Indianapolis Tennis Championships and Sports Business

Lilly rescues tennis tournament

July 2, 2007

A major sponsorship upgrade by local drugmaker Eli Lilly and Co. and a quartet of new corporate partners has helped the Indianapolis Tennis Championships stem its losses after the departure of its title sponsor.

Thomson Consumer Electronics' RCA brand killed its $1-million-plus annual title sponsorship following the 2006 tournament--ending a 15-year run as the event's marquee sponsor. But sources close to the tournament formerly known as the RCA Championships said Lilly and the new sponsors will bring in $600,000 to $800,000 this year to compensate for the loss of funds.

RCA remains an associate sponsor, but likely contributes less than one-tenth its previous outlay, sports business experts said.

The event's previous $1.6 million in corporate sponsorships helped meet about 46 percent of the event's annual budget, according to tournament figures. Due to the loss of its title sponsor, the tournament's budget shrunk from $3.5 million last year to $2.5 million this year.

Tournament officials had to make across-the-board cuts that affected grounds improvements, food and hospitality services, staffing, and the tournament purse, which is $525,000, $50,000 less than last year.

Eli Lilly--which will use the tournament to promote specific drugs such as Humalog and Cymbalta--signed a three-year deal that tripled its annual commitment to the mid-six-figure range, sources close to the deal said. National City Private Client Group--a division of National City Bank--will pay a low-six-figure sum, while Baker & Daniels, Comcast and Indianapolis Power & Light will add $50,000 to $100,000 each in either cash or in-kind contributions, sources said.

The four new sponsors signed one-year deals.

Tournament officials declined to specify financial terms of the sponsorships.

"Those sponsors were absolutely critical in sustaining the event," tournament Director Kevin Martin said.

More sponsors are needed to continue the event in 2008 and beyond, he said.

"They need to find not just a title sponsor that is going to write a check, but a sponsor that will be active in helping this tournament grow beyond its current structure," said David Morton, a local sports marketer and chairman of the marketing committee for the U.S. Tennis Association's Midwest Section.

Structural changes could include adding a women's or pro-am event, enhancing youth offerings and significantly enhancing the host site, Morton said.

Martin said officials for the professional men's tournament set for July 21-29 will have to dip into its reserves to meet the operations budget this year, but that negotiations for a title sponsor are ongoing, and he hopes to have a deal signed shortly after this year's tournament.

"We're bringing in a number of potential corporate partners, and we think we'll make a favorable impression during this year's tournament," Martin said.

Long-term TV deal pending

Earlier this year, tournament officials signed a one-year deal with NBC to continue airing the semifinals and finals on the national network for the 18th year. Tournament officials want to nail down a long-term title sponsorship deal before signing a multiyear deal with NBC.

Tournament officials buy time from NBC, using revenue from advertising sales to pay for it. RCA has been a major advertiser, not only helping tournament officials recoup the money paid for the broadcast but also allowing those ad sales to become a revenue stream that covered nearly 20 percent of the tournament's budget. Without RCA, that revenue stream is jeopardized.

Martin said a single title sponsor could be signed, or two title sponsors might come aboard: one for the live event at the Indianapolis Tennis Center on IUPUI's campus and the other for the TV broadcast.

According to IEG Sponsorship Report, a Chicago-based trade publication following the sponsorship industry, the sports sponsorship market has been growing about 10 percent annually over the last few years.

"Companies are still spending money on sponsorships to reach consumers, and event sponsorships are still strong," said William Chipps, IEG's senior editor. "Tennis isn't selling like the NFL or NBA, but it's still strong for companies such as financial institutions, health care providers, the luxury automotive sector and others trying to reach a high-end, educated audience."

Last year, the final between Andy Roddick and James Blake drew more than 1.3 million TV households, a 20-percent increase over 2005, according to New York-based Nielsen Media Research.

ATP support

The ATP, which represents men's professional tennis players, has come out in strong support of the local tournament, and promised any future calendar changes would not hurt it. The support comes despite the tournament's reduction of player prize money this year, which is counter to an ATP initiative to have tournaments increase prize money 6 percent to 10 percent.

"The tournament offers a great product to sponsors with its strong player field, excellent hospitality options and its broadcasting agreement that makes it the only event of its level in the United States to be broadcast nationally on network TV," said ATP spokesman Pete Holtermann. "The ATP is committed to assisting the tournament's efforts to secure a title sponsor for 2008 and beyond."

While live attendance has dipped from the tournament's heyday in the early 1990s, when it drew more than 97,000 over nine days, Martin said there is a 15-percent increase in pre-tournament ticket sales this year over last. Ticket sales account for more than 30 percent of the tournament's revenue.

Martin attributes the increase to earlier signings of such star players as Roddick. The tournament last year drew about 75,000 fans.

With all that's on Martin's plate, it's easy to lose sight of long-term issues, such as stadium upgrades.

Tournament officials have secured a contract with IUPUI, which owns the tennis center, to hold the event there through 2008, with a possible extension through 2010. Venue upgrades have been discussed, Martin said.

"The title sponsorship is a key building block to the future of this tournament," he said. "In 2008, we plan to roll out our long-range plan."

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