“Show me the Money!”: Sport, Leisure, and Tourism Marketing MKTG.4320 Fall 2008 ©Detlev Zwick, Ph.D.

Attention Economy

The Beckham Effect

The Cost $250m for 10 years Base salary of $6.5m Base salary of $6.5m Cut on merchandise, gate receipts, sponsorship revenues Cut on merchandise, gate receipts, sponsorship revenues

The Payback? The Gate: General admission rises from $15 to $25 Sideline seats from $50 to $75 Sideline Season tickets went for $4000 a piece and sold out mere 3 weeks after the announcements Ticket revenue increase : from 6 to 10 million

The Sponsorship Ticket: From $3.5m to about $9m a year. Herbalife with a $20m/5 year deal for uniform

The Merchandise Ticket: Even before playing in a single Major Soccer League game, more than 300,000 official LA Galaxy jerseys were sold. At $79.99 a pop, those initial sales totaled almost $24 million. Even before playing in a single Major Soccer League game, more than 300,000 official LA Galaxy jerseys were sold. At $79.99 a pop, 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 Real Madrid, the Spanish club more than doubled soccer merchandise sales to US$600 million. One million Beckham-Real Madrid shirts were sold within the first 6 months of Beckham’s arrival (Source: Forbes).

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

How do you explain the Beckham Economics?

The Olympics Games: Center of Attention

Who are the ‘Top 12 Olympic Sponsors’ (“Olympic Partners”)? Atos Origin Coca-Cola General Electric Manulife Johnson & Johnson KodakLenovoMcDonald’s Omega (Swatch Group) PanasonicSamsungVisa

$70 million for Coke About $5 to $15 million sponsoring the torch relay All together about $900 million.

Sports Sponsorship: Perspectives, Motives, Objectives

What is Sports Sponsorship? Def.: Sponsorship When a company pays a cash and/or in-kind fee to a property in return for access to the exploitable commercial potential associated with that property When a company pays a cash and/or in-kind fee to a property in return for access to the exploitable commercial potential associated with that property Part of Marketing through Sport Properties Part of communication strategy through Sport Properties Globally: $38 billion spent on corporate sport marketing Globally: $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 advertising

Why Sponsorship? Seller Perspective Secure broadcast and advertising exposure Secure 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 costs New source of revenue to offset rising costs Pepsi Ten Buck Tuesdays

Why Sponsorship? Buyer perspective Unique positioning opportunity Unique positioning opportunity Cutting through the clutter Cutting through the clutter Emotional connection with consumers Emotional connection with consumersRelevantExperiential Sport appeals to diverse consumer groups Sport appeals to diverse consumer groups Business-to-Consumer (B-2-C) Business-to-Business (B-2-B) Optimally, sponsorship represents a promotion & sales solution!

Sponsorship Philosophy & Policy Results Orientation Return-on-investment (ROI) Return-on-investment (ROI) Return-on-objective (ROO) Return-on-objective (ROO)Servicing Less is More Less is More Activation Activation Embedded activation Added activation “…ROI will almost always go up when the property focuses on activation because activation is the substance of the relationship.” Tony Shiller, Paragon Marketing “…ROI will almost always go up when the property focuses on activation because activation is the substance of the relationship.” Tony Shiller, Paragon Marketing

Most Important Sponsorship Objectives (IEG Sponsor Report, March 12, 2007)

The FedEx Sponsorship Portfolio Model Leadership Revenue Hometown Key Targets Hospitality Consists of five distinct categories of corporate marketing objectives

Creatively Financing Sponsorship Multiple year agreements w/escalating rights fees Multiple year agreements w/escalating rights fees Discount fee in exchange for promotional commitment Discount fee in exchange for promotional commitment Co-op arrangement w/vendor, supplier, or brand Co-op arrangement w/vendor, supplier, or brand Referral rebates Referral rebates Back

Sponsorship Activation Generating Media Traffic & Awareness Hospitality Creating On-site Programs One-on-one/Hosting One-on-one/Hosting Sampling Sampling Branded content Retail Campaign Execution Devising Internal Sales Tool(s)

Optimizing Sport Sponsorship Purpose driven Mutual benefit Start small…think big Identify “hidden treasures”

Back to the “Olympic Partners” Atos Origin Coca-Cola General Electric Manulife Johnson & Johnson KodakLenovoMcDonald’s Omega (Swatch Group) PanasonicSamsungVisa

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

Practical Challenges

Identifying Sponsor Prospects Look For/Demonstrate Audience Fit/Relevancy Audience Research Audience Research Demographics Demographics Psychographics Psychographics Sponsor Recognition/Recall Sponsor Recognition/Recall Loyalty To/Attitude Toward Sponsors Loyalty To/Attitude Toward Sponsors Loyalty To/Attitude Toward Property Loyalty To/Attitude Toward Property

Determine Who To Contact Sponsorship/Sports Marketing Manager Marketing/Advertising Manager Public/Community Relations Manager Brand Manager/Business Unit Manager Owner/President Account Manager at Sponsor’s Agency Foundation/Corporate Giving Manager

Be Street Smart In Generating Leads to Sell Sponsorship New Product Launches Classifieds: Who’s Hiring? Intros by Current Sponsors Marketing/Business Events and Publications

Mine Entire Category At Once Length of decision-making process does not allow for approaching companies one at a time Inform prospects that you have also contacted their competitors

Sponsorship Fact: Your Profit Is In Your Renewal Sponsorship Is About More Than Benefits Sponsors Renew Based On Servicing

Key Takeaways To Focus On Provide turnkey activation platforms Define success in advance Educate your audience Incent activation Facilitate cross-promotions

Post-Fulfillment Reports After the sponsorship is before the sponsorship! Must be an ongoing process. Institutionalize regular meetings with sponsor to discuss recent research and future services. Best renewal tool at your disposal.