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

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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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When Can Stadium Naming Rights Turn a Corporation into a Hero?

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Corporate America: These fans could be cheering just as mightily for your brand soon enough.

Despite the crippling economic situation in Detroit, it seems like it is “all systems go” for the construction of a new home for the Red Wings in the city affectionately known as “Hockeytown.”

Although the City of Detroit filed for Chapter 9 bankruptcy in July in the largest municipal bankruptcy filing in the United States, a state board declared a unanimous vote the same week approving plans for a new downtown hockey arena.  The $650 million project will be funded, in part, with an estimated $285 million in tax dollars – even though the city is in an estimated $18-$20 billion in debt.

Detroit has become a place where police, on average, take an hour to respond to calls for help and 40% of streetlights are powered off in an attempt to save money.  Vacant buildings and empty schools litter the landscape of the former industrial powerhouse.  On the face of it, a new stadium dependent on public funding just doesn’t appear to be an appropriate allocation of property taxes given the dire situation of Detroit city services.

Advocates for its construction, however, view the 18,000-seat arena as the centerpiece in a development plan to inject life into the 45-block area linking midtown and downtown Detroit.  Michigan Governor Rick Snyder hopes the proposed retail, office, and parking space around the arena will create a better long-term environment for the city.

Completion of the area is anticipated for 2017, but to this point, there has been no public mention of any corporations vying for naming rights of the Red Wings’ new home.  The proposed arena would be home to one of the most storied franchises in all of professional sports and would supplant the Palace at Auburn Hills as the premiere indoor concert venue in Metro Detroit.  There is a lot riding on this venue, and it has the potential to breed a very positive influence on a very depressed city.  According to our research, this is the perfect situation for big business to find sponsorship success by playing the hero, rather than the exploiter.

In the first independent study of its kind, Performance Research revealed the critical “Naming Rights & Naming Wrongs” of stadium sponsorship.  When do companies get it right, you ask?  In situations such as this where there is a strong need for a new venue, and there is a deep appreciation for corporate contributions that help make the new stadium a reality, that’s when!

Some pertinent highlights from the study: Nearly 40% of respondents opposed the idea of changing the titles of existing stadiums and arenas to accommodate corporate naming rights, regardless of the reasoning.  However, companies that struck deals with new and developing arenas experienced a positive impact on public opinion with 6 out of 10 fans. Local supporters embraced named stadiums that were new because they often felt they benefitted personally as a result.  ‘Lower taxes,’ ‘more sports opportunities,’ and ‘lower ticket prices’ were the most appreciated benefits cited by fans.

Although hockey is not discussed, this intriguing USA Today infographic highlights the lucrative nature of stadium naming rights today.  Joe Louis Arena, Detroit’s current house of hockey, is one of only three in the NHL without a corporate sponsor.  Our prediction?  Look for the new Detroit arena to buck this trend and shop its naming rights this time around.  And, if corporate America is smart, they will surely listen.

If a corporate sponsor emerges to help facilitate Detroit’s new downtown developments, the results would be tremendous for everyone involved.  A city in desperate need of salvation would see government funding allocated where it is needed most.  The new venue and surrounding infrastructure would provide a well-timed ray of economic hope for Detroit. And its residents, as well as those outside of the area, will recognize that sponsor’s commitment in making it all happen with substantial PR gains in the process.

That is how to become a corporate hero in one easy step.  What’s not to like?

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LGBT Community Calls for Boycott of Olympic Sponsors

ImageRussian president, Vladimir Putin has led a series of harsh political actions against homosexuals over the past month, including passing one resolution that bans propaganda of all non-traditional sexual relations.  With Sochi set to host the 2014 Winter Olympic Games, worldwide protest of this reform continues to grow leaving many calling for the International Olympic Committee to demand retraction of Russia’s laws under the threat of boycott.

The IOC has promised that it would work to ensure members of the LGBT community, athletes and spectators alike, safe participation in the games without experiencing any discrimination.  In a recent statement, the IOC claims to have received “assurances from the highest level” of Russian government that the anti-gay propaganda law will not affect anyone participating in or attending the Games.  Despite these assurances, many remain skeptical.  Would you feel safe?

Human Rights Campaign President Chad Griffin recently challenged NBC Universal, which paid $4 billion for exclusive rights of Olympic coverage, to fully disclose Russia’s human rights violations during its broadcasts.  NBC’s response left much to be desired, as they agreed to “provide coverage of Russia’s anti-gay laws IF the controversial measures surface as an issue during the upcoming Winter Olympics.”

