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Commodity

Even if you don't think you do, you already know plenty about commodities. Want us to prove it? No problem.

What makes oil produced in Saudi Arabia different from oil exported from Nigeria? It's the same thing that makes the corn you ate at last summer¿s barbecue different from the corn used to produce ethanol. Stumped? Well, don't feel bad, it's a trick question. The answer? Absolutely nothing. Corn is corn no matter where it comes from -- just as wheat is wheat and natural gas is -- right! -- natural gas. (Though the quality may differ, the make-up is uniform.)

So, in less elaborate terms, corn and oil (and all other commodities) are homogenous goods that can be processed, resold and more often than not, used as an input to the production of other goods or services. These goods are traded on a commodity exchange, thus setting the price-per-barrel (or other metric unit) used to value them.

Now pay attention, here's a question that indeed does have an answer: What is the difference between a commodity and a stock? While a stock can tank and become worthless, a commodity cannot have its value be wiped to zero. One other difference: Most commodities are traded in futures, meaning traders buy and sell where they think the price of a product will be at a certain point in the future. Stocks trade based on the value of the underlying company at that point in time.

Home / Personal Finance / On Topic / Sports

Arena Football Faces Marketing Challenges, Interest from Investors

 
 

NEW YORK--As Arena Football grows with high-profile investors, so do the challenges it faces to raise attendance and interest from a wider audience.

“Right now the main challenges are marketing and promotion,” said Neal Pilson, owner of Pilson Communications and consultant for the Arena Football League. “[Arena Football] is not the same as the NFL, but it’s not trying to be, and getting that across- the fact that [Arena Football] has something different to offer- that is the challenge.”

Although somewhat similar to American football, an Arena Football field is about half the size of a traditional field, (50 yards long by 28 yards wide) and all games are played indoors. Eight players field offense and defense, yet the scoring system is identical to that of traditional football. Scores at games usually reach 50 points or more per team.

Because the field is smaller and in an enclosed arena setting, “You are right on top of the action,” said Pilson. “It's a spectator sport. Being there for the entertainment and the smoke and the loud music, that’s what makes [Arena Football] great,” he said.

Yet, the need to be present at a game to sense the excitement may be Arena Football’s greatest challenge.

“Arena Football is underexposed,” said Terry Lefton, editor at large for Sports Business Daily. “People don’t sample it on T.V enough, because the sad thing is, it’s more fun on site. I’m flipping through the channels, and I have never seen it before, what is going to make me want to stop and watch?,” he asked.

Arena Football also faces stiff competition from other sports, as well as entertainment mediums such as video games and the Internet, according to Lefton.

“Today there is more competition than ever before for your entertainment dollar,” he said. “The promise [of Arena Football] is that they will satiate American’s supposedly insatiable appetitive for American football, but is this American football? Not necessarily. It’s a creature unto itself that happens to be played with a ball that’s the same shape.”

Around for a little more than 20 years, the AFL debuted its first season in 1987 with four teams, the Chicago Bruisers, Denver Dynamite, Pittsburgh Gladiators and Washington Commandos.

“How was the NFL doing at 20?” asked Lefton. “Not very well. College football was killing them, so from that perspective, the AFL is doing great. It’s just a question of how many football fans really consider [Arena Football] to be football.”

In 2007, AFL teams averaged 12,415 attendees per game, and the average ticket price was $27. In 2005, average NFL attendance was 66,409 per game, and tickets cost approximately $176.26.

Today, the AFL has seventeen teams in cities across the nation, including Philadelphia, where the Philadelphia Soul, owned by Jon Bon Jovi, has been fielding a team since 2003.

“We are a ticket-selling business,” said Rich Lisk, general manager for the Philadelphia Soul. “We concentrate on selling tickets. I tell my staff, we can’t control what happens on the field, but we can control what happens here. I am trying to market to a family of four to five.” The fan of Arena Football is typically a single male in his 20’s, according to the AFL.

In order to get families to attend Philadelphia Soul games, Lisk said he implemented a “homework lounge,” in which two teachers from nearby Villanova University were hired to help attendee’s children with their homework for two hours before every game. Approximately 20 to 50 children use the homework lounge per game.

“We still have the young men who come,” said Lisk of AFL's audience. “But this makes it easier for the families to do games on a Monday night.”

Lisk agreed that the main challenge in promoting the Philadelphia Soul is the stiff competition against  entertainment alternatives.

“In Philly, there are a lot of options. You’ve got every major sport, plus Minor League [Baseball], Great Adventure [amusement park], and the Jersey Shore to compete with,” he said. “We are just trying to carve out our niche in the marketplace.”

In the next few years, Lefton said the AFL may seek further support from the NFL.

“I think they will continue to pursue their strategy of aligning themselves with NFL owners, and if that continues they will form an alliance with them that will only help [the AFL] in the long haul. Lining up with some pretty powerful people like John Elway [who owns the Colorado Crush] is going to save them in the end,” said Lefton.

The January OnTopic series covers the business of sports. Click here to read more from this month’s coverage.

 

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