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Tuesday, August 27, 2002

One strike, and you're out - of $40 million



By Michael McCarthy
USA TODAY

[img]
Green Bay Packers fans don't seem to mind if baseball players go on strike as they wave their signs at an exhibition game between the Green Bay Packers and Cleveland Browns Monday.
(AP photo)
| ZOOM |
        NEW YORK — Major League Baseball could lose more than $40 million in sponsorship bucks if a strike wipes out the rest of the 2002 season.

        And if the fans don't return to the grand old game, look for many sponsors to head for the exit gates in 2003.

        That's the word from sports marketing experts as contract talks between players and owners head for Friday's strike deadline.

        Baseball successfully boosted sponsorship spending to $170 million this year, up from $60 million in 1998. But MLB would lose roughly 25 percent of the sponsorship tab if a strike ends the 2002 regular season and cancels the playoffs and World Series, predicts sports consultant Dean Bonham of the Bonham Group in Denver.

        “Everything starts and ends with the fans. As they go, the corporate sponsors go,” says Bonham.

        The picture is even grimmer, he says, if a strike lasts into the 2003 season. In that case, MLB could lose 50-75 percent of its sponsorship dollars.

        Most, if not all, of MLB's 18 corporate partners for the 2002 season have written strike clauses into their contracts, says Jim Andrews, editor of the “IEG Sponsorship Report. “A work stoppage could force MLB to fork over “make-goods” to corporate partners in the form of cash refunds or credits, he says. “The sponsors will say, 'You took away the most important part of the season.' “

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        Or MLB might have to extend deals into future years, says former CBS Sports president Neal Pilson. “Most leagues try very hard not to give money back,” he says.

        MLB won't discuss how much sponsorship money it could lose. “Any hypothetical questions about the ramifications of a player strike, which is clearly the worst-case scenario, are premature at this time,” says an MLB statement.

        But sponsors are taking a hard line:

        • Pepsi-Cola, in the first year of an estimated $50 million, five-year deal, has written safeguards into its contract. “We are protected financially in the event of work stoppages,” says John Galloway, director of sports marketing for Pepsi-Cola North America. “We're financially protected if the brand of baseball is damaged, as well.”

        For the time being, Pepsi's current TV commercial starring sluggers Ken Griffey Jr. and Sammy Sosa will stay on the air, says Galloway.

        • Nextel is drawing up “contingency plans” for is “Play of the Week” sweepstakes, which rewards winners with tickets to a World Series that may not be played. “If there is a strike, we'll have to make adjustments. And we will,” says spokeswoman Audrey Schaefer.

        • Gillette, an MLB sponsor since 1939, will shift its media spending into other sports and TV programming in the event of a strike, according to spokesman Eric Kraus.

        • MasterCard is considering whether to announce the winners of its “Memorable Moments” promotion during a strike. Fans are voting on baseball's top events. IEG's Andrews thinks MasterCard should wait. “The comedians will have a field day. Who wants to hear about baseball's memorable moments when there's no World Series?”

        MLB sponsors are not the only ones arming themselves with a big stick. Baseball broadcaster Fox, now in the second year of a $2.5 billion, six-year deal, could seek hundreds of millions in rebates.

       



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