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«Sponsorship Program Protection Strategies for Special Sport Events: Are Event Organizers Outmaneuvering Ambush Marketers? Steve McKelvey University ...»

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Journal of Sport Management, 2008, 22, 550-586

© 2008 Human Kinetics, Inc.

Sponsorship Program Protection

Strategies for Special Sport Events:

Are Event Organizers Outmaneuvering

Ambush Marketers?

Steve McKelvey

University of Massachusetts, Amherst

John Grady

University of South Carolina

Companies invest millions of dollars to become “official sponsors” of major global

sporting events. The tremendous publicity and consumer audiences generated by such events provide an attractive marketing opportunity for companies other than the event’s official sponsors who seek to associate themselves in the minds of the public with the goodwill and popularity of these events. This activity, known as ambush marketing, poses significant legal and business challenges for sport event organizers seeking to protect both the financial investment of official sponsors and the integrity of their sponsorship programs. With rising sponsorship stakes, event organizers have become increasingly proactive in their efforts to combat ambush marketing. This article examines the implementation and effectiveness of a variety of evolving sponsorship program protection strategies including: pre-event education and public relations initiatives; on-site policing tactics; contractual language in athlete participation and spectator ticket agreements; and the enactment and enforcement of special trademark protection legislation.

The 1996 Olympic Games in Atlanta will long be remembered for both the good and the bad: Muhammad Ali’s inspiring torch lighting at the Opening Ceremonies, the United States’ finish as the world’s top medal winners, the horrific Centennial Olympic Park bombing, and the marketing activities that made it “the most hyped and over-commercialized [Games] as well” (Brown & Morrison, 2000). Among corporate sport marketers, the company that will be forever linked to the Atlanta

Olympic Games is Nike. As one commentator noted:

Nike’s ambush of the 1996 Atlanta Olympics is still seen as the ambush of all ambushes. Saving the US$50 million that an official sponsorship would have McKelvey is with the Isenberg School of Management at the University of Massachusetts, Amherst.

Grady is with the Department of Sport and Entertainment Management, University of South Carolina.

Sponsorship Program Protection Strategies cost, Nike plastered the city with billboards, handed out swoosh banners to wave at the competitions and erected an enormous Nike center overlooking the stadium. The tactics devastated the International Olympic Committee’s credibility and spooked other organizations such as FIFA into adopting more assertive anti-ambushing strategies. (Sauer, 2002) Nike’s omnipresence at the Atlanta Olympic Games served as an alarming “wake-up call” for organizers of major sporting events to not only acknowledge the potential negative impact of ambush marketers, but also to adopt more vigilant sponsorship program protection strategies that have evolved with each successive major sporting event.

Sponsorship has been defined as “a cash and/or in-kind fee paid to a property (typically a sports, entertainment, nonprofit event or organization) in return for access to the exploitable commercial potential associated with the property” (International Event Group, 2000). The property and sponsor enter into a contract that involves a commercial transaction to transfer defined rights, either exclusively or jointly, to a purchaser. As in any contract, the vendor’s [property’s] ownership of the rights, the freedom to transfer these rights, and the ability to affect the transfer may all be at issue. In a typical sponsorship package, the sponsor may buy various rights including event title or category rights (e.g., official soft drink), signage rights, rights to specific designated emblems and logos, rights to use the word “official,” rights to specific event advertising, promotions, and publication inclusions, and certain first-option rights. The specific rights vary according to the size and nature of the event and the specifics of the contract. In major global events, the rights issue is often complex. (Meenaghan, 1996, p. 105) Official sponsors invest millions of dollars to affiliate themselves with major sporting events. For instance, official sponsors of the 2006 FIFA World Cup invested an estimated total of $675 million in sponsorship fees and activation costs (International Event Group, 2006). For the 4-year Olympiad encompassing the 2006 Olympic Games in Turin and the 2008 Summer Games in Beijing, 11 major corporations have invested on average $80 million to secure the top-tier sponsorship rights (Wharton, 2006). Official sponsors of United States-based annual mega-events such as the Super Bowl, World Series, and NCAA Men’s Final Four, pay millions of dollars for the rights to associate themselves with these premier events.

Given the significant financial investments of official sponsors, as well as the tremendous publicity and consumer audiences generated by major sporting events, it has become increasingly important for event organizers to adopt proactive sponsorship program protection strategies for the following reasons: “(1) to protect the integrity and financial viability of the event; (2) to build the event ‘brand’ and goodwill in it for the future; and (3) to fulfill contractual obligations to sponsors” (Ambush marketing, 2003). Furthermore, one research study, designed to assess the opinions of senior sport marketing executives toward the practice of ambush marketing, revealed that if event organizers consistently fail to protect their investment as official sponsors, official sponsors may ultimately choose not to affiliate with major sporting events or to demand a decrease in fees for sponsorship rights (McKelvey & Gladden, 2006).

