Dollars & Sense - PGA Tour is Thriving

Tiger Woods has not won a major since 2008, but the PGA Tour is thriving financially and in the area of sponsorship stability.  The transition from the years of Woods’ dominance to an era of much more competitive balance was an intriguing one for the Tour with fluctuating television ratings and an overall confusion on how to continue reaching the younger demographics.  Rory McIlroy is a great player and one worthy of grabbing the proverbial torch, but he certainly has a long way to go to reach the golden-Woods standard.

According Michael Smith’s article “Title sponsors in hand, PGA Tour eyes digital international growth” in this week’s Sports Business Journal, the PGA Tour has sold all but one of its tournament title sponsors.  45 of 46 ain’t too bad.  The lone tournament without a title sponsor is the Tampa Bay Championship held from March 14-17 at Innisbrook Resort.  Transition Optical was the previous title sponsor but was the only company out of 11 not to renew their deal.

The most sought after title sponsor ships are those for tournaments that are televised on either CBS or NBC as opposed to the Golf Channel.  Sponsorship for these types of events runs for $6 million to $8 million per year.  Part of this money goes to the television network and part of this money goes directly to the tournament.  Tournament money could potentially go toward paying the exorbitant purses.  The title sponsor-less Tampa Bay Championship has a total purse of $5.5 million with last year’s winner, Luke Donald, taking home $990,000 of it according to the PGA Tour schedule.

Furthermore on the PGA Tour’s stable sponsorship assets is the fact that only Hyundai’s title sponsorship deal expires after the 2013 season.  With FedEx’s recently extended deal, Web.com signing on as the sponsor of the old Nationwide Tour, and broadcast deals with CBS and NBC that run reportedly through 2021, the PGA Tour is able to leverage their current deals further and look for a product more global in nature.

Aided by the established World Golf Championship events including the uniqueness of the Accenture Match Play Championship, the PGA Tour has been looking towards global growth for a while.  Now with PGA Tour Canada under their control and a new tour in Latin America, the PGA Tour continues its expansion

. 

Digital media growth is what ultimately caught eye with the article because typically when you think golf, you think older generations and older generations are not particularly digital media savvy.  Here are a few key digital media points that the PGA Tour is doing in the upcoming season:

-          - Streamlined Apps – Currently apps are on a tournament by tournament basis, but with the PGA Tour undertaking a single aggregated platform, apps will have much greater consistent quality.

-         -  Internet Simulcasts – The PGA Tour plans to simulcast CBS, NBC, and Golf Channel broadcasts on their website as an added viewing platform in hopes to add sellable advertising inventory and drive site traffic.

-          - Digital Division Growth – After taking over control of their digital division from Turner Sports, the PGA Tour looks to grow their digital division and expand on Turner’s successes.

(Quick aside on golf television broadcasts: Golf is often criticized by its haters for being slow and boring, even on television.  Personally, I think that assumption is way off base.  Golf broadcast productions always bring the viewer straight to the action.  How often do you see a guy walking the fairway as opposed to hitting a shot in the middle of a round?  Virtually never.  Golf broadcasts have an element of NFL Red Zone to them that was there before the thought of NFL Red Zone was even conceived.)

The PGA Tour is in an incredible position going forward.  In the United States we have seen unrest and instability in our major sports over the past few years.  Golf and the PGA Tour has remained strong.  Just imagine what a dominant American-born player could do for television ratings!

(Read the SBJ Original Article)

Follow Kevin Rossi on Twitter @kevin_rossi.

My First Monster Mile

Welcome to the Route 30 Detour! US Route 30 intersects at I-95 in Philadelphia and goes from coast to coast, including passing through Pittsburgh and the home of Drexel University SMT student and blog contributor, Bryan Fyalkowski (@fyalkowski)...




I attended my first NASCAR race this past Sunday (Sept. 30, 2012); the AAA 400 at Dover International Speedway. Since I began to "follow" the sport a few years ago, my interest, knowledge and curiosity in it has grown tremendously. When my roommate, a rare (or so I thought) northern NASCAR fan, had an extra ticket for me, I jumped at the opportunity to join him.

When he told me he wanted to get to the track around 10am for the 2:15pm race, I was not necessarily in favor because it meant we would have to leave Philadelphia at 8am on a Sunday morning. When we arrived, however, I realized I was in for a very unique and fun experience.

Outside of DIS, which was probably the most gargantuan sporting venue I have ever seen, there was a carnival-esque setup that stretched for about a mile. If you want to see a clinic on sponsorship activation, I suggest you attend the next available NASCAR race.

