- Growth in sponsorship revenues proves that the already rich major leagues are getting richer
- New sponsors entering the market might have B2B rather than B2C objectives
- Right-holders can take some of the credit for attracting new brands
Media fragmentation has not stopped the major US sports leagues securing vast sums of money from sponsorship.
Figures from analysts show that the National Football League (NFL), the National Basketball Association (NBA), the National Hockey League (NHL) and Major League Baseball (MLB) continue to grow their revenues year after year.
Octagon chief strategy officer Simon Wardle says this is an example of “the rich getting richer in sport – something we’ve predicted for a while.” He adds: “The big leagues have the kind of reach that is so rare these days. Sponsors are buying into the passion of live coverage and the pre-existing emotional connection that these franchises have built up with fans.”
In part, the revenue rises are the result of the increased prices in core categories such as finance, beer, soft drinks, automotive and communications. “But these franchises are so powerful they now secure deals in dozens of categories,” Wardle says.
The NFL, for example, has more than 30 partners, including the likes of Tide, Huggies, CoverGirl, Dannon, TD Ameritrade and Extreme Networks. At MLB, you’ll find brands such as Sheraton Hotels, GoPro and Compuware – to name just a few. NHL’s sponsorship roster, similarly, includes everything from SAP and Dunkin’ Donuts to ANCO, the league’s official wiper blade.
Some new entrants have a clear logic to them, says Wardle. “A few years back, the leagues might only have had one auto category – but now they can divide it up into premium auto, family auto, van and motorcycle.” And once you come to the conclusion that auto is a good fit then why not have official wiper blades, tyres and auto insurers? Geico, for example, is the official automotive insurance partner for ice hockey’s NHL.
Even when the link is not obvious, there may still be a strong commercial rationale for a sports league investment: “The prime objective may be b2b not b2c,” Wardle says. “For an FMCG (fast-moving consumer goods) brand, the objective might be securing supermarket distribution. For an emerging technology brand, an NFL association may provide the recognition that will convince a CEO to follow a chief technology officer’s recommendation.”
Rob McQueen, president of CSM North America, takes a similar line. “The hardcore male fan with a painted face may not realise it, but 45 per cent of NFL fans are women. So there’s no reason why brands like Tide, CoverGirl and Huggies shouldn't be involved. CoverGirl did a great job of targeting women through NFL and Tide has done good work behind the scenes, partnering teams to get their kit and equipment clean. That can generate fan loyalty and open up commercial opportunities.”
Of course, the problem with entering an over-crowded space is that it’s hard to stand out. This is especially true when you’re faced with well-established mega-sponsors. In the NHL, Pepsi has links with the league, 11 teams and is also an official partner of the World Cup of Hockey. For this reason, says McQueen, “you’ve got to go into the negotiating room knowing exactly what assets you need to meet your objectives and have a clear idea of your creative concept and activation plans.”
Ed Horne, executive vice-president at WME/IMG in New York, agrees that adding that authentic activation is key to winning over sceptical fans. “It’s about giving back or creating experiences,” he says. “For tech brands, it might be about helping the coach or team improve performance. For other brands, it’s about integrating into the experience.” Horne highlights the example of NBA star Blake Griffin slam-dunking a basket while jumping over a Kia car. Kia is the NBA’s official auto partner and the stunt has racked up two million views on YouTube.
VIDEO: Watch Blake Griffin jump and slam-dunk over a Kia car:
Fan experience is at the heart of the relationship between hotel group Starwood, which owns Sheraton, and the NHL and MLB. Here, points accrued through the company’s loyalty programme can be converted into game tickets, exclusive dinners involving players and free sports content piped into hotel rooms. With MLB, a lucky few even get to take part in batting practice with players.
These experiences can also be rooted in deeper emotions: “We work with USAA, which sells financial products to members of the military and their families,” Horne says (see pages 22-23). “Their involvement with the NFL is based around a campaign called Salute To Service, which encourages military appreciation among fans.”
Coaches dress up in military regalia and members of the military are offered unique NFL experiences. Team deals with the San Diego Chargers and Washington Redskins support the NFL sponsorship – because of the military presence in those cities.
The right activation can work for most brands. Microsoft’s deal with the NFL, worth $80m (€75m) per year, involves the provision of 25 tablets on each NFL team’s sideline for players to look at replays and to go over plays that they are planning to use. This kind of activation has a double benefit. Firstly, it positions the brand at the heart of the game action. Secondly, it puts a block on rival brands entering this competitive arena. You see a similar dynamic with headphones. Bose currently has a contract to supply headphones to NFL coaches, a highly-prized piece of sponsorship real estate. Not only does this deal put Bose onto the battlefield – it prohibits NFL players from wearing rival Beats headphones immediately before or after games.
