As Coronavirus continues to spread like wildfire (at least in places like Florida, Texas and Arizona), the likelihood of fans attending football games this fall continues to decrease. To help teams fulfill their sponsorship obligations and recoup some of the gameday revenue lost if games are played in front of less than capacity crowds, NFL owners approved a plan that permits clubs to place sponsor logos on tarps that will cover the first 6–8 rows at every stadium (the social distancing measure has also been cited as a safety precaution for the players). While the league’s teams await the valuation research needed to go to market with the white space inventory, doubts remain that the new signage opportunities (16 in total) will be enough to make up for the pandemic-induced losses.
Our Take: In terms of in-game sponsorship assets, white spaces are branding opportunities that have never before been marketed. Dan Lobring (VP, Marketing Communications at rEvolution) said that “it could [be signage or messaging within the] broadcast or in-stadium, but as long as it’s new,” the opportunity meets the definition. The newly tarped seats in NFL stadiums, an unbranded area of the field (think: down the foul lines in baseball) and even vacant space on the team uniform (think: MLS’s plans to allow a short patch partner) could all be considered white space marketing opportunities. Larry Mann (Partner, rEvolution) suggested, “Outside of stadium naming rights, signage visible within live game action is the most premium asset that a team or league could offer.”
rEvolution works with a host of brands that have sponsorship deals in place at either the team or league level across the big five sports leagues. But to date, few details have been disclosed about their respective plans to use white space when play resumes. Says Mann: “There is still time for each of the leagues to implement physical signage or a virtual program, but none of the teams or leagues have defined what assets will be made available or how they’ll be divvied up” (never-mind what they’ll cost). While the NBA, NHL and MLB have yet to announce their white space plans (indicating decisions may not have been made at the league level yet), a corporate partnerships executive at one NFL club said none of teams had “gotten the valuation analysis they sought back yet, which is holding up the sales/asset reallocation process.” Without knowing what the new signage inventory is worth, teams are understandably hesitant to approach their partners.
Many traditional sponsorship assets hold little or no value without fans in the building, so teams and leagues are actively seeking ways to fulfill partner obligations and avoid a situation where refunds and/or make-goods need to be issued. Until the pro sports leagues clearly define the assets they plan to make available to teams—and teams begin to price those opportunities—it’s hard to definitively say if that’s possible, but Mann said he believes “there will definitely be some value shifted into the later years of these contracts. It doesn’t matter what new inventory the leagues end up making available to sponsors; it’s going to be hard in a reduced or no-fan scenario for brands to gain the value they would have received under normal circumstances.” That especially goes for brands associated with teams that end up going on extended playoff runs.
The corporate partnerships insider we spoke to wasn’t so sure. While he acknowledged it might be difficult for many of the league’s teams to offset all of the lost gate revenue and/or sponsorship inventory owed, it will ultimately “depend on the team, the market and the visiting teams coming in. For example, the new stadium teams, which only have so many new partners, might be able to sell these new assets [at a high rate] and grow revenues incrementally.” For what it’s worth, Nielsen Sports determined logo placement on lower bowl tarps during EPL matches deliver media values between $1 million and $2.5 million per game, depending on the teams playing. Jon Stainer (Managing Director, Nielsen Sports Americas) said that he expects NFL teams to be able to deliver “pretty comparable” media values.
For most teams, in most sports, new white spaces offered are bound to help replace assets—or asset value—lost to pandemic-related safety measures (not result in revenue growth). Mann explained that with brands already struggling to make contracted rights payments in the current economic environment, “Most companies would not be looking to increase their spend.” But if/when the sports world returns to pre-COVID norms, much of the new inventory created could represent a growth opportunity for teams. And considering we’ve seen a trend in recent years of leagues looking to create new sponsorship assets (think: NBA jersey patches, NHL on ice branding), it’s safe to assume that at least some of the new white space opportunities will be here to stay.