First of all, DIS has a huge structure of the Monster Mile mascot outside of the entrance with past winners' names etched into plaques that are placed around the bottom. A few hours before the race, Brian Dawkins, who was serving as the grand marshal (guy who says: "Gentlemen, start your engines!"), did an interview right below the statue.

The SPEED channel set up a stage with the four analysts around a desk with the crazed fans in the background waving their arms and their own signs. The signs had big Sunoco (the Official Fuel of NASCAR) logos on them and could be created at a booth just across the way.

Chevrolet had a big area with Dale Earnhardt, Jr.'s #88 National Guard car and Kevin Harvick's #29 Budweiser car. They had a new Challenger and a square table with computers set up to input your name and contact information to receive a free t-shirt.

Sprint set up an area where you could take a picture with the Sprint Cup and have it sent to your email. Meanwhile, there was an emcee on stage with the Miss Sprint Cup girls, throwing free caps to the fans who screamed the loudest.

AAA has to overcome people referring to the race just as the "Sprint Cup Series at Dover" and attempt to leave their footprint on an event for which they actually have the naming rights. AAA had a setup with the winner's trophy of the Monster Mile guy holding a Sprint Cup car in his hand. At one point, the people at the boot held a water balloon toss, where the winning pair received a hat and the losing participants got earplugs (which were absolutely necessary, by the way).

3M, sponsor of Greg Biffle's #16 Ford Fusion, set up an area and fans were lining up to receive free home supplies such as sponges, tape and post-it notes. 5-hour Energy, sponsor of Clint Bowyer's #15 Toyota Camry, was giving out free samples of their product and throwing them into a large crowd in front of their setup.

US Army, sponsor of Ryan Newman's #39 Chevrolet Impala, posted up with a hummer, a table with unloaded firearms and a man dressed up in mossy camouflage. Then, one of the soldiers began pumping up the crowd and asking his bud to shoot t-shirts out of his launcher at the loudest section of fans.

 
National Guard had an area where fans could see who could do the most push-ups as service men and women cheered them on. Anyone who did at least 20 got their choice of a water bottle or t-shirt, while other service men and women gave out #88 stickers, magnets and lanyards. My roommate did the push-ups while my fat ass got in line for the free stuff.

Drive to End Hunger, sponsor of Jeff Gordon's #24 Chevrolet Impala, set up a spot where they held a hourly trivia contest where five fans would answer questions about Gordon and senior hunger in the United States. The winner of the trivia would receive an autographed Gordon item while the losers would received Drive to End Hunger wristbands and drink koozies.

Not to mention, each driver worth rooting for (excluding guys like Dave Blaney, JJ Yeley, etc.) have their own truck in which their employees sell merchandise with their name and sponsor on them. Although drivers like Earnhardt, Gordon and Jimmie Johnson have the most crowds around their trucks, I found the most interesting tidbit from my visit to Brad Keselowski mobile headquarters.

Keselowski drives the (Blue Two) #2 Dodge Charger, sponsored by Miller Lite. While purchasing a t-shirt from his team's truck before the race (which Keselowski would ultimately win and jump to the front of the Sprint Cup standings in the process) I was asked to show my ID to the worker in the truck so I could buy a shirt with a Miller Lite logo.

NASCAR is a unique sport because a fan does not actually see his or her favorite driver during a race. The only thing a fan has to associate with a driver is the number of the car and its sponsor. Even with this huge obstacle, NASCAR drivers connect with their fans as well as any other sport, probably even better.

I witnessed this firsthand at Dover, where some drivers would actually come out to their sponsor's tents and have interviews just a few hours before the green flag. Juan Pablo Montoya came out to the Chevrolet area, Denny Hamlin had a brief interview in the FedEx tent, Mark Martin answered questions near the AAA setup and many more.

Since there are no timeouts, halftimes or breaks in the action during NASCAR races, sponsors have to be more creative with their activation during pre-race and post-race events. It is a highly sponsor-driven (no pun intended) business, but unlike any other sport.

 
As I said before, if you intend to be a sport professional and have never been to a NASCAR race, I highly suggest going at some point. You will get a one-of-a-kind experience you cannot get anywhere else.

Enjoy your trip back to I-95 and I'll see you next week!

FedEx Playoff Approaches With Little Buzz

Wait… Did you hear that?  Neither did I.

That silence is the lack of buzz that the PGA Tour’s FedExCup playoff is generating. 

The FedExCup playoff system is very similar to NASCAR’s playoff system in that competitors earn points based on finishes in regular season events.  After the final event of the regular season, the top 125 golfers in the standings qualify for the first playoff event.

