Monday, October 8, 2007

Sports Sponsorship: When is it too much?

[Editor's note: This article also appeared on the Huffington Post on October 8]

Recently the New York Yankees paid tribute to the late baseball great Phil Rizzuto in a touching ceremony before a home game. There were words of remembrance in front of tens of thousands of fans and the playing of Taps to honor the passing of Rizzuto. There was also a large MasterCard logo on the ceremonial podium. As corporate sponsorship becomes a larger part of major league sports, it raises the question of what can't be bought. Or better yet, what shouldn't be bought?

As sports fans we have become inundated by corporate logos as companies scramble to stick their brand on every aspect of the game. For a corporate name it is the perfect way to gain exposure with a large target demographic, but at some point it stops becoming smart and starts becoming offensive. In Major League Soccer, a number of teams do not wear their team names on their jerseys, rather the name of their highest paying sponsor. The New York Red Bulls, formerly the Metrostars, even changed their name when the energy drink company bought the team. Not only does this make each player a walking advertisement, but also any fan who buys and wears the jersey. It might not be long before other sports follow suit. Imagine the Yankees pinstripes, easily the most famous jersey in major league sports, bearing that MasterCard logo. Or worse yet, becoming the New York MasterCards.

Sports sponsorship investing in the US, which according to eMarketer accounted for $8.9 billion in spending last year, has left outside companies scrambling to get a piece of the pie. VNU, the company who owns data research brands such as Nielsen Media Research and Billboard, recently introduced a service called Sponsorship Scorecard, which allows companies, teams, and sports leagues to track the return on their sponsorship investment of televised sporting events. Through research, they can determine which sponsorships will put a companies brand in front of the highest number of consumers. All of this comes at a cost to the corporations which is then passed down to the consumer in the form of higher ticket prices and raised consumer retail values.

So who wins? First and foremost, the team owners who pocket millions by selling ad and logo space to hungry corporate suits. Hired public relations and marketing firms get paid hefty retainers to find appropriate opportunities, including the misguided recommendation of the aforementioned podium sponsorship. And finally the corporate sponsors themselves, who get to place their brand in front of millions of paying consumers.

In the end, the fans and consumers pay the highest price. They buy products at a cost inflated to cover the expense of the sponsorships, marketing, research and public relations retainers. They pay top dollar for team jerseys, only to wear them and provide free advertising for the company whose name is emblazoned across the front. And they have their emotional moments of tribute intruded upon by the inconsiderate exploitation of the passing of a legend.


Thermocaster said...

The problem isn't the "hungry corporate suits" who are plastering logos and sponsorships on our supposedly sacred sport icons, but rather the marketing and management directors of franchises who are eagerly whoring out their sales inventories to willing buyers.

In many cases, this is a financially necessary step in order to remain competitive in an increasingly crowded marketplace. Your protests against MLS teams putting sponsors on the uniforms makes little sense, because the MLS teams that do that (7 of the 13 league teams in all) generally put that money right back into player procurement, thereby improving their on-field product and enticing more fans to come watch the games. In these and other cases, the fans win as well, because they have a compelling star player or team to watch, where one did not exist before. Most MLS teams simply don't have the existing revenue streams to raise that kind of money --- there is no high-paying national TV contract or YES Network equivalent to pour money into the coffers.

Your contention that sponsorships somehow directly result in higher ticket prices makes little sense. Ticket prices are generally based on perceived value of the franchise's brand, which is affected by a variety of factors, such as on-field success, supply and demand, and market demographics. You'd be hard-pressed to come up with a series of legitimate examples where the signing of a sponsorship deal with a corporation resulted in increased ticket prices. After all, it's still the teams that are setting ticket prices, not the corporations who sponsor the teams.

Furthermore, saying that sports sponsorships are directly causing increases in retail costs to consumers is a rather simplistic way of looking at things. Corporations use sports sponsorships because they actually work - they get product images and brand names in front of a very specific demographic. If anything, retail costs increase because the sponsorships increase demand for the product --- not because the companies have a marketing department. I'd like to see some examples of these supposed spikes in retail cost which result from corporate sponsorship of sports.

SportsGirl365 said...

The problem lies on both sides of the ball. You can't blame the issue solely on the franchises. I happen to be one of those PR/Marketing professionals that gets paid to advise on opportunities, so I'm very familiar with the process.

Yes, sponsorship is a necessary and beneficial part of sports in a lot of ways. The argument here is that there are times when it goes too far. And yes, much of the sponsorship money that the teams collect goes straight to the pockets of franchise owners. Which means when the team needs money to build a new stadium, maintain the current one, or fund team marketing initiatives, it comes from things like ticket revenue, not sponsorship revenue.

And as corporations spend more money in sponsorships, that money has to come from somewhere. While there are other things that factor into retail pricing (manufacturing costs, distribution, etc), a brand's marketing and sponsorship budget is also included. Unfortunately, when you are relegated to a column of 500 words or less, it doesn't afford you the luxury of breaking down the consumer retail process so it is necessary to remain simple in detail.

Again, sports sponsorship is a good thing for the business. Selling off every inch of the game is not.