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SBJ/March 11 - 17, 2002/Special Report
Published March 11, 2002
Sports sponsorship puts itself on display at tracks nationwide via race cars.
Combine the worst ad slump in at least a decade with the absolute marketing freeze after Sept. 11 and you have the ingredients for a slowdown that has made many industry types wonder if the sports sponsorship growth rate really only dropped by 50 percent last year.
Measured sports sponsorship spending increased 8.1 percent in 2001 from 2000, to $6.40 billion. That compares to a 16 percent increase in 2000 from 1999, to $5.92 billion. The spending, however, has been spurred by money from World Cup and Olympic sponsorships, along with stadium entitlements that may never again see levels like Reliant Energy's 30-year, $300 million pact to place its name on the stadium that will house the expansion NFL Houston Texans.
Consider further the fact that much of the sponsorship money spent in 2001 came from deals made during better economic times in the preceding years. That lag could foretell a spending decline in the near future: A tougher selling market now could translate to fewer dollars being spent in the coming years.
The hope of an economic recovery and an associated uptick in marketing spending later this year, however, has many in the business now preaching the virtue of patience, especially those with high-ticket packages.
"It's a time when you've got to be flexible," said Jeff Fernandez, assistant vice president/marketing for the Indianapolis Motor Speedway and the Indy Racing League, who's looking for an IRL title sponsor that will pay $10 million a year. "You also have to realize that it might be better long-term not to sell your most expensive inventory until people are able to have real discussions about long-term sports sponsorship obligations."
If there's one category that marketers think could pull them out of their slump, it's prescription drugs. Typically, they have a relatively small window in which to establish themselves as brands and sell their wares before their patent expires. TV is already cluttered with Rx ads, so sports sponsorships may be the answer, especially for male-targeted drugs, like Pfizer's Viagra, which recently signed on with MLB.
"Overall, there's a sense of tighter scrutiny about any kind of marketing allocations, as opposed to an outright pullback of funds," said Millsport President David Salomon, "but prescription drugs are such a big category that could change for everyone."
— Terry Lefton