SPORTS MARKETING: FACED WITH MATURING BUSINESSES BUT NO LETUP IN COMPETITION, PRO LEAGUES ARE ACTING MORE LIKE BRAND MARKETERS, DETERMINED TO REACH CONSUMERS AT THE GRASS-ROOTS LEVEL AND OVERSEAS.: 'EXPERIENTIAL BRANDING' MAKES IT TO BIG LEAGUES

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Visitors to state fairs this summer may stumble across the NBA Jam Session, a National Basketball Association mini theme park, between the Ferris wheel and an Elephant Ears vendor. Fans of Nascar Craftsman Truck Series races will likely catch sight of a sleek flatbed bearing the marks of the National Hockey League.

European vacationers may be surprised to find a sports festival sponsored by the all-American National Football League.

As their businesses mature and competition for a share of consumers' leisure time grows, pro sports leagues are acting increasingly like brand marketers. They're ramping up marketing activities, particularly at the grass-roots level and overseas, to attract their products' next generation of consumers: more commonly known as sports fans.

Who can blame them? The NBA and NFL see the growth of their licensed merchandise businesses slowing and TV ratings leveling off. The NHL and Major League Soccer are far from mature but find it hard to grow in the shadows of their bigger siblings.

And while Major League Baseball is still big, the sport's relevancy is arguably questionable these days.

LONGTIME EMPHASIS ON KIDS

That's not to say sports leagues haven't done anything like this before. Each of them can boast of some decades-old youth-oriented program, whether it be MLB's Pitch, Hit & Run; NFL's Punt, Pass & Kick; or the NBA's Hotshot Competition. And many have been, or are still, involved in programs in the U.S. and abroad created by grass-roots program organizers such as Streetball Partners, Dallas, and Triple Crown Sports, Fort Collins, Colo.

But such activities have reached a fever pitch.

"The major reason for the recent rise in grass-roots marketing is because of what's happening in the context of sports as a whole," said Richard Luker, executive director of the ESPN/Chilton Sports Poll. In 1994, said Mr. Luker, 85% of sports fans named all 12 top sports brands-including MLB, NBA, NFL, NHL and National Collegiate Athletic Association basketball and football-within their favorite dozen sports entities. In 1996, this percentage fell to 71%. The rest named alternatives, such as so-called extreme sports activities.

"The fragmentation of the audience is something that we're now constantly looking at," said Howard Handler, VP-marketing at NFL Properties. "And it's not just sports leagues we're competing against, but Hollywood studios and anything that consumers spend their leisure time and money on."

More is at risk here than a loss of the interest-and spending power-of fans.

"The stakes are getting higher," said Mr. Handler. "If we can't deliver the juice, sponsors are going to go somewhere else with their money."

For the NBA, initiatives such as the Sprite Playground at NBA Jam Session serve to "cement and reinforce the bonds we already have, and to market our product in cities that don't have NBA teams," said Jud Perkins, the league's president-events and attractions.

NBA PLAYGROUND AT STATE FAIRS

After two years of fine-tuning, the Sprite Playground will travel to 12 state fairs this year, offering such activities as Crash the Boards, a one-on-one jump-shooting contest using trampolines, and Three Point Court, a beat-the-clock game.

Why state fairs? Beyond the Americana appeal, impressions: 8.7 million were generated from last year's six-market test.

It's a different kind of impression than that delivered by traditional media advertising. The All-Star Game Jam Session, Sprite Playground and similar activities are all about "experiential branding," said Mark Dowley, managing director of Momentum IMC, the New York-based event marketing unit of McCann-Erickson Worldwide. Such initiatives are key since the league estimates only 2% of its fans attend pro games each year.

"There's a real need for horizontal marketing-touching anyone and everyone anywhere and everywhere possible," said Mr. Dowley.

Every league can boast of an interactive fanfest of some sort at all-star games and playoffs. More and more are taking them on the road; for instance, the NFL Experience will visit various markets this year.

And some leagues are looking to establish permanent versions of their traveling brand experiences.

NHL COMPLEXES

The NHL is considering a proposal to build branded entertainment complexes worldwide. The NFL's Events & Attractions division is looking to do something similar, especially in NFL markets, where team owners need to find ways to milk more out of their pricey franchise investments.

A concept in retail entertainment, dubbed NFL X, has been on league drawing boards for more than a year.

