My mentor was the late Chuck Fruit at the Coca-Cola Company. He told me the simplest sponsorship marketing rule, but one that to this day stands the test of time: “Buy what you need, and use what you buy.” Too many sponsors today do not apply this simple wisdom, and as a result typically overinvest and under-leverage their assets.
However, when I read that Coca-Cola has taken over the sponsorship of the MLB from arch-nemesis Pepsi, it seemed that Coke had not applied my treasured Chuck-ism in its decision-making.
In addition to now being allowed to call itself the “official soft drink partner of Major League Baseball,” Coke also has individual deals with 18 league teams, versus 11 for Pepsi. These deals typically come with stadium-exclusive pouring rights, as well as airtime packages, on-air presence in the form of “brought to you by…,” tickets for promotions, and usage rights of logos and other paraphernalia.
So, was the MLB platform a sponsorship deal that Coke needed? MLB ratings have been steadily trending down over the last three decades. They did show an uptick in 2016 -- which some call the Cubs Bump -- but it remains to be seen if the trend continues in 2017. Even with the 2016 bump, MLB ratings are still well below their peak from the mid-1980s.
And with the decline came a second trend: The ratings are skewing old. This is true for both the TV broadcasts as well as in-stadium attendance. The MLB has even started to think about changing the game itself to make it shorter and thus more exciting.
Do teens and young adults not care about sports? Sure they do, but not so much the sports you and I grew up with. The new kid on the block is e-sports. And it is huge.
If you want a good primer on the history and current state of professional e-gaming, go over to Wikipedia, which has a very good overview on the phenomenon. There you'll learn that the MLB has done a deal with Riot Games to split revenues of the League of Legends e-game tournaments and play through 2023.
What has the League of Legends got to do with baseball, you ask? Nothing. But it has a lot to do with money and ratings and young digital viewers. Because that is the other thing about e-gaming. Unless you go online, you will not see most of the big tournaments and events. It is of course totally unsurprising to see that the largest chunk of e-sports viewing happens on laptops, tablets, gaming consoles and other devices not hooked up to cable.
The MLB paid $300 million for the League of Legends privilege. You see where those Coke dollars came in handy? The MLB was smart to diversify its sports portfolio, but was Coca-Cola smart in buying the “old world” MLB sponsorship, with at best a so-so audience size that skews way old? Buy what you need, indeed!