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SBD/April 29, 2014/Marketing and SponsorshipPrint All
Fifteen Clippers advertisers since yesterday have "terminated or suspended their sponsorship" in the wake of racist comments allegedly made by team Owner Donald Sterling, although most "expressed their continued support for the team's players, coaches and fans," according to a front-page piece by Pfeifer, Bolch & Rainey of the L.A. TIMES. The following companies announced their "departure" from the team.
Burger King Samsung CarMax Santa Ynez Band of Chumash Indians Commerce Hotel & Casino Southern California Ford Dealers Grupo Modelo Sprint Kia State Farm LoanMart Virgin America Mercedes-Benz Yokohama Tire Red Bull
EDITOR'S NOTE: Amtrak, Aquahydrate and Lumber Liquidators also have either ended or suspended their association with the Clippers, according to other published reports.
The departure of Kia and State Farm were "particularly noteworthy because the companies employ as spokesmen two of the team's stars" -- F Blake Griffin and G Chris Paul. The companies said that their ad campaigns would "continue to feature" the two players (L.A. TIMES, 4/29). Kia said that it was "working with its media-buying agency and the networks to pull its ads off of both national and local games." Kia also said that it was "removing its in-arena ads." The WALL STREET JOURNAL's Suzanne Vranica notes Kia has "had a relationship with the Clippers for the last six years." Red Bull, which has been a team partner for two seasons, indicated that it will "continue to support" Griffin. Meanwhile, sources said that some advertisers have asked Turner Broadcasting to "move their commercials" out of tonight's Warriors-Clippers Game 5 broadcast on TNT. The sources said that those spots "will be reallocated to air during other NBA games, so Turner won't take a financial hit." A source added that some advertisers have "made similar requests" of Fox' Prime Ticket, which airs some Clippers postseason games. Prime Ticket is "exploring various options, including moving those advertisers' spots to run during other sports games on its sister network, Fox Sports West" (WALL STREET JOURNAL, 4/29). In N.Y., Bernie Augustine cites experts as saying that the State Farm signage on the basket stanchions at Staples Center "might remain in place because they also could be part of a separate NBA deal ... even though it’s also a Clippers corporate account." There will be "no monetary loss for these playoffs for the team because the signs are part of current deals that normally run three to five years" (N.Y. DAILY NEWS, 4/29).
IMPACT ON THE BOTTOM LINE: In L.A., Chris Trevino in a front-page piece notes the Clippers "may not face an immediate economic impact, as most sponsorship deals have already been paid for the current season." However, the "longer the scandal hangs around, the more the team will feel the economic blow." Harvard Business School professor Stephen Greyser: "If this festers and spills into next season, it could cost them a lot of money" (L.A. DAILY NEWS, 4/29). PR firm Group Gordon Principal & CEO Michael Gordon said that the "mass exodus" of sponsors "was no surprise." Gordon: "I would be much more surprised if any sponsor stood by. There's nothing about Donald Sterling or the Clippers that's good for any sponsor right now." USA TODAY's Nancy Armour notes team finances "aren't made public, so it is not known how much money this loss of sponsorships has cost the Clippers, or the NBA" (USA TODAY, 4/29). PR expert Mike Paul said that racist remarks or attitudes are the "one thing that's sure to make corporate sponsors on Madison Avenue head for the hills." AD AGE's Michael McCarthy noted that is why it is "not surprising why sponsors reacted so quickly" to a story that only broke this weekend. Paul said, "There's a zero tolerance for it. You cannot be associated with anything racist in this country" (ADAGE.com, 4/28). VCU business professor Helayne Spivak: "If there was ever a time to say you're absolutely not going to be associated with something or someone, this is the time" (RICHMOND TIMES-DISPATCH, 4/29). Online civil rights group ColorOfChange.org Exec Dir Rashad Robinson in a statement said, "Corporations have a choice. They can either continue aligning with Donald Sterling, or stand up and end their association with Sterling and his racist, dehumanizing language and actions" (WASHINGTON POST, 4/29). ESPN's Darren Rovell said, "Sponsors have everything to lose and nothing to gain by sticking with the Clippers at this point" ("SportsCenter," ESPN, 4/28).
