SBJ/February 28 - March 6, 2011/Opinion

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  • Cartoon: Collision course

    Cartoon

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  • Resurgence changing how sports world views Canadian market

    Often over the past 20 years, many of us would have argued professional sport in Canada was in crisis. Only Toronto seemed immune.

    For those who tend not to look northward, here are a few memory joggers:

    • The NBA’s Grizzlies left Vancouver for Memphis.

    • The MLB’s Expos bounced from Montreal to Washington, D.C.

    • The NHL’s Nordiques and Jets took off from Quebec City and Winnipeg for Colorado and Phoenix, respectively. Three other Canadian NHL teams — the Calgary Flames, Edmonton Oilers and Ottawa Senators — each came close to financial failure and teetered on the edge of extinction. At one point, even the storied Montreal Canadiens were reportedly underwater, 26 Stanley Cups notwithstanding!

    • MLB’s Toronto Blue Jays were usually no better than mediocre. In fact, the Jays haven’t won their division since 1993 and finished fourth in their five-team American League division the last three consecutive years.

    • The CFL launched an ambitious expansion into the United States only to retract two years later.

    • The CFL’s Ottawa franchise folded twice and Montreal went under once. These are cities of 1 million and 3.5 million people, respectively.

    • The Formula One race in Montreal, North America’s only F1 event and reportedly the third-most-watched television event in the world in 2005, was shut down following the 2008 race and thought unlikely to return.

    Looking back, it seemed like Canada, one-tenth the size, in population and market, of its big brother to the south, could not house pro franchises and non-Olympic mega events at the highest level. Confidence was down, sport fans looked depressed and Canadian owners were licking their fiscal wounds. Thoughts of an NHL with only two or three Canadian teams (plus the demise of the CFL) were not uncommon or unfounded.

    Fast forward to 2011, and the professional Canadian sports landscape is suddenly sparkling. A 180-degree turn, some might say. To illustrate, we present a few facts worth noting:

    • After placing an MLS team in Toronto in 2007, a team standing out as one of the league’s brightest lights off the field, Don Garber’s expansion crew recently added teams in Vancouver (starting this year) and Montreal (2012).

    • The CFL is doing well, heading back to Ottawa and making serious inquiries about expanding into eastern Canada. In fact, with the exception of Toronto, the CFL is experiencing some of its most notable success ever. The last two Grey Cups — Canada’s Super Bowl — have drawn TV audiences in excess of 6 million viewers, record highs for the event.

    • The Blue Jays hired general manager Alex Anthopoulos, a Greek Canadian, after the 2009 season. Anthopoulos is thought by many to be one of the sharpest young general managers in the game and, perhaps not surprisingly, the Jays finished 2010 eight games over .500 and produced a dynamic offseason in preparation for 2011.

    • While the NHL is now struggling in the southern U.S., there is much attention and interest focused on the league possibly returning to Winnipeg, Quebec City or both. In fact, Canada’s leading sport network, TSN, and its sport business correspondent, David Naylor, presented a six-part series last June outlining the business case for the return of the NHL to Manitoba and Quebec and a second team for the Toronto area. “Hockey Night in Canada,” the country’s most-watched regular sports program, presented a similar piece last December.

    • The F1 race is back in Montreal (the Ferraris and McLarens hit the Gilles Villeneuve Circuit in early June), and the Canadian Sponsorship Forum will run at the same time as the F1 race.

    • Ongoing rumors, innuendo and hints of truth continue to suggest that two and possibly four NFL teams might be considering moving into Toronto, North America’s fourth-largest market and a city with a growing regional population racing toward 9 million. The Buffalo Bills have signed a multiyear deal to play a total of eight preseason and regular-season games in the Rogers Centre over a five-year span.

    Wonder why the Canadian turnaround is so pronounced?

    We can give some credit to a strong Canadian dollar (the loonie is now on par with the U.S. greenback) and a strong Canadian economy that felt the U.S. financial sector implosion much less severely. Also, a growing number of Canadian billionaires place Canadian professional sports in perhaps its strongest position ever.

    If we mix in a successful Vancouver 2010 Winter Olympics and ongoing discussions of Toronto bidding for the 2020 Summer Olympics, we might find Canada is emerging as an attractive place for sport industrialists to ply their trade and generate acceptable margins.

    But what does that mean to American sponsors and league administrators? Should they approach Canada as just a flavor of the month? Or, should they think about buying into a country that has performed admirably when it comes to integrating sponsor support and growing passionate fan bases?

    In an era of globalization, we all may need to view the sports market as North America rather than just the U.S.

    Rick Burton (rhburton@syr.edu) is the David B. Falk Professor of Sport Management at Syracuse University and former commissioner of the Australian National Basketball League. Norm O’Reilly (norman.oreilly@uottawa.ca) is an associate professor of sport business at the University of Ottawa.

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  • Best defense against ambush marketing is a good offense

    Norcross
    O is for offense.

    In the sports event industry, sports organizations must be on the offensive to prevent ambush marketers from compromising their brand identity and the integrity of their sponsors’ brands.

