Category Archives: Caught Our Eye

Mayweather vs. Pacquiao: A Fight for Money

One of the biggest days in sports history centers around money.

One of the biggest days in sports history centers around money.

Tomorrow looks to be one of the biggest days of the year in sports history with both the Kentucky Derby and Mayweather vs. Pacquiao welterweight championship fight happening within hours of each other. It may be one of the last fights of Mayweather and Pacquiao’s careers and the richest boxing match of all time. It also is horse racing’s biggest day of the year.

It also happens to be one of the biggest days of the year for Uncle Sam.

Starlight Racing’s “Itsaknockout” exclusive sponsorship deal with Mayweather-Pacquiao promotion is all about the money, money, money. The aggressive campaign has an estimated $200 million dollar draw, bringing sponsorship to a whole new level for the sporting world, or the world in general for that matter. Mayweather is expected to receive 60% of the total, no matter if he wins or loses.  If you break this down by minute, assuming the fight goes the distance, that means Mayweather will make $5 million for every minute of ring action Saturday night. Break it down further and he is making $83,333 per second. Whoever wins the Derby will make a mere $2 million.  Still a decent salary for one day!

Ticket sales are also at a record breaking high for any sporting event with prices ranging from $87,000 to $150,000 per ticket. One thing is certain, a lot of people are going to make money off of this fight.

What does this mean for the direction of sponsorships?  Is the sports industry changing? Will sponsorships of the future include multi-million dollar deals for athletes?  Is it all about the money first, and then the actual sports?

We will find out on May 2.

photo credit: US Treasury via photopin (license)

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Sponsors Take a Stand

By opposing Indiana’s ruling and speaking out publicly of their support for LGBT inclusion, NCAA has set the bar for sponsors to react.

By opposing Indiana’s ruling and speaking out publicly of their support for LGBT inclusion, NCAA has set the bar for sponsors to react.

The hot topic this week centers on Indiana, but not just the NCAA Final Four that kicks off tomorrow. The controversial Indiana “Religious Freedom” law will allow businesses to turn away gay and lesbian customers and the NCAA, among other sports properties including NASCAR, are taking a stand against Indiana’s religious ruling.

In our 2014 IEG presentation we discussed corporate responsibility to social issues and how important it is to take a stand. People may not like what a brand sponsors, how a brand sponsors, or who sponsors and this negative reaction for decisions made can affect brand equity, rankings, and participation. Brands that say something, right away, fare better than brands that ignore the situation. We found that 44% of those surveyed felt sponsors should say something and be engaged in social issues.

We talked about these issues last year regarding both the Sochi Games and the LA Clippers – negative sentiment can be generated in an instant and tarnish a brand faster than it can be promoted. Controversies and reactions to those controversies continue to play a role in a sponsor’s brand health and sustainability.

By opposing Indiana’s ruling and speaking out publicly of their support for LGBT inclusion, NCAA has set the bar for sponsors to react. With the Final Four in full swing, and such strong opposition for this law, sponsors of the NCAA would fare best to issue a statement and quickly. If they can engage in this social issue to increase public sentiment and decrease the risk for negative associations, they may get more out of the Final Four than they imagined.

As the Final Four unfolds, we will be watching sponsors to see if they follow the NCAA’s lead or wait for the storm to pass.

photo credit: <a href=”http://www.flickr.com/photos/31355653@N07/8257073694″>Mason Plumlee | Duke Blue Devils vs. Temple Owls – Dec. 8th, 12</a> via <a href=”http://photopin.com”>photopin</a&gt; <a href=”https://creativecommons.org/licenses/by/2.0/”>(license)</a&gt;

Additional Links:

http://www.cbssports.com/collegefootball/writer/jon-solomon/25123924/ncaa-expresses-concern-over-indiana-religious-freedom-law

http://www.thenewcivilrightsmovement.com/davidbadash/nascar_becomes_latest_to_denounce_indiana_anti_gay_religious_freedom_law

http://www.sportingnews.com/nba/story/2015-03-29/indiana-religious-freedom-act-pacers-nba-statement-response-criticism-wnba-fever-mike-pence

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The Future is Now – And I Met Him!

