Sponsorship Essentials: Featured Deal of the Week

By: Claire Lingley 

             The Los Angeles Memorial Coliseum is no longer! Instead, say hello to the United Airlines Memorial Coliseum, coming in August 2019.  In late January, the University of Southern California announced the exciting and unprecedented deal: United Airlines purchased the Naming Rights to the Coliseum for $69 million over 16 years.

             This deal is important for two reasons.  Firstly, the LA Memorial Coliseum is one of the sports world’s most beloved historic landmarks.  Built in 1921, it was originally commissioned as a memorial to WWI Veterans, and in 1923, the USC Trojans played, and won, their first game against Pomona College. It is an iconoclast structure, and LA embraces it as a part of its history and culture.  When it comes to naming rights, a structure with such history and such rich cultural relevance can be a challenge. Not only does USC have to ensure that this deal is right for their community, but it has the opinion of the entire city of LA, as well as arguably the entire sports world, to contend with. Let’s be honest, some people simply don’t like change, and this is a big one.

            Secondly, this is a big deal.  And I mean big as in, largest in college sports history.  At $69 million, this naming rights deal supports the stadium’s $270 million upgrade that is due to happen ahead of the 2028 Summer Olympics, hosted by LA.  That money will go a long way for these renovations, and USC is adamant that the changes will continue to honour the Coliseum’s original architectural integrity, (while also providing the customer with the most elevated experience possible). Supervisor Mark Ridley-Thomas, a member of the Coliseum Commission, says, "Through this restoration project, USC continues to demonstrate its responsible stewardship of the stadium. With support from United Airlines, USC is ushering in a modern era for this historic landmark and preserving its legacy for generations to come”. 

            This may be the first deal of this magnitude within the collegiate sports world, but it is certainly not the last. Here at BWA we want to know what you think.

·      What’s the best way for United Airlines to activate on this partnership and enhance their customer experience?

·      Do customers just need to learn to accept change, and stop with the complaining?  Or should properties respect the history that comes with them?

·      How can properties and companies, like USC and United Airlines in this case, work together in order to persuade the public that this partnership is beneficial for the students, the alumni, and the community as a whole?

·      Does this affect your opinion of United Airlines and/or USC and the Coliseum?

Comment below, or email us at lingley.claire@bonhamwills.com to get your thoughts published on our website!

Sponsorship Essentials Part 2: Q&A with Dan Dillon, CMO of Arizona State University

By: Claire Lingley

Dan Dillon is the CMO of Arizona State University with an extensive marketing background in the restaurant and consumer world. In Part 2 of “Sponsorship Essentials”, he speaks towards how he got his start, his experience in this industry, and how ASU is changing the way collegiate properties look at branding and sponsorship. With ASU, it’s not merely a transaction, but a deeper partnership.  Looking at the way ASU’s branding and marketing is going, other universities may want to follow suit.

Q: I understand you got your start in the restaurant/consumer side of the industry.  What drew you to the academic world?

A:  The opportunity at ASU was a unique opportunity. I don’t know if I was as intrigued by the industry as I was intrigued by what’s going on here at ASU, the role that marketing could play, and the role that brand management needed to play in terms of the overall mission of what is trying to be accomplished here. I was persuaded by President Crow (ASU President), that marketing could be a difference maker for the university, that it could add value, and that what he wanted to build was the capacity to do brand management, which is something that wasn’t currently here and available for the university, and quite frankly isn’t prevalent in a lot of universities.

It was the opportunity to do something different, to build something that didn’t exist, and to try and add value to a university that felt like it needed marketing to help it get where it wanted to be.

Q:  What is it about your experience in the restaurant and consumer industry that made President Crow approach you, and has helped you in your position at ASU? 

A:  The principles of marketing apply regardless of sector.  In the case of what my background has that was interesting to President Crow was a lot of variety, so with that variety, there was a belief that I could draw on that experience to solve unique problems at the university, despite not having higher-ed experience.  Quite frankly, the problems that we were trying to solve, or the main issues and opportunities that existed at the university, were getting awareness of, and credit for, a lot of what was going on here in a way that defined the brand, the reputation of the brand, and the quality of the brand.  That’s marketing.  That’s generally trying to impact people’s perceptions of a brand in order to have some favourable outcome.

