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Volume 21 No. 13

Events and Attractions

An hour before Game 1 of the NBA Finals in Oklahoma City, Thunder owner Clay Bennett made his way around the Chesapeake Energy Arena with little fanfare for someone who over the past four years has seen his influence grow in the league. He chairs the NBA’s relocation committee and is a member of the league’s finance advisory committee.

Since bringing the team to Oklahoma City from Seattle in 2008, Bennett in just four years has built the Thunder into not just a powerhouse on the floor, but also on the business side where the team ranks near the top of the league in sponsorship revenue and in full season-ticket sales despite playing in the league’s third-smallest media market.

But Bennett, who keeps a low profile, said there was no specific timeline on building the team’s brand, much less reaching the Finals.

“We really didn’t think of it in that way,” Bennett said. “This is a tribute to the players and coaches.”

Thunder owner Bennett’s actions speak volumes in the team’s loud home arena.
Bennett quietly is one of the most engaged owners in the league. The Thunder executive staff does not have anyone with the team president title, with Bennett serving as the CEO of the franchise with a very active approach in running the team’s business.

“At least once a week we have a meeting with Clay, and he is very involved in all aspects of the business,” said Brian Byrnes, senior vice president of sales and marketing, who reports directly to Bennett.

Like its owner, the Thunder’s business staff is taking a measured approach in leveraging the team’s Finals appearance.

Yes, the team will continue to charge fans $50 to put their name on a season-ticket waiting list that now numbers more than 2,200, but the team this year froze prices for its 14,000 season-ticket holders, it refuses to adopt variable ticket pricing policies and hasn’t decided whether to raise the price of 1,000 single-game tickets to be sold this summer.

The team has very little inventory to sell; it already has sold out of its 14,000 season tickets and has only one of 37 suites yet to be sold for next season.

The biggest piece of unsold sponsorship inventory is a naming-rights deal to the courtside club inside the renovated Chesapeake Energy Arena. Talks are under way, with the likelihood of a deal obviously helped by the team’s Finals appearance. The team also has not filled the airline category.

But the main goal, Byrnes said, is to use the Finals to broaden the team into a statewide brand.

“We are only 4 years old,” Byrnes said. “The Finals for us is to reinforce the value of our brand and to build a wider pool of fans. It is about long-term sustainability rather than just a catalyst of growing revenues.”

SORTING OUT SPONSORS: The NBA did not lose one marketing partner due to the lockout, and the league is hoping for the same track record this offseason as it works to retain Haier, State Farm, HP and Right Guard as their current deals expire after this season.

Mark Tatum, executive vice president of global marketing partnerships for the NBA, will be meeting with representatives from those companies in both Oklahoma City and Miami during the Finals.

Tatum also is wooing executives with various airlines as the NBA looks to replace Southwest Airlines, which did not renew its league deal after the 2009-10 season. The airline category remains the biggest open sponsorship for the league.

“We continue to talk,” Tatum said before Game 1 in Oklahoma City. “It’s the big category we are trying to go after.”

REBUILDING THE BASE: No matter how much momentum the NBA has gained since the Dec. 25 start of the lockout-shortened season, there is no getting back the gate revenue from the loss of 20 percent of the season. And there is no getting around some local team issues as well, notably in Charlotte as the Bobcats look to recover from a 7-59 record, and in Sacramento, where the team’s broken arena deal threatens the future of the franchise in the city.
But one metric showing how the league has recovered from the lockout is that its per-game team gate receipts — or the amount of per-game ticketing revenue — this past season have increased in the low single digits compared with the 2010-11 season.

Chris Granger, executive vice president of the NBA’s team marketing and business operations division, would not disclose specific gate revenue, but there is a broad range in the league, spanning anywhere from around $400,000 on the low end to $3 million in big markets like New York and Los Angeles.

“The per-game gate receipts are at the highest they have ever been,” Granger said.

Granger said the overall strength of the league’s season-ticket sales has helped push the league’s per-game gate receipts to unprecedented levels. In addition, the NBA’s season-ticket renewal rate to date stands at 85 percent, up from 81 percent last year, with overall season-ticket pricing remaining mostly flat.

