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Volume 21 No. 1

Marketing and Sponsorship

CAA Sports’ Corporate Consulting division has won one of sports’ most competitive and closely watched marketing agency reviews of the year, landing the sports/entertainment agency business of JPMorgan Chase.

Chase’s sports portfolio is headlined by its 10-year, $300 million Madison Square Garden deal, which encompasses the New York Rangers, Knicks and Liberty, MSG itself, Radio City Music Hall and the Chicago Theater. Also in the Chase portfolio are sponsorships with the New York Giants and Jets; a U.S. Open tennis relationship; sponsorship of the Sundance Film Festival; a deal with Jeff Gordon and Hendrick Motorsports; and naming rights to the Arizona Diamondbacks’ home ballpark.

“We looked at all the leading agencies, and CAA was strong in activation, acquisition, negotiations and strategy,” said Steve Pamon, the former NFL marketer who has been heading Chase’s growing sports and entertainment marketing department for the past year.

As for CAA’s broad-based assignment?

Chase bought its “marquee partnership” with Madison Square Garden two years ago.
Photo by: JPMORGAN CHASE (2)
“The key thing is maximizing the value of our relationship with Madison Square Garden,” Pamon said. “The second thing is going to be expanding into core financial markets across the country; to support JPMorgan Chase not only nationally, but as a global player; and determining what the key activations will be that will drive value.

“Overall the objective for all our sponsorships is to establish an emotional connection for our customers and clients that moves beyond the commoditized relationships that exist with any consumer product.”

CAA’s involvement in selling Chase MSG’s “marquee partnership” two years ago provided an introduction. However, it was only a little over a year ago that CAA hired Greg Luckman away from GroupM ESP to head corporate consulting. Since then, it has won JPMorgan Chase along with a review for Emirates Airline, increased CAA’s business with Best Buy, and obtained new business from Time Warner Cable and its recent launches of TWC SportsNet and TWC Deportes in Los Angeles.

“We’re happy with the [Chase] win and our first year,” said Luckman, whose financial service expertise includes a decade with Momentum, mostly on the American Express account. “We’re leading with strategic consulting in terms of capabilities, but certainly handling activation for clients like Chase and Emirates. What I have found in a year here is that CAA has a position within pop culture that can provide unique insights. That and our collaborative culture are what has allowed us to build a brand consulting practice so quickly.”

When Charlotte Motor Speedway completed its enormous video board last year, track executives believed the board could provide a major boost to the facility’s bottom line. Now, as the speedway prepares to host the last race of the board’s second season, CMS executives say they’re beginning to realize those benefits.

Sales on the video board are up 15 percent from a year ago, and Dan Farrell, CMS senior vice president of corporate sales, credited the board with boosting the racetrack’s hospitality, sponsorship and display advertising sales by more than 20 percent this year.

Charlotte Motor Speedway said that sales on its video board are up 15 percent from a year ago.
Photo by: AP IMAGES
“It’s made selling everything else more attractive,” Farrell said.

Farrell said the board helped CMS close renewals with race title partners Bank of America and History Channel before this season and sign new agreements with Duke Energy, United Healthcare and United Rentals.

Each of those deals looked different and included different video board inventory. For example, the United Healthcare deal made the insurance company the presenting sponsor of the military presentation at the Coca-Cola 600 and put the company’s logo on the video board for 30 minutes during prerace ceremonies. United Rentals’ agreement was part of a package that includes 3,000 tickets for this weekend’s Bank of America 500 and makes the company the presenting sponsor of college football scores on the video board throughout Saturday.

“Outside of being up in revenue, I haven’t kept a score sheet that says ‘We closed this deal because of the video board,’” Farrell said, “but we had more displays and sponsorships closed and all these pieces of incremental business that no other track is getting, and the video board is tied to that.”

The desire for results like that was part of the reason CMS in 2010 struck a unique partnership with Panasonic to provide the video board, which is 200 feet wide by 80 feet tall. Officials believed the board not only would enhance the fan experience at races and help sell tickets, but that it also would aid in selling sponsorships and hospitality at the venue.

The parties are paying for the cost of the board by selling advertising on the screen and splitting the resulting revenue 60-40 between Panasonic and track owner Speedway Motorsports Inc. Farrell said SMI leads the sales effort with assistance from Sports Marketing Consultants, a Charlotte-based agency, and Panasonic.

This year’s deal with United Rentals underscores how the video board has boosted CMS’s bottom line. United Rentals, which has 700 locations nationwide that rent everything from forklifts to pressure washers, has thrown a party the last two years for more than 2,000 customers during the fall Sprint Cup race at CMS. It paid 50 percent more than it did a year ago so that it could host more people and have its logo shown on the board.

“I paid considerably more for that advertisement,” said Dave Brown, United Rentals’ district sales manager. “It was a true up-sell. The reason I thought it was a good idea was because, here I am entertaining these 4,000 people all day and then they go into the track. What better way is there to reiterate why they’re there than to put my name out there in front of them again? That’s why I look forward to the feedback from it. It’s a way to further insulate the customer.”