BAD LOOK FOR THE LEAGUE? USA TODAY's Armour cites several PR experts as saying that if the NBA "doesn't deal with Sterling swiftly and strongly ... the fallout could spread." Univ. of North Carolina Sports Communications Program Dir John Sweeney said, "If the NBA hedges all over the place, it could be very, very bad. ... Sponsors don't want that kind of incendiary internal controversy. They want everything running as smoothly as possible so all the attention is focused on them" (USA TODAY, 4/29). N.Y.-based Foley & Lardner attorney Irwin Raij said that the lost revenue could "give the NBA additional incentive to suspend Sterling for conduct detrimental to the league." Raij said, "When sponsors are threatening or taking action to terminate their sponsorship agreements, that’s detrimental to the league" (L.A. TIMES, 4/29). 16W Marketing co-Founder Frank Vuono said, "I don't know if the NBA can come up with a fine as big as what the loss of sponsors would mean. ... The negative backlash from the consumers could have long-term implications for a brand that associates with something like this" (Bergen RECORD, 4/29).
LEAGUE COULD HELP CLIPPERS: As the Clippers deal with the business impact from Sterling’s alleged comments, it is not known yet if members of the league’s team marketing and business operations division will be sent to L.A. to assist the Clippers front office as its works to protect its business from the Sterling controversy (John Lombardo, Staff Writer).
SPORTSBUSINESS JOURNAL, 4/28 issue).
MLB Exec VP/Baseball Operations Joe Torre stars in a new multimillion-dollar ad campaign for accounting firm CohnReznick that is "designed to convey the firm’s expertise helping clients navigate and succeed in today’s changing business landscape," according to Tanya Irwin of MARKETING DAILY. The campaign, entitled "Game Change," was "created by Hackensack, N.J.-based Source Communications." The ads, "designed to reach target market decision-makers, will run in national business and key trade publications, top-market and national radio spots, integrated sponsorships, digital/mobile ads, including native content, and social media sponsored posts." The effort also "includes outdoor placements and inclusions on commuter rail lines originating in strategic markets." CohnReznick CMO Chuck Ludmer: "The campaign is a real departure from typical professional services advertisements and no other accounting firm has a spokesperson with Joe’s visibility and values." The relationship with Torre "extends beyond business" and into charitable commitments, as CohnReznick's community service initiative "supports Torre’s Safe At Home Foundation" (MEDIAPOST.com, 4/26).
Shares of the tracking stock tied to 49ers TE Vernon Davis yesterday "rose as much as $2 to reach $12 on the first day of trading," as 390 shares were traded as of late afternoon, according to Eric Young of the SILICON VALLEY BUSINESS JOURNAL.The trading took place "on an exchange operated by Fantex," which "toured the country promoting the Davis IPO." The company said that it "sold all of the 421,100 shares," raising $4.2M. Davis will receive $4M of that cash and the balance "covers expenses related to the deal" (BIZJOURNALS.com, 4/28). In N.Y., William Alden notes yesterday was the "the first time Fantex has brought such shares to market" and will "provide a crucial test for the young company." The shares "simulate" a 10% interest in Davis’ future income, "including the value of his playing contracts, corporate endorsements and appearance fees." Therefore, the total value of Davis’ future income "has to exceed" $42M for investors to "make money." Fantex co-Founder & CEO Buck French said that the "'vast majority' of the shares were sold to individual investors, with some buying just one share and others buying the maximum allowed amount" of 5% of the offering. Fantex "offers no guarantee of liquidity, and the shares may be thinly traded at first." The investment "does not give buyers a direct legal right to the athlete’s income." While the stock "simulates owning a portion of an athlete’s brand, it is actually an ownership interest in Fantex itself" (N.Y. TIMES, 4/29). Pitt finance professor Kenneth Lehn said that the IPO is "novel and interesting," but he warned that "ultimately Fantex's long-term viability hinges on how well the model generates income for investors. And that remains to be seen" (SAN JOSE MERCURY NEWS, 4/29).