Last week’s Wyndham Championship (won by Sergio Garcia on the same day that Augusta announced their acceptance of their first woman members) was the final event of the PGA Tour’s regular season.  A big reason that the lack of buzz is surprising (at least to me) is the fire power among the top five in the standings.  Fifth place currently belongs to Bubba Watson who really became a crowd favorite this year at The Masters.  Third place belongs to Rory McIlroy who is coming off of an impressive eight stroke victory at the PGA Championship.  First place belongs to none other than Tiger Woods.  Enduring intense scrutiny for not winning a major championship this yes, Tiger has put together a solid season winning three events (more than any other player on the PGA Tour this year). 

This week’s event The Barclays will be the first event of the FedExCup playoffs.  Bethpage Black in New York will play host to event and is widely considered to be one of the tougher courses on the PGA Tour schedule.  It is at The Barclays this week that Tiger Woods and Rory McIlroy will be paired together in a group for rounds one and two for the first time in their careers.  You can bet the house that that group will be the most followed grouping on TV.

After The Barclays, the second leg of the FedExCup playoff moves to the Deutsche Bank Championship played at TPC Boston.  TPC Boston typically sees lower scores with tournament winners shooting around 20-under.  Unlike the first round at The Barclays where the top 125 players compete, the Deutsche Bank Championship whittles the field down to the top 100. 

The BMW Championship is the third leg of the playoff where the field is cut even further down to the top 70 players in the FedExCup standings.  The BMW Championship will be played at Crooked Stick in Carmel, Indiana after a run at Cog Hill Golf and Country Club. 

Finally, the FedExCup playoffs come down the Tour Championship which takes the top 30 players in the standings.  Taking place at East Lake Golf Club in Atlanta, GA, the winner of the season long PGA Tour FedExCup is crowned.  Last year Bill Haas took the Tour Championship which won him the FedExCup in dramatic fashion.

Prize money is a huge reward of the FedExCup playoff.  With total prize money in the neighborhood of $35 million, the winner takes home a whopping $10 million for the season’s worth of work.  The second place finisher brings in $3 million; third place gets $2 million all the way through the top 150 players. 

 Although the prize money is big, the stakes just don’t seem to be taken too seriously by the fans and media.  There is very little build up going into these playoffs.  Moving into next year, the stakes could be raised to a point that could garner more attention among golf fans.  Starting in 2013, the FedExCup standings will essentially replace the PGA Tour Money List as the determining factor for the Tour cards the following season.  This raises the stakes much, much higher because now the top 125 spots matter as opposed to maybe the number one spot.

FedEx’s dealings with the PGA Tour began back in 1986, where it started out as a tournament sponsor (FedEx St. Jude Classic).  The FedExCup began in 2007, and prior to this year, the PGA Tour and FedEx extended the agreement containing the FedExCup playoffs through 2017. 

The change for the future that will place importance on the top 125 spots will probably not bring too much extra coverage to the playoff.  However, if the big names at the top of this year’s FedExCup standings can stay in contention (Tiger Woods, Rory McIlroy, and Bubba Watson), then the playoff is sure to gain media and fan momentum by the time the Tour Championship rolls around on September 20 to 23.  For now we can enjoy The Barclays because I think most of us can agree that any golf is better than no golf at all.

--Information gathered from PGATour.com and Sports Business Journal.

Follow Kevin Rossi on Twitter at @kevin_rossi.

Dollars & Sense - London 2012 Olympics

The time has finally come. 

It is the week of the 2012 London Summer Olympic Games.  This week we set aside the 8 years of politics that it took to not only secure the Games but to make it all happen.  This week we set aside the controversy and bad blood that we saw with Saudi Arabia contemplating banning their women from the Games (they ultimately decided to allow women to participate).   Finally, it is time for the glory of athletics in its finest and most prideful form. 

 

London 2012 By the Numbers

$15,000,000,000 is the estimated cost of the London 2012 Olympic Games.

$2,500,000,000 was the first proposed cost of the London 2012 Olympic bid.

Hundreds of millions of people will watch from their home countries.

8,800,000 tickets were to be sold for the Games.

700,000 (up to) volunteers (Game-Makers) will be needed to put on the Games.

10,000 (over) athletes to compete for the gold.

995 euros was the starting price for tickets to the opening and closing ceremonies which is equivalent to a little over $1200. 

302 events to medal in.

269 female athletes will compete for the United States.

261 male athletes will compete for the United States.

205 countries will compete for gold.

110 medals is the number of total medals the United States won in Beijing in 2008.

38 different venues will be used for Olympic competition.

36 of those 2008 US medals were gold.

17 days of competition.

11 official sponsors of the Olympic Games.

2 is the place that the United States finished in Beijing in 2008.

1 is what the United States Olympic team will strive for in London 2012.

