11/13/96 - 12:10 PM ET - Click reload often for latest version
Let's say you own a major league team. You learn that the game's new marketing chief, Greg Murphy, has put together a sponsorship deal with Nike, and potentially Reebok and others, that could be worth at least $30 million annually to you and your colleagues, including the Arizona Diamondbacks and the Tampa Bay Devil Rays.
Naturally, you figure your share in the pie is worth $1 million. Not bad for agreeing to have your team wear a certain logo on its uniform and for giving up some stadium signage and local television and radio advertising. Not bad, you figure, since there are college basketball coaches like Duke's Mike Krzyzewski who get $1 million a year from Nike largely because their team wears the swoosh.
Then you learn that more than 60% of this money does not come to you, but can be used by the sponsors to purchase advertising anywhere. Nike, for instance, could run a Ken Griffey Jr. ad on The Late Show with David Letterman and the money for the ad goes to CBS, which is not even an MLB broadcast partner.
Suddenly that $30 million is a lot less and your share is worth $300,000. If you're a baseball owner narrowly focused on cash flow, you're upset. But if you're Murphy, you're hoping your bosses will look at the bigger picture and realize that by aligning with guerrilla marketers like Nike, they'll reap the rewards of a bigger market in the long run.
''We need to strike strategic alliances with world-class marketers,'' Murphy said last week. ''For Major League Baseball to go forward, we have to reconnect fans to the game, particularly younger fans.''
Rather than strike up a deal with Nike, owners looked, as usual, at the bottom line and quashed Murphy's deal with Nike. They went on a few days later to vote down the proposed labor agreement last week, thus ensuring Murphy's job will remain difficult.
''It's a shame the clubs can't see the value of promotion and what companies like Nike have done to promote the NBA and NFL,'' Nike spokesman Jim Small said. ''We're disappointed that baseball still can't seem to get its house in order.''
According to the proposal, the teams would be assigned to Nike and other companies much as the NFL divides up its clubs among Nike, Reebok, Starter and Logo. Uniforms and jackets would display the corporate logos, with players retaining the rights to cut their own deals for shoes and equipment. Small said the amount Nike would spend on advertising its baseball clients under the agreement would be greater than it would without the deal.
But the owners balked at Nike's so-called ''ambush'' provision, which prohibits clubs from cutting deals with its competitors. If the Florida Marlins, for instance, were a designated Nike club, they could not display Reebok advertising in Pro Player Stadium.
Nike pressed for a decision because it needed enough lead time to manufacture licensed merchandise for spring training. Howard Smith, group director for sports marketing for Reebok, said his company had been conducting talks with MLB about a similar arrangement, but had not issued a deadline. ''We have no reason to believe we should be anything but optimistic at this point,'' Smith said.
In effect, the owners sent Murphy back to the table. But unlike Randy Levine, who negotiated the failed labor deal for owners and is expected to resign, Murphy apparently has not reached his breaking point, even as sponsors shrink from a game again in the midst of unrest.
''There is very substantial enthusiasm for baseball,'' Murphy said. ''It is viewed as a sleeping giant. This is a buy stock and sponsors clearly recognize that. They want to invest in Major League Baseball, but they want an environment to enjoy the right financial returns.''
That environment will come only with a labor agreement and a realization on the part of the owners that financial growth cannot be measured immediately. Maybe Murphy could have gotten more out of Nike, but it's not as if baseball's a hot commodity. Given the events of the last 25 months, the owners should feel fortunate such opportunities exist and rush to embrace them.
Too bad baseball still operates under Murphy's Law.
By Pete Williams, Baseball Weekly