Figure 1: Credit NY Times

Figure 1: Credit NY Times

While attending IEG2015, the sponsorship industry’s annual trek to mecca, amidst the plethora of inspiring presentations from such thought leaders and trend-setters such Target, adidas, and Heineken, I came across one young college athlete that personified the seismic shift in the way we need to be thinking about the sports and live events of the future.

His name is Blake Soberania (blakesoberania@gmail.com / twitter: @lots_of_bs) and he is part of Robert Morris University’s e-sports Eagles, and one of the five recipients of the world’s first academic scholarships for e-sports. Take a moment to think about that.

That’s right. E-sports, what we Boomers and Gen-Y & X’ers used to call, (typically in a condescending tone) video games. Universities across the country have e-sports teams that compete in regional and national leagues, host championships, follow official rule-books, and have announcers, sponsors, coaches, fans, and team jerseys… just like their school basketball and soccer teams. Now, add to that list, scholarships and recruiting.

The RMU Eagles are undefeated in the North American Collegiate Championships (24-0). The game of choice is “League of Legends” and the team is under the authority of the university’s athletic director. They have been featured in NY-Times, The Chicago Tribune, and NPR. But what sets them apart from the school’s other student athletes is the popularity of their sport. E-sports / Gaming is a world-wide phenomenon that most of us simply overlook. Not anymore. While speaking with Blake, he learned he and his teammates were about to be interviewed for a feature in Time Magazine. When was the last time you recall a typical college student athlete receiving call from Time Magazine?

http://www.rmueagles.com/sport.php?seasonID=0&sportID=147

Bill Doyle with Blake Soberania at #IEG2015

According to Newzoo, there are an estimated 2.2 billion traditional sports fans (combined) worldwide while the gaming community reels in 1.7 billion fans annually with an estimated increase to 2.1 billion by 2017. That means gaming has nearly as many fans worldwide as all traditional sports, combined.

Traditional sports typically generate 57 percent of revenue from sponsorships and media selling rights and e-sports is anticipated to match that in just a few short years thanks to the growing interest in sponsorship.

Big name brands like Coca-Cola, Intel, Nissan, and Red Bull are the pioneer sponsors of this global gaming epidemic. By providing multimillion dollar sponsorships to the world’s top players, Coca-Cola is attracting a large, passionate online following. Coke Zero also recently partnered with Riot Games to create a series for amateur League of Legend gamers. “We have worked very closely and collaboratively with Riot Games to create a league that delivers true value to the fans and players of the sport, and that begins to build an infrastructure for e-sports that mirrors that of the more traditional sports,” said Matt Wolf, Coca-Cola’s global head of gaming.

And for some perspective, the 2013 League of Legends Challenge World Championships had over 32 million broadcast viewers, and sold out the 18,000 seat Staples Center in minutes. For 2014, held last fall in South Korea, met or exceeded those figures with even deeper engagement among fans.

http://www.ongamers.com/articles/league-of-legends-2014-world-championship-viewer-n/1100-2365/

Not to be missed, the top 10 You-Tube channels are all centered on gaming. to wit, the number one You-Tube celebrity isn’t Beyonce’, Beckham , or Swift it is an unassuming young man named Pewdiepie (https://www.youtube.com/user/PewDiePie) who talks, laughs and comments while playing the latest game releases – with over 35 million subscribers and over 8 billion (yes billion) video views! http://socialblade.com/youtube/user/pewdiepie

With monumental audiences, professional leagues, increased organizational support, multimillion dollar sponsorships, and now university scholarships and recruiting, one question remains – how long before the NCAA needs to step in?

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Cuba: Opportunity in the Midst of Challenges

When it comes to sponsorship, Cuban athletes as well as other aspects of the sports industry, could benefit from the recent renewed ties with the US and the talk of lifting the US trade embargo.

When it comes to sponsorship, Cuban athletes could benefit from the recent renewed ties with the US and the talk of lifting the US trade embargo.

Just three months ago, President Obama’s announcement that the US and Cuba plan to restore diplomatic relations has created a unique opportunity for US businesses, in particular event and sports sponsorship.  Major brands like AMEX, Nike, and Coca-Cola are waiting anxiously on the side lines to take advantage of opportunities as soon as the US trade embargo is lifted. This will not happen immediately or promise to be an easy transition, but offers prospects to change Cuba’s sporting industry.

