In the not-too-distant past sponsorships that included on-site sales rights were primarily the purview of big-time sports properties, entertainment venues and large-scale festivals, fairs and events.

On the sponsor side, brands interested in selling on site mostly were the usual suspects from the beer and soft drink categories.

But in the past few years new players on both sides of the coin have jumped into the mix, from properties such as grassroots events and performing arts organizations, to sponsors representing a wide range of categories from telecommunications to apparel to shipping.

Sponsorships including on-site sales rights run the gamut from straightforward arrangements offering real estate from which a sponsor can sell product to attendees to multi-level transactions involving third-party concessionaires, royalties and commissions.

The first checkpoint for properties planning to offer such rights is to determine exactly what they control, who else is involved and what they can offer sponsors.

“Many organizations do not have the right to dictate pouring contracts,” said Jon Holman, president of The Holman Group, a sponsorship sales agency that reps the Hollywood Bowl and other cultural properties.

“One of my clients said they had that right and I believed them. We secured a partner and they didn’t have the right. That’s where I learned my lesson.”

Holman advises clients to begin including a clause in their concession contracts that grants them the right to require sponsors’ products be sold.

Below, IEG SR looks at where new on-site sales deals are coming from, ways that properties can add value to sales rights and how to keep all parties involved happy.

Properties And Sponsors Find More Options To Choose From
While soft drink and beer companies have long seen the value in acquiring marketing benefits to augment their pouring rights, many properties are seeing increased interest in purchasing sponsorship inventory on the part of other products that are typically consumed at events.

For example, Comcast Spectacor, L.P.–owner of Philadelphia’s Wachovia Center, NBA 76ers, NHL Flyers and AFL Phantoms–has sold official status to products ranging from ketchup (H.J. Heinz Co.) to deli meat (Dietz & Watson, Inc.), while New Jersey’s Meadlowlands Sports & Entertainment Complex has sold the cookie (Mrs. Fields Gifts, Inc.); ice cream (Carvel Corp.); popcorn (Dale and Thomas); and sausage (Premio Foods, Inc.) categories, among others.

While those categories represent potential incremental revenue, properties should not expect large sponsorship fees.

“Most likely, properties are not going to get a six-figure deal for the ketchup category; you have to be realistic on what the category can withstand,” said John Alper, vice president, central region, for Premier Partnerships, a marketing agency that has brokered many on-site sales sponsorships for property clients such as the Pizza Hut Park soccer complex outside Dallas and the NBA New Orleans Hornets.

Winemakers also represent new hunting grounds for on-site sales deals.

Nearly every property contacted by IEG SR for this story reported increased interest or new deals in the wine category, building on a trend over the past several years that has wine brands using sponsorship to gain a point of differentiation in an increasingly competitive industry.

Denver’s Cherry Creek Arts Festival presented by Janus this year signed a first-time partnership with Cru Vin Dogs Wine Group. The company used the tie to sample product and promote its wine club. It also donated product for the festival’s annual gala and sponsor reception, said Bruce Erley, president of Creative Strategies Group, an event marketing agency that reps the festival.

On the arts front, The Holman Group is negotiating sales deals with a watch manufacturer and a wireless phone provider. The watch deal involves the sale of a property-themed watch, while the phone deal includes a mobile phone with downloadable ringtones from the sponsored property.

To determine which categories and companies to pitch, Holman reviews the property’s on-site sales records from the previous several years to ascertain products that have a successful sales history. He then incorporates those numbers in his sponsorship pitch.

“The reason a company is going to align with an organization is because of a successful sales record,” he said.

Increasing The Value Of On-site Sales Rights
Sellers who have closed on-site sales sponsorships say that pitching such deals is about providing the sponsor with an increased number of distribution points, making those vending and pouring locations as inviting as possible, and providing turnkey promotional activities to drive on-site sales.

“It is a property’s job to help optimize every revenue- and business-driving opportunity for their sponsors,” said Kevin Adler, president of Engage Marketing, an agency that represents Crocs, Inc. and other marketers. “They need to do everything they can, especially with revenue-sharing relationships, to act as a partner and help their sponsors drive business.”

Adler points to Crocs’ sponsorship of running events as an example. The footwear brand looks for events that take an active role in promoting Crocs’ on-site sales opportunities.

“One of the things that we negotiate into our contracts is email blasts to registered race participants to let them know we’ll be at the finish line,” he said. “Properties need to integrate that kind of messaging in their communication efforts to make people aware of on-site transaction opportunities.”

Properties also can increase their value by providing multiple points of sale throughout their venues or grounds.

For example, in addition to sales rights at concession stands in Giants Stadium and the Izod Center, sales in the venues’ suites were also incorporated into the deal for popcorn brand Dale and Thomas, said Tom Lindon, vice president of sales and marketing partnerships with the New Jersey Sports & Exposition Authority, which owns the venues.

The Albuquerque Int’l Balloon Fiesta presented by Wells Fargo increased the value of its on-site sales rights by creating additional events around which Warsteiner Importers Agency Inc. could sell Warsteiner beer.

The festival created evening balloon glows during five of its nine days. To generate even more excitement, it also hosts concerts and fireworks displays during the events.

“People tend not to drink beer in the early morning, which is when we typically have balloon glows, so these new events help Warsteiner by drawing people to the park at the time they usually drink beer,” said Nathan James, CEO of Fishbone Marketing, which represents the festival.

To further add value, properties also should be sure to include sponsors with on-site sales rights in off-site retail and other promotions when appropriate. For example, the Hollywood Bowl has incorporated sponsors E. & J. Gallo Winery and Heineken in a picnic-basket-themed ticket sweepstakes that is running at roughly 800 grocery stores in the Los Angeles area.

Balancing The Needs Of Sponsors And Concessionaires
Properties need to work closely with their concessionaires to develop on-site sales packages that work for all three parties.

“We make it a habit to sit down and talk about the products they want to sell and we then try to find marketing partners in those categories,” said Chris Hibbs, senior director of sales and marketing with the NFL Chicago Bears.

Most sponsors typically sign two contracts: A marketing deal with the team and a vending rights deal with the concessionaire.

It is important for properties to insist sponsors offer their products to concessionaires at competitive prices, a factor that has long been a bone of contention between vendors and sellers.

“We have to make sure product and costs are in line. We can’t bring in a company where prices are through the roof,” said Joe Croce, Comcast Spectacor’s senior vice president of sales.

In addition to looking out for their concessionaires, properties also need to be aware of sponsor-related costs they may accrue themselves. For example, a soft drink bottler may require a property to purchase branded cups or other products.

“Some properties just want to sell a category and they don’t pay attention to details,” said Bill Borger, president of Premiere Partnership Marketing, an agency that represents the Municipal Theatre Assn. of St. Louis and other nonprofits.

“You need to know your cost of goods and other elements in the supply chain so that your sponsorship fees are dropping to your bottom line.”

Properties also must be sure not to prioritize a vendor willing to pay a sponsorship rights fee over a company with popular brands and products that fans and attendees want, or over a company that is better able to meet the property’s needs.

“We have 400 events a year and sometimes our partners have to deliver food every day,” Croce said of the Wachovia Center. “Our warehouse isn’t that big, so service is huge; we can’t advertise a product and be out of it.”