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May 4, 2010
FedEx Proves Overzealous in Protecting Brand
 

NASCAR.FINISHCorporate brands aren't new to enhancing brand image via iconic "celebrity athlete" sponsorships. In fact, many marketing platforms rest on one or more professional athletes. The majority of these sponsorships are likely to be initiated in competitive, one-to-one sporting contests, like NASCAR, Pro Bowling, Tennis, and Golf.

Sponsorship agreements between company and celebrity athletes increase high-end brand exposure for corporate brands in exchange for monetary payment to the athlete. In some instances, the sponsor also supplies equipment, sportswear, and other branded items in addition to a dollar amount. In exchange, the athlete agrees to wear corporate logos, use sports equipment manufactured or provided by their sponsor, appear in TV spots, and attend events held by the sponsor.

Racing provides the best example; the custom-made autos, as well as the driver's apparel, are slathered in logos. While sponsorship levels vary, sponsoring a team for NASCAR costs a corporation at least $10 million dollars, according to a source I found dated in 2004 (corporations aren't required to disclose their sponsorship payments.)

NASCAR.com's six-year-old estimate was that each sponsor sunk between $10 million to $20 million dollars into a racing team (depending on the sponsorship level).

"When UPS announced its primary sponsorship of the Robert Yates No. 88 team driven by Dale Jarrett in November of 2000," NASCAR said, "it was estimated that the deal was in the range of $15 million a year. That would breakdown to around $400,000 per race."

However, the agreement between sponsor and team (or golfer, bowler, etc.) isn't just a matter of forking over $10 million for a logo on the car; it includes corporate identity on uniforms, the commercial trucks haul the cars from race to race, and the rights to use the driver, their image, and the car (in this case) for company branding and marketing endeavors. These are high-dollar brand association agreements, often requiring sponsors to stay continually engaged in promotional efforts, like sweepstakes, promotions, and hosting events.

With sponsors investing millions, for exposure and association, it's easy to understand the media coverage on Tiger Woods devoted to sponsors who -- based on Wood's indiscretions  -- decided to drop their support. The golfer made an estimated $100 million a year from his sponsorship associations, with Nike, the largest, investing 30 percent overall.

The golfer lost the backing of AT&T, Accenture, and Gillette weeks after his personal life went public. Then, PepsiCo's Tiger Focus Gatorade dropped their sponsorship, due to poor sales of the drink, though this was not related to Wood's flagging image. Watchmaker TAG Heuer announced that Wood's image in their ads would be downscaled during his absence from golf.

College sports teams, under strict restrictions imposed by the NCAA to keep athletes from capitalizing on their rising brand names, nonetheless receive financial backing from largeFedEx.Logo corporations. Marcus Jordan, son of perhaps the NBA's greatest star, Michael Jordan, made the news when he refused to wear the University of Central Florida's (UCF) basketball shoes, provided by the adidas brand.

At his father's urging, the younger Jordan stuck with his Nike's, even though adidas provided UCF's uniforms and paid the university $2 million annually for provider rights. While Marcus is not the only collegiate player to request his own footwear, it's the most relevant.  

From professional bowling to the Olympics and World Cup, host organizations, such as the International Olympic Committee and Fédération Internationale de Football Association, have fought to keep "rogue" brands from impinging upon the exclusive rights of sponsorsNike, known for the prolific "Just Do It" tagline that became part of pop-culture, is also one major brand name highly criticized/publicized due to their ambush marketing efforts.

  • 1984 Summer Olympics, Los Angeles: Nike blanketed L.A. with oversize posters of athletes, while also running a spot "I Love L.A.." The official sponsor was Converse; their investment was $4 million.
  • 1992 Summer Olympics, Barcelona: Nike sponsors press conferences with the U.S. basketball team despite Reebok being the official sponsor. During ceremonies, the players covered their Reebok logos.
  • 1996 Summer Olympics, Atlanta: Official sponsor Reebok paid $20 million-plus for sponsorship rights. Nike runs an advertising blitz in time periods surrounding the Games. The commercials feature Olympic athletes. As in L.A., Nike also purchases high-profile billboard spectaculars in Atlanta.
  • 1998 Soccer World Cup: Nike sponsored a number of teams competing in the Cup despite adidas being the official sponsor.
  • 2002 Boston Marathon: Sponsored by adidas, runners are greeted by the Nike swoosh logo as they leave the course. The spray-painted logos commemorate race day, but not the race. 

While opinions differ over whether ambush marketing is a case of being devious or genius, corporate sponsors aggressively protect their paid rights, as does the law. Due to complaints regarding ambush marketing, venues where large sporting events take placer enforce "no-advertising" zones.

Perhaps as fallout from the historic upstaging by ambush marketers, brands holding sponsorships are sensitive of the most minor infractions. Last week, the Professional Golf Association (PGA) moved to ban golfer Lee Westwood from the St. Jude Classic in Memphis, TN. One of Westwood's sponsors, denoted by a small logo on his golf shirts, is UPS; overall, this would not a big deal if it weren't for the fact that Memphis is the global headquarters of FedEx and a major sponsor of the PGA. 

FedEx issued a "do not participate" order to Westwood, who was listed as the No. 4 player on the PGA Tour. St. Jude's tournament director, Phil Cannon, addressed the ban.

“One of his sponsors gives us a little concern," Cannon said. "Brown trucks (referencing the UPS truck on Westwood's sleeve) aren't welcome on site."

The FedEx edict -- and the tournament's support -- did not sit well with Westwood's agent or British news sources. The British press hammered the PGA, and St. Jude's, when they learned Westwood, who hails from England, had been scratched off the invite list.  

While golfers can apply for sponsorship exemptions, there were only eight available and 12 golfers had applied for them. As negative press coverage escalated, Westwood was awarded an exemption.

The damage, however, was already done. The PGA and FedEx, while working to protect the FedEx brand name, are now seen as inflexible and nitpicky. Unfortunately for St. Jude's, they too were dragged through the mud, right alongside their partners.

While FedEx has the right -- and responsibility -- to ensure brand integrity, corporations have every right to protect and ensure their brand receives the benefits they've paid for. There is, however, a distinct difference between a couple of logos on a golfer and initiating a strategic, targeted blitz to appear as a sponsor when the opposite is true.  

It's likely that FedEx has learned an important lesson: Weigh the consequences before you act.


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Jeff Louis: Media Planner, Brand Project Manager, blogger, and aspiring writer. Please leave a comment or get in touch with Jeff on Twitter. As always, thank you for reading!

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