January 19th, 2009

NBA Cans Ban on Liquor Ads

By John Lombardo and Terry Lefton
Sports Business Journal

NBA owners have reversed a longtime ban on courtside advertising by spirits brands in an effort to drive revenue during the economic downturn.

The league is also crafting policies that could allow teams to offer hard liquor advertising on team Web sites, point-of-sale retail locations or in-arena promotions. Those decisions are expected shortly.

The vote to ease the restrictions was taken last week during the NBA’s sales and marketing meetings in Phoenix. It opens new revenue streams for all 30 teams, who have been prohibited from selling courtside/TV visible hard liquor signage since 1991.

The decision follows Major League Baseball, the NHL and NASCAR in allowing spirits advertising within camera view. The NFL does not allow any hard liquor signage within camera view in their stadiums.

“We are always trying to find ways to drive more revenue and this falls in line with that,” said Chris Granger, senior vice president of team marketing and business operations for the NBA. “The vote was simply to rescind the prohibition of teams selling [hard liquor] courtside ads. We are working on what other opportunities will exist.”

NBA club officials were unclear exactly what the new regulations would allow. However, if they allow direct mixing of NBA team marks with spirits brands, such a move would be unprecedented among team sports, and would likely produce further easing of those same restrictions at other sports properties.

At least 20 out of the NBA’s 30 teams have current deals with hard-liquor sponsors ranging from in-arena club sponsors to simple concourse signage. But the advertising has never appeared on signage during game broadcasts, which is regarded as valuable inventory.

Phoenix Suns President Rick Welts said that easing the liquor restrictions had been discussed around the NBA for at least a decade. The Suns’ US Airways Center includes the Bacardi Rum Bar. Welts described the sponsorship opportunity being created as “between small and medium-sized and said he expected to have a deal signed before season’s end.

“This is an evolving thing — we’ve seen restrictions on casinos loosen over the year, so along those lines, this is just a natural progression,” said Welts, a former NBA chief marketing officer.

Over the past decade, various ad restrictions at sports properties regarding once off-limits categories have been loosened. Casino resorts are a fixture at many big sports venues and on sports telecasts, as are state lotteries. Spirits are a logical next step for the NBA and how much direct association with team marks is allowed will be telling.

It is unclear how much more business this would generate for the NBA at the league level. The most likely immediate result for the NBA is that the league would allow its national broadcast partners to sell spirits ads on some telecasts. TBS’s postgame show during MLB’s divisional series had Diageo’s Captain Morgan rum as presenting sponsor. Sister cable network TNT is one of the NBA’s cable rights holders. It’s also conceivable that the NBA could sign a leaguewide spirits brand sponsor. The NHL is negotiating with a spirits brand for league sponsorship rights, according to Keith Wachtel, NHL senior vice president of corporate sales and marketing.

“I don’t have a big issue with this because I don’t see a lot of difference between hard liquor and beer when it comes to advertising,” said Gary Stevenson, a principal at Wasserman Media Group and the former president of the NBA’s media and marketing group. “The NBA has always exercised good judgment in marketing communication guidelines and I am sure they will do that here.”

When NASCAR opened the sport to spirits marketers four years ago, it brought Diageo’s Crown Royal and Brown-Forman’s Jack Daniel’s brands in as large sponsors. The decision was criticized by the American Medical Association and the Center for Science in the Public Interest, but Crown Royal countered with a NASCAR-themed campaign to promote responsible drinking.

Just Marketing International lobbied for years to get Diageo into NASCAR.

“Actually, even the people at NASCAR didn’t know why they weren’t allowing it, other than the fact it was a long-standing prohibition,” said Just Marketing founder and CEO Zak Brown. “Spirits marketers are very responsible. They are used to being held to a higher level of scrutiny than others. So now, all the other leagues are seeing the opportunity and taking note that these are great marketers who spend a lot of money.”

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