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When Pantech announced last year that the company planned to end its title sponsorship of the Dew Tour’s event in Ocean City, Md., the tour quickly moved to find a replacement. It pitched sports apparel companies, gaming and console developers and quick-service restaurants.
But nearly two years later, the tour still hasn’t found a title sponsor for the event. The struggle underscores the challenge action sports properties have faced in the sponsorship sales market in recent years.
Before the recession, the marquee action sports properties of the X Games, Dew Tour and Association of Surfing Professionals had more than 60 sponsors collectively. But by last year, that total had dropped by 40 percent to 37 total sponsors.
The trick for action sports properties is to get sponsors to sign on the dotted line.
Photo by:Peter Morning / ESPN
The challenge with sponsorship sales is part of the reason the Dew Tour in 2012 decreased the number of sponsorships it sells from 12 to eight, and it contributed to ESPN’s $35 million loss on the Global X Games last year. It also forced ASA, an action sports event organizer, to shutter its global tour after losing sponsor LG Electronics, and it played a role in the Maloof Money Cup, a skateboarding competition, not hosting an event in 2013.
Though action sports remain a vibrant marketing platform for hundreds of brands, properties have found sponsorship sales tough. New partners like Kellogg’s and Gillette tapped into action sports to promote their brands last year, but they didn’t sponsor top action sports properties to do it. Instead, they signed athletes and developed branded content.
The reasons for properties’ sales struggles vary from event to event, but there are some common issues that all of them have run into in recent years. They include the proliferation of branded content and events, declining ratings, and changes in the way young people consume media.
“We’ve often lost [brands] because of a lack of structure,” said Steve Astephen, who heads Wasserman Media
Action sports organizers are wrestling with how to reverse that trend and are focused on beefing up the assets in sponsorships and creating more customized packages that include branded content. They remain optimistic that sponsorship sales will improve.
“There’s still a great marketplace out there for action sports, but the money has gotten smarter,” said Rob Simmelkjaer, NBC Sports senior vice president who oversees the Dew Tour. “Companies are looking for clear return on investment. They want more than just [TV advertisements] and signage. Brands are looking for a high level of engagement.”
The biggest reason action sports properties have struggled with sponsorship sales over the last five years is the rise of digital content, and no brand highlights that shift more than Vans.
The company began sponsoring the Dew Tour in 2005, and the mix of advertising on NBC and exposure to 250,000-plus spectators at five events helped double the company’s revenue. But in 2009, Vans general manager Doug Palladini decided to drop the sponsorship and shift the $3 million-plus that the company spent on the Dew Tour to create a branded content site called Off the Wall TV.
Vans began making its own videos focused on art, music, street culture and action sports. The effort drove traffic to
Some sponsors such as Vans have dropped deals in exchange for creating their own content.
“We needed those third parties [like ESPN, Fox and NBC] to connect us to an audience before,” Palladini said. “Now we can control our own destiny, and we’ve been having growing success.”
Vans isn’t the only brand to shift marketing dollars to developing digital content around action sports athletes and culture. Red Bull pioneered the concept with Red Bull Media House, and GoPro has followed suit, creating its own platform for content filmed with its cameras. Even nonendemic brands like Ford, which created a TV show around drivers including Ken Block and Brian Deegan, have followed suit.
“Savvy sports marketing brands want to create,” Sawabini said. “I sit in so many meetings where brands don’t want to sponsor something. They want to create something.”
Brands increasingly prioritize creating their own content or events, as Red Bull has been doing since 1998, rather than sign sponsorships with existing events, and that has challenged the marquee action sports properties.
“[Action sports] was a one-trick pony for a long time,” said Sean Eggert, Red Bull’s head of sports marketing. “It’s been event sponsorship. Now what you’re seeing is that it’s much more than that. Other brands are starting to realize they can control the look and feel [of an event] and what it stands for and the messaging, and that makes a lot of sense. Brands win when they can diversify and create meaningful touch points with consumers.”
