Transition

Things were slightly different last month when the NBA New York Knicks played their first home game of the lockout-shortened 1999 season. For one, long-time Knick center Patrick Ewing, who as president of the NBA Players’ Association unwittingly became the personification of greed this winter, was soundly booed during the introductions. For another, a few hundred of the habitually late Knick fans never bothered to show up.

On the other hand, there seemed to be no dearth of advertising sponsors in attendance. McDonald’s and Jeep Eagle hosted a first-half giveaway, and Anheuser-Busch did the same in the second half. The World’s Most Famous Arena’s scoreboards and marquees were plastered with ads from McDonald’s, Perry Ellis, IBM, and most noticeably the aforementioned Anheuser-Busch.

Ewing will eventually be cheered again. In fact, he was whenever he scored or rebounded during the ensuing game. But the fact that hundreds of paying Knick fans (the game officially was recorded as a sellout) didn’t come to a home opener against the Miami Heat and their coach – the once-loved, now-loathed Pat Riley – raises eyebrows.

Do we really still love this game?

In the 1990s, the NBA emerged as the very model of marketing and licensing efficiency, a Sports Camelot that brought nothing but fame and glory to all sponsors who touched it. While other sports might have had more of an audience, none was growing anywhere near as fast nor as profitably.

But a bitter lockout that wiped out the 1998 portion of the schedule and January to boot left many fans disgruntled. And the subsequent retirement of Michael Jordan, the league’s most valuable star and arguably the most marketable personality in the world today, has sports marketing pundits wondering about the league’s future. The show will go on, but how well?

Making lemonade As the lockout dragged on beyond the NBA season’s traditional Nov. 1 start, the media kept itself busy with stories about the potential effects it would have on the league’s future. Was the dispute between greedy owners and greedier players (or is it vice versa?) ruining the public’s perception of the game, `la the 1994 strike that sent Major League Baseball into a tailspin?

League marketing sponsors kept a positive spin on their public comments, expressing faith in the marketing powers of commissioner David Stern and chief marketing officer Rick Welts.

The lockout hit as New York City-based Sony Corp. of America entered the second year of a three-year sponsorship deal, its first with the NBA. “We had a couple of fourth-quarter [1998] programs planned,” says vp-marketing Michael Newman. “But the league did a good job of keeping us informed, so we held things up in enough time that it really didn’t hurt us.”

Long-time sponsor Coca-Cola Co. of Atlanta, which runs an annual tie-in program for its Sprite brand, was even more on the ball. “We knew we might be faced with a labor situation, so we came up with a program that worked whether there were games or not,” says Coke spokesperson Scott Jacobson.

Coke put a tongue firmly into its marketing cheek to produce the Sprite Salary Cap promo, an under-the-cap instant-win game offering eight $25,000 grand prizes – the approximate daily salary of an NBA player – along with $25 “signing bonuses” and free product. TV spots from Lowe & Partners/SMS, New York City, advertised 1-800-TALL- MEN, an employee hotline for idle NBA-ers. The creative featured young stars including Grant Hill and Tim Duncan mowing lawns and pulling cats out of trees.

More than 400,000 consumers called the number to hear Hill say, ” I can’t believe you really called. It’s a joke, a joke,” then explain how to get more contest information.

Win some, lose some Licensees were more vocal, primarily because the lockout’s effects on them were a lot more tangible (althoughsales of basketball-related product, particularly shoes, has been declining since the end of 1997). New Haven, CT-based apparel maker Starter Corp. warned of the lockout’s potential impact on financial results, while Pentech International of Edison, NJ, said the dispute caused “a significant fallout” in sales of its licensed pens and hurt profits.

Holding contracts with not just the NBA but individual teams and more than 200 players to boot, Nike, Inc., Beaverton, OR, made the most noise of all, issuing a press release in late December stating that it had “temporarily withheld payments to teams and players and. . . reduced payments to the league.” Nike had preceded Coke in running hugely popular TV spots poking fun at the lockout (Spike Lee’s haranguing of an eighth-grade girl on the St. Ignatius basketball team is destined to be a classic). But the company was no longer laughing.

“We took a market that was already in distress and we made it worse,” admits Welts. “There was some damage done.”

Choruses of “We told you so” broke out from the doom prognosticators in mid-January when news broke that Milwaukee-based Miller Brewing Co., an NBA sponsor since 1981, would not renew its contract. Miller was quick to say that it had not abandoned the league entirely, but instead wanted to focus more on the contracts it has with 13 teams including the hometown Bucks, Celtics, Lakers, Bulls, Rockets, and Jazz. “For what we need, the local opportunities are really where our priorities lie,” says Scott Bussen, marketing communications manager for the Miller Lite brand. “The timing of the announcement was really a coincidence. Our contract was up.”

The reasons behind Miller’s decision became less of an issue a week later, when Anheuser-Busch said it would replace Miller in the starting lineup as the league’s Official Beer Sponsor through a multi-year, worldwide pact.

Formal discussions began nearly a year earlier, and A-B had been “seeding” the NBA with overtures for several years, says Tony Ponturo, A-B’s vp-corporate media and sports marketing. The company signed on as a charter sponsor of the WNBA women’s league in 1997 “because it gave us an opportunity to show the league directly what kind of partners we could be,” says Ponturo.

Anheuser already had deals in place with 21 of the league’s 29 teams, “but when your competitor comes in with the official league status, it can dilute what you’re trying to do. We wanted to eliminate that,” he says.

