SBJ/September 12 - 18, 2005/SBJ In Depth

The changing face of winter sports

Promoter Tom Collins talks wistfully about the bygone days of the 1990s, when figure skating generated live audiences, big money and television ratings off the charts. His Champions On Ice skating tour benefited directly from the upsurge, but because his company also is a sponsor of the U.S. Figure Skating Association, an investor in its future, Collins can’t afford to think in purely nostalgic terms.

U.S. snowboarder Lindsey Jacobellis practices for half-pipe competition in the Nokia Snowboard World Cup held in March at Lake Placid, N.Y.
“Saturation TV ruined the sport in the ’90s,” said Collins, who launched his tour business in 1969 to showcase Olympic and world champions. “It is going to be a long time before it comes back.”

Only a decade ago figure skating was the undisputed king of the hill, the Winter Olympic sport most adored by fans, marketers, advertisers and promoters. After surviving the legal storm generated by Tonya Harding’s conspiracy to disable rival skater Nancy Kerrigan, the FSA woke up in 1994 to find that the dust had not settled in the aftermath of a staggering 48.5 Nielsen rating for CBS’s telecast of the Olympic women’s final. The dust had instead been blown away by prevailing winds of change.

In this defining moment following the 1994 Olympics, virtually everything that was thrown at skating’s wall of opportunity seemed to stick. CBS booked more than 20 skating telecasts in 1995-96, some written off by critics as made-for-TV trash. But the schlock drew huge audiences. A weekday prime-time showcase of pro and nearly pro skaters on Fox brought that fledgling network a stunning 11-plus rating. And by 1997 the FSA had negotiated a landmark, 10-year marketing and television rights deal with ABC Sports worth $100 million.

Meanwhile, around this same mid-1990s period, U.S. Skiing was enduring an era of unrest and bickering among paid staff and its board. Despite a legacy of producing Olympic thrills and success, the organization was on the brink of financial collapse.

Onto the unsettled scene came the controversial Bill Marolt, an Aspen-born 1964 skiing Olympian who later headed the sport’s U.S. Alpine program and was known for stringent standards and zero tolerance of second best. In 1996, Marolt was hired as the U.S. Ski Association’s president and CEO after a successful run as University of Colorado athletic director.

Entering the late 1990s, skating and skiing lived in different worlds. Figure skating, according to a former staffer who asked not to be named, was deriving so much revenue from bonus clauses in its ABC deal — through a formula tied to ratings — that it took steps to create a foundation as a place to park the excess cash. Meanwhile, Marolt had skiing hunkered down under a new five-year business plan and was talking internally about a plan to win an unprecedented 10 medals by the 2002 Winter Games.

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See also:

 

National Governing Bodies and their key sponsors

 

Handing out the medals

 

The bottom line: National Governing bodies

 

High figures for figure eights
In 1995-96, according to federation sales and marketing vice president Ted Morris, skiing’s revenue from sponsorship and TV rights was about $6 million. A decade later, the forecast for 2005-06 is $13 million, a dramatic upward spike owed to an increase in sponsors from half a dozen to 20 and a TV partnership with NBC, the Olympic network. Oh, and American skiers just happened to win 10 medals at the Salt Lake Games in 2002.

Before 1996, “[U.S. skiing] was quite unstructured and lacked the focus Marolt brought,” said David Jacobs, founder and president of skiwear maker Spyder, the U.S. Alpine Team’s official uniform provider since 1989.

“Bill is a very disciplined guy,” said Jacobs, an industry pioneer. “He has been there as a world-class athlete and is a proven leader through his sports management. He brought a fiscal discipline to the team it did not have. When companies like Spyder or Chevy talk to someone like Bill they see capable business management.”

Skating falters

With the 2006 Olympic Winter Games five months away and the 2010 Games back in North America (Vancouver, B.C.), the U.S. winter Olympic marketing hill has a new king — a robust and re-branded U.S. Ski and Snowboard Association — even as figure skating’s governing body is in the unenviable position of feeling like a thirty-something adult accustomed to living large while knowing his trust fund is about to dry up. With the looming expiration of the ABC deal in 2007, declining TV ratings and fewer compelling stars, the checks presumably will keep coming from somewhere. But a shrinking bottom line is likely.

Nancy Kerrigan performs during the 1994 Winter Olympics, when huge audiences tuned in to figure skating following Kerrigan’s run-in with fellow skater Tonya Harding.
First, skating must weather its latest leadership crisis. A step in that direction occurred Aug. 31 with the hiring of USA Track and Field events and broadcast chief David Raith as the newest FSA executive director. Raith spent many years as a key player behind the evolution of Turner Broadcasting’s now defunct Goodwill Games.

The sport has not had an executive director since May, when Val Belmonte resigned after seven months on the job. Media reports indicated he was frustrated by a governance structure overrun by volunteers. His departure came three months after the sudden resignation of volunteer president Chuck Foster.

The FSA is financially stable for now despite operating at a $3.7 million deficit in 2003-04. Deficits are not unusual for some Olympic sports in their “off” years. Through its ABC deal alone, the sport is taking in about $12.5 million annually, said its TV consultant and negotiator, Eddie Einhorn, who warned of a need for unified leadership.

“I have been in to see ABC this year with three different pairs of [FSA] people,” said Einhorn, vice chairman of the Chicago White Sox. “It is time to settle down. We could phone it in [until now].”