The move by brands to create their own content or events has coincided with a decline in TV ratings for the two biggest media properties in action sports. X Games has seen average viewership decline for Winter X on ABC by 26 percent, from 1.4 million viewers in 2009 to 1.03 million viewers last year. Summer X saw average viewership decline 51 percent on ABC and ESPN over the same period from 1.36 million viewers to 658,000.
The Dew Tour saw similar declines. It saw a 41 percent decrease in average viewership on NBC between 2008, when it averaged 1.1 million viewers over 10 telecasts, and last year, when it averaged 654,000 viewers over six telecasts.
Before those declines, the Dew Tour and X Games had an easier time netting seven-figure sponsorships based on the media value. Now, that sale has become more difficult.
“You can’t watch TV ratings and say it’s healthy,” said Mike Jaquet, the U.S. Ski and Snowboard Association’s chief marketer and a former ad sales executive at CBS Sports. “It doesn’t fit into [big agencies’] CPM conversation.”
There’s also the perception that more and more of the young demographic that action sports claim to deliver is pulling up content online rather than watching TV.
“Media used to be important, and now that’s not where the kids are consuming,” said Bob Walker, head of Connexions Sports & Entertainment, the agency that represents Deegan. “That core demographic, the 18- to 23-year-old and 18- to 34-year-old, are consuming on phones and iPads.”
The X Games, Dew Tour and ASP have adjusted their businesses and enhanced their sponsorship offerings in response to the challenges they have faced.
ESPN recently launched a 10-month, weekly programming block on ABC called the “World of X Games” and is offering media inventory during that block in sponsorship packages for Summer and Winter X Games. It also relocated its summer event from Los Angeles to Austin, Texas, a move that will allow it to reach a new region and new fans for the first time in 10 years.
Properties such as the X Games have become more flexible with the deals they offer.
Photo by:Eddie Perlas / ESPN
NBC Sports has made adjustments around the Dew Tour, as well. It brought its sales team in-house for the first time last year, which NBC credited with helping it net three new sponsors for this year’s Dew Tour — Jack Link’s Beef Jerky, Wheaties and Quiznos.
The ASP consolidated its media rights for all of its events this year for the first time and partnered with YouTube and ESPN for broadcasts of 26 major competitions. It managed to sell its first title sponsorship to Samsung for this year’s event.
“There’s a lot of interest [from brands] and there’s a lot of potential for sponsorship,” Sawabini said. “It’s just a matter of matching the needs of the sponsor with flexibility from the property.”
But more can be done to improve. Action sports marketers say that properties need to do more to sweeten their sponsorship offerings and deliver the type of customized content brands increasingly want.
“They need to work with athletes and agencies to do creative and branded content,” Astephen said. “Verizon can go to the NFL, get the league, get the players and everything. With us, you have to say: What athletes do I get? What do I do on-site?”
Astephen’s comment could be seen as self-serving, considering he represents skaters and snowboarders, but it’s supported by the success USSA had with sponsorship sales last year.
The U.S. Freeskiing team signed eight sponsors ahead of the Sochi Games, in part because it could package personal-service agreements into deals. For example, a deal it did with Chobani included an endorsement of halfpipe skier Aaron Blunck.
The Dew Tour and X Games can’t do that because they’re invitation-only events, not teams that have contractual relationships with athletes like USSA.
“We’re on terms with the athletes, and it’s easier for the athletes and agents to work with us,” Jaquet said. “I don’t see anyone else packaging event assets, intellectual property and athletes like we do and traditional ball and stick sports do, and it’s been successful for us.”
There’s also an argument to be made that the X Games and Dew Tour haven’t corrected their pricing since the recession. Their sponsorships typically top seven figures, which makes them comparable to some stick-and-ball sports. By contrast, Street League, a skateboarding competition started by Rob Dyrdek in 2010, charges in the low to mid-six figures for its sponsorships and sold out of inventory this year.
“The pricing of being an X Games sponsor or Dew Tour sponsor is not bad, but it’s meant they’re in a more competitive marketplace,” said John Cimperman, whose agency, Cynergy, worked with Dew Tour sponsor Oxy in 2008.
The X Games and Dew Tour are trying to address those issues by enhancing their sponsorship packages and being more flexible with what they offer. In the case of NBC Sports and the Dew Tour, that means being willing to act more as an agency than just a property selling sponsorships.
