Running Head: SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE

Sponsorship Inventory & Sponsorship Revenue

Mollye Peters
Northwestern University
Running Head: SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE
Overview
Sponsorship has become a top marketing solution for generating revenue for both
sponsors and rightsholders. According to Statista, sponsorship revenue has been increasing
steadily since 2006 and is projected to top $45.28 billion U.S. dollars by 2015 - See Exhibit 1
(Sports sponsorship: total revenue worldwide from 2006 to 2015 (in billion U.S. dollars)*, 2014).
With sponsorship revenue becoming increasingly important to the financial success of an
organization, sponsors are looking to rightsholders to create sponsorship opportunities that
generate guaranteed revenue and increase the value of the sponsorship (Migala, 2005). Thus,
the traditional signage and branding opportunities that rightsholders provide is no longer
enough in the eyes of a sponsor. Rightsholders must analyze current sponsorship inventory and
add new and creative assets to their sponsorship programs in order to give sponsors
guaranteed revenue, and ultimately increase the value of the sponsorship. This paper will
explore how sponsorship inventory can directly affect sponsorship revenue and help to increase
the value of a sponsorship for both the rightsholder and the sponsor.

Importance of Knowing Sponsorship Inventory
One of the problems facing rightsholders who are pitching a sponsorship to a potential
sponsor is that the rightsholder might not have a firm grasp on their inventory and assets. An
example of this comes from President and CEO of The Partnership Group Sponsorship
Specialists, Brent Barootes:
Our client, a brand, was being pitched a proposal for a substantial amount. The issue
was that the sponsorship property sellers did not know their assets. When we inquired
SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 2
about additional assets (specific to the property that we were aware of), the property
representative was not aware of them. This rep was not green. She was not new to the
property. And this was not rocket science. It was just a plain failure to understand her
property to the fullest extent. Needless to say, we sent her back to the drawing board
and suggested that she learn her inventory of assets. (2011)
As seen in this example, a rightsholder, or a person representing the rightsholder, not knowing
or understanding the full inventory can lead to the loss of a potential sponsor, and thus a loss in
sponsorship revenue.
In a lecture at Northwestern University, Lesa Ukman, Chief Insights Office, the co-
founder of IEG, and the worlds foremost expert on sponsorship stated that the first step to
selling a sponsorship is to identify assets with their related rights and benefits (Selling
Sponsorship, 2014). In other words, a rightsholder must know its assets and understand how
those assets translate to sponsors. Assets can include intellectual property, audiences, talent,
production, venue, hospitality, signage, printed materials, social media, etc., and these assets
can have rights and benefits from category exclusivity to product placement to exposure and
visibility to incentives and rewards, etc. (Ukman, 2014). The combination of the assets and their
rights and benefits creates the sponsorship package. Rightsholders value their assets prior to
pitching them to sponsors. However, if the sponsorship package offered doesn't match the
objectives of the sponsor, the sponsor views the sponsorship package as having no value.
Therefore, the rights and benefits of the assets must match the sponsorship objectives of the
potential sponsor in order for the sponsorship to have value.

SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 3
Creating New Inventory to Generate Revenue
There are different strategies a rightsholder uses to add additional inventory to its
sponsorship assets. This section will discuss the some of these different methods and how they
can lead to creating better revenue generating assets for both sponsors and rightsholders.

Brand New Ideas
This awareness of a rightsholder's inventory in relation to the sponsor is the start to
securing a sponsorship deal and generating revenue. For example, when Drew Mitchell, Chief
Revenue Officer at the Texas Legends was renewing a sponsorship deal with KIA Motors
America, KIA wanted, ""Bigger and Better' inventory and... a more commanding brand visible
platform" in order for KIA to renew (Mitchell, 2014). The Texas Legends had a big challenge
because their entire premium inventory was already sold out. They now had to brainstorm and
create new inventory that met the objectives of KIA. Working in conjunction with KIA, the idea
of hanging a car above the court and creating a contest to win a KIA car that captured leads and
showed more guaranteed revenue became the premium asset that KIA was looking for in order
for KIA to renew its sponsorship with the Texas Legends - See Exhibit 2 (Mitchell, 2014).

