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NBA talks lockout in boom times
Tickets, merchandise, ratings all at historic highs amid buzz in Los Angeles
Published February 28, 2011, Page 1
|NBAE / GETTY IMAGES|
|NBAE / GETTY IMAGES|
At the Jam Session opening ceremony Feb. 17 , from left: Lawrence Norman, VP of global basketball for sponsor Adidas; Los Angeles Mayor Antonio Villaraigosa; AEG President Tim Leiweke; and NBA Commissioner David Stern.
There were separate agendas being negotiated when the NBA and its players association met on Feb. 18 at the Beverly Hills Hilton. One was the CBA itself; the other was what kind of face to put on the talks, which are aimed to avoid a lockout when the current agreement ends June 30. Stern avowed optimism, noting the National Basketball Players Association was now open to discussing some issues previously classified by the union as deal breakers. Union head Billy Hunter chose optimistic
NBPA Executive Director Billy Hunter (left) and NBPA Vice President Maurice Evans at the All-Star Gala on Feb.19.
As for the yin and yang of ordering a work stoppage when many, if not all, of the league
|MICHAEL BUCKNER / GETTY IMAGES|
The T-Mobile crowd hits the magenta carpet, from left: Meredith Starkey, Suzanne Lowry, Derek Chang, Peter Deluca, actress Ellen Pompeo and Mike Belcher.
NBA owners claim the league is losing between $350 million to $400 million annually.
■ ALL SYSTEMS GO: Season tickets are a portion of the NBA economy that has been unaffected by the threat of a work stoppage. League executives said in October they feared some financial pain of a potential lockout around All-Star Weekend, but the prospect of a labor stoppage has not yet altered season-ticket spending.
“Our early renewals are at a high percentage rate and there has been no impact so far,” Silver said.
The NBA established a new full-season-ticket sales record this past offseason and ended up with a full-season renewal rate of around 81 percent. Though it is still early in the NBA’s renewal campaign, the league is expecting a strong renewal rate this year. “Teams have gotten out earlier than ever,” said Chris Granger, executive vice president of team marketing and business operations for the NBA.
Team sponsorship revenue this season is also up by 6 percent over last season, Granger added.
Next year’s ticketing trends also will reflect the increasing use of variable and dynamic pricing strategies. One team that could leverage its success and star power in Kevin Durant is the Oklahoma City Thunder, but so far owner Clay Bennett has refused to use dynamic pricing to drive ticket revenue as he continues to build the fan base, despite the team playing to near 100 percent capacity in its arena this season.
“We want to build up our brand equity,” said Brian Byrnes, senior vice president of sales and marketing for the Thunder.
The Jam Session, which used variable ticket pricing this year, got a warm welcome in L.A.
In Los Angeles, the NBA priced Thursday and Friday Jam Session tickets at $20, but spiked prices to $30 for Saturday and Sunday, days that draw more people. In prior years, the league charged $20 for each day of the Jam Session. “In much the way our teams vary
This year’s Jam Session drew 102,729 people from Feb. 17-21, one of the strongest gates in history. Last year’s Jam Session in Dallas drew 93,611 for the same number of days, though attendance was diminished by a snowstorm. The all-time attendance record for the fan event was set in 2007 in Las Vegas, with 136,311 fans. But that event ran for six days instead of this year’s five-day event schedule.
■ LICENSE TO SELL: Sal LaRocca, NBA executive vice president of global merchandising, went into the season forecasting high single-digit growth for the NBA’s consumer products. With the expected success of the Miami Heat, a renaissance in New York and Chicago, and the spotlight on players such as Derrick Rose, Blake Griffin and Durant, he’s now predicting sales growth well into the double digits. Unlike past fashion-based growth spurts, this one is based on the health of the game and spread across disparate product areas. 2K Sports’ “NBA 2K11” is well on its way to becoming the league’s most successful video game ever, having sold more than 4 million units worldwide since its October release. For anyone thinking that Michael Jordan is past his prime as a commercial catalyst, recall that MJ is on the cover of the game, certainly the first time a team owner has achieved that status.
Even licensed products as banal as NBA-logoed backboards and basketballs are selling well enough that LaRocca says that Spalding’s sales of NBA-licensed goods will jump 12 percent in one of the league’s most mature product categories.
After more than 12 years on Fifth Avenue in Manhattan, the NBA Store shut its doors on Feb. 13 after being unwilling to pay what league officials considered an unreasonable rent increase. Two nearby sites have been selected and offers are out. The hope is for a new NBA Store to open in time for holiday shopping, but with an eight-month build-out anticipated once a lease is signed, that’s not guaranteed. LaRocca is hoping for a similar-sized store with more of a technological bent, along the lines of the retail emporiums from Nike and Apple. “We have a global footprint now and we’ll look for a way to capture that in a retail environment,” he said.
