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STERN: ALL-STAR MARKETER ONE ON ONE: ON THE EVE OF A NEW SEASON, THE NBA CHIEF RESHUFFLES PRIORITIES, GROWTH OPPORTUNITIES

Published on .

In his New York office, National Basketball Association Commissioner David Stern is busy shuffling through some press clippings. But he can't seem to find exactly what he's looking for.

Mr. Stern, 57, opens up a folded-over magazine ad. "What's this? Link magazine?" He searches on, but can't find the missing story. Leafing through a recent issue of Advertising Age, his interest suddenly-and tellingly-changes. "I like to see who's spending money," he says. "Look! Intel is spending $150 million."

Keeping up on all the marketing news is a point of pride for Mr. Stern, the league's leader since 1984. Sports business analysts consider the NBA, under his direction, the ultimate model of how a professional sports league should not only be run but marketed.

With a new promotional effort set for the first full NBA season since the retirement of league icon Michael Jordan and a shortened 1998-99 season caused by a player lockout, the NBA chief spoke with Ad Age Reporter Wayne Friedman about a wide range of subjects, including future league expansion, new corporate sponsorships, the NBA store, the WNBA-as well as hard elbows in the lane.

Advertising Age: Given all that happened last year-Michael Jordan retiring and the lockout-how do you assess the league now in terms of its marketability, its strength?

David Stern: One way to answer that is in expectations and projections. Certainly, the media at large pre-dicted a worst case scenario. Against that, and against any other scenario, we came out of that, as a business matter and a fan matter, in great shape.

All of our sponsors have renewed. Our attendance was fine. Our viewing was up on cable

[although] flat on NBC in the regular season and down significantly on the finals. I think the problem was that there was this comparison to Michael's last dance [the Chicago Bull's last championship run in the spring of 1998].

But we found our fans and marketing partners extremely forgiving. I think we are going to have an extraordinary season, and we are going to have it with a much better collective bargaining agreement.

It is going to make us a very good long-term marketing partner. We'll have seven years of labor peace. We have a system that is going to encourage teams to make investments-both in players and marketing and the like.

AA: Last year's promotional campaign, "I Still Love This Game!" seemed to have been in response to the previous season's big events-Michael leaving and the lockout. What went into the thinking of this marketing themeline?

Mr. Stern: The thinking was lockout related, not Michael related. The 'still' could have been 'reluctantly.' It was a statement that "You disappointed me, NBA, you've been unable to give me a season of uninterrupted play. But the grace, the beauty and the excitement of the game is such that, however reluctant I might be, I still love this game."

Our fans were hurt-spurned lovers. Connected to this was our 'love songs' CD, which we gave out at the relaunch of the season. There is a certain notion about a love affair with the game.

We took out the "still" by the [time of the] playoffs.

AA: Last year, there was an indication from Turner Broadcasting and NBC, your TV partners, that the NBA on-air promotions were going to change, with promos that would tout the teams, not just individual players. For instance, promos such as, "This weekend, watch Patrick Ewing and the Knicks vs. Shaquille O'Neal and the Lakers. What happened to that?

Mr. Stern: It's very hard for us. "Inside Edition," "Entertainment Tonight" and "Extra" have never done a feature on a team. When you turned on the highlights, Warner Wolf [of WCBS-TV in New York] doesn't say, "I want to show you the great night the Knicks had."

In light of the power of the media, I find the whole discussion amusing. It is true that we will emphasize teams, but the media run with celebrities, with achievers of great performance. No athletic [product marketer] has hired a team of ours as endorsers.

AA: Years ago, there was the thought that when Larry Bird and Magic Johnson retired, the league needed another marquee player to sell its sport. And Michael Jordan came along. So this is still important, right? Don't you need one or two big-name players to help market the league?

Mr. Stern: Michael was transcendent. But the reality was that, when we were going strong [in the 1980s], although it was the time of Larry and Magic, it was [also] a time when every team had a [star] player or two. It was Bernard King or Isiah Thomas and Julius Erving. You have to have someone to play against.

[Even now], every team has one or two household names. We have Alonzo Mourning and Tim Hardaway [of the Miami Heat] going to Italy [for an exhibition game]. We've got David Robinson and Tim Duncan [of the 1999 champion San Antonio Spurs] going to Milan [also for an exhibition game].

Too much is made over this. Michael Jordan was great. But the way you measure that is by having him play against the best athletes in the world. He had to soar over Malone and Stockton one more time, or over Clyde Drexler, or over Isiah and the Pistons, or over Magic and the Lakers.

AA: Regarding the NBA Store in New York . What is the best-selling item?

Mr. Stern: The most authentic things lead the way. Practice wear, jerseys and personalized jerseys tend to do very well. For our personalized jersey, you can pick the jersey number, the team and have it printed in your own name. There's been an extraordinary response in the store.

We were pleasantly surprised by the international fans who wanted NBA merchandise. I was a skeptic there.

AA: Why?

Mr. Stern: I didn't think we had the same cachet as Hard Rock Athens or Hard Rock Reykjavik. A third of [the store's] visitors are from outside the U.S.

AA: What products haven't been doing that well?

