Sports and Marketing in America: Fueled by Grit, Determination, and Corporate Sponsors
By Chip Compton
Nick Symmonds is selling his body (it’s not like that; get your mind out of the gutter). To help fund his quest to become a three-time Olympian this summer (he is an 800-meter runner), Symmonds sold 9 square inches of ad space on his right shoulder to T-Mobile for $21,800. For Symmonds, this is one part innovation and one part desperation. Because in the highly competitive yet not-really-all-that-lucrative world of track and field, if your name is not Usain Bolt, the financial struggles are constant.
Symmonds is tapping into corporate America, nay, Corporate America, to help keep his dreams alive. But relying on Corporate America is not exclusive to the have-nots. The haves are asking for more. For example, NBA teams will be allowed to sport logos on their jerseys beginning in the 2017–18 season. The expected windfall? A cool $100 million a year. But before you express contempt at the NBA’s latest moneymaking development, realize that this is just the evolution of sports capitalism. After all, sports wouldn’t exist without TV contracts (with their commercial-laden programming), venue advertising, or shoe and apparel endorsements.
“Steak ’n Shake agreed to ante up more than $1 million.”
Auto racing — being the most obvious of examples since the drivers are walking billboards — would not exist without sponsorship. NAPA just paid $300,000 for the privilege of being the primary sponsor on Alexander Rossi’s winning Indianapolis 500 car. That’s for one race.
Brands are financing sports and athletes — some who need it and some who don’t. What are the costs and what is the future for this high-priced game?
The Olympian Who Wears His Heart, Um, T-Mobile’s Tattoo, on His Sleeve
This isn’t the first year that Nick Symmonds has worn a temporary tattoo to raise funds for his training. In 2012, the Milwaukee marketing company Hanson Dodge Creative paid $11,100 to place an ad on his left shoulder. This year, Symmonds’ T-Mobile ad will be on his right shoulder because, as Symmonds explained in a CNNMoney story, “Cameras are always on the outside of the track, so the right shoulder is the most valuable ad space.”
T-Mobile CEO John Legere is excited about the endeavor. He tweeted, “Happy to do my part to support USA running & this amazing athlete.” Fair enough. And yes, Symmonds is an amazing athlete. He has been the preeminent American 800-meter runner for nearly a decade. For you nonrunners to get an idea of how impressive this is, drive down to your local high school and run a lap around the track. Now run another one. At close to full speed. How do you feel?
Some NBA fans are not big on this idea, but I would have to guess that these are fans that have not attended a game in person or watched a game on TV.
After you get your breath back, you may agree that Symmonds shouldn’t have to sell his body to fund his training — but track is different from baseball, basketball, and football. Unlike those sports, it doesn’t have a huge fan following or a gigantic TV contract. When was the last time you watched a track meet?
This is sad in a way. After all, we like to wave the flag and cheer these athletes on during the Olympics, but then it’s an “out of sight, out of mind” situation after that. One would think that the Olympics would open up its coffers a bit more and share with those doing the labor. And we are talking about genuine financial struggles. David Woods of the Indianapolis Star reported that “the Track & Field Athletes Association, a labor union, and the USATF Foundation came to the same conclusions: More than 50 percent of those ranked in the world’s top 10 earn less than $15,000 from their sport, and there are wide variations between events.”
How do track athletes compare to athletes in those previously mentioned other sports? They don’t. “There probably aren’t 10 American track athletes who earn more than the NBA minimum: $490,000.” Woods wrote. “It is a surprise to some that track is a pro sport at all. Yet it has been openly so since the 1980s.”
It’s clear that Symmonds isn’t making much money, nor are the plethora of other Olympians, but what about T-Mobile and Legere? Will they see much of a return on their investment? Don’t count on it, thanks to the Olympics. As CNNMoney reported, “He’ll [Symmonds] have to put tape over it [the tattoo] during the Olympics because of ‘antiquated rules’ that prevent athletes from sporting tattoo ads.”
“There’s something so absurd about a really elite runner, world-class runner, running around with a bunch of tape all over him,” Symmonds told CNNMoney. Agreed.
UPDATE: Nick Symmonds failed to make the 2016 Olympic team because an injured ankle prevented him from competing at the United States Olympic track and field trials.
The Rich Get Richer — the NBA Will Allow Jersey Ads
In the 2017–18 season, the NBA’s revenue is expected to be $7 billion. OK, breathe for a second (especially if you haven’t recovered from your 800-meter run yet). With this kind of income, the league probably needs more ad revenue, right? OK, the NBA doesn’t need it, but the league is going to get it, to the tune of approximately $100 million (this is in addition to what Nike, which is taking over from Adidas, will pay to become the NBA’s official jersey manufacturer). That’s the number that will be generated when brands place their logos in the form of patches on players’ jerseys. The NBA will be the “first of the four major U.S. sports leagues to put ads on regular game-day jerseys.”
“It’s my hope, independent of whatever additional revenues are generated through this patch program, that the greatest impact will be in this amplifying effect of companies choosing to associate directly with a team jersey, then going out and promoting that relationship to the largest market,” NBA commissioner Adam Silver told ESPN.
