- The Washington Times - Thursday, July 25, 2002

Baseball fans are growing increasingly nervous as the game heads toward a potential ninth work stoppage since 1972. So, too, are the corporations that are investing more than $200million this season to be connected with Major League Baseball on a national level.
With absolutely no control over the direction of worsening labor talks between owners and players, heavyweight companies like Pepsi, Anheuser-Busch and MasterCard are now reviewing their baseball promotional strategies and developing contingency plans should the season be interrupted for the second time in eight years.
Players have not yet set a strike date, but union leaders are canvassing the membership about their willingness to do so, and a walkout in mid-September is possible. The two sides have negotiated for more than a year on the game's core economic structure with little real progress.
"[The labor situation] is something we're certainly keeping our eye on, and just like fans and the rest of the country, we're hoping for a quick resolution," said Michael Robichaud, director of sports and event marketing for Nextel Communications. "We're not taking sides in this, but it's obviously in our best interest to have a healthy sport."
The stakes are serious for baseball. With attendance down 6 percent and Fox Sports losing hundreds of millions televising the sport, MLB's fast-growing national sponsorship portfolio represents one of the game's key economic bright spots. Several companies such as Pfizer, makers of Viagra have generated significant national discussion through their MLB sponsorship. As a result, MLB sales executives can ill afford to have the game out of action for any extended period. Several major sponsorship contracts, including those with Nextel Communications and Century 21, expire after this season.
"We're not operating in a mindset of [the economic damage of a strike]. We're trying to move forward, and that's a function of our continuing to believe that both sides [in the labor fight] are trying to work toward resolution, not conflict," said Tim Brosnan, MLB executive vice president for business.
Regardless of intent or mindset, too much money and effort are on the line to not plan accordingly. Neither MLB nor its key sponsors would detail the specifics of the contingency plans. But industry sources said most of the sponsorship contracts, similar to baseball's accord with Fox, call for partial reimbursement for lost business opportunities to be paid after a work stoppage ends.
"It's a situation we would not prefer, but we would be compensated," said John Galloway, director of sports marketing for Pepsi, which is paying more than $80million over five years to be the "official soft drink" of MLB. "We've leveraged our relationship with Major League Baseball hard, and we've been thrilled with the results to date. So it would be a real shame to see any momentum get taken away from what's happening on the field."
MasterCard perhaps has the most at risk of any single company in the labor fight. The company earlier this month rolled out a massive campaign entitled "Memorable Moments" in which fans vote on their favorite events in baseball history from a list of 30 finalists announced during the All-Star break. The greatest 10 moments are set to be unveiled during the World Series.
The promotional effort involving national and local TV, Internet and print ads, as well as additional marketing led by MLB could exceed $100million in total expenditures. MasterCard also organized the All-Century Team promotion with baseball three years ago. But this new effort is far larger and involved much more planning.
"Ultimately, all MLB business partners should be concerned about the impact a strike would have on the sport. After all, sponsors use sports properties as marketing platforms to leverage fan affinity," said Marc Levy, MasterCard spokesman. "A strike hurts that but doesn't directly impact us."
While the labor situation unfolds, MLB executives have been in contact with key sponsors on a near daily basis.
"We have high expectations for all of our corporate relationships. We ask a lot, but we are also expected to fully deliver on our end, too," Brosnan said. "That means we have a responsibility to keep those people informed, and in a way so they're not gleaning information solely from what's in the public domain. We're doing as much communication as we can possibly offer."
Other levels of baseball sponsorship are proceeding with less worry. Fox Sports, which will televise the World Series, has sold about 70 percent of the ad inventory for that event, and network sales staffers will not begin selling the full postseason in earnest until after football season starts in early September. Unlike the national MLB sponsors, companies only purchasing TV ad time generally have the option of quickly recouping their money or having the time reallocated elsewhere if an event doesn't happen.
The real risk, however, lies in Fox and ESPN, baseball's other national TV partner, being able to sell baseball long-term if fan interest falls off as a result of a work stoppage.
"It's a cautious ad market anyway, but I wouldn't say more cautious relative to baseball based on what's going on right now," said Bill Carroll, director of programming for Katz Television Group, a New York firm that helps companies buy ad time. "It's kind of like having a hotel reservation. Companies that want to be in the World Series this year and are using the playoffs as part of a fall program are going ahead and doing it. There's relatively little financial risk if it doesn't go off. Fox is going to work to make good to those companies. And among ad buyers, I'm still sensing a belief that the postseason is going to happen."

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