SBJ/June 20 - 26, 2005/Marketingsponsorship
Sprint, NFL near $200M deal
Published June 20, 2005
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.
“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.
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.