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Evaluating my 2009 Sports Marketing predictions

Posted by ZA on January 3, 2010

Time to take a look back and evaluate how I did on my 2009 predictions for the world of Sports Marketing. I posted my “bold predictions” on January 2, 2009 as a wide ranging look at some of the big moves I thought would happen in the industry.  I made seven predictions and wind up getting almost half of them correct.

Prediction: Tiger Woods will sign with Mercedes or BMW.

Result: This one did not happen, but who could have predicted the implosion that would happen to Tiger Woods the endorsement star in 2009.  Tiger is currently losing endorsements by the week, but I still think this prediction will eventually come true.  Companies will stay away from Woods for awhile, but when they do come back I expect Tiger to pickup a luxury car endorsement deal.

Prediction: Wrigley Field gets a new name.

Result: This one didn’t happen, although the Cubs were finally sold at the end of the year so it could be on-tap for 2010.

Prediction: AIG will end uniform sponsorship with Manchester United.
Result: I got this one right.  Shortly after writing these predictions word came out that AIG would discontinue their deal with Man U.  AIG actually just chose not to renew their deal, but close enough I got this one right.

Prediction: NASCAR will cut races.

Result: It was a tough year for Nascar with a tough economy and huge losses in the auto industry both hurting the sport.  The end result was that some races were not return to the schedule (e.g.- Milwaukee Mile in 2010).

Prediction: Reebok will be folded by Adidas.

Result: This did not happen, and with parent company, Adidas’ stock up 20% in 2009, the Reebok brand might be safe for awhile.  That said, I still think we’re still headed towards an Adidas versus Nike world, so at some point Adidas is going to put Reebok down.

Prediction: Under Armour will be acquired by Nike.

Result: This did not happen, but I still feel it’s one that could happen soon.  Under Armour’s stock is only up slightly since beginning of ’09 and UA stock took a pounding in October when they missed the mark with their expansion into running shoes.  Nike is still flying high and has a $30 billion market cap, so I think they eventually make this acquisition to eliminate a big competitor.

Prediction: David Beckham goes back to Europe.
Result: Nailed this prediction.  Becks came, he played a little bit and created a sensation.  Then David high tailed it back to the Spanish Premiere League.  I think Beckham likes the idea of playing in America, but isn’t really interested in doing it just yet.

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Posted in Adidas, Apparel & Shoes, Golf, Nascar, Nike, Sports Brands, Sports Marketing, Under Armour, Venue Naming Rights | Tagged: , , , , , , , | 1 Comment »

Who are the most popular athletes in America?

Posted by ZA on July 30, 2009

Americans love sports, so naturally we love the athletes who play the games.  But which athletes are our favorites?  Who are the top 10 most popular athletes in sports today? The Harris Poll recently released the results of their 2009 survey that asked 2,177 U.S. adults to tell who were their favorite sports stars.

America’s Favorite Male Athletes (2009):
1. Tiger Woods (Golfer)
2. Michael Jordan (Retired, NBA star)
3. LeBron James (Forward, Cleveland Cavaliers)
4. Kobe Bryant (Guard, Los Angeles Lakers)
5. Derek Jeter (Shortstop, New York Yankees)
6. Jeff Gordon (Driver, Nascar)
7. Peyton Manning (Quarterback, Indianapolis Colts)
8. Dale Earnhardt Jr. (Driver, Nascar)
9. Brett Favre (Retired, NFL star)
10. Albert Pujols (Baseball player, St. Louis Cardinals)

America’s Favorite Female Athletes (2009):

1. Serena Williams (Tennis player)
2. Venus Williams (Tennis player)
3. Danica Patrick (Driver, Indy Racing)
4. Candace Parker (Forward, WNBA)
5. Mia Hamm (Soccer star)
6. Maria Sharapova (Tennis player)
7. Annika Sorenstam (Golfer)
8. Chris Everett Lloyd (Retired, Tennis star)
9. Anna Kournikova (Retired, Tennis player & model)
10. Michelle Kwan (Figure skater)

What stands out to me about the lists, particularly among the guys, is the influence that Nike has among the list.  7 of the 10 guys on the list endorse Nike, you could count Brett Favre as an 8th since he endorsed Nike brand, Starter.  The only 2 guys who do not have endorsement deals with Nike are the two Nascar drivers, who wouldn’t be a target for a shoe/apparel endorsement deal.  So you could say that Nike has a clean sweep of the eligible males.  Among female favorite athletes Nike’s percentage drops down a bit, but they still have four of the top 10 and the #1 overall.  Serena Williams, Mia Hamm, Maria Sharapova and Chris Everett Lloyd all cash endorsement checks signed by Phil Knight.

