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Volume 20 No. 41

Marketing and Sponsorship

Editor’s note: This story is revised from the print edition.

Among its local sports sponsorships, Modelo Especial has a deal with the Chicago White Sox that includes the Casa Modelo bar at Guaranteed Rate Field.
GETTY IMAGES
Rapidly growing Mexican import Modelo Especial will replace 10-year incumbent Bud Light as the official beer of the UFC beginning in January, an audacious, eight-figure plunge for a brand that announced its first U.S. sports sponsorship less than a year ago and ran its first national English-language TV campaign only 18 months ago.

Executives from the UFC and Modelo would not reveal specific financial terms of the multiyear deal. But an industry insider said the rights fee, which grants Modelo only the U.S. and allows the UFC to do individual deals in territories such as Canada, the UK and Brazil, is in the $10 million range annually that Anheuser-Busch InBev paid in its prior deal for Bud Light. Two other industry sources pegged the deal at slightly less.

UFC executives would not confirm that but said they are confident that selling the category country by country — and opening up a spirits category that was blocked by the ABI deal — not only will generate more revenue than a global deal, but also will deliver more in-market promotion for their events and fighters.

The switch also moves the UFC to a brand that will make the sport its focus as it strives for greater general market awareness.

Modelo Especial ranks as the fastest-growing beer in the U.S. over the last five years, with double-digit annual growth in 32 of 35 years dating back to its stateside introduction in 1982. It is the No. 2-selling import behind only sister brand Corona, ranking seventh among all beers in U.S. sales and ninth in volume. It also is the top-selling beer in Los Angeles.

First Look podcast, with Modelo/UFC discussion beginning at the 9:45 mark:

Modelo executives see the national sponsorship as a way to amplify that story. Their other sports deals — sponsorship of the Brooklyn Nets and Barclays Center, the Chicago White Sox, Los Angeles Angels and CONCACAF — are either locally driven or smaller in scope.

“It’s a really exciting time right now for Modelo, but the awareness of that growth is not well known,” said Ann Legan, vice president of brand marketing for Modelo brands. “We wanted to identify partners that could really take us to the next level, and not only align with our values but give us the exposure that this brand really deserves based on where we are right now.”

The turnover invites a narrative that speaks to both the growth of mixed martial arts and the seismically shifting landscape in the beer business.

The White Sox deal includes the Casa Modelo bar at Guaranteed Rate Field.
Photo by: CONSTELLATION BRANDS
When the UFC signed on with A-B in 2008, it trumpeted the deal as evidence of its arrival as a viable, credible sports property, with UFC President Dana White hailing the moment as “historic.” Tony Ponturo, A-B’s sports marketing chief at the time, gushed about the UFC’s surging popularity among 21- to 34-year-old males who Bud Light desperately wanted to reach.

A decade later, based upon those parameters, both would call the marriage a success. Yet when ABI began renewal conversations with the UFC earlier this year, it explained that while it was pleased with the sponsorship’s performance, it would not return at the same terms. The UFC opted to look elsewhere.

It soon found a fast-growing brand in search of an established national property that could amplify its story, a situation that sounded strikingly similar to the one the UFC faced a decade ago, when as a fringe upstart it turned to sports stalwart A-B.

“Timing is everything, they say,” said UFC Chief Operating Officer Lawrence Epstein. “We had a 10-year relationship with A-B and we love those guys. They were a great partner; the right partner at the right time. I believe Modelo, as we sit here today in a very different place, is absolutely the right partner at the right time.”

The category opened in the second quarter of this year, when ABI declined to renew at terms similar to those of that last deal. Not long after that, sponsorship executives from UFC owner WME-IMG presented the package to Modelo parent Constellation Brands, whose beer portfolio includes longtime boxing sponsor Corona. It was a logical path for Andrew Judelson, WME-IMG executive vice president of sales and marketing, who at that point was in the process of landing Corona as the official import for the University of Texas, an IMG College client.

When Constellation reviewed the positioning of its brands, it saw the greatest potential in Modelo, which in recent years has billed itself as the beer with the “fighting spirit,” crafting creative around stories of people fighting for their beliefs or to achieve goals. With about 50 percent of its sales coming from Hispanic consumers, it sees millennial multicultural males as a growth target. Just as Modelo sees an opportunity with the UFC fan base, the UFC hopes to tap into Modelo’s strong position among Hispanics, who make up 20 percent of UFC fans, according to Nielsen Scarborough.