The NBA is mulling lots of ideas as well, from joint ventures with a theme park operator to a flagship retail experience in New York.

"We continue to look at these ideas very carefully," said Rick Welts, president of NBA Properties. "They are all very intriguing. They are also all very expensive."

Less expensive are the more traditional grass-roots programs sports leagues are creating to reach future fans and players.

"With this dispersion of interests, leagues have to be concerned about their player pool," said Mr. Luker. "There used to be four or five sports for kids to play, and the good athletes would refine their capabilities in one or maybe two. Now kids have 10 sports to play, diluting skills in any one sport."

PUSHING FLAG FOOTBALL

In part to tackle this dilution of the talent pool, the NFL two years ago launched its Play Football initiative. Since a sizable number of parents cringe at the notion of their kids playing tackle football, the NFL has embraced flag football as the vehicle to introduce their sport to youths.

Play Football encompasses a number of local programs, like Air-It-Out, produced with Streetball Partners and sponsored by Nike, which this year will travel to more than 20 markets.

The NFL has been testing weeklong summer football camps, but is fine-tuning that program with Starter Corp. to create weekend flag-football camps during the sport's season.

Through its teams, the league has been working to get flag football introduced in schools and community recreational programs. Play Football has also encompassed several licensing, retail and ad initiatives.

"We are operating from a position of strength, but to stay No. 1 we have to inspire the next generation of NFL consumers," said Mr. Handler.

This fall, the NFL will team with its licensees and Fox Children's Network on a back-to-school push called the Fox/NFL Play Football Craze, supported with media on the highly rated Fox Children's Network and with retail displays in NFL markets.

A program with Kmart Corp. called NFL Family Day tested last year in Detroit and will roll into all NFL markets this fall.

NFL ANIMATED TV SHOW

For years, the NFL has considered licensing a toy line, a potentially lucrative category. But it found that kids don't take to action figures based on sports stars. So the league is teaming with Fox to test an animated program called "NFL Rough Racers."

If the show gets a green light, the league will license a toy marketer to make NFL-themed toy cars.

Major League Baseball, want-ing a part of the grass-roots activities field, this month unveiled its own program. The Fleer Major League Baseball Diamond Skills competition targets 7-to-14-year-olds and focuses on batting, fielding/throwing and base-running. The program will have 450,000 kids competing in four stages, with finalists slugging it out at the All-Star Game in Cleveland July 8.

STEERING KIDS TO HOCKEY

The NHL has been the leader among leagues in creating programs focusing on participation. Its strategy has been to steer kids playing hockey in sneakers or roller skates in the streets toward the ice.

To round out two ongoing programs, the league this fall will launch in 12 markets NHL Freeze Play, sponsored by Starter and Jofa. The four-week program is designed to provide instruction in ice hockey to kids ages 6 to 12.

This spring, the NHL will announce details of a new grass-roots marketing strategy not dissimilar to Play Football's integrated approach. Coming out of the 1998 Winter Oly-mpics next spring, the NHL will launch a kids marketing initiative that combines sponsorship, licensed products, advertising, media vehicles-including the league's PowerPlay Magazine-and grass-roots programs.

One of the best weapons in the leagues' marketing arsenals is TV. The NFL has recently revamped the way it approaches TV programming, consolidating its activities under one division that sees itself almost as a support arm for the league's U.S. and international marketing initiatives.

"We are deepening and broadening our programming in pursuit of new demos as part a leaguewide fan development strategy," said John Collins, VP-NFL Programming.

NBA TAPS INTO TV

No league has better used ancillary TV programming to grow and sustain its brand than the NBA.

The league's programming unit, NBA Entertainment, licenses national game broadcasts and produces highlights shows like "NBA Action," teen-targeted shows like "NBA Jam," kids shows like "Inside Stuff" and customized programs for 85 broadcasters in 180 countries. It also sells the advertising time in this programming.

"Domestically and internationally, the most critical component of our marketing mix is television," said Mr. Welts. "The vast majority of our fans will experience their fandom through TV."

Despite its popularity among sports leagues and in the overall entertainment arena, the NBA too is developing grass-roots weap-onry in the battle for future consumers.

Last fall, the league rolled out McDonald's/NBA 2ball in its 27 markets. To date, more than 100,000 kids have participated in the program.

