NFL ratings dip and concern increases

Pundits are coming up with all sorts of reasons for the dip in NFL ratings, even though the league remains our nation’s popular sports league.

Many are pointing to the current presidential election as the reason for the lower NFL ratings. This is the sort of campaign that we’ve never seen before and it has created record ratings for the cable news networks. Others are pointing to a lack of stars (Peyton Manning has retired, Tom Brady just returned to the field). Others say the National Anthem protests have turned some fans off, while others point to a handful of teams that haven’t been good for at least a decade. (Think Cleveland, Miami, Tennessee, Jacksonville, Chicago, etc.)

NFL ratings
NFL ratings are down and the reason is an oversaturated market.

The presidential election is an interesting answer because, as Peter King of Sports Illustrated reported this morning, NFL ratings tend to sag a bit during presidential election years.

However, the drop has been even greater this time. Ratings are down 13.4% from last season, nearly double the drop of the worst election year decrease of 2000 (the Bush-Gore race). Is it just because Donald Trump has turned this election into a carnival act that’s accomplished the decline?

Over saturation has created the NFL ratings drop.

I don’t think so. I think there is something else brewing here. Mark Cuban predicted this NFL ratings decrease a few years ago because the league has oversaturated the market.

I agree, and think the NFL needs to think about what it can do to make its games more important. Right now, you practically get the NFL 24/7. There’s the NFL Network, there is a game every Thursday night and, last Sunday, there were four back-to-back games with an early contest airing from London in the morning.

Scarcity is actually a value, and one that’s hard to come by in today’s world. The internet and social media gives us access to anything at any moment, so scarcity is hard to come by. To be scarce enough to create importance means you must take control of your brand.

Think about Krispy Kreme. It held a cherished spot because access to it was hard to find, becoming the darling of Wall Street and southerners. I had relatives visit me (here in North Carolina) who wanted to go to a Krispy Kreme first thing.

Then Krispy Kreme went on an expansion kick, and the value of the brand quickly became diluted. The NFL has been on a different kind of expansion kick, and its lower ratings are the result.

Now, maybe we see returned spike after the election (although don’t think the news cycle will completely go away) and as the playoff races heat up. But the larger problem still exists. For the NFL ratings to return to normal levels, the league needs to slow down its plans to expand into Europe, eliminate the Thursday night games (which are usually terrible anyway) and realize that scarcity is a value.

Fatigued football fans is the result.

Home2 Suites by Hilton is the worst

I am a Hilton Diamond member. This puts me into elite status as a customer of their brands. It also means I travel so much on business during the year that I spend my life in airports and sleep in unfamiliar beds, sheets and pillows. It entitles me to a free breakfast (believe me, you get what you pay for), complimentary Wi-Fi and a bottle of water when I check in.

I am in Seattle on business today and I am staying in another Hilton property (I hesitate to call it a brand) called Home2 Suites by Hilton.

Home2 Suites
Hilton can do better than its Home2 Suites.

It is quite seriously the dog ugliest hotel I have ever seen. It looks like it was built from corrugated metal and scrap. From the outside, you would expect to enter the lobby and find folding chairs.

When I checked in last night. I told the very nice desk attendant that the hotel was the ugliest thing I had ever seen. Her reply was interesting. “Yes,” she said. “We are an extended stay hotel.”

I guess in order to qualify as an extended stay hotel it has a prerequisite of being hard on the eyes.

The limited service at Home2 Suites.

As I write this blog from my hotel room, please excuse any ramblings or tirades. I am not quite myself. You see the rooms are not soundproof and the gentleman in the next room apparently can’t sleep with the TV on full blast with a never-ending parade of action movies. I have the opposite affliction and was not able to sleep with explosions and bad acting ricocheting around my room all night.

Despite telling the front desk about this, that TV is still in a continual loop here at breakfast time. I am assuming that limited services in extended stay also apply to front desk help.

Home2 Suites is poor excuse for a hotel and has no place in the Hilton brand. (And I know something about the Hilton brand, having done brand work for Hampton Inns, Doubletree and Homewood Suites.)

This is a terrible industry for branding because the chains slice and dice the category into such fine segments that you can see through them. They think we know the difference between their descriptors of those who stay at their brands. Here I am. Staying at Home2 Suites. Who am I?

Hilton has no brand permission to be in this low tier segment. It is a boil on the brand’s butt.

So who am I? Well, I am a chump, according to this past stay. Let’s see if they have that as a market segment.

Is Bass Pro Shops buying Cabela’s a good idea?

Earlier this week, Bass Pro Shops announced it is acquiring Cabela’s for about $5.5 billion. The acquisition will double its number of stores.

Bass Pro Shops
Does Bass Pro Shops really need to buy Cabela’s?

From an operational perspective, this completely makes sense. Bass Pro Shops has a great reputation in outdoors sports and recreation, particularly in fishing and boating. Cabela’s, on the other hand, has focused on hunting and fishing. While both brands offerings overlap, Cabela’s can help Bass Pro Shops fill in some gaps in product offerings and vice versa. (Assuming, of course, that Cabela’s is not swallowed up by Bass Pro Shops.)

The problems facing Bass Pro Shops.

However, there could be a problem. While on the surface, the two brands might seem to share a common customer interest and, with that, their customers may even share common values and purchase drivers.

