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'Below Average' Is Plenty Good For Carolina Panthers

Business Journals, April 21, 2015

By Erik Spanberg

Sports consultant IEG Research ranks the Carolina Panthers among 14 teams below the league average in sponsorship revenue in an annual analysis released this month. The ranking says more about the size of Charlotte, among the smallest of the 31 NFL cities, than the interest of companies in advertising with the NFL team.

Overall, the NFL and its teams hauled in $1.15 billion in sponsor money in 2014, according to IEG. That represents an increase of 7.8 percent over the previous year. IEG put the 32 teams (New York has both the Jets and Giants) into one of three categories: above average, average and below average. Each category is based on financial sales ranges, but IEG doesn’t share those figures publicly, IEG senior editor William Chipps told me.

The Panthers and two other NFC South teams, Atlanta and Tampa Bay, are below average. Chipps told me Carolina is in that category because of its small home market. The fourth NFC South franchise, New Orleans, was in the average category. In 2013, all four NFC South clubs were in classified as below average in sponsor sales by IEG. Atlanta seems likely to make a jump in 2017 when it opens a new stadium. The Falcons also should benefit from playing in by far the largest metro area of any of the NFC South teams.

All eight of the above-average teams in the IEG analysis play in large cities or regions. Most have much more history — and a history of winning. Two are from football-crazed Texas (Cowboys and Texans), two are from the nation’s largest metro area (Jets and Giants) and the others include a team with a new stadium (49ers), another Super Bowl win (Patriots) and an avid fan base in a large city (Redskins and Eagles).

Dennis Howard, professor emeritus of marketing at the University of Oregon’s Warsaw Sports Marketing Center, told me sponsorship sales must be viewed in context. Everyone in the NFL is doing well because of the league’s collective $10 billion in annual revenue and its status as the nation’s most popular sport. (How popular? ESPN has a two-hour prime-time special tonight to cover the announcement of the 2015 schedule. That’s right, calendars — live!)

Each NFL franchise receives an equal share of the league’s multibillion-dollar national TV contracts as well as other revenue. In 2013, the Panthers, like every other NFL team, received $131 million in league TV money, according to sister publication SportsBusiness Journal. SBJ expects that number to reach $181 million by next year.

Given those figures, local sponsorship money is not nearly as important as the leaguewide revenue. Even so, the Panthers are tracking in a similar direction, with corporate sales growing by 7 percent to 8 percent last year, according to someone with knowledge of the team’s sales.

Major corporate backers of the Panthers include Bank of America (NYSE: BAC), Carolinas HealthCare System, Pepsi, MillerCoors and Anheuser-Busch InBev. BofA is the largest sponsor, with a deal that includes stadium naming rights. The Charlotte-based bank signed a 20-year, $140 million sponsorship with the Panthers in 2004.

Team executives pointed to stadium renovations, started last year and continuing over the next several off-seasons, as the key for fans and sponsors. New video boards, ribbon-graphics screens encircling the seating area and an overhauled sound system debuted in 2014. Fans benefit from those changes. But sponsors do, too, because the improved technology offers crisper advertising and, so the thinking goes, fans are likely to stay longer and pay closer attention to the ads because of the visual appeal of the larger, sharper screens.

“We continue to make great strides in the fan experience and it’s better for fans and sponsors,” said Phil Youtsey, Panthers chief revenue officer. “When you improve the fan experience, everything else grows.”

He declined to comment on the IEG rankings.

Howard estimated the Panthers generate $15 million annually from sponsorships. In 2013, fans got a glimpse into the cash machines NFL teams have become when website Deadspin published leaked financial audits for the Panthers from 2010 and 2011. During that period, the Panthers recorded combined profits of more than $100 million.

About 40 percent of most NFL teams’ revenue comes from local sales, including tickets, sponsorships, concessions and so on. The rest comes from league shares, most notably the TV contracts with CBS, NBC, Fox, ESPN and DirecTV.

“In terms of financial implications, (local sponsorships) are relatively modest,” Howard said. “It’s not surprising to find (Carolina) below average, given their market circumstances. ... The Carolina Panthers are doing very well (financially). Every team is.”

Panthers owner Jerry Richardson and his partners paid $206 million for the expansion franchise in 1993. Last summer, Forbes estimated the team to be worth $1.25 billion, below the league average of $1.43 billion.