Hidden Assets
Another example of creating new inventory to secure a sponsorship deal and generate
revenue is Lucas Oil Stadium in Indianapolis, Indiana. Lucas Oil paid "$122 million for a 20-year
contract for the naming rights to the stadium" with the hope of the sponsorship becoming a
valuable asset to the company, increasing brand awareness, and creating the
SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 4
association/appearance that Lucas Oil is comparable to a Fortune-500 company (Mielach,
2012). With the premier sponsorship sold to Lucas Oil, the stadium was still looking to increase
revenue. In order to do that, the stadium looked at its hidden assets, which are assets that do
not need funding (Ukman, 2014), in order to create new assets (Clifford, 2008). This worked out
very well for the stadium. Lucas Oil Stadium sold gate sponsorships, as well as sponsorships to
other premium areas within the stadium.
At the stadium, there are gasoline pumps in the north gate area, sponsored by Lucas Oil,
airplane seats in the AirTran Airways food court in the northwest section and cars in the
northeast corner, sponsored by Chevrolet. The Indiana law firm of Baker & Daniels
sponsors the club lounges at the western end of the stadium, and Advantage Health
Solutions, a medical plan, sponsors the club lounges at the eastern end. Sprint sponsors
the east gate, Huntington Bank the west, and Hhgregg the south. (Clifford, 2008)
While the exact terms of these interior stadium deals were not revealed, "Colts officials said the
goal of the project is to score $9 million to $10 million in annual sponsorship revenue. That's on
top of the approximately $6 million the team will bring in annually for its 20-year naming rights
deal" (Schoettle, 2007). According to Anothony Schoettle,
The other sponsorships in the program include the stadium's four corners, which team
officials said would go for about $750,000 annually; and two suite-level and two club-
level sponsorships, each of which would generate $400,000 to $600,000 a year. With all
of the combinations of assets and rights and benefits, sponsorship can create endless
opportunities for sponsors and revenue generation. (2007)
SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 5
The hidden assets of the gates and premium interior areas of the stadium allowed for Lucas Oil
Stadium to further its revenue goals, while giving sponsors unique opportunities to engage with
fans during Colts games, and other stadium events, such as the Super Bowl the NCCA
Championships, and more.
The Chicago Transit Authority (CTA) had a similar strategy for generating new revenue
from hidden assets by selling sponsorship of its inventory including buses, trains, stations, apps,
heat lamps and recycle bind (O'Neil, 2011). In 2012, the North/Clybourn Red Line was reopened
thanks to financing from Apple Computers, with Apple ads inside the station, but no official
naming rights deal - See Exhibit 4 (CTA To Offer Corporate Naming Rights On 11 L Stations,
2012). There were also 11 popular stations whose naming rights were up for grabs to corporate
sponsors, with the intention of using the revenue generated from this sponsorship to offset
increasing costs for the CTA (CTA To Offer Corporate Naming Rights On 11 L Stations, 2012).
"CTA President Forrest Claypool said Wednesday that the agency has found the $80 million it
needs to avert fare hikes and service cuts the rest of this year without labor concessions"
(CTA To Offer Corporate Naming Rights On 11 L Stations, 2012). Without creating sponsorship
inventory out of the hidden assets the CTA owns, the cost of running the CTA would be passed
to its passengers and cause budgeting issues that could cut CTA jobs.

Co-Sponsors/Media Partners
Aside from creating new inventory out of thin air or finding hidden assets to create
inventory, rightsholders can also partner 7with other rightsholders to strengthen and add
unique opportunity in its sponsorship inventory. According to IEG, two successful revenue-
SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 6
building strategies for properties is to team with other properties and partnering with media
(Three Successful Revenue-building Strategies For Properties, 2009). An example of this is with
the Nashville Predators and Baker Curb Racing.
Initially, this partnership will focus on sales and marketing, but may further expand to
include other initiatives in the future. With the Nashville Predators and Baker Curb
working together, their partnership will create avenues for businesses to reach
audiences year round on both a local and a national scale. (Hoag, 2009)
While the deal is said to have no cash-value, both properties gain new and unique inventory,
which can draw in untapped sponsorship revenue.
An example of a media partnership that helped create new inventory and generated
revenue is the T-Mobile San Jose Mariachi and Mexican Heritage Festival present by Target. The
festival worked with Clear Channel to identify open categories, prospects and inventory that
could be used to develop tailored marketing solutionsThis partnership secured two new
festival partners: Annheuser-Busch, Incs Bud Light and the six-store Chavez Supermarket
Chain as well as increasing its sponsorship revenue by nine percent (Three Successful Revenue-
building Strategies For Properties, 2009).

