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Volume 21 No. 1

Marketing and Sponsorship

A couple of days after Liberty Media completed its Formula One acquisition in January, CAA Sports’ Paul Danforth met with the racing circuit’s Sean Bratches in London to discuss the sport’s lackluster sponsorship sales.

Under former CEO Bernie Ecclestone, F1 had not been focused on sponsorship sales — part of the reason why the series currently has only five corporate partners: Rolex, Heineken, Emirates, Pirelli and DHL.

CAA Sports wanted to handle that business, and it was not alone. Others, including WME-IMG, beat a path to Bratches’ door, negotiating for the rights to sell F1’s commercial inventory. The reason was obvious: the agencies believe F1’s sales have been so undervalued that any attention would result in wild revenue growth. It’s not so much the cost of F1’s global sponsorship deals, which generally are valued between $20 million and $30 million per year. It’s more the lack of deals in important categories, like telecom and hospitality, that fuels the interest.

After three months of negotiations, F1 this week will announce officially that CAA Sports is its agency of record, responsible for selling the racing circuit’s rights globally. The deal runs through 2018, after which the two sides expect to renew.

Sean Bratches has been building F1’s sponsorship arm since Liberty Media took over.

“The intention is to create a longer-term partnership,” said Bratches, F1’s managing director of commercial operations, said by phone from London. “This deal won’t preclude other organizations from bringing us deals. We’ll do deals on our own, too.”

Because F1 historically was not focused on sponsorship sales, CAA Sports sees a lot of potential upside. Terms of the deal were not disclosed but CAA Sports likely receives a percentage of deals they close on behalf of F1.

“Formula One wasn’t exactly out there talking to corporations all over the world on how they could partner with the sport,” said Danforth, CAA Sports’ global head of sales. “That’s what we are really excited about.”

A former top executive with ESPN, Bratches has been trying to build out F1’s sponsorship group since Liberty Media completed the acquisition on Jan. 23. Bratches hired Murray Barnett from the World Rugby Union to take on the new position of global head of sponsorship and commercial partnerships. Barnett starts April 25. He hired Matthew Roberts from Sky Television to be global head of research. They will be based in London.

Eventually, Bratches expects to open sales offices in London, New York and Singapore. “We inherited a business without a real sponsorship group, so we have to build one,” he said.

The deal is a boon for CAA Sports, which convinced F1 to hire it because of the agency’s work with other companies. CAA Sports has deals with entities such as F1 team Red Bull Racing, the San Francisco 49ers and Golden State Warriors.

CAA Sports also convinced F1 that it can target relevant categories that have been ignored historically by the sport.

“When you look at the world of technology, each of these teams are probably spending more money on technology than any sport in the world, yet there’s not even a technology partner of the sport,” said Danforth, who will lead the sales effort. “We couldn’t be more excited about digging into that space and talking to everyone that we’ve been talking to in Silicon Valley with our 49ers project and our Warriors project. That is one of the places that we’re going to start. … We need to get the right partners in who are going to want to co-promote the sport around the world.”

Danforth believes that CAA Sports and F1 can work together effectively for a long time and help the sport build its sponsorship business.

“We’ve worked with Madison Square Garden for the last eight years, and they have hundreds of sales people,” he said. “We’re used to working alongside some organizations that have very little internal support and others that have robust sales teams.”

Atlanta’s new Mercedes-Benz Stadium is a sponsor away from completing the sale of its founding-level sponsorships.

It has not been as easy to attract top-level sponsors for the remaining category, health care/hospital, as for some of the others that have been filled, although Children’s Healthcare of Atlanta did sign on as title sponsor of Atlanta United FC’s new practice facility in Marietta.

Tim Zulawski, senior vice president and chief commercial officer for AMB Sports & Entertainment, parent company of the Falcons and Atlanta United, said it is possible health care might not be a top-level sponsorship. Even without the health care piece complete, sources said, the new NFL/MLS facility, scheduled to open this summer, is 95 percent of the way to its originally stated goal of $1 billion in contractually obligated revenue. The price tag for founding-level sponsorships ranges from $3 million to $10 million annually.

Other intriguing sponsorship news surrounding the new stadium involves some categories that might have appeared unlikely at first. For example, Harrah’s is buying naming rights for a pair of mezzanine clubs for five years, even though the closest Harrah’s casinos are about 160 miles away, in Cherokee, N.C., and Wetumpka, Ala.

Malt beverages has been divided among Anheuser-Busch, MillerCoors and Heineken. There are also two winemakers in as sponsors. The new stadium has a handful of distillers and brands as sponsors, including Bacardi.
Lunazul and Avion tequilas, along with Absolut and Deep Eddy vodka, will split team rights and have branded bars, along with Martell cognacs, a whiskey, and a rum.