Individual teams are responsible for selling ad space, and, according to CNNMoney, “Teams will reportedly net half of the sponsorship money from the jersey ads. The rest will go to the league’s revenue-sharing pool.”
Some NBA fans are not big on this idea, but I would have to guess that these are fans that have not attended a game in person (the Indiana Pacers have had the Steak ’n Shake logo on the basketball goal stanchion in years past, just to name one of the many brands on display in Bankers Life Fieldhouse) or watched a game on TV (real fans never tire of Blake Griffin’s Kia spots).
“There’s a reason this is a pilot program,” Silver said in the ESPN story. “We listen very closely to our fans.” I’m sure that’s true, and Silver always seems personable and levelheaded in interviews — but he’s also a businessman, which means my money (not in ad form, of course) is on the NBA never looking back from this decision. And Silver alluded to this when he said, “The media landscape is changing. People are watching less live television outside of sports. People are watching fewer commercials. This will become an important opportunity for companies for connecting directly with their consumers.” In the ever-evolving world of brands and advertising, Silver’s comment should go without saying.
While the NBA’s program is starting with a small patch, it is possible that it could encompass more in the future. It’s not unrealistic to think so. This thought made ESPN curious, and so the sports-broadcasting giant had artist Robb Harskamp design what jerseys might look like in the future, with teams sporting ads for companies based in their home city or state. The results are interesting, and they may be an indicator of things to come.
Brand Exposure — at 230 Miles per Hour
Nowhere is the quest for advertising dollars in sports more intense than in auto racing, particularly IndyCar racing. In a sport where a single crash can cost a team several hundred-thousand dollars, speed isn’t king. It takes a backseat to the all-important cash.
A few teams are locked in with solid and consistent sponsors. For instance, Target has been sponsoring Chip Ganassi–owned cars for more than a quarter century. Target’s support is so strong that the team name is Target Chip Ganassi Racing. This is no small undertaking by Target. According to Jeff Swiatek of the Indianapolis Star, “Bloomberg reported that full-season IndyCar sponsorships cost $5 million to $9 million for a name or logo on the side of the car, $1 million to $2 million for a front wing, and $100,000 to $300,000 for a helmet decal.”
Ganassi is a part of the “big three” of IndyCar ownership. This club includes racing legends Roger Penske (who counts Verizon Wireless, Hitachi, and Pennzoil as consistent sponsor partners) and Michael Andretti (DHL, Snapple, and United Fiber & Data).
T-Mobile CEO John Legere is excited about the endeavor.
But these owners are in the minority. Most other owners have relationships that are a bit more tenuous. Rahal Letterman Lanigan Racing entered into an agreement with Steak ’n Shake last year, an agreement that was strongly bolstered by co-owner David Letterman’s love affair with the hamburger chain that he could trace back to his childhood.
Swiatek wrote, “Steak ’n Shake agreed to ante up more than $1 million to become the primary sponsor of an Indy car in five races, including the Indianapolis 500.” The key words in this quote are primary and five. This is because when Steak ’n Shake isn’t the primary sponsor, the team needs to find another primary, and the car needs repainted, and the driver needs a new firesuit, and the crew needs new garb, and it goes on and on, which means money, money, money.
Money spent sponsoring an Indy Car does not equal television exposure. A driver can have mechanical trouble or merely be mired in the back of the pack and never get a mention on TV. But Steak ’n Shake was happy about the exposure it received after driver Graham Rahal’s runner-up finish in the Angie’s List Grand Prix, the race preceding the Indy 500. The hamburger chain’s excitement came in light of a Letterman stunt on the The Late Show with David Letterman. “Dave recognized Graham’s super finish and gave the whole audience free milkshakes,” James Flaniken, senior vice president of marketing, said. “It was live on the show — 480 milkshakes!”
And if you’re driving an Andretti Autosport car, what goes with Snapple? Well, when you’re looking to pay the expensive bills of IndyCar racing, Butterball turkeys do, of course. The country’s largest producer of turkeys is paying to have its logo on the Andretti Autosport cars of Marco Andretti and Ryan Hunter-Reay.
Will the investment pay for itself? Maybe, if the cars are in the front of the pack at races and get a lot of TV time, but the odds are that the sponsors won’t be placing their brands’ logos on the car for an extended period of time, because longtime sponsors are a rarity. For instance, NAPA gained wide exposure for sponsoring Indy 500 champion Alexander Rossi last month. Now? Um, NAPA is no longer the primary sponsor for Indy 500 champion Alexander Rossi.
Nothing Is Free — at Least in the World of Sports
Whether an athlete is running 800 meters, dunking a basketball, or piloting a race car at 230 miles per hour, he is not going to reach the pinnacle of his chosen sport without financial support, the kind that comes from companies that have huge marketing dollars to spend. That money may come in the form of a tattoo, a patch, a decal, or TV contracts. The secret is to adapt because this is now the way of the world. Take a look around. Commercials are everywhere. Brands are everywhere. It’s a corporate world. So drink a Snapple, have a piece of Butterball, and enjoy the show.
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Photos/Screenshots: Nick Symmonds; 360b and HodagMedia on Shutterstock; Shutterstock
