SBJ/June 20 - 26, 2005/Marketingsponsorship

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  • As AFL season fades to black, worries about TV ratings persist

    As multicolored confetti fell to the turf at the Thomas and Mack Center in Las Vegas last week, where just minutes before John Elway’s Colorado Crush defeated Home Depot co-founder Arthur Blank’s Georgia Force on the game’s final play, all seemed copacetic in the world of indoor football.

    Gatorade, one of two major potential sponsors exercising trial runs during the playoffs, had product placement on the awards stage, while victorious athletes quaffed the isotonic beverage as they conducted postgame interviews.

    Honda, another first-timer sampling the league, had end zone signage considerably larger than any of its automobiles, along with a logo on the field itself.

    The Colorado Crush celebrated victory in the AFL’s championship game, televised on NBC.
    It was the close of the AFL’s first neutral-site championship, a concept that had been kicked around league meetings for more than a decade. And this day was arguably the finest moment of team-owner-turned-commissioner David Baker’s nine years in the job.

    Baker paid a $400,000 fee to enter the league as an owner a decade ago; contrast that to the deal to bring an expansion franchise to football-crazed Kansas City, which will open the new Sprint Center in 2007, that went for $18 million.

    Now the ownership ranks include Blank, Jerry Jones and Jon Bon Jovi. New business partners such as Nike and EA Sports promise to add youthful relevance to a property that prides itself on a demo younger than most pro sports.

    Still, even as championship Nike caps and T-shirts were distributed to winning Crush players, and audience and athletes grooved to a postgame concert from Kool and the Gang, the nettlesome problem of the league’s underwhelming ratings on NBC could not be ignored.

    “I would like to take America by the scruff of the neck and say ‘watch this,’” said NBC Sports President Ken Schanzer, at the AFL’s well-received first Partnership Summit, held during ArenaBowl weekend. “This league seems ready to take [off], yet we don’t see the viewership that would be evidence of that, so we’re struggling.”

    The AFL on NBC averaged a 1.0 rating for the regular season this year, a slight decrease from last year’s 1.1. Overnight ratings for ArenaBowl XIX on June 12 were a 1.1/2, down from the prior year’s 1.3/3.

    NBC’s AFL rights run through next season. Under the groundbreaking deal, which started two seasons ago, the network pays no rights fee but shares advertising and sponsorship revenue while receiving 5 percent of expansion fees in excess of $12 million.

    Even with all the positive indicators, many league insiders felt the clock was ticking on the NBC deal. “Read between the lines in what Schanzer said,” cautioned a longtime AFL owner. “They [NBC] are going to dump us.”

    Even the newer breed of AFL ownership is perplexed by the ratings. “I’m disappointed, but it doesn’t mean we’re losing hope,” said Philadelphia Soul owner Bon Jovi.

    NBC Sports senior vice president of programming Jon Miller insisted no renewal decision had been made. “AFL continues to put a good product on the field, their ownership gets better with every new team and we’re excited about things like EA,” he said. “But frankly, there are some franchises that have disappointed, New York being one of them, and we’d like to see stronger franchises in the Midwest.”

    A New York franchise, most recently owned by Charles Wang, has underperformed, and while the AFL has franchises in Chicago, Columbus and Grand Rapids, Mich., there are no teams in the Pittsburgh area or the Detroit market.

    Miller said the anticipated debut of the NHL on NBC next season could help AFL ratings, since Saturday’s hockey schedule will provide a platform to promote Sunday’s football telecasts.

    “NBC’s been very good to us, but they have said they want to see growth,” said former CBS Sports President Neal Pilson, now an AFL TV consultant. “We’ve built awareness; the next step is building relevance, so people, especially in larger markets, will watch their home teams.”

