SBJ/20100308/This Week's News

WTA retains Sony Ericsson

Sony Ericsson will remain the WTA Tour’s lead financial backer but will drop its title sponsorship of the tour under terms of a new deal that stretches through 2012.

The agreement, which is scheduled to be announced in London early this week, calls for the Sony Ericsson brand to be taken off the tour’s name at a time still to be determined later this year.

The tour is essentially ripping up the final 10 months of its existing six-year deal with the company and creating a nearly three-year, $27 million sponsorship contract. The old deal averaged $14.7 million annually.

While the deal’s average annual fee is dropping by almost 40 percent, the development is likely to be viewed as a great win for the WTA because most observers had written off the chances the financially ailing cellular phone company would stay on. In addition, while the tour is losing some of the assets that Sony Ericsson sponsored, it is also picking up new inventory to sell.

Sony Ericsson is dropping its title sponsorship of the tour’s season-ending championship, so the WTA could recoup some of the loss by selling naming rights to that tournament. It also could sell licensed merchandise around the WTA brand.

“We are thrilled to be able to keep one of the best sponsors in the history of women’s tennis,” said Stacey Allaster, chief executive of the WTA, in an interview last week.

Sony Ericsson signed its initial agreement with
the WTA in 2004.

The WTA signed the initial deal in late 2004. It was the largest sponsorship in women’s sports and in tennis overall. Under that deal, Sony Ericsson owed the WTA $16 million this year, but that payment will be shaved to about $10 million, sources said, with the tour receiving about $16 million to $17 million over the following two years.

A tennis source said the WTA would enjoy the same level of net profitability even with the reduced fees, pointing to fewer tickets being required in the new sponsorship package and Sony Ericsson dropping the requirement that past stars of the game appear at events. The WTA had to pay them appearance fees.

Sony Ericsson will keep its logo on the netposts of all 53 tournaments, and players whose apparel contracts do not forbid it will still be required to wear a patch that incorporates the Sony Ericsson name in some fashion.

The deal underscores an emerging trend in sports: Title deals are tough to renew, and when they are, it’s frequently for reduced rates.

“These global sponsorship properties are really tough sells,” said Bob Basche, chairman of Millsport. “But on the other hand, to salvage the sponsorship at even below-percent costs was a good move for the tour.” Pointing in part to the difficulties of selling naming rights to stadiums in the current economy, Basche added, “All but the most prestigious title sponsorships are really under the microscope.”

Aldo Liguori, Sony Ericsson’s corporate vice president and head of global communications and public relations, said the company’s strategy had changed since signing the initial deal in 2004. At that time, the company was only three years old and needed the global brand exposure a title deal offered, he said.

Now, Liguori said, the company is looking for more activation on-site at events and more use of social media, an area in which the tour plans to expand aggressively. It is planning an announcement in this regard at the Sony Ericsson Open in Miami later this month, but tour officials declined to comment on details.

Sony Ericsson’s sponsorship of that event is separate from its WTA deal.

Sony Ericsson posted a $1.2 billion loss in 2009 and saw leadership changes at the company in October. Still, Allaster, who took on the chief executive’s job in July, never looked at a new deal as being a lost cause. She also shared a fresh partner at Sony Ericsson in the company’s new president, Bert Nordberg.

Perhaps the critical moment in reaching a new deal came on Oct. 15, when Allaster, WTA communications executive Andrew Walker, Venus Williams, Melanie Oudin and Billie Jean King met at Sony headquarters in New York with Nordberg and his team. Allaster pointed to that meeting as giving the tour confidence a deal could be struck and showing Sony Ericsson just how committed the tour, and its players, were to keeping the deal.

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