The housing market continues to crumble, the stock markets are reeling and a recession seems imminent, if not already extant. Yet in 2008, one category looks destined to flourish: sports sponsorships.
The sports sponsorship business is poised to become an 11-figure industry – more than $11.6 billion will be spent in 2008 by North American companies, a 16 percent jump from last year, according to the IEG Sponsorship Report. Though the majority of money will be targeted at U.S. and Canadian leagues and teams, the Beijing Olympics also is driving the figure higher. Some companies, such as Anheuser-Busch and Pepsi, will shell out more than $300 million apiece on sports sponsorships this year.
”Corporate sponsors have a wealth of different opportunities. But when the budgets get tighter, they stay with sports sponsorships because they’re familiar and comfortable with them,” said Jim Andrews, editorial director of the IEG Sponsorship Report.
But as the industry booms, teams and leagues are increasingly selling everything but the owner’s hairpiece to sponsors, which may cheapen the value of sponsorships and could mean a paucity of enticing choices down the line.
One might think it impossible to lure a sponsor for a team’s offseason, but not only did the New Jersey Nets persuade Chicago-based Wrigley to sign up for that category, the gum concern also sponsored the team’s most recent preseason. Franchises are getting more than $1 million by selling the right to sponsor their entire season; for instance, Cub Cadet, a tractor company, sponsored the Cleveland Cavaliers’ campaign in 2005-2006.
League trophies are becoming billboards for corporate adornment. Just this month, the NBA announced that Korean automaker Kia would sponsor four awards, including the Most Valuable Player honor, in “The NBA Performance Awards Presented by Kia.”
State Farm spends millions of dollars each year to sponsor a one-day exhibition that’s not even a game – the Home Run Derby during the All-Star Game weekend. For the past decade, starting with hockey's Phoenix Coyotes, teams have sold naming rights to their practice facilities. Entrance gates to stadiums are offered to the top bidder. College bowl games are named after credit unions, car care companies and colognes.
According to the Boston Herald, the Boston Red Sox will wear a patch paid for by EMC Corp., a technology company, on the sleeve of their iconic uniform during their opening games in Japan this year. In the Netherlands, even a funeral insurance company has gotten into the sponsorship game by tying its name to the Dutch women’s volleyball team, a seemingly incongruous move unless spikes are a little more deadly across the pond.
During games, with everything from pitching changes to halftimes attracting corporate interest, companies risk their message being lost amid the clutter.
”Some teams are pushing it, with every non-game minute being sponsored,” Andrews said. “How do you expect a Chicago Bulls’ or Blackhawks’ fan leaving the United Center to retain anything about the promotions when there are so many going on?”
Considering the drawbacks inherent in sports sponsorships, their continued growth is somewhat amazing. With all the problems that erupt – steroid accusations, on-court brawls – a sponsor never knows when its message will be missed or linked to bad behavior. Such worries are rare for a company that spends its sponsorship money on an an art exhibition. Those who sign up to present a season have no idea if they’ll end up backing a last-place team with dwindling crowds and falling TV ratings. Not only that, it is hard to measure the return on the billions of dollars invested in the industry.
One of the last big-money frontiers in U.S. sports is sponsoring an entire league as is done in England, where top-tier football (soccer) is played in the Barclays Premier League. Though they have welcomed sponsors in many categories, none of the four major U.S. sports leagues – MLB, NFL, NBA or NHL – is likely to bite on similar offers. Why not? For one thing, the integrity of leagues could suffer. In any case, their brands are so strong there’s no point begging for money in the style of, say, roller derby.
Regardless, teams and leagues will be rolling in cash from Fortune 500 companies and others this year – even if owners keep their toupees free of sponsorship.
Last, but not least …
The business model of the National Football League has often been called socialistic. An example is the lack of incentive for owners to make the playoffs.
The NFL, not the teams, keeps ticket revenue during the playoffs (home teams receive two-thirds of the gate during the season). At a 73,000-seat facility such as Lambeau Field, where the average ticket price for the New York Giants’ game this past Sunday was in the $100 range, that’s about $5 million the Packers forfeited because the contest wasn’t played in October. According to Dan Masonson, a league spokesman, the NFL does compensate teams for select playoff expenses such as player shares, taking some of the sting away.
Speaking of players, come the playoffs, New England quarterback Tom Brady is seen as equal to, say, team punter Chris Hanson. Unlike the regular season, each player earns the same amount per playoff game, win or lose, whether he is a record-breaking running back or a second-string safety. That does change, however, during the Super Bowl. Winning players will take home $78,000 this year, while losers will have to make do with a $40,000 paycheck.