Watch this Space: Jersey Sponsorship in the US

In this year’s NBA All Stars game in Toronto, there was one towering difference on the court. It had nothing to do with what the players were doing with the ball, but everything to do with what they were wearing. On their jerseys, for the first time, there was a brand logo – Kia.
Let’s put this in proportion: at 3.25 inches by 1.6 inches it’s barely noticeable in comparison with the logos on MLS or European sports jerseys, but it’s the barrier it crosses that’s significant. There can be no doubt that this is the NBA putting feelers out for what Commissioner Adam Silver talked about back in 2014 when he said: “We know what the value is to advertisers…to be able to show fans in-game branding.”

The math is simple – the average MLS jersey goes for around $3–3.5m dollars a year, but for commercial departments from the leading “big four league” teams in the US, I would imagine that there have been some envious glances across the pond to Manchester United’s deal with American car company Chevrolet at $75m a year.

Whilst the NBA have been joined by the NHL (whose Commissioner described jersey sponsorship as “coming and happening”), the MLB and NFL have been certainly more lukewarm. There are obvious logistical issues around it.

First, with a league’s collective bargaining agreements there needs to be consensus and balance as to whether it’s sold centrally or as per the European sports model, team by team. And secondly, the objection of broadcasters concerned about potential conflict and lost revenue.

The real question here is not whether this will indeed happen in the USA (I believe it’s inevitable over the next few years in NBA and NHL, at the very least), but rather whether it will impact negatively for consumers. And moreover, will brands here in America learn the lessons from the decades of good, bad and ugly jersey sponsorships in the past to influence the future?

So do consumers care…and, in particular, the Millennial consumer?

At Synergy, we’ve long been frustrated by the lack of real understanding and insight on the way Millennials engage with and view sports – both now and in the future. There are countless myths that have been built across the demographic, some of which are wrong and many of which can skew the way brands and rightsholders build campaigns. At the end of 2015, we undertook a bespoke and comprehensive piece of research with our sister agency, The Intelligence Group, around both Millennial and Generation X attitudes towards sports, sponsors and the future of sports engagement, with findings featured throughout Now, New & Next 2016.

The survey (3,145 consumers in America with 66% 18–34-year-olds and 34% 35–54-year-olds) specifically examined the potential impact of jersey sponsorship among the audience.

In short – they don’t see it as an issue. The rise of European soccer, MLS and WNBA has made jersey logos a more acceptable part of the viewing experience for the Millennial sports fan. The research highlights that 27% of Millennials think jersey sponsorship is “very appropriate” (higher than Gen Xers), whilst, tellingly, more Gen Xers than Millennials think it’s better for brands to be in the ad break or break bumpers.

History also shows that team success soon overcomes fans’ commercial objections. FC Barcelona – whose motto is famously “More than a Club” – held out for decades against commercial shirt sponsorship by featuring Unicef on the front of their jersey (at no charge), before replacing the global charity with sponsorship from the Qatar Foundation for a then record $40m a year.

Whilst there was a clear media backlash, it didn’t last long when a team with significantly increased resources went on to lift the UEFA Champions League. So if it helps your team produce a great spectacle, most fans soon overlook the logo.

Critically, fans soon discover that a brand appearing on their shirt will not affect their “fanship.” Indeed, more than being just a benign presence, fans may even come to see a jersey sponsor as a positive force for good, with the brand actively enhancing this very fanship. Another reason why this front-and-center asset can be so powerful.

As a jersey sponsor you have a responsibility, since your logo becomes part of the history of the team. Famous jerseys down the ages of European sports are identifiable due to the brand logo on the front of them – the brand locked forever, in the very midst of that trophy-lifting moment. The same applied off the pitch, where through the replica shirt market, fans of all ages wear your brand on a daily basis.

You cannot be edited out – be that in the live moment, or the subsequent media coverage: your brand is indelibly stencilled into that moment of history (for good or bad).

This responsibility means that you must understand and tap into the players, the fans, the culture and the tone of the team.

Lessons Learned for the Future

So what lessons can brands considering jersey sponsorship here in the US learn to ensure this doesn’t become just a glorified media buy?

Jersey sponsorship has always been the closest you can get to being in the action as a brand. New tech can only help this to literally get up close and personal with your team and your favourite players. At the 2016 CES Sports Forum, virtual reality was talked about by one team owner as “what TV was to radio” – imagine the creative capacity for VR technology being able to take fans into the action courtesy of the jersey sponsor.