But it may not be as simple as that. Does being owned by Bass Pro Shops reduce the focus that Cabela’s has on shooting sports, for example? I doubt that there is much difference in the type of customer. I can only hope that both brands leverage their strengths to the betterment of the other. But a merger of two rivals can often have some unintended consequences.

The most interesting and potentially problematic part of this acquisition is the tremendous amount of real estate that Bass Pro Shops is getting. It will get 85 more stores with about 19,000 employees. Geographically, there is some overlap, especially in the east. Some stores will have to be considered for closure.

And this is the root of the potential problem.

The retail segment is struggling. Sales are declining and more and more retailers are scaling back. It is a very risky business proposition to make a $5.5 billion investment in a business on the decline. While Bass Pro Shops would likely argue that its locations are destinations, the reality is that it is not immune to the changing buying habits of today’s consumer. We may be writing about how Bass Pro Shops is closing stores to maintain its profitability, if the downward trend continues for brick and mortar stores.

Bass Pro Shops is a privately held company and does not divulge its sales numbers. But Cabela’s does and, like many of the big box retailers, it has reported either declines in same store sales or, as in its most recent filing, a reduction in profits due to massive discounting. All is not rosy in outdoor sporting either.

Bigger is not always better, especially in the current retail environment. A year or so from now, this acquisition may a $5.5 billion mistake.

Amazon’s gamble with planes for Prime Air

Amazon recently showed off one of its new 767s that will ship some of its products purchased through the site, with Prime Air printed on its side. Last spring, Amazon announced that it was going to lease 40 such planes in an effort to curb some of its shipping costs.

Prime Air
Amazon Prime Air planes are soon to be crowding the skies.

Recently, shipping costs have outpaced sales growth, cutting into Amazon’s bottom line. In fact, in 2015, Amazon spent a whopping $5 billion on shipping expenses. Leasing the planes is a pretty clear demonstration of Amazon’s desire to streamline its logistical and delivery network.

Amazon trucks have delivered its products for quite some time, particularly with its 2-hour delivery service, Amazon Now, and its grocery fulfillment, Amazon Fresh. However, manning an airplane fleet is a much bigger and costlier proposition and is sure to disrupt what we know of traditional air shipments. Amazon’s hope is that the Prime Air planes will substantially reduce that $5 billion shipping cost.

Prime Air planes may not be such a gamble.

What does this mean for UPS and FedEx? They both should be extremely worried. Both FedEx and UPS depend on Amazon, with the online retail giant accounting for a large share of its business. But you can’t stop progress and it naturally fits for Amazon to take on those duties on its own.

For it to work, Amazon must secure an internal delivery and logistical system that also makes great brand sense. (Much like when FedEx purchased Kinko’s years ago in part because the brands of FedEx and Kinko’s aligned with each other so well – each were about piece of mind.) Amazon’s brand features a sense of discovery and convenience because it has everything you need that you can get easily. A key component of that is actually getting the physical items to the person who ordered them. That’s where the Prime Air planes fit in.

If Amazon can do it with the same or better efficiency as FedEx and UPS, why would Amazon do anything else?

Think about it. Amazon only has to do it as well as FedEx and UPS for this to succeed. That could be the catch because, if Prime Air can’t match that service level, the Amazon brand could be damaged significantly.

However, my money is on Amazon.

Apple Sirius XM would be a bad fit

The battle over market share in the automobile industry will be fought over technology, according to a study by Nielsen. With that in mind, CNBC’s Jim Cramer said an Apple Sirius XM acquisition would make sense so Apple can own more space in auto technology.

For the first point, consumers are already expecting a greater level of technology in their cars. Most of us have become accustomed to using Bluetooth to play music and podcasts from our phones through the auto’s stereo system. And GPS is now simply a table stake. It’s what you have to have to even be a car manufacturer.

But the stakes are getting higher because the differences between automobiles are small. They all last longer, get better gas mileage and have similar designs.

Now, though, the new expectation is that all cars will have rear camera mirrors, smartphone-linked media functionality, blind spot detection, surround view cameras and smartphone-navigation interfaces. If they don’t have those things, then you can’t be manufacturing cars.

That doesn’t even take into account the coming of driverless cars. Like most of our devices, we’re expecting our cars to be smart, just like our phones and, for some of us, our homes.

Apple Sirius XM would not fix Apple’s issues.

That’s why Cramer is proposing the Apple Sirius XM acquisition. Apple is reported to be working on a car itself. Even if that doesn’t happen (and I have my doubts), Apple wants to be more important inside the car than it is now. Just like any technology company.

Apple Sirius XM
Apple doesn’t need Sirius XM.

But Apple Sirius XM is a bad fit. While Sirius XM is adding subscribers, it doesn’t fit within Apple’s brand. Apple doesn’t have permission to own Sirius XM. Actually, more accurately, Sirius XM doesn’t fit into Apple’s brand of “Think Different.” Sirius XM is radio and, while that has value, it does not represent the true innovation that has made the Apple brand.

Admittedly, Apple has lost its way a bit in fulfilling its brand promise. The brand that Steve Jobs built set very high expectations that Apple hasn’t met recently. It just keeps trotting out new versions of the products it already has, while purchasing Beats in an attempt to goose Apple Music. What would it need Sirius XM for?

If I were Apple, I’d concentrate on new products, not just acquiring new properties in the hope that they will help. Any new innovation must come from Apple. Because the reason people buy Apple products and stand in line for the first run of them is because of the brand.

If the new product or service does not represent “Think Different,” than Apple shouldn’t do it. And Sirius XM is not different.