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Marketers question value left in AVP brand

Through its 22 years, the AVP Tour bounced across the American sports scene.

The country’s top beach volleyball circuit became an Olympic favorite on television and a TV staple among niche sports, but it also had to withstand bankruptcies, player revolts and numerous ownership changes. Now, in pulling the plug on the current season with five stops left on the tour, RJSM Partners, majority owners since April 2009, may have finally killed the AVP as a brand.

“Brand equity in the AVP name has been tarnished,” said Julie Solwold, vice president of global sports marketing at John Paul Mitchell Systems, the AVP’s longest-standing sponsor. “As far as sponsors, it definitely has been damaged. As just a tag for the players, it could endure, because it still means best of the best. But I don’t think sponsors will buy anything owned or managed by the AVP.”

“We would need to see a real professional organization to go back to something called AVP,” said Jon Miller, NBC Sports executive vice president of programming. NBC televised the AVP for years before the league jumped to ESPN/ABC this year. “I can’t see any brand associating themselves with something when there is so much uncertainty.”

Nivea signed a five-year, $20 million title sponsorship
with the AVP in April. Owners shut down the pro
beach volleyball tour earlier in August.

Nick Lewin of RJSM said that as controlling partner of the AVP, RJSM invested more than $5 million in the volleyball tour over the past two years and was looking at a $6 million loss this year before the season was suspended on Aug. 13.  Lewin said he was negotiating a sale up to the last minute. “I am a little surprised a deal didn’t get done,” he said. “It’s tough to project profitability when you are losing six million.”

As for the longevity of the name that has meant the best in beach volleyball for more than a quarter of a century?

“All the value is in that AVP brand,” Lewin said. “Right now, I have no idea what that value is, but I’m working on that.”

While there have been veiled references to a bankruptcy, no filing had taken place as of press time last week. Lewin said he will decide whether to sell, relaunch, hibernate or walk away from the AVP within 30 to 60 days.

Until then, the beach volleyball world is somewhere between limbo and chaos, as various groups scramble to reformulate the sport at its top level.

“There’s a lot of activity, because the sport has a passionate fan base. It just needs the right business model — one that includes all levels of volleyball, and appropriate distribution,” said Ben Sturner, whose Leverage Agency sold $6 million of sponsorships for this season, including deals for KFC, Malibu Rum, Progressive Insurance and a five-year, $20 million title deal for Nivea, but who has yet to see a commission from the AVP. Other agencies still owed money by the AVP include Omnicom’s The Marketing Arm for activation expenses.

What’s peculiar about the AVP’s latest difficulties is that they come while beach volleyball in America is arguably stronger than it has ever been, particularly at the grassroots level.

“The sport of beach volleyball has never been healthier in the U.S., but the business of the AVP has never been more difficult,” said Dave Williams, who left his position of vice president of operations at the AVP in late 2009 to become the first managing director of beach programs for USA Volleyball, the sport’s national governing body. Williams cites increased participation numbers, especially in the junior ranks, along with the NCAA’s adoption of what it calls “sand volleyball” as an emerging sport, starting now for Division II schools and in 2011 for Division I.

Meanwhile, qualifying tournaments for the Olympics, where the U.S. swept the gold medals in Beijing, will be held in the United States for the first time in conjunction with the 2012 Games.

Local tournament promoters, agencies and
some players are looking to salvage the
beach volleyball season or resurrect
a league.

“On sand and indoors, things have never been better for volleyball,” said sport hall of famer Karch Kiraly, whose Wide Open beach volleyball tour is expected to benefit from the AVP’s demise. “So it is strange.”

In its early years, the AVP had lifestyle sports almost to itself. Now, with the proliferation of action sports, it doesn’t have that same unique standing.

“They were an icon. Now, they are struggling to find a place within lifestyle sports,” said former AVP President Bill Berger, whose Brand X Marketing produces surfing and volleyball events for Corona. “Now it’s going to be hard to monetize something called the AVP.”

While many in the constituency of AVP player agents, media, and sponsors questioned his business practices, Lewin blamed the economy and a model that relied on sponsorship for 80 percent of revenue.

“I’m not sure it was fixable in the time we had,” Lewin said. “I don’t look at any one thing and say ‘If we hadn’t [messed] that up, we would be OK now.’ At the end, we just couldn’t turn it fast enough.”

Many also questioned the sports’ viability as a TV property outside of the Olympics, noting that time-buy arrangements created overhead that were impossible to underwrite for a sport with no meaningful ticket revenue.

“For 15 years, the sport of beach volleyball has been wrongly positioned in the same pond as basketball and football and golf. It has been TV first, and there’s really been no huge commercial activity swirling around it as a result,” said Steve Lindecke, a former AVP board member, whose Elevation Group stages the Corona Light-titled Wide Open Tour, USA Volleyball’s Junior Tour and the upcoming U.S. Open of Beach Volleyball.

Wasserman Media Group’s Dan Levy, who represents player Misty May-Treanor, added, “There’s a lot of debt and a big question: How important is TV to this property? Maybe it should just be about an event that is beach-cool, so it is sponsors looking for grassroots not media buyers looking for ratings points.”

Former AVP Commissioner and CEO Leonard Armato, now CMO at Skechers, said achieving national scale was important in growing the tour from six to 18 stops, and revenue to $24 million.

“Much is made about the fact that the AVP was never profitable,” he said, “but profitability is only one factor in determining the value of a business. Many sports properties aren’t profitable but highly valuable.”

Armato noted that shareholders derailed a plan to sell the AVP to the Shamrock Group for $40 million in 2007.

Without a decision on the AVP’s disposition, “It’s impossible to crystal-ball anything in the sport now,” Kiraly said.

Nonetheless, local tournament promoters, agencies as large as IMG and even some players are looking to patch together the season, or resurrect an elite pro league by whatever name. Some who contended they were close to a deal called during the writing of this story and asked that it be killed.

A regional tour, with more USA Volleyball involvement and anchored by Olympic qualifying events, is considered an attractive alternative to some observers.

“There is a business, but it has to be recalibrated with more modest expectations,” said former AVP general manager Gabby Roe, now president of Omnicom’s action sports company, ASA Entertainment, which stages more than 100 events a year. “The AVP took a credibility hit in the business community, but pro beach ball leading into the [2012] Olympic Games with qualifiers here for the first time has credibility.”

Added Ryan Morgan, agent for some of the AVP’s top athletes, including Olympians Kerri Walsh, Phil Dalhausser and Todd Rogers, “An NGB could play a really nice supporting role, like USA Basketball does with the NBA, but whatever form this takes, it has to be a restart as opposed to the past, where we were trying to prop up a model that was leaking. Any time you cease operations, you’ve done damage, but as long as you can assure them that the next step isn’t going to be like the last step, you can make it work — though I’m not saying that will be easy.”

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