    MEASURING UP:
    AFL RATINGS ON NBC
    Ratings for the AFL on NBC in 2005 compared with the most recent full-season ratings of the network’s other sports properties
    Property
    Avg. rating/share (year)
    Olympics
    8.8/21 (2004)
    NASCAR
    5.2/11 (2004)
    PGA Tour
    3.3/9 (2004)
    Notre Dame football
    2.5/6 (2004)
    AVP
    1.0/2 (2004)
    AFL
    0.9/2 (2005)
    Notes: AFL’s average includes regular-season and playoff games but does not include a final rating for the ArenaBowl (overnight: 1.1/2). NASCAR’s average does not include the 2004 Daytona 500 (10.6/24), which was on NBC but alternates with Fox annually. The 2004 Olympics average is for all day parts, not just prime time.
    Source: NBC
    Research by Katherine Johnson-Reid, SportsBusiness Daily
    With the amount of sports on cable, the absolute need for a national broadcast contract was a point of discussion. Ken Butler, president of Aaron’s Sales and Leasing, and one of the league’s most active sponsors, said it was vital. “If it wasn’t for that [a network TV contract], we wouldn’t be here,” he said.

    Baker noted the larger aggregate audience watching cable, as opposed to network TV. “The television world is changing. Not just for us, but for the NHL, NBA and even the NFL,” he said.

    Blank hopes NBC will see continued AFL broadcasts as a bookend to its new NFL rights package, in much the same way he sees his AFL franchise as complementary to his ownership of the Falcons. “National TV is vital, because a lot of people across America still don’t know what arena football is,” he said.

    Baker seemed somewhat resigned, even while lauding NBC. “They’re great partners who have treated our game with enormous respect,” he said, minutes before kickoff in Vegas. “We’ll continue to grow together, but there’s also Fox and there’s other guys. I don’t know any league that had one TV network forever.”

    Beneath all the compliments for NBC, there were plenty of questions on whether the famously in-your-face Fox would be a more aggressive and appropriate AFL promoter. Fox Sports Net is already the league’s cable rights holder.

    Gatorade senior vice president of sports marketing Tom Fox was one of many AFL business partners urging patience. “The risk is that you try to define success quickly as simply a big rating increase,” he said to the 400 people at the Partner Summit. “The thing you have to remember is that while it’s almost 20 years old, the AFL has really been going at this like the other big sports leagues for the last two or three years.”

    VEGAS REVIEWS: Given the short time to prepare for Las Vegas, league officials seemed relatively happy with the site. Another year should allow for a larger audience, fueled by such marketing plays as having clubs use ArenaBowl tickets as season-ticket incentives.

    Related events like the sparsely attended “Arena Battle” skills challenge and the desolate Fremont Street Fan Fest, easily outdone by the game-day fan activities outside the Thomas and Mack Center, should also improve with more time to prepare. We also would have liked to see more and better hotel signs at the MGM Grand promoting ArenaBowl and better integration with Saturday night’s Maroon 5 “Arena Bash” concert.

    “Our clock is now running with a year cycle,” said AFL Properties President Glenn Horine. “We got all our partners in one place, so now everyone has a long list of ideas for next year.” The AFL board must approve the return to Las Vegas, something most consider a formality. “Our intention is to be here for at least three years,” Baker said, “but we’d like get it to other venues eventually.”

    While the league was disappointed with a crowd of 10,822 in a facility that holds 15,621, it was the league’s biggest championship gate and revenue generator ever, since tickets were scaled at $40-$125, compared with past ArenaBowls, when tickets started at $10.

    ANNIVERSARY ’APPENINGS: After XIX comes XX, and the AFL is planning a seasonlong 20th anniversary marketing platform that should be a good test of whether its more recent marketing partners like Nike, EA Sports and Champs can carry its message to more fans. A logo has been developed, and the AFL is hoping to stage a season-opening fete at the home of the champion Colorado Crush, similar to the model that the NFL is using. “The next big step for us is partner activation,” Horine said. “That’s what’s going to raise us to the next level.”

    FIVE RINGS OVER VEGAS: Dallas Desperados/Cowboys owner Jones lobbied for international expansion of Arena Football, arguing that indoor football is the key in transforming American football into a viable export product.

    “It [Arena League football] is the Olympic game,” Jones said on a sponsor summit panel. “We in the NFL for years … have tried to get our [NFL] skills into the Olympics. This game can get them there. This is our way to get it, and international expansion is the way to get there.”

