The NBA move comes as McDonald's is poised to finalize a decision not to renew its sponsorship of the National Football League that ended with the 1997 season. The NFL in 1998 is expected to command significantly higher fees.
"From our standpoint, we have been able to penetrate a wider base of fans [with the NBA]. We have a wider base of the kid and youth market actually playing the sport than in football," said Senior VP-Marketing Brad Ball.
He added, however, McDonald's hasn't completely ruled out the NFL. "We're in the window of decision," he said.
The chain is also returning as global sponsor for the year-old Women's National Basketball Association. Details of the NBA agreement are still being finalized, but are expected to cover a number of years and involve continuing sponsorship of NBA All-Star Game balloting, and new programs abroad.
Chicago Bulls star Michael Jordan might also appear in future McDonald's TV spots with the NBA tie-in, said a spokeswoman for the chain.
BACK TO TEENIE BEANIES
As part of the push to turn around its lackluster U.S. operations, McDonald's is turning to the Teenie Beanie Babies, the hugely successful Happy Meal toy promotion that sparked an unexpected frenzy among customers last April when a supply of 100 million toys was wiped out in two weeks.
David Trossman, a restaurant analyst with BT Alex. Brown, is pleased the babies will be back but cautioned promotions alone won't drive profits.
"You don't want McDonald's to be about the Beanie Babies and not the food," he said. "It's got to be about the meal, the quality, the price and the convenience."
Last year, there were reports customers were throwing away Happy Meals but keeping the toys.
The national Beanie Babies promotion is expected to break in the second quarter, possibly in late May, with new TV commercials from Leo Burnett USA, Chicago.
Mr. Ball declined to provide details.
MORE LOCAL AD DOLLARS
Responding in part to franchisee concerns about soft sales, McDonald's this year is spending more ad dollars locally than in the past, but is still using half its budget for national programs like the NBA tie-in and links to properties from Walt Disney Co.
According to an internal marketing schedule for 1998 national promotions, a copy of which was obtained by Advertising Age, McDonald's plans to link with Disney's movie "Mighty Joe Young" in July and with "A Bug's Life" for the 1998 holidays.
McDonald's is getting its brand in front of kids in other ways. Hasbro this year is introducing via toy retailers a new doll called McDonald's Happy Meal Girl through a licensing agreement.
The doll comes with her own Happy Meal. Hold the drink up to her mouth and she emits drinking sounds; hold up the hamburger and she takes a bite. Ad and promotional plans are being worked out.