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Sports Marketing Industry Feeling Pinch of Hard Times

Pittsburgh Post-Gazette, January 27, 2009

By Teresa F. Lindeman

TAMPA, Fla. -- Most Pittsburghers probably didn't notice when the Arena Football League decided in December to suspend its 2009 season for economic reasons. And when a nearly bankrupt General Motors pulled out after a long stint as a Pittsburgh Pirates sponsor, well, that made sense.

But the turnovers that have plagued the U.S. economy of late are threatening to become game-changers for the entire sports marketing industry. All sorts of companies are tinkering with sponsorship deals or simply cutting back hard. Even the NFL's marquee showdown, the Super Bowl, won't avoid hits from the tough times.

"There's no question that no one is immune right now with this economy," said Reid Sigmon, executive director of the Tampa Bay Super Bowl Host Committee, which late last year scaled back its fund-raising goals that were designed to meet the city's Super Bowl bid obligations.

Sports continue to be seen as a good place for advertisers to connect with their audiences -- and that may keep the overall numbers on the positive side. But things are slowing down.

For 2009, IEG Sponsorship Report is projecting overall growth in North American sponsorship spending of just 2.2 percent to $16.97 billion. That's the lowest growth rate the Chicago organization has projected since it started making forecasts 24 years ago.

Sports sponsorship spending in particular is projected to grow at just a 1.8 percent rate to $11.6 billion after years of mostly double-digit growth.

Super Bowl viewers on Sunday may not notice much difference. All 70,000-plus seats in the Raymond James Stadium will be filled as will those pricey commercial slots during the game, industry experts say. But some traditional pre-Super Bowl parties may not happen, and those that do may not be quite as extravagant as in the past.

Sponsoring companies' executives will probably be very focused on determining exactly how much return on investment they'll be getting from whatever marketing gets done.

That's the trend all through the industry, not just around the Super Bowl, said Adrian Staiti, senior vice president of business operations at Front Row Marketing Services in Philadelphia.

"You're seeing the deals happen, but the size and the quantity of the deals are certainly slowing down," he said. Companies want to know exactly how buying this sign or hosting a player's appearance will drive sales.

Details like that might not have seemed so important in the past, said Eric Wright, vice president of research and development for Ann Arbor, Mich., consulting firm Joyce Julius & Associates Inc. The company helps clients analyze the value they're getting from putting their names on stadiums or race cars and in other venues.

For example, last year, Joyce Julius calculated that the University of Phoenix picked up about $20 million of exposure value from media coverage around the Super Bowl game held at the stadium bearing its name. That statistic added up the value of TV shots, on-air mentions, as well as print media and Internet news stories.

Analyzing the value of a sports sponsorship has become complicated. There are more cable networks to track, sports blogs to assess and niche radio shows to check out. Each brand has its own audience, and each year the marketing game plan changes.

"It can be challenging, too, from a standpoint to understand really what the importance is," said Mr. Wright. Shipping company UPS picked up buzz last year when a horse named Big Brown won the Kentucky Derby. That's hard to replicate.

Sports sponsorship has gained acceptance as an effective tool in the past five to 10 years, said Mr. Wright. Passionate fans and a reality show of the old-fashioned sort ­-- actual games -- create a useful advertising platform.

That should help teams and sporting venues hold onto a base of advertisers, but they may have to get more creative, both in the kinds of companies they approach and the packages they offer.

U.S. car companies, for example, may not be the reliable sports marketers they have been.

This year for the first time in decades, there will be no Super Bowl ads for U.S. automakers, marveled Bob Horowitz, president of Bucks County's Juma Entertainment and executive producer of the annual "Super Bowl's Greatest Commercials" show. "That's pretty unbelievable," he said.

Last month, the Deer Valley Celebrity Skifest that his company has produced for more than 15 years went without an automotive sponsor for the first time.

At the Super Bowl, he said, companies may go ahead with deals for luxury boxes or parties but make a few changes. "You may buy the skybox, but your catering within the skybox is not what it was before," meaning some businesses further down the food chain are earning less.

Tampa Bay's host committee has found ways to cut costs since lowering its fund-raising goal from about $8 million to $7 million, a number that the group has now exceeded. "We tried to be as efficient with our dollars as possible," said Mr. Sigmon.

In spite of the economy, he said Tampa was still very excited to be hosting the big game this year, as it did back in 2001.

After all, even a less extravagant Super Bowl is still an economic driver that may bring around 100,000 people to town. Those people need places to stay and food to eat, even if they try to cut back a bit.

Last year's Super Bowl in Phoenix generated more than $500 million in direct and indirect spending by visiting fans and organizations, according to an economic impact study by Arizona State University researchers. This year's game is expected to generate about $300 million for the regional economy, according to the Tampa Bay Super Bowl Host Committee.

Other cities might appreciate having that sort of midwinter boost, especially this year when travel is viewed by many people as an extravagance. As Mr. Sigmon said, "We look at it as this is a great year to host the game."

Teresa F. Lindeman can be reached at or 412-263-2018.