Enrolling, applying, donating, buying tickets or advocating for the brand or participating in events; those are all outcomes that are impacted by marketing and branding. I think President Crow just looked at my background, and because of the number of categories and sectors I had been in, felt that I had enough of experience to drive those types of favourable outcomes here at the university.

Q:  Speaking towards that, you led the creation of the ASU Enterprise Marketing Hub. Can you speak a little bit towards that? What are your goals with it heading into the New Year and beyond?

A:  I arrived at ASU in 2013.  There wasn’t an enterprise marketing hub function; there wasn’t a centralized marketing department.  There were over 400 people with marketing or communications in their title not reporting into one area, not taking direction from one area, but if we were going to operate as we decided we were, as a branded house, not a house of brands, then it was necessary for somebody to manage the branded house, and that’s ASU.

We quickly came to the conclusion that trying to centralize the marketing intake and getting everybody to listen to one leader or report into one area was culturally going to be difficult to implement.  Rather than to go down that path of a command and control approach, we went with a more consulting approach.

We created the Enterprise Marketing Hub as an internal marketing agency that would provide a select set of services and consulting advice on how to manage and build brands at the school level, and the same time, with the belief that in doing that, we could start to manage and control a little bit more of the look and feel and projection of the ASU brand.  If you were a unit and wanted access to that in the form of research or financial resources, or creative resources, or tools that were being used at the enterprise level, then you had to agree to follow some governance and follow some guidance, and that’s a franchised model.  You’ve got the benefit of being a part of a larger organization, but in return, you have to follow and adhere to some guidelines and principles that we were trying to put into place.

The Enterprise Marketing hub has continued to evolve into a stronger unit because of this franchised model approach. 

Q:  Have you experienced difficulty in convincing outside brands joining in to invest in the University outside of the traditional Athletics-focused sponsorship? 

“Later in your career, you’re going to be as successful as your experiences that got you there.”

A:  We’ve changed the model to more of a partnership model.  Sponsors, yes, they get the ability to brand physical assets or put signs up in our stadiums, but we’ve also made ourselves more accessible from other areas of interest other than just building brand awareness through signage. 

So in talking to Adidas, or Coke, or Starbucks, or Mayo, or all these different brands that we are partnering with, what we’re offering is a deeper relationship than just a transaction, whereby you give us a sponsorship check and we give you a certain amount of signage in our athletics venues.  Instead, we are co-founding research and giving these brands access to either our alumni or our students in ways that are beneficial for them in that they drive their revenue, or drive their brand perceptions, or drive their brand awareness. 

We’ve got ways and assets that are not just about logos on billboards or logos on signs, they are much more sophisticated marketing tools and tactics that we are making available.  And that’s a change in the way that we are approaching sponsorships and partnerships, in that we are trying to build a deeper relationship that isn’t just a transactional one or isn’t just about the more traditional, “Name this building; Name this stadium; Put your name on this sign up here” type stuff, because what we’re finding is that the need of these bigger brands that have large budgets is not necessarily brand awareness. 

You know, Coke putting their logo up all over the stadium doesn’t really help them that much.  What helps them is the ability to create experiences that drive affinity.  Allowing them to create events, and to sponsor events, and to participate with our students and alumni in a unique, memorable, engaging way, provides much more benefit to Coke, both in brand affinity and ultimately revenue, than just putting their logo up on our scoreboard.

Q:  Speaking of that, the ASU-Starbucks partnership, that seems like a really unique relationship, can you give me a short history of how that came to be?

A:  It’s pretty simple and I think it goes to the university and the leadership’s propensity to be innovative and creative and solve problems.  Really simply, President Michael Crow and Howard Schultz were at a foundation gathering that they both are board members on.  In the course of conversation, Howard explained that Starbucks had 150,000+ baristas and over half had started post secondary education but not completed it.  Howard and President Crow both agreed that completing a college degree would not only help the individual but also Starbucks.

President Crow gathered a group of us at the university and said, “Okay, how are we going to design a program that enables Starbucks to be able to offer this?”

