College Sports vs. Pro Sports - Community College …

Nike's exposure in the deal can be quantified by analyzing swoosh exposure. How much time is the swoosh exposed on television and to attendees. Licensing is the golden goose of the relationship. Nike/UNC jerseys, hats, t-shirts and shorts alone may pay for the cost of the sponsorship. Image building, an important factor in the sneaker wars. Nike pays pro athletes millions of dollars to wear their shoes. If one player is worth a few million dollars, what are 12 basketball players and the rest of UNC athletes worth to Nike? And relationship building. If Nike, Reebok and Adidas are attempting to develop relationships with high school athletes with professional potential that might be the next professional stars, than collegiate players who are closer to realizing these dreams are even more valuable. I believe that under careful analysis, we would find this relationships is worth for more to Nike than they are currently paying.

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When the New York Yankees signed the first local television contract for $75,000 in 1946, radio and television revenues contributed only 3 percent of MLB's revenues. 6 This figure rose t o16.8 percent by 1956, and continues to increase today where the television contract represents over half of all revenues. In 1993, local television, radio and cable deals generated $350 million for MLB. The New York Yankees deal alone brings in over $40 million annually in their 12 year deal with the Madison Square Garden Network and WPIX. 7Follow the MoneyThere are six primary focuses within the sports marketing business:Each of these areas represents significant slices of the sports revenue pie and they are all intertwined. In fact, the first five areas have a significant impact on the Nike example discussed in class (the sixth area, agencies, are primarily used by the other five areas to help them better use sports as a marketing tool).Let's use the collegiate sports as our example to illustrate each area's influence. The following constituencies represent some of the players in this business.Properties are represented by any entity that can sell their rights, name, likeness or indicia for commercial purposes. Primary examples are teams (team owners) and leagues but athletes and personalities are also included in this category.

