““Show me the Money!”: Sport, Show me the Money!”: Sport, Leisure, and Tourism Leisure, and Tourism

MarketingMarketing

MKTG.4320MKTG.4320

Fall 2008Fall 2008

©©Detlev Zwick, Ph.D.Detlev Zwick, Ph.D.

Attention EconomyAttention Economy

The Beckham EffectThe Beckham Effect

The CostThe Cost

$250m for 10 years$250m for 10 years Base salary of $6.5mBase salary of $6.5m Cut on merchandise, gate receipts, Cut on merchandise, gate receipts,

sponsorship revenuessponsorship revenues

The Payback?The Payback?

The Gate:The Gate:

General admission rises from $15 to $25General admission rises from $15 to $25

Sideline seats from $50 to $75Sideline seats from $50 to $75

Sideline Season tickets went for $4000 a Sideline Season tickets went for $4000 a piece and sold out mere 3 weeks after the piece and sold out mere 3 weeks after the announcementsannouncements

Ticket revenue increase 2006-2007: from Ticket revenue increase 2006-2007: from 6 to 10 million6 to 10 million

The Sponsorship Ticket:The Sponsorship Ticket:

From $3.5m to about $9m a year.From $3.5m to about $9m a year.

Herbalife with a $20m/5 year deal for Herbalife with a $20m/5 year deal for uniformuniform

The Merchandise Ticket:The Merchandise Ticket:

Even before playing in a single Major Soccer Even before playing in a single Major Soccer League game, more than 300,000 official LA League game, more than 300,000 official LA Galaxy jerseys were sold. At $79.99 a pop, Galaxy jerseys were sold. At $79.99 a pop, those initial sales totaled almost $24 million. those initial sales totaled almost $24 million.

Beckham’s track record for merchandise:Beckham’s track record for merchandise:During the four years that Beckham played for During the four years that Beckham played for Real Madrid, the Spanish club more than doubled Real Madrid, the Spanish club more than doubled soccer merchandise sales to US$600 million. soccer merchandise sales to US$600 million. One million Beckham-Real Madrid shirts were sold One million Beckham-Real Madrid shirts were sold within the first 6 months of Beckham’s arrival within the first 6 months of Beckham’s arrival (Source: Forbes). (Source: Forbes).

In sum:In sum:

LA Galaxy generated about $23m in LA Galaxy generated about $23m in additional revenue from the Beckham additional revenue from the Beckham effect. A good deal despite a $6.5m effect. A good deal despite a $6.5m annual salary!annual salary!

How do you explain the Beckham How do you explain the Beckham Economics?Economics?

The Olympics Games:The Olympics Games:

Center of AttentionCenter of Attention

Who are the ‘Top 12 Olympic Who are the ‘Top 12 Olympic Sponsors’ (“Olympic Partners”)?Sponsors’ (“Olympic Partners”)?Atos OriginAtos OriginCoca-ColaCoca-ColaGeneral ElectricGeneral ElectricManulifeManulifeJohnson & JohnsonJohnson & JohnsonKodakKodakLenovoLenovoMcDonald’sMcDonald’sOmega (Swatch Group)Omega (Swatch Group)PanasonicPanasonicSamsungSamsungVisa Visa

$70 million for Coke $70 million for Coke

About $5 to $15 million sponsoring the About $5 to $15 million sponsoring the torch relaytorch relay

All together about $900 million.All together about $900 million.

Sports Sponsorship: Sports Sponsorship: Perspectives, Motives, Perspectives, Motives,

ObjectivesObjectives

What is Sports Sponsorship?What is Sports Sponsorship?

Def.: SponsorshipDef.: Sponsorship When a company pays a cash and/or in-kind fee to a property When a company pays a cash and/or in-kind fee to a property

in return for access to the exploitable commercial potential in return for access to the exploitable commercial potential associated with that propertyassociated with that property

Part of Marketing Part of Marketing through through Sport PropertiesSport Properties

Part of communication strategy Part of communication strategy throughthrough Sport Properties Sport Properties Globally: $38 billion spent on corporate sport marketingGlobally: $38 billion spent on corporate sport marketing 12% Projected Increase in 2007(North American Companies)12% Projected Increase in 2007(North American Companies)

Outpacing the estimated <4% growth in sales promotion and Outpacing the estimated <4% growth in sales promotion and advertising advertising

Why Sponsorship?Why Sponsorship?

Seller Perspective Seller Perspective Secure broadcast and advertising exposureSecure broadcast and advertising exposure Creatively bundle tickets and advertising Creatively bundle tickets and advertising Enhanced patron experiences Enhanced patron experiences New source of revenue to offset rising costsNew source of revenue to offset rising costs

Pepsi Ten Buck Tuesdays

Why Sponsorship?Why Sponsorship?

Buyer perspectiveBuyer perspective Unique positioning opportunity Unique positioning opportunity Cutting through the clutterCutting through the clutter Emotional connection with consumersEmotional connection with consumers

RelevantRelevant

ExperientialExperiential Sport appeals to diverse consumer groupsSport appeals to diverse consumer groups

Business-to-Consumer (B-2-C)Business-to-Consumer (B-2-C)

Business-to-Business (B-2-B)Business-to-Business (B-2-B)

Optimally, sponsorship represents a promotion & Optimally, sponsorship represents a promotion & sales solution!sales solution!