“When we really thought through what brand would be the right fit, I quickly raised my hand and said I want to talk to those guys,” Legan said. “It goes beyond the literal fighting. It really does speak to the values the UFC holds up and the values that Modelo holds true and how they translate to our drinkers and the UFC fans. It really is about activating to our consumer’s passion points.

“We felt like when we looked to the future and thought about where we wanted to source growth from, the UFC was really a perfect fit.”

While the deal marks a striking amplification for Modelo, the move into combat sports is a familiar tactic for its parent, Victor, N.Y.-based Constellation Brands, and its Chicago-based import beer marketing division, which has longtime boxing sponsor Corona as the jewel of its portfolio.

Though Legan said Modelo intends to put its own fingerprints on the sponsorship, it is certain to benefit from Corona’s familiarity with boxing, a touring sport that, like MMA, requires sponsors to adapt to schedules that evolve as the calendar year unfolds and airs its bigger events on pay-per view.

THE MAKEUP OF MODELO

Modelo sponsors the Nets / Barclays Center.
Photo by: CONSTELLATION BRANDS
U.S. sales of Modelo Especial have risen for five consecutive years, according to Beer Marketer’s Insights.
2016 U.S. sales: 6.13 million barrels, up 18.4 percent from 2015. At the end of 2016, the brand had a 2.8 percent market share and was the ninth-best-selling beer brand, by volume, in the U.S.
Modelo spent $26.6 million to advertise during televised sports programming from Oct. 4, 2016, through Oct. 3, 2017, twice as much as it spent during the previous 12-month period, according to SportsBusiness Journal’s analysis of iSpot.tv data. Nearly one-third of the brand’s overall TV ad spend in 2016 was earmarked specifically for sports, the same ratio that it was in 2015.
Major sports properties, which include team sponsorship and naming rights to the Casa Modelo bar at each club’s home venue: Anaheim Angels, Brooklyn Nets, Chicago White Sox, CONCACAF
Modelo’s parent company, Victor, N.Y.-based Constellation Brands, also currently activates its Corona and/or Pacifico brands with more than a dozen major league clubs and the University of Texas athletic department.
Promotions tied to pay-per-views have been strong sales drivers for Corona and competitor Tecate, both at retail and in bars and restaurants.

“It allows us to go into bars that we may not have a presence in, where we know they’ve purchased pay-per-views in the past and they plan to in the future, and to go in and … form relationships with these accounts to drive further [Modelo] distribution,” Legan said. “And it works both ways. Modelo may be in distribution [with bars] that haven’t purchased fights in the past.”

A decade ago, the UFC counted the brand rub-off that it got from Bud Light as the most valuable aspect of the sponsorship, followed by the rights fee and activation. Today, Epstein said he’d flop those three, placing activation at the top.

“One of the things that makes this deal exciting for us is Modelo’s focus on the UFC,” Epstein said. “They’ve got two properties they’re going to be worried about now. It’s going to be soccer and it’s going to be the UFC. That’s it. It’s not baseball. It’s not football. It’s not individual teams or the thousand other focuses that it could be.

“Bud and Bud Light, being this massive, massive brand, [are] always doing something. They’ve always got tons and tons of mouths to feed and that means we have to fight to get some of that activation. We’re with a partner now that is very focused on two properties. And we’re really excited about leveraging some of that focus.”

Epstein said the UFC also is bullish about its prospects to land beer deals in other markets, not only because they will add to the total rights take, but also because of the promotional support that different brewers can provide in varied markets.

“We’re going to lock arms [with Modelo] and be an important player in the U.S. market,” Epstein said. “But when you go to other markets around the world, we still have the flexibility to partner with local brands.

“I don’t care what market you go to, in virtually every country in the world there are really big, powerful beer brands. And those brands have a presence across sports and entertainment properties in those particular countries. Being able to tap into that in Europe, or in any market we’re trying to grow around the world, is really, really important.”


