Power Balance Deepens NBA Connection
Kings, Power Balance form arena naming rights agreement.
“Being active and staying healthy are founding, fundamental goals for Power Balance,” Rodarmel wrote in an e-mail message. “We will be working hard to actively support the league’s comprehensive health and wellness program, encouraging physical activity and healthy living for children and families. This partnership will truly come to life through grassroots programs and events in communities throughout Sacramento.” Rodarmel did express enthusiasm within the e-mail about working with a team in the Sacramento market.
For the Kings, the ability to align itself with one of 2010′s most popular sports brands is a no-brainer. The team has won 33, 38, 17 and 25 games in the four seasons prior to this year’s campaign. They’re 9-32 this season, and their arena is among the oldest and most outdated in the League. The Kings rank last of the NBA’s 30 teams in home attendance per game this season, with an average of 13,261 per game. Their average home attendance ranks the previous three seasons were 29th, 30th and 27th. Forbes valued the Kings franchise at $305 million in its 2009 NBA team value rankings, good for 22nd. Yet the Forbes rankings showed the Kings’ franchise value fell 13 percent from the previous year’s rankings, which tied the Memphis Grizzlies for the worst percentage drop of all NBA franchises. It’s evident how much the Kings have struggled, which makes it all the more valuable they be recognized with a brand popular with NBA players.
As much as Maloof described his excitement at beginning his relationship with Power Balance, he was adamant that this partnership will thrive on MS&E’s non-NBA platforms.
“It’s a very lucrative deal, and a lot of it is based on how well the bracelet sells in Power Balance Pavilion,” Maloof said. “And then the Las Vegas area. We’re going to sell them at our casino at The Palms. We’ll set up kiosks at The Palms.”
Maloof continued that he sees Power Balance playing a big role in the Maloof Money Cup. For those unfamiliar with skateboarding, the Maloof Money Cup is one of the most prestigious events in the sport. The three-day series of events began in Orange County, Calif. in 2008 and continued in 2009. A New York City stop was added to the Orange County event in 2010. The event will become international in 2011 as Kimberley, South Africa has been added as a stop in addition to Orange County, Washington D.C. and New York City.
“I want to come up with the Power Balance Maloof Money Cup wristband,” Maloof said. “It helps with your balance in skateboarding. That’s what I want to do next.”
Maloof claimed 27 cities have contacted him about hosting the Money Cup. He has his sights set on Thailand (likely Bangkok), Brazil and Mexico as Maloof Money Cup locales in 2012. “We’re going to go global with the skateboarding brand,” Maloof emphasized.
The deal’s impact
Clemente preferred to call the deal a marketing alliance, rather than a naming rights deal. He said he had never seen performance-based milestones like those seen in this deal. Yet, as mentioned earlier, the Kings would state only that the revenue sharing on Power Balance products sold in Sacramento and Las Vegas begin with the first product sold.
The team outlined that bracelets will be sold in-arena, on the Kings’ website and at retail locations throughout Sacramento. They wouldn’t offer sales projections for bracelets sold in-arena or at The Palms. Power Balance signage will be located throughout the arena and the brand will have a presence on TV and radio broadcasts and on the Kings’ website. The Get Fit With The Kings community platform will also incorporate the brand.
It’s a given that some consumers will be turned off to Power Balance now that the company admitted its products have no scientific backing. Power Balance never claimed there was scientific evidence supporting its product, but it did suggest people could benefit by wearing it. (Rodarmel’s brother, Josh, gave what can be considered a scientific explanation of the bracelet’s functionality in this SLAMonline interview from February 2010.) The company announced its admission January 5, providing awkward timing for the announcement of the naming rights deal a week later.
David Carter, a sports economic professor at the University of Southern California, explained the Maloofs’ risk in the deal is magnified since Power Balance will become integrated into business interests beyond just the arena’s naming rights. Of course, there’s another side to it.
“If the controversy about the lack of scientific evidence dies down or otherwise becomes a non-issue, then things should be fine,” Carter wrote in an e-mail message.
There is a part of the deal which carries minimal risk, and that’s the length of the agreement. At just five years, the Kings are less apt to be significantly affected if Power Balance’s grow is stymied.
“I think this is a stopgap deal,” Boland said by phone. “This is a team that wanted to have a naming rights deal so they could get something out of [the arena]. Power Balance is a company that would be hungry to do the deal, and they get some related business for the Maloofs. It’s not a horrible deal.”
Boland acknowledged the Kings could move, threatening naming rights portion of the deal. The team has been rumored to be interested in moving to various cities, including San Jose and Orange County. The Kings have repeatedly denied they’re searching to leave Sacramento.
When asked if Power Balance has an opt-out in the agreement should the Kings move elsewhere, the team responded by e-mail that there is “nothing related to relocation in the agreement.” The Kings did write that Power Balance has the right of first proposal if they secure a new arena deal in Sacramento.
Yet Boland came to the conclusion that Power Balance gaining exposure at The Palms and the Maloof Money Cup enables both parties — Power Balance and MS&A — to benefit equally from the partnership. He estimated the deal’s annual worth is “a little bit more or a little bit less” than Kings’ $750,000 per-year deal with ARCO. The per-year figure isn’t know, and it may not even be the most important face of the deal. What could ultimately be important to the Kings is that they have aligned themselves with a popular corporate sponsor at a time when that’s not an easy task to accomplish.