Official sponsors of the astros

Case Studies

Case Study 1: Tradition vs. Trend: A case study of team response to the secondary market Secondary Markets (Case Study )

Case Study 2: Is sport becoming too commercialised? The Houston Astros public relations crisis Communication and Public Relations (Case Study)

6. Presentation of Case Studies (NFL Secondary Ticket Market & Houston Astros Public Relations Crisis):

The Case Study Method

WHY CASE STUDIES ARE USED

The role of case studies in business education is to teach conceptual skills. Conceptual skills increase in importance as you move from junior to more senior management roles. It is estimated that a first line supervisor mainly needs technical skills but will need to have at least 12% of his or her skills mix as conceptual skills. A senior manager will in contrast need 40% of his or her skills mix in conceptual skills, about 43% in human and interpersonal skills, and the rest in technical skills.

A case study approach presents you with actual business situations, allowing you to examine them, apply your theory to explain corporate actions, and make assessments of alternatives. You may be asked to critically analyze a situation where a manager had to make a decision affecting the corporation in marketing, financial management, law, production, or management. This approach gives you some insight into how business really operates.

The following general guidelines may be used in preparation for written case analyses:

There may be several feasible courses of action regarding the solution to any case. It is more important to concern yourself with the process of problem definition and isolation, analysis and evaluation of alternatives, and the choice of one or more recommendations than to simply try to find a single answer. Very often, the right answer is the one that you can propose, explain, defend, and put into practice.
The Process of Analyzing a Case

A. Read and study the case thoroughly and efficiently. Read the case once for familiarity, noting issues that come to the forefront. Read it again. Get all the facts, making notes about symptoms of problems, root problems, unresolved issues, and roles of key players. Watch for issues beneath the surface.

B. Identify the problem(s). Get a feel for the overall environment by putting yourself in the position of one of the key players. Seek out the pertinent issues and problems.

C. Analyze and evaluate alternatives. Once the problems and issues are isolated, work at gaining a fuller understanding of causes. In what area of the unit do the problems exist? Why do the problems exist? What caused them? Examine and evaluate the strengths and weaknesses of the unit’s processes (communication, financial statements, sales reports, etc.). Check out the effectiveness of managerial competencies. Are the unit’s objectives and strategies compatible with its skills and resources?

D. Formulate a solid evaluation of the case.

Examine various alternatives. Weigh the pros and cons of each. Are they feasible? Decide which is most valid.

E. Make recommendations. Draw up your set of recommendations on what must be done and prepare an agenda of corrective actions. What recommendations would you make to the manager of this unit? What specific functions and activities does the unit have to perform in order to solve its problems? Are the recommendations workable? Affordable? A good rule of thumb to follow is to avoid recommending anything you would not do yourself if you were in management’s shoes. Give reasons for your recommendations.

CASE STUDY

Is sport becoming too commercialised? The Houston Astros’ public relations crisis

Keywords commercialisation Houston Astros naming rights public relations Enron

Executive summary

The practice of selling the naming rights of sports stadia to corporations is widespread in the United States. Crompton & Howard (2003) suggest that the sales of stadium naming rights will become more widespread and more financially lucrative as sports organisations seek additional revenue to offset higher salaries paid to players. Although the sales of stadium naming rights are thought to be a financial windfall, Chen & Stone (2002) describe many situations in which corporate naming rights partners have

encountered financial and ethical challenges which in turn pose challenges for sports organisations. This paper focuses attention on the extraordinary circumstances facing the Houston Astros Major League Baseball team when their stadium naming rights partner, Enron, collapsed in 2001.

The Enron case is unique in several respects. Before its fall, Enron claimed revenues of more than $100 billion and was named ‘America's Most Innovative Company’ by Fortune magazine. After its collapse,

Abstract

Throughout sport, the incidence of commercial sponsorship is increasing and shows no signs of slowing. This case study examines the negative consequences that can arise when a corporate stadium naming rights partner (Enron) becomes embroiled in financial and ethical controversies and how its collapse affected the team that uses the stadium for its home games (Major League Baseball’s Houston Astros). It examines public relations strategies and tactics the Astros used to disassociate themselves from Enron and to recapture public support.

