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HOW U.S. SOCCER HOPES TO SCORE Holding the World Cup in the U.S. is part of a massive business plan to sell soccer to Americans. Sound familiar? Here's why it may work this time.
(FORTUNE Magazine) – AMERICA FACES a stiff test in global competitiveness this summer that has absolutely nothing to do with technology, productivity, industrial output, or gross domestic product. The World Cup is far more important than any of that. From June 17 to July 17, teams from 24 nations will kick each other across nine U.S. cities to resolve the quadrennial argument of planetary futbol supremacy. ''There is one universal sport and one universal religion in the world, and that is soccer,'' says Alan I. Rothenberg, a trial lawyer and Los Angeles sports figure who is president of U.S. Soccer and World Cup USA 1994 Inc. Yet even as soccer holds its High Mass here, Americans remain largely unconverted, gridiron pagans in the Holy See of Feet. So staging the World Cup in the New World is not so much a sporting event as it is a marketing initiative. The U.S. is to soccer what China is to Procter & Gamble: the last vast, harvestable territory. For corporate sponsors like Coca-Cola, General Motors, and McDonald's, soccer represents an opportunity to reach high-income American families at the grassroots level through the game's 16 million youthful participants. And in the age of diversity, the sport has the added attraction of a strong following among women and Hispanics. U.S. Soccer, a nonprofit corporation in Chicago that rules the sport here, plans to use a successful World Cup to convert these and other sports fans into paying customers and television viewers for the newly established, very much for-profit Major League Soccer (MLS), a professional league set for an April 1995 debut. This year's events are going to surprise some skeptics. More than 3.5 million tickets have been snapped up already for the 52 games, about 95% of the available seats. Nearly 40 of the games are sold out. In the New York City area, the match between two favorite sons, Italy and Ireland, has set off a ticket-scalping frenzy, with $25 seats going for $450. In Chicago, there are no tickets left for the Bulgaria-Greece contest. It may be hard to imagine citizens of the U.S. paying money to watch Bulgarians doing anything. Yet more than 70% of all tickets to all matches have been purchased by Americans. Winning isn't everything, but it's a vital selling tool for the home side that wants to create fan interest beyond the Cup. The heretofore overmatched American 11 will have to conjure some snappy footwork to best Switzerland, Romania, or Colombia, its opening-round opponents. Says Hank Steinbrecher, the former director of sports marketing for Quaker Oats who is now executive director of U.S. Soccer: ''If we aren't successful, the press will bury us; the public will bury us, and then soccer is dead in terms of spectator appeal.'' Some two dozen U.S. multinationals, including MasterCard and American Airlines, are in competition too. American firms have virtually completed a costly takeover of the Cup from European companies like Alfa Romeo. Eleven companies kicked in up to $25 million each to become official Cup sponsors. FIFA (Federation Internationale de Football Association, the sport's governing body in Zurich) will pull in some $105 million in sponsorship fees. Others are backing the U.S. team for a couple of million. Perhaps $1 billion will be riding on additional advertising, licensing, and promotions. THE BIG SPENDERS aren't here out of patriotism. ''This is strictly business,'' says Mava Heffler, captain of MasterCard's 25-person U.S. World Cup task force. The company became a sponsor of the 1990 Cup in an effort to boost its name recognition. Says Pete Hart, former CEO of MasterCard International and now executive vice chairman of Advanta, a credit card company in Pennsylvania: ''We were perceived as being dramatically behind our global competitor, Visa, and we were looking for something to raise our brand awareness.'' That he got. MasterCard's name recognition has skyrocketed since then. Hart re-upped MasterCard for 1994 before moving to Advanta, and signed two soccer deities, Brazil's Pele and Britain's Bobby Charlton, to promote the card. Another sponsor, Coca-Cola, will fire its new PowerAde sports beverage in a direct frontal assault on Quaker's Gatorade, an irony that isn't lost on Quaker vet Steinbrecher. Coke will hand out a million free samples in and around the games in an effort to quaff 20% of the $1.2 billion sports-drink market. Ralston Purina's Eveready Battery Co. unit, charged with creating a global brand for its premium battery, will expand the Energizer name in Europe, while Sprint hopes to do the same for phone cards. To demonstrate their technologies in a global setting, Sun Microsystems, EDS, and Sprint have built a client-server network of 1,100 workstations spread over 24 countries, in part to assist the 8,000 journalists attending. Soccer programming is mass media on an epic scale. A cumulative 31 billion television viewers will take in the matches, and two billion fans -- that's 36% of all featherless bipeds -- will watch ABC's broadcast of the championship match from Pasadena's Rose Bowl on July 17. Says Roy Roberts, vice president of General Motors' GMC Truck unit, a first-time sponsor: ''When we got involved we thought we were reasonably intelligent about it. We truly didn't understand the enormousness of it. I have never seen any sport like this in my life.'' A U.S. audience completes the global selling circuit. Gillette, for instance, a longtime sponsor, is running its first global promotion, including a soccer sweepstakes in 57 countries. New sponsor McDonald's is doing likewise, and is also staging McSoccerfest -- youth contests in 13 cities nationwide. All this will doubtless startle the many who by the early 1980s had all but pronounced last rites over soccer as a sports entertainment product in the U.S. Soccer is an Olympic medal event, but during the 1984 games in Los Angeles, organizers argued that no more than 5,000 spectators would attend each game. Instead, more than 1.4 million tickets were sold, mostly to Americans, filling some 95% of seating capacity. It was a signal to FIFA, still bruised by the failure of the North American Soccer League, that perhaps all was not lost. The U.S. was awarded this year's games in 1988. Several years of infighting over directions that soccer should be taking in the U.S. ended in 1990 with