SBD/July 24, 2012/Marketing and Sponsorship

Penn State Penalties: State Farm Drops Sponsorship Of PSU Football Program

State Farm latest company to pull its sponsorship from Penn State football
State Farm has "dropped its sponsorship of Penn State football for the upcoming season, with plans to remove its signage from Beaver Stadium and pull its radio commercials from broadcasts for home games," according to Ron Dicker of the HUFFINGTON POST. The announcement came in the wake of heavy sanctions levied yesterday against the school, but State Farm Philanthropy & Community Relations Specialist Arlene Lester said that the decision "has been in the making for some time." Lester noted the company has sponsored PSU football for "several years." Lester added that State Farm "will continue to advertise with the NCAA on a national scale -- and that could involve games with Penn State." The company also planned to "continue advertising in regional broadcasts that could include Penn State as an opponent for the local team." Lester said that State Farm "will maintain its sponsorship of Penn State basketball." Dicker notes State Farm "stayed put" last fall as news broke of former assistant coach Jerry Sandusky's then-alleged crimes and arrest. Other advertisers "bowed out, including paint company Sherwin Williams, which removed its logo from Penn State press conferences, and Cars.com, which refused to advertise during two Penn State TV broadcasts" (HUFFINGTONPOST.com, 7/24).

BRANDING PROBLEMS: AD AGE’s Rich Tomaselli wrote the penalties against PSU further damage the school's “previously pristine brand and likely crippling its ability to forge new corporate sponsorships.” The sanctions “all but devastate the football program, the marquee sport that draws virtually all of Penn State's corporate sponsorship dollars.” It has been “difficult to determine the relationship between sponsors and the school at this point.” Pepsi yesterday reiterated a statement it made two weeks ago, saying the company will "continue to honor our longstanding contract as a campus provider." Meanwhile, a GM spokesperson said that its sponsorship of the school is under review. Tomaselli noted PSU “removed the names of its sponsors on the corporate partners page on the school website shortly after the scandal broke in November.” Marketing firm Madison Ave. Sports & Entertainment CEO Ed Horne said, “I would expect current sponsors to be extremely cautious in their activations" (ADAGE.com, 7/23).

LOSING THEIR SHIRTS: The AP’s Begos, Levy & Scolforo note an area that "some analysts say is already hurting" for PSU is apparel sales. Charlotte-based SportsOneSource analyst Matt Powell said that “sales are dropping," from about $80M in '10 to $60M "after the scandal broke last year to possibly" $45M this year (AP, 7/24). ESPN’s Darren Rovell noted it is expected that there is "going to be a mighty fall” in PSU merchandise sales. Rovell: “I expect the licensing royalties to also suffer” ("Outside The Lines," ESPN, 7/23).
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