 

Olympic Sponsors By the Numbers (via The Guardian)

Company            Type      Value, $m, total known deal       £m         

Coca Cola             Worldwide          100         64           1

Acer                       Worldwide          100         64           2

Atos                       Worldwide          100         64           3

GE                          Worldwide          100         64           4

Dow                       Worldwide          100         64           5

McDonald's        Worldwide          100         64           6

Omega                 Worldwide          100         64           7

Panasonic            Worldwide          100         64           8

P&G                       Worldwide          100         64           9

Samsung              Worldwide          100         64           10

Visa                        Worldwide          100         64           11

Adidas                  London 2012 Olympic Partners   63           40           1

BMW                     London 2012 Olympic Partners   63           40           2

BP                           London 2012 Olympic Partners   63           40           3

British Airways  London 2012 Olympic Partners   63           40           4

BT                           London 2012 Olympic Partners   63           40           5

EDF                        London 2012 Olympic Partners   63           40           6

Lloyds TSB           London 2012 Olympic Partners   63           40           7

Adecco                 London 2012 Olympic Supporters             31           20           1

ArcelorMittal     London 2012 Olympic Supporters             31           20           2

Cadbury               London 2012 Olympic Supporters             31           20           3

Cisco                      London 2012 Olympic Supporters             31           20           4

Deloitte                  London 2012 Olympic Supporters             31           20           5

Thomas Cook     London 2012 Olympic Supporters             31           20           6

UPS                        London 2012 Olympic Supporters             31           20           7

Aggreko               London 2012 Olympic Providers and Suppliers    15           10           1

Airwave               London 2012 Olympic Providers and Suppliers    15           10           2

Atkins                   London 2012 Olympic Providers and Suppliers    15           10           3

Boston Cons.     London 2012 Olympic Providers and Suppliers    15           10           4

CBS Outdoor      London 2012 Olympic Providers and Suppliers    15           10           5

Crystal CG           London 2012 Olympic Providers and Suppliers    15           10           6

Eurostar               London 2012 Olympic Providers and Suppliers    15           10           7

Freshfields BD   London 2012 Olympic Providers and Suppliers   15           10           8

G4S                        London 2012 Olympic Providers and Suppliers    15           10           9

GSK                        London 2012 Olympic Providers and Suppliers    15           10           10

Gymnova            London 2012 Olympic Providers and Suppliers    15           10           11

Heathrow Air.    London 2012 Olympic Providers and Suppliers    15           10           12

Heineken UK     London 2012 Olympic Providers and Suppliers    15           10           13

Holiday Inn         London 2012 Olympic Providers and Suppliers    15           10           14

John Lewis          London 2012 Olympic Providers and Suppliers    15           10           15

McCann World  London 2012 Olympic Providers and Suppliers    15           10           16

Mondo                 London 2012 Olympic Providers and Suppliers    15           10           17

Nature Valley    London 2012 Olympic Providers and Suppliers    15           10           18

Next                      London 2012 Olympic Providers and Suppliers    15           10           19

Nielsen                 London 2012 Olympic Providers and Suppliers    15           10           20

Populous             London 2012 Olympic Providers and Suppliers    15           10           21

Rapiscan Sys.     London 2012 Olympic Providers and Suppliers    15           10           22

Rio Tinto              London 2012 Olympic Providers and Suppliers    15           10           23

Technogym        London 2012 Olympic Providers and Suppliers    15           10           24

Thames Water  London 2012 Olympic Providers and Suppliers    15           10           25

Ticketmaster      London 2012 Olympic Providers and Suppliers    15           10           26

Trebor                  London 2012 Olympic Providers and Suppliers    15           10           27

Westfield            London 2012 Olympic Providers and Suppliers    15           10           28

What does is all mean?

The Olympic Games are truly a mega event in every sense of the phrase.  No other event in the world brings countries together in the way that the Olympics do, not even the World Cup.  The Olympics are huge on every single level; the pinnacle of athletic competition and certainly the pinnacle of sports business dollars.  However, as Biggie Smalls said so eloquently, “Mo’ Money Mo’ Problems”.  There is a great deal of controversy that comes with the Games.  Terrorist threats, country-wide debt, frivolous government spending, countries making political statements, boycotts, athletes changing countries, athletes doping, spectator safety and security, transportation, lodging, venue construction, ambush marketing, the list goes on and on almost endlessly.  Yet in spite of it all, there is something perceived to be so graceful and so pure.  The Olympic Games are a grand spectacle and marathon event that the entire world will tune in to see.  London 2012 Summer Olympic Games will begin this Thursday July 27 with the Opening Ceremony.  Enjoy, World.

Click here for a link to the full London 2012 schedule (day by day).

