The Endorsement Game

If you haven’t done it yet, check out SI’s Fortunate 50, which breaks down athletes’ earnings (salary or winnings) and endorsements and totals them to find the richest athletes. Tiger Woods has been number one since SI began keeping track 5 years ago and has brought in a whopping 100 million dollars two-years running—most of it due to endorsements. Surprising? Not really.

What is surprising, however, is the performance of baseball players on the list—especially the dearth of endorsement money that major leaguers take in. There are ten baseball players in the top but their spots are earned because of high salaries rather than endorsement deals and four of those ten are paid by the deep pockets of the Steinbrenner family. Alex Rodriguez, arguably the game’s best player, took in only $6 million and Derek Jeter, arguably the face of baseball, took in $8 million. Why is it that the top endorsement earners come predominantly from golf (Tiger and Phil Mickelson are 1 and 2), basketball (LBJ is third with $28 million), and NASCAR (Dale Earnhardt Jr. raked in $22 million and Jeff Gordon $15 million)? After all, baseball is America’s game—indeed it’s our national pastime. Can baseball players not sell a product? Is this an early warning sign of baseball’s dwindling popularity?

While MLB could certainly stand to improve its own marketing strategy, I think the discrepancies are due to the fact that sports like golf, basketball and NASCAR naturally lend themselves to successful endorsement campaigns. Golf is an affluent sport and there are an endless number of expensive golf gadgets and non-golfing products such as cars that match golf’s fan-base. Furthermore, it’s a relatively pure and drama-free sport so it’s low risk and doesn’t scare off potential sponsors. Plus, I can’t imagine Randy Johnson being the face of Buick, let alone KPMG.

The basketball industry, in my opinion, is successful because it has been able to market its products in a way that has transcended the basketball court and has landed in people’s everyday lives. For instance, you won’t see a kid walking through the classroom halls in a pair of baseball spikes but you will see Nike Air Jordan’s all over the place. Indeed, basketball is probably the king at making its players endorsement rich. Even Carmelo Anthony, who should be product poison after his most recent antics, pulls down $9.5 million and hasn’t lost an endorsement yet. For some reason, basketball has been able to maintain high endorsement levels despite a constant struggle with player behavior and the league’s image.

And then there’s NASCAR—our country’s most popular sport. Have you ever seen one of those vehicles, or their driving suits? Have you ever heard a driver speak in an interview? Talk about sponsor heaven!

I’m not saying that baseball should paint sponsor logos all over their uniforms. But baseball is behind in the endorsement game. For me, baseball needs to define more clearly who it is. Getting more creative and reaching out to sponsors that connect with baseball’s fan base will only serve to help them. Other sports—whether you like them or not—seem to have distinct and definable identities. It’s not an identity crisis for baseball, per se; but it could stand to do some soul searching.

An Inauspicious Start Indeed

This exchange is simply too good to be true. I love everything about it: the honesty, the passion, the stupidity (from both sides).

It's still just a "hand-shake" trade but it looks like Ron Artest, of Palace Arena fame, will be bringing his right-hook and ball stealing skills to Yao Ming and the Houston Rockets. But Yao, generally soft-spoken for a man of his size, had some strong (read priceless) opinions on the deal:

For some reason, I like (Artest). Because in the games we play against him, I
hate him. We worry about the new attitude to the team. We are adding talent to
the team and we need that, but building team chemistry is important. This is not
bad. I don't mean he is not welcome to Houston. But a new player always needs
some time. There’s worry. Obviously,yes. We will think about it, of
course. Hopefully, he’s not fighting anymore and going after a guy in the
stands. I haven’t talked to Ron yet, so it’s hard to say. I have to find a
way to talk to him and see what we can do as a basketball team. He has a
history. But we know he is a physical player. He is a good player. He really can
help us. And Ron is on a contract year, too.

OK. So Yao is merely expressing reasonable reservations about bringing in a large and rather belligerent personality to his city. Artest didn’t quite see it that way. Here’s his eloquent and deeply intellectual response:

I understand what Yao said, but I’m still ghetto. That’s not going to change.
I’m never going to change my culture. Yao has played with a lot of black
players, but I don’t think he’s ever played with a black player that really
represents his culture as much as I represent my culture. Once Yao Ming gets to
know me, he’ll understand what I’m about. If you go back to the brawl,
that’s a culture issue right there. Somebody was disrespecting me, so he’s got
to understand where I’m coming from. People that know me know that Ron Artest
never changed.

Sounds like a match made in heaven!