Social issues of this magnitude are typically not on the minds of corporate sponsors when they are inking multi-million dollar contracts.  Their concern lies in putting together innovative and effective campaigns that will maximize their ROI.  With the Sochi Games fast approaching, however, opposition to Putin’s war on the gay community is gaining steam.

In addition to the rampant and growing calls on Facebook for boycotting anything Russian, the latest target on social media is aimed squarely at Olympic sponsors.  The controversy will challenge companies like AT&T, Coca-Cola, General Motors, McDonald’s, Panasonic, Samsung, VISA, and Procter & Gamble that have made huge commitments to sponsor all that is positive about the Olympic movement.  However, with the unanticipated turmoil in Russia, they run the risk of being associated with the event for all the wrong reasons.  The controversial nature of this issue leaves them vulnerable to offending the LGBT community to the point where they may lose the group as consumers for years to come.

Coca-Cola, sponsor of the Sochi 2014 Olympic Torch Relay, has a longstanding history of support for LGBT events and causes.  Coke has repeatedly stood behind their statement that they do not condone intolerance of any kind.  Despite this, it has refused to weigh in on the controversy, claiming that it “does not take positions on political matters unrelated to our business.”

Olympic sponsors will continue to feel immense pressure to make a statement against Russia’s policies as the February Opening Ceremony nears.  The Olympics are almost always accompanied with some form of controversy.  This includes, most recently, protests against Beijing’s 2008 Olympic Summer Games due to China’s human rights track record.  However, given the recent passion surrounding LGBT equality and the proliferation of social media since 2008 the potential for an issue to directly impact official sponsors in this capacity is unprecedented.

Regardless of how this plays out, the bigger question for sponsors will remain.  What level of responsibility should sponsors of the Olympics bear?  Where do you draw the line between sports and politics?   Is there truly an effective reaction for sponsors to take that will satisfy anyone in situations like this?

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Rough Sailing for America’s Cup and Sponsor Louis Vuitton

ImageTwo months before competing catamarans are scheduled to set sail in the San Francisco Bay for the 34th defense of America’s Cup, the event seems to be in deep water.

Oracle Team USA’s Cup title defense, following a 2010 victory that was the first for an American team in nearly 20 years, was pegged as a groundbreaking affair that would generate an estimated $1.4 billion in the host the city of San Francisco.  The opening weekend of the Louis Vuitton Cup, however, shows little promise for the 2013 rendition of sailing’s finest venture.

The Louis Vuitton Cup is a round-robin tournament featuring global competitors vying for the right to sail against the American team for the America’s Cup crown.  Since 1980, between 7 and 13 teams have competed in this preliminary round.  This year’s version, however, has only produced 3 competitors: Italy’s Luna Rossa, Sweden’s Artemis Racing and Emirates Team New Zealand.  Countries such as France and Spain pulled out of the races, most citing lack of funding as the primary cause.

Following a boycott by the Italian team and an Artemis shipwreck, Emirates Team New Zealand raced to the finish in deserted waters twice over the weekend, earning the first two points of the Cup sailing unopposed.  Safe to say, L-V did not fork over $10 million in sponsorship fees for New Zealand to hold open practices on the bay.

After a rough start to the competition, the stylish French retailer and title sponsor is having second thoughts about its initial investment.  Hopefully they kept their receipt, because L-V is reportedly looking to receive a $3 million refund due to the poor international showing.  Contractually, they are eligible to receive a $1 million refund for every team below six in the tournament.  More teams could be on the way out too, leading to an even greater return to Louis Vuitton.

Sponsorship refunds are relatively unheard of, but this year’s America’s Cup may set the precedent for future sponsorship contracts.  Frankly, nobody expected the event to be such an epic flop.  If an event with as much history as America’s Cup can falter, so can others.  Moving forward, the turmoil in the San Francisco Bay will serve as a cautionary tale for prospective sponsors across the board.