Preview: The Open Championship

It is that time of the year again!  Another major championship on the PGA Tour is upon us and this time it is The Open Championship.  This year’s edition of the British Open will be played at the Royal Lytham & St. Annes Golf Club in Lancashire, England.  Last time the British Open was held at Royal Lytham, the champion went by the name of… wait for it… yes you guessed it, David Duval. 

Going into the PGA Tour’s weekend in England, let’s take a look at three key elements:

1) Sponsors

We know about the players and their personal endorsement deals.  We know that Tiger Woods is sponsored by Nike.  We know that Rickie Fowler is sponsored by Puma.  The visibility of player sponsors has never been in question.  What is in question is the visibility of the tournament sponsors.  Do they get enough television visibility during the broadcast?  Is their on-site activation done well enough to interest the largely corporate crowd that attends PGA Tour events? 

Here is the list of sponsors for The Open Championship:

Doosan (South Korea – Infrastructure Support Business)

HSBC (England – Bank)

Master Card (United States – Credit Card)

Mercedes-Benz (Germany – Automobile)

Nikon (Japan – Technology)

Ralph Lauren (United States – Clothing)

Rolex (Switzerland – Technology)

Clearly, when you look at this list, you can see that there must be widespread interest in the British Open.  Companies from all over the planet come to be a sponsor of the tournament.  It will be interesting to watch and see how well they can activate through the weekend.

2) Weather

As we have all come to expect with the British Open every year, the weather is never too nice.  Weather is one of the big reasons that American golf and European golf is so different.  European players learn how to play golf in a different way.  They must hit lower shots and they can adjust to winds much better.  That is part of the reason that the British Open is one of the toughest majors to predict.  Anyhow, the weather for the weekend in Lancashire, England is looking to be similar to what we expect of The Open Championship.  It looks like it will be a cool weekend with temperatures staying in the low to mid 60s.  In typical English fashion, it also looks to be rainy for three of the four days which should make for an interesting start.  Luckily for the players, it does not seem like the wind will be as bad as it can sometimes be.

3) Champion

As with any tournament, everyone feels the need to try to predict a winner.  To be honest, I have no idea who will win.  If I had to put my money on somebody, I would go with a European player.  Why do you think Darren Clarke was able to win it last year?  It is a different game in Europe.  The courses are links style, which is different from most courses in the United States.  Also, as mentioned previously, the European players are more used to the poor weather conditions. 

When it comes to PGA Tour tournaments, many people immediately turn to Tiger Woods when asked to pick a winner.  Are his chances good?  Sure they are, but when it comes down to Tiger versus the field, I will take the field 98% of the time.  The odds are against him.  You’re picking a guy who hasn’t won a major in close to a handful of years and you’re picking him to win a tournament that is out of any American player’s element.  I love Tiger, but I’ll take the other 100-plus guys playing alongside him.  Don’t just go with the easy big name guy who the media picks almost every single week.

Two guys that I’m looking out for this weekend at The Open are Lee Westwood and Rickie Fowler.  I’m looking at Lee Westwood because he is a native of England and frankly I believe that he’s just too good to not have a major victory.  Before Westwood missed the cut at last year’s British Open, he finished T3 in 2009 and 2 in 2010.  The 39 year old is known for his consistency, so it will be interesting to see if Lee Westwood can bounce back this year and remain in contention through the weekend. 

Rickie Fowler intrigues me, not because I think he will win, but because he finished 5th last year.  Fowler is a guy who can become a face of golf and bring the game to the younger generations, but he hasn’t been able to stay at the top on a consistent basis.  I’m watching Rickie Fowler this weekend to see if he can capitalize on last year’s British Open top 5 and compete through the weekend.  Ok, I’ll be honest, I’m also watching to see what blinding colors he dons this week.

So, it looks like I’m going Lee Westwood this week at The Open Championship.  And yes, I do expect Tiger Woods to be in contention.  Then again, golf has a funny way of being completely unpredictable sometimes.  Tune into the first round bright and early tomorrow at 5am on ESPN for the first round!

Dollars & Sense - UFC 148 Recap

Chael Sonnen may be a world class mixed martial artist, but his mouth tends to steal the show more often than not.  UFC 148 was no different.  Sonnen’s fight with Anderson Silva was touted as one of the most anticipated fights in UFC history.  Anticipated being the key word. 

Chael’s mouth accomplished some impressive feats leading up to the fight.  It got the normally quiet and humble Anderson Silva to give a surprisingly quotable interview saying he was going to break Sonnen’s teeth.  It got Silva to throw a vicious and now infamous shoulder… at the weigh-ins.  It got Silva’s blood boiling so badly that the two didn’t even do the customary touching of gloves at the onset of the first round. 

