Amway deal significant in current economic climate
The San Jose Earthquakes recently announced Amway Global will become their first jersey sponsor, widely reported as a $2 million to $3 million annual investment for three years. In itself, it's an impressive number that will positively impact on the Quakes' finances, but the significance of such a partnership amid the current economic times is even more important.
Although the amounts that Herbalife ($4 million to $5 million per year for Los Angeles) and Microsoft ($4 million per year for Seattle) are paying for similar pieces of inventory clearly are larger figures, they can be directly linked to specific factors that can be considered one-of-a-kind marketing outliers.
In Herbalife's case, the strategy is to promote the brand via the worldwide David Beckham infatuation. In Microsoft's case, the sponsorship can be considered as something of a philanthropic gesture from a local company that was co-founded by a member (Paul Allen) of the Sounders' impressive ownership group. This is not to discount such reasoning for a sponsorship of any sport, as they are intelligent marketing endeavors.
What is noteworthy, however, is that the San Jose and Amway relationship doesn't seem to have a similarly high-profile link. Therefore, it can be reasonably concluded that this partnership was struck because of the standard local, domestic and international marketing power that the typical MLS franchise has under its hood. Under normal circumstances, such a sponsorship should be considered another positive step in MLS' continued ascent toward global credibility. Given the current economic environment, however, this sponsorship should be considered historic.
Let's take a look at some of the other recent comparative news in and around the sports world:
1. AIG backing out of its Manchester United jersey sponsorship
2. NFL implementing leaguewide layoffs
3. Chicago Cubs suing Under Armour for breach of sponsorship contract
4. Indy Racing League heavyweight owner Rahal Letterman Racing not fielding a car in '09 thanks to lack of sponsorship
5. The Arena Football League shutting down for an entire season
Until a few months ago, there was a well-followed belief that sports were "recession-proof." The thought was that fans couldn't do without their favorite teams, and that the fans' continued attendance/viewership would force brands to continue to invest advertising dollars in sports properties. The aforementioned story lines, and many others like them, have put that notion to bed.
All this begs the question: What makes MLS and, more specifically, the San Jose Earthquakes a viable marketing medium in such tough economic times? The answer may very well be global value. MLS recently sold its international TV rights through 2013, therefore assuring the league and its sponsors significant worldwide exposure. Such exposure might otherwise be difficult to obtain at a reasonable price for many companies that market themselves globally. Is this the same as emblazing a brand across the chest of Cristiano Ronaldo? Of course not, but it's also not costing Amway $25 million to stick its logo on the likes of San Jose midfielder Darren Huckerby, a name that will at least catch the attention of many a football fan in a British pub should an MLS match happen to be on TV.
Also of note is the fact that come this spring, MLS executives will name the two cities that have been selected to house the newest of the league's franchises. This will leave three other ownership groups flapping in the wind, all the while ready to shell out their $40 million expansion fee, a 33 percent increase from what the Philadelphia franchise agreed to pay to begin play in 2010. This is an extremely positive sign for the league, its owners and, ultimately, its sponsors. If franchise values are rising during a deep economic downturn, it is a positive sign for the times ahead.
A down economy is often the best time to find a great deal, whether that be an automobile, a home-improvement initiative or a major marketing partnership. Perhaps Amway Global is cognizant of that fact and is looking to capitalize on an opportunity to lock itself into an agreement that it feels will reap fruitful exposure beyond the significant investment.
Undoubtedly, there are numerous MLS league and team sponsors that aren't targeting a global audience, and many packages and inventory items may be for them, at an appropriate price point. However, recognizing a broader audience and the brands that desire to speak to them might be what keeps MLS driving toward success, regardless of whether the current market's mascot is a bear or a bull.
Tim Martin is the president of Gallagher Sports, a soccer-specific marketing agency. He can be reached at email@example.com.