SBJ/20090921/Opinion

Time to start spending on sports again

I knew 2009 was going to be an uphill battle for my business when President Obama stated at a town hall meeting last October in Indiana, “You can’t get corporate jets. You can’t take a trip to Las Vegas or go down to the Super Bowl on the taxpayers’ dime.” 

See, my niche segment of the sports marketplace specializes in corporate incentives wrapped around major sporting events such as the Super Bowl. Many of the prize packages we create for incentive contest winners include private airfare, hotel accommodations and event tickets. The contests we develop, mainly for Fortune 500 sales teams, aim to drive revenue and raise earnings before interest, taxes, depreciation and amortization, increasing a business’ bottom line production.

The program costs a company incurs on these incentive trips help to keep thousands of hospitality industry personnel employed. There is powerful trickle-down effect on each piece of business that flows through hundreds of hands all the way through to the guy making a $5 tip for handling your bag at the airport.

Unfortunately, this business and others in the sports industry slowed earlier this year after the credit crisis virtually shut the faucet on corporate spending. It was obvious that many companies directly and indirectly affected by the recession needed to work to get their balance sheets back into shape. This meant reducing operating costs, which included trimming marketing budgets and laying off employees.

The good news is many businesses made quick rebounds in just a couple of quarters to show profit gains. The bad news is in many cases this was caused by extreme cost-cutting measures having nothing to do with revenue-generating business growth. The next earnings report is where it is going to get very tricky for companies to look good as they need to start producing revenue again. Incentive contests, promotions and sports sponsorship programs are needed now more then ever to get the engine going.

Interestingly enough, many companies no longer face the dilemma of not having actual dollars to spend on these meaningful initiatives. You would think the solution would be quite simple then. But these companies are so fearful of being singled out by politicians for what they term frivolous spending that they are shutting down some of these needed practices. Fortunately, our overall business as well as many others’ in sports have picked up some in the last couple of months. But we are still having to prod some clients who act like a deer frozen in the headlights when it comes to spending on sports. They want to get back in the game, but they are terrified of being perceived in a negative light. This trepidation will have a devastating effect on a company’s ability to grow its business.

Why is sports being targeted? When a company throws $10 million into a campaign for one of their products to tie into a Hollywood film, no one bats an eye or asks questions. Tying in with Tiger Woods or the Super Bowl? That’s another story.

A short while after hearing President Obama’s words on going to the Super Bowl, I happened to catch him on ESPN sitting front row at a Wizards-Bulls game. Last month Nancy Pelosi and our House of Representatives approved a bill for $550 million to purchase private aircraft, including a Gulfstream plane so our leaders can fly to places like Costa Rica and Panama for “government educational trips.” Smells of hypocrisy.

Moving forward, it’s imperative that we in the sports industry not be hesitant in promoting our business. We shouldn’t be embarrassed for using the word “luxury” when selling suites at a game. We all know sports is a huge business around the world nowadays. Sponsorship, promotion, media and hospitality are all legitimate must-have business practices that help companies grow and succeed. There is nothing wrong with that.

Robert Tuchman (rtuchman@pcevents.com) is president of Premiere Corporate Events, which plans corporate hospitality around sporting events.

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