Another swing at sponsors
As the Rays work to reinvent themselves on the field, they also need to put together a team of corporate partners.
By LOUIS HAU
Published January 29, 2006
The Tampa Bay Devil Rays have been candid that they are in rebuilding mode under new principal owner Stuart Sternberg.
Sternberg and his new executive squadron are attempting to beef up the team's player roster. They've launched a quirky marketing campaign. And they're spending millions to spruce up their oft-maligned ballpark, Tropicana Field.
But behind the scenes, the Rays face another urgent task: Replenishing what has deteriorated into one of the most threadbare sponsorship portfolios in Major League Baseball.
The team's list of sponsors has shrunk significantly since the Rays' inaugural 1998 season - before years of last-place finishes, flagging home attendance and questionable actions by the Rays' front office and then-managing general partner Vince Naimoli sapped the enthusiasm of businesses looking to get their names out in front of fans.
Sponsorships are critical to the Rays' financial success, accounting for about one-quarter of team-generated revenue. The Rays, like most professional sports franchises, won't disclose specific financial data. However, a glance at the Rays' sponsorship roster reveals troubling holes and millions in lost revenue:
- A major bank deal is one of the cornerstones of most teams' sponsorship portfolios. According to internal team records obtained by the St. Petersburg Times, the Rays used to generate about $1.95-million a year from First Union Corp., the predecessor of Wachovia. But that crucial partnership ended acrimoniously in 2001 after Naimoli decided to switch the team's primary loan with First Union for a cheaper one via Major League Baseball. Following the expiration last season of a tiny $50,000-a-year partnership with United Bank (which later changed its name to Synovus Bank), the Rays were left without a bank deal.
- Team records show that the Rays used to draw about $1.6-million a year from Southwest Airlines via a five-year sponsorship deal that expired in 2002. Today, the team doesn't generate a single dollar from an airline sponsorship. Its sole airline pact is with Delta Air Lines, which swaps about $225,000 worth of flights and other services in exchange for half of an outfield sign, season tickets and ads in the Rays' game program and yearbook.
- Under a deal that expired in 2000, the Rays had received about $1.35-million a year from PrimeCo Personal Communications, a wireless carrier that was later merged into Verizon Wireless. Today, the team has only a modest deal with Sprint Nextel.
Among the Rays' other financial backers, there isn't a single grocery chain. There's no automaker. There's no home-improvement retailer.
"Few teams are filled in all of those categories all of the time, they always have holes they're trying to fill," said Shawn Bradley, chief operating officer of the Bonham Group Market Research Co., a Greenwood Village, Colo., sports and entertainment marketing firm. "But if you're missing the majority of the major categories, there's probably some reason for concern. That's a lot of revenue that you're not generating."
According to an April 2005 Forbes magazine report on Major League Baseball team values, the Rays tied for second among all 30 teams in terms of operating income in the previous year.
But that surprisingly robust showing was clearly not due to the revenue the team was raking in, which ranked a lowly 24th. Rather, it was mostly a function of revenue sharing and a league-low payroll.
Ticket sales and broadcast rights are typically the most important sources of revenue for a major league franchise. But sponsorships are also crucial.
The Rays' estimate that sponsors account for about 25 percent of team-generated revenue is a telling figure, given that the franchise has consistently posted among the lowest attendance totals in the majors.
The point man charged with turning things around is Rays vice president and chief sales officer Mark Fernandez. The 42-year-old Tampa native joined the Rays in December from the Arizona Diamondbacks, where he was senior vice president of sales and marketing.
Fernandez's arrival was part of a shakeup of the Rays' front office following Sternberg's ascension to principal owner in October. Among the executives who have left are vice president of marketing and broadcasting John Browne and senior vice president of business operations David Auker.
Fernandez acknowledges that he is inheriting "a pretty shallow" list of sponsors. But he sees promise in the fact that the cupboard used to be full. "If it had never been large, I'd be more concerned," he says.
Banks, wireless carriers, grocery chains and automakers are "obvious areas" where the team will seek to secure deals, Fernandez says. A major airline partnership would be welcome as well, but it isn't a top priority, given the troubled state of that industry.
Among his initial tasks is renewing a multiyear sponsorship agreement with Anheuser-Busch, a critically important pact that expired at the end of last season.
The previous pact had been worth about $1.9-million a year in 1999, according to team records. Given all the games and fans the Rays have lost since that deal had been negotiated, isn't it inevitable that any new pact with the beer giant will be far less lucrative?
"I'm not going to go at it that way," Fernandez says, adding that, "if you do a projection of what the value of being part of this (team) is going to be . . . they'll see maybe spending a little more now is worth it rather than having to spend a lot more later."
The confidence reflected in that sales pitch also highlights a dilemma facing the new Rays ownership group: Should it pursue a large number of long-term deals to quickly repair its tattered sponsorship portfolio? Or should it seek shorter-term agreements, betting that an improved ball club and higher ballpark attendance will yield more lucrative deals later?
Fernandez says the team doesn't have an overarching strategy regarding the length of the new deals it is seeking. "It really is a case-by-case assessment," he says.
Baseball's broad appeal will help the Rays' efforts to generate more sponsorship dollars, Fernandez says.
The sport's demographic reach "skews all over the board," he says. "The rest of sports is so heavily male and so heavily 25-to-54. Baseball is the most white collar. It also has the highest percentage of Hispanics and by far the highest percentage of women."
As a result, he says, "we can typically find a niche that's going to fit" a company's marketing goals.
"I believe this could really become something special," Fernandez says of the rebuilding Rays. "To me, it's sort of a do-over."
Louis Hau can be reached at hau@sptimes.com or 813 226-3404.