SBJ/March 14-20, 2011/Marketing and Sponsorship

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  • In K.C., mixing naming rights and doing the right thing

    Every day, the unfinished steel and concrete structure in the western suburbs of Kansas City, Kan., better resembles the rendering of Sporting Kansas City Park, the $200 million, soccer-specific home of Sporting Kansas City. In late September 2010, Sporting Kansas City CEO Robb Heineman sent Lance Armstrong Foundation CEO Doug Ulman a picture of the rendering with the words of his foundation alongside, “Livestrong Park.” It was not a blind pitch, as both organizations did business with the Kansas City-based American Century Investments group.

    From left, Robb Heineman, Doug Ulman, Lance Armstrong and Cliff Illig announce the deal last week.
    “When someone approaches you with an idea you’ve never thought about, it seems crazy,” said Ulman, whose Livestrong organization is most associated with cancer research, Nike and the seven-time Tour de France champion. The picture sat on Ulman’s desk for two weeks, and to his surprise, it routinely caught the attention of his office visitors. “I started to realize there might be something big here, something innovative,” he said.

    That was the first in a series of steps that led to last week’s announcement that Livestrong will become the naming rights partner of Sporting Park, which opens on June 6. The marriage of the cancer foundation and Kansas City’s recently rebranded professional soccer team (formerly the Wizards) is not the most novel part of the deal, which was the talk of sports marketing circles last week. In a unique twist, Livestrong is paying nothing for the rights or activation at the park. The team, instead, will cover all activation costs, and will pay the foundation an undisclosed percentage of all stadium revenue — including a guaranteed minimum of $7.5 million — over the six-year deal.

    Both parties were quick to point to altruism as the force behind the deal. “The core tenet of this relationship is to support the [Livestrong] cause,” Heineman said. “We’d love it if we could give $20 million.”

    Ulman, who played college soccer at Brown, told the team from the outset that Livestrong would not pay a naming-rights fee, and said that Livestrong would only come on board if there was “raised awareness and significant financial impact” from the partnership. A source close to the foundation confirmed that, since 2007, Livestrong has required partners to guarantee minimum contributions — usually $1 million to $1.5 million per year — to use the brand’s name.

    Timing also drove the deal, and Heineman said that the four-year political debate over the stadium’s public financing meant the organization got a late jump in searching for naming-rights partners. Sources said the team simply found no suitors that would come close to the minimum $1 million to $1.2 million annual value the team and the league were seeking. Heineman admitted that the team pursued half a dozen traditional naming-rights opportunities, and that Livestrong was the “outlier.” But he insists that a lukewarm sponsorship market wasn’t the reason for the partnership.

    “Yes, it would have been difficult to say no to a [deal] that would pay you $3 million for 10 years,” Heineman said. “We never got to contract terms with [anybody else]. But this is an opportunity that we could not have done with a traditional sponsor.”

    Naming-rights analysts contend the team most likely found its options limited for traditional naming rights, considering the scarcity of Fortune 500 firms in Kansas City. Randy Bernstein, president and CEO of sports agency Premier Partnerships, which brokered the naming rights for FC Dallas’ Pizza Hut Park, said his firm could not find a sponsor to name the field at Arrowhead Stadium, where the Kansas City Chiefs play. “Kansas City is not one of the stronger corporate headquarters in the U.S., with Sprint a notable exception, and they obviously signed a long-term deal [in 2004] with AEG for the new arena in town,” Bernstein said. “National companies have a limited interest in Kansas City due to its market size and geographical location.”

    Heineman said the stadium and the partnership with Livestrong are the centerpieces of the team’s new membership model, which invites fans into an online community where they engage with products and marketing from team partners. The membership is free, and members receive discounts to partner products and other perks, such as unlimited free tickets to away games and three free tickets to home games. Partners receive marketing data on the members.

    “They are a really special and innovative ownership group,” said MLS Commissioner Don Garber. “They are in a small market but they have big goals and aspirations.”