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Corporate Sponsor Objectives - "Corporations use of Sports as a Marketing Tool"Corporations typically use sponsorship for three reasons: reach consumers (generate awareness/sales), reach the trade (incentivize middlemen) and reach their own employees/sales force (motivation/"feel good"). For this paper we will focus on corporations use of sports to reach consumers to sell incremental product.Today, sports and television coexist in a high-priced equation. The leagues sell the right to broadcast games for millions of dollars each season. The network in turn sells advertising in :30 second increments to sponsors/advertisers on a national, regional and local level. A driving force behind the advertising spending of these sponsors is their ability to reach the extremely desirable 18-49 male demographic segment. This demographic segment is considered important because of their spending power as well as the fact that these men are the most difficult demographic group for advertisers to reach. This predominantly working class male, with a high disposable income, traditionally has more time constraints than other demographic segments. However, sports offer the one channel to consistently reach him. Advertisers pay for Cost Per Thousand (CPM) reached among their target audience. While the price to advertise on NFL games is expensive, it is the best way to reach these men, and if your product is Gillette, Budweiser or GM, these ads are worth the price because of the relatively low CPM.In fact, sponsors are willing to pay excessive amounts for billboards that might be seen on the sidelines during sporting events. Media companies will watch sporting events with a stop watch and time the amount of in-focus exposure that a corporate logo receives. This time is then divided into :30 second increments and equated to advertising dollars. If an ad during the Indy 500 costs $400,000, and the FedEx logo is shown for a total of 3 minutes 15 seconds during the event, FedEx will be considered to have received $1,300,000 worth of exposure. Companies typically discount this by as much as 75% as commercial's strategic messages are more effective in selling/discussing product/services attributes. With the increased clutter in today's society many believe lifestyle advertising is the best way to reach consumers. This is another reason for the increased flow of dollars into sports marketing. Marketers believe that they can more effectively reach consumers in their lifestyle when their guards are down and they do not realize they are being marketed to. This is the reason for the increasing sponsorship of events and stadiums, i.e. Ericsson Stadium, 3COM Park, Bud Light Beach Volleyball tour, Nuveen Senior Tennis Tour, Discover Card Smithsonian Institute National Tour, etc. Here Sponsors have an opportunity to integrate themselves into the lexicon of the event/arena as well as subtly integrate their product benefits and messaging into the event communications/look/feel.Under different time constraints, I believe it would be worthwhile to undertake a cost-benefit analysis of the UNC / Nike deal. What are the actual costs being defrayed by the contract? What opportunities does the University now have with a significantly less burdened athletic department budget? Should we be upset with Dick Baddour and Michael Hooker for sacrificing up the "integrity" of the school? What are we really giving up? Is this relationship any less egregious than the McColl building, Kenan Stadium or the Friday Center or should I assume that this money was given with only the best interest of all parties in mind and no selfish motives? Or maybe the ends actually justify the means, does the richest sponsorship in the history of collegiate athletics, merely for the cost a wearing a swoosh on their uniforms allow the Universiy unprecedented opportunities? Chancellor Hooker did state that only Reebok and Nike were capable of meeting the demands of the entire UNC sports program from a uniform and sneaker standpoint and the Nike proposal was not even the most lucrative opportunity. The Athletic Department and Dean Smith chose to select the relationship that was best for the school. I do not have any question that the relationship is good for the school. My only question is whether or not we got appropriate value. We definitely got market value, as the contract represents the largest in the history of collegiate sports. On the other hand, I believe the relationship is worth far more to Nike than what they are currently paying. To understand this we must understand how Nike values the relationship, primarily from exposure, licensing, image building and relationship building.Nike's exposure in the deal can be quantified by analyzing swoosh exposure. How much time is the swoosh exposed on television and to attendees. Licensing is the golden goose of the relationship. Nike/UNC jerseys, hats, t-shirts and shorts alone may pay for the cost of the sponsorship. Image building, an important factor in the sneaker wars. Nike pays pro athletes millions of dollars to wear their shoes. If one player is worth a few million dollars, what are 12 basketball players and the rest of UNC athletes worth to Nike? And relationship building. If Nike, Reebok and Adidas are attempting to develop relationships with high school athletes with professional potential that might be the next professional stars, than collegiate players who are closer to realizing these dreams are even more valuable. I believe that under careful analysis, we would find this relationships is worth for more to Nike than they are currently paying. History of Corporate SponsorshipsEarly 60's - Mid 60'sAthlete Visibility/popularity via televisionUtilizing athletes as overall corporate image building program (e.g., Mark McCormack/Arnold Palmer/Jack Nicklaus)Late 60's - Early 70'sFCC ruling disallowed cigarettes and most alcohol from advertising on TVTobacco and liquor companies forced to find other, less traditional ways to reach consumers (sponsorship of races, rodeos, etc.)1984 LA OlympicsBeginning of the modern era of sports marketing. Sponsorships became an integral part of marketing mix for many companies to reach overall marketing objectives, not just traditional industriesRecognition that impacting consumers "within their lifestyle" versus advertising will help reach objectives1990's - Ambush Marketing in AtlantaWith the rising costs of sponsorship ($40 million + for an Olympic sponsorship) many companies feel these price tags are out of line. Instead, companies will ambush the games by making consumers believe that they are the sponsor when they are not. Ex: McDonald's was an Olympic sponsor, but every time you turned the television on you saw Dave Thomas discussing "Go for the Gold" with a famous Olympian touting Wendy's. Wendy's was not legally allowed to use the 5 rings logo or terms Olympics, Atlanta Summer Games, etc., however they cleverly drew a correlation with games and saw a sales spike during the Olympic fortnight. McDonald's prefers to call this parasitic marketing and increased curbs are being put in place by event media partners to avoid similar situations in the future. 1990's - Complete Integration/OwnershipSponsors now attempt to create more significant presence at events to maximize consumer impressions. This includes naming rights to stadiums, naming rights sponsorships to events, sponsorships of Universities, logos on uniforms, advertisements during event commercials, consumer promotions to create in-store linkage to sponsorships, in-store appearances, etc.Because of the increasing clutter in advertising, specifically in professional sports, sponsors seek more "bang for their buck" through sponsorship of entities with fewer sponsors. Additionally, the NBA and NFL are becoming global brands by their own right and the leagues will only allow sponsors so much exposure at their events. Consequently, sponsors are turning to grass roots sports, extreme sports and collegiate sports in increasing rates to reach more targeted audiences in less cluttered environments. BIBLIOGRAPHYFlood v. Kuhn, U.S. 258, 92 S. Ct. 2099 (1972)

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Because of the increasing clutter in advertising, specifically in professional sports, sponsors seek more "bang for their buck" through sponsorship of entities with fewer sponsors. Additionally, the NBA and NFL are becoming global brands by their own right and the leagues will only allow sponsors so much exposure at their events. Consequently, sponsors are turning to grass roots sports, extreme sports and collegiate sports in increasing rates to reach more targeted audiences in less cluttered environments.

