As major (and minor) sports leagues go dark, sponsors’ plans are up in the air

by Chris Powell

The abrupt suspension of play by major sports leagues in North America and around the world as a result of the COVID-19 pandemic will force advertisers and agencies to scramble to find alternate plans.

All of the major professional sports leagues went dark within a 24-hour period starting Wednesday evening, when the NBA announced it was shutting down after one of its players, Rudy Gobert of the Utah Jazz, tested positive for COVID-19.

Major League Soccer announced a 30-day suspension of match play on Thursday, while the National Hockey League said it would pause league games later that day. The ATP Tour has also announced a six-week suspension, while Major League Baseball cancelled its remaining Spring Training games and announced plans to push back the start of the season.

The cancellations also include the NCAA’s March Madness, and National Lacrosse League, while e-sports franchise Toronto Defiant said that it had cancelled its Overwatch League home-stand event scheduled for April 18-19. On Friday, England’s Premier League announced that it would suspend play until at least April 4.

Michael Beckerman, president and CEO of the sports marketing firm MKTG Canada, said his company established a war room for its major clients—a group that includes financial services companies Scotiabank and Tangerine—about two weeks ago, when it started to become apparent that coronavirus and COVID-19 was going to become an issue in North America.

MKTG has been engaged in a range of scenario planning, he said, from business as usual to closed stadiums to an actual stoppage of play. “It’s a challenge creatively that nobody’s been through this before, but as a society we’re going to get on the other side of this and go back to our daily lives,” said Beckerman. “The next few weeks are going to be rocky and unpredictable, but it’s up to us as agency partners to let our clients know that we’ve got this and we’re going to do what’s right for their brand and their customers.”

While no formal plans have been announced given the disruption is so new, Beckerman predicted that sponsors would continue to activate against the teams even in the absence of actual games, with much of their activity likely directed towards digital channels.

“Even though the Raptors aren’t playing it doesn’t mean people are no longer Raptors fans,” he said. “It’s just that there’s a little bit of a void in their life right now.”

Canada’s professional sports landscape boasts literally hundreds of sponsorships that span the entire business ecosystem. The Vancouver Whitecaps alone list more than 40 corporate partners, from major corporations like BMO, Bell and Adidas to mid-tier companies like Booster Juice and Remax as well as regional sponsors like B.C.-based pasta brand Duso’s.

Maple Leaf Sports and Entertainment has a wide array of corporate sponsorships in place across the Toronto Maple Leafs, Raptors and Toronto FC. The defending NBA champion Raptors’ sponsors include Sun Life Financial (which became the team’s first jersey sponsor, at a reported cost of more than $5 million a year, in 2017), GoDaddy and Pizza Pizza.

The Toronto Maple Leafs’ sponsors include Ford, Intact Insurance, Casper, and Molson Coors Canada (which signed a 10-year renewal of its existing partnership with MLSE in 2016).

Just last month, the Campbell Soup Company of Canada announced a sponsorship deal with Russian-born forward Ilya Mikheyev, who was dubbed “Souperman” or “Soupy” by teammates after telling an interviewer last year that he didn’t understand why Canadians didn’t eat more soup.

Toronto F.C. sponsors include BMO and GE Appliances Canada, which signed a multi-year deal with the team in 2019 that includes signage at BMO Field, in-stadium activations and PR and digital media executions. It also became Toronto F.C.’s first official sleeve sponsor to start the season.

MLSE did not respond to The Message‘s interview requests.

In some ways, this shut down won’t be all that dissimilar from other instances where leagues have been halted because of labour disputes, said Bob Stellick, whose company Stellick Marketing Communications has worked with brands including Home Depot, RBC and McDonalds. The reasons for the shut down are unique, he said, but the template for responding is already there.

For now, he said, sponsors and rights holders won’t have to say anything. “But at some point the teams will reach out and say you get a pro-rata refund on your sponsorship based on games played.” Most NHL teams have about 15% of their season remaining, so sponsors will get a 15% refund on their sponsorship for this year, he said.

“I guess the unprecedented part is where labour stoppages happened individually in the past, it’s never been a collective,” he said. All-sports broadcasters like TSN and Sportnset will “have to come up with some gimmicky types of things” to fill their air time, he said, although their ratings will plummet regardless.

In a Twitter statement Thursday, TSN said that it remains in “close discussions” with advertising partners as the situation unfolds. TSN did not respond to The Message‘s request for comment, while Sportsnet directed it to a tweet from its PR department, which said that it has “contingency programming plans in place.”

In the short term, the ratings hit created by the absence of live hockey broadcasts might not hurt the networks that much. Producing hockey games is actually quite expensive compared to the advertising they generate, with the networks relying on subscription fees to make their coverage profitable. The real pain would come if the situation led to the cancellation of the more financially lucrative playoffs.

“Other than having to fill the time, which will be a challenge because [live] sports is so much of their schedule… they’ll be okay,” said Sherry O’Neil of cairns oneil strategic media. “I don’t know what content TSN or Sportsnet could drum up to fill up all those hours.” If prior history is any indication, viewers should prepare themselves for a steady diet of historical games.

The challenge for brands, said O’Neil, will be making up the lost ratings from cancelled sporting events. It will also require marquee property sponsors to get creative with how they pivot.

“If I’m the title sponsor of the first period of X number of hockey games, there is alternate entertainment content that somebody could do something really cool,” she said. “You have to be able to pivot.”

This is where a brand such as a Red Bull or even some packaged goods marketers might have an advantage over inherently more conservative marketers such as banks and insurance companies, she said. “It’s such a fine line to walk.”

MKTG Canada, meanwhile, is one of the companies at the frontline of addressing the business challenges that accompany the pro sports shutdown. “We’ve got our hands full, but we’ve got this,” said Beckerman.

The other interesting dimension to the story is how fans themselves will be affected by the shutdowns, said Stellick. “If you look historically, they kept Major League Baseball going during World War II  for morale purposes. Right now, it’s like a double whammy: people are discouraged, and normally would look to sport as a release or whatever, and that’s not there either.”

—With files from David Brown

 

Chris Powell