Mr. Stern: It isn't that some products aren't selling well; we just need broader [product] lines-[particularly] home furnishings and kids apparel.

It's been very constructive for us to watch consumer reactions and to be a retailer, to see how licensed products are delivered. We are into using the store as a sort of laboratory. We are into a complete product-development and consumer-response [phase], as it related to marketing partnerships. We have begun a whole department just to develop programs for our partners.

AA: When it comes to broadening your NBA sponsorships, what are some of the business segments you are targeting?

Mr. Stern: The ones that I think we'll go into in the next 18 months to two years are financial services, overnight delivery, film products, gasoline retailers-just to name four categories that we are working on right now.

Gas stations have enormous consumer reach, and have substantial advertising budgets. They are [becoming] convenience stores and they are more promotionally active. They touch consumers on a daily basis.

We are talking to overnight delivery companies, which is a very competitive category, especially with the international marketplace and our international positioning.

Financial services is a huge and burgeoning category, with respect to banking, insurance, financial advice and the like. It's a very large advertising category.

I don't want to hide here, but we are also talking to rental cars and hotels. These are large categories that reach consumers.

Look at Olympics sponsors. They are trying to expand their brands, and we are trying to expand ours. We take our clue on the various campaigns that are under way-the measured media, and the sports marketing agencies that are looking for promotions for these companies.

AA: What about the Internet?

Mr. Stern: The reason [that was not] mentioned by me is that we are holding off [on talking to Internet companies about marketing deals]. We are getting a proposal a week in that category. Because of the extraordinary content NBA.com is developing, portals, search engines, other companies are all over us on a global basis. [That is] the single most active category our international offices are being inundated with.

AA: This past season, McDonald's and Coca-Cola opted not to participate as sponsors in the WNBA. What happened?

Mr. Stern: They didn't execute their program this past year but we are in discussions with them. They said they'd like to take another look at it.

AA: Is that because you'll have more WNBA teams next year, for a broader reach?

Mr. Stern: It'll be easy for them to do something for global promotion. But our renewals for the WNBA-Anheuser-Busch; American Express; Sears, Roebuck & Co.; General Motors-are . . . global leaders in their category that we need-to help our brand, and to help their brands.

AA: How important is it to target women advertisers and/or sponsors, rather than just male-targeted sponsors. You have mostly male-targeted sponsors in the WNBA.

Mr. Stern: For [GM's] Buick Regal, for instance, the average car buyer is a woman. The average buyer of alcoholic beverages in a supermarket is a woman.

Every company defines their marketing goals a little differently. Remember, the WNBA also has a large male TV following-almost 50% of those watching the WNBA are male.

That means it has the highest female audience of any league in network TV. And more than 50% [of the WNBA viewing] on ESPN is male.

But it's coming. More than 50% of the [WNBA] viewers on Lifetime are female, and 70% [of those at WNBA games are young women or girls]. So we have a huge opportunity to do a lot of different marketing.

AA: NBA.com TV is a satellite-delivered 24-hour service. Where do you see this venture in the short term?

Mr. Stern: It is part of your "NBA League Pass" [package of NBA games on DirecTV]. So if you have "League Pass," you'll also get a studio show. That's No. 1. No. 2 is that it becomes, in effect, a barker channel of the "Pass," which is no small thing. And No. 3, it is for fans who can't get enough of the NBA.

[NBA.com TV will] be in 3 million TV households. I don't compare this to the cable universe of 70 million households; I compare it to the local-market universe, and if it can get into 3 million homes, [NBA.com TV] will be a top 10 market for the NBA.

It's going to give us a chance to do NBA vintage programming, NBA instructional, NBA nutritional, NBA lifestyle and NBA talk shows. You name it and we can begin to develop it.

AA: How are international TV sales of the NBA?

Mr. Stern: Stronger than ever. We are growing in double-digits in station sales [revenues]. And we don't have lot to go in country coverage-we are at 199 countries. But we are upgrading the coverage in each country.

AA: The NBA has set such a high standard for all sports. What's left for you to do?

Mr. Stern: If you don't change, you fall backward in my view. What's left for us is remaking the consumer-products business with new products. . . . There are new promotions with KMart, Sears and J.C. Penney.

We have done a development deal with Columbia Tristar for a potential TV sitcom. We also are having discussions about animation [programming] with two or three different producers. We are programming an NBA network, 24 hours a day: NBA.com TV. We are expanding the WNBA to 16 teams.

AA: As you start actual play, there are new rules because of lower scoring games. Elaborate on this.

Mr. Stern: If you look at the tapes, you'll see that defenses have gotten more physical, and over time more was being tolerated. We made some, shall we say, some refinements to the product itself that will address the slowdown of the game, the lack of openness, the inability of our players to move as fluidly as God meant them-to move by virtue of elbows, blocks and chucks, as they call it.

There'll be a lot closer monitoring of hand-checking, where it should be a bit safer for players to cut through the lane, without the ball. And discouragement of backing in on a player just dribbling and hitting. We're also eliminating the confusion over illegal defense.

There is an ebb and flow in every game. In baseball, they lowered the mound because overpowering pitchers seemed to be doing well. There is usually an offensive/defensive situation, where the defense overtakes the offense. Then adjustments are made.

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