By Jordan D. Mamorsky
In today’s marketplace, established sports leagues like the NFL, NBA, NHL and MLB dominate in terms of viewership, profits, and general popularity. However, many other successful leagues operate in the United States and have developed relationships with communities, created jobs and mobilized fan bases through effective growth strategies.
Lessons can be learned from these leagues. They have excelled in problem solving, advertising relationships, and continuing profitability despite periods of economic downturns.
On Friday November 4, New York Law School hosted the commissioners from the Major League Lacrosse League (“MLL”) David Gross and the National Lacrosse League (“NLL”) and the Vice President, Business and Legal Affairs of Major League Soccer, Bill Ordower to discuss the various challenges facing league formation and vitality.
Perhaps the greatest small league success story has been MLS. The league was established in 1993 with ten initial teams. Currently, the league has 18 franchises including “Toronto FC,” the first Canadian club competing in MLS.
The MLS has gone from irrelevant to in the public consciousness through smart marketing, advertising and strategic planning. “There’s no silver bullet,” said Ordower. “A lot of our marketing is on a market to market basis.’ “Its very much trial and error.”
For the MLL and NLL, both lacrosse leagues continue to build their respective products and have achieved marketing successes in recent years. The MLL is the newest of the two lacrosse leagues and began play in 2001. The MLL includes eight franchises in both the United States and Canada and has expanded through sponsorships and television contracts. The league counts New Balance, Bud Light, Ford, and POWERADE as sponsors. In 2003, the ESPN family of networks began to call their games.
In discussing the MLL’s success Commissioner Gross explained: “Know what you are and embrace what you are. We watched very penny and decided that spending a ton on mass media is not going to grow us, its is going to destroy us.” Instead, the league focused on smart sponsorship growth, which allowed for continued revenue growth.
The National Lacrosse League has had tremendous longevity considering it began its inaugural season in 1987. The League averages a phenomenal amount of fans for the sport of lacrosse—around 10,000 fans per game depending upon the market.
“We have teams that are historically strong,” Commissioner George Daniel said. “We are looking at more critical masses to build our sport.”
For a young league, activation rights are critical in generating sponsorship profits. Activation is the amount of money a sponsor invests, in addition to the sponsorship rights fee to enhance their presence at the event. This is a critical term in contract negotiations and can make a major difference in sponsorship revenue.
“You want to maximize revenue and accordingly, it’s important what sort of activation agreement is in place,” Daniel said. “How are they going to go about it? Activation is as good as money. Activation is huge.”
Apart from activation rights, another key negotiated term of a sponsorship contract is the ability to modify and change terms in response to evolving market conditions.
“Contracts with the right partner is just the framework,” Commissioner Gross said. “We have found the right partners where we have been able to change terms to fit evolving landscape. If you have the right partner, that is flexible, the contract can often just serve as guidance.”
Relationships with sponsors are critical for an emerging league. Yet arguably just as important is the league’s relationship with its own employees- the product that is meant to draw fans to the league’s contests. Commissioners and their staff must keep their players content to retain top talent and avoid work stoppages.
Along these lines, the MLL has decided upon having a transparent relationships with its players. While most leagues are reluctant to show financial information to their players, the MLL maintains they have nothing to hide and welcome the players to inspect their books and records.
“Back in 2005 we had rumblings about starting a union,” Gross said. “We said to the players if you want to see our books come on by. We have nothing to hide. We have consistently made adjustments for them [the players]. Labor is one of our smallest worries.”
The MLS has successfully controlled costs and enjoyed union peace because of the single entity league formation, which has shielded the league from the looming threat of anti-trust litigation. This is starkly different from the NFL and NBA multi-entity formation which is in part to blame for testy league-player relations and the threat of decertification and the anti-trust lawsuit.
“In deciding what structure we wanted we choose the single entity,” Ordower said. “It allows us to control costs, maintain salaries, and reasonable price our product. There are fewer Jerry Jones’ of the world pushing us in one direction. The owners were aligned in the same thought process.”
Regardless of league formation, sponsorship agreements, revenue, and labor negotiation, both the MLS, MLL and NLL have successfully navigated their leagues to consistent revenue and growth. While there might not be as much demand for their sport, the leagues have prospered with smart and strategic decision-making that big ticket leagues like the NFL, NBA and MLB could learn from.