In case you’re thinking a work stoppage would slow down this process, remember that the original NBA Store opened during the 1998 lockout.
|NBA licensee ProPatch takes titanium into the non-bracelet category.|
An NBA license means players can wear the product during games, and it will be available in locker rooms for players to sample. New York’s Amar’e Stoudemire is an early endorser for the company, whose investors include Alphabet City Sports Records and Marquis Jet co-founder Jesse Itzler. However, it’s the delivery system, not necessarily the much-debated merits of titanium, that are intriguing. Itzler said the company hopes to market similar patches that can deliver topical pain relief, energy, analgesics and even vitamins. “The home run would be a kids vitamin delivered by patch,” Itzler said. “In any case, it’s a great combination of fashion and function.”
■ HELP WANTED: The search for a new chief executive officer of NBA China is drawing to a close. “We are narrowing it down to a very short list of candidates” Silver said. The league has been looking for a new executive to replace former NBA China CEO Tim Chen, who resigned in October. Steve Richard, chief financial officer of NBA China, has been serving as interim CEO based out of the NBA China Beijing office.
Meanwhile, the league continues to seek a new president of the WNBA to replace Donna Orender, who resigned effective Dec. 31, 2010, after five years. Granger has been assuming Orender’s duties on an interim basis, but the thinking is that the WNBA wants its own president to lead the league. The WNBA season tips off June 3.
■ THE RIGHT BANK: A familiar face is administering sponsorship activation for BBVA, one of the NBA’s newest sponsors. It’s the man who signed the NBA’s first banking sponsorship deal last year, Peter Farnsworth. The former league executive resigned in December after a decade at the NBA, last serving as senior vice president of business development. His new Foxrock Partners counts BBVA among its initial clients.
For its first activation of All-Star Weekend, Madrid-based BBVA entertained around 250 clients and executives in Los Angeles and sponsored the celebrity All-Star Game, in which MVP Justin Beiber gave slam-dunk winner Griffin competition as far as who would emerge as the weekend’s “it guy.” A spokeswoman said BBVA was pleased since ratings for the celeb game were up 6 percent for an all-time high and it was among the top-trending topics on Twitter.
BBVA also helped sponsor the NBA’s annual Day of Service community initiative. Similar to the other offshore brands with NBA marketing rights, such as Haier and Lenovo, BBVA, which has achieved U.S. growth largely by acquisition, is using its league sponsorship as a platform for a stateside branding play. Long term, BBVA will support its NBA rights with a handful of team sponsorships in the Western U.S. The company also is presenting sponsor of Spain’s top-tier La Liga soccer league.
As for Foxrock, Farnsworth said the company will have three lines of business: corporate consulting, like BBVA; property representation; and nonprofit client’s cause-related efforts. The latter group will include the two-year-old Topspin ping-pong tournament, which draws mainly from the sports, media and marketing crowd, and will expand from New York to three cities this year, likely adding Chicago and Los Angeles.
■ CARD TRICK: Outside of a bodega or the like, when was the last time you were at any retailer, or even a restaurant, that didn’t have point-of-sale ads for a payment card in abundance, especially near the cash register? So it was puzzling to find nary an American Express logo in the NBA Store at Jam Session.
AmEx returned as a league sponsor late last year after a five-year absence and its logo did find its way on hotel key cards used during the weekend and on thousands of stickers on issues of USA Today delivered within those hotels.
On the other hand, being the presenting sponsor of the launch of an All-Star entertainment series, which included inside access events such as meet and greets with celebrities, was a smart way to leverage its restored NBA affiliation while adding a weekend of proprietary events for cardholders.
|NBAE / GETTY IMAGES|
Jumping over the Kia was the easy part.
While Kia has been reluctant to use athletes in their stateside marketing outside of golfer Michelle Wie, a quick call to the automaker’s U.S. headquarters confirmed their enthusiasm. However, there was the not-inconsiderable matter of convincing Sprite, title sponsor of the event since 2003 and one of the league’s largest corporate patrons, that Kia was not carjacking the event. With the help of NBA officials, the Kia Optima was used. It was not a billboard for the automaker and also included Sprite logos as a nod to Coca-Cola.
“We had to be very respectful of Coke’s rights, and fortunately they saw the value it had for the overall event,” said Tim McGhee, senior vice president for IMG Consulting, Kia’s sports and sponsorship agency. Kia paid what McGhee called “a reasonable” incremental fee to stage the automotive aerial. A TV ad around the dunk is still in the works. “We haven’t started to calculate the media value of this yet, but you just know it is something that will endure,” McGhee said.
Author Malcolm Gladwell (left) and ESPN columnist Bill Simmons at the All-Star Technology Summit.