    EA’s AFL release, to go on sale next year, will put league sponsors in the game.
    VIDEO VAMPS: The AFL has consistently been described as a video game version of the NFL, so the challenge to EA is bringing that to life in an actual video game, which will be released next February. EA’s standards are high: Its Madden NFL game is the top seller of any game, and its NFL Street and NCAA Football titles are also top sellers. “This game will be very different,” promised EA Sports vice president of marketing Todd Sitrin. AFL partners are eager to participate, and at least one club hopes to use animation from the game in its marketing. Sponsors are being offered in-game enhancements, including a “Player of the Game” vignette, along with the standard in-game signs.

    LICENSING LINEUP: The combination of Champs (which has mall exclusivity) and Nike put AFL licensed apparel in about 200 AFL market stores this year, the widest selection ever. We’re still curious if there’s a downstairs retail

    The league is talking about getting its licensed goods into mass merchants.
    opportunity for AFL apparel. Horine acknowledged some early talks with mass merchants. We’re also hearing rumblings of a possible deal with Nike’s Starter brand, which Horine would neither confirm nor deny.

    CHEERS FOR THE AFL: Aaron’s Sales and Leasing was the most visible sponsor in and around AFL events. Butler, the company president, said he had agreed to terms on a renewal. The key ingredient in the new deal? Cheerleaders. Aaron’s gets its name on an all-star Dream Team of AFL talent at three ArenaBowls. Aaron’s will also use them to support the company’s considerable NASCAR investment.

    “We need gals in racing too, so we’re going to bring them to Talladega [Aaron’s-sponsored Busch race],” Butler said.

    HEARD ’ROUND THE ARENA: Rock star turned pro team owner Bon Jovi, on the genesis of his decision to buy an AFL franchise. “It was late and I was drunk,” he quipped. As evidence of what his star power means for the AFL, the league was paying for Bon Jovi’s hair and makeup over the weekend. … We also enjoyed the 6-foot-9, 400-pound Commissioner Baker’s tongue-in-cheek explanation at the conclusion of the summit as to why he’s the man in charge. “David Stern may have a better legal mind and Gary Bettman may be more intellectual at times,” he said hefting the cumbersome James Foster AFL Championship Trophy, “but neither one of them could lift this thing.”

    Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.

    Print | Tags: AFL, CBS Broadcasting Inc., Electronic Arts, Football, Honda Motor Co., Marketing and Sponsorship, NBC, NFL
  • ESPN launching fantasy football game for 2005 with Goodyear as presenting sponsor

    ESPN has signed Goodyear as presenting sponsor of its 2005 fantasy football game on espn.com.

    The sponsorship is expected to be announced this week as part of an overall unveiling of ESPN’s 2005 fantasy football programming plans. Terms of the sponsorship were not disclosed, but title or presenting sponsorships for fantasy football products now typically exceed seven figures annually for the major Web sites. ESPN officials said they are still in discussions with other potential sponsors for the 2005 fantasy season.

    ESPN is introducing a new pricing model.
    This is Goodyear’s first fantasy sponsorship.

    “Fantasy sports leagues are a tremendous way to reach a large number of consumers, and espn.com is the top sports destination,” said Chuck Sinclair, senior vice president of global communications for Goodyear.

    ESPN.com will offer its league manager product for free in 2005, although participants will have the option of paying for leagues that come with real-time scoring tools and other premium content. This new pricing model, utilized with great success in recent years by Yahoo! Sports, is part of an effort by ESPN to canvas more of the 15 million people who played fantasy sports in 2004, according to the Fantasy Sports Trade Association.

    A Nielsen/NetRatings study conducted last October found Yahoo! Sports had more than 3 million fantasy subscribers, while espn.com and SportsLine.com, which unlike Yahoo! charged for their league manager products, each had just under 1 million players.

    For the fantasy participants the discount does not attract, ESPN executives are looking to the network’s promotional machine to take care of things.

    ESPN’s “Monday Night Countdown” and “SportsCenter” shows will feature fantasy football segments before the start of the NFL season. On Aug. 25, ESPN will televise a 90-minute fantasy football special that last year aired via pay-per-view. Fantasy content and analysis will be featured on “NFL Live,” which airs five nights a week during the season, and on ESPN Radio.

