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Sweat Equity
While corporate dollars invested in sports has skyrocketed nationally,
sports marketing on the local level remains a door-to-door sell
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Business New Haven
9/4/2001
By: Michael C. Bingham
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Once upon a time, sports was organized play. Now, it may be the fastest-growing industry of all.
“Americans have been transformed into a nation of sport fans and sport participants,” observes University of Connecticut researcher John Douvis, “as more than 40 percent of them participate in an athletic activity at least once a week.”
Even more than playing, we're watching. “Sports coverage by the electronic and printed media has also grown,” Douvis observes, “and together with the unbelievable competition between the different sport products and programs, have transformed the sports market into a multi-segment industry. Organizations of all types are fighting for the sport consumer's discretionary time and money.”
Especially money. Today, companies line up, fists brimming with cash, to associate themselves with sporting events, teams and individual athletes. And the forms these associations assume are limited only by the bounds of human imagination.
Logos on team jerseys. Footwear (Michael Jordan made significantly more money shilling for Nike than he ever made actually playing basketball). Event naming rights (e.g, the “Nokia Sugar Bowl”). In our lifetimes it's unlikely we will ever again see contructed a major professional sports facility that doesn't have a company's name attached to it - often at a $100 million-plus price tag?
Has the world gone mad? Maybe - especially when you consider that our would-be role models have never seemed more tarnished (think of Rae Carruth, or Patrick Ewing's Gold Club escapades in Atlanta).
Details, details. Corporate marketing executives can't get enough of sports audiences, particularly sports spectators.
What's so special about a person who buys a ticket to a game? For one thing, “From a marketing perspective, it's hard to reach males,” explains Cleary Simpson of New Canaan, executive vice president of Time Inc.'s Sports Illustrated (see related story, page 3). “But the core passions of the sports fan are still so strong that it continues to attract companies to these huge-price-tag opportunities.”
But it's not just at the Super Bowl/World Series level. Moreover, it's not just the fan himself, but the experience of viewing sporting events.
“When people come to a sporting event, they're relaxed, they've left their day-to-day worries at the office,” explains Angelo Mazzella, general manager of the New Haven Knights, who begin their second year of play in the United Hockey League October 12 at Veterans Memorial Coliseum. “They're more receptive” to marketing messages.
In their first year on ice Mazzella's team nabbed a few national companies such as Nextel and Dodge, but naturally were more dependent on local sponsors such as New Haven's A-1 Toyota and the United Illuminating Co.
While Mazzella describes the New Haven-area business community as “very receptive and supportive” of the still-new team, he acknowledges that selling sports marketing on a local level “is always a battle. We try to tailor corporate packages to individual companies' needs” - for instance, dasher-board signage with on-ice, between-period promotions.
But even locally, the disparity between the haves and have-nots can be enormous. At the top you have last month's Pilot Pen tennis
Tourney (“presented by Michelob Light”), which successfully markets its high-end audience to upscale national brands. Then there are the minor-league players such as the Eastern League's New Haven Ravens and newcomer Knights, which hustle to sell auto dealers and beer distributors. The scramble for company dollars extends all the way down to the high-school level, where volunteers work the phones to sell $50 program ads to the corner deli.
The Ravens, which just ended their 2001 campaign, offer sponsorship opportunities including Yale Field signage, promotions, print advertising, spots on radio broadcasts of games on WAVZ-AM and advertising on the team's Web site (www.newhavenravens.com).
The baseball team this year snagged a few national advertisers such as Schick and Sprint PCS, but most of the corporate dollars come in the hard way - a little at a time - from local companies such as Viglione Heating & Cooling or Premier Subaru.
Three years after it morphed from a men's to a women's event, organizers at the Pilot Pen tennis tourney feel their event has achieved traction - at least with the live audience.
This year's event, which took place August 19-25 at the Connecticut Tennis Center in New Haven, set not one, but two new attendance records during the week: the 8,485 who turned out to see Lindsay Davenport dispose of Amelie Mauresmo (6-4, 6-4) the evening of Wednesday, August 22, and then the 10,107 who attended the singles semifinals two days later in an evening session. The previous attendance record of 8,113 was set during the 2000 final.
The final match, won by Venus Williams, was broadcast live on CBS. Earlier sessions aired on ESPN2.
Basking in this glory doesn't come cheap. “Platinum” sponsorships featuring courtside signage on backwalls (televised tennis matches are typically shot from either end of the court, unlike the sidelines views typical of football of basketball) started at $75,000. Sponsorships featuring sidewall signs started at $40,000. Even $20,000 wouldn't get your company's logo courtside - just two smaller signs up where most of the spectators had wings.
But plenty of companies - from international sports-apparel maker Fila and the NASDAQ stock exchange down to locals like Yale-New Haven Health - gladly ponied up for the privilege of associating with some of the world's highest-profile female athletes.
