Theme Park Sponsorship

ROLLERCOASTER RETURNS
*Theme parks aren’t just wonderlands for the guests. Now, blue chip companies are exploring the promotional power of sponsorships.

words by > Christian Sylt

Building a theme park isn’t for the faint-hearted. Top rides co st upwards of $100 million, easily sending park construction costs soaring into the billions of dollars. But that’s just the start. Running these structures also costs billions, with eye-watering energy costs and thousands of staff required for operation and maintenance. But aft er decades of growth, the theme park market has almost become saturated, and experts are predicting that guest spending will slow. Finding increasingly innovative methods of financing has put theme park owners’ creativity to the test.

Profits are thin in the theme park industry. Admission sales generally bring in about 55% of a park’s revenues, with food and beverage comprising around 20%, games and merchandise 15% and other sources close to 10%. But the business model is overhead-heavy, meaning that admission r evenues provide little to the bottom line. Merchandise and costly food and beverage make up the bulk of a park’s profit, but this requires the turnstiles to be turning. It’s also the start of what seems to be a vicious cycle at the heart of the business.

Building new rides helps ensure that guests keep coming back, but the bulk of the capital to fund construction comes from profits brought in by guest spending. Parks are forced to look to other profit sources as spending slows, and this is exactly what is set to happen.

A recent annual study by PriceWaterhouseCoopers predicts that consumer spending at US theme parks will rise from $11.7 billion in 2005 to $13.4 billion in 2010, yielding an annual growt h rate of just 3.6%—a decline of 3% on the previous year’s result. As the industry slows, the giants at the top have the biggest shortfall to cover, and the players don’t come any bigger than Disney. Disney’s 11 theme parks worldwide had revenues of $9 billion in 2005, constituting almost a third of its total sales and a quarter of its $4.6 billion profit. In total, Disney’s parks welcomed around 100 million guests in 2005, and by leveraging this, Disney has found itself a lucrative source of income.

Although arts and sports sponsorships cram column inches, theme park sponsorship is lesser-known. Disney has cornered the market, owning the best-sponsored theme parks in the US, with numerous attractions having a corporate partner’s sign over the entrance. the deals have negligible overheads, and so the revenue is almost pure profit. One of the biggest spenders is also Disney’s longest-standing partner, General Motors.

The heart of GM’s deal is its sponsorship of Test Track, a high-tech rollercoaster themed like an auto proving ground. the ride in Epcot, Disney’s science-based park, opened in 1999, but as Mike Romeo, GM’s Test Track manager, explains, “we signed our first contract back in 1979 before there even was an Epcot.”

GM previously sponsored World of Motion, a tour through animated exhibits of the history of transportation. When it closed to make way for Test Track, GM extended its deal, which currently runs until 2009 and is believed to be worth $30 million.

The ride uses six-seater vehicles which accelerate to a top speed of 65 mph in around eight seconds. the theme of auto performance pervades the entire ride, and thanks to the wizards who create Disney’s attractions, GM’s branding is woven so seamlessly into the entire experience that it is almost subliminal.

The line for the five-minute ride regularly lasts up to 90 minutes, and this is a captive audience for GM. the line winds around a mock-up of a GM assembly plant complete with working exhibits. “they’re all based around safety and quality, and those are the messages we’re trying to convey,” says Romeo.

The product-placement in the ride itself is more direct. Whizzing around the high-banked oval, astute observers can spot an arrangement of GM vehicles in the center. And for those who missed it, every guest is funneled through a GM gift shop and glitzy showroom area on the way to the attraction’s exit.

“Exposure is absolutely key,” says Romeo. GM has its logo on all Test Track marketing materials and signage. In the park, the ride reaches the estimated 10 million guests visiting Epcot every year. But Romeo adds that the “key draw” was not just the exposure, but suitability of the target market.

In an environment where guests are relaxed and more receptive to whatever is thrown at them, the opportunity for product placement would make any marketing exec’s mouth water. And, unlike sports sponsorships, which are oft en loosely tied to a team, GM’s product is literally at the center of the attraction.

Disney’s guest profiles also perfectly fit GM-buyer profiles. they are mostly middle- and upper-income people with an average household income of $50,000 and almost all have high-school diplomas. Most are married with children, which allows GM to build early relationships.

Romeo says that the brand fit with Disney is particularly strong since Epcot gets a large number of international guests, and GM has an international portfolio of 12 brands. “So much of our potential audience doesn’t even know that some of these vehicles are produced by General Motors,” he says.

GM makes the most of its partnership by having a VIP lounge in Test Track for current and retired GM employees and their families. Even GM chief executive Rick Wagoner and his son have visited. All Epcot attractions have corporate lounges of varying sizes, but GM’s is the grandest, with floor-to-ceiling windows overlooking the park. Each year, around 30,000 guests enjoy free refreshments in its air-conditioned facilities, and its meeting rooms have included everything from executive management sessions to dealer meetings.

And although the deal is essentially exposure-driven, it has a B2B element in that GM supplies fleet vehicles to Disney World’s 50,000 employees. In fact, beyond the ride, GM gets equally invaluable Disney-linked coverage. Photo opportunities with historic Chevrolets litter Disney’s Victorian themed hotel, and its European Opel brand is used in the stunt show at Disney’s movie-themed park.

An obvious question that arises is how GM measures its return, and Romeo admits that monitoring the success of the deal is always challenging. “It’s not unlike airing a commercial on TV. I don’t think you’ll ever be able to put a true value on the deal.” Accordingly, his advice to potential sponsors is that to get the most out of it, “you have to approach it as a lot more than simply putting your name outside a building.” Thinking beyond this box can be challenging but may off er the richest returns.

Some parks, such as Universal Studios in Hollywood, are even using sponsorship to attract customers. Many of the park’s attractions are more than 10 years old, and it suff ered a 6% attendance drop last year. Ron Herman, senior vice president of partnership development for Universal Parks and Resorts, says that sponsors would undertake promotional eff orts to drive consumers to the park. “Media promotions are good for us, and we see an uplift in attendance when sponsors do promotions,” he says.

Universal Parks has hired Velocity Sports and Entertainment to bring in family-friendly park sponsors to its Hollywood and Orlando parks, and the firm is hoping to land four or five long-term deals a year. the Hollywood park already has a handful of sponsors, including Volkswagen, Coca-Cola, MasterCard and Chase Bank, with sponsorship revenues hovering between $6 million and $7 million for the parks on both coasts.

Technology companies are being targeted to supply a steady stream of new toys that can be integrated into rides, shows, interactive displays and park shops. “the tech sector is most interested in getting their products in front of consumers right now, because they have so many new things to put in front of people,” says Herman.

Whether guests are having too much fun to notice the brands remains to be seen. Ultimately, corporations could end up being victims of their own success, considering that the more subtle sponsorships become, the less they may be remembered. In any case, success in theme park sponsorship is far from child’s play.