Don't Let Pac Bell Become the Tropicana Field of 2005

In baseball streaks are usually good. Players try to amass hit-streaks and teams try to run up win-streaks. As an organization, the SF Giants would love to continue their streak of attracting over 3 million attendees in a season—a feat they have accomplished each year since Pac Bell Park opened in 2000. But this year that streak is at risk.

If ticket sales continue at their current pace, the team will sell around 2.8 million tickets. That would not make Russ Stanley, Managing Vice President of Ticket Sales and Client Relations, a very happy man. “Unless we do 3 million we’re upset about it,” Stanley said in an interview with Eric Young of the SF Business Times. To keep the streak alive, and to spur ticket sales “We’ve got to be a lot more creative than we did before,” says Stanley.

This year, the Giants have thought outside the box in marketing tickets. Early in the season, the organization made a deal with Chevron to package a gas card and four tickets to a game for 75 bucks. More than 12,000 tickets have been sold thanks to this marketing idea. Player performance has also become linked to the marketing strategy. For every batter that Tim “The Freak” Lincecum mows down on the road, the Giants will subtract one dollar from the ticket price of his next start for seats in the bleachers and upper deck.

The most interesting strategy that the team has been playing with is dynamic pricing. The team has already switched their online ticket sales system to Stubhub.com, which for the first time allows fans to sell their tickets at below face value in an effort to boost ticket sales. But dynamic pricing would take the concept even further. Right now ticket prices are fixed, with differences arising only because of seat location. Dynamic pricing allows for tickets sold by the Giants to move up and down in price as demand fluctuates. For instance, if the Giants are playing well and the Dodgers come into town for a weekend series, ticket prices would increase to match demand. Conversely, if the Pirates come for a mid-week series, dynamic pricing would force ticket prices down and hopefully increase demand so the team could fill their pockets with revenue from seats that would otherwise be empty. It’s the same strategy employed to sell airline tickets and to book hotel rooms. However, it’s new to sports. The team is currently studying exactly how to role out the plan and, if they do, it would go into effect in the next couple seasons.

Ticket sales are vital for a team’s viability. According to an estimate in Forbes Magazine, of the $197 million in 2007 sales for the Giants, $90 million was due to ticket sales. Without a big attraction like the All-Star Game, a playoff ready team, or a living-legend like Barry Bonds, the team will indeed be tested to reach the desired goal of 3 million fans. If they fail that test, the Giants may need to get even more creative in marketing the team. Broadening the reach of their brand with more sponsors and corporate promotions could be the ticket.

The Perfect 5-Hour Sales Call

As an aspiring business man and lover of the game of golf I, for one, hope to make many business deals on the course. I can hardly imagine a job better than one that involves going to great golf courses with great people and doing good business. Plus, I just can’t wait to say “Great shot Bruce! Now how about investing $20 mil in my company!?”

A joint Sports Illustrated-CNN article does a good job outlining several guidelines for doing business on the course. You can check it out if you want, but here are some of the best rules to follow (my comments in italics):

-Don't Sandbag or Tank It
It's the most common question: to win, or not to win? The answer is: play to your ability, fair and square. Gauge the personality of your partner and determine how intense he or she is about the game. Don’t dupe your playing partner. If you dupe him on the golf course, you may the type to try and dupe him in business.
-Patience is a Virtue
Don't discuss business before the 5th hole or after the 15th hole. Like golf itself, you're in this for the long haul. I guess the point here is not to seem like you’re forcing the issue. You’re out of the office for a reason: to get to know the person in a non-formal setting. Therefore, don’t present your idea in a traditionally formal manner. Weave it in there effortlessly. When your playing partner comes up short on the par-3, let him know that if Callaway had used your metals he would have been pin-high-stiff!
-Focus on Results
And by results, we don't mean score. Before the round, think about what you hope to get out of the day, outlining your goals and how you plan to meet them. It's a vital component to business golf, as key to good performance as a pre-shot routine. Treat the “five-hour sales call” the same as usual but with appropriate modifications. You aren’t out there to completely screw around. You have goals so outline them and make sure to achieve them by the end of the day.
-Right Time, Right Place
This would be my only addition to an already good list. Timing is everything. You don’t want to abruptly make your proposal right after a bad shot. Instead, hit him up for his business after he hits the green in two on the 600 yard par far. Bruce is probably going to be less excited about shelling out a few million if you solicit him just after his Titleist strikes a tree branch and falls right into the lake. If you do, Bruce might impale you with his 7-iron.