    Heineman said the team has already seen positive business from the deal — in the 24 hours after the partnership was announced, the club sold 400 season tickets, its greatest single-day haul in the team’s 15-year history. Looking ahead, he foresees the stadium hosting Livestrong concerts and other events and predicts that revenue from those events could equal any traditional naming-rights deal he could have secured.

    Ulman said that plans for holding other Livestrong events at the facility were only in the discussion stage. “This is the first time we’ve had this type of access to a world-class facility,” Ulman said.

    The deal raises questions of how the team will balance its leaguewide partnership with Adidas and an alliance with Livestrong, which has a long-standing relationship, and is closely identified, with Nike. The stadium’s logo does not include a Nike swoosh. But Heineman said that a team store at the stadium would sell Livestrong-branded Nike clothing, and that revenue generated from the sale of Adidas-made team jerseys and clothing would be included in the donation to Livestrong.

    A spokeswoman from Adidas declined to comment. But one marketing executive believes Livestrong’s strong ties to Nike and its major presence on the building is detrimental to one of MLS’s biggest sponsors. “Even if there are no [Nike] logos, it’s well-known that Livestrong and Nike are almost interchangeable — it’s basically Nike Stadium, that’s what you’re saying,” said Lou Imbriano, former vice president and chief marketing officer for the New England Patriots. “If I’m Adidas, I’m not too pleased.”

    Heineman said he does not see the Livestrong deal as risky to the Adidas partnership. “Adidas is a very important partner for us and we’ll do everything we can to make them feel good about the Sporting Kansas City brand,” he said.

    The partnership also raises questions of how the team will deal with the millions in lost revenue — a traditional naming-rights deal could have earned the club $5 million to $10 million for a six-year deal.

    stadium rendering
    The stadium is scheduled to open June 6.
    Heineman said the city of Kansas City, Kan.’s $147 million contribution in sales tax and revenue bond sales has helped ease much of the financial burden. He declined to say how much the team contributed to the stadium project and said that the stadium’s public financing was “irrelevant in our decision” to partner with Livestrong.

    Several outside analysts noted the tax implications of the deal, citing the team’s ability to write off some of the partnership as a charitable donation. Heineman said he did not know how much the team would write off. “It’s not like we did this because of tax planning,” he added.

    FC Dallas President and CEO Doug Quinn, who battled and survived a bout with throat cancer, said the Livestrong deal signals the start of a cause-marketing trend and pointed to FC Barcelona’s jersey deal with Unicef as the beginning of a move by sports enterprises to donate valuable inventory to charitable causes.

    “I expect to see more of it,” Quinn said. “It could be a stadium, it could be a jersey, it could be a car, but I’m confident it will happen again.”

    Staff writers Don Muret and Tripp Mickle contributed to this report.

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  • AmEx back for three more years with PGA

    American Express has renewed its patron-level sponsorship with the PGA of America for three more years.

    AmEx came on board with the PGA in 2006 as one of its first partners at the patron level, which is the PGA’s highest level of sponsorship. Mercedes-Benz and RBC Bank are the other two patron sponsors.

    Kevin Carter, the PGA’s senior director of business development, said he is searching for a fourth patron sponsor and hopes to add one this year.

    “If we could add one more, we’d probably hold off after that,” Carter said.

    learning center
    The American Express renewal keeps the credit card company, which is represented by sports marketing agency Wasserman Media Group, on board through 2013. Financial specifics were not available, but these sponsorships range from $3 million to $5 million a year and often require incremental media spending with the PGA’s media partners. CBS has broadcast rights for the PGA Championship.

    Learning center
    The PGA Learning Center presented by American Express takes the sponsorship to event sites.
    The sponsorship includes access to other PGA championships throughout the year, such as the Senior PGA; Ryder Cups on U.S. soil; and access to market AmEx’s credit cards to the 28,000 golf pros represented by the PGA.

