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The four big stick-and-ball leagues are leaving a total of more than $370 million on the table annually by not selling jersey advertising, according to new research from Horizon Media.
The NFL, with its unrivaled ratings and concomitantly higher ad rates, topped the list for jersey valuations at nearly $231 million, or 62 percent of all potential big four jersey ad sales. However, the nature of football — with players more crowded together and with less static time facing the camera — means that the NFL offers the least of what the study terms "detections" among the four leagues, with 28,560 calculated over the course of a season. Baseball, meanwhile, with its typical center-field and behind-the-catcher camera angles, scored more than 314,000 detection opportunities.
The total jersey valuation for MLB teams came in at more than $101 million. The NBA total was $31 million, and the NHL at $8 million, according to the report.
Players' amount of static time facing the camera hurt the NFL's value but helped MLB.
While NHL teams posted the lowest monetary value in the survey, the NHL's quality impact score was second only to MLB. Hockey's fast pace of play provides for fewer detection opportunities during game action, but when play is stopped in the NHL, the exposure "duration," or amount of time the jersey is visible on-screen, is higher in hockey than other sports.
Using computerized exposure evaluation techniques and assuming a brand logo across the middle of a team's jersey that would occupy 3.5 percent of the TV screen — comparable to an English Premier League kit — the study formulated media evolutions for the NBA, NFL, NHL and MLB in their top 20 markets over their most recently completed seasons.
The study did not account for logo value in print and digital media, or from being viewed on-site.
Since the study made assumptions on a team's national broadcast appearances, it's not surprising that the top five NFL teams in exposure value are Dallas, New England, the New York Giants, the New York Jets and Philadelphia — all prime targets for the NFL's national broadcast windows.
Likewise, the top three MLB teams in exposure value are the New York Yankees, Boston and the New York Mets. The NBA list is led by the Los Angeles Lakers, New York and Boston, while in the NHL, the top three are Chicago, the New York Rangers and Pittsburgh.
The research noted that the list of teams for potential ad value of jersey sponsorships parallels Forbes' list of the most valuable sports teams.
Jersey ads are a common practice in most of the world, but the big U.S. leagues have thus far resisted selling their jerseys as billboards, except to brands such as Nike, Reebok and Adidas, which hold their apparel rights.
"We don't necessarily see this happening soon in the U.S.," said Michael Neuman, Horizon Media's managing partner for sports, entertainment and events, "but until the revenue potential is clear, it certainly won't go anywhere, and clearly this shows there is significant opportunity at a time when most of the big leagues are looking for new revenue."
Consider, for example, the NHL's exposure value of $8.17 million, compared with its current NBC contract, which is a no-rights-fee, revenue-share deal. Or imagine the incremental value jersey advertising could bring if it were bundled with TV rights for rights holders to sell.
POTENTIAL JERSEY SPONSORSHIP VALUES* LEAGUE NO.OF
NFL 28,560 18:26:40 2.33 0.209 $230,911,504 MLB 314,280 273:36:00 3.13 0.308 $101,052,782 NBA 127,920 94:11:10 2.65 0.238 $31,186,931 NHL 74,620 60:08:00 2.89 0.248 $8,171,211 TOTAL 545,380 446:21:50 2.94 0.278 $371,322,428 * Values based on the 20 teams in the largest markets in each league, for a full season within each league. Quality impact score: A relative measurement of performance based on the duration, size, isolation and source type. Monetary value: A dollar amount representing the exposure value of a brand/sponsor/source. Source: Horizon Media
In England, Premiership club deals range in annual price from $32 million for the Aon-Manchester United and Liverpool-Standard Chartered deals to less than $1 million for Blackpool's sponsorship deal with online loan company Wonga.
Of course, the political machinations of jersey ads for the big four leagues are probably greater than what for some is a psychological barrier of swapping an Adidas or Nike logo for Coke or McDonald's. A leading question: Who would sell the uniform ads: networks, leagues or individual teams?