All professional sports in Cuba were banned in 1962 and with the US trade embargo in place, US Companies have been forbidden from capitalizing on sponsoring all sporting events, Cuban athletes and facilities. Instead of advertising billboards surrounding the ballparks, portraits and slogans of Castro dominate the fields. No sodas or alcohol have been available at sporting events, and local food options have been scarce. Equipment is outdated and falling apart. Athletes keep a meager 20% of their salaries with the government pocketing 80%. Admission to games is free or for a nominal fee – Cubans come to simply enjoy the game.

“Sport is the victim of limitations of the embargo,” said Tomás Herrera Martínez, the director of international relations for Cuba’s sports ministry and a bronze medalist in basketball at the 1972 Munich Olympics. “Sport is one of the main rights of the people, but sometimes there have not been enough resources.”

For a country where sponsorship has been non-existent for the past 50 years, huge benefits exist for all those looking to get involved in Cuba’s sports and events market.  Infrastructure improvements and resource availability for hosting events will become possible. For example, if a financial service like AMEX sponsored the Cuban national baseball team, they could have the opportunity to bring banking basics to a large portion of the country through an in-person experiential form of marketing. IT companies could provide sponsorship and provide access to internet services, a foreign concept to most Cubans as less than 5% of the population has internet access.  Sporting events will help stimulate the economy and provide more jobs for Cubans. This could start as early as 2016 with a few Major League Baseball teams interested in an exhibition game during spring training.

Companies in the food and beverage industry will look to provide sponsorship and make their brands available at all sporting events too. Huge opportunities exist for sports merchandise as well as concessions at the stadiums. Coca-Cola, for example, is anxious to enter one of its last untouched markets. Like Cuba, Coke was banned in Myanmar for many years, and recently obtained its license to operate by creating value for the overall Myanmar economy.  It’s likely that Cuba’s new investors will look to Coca-Cola for guidance on entering a new market with due diligence and responsible business conduct.

Sponsorships could also provide important resources for the athletes, such as updated equipment, proper nutrition, and fair compensation. Just recently it was announced that Cuba’s Athletics Federation is now allowing athletes’ autonomy over sponsorships. The federation’s choice of brand for all athletes, regardless of their preference, has been German owned adidas until 2 years ago when track athletes started wearing Nike. This change has opened a door for US companies to sponsor Cuban athletes and increase their brand awareness in this emerging market. Nike is on the forefront of this change but Under Armor is looking for the next window of opportunity as these sponsorships spread to Cuba’s other most popular sports, baseball and boxing.

Despite doubts and obvious challenges with the Cuban government, economy, and infrastructure, this will be the new journey in sports and event sponsorship for US businesses.  Prospects will just have to be patient.

photo credit: Cuba Havana via photopin (license)
photo credit: Paralympics 2012 – 35 via photopin (license)

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Quicken Loans and Warren Buffett Team Up for Billion-Dollar Hype Machine

March Madness

Quicken Loans and Warren Buffet hope to make a sponsorship splash during this year’s edition of March Madness. Despite their lack of official NCAA sponsorship, the two seem poised to do just that.

March Madness is about to get even wackier this year, but at what cost?

The annual NCAA Men’s Basketball tournament of champions attracted 23.4 million television viewers last year, says CBS Sports.  Each year millions of armchair point guards try their hand at predicting the outcome of the 64-team bracket in local office pools.  However, Quicken Loans and Warren Buffett hope to initiate much more than water cooler bragging rights this year with what could be considered the mother of all guerrilla marketing tactics.

Quicken Loans founder and NBA owner Dan Gilbert announced a $1 billion prize to any fan that correctly predicts the “perfect bracket” before the 2014 rendition of the NCAA tournament.  This prize is being insured by Buffett, the world’s fourth richest man, through one of his companies – Berkshire Hathaway.  Essentially, Quicken   Loans pays Berkshire Hathaway to cover the billion-dollar prize, should someone enter a perfect bracket in the contest.

While the odds are astronomically low, the buzz is deafeningly high.  The question we ponder is how a brand like Quicken Loans can effectively own this considerable  amount of the positive energy surrounding the NCAA Men’s Division I Basketball tournament without paying to be one of the organization’s corporate champions and partners.