Being at the heart of the action means being at the heart of the live moment, and research shows that Millennials notice brands in-game more than anywhere else. As a jersey sponsor you need to ensure you contractually own the live moment by having access to your team’s official social media feeds in order to feed the consumers’ desire for in-play, shareable content that can enhance their fanship.

Get the players onside and fast, as they’re the living embodiment and running billboard for your brand. This is what can make the activation of a shirt sponsorship both easy (as you don’t need to shoehorn your brand into the situation) but also dangerous (you may not want your brand involved in certain off-court exchanges).

Again, with players controlling their own IP and the restrictive contracts they can have with teams in the US on its usage, brands need to be savvy enough to work in harmony with the players. Additional agreements with them are a must, especially in relation to their social feeds. Take, for example, the starting line-up for the Cleveland Cavaliers, which has a combined Twitter and Facebook following of 58m, versus the team’s official feeds of just over 5m.

LeBron’s Twitter following alone is nearly as big as that of all the other teams in the league combined.

Don’t be afraid to innovate or have fun with it – when Intel signed a jersey deal with FC Barcelona they literally turned the traditional model inside out by putting their Intel branding on the inside of the jersey. Some brands have handed over the space to a charity that they back for key matches – something that usually attracts positive sentiment.

The geographic activation restrictions of most US league deals ensure that the jersey sponsor would need to keep home fences mended, but the real potential for the leading teams would be the global potential. It’s no accident that leading UK soccer clubs Manchester United, Liverpool and Chelsea are sponsored by Chevrolet, Standard Chartered and Yokohama respectively – all brands targeting a global audience. Chevrolet don’t even sell vehicles in the UK.

Jersey sponsorship will happen here in the US, and fans will accept it. Leagues and brands, however, must look past the jersey as simply prime estate, instead seeing it as a chance to help share the very beating heart of the team.

Respect this, enhance it and tap into the fan culture, and it’s among the most powerful assets in a sponsorship arsenal. Get it wrong and it’s an expensive – and very public – mistake.

This blog comes from Synergy’s Now, New & Next sponsorship and entertainment outlook for 2016, which can be viewed in full here.

Ambush and Amateurism: How Rugby World Cup Sponsorship Began

The closer we get to the start of the 2015 Rugby World Cup, which Synergy is working on for four of the tournament’s sponsors and one of ITV’s broadcast sponsors, the more I’ve been reminded of the very different commercial background to the 1991 Rugby World Cup, the first time the RWC was staged in England, and the huge impact the tournament had on rugby and sports marketing in the UK. So, being (I suspect) one of a fairly small group of people to have worked on both RWC 1991 and 2015, here’s my take on the formative years of RWC sponsorship.

Ahead of RWC 2015, the eighth Rugby World Cup, we have a very good idea of what the tournament’s going to be like off the field – consumer behaviour, media coverage, brand activations, and so on. But ahead of the 1991 tournament, the Rugby World Cup was an unknown quantity for UK marketers.

It was by far the biggest sporting event to have been staged in the UK since the 1966 World Cup, so it was our first taste of a world event for merely twenty-five years.

The first Rugby World Cup, held in Australia and New Zealand in 1987, hadn’t really cut through here at all: rugby was a much smaller sport than it is now – pro rugby was still eight years away – and the Antipodean time-zone meant that pre-Sky, pre-satellite media coverage in the UK was after the fact, and light.

There were no meaningful sponsorship benchmarks: only a handful of companies had signed up to sponsor RWC 1987, almost all of them Japanese brands motivated solely by strong TV coverage of the tournament in Japan. One, KDD, paid more than the others and effectively became the tournament’s title sponsor. And as we shall see, in 1991 another Japanese brand repeated the trick.

A 1987 Rugby World Cup Final ticket. Note the KDD branding.

These were also evolutionary times for sports marketing in the UK. Although the industry was growing fast, the supply of opportunities was still limited, rights holders were old-school and commercially under-skilled (not least in rugby), and among brands, sports marketing was very much a minority activity.

The result of all that was that many of the operating principles we take for granted today just didn’t apply ahead of RWC 1991.

And the biggest difference was how RWC 1991 event and broadcast sponsorships were sold.

