Sports marketing — the association that companies have with professional sports teams, venues or athletes — held its own during the economic slump that struck the advertising industry. In spite of waning fan interest and the threat of a players’ strike, corporate sponsors of Major League Baseball will shell out some $170 million this year for promotions, media buys and carriage fees. Reebok’s $250 million marketing and merchandising deal with the National Football League is one of the company’s biggest partnerships ever. And NASCAR sponsors continue to spend $10 million and up each just to put their logo on the hood of a racecar.
The popularity of sports notwithstanding, challenges abound, warns Richard Luker, president of Leisure Intelligence Group, a sports consulting firm in Ann Arbor, MI. “The days of ‘sports marketing’ may be numbered. The future is in ‘leisure’ marketing that is consumer-centered,” Luker says. Luker adds that professional sports no longer lie at the center of Americans’ leisure space. The transformation was hastened in part by last year’s terrorist attacks, which caused people to think more about the value of life and less about “fun” things.
For now, however, marketers continue to spend heavily to be associated with the “big five” sports organizations: Major League Baseball, the National Football League, the National Basketball Association, the National Hockey League and the National Association of Stock Car Auto Racing. Companies will commit an estimated $35 billion to sports marketing this year. The bulk of it is spent on advertising, but more than $7 billion will go to event and venue sponsorships and athlete endorsement deals.
Major League Baseball
Major League Baseball, in the midst of critical labor negotiations between players and owners, still reaps the benefits of corporate sponsorship. Blue-chip backers include Pepsi-Cola Co., Pfizer (Viagra), MasterCard International, Schering-Plough Corp. (Clarinex), and Anheuser-Busch Cos. This summer’s Major League All-Star Game featured such corporate-driven events as the Century 21 Home Run Derby and the Clarinex All-Star Workout Day.
“Through our MLB partnership, we are able to reach millions of baseball fans and allergy sufferers,” Rich Zahn, president of Schering Laboratories, said in announcing his company’s one-year sponsorship agreement.
Baseball fans are a restless bunch, however. A recent ESPN Sports Poll found that fan interest in major league sports teams has declined over the past five years. Moreover, baseball appears to be losing its position as the favorite sport of blue-collar America. The ESPN poll also reported that the number of fans who earn less than $30,000 per year has declined 7% since 1997.
Icing the hockey market
Hockey fans are rabid. Problem is, there aren’t that many of them. Still, the National Hockey League claims success in renewing corporate sponsorship agreements with nine of its 10 biggest partners in the past year, including Coca-Cola (for four years), Dodge (three years), Labatt Brewing Co. (five years), and MasterCard (five years). The NHL also signed on Sun Microsystems, The Quizno’s Co., and PowerBar Inc. as new corporate sponsors this year. The league focuses its efforts on 18-to-34-year-old men and households with children.
“From a national perspective, in terms of rights, promotional marketing, and advertising, we’ll do in excess of $350 million this year,” said Andrew Judelson, the NHL’s vice president of corporate marketing, who adds that the league’s take has swelled from just $25 million in 1992.
The NBA without Mike
The National Basketball Association has its own future issues. Interest in the NBA waned among fans when superstar Michael Jordan announced his retirement. Even Jordan’s return to the game last year has not fully rekindled the fire. Still, the NBA has scored a number of substantial sponsorship agreements, some of them unusual. Children’s toymaker The LEGO Co. this year bought the right to use NBA league and team logos in a multi-year marketing and merchandising campaign, and will sponsor the LEGO Creative Play of the Week.
The NBA recently renewed a deal with one of its longest-lasting marketing partners. The multi-year agreement with The Gatorade Co. will include player endorsement deals, team partnerships, and “courtside presence.” Gatorade has been a league sponsor since 1984.
Kicking around the NFL
The National Football League continues to rake in big corporate sponsorships. Adolph Coors Co. has committed $300 million over five years to be the NFL’s exclusive beer sponsor. The company also gets the rights to promote its affiliation using team logos.
“We have the NFL shield to play exclusively, which puts us in a good competitive position to have the merchandising and the topspin across the country. We feel good about it,” Coors president Leo Kiely told analysts during a company conference call in late July.
Reebok last year signed a $250 million contract to be the league’s exclusive apparel supplier, but the NFL’s most famous logo — the blue star of the Dallas Cowboys — won’t be part of the deal. Dallas owner Jerry Jones opted out, saying the team will handle its own merchandising, thank you. Cowboys duds account for about 15% of the $3 billion consumers spend on NFL merchandise each year, according to the Sporting Goods Manufacturing Association. But merchandise sales show signs of leveling off.
NASCAR marketing zooms
The most sponsor-friendly of the major sports leagues remains NASCAR, beneficiary of a $2.4 billion TV rights deal with NBC and Turner Broadcasting. Once limited to a few dirt tracks, the stock car circuit has morphed into a national phenomenon, and sponsors are falling all over each other buy in.
And why not? Ever hear an interview with a NASCAR driver after a big race? Picture him, adorned in overalls blanketed with sponsors’ endorsement patches, and wearing a logo-covered cap. It might go something like this: “It was an awesome win for the Discount Auto Parts Viagra Jiffy Lube Home Depot Miller Lite DeWalt Tools Chevy. I just have to thank my Hill Bros. Coffee Mr. Goodwrench America Online pit crew for doing a fine job....”
NASCAR fans have come to expect the hype, says Andrew Rohm, a sports marketing expert at Northeastern University in Boston. “There is always the debate about whether the athlete is touting a product because the company pays him, or because it improves his performance, but I think the NASCAR consumer looks past that,” Rohm says.