Ric Jensen Instructor, Sports Management Program, Texas A&M University College Station, Texas 77843, US Tel: +1 979 845 8571 Email: rwjensen@ag.tamu.edu

Bryan Butler Doctoral Student, Texas A&M University

Peer reviewed

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Enron was associated with the dubious honour of having filed the largest bankruptcy in American history. To make matters worse, Enron was not just a financial disaster: to many experts it presented a moral tale of greed and callous disregard for the public good. Some of the words used to describe Enron include “notorious,” “scandal-tainted” and “a black eye” (Chen & Stone, 2002). Darren Rovell of ESPN commented: “Although many stadia still bear the names of sponsors that recently went bankrupt, the Astros’ situation might be the worst. Being associated with a bankrupt company is much different than being associated with a bankrupt company that has been charged with record shredding, insider trading and blatant accounting abuses.”

This article describes the process that the Astros went through to disassociate themselves from Enron, how they tried to incorporate ‘good citizen’ requirements into the criteria of choosing a new stadium naming rights partner, and community outreach efforts the team undertook to restore the confidence of fans. The paper suggests that comprehensive use of public relations strategies that stress the importance of building relationships between sports organisations and valued publics can be effectively used to cope with crises such as this.

Introduction

Today it has become increasingly difficult to watch a sporting event without being inundated by manifestations of corporate influence (Boyd, 2000; Chen & Stone, 2002). In Major League Soccer, the New York franchise is named for an energy drink and the team uniforms prominently feature the Red Bull logo (Freedman, 2006). As players run from one end of a National Basketball Association floor to the other, advertising signs can be seen from basket to basket, enticing fans to buy products and services (Clark et al, 2002). Perhaps the most egregious examples can be found in NASCAR, where stock car racers and their cars are covered head-to-toe and bumper-to-bumper

with advertisements and promotions (Pruitt et al, 2004).

It wasn’t always this way. In the minds of many fans, the ideal is to separate corporate advertising and promotion to create a sacred place, a cathedral of sorts, that is pure and untouched by the world of business (Boyd, 2000; Aden, 1993). A former Major League Baseball commissioner, A. Bartlett Giamatti, wrote that baseball is played so fans can remember a past that is graceful, energetic and free of the urban, commercial environment (Giamatti, 1998). Perhaps it’s not too surprising that some of the names given to public sports venues include gardens, parks and fields (Giamatti, 1989; Aden & Reynolds, 1993). In the movie Field of Dreams, a cornfield converted to a baseball diamond provided spiritual health and was even likened to heaven, in part because the site was rural, isolated and free from the trappings of consumerism (Aden, 1993).

For many years, sports stadia were named after a local trait of the community or one of the area’s landmarks or heroes (Chacar & Hesterly, 2004; Boyd, 2000). Today, the sports landscape has changed considerably as collegiate, amateur and professional sports teams are becoming totally immersed in corporate sponsorship, advertising and promotion (Crompton & Howard, 2003; Ashley & O’Hara, 2004). Almost every collegiate football bowl game has sold its naming rights to corporations – even the venerable Rose Bowl is presented by a corporate sponsor.

The bottom line is that many sports organisations throughout the United States have entered into business deals with corporate sponsors for the naming of stadia, in-stadium promotions, advertisements and promotions (Covell, 2001; McCarthy & Irwin, 1998). The reason such agreements are increasing in frequency and scope is obvious. As the cost of running major sports programmes escalates, administrators of sports franchises are faced with a series of unpleasant choices: they can raise the price of tickets, parking and concessions, drawing the ire of fans; professional teams can spend less on player salaries and risk a losing season; or they can enter into sponsorship

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arrangements with the corporate sector. When these factors are considered, corporate sponsorship may be viewed by some fans as acceptable compromise (Shelton, 2006; Walberg, 2004).

This paper aims to provide an overview of some of the issues associated with the commercialisation of sport. Specifically, the paper examines public relations issues that may occur when corporate sponsors of sports stadia become embroiled in controversial issues. The association of the Houston Astros’ baseball team with Enron Corporation is examined in depth.

