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Telecom Firms Are Eager to Play Sports

Analysts predict more big sponsorship deals as the telephone industry slowly recovers from its downturn.

September 02, 2003|Ben Klayman | Reuters

CHICAGO — Staring out over the lush green grass of the baseball diamond in a stadium emblazoned with his company's name, Jack Rooney is grinning broadly.

The chief executive of U.S. Cellular Corp., the eighth-largest U.S. wireless operator, was not on the field during July's Major League Baseball All-Star Game at U.S. Cellular Field. Nonetheless, he felt as though he had hit a home run with all the free airtime his Chicago-based company received during the nationally televised game.

"We're loving it. Our name recognition has just gone up significantly. I don't think there's anybody out there that doesn't know who we are," he said.

Sports has long attracted telephone companies that see sponsorships as a way to appeal to consumers. Industry experts said such deals would become more attractive as the telecom industry slowly recovers from its slump.

North American public companies will spend an estimated $7.21 billion on sports sponsorships this year, up 11.2% from last year, according to Chicago-based IEG, which tracks such spending. Many big spenders are telecom companies.

"The demographics of avid sports fans fit well with the new-age telecommunications companies, and sports offers integrated and interactive opportunities for telecommunications companies to make contact with consumers," said Dean Bonham, chairman of Bonham Group, a sports and entertainment marketing firm in Denver.

Telecom "is an industry that's been very active, and in the next 18 to 24 months you're going to see it reemerge and become active in the area of sports sponsorships," he said.

Bonham Group negotiated U.S. Cellular's deal -- $68 million over 20 years -- with the Chicago White Sox to rename the former Comiskey Park.

Another wireless company, Nextel Communications Inc., has signed several sports sponsorship deals, but none bigger than the one in June to be the new title sponsor, starting in 2004, for NASCAR's premier racing series, currently known as the Winston Cup series.

NASCAR fan loyalty and heavy corporate participation offer Nextel strong growth opportunities, said Mark Schweitzer, the company's senior vice president of marketing. "If 75 million fans are three times more likely to choose your product versus a competitor, that's a pretty good foundation for business," he said of studies conducted about NASCAR racing fans and their buying habits.

Although the fifth-largest U.S. wireless operator recently signed deals involving thoroughbred horse racing and professional soccer, the NASCAR deal drew the most attention because reports valued it at $70 million to $75 million annually over 10 years.

That level of spending should vault Reston, Va.-based Nextel into the top spot among big telecom spenders in the sports world.

AT&T Corp., Motorola Inc., Verizon Communications Inc. and WorldCom Inc. each spent $30 million to $60 million last year on sponsorships of all kinds, according to IEG. Sports sponsorships made up almost 70% of overall sponsorship spending.

Local phone company BellSouth Corp. is in talks with the hometown Atlanta Falcons football team about some type of sponsorship. However, it is looking only at situations in which it can quantify the effectiveness of the deal. For example, it might want to track how many enhanced caller ID plans it sells during the tailgating before University of Tennessee football games.

"We've really tried to focus and say, 'What's making the cash register ring?' " BellSouth spokesman Jeff Battcher said.

However, some analysts are not sold that sports sponsorship deals are worth the cost.

"I think the value is questionable ... ," said Bill Benton, an analyst with William Blair & Co.

"My honest opinion is that a majority of the time they like to see their name in lights."

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