News: Analysis & Commentary: SPORTS
RUN, JUMP--AND SELL
Commercial exploitation of sports explodes
For the bottled-in-Atlanta Olympics, Coca-Cola Co. is spending $250 million on its sponsorship, the Olympic torch run, a 20-acre temporary theme park, and advertising and marketing. But never mind that. Three weeks before the games, Coke marketing chief Sergio Zyman was entertaining at soccer's European championships, hanging out the window of a speeding sports car assessing Coke's presence at the Tour de France, calling on global track-and-field king Primo Nebiolo. Days after the Olympic flame dies, he'll host a meeting in France to finalize plans for the 1998 World Cup in France. Says Zyman: "We're moving slowly, inexorably into every sport."
Coke is far from alone. If there's one thing this most commercial of Olympics underscores, it's the exploding corporate exploitation of sports worldwide. With U.S. companies leading the way, sports tie-ins, endorsements, ads, and other promotional ploys have become the linchpin of marketing strategies for companies ranging from Brazil's Brahma brewery to Japan's Sony to Danish brewer Carlsberg. As Philip H. Knight, chairman and founder of Nike Inc., notes: "Sports has become the dominant entertainment of the world."
In the U.S., sports-related marketing is a key strategy for such savvy behemoths as Walt Disney Co., which is pouring $200 million into a new sports complex near its Orlando (Fla.) theme park, and Anheuser-Busch Cos., which is making athletics the backbone of its push to introduce Budweiser beer to global consumers. Worldwide corporate spending on sponsorships alone this year should reach $13.5 billion, says the newsletter IEG Sponsorship Report. The ties between pro sports and business have grown "faster and higher and more explosively than anyone would have thought," says Mark H. McCormack, head of sports marketing group, International Management Group/IMG. "It can't continue at this pace."
NEW STADIUMS. Perhaps it can't. But growth in the big bucks being thrown at sports shows no sign of slowing. Olympic sponsors who squawked at paying $40 million for worldwide rights to the Atlanta games are lining up to pay $45 million for Sydney 2000. NBC paid a record $4 billion for U.S. broadcast rights to the Olympics from 2000 through 2008. New stadiums galore are being built. The National Basketball Assn.'s Michael Jordan just signed a $30 million, one-year deal with the Chicago Bulls, the richest player contract ever. "There's no way I can justify that contract from a business standpoint," admits Bulls owner Jerry M. Reinsdorf.
The companies betting most heavily on the potency of sports marketing are among the world's most successful (table). Nike taps into the phenomenon by getting endorsement deals with tennis stars such as Andre Agassi and Pete Sampras and Olympic sprinter Michael Johnson, by sponsoring events, and even by underwriting professional golfing's junior circuit, the Nike Tour.
And most Olympic sponsors say their bucks were well-spent. "If you do it right, it will result in increased revenues, greater awareness among customers, and insulate you from some of the one-time promotions of your competitors." says David D'Alessandro, head of John Hancock Mutual Life Insurance Co.'s Olympic sponsorship.
International companies are honing sports marketing to a fine--and profitable--art. Brahma Beer bought blocks of soccer seats and dressed fans in Brahma-logo T-shirts to help turn its ad jingle into the unofficial song of Brazil's World Cup championship team in 1994. In Japan, Sony Creative Products is backing upstart J-League soccer by placing $300 million of J-League apparel in 100 stores it owns nationwide.
MOMENTUM. It seems that almost any sport, in any form, can make a buck on TV. Cable company ESPN's plans for a second sports channel drew predictions of failure when the broadcaster floated the idea. Wrong. "The deuce" has turned a smart profit. Now, 5,300 hours of sports programming and ownership of one of the world's most popular Web sites isn't enough. "Our viewers are telling us they want more," says ESPN Inc. Executive Editor John A. Walsh. So, ESPN is launching another channel, dubbed ESPN 3.
The Olympics may add momentum to the trend. "Sports lets you get into a dialogue with the consumer without forcing them to buy into the whole gestalt of your product," says Zyman. Coke's marketing is subtle. It invited "community heroes" to carry the Olympic torch, for instance, and designed Atlanta's Olympic City as a place where people can imagine competing in the games. But every aspect of it turns a profit and pushes product.
And overkill? Never mind that this is the Olympics in which TV personality Vanna White also carried the torch for a time, promoting the game show Wheel of Fortune. Zyman insists that "we haven't gone far enough yet in any instance." For the hypermarketers, there is no limit to what sports can do.By DReturn to top