Sports marketing dollars in demand
- New PGA, LPGA events in Michigan will seek corporate sponsorships
- Spring, summer are filled with sports events competing for ad budgets
- Brands seek better ROI using digital metrics
Events such as Detroit Tigers games, the Detroit Grand Prix on Belle Isle, the Gold Cup hydroplane races on the Detroit River and the Volvik Championship in Ann Arbor seek corporate sponsorships dollars in Michigan.
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Michigan is landing two new professional golf tournaments, increasing what sports marketing insiders say is already significant demand for corporate advertising dollars in Michigan.
The PGA Tour intends to launch a new tournament, sponsored by Quicken Loans Inc., at the venerable Detroit Golf Club next summer, and the LPGA Tour on Thursday announced the inaugural Dow Great Lakes Bay Invitational at Midland Country Club from July 17-20, 2019.
Both events will seek millions of dollars in corporate sponsorship investment in a calender already crowded with everything from the Detroit Tigers to the Detroit Grand Prix, the Gold Cup hydroplane races on the Detroit River and NASCAR races at Michigan International Speedway. Lower-tier leagues, such as the semi-pro Detroit City FC soccer club and the United Shore Professional Baseball League, also have sophisticated sponsorship deals that tie up ad dollars.
In golf alone, there already are two LPGA events in Michigan that command sponsorship money: the Volvik Championship in Ann Arbor at Travis Point Country Club from May 21-27, and the Meijer Classic in Grand Rapids running June 11-17.
Post-recession, there seems to be plenty of money to go around, even if competition is increasingly stiffer among professional, collegiate and amateur events.
“Competition for corporate sponsorship is good,” said Keith Karbo, the Volvik Championship’s tournament director for its three years of existence. “Each event is unique and has its own set of compelling attributes. It’s our job to tell our story, develop creative ideas that drive results for our sponsors and build the right long-term partnerships. If we continue to deliver a fantastic spectator experience, then we’ll be relevant and attractive to our corporate partners, too.”
As sports sponsorships have grown more complex, opening them up to smaller companies with digital and social media opportunities atop traditional signage and hospitality and naming rights, advertisers expect more bang for their buck.
That’s been Andy Appleby’s business strategy with his development USPBL league in Utica, which began its third season May 11. He’s sold more than $4 million in corporate deals to put his startup league in the black from Day 1.
“There is increased competition (for ad dollars). Companies have to be very judicious in who they choose to partner with. From that perspective, I believe we as properties have to be better than ever in terms of our service. I spend 365 days a year servicing our partners, not just during the season,” he said. “You have to show companies value and service.”
Cost of sponsorship
Depending on the sport and event audience, sponsorships can range from a few hundred dollars to the millions for event title deals.
Increased sophistication in what teams, venues and events offer potential sponsors has lowered the barrier to entry while increasing the overall cash intake. Mike Dietz, whose job it is to preach the gospel of sports marketing effectiveness as president and director of Farmington Hills-based Dietz Sports & Entertainment, laid out the democratization of the industry.
“Even if companies start small, they will find success with sports marketing and can grow their budgets and partnership assets,” he said. “Some companies invest in large assets with naming rights, entitlement jersey patches, entrance naming rights and category exclusivity. Other companies maximize smaller assets: digital signage, social media, community events, youth sports venues. No matter what your budget, there is room in the Detroit sports landscape to invest in a program that will bring measurable results. Community partnerships can run from $1,000 to $10,000 and are the perfect entrance vehicle into sports for small businesses.”
Pro-golf sponsorship isn’t cheap. Dave Richards, owner of Bloomfield Hills-based Resort & Golf Marketing, told Crain’s in 2015 that an LPGA event costs its main sponsor about $500,000 to $750,000; while a mid-level event on the PGA Tour, such as the now-defunct Buick Open in Grand Blanc, is $5 million to $6 million.
Hospitality packages for the 2008 PGA Championship at Oakland Hills Country Club began at $37,500 for a 10-person table and increased to $500,000 for larger, more sophisticated offerings.
Larry Peplin for Crain’s
The opening of Little Caesars Arena garnered significant investments, putting additional pressure on the other franchises and events.
The financial details, including sponsorship costs, for the new PGA Tour tournament in Michigan are still being worked out, according to title sponsor Quicken Loans. The online mortgage giant owned by Dan Gilbert, a heavy sports marketing spender, has been title sponsor of the PGA Tour’s The National near Washington, D.C., since 2014. It dropped involvement with that event after the 2017 tournament for the new Detroit event.
“We are currently focusing on finalizing the contract,” said Aaron Emerson, senior vice president of communications at Quicken Loans, via email. “As we move toward execution of the contract we will have much more information on the business aspects, including corporate sales and hospitality, of the Detroit event.”
One academic that monitors sports investment predicts that the new Detroit PGA Tour event will have competitive ripple effects in the market.
“Its impact will be felt by other major events in the area as they reach out to additional sponsors,” said Victor Chiasson, an assistant professor of sport management at Eastern Michigan University. “The competition is fierce at every level and every new event that comes to town adds to that competition.”
Dietz, whose firm creates sports sponsorship deals for companies, agreed.
“Competition is fierce for sponsorship dollars, and we encourage companies to have a strategic plan in order to maximize the return on their investment,” Dietz said.
“The new PGA Tour event will mostly target hospitality budgets for tickets and chalets, so the competition for the hospitality budgets will get more competitive, with suites at Comerica Park, Ford Field, Little Caesars Arena, as well as chalets at the Grand Prix and season tickets with the teams. Adding a premiere event to the calendar will give sponsors more options but also open opportunities for new companies to get started in sports.”
There are long-term sponsorships, such as venue naming rights, presenting rights, signage and suites but also deals for fixed-time events where the deal is for a temporary tent, social media, etc. And companies can get immediate ROI data from digital ad campaigns, which has made online and social media ad spending an integral part of sponsorship deals for some time.
That said, traditional sports branding investments have still an enormous effect on ad dollar competition.
“The opening of Little Caesars Arena garnered significant investments, putting additional pressure on the other franchises and events,” Dietz said.
Within the golf industry itself, broader troubles led to companies re-thinking how they spend ad dollars, said one of Michigan’s top golf minds.
“‘Green grass’ golf participation (at real golf courses) has been stagnant-to-declining over the past decade with an accompanying drop in television viewers. Corporate sponsors responded by allocating sponsorship dollars more carefully and strategically,” said Jan Brintnall, who owns DeWitt-based Jan Brintnall Golf School LLC and who teaches a business golf program for Michigan State University’s Eli Broad College of Business. “It remains to be seen how corporate sponsors react to the influx of professional tournament activity in the state of Michigan.”