"If I'm an owner, I'm saying that's my real estate. And if I'm a network with league rights and I can't sell it, then I'm paying less for those rights," said Chris Weil, CEO of marketing agency Momentum Worldwide, whose client list includes heavy sports spenders like Coca-Cola and American Express. "You also might run into a problem if you ask a player to take a pay cut, as they are in the current [NFL] labor negotiations, and then sell space on what a player might consider his jersey"
Another constituency that could insist on a piece of the action are the jersey manufacturers, who are accustomed to having their trademarks on pro uniforms. There also likely would be conflicts between individual athlete endorsement deals and the company ad that's on the jersey the player might be wearing.
"My opinion is that it's been a business barrier stopping us from doing this rather than a belief that we would be violating something sacrosanct," said Phoenix Suns President and CEO Rick Welts, formerly the NBA's chief marketing officer. "I wouldn't say the leadership in our league is against it, but certainly we're not prepared to do it until it comes with a price everybody can be comfortable with. I don't think we're anywhere close to that now."
AEG picked a sweet spot last July to launch its naming-rights pitch to Farmers Insurance for an NFL stadium in downtown Los Angeles.
The Ritz-Carlton Residences at L.A. Live, a shiny new condo-hotel property, sits across the street from Staples Center and overlooks the Los Angeles Convention Center’s West Hall, the site where AEG wants to build $1 billion Farmers Field.
Inside, AEG dressed up a luxury condominium on the 42nd floor with photographs of football games, soccer matches and concerts, all the events the new stadium could attract. It set up a “sizzle video” as part of the presentation, the same piece shown during the Feb. 1 news conference to announce Farmers’ 30-year deal, an agreement that with escalator clauses stops just short of $700 million. The hallway leading to the condo was lined with graphics depicting a concrete tunnel, as if Farmers officials were inside the stadium, walking from the locker room to the field.
AEG sold the new stadium as the next step in the revitalization of downtown Los Angeles.
Leiweke, AEG’s president and CEO, pointed toward the West Hall and talked about the vision for building a stadium next door, an idea first hatched by Casey Wasserman, chairman and CEO of Wasserman Media Group. Farmers Field would be the next step in revitalizing downtown Los Angeles, a process that began 12 years ago when Staples Center opened its doors, and moved forward when the first piece of the L.A. Live development opened in October 2007. Leiweke told Farmers officials to look past the absence of an NFL tenant, the key obstacle to building the stadium.
Farmers bought in early on the project, said Kelso, the company’s chief marketing officer.
The Los Angeles-based companies had done business together before: Farmers was title sponsor for international soccer matches at Home Depot Center, the MLS facility owned by AEG. Farmers also had done deals with the MLS Galaxy and NHL Kings, two teams AEG owns. As a result of that relationship, AEG Global Partnerships, AEG’s sports marketing division, knew Farmers had interest in doing something in the NFL, said Mirhashemi, AEG Global’s chief operating officer.
When the time came to start the search for a stadium naming-rights partner, AEG went straight to Farmers.
“Amazingly, although we had other people approach us, we had one conversation,” Leiweke said. “We happened to find a company that stayed with the conversation from the first pitch until the press conference.”
As the discussions progressed, Kelso brought in Farmers CEO Bob Woudstra. In September, entering a three-month stage that Mirhashemi described as “heavy negotiations,” Farmers hired Greg Luckman, CEO of GroupM ESP, to advise on the deal. Luckman, who consulted on the $400 million naming-rights deal for the Mets’ Citi Field, studied the Farmers-AEG proposal that could ultimately trump that figure and gave it a big thumbs-up.
“When we conducted our valuation analysis for Farmers, it exceeded every criteria, scoring off the charts because of the unprecedented nature of the opportunity,” Luckman said. “This is an unparalleled platform for Farmers … increasing its ROI across the board.”
Tied into that valuation, and most important for Farmers, was the trust it had developed with AEG through previous deals, Kelso said.
