Aug 15, 2022 Published On: Sports Business Journal

In the HEAT of the moment

Miami’s 601 Analytics group gives the team a real-time data analytics edge, which it’s willing to share with others.

The Miami Heat’s social media team reached out to Matthew Jafarian in early August with a hunch. The social folks wanted to run a paid ad campaign online around the NBA’s 2022-23 schedule release with a focus on the importance of buying early for fans.

Their email arrived at 601 Analytics at 10:48 a.m.

Jafarian, the Heat’s executive vice president of business strategy and co-head of 601 Analytics, the 30-plus-person data analysis startup created within the Heat organization that is expanding beyond the organization’s walls, wasn’t even sure that buying tickets early was better.

601 Analytics helps the Heat collect and make sense of its data, often in real time. That information is steering significant parts of the team’s business just as it has reemerged as an NBA championship contender.

The 601 Analytics team ran the numbers for the Heat social media team and in just over an hour sent back a multilayered analysis that determined buying early for high-demand games was in fact smarter for fans because they got better prices. When the NBA schedule is released this week, the Heat will run social media ads encouraging fans to buy early for those games.

“That speed allows our team, the Miami Heat, to make decisions quickly and move the business in the direction it needs to,” said Jafarian, who works alongside Edson Crevecoeur, Heat senior vice president of strategy and data analytics.

The road to 601 Analytics’ present began in 2014 when the Heat hired Crevecoeur, who along with Jafarian created the startup. Crevecoeur, a 20-plus-year veteran of designing and building enterprise-level data initiatives, wasn’t initially looking to build a data analytics company. But when the Heat went to market looking for help with data analysis, the team didn’t find what it needed, so the organization and Crevecoeur built their own.

“This is an idea that started inside the Miami Heat. We realized we needed a solution,” said Jafarian, who joined the organization in 2016. “When we were a low-demand team, it helped us prop up the business. Now that we’re a high-demand team, it’s helping us maximize the business.”

It’s no longer just the Heat benefiting from capabilities.

After several years of testing and development — and likely seven figures worth of investment, according to Jafarian — 601 quietly partnered with the Milwaukee Bucks in 2020, an R&D-heavy deal that has just been renewed for another two years. 601 then became the official provider of league wide attendance and ticketing data for the NBA a year ago, and just added its first non-NBA teams through a deal with Ilitch Sports & Entertainment, which includes the Tigers, Red Wings, Comerica Park and Little Caesars Arena. Conversations with several European soccer clubs are also underway.

“They have a specific value proposition unique to them,” said Sumathi Thiyagarajan, Milwaukee Bucks vice president of business strategy and analytics. “They not only provide the data engineering, but they are also able to understand our business problems better than other vendors because they’re living it on a day-to-day basis with the Miami Heat.”

One of the most appealing 601 offerings is real-time data analysis, available through a native app the company has developed. The data that 601 is collecting, like show rates at NBA buildings or detailed portraits of individual ticket holders, has been put in a central location accessible to NBA teams.

“We at the league and teams, individually, have a lot of appetite for the ability to understand what is happening in their buildings in real time,” said Matt Wolf, NBA senior vice president of team marketing and business operations.

601’s predictive capabilities helped the Heat accurately predict game attendance, enabling them to deploy workers and resources intelligently. During games, the platform, running on Microsoft Azure, can be accessed through an app on a phone, and it houses the 360-degree fan profile that many sports entities speak of covetously, making it equally useful to guest services or fan experience-related decision-makers. Jafarian shared his screen with a reporter showing a Miami Heat fan’s profile and, for example, the amount of Wi-Fi data they consumed while at FTX Arena, how many times they’ve transferred their tickets, or how much they spend in the arena.

On non-game days, challenging long-held assumptions is one of 601 Analytics’ specialties. The Heat historically held a dim view of ticket brokers, but 601 Analytics determined that tickets to less desirable games should in fact be steered toward brokers because their buyers showed up 10% more often — and subsequently spent money at FTX Arena — than when the tickets were sold to groups.

601’s NBA team roots show up in how it works with outside clients’ data. Some data analysis companies sequester clients’ data; when the relationship ends, the client must retrieve its data and then migrate it to the new vendor. Some vendors charge annual data storage fees, and some charge extraction fees when a relationship ends. 601 Analytics, whose competitors would include KORE Software and Kraft Analytics Group, does everything in the clients’ data environment and charges no fees.

“They understand that the ability of an analytics partner to conform and adjust to the data environments that teams have already invested in is a critical ingredient toward their success,” said Wolf.

Jafarian said 601 Analytics is profitable, owing to its selectivity in adding clients. The Heat has received outside inquiries about investment in 601, though nothing has materialized.

“It’s more about a strategic opportunity versus just an investment of funds, which is not something we really need,” Jafarian said. “There have been several inquiries, and they continue to come.”

The company is entering a more aggressive third phase of existence, after initially testing the waters and then launching its product early in the pandemic. It’s not clear if the Heat would ever spin off 601 Analytics, but Jafarian said “nothing is out of the question.” Regardless, it’s clear the Heat built something of value that most teams don’t have the appetite or wherewithal to replicate.

“I can’t speak to the full dollar amount, but my understanding of how much data systems cost is in the millions,” said Thiyagarajan. “A company that understands our business problems, and a company that’s willing to enter new spaces together, a monetary value is hard to put on that.”