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SBJ/March 25-31, 2013/FranchisesPrint All
The Cleveland Cavaliers have started selling sponsorships for team owner Dan Gilbert’s Rock Gaming corporation, creating an interesting new revenue stream for the NBA franchise.
Under the direction of Brad Sims, Cavs senior vice president and chief revenue officer, the team is leading the effort to sell corporate sponsorships at two existing Gilbert-run casinos — the Horseshoe Cleveland and Horseshoe Cincinnati properties — along with another Horseshoe Casino that’s expected to open in Baltimore next year.
The three Ohio properties are part of a joint venture between Rock Gaming and Caesars Entertainment.
Cavs owner Dan Gilbert’s Rock Gaming runs the Horseshoe Cincinnati.
The Cavs have hired Matt O’Brien, former president of the minor league baseball Sugar Land (Texas) Skeeters, as senior director of corporate partnership development, overseeing the casino properties. The Cavs will hire marketing directors at each of the casinos, who will report to O’Brien, who begins his job on April 1. O’Brien reports to Randy Domain, vice president of corporate partnerships, who in turn reports to Sims.
The relationship is fairly unique in team sports in that a team’s sales group has a number of outside assets to sell, and the team itself will be able to share in the revenue. The revenue generated from any sponsorship sales will be shared by the Cavs and Rock Gaming, but Sims would not disclose what percentage of the sales total would go to each side. How this would affect the NBA’s revenue sharing is unclear.
The team expects to generate between $2 million and $3 million in annual sponsorship revenue at each of the casinos in the short term. Longer-term sponsorship sales projections are pegged between $5 million and $6 million, Sims said.
The team plans to sell title sponsorships at the casinos, including deals for parking garages, poker rooms, high-stakes areas, and bars and restaurants. The Cavs already have a deal of this type at the Horseshoe Cleveland casino, which opened last year. That deal is with a local car dealer for the parking garage of the casino. Specific financial terms of the 10-year deal were not disclosed, but that one deal, negotiated by the team, served to influence the strategy to sell sponsorships across the Rock Gaming properties.
“We have between 10 to 12 different areas in the casinos,” Sims said. “We are also looking at carving out five product deals.”
While the Cavs already have cross-promotional marketing efforts between the team and the Horseshoe Cleveland and Horseshoe Cincinnati casinos, league marketing rules will prevent the team from any cross-promotional efforts in Detroit and Baltimore.
In addition to the casinos and the Cavaliers, Gilbert also owns the AHL’s Lake Erie Monsters, the NBA Development League’s Canton Charge, the AFL’s Cleveland Gladiators and Quicken Loans Arena.
The Minnesota Timberwolves have joined the ranks of NBA franchises that are offering season-ticket packages with year-round benefits.
The plan carries a pricing-related twist that makes it unique among other teams’ programs, and it aims to entice the Wolves’ fan base after an unexpectedly disappointing season for the team on the court. It also comes as Minnesota prepares to increase the average cost of season tickets for next season by 10 percent. That increase, however, is the result of an offer the Wolves rolled out in January that called for a 20 percent price hike if the team made the playoffs, or a 10 percent increase if the team did not.
With a 23-42 record last Wednesday, 11 games behind the Los Angeles Lakers for the eighth and final Western Conference playoff seed, Minnesota is planning on the 10 percent hike.
The Wolves are the only NBA team to offer a performance-based ticket-pricing strategy this season, according to the league.
“It is a new wrinkle and it is a risk, but we are OK with it,” said Wolves President Chris Wright. “A 20 percent increase would bring us closer to NBA [season-ticket] pricing averages, and we have said all along that the expectation is that we would be a playoff team.”
A lineup featuring all-star Kevin Love and Ricky Rubio had Minnesota fans anticipating a playoff drive this season, but injuries to Love and other key contributors derailed those plans. As of last week, the Wolves were averaging 16,330 fans per game at 19,356-seat Target Center. That compares to 17,517 fans per game to date during last year’s lockout-shortened season.
Full-season-ticket sales over the past few seasons have been strong, though, with the Wolves selling at least 2,000 new full-season packages in the past three years. The team has about 10,000 full-season tickets sold, and it posted a season-ticket renewal rate of 95 percent for this season after holding prices flat from 2011-12. Much of that increase was due to the anticipation of Rubio pairing with Love, expecting that wins would follow.
League projections for this year have the club renewing at a 70 percent clip for 2013-14. Wright said the actual renewal rate will be higher.
Among the other NBA teams that offer year-round benefits to fans buying full-season tickets are the Charlotte Bobcats (with their Cats 365 program) and the Washington Wizards (with the DC 12 Club). The Wolves’ twist on the ticket-selling trend — their program is yet unnamed — is to create a range of year-round benefits based on the price of the season ticket. There are five benefit levels.
“Our performance on the court has been less than stellar,” Wright said, “and this is a 365-day, holistic look at how we can get our stakeholders close to our players and staff.”