Jones' marketing vision is putting pressure on Modell, other owners
From their opposite ends of the field, a renegade Texan and a pillar of the old guard could help throw up for grabs the way the National Football League markets itself and how other companies market themselves through the league.
Last week, Dallas Cowboys owner Jerry Jones filed his $750 million a lawsuit against NFL Properties and every team owner except the Oakland Raiders' Al Davis.
A day later, Browns owner Art Modell announced he would move his team from Cleveland to Baltimore next season.
At issue for both owners is control of their own destinies, but their actions could also affect:
The league, whose NFL Properties annually generates $3 billion-plus in licensing revenues at retail from team-sponsored merchandise. Each NFL team, regardless of the size of its market, equally shares those proceeds, about $3 million each. But Mr. Jones' Cowboys account for 20% of licensing dollars, and he wants complete control to sign his own deals.
National marketers. Browns sponsors are uncomfortably close to the heat Mr. Modell is taking from seething fans in Cleveland. This scenario has the potential to be replayed again and again, as nine other teams are making noises about leaving their current hometowns.
Unfortunately for marketers that have come to rely on the NFL as a national marketing vehicle, teams like the Browns may feel compelled to take action since Mr. Jones has raised the stakes to play and profit in the NFL. He has proven that a team must be cash rich to be a winner. The Cowboys are worth more than $200 million, up 21.2% from $165 million just two years ago.
In the past couple years, Mr. Jones has concocted a formula to make that kind of money: build or rent a state-of-the-entertainment-art stadium loaded with premium seats and corporate suites, and control your own marketing in most, if not all, categories.
Mr. Jones has made more than $45 million from his stadium this year. He spent that money to get superstar Deion Sanders, himself a hired gun who jumps from team to team looking for the best deal. The Cowboys were 8-1 going into the weekend and are favorites to win the Super Bowl.
Mr. Jones' lawsuit was in retaliation to the NFL's $300 million lawsuit against him earlier this fall, over his outside marketing deals. At the time, the rest of the NFL seemed unified against him over the outside sponsorship deals, but many NFL observers feel that the tide will turn for Mr. Jones, especially now that Mr. Modell, a respected member of the NFL old guard, has opted to go his own way.
The Browns are worth $165 million, but the team is only milking its stadium for $7 million. Under his deal in Baltimore, Mr. Modell could triple that figure, and maybe get more, if he has the flexibility to sell sponsors exclusivity rights to his team, traditionally the job of NFL Properties.
Nine other franchises are looking to move on: the Houston Oilers are on the brink of moving to Nashville, Tenn.; the Tampa Bay Buccaneers are negotiating to relocate to Orlando; the Arizona Cardinals and Seattle Seahawks are eyeing Los Angeles, and the Chicago Bears, Cincinnati Bengals, Detroit Lions and even Washington Redskins are all threatening to move if their cities don't give them better deals and better stadiums.
Mr. Jones has a convert, albeit a qualified one, with the St. Louis Rams, nee the Los Angeles Rams. The Rams last year abandoned the City of Angels, the No. 2 media market in the U.S., for a town that allows them to take charge of their financial destiny. The Rams control marketing for the new stadium and adjoining convention center and have seen revenues increase "multifold," said Marc Ganis, a marketing consultant and strategist for the Rams.
Mr. Ganis said he agrees with Mr. Jones' philosophy to a point. But unlike the Texan, Mr. Ganis believes licensing should be handled by NFL Properties. "Merchandising is more effectively handled by a centralized staff," Mr. Ganis said. "Teams can't handle that kind of marketing on a national scale."
"NFL Properties should continue to market us nationally; I think marketers will still find value in those deals," Mr. Ganis said, though he added: "But if they don't because it's not exclusive, that's fine. From our perspective, we don't need them."
Mr. Ganis believes sponsorships in key cash-cow categories like restaurants and soft drinks should be handled by the teams, because they can milk more money out of them, especially if they can offer these marketers exclusive concession rights within the stadium.
If such a tack becomes the league rule, current NFL sponsors like Coca-Cola Co., True Value Hardware Stores and Visa USA would find it more difficult, if not impossible, to execute the kind of high-profile, national promotions NFL fans have come to expect, because now they would have to negotiate individual deals with each team for prices that, added together, would exceed what they pay now.
But Messrs. Jones and Ganis believe teams will be better served by sponsors that execute promotions that speak specifically and intimately to the local market.
That local market is in turmoil on the shores of Lake Erie. Two days after Mr. Modell announced the Browns would leave, the Ohio Lottery, McDonald's Corp., and Papa John's Pizza requested immediate nullification of their ad deals in Cleveland Stadium in deference to angry fans.
"NFL owners are proving that, like lower life forms, they are willing to eat their young without second thought of the future generation," said Weston Anson, chairman of Trademark & Licensing Associates, La Jolla, Calif., which evaluates the marketability of brand names.
"The Baltimore Browns brand will not move any product for a marketer in Cleveland," Mr. Anson said. "Similarly, if nine other teams move, they won't be of any value to a marketer in the markets they abandoned.
"Moreover, if we see a bunch of teams move en masse, you might see a multimarket or even nationwide rejection of those brands, a sort of solidarity gesture."
"It's a situation we're looking at closely," said Chuck Kremers, VP-marketing for True Value, which uses its national NFL sponsorship to create extensive marketing campaigns and customized products for each NFL city. "In Cleveland, an important market for us, marketing for fall '96 relied heavily on the NFL. That has to be rethought now," Mr. Kremers said. "We tap the passion of NFL fans, but the passion in Cleveland right now isn't what we had in mind."
Companies with licensing arrangements with the NFL see the situation differently. Marketers like Starter Corp., Logo Athletic and Reebok International buy rights to all logos, but have an on-field presence with only certain teams.
"We put most of our marketing muscle behind the teams we have on-field relationships with. We sell more of their product than anyone else," a Reebok spokesman said. "We are prepared to play the game the NFL decides to play, and we intend to play it aggressively."
Yet Mr. Anson argues that franchise free agency could undermine the licensing industry, as well, if sports fans come to the conclusion not to buy a team's merchandise if their loyalty can be so easily betrayed.
"Yeah, I'd say the NFL is in a state of flux, wouldn't you?" asked Steve Rosner, exec VP at Integrated Sports International, an East Rutherford, N.J. sports marketing agency that has assisted the likes of Coca-Cola Co. in its NFL marketing. "And they better decide quickly which way they're going to go before the fans start walking away."
Copyright November 1995 Crain Communications Inc.