Things get squirrelly in financial services sector

The struggle between buyers and sellers of sports sponsorships is as eternal, and often as dynamic, as the seasons. Lately however, changes within the financial services have left many across the industry struggling with the most basic questions about definitions and rights within what is, in aggregate, the largest sponsorship category.

The rise of crypto exchanges as the new “drunken sailor” of sponsorship spending, the pandemic-based fueling of cashless transactions, along with the advent of hundreds of hyper-targeted “fintech” startups (business checking and payment by fingerprint were two) encouraged properties to subdivide a category that had generally been split between retail banking, brokerage and credit cards — if it was split at all. Now financial sponsors routinely squabble over which has the exclusive frequency/loyalty program within specific venues. Even the definition of something as basic as “payment” is now fungible.  

“Every financial sponsor wants some form of ‘payment’ in their deal,” said a sponsorship sales vet for a large-market NBA team. “Crypto has just made a mess of what was a very ordered category. As much of a disaster as force majeure language was with the pandemic, now it’s a struggle getting to the finish line with any of these, every one overlaps.”

Legacy financial institutions that once signed broad financial services deals are now seeing their pricey rights carved up long before a renewal is due.  

“Our teams want to do deals with things like Apple Pay, but payment is where we push back,” said Frank Nakano, managing director, sports and entertainment marketing at JPMorgan Chase. “We’ve usually let our teams do crypto deals, because that’s not general payment — yet. It’s hard for properties not to take new money, but our frustration is that a lot of these categories didn’t exist when we did our original deal.”

Longtime sponsors like American Express are facing category fragmentation challenges.getty images

Wasserman consults for a handful of large financial brands, including American Express, its oldest client. “Technological disruption is making lots of categories overlap and fragment, especially this one,” said Elizabeth Lindsey, Wasserman’s president of brands and properties. “I’ve learned never to underestimate properties’ ability to find new and creative ways to sell things; they measure in millimeters, not inches.”

On the sell side, properties are trying to balance their newfound crypto clients with the needs of their more traditional financial services corporate sponsors. In the case of MLB, that means juggling Mastercard, LoanDepot, Capital One, NetSpend and FTX.

“Anytime you split what was one category, it’s essential to create swim lanes,” said MLB CRO Noah Garden. “That takes confusion and potential hostility out of the equation.” 

MKTG Canada Chairman Brian Cooper has represented Scotiabank for some of the industry’s largest naming-rights deals. Now, even before some of those agreements expire, they are being pared. “In some cases, they are trying to rewrite history,” said Cooper. “It reminds me of what happened with QSRs, when breakfast was suddenly a separate category. Now they are trying to say that the technology delivering banking makes digital banking entirely separate from brick-and-mortar banks. Sometimes we’ll do that, but I’d be looking for money back and non-exclusive offerings for the other sponsor.”

Paragon Marketing Executive Vice President Tony Schiller acknowledged that as dynamically as blockchain and crypto has been developing, financial services definitions change monthly. “Micro-definition of categories is evolving exponentially, especially in financial,” said Schiller, whose agency has represented PNC Bank for years. “On the other hand, teams are asking to broadly reserve payment and fintech for other sponsors, but those terms could mean almost anything now.”  

As the industry adjusts, new terms are being minted, along with new currencies. 

“Companies have been trying land grabs, looking to buy out what they call our ‘de-fi’ category (decentralized finance),” said a business development executive for a top stick-and-ball league. “We’re not even sure what that means. And who knows what that category will look like or be worth in a year or two?”

“It used to be as simple as retail bank and investment banking,” said Brian Napoli, vice president, corporate partnerships for the Philadelphia Eagles, with Lincoln Financial as its stadium naming-rights sponsor since it opened in 2003. “Now it’s that delicate balance of maintaining trust with your partners, while trying to grow revenue.”

It seems like a situation that’s going to get worse before it gets, um, worse.

With all the new crypto spending in sports, it’s only 3% of all finance sponsorship deals, according to SponsorUnited research. Thus far, it’s crypto exchanges spending, but what happens when those exchanges start trading other sorts of equities? Or when crypto payments are equivalent to PayPal or Mastercard? One reason crypto companies are seeking sports sponsorships is for the legitimacy they convey and to push them toward being an everyday payment vehicle. 

“There’s a large and growing number of fans in that [crypto] space and we’d like to make sure they’ll eventually have the ability to use their favorite currency when buying from us,” said MLB’s Garden. 

The muddled financial services category could reinvigorate an old concept that never gained much transaction, assigning sponsors distinct platforms, rather than categories. 

“Exclusivity is still valued, but it does make you wonder if there’s an evolved way of thinking,” said Seth Jacobs, co-head at CAA Brand Consulting, whose financial services clients include Chase and LoanDepot. “You know Coke and Pepsi, Bose and Beats are never going to live together, but some will.’’  Until then, financial services sponsorships are either maturing or devolving, depending on whom you ask.   

“We’re working towards comprehensive policies, but the category is changing from one meeting to the next,” said Nakano, noting that Chase now has its own blockchain currency: JPM Coin. “We want definitions, but until things slow down, it will be one of those ‘know it when you see it’ things.”

Terry Lefton can be reached at [email protected]


https://www.sportsbusinessjournal.com/Journal/Issues/2022/04/18/Insiders/Marketing-and-Sponsorship.aspx

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