LPGA Needs Visionary Leader and Game Changing Support

It’s not often that an entire league of players unifies against a commissioner without any intermediary coming to the latter’s defense. Usually these disputes have two sides. Not so here, Carolyn Bivens performed so poorly nobody could logically defend her. She leaves the tour in a vulnerable situation heading into 2010 with major questions surrounding its schedule, lack of interested sponsors, and dwindling fan support – among other problems.

Bivens situation played out quickly in the end, an immediate resignation avoided another negative situation for the tour. Now the hard part. The next commissioner steps into a make or break situation. How the next year or so plays out for the LPGA will determine if it survives as a major sport in the next 5-10 years.

Many quality people are in the running for the job now occupied by acting commissioner Marty Evans – Donna Orender and Cindy Davis among them. However, does the next commissioner need to be a woman? Although it makes sense to have a powerful woman as the face of a woman’s sport, last check Larry Scott did a pretty good job with the WTA. The tour needs someone with a plan, someone with a track record of action and decisiveness, and most importantly a charismatic commissioner that can sell the sport to sponsors and sell the plan to players. It does not need to be a woman.

Looking at the current LPGA situation analogous to past labor disputes in major sports, in this case the players and leadership acting as the league side and the title sponsors, advertisers, and fans as the union. Before making any progress with sponsors and fans, the league side needs to get on the same page. The next commissioner needs to come in, get the players – past and present – in a room and create a plan by soliciting input from everyone. The tour must present a unified front and execute it. In-fighting shows weakness and creates a negative public perception. The player language issues, Twitter, you name it, Bivens presented her stance, then almost immediately most players disagreed with her. That must stop.

From the outside, Bivens seemed brash and approached negotiations from a controversial, adversarial perspective. That does not fly in today’s market, nor is the LPGA, without a strong national TV deal or tremendous fan support, in position to dictate terms. The next commissioner needs to develop a partnership model that adds value to the tournament sponsorship, find ways to manage costs more efficiently, not impose increased purses and production costs on tournaments without providing more value. They have multiple routes to achieve this. One such idea is to make the tour a platform for woman that transcends golf. Specifically target the entire female demo with different initiatives for young woman, adults, and older woman. The key is taking it beyond the sport. While promoting the sport, the fan base must exceed the participation numbers. Further, creating this platform that woman can rally around gives sponsors a marketing tool to reach the target demo and showcase products.

The tour needs to act quick and decisively in selecting the commissioner, then the commish needs to do the same when taking office. Pumping life back into the tour will take a concerted effort by everyone involved, but its not out of the realm.

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Athlete Actions Feed the Sponsorship Stereotype

One action served as a good example of why two stereotypes currently plague the world of sports sponsorship. As the public continues to criticize public companies for frivolous spending during a recession and the people cringe at the ever escalating salaries of athletes in walks Vijay Singh sporting his Stanford Financial sponsored apparel.

The same Stanford Financial wrangled in Federal case into a Ponzi scheme run by its leader. Ironically, the same day articles about Allen Stanford’s trial ran prominently in the Wall Street Journal.

It shows poor judgment by Singh and his representation. By adorning Stanford gear he is essentially advocating the brand and associating himself with the company – one that lied to customers and lost lots of money for lots of people. In fact, the very $8m paid to Singh to sport the company logo could have come from this fraudulent activity. Does Vijay Singh advocate how Stanford runs its business? I have a hard time believing otherwise considering he is well aware of the news and still wears it.

Earlier this year, Stanford pulled its sponsorship of an LPGA tournament, so why is the company allowing Singh to flaunt its logo during what should be dark days for the firm. It’s not the time to build brand awareness or try to repair public perception. I’m sure lawyers and agents can work out a deal to get Singh the money he’s owed and prevent him from this negative association.

Thoughtless actions like this are what increases public outcry against sponsorships and pressure companies to avoid sports sponsorships. Athletes should act more responsible. Companies should step in and control the situation more. One negative action like this can damage the efforts of everyone else trying to make good.