Player endorsement can also pay off for brands from less high-profile commercial sectors. Online broker TD Ameritrade, for example, runs NFL Personal Finance Camps in which current and former NFL players take part in a four-day financial education programme. This is a way of promoting the importance of financial security to the broader NFL fan base.
In the NHL, meanwhile, GoPro has also found a way to showcase its product capabilities while improving fan experience. As part of its current contract, it works with the NHL to produce NHL After Dark, an 11-part series that gives hockey fans an immersive look at what happens on the ice during training sessions. “We know hockey fans want a more comprehensive, personal understanding of players’ lives,” says Keith Wachtel, the NHL’s executive vice-president of global partnerships. “The NHL After Dark series delivers not just a unique perspective on the game of hockey, but a new look into the personalities of our players.”
For other brands, the key has been to base their association with leagues around a wider pro-social agenda. Kimberly-Clark’s Huggies, for example, has linked its association with the NFL to a government-backed campaign to help poor families secure clean diapers. In 2016 diaper drives organised with the Miami Dolphins, San Francisco 49ers and Detroit Lions contributed towards a donated total of 48 million diapers and wipes.
While a lot of the category diversification is down to efforts on the part of brands and agencies, the leagues can also take some credit for driving their inventory harder. MLB, for example, managed to grow revenue from $695m to $778m between 2014 and 2015, according to IEG. This surge coincided with the appointment of Rob Manfred as commissioner and his shift towards a ‘One Baseball’ vision. According to Noah Garden, MLB’s executive vice-president, business, combining the sales force into one unit has allowed the league “to showcase and sell the enormous assets of Major League Baseball more completely and efficiently to the corporate community.”
Horne says that it is not just better selling that has secured new revenues. “I think the big sports properties have learned to be real partners not just logo salesmen,” he explains.
Expansion into new media and new territories has also made the big leagues more appealing to some brands. Digital insurance company Esurance, for example, has identified MLB’s high levels of social media engagement as a perfect fit with the busy, tech-savvy consumers that the firm targets. Likewise, the NFL’s growing presence in the UK has helped it grow its roster from seven international partners in 2009 to nearly 20 this year. New additions for 2016 included Bagel brand New York Bakery Co, which distributed its products for free to fans at the New York Giants v LA Rams fixture at Twickenham in October. “The NFL felt like a natural fit – aligning New York Bakery Co with a partner that reinforces our US heritage and New York connection,” the brand’s marketing director, Tim Barkey, says.
While clutter is clearly a concern for brands in the big US leagues, Horne suggests that there is an upside. “We’re seeing more collaborations between sponsors,” he says. “These rights are so valuable that it makes sense to align with like-minded partners.” An example was Visa and Papa John's collaborating on a television commercial with two NFL stars – Antonio Brown and Malcolm Butler. “Properties that encourage this kind of relationship can really add value,” Horne says.
VIDEO: Watch Visa and Papa John's link up with NFL stars for TV commercial:
CSM’s McQueen believes the combination of live content and fan passion will keep US league sponsorship revenues strong going forward. He also envisages further category diversification – and not just because of a hard sell by the leagues. “CFOs and CMOs at brands look at the tickets and billboards they have acquired and ask whether all of it is really necessary to achieve their objectives,” he says. “So, I can see a scenario where categories are carved up even more. Working assets harder is something the sponsorship industry could do better.”
EXTRA: New Money
The NFL generated a record $1.2bn in sponsorship revenues for the 2015-16 season – up 4.4 per cent year-on-year, according to research firm IEG. If there was a slight note of caution, it’s that the league’s revenue growth fell behind the overall 4.5 per cent increase in the sports category.
MLB sponsorship revenue has been growing since 2010 and is reckoned to have generated $778m in 2015, up an impressive $83m on 2014. That increase has been partly achieved by securing new sponsors, such as Esurance, the Hartford, Draft Kings, Falken Tires, Maytag, Dunkin’ Donuts and Amazon Web Services. The latter powers MLB’s Player Tracking System. “Consumer behaviour is changing. It’s going online, it’s going mobile, and this kind of technology is crucial for the game to evolve,” says Joe Inzerillo, executive vice-president and chief technology officer at MLB Advanced Media.
NHL sponsorship revenues, combining the league and teams, rose 6.7 per cent in 2015-16 to $477m, up from $447m, continuing a six-year upward trend that began with $356m in 2010-11. As an example, the Chicago Blackhawks, one of the league’s leading franchises, has a roster of sponsors including Anheuser-Busch, Lexus, CME Group, BMO Harris Bank and NorthShore University HealthSystem. The latter three of these are Chicago-based companies. The most marketable player in the NHL is Sidney Crosby (pictured), who currently earns about $4.5m per season from the likes of adidas and Gatorade.