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Volume 20 No. 42

Marketing and Sponsorship

On the eve of the Australian Open, world No. 3-ranked player Victoria Azarenka has signed deals with Nike and Wilson, pushing her toward the ranks of the world’s highest-paid female athlete endorsers.

Azarenka considered deals with Under Armour, Yonex and even Red Bull, said her agent John Tobias, noting that the energy drink maker is considering a clothing line. But Azarenka, routinely pegged as one of the best players on the WTA Tour not to have yet won a Grand Slam, decided to re-sign with Nike in a four-year deal likely to net her around $4 million annually, presuming she stays in the top five.

Victoria Azarenka renewed with Nike but is changing rackets, from Head to Wilson.
Tobias, head of tennis for Lagardère Unlimited, maintained that Nike’s top two female tennis players, Maria Sharapova and Serena Williams, are in decline and would be overtaken by the likes of Azarenka. While that is certainly debatable, there is no doubt that at age 22, Azarenka could be a star for many years to come.

Sharapova, 24, and Williams, 30 have suffered significant injuries in recent years. Williams last week even told an interviewer she does not love tennis, suggesting to some that her stay in the game may not last much longer.
Born in Belarus, Azarenka has lived in Scottsdale, Ariz., since she was 13.

While she chose not to switch her apparel, she is switching tennis rackets — something that in the insular world of tennis always causes heads to turn. Her new four-year deal with Wilson will bring her more than $2 million over that term, a huge sum for a racket deal. She previously played with Head.

Players are loath to switch rackets, often feeling their racket is the secret to their success. But Tobias pointed out that the newly lengthened WTA offseason gave Azarenka time to try out the new Wilson racket and become comfortable with the equipment.

“It’s very rare for a player ranked in the top five to switch,” he said. “The reason she was successful in switching is the WTA Tour season ended so much earlier now. They were finished on Oct. 21, which is a huge advantage for anyone to switch manufacturers. She got a full 2 1/2 months training with the racket.”

Azarenka last year earned roughly $3 million in prize money and exhibition guarantees. Assuming she earns the same level this year — and she already took in a low-six-figure check for playing an exhibition on New Year’s Day in Thailand to mark that country’s king’s birthday — she could be looking at a total take for 2012 in the high seven figures.
Sharapova, Williams, the Chinese star Li Na and Caroline Wozniacki, the world No. 1-ranked player in tennis, the top-earning sport for female athletes, are all in the annual eight-figure range.

The Australian Open begins next week.

International sports marketing agency Helios Partners and boutique sports consultancy GlideSlope are forming a joint venture called HGS that will advise corporate clients marketing sports globally.

The joint venture comes a year after the two agencies partnered to become the Olympic agency of record for Dow Chemical.

Chris Sanders, Helios’ chief operating officer, and Dave Mingey, GlideSlope’s founding partner, said the joint venture will look to support other companies with limited sports experience as they develop international marketing efforts.

The partnership offers different advantages to each agency. Helios will benefit from the brand consulting expertise of Mingey, who developed Johnson & Johnson’s Olympic marketing campaign in 2008, and his fellow founding partner Eric Guthoff, who oversaw J&J’s activation in Beijing while working for IMG. GlideSlope will benefit from Helios’ established reputation in the Olympic world, where it helped Acer negotiate its Olympic sponsorship, and the connections of its top executives, Terrence Burns and Chris Welton, who previously worked for Meridian Management, the International Olympic Committee’s marketing arm.

“We offer a collective of professionals that come from a very diverse background,” Mingey said. “You’ve got bid-city stewards, leaders that have been at key properties like the IOC, global PR leaders, agency leaders.”

Mingey said the fact that neither agency buys media, represents athletes or has a hospitality group means that HGS will serve as a “neutral adviser” that helps companies identify experts to work with in those areas of their sponsorships. “We don’t see ourselves competing with the IMGs and Octagons,” Mingey said. “In many cases, our goal is to work with them to help the client with understanding what [those agencies] have to offer.”