“I was really excited about the prospects of this project right from the beginning and, frankly, so were Paul [Patsis, Farmers president of market management] and Bob,” he said. “It’s obviously such a huge story to have the NFL come back to L.A., and so being able to be involved in that in and of itself is big. For us, one of the critical things was [AEG] has a great track record with fantastic venues all over the world. We see their handiwork in L.A., and we saw potential for this project to really anchor and revitalize downtown in a way that really is going to transform Los Angeles, basically forever.”
The negotiations intensified during the fall, and both sides set a deadline for the end of 2010 to get a deal done.
The name Farmers Field, Kelso’s idea, was easy to come up with, both sides said. One challenging piece to navigate through was developing the intellectual property tied to branding the collateral involved with naming rights and how those marks could change over the next 30 to 35 years. Normally that is not the case, but with a “longer runway” for a project targeted to open in 2015, it was something officials had to carefully evaluate, said Mirhashemi, an attorney by trade.
“Because this deal is not about a structure that is now operating or will open up in a month or a year, we had to sit there and think … there may be different things that happen between now and the opening,” he said.
In addition, AEG Global Partnerships had never done a naming-rights deal for an NFL stadium, so the two groups had to “think through NFL assets and how the league controls those assets compared with the team and how it’s different than other leagues,” Mirhashemi said. “There was some forward thinking on behalf of all of us.”
The deal, a key piece of stadium financing, hinges on whether an NFL team moves to Los Angeles. Both AEG and Farmers officials remain confident it will happen. Farmers received further assurance after having conversations with league officials about the situation early on during its talks with AEG, Kelso said. Should a team migrate to Los Angeles, Farmers would start making payments in 2013, two years before the facility opens, said sources familiar with the negotiations. No money would change hands until that time.
The value of the deal could climb to $1 billion should a second NFL tenant materialize, sources said.
Now that the Los Angeles stadium’s naming rights have been sold, AEG Global Partnerships turns its attention to signing eight to 12 founding partners for Farmers Field, deals with an asking price averaging $10 million annually over 10 years, sources said. Staples Center’s founding partners, including Anheuser-Busch, Coca-Cola, McDonald’s and American Express, get first crack.
AEG is already in talks with a potential financial services partner for Farmers Field, and has used the same stadium-themed condo at the Ritz-Carlton that it set up for the Farmers pitch.
“We’re trying to lock that category down for the purpose of filling in the financing piece of the stadium and our pro forma,” said Tim Leiweke, AEG’s CEO and president. “We’re in a unique situation here. They’re chasing us, and everybody is excited about where we’re headed here.”— Don Muret
Farmers Insurance’s naming-rights deal is the latest escalation within an insurance category that has always spent heavily on sports.
Brands such as Allstate, State Farm, Geico, MetLife and Nationwide are familiar to anyone who watches sports on TV, but lately, they have been gobbling up sports media and marketing assets like so many Pac-Men chasing goblins.
Over the past three years, State Farm added NBA rights to its extensive stable of MLB and NCAA rights; Geico signed on with the NHL; and Nationwide became title sponsor of NASCAR’s No. 2 series.
Those deals pale when compared with the escalating media buys by insurers, many of whom are buying share of voice well in excess of market share. According to Kantar Media data, ad spending by insurance brands during sports programming grew an eye-opening 36 percent during the first nine months of 2010 compared with the same period in 2009 — and that’s before the fourth quarter, when most brands load up on advertising.
“It’s an arms race. That’s exactly how we refer to it,” said State Farm advertising director Ed Gold. “We’ve seen it escalate to the point where it’s now a $3 billion advertising category, and that’s not counting sponsorship spending.”
Insurance proved recession resistant, and through it, brands continued to spend. Some marketers in the category believe that the recession set in motion more churn as consumers looking to cut costs started comparing rates. With more potential customers, that elicited even more marketing noise.
“It’s always been competitive, but recently, it’s really been ramping up even more,” said Richard Hong, vice president of global brand and marketing services at MetLife.
Insurance is also, however, a relatively low-interest category. That’s left insurance marketers longing for the passion sports engenders and looking to appear endemic to sports. “For us, it is a form of product placement,” Hong said. “How do you get an insurance product inside the broadcast of major sporting events where you know it is TiVo-proof? We’ve been doing it with blimps for more than 20 years.”
