Sponsorship is the fastest-growing form of marketing because it does a better job of cutting through the barrage of advertising messages sprayed on us every day.
But the unintended consequence of sponsorship’s success is an increasing number of sports properties that are cluttered with sponsors.
Sponsors committed to making big splashes in national sports properties would do well to learn from Sprint Nextel Corp.’s experience with NASCAR and FedEx Corp.’s 2007 PGA Tour deal.
In 2004, Nextel Communications (since merged with Sprint to form Sprint Nextel) assumed the NASCAR title-rights sponsorship from RJR’s Winston cigarettes brand. Nextel needed sponsorship leverage to overcome race fans’ long-standing loyalty to the Winston brand.
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NASCAR’s Chase for the Nextel Cup created a
windfall of publicity for its biggest sponsor. |
Nextel CupAmong the most interesting and ambitious tactics taken by Nextel was thecreation of the Chase for the Nextel Cup.
Launched in 2004, the popular program resets and tightens the title points so the top 10 NASCAR drivers compete for the championship in the last 10 races of the year. The Chase provided big revenue opportunities for NASCAR.
The sanctioning body’s TV rights holder agreements were scheduled to expire in 2006. Although overall ratings were up, there were two main threats to NASCAR achieving maximum TV rights revenue under the new deal.
First, NASCAR TV viewership historically dropped off in the fall when football and the baseball playoffs began. Second, too many NASCAR events were held in small TV markets, which lowered TV viewership in big markets.
In May 2004, NASCAR announced a controversial schedule overhaul that shifted events from rural Darlington, S.C., and Rockingham, N.C., to large urban television markets in Southern California, Dallas/Fort Worth and Phoenix.
When TV negotiations were concluded, NASCAR gained a more than 25 percent increase in its TV rights fees, beginning with the 2007 season (increasing annual fees from $400 million to $500 million under the new deal).
The Chase for the Nextel Cup also added TV viewers, increased ticket sales to late-season events, created a windfall of publicity for its biggest sponsor, generated increased media coverage and lopped off less desirable events from its schedule.
Plus, the Chase is thought to be responsible for boosting NASCAR’s fall TV ratings.
FedEx Cup
It looks like FedEx (a NASCAR team sponsor, by the way) and the PGA Tourwere paying attention.
The PGA Tour wrestled with many of the same issues faced by NASCAR in 2004: a looming TV rights deal negotiation, sagging fall TV viewership, and neither fans nor media were paying much attention to its concept of a championship.
So last fall, as it was entering TV rights negotiations, the Tour announced the creation of the FedEx Cup. Beginning with the 2007 season, the FedEx Cup identifies a national pro golf champion based on his scores in a championship series rather than on his earnings on the golf course, as has historically been the case.
The FedEx Cup covers 37 tournaments, starting with Hawaii’s Mercedes Championships in January and ending at the Sept. 16 Tour Championship in Atlanta. Several events were realigned as the FedEx Cup was developed.
The last four events, held chronologically in New York, Boston, Chicago and Atlanta, will amount to a playoff that determines a champion from the 144 competitors. Specific details, such as seeding, playoffs and prize money, are under development.
The FedEx Cup is already a big winner for the PGA Tour because it gave the Tour leverage that it used to increase its TV rights by $600 million and 35 percent during the 2007-12 package, according to PGA Tour Commissioner Tim Finchem.
Only four months elapsed between the time the FedEx Cup was announced in the fall of 2005 and Finchem’s January announcement of a richer six-year TV rights deal.
The FedEx Cup also establishes a credible PGA Tour champion. Plus, it is expected to increase fall TV viewership and has compelled overdue changes in the Tour’s competition schedule.
The PGA Tour will benefit year-round from FedEx’s sure to be aggressive promotion of the FedEx Cup in media that reach mainstream, business and affluent consumers.
Good for FedEx and the PGA Tour. Too often, sponsors bring little — other than money — to sports properties. FedEx has made pro golf more interesting and credible. And it brought a ton of money, too.
The positives of this deal for FedEx are impressive.
The FedEx Cup is an exclusive, new property, so FedEx has no other sponsor’s equity to overcome. No one will be confused that any company other than FedEx made this possible.
The FedEx Cup also provides good seasonlong corporate hospitality options for FedEx’s best customers. And it inextricably integrates the world’s best golfers with the FedEx brand, which is more powerful than a sticker on the hood of a race car or naming-rights deals at basketball and football arenas.
FedEx and Nextel indelibly staked out properties within properties that have added to, and will continue to build on, the positive public perception of the PGA Tour and NASCAR. Both companies also have ensured that their brands will not be buried by clutter.
These two deals are best-practices case studies for sports marketers.
Sponsors committed to national sports marketing programs should be asking themselves where similar opportunities exist. And properties that wish to attract elite-level, long-term sponsors should re-evaluate their assets in anticipation of selling similar deals.
What sponsors should look for in breakthrough properties:
- Exclusivity: credibility and no clutter
- Ease of measurement and administration
- A willing property partner and honest support of participants
- Ability to make a positive difference for the fans
- Prepaid media extensions such as TV, print, radio and the Internet
- Ability to drive sales / branding
- National and local activation elements
- Media and PR excitement
- Powerful hospitality components
- Good fit with the brand's personality
- Ambush-proof
Mel Poole (mpoole@sportsbusinessjournal.com) is president of consulting and marketing firm SponsorLogic.