    The first ESPN 2005 Fantasy Football Guide is to hit newsstands on Tuesday. The $6.99, 176-page, stand-alone issue features San Diego running back LaDainian Tomlinson on the cover and will be available to Insider subscribers on espn.com.

    Print | Tags: ESPN, Football, Goodyear, Marketing and Sponsorship, San Diego Chargers
  • Eye-black maker avoids a shiner

    BMC Custom Eye Black, despite several months of legal turmoil, has landed its largest deal to date, providing its logoed, temporary-tattoo eye black to Topps Co. for its 50th anniversary football card packs this fall.

    The deal is in the mid-five-figure range, according to Peter Beveridge, president and CEO of BMC Custom Eye Black, and is for 100,000 units that will be sprinkled in packs of Topps Bazooka Football cards. The eye black is one of several giveaway items from various companies, including stickers and window cling-patches, augmenting the card packs.

    The deal follows a victory last month by parent company Beveridge Marketing Co. (BMC), which won a summary judgment in federal court in a patent-infringement lawsuit brought by Mueller Sports Medicine, which holds the patent on adhesive under-eye patches. BMC, founded in October 2003, has exclusive patent rights to logoed patches as well as the temporary-tattoo patches.

    The court battle, Beveridge said, resulted in many universities declining to grant BMC licenses while the case was pending, though the company did continue to sell directly to several dozen college teams for their own use.

    Mueller filed a notice to appeal last week, according to Timothy Molino, an attorney for Bingham McCutcheon LLP, which represents BMC. Mueller company President Brett Mueller had no comment. Beveridge said he expects to have collegiate licenses this fall. “This is the normal course of litigation,” Beveridge said. “The judge [last month] ruled in a summary judgment, and that sends an unusually powerful message.”

    BMC Custom Eye Black also has struck high-volume giveaway deals with the MLB Washington Nationals and Tampa Bay Devil Rays this summer and has at least one NFL team, the Green Bay Packers, on board for the fall. Beveridge said he’s in discussions with sports apparel companies, as well.

    The Topps eye black will read “Topps Football 50 Years.” It’s part of a strategy to keep kids interested in sports trading cards, which recently have suffered in competition with non-sports cards, sports video games and the Internet. The overall market for sports cards is now at $300 million wholesale, down roughly 75 percent in five years, according to Topps’ own most-recent annual report.

    “We strongly believe the trading card format works … but increasingly, they’re being bought by older, collector-types,” said Jeff Haza, Topps product manager for football. The eye black is one of several giveaway items aimed at younger sports fans.

    Topps had revenue of $295.9 million in the fiscal year ended Feb. 26, essentially flat over the past three years. Its profit was $11 million in the most recent year, down from $12.7 million last year and $16.9 million two years before. Slightly more than half of its revenue comes from its candy business; trading cards fall under its other division, entertainment.

    Print | Tags: Baseball, Football, Green Bay Packers, Marketing and Sponsorship, Topps Co., Washington Nationals
  • NFL’s Tom Murphy takes sponsorship post with MasterCard

    MasterCard has hired NFL director of corporate sponsorships Tom Murphy as its new vice president of sponsorships, a highly sought-after position that had attracted competition from across the industry.

    Murphy leaves the NFL after nine years, making him one of the most tenured members within the league’s sales and marketing departments. In moving from the sell side at the NFL to the buy side at MasterCard, Murphy will manage a portfolio that includes league deals with MLB (up for renewal after this season), the NHL and more than 20 NFL team sponsorships. Murphy will report to MasterCard vice president of partner and content integration Bob Cramer.

    Prior to the NFL, Murphy was at Advantage, where he worked on the Cadillac NFL Golf Classic, among other things. The opening at MasterCard was created when Barry Hyde left in March to become the U.S. Golf Association’s first chief marketing officer.

    Print | Tags: Football, Marketing and Sponsorship, MasterCard International Inc., NFL
  • Pizza Hut’s naming deal rare for fast food

    Yum Brands’ Pizza Hut has acquired naming rights to the new home stadium of MLS’ FC Dallas franchise for $30 million over the next 20 years.