Other brands are well represented; Gatorade has deals more than half of the two lists.  That number is even greater if you factor in all of the Pepsico clients, Gatorade’s parent company, on the two lists.  Nike’s chief competitor, Adidas, also has a couple of current (Parker) or former endorsers (Kournikova) on the list.

But no brand is as well represented on the two lists as Nike.  The question it brings up is whether Nike’s marketing is helping to make these stars more popular or whether Nike has just picked the most popular athletes?  My thought is that it’s a bit of both.  Nike has always been one of the innovative marketers in sports.  They’ve revolutionized the game of sports marketing with campaigns they built around athletes, starting with Michael Jordan and continuing today through Tiger Woods.

Consider that Nike did not even make golf shoes or clubs prior to signing Tiger in 1996.  Nike’s original endorsement contract with Tiger Woods was $40 million dollars over five-years, which was then followed by a five year, $100 million dollar extension.  But their spending did not stop there, Nike has spent tens of millions more to promote their association with Tiger Woods.  And for their efforts, it’s estimated that Nike Golf pulled in $725 million in sales in 2008.  Through their endorsement deal and promotion, Nike essentially created a new billion dollar revenue stream for the company.  That type of innovative marketing will generate the cash to pay for a lot of endorsement deals.

And Nike has never been shy about spending for top talent.  They signed quasi lifetime endorsement deals with a few of the top names (Jordan, Woods & Serena Williams) to make sure they locked up their stars.  Other deals might as well be lifetime contracts because you won’t see Jeter or Sharapova pitching anyone else’s shoe brand anytime soon.  And Nike jumps at the chance whenever their has been an opportunity to add a big, new star to their roster.  Just recently they solidified long-term agreements with two members of the top 10 list above who happen to be the most popular players in the NBA; LeBron James and Kobe Bryant.

All of the athletes above are some of the biggest stars in sports; a feat they achieved because of their superior talent and lots of hard work.  But to ascend to the top of the list of America’s favorite athletes also requires a little help from sponsors.  And from their dominance on the two lists, it appears that Nike is a really good sponsor to have.

Posted in Athletes, Endorsement Deals, Gatorade, Golf, MLB, Nascar, NBA, NFL, Nike, Sports Brands, Sports Marketing | Tagged: , , , , , | 5 Comments »

NBA changes ad decision on liquor

Posted by ZA on January 22, 2009

“Better the devil that you know than the devil that you don’t know.”  I think that expression is apt for this story.

Due to the tough economic times the NBA has decided to reverse its ban against in-stadium liquor signage.  The ban prevented liquor advertisements from being located courtside, or anywhere else in the stadium that could wind up being seen on a television broadcast.  Teams were previously allowed to sign deals with liquor companies, but had to restrict the signage to areas out of view of tv cameras.

The NBA is not the only league to go down this path.  Major League Baseball, Nascar and the NHL all have previously overturned this same regulation in their own leagues.  They now allow liquor advertisers to position themselves so that they will appear on those leagues television broadcasts.

Although these decision are assuredly not popular with organizations like MADD, they are necessary to keep new sponsor dollars coming in during this recession.  Liquor sales are not going to be greatly impacted by the downturn, so that segment is one of the few that has sponsorship dollars to spend.

I can’t blame the NBA, in these tough financial times you have to do whatever is possible to stay afloat.  They are choosing to take the dollars available to them rather than face the unknown consequences of not getting that money.

Posted in MLB, Nascar, NBA, NHL, Sponsorship Deals, Sports Marketing, Stadium Signage | 2 Comments »

Bold predictions for Sports Marketing in 2009

Posted by ZA on January 2, 2009

There were lots of changes in the sports marketing world in 2008.  So predictable, but many were one’s that no one saw coming.  With the global economy in a tailspin, cash is now king.  That means big changes are in-store for the world of sports marketing in 2009.  So what is coming in the sports marketing world for 2009.  Here are 7 bold predictions.

2009

1. Tiger Woods signs with Mercedes (or BMW)
* He was dropped by Buick in 2008.  His agent said Tiger wouldn’t have a new car sponsor.  US automakers are in horrible shape, so look for one of these foreign car makers to make a run at Tiger. Mercedes stepped up and landed a spot in the Masters, so they are the favorite.  But don’t rule out BMW and even Lexus.

