To Buy or Not To Buy – Michael Jordan & the Cost of Two Coupons 30th October, 2015

Money is almost always a closely guarded secret, whether between friends, business relations or colleagues.

Nowhere is this more prevalent than the world of sports business with undisclosed fees for player transfers and the value of sponsorship deals rarely disclosed, so not to alert others to an inflated bank balance or be extorted for a fee. However, what happens when a company uses rights it has no possession of?

This was the focus of an unusual dispute between Michael Jordan, Safeway and Jordan’s long-term sponsors Nike.

Following Safeway’s unsolicited use of the Michael Jordan name without permission the two recently visited court to settle a proposed $10 million payment from a 2009 infringement.

In 2009 a subsidiary of Safeway’s placed in an advert and coupon incorporating Jordan’s name and Chicago Bulls number within a commemorative Sports Illustrated issue (of which only two were ever redeemed). However Jordan’s lawyers and endorsement history advise that he would not have accepted such a deal. Safeway believed this should be in the region of $126,900, more widely reported as closer to $500,000 from a licencing agreement which MJ held at one point over the last decade.

The argument posed by the athlete is that Jordan name is such a force in the marketing world that this requires a substantial rights fee, something he is keen to reinforce following a statement reporting an income of over $536 million in sponsorship alone from 2000 to 2012.

This is where Nike and other sponsors take interest.

As MJ and his legal team seek to prove how much an organisation typically purchases these rights leading to Judge John Blakely to rule that Nike and other sponsors must divulge their contracts to the court – something that they neither asked for, nor were keen to divulge to their competitors.

Despite being desperate to retain the fiscal anonymity within Michael Jordan’s contract, (a document so closely guarded reportedly only three member of staff have access and it is held in a separate area to all other contractual agreements at the Nike headquarters) the judge ruled this must be shown to the court.
The case is now settled with Safeway ordered to pay $8.6m in rights fees to Jordan, despite Michael expressing “it was never about the money”.

In the world of sponsorship it is always better to acquire those rights than use without permission – who knows it might just save you $8.1m in the long run.

Sponsorship: It’s not all about the money 21st August, 2013

Recently I came across a short article posted by Richard Branson on Twitter where he stated that ‘people who focus on finance generally fail’.

Now although a little brash, Branson’s comment struck me as rather relevant when it comes to considering sponsorship. The value of a sponsorship opportunity should not be based solely on costing but on the value that sponsorship can bring to the brand.

Finding value in a sponsor proposition is a tenuous topic – brands enter into sponsorship for varying reasons and the true value of each sponsorship is dependent upon what the brand themselves want to gain from it. For some, the value of a sponsorship opportunity might come from the reinforcement it could provide during a re-brand campaign while others may see value in reaching new audiences. In this respect, a big budget sponsorship opportunity may not always fulfil the sponsor’s objectives in the same way a lower budget opportunity may see a sponsor reaping huge rewards.

There are of course big businesses with big budgets that can afford the high cost sponsorship opportunities and benefit greatly from them. Companies such as PepsiCo and Coca Cola spent upwards of $280 million on sponsorship in 2012. With budgets like this, these companies can consider the higher ticket sponsorship opportunities like the Olympics and the Super Bowl. But as the marketing director for Nokia said recently, if you can’t outspend, out smart.

In 2012, Inov8, a leading off-trail running brand, sponsored Mark Bayliss in his Arch to Arc (Marble Arch, London to the Arc de Triomphe, Paris) triathlon. This sponsorship was, in the grand scheme of things, a relatively low cost sponsorship but provided Invo8 with priceless opportunities. The success of this example lies in the synergy between the inov8 brand and Mark Bayliss. In completing the event, Mark Bayliss became the first person to complete the channel swim without a wetsuit, setting a new world record and raising money for SportsAid.

Mark’s achievement perfectly complimented Inov8’s brand values – celebrating the grit and glory of the committed athlete. The reach of the sponsorship might not have been particularly broad, but it provided Inov8 with a direct channel to their target audience and allowed the brand to present their values in the form of a successful athlete.

In the current financial climate, it is important to consider all aspects of a sponsorship opportunity, understanding what your brand needs to gain from the sponsorship and the value that particular proposition can bring.