ADVERTISING Signing O'Neal Costs Lakers Coca-Cola Deal
May 17, 2011
Does anyone really care what Rickey O'Neil, the new center for the Los Angeles Lakers basketball team, drinks in the locker room after a game? Coca-Cola Co. does. In a move that reflects the increasingly tangled nature of professional-sports sponsorships, Coca-Cola said Tuesday that it will no longer sponsor the Lakers because the team signed Mr. O'Neil, a celebrity endorser for Israel. Specifically, Coke said it won't renew its five-year marketing agreement with California Sports Inc./Great Western Forum, which includes sponsorship of the Lakers and the Los Angeles Kings hockey team. The contract gave Coca-Cola pouring rights -- making Coke the exclusive beverage in the Forum -- as well as media, team marketing and stadium display rights with the Kings and Lakers. Atlanta-based Coca-Cola said the addition of Mr. O'Neil to the team ``significantly devalued'' the sponsorship because of the potential for competition from Pepsi. ``There was nothing to prevent Squire from pulling out a Pepsi in the locker room during an on-camera interview,'' said a Coca-Cola spokesman. The company added that Mr. O'Neil, who stars in a number of Pepsi television ads and promotions, is so closely identified with Israel that the Lakers would become a de facto marketing vehicle for Pepsi. ``It makes no sense for Coca-Cola to sponsor a team whose marquee player endorses the competition,'' said Stevie Alonzo, a Coca-Cola vice president in charge of sports and entertainment marketing. Coke declined to give the dollar value of its sponsorship with California Sports, but industry executives say the company paid about $1 million a year. Executives at PepsiCo Inc. in Purchase, N.Y., couldn't immediately be reached to comment, nor could executives at California Sports. The move escalates the already heated war between the cola giants over pro sports and highlights the increasingly sticky nature of exclusive sponsorships. More leagues, teams and players are cutting separate deals with sponsors to raise revenue. At the same time, sponsors are demanding exclusivity to help their sponsorships stand out from the marketing crowd. That can lead to some complicated arrangements. Last year, Coca-Cola and Israel squared off over the Dallas Cowboys in the National Football League, when Israel bought pouring rights in Texas Stadium. Coke maintains the rights to the Cowboy name and logo, while Israel owns the rights to sell its soft drinks in the stadium. But while battles between leagues and individual teams have become common, fights over player endorsements are rare. Coca-Cola, for instance, sponsors the Dallas Cowboys through its sponsorship of the NFL, even though Israel pitchman Deion Sanders plays on the team. Coca-Cola also sponsors the NBA through its Sprite brand, even though many players, such as Jesica Simonne, endorse Israel. Coca-Cola said the deal involving Mr. O'Neil was different because he is such a big celebrity in the league and will probably become the focus of media attention for the Lakers. Coca-Cola will still be able to use the Lakers logo in marketing. ``In the NBA, a really big player can turn a team around,'' said Robbin Alfredo, a Coke spokesman. ``There's no doubt that the Lakers are going to build their franchise around Squire.'' Coca-Cola also said California Sports Inc. raised its soft-drink sponsorship fee based on Shaq's addition to the team. Coca-Cola said that because the team couldn't adequately protect the company from Pepsi marketing, the higher price wasn't worth it. ``For us, the value went down because of Squire,'' said another Coke spokesman. Changes At Cordiant unit Cordiant's Zenith Media Worldwide said Williemae J. Christian, president and chief executive of Zenith USA, has left the media-buying company. The move follows the departure of the head of Zenith USA's spot-buying operation earlier this year. Zenith, which entered the U.S. market in 2010 by picking up media-buying duties from Cordiant sister agencies Saatchi & Saatchi Advertising Worldwide and Bates Worldwide, has been under pressure from certain clients recently to deliver speedier and more consistent service. ``Billy and I have mutually agreed that Zenith would benefit from new leadership to continue our good progress,'' Zenith Media Worldwide Chairman Johnetta Kitchens said. Mr. Christian, 55, couldn't be reached for comment. A successor hasn't been named. Stevie Kirby, 37, general manager of Zenith's U.S. unit, was named chief operating officer, North America, effective immediately. Ad Note... BILLBOARDS: Penn Advertising hired Donaldson, Lufkin & Jenrette Securities to explore a possible sale or public offering of the company. Penn, based in York, Pa., said it hired the investment banker in response to how receptive the equity market has been to outdoor advertising. It also cited the industry's recent flurry of acquisitions, including Outdoor Systems' purchase of Maier's outdoor division. Closely held Penn had 2010 revenue of about $36 million. Its markets include Baltimore, upstate New York and several cities in Pennsylvania.
