IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING

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1 THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING JANUARY 25, CATEGORY UPDATE ALL IN: CASINOS UP SPONSORSHIP SPEND TO OFFSET DECLINING REVENUE Casinos increase use of sponsorship to promote non-game offerings. Casinos are upping the ante on sponsorship. Casinos large and small are signing new deals with sports teams, festivals and other properties to gain a point of differentiation amid the growing number of gambling options and gaming destinations. Much of that activity is driven by tribal casinos. Recent deals include Agua Caliente Casino Resorts and the NBA Los Angeles Clippers (presenting sponsor of 2015/2016 season); Pearl River Resort and Memphis In May; and Cache Creek Casino Resort and the MLB Oakland Athletics (five year extension). One primary factor behind the sponsorship surge: stagnant revenue. Pressured by market saturation and increased competition, annual gaming revenue at the 479 U.S. tribal casinos grew 0.5 percent to $28.3 billion in 2013, according to Casino City s 2015 Indian Gaming Industry Report. While gaming revenue grew in 2013, it was at a slower pace than in 2011 (3 percent) and 2012 (2 percent) and well below the pre-recession growth rate of nearly 5 percent in 2007, according to the report. Other segments of the industry also are struggling. Annual gaming revenue at commercial casinos fell nearly 4 percent in 2012 to 1.5 percent in 2013, racino (combined race tracks and casinos) slid from roughly 8 percent in 2012 to -0.2 percent in 2013, while card room revenue dropped from 2 percent in 2012 to -0.3 percent in As a result, a growing number of casinos are using sponsorship to promote concerts, restaurants, golf courses and other non-game offerings. Memphis in May recently pitched a branded cool zone activation program to Pearl River Resort to promote the casino s Geyser Falls waterpark. The Choctaw, Miss.-based casino operates the closest water park to Memphis IEG, LLC. ALL RIGHTS RESERVED. 1

2 Casinos are popping up all over the place. With so many facilities, they have come to realize they need to differentiate themselves through other amenities, said Kevin Grothe, Memphis in May vice president of sponsorships. Other casinos have no choice but to promote non-gaming business due to restrictions on the category. Chukchansi Gold Resort & Casino leverages Chukchansi Park home to minor league baseball s Fresno Grizzlies to promote concerts and other non-game activities. The casino, which signed a 15-year naming rights deal in 2006, cannot promote gaming due to Minor League Baseball restrictions. We can t promote gaming, and we can t take our mascot to their property. Baseball has clearly drawn a line with gambling, said Derek Franks, Fresno Grizzlies general manager. If all they had was gaming, we wouldn t have been able to do a significant deal. Below, three hot buttons in the casino category: Showcase The Gaming Experience Casinos frequently leverage sponsorship to promote the gaming experience, with the ultimate goal of driving traffic back to their venues. Parx Casino this year will sponsor an end zone seating section in Wells Fargo Center as part of an expanded partnership with the Philadelphia Soul. The casino, which has sponsored the AFL team since 2013, plans to activate the seating section with mock games that play up the gambling experience. While Parx is not the first company to sponsor the seating area, it will be the first to leverage the tie as a consumer engagement platform, said Robyn Colajezzi, Philadelphia Soul vice president of corporate partnerships. The sponsorship gives the Soul another valuable benefit: a business-building platform for sponsors and other stakeholders. Parx earlier this month hosted a Super Bowl-themed dinner for the team that featured a panel discussion by Soul coaches, team owners and former NFL players. Entertain High Rollers Casinos are increasingly using sponsorship to entertain VIPs and reach new customers through suites and other branded areas. Maryland Live! Casino in 2015 expanded its partnership with Washington, D.C. s Verizon Center with the Maryland Live! Casino Players Club. The members-only space features an all-inclusive menu, pool tables, TVs and end-zone viewing of NBA Washington Wizards and NHL Washington Capitals games and other sports and entertainment events that occur in the building. Casinos provide an opportunity to tap into a similar customer: consumers with discretionary income who are looking for live entertainment, said Josh Brickman, vice president of strategy and research with Monumental Sports & Entertainment, which owns the Verizon Center and the Washington Capitals, Mystics and Wizards. In a similar vein, Potawatomi Hotel & Casino this year expanded its long-running partnership with the NBA Milwaukee Bucks with the Potawatomi Club, a private event space for club seat holders in BMO Harris Bradley Center. The casino uses the partnership to entertain customers and employees, said Matt Pazaras, Milwaukee Bucks senior vice president of business development and strategy IEG, LLC. ALL RIGHTS RESERVED. 2

