Feb 4, 2011

Why Did Farmers Commit $700 Million To An NFL Team That Doesn’t Exist?

The new NFL logo went into use at the 2008 draft.
Image via Wikipedi
I really hope that LA gets a football team...even if it seems like a far off notion today, if enough money is thrown at it eventually something will happen.   $700 million seems like a good place to start!
*    *    *    *    *    *    *    *    *    *    *    *    *    *    *    *    *    *    This week Farmers Insurance inked a record-breaking naming rights deal for a nonexistent Los Angeles stadium that might be home to a nonexistent Los Angeles NFL team. To Kevin Kelso, Farmer’s chief marketing officer, the $700 million, 30 year branding deal with billionaire Phil Anschutz’s AEG makes perfect sense.
Today, Kelso let me peek inside the Farmer’s marketing playbook. Here’s the thinking: Last year, 18 of the 20 most watched TV programs were NFL broadcasts. Even better, people tended to watch the games in real time. For Kelso it’s simple: “You go where the people are.”

L.A. hasn’t had an NFL team since the Rams ran to St. Louis after the 1994 season. If Anschutz (check out Chris Helman’s great profile) can lure an NFL team from another city (Minnesota and San Diego are rumored to be likely candidates) Farmers will have its name stamped on a piece of America’s most lucrative sport in America’s second largest market. Farmers is already California’s biggest auto insurer, the NFL deal would help expand its national brand.
More importantly, Kelso thinks the sponsorship is a good fit. Farmers was founded in L.A. and is headquartered 6 miles away from the proposed stadium site in downtown L.A. (plus an auto insurer sponsor like Farmers makes sense in car-clogged L.A.). If the deal goes down, Farmers could be seen as partners in a movement that brought an NFL team, thousands of jobs and revitalization to downtown Los Angeles.
This leads us to the timing of the deal. Kelso made the investment early to add financial kindling to AEG’s $1 billion stadium proposal. He says since the project will use no public money “private industry has to step up to make this happen.”
Greg Luckman, chief of GroupM brand consultants who advised Farmers (and consulted for CitiXerox and Volkswagen on their sports deals) says Farmers is joining the effort at its earliest stages to show it’s not simply slapping a name on a building, but an active contributor in the fight for an L.A. football team.
But $700 million? Kelso says it sounds like a huge number, but not in the context of a 30 year deal. “One of our competitors spends more than that on its annual marketing budget.”
And right now, the commitment is more like a call option. If the stadium isn’t built, Farmers keeps its cash. This will be interesting to watch, once the Super Bowl is done and the specter of an NFL lockout lurks closer.

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