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Yum Brands, owner of KFC and Pizza Hut, in first push to publicize its corporate name.
NEW YORK (CNNMoney.com) - The best known name in horse racing -- the Kentucky Derby -- is changing that name to include a corporate sponsor.
The sponsorship by Louisville-based Yum! Brands (Research) continues the sporting industry trend that could eventually lead to most of the nation's top sporting events including a corporate sponsorship in its name. "The Kentucky Derby presented by Yum! Brands," is not much more jarring than "The World Series presented by MasterCard."
The owner of such well known fast food chains as KFC, Taco Bell and Pizza Hut is doing its first advertising to highlight the corporate name. The company believes it will see a benefit from its sponsorship of the Derby not in its food sales but in its stock price.
"Individual investors probably know our leading restaurant brands, but they don't know the Yum name," said Jonathan Blum, chief spokesman for Yum. "We currently have 20 percent of our shares held by individual investors. We'd like to increase that to 30 percent over time. Individual investors tend to be more loyal and they like to buy the stock of companies whose products they use."
Blum would not disclose the price of the sponsorship, but it is believed to be less than half the cost of a 30-second Super Bowl ad. Since the most recent ads sold for $2.5 million, that would put the value of the sponsorship at just over a $1 million.
Andrew Skehan, chief operating officer of Churchill Downs Inc. (Research), the race track company whose track includes the home of the Derby, says the company weighed any possible backlash against taking a corporate name.
"Change just inevitably brings criticism," he said. "Sometimes some of it is justified. I wouldn't say we were afraid; we expected some resistance. We firmly believe it was the right thing to do and that we have the right partner."
Having the sponsor's name trailing the event's name is significantly less intrusive to fans of the event, and also less valuable to the sponsor, said Marc Ganis, a sports marketing consultant. For example, the sponsors are far more memorable for college football bowl games which includes the name in the event name, the Tostitos Fiesta Bowl, rather than trailing the event name, such as "The Rose Bowl presented by Citi." In fact Ganis couldn't remember the name of the Rose Bowl's most recent sponsor when questioned about it.
Still even if such "presenting sponsors" are less valuable to the corporation putting up the money, Ganis also believes that the college bowls and the Derby won't be the last major sporting events to have such sponsorship attached to their names.
He predicted golf's U.S. Open, the Daytona 500 and even baseball's World Series will eventually include a corporate brand at least trailing the name if not preceding it.
"I don't know about the Super Bowl, but that's because the NFL would have to split so much of the money with the players association (due to the league's labor contract) that it might not be worth it," he said. "But I do think it's coming to most other events. There's too much money available, and too little disruption, not to have it happen."
As for the value to Yum from the Derby sponsorship, Ganis said it's probably a good deal.
"It's one major local institution supporting another major local institution. I think they'll get more than $1 million in value just out recognition of the stock symbol," he said.
Blum said the company is trying to limit any backlash against the sponsorship by fans of the tradition-rich race by limiting where its logos will be displayed during the race Saturday.
"We've been sensitive to the great history and heritage of the Derby," he said. "We had initially planned on placing signage between the spires. We chose not to do that because that would interfere with the historic architectural of Churchill Downs."
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