    Ambush, a form of guerrilla marketing, is a marketing campaign occurring around a public event, typically a major sporting event, and involves circumventing payment of a sponsorship fee. Many companies pay hundreds of thousands, even millions, of dollars to sponsor an event in exchange for exclusive advertising rights before a large, captive audience.

    Sports marketing experts Simon Chadwick and Nicholas Burton of the Centre for the International Business of Sport located at the Coventry University Business School in the United Kingdom, estimate the amount spent on exclusive sponsorships in 2009 was $43.5 billion. That’s billion, with a B.

    Ambushing occurs when competing companies promote their brands despite another company having paid a handsome sum to market their brand as the official, exclusive event sponsor. Organizations including venue owners, leagues and teams are then left scrambling to come up with an effective deterrent in response.

    Chadwick submits that many organizations have trouble appreciating what ambushing means for them because they are preoccupied with sponsorship sales rather than sponsorship management. Unless organizations adopt a proactive strategy for dealing with ambushers, we will continue to see more and more unwelcome ambush campaigns and unhappy sponsors as a result. For example:

    During the 1996, at the Summer Olympics in Atlanta, British sprinter Linford Christie wore contact lenses bearing the Puma logo at a news conference held before the 100 meters final. Reebok had paid $40 million to be the official sponsor of the Games.

    At the 2006 World Cup, fans of the team from Netherlands sported orange lederhosen, which had been provided by Bavaria brewery. Stadium officials responded by forcing those wearing the brightly colored trousers to remove them if they wanted to be permitted inside the stadium. Budweiser was the official World Cup beer.

    World Cup
    GETTY IMAGES
    Charges of ambush marketing were leveled against Bavaria beer after a group of women at a World Cup match shed their top layer of clothing to reveal the orange mini-dresses.
    More recently, during the World Cup match between Netherlands vs. Denmark last June 16, Bavaria was at it again. During the match, nearly 40 Dutch women stripped out of the clothes they had worn into the stadium to reveal bright orange mini-dresses. The mini-dresses incorporated the color of the Dutch national team, but also bore a small logo identifying Bavaria brand beer. The dresses were distributed as part of a giveaway campaign with the purchase of an eight-pack of beer.

    The choreographed striptease would not have posed such a problem were it not for the fact that Budweiser was the official beer of the World Cup. Both FIFA and Budweiser cried foul. The two ladies considered ringleaders of the mini-dress campaign were arrested by Johannesburg police and their passports were confiscated. Charges against the ladies were dropped, and their passports returned. Bavaria entered into a confidential settlement agreement with FIFA through the end of 2022.

    According to Rob Prazmark, president of 21 Sports & Entertainment Marketing Group, a more appropriate description for ambushing is “parasitic marketing.” Companies that engage in this tactic do so in a way that damages legitimate properties, negatively affecting their ability to reap the benefits of the good will they have worked so hard to create, and in this case, paid large sums to exclusively promote.

    As one of the founders of The Olympic Partnership program, Prazmark’s approach for effectively dealing with ambushers has included a successful PR campaign involving communication with nonsponsors before big events, letting them know that the host organizations are on the lookout for ambush activity, emphasizing that it hurts athletes, teams, sponsors and even the communities the nonsponsors serve. Prazmark challenges nonsponsors to do the right thing and focus their marketing efforts elsewhere, rather than “denigrating someone’s legitimate interest in supporting an event.”

    So how can organizations score against ambushers? Daren Libonati, president of Justice Entertainment Group and former executive director of the three special-event venues at the University of Nevada-Las Vegas, encourages a proactive strategy as well. “Articulate what to expect,” so ambush activity will be reported, because everyone from ushers to executives knows it does not belong at the event. Michael Pine, formerly with Zuffa LLC, owner of the Ultimate Fighting Championship, and now chief sales officer of the World Triathlon Corp., agrees. “Set the right precedent” by preparing all those involved to prevent cannibalizing a sponsor relationship.

    The overriding response in the sports industry is that communication is key. From creating a style guide for athletes to a pre-event punch list educating the key organization players, the more information shared, the less likely an ambusher will successfully infiltrate an event.

    Nikki Hart, assistant counsel for the NFL, said the league’s proactive approach serves dual purposes: protecting the NFL and its sponsors. Because there are so many ways to ambush, “the best defense is an aggressive offense.” She added, “The bigger circle of rights we can carve out, the further back we can [push] ambushers.”

    In addition to developing and protecting its intellectual property rights, the NFL considers whether it can complement its efforts through well-crafted rules and policies, including player conduct rules and ticket-back and media credential language, all of which are carefully crafted to best protect the rights of the league and its sponsors.

    Trademark protection is a critical step in insulating organizations from ambushers. Organizations that stay one step ahead by proactively shoring up their trademark rights will be the winners. Otherwise, their bargaining power for generating sponsorship revenue and the ability to protect their own brand identities may be irreparably ambushed. 

    Linda Norcross (lnorcross@lrlaw.com) is a senior associate in the intellectual property group with Lewis and Roca.

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