    Pizza Hut President Peter Hearl (left) and FC Dallas owner Lamar Hunt shake at Pizza Hut Park.
    The construction cost for the project is now $80 million, up from $65 million originally, so Pizza Hut’s money could help pay for overruns. The deal naming the facility Pizza Hut Park is believed to be the only fast-food franchise naming-rights sponsorship at a pro sports facility in the United States. Papa John’s has title rights to Papa John’s Stadium, home to the University of Louisville Cardinals football team.

    The announcement was made last week in Dallas, home of Pizza Hut’s headquarters. The 21,000-seat stadium located in Frisco, Texas, is part of a 117-acre suburban soccer complex built by Hunt Sports Group that also will feature 17 soccer fields. The stadium is scheduled to open in August.

    Other founding partners for the stadium include Texans Credit Union, Baylor Health Care System, North Texas Chevrolet Dealers and Dr Pepper. Sources said at least one of Yum’s other brands — Wing Street, Taco Bell or Kentucky Fried Chicken — is expected to have a presence in the stadium.

    Pizza Hut has long been a big sports media buyer, and this represents the company’s second big move into sponsorships this year, after a deal with some of Hendrick Motorsports’ NASCAR drivers.

    Premier Partnerships has been selling marketing rights for the stadium.

    Print | Tags: FC Dallas, Marketing and Sponsorship, Pizza Hut, Soccer
  • Sprint, NFL near $200M deal

    The NFL is close to completing a five-year, $200 million sponsorship and content rights deal with Sprint that includes the ability to deliver video highlights of NFL games to cell phones for the first time.

    Sprint’s return to the NFL would be one of sports’ biggest sponsor deals.
    Sources familiar with the deal, which would begin this season, said the $200 million rights fee would swell to $600 million over the five years with the addition of broadcast ad commitments with NFL rights holders, marketing requirements, and nfl.com and NFL Network advertising spending. That would make it easily one of the largest sponsorship deals in sports and would equal the annual payment that NBC will make to the NFL as part of its recent rights deal for Sunday night games.

    “As traditional sponsorship rights have shifted, the league is turning into more and more of a media company,” said one league insider. “This is the latest evidence of that.”

    Officially, a league spokesman said the NFL was “in discussions” with several companies for telecom rights.

    Sources familiar with the deal said Sprint was the only serious competitor for the deal. They said that while no documents have been signed, financial terms have been decided. Indeed, it was the guarantee of significant revenue to the NFL clubs that convinced ownership to pass a resolution last week divvying up local and national wireless content.

    The league and its teams have been debating for months the details of the wireless category, a lucrative sponsorship for the teams. The league’s initial plan to include streaming radio rights in the national wireless deal drew serious opposition from teams.

    In the end, only audio highlights, not the entire broadcasts, are included in the national rights. And with a 31-0 vote last week at an owners meeting in Detroit on giving the league the go-ahead on a national deal (the Vikings were absent), the issues had been resolved.

    “From our standpoint, the league really did a fantastic job of doing the research on the category and incorporating the teams to get their feedback,” said Lou Imbriano, vice president and chief marketing officer of the New England Patriots.

    Teams can continue to sell their own local market wireless sponsorships and deliver to local fans audio and video highlights from shoulder programming like coaches shows, but not game broadcasts. Wireless will become like many other league sponsorships, where teams can sign deals with competitors to the national sponsor.

    Wireless carriers already have invested heavily in NFL team deals: Verizon has more than 10 team sponsorships, Sprint and Nextel combine for three, while Alltel also has three.

    In addition to audio and video highlights, that national deal gives the rights holder the ability to transmit official NFL fantasy football material, as well as NFL Films footage, said Chris Russo, senior vice president of new media at the NFL, who is spearheading the negotiations around the deal. Russo did not confirm a deal with Sprint, only the parameters of what a new league wireless sponsor would get.

    Transmitting live game action, audio or video, will not be part of Sprint’s deal. Notably, ESPN, which is coming out with its own cell phone, has the right beginning in 2006 to transmit “Monday Night Football” live to its cellular subscribers.