Today, it’s well-established practice for rights holders to sell their event sponsorships well in advance, and give their major sponsors a contractual first option to buy sponsorship of the event’s TV coverage. World Rugby been exemplary in this respect, and as a result one of the Worldwide Partners, Land Rover, has exercised their contractual option to become a co-sponsor of ITV’s RWC coverage. Similarly, our client SSE was only able to buy the other ITV broadcast sponsor position after the other RWC Worldwide Partners passed on the opportunity and it went to the open market.

All very orderly. But there was nothing like that in place for RWC 1991. Back then, the ITV broadcast sponsorship was open to all from the off, and taken to market at the same time as the event sponsorships. The broadcast sponsorship sold relatively quickly, whereas most of the event sponsorships were eventually sold at the last minute.

Compared to today, it was chaotic.

Two events above all led to this happening.

The first was the organising committee’s mysterious decision to award the tournament’s commercial rights lock, stock and barrel to a (now long-defunct) company called CPMA. This proved to be disastrous in many ways, not least in relation to sponsorship. CPMA priced each RWC event sponsorship at a deluded £2m, got knocked back by the market, and never recovered. Although Heinz (then run by former Irish rugby international Tony O’Reilly) signed up in 1990 for £1million, there were no other takers, and as a result CPMA inevitably became a price-taker reduced to doing last-minute deals: seven of the eight RWC 1991 event sponsors signed up in the six months prior to the tournament (I was on the buying side of two of these deals) for an average of around £300,000 each, including three in the last month.

The second was ITV’s coup in 1989 of winning the exclusive UK TV rights to RWC 1991, with a bid of £3million which the BBC could not, or would not, match: great business for ITV when you consider that the tournament was a big TV hit (over 13 million watched the England-Australia Final on ITV) and that this success paved the way for ITV to retain the rights to the RWC to this day. And even before the 1991 tournament started, ITV knew they were certain to make a profit when Sony bought the RWC broadcast sponsorship for £2million – two-thirds of what ITV paid for the rights.

This also turned out to be very good business for Sony, as David Pearson, Sony’s UK MD at the time, later recalled:

‘Various [Rugby World Cup] opportunities were presented to Sony including [being] one of eight named sponsors of the competition itself. However, what I felt was of much more interest was the opportunity to become the unique sponsor of the [ITV] broadcast rights…I decided to only sponsor the broadcasting and leave the event sponsorship to others…I believed that far more people would watch the matches on TV than in the stadia and I did not like the idea of sharing sponsorship with seven other parties. So it proved. The majority of people believed that Sony had actually been the event sponsor, giving rise to allegations by the official event sponsors that Sony had ambushed the competition. But that was false. We had chosen legitimately from the choices put to us by the agency representing the World Cup organisers and [ITV].’

I couldn’t agree more: Sony did nothing wrong. They took a brave decision on a new tournament and a new advertising format – paying, let’s not forget, far more than any of the event sponsors – and reaped the rewards. Ambush it may have been, but it was an officially-sanctioned and enabled ambush: the responsibility was wholly CPMA’s owing to their mismanagement of the commercial rights.

As to the ‘allegations by the official event sponsors’, my strong impression at the time was that most of this was driven by Heinz, who were particularly aggrieved: not only had they been undercut by CPMA’s fire-sale of the other event sponsorships, but they’d also seen the main benefit of being the first sponsor to sign up – the highest level of brand association with the tournament – blown away by Sony. (It’s perhaps not entirely coincidental that Heinz has eschewed major sponsorship ever since).

So all in all a painful lesson for the RWC, and a wake-up call for sports rights holders and brands everywhere about how sponsorships should be bought and sold around major events.

But I don’t want to leave you with a negative impression of RWC 1991 on or off the field: quite the opposite. The tournament was a huge success and left behind some very significant legacies.

It turbo-charged the UK sports marketing industry, accelerating its skills and giving it its first experience of activating the multi-sponsor major event model which was becoming the worldwide norm. Without that experience, for example, I have no doubt that five years later Euro 1996 would not have have been the huge success that it was off the field for sponsors in the UK.

But above all RWC 1991 was a watershed moment for rugby’s profile, which took off and never looked back. Quite simply, the tournament electrified the country. Everybody was talking about it, everybody was watching it, and especially in the week of the Final, it was everywhere – back pages, front pages and everything in between. It was glorious.

Here’s hoping for more of the same over the next couple of months. Good luck to everyone involved with RWC 2015.