Group Created with Sketch.
Volume 21 No. 1

Marketing and Sponsorship

Major League Soccer has signed Microsoft to a multiyear sponsorship that will focus on the technology company’s Windows 8 brand. According to an industry source, the agreement — including Microsoft’s commitments to spending on broadcast and digital advertising — is for mid-seven figures annually.

Among the deal points, Windows 8 will be featured on LED signage on MLS’s nationally televised games on ESPN, NBC Sports Network and Univision. The brand also will be featured as an in-game segment sponsor on the broadcasts.

Windows gets LED board space in MLS stadiums as part of the deal, Microsoft’s first with a North American league.
Windows 8 becomes the official operating system of MLS with the deal.

According to Microsoft, a key element of the sponsorship will be on-site product demonstrations of Windows 8, using an MLS app, before and during matches at stadiums.

“With these trial experiences at the matches, we’ll present Windows in a way that [fans] can digest it easily,” said Kathleen Hall, general manager of Windows consumer marketing. “Soccer is a global game, and we’re a global brand, with a billion-plus users around the world. We want to emotionally connect people to our brand.”

The first such on-site activation was slated for this past weekend, at the New York Red Bulls-Los Angeles Galaxy match at Red Bull Arena in Harrison, N.J. One hundred “brand ambassadors” were scheduled to show off the product to fans outside the stadium and on its concourse, using Microsoft’s Surface tablets. The activation was being managed by the collaborative agency partnership of Gilt Edge Soccer Marketing and Eiger Marketing Group.

The schedule of future on-site activations has yet to be determined, but Hall said Microsoft hoped to be at all MLS stadiums during the season. An MLS spokesman said there were no potential team-level sponsor conflicts for Microsoft’s league-level deal. Microsoft also aims to activate at the MLS All-Star Game and MLS Cup.

A first version of the free MLS app for the Windows 8 platform went live in the Windows Store at the beginning of this season. An enhanced version, featuring video highlights during games; live scores; statistics and play-by-play of every match; and news and opinions from the league’s website, will be available in the coming months.

“This is a deal that shoots straight to the core of who we are and what we’re trying to accomplish with our fan base,” said Kathy Carter, president of Soccer United Marketing, MLS’s commercial arm. “With Microsoft, we’re kindred spirits in our desire to improve the way soccer fans can interact with our game.”

Negotiations for the deal, which was done without agency involvement, began in September. Other than developing apps, Microsoft does not sponsor any sports leagues in North America. In the company’s sole team sponsorship, Xbox is the shirt sponsor of Seattle Sounders FC, with an agreement that expires at the end of the 2013 season.

“Xbox and the Sounders have a great relationship and, sure, that helped grease this deal a bit,” Hall said. “But I have to say, the people at MLS … brought to life the word ‘partnership.’ There’s things they want to get out of it, and there’s things we want to get out of it. They want the people who watch the game to have a deeper and richer experience. That’s what we’re going to help them do.”

The Class A Savannah (Ga.) Sand Gnats and Class AA Pensacola (Fla.) Blue Wahoos, two clubs with vastly different baseball histories, are first-time entrants on the list of Minor League Baseball clubs that generated the most merchandise sales last year, according to data obtained by SportsBusiness Journal and scheduled to be released by MiLB today.

The 160 U.S.- and Canada-based clubs affiliated with MLB teams collectively generated $54 million in 2012 through the sale of apparel, headwear and novelties, up 3 percent from 2011 and trailing only pre-recession 2008 as MiLB’s highest annual total.

The Savannah Sand Gnats have found success after working on improving product quality.

While MiLB’s 2012 roster of top-selling clubs is stocked with familiar, nationally recognized names, including the Durham (N.C.) Bulls and Toledo (Ohio) Mud Hens, regional support continues to bolster the bottom lines of lesser-known franchises.

Jeremy Auker, vice president of business development for the Sand Gnats, said the club (a New York Mets’ affiliate) saw a 74 percent increase in merchandise sales from 2009 to 2012. He credited that growth to a smarter mix and higher quality of merchandise offerings than in years past, the result of the team’s analysis of area demographics.