Met Life is the PGA’s “official aerial coverage provider.”
Chris Sorgie, corporate vice president and advertising director at New York Life, said it’s a question of making insurance relevant to consumers. Accordingly, New York Life’s SEC football sponsorship with CBS has a first-down marker sponsorship once each quarter, during which the company logo is superimposed over play. There’s a similar “safe at second” integration within MLB telecasts.
“It would be hard for us to integrate within a prime-time program,” Sorgie said, “and even with all the noise lately, our brand awareness measures are up.”
New York Life also recently grabbed some NFL equity, partnering with Stats LLC to create the New York Life Protection Index, an innovative weekly rating index that measures how well each NFL team’s offensive line protects its quarterback.
Unlike some categories, sports can work for a number of brands within the insurance market. “The whole category is way up,” said Michael Neuman, managing partner for sports, entertainment and events at Horizon Media, which represents Geico. “Spending can go beyond the big three and still achieve results. Insurance companies are doing a better job of segmenting against new and different consumers to sell things like motorcycle, RV and ATV insurance, and they’ve found sports are effective there also.”
Added Malcolm Turner, who heads Wasserman Media Group’s consulting and has Nationwide as a client: “All any brand wants is to get into consumers’ consideration set. It’s just getting more expensive to do that in this [insurance] market every day.”
Editor's note: This story is revised from the print edition.
When the green flag drops at the Daytona 500, American Ethanol will be there, literally, and it will be just about everywhere else fans look, as well.
The customized red-white-and-blue, lower-cased “e” logo of NASCAR’s newest partner will adorn not only the green flag at the start-finish line but also more than 120,000 green flags distributed to fans before the race. The flags will be one of the most visible components of American Ethanol’s yearlong plan to raise awareness and support for the ethanol industry among NASCAR fans.
Ethanol will make its NASCAR debut with cars running Sunoco Green E15 fuel at Daytona during the next two weeks. Most of American Ethanol’s promotion will be on conveying the values of E15 fuel, which it believes contributes to cleaner air, more jobs for farmers and more energy independence for the nation.
NASCAR’s decision to use E15 and American Ethanol’s promotion of it comes at a critical time for the ethanol industry. The Environmental Protection Agency recently approved a blend of E15 fuel for cars built since 2001, but the ethanol industry would like to see the EPA mandate it for all vehicles.
“Having a 15 percent blend of ethanol with Sunoco Green E15 is a great way to validate to tens of millions of Americans that E15 is a safe, good fuel for your car,” said Greg Breukelman, a board member of Growth Energy.
As part of its deal with NASCAR, American Ethanol’s logo will be featured on the green flag at every race and will encircle the fuel port of each car. American Ethanol is the first partner to be featured in both locations, and NASCAR amended its annual driver-owner agreement in order to pass the space around car fuel ports to American Ethanol. It did so because of American Ethanol’s support of the contingency program recognizing the driver with the fastest average speed on all restarts.
American Ethanol is supporting those components of the deal by signing former driver and TV analyst Rusty Wallace as a program spokesman. It also is in negotiations with a Sprint Cup driver who will promote its cause, and may support those efforts by partnering with a driver or team for a one-race primary sponsorship, Breukelman said.
The brand hasn’t signed any track deals, but it plans to activate at tracks in the Midwest with a mobile marketing effort focused on ethanol and the American farmer.
“It will be done in a way that will be very visible and impactful,” said David Grant, principal at Velocity Sports & Entertainment, which is handling American Ethanol’s sports marketing. “It will bring to life what not just American Ethanol is about but what the American farmer is about.”
American Ethanol also will be the presenting sponsor at the first of NASCAR’s Fuel for Business business-to-business meetings in 2011 and also the presenting sponsor of NASCAR’s first Green Summit, which hasn’t been scheduled yet.