Could Chael’s mouth finally have done some good for the fighter’s career in the octagon and throw the seldom-rattled Silva off his game?  Of course not.  Sonnen looked strong in the first round, probably taking it by a slight margin.  The second round was classic Silva.  About two minutes into the second round, referee Yves Lavigne stopped the fight after a dominating flurry of punches and knees.  Silva’s TKO of Sonnen proved that the only thing that may be able to stop Silva at this point is the 37 year olds age.

To give some credit to the American Gangster, Chael Sonnen has been able to point out two of Anderson Silva’s very few weaknesses in their two fights against each other.  1) Silva has the most trouble with wrestlers. It seems that if age doesn’t beat Silva first, a wrestler will.  2) It is possible to get under Silva’s skin (for better or worse).  Judging by the result of Saturday night’s fight, I wouldn’t advise the approach going forward. 

The Dollars

The difference between the appearance fees of the two fighters was a point that I found most interesting.  Naturally, Silva, the middleweight champion going into the fight, earned more than the challenger Chael Sonnen.  The disparity however, is what struck me as interesting.  Silva brought in $200,000 for showing up to the fight.  Sonnen’s contract seemed to be a bit more incentive laden with a $50,000 appearance fee and $50,000 bonus for winning the fight.  Of course, the $250,000 in appearance fees between the two pales in comparison to the reported $2.5 million that Tiger and Phil brought in at this weekend’s Greenbriar Classic (and they both missed the cut!). 

The total appearance fees between the main event fighters Silva and Sonnen weren't even the highest of the night.  Tito Ortiz and Forrest Griffin combined to bring in $375,000 in appearances fees for their battle and Tito Ortiz’s “final fight” ($250,000 went to Ortiz and $125,000 went to Griffin).  UFC 148 Fighter salary data is from mmajunkie.com.

The Sense

Within the past few years, UFC has been under some scrutiny from fans, fighters and the government from their relatively low fighter pay outs.  The business model that the UFC uses for paying their fighters is heavily structured around incentives.  Fighters fight for bonuses like Fight of the Night and KO of the Night.  Bonuses are typically capped around $70,000. 

The UFC will be an extremely interesting case study to follow into the future because they are blazing their own trail.  Mixed martial arts is most often compared to boxing, but that’s like comparing basketball and football because they are both played with balls.  Amazingly, the sport of mixed martial arts and the UFC are still growing in popularity.  However, with growing popularity of a sport comes growing popularity of fighters.  UFC is often complimented on its innovative social media strategies.  As fighters become more and more visible, there has to come a point that fighters want to capitalize big time on their popularity.  Appearance fees have to rise eventually.  I wonder, can the UFC business model absorb rising fighter dollar demands?

One thing is for sure, the UFC has put together an impressive global approach.  The top three fighters in the world are (arguably) Anderson Silva, Jon Jones, and Georges St. Pierre.  Their countries?  Brazil, USA, and Canada respectively.  Although Japan does not have a top fighter right now, the country loves the action just as much.  This diversity at the top levels makes global expansion a demand of the fans, not just a want of the UFC suits (would they be called suits? I’m pretty sure Dana White only wears sport coats). 

Going Forward

In boxing, a majority of the money is with the few top fighters in the world (let’s start a campaign Occupy Boxing).  In MMA, the money is dispersed relatively even.  Boxing and MMA are completely different in the respect that boxing is one perfected discipline, while MMA is a combination of disciplines.  I strongly believe that that inherent difference between boxing and MMA, is why the money will always stay relatively evenly dispersed.  Why?  It is tougher for one person to dominate long enough to make the type of name for them that would command $1 million plus appearance fees.  There are many more factors to success in mixed martial arts. 

Given the UFC’s global business approach, social media presence and their plethora of unique sponsorship/branding opportunities, the Zuffa-owned company is constantly growing.  Appearance fees for fighters will more than likely be growing in the next 3-5 years with the increasing visibility of the sport and personalities alike.  Even though there is the stiff competition that comes naturally to mixed martial arts, is that competition strong enough to retard the growth of fighter appearance fees so that the UFC can absorb the costs?  With the uniqueness of UFC’s product and the tremendous platform they provide in the sports business world, one would have to think so. 

Anderson Silva is one of the few fighters that have been able to build a big name for himself in the UFC.  He kept held onto his middleweight championship belt with a win over Chael Sonnen.  Keep in mind that Silva, possibly the best pound for pound fighter on the planet, did not even have the highest appearance fee of the UFC 148 fighters.  As the UFC evolves, the model for paying the fighters will evolve as well.  Right now the UFC uses contracts with heavy incentives.  When will the fighters’ cries for more guaranteed money be answered?  Only time will tell.