“Spirits haven’t been a major revenue stream for MLS or NFL, but we will total a couple of million bucks a year for that category over the next five years,” Zulawski said.

Founding-level sponsors in the fold so far include Mercedes-Benz, AT&T, American Family Insurance, SunTrust, NCR, Coca-Cola, Equifax, Novellis, Home Depot and IBM.

Anheuser-Busch, the PGA Tour’s longest-standing sponsor, has signed a new four-year deal with the tour that for the first time will include customized Michelob Ultra cans bearing the tour’s logo to be sold at retail.

Specific financial terms of the renewal were not disclosed, but the seven-figure annual agreement calls for the Michelob Ultra brand to be the exclusive beer of the tour, with increased activation at the tournament level to include the addition of five new Ultra Club hospitality venues at still-to-be-determined events each year. Last year, the Ultra Club hospitality venue was limited to The Players Championship event in Ponte Vedra, Fla.

Anheuser-Busch also will activate around 45 various PGA Tour, Champions Tour and Tour events, including an expansion of its “Build-a-Bar” general concessions program that features a 40-foot Ultra branded bar at select events.

But it’s the rollout of the tour-branded Michelob Ultra cans at retail in July that marks the biggest shift in the longtime partnership. It follows a similar strategy currently used by Anheuser-Busch’s Bud Light brand in the NFL and MLB.

“It’s quite a dramatic change from the past,” Eelco van der Noll, vice president of experiential marketing at Anheuser-Busch, said of the new PGA Tour deal. “In the past, it was more of a hospitality play, but what has become more important this year is the consumer element. It is all about customization and personalization.”

The new deal runs through 2020. Anheuser-Busch has been an official marketing partner of the tour since 1994, with the focus on the Ultra brand beginning in 2002.

WME-IMG is Anheuser-Busch’s agency of record, but the deal was negotiated directly between the company and the tour.

The new tournament sites and admission cost for the various Ultra Club hospitality venues have not been finalized, though The Players Club again this year will be included. Ultra also will activate around this year’s Presidents Cup to be held in September at Liberty National in New Jersey.

Other traditional sponsorship elements including a tour-wide media buy are included in the deal. Anheuser-Busch’s O’Doul’s brand will continue as the official non-alcohol brew of the tour, but it’s the Ultra brand’s retail activation that represents a new focus among the tour renewal.

“We like to see the brands activate at retail; it is important to us,” said Brian Oliver, senior vice president of sponsorship and partnership for the tour. “Anheuser-Busch has been a great partner for a long time, and the way the brand is positioned in the market aligns quite well with our fans.”

Anheuser-Busch this week is announcing a national loyalty program around Busch beer and will leverage the value brand’s NASCAR assets to get the message out.

The program — Busch Bucks — is part of the beermaker’s push to revive the Busch brand since it switched the brand it promotes in NASCAR from Budweiser at the beginning of last year. NASCAR makes up a significant segment of Busch’s total marketing.

A-B will launch, where consumers who purchase Busch products can snap a picture of their receipt, the value of which will determine how many bucks the person gets. The consumer will then be eligible to earn prizes such as T-shirts, coolers, tents and signed memorabilia from Kevin Harvick, driver of Stewart-Haas Racing’s No. 4 Ford, which Busch sponsors.

A-B tested a pilot program for Busch Bucks in a select retail locations last year, but this move marks its full launch.

“The Busch consumer is unique in how loyal they are as people in general, as well as with their beverage choice, so we wanted to reciprocate that and thank them for their loyalty to us by offering up this program that turns their purchases into things they can take home and show off,” said Chelsea Phillips, A-B’s senior director of U.S. value brands.

Busch will tie the program into NASCAR’s Monster Energy All-Star Race at Charlotte Motor Speedway in May. At the race, Harvick will run a dollar bills-covered paint scheme promoting the program, and the brand will hold a contest where fans who enroll at by May 6 get a chance to win $1 million if Harvick wins the race. The potential winner will be invited to the race to watch trackside.

A-B will promote the contest both digitally and at the upcoming spring NASCAR national series race weekends at Richmond and Kansas. Busch will also promote the full Busch Bucks program at retail.

Phillips said the push to reinvigorate the Busch brand in NASCAR “has worked really well for us as a platform in general,” and produced upticks in market share.

Nike has signed some top NFL rookies in preparation for the April 27 draft, including Clemson quarterback Deshaun Watson.

