WorldCity Business Magazine

A new rule book

by Mary Dempsey

Both corporations and athletes are becoming more sophisticated about how they approach sports marketing.

Ski phenomenon Bode Miller, a holder of two Olympic gold medals, is the first U.S. skier in 22 years to hold the title of Overall World Cup Champion. He’s also only the second man in history to win races in slalom, giant slalom, Super G and downhill skiing in the same season.

Then why, two years ago, did this super-skier compete in the Men’s Alpine World Cup in Italy with a hat emblazoned “Rent Me?” The message on his Miller’s headgear in Alta Badia was an acknowledgment that he, like athletes in nearly every sport, cannot survive without endorsements.

And the stakes for those endorsements is rising ever higher.

The global sports market is expected to rake in more than $111 billion by 2009, according to a new survey by PricewaterhouseCoopers.

Corporate sponsorship of sports unfolds in different forms, but it has become inseparable from the game, the race or the contest. Sports events sell television rights, uniforms bear the logos of corporations, mobile-phone companies pay for the privilege of posting real-time race results and athletes endorse medicines, services and products. Merchandize carrying the seal of approval from sporting events and athletes is in itself a huge part of the formula. A NASCAR Barbie doll dressed like a car racer single-handedly brought in $50 million in 1998, the year it was introduced.

Lasting connections

“If your company gets an endorsement from a sports celebrity or a venue, you’re creating a relationship, one that’s unique,” Jason Teitler, director of sports marketing at public relations firm Porter Novelli, told participants at a WORLDCITY DHL *Connections *event at the end of September. “You can then go directly to your audience if you’re using the right kind of relationship.”

Teitler joined United States Ski and Snowboard Association COO Bill Gorton, Super Bowl Host Committee President Michael Kelly and French race-car driver Nelson Philippe, who also made presentations at the breakfast conference.

The men acknowledged that sports marketing has been changing, in part to incorporate new technology, including the Internet, blogs and real-time video games. But to alarge degree, the shift has been driven by a desire to tap specific markets that are not paying attention to traditional messages: the television-watchers who use TiVo to skip the commercials, the 20-somethings with no time at all for TV or the computer geeks who get the bulk of their information online.

Satellite radio and TV and mobile phones now figure into marketing rights, as does online advertising. Race-car driver Philippe told the *DHL Connections *audience that he’s even considered deals with sponsors in which he would go online to play X-Box car racing games with fans.

“Technology is having a huge impact on sports and sports marketing. Companies now have a lot more options,” Teitler said. Those options take sports beyond TV commercials. They also take sports marketing across borders and the events, as well as corporate sponsors, are well aware of what that added exposure will bring to revenues. For the first time ever, the National Football League this year played a regular-season game in Mexico City. The 103,467 fans who showed up at Azteca Stadium for that game between the Arizona Cardinals and the San Francisco 49ers marked the largest regular season crowd in NFL history. Toronto and London are reportedly being examined as venues for next season.

The PricewaterhouseCoopers study predicted that the United States will remain the dominant and fastest-growing sports country, accounting for $42.1 billion in sports revenues in 2004 and expected to push that to $57.4 billion by 2009, led by Major League Baseball, the National Football League and the Olympics. But the rest of the world is playing, too.

Latin America’s revenues were projected to rise 6.1 percent, calculated at a compound annual growth rate, to $3 billion. Gate revenues, principally driven by 50 World Cup qualifying matches and 110 Copas Libertadores soccer matches over the next four years, were expected to generate $867 million in sports business in 2009 while another $1.1 billion comes from network rights and expanded advertising. The improvement in Latin America’s economies should boost corporate sponsorship and merchandising in the region, raising $1.1 billion in that category in 2009.

Canada’s sports revenues, meanwhile, were expected to rise 2.8 percent to $878 million. The area encompassing Europe, the Middle East and Africa, which totaled just under $25 billion in 2004, was slated to hit $32.9 billion by 2009, while the Asia Pacific revenues were projected to go up 5.9 percent to $17 billion in the same period.

The “Global Entertainment and Media Outlook: 2005-2009” report takes into consideration gate receipts, broadcast fees, merchandising, sponsorship and other sports-marketing efforts, but not concessions revenue.

The pinnacle of sports marketing is the Super Bowl, the largest single-day event on the planet. Some 155 million people in the United States will watch this year’s football game in person or on television. Globally, as many as 1 billion people may see it, said Michael Kelly, president of the Super Bowl XLI Host Committee overseeing the February 2007 game in Miami.