American Ethanol doesn’t plan to buy any media time, but it will receive media exposure and promotion in an environmental campaign being developed by NASCAR. The sanctioning body plans to use some of its commercial inventory this year with networks to promote NASCAR Green — a new initiative built around what NASCAR calls the pillars of conservation, job creation and American energy security.
The spots will feature American farmers and NASCAR’s use of Sunoco Green E15 fuel.
“We’re going to show imagery of how the country comes together to have American ethanol in the fuel cell of a race car,” said Mike Lynch, NASCAR’s managing director, green innovation. “That’s an American communal effort to make that happen that creates jobs and helps conserve the environment.”
NASCAR’s push around ethanol comes at a time when viewpoints on the benefits of corn-based ethanol are shifting. Former Vice President Al Gore, a leading environmentalist, in November said that he made a mistake in supporting corn-based ethanol subsidies and said the energy-conversion ratios of corn-based ethanol was small at best.
The corn-based ethanol industry also has faced criticism for contributing to food scarcities — ethanol production last year reportedly consumed 41 percent of the U.S. corn crop — and contributing to the national debt — federal ethanol subsidies topped $7.7 billion in 2009.
Lynch said NASCAR was aware of those issues when it struck its long-term partnership with American Ethanol and felt the data supported the partnership, especially as the refinement process for corn-based ethanol evolves. He said that it was important to think that “commentary through.”
“We look to the EPA and the fact that corn ethanol has been classified as a renewable fuel,” Lynch said. “That’s based on tremendous research done over years, and we get that.”
Did you know Kevin Harvick is afraid of plungers? Probably not, but fans of the NASCAR driver will hear about that and other embarrassing tales when Budweiser roasts Harvick during a made-for-TV special on Speed.
The special is one of the main features of Anheuser-Busch’s activation around Harvick in 2011. The company last year signed on as a co-primary sponsor of the Richard Childress Racing No. 29 car driven by Harvick, and it’s using the roast as a way to introduce fans to its relationship with one of the top contenders for the Sprint Cup championship.
When Anheuser-Busch last year jumped from Richard Petty Motorsports’ driver Kasey Kahne to Harvick, it decided to dump the marketing “One Night Stand” parties that had been the centerpiece of its marketing around Kahne. Elevation proposed the idea of a roast, and Anheuser-Busch executives liked how a made-for-TV event like that could appeal to casual viewers and not just NASCAR fans.
“This is a way to bring more entertainment value centered around our ‘Grab some Buds’ tag line,” said Brad Brown, A-B’s senior director of sports marketing. “The NASCAR fan is very loyal, but this gives us an opportunity to cross over to the non-NASCAR fan.”
The show on Speed will be supported by Budweiser advertising and will feature the No. 29 Budweiser show car and Bud girls as part of the program. Speed will sell other commercial inventory within the broadcast.
Brown said that Budweiser will not measure the effectiveness of the show on ratings but on its afterlife in digital and social media. If it meets Budweiser’s return-on-objective goals, then A-B will consider producing a similar show next year that could feature Harvick roasting another driver.
“It’s our plan to do this well, and definitely our plan to do more of these,” said Denny Young, Elevation Group president.
In a move NASCAR licensing officials hope sparks a consolidation in motorsports e-commerce, JR Motorsports has signed a multiyear partnership that will turn over management of day-to-day operations for its online shop to NASCAR.com.
Earnhardt Jr. reportedly accounts for as much as a third of all NASCAR merchandise sales.
GSI will handle ordering, billing, fulfillment and product tracking for JR Motorsports. Visitors to JR Motorsports, JR Nation, Dale Jr. and NASCAR websites all will be funneled to the same online store featuring the same merchandise.
JR Motorsports’ decision to shift its e-commerce business to GSI comes as NASCAR begins its first season with the new NASCAR Teams Licensing Trust, a centralized operation that negotiates with merchandise companies on behalf of all NASCAR teams. Previously, teams negotiated individually with merchandise companies.
