In a changing media landscape largely devoid of safe bets, advertisers are going all-in for the NFL. Their mixed results are perhaps the best reason for investors not to do the same when considering those sponsors' stocks.
As standard television increasingly loses the competition for eyes and time, NFL football draws rabid fans into the game. Advertisers bank on the fact that last year, 17.5 million people watched NFL broadcasts -- that's the league's second-highest total since 1989. (Only the 17.9 million-per-game draw of 2010 topped it.)
On NBC, CBS, ABC and Fox, viewership grew by 25% over the last decade to 19.8 million last year, according to the Nielsen Company. Audiences for those networks' prime-time offerings shrank by 21% to 8.1 million over the same span, with the NFL draw more than double that of sitcoms, dramas and song-and-dance competitions. Last year, 23 of the 25 most-watched shows on television were NFL games.
Surely, getting their ads in front of that many viewers is a boon for the sponsors -- and, thus, their shareholders -- right?
In some cases, yes. But it's not always that simple.
With all those viewers, it's easy to see why Anheuser-Busch InBev (NYSE: BUD) paid roughly $1 billion in 2011 to get Budweiser the NFL's official beer sponsorship formerly held by Coors Light of MolsonCoors (NYSE: TAP). It's also why that company has spent $239.1 million on Super Bowl ads within the last decade, according to Kantar Media. By comparison, PepsiCo (NYSE: PEP), the NFL's official soft-drink sponsor and snack sponsor through Frito-Lay, spent $174 million on big-game ads within the last decade.
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The NFL's huge audience and potential returns are why USAA, Bose, Marriott (NYSE: MAR) and Microsoft (NASDAQ: MSFT) shelled out for official league sponsorships last year and why Procter & Gamble (NYSE: PG) added its Duracell and Tide brands, and PepsiCo added its Quaker products to an already lucrative deal with the league. For companies like Lenovo, which became the NFL's official computer supplier this year, it's a chance to grab some market share while increasing profile among couch surfers.
Sometimes it works, sometimes it doesn't. General Motors (NYSE: GM), for example, has been the NFL's official vehicle sponsor since 2001. While its NFL ads may have helped as it emerged from bankruptcy, its NFL didn't help its troubles in the mid-2000s.
For investors who want an idea of how to get into the NFL's game without setting themselves up for a loss, we look at some of the NFL's official sponsors who rode football Sundays to riches, others who've headed to ruin and others still waiting on the outcome.
Official Isotonic Beverage Sponsor
NFL sponsor since: 1983
Perhaps no brand has benefited as greatly from its NFLas Gatorade. Back in 1983, Gatorade was a quirky sports drink shipped by a canning company. No sooner did Gatorade sign on with the NFL than the Quaker Oats Company came calling and bought out the brand for $220 million. Three years later, New York Giants Harry Carson and Jim Burt dumped a cooler of Gatorade on head coach Bill Parcells en route to the team's first Super Bowl win and cemented the drink's tie to the NFL.
Meanwhile, Quaker started taking Gatorade worldwide and bumped sales into the hundreds of millions. When PepsiCo decided it wanted Gatorade for itself, it laid out $13 billion to take over all of Quaker Oats just to get to its coveted sports drink. Since slugging back Gatorade, PepsiCo has seen its share prices rise 59% and bounce back from two economic downturns.
Visa (NYSE: V)
Official Payment Systems Services Sponsor
NFL sponsor since: 1995
Visa plays it fast and loose with big sports sponsorships. It's been all over the Olympics for decades and went after America's biggest sport in the mid-1990s. While the details are somewhat sketchy about the NFL's impact on Visa before the credit card titan went public in 2008, there's very little doubt about how it fared afterward. Visa renewed its sponsorship in 2009 and not only served as the league's exclusive payment service but formed local partnerships with teams that included putting its logo on the San Francisco 49ers practice jerseys. Visa's share price has more than doubled since its NFL sponsorship was renewed.
FedEx (NYSE: FDX)
Official Worldwide Package Delivery Service Sponsor
NFL sponsor since: 2000
Wait, you mean UPS isn't the NFL's delivery sponsor? But what about all of those ads with the "That's" jingle they ran during games a few years back?
Well, that's ambush advertising. Since FedEx hooked up with the NFL, its share price has soared 84%. Contrasted with UPS' 10% share growth over the same span, that's not justat play. That's smart spending.
Campbell Soup Co. (NYSE: CPB)
Official Soup Sponsor
NFL sponsor since: 1998
When do you know a sponsorship hasn't worked? When your brand suddenly has "Curse" tacked on to the end of its name as a result.
Campbell's made its Chunky Soup the official soup of the NFL and has used more than a dozen NFL stars to promote it. Unfortunately, those stars keep getting injured or being beset by countless tragedies.
Denver Broncos running back and original soup pitch man Terrell Davis started shilling for Chunky back in 1998 after winning two Super Bowls and watched it all fade away as a result of knee injuries. Former Philadelphia Eagles, Washington Redskins and Minnesota Vikings quarterback Donovan McNabb filmed his first Chunky commercial in 2002 then fractured his leg, faced scrutiny from Rush Limbaugh, was paired with mercurial wide receiver Terrell Owens and then tossed his Chunky Soup on the field during a Super Bowl loss to the New England Patriots.
Then there were Kurt Warner, Jerome Bettis, Ben Roethlisberger, Larry Johnson, LaDanian Tomlinson: All had great careers until Chunky Soup introduced some measure of woe into their lives. None have suffered more than Campbell's, though, as share prices have tumbled 36% since its NFL sponsorship went into effect.
Official Tire Sponsor
NFL sponsor since: 2007
What do you think of when you think Bridgestone? Do you remember Tom Petty, Bruce Springsteen, The Who, The Black Eyed Peas or Madonna during a Bridgestone-sponsored Super Bowl halftime show? Even if that memory is of walking away from the screen or switching channels, Bridgestone's NFL sponsorship has done its job. If you still hear Bridgestone and think of the early 2000s, ailing Firestones, recalled cars and overturned Ford Explorers lining the roadside like dead elephants, Bridgestone likely has some more work to do. Bridgestone's Pink Sheets shares are up 37% since 2010, but gains from its NFL sponsorship are measured in its public image.