3 Drive Out-Of-Market Traffic The lack of legal gambling in Georgia hasn t stopped the Atlanta Hawks from mining the casino category. The NBA team works with two out-of-state casinos: Harrah s Cherokee Casino & Resort (North Carolina) and Wind Creek Casino (Alabama), both of which use the partnership to build awareness and drive traffic. Each casino receives exposure in Philips Arena, traditional media and social channels, said Andrew Salzman, the Atlanta Hawks executive vice president and chief revenue officer. The casinos use the tie to promote concerts, poker tournaments and other events and to entertain VIP customers via suite nights, road trips and player meet-and-greets. Experiential, high-end entertainment is an important component in both partnerships. Sources Atlanta Hawks, Tel: 404/ Memphis In May International Festival, Tel: 901/ Monumental Sports & Entertainment, Tel: 202/ IEG, LLC. ALL RIGHTS RESERVED. 3

4 THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING JANUARY 25, SIDEBAR THE NUANCES OF WORKING WITH TRIBAL CASINOS While tribal casinos represent a good source for sponsorship dollars, there is one potential downside: they can be difficult to work with. From navigating tribal politics to working with rotating staffs and inexperienced sponsorship decision-makers, sales executives contacted by IEG SR ticked off a list of challenges in working with tribal councils. They work at their own pace and do business differently than the rest of the world. They have a lot of money, and they know it, said one sponsorship seller who, like others contacted for this story, did not want to be quoted. Similar to companies in the public sphere, sellers need to know who to approach for sponsorship dollars. Sellers should approach casino marketing departments, not tribal councils, said one sales veteran who currently works with a casino. There can be a lot of funny stuff going on with tribal councils. Sometimes there is no rhythm or reason to what they re doing. Chukchansi Gold Resort & Casino s sponsorship of minor league baseball s Fresno Grizzlies exemplifies the challenges of working with tribal casinos. Tribal infighting nearly derailed the casino s 10-year-old sponsorship of Chukchansi Park, the team s home venue. A feud between factions of the Picayune Rancheria of Chukchansi Indians forced the casino to unexpectedly close in October While the casino made its $1 million annual rights fee to the team in the previous month, it delayed its 2015 payment as a result of the closure. The casino has since made a partial payment and has negotiated terms for the remaining funds following its December 31st, 2015 reopening. We re close to putting this behind us, said Derek Franks, Fresno Grizzlies general manager IEG, LLC. ALL RIGHTS RESERVED. 4

5 THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING JANUARY 25, SIDEBAR THE MOST ACTIVE SPONSORS IN THE CASINO CATEGORY While tribal casinos lead the charge in signing new deals, their commercial counterparts top the list of the most active sponsors. Caesars Entertainment Corp. is the most active sponsor in terms of number of deals, with 14 percent of properties with a sponsor in the casino category reporting a partnership with the gaming giant. Penn National Gaming (10 percent) is the second most active sponsor followed by San Manuel Band of Mission Indians (7 percent) in third. To no surprise, sports capture the largest share of sponsorship revenue (81 percent) followed by fairs and festivals (13 percent). Most Active Casinos (U.S.) CAESARS ENTERTAINMENT CORP. 14% PENN NATIONAL GAMING, INC. SAN MANUEL BAND OF MISSION INDIANS MOHEGAN TRIBAL GAMING AUTHORITY MARYLAND LIVE! CASINO 5% 6% 7% 10% Fourteen percent of properties with a sponsor in the casino category report a partnership with a Caesars Entertainment brand IEG, LLC. ALL RIGHTS RESERVED. 5

6 Where Casinos Spend Money SPORTS 81% 13% FESTIVALS ENTERTAINMENT 4% CAUSE 2% 2016 IEG, LLC. ALL RIGHTS RESERVED. 6

7 THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING JANUARY 25, MOTORSPORTS HOW DELL IS DRIVING THE INTERNET OF THINGS WITH RICHARD CHILDRESS RACING Tech giant partners with NASCAR team to demonstrate technology in action. Roughly eight months into its partnership with Richard Childress Racing, Dell, Inc. is gaining traction. The computer technology company partnered with the NASCAR team as a platform to demonstrate its expertise in the Internet of Things a term used to describe the growing trend of physical objects with networked connectivity. Dell is working with RCR on leveraging big data, analytics and connected devices to give the team a competitive edge on the track. The Internet of Things is starting to explode, and everyone in pro sports is chasing it. For us, it s critical that we have connectivity from the race track to the shop to the car, said Ben Schlosser, RCR chief marketing officer. The two organizations spent the better part of 2015 getting to know each other, learn each other s processes and identify priority projects, he said. Identifying priority projects in the technology space can be a challenge, said Schlosser, pointing to lessons learned from RCR s partnership with Dow Chemical Co. Similar to how Dell is introducing the team to new technology, Dow supplies next-generation materials designed to improve vehicle performance and safety. As with any of these partnerships, people get excited. We have to sort through 80 ideas to find the critical places where we need to focus. While the Dell partnership has centered on engineering and competition, the two organizations may eventually expand the relationship outside the RCR shop, said Schlosser, pointing to wearable technology that monitors heart rates and hydration as an example. We re starting to look at some of those things with our pit crews and drivers. Although the current partnership centers on technology integration, Schlosser does not rule out the possibility of a larger package with marketing rights IEG, LLC. ALL RIGHTS RESERVED. 7