As a foreshadowing of what the FSA is up against in the current economic environment, the International Skating Union’s $22.5 million-a-year rights deal with ABC for world championships and other international events was renegotiated as an ESPN deal for $5 million annually.

Sponsors weigh in

For sponsors, the next few months are critical toward maximizing their investments. Even with a tie-in to the Olympic countdown, these are not sports on par with NASCAR or the NFL. Most sponsors — excluding those that cross over through separate deals, such as Anheuser-Busch, GM, Nike or Visa — are not technically Olympic sponsors. And with the exception of a few names such as skiing’s Bode Miller or skating’s Michelle Kwan, they are banking on star potential more than established household credibility.

Most will achieve that through title sponsorship and advertising of televised competitions crucial to the selection of Olympic team members for the Feb. 10-26 Winter Games.

Sponsors such as Sprint have found value in aligning with the U.S. Ski and Snowboard Association and top athletes such as freestyle skier Joe Pack.
In fact, State Farm Insurance advertising executive Bobby Wilkinson apparently is so focused on the company’s title sponsorship of the U.S. Figure Skating Championships in January that he acknowledged during an interview he was not aware of Belmonte’s resignation.

“Kudos to them,” he said of the FSA. “We saw no interruption.”

Wilkinson said State Farm’s deal also gives it rights as an associate sponsor of skating’s key competitions this fall — the Campbell’s Soups International Fall Classic and Smart Ones Skate America, an International Skating Union-sanctioned event in October in Atlantic City, N.J. Smart Ones is a consumer foods brand under the H.J. Heinz Co.

State Farm has further evolved its presence as title sponsor of skating’s nationals — the Olympic selection event in an Olympic year — by creating a scholarship fund, partnering with Tiffany & Co. on a permanent championship trophy and adding its logo to the Zamboni ice maintenance machines in arenas.

Clothing retailer Marshalls sees value in skating at the grassroots level. The company sponsors the sport’s nationwide basic skills programs at youth skating facilities.

Skiing’s potential for a repeat of Salt Lake City’s medals haul is not lost on Visa, a U.S. Ski Team sponsor since 1986, and a global and U.S. Olympic sponsor as well. Of its 15 Olympic prospects under contract in 2005-06 as members of Visa’s roster of Gold Medal Athletes, nine are skiers, representing the disciplines of Alpine, freestyle, Nordic and snowboarding.

Images of Miller, snowboarders Lindsey Jacobellis and Seth Wescott and freestyle skier Emily Cook will be a part of “literally millions of pieces of marketing collateral,” such as point-of-sale materials, said Visa USA spokesman Michael Rolnick. Additionally, through its U.S. Ski team contract, Visa title sponsors the “Birds of Prey” World Cup Alpine event this fall in Beaver Creek, Colo., and associate sponsors the three-part Chevrolet U.S. Snowboard Grand Prix, and the freestyle skiing Olympic trials event.

USSA’s Morris said the federation pours about $3.5 million a year into buying time from NBC and producing events, a total of eight hours leading to the Turin Games. But the returns are substantial for a key sponsor such as Sprint, which wants broad visibility in order to justify logo headgear deals with athletes such as freestyle star Joe Pack, one of the world’s best in 2005.

“When you have networks willing to partner with you, it transfers the excitement to the sponsors,” Morris said. “You have got to be on TV and then the sponsors will come. We had sponsors [pre-Marolt] saying ‘If you get on network TV, we will support you.’ When you go to the market with 50 percent of your inventory sold, that makes it a lot easier in the scatter [ad sales] market.”

Spyder’s Jacobs said aligning his brand with the U.S. ski team as it expands its dominance has produced measurable results — 30 percent growth in Spyder’s U.S. sales in the last three years. And the brand’s contract with Alpine superstar Miller has even farther-reaching implications.

Miller’s Spyder signature skiwear collection is so hot in Europe, “he can’t walk down the street at a ski resort without being recognized,” Jacobs said. “Then he comes to Boulder [Colo.], and nobody really knows who he is.”

Long-term deals sought

Even as the countdown to the Turin Olympics is all-consuming, executives inside both sports know they already have to start thinking about revenue and sponsor renewals beyond 2006. Morris said about 50 percent of USSA’s sponsors have deals into 2007. Sprint’s deal is through 2008.

To reclaim the spotlight, figure skating must return TV and sponsor value to the sport.
With the 2010 Games headed to a highly desirable geographic location for U.S.-based companies, sponsor sales are expected to be strong for the major sports.

But figure skating’s road remains fraught with uncertainty. For nearly a decade ABC’s sales force has delivered the sponsor deals as part of the joint $100 million agreement. Ramsey Baker, FSA’s assistant executive director for marketing, said the organization is prepared already for the day when it might be back on its own, and Einhorn agreed that is a possibility.

“I think there will be different terms [after 2007],” Einhorn said. “We would like to get more involved with our sponsors.”

Baker said three to four sponsorship agreements negotiated outside of the ABC pact are pending, due for announcement before Turin.

“We’re looking beyond [ABC] to see what is out there, so we make sure we know what our options are,” Baker said. “I think there is definitely a niche of long-term sponsors out there for us. I think it is important for figure skating to recognize who we are — that there are not that many sports out there who offer that [strong female] demographic.”

Just ahead of Labor Day weekend, an FSA creative committee was scheduled to convene quietly in Chicago to begin charting the first steps toward returning TV and event sponsor value to the sport.

“I told them to bring their creative minds,” Einhorn said, “and leave their egos at the door.”

Steve Woodward is a writer in Illinois.

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