Heading into the final game of the regular season, the Minnesota
Timberwolves had more than a playoff berth on the line—a
portion of the NBA team's beer sponsorship money also hung in the
The franchise operates under Anheuser-Busch InBev's new sponsorship model, under which teams, leagues and other so-called rights holders get paid more if they reach certain goals, like making the playoffs. The incentive-laden arrangement, which the brewer recently began rolling out to some of the more than 80 pro teams it sponsors, represents a sea change in the world of sports sponsorships, in which multiyear deals with fixed fees have long been the norm.
For the Timberwolves, which hadn't been to the playoffs in 14 years, it was a bit of a gamble, but one the team wanted to make. "We were willing to bet on ourselves," says Timberwolves Chief Revenue Officer Ryan Tanke. And it paid off: The team made the postseason after beating the Nuggets in an overtime thriller on April 11.
For AB InBev, the calculation is simple: Fans of winning teams buy more tickets—and ultimately more beer. But the brewer isn't stopping at wins and losses. It is layering in a range of metric-based incentives, like reaching a certain number of eyeballs with Budweiser-branded social media videos produced by teams. The Timberwolves will even get paid more if Budweiser's market share jumps in the Twin Cities over a 12-month period, Tanke says.
The results-based model comes as marketers put more scrutiny on sports deals once powered by access to tickets or traditional media buys like TV, radio and billboards aimed at coveted male audiences. But for most big brands, simple awareness no longer cuts it, because those audiences can be found in less expensive ways, like through targeted digital media, which does not come with multimillion-dollar sponsorship fees.
"Ten years ago, it was guys and sports. Well, guys are everywhere now," says Brian Gordon, CEO of experiential agency Engine Shop. "Data has allowed marketing to understand where," he says, citing new interest from men in culinary trends as one example. "All of that is fragmenting the spends and the dollars in much more efficient and niche ways."
Televised sports remain a ratings behemoth. But some troubling signs are on the horizon. The NFL lost 9 percent of its TV audience last season from a year ago (although games still accounted for 37 of the year's top 50 broadcasts), as Ad Age recently reported. At the same time, the National Football League's total regular season attendance dropped to 16.4 million in 2017 from 17 million in 2016, although the 2016 figure was the third-highest on record, according to the league. What's more worrisome is the graying of sports audiences. Magna Global last year conducted a study for SportsBusiness Journal and found that 23 of 24 sports analyzed saw their median age of TV viewers increase in the past decade. The NFL's median viewing age jumped from 46 in 2006 to 50 in 2016, while Major League Baseball's changed from 52 to 57.
"TV viewership is down, venue attendance is down. For us as brand builders, it's much more challenging to grab consumers' attention," says Marcel Marcondes, AB InBev's U.S. chief marketing officer. "We need to evolve the way we bring our [sports] relationships to life." There's a lot at stake: The brewer spends more than $350 million annually on all its sponsorships in the U.S., second only to PepsiCo, according to the latest data from WPP-owned sponsorship consultancy ESP-IEG. So executives hope their new incentive-based approach resonates widely across the sporting landscape. "It's all about behaving again with a leadership mentality," Marcondes says.