His desire was to offer the opportunity to get a college degree for free, as long as you’re an employee at Starbucks working more than 20 hours a week, and so we designed a program in such a way that Starbucks could afford to offer that benefit to their employees, and their employees could get high quality degree options available online and be able to complete their degree.  In the beginning, it was complete their degree, and we since have evolved to actually obtain a degree.  Even if you haven’t started, even if you’re a first-time freshman, you still can take advantage of that benefit: as long as you are working 20 hours a week at Starbucks, you can take an ASU-Online program, enter your degree and obtain it.

Q:  Going to switch gears just a little bit here, what is the best piece of advice that you’ve ever received?

A:  Early, early, early on in my career, it was get as much different experience as you can and in as many different places, brands, and companies.  Don’t ever say no to opportunities.  Fundamentally, this was unique advice at a time where people were starting at companies and staying for 30 years.  Getting a lot of experience at a lot of different places, or getting to a place that offers you a lot of experiences, doesn’t necessarily mean that you have to move companies, but it’s important to seek out those opportunities so that later in life you’ve got a wide variety of experiences to draw from to help solve problems and create opportunities.

Later in your career, you’re going to be as successful as your experiences that got you there.

Q:  If you could have dinner with one person, dead or alive, who would it be?

A:  That’s a tough one. You know it’s funny, my wife would say this, I am not star struck or enamoured by individuals per say, I find a lot of people really very interesting in very unique ways, but if I had the opportunity to have dinner with anybody, and it sounds really silly, I’d rather go out to dinner with my dad than someone I don’t know.  Primarily, because I find him to be more interesting than a lot of people who I go out to dinner with. 

Dad, if you are reading this, I’d say the same thing!

Credit Unions: The New Player in Naming Rights

The naming rights industry has typically seen its world dominated by the same types of corporations again and again:  automotive corporations, telecommunications corporations, and the big banks, among others. The result is arenas and stadiums across the United States bearing household names that are recognized across the country, and the benefits for both parties involved in those naming rights deals are clear.  Recently, however, a new kind of business has stepped onto the scene and is taking the naming rights world by storm: Credit Unions.  A member-owned financial co-operative, these institutions are created by their members, operated by their members, and owned by their members, and recently, they have entered the naming rights market in a big way.

In 2017 alone, over 10 credit unions across the country signed tremendously lucrative naming rights agreements, and that number is only growing. So, why Credit Unions?  And why, as a Credit Union, would you look to potential naming rights opportunities when considering your next move? Credit Unions are intrinsically community oriented. They are based around ideas of a democratically elected ownership that profits its members. This appeals to many, and that is reflected by the growth that Credit Unions have seen across North America. Yet, Credit Unions must remain true to the beliefs that they are founded on amidst this growth, and naming rights opportunities grant them that opportunity.  By putting their name on arenas and stadiums attended by hundreds of thousands of people within their community every year, not only are Credit Unions increasing their visibility and awareness of their company exponentially, but naming rights deals also offer companies the ability to directly connect with attendees via multiple interactive platforms.  Such interaction builds the relationship with communities that Credit Unions both strive for and rely on.  As Jeff Sermon, CEO of Utah Community Credit Union and one of the main men driving the UCCU Center naming rights deal with the Utah Valley University states, “Our members go to school here, so serving UVU is one way of serving our members”. 

Further, naming rights opportunities open up an entirely new channel to expand Credit Unions’ reach to different generations, specifically Millennials.  This expanded reach can be seen in the partnerships struck between Credit Unions and collegiate arenas across the nation.  For instance, CFE Federal Credit Union Arena (CFE Arena), located on the University of Central Florida campus and home to the one of the largest student population in the nation, is a prime example of the effect that naming rights can have on a Credit Union.  Home to the UCF Knights, this 10,000 seats sports and entertainment arena has transformed the reach of the CFE Federal Credit Union.  As stated by Michael Ferreer, former director of marketing for CFEFCU, the effect of this naming rights partnership on CFEFCU was immense, “These branches acquired 629 new households, resulting in more than $1.5 million in deposits and $1.6 million in loans with an annual retention rate of over 87%... an important measurement for our efforts in targeting young members for lifelong relationships”. 