The NHL, NBC Sports and BAMTech Media are bundling a package of assets and bringing it to market jointly in an effort to sell the NHL’s wireless carrier category in the U.S.

The package will consist of league marketing assets made available to any of its top-tier U.S. partners, such as exposure at events like the Winter Classic and All-Star Game, but also an on-air presence during the nearly 200 regular-season and postseason games that will both air nationally across NBC and NBCSN and be streamed by the network, as well as opportunities through BAMTech Media’s streaming of more than 1,000 league games with NHL.TV, and its operation of NHL Network, NHL.com and all 31 team sites. It would also include exclusive content opportunities for the wireless carrier, such as game content and originally produced content.

“We’ve built an all-in, three-party opportunity for the category. ... We think this is a unique opportunity for someone to come in and own the sport.”
Keith Wachtel
Chief revenue officer, NHL
Photo by: GETTY IMAGES
The potential deal would further expand rights provided in its last deal in the category, which was with Verizon and ended after the 2013-14 season. NHL Chief Revenue Officer Keith Wachtel said the league initially sought a renewal with Verizon before Verizon shifted its focus to its then-new NFL partnership, and spent much of the following year in the market for a new partner. However, as talks with MLBAM began in 2015, Wachtel said, the league saw the potential to create a package that could offer more value. After discussing the idea for the last four or five months, the three parties are now bringing it to market.

“We’ve built an all-in, three-party opportunity for the category that offers a unique and compelling advantage. We think this is a unique opportunity for someone to come in and own the sport,” Wachtel said.

Wachtel said that similar to the positions that Verizon, AT&T and DirecTV have built with the NFL, a partner would have a similar opportunity with the NHL. He noted that it may appeal to companies looking to fortify their positions in sports marketing, or to further help put a carrier on the map, such as Cricket Wireless.

Wachtel said the league wants its content to be distributed as broadly as possible, so any potential deal would not restrict live game content.

All three parties declined to speculate on the size of a potential deal. The NHL’s deal with Verizon was thought to be worth an eight-figure sum annually when considering total commitments to the league and clubs, as well as planned media spending and other activations.

Dan Lovinger, NBC Sports executive vice president of advertising sales, said he thought packaging the assets would lead to a deal larger than if a league partner tried to do each deal separately.

“One of the things I hear consistently from a lot of marketers is that they don’t always marry media to marketing, and they wish they could, and that they could do it better,” Lovinger said. “The biggest hook for all of us in this is that we’re lined up in sync, and are able to deliver a much greater ROI for a marketer that doesn’t have any waste of motion.”

Whitney Howard, senior vice president and general manager of hockey at BAMTech Media, said that the alignment of the three organizations would allow a carrier “to take advantage of the accelerating growth we’re seeing across NHL’s digital properties and reach highly engaged, passionate fan bases across the league.”

Howard noted that it would also provide a partner with the opportunity to have persistent branding across all of the NHL’s digital properties and NHL Network, which share cross-platform original content.

Both Wachtel and Lovinger said there is no timetable to complete a deal in the category, but think it is possible one is done for this season.

“The notion of a traditional sponsorship in most categories has gone by the wayside,” Wachtel said. “This is really about media, live content and all the other forms of content we’re able to create.”

The commercial arm of USA Rugby is using its role selling the 2018 Rugby World Cup Sevens tournament to bolster its own domestic sponsorship portfolio.

Rugby International Marketing has secured Chicago-based Underwriters Laboratories as a global partner of the event, set for July 20-22 at San Francisco’s AT&T Park — along with a multimillion-dollar, three-and-a-half-year deal to become the back-of-the-jersey sponsor to Team USA.

Underwriters, a 120-year-old safety and compliance company now branded as UL, will join AIG and Adidas in the middle tier of USA Rugby sponsors underneath presenting partner Emirates.

Last week, RIM signed a deal with Australian wine brand Blass to sponsor both the 40-team tournament and join Team USA as a third-tier official partner through 2019.

Rugby is growing rapidly in the U.S., but the sport can still only offer potential sponsors a niche platform with little television exposure and no consistent league presence. But for the World Cup Sevens, global governing body World Rugby turns over the business side to local organizers. That gives the U.S. new opportunities, said David Sternberg, CEO of Rugby International Marketing, founded in 2015 by USA Rugby and minority investors England Rugby Football Union, CSM Sport & Entertainment and Harlequins FC.