Louis Vuitton has been a Cup sponsor for 30 years.  Prior to its sponsorship, the teams competing in the preliminary rounds were forced to divide the cost of the event among themselves.  Title sponsorship of events rarely leads to such a profound direct impact on the competition as in this case.  Louis Vuitton has been a driving force behind the Cup for decades, but their commitment seems to be wavering.  Maybe their long-term presence with the event led America’s Cup to feel comfortable enough to include contractual provisions allowing them to get some of the money they fronted returned to them.  But if they are able to run away from an unsuccessful sponsorship deal with millions of dollars stuffed back into their designer handbags, other companies may look to follow suit.

It remains to be seen if the Louis Vuitton Cup will prove to be a strange gem in sponsorship history or a frontiersman for protected deals in the future.  Either way, a quiet storm is brewing in the city by the bay.

What is your take on the concept of sponsorship refunds? Comment below and give us your thoughts!

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Lack of Funding for US Speedskating Offers Huge Sponsorship Opportunity

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A recent USA today article highlights the plight of Olympic aspirants that struggle just to make ends meet.  Olympic short-track speedskating hopeful Emily Scott’s story is highlighted.  She has seen her monthly direct athlete stipend cut by nearly 70%, forcing her to take on the third-shift at a surgical supply factory and apply for food stamps.

Scott’s predicament is not an isolated one, however, as many other Olympic hopefuls are forced to live paycheck to paycheck.  Outside of a few skiers and snowboarders with lucrative sponsorship deals, other winter athletes endure the same kind of financial struggle as Scott.  The US Olympic Committee can only do so much for its athletes, and naturally allocates funding to the athletes with the greatest chance of standing atop the podium draped in gold.  Other athletes are left to fend for themselves as their direct stipends continue to decrease. 

The limited funding the USOC distributes to the lower-profile winter sports provides an ideal opportunity for resourceful sponsorship.  Funding sports like speedskating or bobsledding offer potential sponsors a cheaper method of becoming officially affiliated with the Winter Olympics that can do wonders for their public image.

Prior research conducted by Performance Research consistently suggests that companies who fund struggling Olympic teams hit emotional trigger points with consumers that make the venture a worthwhile one.  Olympics-related sponsorship is particularly good at generating good will, and companies who fill voids such as this one are viewed as altruistic and patriotic leaders in their field. 

US Speedskating currently boasts a 15-member sponsorship roster, but there remains plenty of room for any corporation looking to become an official Olympic sponsor on the cheap.  The domestic speedskating governing body has seen the money it receives from the USOC for direct athlete support cut by about $15,000 from last year.  This is particularly surprising because speedskating is historically USA’s most successful winter sport.  Not only will forthcoming sponsors be perceived as charitable, but their brand will also be associated with athletic success of the highest order.    

Before Tuesday, Emily Scott has raised $195 on her crowdfunding site, gofundme.com.  Since the USA Today story broke, she has raised $35,498 and counting.  This is a testament to just how impactful a new corporate sponsor can be not only to US athletes, but also to consumers across the country.  If people are willing to empty their pockets for an Olympic athlete in need, imagine their perception of a company that would do the same.

It is astonishing that additional sponsorship of US Speedskating is yet to emerge.   To any companies thinking about pulling the trigger on this type of deal: please fire away!  Opportunities like this to generate progressive public sentiment are hard to come by.  Our research suggests that you will not regret your decision.

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LA Tech Firm Belkin Hopes to Rejuvenate Pro Cycling with Sponsorship

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Professional cycling is getting a much-needed boost heading into the 100th rendition of its major annual event, the Tour de France.  Los Angeles based tech company Belkin has announced a deal to sponsor the artists formerly known as the Rabobank Pro Cycling team through 2015.  The Dutch lending firm is just one of the many team sponsors to remove themselves from the sport in the wake of all-time cycling great Lance Armstong’s fall from grace.

Rabobank asserted, “the trust in the cycling world has gone,” upon its withdrawal of its $20 million annual sponsorship.  Nissan has also dissociated from another cycling team featuring at least one member with ties to Armstrong’s serial use of performance enhancing drugs.  In addition, The HTC-Highroad team was forced out of commission because of potential sponsors’ hesitation to associate with a sport whose history is rooted in corruption.

Belkin has an incredible opportunity to expand its brand globally this weekend.  The Tour de France is one of the only truly global sporting events.  The three week long ride provides ample advertising opportunity, especially if the Belkin Pro Cycling team competes near the front of the pack. Riding as Team Blanco, Belkin’s new squad has already amassed 19 victories this year. The team is comprised of 29 different cyclists of five different nationalities.  Belkin currently sells products to more than 100 countries, and will look to amplify its presence in the global market with this move.

