The company's tab to date was close to $500,000 -- Rice had been regularly loaning personal funds on an as-needed basis -- and it had yet to bring in a dime. But they knew they could find more capital and agreed to the policy board's request.
Rice and his sisters continued borrowing against $328,000 in certificates of deposit that made up their savings; an uncle loaned him $300,000 to be paid back when it was convenient. The company got a bank loan of $138,000 against its hard assets. Mitchell sold some oil interests to kick in about $175,000 in cash and credit.
In the fall of 1987 SportsBand broadcast at three tournaments. "We saw firsthand," Mitchell says, "the future of this product." Contrary to the players' concerns, the audio play by play seemed to have a calming effect on the gallery, and in December 1987 the tournament policy board unanimously approved the system.
Mitchell and Rice went back to the Tour in January 1988, expecting to pick up the agreement negotiated a year before and simply put pen to paper. But its officials had become more intrigued with SportsBand. "The broadcast raises the value of a tournament ticket, which is important to us," says the Tour's West. The Tour offered a new proposal: why not rework our relationship as a joint-marketing venture? The Tour would sell SportsBand sponsorships to its stable of corporate partners and help with operations and advance work. In return, it would get $10,000 per event to split 50/50 with each tournament, and a percentage of SportsBand's revenues -- 15% to start, increasing to 30% over the life of the contract.
For Mitchell and Rice, it sounded perfect. The affiliation would lend them leverage and prestige in the world of big-bucks corporate sponsorship, which they envisioned SportsBand entering. And it would help them address the question that they'd been mostly avoiding: how to make SportsBand pay.
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At that point -- early 1988 -- Mitchell and Rice were counting on three sources of revenue: receiver rentals, sale of tournament updates to such radio networks as the Mutual Broadcasting System and NBC, and corporate sponsorship. Their business plan outlined a 1989 schedule of 20 tournaments and $4.2 million in revenues; receiver rentals at $5 each to 10% of the crowd would make up 35% of sales, updates 20%, and corporate sponsorship 45%.
Selling the receivers to spectators and developing relationships with radio networks seemed to Mitchell and Rice challenging yet doable marketing tasks; market research with listeners at one tournament showed interest among spectators to be high, and Mitchell had already begun talking with radio people. But they guessed that finding sponsorship through cold calling would be enormously difficult, and that the PGA Tour, which had so successfully sold itself, could prove invaluable. "The PGA," figured Mitchell, "is a 900-pound gorilla to do our marketing for us."
SportsBand's title sponsorship would be priced at $1 million, for which a company would be incorporated into the program's name and get its logo printed on the receivers and SportsBand trucks, uniforms, and promotional materials. Secondary, or "presenting," sponsorships for individual tournaments would go for tens of thousands of dollars, depending on the prestige of the event. There would be commercials, too, but only in conjunction with such features as health tips, and they'd be made to sound like part of the broadcast.
Were the prices realistic? Mitchell and Rice didn't know, and the Tour was guessing; mostly they were working on instinct and a sense of what the market would bear. SportsBand would ask corporations to be visionary. If you believe in the concept, they'd say, help us get launched -- and you'll have a lock on affiliation with this unique and eventually prestigious medium.
Most media buys, however, are not made on instinct alone. Advertising-placement decisions center on how many impressions are presented to how many people how many times; sports marketing usually works the same way. "When you don't put a calculation on it, it's harder to sell," says Bill Neff, director of sales at Advantage International, a Washington, D.C.-based firm that matches sponsors with events. "The sophisticated clients now ask the hard questions, although they didn't for years."
SportsBand, reaching maybe 30,000 fans a day, couldn't sell on the numbers, but Mitchell was convinced that "sports marketing is, has been, and always will be an emotional, impulse buy." And with some 3,900 businesses plowing $2.1 billion into events from golf tournaments to marathons, according to Special Events Report, a Chicago newsletter that tracks sponsorship; with major sponsorships for weeklong tournaments running $500,000 to more than $1 million; with companies already pouring tens of millions of dollars into golf; and with the Tour's assurances that the pricing was in line, Mitchell figured sponsors would take the lure. "There's nothing that's going to be closer to people at these events than my broadcast," he insists. "Wouldn't common sense tell you that if you give sponsors a talking sign, which can bring their affiliation to life, it would be of value? Much more so than hanging a banner."
SportsBand signed a five-year contract with the PGA Tour in the spring of 1988, and for the rest of the year Art West and another member of the Tour's promotion department made sponsorship introductions. Mitchell and Rice built a staff at their Dallas headquarters, planned a 1989 schedule, and raised additional capital through a private offering -- getting $1.15 million in $25,000 units from 35 limited partners for 35% of the company.
At the end of the year SportsBand broadcast at two tournaments, underwritten by RJR Nabisco for $50,000 each. Mickey Nutting, a vice-president at Sports Marketing Enterprises Inc., which advises RJR Nabisco, says that while he initially considered the idea "a gimmick" back in 1986, he'd come around to it by the end of 1988. "I was impressed by those two shows. The receivers were used extensively by people out there." SportsBand seemed to be a good thing to tie into hospitality packages, he says, and was a good forum for pitching individual brands of RJR Nabisco products.
