SBJ/May 14-20, 2012/Marketing and Sponsorship

Sports marketers, listen up: Dolby deal not just white noise

Terry Lefton
Devotees of this page know that we consider entertainment to be a subset of sports, so while our spouse of 30-plus years is familiar with the actress who played the second girlfriend of the second actor who portrayed James Bond on celluloid, we are secure in our knowledge of more important minutia, like the name of the man who played third base with Tinker to Evers to Chance.

There’s also the name of this publication providing some definition, when it comes to subject matter. However, superseding that boundary marker are two cogent facts: Entertainment and sports marketing properties compete for consumers’ loyalties, and for the same marketing budgets.

The Dolby Theatre, formerly the Kodak, rivals any venue in terms of number of events, which includes the Academy Awards.
Photo by: GETTY IMAGES
So while you are used to reading about sports arena and stadium naming-rights deals here, there are a number of compelling reasons why we need to report and you need to read about an entertainment naming-rights deal, such as the one struck recently between Dolby Labs and the Hollywood theater that’s been the site of the Academy Awards since 2001.

There’s the magnitude of the deal, which we’ll get to later. However, the agencies involved also made for a compelling story since it had two influential names when it comes to naming rights: Randy Bernstein of Premier Partnerships, whose naming-rights deals include O.Co Coliseum in Oakland and MLS venues Pizza Hut and PPL parks.

Bernstein and Premier represented the seller on the basis of having completed a 10-year pouring-rights deal with Pepsi immediately before incumbent naming-rights holder Kodak filed for bankruptcy protection in January.

On the other side of the table was Jeff Knapple. If there is any institutional memory in naming rights, we humbly suggest it’s either his or ours. Knapple’s naming-rights credentials date from Target Center in 1989 and include Los Angeles’ Staples Center.

After a decade with Wasserman Media Group, Knapple joined Van Wagner Sports as executive vice president in mid-February. Four days later, the phone rang; it was an unsolicited call from Dolby Labs’ outside counsel asking Knapple to work in securing the rights to what used to be called the Kodak Theatre, which Oscars host Billy Crystal referred to as the “Chapter 11 Theater” and the “Your Name Here Theater” on this year’s Oscars telecast, during which the Kodak name was conspicuously absent.

Jeff Knapple of Van Wagner Sports represented Dolby Labs.
Photo by: TERRY LEFTON / STAFF
Another intriguing fact: Knapple and his former Envision agency represented the theater’s original developer on the Kodak deal. Oddly, Dolby didn’t know that when they called Knapple. We don’t know what prompted Dolby to call Knapple; they wouldn’t agree to an interview. Very low-fidelity on their part.

Premier made initial inquiries to around 100 prospects, a list that was narrowed to four within 30 days. Dolby made sense because of its target audience and because of the global nature of the property.

“The first couple of phone calls with them, we didn’t even talk price,” Bernstein said. Any potential partner had to want global reach and believe what was being sold “is like having the Super Bowl at your building 20 years in a row,” Bernstein said.

Value is the most relative of terms, but the uncluttered nature of what is now the Dolby Theatre compared with the signapalooza at any pro sports venue also helped, as did the theater’s unquestionable prestige.

Then there’s the matter of price, which makes this deal relevant to anyone selling venue marketing rights. Kodak’s agreement, voided by bankruptcy, was 20 years for about $74 million. Neither agency would comment on the price of the new deal, but lest we be accused of fictionalizing, industry sources we trust tell us Dolby’s 20-year deal was in the neighborhood of $175 million. On a per-annum basis, that makes it one of the larger deals in naming rights, especially intriguing when you consider it’s a 3,300-seat theater, and the larger naming-rights deals are with arenas and stadiums that are exponentially larger.

Still, the theater rivals any venue in terms of number of events. Cirque du Soleil alone has 350 shows there annually.
It’s also interesting that this is a business-to-business naming-rights deal. We can think of only a few comps: Oakland’s Oracle Arena, a vanity plate for Larry Ellison, and Nashville’s LP Field, a hometown play for the building products company based in Tennessee’s capital.

Certainly, this was an ideal situation for Dolby, because of the film industry Hollywood audience that Dolby covets. Perhaps the lesson is one of filling a need rather than asking for assistance in moving inventory.

“No brand sets out to name a stadium, arena or theater,” said Bernstein. “If you can create a powerful enough value story, they’ll have a conversation and you have an opportunity to show that whatever the price, is far exceeded by the expected return.”

Another important reason for sports-marketing types to pay attention to this non-sports deal is that there are still some big, new sports assets out there without corporate monikers, including Jerry World, the Dallas Cowboys’ home field in Arlington, Texas, and the Marlins’ month-old home in Miami.

While it’s still unclear to us whether and how much money changed hands, there was a good enough story built around the NFL in downtown Los Angeles that a naming-rights deal was struck there before there was a blueprint, a site plan, or even an NFL team committed to moving into Farmers Field, which may never be plowed — or built.

The paramount question for sports marketers regarding this entertainment marketing deal is whether the days of an automatic cash bounty in exchange for the nameplate of every new pro sports facility are over. From our vantage point, it’s clear that premium seating and naming rights are the only parts of the pro sports economy that haven’t recovered from the recession. Will they ever?

“Quality and scarcity are the ultimate drivers in this and any market,” said Knapple. “They both were very much in play here.”

FLYING HIGH: CAA Sports’ nascent corporate consulting group won a shootout among some of the biggest sports agencies, landing the right to work on Emirates Airline’s domestic sports marketing initiatives.

It’s the first big win of a high-profile agency shootout for CAA, which brought on former GroupM Entertainment & Sports Partnerships CEO Greg Luckman to lead its consulting business. Since then, it has added Best Buy and RBS as consulting clients, and others in golf, through its acquisition of MG Sports Marketing. Luckman would not comment.

Stateside, Emirates’ sports properties center on its recent U.S. Tennis Association deal, in which the airline received naming rights to the U.S. Open Series of summer tournaments, along with rights for the U.S. Open itself. Globally, Emirates is one the biggest sports spenders, with top-shelf properties including FIFA World Cup rights, the jersey sponsorship and stadium naming rights for EPL club Arsenal, other jersey deals with fellow Euro soccer powers AC Milan, Paris Saint-Germain and Hamburger SV and primary sponsorship of New Zealand’s America’s Cup challenger team.

COMINGS & GOINGS: David Bruce joins Major League Soccer as senior director of brand and integrated marketing. Bruce worked previously at General Sports and Entertainment and brand consultancy Wolff Olins. … 24 Hour Fitness CMO Tony Wells leaves after five years to become CMO and chief marketing and customer officer at ADT. Bill Quinn, senior vice president of merchandising, is the fitness chain’s interim CMO.

Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.

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