An obvious first-round selection, some scouts have pegged dual-threat Watson as the top QB prospect in the draft. Insiders said Nike had the 21-year-old Georgia native tabbed as a “must-have” endorser, based on a combination of his athletic ability and personality.

Deshaun Watson has joined the Nike ranks.
Other rookies new to the Nike roster are Florida State’s Dalvin Cook, vying with LSU’s Leonard Fournette as the top running back available in this year’s draft. Also signed to a Nike endorsement deal was Christian McCaffrey of Stanford, another highly rated running back. All those rookies were added to the preponderance of NFL players under contract to Nike (more than of 70 percent), which has also held NFL jersey rights since 2012.

In a twist of fate, Nike signed John Ross, the Washington Huskies wide receiver who set an NFL record 40-yard dash time of 4.22 seconds at this year’s NFL combine. As a marketing ploy, before the combine, Adidas promised to give an island or $1 million to anyone breaking the record of 4.24 seconds, set by Chris Johnson at the combine in 2008. Since Ross wore Nike cleats while setting the record, Adidas backed out.

Last year, Nike signed more than 15 top rookies, including the first two players selected: California’s Jared Goff (Los Angeles Rams) and North Dakota State University’s Carson Wentz (Philadelphia Eagles).

The NFL draft is set for April 27 in Philadelphia, where it’s being held for the first time since 1960.

Call it “next year’s model.” Sponsorship industry sales veteran Jeff Marks is opening Innovative Partnerships Group in Los Angeles. Even with years selling naming rights and other top-shelf sponsorships for the likes of the Atlanta Falcons, the Pro Football Hall of Fame and the Oakland-Alameda County Coliseum Authority for its former nameplate, Marks insists he’s not opening another sales agency.

Given that the agency’s principal backer is billionaire Stuart Lichter, founder of Industrial Realty Group, one of the largest property owners in the U.S., it’s clear that IPG will have access to capital. So the new agency’s focus is altogether different: It’s about getting in on ground-floor development opportunities that eventually may lead to sponsorship sales but start with far more expansive concepts like development.

Lichter is the master developer of the Hall of Fame Village under construction in Canton, Ohio. Along those lines, Marks is positioning the agency to work with owners and developers at the outset of projects like the kind of entertainment districts for which sports venues have become anchor tenants. Of course, that eventually leads to traditional income opportunities like naming rights and other marketing and sponsorship inventory.

The agency will open with the Pro Football HOF as a client.
“We’ll be more like investment bankers and come in as part of the capital stack as business development consultants for things like strategy of public financing, and public/private partnerships, along the McKinsey/Booz Allen model,” Marks said. “Expertise, plus we’ll put our own skin in the game.”

IPG also will offer capabilities in valuation and analytics; intellectual property and asset creation; and traditional agency creative capabilities.

The agency will be based in Westwood and will open with the Pro Football Hall of Fame as a client, but Marks said he has a handful of clients on board, including traditional sports and entertainment properties. Offices in New York City and in the Midwest are expected soon.

With IRG’s reach across the real estate industry, “We’ll probably go into that business and unlock a lot of nontraditional properties there within sports and entertainment development,” Marks added.

IPG (not to be confused with the holding company by the same acronym) opens with six people, including Marks as CEO and former Pepsi and eBay marketer (and established startup vet) Jim Davis as COO, along with former Nike and VF marketer Renu Mathias as CMO.

> CATCHING THE NEXT WAVE: Mark Noonan is leaving the World Surf League, where he’s been global chief revenue officer since 2014. Noonan said his departure was “nothing but positive,” of his own accord, and that he will be moving on by the end of June at the latest. Even before then, Noonan said, the WSL will close what he called the “largest (sponsorship) deal in surfing history.”

Noonan’s exit follows that of former CEO Paul Speaker, who left the surfing circuit in January after a five-year run.

Noonan, a former MLS marketer, said he’s looking at opportunities inside and outside of soccer.

Meanwhile, we’re told that billionaire WSL owner Dirk Ziff is seeking a new CEO, CRO and CMO, or possibly some combination thereof.

A job description for the vacant CEO slot says the ideal candidate should have “a surfing lifestyle … or at least own a surfboard.”

The same document lists WSL revenue from sponsorship and advertising at $50 million annually and notes that the WSL “historically has been run more like a hobby, but Dirk is positioning the business for rapid growth over the next two to three years, including additional capital investment. … Growth will come primarily from media rights, e-commerce, premium subscription content, event ticket sales and big ticket surfing wave pools (effectively licensing recently commercialized wave pool technology at $25 million per pool) targeted at billionaires and countries competing in the Olympics in 2020 in surfing.”

Terry Lefton can be reached at