With uncertainty being the only constant, sports business faces myriad challenges as it navigates a future changed forever by the coronavirus pandemic.
By Terry Lefton - Sports Business Daily
For a brief time last weekend, LPGA Commissioner Mike Whan was feeling as good as one can these days within the sports industry. Just as other U.S. sports leagues were changing their plans in the wake of the coronavirus pandemic, the LPGA had decided to postpone its three U.S. tournaments scheduled to take place in the weeks before the Masters. However, after some weekend overtime, his staff had figured how and when to reschedule those tour stops in Arizona and California.
“Sunday morning we felt pretty good,” Whan said, “but by Sunday night, I was pretty sure three wouldn’t be enough.” Those three tour stops were officially canceled the next day, March 16, joining three earlier Asian LPGA events in the discard pile. “It was one of those situations where you think you’re ahead of it — until you wake up the next day,” Whan said. “The day after the NBA suspended its season was about a month long for me.’’
Clearly, Whan was speaking for much of what is now a beleaguered industry in full stop. Without sports events to administer, televise and activate against, much of the industry’s efforts last week turned to the care and feeding of the corporate sponsors that help keep it afloat.
With the economic outlook the most unsettled since the 2008 recession, and the stock market now in regression, the coronavirus economy was said by some to be catalyzing unprecedented behavior.
“We’ve been told by brands they can’t pay properties, and properties they can’t pay agencies money already owed — just because the future is so murky,” said Jeff Marks, CEO of Innovative Partnerships Group in Los Angeles. “This industry always talks about ‘partnerships’ for the last decade. I’m interested to see if that’s the way they act when things are upside down.”
LIVING IN A POSTPONEMENT WORLD
For those at some of the largest sports properties, that meant days on the phone with their sponsor base, attempting to allay concerns, even when no one knew when sports will resume, nor what their make-goods will be. What do you say to sponsors that already have committed millions of dollars for signs, media and suites when none of those are being seen or used?
“It’s relationship 101,” said Andrew Judelson, executive vice president of national sales at Learfield IMG College, which represents around 200 colleges. “I’ve told our people that it starts with a personal conversation, not a business discussion. ‘How’s your family doing?’ We are dealing with health issues, which is as personal as you can get — it’s not a banking issue. When and if it gets to a business conversation, provide as much understanding, clarity and reason you can. If they’re asking for extensions or new payment terms, we have to be all about flexibility. One thing we do all know is that there’s not a single category or business unaffected by what’s going on.”
Ron Skotarczak, executive vice president of marketing partnerships at Madison Square Garden, said he contacted all sponsors on March 13. “We have to lean in with partners, not overwhelm them, but let them have the information we have,” he said.
“Partners were helping us, our health-care partners were sending us daily updates, and Delta was updating us on what’s going on in their business,” Skotarczak said. “And very few were asking about deals and terms, moving forward. When there’s more certainty, we’ll figure that out together. That was our message.”
Call it an industry telethon. “These calls — and we’re all making them — all have a big humanity piece,” said Harris Blitzer Sports & Entertainment CEO Scott O’Neil. “It’s a lot less about contracts and legal Xs and Os and more about health and family.”
“It’s very simple,” said another sponsorship executive at an organization that owns multiple “big four” pro teams. “I’ve been making a ton of those calls all week. We’re keeping track of what assets we haven’t delivered, and as soon as it’s feasible, we’ll come back and say, ‘Here’s what we’ll do for you.’”
Echoed Momentum Worldwide CEO Chris Weil: “We’re getting the questions you’d expect about value and credit on sponsorships, but when we’re living in a postponement world, it’s more about keeping clients up to date and delivering empathy.”
HOW WILL THINGS CHANGE?
WWE is one of the few organizations still putting on an event, although the April 5 WrestleMania 36 has been moved from Tampa’s Raymond James Stadium to the WWE Performance Center in Orlando, where it will be staged on a closed set.
“Prosperity brings friends and partners, but adversity proves them,” said John Brody, WWE executive vice president and global head of sales and partnerships, adding that Snickers remains presenting sponsor of the event, while other sponsors are to be determined. “We remain open for business and producing content [like its “Raw” and “SmackDown” shows], but we’re doing it with the right tone and trying to provide an escape for people. … We’re balancing the precautionary measures necessary [to put on WrestleMania 36] to protect our employees with our desire to entertain.”
As the head of one the nation’s largest sports marketing consultancies put it, “You can make a good case that clients need agency guidance more now than ever. No one’s got a road map, so the basics are for properties to deal with ‘partners’ like partners, instead of reading from clauses in contracts.
“The question we’re getting from every [brand] client is how they can take something that largely lives in the physical world and now pivot it for something that can be delivered in social or digital at a time when everybody’s home. We’re also getting a lot of questions about how the consumer psyche will change when we emerge from all of this. Could the seventh-inning stretch turn into the seventh-inning hand wipe? Is this eventually a big opportunity for a Venmo or a contactless payment card? Does Purell get on every MLB bench? All that’s a ways off, but those are discussions we’re having.”
Judelson, the former senior vice president of sales and marketing at the NHL, recalls the pain of working for the league during and after the 2004-05 lockout, which canceled that season. A maxim from Commissioner Gary Bettman from those days has stayed with him: “He always told us that ‘This big business is rather small, and forever is a long time,’” Judelson said. “You will be be remembered for how you act in times like these.”