    For the coming season, video highlights would be available after midnight of the day the game is played. But starting with the new broadcast agreement in 2006, audio and video highlights of the 1 p.m. early games will be available to Sprint cell subscribers as soon as 4 p.m. that day. Sprint also gets in-game ad enhancements to tout its service, which are permitted under the TV agreements that begin in the 2006 season.

    The marketing rationale for the Sprint deal is powerful: Sprint, which announced an intended merger with Nextel late last year, plans to relaunch its telecom business in the third quarter, when the NFL season begins. The deal also reunites Sprint with the NFL, as the company held NFL rights from 1996 to 1999, paying $24 million a year for telecom rights that included the widely seen branded headsets that coaches sported on NFL sidelines. Those rights now belong to Motorola for the next two seasons.

    The pending deal also means that the new Sprint Nextel would hold two of the biggest sports sponsorships in the United States. Nextel now has title rights to NASCAR’s top circuit, which reportedly is close to being renamed the Sprint Cup Series in 2006. Now the merged company’s top two sports properties will compete for viewers’ attention on Sundays in the fall.

    From an industry perspective, the pending deal is indicative of perhaps the biggest developing story in the business of sports and one that portends a seismic change: the race to develop wireless content for a future generation of wireless handheld devices that will serve as phones, Internet connections, TVs and music and text libraries.

    “On the national level this is a new opportunity to take advantage of a very exciting wireless marketplace, which is evolving from a phone business into a media business,” Russo said.

    Ultimately, that will leave carriers like Sprint and Verizon competing with cable giants like Comcast for sports and other valuable content rights with TV networks, whose funding has been the engine that drives sports.

    “As the [U.S.] phones begin to resemble more robust phones like those in Asia, content will be the driver there,” said MLB Advanced Media President Bob Bowman, who has about 1 million wireless customers through various content offerings. “That’s what drove adoption of broadband in the PC world, and that’s what will drive it in wireless.”

    Octagon, which handled sports marketing for Nextel, now oversees Sprint’s sports marketing as well.

    Print | Tags: Ameriquest Mortgage, Coors Brewing Co., Football, Marketing and Sponsorship, NFL, PepsiCo, Sprint Corp., Visa
  • Taco Bell hungry for MLB

    Halfway through its three-year sponsorship deal, Taco Bell is so pleased with its relationship with Major League Baseball that it’s already thinking of a renewal.

    “We love baseball, because it is something that dependably pulls people to TV in the summer, which is our main communication vehicle,” said Greg Creed, Taco Bell’s CMO. “We’ve had strong sales since we signed on with MLB, and while it’s hard to pull apart those numbers, we believe baseball was a key part.”

    Taco Bell has been active in MLB since signing on in June 2004.
    Taco Bell became the official quick-service restaurant of MLB in June 2004, and activated for the rest of the season. This year, the site of MLB’s All-Star Game next month is driving much of the brand’s execution; Taco Bell has more than 100 restaurants in Detroit. Local store crews will be wearing All-Star caps, and some point-of-sale material should be evident.

    Activation plans for Detroit include a reprise of the televised stunt from last year, in which a randomly selected fan at the park won $1 million for throwing five baseballs from the pitching mound through a 25-inch hole in a Taco Bell sign next to home plate. All within 30 seconds. This year the fan will be picked from entries around the MLB FanFest.

    Along with TV ads and virtual signs on Fox’s All-Star broadcast, Taco Bell will become presenting sponsor of ESPN “Sunday Night Baseball” in the third quarter.

    While the two brands seem disparate, that may be why the combination works.

    “They’ve brought MLB to a younger demo and brought a little bit of attitude to MLB,” said John Brody, MLB’s senior vice president of corporate sales and marketing. “Everything they’ve done with us is a little bit left of center, and that’s something we could use a little of.”

    Brody noted the ticket lanyard Taco Bell will give away on the Sunday before the All-Star Game, fashioned after restaurant hot sauce packs, each one of which features humorous “sauce pack wisdom.” The one on the Detroit lanyard states “cleats scare me.”

    Print | Tags: Baseball, ESPN, Marketing and Sponsorship, MLB
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