In some cases, the agencies will pursue clients individually. In others, they will work together as HGS.

Sanders said that Helios, which is owned by French media and event company the Amaury Group, and GlideSlope will split revenue generated by their partnership.

GlideSlope will continue to operate independently in the United States. It is now consulting for Pepsi, The North Face, Johnson & Johnson and Citi.

NASCAR teams started the year with three times more primary sponsorship inventory to sell than a year ago.

Six of the top-tier Sprint Cup teams have primary sponsorships available for a combined 90-plus races this year. It’s a total that would have been higher had Roush Fenway Racing and Richard Childress Racing not decided to contract by one car apiece, taking primary sponsorships for an additional 72 races out of play this year.

The teams with open inventory at the start of this season include Hendrick Motorsports, which has 12 races to sell on Kasey Kahne’s No. 5 car; Michael Waltrip Racing, which added 5 Hour Energy as a sponsor and expanded by one car this season, leaving it with 18 races to sell across the No. 15 and No. 55 cars; Richard Childress Racing, which has four races to sell; Richard Petty Motorsports, which has 24 races to sell on the No. 43 car; and Roush Fenway Racing, which has 27 races to sell on Matt Kenseth’s No. 17 car.

At this time last year, top-tier teams collectively had fewer than 25 available races.

“It’s a buyer’s market,” said Jeff Elliott, chief operating officer of Breaking Limits, a motorsports agency that works with General Mills and Front Row Motorsports. “There’s a lot of value to be had out there. It’s not unlike the housing market. You can walk into a neighborhood and have your pick of houses and maybe get more house for the money than you would have a few years ago.”

RCR chief marketer Ben Schlosser said the amount of open inventory reflects the number of long-term agreements that elapsed on the team side last year. Companies like Caterpillar, Aflac, Mars, U.S. Army, Crown Royal, 3M, General Mills, Best Buy, UPS and others all had multirace deals that expired in 2011. Caterpillar, Aflac, U.S. Army, UPS and Best Buy all decided to decrease the number of primary races they will sponsor this year, and Crown Royal decided to stop sponsoring race teams altogether.

Those moves opened up a lot of the inventory that’s available this year, and in some cases created a situation where teams have to find a sponsor to fill out a handful of races on a car that’s mostly full. That means teams tend to have more sponsors to manage than they ever had in the past. For example, RCR will have more than 40 sponsors across nine teams in the Sprint Cup, Nationwide and Camping World Truck series. The team’s previous high-water mark was 35 sponsors.

“The economics [of that many sponsors] are OK, but the complexity is way up,” Schlosser said. “You have to fit the pieces so they work together.”

Teams are optimistic they can close the inventory before the season starts. Sales executives and consultants worked through the holidays in an effort to maintain momentum with potential sponsors.

“There’s been good progress by all the teams filling up the inventory they have,” said Jonathan Gibson, Penske Racing’s vice president of marketing. “I have no doubt Hendrick will fund its other races, Waltrip will find a solution for [Clint] Bowyer, and Roush is optimistic. We’re moving in the right direction.”

But teams with open inventory are finding themselves on the wrong end of the supply-and-demand curve. The options at multiple teams give sponsors more leverage when they come to the table because they know that the teams need financial support.

“It’s pushed the price point down and recalibrated the economics of the sport, allowing new sponsors to get into the sport with top talent at reasonable prices that haven’t existed before,” said Jon Flack, president and chief operating officer of Just Marketing International, which works with Subway, Farmers Insurance and UPS. “When we’re talking to CMOs right now, we’re telling them that there’s lots of inventory, good drivers and good deals to be had right now.”
Best Buy shifted its spending from RPM’s No. 43 car to Roush Fenway’s No. 17 car.
Photo by: GETTY IMAGES (2)

Best Buy is an example of a sponsor that took advantage of the surplus of open inventory by cutting ties with RPM, where it was spending as much as $10 million on 24 races for the No. 43 car, and shifting its sponsorship to Roush Fenway Racing, where it reportedly will spend $4 million to sponsor nine races on the No. 17 car driven by Matt Kenseth and two races on the No. 99 driven by Carl Edwards.“Options like that didn’t always exist in the sport, but today I’m sure that was a good business decision for them,” Flack said.