Over the past decade, properties have devised, with varying degrees of success, multiple strategies designed to close the many “loopholes” that have been exploited 552 McKelvey and Grady by nonsponsors. However, the complexity of the rights issues within sponsorship contracts and the legal gray areas of ambush marketing, coupled with the creativity and ingenuity of ambush marketers, make it virtually impossible for event organizers to insure an ambush-marketing-free event. For instance, in conjunction with the 2006 Major League Baseball All-Star Game in Pittsburgh, Pennsylvania-based Consol Energy attached two 100-foot lighted signs on a barge traveling up and down Pittsburgh’s rivers; the signs carried the message “This coal creates enough energy to cook every hot dog ever served at baseball’s big game” (Lindeman & Sosek, 2006). Before the 2006 Super Bowl, nonsponsors Miller Brewing, Scott Bath Tissues, and ConAgra Foods were among the many companies that used former NFL stars in consumer promotions designed to trade off the event’s popularity and goodwill (Petricca, 2006). Although the 2006 Olympic Winter Games in Turin, Italy, were widely touted for effectively limiting ambush marketing, nonsponsor Target negotiated a deal with Trenitalia, the Italian train system, to have its red-and-white bullseye logo, along with pictures of models in red and white winter ice-skating costumes and luge suits, prominently featured on its trains (called “Target Express” trains) taking spectators to various events (Hiskey, 2006). Target employees greeted spectators as they boarded trains and distributed logoed noisemakers and large red and white foam fingers (Hiskey, 2006). By teaming with Trenitalia, “Target skirted the [Italian] federal law... that makes it a crime to affiliate a nonsponsor with the Olympics” (Hiskey, 2006).

A myriad other examples could be provided to illustrate the practical and legal challenges faced by event organizers seeking to create an “ambush-proof” event. However, when utilizing the “wake up” call of 1996 Olympic Games as a benchmark, event organizers have arguably made strides in the area of sponsorship program protection. Following an overview of the practice of ambush marketing and its legal parameters, this article examines four over-arching sponsorship program protection strategies increasingly used by event organizers: (1) preevent education and public relations initiatives; (2) on-site policing, which ranges from confiscation of nonsponsor product and signage to the creation of “clean zones”; (3) the use of contractual language in athlete participation agreements and on spectators’ tickets;

and (4) the enactment and enforcement of special trademark protection legislation (the term “event organizers” is used throughout this article to refer generally to the governing bodies and leagues that, in essence, own and manage the special sport event discussed herein). The current article builds upon prior research examining the effectiveness of ambush marketing prevention measures (Curthoys & Kendall, 2001; Hartland & Skinner, 2005; McAuley & Sutton, 1999; McKelvey & Grady, 2004). Additional research, review of internal documents provided by event organizers, and findings from the 2006 FIFA World Cup, are used to illuminate these sponsorship program protection strategies and provide “best practices” guidance for event organizers of future special sport events.

Overview of Ambush Marketing The review of the academic literature illustrates the challenges in conceptualizing “ambush marketing,” the term that was coined during the 1984 Los Angeles Olympic Games to describe the marketing activities of nonsponsors such as Kodak, which Sponsorship Program Protection Strategies used a variety of tactics to “ambush” official sponsor Fuji (Sandler & Shani, 1989).

The earliest definitions of ambush marketing were pejorative, implying unethical business conduct laden with the evil intent (thus supporting the perspective of event organizers and official sponsors). For instance, the term has been defined as “a company’s intentional efforts to weaken—or ambush—its competitor’s ‘official sponsorship.’ It does this by engaging in promotions and advertising that trade off the event or property’s goodwill and reputation, and that seek to confuse the buying public as to which companies really hold official sponsorship rights” (McKelvey, 1994a, p. 20). Townley, Harrington, and Couchman (1998) stressed the concept of “unauthorized association” in defining ambush marketing, stating that the practice consists in the sports context of the unauthorized association by businesses of their names, brands, products or services with a sports event or competition through any one of a wide range of marketing activities; unauthorized in the sense that the controller of the commercial rights in such events, usually the relevant governing body, has neither sanctioned nor licensed the association, either itself or through commercial agents. (p. 1) In this context, ambush marketing has been viewed as not only those activities that are aimed specifically at undermining a competitor’s official sponsorship of an event, but also those activities that seek to associate a nonsponsor with the sporting event itself. Additional literature on ambush marketing has suggested that, beyond this more pejorative definition, ambush marketing can be more broadly defined to describe “a whole variety of wholly legitimate and morally correct methods of intruding upon public consciousness surrounding an event” (Meenaghan, 1994, p. 79).

More recent scholarly research on the topic of ambush marketing has suggested that the term “ambush marketing” is often used inappropriately (Crow & Hoek, 2003; Hoek & Gendall, 2002). For instance, the term “ambush marketing” presents numerous ambiguities: If a nonsponsor’s activity is legal, should it still be deemed to be ambush marketing? If there is no purposeful intent to confuse consumers as to a nonsponsor’s association with an event, is it still ambush marketing? If the nonsponsor is legitimately sponsoring a team within a league, well within the league’s sponsorship guidelines, is it still ambush marketing? Is it ambush marketing only because the event organizer says it is? Furthermore, researchers have suggested that it is unrealistic to expect nonsponsors to make decisions regarding sponsorship differently than they would with regard to other promotional techniques designed to compete in the marketplace (Shani & Sandler, 1998). This conceptual framework serves to acknowledge the practical, ethical and legal ambiguities (often referred to as the “grey areas”) that surround the concept of ambush marketing.

While the practice of ambush marketing has been widely debated, the answer as to whether it is an “immoral or imaginative practice... may well lie in the eye of the beholder” (Meenaghan, 1994, p. 85). For instance, event organizers and their official sponsors typically denounce as ambush marketing any activity by a nonsponsor that wittingly or unwittingly intrudes upon the property’s or official sponsors’ rights, thus potentially detracting from the sponsor’s “exclusive” association with the sport property. Utilizing this definition, for instance, even a company that 554 McKelvey and Grady purchases advertising within the telecast of a sport special event could be construed by the event organizer and official sponsor as an ambush marketer regardless of that company’s business motives, ethical perspective, or legal rights. Highlighting, on the other hand, the ambiguities surrounding the concept of ambush marketing, such activity engaged in by nonsponsors is typically perceived and defended as nothing more than a part of the “normal ‘cut and thrust’ of business activity based on a strong economic justification” (Meenaghan, 1994, p. 85).

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