The lockout did hold up announcement of the deal. “We thought it was appropriate to wait and see what happened,” Ponturo says. Otherwise, the marketer says he’s not too concerned about the NBA’s status declining.

“We’ve lived through this situation before” with its Major League Baseball and National Hockey League sponsorships, Ponturo says of the potential effects a labor dispute will have on a sport’s popularity. A-B’s policy of establishing “audience guarantees” for game attendance and TV viewership will safeguard the investment, he says. “We’re going to pay for the value we get.”

A-B expects to have the NBA on packaging and point-of-purchase materials by this month. Among its plans are a major promotional event for the league’s annual All-Star game, Ponturo says.

Analysts have suggested that A-B bought in at a substantially lower price than Miller, whose last four-year deal was worth a reported $100+ million (although a source at the company says that figure primarily reflects TV ad estimates).

Damage control The NBA generally carries about one dozen sponsors and has existing multi-year deals with Quaker Oats Co.’s Gatorade, Castrol, Sony, Coke and A-B. Renewals of other sponsorships from a list that in the past included IBM, AT&T, Kellogg, Nike, American Express, and Nestle (which is currently running a Tear Into It! online sweepstakes with Yahoo offering NBA gear) were imminent as promo went to press, according to a league spokesperson.

Sponsorship deals generally come up for renewal on the same schedule as TV rights, the spokesperson says.

This season is the first year in four-year pacts through which NBC will pay $1.75 billion and Turner Sports will shell out $890 million.

“The biggest hurdle the league will have is resigning sponsors,” says Einson Freeman senior partner John Hopper. “How will the NBA promise that it won’t get sidetracked again?”

Welts says that question was partially answered in the terms of the labor settlement, which prohibit owners and players from challenging the deal for at least six years. The approved salary structure will help “to make all NBA teams competitive,” which should increase fan interest, he adds.

As for wooing back fans, the NBA wasted no time in jump-starting the damage control machine. Almost immediately after the dispute ended, the league office handed down a mandate and individual teams began hosting open practices, scrimmages, autograph sessions, free exhibition games, and other publicity events, many of which attracted large crowds. By next year, all teams must offer at least 500 seats for $10 or less. “We want to emerge from this as a more fan-friendly league,” says Welts.

NBA TV spots broke in January unveiling a new league tagline: I still love this game. The creative was changed a few weeks later to depict the player-fan interaction that had taken place at the special events.

On opening night at every arena, fans received a custom-made I Still Love This Game CD featuring 11 songs from Sony Music recording artists and a CD-ROM component serving up schedules, screen savers from Team Mouse, a demo of an Electronic Arts video game, and a link to nba.com. Past subscribers to the league’s satellite broadcast package were mailed a copy.

The league pitched the idea to Sony, which was happy to supply the music and handle manufacturing and distribution for a chance to get a sampling of its artists to nearly 700,000 consumers, says Jed Corenthal, Sony Music Special Products director of sports marketing.

One week later, 300,000 season ticket holders and business partners were mailed Happy Valentine’s Day cards signed by executives, coaches, and players. An electronic version of the mea culpa missive was sent to 400,000 registered users of nba.com. Related TV spots ran for one week.

The other sneaker drops Shortly after players and owners finally reached a settlement in early January, commissioner Stern appeared on The Late Show with David Letterman to recite what the talk show’s writers decided were “The Top 10 New Slogans for the NBA.” (The clip was included on the CD).

Although played mostly for laughs (“You never know who Dennis Rodman is going to marry next”), the list offered a few truisms as well, including “With Michael Jordan gone, maybe your team will have a chance to win.”

Industry watchers all agree that the departure of Jordan will have more of a long-term effect on the NBA’s clout than any bad blood caused by the lockout. The man who came to be known simply as Michael put fannies in both arena seats and couches. With him out of the picture, the question is not if NBA ratings will decline but by how much.

“Michael has a media forum in 1999 that no player has ever had before,” says Welts. While not denying Jordan’s role in the rise of the NBA, Welts said he’d like to think that the opposite was true as well. “When Jordan came into the NBA, Italy was the only foreign country broadcasting games,” he notes. “Now there are 195. We have a platform for popularity that is going to go away.”

At least not right away. But sponsors who spoke with promo say they knew the Jordan era was coming to an end, and are willing to give the NBA a chance to prove that it can carry on without him. “It was just a matter of when,” says Sony’s Newman. “As a partner, you don’t just buy into Jordan, you buy into the whole package.”

“Nobody at NBC, or Turner, or any of our sponsors expected that Michael would still be playing [through the end of their contracts.] All of our partners had to make that judgment before now,” says Welts.

“The hope is that they’ll be renewed fan interest in other teams” now that Jordan’s Chicago Bulls will no longer be expected to win the NBA Championship every year, says Newman.

And although almost no one expects another player to ever rise to Jordan’s level in terms of either talent or marketability, there is the expectation that someone will step up to fill part of the void. The aforementioned Grant Hill has been most often cited as the Air Apparent.

Welts says the league’s marketing tack will focus more on teams rather than individual players, and will “promote more players, not fewer players.” But he also says the league will be looking “to see what players come forward.

“I don’t know if we’re completely through the process,” says Welts, when asked if the league will be forced to make concessions to sponsors. As of yet, no one has asked for their money back. “We haven’t tended to address economic issues,” but instead are talking about ways to help sponsors revamp marketing plans that were scuttled because of the lockout, he says.

And doing whatever it can to keep the NBA’s momentum moving upward.