How Sports Greening Is Generating New Revenue

For leaders in the sports greening movement, the first few years have more than justified their hard work. The Portland Trail Blazers’ story is a good example, advocates say: Cost savings generated by the team’s green initiatives have continued to grow year over year for the past four years. And 2013 is shaping up to be the best yet in terms of savings from reduced energy and water use, and from a more than 80% landfill diversion rate.

But after four years, the growth curves at the venues of early adopters are starting to level out, says Justin Zeulner, senior director of sustainability and public affairs for the Portland Trail Blazers. While new strategies continue to yield new savings, the reality is that those who started greening several years ago have already plucked much of the low-hanging fruit. The organizations will continue to benefit financially from the steps that have already been taken, but finding new approaches that will boost the bottom line is likely to become more difficult in the coming years.

Zeulner was one of the speakers at the recent Wharton conference, “Leadership in Greening the Sports Industry,” sponsored jointly by Wharton’s Initiative for Global Environmental Leadership (IGEL) and the Natural Resources Defense Council (NRDC). This article includes information shared at the conference, in addition to insights gathered from experts in the field.

Given that many of the easy gains have already been realized, revenue growth from green sponsorships is likely to become more important as a business driver of the movement. “The strongest business case is to diversify, to think about operational cost savings, but also to think about brand and sponsorship opportunities,” says Alice Henly, resource specialist and coordinator of college sports greening at the NRDC. “And the business case is being made by a lot of the leaders who have jumped in with two feet in the first few years of this movement.”

“The strongest business case is to diversify, to think about operational cost savings, but also to think about brand and sponsorship opportunities.”– Alice Henly

Green Companies and Green Sports Sponsorships

Eager to associate their brands with the excitement of game day and the emotional connection fans have with their teams and each other, “some of the largest industries on earth pay millions of dollars to affiliate with professional sports,” according to the NRDC’s “Game Changer” report, and have for decades. What is new and growing rapidly in the world of sports sponsorships is the interest companies are showing in the industry’s sustainability work.

AEG, which owns or manages 68 sports and entertainment venues around the country, has seen existing sponsors gravitating toward green sports efforts, says Jennifer Regan, former director of global sustainability at AEG and now principal at We Bring It On, Inc., a consulting company specializing in the live entertainment and sports industries.

Speaking at the Wharton conference, Regan noted, “There aren’t climate deniers in the business community anymore, so sponsors, even if they aren’t a green brand, are looking for stories they can tell to their stakeholders about how they are investing in innovation and sustainability.” These partners, she added, “want to be able to tell their sustainability success stories alongside the excitement of our sports and entertainment venues.”

The success of such sponsorships depends to a large extent on the alignment between a company’s message and the green sports initiative it sponsors, observers say. That is why Christopher Bradlee, market development manager for BASF’s line of biopolymers in North America, was eager to partner with the Seattle Mariners’ zero-waste initiative. Bradlee saw a mutually beneficial connection between the venue’s zero-waste effort and his own responsibility for increasing awareness of zero-waste programs and the use of compostable products. And he knew that Seattle was an important market for his business.

According to Bradlee, a sponsorship with the Mariners’ program also fit the company’s new mission. Sustainability had been important to BASF for many years, but its significance jumped to a whole new level when the multi-billion dollar chemical firm revamped its mission last year and made going green a key focus.

Despite all these compelling reasons to sponsor the Mariners’ zero-waste program, Bradlee knew that BASF had a long-standing policy of not sponsoring sport teams. Still, he felt so strongly about the potential of a partnership that he went to the company’s board of directors to present his case. “We’re not sponsoring a team,” he told the board. “We’re aligning with the programs that are at the facility, and really we’re carving out new space.” The board agreed and gave Bradlee approval to launch BASF’s first sports project.

“There aren’t climate deniers in the business community anymore, so sponsors … are looking for stories they can tell to their stakeholders about how they are investing in innovation and sustainability.”– Jennifer Regan

The Mariners’ extensive zero-waste program, which has now achieved an 86% landfill diversion rate, includes a very popular program known as Sustainable Saturdays. As part of this program, fans engage in a green-themed trivia challenge highlighted on the team’s giant, energy-efficient LED display board. The prize is substantial — this year it was a tablet computer with a year of free data service — and so is the participation. And the result “from a brand perspective is very effective,” notes Bradlee.

At the end of the first year, BASF fielded a detailed survey of fans that attended games on Sustainable Saturdays, and found that the company had gained important brand awareness. The same survey also revealed that the sponsorship was building not just brand awareness but brand loyalty, which Bradlee says is key. Sustainability sponsorships in sports offer a unique value, Bradlee adds, and it’s different from the boost generated by sponsorships at non-sport facilities. “People are very loyal to their sports teams, and by having sponsorships at sports venues, that loyalty is transposed over to the brands sponsoring the games.”