While Quicken Loans has sponsored the Carrier Classic, an annual college basketball contest turned outdoor spectacle aboard a US Navy aircraft carrier, since 2011, this does not garner them rights to the NCAA Tournament.  With this announcement, president and marketing chief Jay Farner hopes they can earn an even larger place in the heart of college basketball fans.  But at what cost?

It’s tough to argue the virtuosity of Quicken’s marketing ploy.  The buzz generated by the incentive of a billion bucks should make their investment worthwhile, especially since they are paying pennies on the dollar for Berkshire Hathaway’s insurance policy.  In fact, Quicken could emerge as one of the biggest corporate victors come tournament time.

Each March, companies amp up marketing efforts around the NCAA tournament in an attempt to increase brand recognition and drive revenues.  Busiest among them are NCAA’s official Corporate Champions AT&T, Capital One and Coca-Cola, whose support helps fund 89 different championships and over 400,000 college student athletes nationwide.

Quicken Loans, on the other hand, is not an official NCAA corporate sponsor, thus their promotion isn’t benefiting anyone but themselves, along with a very unlikely new billionaire.

Performance Research studies tell us that modern fans are much more likely to favor a brand when that brand’s sponsorship of an event or campaign adds substantial value to the user-experience, regardless of its “official” status.  In other words, if a promotion can engage consumers on a personal level it becomes considerably more effective.  Thus this billion-dollar bracket contest offers the potential for huge returns for Quicken Loan.

Rather than cough up the dollars necessary to be dubbed an “official” sponsor, Quicken opted for this unconventional move.  However, they will be garnering serious exposure from an event without supporting the organization responsible for putting it on.  There are positive benefits to real people being bypassed by this agreement.

The Billion Dollar Bracket Challenge may ultimately be the best business decision for Quicken.  We’re just not sure that it is the appropriate one.

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International Soccer Sponsorship Provides GM with a Global Reach

Big things have been happening across the pond as October marked the signing of the largest jersey manufacturing deal in history. Manchester United has reportedly signed with Nike for £300 million over the next five years, giving Nike the right to manufacture Manchester United game kits (kits are apparel worn by football players during games) until 2019. This historic deal shatters the previous record held by Spanish football club Real Madrid and sponsor adidas, worth £248 million over eight years.

Not only does Manchester United receive a significant cash infusion, which is likely to be used for signing more star players to their roster, but also included in the contract is the right to sell the jerseys. Sales could generate another £15 million a year, pushing the potential worth of this contract close to £375 million.

The latest partnership with Nike isn’t the only record-breaking deal England’s most commercially successful football club struck this year. This past May, Manchester United worked a deal with Chevrolet for the American car company to become the principal sponsor of the team starting in the 2014/2015 season, replacing insurance company AON. The deal is supposed to run until 2021 and will be worth $559 million.

This deal doesn’t mean the end of AON’s involvement with the club. AON has partnered with Manchester United as the official sponsor of the team’s training facility and practice kits in a $240 million, 8-year deal. They will also assist the club with player analysis and risk management practices. While they were unable to secure the principal sponsorship again, AON’s reinvestment in the Manchester United brand speaks volumes about the marketing power of the world’s largest football club.

The partnership with Manchester United sponsorship solidifies GM’s position in the English Premier League. Chevy has also worked a deal as the official automotive sponsor of Liverpool. The deal with Manchester United did not come without controversy for the American auto brand. GM’s Global Chief Marketing Officer, Joel Ewanick, resigned the day before the Manchester United deal was announced. It has been said that the deal with Manchester United was the breaking point for GM, which asked Ewanick to resign on his own terms.

While there is much doubt in the GM camp regarding the value this sponsorship will bring, they cannot question the global reach their new partnership will extend to them. With over 650 million fans in nearly every country on the planet, Manchester United’s brand is recognized by millions of people all over the world. Receiving that kind of exposure will certainly bring Chevrolet a new level of awareness globally, especially among the 325 million Manchester United fans in Asia alone. Pair those numbers with the current trends in the auto industry outlined by the current KPMG report, and the Manchester United / Chevy partnership seems like a match made in heaven.