“When [ownership group] Hardball Capital bought the team in 2008, most of the merchandise was low quality and it was all pretty basic stuff,” Auker said. “We brought in Nike and Retro Brand and a lot of higher quality licensed vendors, and that’s made a big difference. People will pay more money if it’s good quality, and that helps the bottom line.”

The Sand Gnats’ predecessor, the Savannah Cardinals (who played from 1984-95), did make the minor-league sales list once, in 1993, the first year MiLB tracked such sales. But the Sand Gnats (as the team has been known since 1996) had been shut out from the annual list each year of its franchise existence — prior to 2012.

Land shark! Foam shark and wahoo hats were surprisingly strong sellers for the Pensacola Blue Wahoos.

Auker said the demographics in Savannah are more diverse than most MiLB markets. For example, Savannah College of Art and Design has more than 10,000 students and is located near the ballpark. Auker said those students tend to appreciate merchandise that is “way off the beaten trail.” Additionally, more than 35 percent of the Savannah market is African-American, so the club has significantly increased its inventory of snapback caps and other apparel that has an urban feel.

Approximately 35 percent of the team’s sales incorporate an image of the club’s mascot, which is a big increase over a few years ago, before the cartoon-like Gnate the Gnat replaced the team’s bodybuilder-like mascot, Gnic.

Auker said he also “leans a lot” on Karen Schieber, merchandise manager of the Class A Fort Wayne (Ind.) TinCaps, a sister team under the same ownership group. The TinCaps have made MiLB’s list the past four seasons (and six times overall), and the teams often share best practices.

Top 25 MiLB clubs for merchandise sales in 2012

Albuquerque Isotopes (AAA) 8
Carolina Mudcats (High A) 15
Columbus Clippers (AAA) 3
Corpus Christi Hooks (AA) 8^
Durham Bulls (AAA) 20^
Fort Wayne TinCaps (A) 6
Greensboro Grasshoppers (A) 9
Indianapolis Indians (AAA) 11
Lake Elsinore Storm (High A) 15
Lakewood BlueClaws (A) 12^
Lehigh Valley IronPigs (AAA) 5^
Midland RockHounds (AA) 7
Pawtucket Red Sox (AAA) 15
Pensacola Blue Wahoos (AA) 1^
Portland Sea Dogs (AA) 20^
Reno Aces (AAA) 4^
Richmond Flying Squirrels (AA) 3^
Rochester Red Wings (AAA) 15
Round Rock Express (AAA) 13^
Sacramento River Cats (AAA) 13^
Salt Lake Bees (AAA) 8
Savannah Sand Gnats (A) 1
Toledo Mud Hens (AAA) 18
Trenton Thunder (AA) 19^
Wisconsin Timber Rattlers (A) 15

Note: Teams listed alphabetically. Rankings and team-specific sales data were not available. Teams in bold were not in the top 25 for 2011. Teams that fell out of the top 25 from that 2011 list are the Charleston RiverDogs (A), Lansing Lugnuts (A), Louisville Bats (AAA), Myrtle Beach Pelicans (High A) and Omaha Storm Chasers (AAA).
* Since 1993, the first season MiLB began tracking sales data.
^ Ranked every year of team’s existence and/or every season since 1993, the first season MiLB began tracking sales data.
Source: Minor League Baseball

In Pensacola, merchandise revenue in 2012 for the first-year Blue Wahoos, a Cincinnati Reds’ affiliate, was triple what the team’s internal market data and MiLB-provided research had projected. Donna Kirby, who operates the merchandise business for the club, said the team played it safe with most of last year’s merchandise offerings, opting to go with many basic apparel items that were designed to get the Blue Wahoos’ logos out into the marketplace. The staff conducted surveys of fans after every game, and team officials met regularly to go over what was selling, what wasn’t and why. Such communication allowed them to adjust orders throughout the season and during the offseason.