Concerns about the increased commercialisation of sport

What are the societal implications related to the heightened presence of corporate involvement in sports? Chacar & Hesterly (2004) provide a historical perspective about the naming of Major League Baseball stadia. They describe how sports stadia in the United States were traditionally named after a geographic area, a local landmark, the name of the team or a prominent individual in the community. One of the first instances in which a stadium was named after a corporation occurred in 1926, when the Chicago Cubs’ stadium was renamed Wrigley Field. August Busch Jr, the owner of the St. Louis Cardinals baseball team, bought the franchise and renamed Sportsman’s Park Busch Stadium in 1953. In 1972 Rich Foods paid the National Football League’s Buffalo Bills to have their ballpark titled Rich Stadium (Ashley & O’Hara, 2001). Shelton (2006) sees corporate stadium naming rights as the logical outgrowth of a trend towards increased commercial sponsorship of sports teams that started when tobacco companies printed and distributed baseball cards in the 1870s. At the 1936 Berlin Olympics, the Adidas sportswear company provided free shoes to Jesse Owens and other athletes to generate free publicity and to build the reputation of their shoes.

Boyd (2000) suggests that stadium names in the United States historically made a statement about a

community to create a sense of place. When a corporation places its name on a stadium, however, the only message that is sent is that the firm paid a lot of money for this privilege. Boyd writes that stadium names are “critically important, anchoring the building as a memory place and making an identity statement about the city and its fans”. Boyd suggests that naming a stadium is essentially a commemorative event that communicates messages about the past and present relationships between teams, fans and cities. When corporate sponsors replace commemorative names, these tenuous relationships are threatened. Boyd further asserts that “corporate names communicate two critical identity statements: as an event this ‘game’ is actually a business that rewards the highest bidder and, as fans, team’s supporters are nothing more than paying customers.”

Several authors explore how increased corporate involvement with sports may affect the attitude of fans. Covell (2001) discusses how a few university sports programmes believe corporate sponsorship may adversely affect the reputation of the college and describes how the University of Oregon had to weather criticism after their corporate sponsor, Nike, was accused of underpaying workers in Third World countries. Reebok included a clause in its agreement with the Athletics Department of the University of Wisconsin that prohibited any university employee from criticising the company. Covell notes how former Harvard University AD Bill Cleary said that placing the Nike swoosh logo on sports uniforms indicated that that company owned those college sports programmes. Recently the presidents of the University of Michigan and Ohio State University refused corporate sponsorship of their football rivalry (Cowan, 2005), while Stanford University removed all corporate advertising from its football and basketball stadia. Similarly, the National Football League’s Cincinnati Bengals chose not to sell their stadium rights but instead to name their new ballpark after the team’s founder and coach Paul Brown, even though this decision cost the team more than $16 million (Pulfer, 1998).

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Public relations issues associated with sports naming rights

Corporate involvement in naming stadia runs along a continuum ranging from ‘have firms help pay to have a stadium built’ to ‘purchasing naming rights and ancillary deals’ (i.e. the rights to provide stadium food and drink) to ‘merely presenting the corporate name and logo prominently throughout the park’. Pepsi helped fund the new arena in Denver shared by the National Hockey League’s Colorado Avalanche and the National Basketball Association’s Denver Nuggets. As a result, Pepsi is credited with playing a lead role in bringing the Avalanche to Denver and preventing the Nuggets from moving to another city (McCarthy & Irwin, 1998). Crompton & Howard (2003) suggest that the practice of selling naming rights to sports facilities will become more widespread and that some leagues might sell advertising on players’ kit. When considering whether corporations should pursue purchasing naming rights, companies should identify whether the promotion may build the company’s reputation, expose the brand to more people and increase sales of the product or service (Ashley & O’Hara, 2001; McCarthy & Irwin, 1998). Walberg (2004) suggests that corporations should consider the success of the club on the field, the aesthetic appeal of the ballpark and their profile in the marketplace. Clark et al (2002) suggest that corporations that enter into naming rights agreements often see an increase in stock prices. When Chicago-based Bank One Corporation wanted to reposition itself as a national bank, the company paid $66 million over 30 years for the naming rights to the Arizona Diamondbacks’ new Major League Baseball stadium. Alvarado (2006) suggests that corporations that sponsor collegiate athletic programmes can often expect to create positive associations with local fans.

