Grizzlies owner Michael Heisley has said the thing that made him choose Memphis over Louisville was the involvement of FedEx.
FedEx will have naming rights for the new downtown arena, the latest in a long list of sports and entertainment connections that includes FedEx Field, the home of the Washington Redskins; the FedEx St. Jude Classic golf tournament; the FedEx Orange Bowl; commercials in pro and college football, basketball, and auto racing; and prominent placement in such movies as Cast Away and Driven.
FedEx chairman Fred Smith was a leader of the Memphis quest for an NFL team for more than a decade and owned the short-lived Memphis entry in the Canadian Football League, the Mad Dogs. While he was not personally involved with NBA Now, he is a keen student of the professional sports scene as both a fan and a CEO.
The Flyer asked him about the NBA and FedEx.
What is the deal between FedEx and the Grizzlies?
ÒAt this point there is simply the sponsorship of the arena. Now, we did make them a proposal for naming the team as well, but the NBA was not prepared to go there at this point. I donÕt know exactly what the amount is, but itÕs a fair price based on the comparables.Ó
How does a sponsorship make sense for your company?
ÒThe demographics of the people who make shipping decisions heavily favors sports marketing and, to a lesser degree, news marketing. Those two sectors are most effective for us in terms of broad opportunities.
ÒThe problem with all advertising today is that all outlets have been balkanized, first by cable television, second by the emergence of industry-specific publications, and third and most of all by the Internet. The trick in reaching broad markets is to have presentations where commercials or your brand name canÕt be cut out. So a sponsorship, whether itÕs the NBA or the Redskins stadium or the FedEx Cart Series or the FedEx Orange Bowl, is the total number of impressions. In Washington there is the added value of the political and international communities. In Memphis, obviously, itÕs our headquarters and important for our recruiting and quality of life. But both are commercially justifiable on the basis of millions of impressions.Ó
Sports commentator Frank Deford says the NBA today is as out of favor as day trading. But mutual fund manager and team co-owner Staley Cates says now is the time to buy. How do you see it?
ÒIÕm not really familiar with the economics of the NBA. The economics of reaching NBA audiences and owning an NBA team are two different things. IÕll leave the second one to Pitt Hyde and Staley Cates.Ó
In 1993, the expansion fee for the NFL was $150 million when Memphis was going after a team. In 1998, the initiation fee for the Cleveland Browns was $476 million, and a year later it was $700 million for Houston. You and Billy Dunavant had a bargain.
ÒThe reason sports teams sell for so much and athletes make so much is scarcity. It is just that simple. A lack of competition allows providers to claim premium prices. ItÕs also driven by the things I mentioned earlier. The added outlets of cable and the Internet make the ability to assemble a broad audience worth more even in a declining marketplace. ThatÕs why the Super Bowl charges more every year, and why we advertise on the Super Bowl.
ÒThe price of these teams is very remarkable. ThereÕs no doubt in my mind Memphis could have had an NFL team last time if it had been willing to do what Jacksonville did. Perhaps partly because of that experience or for whatever reasons, the city did do those things and it got the NBA team. The fundamental thing was building the new arena. That was the same thing the NFL wanted, absent which there was no chance to get either.Ó