UFC 148 Business Notes

According to ESPN.com, UFC 148: Silva vs. Sonnen 2 grossed $6.5 in ticket sales which makes it the highest grossed UFC event at the MGM Grand Garden Arena and also puts the event among the top 35 boxing gross gates in the state of Nevada’s history. 

Another salary note, according to mmajunkie.com, Cung Le earned $150,000 for his appearance while his opponent, Patrick Cote earned $21,000 for his appearance with a $21,000 bonus for winning (he lost). 

Tweet Follow @kevin_rossi

World Cup Sponsorship

World Cup Sponsorship 

Every four years the world comes together to watch soccer in the World Cup. Pride and nationalism is on display during the games and citizens of countries all around the world care a great deal about the success of their country. The World Cup also means a great deal to FIFA because it is their biggest single event revenue generator.

The last World Cup was 2010 in South Africa. This event generated $3,655,000,000 for FIFA which was comprised of the sale of TV rights, marketing rights, hospitality rights, and licensing rights. This figure did exclude ticket revenue. The expenses for the 2010 World Cup totaled $1,298,000,000. The expenses included prize money, contribution to the local organizing committee, TV production, and legacy trust. The legacy trust was created to ensure that the host country would continue to benefit from the Wold Cup long after it is over.

The World Cup in 2010 had a lot of people viewing, in fact people who watched at least one minute of action in the 2010 World Cup was 47% of the world's population! 3.2 billion people around the world tuned in. With the massive amounts of global exposure for the tournament, corporate sponsorship is in high demand. Some of the corporate sponsors include Adidas, Coca-Cola, Visa, Budweiser, McDonalds and many more. The high exposure that is gained from the World Cup does not come cheap for these companies. Before the 2010 World Cup, Adidas agreed to pay $351 million  for the 2010 and 2014 World Cup. The benefits for Adidas includes access to TV and stadium advertising, the ability to provide the official ball used and other benefits. The big money has paid off for Adidas. Adidas has showed a double digit rise in sales of goods from endorsement deals in Asia. Another major sponsor for the tournament is Visa. Visa is the official financial services partner for the World Cup by paying $150 million for the 2010 and the upcoming 2014 World Cup. This sponsorship meant a lot for Visa because they spent significant money to outbid MasterCard for the opportunity to sponsor the tournament. Visa's large financial contribution does not come without its benefits. As the official financial services partner Visa will be the preferred payment method at all FIFA venues. In addition, the 2010 World Cup saw Visa introduce 'Go Fans' which consisted of television, print and out of home advertisements, usage promotions, experiential offers for cardholders and merchant discounts. Visa and Adidas are two of the many companies that have a large impact on FIFA and the World Cup.


Final Thought

Soccer is growing in America, yet is still far from the major sports in the country. Around the world, this is not the case. Soccer is the major sport around the world and companies know that. Although the sponsorship dollars may seem extreme for the World Cup, when looking at the global market that the sponsoring companies are reaching it may be worth it. I am excited to watch the upcoming 2014 World Cup in Brazil not only for the action, but for the sponsors. I want to see how big of an impact companies can make on such a huge scale. I think it is a safe assumption to believe that all sponsoring companies will see benefits from sponsoring the World Cup.

Drew Rosen

Follow @dmrosen7

Information provided by: Fifa.com, corporate.visa.com, adidas.com

Dollars & Sense - NBA Jersey Sponsorship

In the first post in I-95 SportsBiz history, the proposition of sponsorship space being sold on NBA jerseys will be under the intense scrutiny of the weekly Dollars & Sense column where, well you guessed it, we examine whether the dollars make sense.

With the NBA Playoffs in full swing and many of our favorite teams knocked out long ago, we can’t help but look ahead to next season.  Where are those marquee free agents that ESPN keeps talking about* going to land?  Are the Spurs really going to be able to stay young for one more year?  The Bobcats can’t really be that bad again, can they?  But one question that should be engrained in your mind now is will there be sponsors on the front of my favorite team’s jersey?

The Facts
The owners have been looking into the idea of jersey sponsorships throughout the season, and now more than ever it seems to be coming closer to reality.  There are essentially three choices: replacing the name, under the number, and on the jersey shoulder. 

The money that could be generated from jersey sponsors could potentially help the league immensely.  Although it is unclear as of now how many teams stand to lose money this season, last season a reported 22 teams dipped into the dreaded red numbers. 

Money is the clear-cut motivating factor here.  Many have spoken of the jersey sponsorship models currently used in the WNBA and the EPL.  The WNBA currently has a deal with Boost Mobile that has 10 of the 12 teams in the league bear the Boost Mobile brand on their uniforms.  The deal has allowed the league and its teams to see a little bit more stability**.