Chen & Stone (2002) describe professional sports teams that struck naming rights deals with 27 corporate sponsors from 1998 to 2000 and present many of the challenges these franchises encountered. Firms that purchased naming rights for the stadia of

the Baltimore Ravens (PSI Net), the St. Louis Rams (Trans-World Airlines), the St. Louis Blues (Savvis) and the Carolina Panthers (National Car Rental) went bankrupt or became defunct. Radin (2001) described the situation this way in The Pittsburgh Post-Gazette:

“So the Baltimore Ravens, the New England Patriots and St. Louis Blues are all in jeopardy of not getting paid for the naming rights on their homes. At best, they’re risking major embarrassments because they may have to restructure their deals or even change the names on their stadiums. At worst, they lose out on a substantial sum of money if the companies whose names adorn their facilities default on their agreements.”

Several other cases provide instances in which a stadium naming rights agreement created a public relations liability (Crompton & Howard, 2003; Siebert & Brovsky, 2001; Leone, 2002; and Kass, 2000). In San Francisco, fans protested after the name of historic Candlestick Park was sold to 3Com. Siebert & Brovsky (2001) describe how Denver residents refused to acknowledge Invesco Field, the corporate name of the new stadium built for the National Football League’s Denver Broncos. Denver mayor Wellington Webb opposed giving the stadium a corporate name that would take away from the tradition of referring to Denver as ‘The Mile High City’. He said: “The Mile High tag marking the Denver stadium’s perch 5,280 feet above sea level is a priceless local icon that shouldn’t be traded away” (Kass, 2000). The stadium is now officially titled Invesco Field at Mile High, even though most fans keep on calling the structure Mile High Stadium (Alvarado, 2006).

Ray Schaetzle of the National Basketball Association’s New Jersey Nets cautions that the potential brand damage from having a disgraced company’s logo on your ballpark is hard to estimate. He said (quoted in Leone, 2002): “At the minimum, chief financial officers have to do credit checks on

sponsors to make sure they are worthy from a public relations perspective and financially sound.” Tim Hofferth of Nelligant Sports Marketing suggests the value of stadium naming rights may decrease when the name has to be changed. He said (quoted in Leone, 2002): “What’s the value of naming rights when a stadium has to be rebranded more than once? Rebranding causes confusion and that’s the very thing marketers want to avoid.”

As a potential remedy, Minnesota Twins president Dave St. Peter suggests that franchises must consider public relations concerns when selecting a corporate naming rights partner. “From an organisational perspective, we’ll be looking for [stadium naming] partners who mirror the same values of affordable entertainment, who are good stewards in the community and who are really committed to creating a positive experience for fans” (quoted in Vohmhof, 2006). Moorman (2002) suggests that franchises may want to restrict the ability of a corporation to transfer or sell stadium naming rights if a financial or ethical disaster occurs. Moorman wrote:

“The recent bankruptcy of Enron and the resulting Justice Department investigation created a… complex bundle of concerns for the Houston Astros. It is one thing to have a corporate partner that is encountering financial difficulties that may affect its ability to fulfill its naming rights agreement and create some legal and financial challenges for the stadium owner [or] sport organisation; however, it is quite another to have a corporate partner whose financial troubles include criminal fraud allegations and alleged violations of state and federal laws, as well as the public trust. In recent years, we have seen an increased presence of ‘morals clauses’ and ‘good behaviour clauses’ in professional player contracts… Stadium owners [and] sport organisations need to consider whether provisions need to be included that will allow them to cancel the agreement if conduct such as that alleged in Enron’s situation occurs.”

Brief overview of the rise and fall of Enron

Prior to its bankruptcy in 2001, Enron employed more than 21,000 people and was one of the world’s leading energy providers. The company claimed revenues of more than $101 billion in 2000 and was named ‘America’s Most Innovative Company’ by Fortune magazine for six years in a row. However, the company collapsed in 2001 and filed the largest bankruptcy in American history on 2 December 2001 (Schwartz & Watkins, 2003).