2. Wrigley Field gets a new name
* Actually I don’t think they’ll change the name, just add a presenting sponsor (e.g.- Rose Bowl presented by Citi). Tribune Company needs the cash and a Wrigley Field naming rights deal should bring in $20M+ annually (even in a down economy).  As to which company will pony up the cash, keep an eye on local Chicago corporations like McDonald’s.  It’s possible that the Big Mac will replace the Chicago style hot dog as the official food of Wrigley Field.

3. AIG defaults on Manchester United sponsorship
* There are a number of sponsorship deals that could go belly up, but I’m predicting AIG to be one of them.  AIG’s financial troubles brought them to the brink of bankruptcy before they were bailed out.  Their deal with Man United is $20M per year.  Some government auditor is going to force AIG’s hand on reigning in their spending, and the Man United deal gets cut (think Tiger Woods and Buick).  Not to worry Manchester United fans, there will be plenty of global companies eager to put their corporate name on the United kits.

4. Nascar will eliminate races
* For years Nascar has been the darling of the US sports world, growing faster than all of the other major professional sports leagues.  But the troubles in Detroit are going to take a big bite out of Nascar, forcing them to cancel a few races.  This will actually turn out to be a good thing as the attrition will make the races that remain that much stronger, think of it as addition by subtraction for Nascar.

5. Reebok brand is eliminated
* Not eliminated, but rather folded into Adidas so that all Reebok shoes/apparel/deals will now be Adidas.  Reebok’s sales were down in 2007, and soft 2008 sales will prompt Adidas to consolidate.  Since Reebok is already a subsidiary of Adidas Group, the change will be to convert Reebok into Adidas.  The move will eliminate jobs at Reebok and strengthen the Adidas brand which inherits deals with the NFL, NHL and MLB.  The Adidas logo will appear on NFL jerseys, rather than Reebok.  This type of brand changeover (consolidation) is not unheard of and already occurred when Adidas took over the NBA sponsorship from Reebok in 2006.   This cost cutting, brand building move is another move in the global sneaker wars between Adidas and Nike.

6. Under Armour acquired by Nike
* Nike’s reaction to Adidas taking out Reebok will be to acquire upstart Under Armour.  Under Armour is the new kid on the block in the sports apparel and shoes world, but UA has been growing fast and are preferred by a lot of kids today.  Plus, Under Armour is nearing $1B in annual sales so they have become a major player in the market.  Nike is flush with cash and looking to add to its roster of successful subsidiaries with already includes; Umbro, Converse, Hurley and Cole Haan.  Buying Under Armour ensures that Nike will remain popular with younger generations.  I don’t get the feeling that Under Armour wants to sell, but $5B to $10B offers are hard to turn down.

7. David Beckham goes back to Europe
* He came, we (barely) saw, he conquered (our wallets)…and now he leaves.  I was excited when he came to the LA Galaxy, but early injuries dampened that enthusiasm.  Since then it seems like Becks has spent more time socializing than playing soccer.  Now I think he goes back to England to finish his career in the EPL.  Overall, I think it was a positive for MLS that Beckham joined.  My hope is that the MLS will continue to add these type of players to provide a little more global appeal to the league.  Even aging stars on the tailend of their careers will bring more attention to the league.

Are the predictions bold?  Absolutely.  But the current market ensures there will big changes in 2009.  So bookmark these predictions and we’ll comeback next year to see which came true.

What do you predict will occur in the sports marketing world in 2009?

Posted in Apparel & Shoes, Endorsement Deals, Golf, Nascar, Sponsorship Deals, Sports Brands, Sports Marketing, Venue Naming Rights | 4 Comments »

Darling of sports marketing hits the skids

Posted by ZA on December 8, 2008

nascar_logo
NASCAR…the fastest-growing, best-run sports business in America...” – Fortune Magazine, September 2005

For years NASCAR has been the sport that sponsors pointed to as an example of strong brand identification and growth.  NASCAR fans were known as the most fiercely brand loyal group of sports fans, this side of English Premier League soccer. The NASCAR fans are the ones who drove around with numbers on the back of their car signifying the driver they support.  They shopped at the stores their drivers pitched (you would never fan a Tony Stewart at Lowe’s) and used the products their drivers wore on their sleeves.