The EPL’s jersey sponsorship deals are on a team by team basis.  According to Sports Business Journal, the top annual values are $32.6 million worn by Manchester United (Aon), Liverpool (Standard Chartered), and Manchester City (Etihad Airways).  Chelsea’s deal with Samsung worth $22.5 million is good for fourth in the EPL.  Even though these are widely regarded as some of the strongest international brands, they are worth noting as a point-of-reference.

Estimates for NBA jersey sponsorships slot the value somewhere between middle of the EPL pack and somewhere closer to the WNBA.  It all depends on which sponsorship placement is used.  Experts cited in Sports Business Journal place their estimated values between $1 million and $20 million.

The Pros
A big pro for the teams of the NBA is pretty clear and that is the sweet smell of "straight cash, homie***".  The obvious new cash flow would be coming straight from the sponsorship deal.  However, it is important to keep in mind an indirect yet large chunk of change that could stem from a jersey deal: merchandise.  Avid fans always want to keep up with the latest and greatest trends from their favorite team.  Having the newest jersey is something that many avid fans pride themselves on^.  A jersey sponsorship would change up that avid fan’s favorite team’s jersey, therefore that fan is now on his/her way to the local sporting goods store to don the team’s newest look.

There is also one huge pro for sports marketers and that is cutting through the clutter with these jersey sponsorships.  Marketers spend millions of dollars with teams for signage and category exclusive rights.  In this day and age of sport, it has become increasingly hard as to not blur the lines of categories.  It is tough for fans to recall team sponsors because there’s so many.  Fans see so many signs that many have become immune to the sight and no longer internalize what they see.  Jersey sponsorships can cut through the cluttered sponsorship place.  With essentially a few signatures^^, a brand can instantly become the most visible of a team’s partners. 

The Cons
The con is the reason that we do not already see jersey sponsorships.  The con is that tradition says no.  Close your eyes for a second.  Imagine Michael Jordan’s famous cross-over of Byron Russell of the Utah Jazz in game 5 of the 1998 NBA Finals^^^.  We can all picture it vividly.  Now, at the moment when Jordan turns around after following that famous follow-through, place some large and obnoxious logo on the front.  I know it’s hideous, right?  It’s exactly why the traditionalists say no way.

The Sense
My senses say that traditionalists may not be able to hold their ground much longer.  I personally can’t decide where I stand on the matter.  I usually find myself initially siding with tradition, but tradition only sells for a small number of teams.  I think that the NBA should do one of two things, assuming that they do go in the jersey sponsorship direction. 

Option #1 – Make the Adidas, the NBA’s jersey provider, logo visible on game jerseys.  The logo is on all warm ups and fan purchased jerseys.  We see it in other sports, most notably in the NFL who has a huge jersey deal with Nike.  Fans are used to that and Adidas would put in extra money to make their logo more visible during games.

Option #2 – Go all out.  If the NBA is going to do it, then they should just do it.  There is no use in beating around the bush trying to sell the fans on false statements about attempting to avoid over-commercialization.  They aren’t fooling anybody.  Just take the most money that is offered and move on.  Fans will get used to it because they won’t have another choice.

The NBA is already trying to loosen up the fans by “experimenting” in the NBDL and throwing quotes out in the media saying that jersey sponsorship is inevitable.  As a fan, I say please make the decision, lay it on us, and let us adjust yet I’m also wondering what a Celtics jersey would look like with a corporate logo on it.  With the NBA becoming more of a global appeal, the jersey sponsorship could make sense because it would put them more on the international level with the EPL.  From a sports marketer’s standpoint, I would jump on this as quickly as possible and really elevate my brand to a new level by paving a new path. 

The Final Verdict
The dollars make sense for sports marketers trying to elevate their brands.  The dollars will only make sense for the NBA if they are straight forward with selling points to the fans and really use it as a platform to make the league a true global brand.

In the meantime, I’m on my way to meet with Commissioner David Stern on my new proposal… Selling ad space on the forehead of every player in the NBA.

Footnotes: 
* – No that will not be the last shot that I will be taking at ESPN.  Don’t worry, there will be plenty more.
**– Stability relative to the Women’s National Basketball Association of course.
***– That quote has to be one of Randy Moss’s top 5 contributions to the sports world.  Seriously.
^– Sheer observation through the years.  Nothing scientific.
^^– And a large briefcase full of freshly printed, neatly wrapped United States dollars.
^^^– I was going to say imagine Ron Artest making his way through the stands at the Palace at Auburn Hills with a large and obnoxious logo on the front, but I figured it didn’t hold a place in your heart that would instill anger toward over-commercialism.