SECU Arena of Towson University saw a similar result for its naming rights partner, the State Employees Credit Union. Carmen Mirabile, former VP of Marketing stated, “As an organization, our commitment to our members is to ensure that we provide them with the best banking products and services.  We can only continue to do that by attracting new members.  This partnership significantly enhances our visibility, greatly improving the opportunity to do exactly that… With every event taking place and promoted at SECU arena, we build awareness and attention to our great organization”.

The benefits of naming rights partnerships for Credit Unions are clear, and BWA only sees this trend continuing to grow and expand in the future.  In an ever-competitive market, there are few better ways to establish a business within a community in a way that mutually benefits all partners involved.  Other financial institutions should recognize the steps that Credit Unions are taking to further their reach, and emulate it, if not to be left behind. 

San Jose Spartan Stadium Now Named After Credit Union!!!!

http://www.mercurynews.com/bay-area-news/ci_30214706/san-jose-states-spartan-stadium-now-named-after

By Hannah Knowles, hknowles@bayareanewsgroup.com

SAN JOSE -- With its plan to rename Spartan Stadium after a credit union in exchange for $8 million, San Jose State joins a growing number of universities nationwide striking lucrative corporate deals to rebrand athletics facilities.

The partnership, which California State University trustees approved last month, will turn San Jose State University's football and soccer team turf into "CEFCU Stadium — Home of the Spartans," or just "CEFCU Stadium." That's short for Citizens Equity First Credit Union.

While other California schools have entered similar deals for smaller sports centers like basketball arenas, SJSU will be the first NCAA Division I school in the state to sell naming rights for its stadium to a company. San Diego State's football team plays in a stadium named for the tech company Qualcomm, but the school does not own the venue and shares it with a pro team, the San Diego Chargers.

Traditionally, universities name arenas and stadiums after big donors, notable staff or simply after the institution itself, but corporate naming -- ubiquitous among professional sports facilities -- is on the rise among colleges.

"We're constantly looking for corporate partners and sponsorship opportunities, and that's an expanding area only limited by one's imagination," said Gene Bleymaier, SJSU's director of athletics.

CEFCU will give the university $8.6 million to support the SJSU athletics department through scholarships, improvements to facilities and other programs. The payment is spread out over the 15-year agreement, starting this school year with $450,000 and rising annually to adjust for inflation.

SJSU's stadium partnership is part of the school's broader push to find new sources of revenue, both philanthropic and corporate -- not just in athletics but for the university as a whole, said Paul Lanning, vice president of university advancement.

"Universities and colleges are seeking ways to continue to augment constrained budgets," Lanning said. "Public-private partnerships like this one -- they're going to be a very important element of our strategy going forward."

The strategy extends beyond athletics. Recently, SJSU entered a five-year agreement with Cisco Systems worth $1,050,000 to name a laboratory and professorship in the College of Engineering.

Lanning said that the university's budget is in "good shape," having stabilized since a last-minute scramble for budget cuts in 2013. But state funding can't cover all of SJSU's needs, he said, especially as the CSU system grapples with growing demand.

The CEFCU deal, SJSU's largest corporate sponsorship to date, will help restore an aging stadium to top shape with improved concessions and amenities for spectators. It will also help cover new costs in the athletics department caused by a change in NCAA rules last year that meant the university needed to contribute about $1.6 million more per year toward sports scholarships. The NCAA expanded the definition of an athletic scholarship to include travel expenses and other miscellaneous items, which effectively raised the amount of money that schools are allowed to provide their players. Currently, SJSU is tapping general university resources to provide those extra dollars.

SJSU found CEFCU through a third party, a sports consulting company called Bonham/Wills & Associates that specializes in naming deals. CEFCU has been a lower-level Spartan Stadium sponsor since 2011, one of over 100 sponsors at various levels throughout the entire SJSU athletics department.

While some cash-strapped colleges have embraced brand names from AT&T to Papa Johns for their stadiums, other universities have shied away from the corporate trend and turned down millions of dollars. In 2007, shortly after University of Minnesota debuted TCF Bank Stadium in return for $35 million, officials at Notre Dame University and Michigan State University told Sports Business Daily that they would not follow suit and wanted to maintain a strictly collegiate image.

