More bad news for the Kings:
Sponsors bounce the Kings
Several end ties to team, threatening key revenue.
By Clint Swett and Dale Kasler -- Bee Staff Writers
Published 2:15 am PST Saturday, November 5, 2005
Story appeared on Page A1 of The Bee
Southwest Airlines, a stalwart sponsor of the Sacramento Kings for more than a decade, is one of at least four business partners who have canceled deals with the team this season, potentially cutting into an important revenue stream.
The departures, occurring as the Kings start their 21st season in Sacramento, coincide with the team's struggles to put together a deal to replace aging Arco Arena.
It also may reflect the business community's difficulties in justifying huge expenditures on sports sponsorships that can run upward of $500,000 a year.
"We work hard and do everything we can to never lose a partner," said John Thomas, president of Maloof Sports and Entertainment, which owns the Kings. "But sometimes people choose to go in a different direction. That's just part of business."
He said Maloof Sports still doesn't know if sponsorship revenue this year will be higher or lower than last season, when it totaled an estimated $18.2 million.
"It's just too early to tell" because negotiations with a number of sponsors are still under way, Thomas said. Among those said to be still negotiating their renewals are the Sacramento Municipal Utility District and Cache Creek Casino. This week, the Kings dropped longtime sponsor Pepsi Bottling Group and are negotiating with Coca-Cola to become Arco Arena's soft-drink provider.
For their money, the team's "strategic alliance partners" typically get their names on arena signs, commercials on Kings radio and television broadcasts, space in the Kings' fan magazine, and other promotional tie-ins.
Sponsorships are particularly vital for a small-market team like the Kings, which are limited in how much they can earn from ticket sales and TV revenue.
Some former sponsors contacted by The Bee said their relationship with the team had become too expensive. Others, like Southwest, said they enjoyed their relationship with the Kings but decided to alter their marketing strategy.
Andrew Zimbalist, a sports economist at Massachusetts' Smith College, said sponsors may be edging away because of the Kings' recent playoff struggles, along with the controversy over construction of a new arena and speculation that the team might leave town.
Another factor: Corporations are becoming more discriminating about who they'll sponsor and how much they'll pay.
"It's been an ongoing trend toward sponsors demanding that sports properties demonstrate a return ... some sort of quantifiable, demonstrable return," said Larry DeGaris, director of the Center for Sports Sponsorship at Virginia's James Madison University.
Andy Allmann, Southwest's senior manager for sports sponsorships, said the airline's decision not to renew its Kings deal had nothing to do with unhappiness with the team. Instead, he said, Southwest was transferring its marketing dollars to pro sports teams in Pittsburgh and Philadelphia, where the airline recently established service.
"We've had a fantastic relationship with the Kings," Allmann said. "They've always been a great company to work with. It wasn't an issue of price. We just felt we needed to use the resources in other parts of our system."
He wouldn't say how much Southwest had paid the Kings for its name and image on arena signs, TV ads and other forms of advertising.
Southwest still has sponsorships with 10 NBA teams, including the Golden State Warriors, plus a separate deal with the league. Solidifying its identification with the NBA, the airline on Thursday unveiled a Boeing 737 jet painted with a flashy basketball motif.
Other sponsors are sticking with the team, including McDonald's, Raley's, The Bee and Wells Fargo.
"It's a great networking tool for us," said Bob Poole, co-owner of Dome Printing, which is entering its fifth season as a sponsor.
The company's deal includes the use of its logo on some Kings' printed material, plus four seats at every game.
Poole said his company uses those seats to entertain business clients, and also invites them to private "chalk talks" put on by Kings coaches. His deal doesn't include signage or ads on Kings broadcasts. He declined to say how much Dome pays the Kings every season.
But others say their Kings sponsorships have become too pricey.
"We didn't feel the value was there any longer," said Bruce Cooper, president of Village RV in Roseville, which decided not to renew its $250,000 sponsorship this season. "There's a lot of ways to brand your company in this town and we didn't feel (a Kings partnership) was the best way."
Tim Burke, owner of Quest Technology, a Sacramento information technology firm, said he dropped his $250,000 annual sponsorship this season when he and the Kings couldn't agree on price and other details.
Quest, however, will continue to lease a luxury box at Arco for about $250,000 a year. "For customer appreciation and employee appreciation, the suite supplies what we need," he said.
It's not only the bigger companies that have canceled deals. Men's clothier Patrick James Inc. dropped its $30,000 annual sponsorship after two years because of cost, said Patrick James Mon Pere Sr., owner of the 16-store chain based in Fresno. "We enjoyed the alliance but candidly ... it was cost-prohibitive."
Such sentiments reflect a nationwide trend of businesses reconsidering their embrace of sports, said DeGaris of James Madison University.
"Sponsors are demanding that sports properties demonstrate a return," he said. "Plus there are a number of corporations that just get sticker shock. ... They just look at the price tag and say, 'Wow, that's a lot of money.'"
Such was the case with GenCorp Inc., which, though not a sponsor, had rented a luxury suite at Arco for 17 years, until this season.
"It was an expensive proposition, and they were raising their rates," said company spokeswoman Linda Cutler, who declined to say what GenCorp had been paying.
One expert contends that a decline in sponsorships isn't necessarily bad news for a team.
"Five to 10 years ago, the idea was to get as many corporate partners on board as possible," said Dennis Howard, a professor at the Warsaw Sports Marketing Center at the University of Oregon. In recent years, he said, many teams have cut back on the number of sponsorships but charge higher fees in exchange for more benefits, such as larger signage.
Still, Howard said, "I have no idea if that's happening with the Kings."