Subject: [NEXTEL-1] IBM, Nextel Demand More Than Courtside Seats to Sponsor Sports

From: [email-masked]
Date: Fri, 05 Sep 2003 01:44:08 -0400

IBM, Nextel Demand More Than Courtside Seats to Sponsor Sports 
Sept. 4 (Bloomberg) -- Even at the U.S. Open, it isn't all tennis 
all the time for Ezra Kucharz, the U.S. Tennis Association's 
managing director of advanced media. 

During last year's Open, Kucharz sped away from Arthur Ashe Stadium 
in Queens to meet with a client of International Business Machines 
Corp. at the Millennium Hotel in Times Square. The reason? The 
world's biggest computer maker is a U.S. Open sponsor, and the 
client needed reassurance. 

``The company was going to make a big purchase, and he wanted to 
verify IBM's products worked in an intensive atmosphere like we have 
here,'' Kucharz recalled. 

The routine will likely be repeated during the current Open, which 
is scheduled to end Sunday barring more rain delays. As part of 
IBM's agreement, tennis association executives stand ready to show 
clients how the IBM-run U.S. Open Web site and other computerized 
systems operate. 

No longer are companies like IBM satisfied to sponsor athletic 
events for a few tickets and some brand recognition. They want the 
sport, team or stadium group to buy their products and provide 
direct help selling them to others. 

``Executives are constantly asking what the return on their 
marketing dollar is going to get them,'' said David Cope, co-owner 
of Gilco Sports, a sports marketing consultancy in Bethesda, 
Maryland. 

``In the beginning, deals got done because some CEO was a big hockey 
fan and wanted to get to know the players and impress his buddies 
with some tickets,'' Cope said in an interview. ``Today, it's so 
much more sophisticated. Every dollar is measured.'' 

Sponsor Spending 

That's probably because there are more dollars being spent today 
than ever before. Sports sponsorship spending in North America will 
reach $7.21 billion this year, up from $3.84 billion in 1997, 
according to estimates from Chicago-based IEG Inc., which tracks 
corporate sponsorships. 

``It's only going to get more concentrated and more scrutinized in 
the future'' as companies insist that new marketing expenditures 
lift sales, said Dean Bonham, president of the Bonham Group, a 
Denver company that provides consulting and research to sports 
franchises. 

Sponsoring companies now negotiate personal appearances from 
athletes, hospitality tents, promotions and giveaways -- and even 
help on sales calls. 

Nextel Communications Inc., the fifth-largest U.S. provider of 
mobile-phone services, signed a 10-year, $700 million agreement in 
June to replace R.J. Reynolds Tobacco Holdings Inc.'s Winston brand 
as the primary sponsor of the Nascar auto racing series. 

Gaining Customers 

In addition to Nextel gaining hospitality tents, driver appearances, 
tickets and promotions, the agreement guarantees that Nascar will 
purchase Nextel's wireless phones and services for all Nascar 
communications -- from executive teleconferences to drivers talking 
race strategy approaching the final lap. 

Michael Robichaud, director of sports and event marketing for 
Reston, Virginia-based Nextel, said his company wanted more than 
just the basic fare. It wanted Nascar as a customer. 

``There are tens of thousands of Nascar employees, and that's a lot 
of product,'' Robichaud said. ``Then you factor in all the customers 
we might reach at events, and you begin to see how you can measure 
your return on investment.'' 

Like IBM, Nextel can use an intensive sports event as a proving 
ground for its equipment. 

``We are all competing for the attention of decision makers, and 
these events are a good way to get their attention,'' Robichaud 
said. ``We can show them our product while it's in use and put it in 
their hand. 

``Tell me, where would you rather show your product? In a meeting 
room with a Power Point presentation, or in the pits where it's loud 
and intense and your product has to perform at a high level without 
fail?'' 

Real-World Test 

Sports events that create sharp increases in demand from fans, 
managers and the news media for instant scores, times, rankings, 
schedules and messaging can push a computer or communications 
network to the limit. Such real-world tests are often considered the 
most reliable. 

``IBM is a great sponsor, but I wouldn't meet with these people in 
the middle of the Open if I didn't believe in IBM's products,'' 
Kucharz said. 

Neither Nextel nor IBM would reveal the terms for their sports 
sponsorships. 

The costs don't seem to rankle investors. 

``I think they get their money's worth from these big events,'' said 
John Jacobs, an investment adviser and fund manager, referring to 
IBM's sponsorships. 

`Great Alliances' 

``These relationships tend to create great alliances and can have 
longstanding value, and in the bigger picture it's not a huge amount 
of money,'' said Jacobs, president of Charleston, West Virginia-
based Jacobs & Co., which has $150 million in assets. 

Stadium sponsorships are following the same pattern as event 
sponsorships. 

When the National Football League's Cleveland Browns moved into 
their new stadium in 1999, they sold a naming-rights sponsorship to 
FirstEnergy Corp., a public utility holding company based in Akron, 
Ohio. 

FirstEnergy received the usual suite, tickets and advertising 
placement. It also was awarded a contract to repair and monitor the 
stadium's plumbing, engineering and ventilation systems. 

The value of that agreement was equal to about 40 percent of 
FirstEnergy's sponsorship contract, said Bruce Popko, the Browns' 
vice president of marketing and development. 

Building a Relationship 

``Quid pro quo,'' Popko said. ``We had to contract for those 
services anyway, so all things being equal, it made sense to give 
them the contract as part of the relationship.'' 

FirstEnergy executives declined to comment, spokeswoman Ellen Raines 
said. 

In Philadelphia, Lincoln National Corp., which sells life insurance, 
annuities and mutual funds, wanted to generate more business when it 
paid $140 million in June 2002 for a 20-year stadium sponsorship 
agreement with the Philadelphia Eagles. In addition to getting 
tickets and suites, the company is allowed to make sales 
presentations twice a year to the Eagles' players, executives and 
staff. 

The company also gets an executive boardroom at Lincoln Financial 
Field where it can hold financial planning seminars for wealthier 
clients or hold executive staff meetings. 

``This allows us to speak directly to potential customers in an 
environment where they really listen to us,'' said D'Arcy Rudnay, 
Lincoln National's vice president of communications and media 
relations. ``It's way more effective in helping us reach our 
audience than just an advertisement.'' 

Scoring and Data 

At the U.S. Open, where IBM runs the scoring system and other data 
systems beyond the Web site, play will halt if the computers fail. 

Rick Singer, IBM's director of worldwide sponsorship marketing, 
brings clients through the U.S. Tennis Association's National Tennis 
Center in New York to see how the technology works. 

``We always ask, `How do we generate real business from our 
sponsorships?''' Singer said. ``This is a great way to do that. The 
Open allows us to demonstrate the tremendous range of our products, 
expertise and reliability, and the sales can be tracked.'' 

Last Updated: September 4, 2003 00:06 EDT

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