MLB lockdown leaves brands locked – ‘It’s embarrassing’
The economic damage to the game and its players is already severe. Mets pitcher Max Scherzer, who shortly before the lockout signed the richest contract in baseball history, stands at losing nearly $233,000 a day, according to a study by the Associated Press. Clubs are missing out on lucrative national, local and online broadcast deals and their advertising, estimated at just over $1 billion a year, according to people familiar with MLB operations. Advertising generates about 10% of baseball’s $10 billion in annual revenue, making it one of the game’s biggest sources of wealth.
How brands handle cancellations remains a mystery. Official MLB sponsors including Anheuser-Busch InBev, Hyperice, Taco Bell and LoanDepot declined to comment; several other people contacted by Ad Age had not returned messages. The lockout hasn’t stopped AB InBev from renewing its MLB sponsorship: the brewer has extended its pact for another four years, according to a report by Beer Marketer’s Insights, including an arrangement that includes the Budweiser brand in the celebrations post-season locker rooms.
A spokesperson for the MLB commissioner’s office declined to comment on Ad Age, but pointed to a open letter to fans expressing regret for commissioner Rob Manfred. The Major League Players Association did not respond to a request for comment.
Sports marketing experts said the short-term tasks for brands should be to inform their partners that events scheduled around opening day, for example, events in the stadium suites, would no longer take place. Pocket schedules — a popular sponsored start-of-season freebie for nearly every MLB team — have already been rendered useless for 2022, given early cancellations and the likelihood that schedules would have to be reconfigured at the start of the season. .
“It’s embarrassing to have to tell people, we promised you all of this and we can’t deliver,” said Ricardo Fort, a former Coca-Cola sports marketing executive who now runs a consulting firm called Sport by Fort Consulting. “It’s an unnecessary hassle.”
Far greater implications, however, lie in the fate of funds not spent on advertising. Some experts predict that brands would be reluctant to redeploy spending, given the unique nature of the sport and the time it takes to shift gears.
“If you’re a broadcast sponsor and the first two weeks of the season are canceled, the company could say, let’s put that money in our pocket, it’s a saving for us. Financiers will want to take that into account,” said Tony Ponturo, a consultant who previously served as CEO of the internal agency responsible for sports marketing deals at Anheuser-Busch. At one time, the brewer not only owned the St. Louis Cardinals (from 1953 to 1995), but spent about $100 million a year on baseball-related advertising, most of it with local teams. “If you want to reuse that money for other things, you can expect a tussle between the marketers and the CFO.”
Smart brands will likely have alternate plans in place, Fort added, but none of those would replicate the everyday beats of baseball or necessarily reach the same audience.
“If they haven’t planned for that type of scenario, then that’s a problem,” Fort said. “Brands have a window in their calendar called ‘baseball’ that they’ve already sold to their customers, with material they can’t put anywhere else. There really is no replacement.
Dale Song, director of partnerships, consulting, at Omnicom’s Optimum Sports division, agrees.
“All the reasons advertisers leverage baseball still exist: it’s the right audience, in the right markets, at the right time of the calendar year,” Song said. “It takes up space that’s not easily replaceable, so it’s not as linear as the redistribution of dollars elsewhere.”
Fan sentiment on social media sites would seem to strongly favor the players.
A tweet from California Angels superstar Mike Trout condemning Manfred received nearly 100,000 likes within hours on Wednesday, while replies to an MLB tweet containing Manfred’s statement to fans were met with the kind of public reception the Red Sox fans would book the Yankees’ Derek. To throw.
But disillusion on both sides has also set in, with thousands of fans pledging not to attend games when they resume and vowing to avoid purchases of MLB-licensed merchandise. The average age of nationally televised baseball games in 2019 was 57, according to Optimum Sports, suggesting there’s a lot to lose for a sport that has long struggled to cultivate a younger audience more attractive to advertisers.