SBJ/December 10 - 16, 2001/Special Report
MLB builds momentum with sponsors
Published December 10, 2001
The NFL has long had centralized control of its marketing rights because of the national broadcast contracts former Commissioner Pete Rozelle insisted on. Major League Baseball developed in the opposite direction, and power and sponsorship dollars flowed to the clubs.
As a result, the NFL has been able to sell rights to players and coaches, and even reserve some categories for exclusive sale by the league. MLB controls a smaller parcel of rights, and its national deals often conflict with those cut by the clubs.
MLB has been without a sponsorship vice president since April 1999, has among the smallest sponsorship staffs of any major property and easily has the most strained relationship with its labor union of any of the big four, not a recipe for success.
Yet MLB sponsorship has rebounded. In the last five years, rights fees have more than tripled. In 2001, MLB sponsors spent $125 million, or 26 percent more than last year, to support their baseball programs. Ad spending from corporate sponsors on MLB broadcasters ESPN and Fox also rose exponentially.
In recent years, MLB has been one of the few big properties signing deals in new categories. This is testimony in part to the fact these categories were unfilled and to how badly beaten up the sport was after the 1994 player strike. But ConAgra, Radio Shack, Nabisco, Claritin and John Hancock, which agreed to the biggest MLB sponsorship pact ever, have all signed in the past three years.
What's changed? A directive from Tim Brosnan, MLB's executive vice president for business, to eliminate the bottom feeders that rented baseball's equity for only a year, or only during its jewel events, helped. Exit the likes of Gulf Lite & Wizard charcoal.
"Our sponsors can now point to real [return on investment]," said Brosnan, who ascended to the league's top business post in 1998. "It's no longer a feel-good sponsorship, based on tickets and hospitality."
Without a lot of rights to sell, MLB has slowly assembled exclusive marketing platforms for its sponsors. Hancock has the All-Star Fan Fest and Roberto Clemente Award; Pepsi has been getting more involved in All-Star balloting; Century 21 has the Home Run Derby; ConAgra gets MLB's traveling road show; Nextel has its name on ESPN's "Sunday Night Baseball."
"We're trying to operate like we're a marketing agency and not just a place with something to sell," said John Brody, MLB's director of corporate sales and marketing. That includes better protection of sponsors. So while Fox took some heat for the virtual signage during the World Series, Brody said "we'd prefer to have 'The Tick' or 'Ally McBeal' versus a competitor to one of our brands so we can show the kind of exclusivity we can offer."
Requiring its sponsors to buy millions in media support and selling in conjunction with its media partners are also relatively new developments.
Like any marketers, Brody and fellow director of corporate sales and marketing Justin Johnson are most proud of where they've been able to get new distribution. In the case of baseball, that means nontraditional sponsors like Claritin and Century 21.
"No one is more important to us than [Anheuser-Busch], but we already know most Bud drinkers are baseball fans," Johnson said. "It's the fact that we weren't in real estate offices and doctor's offices with Century 21 and Claritin and the fact that they were on our fields that got us juiced."
On the list of sponsors to be re-signed this offseason are Gillette, which just happens to have its next men's razor launch at the same time MLB's season opens, along with Fleet and Real Networks. New categories being targeted are automobile, computers/technology, home improvement, overnight delivery and quick-service restaurant.
With a collective-bargaining agreement that expired just one of the most exciting World Series ever, the only thing that can stop MLB's sales momentum is MLB itself. How willing will new or existing sponsors be to base their marketing plans on a sport with the most labor stoppages of any? Well, eight already have signed or agreed in principle. Most have been offered protection in the form of contractual language that offers dollar givebacks or contract extensions if a significant number of games (usually 50 or more) are missed because of labor action.
"We're offering sponsors appropriate adjustments with appropriate contractual language," said Brosnan, who, along with sponsors, would not comment on the specifics.
The sponsor community used to carp a lot about MLB, but now the most common complaint is there's no senior executive with sponsorship in his or her title. MLB sources said Brosnan wanted to be more hands-on building the sponsorship department before delegating those responsibilities.
Without a senior marketing executive since the departure of Kathy Francis in June, MLB and Brosnan have the ability to create an intriguing new position when and if a long-rumored reorganization takes place.