Yield Management Is Biggest Sponsorship Challenge, MSG's O'Neil Says

MSG President Scott O'Neil last week took some time to explain the organization's less is more philosophy when it comes to sponsorship. "Can you go out and do a deal in the auto category or is it better for this organization to do six deals or three deals or five deals?" O'Neil asked. "That's what we wrestle with every day and that becomes kind of a little bit of mixture of art and science."

O'Neil says that MSG is "pretty far along" with a couple deals that may show the prudence of doing "one or two deals" in a category as opposed to "four or five." Below is a transcript of what O'Neil had to say about Madison Square Garden's blockbuster Chase deal, ongoing partnership strategy and the challenges it faces in managing sponsorship for the World's Most Famous Arena.

From MSG's 2012 Q2 earnings call, transcript courtesy of SeekingAlpha.com:

"When you do a deal with a company like JPMorgan Chase at the marquee level, which is kind of our top partner, and they're across all our properties, all our assets fully integrated. And the one piece that was missing the credit card piece which is much more retail other than the bank, and all through other lines of business. AMX was our incumbent for some time and among our largest partners, and this deal expanded upon that. So, to give you a sense, if these were standalone, it'd be among our top partners.

And I guess, I don't want to minimize the impact of Chase and the impact. They have about 49% penetration in the overall market with their cardholders, card members. For us, as marketers and those of us who sell tickets for a living know that their reach and depth and the integration between their card members, the retail banks, their ATM network, we think not only give us a short-term boost and lift, but also kind of more long-term horizon gives us a chance to really blanket the market the way we haven't been able to in the past.

So, we're thrilled about the relationship, the partnership and the way they cover the market. In terms of where we are in the market, yes, we do have a full pipeline as I mentioned. Our biggest challenge quite frankly is more of one of yield management and that is a question of -- we don't have an inventory problem. We've managed that very tightly and efficiently, so the issue won't be do you have enough big or anchor assets to drive big deals, we have that covered. This is a company that is wide and has a breadth and depth that's unmatched when you're in the marketplace.

But one of the old management where -- can you go out and do a deal in the auto category or is it better for this organization to do six deals or three deals or five deals? That's what we wrestle with every day and that becomes kind of a little bit of mixture of art and science. So, I will tell you that we are pretty far along with a few deals and we hope in the next six months that it ends up, that it's more prudent to do deals with one or two partners in the category rather than four or five."

photo credit #sellingtag