MERCHANDISE RISING: Sales at and at the temporary NBA Store on Fifth Avenue in New York to date are up 30 percent from Dec. 1, 2011, compared with the same time period a year earlier, according to Sal LaRocca, NBA executive vice president of global merchandising.

“We lost September, October and November,” LaRocca said. “But there was pent-up demand.”

LeBron James, Dwyane Wade and Chris Bosh make the Heat a traditionally strong seller in the league, but the postseason has helped push Thunder All-Star Kevin Durant to the top of player jersey sales during the playoffs.
Meanwhile, the league continues to try to find a permanent location for its NBA Store on Fifth Avenue. The temporary store opened on Fifth Avenue and 47th Street in midtown Manhattan with a two-year lease last fall in the midst of the lockout.

ON THE MOVE: A few NBA teams have added chief revenue officer jobs of late. The Cleveland Cavaliers have hired Brad Sims as chief revenue officer. Sims formerly was an account manager for the NBA’s team marketing and business operations department. In addition, Mike Maleski has rejoined the Cavs as vice president of digital sales. Maleski left the team last year along with former Cavs executives Jeff Lillibridge and Jeff Ryznar to create a Cleveland office of Phizzle. Both Sims and Maleski started in early June.

Earlier this month, the Hawks hired Andrew Steinberg as chief revenue officer. Steinberg comes to Atlanta from Major League Soccer’s Sporting K.C. franchise, where he was executive vice president of business operations.

In its second year, the USA Pro Cycling Challenge bicycle race has taken a step forward with its sponsorship business, and race organizers think the event — funded largely by Colorado restaurateur Rick Schaden — could be self-sufficient in three to four years. The race runs Aug. 20-26 in Colorado.

The number of major partners has increased from nine to 12, but sponsorship revenue has tripled from 2011, said CEO Shawn Hunter, who took leadership of the race six months before its debut.

The Colorado race has tripled its sponsor revenue heading into its second edition, which will take place Aug. 20-26.
“The model is the same: Less is more,” Hunter said. “We want 10 to 12 founding partnerships, the same as what you see at the Tour [de France] or the U.S. Open.”

The race debuted last year with Nissan, United Health Care, Coca-Cola, RadioShack, Waste Management, Kroger and Exergy Development Group each paying high-five to low-six-figure sums. The deals, Hunter said, were for a year, and had to be signed on a compressed schedule. Sources pegged the race’s total budget in the $10 million range, much of it supplied by Schaden, whose Quiznos and Smashburger chains paid $1.5 million each for sponsorship space.

This year the race has signed new multiyear partnerships with the Colorado Tourism board, Centura Health, Dutch water company Aquadraat, recovery drink Umii and Colorado-based brewery New Belgium. It also has signed multiyear renewals with Nissan, Waste Management, United Health Care, Coca-Cola and RadioShack. Sources valued the 2012 partnerships in the low- to mid-six-figure range annually. Smashburger will continue its partnership for 2012; financial details were not available.

“Every [deal] we did last year was a one-year deal, because we wanted to prove ourselves and then improve our market value,” Hunter said.

Hunter said the race will introduce premium seating at the finish areas for $75 to $250, with between 500 and 2,500 seats available, depending on the size of the finishing city.

Last year the race attracted the world’s top pro teams, and 2011 Tour de France winner Cadel Evans. It featured 26 live hours of television on Versus, now the NBC Sports Network, as well as international TV coverage on Eurosport.

For 2012, the race has signed a new domestic deal with NBC Sports that includes 29 total hours of coverage and four hours of live coverage on NBC. It has not completed its international TV deal. Sources said the race does not receive a rights fee from NBC.

Meredith Giske, event director at New Belgium, said the Colorado-based beer company signed its deal because of the race’s national and local footprint. Giske said the two-year deal represents the largest endorsement ever for New Belgium. “Last year it was hard to see the event being that successful and knowing we weren’t involved,” Giske said. “Cycling is an important lifestyle element for us.”

Fred Dreier is a writer in New York.