McDonalds is in the business of what? The vast majority of
people will say the obvious, hamburgers. Fast food, happy meals, chicken
nuggets, etc. Wise investors realize that McDonalds sells franchises that sell
hamburgers in order to conduct its true business, real estate acquisitions. McDonalds
is a one of the world's richest real estate companies. While individuals can
"own" a McDonald's by being
approved for a franchise, the real estate under every McDonalds in the country
is owned by the McDonalds corporation. Owning commercial property on the corners
of pretty much every well populated city in the country is masterful! Not
burgers but land. This brilliant and misunderstood business concept repeats
itself in grassroots girls basketball.
The club I co-founded was "sponsored" by a shoe company last year. Here is how most "sponsorships" work
in girls basketball. A club becomes good enough to earn free shoe company
product ranging between $2000-$8000. In some cases, some well performing clubs
can get $10,000-$15,00 in product. Unlike the boys side of the game, where free
product and money can reach six figures, girls programs do not get actual
financial sponsorship from shoe companies. Being that girls basketball is not an
affluent sport, any free product given to girls to help celebrate the girls
game is a good thing. The negativity surrounding the "sponsorships"
comes through the misleading perceptions spewed by "sponsored" teams
and parents. Mind you, I was one and in
full disclosure, chose not to continue to be one PARTLY because...... I can count!
Sponsored teams are required to attend a particular number
of events. Let's do some math. Lets say Team Blue is "sponsored" by a shoe entity
for $6000 in product. With major discount in shoes, uniforms, bags etc., we
will assume they can outfit four teams of 10 players with the $6000 in product.
Hamburgers right? But further inspection shows that the "sponsored" team now must attend 2-3 required
events. Now, please take two of the four teams and buy plane tickets for the 20
players at a discounted price of $300 a ticket, a total of....$6000. Cool, a
break even right? No! The two teams still have not paid tournament registration
fees, hotels, car rental, food , and gas. Assuming that 20 girls will share 5
rooms at $100 a day for 6-9 days is an easy $3000-$4500, just for hotels. Add
tournament fees and the other expenses and Team Blue is easily $10,000 in the RED! As you can see,
"sponsored" does not mean free.
Are girls shoe sponsors selling hamburgers or are they in
the real estate game? The answer should be obvious. Team Blue outfits 4 teams
with "free" product. However, the club director sells his/her
additional 5 teams shoes and uniforms. A "sponsored" discount allows Team Blue to buy a
shoe and uniform combo for $120 instead of the $240 retail price. Team Blue goes
to the affiliated 5 teams, or 50 players, and sells them the combo of uniform
and shoes for a $150, a $30 markup, yet still a 33% discount from the retail costs. A win win. The kids needed
shoes and uniforms anyway, they received them cheaper than retail and are part of a "sponsored" club and all
the prestige that come with it. It's a win for Team Blue since now they have offset
the previously mentioned $10,000 debt by $1500, now only down $8,500. If they
can duplicate this to bring that down even further, great, if not, that's a pretty expensive trophy or title to
be chasing.
Shoe companies are doing a terrific thing by
"sponsoring" girls basketball clubs. Girls basketball is hardly a
lucrative market in terms of brand enhancement, unfortunately. I truly hope
this changes. Shoe brand enhancements to the bottom line comes with the Derrick
Rose's, Lebron James' and Steph Curry's. "Sponsored" teams are the
franchise owners selling real estate, in the form of product for shoe companies. That is what the business
is all about. Elite, Best, Circuits, National Championships etc, all are the
chicken nuggets and hamburgers of the true business, selling product. For this reason, a lot of "sponsored" franchise
owners sell elitist proclamations in order to enhance their personal club
brands. They know that they better keep slanging
those happy meals( acquiring the best players) because the land under their businesses ain't theirs!
