovation and strategic thinking.
3. Revenue Diversification and Financial Stability:
- Explore new revenue streams: Diversify revenue sources beyond ticket sales by exploring partnerships with sponsors, developing new merchandise lines, and creating unique fan experiences.
- Optimize pricing strategies: Implement dynamic pricing models based on demand, time of day, and other factors to maximize revenue and optimize ticket sales.
- Invest in stadium upgrades: Invest in modernizing the Oakland Coliseum to improve the fan experience and attract larger crowds. This could include adding new amenities, enhancing technology, and improving the overall aesthetic.
4. Strategic Partnerships and Alliances:
- Form strategic alliances with technology companies: Partner with technology companies to develop innovative fan engagement solutions, such as virtual reality experiences, augmented reality games, and personalized content.
- Explore international partnerships: Expand the team's reach by partnering with international organizations and exploring opportunities in emerging markets.
- Collaborate with other sports franchises: Partner with other sports teams to create joint ventures, share resources, and leverage each other's strengths.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations leverage the Athletics' core competencies in data analytics and innovation while aligning with the team's mission to build a winning team and create a positive fan experience.
- External customers and internal clients: The recommendations address the needs of both external customers (fans) and internal clients (players, staff, and management).
- Competitors: The recommendations consider the competitive landscape and aim to differentiate the Athletics from other teams through innovation, community engagement, and a unique fan experience.
- Attractiveness ' quantitative measures if applicable: While specific financial projections are not provided, the recommendations aim to increase revenue, improve profitability, and enhance the team's long-term sustainability.
- Assumptions: The recommendations assume that the Athletics can successfully implement the proposed strategies and that the sports landscape will continue to evolve towards a more digital and personalized experience.
6. Conclusion
By embracing digital transformation, community engagement, and business model innovation, the Oakland Athletics can reinvent the fan experience, secure long-term financial stability, and solidify their position as a leading franchise in Major League Baseball. The team's unique strengths, including its data-driven approach, innovative spirit, and strong community ties, provide a solid foundation for success.
7. Discussion
Alternatives not selected:
- Relocation: While relocation could provide access to a larger market and a more modern stadium, it would also alienate the team's loyal fan base in Oakland and potentially damage the team's brand.
- Status quo: Continuing with the current business model would likely lead to continued decline in attendance and revenue, making the team's long-term future in Oakland unsustainable.
Risks and key assumptions:
- Implementation challenges: Successfully implementing the proposed strategies requires significant investment, organizational change, and a commitment to innovation.
- Changing fan preferences: The recommendations assume that fans will continue to value the digital and personalized experiences proposed.
- Economic uncertainty: The global economic climate could impact fan spending and sponsorship revenue.
Options Grid:
| Option | Benefits | Risks |
|---|---|---|
| Digital Transformation | Increased fan engagement, new revenue streams, data-driven decision making | High investment costs, potential for technological disruption, need for skilled personnel |
| Community Engagement | Strengthened brand identity, increased fan loyalty, positive public image | Time-consuming, potential for misaligned initiatives, need for effective communication |
| Revenue Diversification | Reduced reliance on ticket sales, increased financial stability | New ventures may not be successful, potential for cannibalization of existing revenue streams |
8. Next Steps
- Develop a detailed implementation plan: Outline specific actions, timelines, and resource requirements for each recommendation.
- Secure funding: Identify funding sources for the necessary investments in technology, infrastructure, and community initiatives.
- Build a strong leadership team: Recruit and develop leaders who are passionate about innovation, fan engagement, and community building.
- Communicate the vision: Clearly communicate the team's vision and strategy to fans, staff, and stakeholders.
- Monitor progress and make adjustments: Continuously monitor the implementation of the recommendations and make adjustments as needed.
By taking these steps, the Oakland Athletics can embark on a transformative journey that will revitalize the fan experience, secure long-term financial stability, and solidify the team's place in the hearts of Oakland and beyond.
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Case Description
This case focuses on the Oakland Athletics, one of Major League Baseball's (MLB) 30 franchises, in its quest - starting during the 2018 season - to reinvent the fan experience through design thinking and business model innovation. Throughout the franchise's five decades in Oakland - from original owner Charlie O' Finley to current head of baseball operations Billy Beane - the A's have had a history of innovation, both on and off the field, to create championship-caliber teams. Most of this organizational scrappiness has been largely driven by economics Even though the A's operate in the sixth largest metropolitan market in the U.S., they share the market with its more successful cross-Bay rivals, the San Francisco Giants. The A's also have one of the smallest payrolls in MLB; occupy the fourth-oldest stadium that is also the last multi-purpose venues in sports; and have seen home attendance and revenue consistently fall below the MLB average for most of its 50 years in Oakland. With plans to build a new ballpark in Oakland by the 2023 season, and faced with declining MLB attendance in general and the loss of a key small market exemption in particular to the A's, Chris Giles, the team's chief operating officer, is challenging long-accepted MLB marketing principles in the hopes of reinventing the fan experience and customer offerings at its present Oakland Coliseum home - with the intention of applying the most successful business innovations at the new ballpark and designing the new facility to best accommodate them.
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