When Dow decided to partner with the Olympic Games in Sochi, Russia in 2014, it was also interested in increasing its brand awareness and loyalty. Dow makes many products that are valuable to sustainability efforts, most notably in construction, agriculture, packaging and infrastructure. While these products are well known in the U.S., Teresa Angsten, Dow’s Olympic-Sports marketing manager, notes that “outside the U.S., people may know the Dow name but not necessarily all the products we have to offer in terms of solutions.”

Primarily a business-to-business company, Dow was less interested in the Olympics’ enthusiastic fans than it was in the enthusiasm of the Olympic Organizing Committee to “ensure the long-term sustainable development and flourishing of the city of Sochi, the Krasnodar Region and Russia as a whole,” Angsten states. As the Official Chemistry Company of the Olympic Games, Dow is introducing its sustainability products directly to those who will use them by working with local companies and marketing partners of Sochi 2104 to mitigate the Game’s direct carbon footprint.

‘Walking the Walk’

The competition for sponsors of green initiatives is intense, and teams and venues vie with each other to create authentic and effective greening programs that sponsors will find attractive, experts say. The Miami HEAT, the NHL and NASCAR, for example, have approached this challenge in three different ways.

The HEAT Group, which owns the Miami HEAT basketball team and manages day-to-day operations of AmericanAirlines Arena where the team plays, began its green sports initiatives not because they were green, but because those in charge considered such a program to be “fiscally responsible” steps that would save money and improve the bottom line, says Jackie Ventura, sustainability coordinator for the HEAT Group.

It was not until the NBA, in partnership with its environmental advisor, the NRDC, encouraged the arena to explore LEED certification that the organization realized just how green the facility had become. Already close to meeting LEED standards, the HEAT decided to pursue LEED certification, and began a search for sponsors. Both Home Depot and Waste Management were interested, and together invested $1 million in sponsorships because of the certification process that first year.

The participation of Waste Management was especially significant to the HEAT. In the past, the company had resisted repeated appeals to become a sponsor. “As much as we tried, as much as we pushed, as much as our corporate guys went after them, they would not sign on,” notes Ventura. Four years later, Waste Management is still sponsoring the HEAT’s sustainability work, and other sponsors have signed on as well, including Pepsi, Levy Restaurants and Pritchard Sports and Entertainment Group — which provide the venue with beverages, food and cleaning services, respectively.

The HEAT’s success with these first green sponsorships opened up a whole new market for the venue. “Now that we have this history and [companies] know that our success was not just a fluke, that we really do walk the walk,” the HEAT Group has decided to go after green sports sponsorships much more aggressively, Ventura says.

While teams like the Miami HEAT have formed individual relationships with sponsors around their green initiatives, there are also greening platforms (and green sponsorship opportunities) at the professional league level. For example, the NHL has consciously set about building a solid sustainability platform to offer potential sponsors, observers note.

“These are new marketing dollars. These partnerships didn’t happen before.”– Justin Zeulner

The NHL Food Recovery Program is the most well-known of the NHL Green initiatives, but two other programs are also contributing to a healthy environment and educating fans about important environmental issues. The league’s Gallons for Goals restores 1,000 gallons of water to a critically dewatered river for every goal scored during the regular season. Meanwhile, through its Hat Tricks for Trees program NHL Green has pledged to donate 50 trees to the Nature Conservancy’s Plant a Billion Trees campaign for every hat trick scored during the regular season.

These fan engagement activities are promoted at games and on the league’s website, and NHL Green is now beginning to actively exploit the considerable marketing power of its social media presence. (The league has more than two million followers on both Facebook and Twitter.)

This level of commitment reflects the kind of genuine concern for the environment that is driving so much of the green sports movement, observers say, noting that it also makes sense from a business standpoint, attracting like-minded sponsors that want to support the league’s initiatives with their advertising dollars.

NASCAR has been particularly determined and focused in securing green sponsorships. Mike Lynch, director of Green Innovation at NASCAR, says that NASCAR Green “was intended from the beginning to be a business.”

With millions of fans and billions in revenue, NASCAR did not skimp in launching its new initiative. Lynch showed the attendees at the IGEL/NRDC conference a 30-second TV spot promoting NASCAR Green, which was seen by 10 million viewers every week for 38 weeks. As a result of the green platform, a survey revealed that 75% of avid NASCAR fans were aware of NASCAR Green and believed the sport cares about the environment. On average, according to Nielsen ratings, NASCAR has an average of 100 million unique viewers.

As part of its Race to Green program, NASCAR Green also ran an online video vignette supporting its tree-planting program, sponsored by UPS, which motivated more than 100,000 fans to donate a dollar in support of tree planting in areas that had experienced a natural disaster. And extensive marketing of NASCAR’s newly branded 15% ethanol race fuel, trademarked as American Ethanol, has helped make NASCAR fans “50% more likely than non-fans to be accepting of ethanol in their street cars without any concern,” notes Lynch.