Tournament director Anne Worcester explains that her organization markets to two distinct tiers of corporate sponsors.
“One is a national company, maybe headquartered in Connecticut, that can take advantage of 12 and a half hours of national television [exposure] as well as local promotional opportunities and tickets and hospitality opportunities,” she says. These include backwall sponsors such as Chrysler-Plymouth and Sports Illustrated for Women.
The other target, she explains, “are Connecticut companies that might not be concerned with national TV exposure as much as reaching the very attractive demographic of women's professional tennis.” Those sponsors get onsite signage, sales and promotional opportunities as well as client entertainment and “client cultivation.”
But even at southern Connecticut's most prestigious sporting event, selling to companies is tough in an uncertain market.
“In a year when our player field and attendance were stronger than ever before, we're proud to say that we held our own on sponsorships, because this is a very difficult market for sponsorships,” Worcester says. “I just came from three days of meetings with 55 of the other tournaments in the world, and I'll I hear is how tournaments are not renewing or attracting new sponsors.
“What's happening in this market is that some companies cut their promotional dollars first, while others feel that it's the last thing they should cut in a more competitive marketplace,” says Worcester, whose Pilot Pen marketing pros toil year-round to identify the latter group from the former.
Officials at Connecticut's largest sporting event made the shocking announcement August 20 that Canon U.S.A. Inc. would no longer be the Greater Hartford Open's title sponsor after next year, ending a relationship that began in 1985.
The GHO is the second-most attended event on the Professional Golfers Association (PGA) tour to the Phoenix Open, attracting about 275,000 fans annually.
A softening economy and “change in strategy” led Canon to surrender its role as title sponsor, for which it paid a reported $6 million annually.
“We think the GHO is a great event and are very sorry to go as a title sponsor, but it was purely a business decision and reflects a change in our strategy as far as wanting to spread our resources over more properties and activities across the country,” Jonathan Lese, assistant director of corporate events for Canon, told the Hartford Courant.
At Canon, the matter of resource-allocation is no academic matter: The company's stock plunged to a 52-week low just one business day before the GHO announcement. Pressure from Wall Street, certainly, can and often does persuade public companies to drive “discretionary” dollars down to the bottom line.
As well, companies are increasingly questioning just how tangible the benefits of name association with sports properties really are. In Denver, a mutual-fund company called Invesco committed $120 million to naming rights for the NFL Broncos' new playground, which opens for business September 10 in the glare of ABC's Monday Night Football.
Great for Invesco? Bronco fans are adamant against surrendering the name of the team's old home, Mile High Stadium. The team responded by adjusting the name to “Invesco Field at Mile High,” but the Denver Post announced that it will refer to the facility as nothing other than “Mile High Stadium.”
Invesco, not surprisingly, now asks itself what, exactly, did it pay $120 million for, if not lots and lots of media mentions - and audience impressions?
What is most shocking about the vast sums being spent by companies to associate with sports is how little hard marketing science justifies it.
There is some, however - albeit mainly confined to the academic realm. A study by Larry M. McCarthy of Seton Hall University of naming-rights relationships, specifically, argues that such sponsorships “provide the most cost-effective marketing communication in the marketplace today.” McCarthy notes that a typical price U.S. sponsors pay annually to attach their name to a sporting venue is in the region of $2 million. Comparing the number of mentions, or impressions, to paid television advertising of equivalent duration, and considering that the cost of advertising is going to continue to rise, “the long-term agreements (typically longer than ten years) which are commonplace appear indeed to be very good buys by corporate marketing executives,” he concludes.
Ronald G. Shaw, CEO of Pilot Pen of America, agrees. On August 26, the night before the tennis tourney's final, he agreed to tear up his company's existing contract through 2003, and extend its title sponsorship through 2008. (The lease for the Connecticut Tennis Center is concurrent with the sponsorship lease of the Pilot Pen.)
“It's the right time, it's the right thing to do,” said Shaw. “I think it was right for all of us to do.”
Score one for tennis in Connecticut. As for big-time golf in Cromwell, officials at the Greater Hartford Jaycees, which operates the GHO as a charitable fundraiser (proceeds from which have helped the Jaycees to contributed about $23 million in community programs, grants and scholarships over the years), express confidence that major companies will line up to bid on the event's title sponsorship for 2003 and beyond.
But the inexorable law of the marketplace is that the cost of getting into the game will continue to rise.
The PGA Tour's new four-year, $850 million television contract that begins in 2003 is expected to make companies spend more to pay for larger purses and TV rights fees.
Pilot Pen's Anne Worcester feels their pain. “I'm sure Canon had to think long and hard about giving up an event that had basically become synonymous with Canon,” she says.
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