Facility Upgrades
Another method to increase sponsorship inventory and generate sponsorship revenue is
to make facility upgrades. These upgrades can range from upgrading a cup holder or rebuilding
a stadium. For example, a company called Branded Seats designed a new cup holder that is
easier for facilities to install, reduces time and cost of replacing cup holder signage, and creates
SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 7
flexibility for facilities and sponsors See Exhibit 6. The Royals at Kauffman Stadium installed
these new cup holders for the July 10
th
2012 All-Star Game. The
product snaps easily in place over existing cup holders in a tamper-resistant manner,
thus eliminating the need to apply and remove stickers, a process that can be difficult
and time consumingif the Royals were to use razors to remove hundreds of old
stickers and adhesive residue, it could take days to complete the task, resulting in higher
labor costs. (Muret, 2012)
This solution of purchasing the cup holder upgrades from Branded Seats adds more value to the
Royals sponsorship packages because of its ease of use and flexibility in switching out
messages on the cup holders.
The new Cowboys Stadium was a bigger upgrade than the cup holders, but ultimately
had the same outcome of adding inventory that creates a higher sponsorship value and
increases revenue generation. In the old home of the Cowboys, Texas Stadium,
changing signage between events was not only costly for sponsors and advertisers, the
process was time-consuming, manually intensive, and costly The new Cowboys
Stadium required technology solutions that would provide a dynamic high-definition
experience for fans, the flexibility needed to offer advertisers and sponsors a more
relevant role in the game-day experience, and the ability to transform the venue on a
daily basis The increase in advertising and sponsor promotion inventory has resulted in
significant revenue growth. (Cowboys Stadium Scores Big with Fans, Sponsors, and
Advertisers, 2010).
SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 8
This example clearly shows how upgrading a facility can create new inventory and better
opportunity for sponsors that result in increased sponsorship revenue.

Conclusion
There are many other examples of rightsholders assessing their current sponsorship
assets and determining that new inventory is needed to generate more revenue. Whether
rightsholders create brand new opportunities from a new idea, hidden assets, by partnering
with other properties and media, or gaining new inventory from facility upgrades, the increase
in inventory definitely generates revenue for the rightsholder, as well as the sponsor. In 2010,
the LA Marathon tripled its sponsorship revenue by adding another five sponsors due to adding
new inventory, creating better opportunities for experiential marketing, providing additional
reach, offering tailored sponsorship packages, and gaining new media partners (How The LA
Marathon Has Tripled Sponsorship Revenue, 2010). This is a great example of creating
opportunities for sponsors to generate guaranteed revenue, which is a trend that continues to
grow in sponsorship. Typically these types of sponsorship engage with the target audience,
making the value of the sponsorship much more valuable than signage and branding. From a
purely financial standpoint, a rightsholder or sponsor can determine exactly how much the
sponsorship assets contribute to the revenue of the organization by calculating the asset
turnover, the net profit margin, and the return on assets of each sponsorship deal. Many of the
terms for sponsorship deals are not fully disclosed to the public as part of confidentiality
agreements; however, internally these financial ratios can further help to determine whether or
SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 9
not the sponsorship inventory/assets and its rights and benefits were truly successful in the
sponsorship.
(Word Count: 2,134 words)

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SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 13
APPENDIX
Exhibit 1

(Sports sponsorship: total revenue worldwide from 2006 to 2015 (in billion U.S. dollars)*, 2014)

SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 14
Exhibit 2

(Mitchell, 2014)

SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 15
Exhibit 3

(Clifford, 2008)

SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 16
Exhibit 4

(Apple Store Lincoln Park, 2014)

SPONSORSHIP INVENTORY & ITS AFFECTS ON SPONSORSHIP REVENUE 17
Exhibit 5

(Hoag, 2009)

Exhibit 6

(Muret, 2012)