With programs like these, NASCAR Green has garnered 25 sponsorships in five years. Fifteen of those sponsorships involve existing NASCAR partners that have extended their sponsorships into the green space; the other 10 are new — not only to NASCAR but also to sports.

Long-term Relationships

If growth through green cost savings begins to level out once the low-hanging fruit is harvested, what are the longer-term prospects for bottom-line growth through green sponsorships? According to Martin Tull, executive director of the Green Sports Alliance, “There is a very large and growing green economy and many of those companies and potential sponsors are not yet involved in sports marketing.” (The Alliance is a nonprofit organization with a mission to help sports teams, venues and leagues enhance their environmental performance.)

The Trail Blazers’ Zeulner agreed when he spoke in September at the Green Sports Alliance Summit in New York City. Citing a recent study, he reported that sports sponsorships represent a $14 billion per year industry in North America. “And yet we are not seeing it being used much for the greener products and services that are out there,” Zeulner noted.

But do these potential green sponsorships represent incremental new business or will existing sponsors simply switch from one team or vertical to another? “Is it a zero-sum game?” Henly asked participants on a panel on sponsorships at the IGEL/NRDC conference.

Lynch said in response that green sponsorships of NASCAR race teams have been doubling every year. Four years ago, just 15 green companies bought sponsorships on race cars; the next year it was 30; last year it was 60, and in 2013 it looks like 120 green companies will sponsor NASCAR race teams. Lynch sees this expanding group of sponsors as “an opportunity space” that will allow NASCAR Green to continue growing without cannibalizing any of NASCAR’s other business.

Ventura also spoke about going after new sponsors, and Zeulner was enthusiastic at the IGEL/NRDC conference about his team’s experience and the “millions of dollars that have rolled in now that we are authentic and real in the space. These are new marketing dollars. These partnerships didn’t happen before.” Other leagues are seeing the same effect, observers say, as new sponsors such as Sprint and Continental Tire are signing up with the NBA and MLS respectively.

Attracting Sponsors and Students

In professional sports, green sponsorships often include elements designed to educate fans about sustainability and move them to action. In the world of collegiate sports, it is often the fans who are pushing their schools to join the green sports movement.

The pressure begins even before students enroll. Surveys by UCLA, the University of Michigan and Tufts University all show that many students choose schools based in part on their perception of the school’s sustainability profile. A survey conducted by the University of Colorado-Boulder found that this was true for 41% of the school’s incoming freshman. In a 2013 Princeton Review survey of college applicants, 62% said a “college’s commitment to the environment would impact their decision to apply to or attend a school.”

Where students get their perception of a school’s commitment to sustainability is key, according to Dave Newport, the director of CU-Boulder’s Environmental Center. Athletics, he added, is “the front porch of the university,” so having green sports initiatives in that realm is important to the university’s marketing efforts to students.

Those same green initiatives affect the school’s financial health as well, observers note. At CU-Boulder’s Folsom Field, the school’s popular mascot, a female buffalo named Ralphie, has also become the mascot for the football stadium’s zero waste program, “Ralphie’s Green Stampede.” The program has attracted several sponsors, including White Wave Foods, which makes and sells such well-known brands as Land-o-Lakes and Silk soy products. The White Wave sponsorship was “a very high-profile activation, with their brands on the scoreboard, on recycling cans, on t-shirts, in announcements — so lots of visibility,” says Newport. Ralphie’s Green Stampede also “got a lot of ink,” adds Newport, including an article in The New York Times.

As in professional sports, authenticity is critical to winning green sponsorships in collegiate sports. CU-Boulder’s zero waste program includes compostable food service and packaging, compost collection containers throughout the stadium, plant-based compostable bags to collect compostable material, the elimination of trash bins in favor of recycling and compost containers, and the active involvement of students in collecting all waste in and around Folsom Field.

And now that Ralphie’s Green Stampede has been successful and integrated with other sports at CU-Boulder, the university is considering an expansion that would reach beyond athletics. “What we’re looking for now,” says Newport, “is an integrated sustainability brand for all our zero waste activities all across campus.” The university hopes that such integration will help drive improvements in the effectiveness of the now disparate programs.

Inspired by a very successful campaign at the University of Michigan known as Planet Blue, CU-Boulder is also looking at the possibility of integrating all of its sustainability activities, from athletics to academic research, under one rubric. The University of Michigan has used such an integrated brand to attract sponsorships. “But they’re using athletics as the platform because of its high visibility, and right now it’s returning some pretty good value,” Newport notes.

Professional sports teams are well known for their marketing prowess. “Partnerships, that’s my industry, that’s what we do; we’re marketing empires,” said Zeulner during his presentation at the IGEL/NRDC conference. And he and other observers note that increasingly, as teams, leagues and venues join the sports greening movement, they are using their marketing know-how to forge partnerships with companies that are eager to associate their green brands with millions of loyal sports fans across the country.

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