Other schools in Bay Area feel similarly. Stanford avoids corporate signage for its sports venues. Santa Clara University has none either. UC Berkeley has no plans to sell naming rights to Memorial Stadium, even as it struggles with debt after spending $321 million to upgrade the venue, which a study deemed unfit to weather earthquakes. A school spokesperson said that the Memorial Stadium name is "essential to the history and traditions of the university."

However, UC Berkeley welcomed a corporate sponsorship similar to SJSU's in 2013, a year after completing the stadium renovation. The school made a 15-year, $18 million deal to rename the playing field inside the stadium after Kabam, a video game company with three UC Berkeley alumni among its cofounders.

SJSU will debut the new name at its first home football game Sept. 10 against Portland State.

Some worry that SJSU's stadium name change will undermine the Spartan tradition.

"We take pride in where we went to school, and when you start seeing names that really do not go with the university, I think it takes away from the teams," said Judy Najero ,who graduated from SJSU in 2004 and works in San Jose. "I think you're going more toward the dollars than the education or what makes up the Spartan community, which is the alumni, the students and the staff."

Bleymaier said that the athletics department weighed these concerns but believes the sponsorship will only enhance the sports program And, as Lanning pointed out, the stadium's official title still includes "Home of the Spartans."

"We understood that change can be difficult," Bleymaier said. "But looking at the environment and the need to generate new money is not something that's new to colleges."

$$$ Dollar for Dollar $$$

 Viewing sponsorship as a cost-effective method of achieving specific marketing objectives, has been the driving factor behind the dramatic increase in Naming Rights over the last decade. Sponsorship marketing is particularly valuable because of its effectiveness in introducing new products, helping new or established products contend with competitive brands, and increasing corporate brand awareness. Increasing brand awareness is a primary factor behind a significant sub-trend within the sponsorship industry over the last several years. It has been proven that "Dollar for Dollar" Naming Rights is the best investment a corporation can make.

Corporate Benefits

• Enormous brand exposure
• Strong connection to iconic civic facility
• Demonstrate commitment to community
• Increase sales through direct access to property's audience and prime hospitality opportunities
• Ability to target specific demographic groups/audience
• Credibility (sponsorships have greater credibility than straight advertising)
• Interactive marketing platform

Property Benefits

• Generate immediate and annual revenue
• Build image/profile of property through linkage with prestigious corporate entity
• Create marketing synergies for an expanded marketing reach
• Eliminate various line-item expenses

General Naming Rights Benefits

• Impactfull branding exposure
• A prestigious association with the property and its tenants
• the ability to rise above the advertising clutter normally associated with sports and entertainment properties
• The opportunity to pre-empt a company's competition from an association with the property 
• The potential for lucrative direct and indirect business relationships 

Naming rights occupy the highest point on the sponsorship pyramid and typically carry with them a number of major benefits for all parties included. This is why we will continue to see these investments increase across industry categories, sports and entertainment venues, events and properties around the globe. 

Playoffs & Exposure

What happens with our favorite teams and their sponsorship contracts when they hit play offs???

As the world of sponsorship in sports has evolved, so have the terms of negotiation when signing deals involving teams, properties and corporations. Traditional formulas once used have now been broken down and personalized creating an exciting window of creativity when drawing up contracts.  This gives the freedom to develop standards for negotiation on a case by case basis when getting down to Playoffs.

Methods of Negotiating Playoff Deals with Sponsors vary.  It is up to the negotiation team to use their own hypothesis to determine the extended value regarding the property/team when/if playoff games are held on the property or involved teams are headed for an extended season (playoff run). 

Drilling for Oil….

Rolling the Dice in 2006, Lucas Oil purchased the naming rights to Colts Stadium in Indianapolis, Illinois.  The Naming rights cost Lucas $122 million over a 20 year span.  Six years into this contract Lucas Oil “struck oil” as the Colts had made it to Super Bowl, to top it off Illinois won the bid the same year to host the event that then in turn catapulted Lucas Oil onto an invaluable yet unexpected Global Marketing platform.  Lucas estimates this single event alone has increased revenue by $10 million and Lucas Oil hasn’t looked back since.

Bonus Structures….