"You ask 55-year-olds what's behind their interest in the sports they watch or participated in the most and their answer will be that they had an interest in that sport as a young kid," said Mr. Welts. "So a 55-year-old will probably cite baseball or football as their favorite sport. We don't have a history that gravitates toward basketball.

"So we're cultivating that now. And if we're right, over the course of the next 20 to 30 years, potentially the size of our audience will grow."

For sponsors, grass-roots programs like 2ball can round out packages of promotion rights and TV time, allowing them access to a broader demographic scope of a league's fan base and the ability to drive sales or traffic.

"Basketball has universal appeal among kids and families, and kids and families are our best customers; so we want to utilize the power of the NBA to allow our consumers to interact with our brand," said Jackie Woodward, director of strategic sports alliances for McDonald's Corp.

DEEP POCKETS

League executives won't quantify how much they're spending on fan development and new business initiatives. One thing is clear: Much of it is coming out of the pockets of corporate sponsors.

Sports marketing executives said sponsorships of a large national program, like Streetball Partners/NFL's Air-It-Out, could range from $200,000 to $1 million.

"More often than not, grass-roots programs are part of an overall sponsorship fee. They are definitely not cheap, but they do deliver definite value," said Mr. Dowley of Momentum IMC.

Fan development efforts aren't confined to the U.S. Basketball is a global sport, and the NBA is well-positioned as the best brand of basketball in the world, thanks to the Olympic "Dream Teams."

Last fall, McDonald's and the NBA took 2ball to 31 states and one federal district in Mexico; winners qualified to compete in a national contest in Mexico City last October.

In Europe, where McDonald's doesn't hold sponsorship rights, the strategy is to sell 2ball to schools as an educational curriculum for their physical education programs.

"In this way, we position basketball as a real sport to kids, not just Americana they see on TV," said Paul Zilk, president of NBA International.

NBA'S 2BALL IN EUROPE

Last year, the NBA and Adidas tested 2ball in 500 schools in the U.K. According to data sent back by teachers, 25% of the kids participating in the 2ball program were touching a basketball for the first time.

This year, the NBA sought to expand the program, canvassing 6,000 schools in the U.K., France and Germany with direct mail. Within 48 hours of sending its information, said Mr. Zilk, 2,400 schools responded, oversubscribing the program.

"We will never be able to be as large as the NFL in terms of TV ratings and merchandise in the U.S.," said Mr. Welts. "We can, however, be bigger worldwide."

The NBA isn't alone in exploring international opportunities. The NFL was the first among the big U.S. sports leagues to establish a licensing business in Europe; its World League currently has teams in Germany, Great Britain, the Netherlands and Spain-and a TV deal with various broadcasters in those markets.

"Our international business is at a crossroads," said Don Garber, senior VP, NFL International. "For 20 years, it has been about generating profits [and] capitalizing on hot fashion for things American, [but it has not been] about developing the fan base that the business now needs."

PLAYERS AS CELEBRITIES

Just as the NBA cultivated a celebrity image for its players to boost its brand in the U.S., the NFL will try to do the same abroad. NFL International has produced a pilot for a 30-minute magazine-style show called "NFL Extra"; Canada Global Television and TV Azteca in Mexico are among those that might pick it up.

Mr. Garber said advertising will eventually be employed in various markets to promote the NFL brand of sport and entertainment to consumers. But the ads couldn't just replicate the "Feel the power" message used in the U.S.

"One of the things we are looking at is an international branding effort," said Mr. Garber. "But what works in the U.S. may not work in Germany."

The NFL intends to sign a roster of international sponsors to support its marketing and media programs abroad. The NFL is also looking to replace Reebok International as a title sponsor of its World League.

TARGETING WOMEN

Another new market leagues are hoping to tap: women. In addition to products and apparel lines aimed at women, leagues are likely to add more features to pre-game shows and game coverage aimed at women.

According to Mr. Luker's research, women represent a legitimate market for leagues to target in growing their businesses.

But, he cautions, "We still don't understand what drives women's interest in sports."

Add the challenge of reaching women to the long list facing the leagues and you can begin to understand why there's such keen interest in securing the future of pro sports.

Said Mr. Welts, whose NBA Properties is working to launch the Women's National Basketball Association in June: "I can't imagine the competition for attention

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