    AmEx’s activation has centered on programs designed for its card members, some of which grant them access to PGA professionals. On-site activation has focused on the PGA Learning Center presented by American Express at the PGA Championship and Ryder Cup.

    The Learning Center last year at Whistling Straits entertained more than 50,000 visitors the week of the PGA Championship, about 8,700 more than the previous year. Inside the center, PGA pros offer swing analysis and other tips to the fans.

    “It all goes back to access for our card members,” said David Eisenberg, manager of sponsorship marketing at AmEx. “We’re able to deliver that in a variety of forms, from sports to music and entertainment. The partnership with the PGA very much helps deliver on that strategy, which is one of the main reasons we renewed.”

    The Learning Center “is one of the more unique activations in golf,” Carter said.

    American Express has been a U.S. Golf Association corporate partner since 2006, which gives it a presence at the U.S. Open as well. AmEx in the past has had relationships with the PGA Tour and Tiger Woods before it turned to more consumer-driven deals and activation. It still has some ties to PGA Tour events, such as the American Express Volunteer Pavilion at the Wyndham Championship in Greensboro, N.C.

    “We know our card members are passionate about golf,” Eisenberg said. “Anything we can do to enhance their experience on-site means we’re delivering for the card members.”

    AmEx also got behind a PGA program called “Friend of a Card Member” that allows anyone paying for a golf lesson with an AmEx card to bring a friend and get a lesson for free. Another program called “Championship Tees” enables card members to have access to courses that have previously hosted PGA or USGA championships.

    AmEx also recently announced a three-year deal with the NBA.

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  • Food City CEO: Changing Bristol race name was the right thing

    Food City CEO Steve Smith wanted to pay tribute to friend and longtime business partner Jeff Byrd at this spring’s NASCAR Sprint Cup Series race at Bristol Motor Speedway. Byrd, longtime president at the Tennessee track, died last fall at age 60, and Smith proposed giving up Food City’s title sponsorship of the race in Byrd’s honor. As a result, this weekend’s race will be known as the Jeff Byrd 500. Smith spoke with staff writer Tripp Mickle about the decision.

    Food city
    Food City CEO Smith (right) with Darrell Waltrip (left) and Rusty Wallace
    How did the leadership at Bristol react to the idea of naming the race in honor of Jeff Byrd?
    Jerry [Caldwell, general manager of Bristol Motor Speedway] got a little emotional with that thought. We talked about it and he said, “Jeff wouldn’t like that.” I said, “I know, but what Jeff meant to the sport and the drivers and the community, I’d like it.” That’s what set it in motion. It felt like the right thing to do for us.

    What kind of value have you given up to do it?
    I know what we pay for the race, and it’s certainly in the big dollars to give up, but when you do the right thing and the right reasons, we’ll get value back. We’ll get value from the loyalty from our customers and our fans. The local media has picked up on it and written about it.

    We’ll see it on Fox. Darrell Waltrip and Rusty Wallace were gracious enough to come up and help us with the press conference [announcing the name]. There’s no contract that anybody would do anything [on Fox], but ... if they get the chance to talk about Jeff and what he’s meant, that will be good. And the fact that it is a one-time event [means] it will be a one-of-a-kind trophy.

    What’s your hope from all of this?
    My hope is first and foremost that we salute a great leader in Jeff Byrd, and equally important we help provide some revenue that flows to the Jeff Byrd Foundation and continues in his area of concern: youth initiatives and education.

    Over the years, what has the race affiliation done for your business?
    When we started in 1992, we were about a third of the size we are today in retail volume. We’re almost a $2 billion company today. The track has tripled its size and seating, and we’ve tripled our volume. It’s an interesting parallel. We’ve been on parallel courses to grow our business. It’s a big investment to be a race sponsor, but when you have a marquee event in your backyard and you’re a race fan like I am, and most of our customers are you, you have to do it. The race hits that sweet spot for a supermarket company.