“Our per caps last year were through the roof and are trending even higher this year,” Kirby said. “We use the per caps to give us a gauge on if we are giving our customers the assortment that they want. In mid-May last year, we went to Nike and asked about Dri-Fit T-shirts that we hadn’t even thought about [but that fans had asked about]. They shipped us four colors with our logo, and we sold out of three of the four colors.”

Kirby said one of the biggest sellers, and surprises, was the sale of foam shark and wahoo hats made by Foamworx in Nova Scotia. “We had to keep reordering and reordering those,” she said.

Five MLB clubs had two affiliates each on the top 25 list: Boston (Pawtucket and Portland), Cleveland (Columbus and Carolina), Oakland (Sacramento and Midland), Philadelphia (Lehigh Valley and Lakewood) and San Diego (Lake Elsinore and Fort Wayne).

Chip Ganassi Racing signed an associate sponsorship with C9 by Champion, a Hanes brand.

The apparel line, which is available at Target, one of Ganassi’s largest sponsors, will become the official outfitter of Chip Ganassi Racing’s IndyCar and NASCAR teams. The multiyear deal is a mix of cash and value-in-kind exercise and at-track apparel.

It is the sixth associate deal Ganassi has signed this year. It also signed agreements with PNC Bank, Siemens, NTT Data, Hulu and Vizio. Collectively, those deals have boosted the race team’s revenue by more than $1 million.

Chip Ganassi Racing President Steve Lauletta credited the team’s ability to include IndyCar and NASCAR assets in its sales packages with driving its uptick in associate sales this year. He pointed to the Hulu and Vizio deals as an example. The brands bought into the idea of having exposure on cars during two of motorsports’ biggest races, the Coca-Cola 600 and Indianapolis 500. The brands will be featured as associate sponsors on Ryan Briscoe’s IndyCar in the Indy 500 and Jamie McMurray’s No. 1 Chevrolet in the Coca-Cola 600. They also will be the primary sponsor on Kyle Larson’s Nationwide Series car that weekend.

“Here’s a weekend of racing that allows us to take a partner and put them across our entire organization,” Lauletta said. “Big brands are seeing the value in that. It helps us when there’s more competition to stand alone and offer things other teams can’t.”

Lauletta said that increasingly the team is trying to emphasize to sponsors that they’re supporting the entire Chip Ganassi Racing program, not just the individual car and driver who they have aligned with for a given race.

“I say all the time that I want McDonald’s [which sponsors McMurray’s No. 1 car] to be as excited when we win an IndyCar race as a NASCAR race,” Lauletta said. “They’re part of our team.”

Earnhardt Ganassi Racing, the team’s NASCAR operation, still has primary spots for at least five races to sell on McMurray’s No. 1 car this year. It was the only team to land a new, multirace, primary sponsor this year when it signed a new agreement with Cessna before the start of the season.

The ATP World Tour at the start of this year authorized players, for the first time, to wear gambling logos on their apparel, an apparent concession to agents who had clamored for more opportunities to commercialize their clients’ success.

More than four months later, no player among the top 150 singles or top 20 doubles competitors is wearing such a logo, according to a study the ATP conducted of the changes its new rules had effected.

A restriction the ATP added to the change, that the gambling company could not take tennis bets, appears to be a big inhibitor.

“The fact that companies who allow betting on tennis are not allowed to have an association with players is probably the biggest deterrent for these deals,” said John Tobias, head of tennis at Lagardère Unlimited. “Players are effective at reaching the tennis [audience] but struggle to have much impact outside this [audience] unless they are at a top-10 ranking level. I’m guessing these betting companies could not afford the cost of a top 10-level player.”

Rafael Nadal does have a deal with online group PokerStars and takes part in their contests. He does not, however, wear the company’s logo, likely because of his deal with Nike. Most Nike contracts prohibit selling space on the company’s apparel.

Other changes the ATP instituted have brought success. Four players, the study found, have sold space on their hats that once was off limits, and 11 have sold space on the front of their shirts. Before this year, only a logo for a player’s apparel or racket company could appear on headwear. A player could sell space on his clothes to only two companies — apart from a logo presence for his apparel company — and those nonmanufacturer logos could appear only on sleeves.