One of the worst allegations against Enron was that CEO Ken Lay and other executives may have had insider information about the pending collapse and sold Enron stock at a profit while employees were being forced to hang onto Enron shares that would soon be worthless. Even worse, the life savings, pension funds and children’s college funds of many Enron employees were almost exclusively tied up in company stock (Lehrer, 2002). Columbia University law professor John Coffee, interviewed on the Public Broadcasting System Lehrer NewsHour described public attitudes about Enron’s collapse and how company employees lost their life savings while company leaders may have profited from the downfall:

“The public is intensely angry because this is a case that looks like the captain of The Titanic jumping into the lifeboat while he locks up all the crew down in steerage… That’s something the public does understand and it’s created a firestorm.”

Following the bankruptcy petition, a number of Enron officers, including Lay, were indicted for a wide range of financial crimes including bank fraud, making false statements to banks and auditors, securities fraud, wire fraud, money laundering and insider trading.

The scandal has become so ingrained in American culture that the word Enron has now evolved into commonly used terms to describe corporate wrongdoing. For example, to be ‘enroned’ is to be victimised by the company you work for (Beatty, 2002). An ‘enronian’ is an Enron employee or investor

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who has suffered from corporate scandal through no fault of their own (Frank, 2002).

The relationship between Enron CEO Ken Lay and the Astros goes back to well before the stadium was planned, approved and built. Sloan (2006) describes how Lay played a prominent role in getting out the vote among Houston’s African-American community to win public funding of the stadium. In fact, Schwartz & Watkins (2003) suggest that Lay seemed to be much more interested in raising money for the stadium and other philanthropies than running Enron. In fact, Lay threw out the first pitch at Enron Field in the 2000 season opener.

The Houston Astros’ new ballpark, initially known as The Ballpark at Union Station, opened on 9 April 1999. In April 1999, Enron signed a 30-year $100 million deal for the naming rights to the new ballpark. At the time, this agreement was the tenth most valuable naming rights agreement in sports in terms of total value (Rovell, 2002). As part of the naming rights agreement, Enron’s name was adorned on all interior and exterior signage at the stadium and on uniforms worn by game-day staff. Enron spent $108,000 for a luxury suite and $90,000 for season box seats, as required in their agreement to be the named sponsor of the Astros’ ballpark.

How Enron’s collapse affected the Astros In December 2001 Enron filed for the biggest Chapter 11 bankruptcy proceedings in the history of the United States (Duarte, 2002). The bankruptcy put 4,500 Houston-area residents out of work and wiped out most of the savings in employee pensions. Investors who purchased Enron shares at the time the company was most prosperous lost millions as the stock price plummeted in 2001 (Clayton et al, 2002). The Astros quickly filed legal action to force Enron to make a decision on whether the company wanted to honour its naming rights agreement. The club acted rapidly in order to have the name changed by the time their season opened on 2 April. In filing with the court, AstrosÆ spokesperson Pam Gardner expressed the club’s point of view about the scandal:

“The Houston Astros have been materially and adversely affected by the negative public perception and media scrutiny resulting from Enron’s alleged bad business practices and bankruptcy. We have worked diligently with Enron to transition the stadium name, but we’ve been unsuccessful. At this point we have no other alternative but to seek relief from the bankruptcy court.”

Ken Charles of Houston’s KTRH radio, which broadcasts the games, explained the need to change the stadium name rapidly (Rovell, 2002):

“Enron’s has to be off that building before March 29 when the Red Sox come into town for the first game here. Once the game is on television and it’s televised in other markets, no one here wants it to be called Enron Field. It just leaves an unpleasant taste in people’s mouths.”

Initially, the Astros had asked that Enron allow it to move forward with a new naming rights agreement but Enron refused (Glater, 2002). Enron officials responded that their main concern was trying to recover some of the $3.4 million they had paid the Astros to name the stadium in August 2001. Enron spokesperson Karen Denne said: “Our agreement with the Astros is in full force and effect, which is in the best interest of our creditors. The naming rights agreement is a valuable asset in the estate.” Darren Rovell of ESPN Sports Business described the public relations dilemma that faced the Astros:

“The Astros now must contend with the public relations fallout from a deal with a company whose business practices are being investigated by a [United States] Senate committee. It used to be that stadium naming rights were considered an image risk only to the corporate sponsor. As the Enron scandal deepens, however, the company’s black eye could start to hurt the team.”