“Forty years ago, the tickets were $6 and they didn’t sell out. Now the tickets bear an $800 face value and hundreds of people are on the waiting list,” said Kelly. “The Super Bowl has become an unofficial American holiday.”

Kelly was also spearheaded the Super Bowl in Jacksonville last year. He said beyond the fans and spillover revelers, there were 3,800 journalists and photographers credentialed to cover the event. Even more telling was the fact they were not all writing about sports. “There were lifestyle media and celebrity media,” Kelly said.

Beyond the game

The football match has become a springboard for something much bigger than sports. “It’s a status symbol to be associated with the game. There are concerts, retail opportunities, social events during the week of the game,” Kelly said. “The Super Bowl has become large and I think it will only become larger.”

In Jacksonville, the host committee worked with a $22 million budget, which included the construction of five new hotels to accommodate fans. In Miami, the budget is expected to end up around the $8.5 million mark, including game and venue expenses and law enforcement. Some 120,000 out-of-towners are expected to flood South Florida, even though the stadium only holds 72,000.

But size is only one consideration when it comes to sports marketing. Some companies want to use a connection to sports in order to target small but specific groups of consumers. Professional volleyball, for example, is a good sport for catching the 18-to-34-year-olds. “They aren’t watching TV, they’re going on line. This market is otherwise hard to reach,” Teitler said.

Ski and snowboard association COO Gorton says snowboarders are another popular target group, but marketers have to be creative about reaching them. “Most people in the 14-to-34 cohort don’t read papers. They don’t buy magazines. They’re gaming or on the Internet,” he explained. Marketers are using high-tech avenues to reach them.

Baseball has been effective for marketing to families. Minor League baseball, which is one of the fastest growing sports in the United States, is the target for companies seeking an audience of males 45-years-old and up. Rolaids, the antacid brand, launched a “Bat and Win $10,000 Game” sweepstakes in which baseball fans were given a chance to bat against Hall of Fame pitcher Rollie Fingers at 10 Minor League Baseball games. Registration for the event gave Rolaids a database of the male baseball fans they sought, including online contact information.

“More and more the audience is becoming very very smart, very very educated about marketing,” said Teitler at Porter Novelli, which handled the Rolaids campaign.

As consumers become savvier, corporations must become more creative. Since the beginning, companies have sought athletes’ testimonials of their products. But nowadays, unexpected companies are seeking and getting unexpected endorsements. Teitler pointed to pharmaceutical companies as one of the best examples.

Athletes not only are endorsing medications that helped them with injuries, but they’re doing commercials for the diabetes treatments that helped family members. Several sports stars have loaned their names to endorsements for medications combating erectile dysfunction disorder. They include former gridiron Mike Ditka, retired Brazilian soccer great Pele and Baltimore Orioles player Rafael Palmeiro. Ex-quarterback Joe Montana, who used to be a spokesman for high cholesterol treatments, is now doing commercials for the high blood pressure medicine Lotrel, while Olympic skater Dorothy Hamill has endorsed Vioxx for arthritis pain.

Teitler said that personal-message commercials from athletes create a connection with consumers.

Sometimes sports find themselves in a debate over how far they should go for endorsements. Gorton said the 30,000-member snowboard and ski association, the largest such Olympic group, said his organization faces such discussions as it tries to raise the $1-million-per-skier it needs.

“We have been focused over the past nine years on building a truly elite team. Our ladies alpine team is not only going to be the best in the world in 2006, it will probably remain the best in the world over some years,” said Gorton, a retired U.S. general. “My job is to basically throw as much money over the transom to sports, coaches and education as I can raise.”

He added: “We not only sell space at venues, but we sell space on our athletes, on their uniforms. One of the great debates is whether we should expand revenue through affiliation with recreational skiing.”

At least for now, Gorton said, the Olympics association will keep a clear line between its sports and recreational skiing. That said, it does have one merchandising initiative that oversteps the line a bit. The association, which is the governing body for Olympic skiing and snowboarding, generates $1.2 million in annual revenue through the sale of a ski pass. The $6,000 pass ($5,000 of which is tax deductible) looks like an Olympic medal and its owners get reduced rates at ski slopes across the United States.

Gorton acknowledged that marketing can blanket the sports venues with advertisments and turn the U.S. skiers into human billboards, with logos on their clothing and equipment. But he noted that there’s another way of looking at it: “We’re providing an opportunity for young athletes to reach levels of excellence.”