8 Neither of us are rushing to make that the focal point. We want to build out the backbone, and then we ll figure out how to use it from a marketing perspective. Dell has already benefited from the relationship on the new business front. RCR introduced Dell executives to a Fortune 500 sponsor at a race, a meeting that led to conversations about a potential business partnership. The meeting blossomed into a potentially large relationship. That wouldn t have happened if we didn t make the introduction. Outside of NASCAR Dell focuses on the Dell World Golf Championships-Match Play ( Long Drive: Dell Partners With World Golf Championship, 3/9/15). The company uses the sponsorship as a global platform to engage IT and business decision-makers. The World Golf Championships replaces Dell s sponsorship of the Caterham F1 team a partnership that ended following the team s demise in 2013 and Emirates Team New Zealand in the 2013 America s Cup IEG, LLC. ALL RIGHTS RESERVED. 8

9 THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING JANUARY 25, PACKAGING PORTLAND TRAIL BLAZERS FIND SUCCESS WITH LESS IS MORE SPONSORSHIP STRATEGY Pro sports team finds sponsorship success despite lackluster on-court performance. A less is more packaging strategy is paying dividends for the Portland Trail Blazers. The NBA team has posted a roughly 50 percent increase in sponsorship revenue over the past three years while reducing the number of corporate partners from approximately 190 companies in 2013 to 110 in We have reduced the number of partners, but we re producing 20 percent more revenue each year, said Steve Scott, the Portland Trail Blazers vice president of corporate partnerships. The team s 2013 naming rights deal with Moda Health also has played a role in that growth, he added. The crux of the team s sponsorship strategy: provide customized marketing platforms that span multiple assets and provide more impact. Scott points to Daimler Trucks North America as an example. The truck manufacturer partnered with the team in 2014 as a platform to demonstrate involvement in its headquarters market. The two organizations focused on the environment, a topic of interest to the citizens of Portland. The result: 3 s for Trees, a season-long promotion in which Daimler, the Trail Blazers and Friends of Trees plant three trees for each three-point shot made by the Blazers. The Trail Blazers and Daimler have since expanded the program with a dedicated advertising campaign that features head coach Terry Stotts and Daimler president Martin Daum; in-arena activation programs; and a season-ending tree planting ceremony that draws roughly 1,000 Daimler employees. The expanded program allows the team to engage Daimler s top executives as well as its human resources and community relations departments, said Scott IEG, LLC. ALL RIGHTS RESERVED. 9

10 We re hitting different areas of their business to tell their story. That becomes much more impactful than Hey, we ll do a community initiative for you. The partnership with further expand in the season with the Daimler Tree House, a lower-level seating section in the Moda Center. New Trail Blazers sponsors include FanDuel, CarMax and 10 Barrel Brewing IEG, LLC. ALL RIGHTS RESERVED. 10

11 ABOUT IEG AND ESP PROPERTIES IEG has shaped and defined sponsorship over three decades. It is the globally recognized source for industry insights, trends, training and events via sponsorship.com, its annual conference, online publications, trend reports, surveys and webinars. IEG is part of ESP Properties, a WPP company. As a commercial and creative advisor for rightsholders, ESP Properties helps organizations unlock greater value from their audiences and brand partnerships. Our consulting team assesses and advises how to grow the value of rightsholders commercial programs. We do this through a full range of services across data, digital and content development to better understand audiences and create more relevant ways to engage with them. This provides brand partners with new ways to connect with communities of fans and followers, growing the potential value of commercial partnerships. Our sales team provides partnership strategy and sales representation to the world s most active sponsors, within and beyond the WPP network of brand clients. Through WPP we have extensive contacts and deep insights into what it takes to create successful partnerships. INSIGHTS EVALUATION GUIDANCE IEG LEADS THE WAY IN SPONSORSHIP ANALYSIS, INSIGHT, VALUATION & MEASUREMENT WWW. SPONSORSHIP.COM For more information about IEG and the sponsorshp industry, please visit or call IEG, LLC. ALL RIGHTS RESERVED. 11