the election of attorney Rothenberg as CEO. The effect, notes one critic, is that ''there are not too many soccer people left running soccer.'' An overstatement perhaps, but clearly the business was too important to be left to sportsmen. Says Rothenberg, a former part-owner of the Los Angeles Lakers basketball team: ''FIFA was going to pull the games. They approached me to step in and I decided it was doable.'' One of Rothenberg's first self-assignments: to persuade Steinbrecher, a former Boston University soccer coach, to sign on as No. 2. This meant asking Steinbrecher to leave a dream job at Quaker, where his No. 1 product, Gatorade, had a 90-plus market share, to sell a game that had virtually none. The game and its business challenge proved too much to resist. The pair first had to build a sales and service organization. Says Steinbrecher: ''We lacked the most essential business elements: a vision of where we wanted to be, and any kind of strategic planning.'' The sport's multiethnic background and parochial politics made basic planning difficult. Steinbrecher, in fact, is the first American-born executive to run U.S. Soccer. He spent 56 hours over a three-day weekend negotiating with various state and regional federations for the local marketing rights for U.S. Soccer. ''Corporate politics are a breeze compared to the nonprofit side,'' he says. The biggest fight was changing the federation's name and nebulous logo to a slick, packageable image. The new logo has a soccer ball (an identity its predecessor lacked) soaring through the letters U and S. Result: Sales of licensed products with the new logo have far exceeded budget. The key to soccer's future in the U.S. is that the people associated with the sport are gold-plated demographics in short pants. More than 11 million kids under 18 are actively involved, and their families are more wealthy and more suburban than most collections of sports types. Many women are involved, both as players and as coaches. In addition, the rapid growth of the soccer- loving Hispanic population is commanding attention from anyone selling anything. These demographic charms had been lost on many companies, who viewed the game as the passion of guys named Helmut, Dino, Julio, and 'Arry who brought soccer with them from their birth countries. In other words, soccer had a cultural and positioning problem. Says Steinbrecher: ''We have a sports entertainment product to sell, and the dynamic is no different from Gatorade going up against Coke or Pepsi.'' U.S. Soccer's game plan is to showcase its demographics and make it easier for corporations to connect with those consumers. Armed with the local rights and new packaging, U.S. Soccer offered corporations comprehensive national sponsor programs, including any number of local events, such as soccer clinics for kids. The organization could also offer a database of 2.5 million names, custom sliced and diced, of players, coaches, and officials who are registered with the federation. SO FAR the strategy is working. Says Rothenberg: ''We are now positioned to be the great family sport of fun and fitness. And if you look at the demographics of who attends our games, who's playing, it would be foolish of us to fight it.'' A recent warm-up match pitting the Yanks against Saudi Arabia offers some evidence of the game's demographic appeal. The sellout crowd at a small Rutgers University stadium is decked in souvenir T-shirts, hats, and shorts. Half the spectators are kids, many of whom clamor for autographs from U.S. stars and New Jersey locals Tab Ramos and Tony Meola, and from fullback-cum- rock-star Alexi Lalas. During the game there are no crowd problems, only the threat of a thunderstorm. This unrelenting wholesomeness proved too appealing to GMC Truck; it is using soccer to move away from its traditional macho-man approach to truck selling and instead targeting both women and Hispanics, two segments where its market share trails its overall performance. ''We have to understand the changing country that we live in, and address the changing customer base,'' says GMC chief Roy Roberts. Women are pulling the trigger on 60% to 70% of the sport-utility vehicle purchases, for instance, and Roberts no doubt sees them driving kids to soccer games every weekend in a Jimmy or a Suburban. To McDonald's the notion of whole families assembled in one place is as irresistible as the smell of French fries. With its franchisees already sponsoring youth teams around the country, the company views the game as a grassroots opportunity to build relationships. Says Dean Barrett, a McDonald's vice president for marketing: ''You can't go anywhere in the U.S. on the weekend and not see kids and families involved. It was a perfect fit for us.'' Mars, an eight-year sponsor via its Snickers brand, signed a 20-year agreement with the American Youth Soccer Association to hold state and national championships. ''Kids and sports is exactly where we want to be,'' says company external affairs director James Conlan. What American soccer wants is a league. World Cup USA 1994 is expected to earn a profit of $20 million to $25 million on sales of $300 million. The profit will go toward the $60 million to $100 million needed to fund Major League Soccer's startup in 12 as yet unnamed cities next April. Says Rothenberg: ''We really think this is going to happen, and the effect is going to be the lasting elevation of soccer to a higher position as a sport and as a business in this country.'' MLS will not attempt to duplicate the NFL, but rather to create a cozier atmosphere in smaller stadiums. The idea is to stick to the sport's big selling advantage, namely its attraction as family entertainment, including pregame and postgame events. The business plan is predicated on drawing just 12,000 spectators a game. The league already has something no sport can do without: a television contract, from ABC and ESPN. Just as important, soccer now has the keen interest of major marketers, no small detail in the cluttered sports entertainment environment. Says McDonald's Barrett: ''We are making a major investment in this sport and in the success of the sport in the U.S.'' A lot will depend on those 7- to 12-year-olds who spend their weekends chasing a ball around like kittens after a toy mouse. The game is thriving among kids because it's easy to play, safe, and accessible to boys and girls; the player's size doesn't matter; and it's fun. Even if soccer never does grow up here, that can't be all bad. |
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