Marketing and Indianapolis Tennis Championships and Pro Sports and Sports Business

RCA ends 15-year run as sponsor of tennis tournament

November 20, 2006

Nipper and Chipper have left the tennis center.

After a 15-year run--the longest on the ATP Tour's North American Circuit--Thomson Consumer Electronics' RCA brand is ending its title sponsorship of Indianapolis' professional men's tennis tournament.

"The RCA title sponsorship was a strong, long-lasting relationship that won't be easy to replace for local tennis tournament officials," said Peter Bodo, senior editor of Tennis Magazine.

Maybe so, but Eli Lilly and Co. Inc. has already emerged as a front-runner.

"We have been approached by tournament officials, and we're evaluating our options, which include being involved from a company or a brand perspective," said Edward Sagebiel, Lilly spokesman.

Lilly officials have set no timetable for a decision, but sources close to negotiations said the locally based pharmaceutical company is leaning toward assuming the tournament's title sponsorship. Tournament officials said they'd like to get a title sponsorship deal nailed down by year's end.

RCA Championships Director Kevin Martin said tournament officials are still talking with several possible replacement candidates for RCA. Martin added that, even without a title sponsor, the tournament has enough reserve funds to continue "well beyond 2007."

"We're working toward having a title sponsor for 2007; that's plan A," Martin said. "We're also looking at increasing and diversifying our presenting sponsors. We'd certainly like to preserve our reserves to help fund initiatives to grow the tournament and continue our charitable giving."

Lilly, which is already a presenting sponsor for the local tennis tournament, has recently ramped up its sports marketing and advertising efforts, signing on as title sponsor of a PGA Tour event. Cialis, Lilly's erectile dysfunction drug, has been a focus of much of the company's recent advertising.

"If you would have asked me 10 years ago if Lilly would have interest, I'd have said, 'Absolutely not,'" said Milt Thompson, president of Grand Slam Cos., a locally based sports marketing consultancy. "Now they do much more external advertising pointed directly at the consumer, and this event fits their demographic target."

Lilly certainly has the deep pockets needed to fund the local tournament, which is facing increasing prize demands by the players' association. It also needs money to fund the large donation it makes every year to several local charities, including Riley Hospital for Children.

RCA, which took over title sponsorship of the local tournament from GTE in 1992, ponied up more than $1 million of the just more than $1.6 million annual sponsorship revenue that helped cover the tournament's $3 million budget.

Though the tournament has added corporate hospitality revenue in recent years, sponsorships remain its top moneymaker.

What's in it for me?

Tournament officials have commissioned Indiana University's Kelley School of Business to study the tournament's economic effect on its title sponsor and the community at large.

"A big part of the reason for this economic impact study is to show the benefit to the tournament's title sponsor," said Bruce Jaffee, a professor in IU's School of Economics who also headed a recent study of the Indiana World Skating Academy. "But we insist on complete project and editorial independence."

Jaffee said the study--which won't be complete until after the 2007 tournament--will answer many important questions for the tournament and its new title sponsor.

"If I was a title sponsor, I'd like to know who's coming to the event, and what they think about it, and how they associate it with the title sponsor," Jaffee said. "Those are the types of things we'll be examining, and it's the first time the tournament has been the focus of a study using scientific methodology."

Officials for Thomson, which is headquartered in France and keeps its North American headquarters in Indianapolis, said its departure as title sponsor was made as part of a marketing repositioning.

"This is part of the evolution of our business," said Thomson spokesman David Arland. "I wouldn't want people misreading this as us giving up on the tournament. This move is not a reflection of the tournament. We still feel it's an asset to the city."

RCA started pulling out of its sports sponsorships in the last couple of years, including ending a deal with the NBA's Dallas Mavericks in 2005. Earlier this year, Thomson decided not to extend its naming rights deal on Indianapolis' NFL venue. California-based Lucas Oil Co. instead snapped up the naming rights for the new Indianapolis Colts home, signing a 20-year, $121.5 million deal.

And even though RCA will continue--at least for the short term--in a smaller sponsorship role for the local tennis tournament, its name will all but evaporate from the local sports landscape.

"Our priorities have changed," Arland said. "And our strategies have changed."

As shopping patterns change and Internet commerce develops, Thomson will work to market its brands through its retail partners and other outlets, Arland said, adding that RCA and Thomson's other brands have ceased buying TV and other advertisements.

Thomson officials told local tournament officials several months ago RCA would not be renewing its title sponsorship beyond 2006, Arland said.

See and be seen

In addition to its title sponsorship package, officials for the local tennis tournament also hope to have a contract extension for its national television deal with NBC finalized by year's end, a component seen as essential to luring a new title sponsor.

"TV is what gives the tournament its national appeal," Bodo said. "Minus that, their chances of attracting another title sponsor are greatly reduced."

Martin is bullish on the tournament's future with NBC, but said he and NBC officials would like to have the title-sponsorship deal complete before finalizing the TV package.

"We've had a great 17-year relationship with NBC, and we've had a great dialogue to assure that continues," Martin said. "We're just trying to determine the right structure for the deal, and the new title sponsor could have a great impact on that."

With the national telecast deal and other attributes inherent to the event, Thomson's Arland thinks tournament officials will be able to attract another title sponsor.

RCA was seen as a particularly strong title sponsor because it was actively involved in the tournament, sports marketers said.

"It was a major commitment, and payment for the title sponsorship was just the beginning," Arland said.

Thomson officials shelled out large sums of money to run advertisements during the NBC telecasts of the tournament, outfitted the Indianapolis Tennis Center and surrounding area with high-end RCA televisions and other electronics, constructed displays and put on demonstrations at the tournament, and used it as a platform for new product launches, sports marketers said.

On the rebound

Tournament officials could get a boost from a rebounding sponsorship market. According to Chicago-based IEG Sponsorship Report, spending on sponsorships by North American companies will grow double digits in 2006 for the first time in almost a decade. IEG is projecting 10.6-percent growth in sponsorships over 2005, which saw an 8.9-percent growth over 2004. Sports sponsorships, according to IEG, represent 66 percent of all sponsorship deals.

But companies "have not been lining up for tennis sponsorships since the heyday of the sport" in the 1980s and 1990s, Bodo said.

"Several title sponsors have been disgruntled about lack of exposure," Bodo said. "And exposure is the absolute most critical element to a naming rights deal."

Martin said he has gotten largely positive feedback from potential sponsors about the tournament and desirability of exposure in the local market.

The local tournament's inclusion in the 10-tournament U.S. Open Series should help it remain viable.

"This tournament has a very long history here that is deeply woven into the professional tennis circuit," Grand Slam's Thompson said. "It has adapted to survive many times, and I expect it to continue to do so."

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