What’s In A Word: For Sports Sponsorships and Sales – Everything

Bill Sutton penned an interesting piece in this week’s Sports Business Journal that addresses a concept, which has likely hurt sponsorships more than the recession – perception is reality. Since TARP became a part of American lexicon, firms have tried to run from public affiliation with anything deemed luxury, premium, or naming rights. The result is a negativity surrounding the sports sponsorship landscape that threatens a critical revenue stream for its properties.

GM left its suites at the Final Four dark, the US Open has cut back its hospitality offerings due to lack of demand, golf title sponsors have pulled their names off tournaments, and teams have struggled with renewal deals.

Experts in various fields from finance and economics to sports have advanced a theory that this recession is good in the long run because it will force process improvement and lead to more efficiency and better decisions down the road. This directly applies to sports sponsorships – and more directly to suite sales.

Sutton is right, teams need to find better terminology to replace the word ‘luxury suites’ and ‘premium tickets’. But more than the name, they need to change what it stands for because up to this point for many firms luxury suites has been appropriate. That is the part about to change. Going forward, executives can no longer make luxury expenses on behalf of the company – at least publicly – without nasty repercussions and government threats.

Sports teams need to find ways for businesses to link suite purchases to sales numbers, and a positive brand affiliation with the team. Technology creates more options, for example LED signs throughout the stadium that allow for dynamic signage, creating more inventory in smaller increments and allowing ads to pump through all suites. One way to foster change is selling suites with customizable features that allow companies to transform it into a mini-sales center that showcases their product or service, and can even allow for client presentations. In this scenario, each suite would have a slightly different look and feel, maybe company logos or product displays, and would serve the dual purpose of boardroom and stadium seat.

Give buyers access to hold client meetings on non-game days, or during the afternoon of a game, so they can focus on business. The business can they view it as a office real estate, measure it against a portion of the sales deals it closes on these visits, and teams can truthfully change the name from luxury suite to ‘Arena Executive Room’ or ‘Offsite Corporate Sales Center’. Those names emit business related tones, and match what business need to get in return for these expensive investments.

On the sponsorship side, the focus should be brand integration and strategy alignment. Sports properties need to find ways to connect sponsors directly with fans in a way that achieves the sponsors goal and showcases their product. IBM is a great example. It developed the USGA’s US Open iPhone application and handled data storage technology for the NFL for many years. IBM used both sponsorships to exhibit what its technology is capable of, creating a selling point when it looks for customers. Strategy alignment pertains to partnering with brands that share the same goals and have a value position in the target market of your sport. For IBM, golf makes sense, as many executives who make purchasing decisions on technology will interact with the US Open. While beer promotions on the LPGA tour are not the quality activations, since the sport is trying to attract a younger, female demographic, not as interested in beer as their male counterparts.

Words are powerful, though in the end changing the words alone will not lift all the preconceived notions unless sports properties change what the words stand for. It may be an old axiom, but they can only change this one customer/sale/sponsor at a time.

Can Jersey Sponsorships Actually Damage Long Term Revenue?

It seems that jersey sponsorship has come fast and furiously the past few weeks. First the Phoenix Mercury breaking ground in the WNBA, then Man U striking a major deal with Aon showing pro teams how much revenue potential jersey sponsorships can have, followed by rumblings of NFL teams on the verge of deals for patches on practice jerseys and rumors of more WNBA teams jumping on board.

Inevitably, the debate turns to the MLB, NFL, NBA, and NHL. Will commercialization outweigh tradition in these sports? For the most part, over the years, business in sports usually wins out over tradition…eventually. TV schedules, start times, the wild card, stadium naming rights, the list goes on. But, this is one case where tradition may actually be the better business decision.

Put the WNBA aside, which has a small, yet loyal fan base, but lacks the tradition of the big leagues and is not a big money sport. Each of the four major leagues has built substantial properties businesses over the past 10-20 years. Merchandise and licensing is a significant revenue source for players, teams, and leagues – led of course by jersey sales. If Warner Bros. replaces Lakers on the front Kobe Bryant’s #24 jersey will it have the same value? Will fans still want to buy it? Better yet, will removing the single most recognizable team image devalue brand affiliation in the long run, thus damaging overall merchandise sales?