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But in all seriousness, the golf course can be a great place to do business and learn about existing/possible business partners. The theme of all these rules is to remember that even though you’re playing a game, you’re still performing, still making a business pitch. There’s a famous saying that “Sports builds character.” This is true, but I’ve always felt the following should be equally famous: “Sports reveals character.” And really, there’s none better than golf. A round of golf can provide insight into someone’s decision making skills (how do they go about choosing a club?), risk tolerance (do they go for the green in two over water) and integrity (do they follow the rules of the game?). Do enough good business on the course and maybe you’ll be able to put down that club membership on the company’s expense account.

Video of the Week: Beauty Comes In All Shapes and Sizes... Except Here

This is the first installment in this blog’s “Video of the Week” series. Each Monday, I will post a usually hilarious, but always amazing, sports clip. And what better way to christen the series and set it off on the right foot than by honoring Sir Charles Barkley.

For many golfers, watching Charles Barkley swing a club has similar effects to catching a glimpse of Medusa—one sighting might forever poison your mechanics and send you careening into Shanks-Ville. But people aren’t drawn into watching Sir Charles’ swing because of its beauty. Indeed, the former All-Star-basketball-player-turned-Pro-Am-hustler draws stares because he possesses quite possibly the worst golf swing in the history of the game. When you see him on the tee it’s like driving past a ninety-six car pileup on the other side of the highway—you just have to rubber-neck. In a recent Pro-Am in Lake Tahoe, where double bogey is the max you can score on a hole, Barkley took double on 41-54 holes in the Stableford format (a good shooting percentage in basketball but certainly not golf). But to his credit, Charles is always having fun on the course and enjoys entertaining sympathetic fans.

Take a slow-mo look for yourself here. Also, watch other celebs and golf instructors discuss Charles’ helpless technique.

And here’s a clip of Tiger Woods, who arguably does possess the world’s most beautiful swing, imitating and analyzing Sir Charles’ flailing swing.

No More Clydesdales?!? Say It Ain't So!

We’re all familiar with Budweiser’s ads. You know, the ones with the Clydesdales playing football? Or if you’re really good, we can throw it back to 1995 and the “Bud-weis-er” frog commercials. Unfortunately, we may be seeing less and less of those beautiful beasts. The recent sale of Anheuser-Busch to Belgium-based InBev could have effects on advertising and marketing that could reach all corners of the American sports industry. It’s a big buy for InBev. The $52 billion deal unites the maker of Budweiser and Michelob with the producer of Stella Artois, Bass and Brahma. The two companies would have had over $36 billion in yearly sales using 2007 figures, making it the world’s largest brewing company.

According to Nielson Media research and the SportsBusiness Journal, A-B is the country’s number one sports advertising and sponsorship spender. They spent $218 million in 2007 alone. The A-B brand has sponsorships in the NFL, MLB, NBA, NHL, NASCAR and the PGA Tour. Consequently, teams and leagues have come to depend on A-B for much of their promotional and advertising revenue. Though A-B shareholders may be happy with the $70 per share deal, it turns out that the sale has fomented some concern among American sports marketing executives.

With the A-B board no longer calling their own shots, many sports marketers predict that the American company will ultimately have to cut ad spending to keep in line with InBev’s cost and price cutting post-merger strategy. Tom Pirko, a consulting executive at Bevmark who has consulted for both firms, anticipates as much as a 33% cut in A-B’s sports marketing spending. As the new team works on debt and cost reduction, Pirko says “It’s [Advertising] all going to decline severely.” But it won’t happen overnight “because they have to make things look good here. It’s a lot easier to cut an ad budget than to close a brewery.”

However, others are not so sure that the merger will truly alter the sports marketing landscape in a negative way. For one, sports sponsorships are often long term deals which carry conditions that make them hard to break or modify. Also, A-B spends an additional $300 million a year on marketing outside the US, a market that InBev could stand to gain ground in. Moreover, there seems to be no real reason why A-B and InBev couldn’t just combine forces and continue as usual. After all, InBev’s strategy appears to be to let A-B function with relative sovereignty due to A-B’s long-standing and deeply rooted advertising tradition in the US. It thus seems unlikely that InBev would significantly slash something that has been successful for so long. So expect ad spending to decline slightly, but not dramatically so. Finally, the deal could open up opportunities for other US-based breweries to fill in the gaps should A-B cut spending. It could allow companies such as Sam Adams or Coors to step up and position themselves as the new All-American beer. Increased spending from such companies would probably level out whatever could be lost from cuts by A-B.

But of course none of this will do anything to bring down the price of beer at a game. I’d almost rather brew beer out of my own spit than spend $8.75 on a domestic brew.

