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NBA Safe For Marketers Again As Silver Drops Hammer On Clippers Owner

Advertising Age, April 29, 2014

By Michael McCarthy

The National Basketball Association suspended Los Angeles Clippers owner Donald Sterling for life and fined him $2.5 million for making racist remarks. The move came after nationwide outrage — and a couple of days of marketers abandoning the basketball team during the midst of a playoff series.

NBA Commissioner Adam Silver, speaking at a news conference in New York, also said that he would urge the NBA board of governors to force a sale of the team. A three-quarters vote of the 30 members would be necessary to force a sale, and Mr. Silver said he expects to get that.

"The views expressed by Mr. Sterling are deeply offensive and harmful," Mr. Silver said. "That they came from an NBA owner only heightens the damage and my personal outrage."

Between Monday and Tuesday, thirteen marketers ranging from Mercedes-Benz to Diageo dropped or suspended marketing activities associated with the team. McDonald's on Tuesday announced it would be yanking TV ads from the national telecast of tonight's game between the Clippers and the Golden State Warriors on TNT.

David Levy, president of TNT parent Turner Broadcasting, confirmed that advertisers had "pulled from the game tonight." He added that "hopefully [Mr. Silver] can persuade the advertisers to come back because of his swift response."

The promptness — and severity — of Mr. Silver's response seemed partly to put the league's marketing partners at ease. While team sponsors dropped out, league-wide sponsors told Ad Age they were waiting on the results of the investigation.

'Judge us by our actions'
"This has all happened in three days," said Mr. Silver. "So I'm hopeful that there will be no long-term damage to the league or the Clippers organization. As I said earlier, I'm outraged. So I certainly understand other people's outrage. This will take some time...I can understand how upset they are. I'll do my best to bring them back into NBA family."

Only three sponsors said they were actually dumping the team during the Clippers feeding frenzy that took place Monday: luxury auto marketer Mercedes-Benz; CarMax and Virgin America.

The rest of the sponsors — Diageo, Kia, State Farm, Red Bull, Sprint, Corona, Aqua Hydrate, Burger King and Commerce Hotel & Casino — said they were "suspending" their deals or putting them on hold.

He added: "Marketing partners of the Clippers and of the entire NBA should judge us by our actions."

Samsung called the decision "momentous" and announced that it was reinstating ads in tonight's game. In a statement, Kia said it "wholeheartedly endorses Commissioner Silver's decisive action related to the offensive remarks allegedly made by Los Angeles Clippers owner, Donald Sterling."

State Farm, one of the first to back away from the team, also applauded the action, but was still taking a cautious approach: "State Farm reaffirms its support of the NBA, Chris Paul and the 'Born to Assist' campaign. At this time, we are continuing the pause of our sponsorship of the Clippers organization as we evaluate this ongoing situation."

How much spin?
Sports sponsorship expert Jim Andrews of IEG wonders if some of the companies that so publicly distanced themselves from Mr. Sterling's Clippers Monday were engaging more in spin control than making real changes.

The sponsors were "smart" to distance themselves from the now toxic Mr. Sterling. But some sponsors may have made scored some nice PR points for themselves by saying they were breaking up with the Clippers — without actually calling the lawyers and signing the divorce papers, he said.

"The devil's in the details," said Mr. Andrews. "You've got all these sponsors announcing, 'We don't want to be affiliated with the Clippers as long as Donald Sterling is the owner.' What's not clear is whether they are actually in the legal process to get out of these contracts. This could be a little bit more of a PR move at this point."

Cost of a sponsorship
So how much do NBA team sponsorships cost per season? It depends on how many mentions a marketers gets inside game telecasts as well as signage inside the arena. But they generally range from low six figures to low seven figures per season, according to Mr. Andrews.

NBA league-wide sponsorship deals, on the other hand, start at seven figures per season and quickly shoot up depending on the product category. But with the league taking such a firm hand with Mr. Sterling, they're unlikely at this point to face a boycott.

African-American players comprise around 78% of NBA players, according to the 2013 Racial and Gender Report Card issued by Richard Lapchick of The Institute for Diversity and Ethics in Sport.

TNT "Inside the NBA" analyst Charles Barkley called the Sterling scandal Mr. Silver's first big test as NBA Commissioner, according to Richard Deitsch of Sports Illustrated.

If the voice on those tapes is confirmed to be Mr. Sterling, then Mr. Silver should immediately suspend and fine the Clippers owner, said Mr. Barkley. For starters.

"You can't have an NBA owner discriminating against a league — we're a black league," said Mr. Barkley.