Team Presidents starved for revenue should consider these questions before entertaining jersey sponsorships – if the leagues decide to allow it. A patch on the uniform is one thing, but headlining the jersey is another, which is how the WNBA deal works. Companies come and go, change names through merger and acquisition, or simply decide not to renew sponsorships, just look at the stadium/arena naming rights landscape. What happens to teams that decide to sell jersey sponsorships and wind up with 3 or 4 different names on their jersey over a decade, or have the next Enron plastered on the front. Will anyone actually want to buy that merchandise?

Think 10, 20, 50 years out with generations that grow up without any affiliation to the team logo. It could go two ways – people accept it and consciously like to buy it, or it could destroy what has become a lucrative team merchandise business. It’s an interesting study for teams to consider when making these decisions, and when structuring contracts for jersey sponsorships.

On the flip side, if it hurts sales and teams decide to build that economic value into the sponsorship to make sure they profit from the deal, do sponsors have any chance for a positive ROI? Without delving too far into the ROI debate, which is not quantifiable yet, what is the difference in value and impact between a patch on a jersey and title sponsorship?

The jersey sponsorship question goes much further than commercialization vs. tradition. It lies in a detailed team business analysis that could have substantial long term revenue effect.

Dolphins Stadium Naming Deal Bad for Market

The stadium naming rights market has receded from guaranteed long-term, 8-figure deals only a few years ago to this – a one-season contract with a musician’s niche beer brand. When the Dolphins agreed to a sponsorship with Jimmy Buffett licensed LandShark Lager, an In-Bev product, they showed that teams are willing to do anything for revenue in this recessionary market. They also set the stadium rights market back, potentially hurting future deals.

A recent opinion article in SBJ touts the agreement as the future of stadium sponsorships, teams affiliating with individual brands (http://tinyurl.com/qmal6n) thus mitigating the risk associated with large corporations. The author makes a case for the shared values of the football team and the brand. I buy the latter argument, however the former does not hold much clout, and overall the deal devalues what stadium naming rights brings to the table.

Start with the length – one season. Stadium deals are built on impressions and long-term associations between the team and company brand, plus an ability to integrate products or obtain leads through the sponsorship. One season is not enough to establish that connection. In the long run, annual deals will devalue naming rights. Fans will struggle with recall, media will mock the name and probably misstate it, and brand affiliation will be weak. Yes, what about the constant name changes spurred by mergers and acquisitions in the past. While the inconsistency is not preferred, I’ll argue that it’s still achieving goals or the brand. Take the former Pac Bell Park in San Francisco, which has since been SBC and AT&T Park. While the name took on many forms, the company was constant. The product was constant. In fact, one could argue the stadium name change helped reinforce to fans that the company name had changed. Fans in the Bay Area could make the connection with the fact their phone bill had a new company logo. Further, the activation around the stadium, and the promotions AT&T leveraged the sponsorship for did not have to change, so in many ways the deal remained beneficial.

I submit that the brands have shared values and it’s easy to find common ground between the two. However, I argue that better sponsorship packages exist to extract this value. Building a sponsorship around the tailgating before the game, or a particular section of the stadium – as many teams have started to do, where the Dolphins can create some entertainment or bar/beach atmosphere make more sense. A sponsorship akin to the partying and entertainment aspect of a football game would directly drive beer sales for LandShark, and create a package that fits the size of this brand better.

To address the point on mitigating risk – I simply don’t see it. If anything individuals are higher risk than corporations. Yes, Citi took TARP money and Enron went bankrupt due to corruption, but do we need to review all the public humiliations that individuals have. With individuals you can’t sweep it under the rug, with a large company that is constantly in the news for good and bad it usually becomes a footnote – for instance, Citi Field debate has subsided after strong sentiment over the winter. Buffett may not create a problem, but as a general statement, individual brands are far riskier than corporations are.