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Chen & Stone (2002) describe the Enron collapse as “notorious” and “scandal-tainted”. Sloan (2002) suggested that the collateral damage caused by the Enron collapse was so widespread the ballpark should perhaps be referred to as the ‘House of Cards’. Leone (2002) described how the Enron scandal caused public relations challenges for the San Francisco Giants baseball club. The Giants asked a federal bankruptcy court judge to force Enron to remove its logo from the scoreboard at Pacific Bell Park because Giants’ officials didn’t want fans to get the impression that the franchise supported the troubled firm.

The process of choosing a new stadium naming partner

In 2001 the Astros bought back the remainder of Enron’s naming rights for $2.1 million over a period of 30 years. In February 2002 the ballpark was referred to simply as Astros Field. Sports marketing consultant Dean Bonham of Denver suggested that the rights to rename the park could earn as much as $3.3 million annually. “I’m very bullish on the Astros eventually coming out on top of this financially. Part of it is it’s quite likely there would be a good bit of public rejoicing for the company that comes in and removes the Enron name” (Berger, 2002).

From February to June 2002 the Astros entertained proposals from 10 corporations about purchasing the stadium naming rights (Schepp, 2002). Some of the entities that showed interest included Southwestern Bell, Texaco, Continental Airlines, Dynergy and Conoco. On 5 June 2002 the team announced that Minute Maid would pay more than $170 million over 30 years to become the new stadium naming sponsor and to become the exclusive vendor of beverages in the stadium (Schepp, 2002). Minute Maid spokesman Dan Shafer said that acquiring the rights to name the ballpark was a big step into the limelight for a company that was largely invisible to the average person in Houston. He suggested that the naming rights agreement would tell people throughout the US

that Minute Maid was based in Houston, would create a connection between Minute Maid orange juice and baseball, and would build a positive relationship between the company and Astros fans (Nichols, 2002). Several experts disagree about the value of the stadium’s naming rights in the wake of the Enron scandal. Walberg (2004) suggested that Minute Maid may have overpaid and that the stadium deal may not increase the company’s juice sales and market share since the brand is already well known. On the other hand, Crompton & Howard (2005) suggest the Minute Maid strategy makes sense because the company has been a part of the Houston business community for more than 35 years.

As part of the name change, the Enron name and logo had to be removed from a huge clock and more than 300 signs in and around the ballpark. The city of Houston had to change the signage on streets and maps of the area around the ballpark that referred to the ‘Enron Field District’ (Schepp, 2002).

Public relations issues associated with Enron’s collapse In a motion filed with a New York court overseeing Enron’s bankruptcy, Astros attorneys wrote:

“Thousands of people who have been adversely affected by the Enron collapse are being reminded on a daily basis of this continuing tragedy… The Enron logo displayed on the stadium wrongly suggests to the public that the Astros are associated with the alleged bad business practices of Enron. As it stands, the Houston Astros arguably are viewed as Enron’s team… This court should require Enron to make an immediate decision regarding the licensing agreement so the Astros will not continue to be harmed throughout the 2002 baseball season.”

The Houston Business Journal (2002) cited club officials as describing the negative public perceptions and media scrutiny related to the Astros’ association with the Enron failure as “a public relations

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nightmare”. Crompton & Howard (2003) wrote: “To the Houston and broader American public, Enron quickly became a pariah. The name became synonymous with unethical behaviour, shame and failure. The continued use of the name Enron Field stigmatised the Astros.”

Rovell (2002) discussed how Enron’s collapse created a scandal for the Astros:

“Although many stadiums still bear the names of sponsors that recently went bankrupt, the Astros situation might be the worst. Being associated with a bankrupt company is much different from being associated with a bankrupt company that has been charged with record shredding, insider trading and blatant accounting abuses.”

Public relations professionals speculated that the damage to the Astros could be long-lasting. “The Enron name will have mud on it for at least four or five years and that’s only if [the Astros] can somehow recover from the mess they created,” said Mike Paul of MGP & Associates PR. Marc Ganis of the Sportscorp Limited sports consulting firm commented that the Astros “should be working to get that name off the stadium as soon as possible. Every single time [the media] announce the field’s name in every single broadcast, there will be jokes about the Astros and jokes about Enron”.

