Indianapolis Indians and Profitability and Finances and Sports Business

Indians buck recession, score more sponsor dollars

March 30, 2009
At a time when many professional sports teams are seeing their revenue drop in the wake of a rocky economy, the Indianapolis Indians are driving in runs.

The AAA minor-league baseball team's sponsorship revenue this year has already nearly matched what the franchise brought in all of last year, and could be on its way to record sales, said team officials.

For 2009, the team has scored $1.65 million in sponsorship sales, almost $300,000 ahead of where it was at this time a year ago, and only $50,000 behind last year's total. It's pretty amazing for a team that brought in $1.37 million in sponsorship revenue in 2007, when the economy was much more robust.

"It could be that the faltering economy is having a reverse effect on this franchise," said Richard Sheehan, a University of Notre Dame economist and author of "Keeping Score: The Economics of Big-Time Sports."

"People pinched by this historically difficult economy are now looking for affordable, family-friendly entertainment. A team like the Indians falls dead center on their radar screen. Attendance goes up, and that gets the attention of sponsors looking to maximize their marketing dollars in a challenging economy."

Indeed, that seems to be the case. The Indians drew 606,155 fans to 72 games last year, the team's highest attendance since 2000. During a stretch of 38 games starting June 19, the team averaged more than 10,000 per game, with the season-closing game drawing 15,066.

With no television deal and a relatively small radio pact, sponsorship and ticket revenue is more important for the Indians than to most big-league teams.

Last year, sponsorship revenue made up almost 20 percent of the team's $8.7 million in revenue. The team has long been profitable, and cleared $1.23 million last year.

The Indians are certainly bucking the current trend among their sports brethren.

Nationwide, corporate spending on sports skyrocketed more than 106 percent since 1999, to an estimated $11.4 billion in 2008. But that figure is expected to grow just 1.8 percent this year, the slowest rate in seven years and the second-slowest rate in more than two decades, according to IEG Sponsorship Report, a Chicago-based trade publication for the corporate sponsorship industry.

In a recent survey, IEG found 87 percent of sports sponsors plan to either maintain or decrease spending this year.

"Flat is the new up right now," said William Chipps, IEG senior editor. "Everyone is really just looking to hold their ground. So the Indians' numbers are very impressive."

What makes the sponsorship sales growth more impressive, said Chipps, is that there is no "special buzz" around the team.

"They're not a new team and they're not in a new stadium," he said.

Bigger crowds fuel fire

With a bevy of promotions on tap, static ticket prices and a plan to expand Victory Field's gift shop and other offerings, Indians officials are confident they can increase attendance again this year. If the Indians can show early-season attendance gains, that's another arrow they can put in their quiver to hunt sponsors, Chipps said.

After a single-season attendance peak of more than 655,000 shortly after Victory Field opened in 1996, attendance dipped to 558,901 in 2006.

The turnaround started when team officials began making a serious push to brand Indians baseball as "affordable, family entertainment." It's been a theme forwarded by the team's local ad agency, Hirons & Co., sans glitzy marketing campaigns or the zany game-day antics that often dot the minor-league baseball landscape.

"We think providing affordable, family fun in a safe environment is more important than anything else," said Indians General Manager Cal Burleson.

The team's approach doesn't mean there aren't special promotions. But Burleson said those deals are more about creating value for families than attracting attention just for attention's sake. For instance, Monday games are dollar menu night, when many concession-stand items cost just $1. Tuesdays are two-for-one ticket night. The Indians plan to announce a major sponsor of that night in early April.

Many Wednesday games will be aimed at business outings, with a 1 p.m. start time and free shuttle rides to and from the games. Thursdays, the team offers four box-seat tickets, hot dogs, sodas and Indians caps for a total of $52. Fireworks shows will be offered for all Friday games, special guest appearances by the likes of the San Diego Chicken and Pittsburgh Pirate Parrot will mark Saturday games, and souvenirs will be given away at Sunday games.

"With the Indians, it's always been about value," Burleson said. "Now that times are tough, we know people are looking to stretch their entertainment dollar. So our strategy might have added relevance."

Increasing crowds, coupled with sponsorship packages priced much lower than those of the Indiana Pacers and Indianapolis Colts, has been a powerful sales tool, sports marketers said. AAA baseball franchises generally charge one-third to one-fifth the price of a sponsorship for a National Football League or National Basketball Association team.

"Their price point in the marketplace certainly hasn't hurt," said David Morton, principal of Sunrise Sports Group, a locally based sports marketing consultancy. "The first thing sponsors look at is value and return on investment. Corporate marketing officers must be accountable for their buys now more than ever."

The Indians have always been strong with retail-oriented business, Morton said, but now team events are becoming more attractive for corporate activities.

"The experience at Victory Field for a family or business is universally accepted as positive, and that creates value across platforms whether business-to-business or business-to-consumer," Morton said.

Still scoring

With many companies "hedging their bets," and waiting to make sponsorship commitments later in the year, Burleson thinks the financial scoring for the Indians may not be over.

"There are a few more opportunities this late in the year than in years past," Burleson said. "We're going to continue to work very hard to take advantage of those opportunities."

The Indians are not merely waiting for those opportunities to knock on their door. Recently, the franchise has upgraded its computerized contact management system for current and potential sponsors. The team this year for the first time added a full-time sponsorship sales coordinator to assist its three-person sales staff. And the Indians are planning sponsor events, including an outing to a Chicago Cubs game.

In the last two years, the Indians, an affiliate of the Pittsburgh Pirates through 2012, have inked new sponsorship deals with Toyota, Cardinal Fitness, Coors Brewing Co., Ivy Tech Community College, Eli Lilly and Co. Inc., Flagstar Bank, Vincennes University, Kenny Outdoor Solutions and others.

"I'm at a loss as to how they've made these gains," said IEG's Chipps. "It's not something I've seen in baseball or with other minor-league teams."

Officials for St. Francis Hospital and Health Center, an Indians sponsor, said the reasons they work with the team are simple.

"What better way to enjoy yourself than with a hot dog, popcorn and baseball while sitting in the summer sun?" said Mara Hoberty, St. Francis marketing coordinator. "It's very much a family event, and the sponsorship is very affordable. The organization is very easy to work with, and we feel this is an avenue where we can reach the broadest audience most efficiently."

Source: XMLAr00800.xml
ADVERTISEMENT

Recent Articles by Anthony Schoettle

Comments powered by Disqus