Tuesday 25 November 2008

DHL and Tiger Woods; Sport Sponsorships in Turmoil

What happens when when globalization meets sports sponsorship meets economic turn down? The recent announcement of DHL regarding its continuing sponsorship of Major League Baseball in the US (what we call "MLB") is an interesting case in point.

According to a November 18th article in Bloomberg.com ("MLB Holds Talks with DHL over Sponsorships After Exist from U.S."), the discussions between MLB and DHL arose after DHL, a unit of Deutsche Post, announced that it was withdrawing from the U.S. express delivery market. It was reported that DHL fired 14,900 employees and shut down 3/4 of its outlets due to a lack of commercial success in competing with UPS and FedEx in the U.S. market. As a result, DHL will focus only on international deliveries from the U.S.

It appears that DHL sponsors a number of baseball teams--including Cincinnati, Los Angeles, San Francisco, (my beloved) Cleveland Indians, New York (Mets) and Atlanta for various periods through the year 2010. DHL also sponsors an award for excellence for a particular position of baseball, namely the relief pitcher (for you non-U.S. readers, you can find more about that position here). DHL also highlighted baseball players in its commercials, with a thematic tie-in between the players and the ad contents that only a U.S. native could appreciate.

Relief Pitcher: Vermeer style

So we have an interesting marketing question. As DHL withdraws from the U.S. marketplace, what is the value in being associated with a quintessential U.S. sport? DHL did not indicate that it intends to take any current steps to refashion its promotion relationship with MLB, if for no other reason that to avoid the potential damage to its goodwill that might follow from a midstream unilateral change in its sponsorship. Still, one wonders how much bang for its buck DHL can get from promoting overseas delivery services via sponsoring baseball games for the denizens of say Cleveland (my home town, by the way), Cincinnati or St. Louis? Do I detect a possible renegotiation of sponsorship rates?

If Kodak will apparently cease to sponsor the Olympics after the current Beijing Games, it is difficult to imagine how DHL will find much benefit it continuing to sponsor MLB in various forms after the current agreements come to an end. However, views have been expressed that seem to suggest that DHL might be well-advised to refashion its relationship with MLB, but not terminate it in its entirety. We can only wait and see.

Less complicated to understand is a short item that appeared today, also on Bloomberg.com. Entitled "GM, Tiger Woods to End Nine-Year Endorsement", the gist of which is clear from the title. In fact, while Wood's contract was set to run through 2009, the relationship will conclude at year's end. Two quotes from the article say it all:

"We began speaking with Woods earlier this year," Ternes [ a spokesman for GM] said in an interview. "He expressed an interest in growing his own Tiger brand and we have been looking for market savings."

Or, as noted by an advertising executive: "This is something you kind of expected that they had to do."

The Tiger on the Prowl for a New Sponsorship

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