Though the trust is representing teams in licensing negotiations, most teams still manage their own e-commerce business. JR Motorsports, Turner and GSI executives hope their new agreement acts as a catalyst to spur other teams to turn over e-commerce operations to NASCAR.com. By doing so, they believe teams could direct more visitors into online stores through promotions on NASCAR.com and direct e-mails to NASCAR fans. They also believe GSI and teams would enjoy more buying power with licensees, which would improve sales margins.
The NBA and Marvel Entertainment are launching a co-branded merchandise line that puts Marvel’s biggest superheroes, including Spider-Man, Iron Man and Captain America, in uniforms that have team colors.
The multiyear deal calls initially for apparel and headwear. Products will debut at Jam Session during All-Star Weekend in Los Angeles later this month, with the NBA and its teams subsequently responsible for marketing the products.
Financial terms of the deal were not available. Mike Jerchower, director of licensing for Marvel Entertainment, called it a “co-branded partnership deal.”
Deals have been secured with New Era for headwear and C-Life for apparel.
This partnership is not related to an agreement between Marvel and ESPN that featured NBA stars on Marvel comic book covers earlier this season.
Marvel Entertainment is owned by Disney, parent company of ESPN, an NBA television partner.
After the new merchandise line rolls out at All-Star Weekend, it will be made available nationally through NBA distribution channels and via sporting goods retailers. Marvel officials said Modell’s has been secured for distribution, with other deals expected.
Prices for the products will be set by the individual teams and retailers.
The line will be branded for each NBA market. For example, apparel will have The Hulk wearing a Boston Celtics jersey and Spider-Man wearing New York Knicks colors. Plans call for each NBA market to have co-branded products available by April, with playoff teams being the prime targets.
“For us, it was an interesting partnership, and we are creating both adult and youth products,” said Lisa Piken, senior director of apparel licensing for the NBA. “We are seeing more cross-licensing. It helps with distribution and it’s more a fashion [merchandise line] versus hard-core fan gear.”
The NBA and Marvel likely will add novelty merchandise — such as mini-basketballs and pennants — along with the apparel and headwear.
“[The NBA’s fan base] and retail distribution channels provide a great opportunity to expand the reach and exposure of our brands,” said Paul Gitter, president of consumer products for Marvel Entertainment, in a statement.
Wasserman Media Group has won a shootout to become agency of record for Scotts and activate the lawn care company’s burgeoning MLB and NASCAR sponsorships.
In the initial year of its MLB sponsorship in 2010, Scotts’ efforts included an ambitious program of team deals, licensed grass seed, themed advertising and sponsorship of MLB All-Star Game balloting at Lowe’s.
Scotts has launched Yankee Stadium grass seed.
“Of course, we had a great deal of comfort and trust with John,” said John Price, senior brand manager for sports marketing and sponsorship at Scotts, “but we were also impressed by the level of expertise displayed by the Wasserman account team in both MLB and NASCAR.”
Scotts’ NASCAR ties include a sponsorship of Carl Edwards’ No. 99 car in support of its EZ Seed product along with title sponsorship of the March 19 Nationwide Series race in Bristol, Tenn., the Scotts Turf Builder 300.
For the coming MLB season, Scotts will add a significant ninth MLB team to its lineup: the New York Yankees. Already on board with Scotts are Atlanta, Boston, the Chicago Cubs, Cincinnati, the Los Angeles Angels, Philadelphia, St. Louis and Texas. The Yankees deal includes the launch of licensed Yankee Stadium grass seed; Scotts product usage on the field; media; branding on the grounds crew and their drag mats; and sponsorship of the grounds crew’s familiar “YMCA” routine during the middle of the fifth inning.
Price said last year’s MLB activation “easily exceeded” sales expectations.
“Clearly, Scotts isn’t in the most traditional category, but they really made an aggressive push in their first year with baseball, and we’re excited they chose us to map out the future,” Brody said.
The deal adds to Wasserman’s list of consulting clients, which includes T-Mobile, American Express, Nationwide Insurance and Northern Trust. Scotts is the second win for WMG since Brody came on board. Sources said WMG has quietly won some strategic consulting work from Pepsi, another MLB sponsor, but Brody would neither confirm nor deny the assignment.