Mods, feel free to move if this is inappropriate, but I found this article pretty interesting from a league-wide perspective. Some good info on here re: sponsorships, branding, etc. http://www.sportsbusinessjournal.com/article/65226
It was awesome and I can't wait to attend this weekend for the match vs. the Fire. For all the cons of having an energy drink company as an owner, the pros severely outweigh them. And, it seems that the owners are interested in making this a real soccer club, albeit named after another company.
So, what exactly is the Red Bull way? 1) They don't advertise. 2) They discourage sponsorships. 3) They spent money on a big production that they didn't follow up on and had no long-run effect. 4) They spent a lot of money to improve the stadium. The stadium is great, and I give them credit for that, but what is so great or insightful about the other stuff? Red Bull as a business is all about hype over substance. This article is just another example of that.
If you remember the Ives articles from about a year into the RB regime reporting huge, 8-figure losses for their early tenure, the setting aside of sponsorships explains a lot. (Including, probably, why those figures were leaked to Ives in the first place. Lots of applecarts must have been upset by these guys when they came on the scene.) It was also amusing the way they foster an image of 'nonconformity' through a strict dress code.
Yeah, it makes sense not to allow other drink sponsors, but an official paint partner or something can't hurt. I doubt RB is gonna get into that business anytime soon.
I think they want 100% of the advertising focus to be on Red Bull itself. I guess that makes sense. The only sponsorship partner they've announced so far is Prudential insurance, which has its headquarters across the river in Newark, NJ.
I'm sure this will endear me further to the RB haters, bit I like the fact that I am not being bombarded by 30 different sponsors every time I turn my head, like at Citi Field, for example, which is just a cluster***k of commerce. FWIW I think Panasonic is also featured here and there in RBA, but for the most part it's Red Bull and Red Bull only.
League Sponsors One takeaway from this piece is that at every opportunity to dilute their brand and goose the bottom line, Red Bull instead doubled down. Who knows if the strategy will pay off, but it's bold, especially in the context of American soccer.
If you saw the pregame on MSG, Franz Beckenbauer was in attendance to open the stadium and he told an interesting story about his friendship with Dietrich Mateschitz and Red Bull's decision to invest in MLS. According to Beckenbauer, Mateschitz asked him about the league, which Beckenbauer thought promising. Beckenbauer urged Mateschitz to invest in the New York market, and to do it in a first class way. During the interview, he said he told him "we used to play in front of as many as 70,000 people. They're still out there. They just have to reach them." It was interesting to see Beckenbauer still is passionate about the development of club soccer in the United States. If the opportunity ever presents itself, it would be wonderful to get him more involved with MLS.
Yeah, if you look at almost all Red Bull sports teams (even F1 which is ridiculously expensive), no other sponsors are shown. There really is no problem with that, it's their money.
This really sticks out in my mind, when I was at the stadium last week I looked around and thought about how different it would have been if we had a stage and partial roof.
RedBull paid for that for you. Don't ask questions, yo. The funniest part about that was the people who hated RB because of the re-branding (which is fair enough), who attacked them for being stupid by getting rid of the sponsorships and losing TOO much money on RBNY. It may be a wacky plan, but they were doing it on purpose. There was some on-point whinging about losing the Wendy's/McDonald's deal that got you discounted Metro tickets, but it was lost amongst the pretty funny hand-wringing about us losing other stuff like our official hospital sponsorship, as if anyone went to soccer games because of the affiliation with Hackensack University Medical Center, etc. (I do wish MetroPCS had the iPhone though, sniff). NickSack & John Guppy were the masters of the sponsorship-for-tickets-cum-empty-seats business, but we had as many empty butts in seats with the RB way and the non-RB way; losing was always the biggest problem. RB just made the hating easier. You see that a lot though. Visit any high school, all of the nonconformist kids hang out at the same table in the cafeteria, all dressed alike.
And don't forget, there would also be a lot more club seats and luxury boxes. Most of which would probably be empty.
The interesting thing about owning a team in stadium is that you can calculate revenue differently. Take the past week, there were hundreds of articles about the new york red bulls playing in the new red bull arena. That's a huge amount of advertising. When ESPN talks about how amazing the new red bull stadium is....there's another dose of red bull name entering the home. I wonder at what point, internally, it's considered a profit? Is paying Chelsea a few million bucks worth it if it means all the papers in London talk about Chelsea playing a friendly against the new york red bulls?
You make a great point. Look at it this way. Home Depot is paying AEG about $7 million a year (in cash and in kind) for naming rights to the HDC. I believe Herbalife is reportedly paying between $4 and $5 million for the shirt sponsorship. If those deals are extended, at the end of 20 years they will have paid AEG about $240 million for that advertising, at which time they shake hands and walk away. Contrast that with what Red Bull has done. If the naming rights and shirt deal are worth a comparable amount in New York, at the end of 20 years, for that same $240 million, Red Bull will have the benefit of the advertising plus that terrific stadium and the team itself -- assets they can keep or sell long after the advertising deal is done. So, whether you look at it as getting the advertising for free or the team and the stadium for free, Red Bull will have done very well here at the end of 20 years. Yes, it comes at a cost. You have a corporate name attached to the team, which many people don't like, and more limitations on how that name and image is used. But this kind of vertical integration -- sponsor owning and financing team and stadium in return for naming rights -- is about the only way building and privately financing a stadium like RB Arena makes any economic sense in MLS. It will be interesting to see if the stadium makes fans feel any better about the team name, or whether MLS would ever do this again. For example, if VW approached MLS today and said they would buy DC United and build a copy of Red Bull Arena in the District at their expense -- in exchange for renaming the team VW United and the stadium VW Stadium for at least the next 20 years -- would MLS and DC United fans take that deal? Something to think about.
This is one of those solutions that would really not be any better than DC United moving imo. On the other hand I'm sure that many wouldn't agree with me. MLS would add another metropolitan area with a split soccer fandom just like the NYC area.