UMBC

      Does Pay For Performance Make Sense For Sponsorship?  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
       Yesterday, Anheuser-Busch announced a decision to    utilize    "a new sponsorship model that promises to shake up the industry. It is built on incentives for performance on the field, pitch or court, as well as off of it". In 2012, B6A explored a similar approach The Emirates Group employed with the Arsenal as part of a larger deal including a jersey sponsorship. That blog post is included below.    The Arsenal Football Club and The Emirates Group recently made news when the Dubai based airline  announced  there had incorporated performance-based clauses in its sponsorship agreement with the English Premiere League team. Emirates and Arsenal have a five-year contract that pays Arsenal £30 million ($48.6 million) in annual fees for partnership inventory including a jersey sponsorship. While Arsenal has qualified for the Champions League every season for the past eight years, it has not won a major title during this span (FA Premiere League, FA Cup, and UEFA Champions League). If the team fails to qualify for the Champions League or does not perform well in the Premiere League then, "There are certain clauses, from 2015, that we pay them a percentage less if they don't perform," Emirates SVP Boutros Boutros  said . "It's fair to us and fair to them."  On the surface, it does seem fair. Sports organizations should absolutely be held accountable for their performance with regards sponsorship agreements. The question is what the definition of performance. More importantly, does competitive performance always translate to a successful sponsorship?  The answer is both yes and no. A team should be evaluated on both the quantity and quality of the impressions it delivers to corporate partners through inventory items like jersey sponsorships.  Quantity of impressions is relatively easy to define. It is generally considered to be the number people who view, consume, or experience an inventory item. For a corporate partnership agreement, a team should estimate the total number of impressions for each inventory during the course of the year. It should be rewarded for exceeding this number and penalized for missing these estimates.  Quality of impressions, however, is more difficult to define. At Block Six Analytics, we define the quality of impressions by a sports organization’s ability to help its partners to increase revenue and meet sponsorship goals.  By increasing revenue, B6A recognizes that different types of impressions can generate differing amount of revenues. For example, arena / stadium signage likely does not have the same impact on new customer acquisition or customer attention as having a partner’s core customers attend a game in a luxury suite. It is not that the stadium / arena signage in not a valuable piece of partnerships inventory. It is that that the luxury suite is more valuable to the partner because it targets specific customers and creates in an environment that is more likely to generate revenue.  Not all partnerships, however, are about generating revenue. Therefore, it is critical to define what the sponsorship goals are for each partner. Enhancing brand perception through sponsoring a community’s professional, collegiate, or high school team has a higher priority for many partners than increasing revenue. Sports organizations can be evaluated for its ability to maximize this type of impressions as well.  The Emirates deal, and the fairness component of this deal, appears to focus more on the quantity of impressions. Most of the Champions League value comes from the media rights deals for tournament games. If Arsenal does not qualify for the Champions League then the team will not be able to broadcast its jersey sponsorship to the hundreds of millions of fans who watch the tournament each year. This will decrease the overall number of impressions. However, it is not clear how much it will decrease quality of impressions. Most of the impressions from a jersey sponsorship go towards increasing brand awareness to viewers watching television broadcasts. While these are valuable, these impressions may not be as valuable those that go directly to increasing customer acquisition and customer retention.  This goes to the heart of return on investment (ROI) calculations when it comes to sponsorship. Winning generally does help increase awareness and interest in a team or individual. This translates into increases in gameday attendance, television ratings, and unique visitors the organization’s websites. While this is good for the sports organization, corporate partners need to ensure that these new impressions actually generate profitable revenue growth or help meet sponsorship goals for their organizations. Simply generating a massive number of impressions can no longer be the standard used to evaluate partnership value. Books like Sasha Issenberg’s  The Victory Lab: The Secret Science of Winning Campaigns  shows how successful political campaigns use microtargeting to focus on the most valuable voters – people who can be persuaded vote for a specific candidate but only after being contacted by a campaign with a specific message.  This same logic should be applied to corporate partnerships. For example, Arsenal could provide Emirates with introduction to team fans or other sponsors that make enterprise purchasing decisions about corporate travel. This type of introduction could occur whether the team is losing or winning on the field. More importantly, this is the type of microtargeted impression that is much more likely to deliver increases revenue to the Emirates than if the team qualifies for the Champions League.       While usually aligned, winning in competition can mean something entirely different than winning with the corporate partnerships. It is definitely a good idea to hold sports organizations accountable for sponsorship spend. Partners need to ensure that they are holding sports organizations accountable in the right way.    
BY ADAM GROSSMAN

Does Pay For Performance Make Sense For Sponsorship?

Yesterday, Anheuser-Busch announced a decision to utilize "a new sponsorship model that promises to shake up the industry. It is built on incentives for performance on the field, pitch or court, as well as off of it". In 2012, B6A explored a similar approach The Emirates Group employed with the Arsenal as part of a larger deal including a jersey sponsorship. That blog post is included here. 