It should come as no surprise that Asia is slated to become the world’s next big market for autos. As rapidly developing countries such as China and India begin to witness an increase in the purchasing power for their ever growing middle class, the demand for quality, name-brand automobiles should provide the auto industry with plenty incentive to shift the focus of their global supply chain to Asia. GM has already positioned itself to take advantage of this growth by establishing an Asia-Pacific headquarters in Shanghai, as well as developing several manufacturing plants throughout China, Russia, and India. Three countries that, when grouped together, are expected to surpass the US in automotive sales in the next 5 years.

These moves mark a significant shift in the corporate philosophy of GM, showing that in order to maintain their expansive share in the automotive market, a serious effort needs to be made to get the attention of the people living in developing areas. Although the team at GM recognizes that there is foreseeable future in the Asia-Pacific region, bringing awareness to these people will come at a cost for the American auto giant.

In order to fund their global football initiative, GM has been forced to cut spending on domestic advertising and sponsorships. Last year it was forced to eliminate advertising on Facebook and even cut their ad in the Super Bowl. While their new sponsorship with Man U and the One World Futbol Project paints Chevy in a positive light to footballers everywhere, GM could appear to be neglecting the needs of its own city.

As we mentioned in a previous post, Detroit is desperately seeking a corporate sponsor for its new hockey stadium. However, with a price tag of $650 million, a new stadium for only the US’ 3rd most popular sport pales in comparison with the Manchester United deal. Although soccer fans around the globe will begin to recognize Chevy, this iconic symbol of American ingenuity may risk losing the support of the city that fondly refers to itself as Hockeytown, and built the company up to where it is today.

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Oracle stages remarkable comeback, but it’s still New Zealand’s Cup

Image

While Oracle Team USA may have defended the America’s Cup, they hardly represented the United States as they chose to field only one American sailor. Meanwhile, it was truly a national effort for the Kiwis as even the government gave its support to the America’s Cup challengers, providing $36 million dollars in funding for the program to bring the cup back to Auckland. The people of New Zealand were equally responsible for making this storied competition happen. Not only did their tax dollars fund a large portion of the team that was made up of 80% Kiwis, but the marine industry in New Zealand developed and manufactured most of the innovative technology that was showcased in the cup.

Many New Zealanders have to be wondering about the future of Emirates Team New Zealand. With this latest effort turning out to be unsuccessful, the country will not receive the NZ$600 million dollar boost to the economy it has received in its previous two defenses of the cup. The program’s shortcoming poses a tough question to policymakers in New Zealand: do they continue to spend public money at a potentially unsuccessful program, in a time where the country is considering austerity measures in other areas of government?

The effects of an America’s Cup victory, and defense, are clear to tourism in New Zealand. Contributing about NZ$15 billion to the nation’s GDP annually, tourism in New Zealand has typically seen a 12.5% increase in international visitors when they have the cup. However, this industry has been known to struggle in the absence of the Auld Mug.Image

As you can see, tourism rates in New Zealand were booming after Team New Zealand successfully defended the cup in 2000. When they were unable to defend the cup in 2003, growth in the tourism sector became stagnant and was further decimated by the global recession.

Even though the Kiwis were unsuccessful in this past run, they received a great deal of press from competing for the America’s Cup. Domestically, nearly a quarter of the New Zealand population watched the first weekend of racing. The cup was also broadcast in over 170 countries, bringing exposure to an untold number of international viewers. The United States had over a million people watching each of the first two races. However, these numbers were short lived when viewers dropped from one million to about a quarter million viewers per race for the rest of the series. While Team New Zealand sponsors such as Emirates, Nespresso, Toyota, Omega and Camper expected a greater return in the US considering how much it cost to invest in an America’s Cup campaign, they may have gained the respect and admiration from the famously loyal New Zealand sailing community for making one of the most prestigious and thrilling events in America’s Cup history possible.

With global economic conditions seeming to improve as of late, press from the America’s Cup may have provided the push that will cause New Zealand’s tourism figures start to grow again. While they may not realize the same growth rates as the early 2000s, we’re hoping the New Zealand government will realize a great enough return to justify sponsoring another challenge.

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