Friday, December 31, 2010

Foreign-Owned League

Watching a typical NBA television broadcast, one realizes that almost all of the league's corporate sponsors are based outside the United States:

  • T-Mobile, which is one of the top four mobile phone service providers in the United States, is owned by Deutsche Telekom of Germany. T-Mobile's ads featuring Charles Barkley and Dwyane Wade are ubiquitous during nearly every national NBA broadcast.

  • Kia - This Korean car company became an NBA sponsor in 2008 and bought the title of "official NBA auto sponsor" in 2009, supplanting Japan's Toyota in that role. Kia then extended the relationship in 2010. Kia attaches its name to ESPN's NBA pregame show, various individual awards, and various elements of the All-Star weekend.

  • Hyundai is another Korean automaker, known in hoops circles for attaching its name to TNT's "Inside the NBA".

  • Haier is a Chinese home appliances manufacturer that has become a "global strategic partner" of the NBA, whatever that means. Their television advertisements use the homophony between their company name and the English word "higher", much like ads for Chivas Regal scotch play on the resemblance to the word "chivalry". This is semantics for eleven-year-olds.

  • BBVA, one of Spain's largest banks, last fall signed an agreement to be the "Official Bank of the NBA". During and after the 2008 financial crisis, BBVA managed to buy up several troubled American banks and now owns over 700 retail bank branches in the US, all under the "BBVA Compass" brand name.

  • All of these foreign-based firms sell products to US consumers, of course, which makes the NBA, a touchstone of youth culture, an attractive marketing vehicle. While other American pro sports have signed up American companies as sponsors (a typical NFL broadcast features Brett Favre shilling for Sears, overgrown men wolfing Campbell's Chunky Soup ladled by Donovan McNabb's mother, and a few Bud Light ads), the NBA has become beholden to international patrons. This certainly fits with Commissioner David Stern's long-marching goal of bringing the league to hundreds of millions in Europe and Asia.

    Things were not always thus. Reading David Halberstam's The Breaks of the Game, I recently learned that brands like Ford and Chevrolet were inveterate sponsors of the Association back in the 1970s. Perhaps large American consumer-focused companies no longer see NBA fans as an attractive market; are hoops-heads too poor, too pigmented, or possibly too young? (I thought a maxim of marketing is to sign up young customers while they are still forming their habits and loyalties.) Alternatively, foreign-based corporations, perhaps applying different marketing strategies due to their previous nonexistence in this country, may simply value those fans more. It could even be that these international entities can juice their reputation in their home countries by associating with the NBA.

    These days, it seems that all the action in the US economy is in the digital space. By building a cool website like a Netflix, Twitter, or Groupon, an entrepreneur can scale his customer base very quickly, build a following in the zeitgeist, and attract billions in capital. Lions of the American "old economy" no longer have a need for the NBA. When will we see the Google Halftime Show or the Pandora HORSE Challenge?

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