Sponsorship Philosophy & Sponsorship Philosophy & PolicyPolicy

Results OrientationResults Orientation Return-on-investment (ROI)Return-on-investment (ROI) Return-on-objective (ROO)Return-on-objective (ROO)

Servicing Servicing Less is MoreLess is More ActivationActivation

Embedded activationEmbedded activation

Added activationAdded activation “…“…ROI will almost always go up when the property focuses on activation ROI will almost always go up when the property focuses on activation

because activation is the substance of the relationship.”because activation is the substance of the relationship.” Tony Shiller, Paragon Tony Shiller, Paragon MarketingMarketing

Most Important Sponsorship Most Important Sponsorship ObjectivesObjectives

(IEG Sponsor Report, March 12,(IEG Sponsor Report, March 12, 2007)2007)

                                                                                                                                                                                    

The FedEx Sponsorship Portfolio The FedEx Sponsorship Portfolio ModelModel

LeadershipR

evenu

eH

omet

own

Key Targets

Hospitality

Consists of five distinct categories of corporate marketing objectives

Creatively Financing Creatively Financing SponsorshipSponsorship

Multiple year agreements w/escalating rights fees Multiple year agreements w/escalating rights fees Discount fee in exchange for promotional Discount fee in exchange for promotional

commitment commitment Co-op arrangement w/vendor, supplier, or brand Co-op arrangement w/vendor, supplier, or brand Referral rebates Referral rebates

Back

Sponsorship ActivationSponsorship Activation

Generating Media Traffic & AwarenessGenerating Media Traffic & AwarenessHospitalityHospitalityCreating On-site Programs Creating On-site Programs One-on-one/HostingOne-on-one/Hosting SamplingSampling

Branded contentBranded contentRetail Campaign ExecutionRetail Campaign ExecutionDevising Internal Sales Tool(s)Devising Internal Sales Tool(s)

Optimizing Sport SponsorshipOptimizing Sport Sponsorship

Purpose drivenPurpose driven

Mutual benefitMutual benefit

Start small…think bigStart small…think big

Identify “hidden treasures”Identify “hidden treasures”

Back to the “Olympic Partners”Back to the “Olympic Partners”

Atos OriginAtos OriginCoca-ColaCoca-ColaGeneral ElectricGeneral ElectricManulifeManulifeJohnson & JohnsonJohnson & JohnsonKodakKodakLenovoLenovoMcDonald’sMcDonald’sOmega (Swatch Group)Omega (Swatch Group)PanasonicPanasonicSamsungSamsungVisa Visa

In your groups:In your groups:

Pick on and identify at least one form of Pick on and identify at least one form of activation this company did with the activation this company did with the Olympics.Olympics.

Practical ChallengesPractical Challenges

Identifying SponsorIdentifying SponsorProspectsProspects

Look For/Demonstrate Audience Look For/Demonstrate Audience Fit/RelevancyFit/Relevancy Audience ResearchAudience Research DemographicsDemographics PsychographicsPsychographics Sponsor Recognition/RecallSponsor Recognition/Recall Loyalty To/Attitude Toward SponsorsLoyalty To/Attitude Toward Sponsors Loyalty To/Attitude Toward PropertyLoyalty To/Attitude Toward Property

Determine Who To ContactDetermine Who To Contact

Sponsorship/Sports Marketing ManagerSponsorship/Sports Marketing Manager

Marketing/Advertising ManagerMarketing/Advertising Manager

Public/Community Relations ManagerPublic/Community Relations Manager

Brand Manager/Business Unit ManagerBrand Manager/Business Unit Manager

Owner/PresidentOwner/President

Account Manager at Sponsor’s AgencyAccount Manager at Sponsor’s Agency

Foundation/Corporate Giving ManagerFoundation/Corporate Giving Manager

Be Street Smart In Generating Be Street Smart In Generating Leads to Sell SponsorshipLeads to Sell Sponsorship

New Product LaunchesNew Product Launches

Classifieds: Who’s Hiring?Classifieds: Who’s Hiring?

Intros by Current SponsorsIntros by Current Sponsors

Marketing/Business Events and Marketing/Business Events and PublicationsPublications

Mine Entire Category At OnceMine Entire Category At Once

Length of decision-making process does Length of decision-making process does not allow for approaching companies one not allow for approaching companies one at a timeat a time

Inform prospects that you have also Inform prospects that you have also contacted their competitorscontacted their competitors

Sponsorship Fact:Sponsorship Fact:

Your Profit Is In Your RenewalYour Profit Is In Your Renewal

Sponsorship Is About More Than Sponsorship Is About More Than BenefitsBenefits

Sponsors Renew Based On ServicingSponsors Renew Based On Servicing

Key Takeaways To Focus OnKey Takeaways To Focus On

Provide turnkey activation platformsProvide turnkey activation platforms

Define success in advanceDefine success in advance

Educate your audienceEducate your audience

Incent activationIncent activation

Facilitate cross-promotionsFacilitate cross-promotions

Post-Fulfillment ReportsPost-Fulfillment Reports

After the sponsorship is before the After the sponsorship is before the sponsorship!sponsorship!

Must be an ongoing process.Must be an ongoing process.

Institutionalize regular meetings with Institutionalize regular meetings with sponsor to discuss recent research and sponsor to discuss recent research and future services.future services.

Best renewal tool at your disposal.Best renewal tool at your disposal.