“We can sit down with brands and say, ‘We have a bunch of properties you can associate with, or if none of those suit you, what would you want to [create to] be your own version of that?’” Simmelkjaer said. “That’s where the real future is. Properties like X and Dew can thrive, but where brands feel ownership is where the real momentum is.”
Properties aren’t the only division of the action sports industry that has run into sales challenges. Athletes have, as well.
Endemic sponsors, who once served as the backbone of athletes’ endorsement portfolios, have reduced the number of athletes they sponsor in recent years. Quiksilver, Burton, Nike and others have chosen to sign fewer athletes and center their marketing around well-known stars rather than up-and-coming talent.
“We’re putting more eggs into fewer baskets,” said Doug Palladini, Vans’ general manager. “We’re trying to go narrow and deep with the people that turn the dial.”
Action sports agents trace the change in approach back to the recession and say that it caused endemic and nonendemic sponsors alike to be more judicious in the number of personal-service agreements they sign.
“There seems to be more of a quality versus quantity approach from brands,” said Mark Ervin of IMG, which represents Japanese snowboard star Ayumu Hirano. “They’re decreasing the size of their roster and honing in on the athletes they can activate around.”
Around the time of the recession, endemic brands also went through a period of consolidation. Vans went from signing footwear-only deals to head-to-toe sponsorships. Nike went from signing deals across multiple brands like Nike 6.0 and Nike SB to concentrating on Nike alone. That meant fewer brands for athletes to work with.
“Brands are taking what they did with fringe athletes and putting more of it behind one guy and trying to leverage that guy,” said Bob Walker, who represents freestyle motocross star Brian Deegan. “It hurts the guy coming up, but the guys at the top paid the price to get there.”
■ The ESPN-owned Extreme Games, an eight-day action sports competition, launches in Newport, Providence and
■ The Extreme Games are officially rebranded as the X Games.
■ ESPN launches the Winter X Games, held in Big Bear Lake, Calif. The event is televised to 198 countries.
■ The first Asian X Games take place in Phuket, Thailand.
■ ESPN.com and Intel Corp. offer at least one hour a day of live, streaming video from the X Games, for visitors with 56k modems or faster and RealPlayer G2 with Intel Streaming Web Video software.
■ Tony Hawk lands the first 900 trick on a skateboard.
■ During the Winter X Games, ESPN launches an alternative sports website, EXPN.com.
■ Philadelphia’s First Union Center (now Wells Fargo Center) becomes the first indoor venue used for X Games competition.
■ Four first-time X Games-related events are scheduled outside the United States: the Japan X Games Qualifier; the European X Games Qualifier; the Latin American X Games Qualifier; and the Australian X Games Qualifier. Top finishers at those events would become eligible to compete in the U.S. X Games.
Gretchen Bleiler competes in the Women’s Snowboard SuperPipe Final during X Games Aspen 2014.
Photo by:Chasen Marshall / ESPN
■ The Winter X Games are televised live for the first time.
■ The entire 2002 U.S. Olympic freestyle snowboarding team shows up to compete in the Winter X Games, just weeks before the Salt Lake City Olympics.
■ Touchstone Pictures and ESPN present “Ultimate X,” a film that chronicles the highlights and stories behind ESPN’s Summer X Games.
■ ESPN announces the establishment of the X Games Global Championship, which will feature two venues hosting competitions in summer and winter action sports simultaneously, scheduled for May 15-18, 2003.
■ Shaun White wins his first X Games gold medal.
■ All telecasts of the 2004 X Games air live on ESPN and ABC, a first for the event. In previous years, the X Games have aired largely on a tape-delay basis, and only portions were broadcast live.
■ ESPN unveils its new logo for the X Games brand.
■ Travis Pastrana becomes the first person to land a double backflip on a motorcycle in competition.
■ Winter X Games 11 draws its largest attendance in the six years the event has been held in Aspen, with 76,150 people attending the four-day event.