“It’s a challenge, and we can’t rely on anybody else to deliver it, but it does give us the opportunity to package the World Cup with the longer-term opportunity with USA Rugby,” Sternberg said. “As we found in the case of UL and Blass, and some of the others, that’s been a very compelling opportunity and helped us get in the door with brands that might not have otherwise looked at us.”

UL is title sponsor of the UL International Crown, the new biennial women’s team golf event, and had used some rugby sevens events for corporate hospitality events before, said sports marketing manager Mike Galeski. But the rugby partnership is a major expansion of its efforts to familiarize modern consumers with its brand, which used to be better known for its role ensuring that household appliances are safe. It has offices in 40 countries.

Of rugby, Galeski said: “There’s a lot of international interest — it’s being played all over the world, and I feel like we’re getting in at the right time with USA Rugby, as it’s growing. Yes, it’s currently a small base but it’s growing in double digits.”

The total operating budget for the sevens tournament is about $10 million. The premier and present-level sponsorships of USA Rugby are “multimillion-dollar” deals over their lifetime, but Sternberg declined to share other financial details.

Other sponsors of the World Cup Sevens include: PrimeSport, the official ticket reseller; San Francisco Travel; and AIG, which expanded upon its USA Rugby partnership to be a global partner of the tournament.

AEG is the official licensing and merchandise partner.


AXS has developed a 360-degree, three-dimensional seat visualization tool called FanSight that it believes will further the growth of mobile-based ticket purchasing.

The new product, nearly a year in development, offers full surrounding views from each seat in a venue and was designed foremost for use on mobile devices, which now represent roughly two-thirds of AXS’s total traffic to its digital platforms. FanSight also will be integrated directly into a newly rebuilt AXS ticket purchase process.

The Los Angeles Clippers are the first AXS client to deploy FanSight for its single-game ticket sales, with other teams and venues serviced by AXS expected to adopt the technology in the coming weeks and into early 2018.

The new tool will let ticket buyers see a virtual view from each seat for sale in a venue.
Photo by: AXS
FanSight joins several other seat visualization technologies across ticketing such as IOMedia’s Virtual Venue, which holds a large-scale partnership with AXS rival Ticketmaster. Many of the visualization tools, however, have been designed primarily for desktop use and often require substantial processing power.

“One of the big breakthroughs for me is the inclusion of this right into that purchase flow,” said Bryan Perez, AXS chief executive. “This is really about reimagining how fans buy tickets on mobile and giving them a lot more information and choice.”

The detailed digital renderings for FanSight were developed with the aid of Barcelona-based global technology company MMC, which operates its 3D Digital Venue solution and also counts Manchester City and Etihad Stadium, and T-Mobile Arena, among its base of clients.

For the Clippers, the addition of FanSight to its ticketing comes amid other seating changes for the team, including the recent development of eight new “Star Courtside” seats at Staples Center costing $175,000 each per season.

“The Clippers are focused on enhancing our fan experience, and purchasing a ticket is one of the first touchpoints a fan may have with our brand,” said Gillian Zucker, Clippers president of business operations.


Barror
Continuing to expand its third-party sales capabilities, Excel Sports Management has hired veteran property salesman Sean Barror away from WME-IMG. Barror starts this week as Excel’s new head of property sales.

Barror will report to Emilio Collins, who joined Excel from the NBA in April as chief business officer.

“Sean is a veteran who has worked every side of this business, so we’re just happy to have him as we look to grow,” Collins said.

Barror, who will be based in New York City, has worked at WME-IMG for the past two years as senior vice president of global partnerships, naming rights and sponsorships. In that role, he helped sell NBA advertising patches for the Boston Celtics, Los Angeles Lakers and Atlanta Hawks. Intriguing enough since one of the lead pieces of inventory he’ll be selling for Excel is the Charlotte Hornets jersey patch, for which, sources say, the team wants about $8 million a year.

“I’ve known many of the people at Excel for a while and I like their entrepreneurial nature,” said Barror, who’s also sold for Madison Square Garden, the Celtics and was chief commercial officer for Italian soccer club AS Roma.