May 28th, 2008
Soccer's Sounders Get a Microsoft Kick
By Matthew Futterman
The Wall Street Journal
Software Titan Suits Up As Sponsor, in Rare Step For Major U.S. Sports
Ten months before their first game, the Seattle Sounders of Major League Soccer have signed only one player and still don’t have a coach. But they have landed a major sponsor—Microsoft, which will emblazon the front of the team’s uniforms.
While splashing the names of corporate sponsors on sports jerseys is nothing new in Europe and other soccer-heavy markets, it’s still extremely rare in U.S. team sports. Beyond soccer, the only other major U.S. sport where it happens are tennis, golf and auto racing. The others consider it déclassé. Yet uniforms are arguably the choicest real estate for sports marketers.
On Wednesday, Microsoft and the Sounders plan to announce a deal that will place the words “Xbox 360 LIVE” on the front of the Sounders’ uniforms when they open next March at Qwest Field. Under the terms of the deal, Microsoft will pay the Sounders roughly $4 million a season for five years, according to people familiar with the arrangement.
It’s the latest coup for the team’s owners, who include former Walt Disney Chairman Joe Roth, Microsoft co-founder Paul Allen, actor Drew Carey and Seattle businessman Adrian Hanauer. The expansion Sounders have already received deposits for 16,000 season tickets.
But the sponsorship deal with Microsoft is perhaps the biggest milestone, since the company has done little within the sports marketing arena previously other than a minor pro volleyball sponsorship and a few small ventures in foreign countries.
“Getting in on the ground floor with a new franchise and a relatively new league is a great opportunity for us,” says Robbie Bach, president of Microsoft’s entertainment and devices division.
While it would be considered sacrilegious to scrawl a corporate logo across the New York Yankees pinstripes or a Detroit Red Wings sweater, soccer fans throughout the world long ago began to view a team’s ability to sell the front of their uniforms as a sign of strength. Manchester United, the Yankees of soccer, reportedly collects $26 million from insurer American International Group. While MLS at first resisted selling uniform sponsorships, it has seen a rush of deals valued at between $1 million and $5 million since opening the door in 2006.
First came Red Bull, the energy-drink maker, which bought the league’s New York area franchise in 2006 and re-named them the Red Bulls. That same year juice company XanGo Juice put its name on the uniforms of Real Salt Lake. Last year, five more companies jumped in, led by Herbalife, which signed up with the Los Angeles Galaxy as superstar David Beckham agreed to join the team.
MLS, after year of struggling, received a much-needed boost last year with the arrival of Britain’s Mr. Beckham, the game’s best-known personality, if not its best player. Other international stars, including Mexico’s Cuauhtemoc Blanco of the Chicago Fire, have brought thousands of new fans to soccer-specific stadiums in Chicago, Los Angeles and Texas.
Several more stadiums will open in the coming years, and despite a slim presence on television, franchises are now valued at $25 million to $40 million, up from just $5 million to $10 million earlier in the decade.
MLS Commissioner Don Garber said the Microsoft deal is the latest sign that the league, which nearly went belly-up seven years ago, has gained an unprecedented level of traction.
Mr. Roth, one of Hollywood’s most respected executives, has been making movies for 35 years but has always had his eye on owning a sports franchise.
A former soccer player in high school who also coached his son’s teams for 15 years as an adult, Mr. Roth decided to pursue a soccer franchise in Seattle because the city’s demographics and soccer history pointed to a success.
“We all felt the best place to start in Seattle was Microsoft,” he says. “It’s an international company but also a local company, which is what soccer should be.”
The city’s team in the former North American Soccer League, also named the Sounders, was one of the more successful franchises. Also, the state has one of the highest rates of youth soccer participation with 130,000 young players, plus another 60,000 players in adult leagues. A 2006 exhibition between Real Madrid and D.C. United in 2006 sold out Qwest Field, and earlier this year some 56,000 fans watched Mexico play China.
When it starts play next year as the league’s 15th franchise, Seattle will be the tenth MLS team to have a corporate name emblazoned on it.