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  • NHRA rolls out greatest moments contest to boost Facebook fan base

    With an eye toward strengthening its Facebook fan base and raising the profile of its 60th anniversary, the NHRA last week launched its first social media contest.

    The sanctioning body will post two to three of what it’s calling its 60 Greatest Moments each week until August and will tally the number of “likes” that each moment receives in order to narrow the list to 20 top moments. Those 20 will be posted on a specially designed Facebook tab, and fans will have the chance to vote and narrow the list to 10 by early September and to five by the last race of the season in November.

    The NHRA is in discussions with partners regarding a presenting sponsorship to the Facebook program. It hopes to finalize those conversations this spring, said Gary Darcy, the NHRA’s senior vice president of sales and marketing.

    “Anything we can do to provide proprietary content or special experiences for fans of the NHRA Facebook page is a good thing,” Darcy said. “Hopefully, it’s something they have fun with and can engage with around our 60th anniversary.”
    The NHRA had 195,170 fans on Facebook when the promotion started. By comparison, NASCAR has 1.3 million fans on its site, while IndyCar has 33,700 fans.

    The series hopes that promoting the 60 Greatest Moments countdown at races and across stakeholder Facebook pages for teams and tracks can increase the size of its Facebook fan base. Darcy believes increasing the size of that fan base will help the series engage fans more effectively, something that ultimately would allow the series to provide more value to corporate partners, foster more ticket sales and encourage more television viewership.

    The NHRA has put more resources into social media in the last six months with those goals in mind. Last month, it named Michael Padian, a public relations manager, as its director of social media.

    “We’re a teenager trying to assert ourselves and become a grown-up,” Darcy said. “There’s such an opportunity here with our passionate fans and there’s so much more we can do. I’d like to see [social media] fully integrated into everything we’re doing and to truly maximize it.”

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  • Deal puts 'Top Gear' on speedway's giant video board

    Top Gear
    The History Channel series will title sponsor the May Nationwide race at Charlotte.
    History Channel has signed on to title sponsor Charlotte Motor Speedway’s spring Nationwide Series race, giving it a chance to show its car-centered, reality show “Top Gear” on the nation’s largest video board.

    The one-year agreement, which sources valued at slightly more than $1 million, means the race will be known as the Top Gear 300. History Channel executives said the deal was driven by the demographic fit it saw between “Top Gear” and NASCAR, and the opportunity to show “Top Gear” and other History Channel programming on the speedway’s new, 80-foot-tall by 200-foot-wide Panasonic LED board.

    Top Gear logo
    “We’re a content company, and we love having our content on big-screen TV,” said Chris Meador, History Channel’s vice president of marketing. “Now we have the opportunity to be on the biggest screen in the world. We have a chance to create content that’s not just a logo but an experience for consumers at the race.”

    The title sponsorship is the first significant deal the speedway has closed since announcing plans to construct the video board last September. The speedway and Panasonic, which is working with Wunderman Motorsports, are selling advertising on the board and sharing the resulting revenue. Dan Farrell, Charlotte Motor Speedway senior vice president of corporate sales, said they have sold a third of the inventory available this year. He declined to name the advertisers.

    “With the biggest TV screen in the world going into the backstretch, that adds that much more excitement this year,” said Charlotte Motor Speedway President Marcus Smith. “Things are continuing to look positive.”

    The Top Gear 300 won’t be the first time History Channel has used NASCAR as a promotional platform. In 2007, the network did a series of track deals in order to promote the launch of its show “Ice Road Truckers.” When it decided last month to pick up a second season of “Top Gear,” which shows professional driver Tanner Foust and two other hosts undertaking a series of vehicular challenges, it looked to NASCAR again.

    Meador said the network is still making its activation plans for the race. It will likely activate at track and also develop content for the video board.

    With the History Channel deal, Charlotte Motor Speedway has sold out of its title sponsorship inventory for 2011.

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