George Vecsey of The New York Times suggested that the Astros should put the money Enron paid for the naming rights into a trust fund for all the people who lost money because of the scandal: “Thousands of people have lost salaries, stock value and pensions because of the friendly folks from Enron. And anybody who can scrape together a few dollars for a ticket must contemplate walking into Enron Field, named for a company synonymous with pumped-up stocks and the shredding of documents. Who wants to go to a ballpark with a name that stinks? Baseball [because of Enron] is now stuck with a name that represents the dangerous friendship between rapacious business and complacent government.”

Summary

It seems inevitable that corporate sponsorship of sport is only likely to become more widespread. The dimensions of corporate sponsorship will probably include stadium naming rights agreements, the naming of teams after corporations, in-stadium advertising and off-the-field promotions.

There is considerable debate about the extent to which the increased linkages between corporations and sport ought to be embraced or viewed with caution. One line of thought argues that the naming of sports stadia is an aberration that only serves to disconnect franchises, fans and communities. According to view, sports stadia should ideally be named to honour the traits of a community or its heroes. On the other side, advocates of corporate tie- ins suggest that naming rights agreements can benefit the sponsoring firm as well as sports organisations. Through these arrangements, sports franchises can receive additional revenues while the corporate sponsor can achieve public relations and marketing objectives. It is unclear whether fans might prefer walking into a ballpark with a corporate name that is adorned with advertising than absorb higher prices for tickets, parking and concessions. It seems as though the only way to maintain the purity of sport (a future without advertising) would be to reduce player salaries and the profits enjoyed by team owners; these scenarios seem unlikely.

Several recent instances point to the public relations challenges that corporate sponsorship may cause, especially when the corporate sponsor gets into financial, legal or ethical trouble. The liabilities associated with entering into corporate naming rights agreements are magnified to a grandiose scale by the ill-fated association of the Houston Astros with the monumental collapse of Enron Corporation. First, Enron’s fall represented the largest bankruptcy in American history. Second, Enron was much more than a case of financial failure caused by an innocent hiccup in the global market. In stark contrast, the collapse of Enron has become firmly associated in the

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American psyche with corporate greed and a callous and reckless disregard to fiscal responsibility. Worst of all, Enron exemplifies corporate indifference to the well-being of company employees, stakeholders and the public.

The way in which the Houston Astros reacted once the Enron scandal broke provides several public relations lessons for sports organisations. First, the Astros went to court to force the removal of anything related to Enron from the franchise. Second, even though Astros president Drayton McLane shared a deep personal relationship with Enron CEO Ken Lay, the ballclub took determined steps to disassociate itself from the firm. When a new corporate sponsor was sought, the Astros put emphasis on finding a trusted corporate partner with established ties in the community and, as far as could be determined, a squeaky-clean corporate image.

This case also offers practical insights for public relations professionals. First, ballclubs may want to consider incorporating ethics clauses into naming rights agreements associated with the corporate branding of stadia, uniforms, merchandise and a wide array of paraphernalia. Such clauses could take a similar form to provisions put into the contracts of professional athletes. Second, sports franchises should do contingency planning to prepare for the eventuality that corporate naming rights sponsors might get into trouble that could affect the reputation and image of the franchise. Finally, the Astros demonstrated that even though the process may be painful and difficult to overcome, organisations can emerge relatively unscathed from these potential public relations nightmares.

© 2007 International Marketing Reports

Biographies

Ric Jensen has developed a sports public relations class he teaches as an adjunct lecturer for the Sports Management programme at Texas A&M University. He also teaches college courses Public Relations

Principles and Strategic Public Relations for Organisations. Jensen is a former newspaper sports writer. He has recently published papers about the public relations controversy surrounding the naming of Houston's Major League Soccer franchise.

Bryan Butler is a doctoral candidate in the Sports Management programme at Texas A&M University. He has worked as a sports journalist and editor on newspapers. His doctoral research examines how sports are portrayed in the mass media.

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