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In The Sponsorship Game, AT&T Promotes And Protects Its Brand

Dallas News, August 31, 2013

By Gary Jacobson

It’s one of the most valuable brands in the world, and to bolster it, AT&T Inc. reportedly spends nearly $200 million a year on sponsorships here and around the country.

The giant Dallas-based communications firm attaches its name and its blue and white globe logo to such places and events as AT&T Stadium in Arlington, the AT&T Performing Arts Center in Dallas, SXSW in Austin and the AT&T Jeb Bush Florida Classic, a golf and fishing tournament that raises money for the Cystic Fibrosis Foundation.

Earlier this year, AT&T even teamed with Latin Grammy winners Jesse & Joy to create an anthem for fans of the Mexican national soccer team. No doubt you’ll hear choruses of “Corazón de Campeón” (Heart of a Champion) when Mexico plays the United States in a World Cup qualifier on Sept. 10 in Columbus, Ohio. It’s one of the most important matches of the year for both teams.

At its basic level, “Corazón de Campeón” is about passion — the passion of fans and players — which is also a good word to describe AT&T’s approach to sponsorships.

“We want to connect with people at their passion points,” Jamie Kerr, an AT&T sponsorship director, said last year in a video posted on a sports marketing website.

Another word to describe the AT&T approach might be secrecy. For competitive reasons, AT&T initially declined interview requests for this story, which began two weeks ago. But late Friday afternoon, after the deadline for the Sunday section, the company offered to make someone available next week.

The telecom industry is huge and ultracompetitive. Sprint has partnered with the National Basketball Association. Verizon is the official wireless provider of the National Football League. Earlier this year, Verizon renewed an agreement, said to be worth $1 billion over four years, allowing it to stream even more NFL games to its customers’ smartphones.

Because of its recent naming rights deal with the Cowboys, though, AT&T grabbed a share of pro football’s glow for itself. In a rights package that some news outlets estimate could approach $20 million some years,

AT&T secured the marquee venue — AT&T Stadium — in the marquee American sports league.

“These sports are where companies can be assured of reaching their audience,” said Michael Wright, executive vice president at IEG, a Chicago-based marketing consultant.

In a report this year about sponsorship growth, IEG said there is “unprecedented recognition at the highest levels of corporations” that sponsorships can support brands “in an environment that is otherwise hostile to marketing communications.”

Sponsorships are now a key part of corporate strategic planning, IEG said, and are likely to be part of “integrated marketing programs” that also employ traditional advertising.

Changing world

In some ways, today’s AT&T is reinvigorating the power of a brand that had gone a little stale after the breakup of the Bell System in the 1980s into Southwestern Bell Corp. and other regional operating companies.

Southwestern Bell later changed its name to SBC Communications and, in 2005, acquired AT&T Corp., changing the corporate name to AT&T Inc. The next year, the new AT&T acquired BellSouth, its partner in Cingular Wireless.

The rebranding of Cingular to AT&T in 2007 caused a major controversy on the sponsorship front, illustrating just how important such arrangements can be.

Nextel (Sprint Nextel after a merger) was the sponsor of NASCAR’s top stock car racing series, but Cingular’s sponsorship of a car was grandfathered. When AT&T wanted to replace Cingular logos on Jeff Burton’s No. 31 car with AT&T, NASCAR said no. AT&T sued and NASCAR countersued, for $100 million. An appeals court sided with NASCAR. A settlement was reached, however, that allowed AT&T to sponsor Burton’s car through the 2008 season.

With more than $125 billion in annual revenue, AT&T is one of the largest companies in the world. Its brand is the sixth most valuable, behind Apple, Google, IBM, McDonald’s and Coca-Cola, according to Millward Brown’s BrandZ Top 100 global report for this year.

“Brands take on greater importance, meaning and responsibility in today’s rapidly changing, interconnected world,” the Millward Brown report said.

You won’t get an argument from AT&T chairman and CEO Randall Stephenson. In 2010, two years after the company moved its headquarters from San Antonio to Dallas, Stephenson sat for an interview with The Dallas Morning News. He related an analogy he used to emphasize the importance of the AT&T brand.

“That brand is my 13-year-old daughter, and I’m giving you responsibility for protecting her,” Stephenson said he told the company’s global marketing officer. “Do not attach that brand to anything that we do not have the highest confidence in.”

In 2012, AT&T spent between $175 million and $180 million on sponsorships directed at the U.S. market, IEG estimates, ranking behind only PepsiCo, Coca-Cola, Anheuser-Busch InBev and Nike.