      UMBC Positioned to Take Advantage of March Madness Success  BY ADAM GROSSMAN     

 
   
     
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
      
       
         
            
            
         
       
     
   
      The biggest star of the 2018 NCAA Division I Men's Basketball Tournament so far is Zach Seidel. The University of Maryland Baltimore County (UMBC) director of multimedia communications for the athletic department is the man behind the Twitter account that has done everything from trolling CBS /  The Athletic reporter Seth Davis  and ESPN to espousing the virtues of UMBC to people who had not heard of the university prior to the school becoming the first 16 seed to upset a 1 seed in the history of the NCAA Tournament. Seidel’s ability to create a unique voice through real-time comedic Tweets generated interview requests from national media outlets – including The Athletic and ESPN.  Seidel, however, is “only” a star on the UMBC team. UMBC as an institution is the biggest winner of the NCAA Tournament so far, even more for what it has done off the court than on the court. More specifically, UMBC had positioned itself to take advantage of success if / when an upset in the NCAA Tournament happened.  The first step in understanding why this is so is understanding the full potential value of college athletics. For many schools, college athletics is a marketing asset that functions like a brand influencer. In particular, the reason that Seidel became a star is that conversations around varsity athletics can generate significant attention for schools in ways that professors, academic programs, or new research does not. That is why so many analyses of the value of UMBC’s upset are focused on the “ media value ” the school generated for the win.   Media value, however, is not likely UMBC’s ultimate goal. The school is attempting to use athletics in similar ways that corporate partners should be using sponsorship assets – to achieve discrete business goals. UMBC’s “business” is focused on recruiting as many bright students as possible to apply to the school for admission. For virtually every college or university, tuition is by far the biggest revenue driver for the school. Investments in athletics should have an impact in both the number of applicants that apply and the annual tuition a school can charge because it is more attractive.  Making investments in basketball, as UMBC has done, or in football can have a tangible impact on a school’s admissions. In particular, a school that has an upset does see a significant increase in admissions. According to a recent analysis of Department of Education Data from  Bloomberg :  Schools that beat performance expectations during March Madness receive a bump not only in public awareness, but also in the number of applications they receive. For example, as Bloomberg points out, after then-15th-seeded Florida Gulf Coast’s wild run through Georgetown and San Diego State to advance to the Sweet Sixteen of the 2013 tournament, applications to the Fort Myers, Florida, campus spiked 27.5 percent. A similar trend was observed at Lehigh University after it bounced perennial tournament contender and then-second-seeded Duke from the first round of the 2012 tournament. And it’s not just one shocking upset that results in more applications: If a team makes it further into March than expected—such as Wichita State’s surprising Final Four berth in 2013—it can also experience increased interest. Wichita State, for its part, received almost 30 percent more applications following its success on the court in 2013, Bloomberg reports.  This is not just the case in basketball. In his study of the “Flutie Effect”, Harvard Business School professor  Doug J. Chung  found  that :   When a school goes from being mediocre to being great on the football field, applications increase by 18.7%.  To attain similar effects, a school has to either decrease its tuition by 3.8% or increase the quality of its education by recruiting higher-quality faculty who are paid 5% more in the academic labor market.  Schools become more selective with athletic success. For a mid-level school, in terms of average SAT scores, the admissions rate improves by 5.1% with high-level athletic success.  Surprisingly, students with high SAT scores are also significantly affected by athletic success.   UMBC appears to have applied these types of lessons to its commitments to athletics. As Seidel humorously stated in a  Tweet , ” BTW guys, we have a brand new $85 million Event Center we opened up last month that still doesn't have a corporate sponsor name.... (sic) .”  UMBC is in a better position now to obtain a sponsor after its historic upset. However, the decision to make this type of investment into an Event Center shows the importance the school placed on sports and events long before its upset occurred. It also positions the school for longer-term success in admissions by making this type of investment in athletics.  UMBC should also take this point-of-view when looking for corporate partners for its new venue. Rather than just examining the media value of its basketball team, the school should look at the core business of potential corporate partners. For example, Seidel’s efforts increased the school’s Twitter followers from 5,500 to 109,000 followers over the course of the Retrievers run through the NCAA Tournament. The University of Maryland has 149,000 followers. If partners are only looking at audience size then the Terps are still a significantly better spend than the Retrievers.  UMBC should focus on why the quality of its audience can help potential corporate partners achieve their revenue and marketing goals. For example, UMBC can now make a compelling argument to Adidas about why the apparel brand should be the naming rights partner for the Event Center. Seidel’s social media activity has helped to define a UMBC brand in-line with  Adidas ’ “three clear strategic choices that we want to focus on: Speed, Cities and Open Source.” In addition, Under Armour (one of Adidas’ biggest competitors) has made significant investments in the University of Maryland’s athletic department. Adidas’ sponsorship of the UMBC Event Center would enable the company to directly compete with Under Armour in the county and state where Under Armour is headquartered.  Schools do not need to make $85 million investments to achieve success. In   The Sports Strategist: Developing Leaders for a High-Performance Industry  , my co-authors and I highlight the University of Chicago. The Maroons was an original member of the Big Ten athletic conference and home of the first Heisman Trophy winner. However, the school decided to end college athletics in 1939 so that it could make sure its students and the institution could focus on academics.  The decision contributed significantly to the school earning the reputation of the  place  “where fun goes to die.” While the school re-instituted its  college football program  in 1969, it only more recently made the team a priority to show that the college experience was more than solely the academic experience. The school saw a rise in applications after making a more public face of the out-of-class offerings Chicago provides its students.  UMBC was the winner of the opening weekend of the NCAA Tournament. However, the school’s investments in athletics should pay long-term dividends in helping the school take advantage of this success.   
BY ADAM GROSSMAN

UMBC Positioned to Take Advantage of March Madness Success

The biggest star of the 2018 NCAA Division I Men's Basketball Tournament so far is Zach Seidel. Seidel, however, is not the “only” a star on the UMBC team. UMBC as an institution is the biggest winner of the NCAA Tournament so far, even more for what it has done off the court than on the court.