Now things are starting to change at NASCAR, those same fans are not turning out in the same numbers at the track or on television.  And sponsors are finally starting to reduce, or drop entirely, their sponsorships of NASCAR.  Long-time sponsors like Kodak are leaving entirely (22 year relationship) and others like Sears and General Motors are significantly scaling back their investments in the sport.  The big US automakers are being forced to rethink their investment in the sport.  NASCAR drivers are without sponsors heading into 2009 and NASCAR just laid off 1000 employees.  It seems everything and everyone involved in NASCAR are starting to tap the brakes.

The question is how long will the downturn last for NASCAR? And will NASCAR comeback just as strong once the economy, and the automakers, gets going again?  Both are impossible to answer right now because no one can accurately predict the effects of their economic downturn.  What I do know is that NASCAR once again needs to change.

NASCAR has evolved in a large way before, moving from a regional sport supported by people in the South to a sport that commands more sponsorship dollars ($3 billion per year) than the NFL.  It has shed its hillbilly, redneck reputation and being a darling of the corporate world picking up huge deals with brands like Fox and Sprint.  Now NASCAR must change again, again evolving to ensure it can stay afloat in the wake of these tough economic times.

NASCAR needs to continue to diversify, adding more drivers from other cultural backgrounds like Juan Pablo Montoya.  Don’t believe me?  The most popular driver in Formula One right now is a Lewis Hamilton, an Englishman who is black.  Hamilton has become such a phenom on the F1 circuit that he had to move from his home country, England, to Switzerland to avoid being mobbed on a daily basis (and to save a few dollars on taxes).  I know the old guard probably gets tired of outsiders, like me, beating this drum but a more diverse group of drivers will increase exposure.

NASCAR also might consider tweaking  some other things like shortening a few races to appeal to a more mainstream television crowd.  They could also do some more skills type competitions, that auto racing purists might hate, but would appeal to the casual fan.  Look at the success the NBA All-Star Game, MLB All-Star Game and Pro Bowl have been as showcases for their sports.  Also trimming the number of cars in the field from 40+ back to a more manageable 30 would help, as currently 12 drivers are without sponsors heading into 2009.

But one thing that NASCAR needs to change for sure, is they must change the way they fund their sport so they are not so reliant on corporate sponsorships.  NASCAR teams get up to 80% of their revenue from their sponsors, which typically equates to nearly $20 million per year for the sponsors.   There are not going to be as many companies who can afford to throw down $20 mil a season for operating costs, plus the supporting millions required to promote their brand in that sponsorship.  With a declining ROI on NASCAR sponsorships large companies are going to pass on that investment opportunity, and smaller brands will only be able to tackle a portion of it.  That will leave most NASCAR teams scrambling to find dollars to keep the lights on, instead of focusing on racing.  Other professional sports teams don’t operate that way, and NASCAR won’t be able to either if they want to keep growing.

Update: NY Times did a piece on Nascar’s sponsor cash crunch.

Posted in Fox, Nascar, Sponsorship Deals, Sports Brands, Sports Marketing | Leave a Comment »

Microsoft Office for Rednecks?

Posted by ZA on March 27, 2008

I can only imagine the tech support calls that are going to ensue from this deal.  But Microsoft has agreed to sponsor a car in the 2008 Nascar Sprint Cup season.  Microsoft’s Small Business division logos will be placed on the car of Ken Schrader, a drive on the circuit.

Why Microsoft decided to jump into Nascar now is hard to figure.  Everyone has been talking about Nascar as the fastest growing sport for two years.  It’s also been discussed ad naseum that Nascar fans are very loyal to their sponsor brands.  So the successful track record for sponsorships in Nascar was already there.  I can only assume that Microsoft’s Marketing offices for sponsorships are in the same building as their Search Engine team, because they both work at the same pace. 

Cletus (in Tennessee): How do this dadgum thang here werk?
Microsoft Support Rep (in India): This is Microsoft Support, can you repeat the question?
Cletus: I saw ya at the track.  I bought a window for my computer.  How do it open?
MSFT Support: Sir, can you repeat the question?
Cletus: Is dar any person there that speaks American? My computer window is broke.
MSFT Support: Sir, can you repeat the question?
Cletus: How do this window work on my computer?
MSFT Support: Sir, I’m going to pass your call to a supervisor.  Thank you, please call again.

Posted in Nascar, Sponsorship Deals | Leave a Comment »