College athletics in the United States - Wikipedia

When NBC provided the first live network coverage of the World Series in 1949, fewer than 12 percent of U.S. households had television sets. By 1953, fifteen of the sixteen MLB teams had local contracts, and ABC introduced their Game of the Week format. The share of U.S. households (a Nielsen point equals 990,000 households/HH, reached) with televisions grew rapidly throughout the 1950s, reaching 67 percent (34.9 million HH) in 1955 and 87 percent (45.8 HH) in 1960. Today over 98 percent of U.S. HH, or 92 million, own at least one television set. 5When the New York Yankees signed the first local television contract for $75,000 in 1946, radio and television revenues contributed only 3 percent of MLB's revenues. 6 This figure rose t o16.8 percent by 1956, and continues to increase today where the television contract represents over half of all revenues. In 1993, local television, radio and cable deals generated $350 million for MLB. The New York Yankees deal alone brings in over $40 million annually in their 12 year deal with the Madison Square Garden Network and WPIX. 7Follow the MoneyThere are six primary focuses within the sports marketing business:Each of these areas represents significant slices of the sports revenue pie and they are all intertwined. In fact, the first five areas have a significant impact on the Nike example discussed in class (the sixth area, agencies, are primarily used by the other five areas to help them better use sports as a marketing tool).Let's use the collegiate sports as our example to illustrate each area's influence. The following constituencies represent some of the players in this business.Properties are represented by any entity that can sell their rights, name, likeness or indicia for commercial purposes. Primary examples are teams (team owners) and leagues but athletes and personalities are also included in this category.Corporations are the sponsors that use sports as a marketing tool to reach targeted demographic and psychographic groups. Corporations will sponsor properties, venues and media while using agencies to help them in these areas. You can consider Corporations and fans the universal donors in this equation and the properties the universal receivers.

The Explosion of the Business of Sports in the United States

The recent trend in developing new stadiums has been a direct effect of owners seeking new ways to generate money. While the NFL and NBA adds the gate (ticket) receipts for each team together and then distributes this money evenly, ticket sales from luxury suites are the sole possession of each team. Therefore, new stadiums are being built to generate additional luxury box revenues for owners. Art Modell claimed the Cleveland Browns could not compete without additional luxury boxes. When the city would not approve a new stadium he moved the team to Baltimore. The next NFL expansion will place a team in Cleveland, however, the city will now build a new football stadium with additional luxury boxes. When Jerry Reinsdorf built the new Chicago Stadium, he actually reduced the number of regular tickets and increased the number of luxury boxes from 4 to 228. 4An additional revenue generator, at the expense of fans, is the Personal Seat License (PSL). Team owners basically had three ways to fund the building of stadiums: ask the local government for money, borrow money, or use their own money. Now, the owners have created a fourth option by using their fan's money to help build their stadium. The owners offer fans the "opportunity" to purchase a PSL where basically the fans has only paid for the right to purchase a season ticket at a later time. This season ticket is saved for the fan, however, this ticket must still be paid for at full cost. This PSL money will not even buy a snow cone at a ball game let alone a nose bleed seat. The Role/Growth of TelevisionWhen NBC provided the first live network coverage of the World Series in 1949, fewer than 12 percent of U.S. households had television sets. By 1953, fifteen of the sixteen MLB teams had local contracts, and ABC introduced their Game of the Week format. The share of U.S. households (a Nielsen point equals 990,000 households/HH, reached) with televisions grew rapidly throughout the 1950s, reaching 67 percent (34.9 million HH) in 1955 and 87 percent (45.8 HH) in 1960. Today over 98 percent of U.S. HH, or 92 million, own at least one television set. 5When the New York Yankees signed the first local television contract for $75,000 in 1946, radio and television revenues contributed only 3 percent of MLB's revenues. 6 This figure rose t o16.8 percent by 1956, and continues to increase today where the television contract represents over half of all revenues. In 1993, local television, radio and cable deals generated $350 million for MLB. The New York Yankees deal alone brings in over $40 million annually in their 12 year deal with the Madison Square Garden Network and WPIX. 7Follow the MoneyThere are six primary focuses within the sports marketing business:Each of these areas represents significant slices of the sports revenue pie and they are all intertwined. In fact, the first five areas have a significant impact on the Nike example discussed in class (the sixth area, agencies, are primarily used by the other five areas to help them better use sports as a marketing tool).Let's use the collegiate sports as our example to illustrate each area's influence. The following constituencies represent some of the players in this business.Properties are represented by any entity that can sell their rights, name, likeness or indicia for commercial purposes. Primary examples are teams (team owners) and leagues but athletes and personalities are also included in this category.Corporations are the sponsors that use sports as a marketing tool to reach targeted demographic and psychographic groups. Corporations will sponsor properties, venues and media while using agencies to help them in these areas. You can consider Corporations and fans the universal donors in this equation and the properties the universal receivers.Venues are the arenas/playing fields for games. Jerry Jones, owner of the Dallas Cowboys, has creatively used his venue, Texas Stadium, in his personal war with the NFL. While teams are restricted against signing sponsorships with non-league sponsors, the venues do not have the same restrictions and Texas Stadium now has major relationships with American Express and Nike instead of NFL sponsors Visa and Reebok.