That doesn’t capture the complete extent of AT&T’s commitment to the events and organizations it sponsors, particularly when sponsorships extend into traditional advertising. AT&T spends roughly $3 billion a year on advertising, according to its financial filings.

Active in sports

IEG estimates that total North American spending on sponsorships will hit nearly $20 billion this year, up more than 5 percent from a year ago. Nearly 70 percent of the spending goes to sports, 10 percent to entertainment, 9 percent to causes and 5 percent to the arts.

AT&T is active in all of those areas.

In sports, AT&T sponsors the annual Cotton Bowl game, now in Arlington at AT&T Stadium, the Red River Rivalry (Texas vs. Oklahoma football) at Fair Park and the AT&T Nation’s Football Classic, a game between black colleges at RFK Stadium in Washington, D.C.

AT&T already has its name on two golf tournaments on the PGA Tour and in 2015 becomes the main sponsor of the Byron Nelson Championship here. It’s also one of the main corporate advertisers for the Masters.

The company sponsors U.S. Olympic and Paralympic efforts, the Grand Prix race track in Austin, and National Collegiate Athletic Association events as a corporate champion and official wireless service provider. At the Men’s Final Four basketball tournament in Atlanta this year, the Zac Brown Band headlined the AT&T Block Party.

AT&T Stadium is one of five sports venues with the company’s name. AT&T Center in San Antonio is home of the Spurs in the NBA. AT&T Park in San Francisco is home of the Giants in Major League Baseball. Jones AT&T Stadium in Lubbock hosts Texas Tech football. AT&T Field in Chattanooga, Tenn., is home of the Chattanooga Lookouts, a Double A baseball team.

In entertainment and the arts, AT&T is a sponsor of the popular TV show American Idol, is the official wireless provider of Walt Disney World and Disneyland, and is a sponsor of the Tribeca Film Festival in New York, the DUMBO Arts Festival in Brooklyn, and the Bonnaroo Music Festival in Tennessee.

AT&T also sponsors QuakeCon, the annual gaming gathering here.

“Those AT&T guys are really cool,” said Tim Willits, studio director for id Software. Willits said that on the peak night of QuakeCon, there are 6,000 machines plugged into the Internet connection — supplied by AT&T — at one location.

“It’s a ridiculously fast connection,” he said.

In its sponsorships, AT&T tries to make the venues a showcase for its technology, which will ultimately expand traffic on its network.

Increasingly, AT&T also tries to secure exclusive content that it can offer to customers and potential customers. That’s part of the deal with the Cowboys and Bonnaroo.

“Companies with the conduit between that content and the audience clearly will be the major players,” IEG’s Wright said.

Additionally, AT&T is the communications sponsor of the Boy Scouts of America. It provided the initial funding to help create, and continues to support, Curing Kids Cancer, an organization that funds pediatric cancer research. And it was a sponsor of this year’s Blogging While Brown conference in New York, dedicated to bloggers of color.

Numbers kept secret

How much does AT&T spend on these individual sponsorships?

The company doesn’t say. Confidentiality was a stipulation in the agreement with the Cowboys, though there have been plenty of estimates. AT&T has never said what it spends on its Performing Arts Center sponsorship, and the arts organization’s publicly available financial documents don’t say, either.
Occasionally, the public gets a peek at specific amounts.

Financial disclosures for the Cotton Bowl Association indicate that AT&T paid $771,400 to sponsor the 2010 game. It was the first game in Arlington and the final year of the old contract between AT&T and the association, an association spokesman said. In more recent financial disclosures, there is no indication of what AT&T is paying.

AT&T paid a total of $21 million, from 2007 through 2011, in its sponsorship agreement with Texas Tech, which included the company’s name on the football stadium. A copy of the agreement was obtained through an open records request.

The company’s corporate champion deal with the NCAA and its umbrella deal with Major League Soccer, U.S. Soccer and the Mexican Soccer Federation are each estimated, or hinted, to be worth “eight figures” annually by Street & Smith’s Sports Business.

And when AT&T Park in San Francisco opened as Pacific Bell Park in 2000, the naming rights had been acquired by Pacific Telesis in a deal totaling $50 million over 24 years.

Christina Landshut, executive director of the South Florida office of the Cystic Fibrosis Foundation, said AT&T has been “wonderful” to work with on the Jeb Bush Classic.

Named for the former governor of Florida, who is the son of one U.S. president and brother of another, the event has netted more than $6 million for the foundation since it began 18 years ago. AT&T became the title sponsor in 2008. This year, the title sponsorship is listed at $75,000 on the classic’s website.

“Having such a prestigious organization involved just lent so much credibility to the event,” Landshut said.