Considering there are no guarantees a team’s annual performance. Putting a monetary value on extended seasons have known to be structured in different ways.  In some cases an “exceptional performance revenue” will be included in the contract.  Stating a specific royalty to be exchanged from the corporation to the team/property, usually multi-level bonus structure.  Value based upon number of playoff games, final fours, championships and wins.  Due to extensive exposure during these time periods teams/properties can negotiate based on enhanced marketing exposure frequencies. 

Playoff Packages….

In some cases, additional packages are set to sell if playoffs become a reality.  This is a high risk and high reward method that is used to maximize sponsorship revenue.   This method consists of a fast paced negotiation process, utilizing sales teams attempting to maximize complicated short term contracts.  Evaluation on the team/property/event and exposure, may prove the dependant variables included in this process are well worth the fuss!

Long Term Commitment….

In this case most commonly linked to Naming Rights or Exclusivity Deals the commitment of a sponsor will remain through playoffs with a pre negotiated plan of action.  A per-game calculation is determined due to the undetermined amount of games.  In these relationships it is most common for benefits of regular season contracting stay static, additional promotions may be optional.

Tactics and Strategies….

We all know the amount of impressions significantly increases if a team makes it to playoffs.  For a hosting property and all brands involved during this time, promotional communication has potential increase revenue far above the original projection value.

The characteristics of negotiation allow both Team/Property and Corporation to determine the most symbiotic and profitable approach for their specific contract when approaching the topic of Playoffs. 

Category Exclusivity: what it means & the industry categories that are more likely to pay for it

When entering into a sponsorship partnership, category exclusivity is often an essential consideration for sponsors. Category exclusivity dictates that the sponsor is the only company within its product or service category that has a relationship with the property or event. A guarantee of exclusivity is very appealing for potential sponsors because it serves to limit their competitors’ access to the consumer group affiliated with a certain property or event.

Sponsorship typically exists on a continuum however, from high level Naming Rights partnerships where the sponsor gains exclusivity that runs throughout a property or an event, to small scale sponsorship where the sponsor competes for consumer impressions alongside other sponsors that are from the same industry category such as is often the case with sporting events featuring multiple beverage and performance products. In practice, categorical exclusivity often exists on a middle plane that might include categorical exclusivity to a certain area, but not the entirety, of a property, for example the “Lexus Lounge” in Amalie Arena in Tampa, FL.

The ultimate value that a property or event can garner from a sponsorship partnership is often directly related to the level of categorical exclusivity offered. In most cases, a lack of categorical exclusivity can significantly lower the value of a sponsorship deal. An exception to this general rule is in the case of sponsorship deals for charities or non-profit organizations where a company may relinquish its requirements for exclusivity in the interest of boosting their Corporate Social Responsibility portfolio.

So the question is, when seeking high level sponsorship such as a Naming Rights partner, what industry category is more likely to pay for the privilege of being the exclusive category partner? While a company’s willingness to pay for category exclusivity is influenced by a number of market variables, there are two primary characteristics that are thematic of industry categories that most often purchase category exclusivity: 1) The product experiences high competition in the marketplace, meaning that there is high cross elasticity of demand between their product and a competitors’ as consumers are more prone to substitution, and 2) They exhibit a strong command of their product supply chain that allows the company in the industry category to keep production costs low and profits high.

According to the 2015 IEG Property Sponsorship Category Survey, these two characteristics are present in the top three Industry categories most likely to purchase exclusivity, starting with non-alcoholic beverages in first at 55%, the automotive industry coming second at 54%, and alcoholic beverages third at 53%.  Rounding out the lower end of the scale is retail with 14% and restaurants at a low 13%, which both exhibit a lower elasticity of demand due to consumer’s diminished proclivity towards substitution, longer supply chains and, generally, lowered profit margins.

While these numbers are indicative of sponsorship trends overall, the tried and true method when searching for a sponsorship partnership that exhibits high categorical exclusivity such as naming rights is to look at the community where the property or event is based. Most often, high level sponsorship is derived from companies that have their headquarters or a large consumer base in the area and are interested in securing and growing that consumer base through an integrated community presence.  

See the full table of industry categories that are most likely to purchase exclusivity here.

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-Erin Beaudoin