The stadium naming rights market was overpriced for the better part of the last decade, and is undergoing a major correction as marketers seek better ROI measures and make smarter investments. That correction is taking place across the entire advertising and sponsorship market, not just in sports. It does not mean that stadium naming rights no longer have value. It’s just identifying what value they have. That said, teams only have one stadium asset to sell against, probably their biggest revenue source outside of tickets and television. Making short-term decisions to earn any revenue they can, as it appears the Dolphins have done, will diminish the long-term value of the asset. On the other hand, the Cowboys are holding out. Recessions can lead to irrational behavior. I think the Dolphins acted in this manner, and will suffer in the long-term.

Initial Reactions to WNBA Jersey Deal: League Wins, Sponsor…

Before even raising the question, this deal was a no-brainer for the WNBA and Phoenix Mercury. A seven-figure deal for a fledgling league that’s run on a low budget in the midst of a macro-economic recession. Unless it threatens the image of the league, take the money and run – do not pass go, do not collect $200. Without the history and tradition deeply rooted in the major sports leagues, the WNBA does not face any fan lash back from putting logos on uniforms, and it already paved the way last season with the McDonald’s logo on jerseys for opening weekend.

Last year’s deal McDonald’s deal paved the way for the LifeLock-Mercury sponsorship, and the other team uniform sponsorship that will presumably follow this season and beyond. My only caution for the league is how they integrate the logo onto the uniform. If it takes top billing, right above the number (http://tinyurl.com/oktbm2), I think it will damage jersey sells and team merchandise revenue. Fans that grow an affinity for the team and root for the logo (rather than the names on the back) may lose some of the association in the long term. Otherwise, an up front revenue windfall is good for the league and its team, especially after an off-season that saw its initial cornerstone franchise, the Houston Comets, fold.

On the sponsor side, the verdict remains out on LifeLock. Sports sponsorships are difficult to measure, and the days of just using signage and placing ads has started to give way to the need for product and brand integration. Obviously, outside of the apparel makers that’s difficult to achieve with a jersey. However, I’m curious what LifeLock’s objectives are with the sponsorship. How do they intend to sell their identity theft protection service, or exhibit the benefits of their service, by slapping a logo on the uniform? Unlike other sports advertisements, this brand impression is unlikely to solicit a direct response or much of anything toward a purchase. A lot comes down to LifeLock’s activation and how the firm plans to leverage the entire sponsorship package to gain awareness, encourage sampling, and convert sales.

I feel the prototypical jersey sponsor is a national brand, either in a competitive market or in a growth mode, where awareness can drive value. The sponsor should have a reason to associate with the league – shared values, targeting the same demographics, or have a product that is endemic to the sport or the lives of the athletes. It’s very much a national sponsorship because of the television exposure, road games in other markets, and media coverage, so it should be a nationally relevant firm. Further, that exposure will show up in the premium, so the sponsor needs to attain that value to make it worthwhile. Again, not being an expert on LifeLock, I don’t know that it’s a good investment. The WNBA is a niche product, so it won’t gain wide exposure, the league focuses on the youth demographic, who probably are not interested in identity theft services, and it does not deliver a message with the uniform logo, so as an unknown company its not communicating with the fans. Activation remains to be seen.

It’s only a matter of time for the rest of the teams to sign sponsors, and I’m sure it’s a discussion point in the D-League – but what about “The League”. I think eventually sponsors will appear on jerseys in major sports, with the NHL or NBA leading the way, however I think its still a few years out. I’d be curious what the impact on jersey sales would be – logos excluded, sponsors pay more to appear on merchandise, sponsors get a share (unlikely). The biggest roadblock is fan reaction – and associating one of the last pure parts of the game to sponsors, leaving teams susceptible to the same risk they face with stadium naming rights. Will the Cavs jersey have a new sponsor on it each year due to bankruptcies, mergers and acquisitions, and expiring contracts – thus devaluing the whole concept?