Bat + Pine Tar = Frickin' Tyrade

Today marks the 25th anniversary of one of the greatest flip-outs in baseball history. Lou Piniella has had some special moments. And no one can forget Phil Wellman, Double A manage in the Braves' organization, get so creative he’s now a candidate to choreograph the next Chris Brown video. But the top award must go to George Brett. On this day back in 1983, Brett mixed a deadly concoction of pine tar and hickory and added a bit too much power than umpire Tim McClelland cared to stand for. The result: the best sports tirade ever! Judge for yourself here.

But at least Brett has been able to look back on the incident lightly. Now supporting his post-baseball income as a spokesman for Ben Gay, Brett quipped that had the Pine Tar Incident never happened “then I'd only be known for hemorrhoids.” Agreed, George.

Oh and don’t forget to check out those uniforms too. Jesus.

MLB All-Star Game Is Big Opportunity for Marketers

Major League Baseball’s All-Star Game is gaining on the Superbowl. No, not in terms of explosive tackles á la Pete Rose, when he absolutely leveled Ray Fosse in the 1970 match-up and ended the poor man’s career. For better or worse, such intensity has left the mid-summer Classic. Instead, it is in the realm of advertising where the All-Star game is making ground. Last weeks game attracted approximately 14.5 million viewers, making it the most watched AL-NL matchup since 2002. That, combined with Fox’s year long campaign to highlight the historic nature of the venue—Yankee stadium, the House that Ruth Built, will close after this season—made this a mouth watering opportunity for advertisers.

Live events with big followings are always major vehicles for advertisers to showcase their brands. With seventy ad slots available, companies such as MasterCard, Chevrolet, Pepsi, and Bank of America shelled out an average of 15% to 20% more for ads this year than for last years match-up in San Francisco. A 30-second spot fetched around $550,000, up from $425,000 yielding an approximate total of $38,500,000. Add to that the $100 million spent on promotions such as seat cushions, parades and a Bon Jovi concert in Central Park, and you have a Patton like marketing assault.

The growth can be attributed to the “scale, history and tradition” of the event, said MLB head of business development Tim Brosnam. “New York is one of the largest cities in the world, has the biggest TV market and Yankee Stadium has one of the largest capacities.”

Sports purists often complain that too much commercialization hurts the intrinsic sporting value of the event. They say it shifts the focus from the realm of sport and relegates it to the jurisdiction of simple entertainment. Perhaps, but this year’s midsummer classic delivered entertainment and good baseball. Fans were treated to the feel-good story of Josh Hamilton who turned the Home Run Derby into a record breaking spectacle. The next night, not to be outdone, both the NL and AL teamed duked it out in an exciting 15 inning duel. Baseball’s purists may not have been thrilled, but you can be sure the advertisers were.

WELCOME!!!

Welcome, welcome, welcome! Glad to have you here (imagine that’s being said by Harry Caray). Perhaps you came here on purpose or perhaps by complete accident, but now that you’re here I hope you’ll enjoy what you find.

What I hope to do with this blog is create a place where sports enthusiasts can talk, laugh and argue about sports. But as opposed to concentrating on the day’s headlines and discussing standings, strategy and Jason Giambi’s mustache—the AP already takes care of that—I plan on going in a somewhat different direction.

If you travel back to mid-19th century America, sport as we know it today did not exist. Ideas of competition and physical exercise as a way to improve the body did not mesh with the social fabric of the Victorian mode that held the country. By the turn of the century that had changed. With the Industrial Revolution came new values that complemented those of sport. As a result, sport began to grow in popularity and became largely a 20th century phenomenon. Many events, such as the rise of the leisure class to vast advancements in technology, have abetted sport’s continual growth throughout the past 100 years.

With this blog, I hope to explore how sport has become more and more intertwined with American society. In many ways, one cannot be talked about without the other. Sport was the backdrop to the growing conflict with Germany in the late 1930s when Joe Louis felled Max Schmeling in 1938. And sport was present during the Civil Rights Era when Jackie Robinson integrated baseball. Even today, the controversy of steroids in sports has meaning and implication far beyond the playing field. This blog will examine current events and, while noting and paying respect to the past, flesh out an understanding of an age-old question: does society lead sport or, with its captivating grip over many of us, does sport lead society?

With its increasingly strong grip, sport has grown into a $250 billion per year industry in the US alone. In hopes of answering our central question I will also be posting on topics relevant to sports business—from corporate marketing to player imaging and branding. This does not mean that I won’t be noting my favorite sports quotes (Shaq and Bobby Knight supply finer material than an Italian silk weaver) or that I won’t post hilarious sports videos (wait until you see Sir Charles Barkley swing a golf club!). However, it does mean that I hope to bring something new to the table, something that has been racking my brain for quite some time. I hope you will join me in discussing some of these issues. Most of all, I hope you enjoy what’s here! Welcome!