Business & Technology

Business & Technology
sports business

Pro Sports Go for Slam Dunk on Economic Rebound

Article Highlights

  • Many major corporate sponsors cut their sports marketing budgets during recession.
  • Teams get creative in an effort to get fans back in stands.

Rate This Article

Related Topics

View PDF Print Article

Sports are still big business, but the recent economic downturn has left a lasting effect on the industry.

The recession that reached its height from 2008 to 2009 forced many sports fans and companies to tighten their wallets. Fans were attending fewer sporting events and spending less on food, souvenirs, and merchandise when they did attend.

“Many fans are choosing to watch games on TV or on their computers instead of attending the event,” says Troy Ralston, president of South University — Richmond. “And for many still choosing to attend the event, they help to reduce their overall costs by eating before going to the stadium or taking bottled beverages or snacks into the stadium instead of paying the high dollar amounts at the concession stands.”

Meanwhile, professional sports also saw sharp declines in the amount of corporate dollars they saw.

The cut in corporate spending hurt. Teams and leagues have become more reliant on corporate sponsorships, advertising, and luxury suites in the past 20 years, especially from the automotive and financial industries — which have both required government bailouts.

The sports industry has survived.

Some of the sports sponsorship industry’s major players, including General Motors and Nike, had cut their sports marketing budgets.

“Many corporations are no longer spending millions of dollars on sponsorships or hundreds of thousands of dollars on luxury suites,” says Ralston, who prior to his career in higher education, worked in a sales capacity for different professional sports franchises including the Oakland Athletics, Phoenix Suns, and Denver Nuggets.

Professional sports also suffered more setbacks in the form of staff layoffs. The National Football League (NFL) and National Basketball Association (NBA) reduced their staffs.

After taking a pummeling in the past couple years, there are signs of a recovery and predictions that the global sports industry will experience an upward trend in coming years.

“The sports industry has survived,” says Adam Nisenson, principal and creative director for marketing firm Active Imagination, which specializes in strategic sponsorship consulting. “Things are turning around.” Nisenson adds that professional baseball, in particular, has done well because people looking for family activities find that baseball is still affordable.

Also, companies are starting to dive back into the sports marketing waters again.

sports business

“I just worked with a client that did a title sponsorship with a major team,” Nisenson says. “There is a huge value in sponsorship.”

Television contracts and other broadcast rights fees, advertising, luxury boxes and club seats, licensed merchandise, ticket sales, and concessions are the main sources of revenue for sports franchises. Sponsorships account for a large portion of teams’ income, sources say. It is also an effective tool for companies seeking to increase brand recognition.

“Sports sponsorships offer companies an opportunity to get exposure,” says Hiroto Takagi, sports marketing consultant at Bryton Harry Inc. “These companies want to get their name out to many people and sports are a good way to do that.”

The sports industry may be resilient, but it is not immune to the recession. Many companies and advertisers trimmed the size and quantity of their sponsorships and reconsidered the value of their sports marketing deals.

It is a new ballgame for professional sports marketing. The recession has taught teams to become more creative in their efforts to lure fans and sponsors.

“Teams are also doing a lot more promotions in order to get fans into the stadium and once at the stadium, there are now a lot more activities to entertain fans besides the game itself,” Ralston says.

“The trend I have been seeing is that consumers are smarter and expecting more,” Nisenson says. “Teams now have to look at ways to give fans a chance to be a part of something without the sponsor and build a campaign they can run every year.”

Marketing campaigns that involve sports collectible items that can be purchased at stores or through a vendor are effective, Nisenson says.

“The Pittsburgh Penguins hockey team did a hugely successful campaign when Pizza Hut sold commemorative cups featuring a different player each week,” Nisenson says. “The campaign was successful because it drove traffic to the restaurants and they could upsell the customer on a collector’s set.

“It’s different than a bobblehead or T-shirt handed out at games because it is driving fans who are passionate to the sponsor, where they are purchasing something that is branded.”

Technological advancements are also delivering new ways for fans to watch games and interact with teams, players, and sponsors. Fans can watch games on their computers by purchasing subscriptions through the NFL and Major League Baseball (MLB) websites. They can also watch streaming video of games on their mobile devices.

“Because of this, fans can determine what they want to watch as opposed to watching what the network decided to televise,” Ralston says. “I think sports franchises and individual athletes are also paying closer attention to brand imaging.”

Teams and sponsors must now incorporate a web component into their broader marketing campaigns. While the web has become integral in sending brand messages out, sports fans will still seek out enjoyable in-person experiences. This might be the main reason behind the sports industry’s resilience during economic downtimes.

“Having fun at the games, face-to-face opportunities with players, and local opportunities will continue to be the most important things for fans,” Takagi says.

Author: Darice Britt

© South University