Golf Needs to Revisit Business Model

Golf is arguably seeing the most direct impact from the economic recession. The higher income, older demographic of golf fans attracts a higher proportion of financial institutions as sponsors than other sports, many of which have had to pull back advertising. Not to mention that Buick and Chrysler have bigger problems than golf sponsorships right now.

The PGA has lost two sponsors for next year already, has had two other sponsors who received TARP money remove their name from tournaments (though still pay for the sponsorship), and has almost 1/3 of its tournament sponsors up for renewal after next year. A few non-PGA, made-for-TV tournaments have also been canceled. On the women’s side, a sport already at the fringe of sports, is facing significant problems due the recession, already losing three tournaments.

Sports sponsorships are already difficult to measure results against, with golf it’s more difficult and a riskier investment because it’s a one weekend deal. Sponsoring baseball or football gives the sponsor an entire season to integrate its brand with the sport and make an impact on fans, a prolonged time period to leverage new business. Golf gives a sponsor four days, or a week if you count the pro-am. And no guarantees on who is going to play, which impacts TV ratings and attendance more than in any other sport.

On top of participation and short time periods, golf tournaments have become increasingly more expensive to run – primarily thanks to skyrocketing payouts. According to a recent SBJ article, purses have doubled since 1999, an unsustainable rate that is raising costs for sponsors and tournament operators.

In the face of sponsorship problems and a growing popularity problem (when Tiger doesn’t play), golf needs to reinvent itself somewhat. On the sponsorship front, it needs to become more creative. A generic title sponsor doesn’t cut it anymore. The sport needs to do a better job of adding value for its sponsors, and helping them unlock the value that a golf sponsorship can provide. For tournaments struggling to find major sponsors, one idea is to localize. Put the name of the city on the event, or the local commerce bureau, and gather multiple local businesses in the area to come sponsor the event. Hold networking events, get employees involved with the players, find a way for each sponsor either to generate sales or leads through the tournament. The key is to focus local, and maximize the value by connecting sponsors with the community in a meaningful way, when you can’t sign national title sponsor.

Taking this a step further, golf should investigate creating a central authoritative body to work on sponsorship and revenue generation for the sport. The PGA, USGA, players, tournaments, it’s a hodge podge of stakeholders. The various constituents should jointly form a group – not too dissimilar from the internal consulting groups that most major leagues not use – to help with sponsorship sales, possibly leading to the point where companies can sponsor multiple tournaments, or maybe the entire season, through one entity. Tournaments working individually will not be sustainable in the long run. At the least, the smaller tournaments need to share resources.

On the player side, purses need to be scaled back and participation mandates put in place. Joe DiMaggio said he always played his hardest because there might have been one kid in the stands who had never seen him play before. Golfers should consider that when they decide to play one event a month – that means you too, Tiger. No matter how good you are at any sport, no player is bigger than the sport. Many systems have been considered – from a certain number of events per year to playing each event at least once every four years, but the question is what is the penalty and how to enforce it. The WTA mandates participation or they fine you. What could you possibly fine Tiger to make this enforceable? Again this comes back to creating a more centralized organization, one where the tournaments help each other. I think the best way is to create participation rules and the penalty for not meeting the requirements is not playing in the majors – with injuries and other personal reasons as the exceptions, just like other sports. Basketball teams don’t sign players each year just for the playoffs, the play all season to qualify for the playoffs. Golf needs an incentive system that forces players to play more than they do.

Revenues should dictate purses. Less television dollars, lower payouts. Less sponsorship money, lower payouts. Look to the other sports. Golf is an individual sport and fundamentally different than the major leagues, but it can use better governance and a more centralized approach.

One final thought on sponsorship, the title sponsor category lacks significant endemic sponsors. Where is the Nike Open? Yes, they sponsor individual players, but how could a tournament sponsorship not benefit a club or ball manufacturer. The product integration and sales possibilities are tremendous. If not a title sponsorship, a secondary or category sponsorship seems like a good idea. Overall, golf needs to reevaluate its structure and move to make the changes that have wide ranging impact on the business of the game.