Brown said the company will have guests from as far away as Alaska come to the race. The guests represent $75 million to $100 million in revenue for United Rentals. In the 90 days after the event, he will watch to see if revenue increases at all to determine if the video board was a worthwhile investment.

“We’ll have the party next year no matter what,” Brown said. “The video board [extension] won’t be decided on whether revenue increases, but it will be about chatter. How many people notice? How many people talk about it? We’re excited to see how it does.”

UEFA surprisingly last week chose a newly created subsidiary of CAA Sports to exclusively sell the commercial rights for Euro 2016 as well as qualifying events for the 2018 FIFA World Cup, marking the agency’s biggest push — and gamble — into the lucrative global soccer business.

The subsidiary, CAA Eleven, was chosen over fellow finalists IMG and Sportfive after an almost eight-month process that was thought to have drawn interest from dozens of companies, said CAA Managing Director Michael Rubel. It is the largest global commercial rights assignment for CAA.

CAA also represents Chelsea FC and FC Barcelona for property sales.

While it is not clear exactly how much the rights are worth, Euro 2012 generated in excess of $1.6 billion in revenue, according to published reports.

UEFA and its 53 member organizations have historically sold the rights for the tournament and qualifying events, but UEFA decided to centralize the rights last year, offered a

Global soccer is booming: Euro 2012 reportedly generated more than $1.6B in revenue.
Photos by: GETTY IMAGES (2)
guarantee to its federations and opened bidding to outside companies. After interested firms submitted written presentations, the finalists made presentations in person in early summer.

CAA began planning to bid for the rights early this year, and during the spring it began conversations with veteran media executives Olivier Guiguet and Stéphane Schindler, who left Lagardère Group-owned Sportfive last year, Rubel said.

Guiguet will serve as CEO and Schindler as COO of CAA Eleven; both are partners with CAA Sports in the new company.

The CAA Eleven board includes Rubel, Guiguet, CAA Sports co-head Howard Nuchow, CAA Managing Partner David O’Connor and two members of UEFA. The company will be based in Nyon, Switzerland, where UEFA is based, and is expected to hire a staff of 40 to 50.

“This will be an exclusively dedicated staff, and they will be managing the broadcast, sponsorship and licensing rights of these tournaments and national teams’ competitions,” Nuchow said.

Initially, the bid process was to include just the qualifying events for Euro 2016, but it was expanded to include the finals. About 40 percent of the 2016 finals was pre-sold as part of Euro 2012, so CAA Eleven will be charged with selling the remaining 60 percent of those commercial rights, including broadcasting, sponsorship and licensing, Rubel said.

Euro 2016 will be expanded from 31 matches to 51 matches. Rubel noted that the 31 matches played this summer over 3 1/2 weeks drew a global television audience the size of the Super Bowl.

“We underestimate in the United States the power of football generally and European football specifically, worldwide,” Rubel said. “These are very, very serious rights.”

Mark Noonan, president of sports marketing firm FocalSport and former executive vice president of MLS, said: “It is a huge coup for CAA. It is one of the biggest properties in the soccer world and one of the crown jewels out there.”

Noonan said CAA partnering with Guiguet and Schindler and getting the rights shows the increasingly global nature of sports business. “The fact that a Hollywood talent agency was able to partner with seasoned executives with deep roots in the game speaks to how global and powerful the game had gotten from a viewership and commercial standpoint,” he said.

UEFA reportedly has guaranteed the 53 federations it governs more than $1 billion as part of the deal with CAA Eleven. UEFA did not respond to requests for comment.

Rubel said CAA made no guarantee as part of the deal. “This is a straight agency relationship,” Rubel said. “The rights weren’t bought and there is no guarantee.”

While he would not provide financial details of the deal, he did say, “There is a financial relationship where we get paid against performance and we service these rights in the way we might service any other client that we might have at the agency.”

Typically, CAA charges clients a percentage fee.

IMG declined to comment for this story.

Sportfive spokeswoman Heidi Farr confirmed by email that the company was a bidder. “We submitted a highly competitive bid that would have provided a low, but acceptable, margin,” Farr said. “However, bearing in mind the tremendous experience of Sportfive in commercializing rights to the European Qualification Matches (currently we represent 37 out of the 53 national associations), working at a loss in this highly volatile and sometimes unpredictable market was never an option for us.”

For CAA, the move is the agency’s strongest bid to be a major player in global soccer commercial sales. It also comes amid news last week that CAA Sports sold its World Football Challenge, a tournament featuring European clubs playing at U.S. venues, to RSE Ventures, a company owned by Miami Dolphins owner Stephen Ross. Veteran soccer executives Charlie Stillitano and Jon Sheiman, who had been at CAA Sports since 2007, joined RSE Ventures as part of that agreement.

The UEFA rights that CAA Eleven will market are among the most significant global rights in sports. Some industry insiders wondered if it was a big risk for CAA, a company that has not had a global sports sales force, to organize and build such an operation from scratch. Rubel, asked why he believed CAA Eleven won the assignment, said, “I think our commitment to devote exclusive resources to UEFA was very important.”