■ After six years of hosting competitions throughout the Los Angeles area, the event is moved entirely to downtown Los Angeles, with competitions held at Los Angeles Memorial Coliseum, L.A. Live, the Nokia Theatre and Staples Center.
■ ESPN announces that it will take the new Global X Games to Brazil, Germany and Spain in 2013. ESPN would later shutter Global X after only one year, opting instead to concentrate on its Winter and Summer X events in the U.S.
■ Austin, Texas, is named the new X Games host city from 2014-17. The event will be held at the city’s new 1,500-acre Circuit of the Americas.
■ ESPN and the Aspen Skiing Co. announce a deal that will keep the Winter X Games at Aspen’s Buttermilk ski area through 2019.
■ PepsiCo’s Mountain Dew brand signs on as title sponsor of the Clear Channel-NBC extreme sports tour that will be known as the Dew Action Sports Tour.
■ The Dew Action Sports Tour and Fuel (Fox Sports’ action sports channel) sign a three-year deal in which Fuel will produce and market programming around the tour.
■ What began as the Dew Action Sports Tour and was shortened to the Dew Tour will now be known as the ASPT Dew Tour. After only two months, the action sports series alters its name again to the AST Dew Tour.
■ Mountain Dew announces it will title sponsor the new AST Winter Dew Tour series and withdraw its support of the X Games after 13 years as a founding partner.
■ NBCUniversal buys Live Nation’s 45 percent share of the AST Dew Tour in a deal sources valued at $15 million to $20 million.
■ NBC sells MTV a stake in the Dew Tour as officials believe that MTV’s cable networks, digital expertise and appeal to youth could help expand the tour’s fan base.
■ NBC Sports and MTV announce the creation of Alli (Alliance of Action Sports), which will combine AST properties, including the Dew Tour, Winter Dew Tour, Free Flow Tour and the China Invitational, with several other action sports events.
Drew Bezanson catches air in BMX Park competition.
Photo by:NBC Universal
■ PepsiCo agrees to a two-year extension to keep Mountain Dew as the title sponsor of the action sports series through 2011.
■ The Dew Tour downsizes from a five-stop to a four-stop series this summer and adds new disciplines.
■ Three years after selling a stake in the Dew Tour to MTV, NBCUniversal buys it back in a deal that values the property and its assets at $40 million to $60 million.
■ Mountain Dew negotiates a new title sponsorship for the Dew Tour. Under terms of the deal, the Dew Tour will go from a seven-stop series with four summer events and three winter events to a three-event series.
■ The U.S. Ski and Snowboard Association names the Dew Tour’s iON Mountain Championships an Olympic selection event.
■ The Dew Tour is expanding from three to four events in 2014, and in the process is going to New York City for the first time.
Source: SportsBusiness Journal research
President, Street League Skateboarding
Hired as the first employee of Street League, Atlas has cemented his position leading the upstart property into its fourth year. He played an integral role in securing a multimillion-dollar investment from Causeway Media Partners and helped Street League sell out of sponsorship inventory for the first time this year.
Head of sports marketing, Red Bull North America
The former Gatorade marketer joined Red Bull in 2008 and took over the helm of its sports marketing efforts last year. The role puts him on the front lines of the energy drink’s negotiations with athletes, and its wide range of events broadcast on Fox Sports and NBC.
President, Alli Sports, a division of NBC
The former Comcast digital executive took over leadership of Alli Sports early last year. He oversees NBC’s management of the Dew Tour, Red Bull Signature Series, Lucas Oil Motocross Series and other events. He helped the Dew Tour add its first event in New York City this year.
Senior director, events and content, X Games
With founder Ron Semiao and longtime X Games executive Chris Stiepock no longer at ESPN, Reed has become the steward of the 20-year-old property. The Yale grad oversees the day-to-day operations, marketing and execution of the X Games. He helped create the World of X Games series on ABC that begins this year.
CEO, Association of Professional Surfers
The former Time Inc. president partnered with Kelly Slater’s longtime agent, Terry Hardy, to overhaul the structure of the ASP. The organization subsequently cut its first, consolidated media rights agreements with ESPN and YouTube, and sold its first title sponsorship to Samsung.