Belkin has pledged to uphold a no-nonsense policy on doping, a plan that their newest sponsees should have no problem respecting.  The team made the decision to ride as Team Blanco after being dropped by Rabobank to signify a fresh start for its members and the sport in general.  They will remain a member of the Movement for Credible Cycling (MPCC) as they ride under the Belkin umbrella.  The MPCC is an assembly of teams devoted to cleaning up the sport, holding themselves to even stricter anti-doping measures than those established by the World Anti-Doping Agency.

This sponsorship represents a huge investment for the California consumer technology firm.  In fact, CEO Chet Pipkin says it is the largest Belkin has ever made in the marketing arena.  Pipkin will not be the only person eager for this marriage to work.  From prospective sponsors to the most casual of fans, the world will be monitoring the success of this relationship closely.  The tech savvy and faithful cycling fan base already in place fits well with the Belkin brand.  Pipkin hopes this association with a well-established pro team will introduce Belkin to a new pool of consumers and stimulate the reemergence of cycling on the world scale.

Lance Armstrong was once one of the most revered athletes in the world, but the truth behind his success has pushed many potential followers in the other direction.  Fans of a sport in need of a savior should be optimistic about the combination of an enthusiastic sponsor and a team devoted to competing with honesty and integrity.  Belkin’s pledge bodes well for professional cycling, but the question remains: How will the sport recover from the fall of its prodigal son?

A good showing by the Belkin Pro Cycling squad in France will go a long way in accomplishing just that.

Catch coverage of the 100th annual Tour de France throughout July on NBC Sports Network.

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Ireland Considering Ban on Sports-Related Alcohol Sponsorship

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Irish officials are currently mulling a proposal by the Department of Health that would terminate the presence of alcohol companies in sports sponsorship.  Newly elected Minister of State for Primary Care, Alex White, drafted a memorandum last month that called for a gradual phasing out of the drinks industry that is so heavily involved in the state’s premier sporting events.  His plan would entirely detach alcohol sponsorship and sports by the year 2020, and ban the establishment of any new sponsorship deals beyond 2016.

Opposition against the proposed ban is gaining momentum among domestic sporting organizations.  The Irish Sports Council believes Ireland’s ability to compete on the international sporting stage will be destroyed if the Government proceeds with plans to ban alcohol companies from sponsoring major sporting events.  The most successful Irish sports organization stands to lose the most in this situation.  Alcohol-related sponsorship is pivotal the success of the Irish Rugby Football Union (IRFU), with an estimated value of € 9 million.  The Union will be unable to compete to keep the top players currently playing for the Irish clubs that have proven to be worldwide competitors at the Heineken Cup.   

It is important to note the link between alcohol sponsorship and sport extends beyond the country’s premier sports leagues.  Local pubs across Ireland regularly sponsor local sports clubs by providing gear marked with their logo.  By and large, these deals are not built in the financial interest of the pub, but as a testament of commitment to the local community.  The proposed ban would eliminate this type of goodwill funding that provides so much value for the youth in the country.  Athletic competition across the spectrum would suffer a fatal blow were this type of sponsorship to be prohibited.

Supporters of the ban believe as alcohol moves out of sport, other companies will move in to fill the sponsorship void.  Current evidence, however, suggests otherwise.  Take for example the annual Irish Open, which for the third straight year is left without a title sponsor despite its worldwide appeal and star-studded cast, including world top-ten performers Rory McIlroy and Graeme McDowell of Northern Ireland.  And what about the 2013 World Cup champion women’s rugby squad? They too are in the midst of a desperate search for funding. 

Adequate patronage presents itself far too infrequently for Ireland to render alcohol companies castaways in the sea of sponsorship.  They instead need to facilitate a RESPONSIBLE relationship between drink and sport.  NASCAR provides an ideal example of healthy participation by alcohol companies in sport.   Teams sponsored by liquor companies are required to run responsible drinking campaigns both on the track and in the media.  Jack Daniels, for example, displays “Pace Yourself. Drink Responsibly.” on their sprint car and flies a waving yellow flag warning drinkers on their section of the NASCAR website. 

In a country where the mantra “Drink Responsibly.” is too often superseded by “Drink Relentlessly.” conscientious alcohol sponsorship provides the perfect opportunity to educate people of Ireland about alcohol use and abuse.  

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