Multirace agreements historically have been tough to close once a race season begins. Only three multirace agreements closed between January and May last year.

“We’re going to see a lot of sponsors take a wait-and-see attitude this year with the sport and choose to spend a little this year to see if a sponsorship works,” said Andrew Campagnone, a senior managing partner at Sports Marketing Consultants, which helped negotiate Farmers’ deal with Hendrick Motorsports.

Team and agency executives believe the combination of Sprint Cup ratings, which increased for the first time since 2005, and new sponsorship deals that closed late last year will give them momentum as they search for primary sponsors to fill open inventory this year.

“We’re feeling much better than we did six months ago,” Schlosser said.

Rolex, which signed Tiger Woods to be one of its ambassadors in October, has deepened its presence in golf with a new eight-year sponsorship of the U.S. Golf Association.

Rolex has had an association with the USGA since the 1980s when it began sponsoring the print publications, such as the rule book. Rolex over the years has added its clocks to the practice areas and first tees at USGA major championships, including the U.S. Open, and in the late ’80s started sponsoring a Monday night dinner hosted by Arnold Palmer the week of the Open for Rolex player ambassadors and USGA officials.

Rolex, sponsor of USGA publications since the 1980s, is now a full corporate partner.
But Rolex never before was designated as a full corporate partner until this agreement was signed in recent weeks. The deal will run through 2019 and puts Geneva, Switzerland-based Rolex on the same sponsorship tier with the USGA’s most prominent partners, American Express, IBM and Lexus.

Barry Hyde, the USGA’s chief marketer, called the deal the longest the association has ever signed. Most partnerships run four to five years.

“Rolex’s involvement in golf goes back almost 50 years when it first started its relationship with Arnold Palmer,” Hyde said. “Golf is the centerpiece of what they do in sports marketing.”

In addition to its support of the USGA’s print publications, including the U.S. Open annual, Rolex sponsors the “Rule of the Day” segment at Rolex is making copies of the 2012 rule book available for free from the USGA’s website.

At the U.S. Open, Rolex will have full promotional rights, hospitality and tickets in the corporate partner village, and global use of the USGA and U.S. Open marks in its print and broadcast advertising.

There also has been talk of Rolex sponsoring with the USGA a new international competition this year, but details of that were not available.

“To become an official partner of the USGA is a proud step for Rolex,” Rolex CEO Gian Riccardo Marini said. “The integrity of the game, its timeless appeal and respect for the rules of golf are shared values for our organizations.”

Rolex’s deal with the USGA comes at a time when the luxury timepiece category is bubbling over with player deals and new property agreements.

Rolex also has arrangements with the Royal & Ancient, which gives it marketing rights to the British Open and the Ryder Cup, as well as a deep association with the LPGA. Its player endorsement deals include Woods, Palmer, Jack Nicklaus, Gary Player, Tom Watson, Paul Casey, Phil Mickelson, Annika Sorenstam, Lorena Ochoa, Rickie Fowler, Camilo Villegas, Adam Scott, Martin Kaymer and Trevor Immelman.

“I can’t think of a company that is more globally and passionately associated with golf,” said Mike Davis, the USGA’s executive director. “Rolex’s support permeates the core of golf, beyond championships and players, to the rules, history and etiquette.”

Omega also has made a big bet in golf with a new sponsorship at the PGA of America, which will give it rights to the Ryder Cup. It also has deals with Sergio Garcia and Michelle Wie.

Another luxury Swiss watchmaker, Audemars Piguet, counts the last two U.S. Open champs, Graeme McDowell and Rory McIlroy, among its ambassadors, along with Darren Clarke, Lee Westwood, Cristie Kerr and Morgan Pressel.

“The luxury timepiece category certainly recognizes the importance of golf and the audience that comes with it,” Hyde said. “It’s also about the Rolex circle of jewelers as well.”