Sports Team Branding through Corporate Social Responsibility in North America

An analysis of the Toronto Marlies' social activities scheme


Bachelor Thesis, 2011
81 Pages, Grade: 1,7

Excerpt

Table of Contents

Abstract

List of Figures

List of Abbreviations

1 Introduction

2 Brand and brand building in professional team sports
2.1 Definitions
2.2 Importance of a brand for sports teams.
2.2.1 Brief overview and history of professional team sports in North America
2.2.2 Unique characteristics of the North American professional team sports system
2.3 Benefits of a strong sports team brand
2.4 Building a sports team brand – The Ottawa Senators approach
2.5 Summary

3 Corporate Social Responsibility
3.1 Corporate Social Responsibility in corporate businesses.
3.1.1 Definitions.
3.1.2 Benefits and criticism
3.1.3 CSR and brand building
3.1.4 Four ideologies.
3.1.5 Geographic levels
3.1.6 Points to consider when establishing a CSR program
3.2 Corporate Social Responsibility in professional team sports
3.2.1 History of CSR in professional team sports
3.2.2 Obligations for a social engagement
3.2.3 Advantages and possibilities.
3.3 Summary

4 A practical analysis using the example of the Toronto Marlies
4.1 Approach of the analysis.
4.2 The SWOT-analysis.
4.2.1 Overview and definition
4.2.2 Internal environment
4.2.3 External environment
4.3 The SWOT-analysis of the Toronto Marlies.
4.3.1 History and ownership of the franchise
4.3.2 Internal environment
4.3.3 External environment
4.4 Presentation of the results in a TOWS-matrix
4.5 Suggestions for improvement

5 Summary and predictions

Appendix

Literature review

Disclaimer

Abstract

Corporate Social Responsibility is gaining importance as a marketing and communication tool for professional sports organizations nowadays. In societies packed with different possibilities and alternatives to professional sports, organizations get involved more socially and community-based, aiming to enlarge their fan base and to build a favourable reputation. By coining vitally important bonds and creating valuable content by raising awareness for social needs, sports teams enhance awareness and ingrain themselves into a city or region. It is not unusual that professional sports organizations nowadays follow the device: 'doing what is expected by the society'. Indeed, societies expect proximity and demand that professional sports franchises 'pay back' the society for being a loyal supporter through donations, creating awareness for charitable causes or player appearances.

The example of the Toronto Marlies Hockey Club demonstrates that not only large or global business enterprises have a broad CSR scheme in place, but also sports franchises deal with socially responsible acting in different areas. Representing an unique example due to the ownership situation and geographical placement of the franchise the Marlies accomplish all five areas CSR is served in today, although only the area 'community activities' is served by the Marlies organization semi-independently. As property of the MLSE, the Toronto Marlies moreover contribute mainly to the activities of the 'MLSE TeamUp Foundation' and execute the overrided MLSE CSR scheme.

According the results of the SWOT-analysis, improvements regarding their social activities scheme suggest to consider females within scope of support as well as following politically addressed community activities. In addition to that, a broader employee welfare concept benefits the reputation of the Toronto Marlies within the MLSE organization as employees seeing the Marlies only as a diving board. Last but not least, using university research through their internship program provides the possibility to know current developments in marketing, branding and CSR from first hand which can be used as an advantage towards the other six professional sports organizations in Toronto.

List of Figures

Figure 1: Broadcasting revenues of the NFL, NBA, MLB and NHL 1995-2005

Figure 2: Three steps brand building process of the Ottawa Senators

Figure 3: The triple-bottom-line and the five CSR areas nowadays.

Figure 4: The three approaches to aligning brand and CSR

Figure 5: Brand building through Corporate Social Responsibility

Figure 6: Ranking of Strengths and Weaknesses in a SWOT-analysis

Figure 7: Ranking of Opportunities and Threats in a SWOT-analysis

Figure 8: Average attendance: Seasons 2005/06-2010/11

Figure 9: The six other professional sports organizations in Toronto

Figure 10: Toronto Marlies: TOWS-matrix

List of Abbreviations

illustration not visible in this excerpt

Chapter One: Introduction

Professional sports franchises in North America have grown over the past decades from small business into corporate undertakings and are commonly worth mid to high triple-digit million US dollar (Badenhausen 2011, p.u.). Nowadays, these sports organizations do not only need to have an understanding of the history of professional team sports and their characteristics, but also have to provide a broader knowledge of business practices in general as more money is involved in professional sports and risks rose as a consequence.

Hence, marketing and in particular brand building have become major issues aiming to ensure awareness and beneficial reputation for the organizations within a city and their respective community. In the summer of 2011, the example of the Atlanta Thrashers revealed once again how important it is to focus on building a strong brand. The Thrashers were unable to identify themselves properly which resulted in an unsuccessful market placement, an unsatisfying relationship with the inhabitants of Atlanta and consequently missing backup from various sides. Following, attendance decreased over the years and sponsors did not prolong their engagements. The insurmountable financial difficulties lead finally to their relocation to Winnipeg. Knowing the city, the inhabitants and the whole country in their back, initial difficulties such as growing a fan base and attracting people for the sports are nearly excluded for the new organization. Nevertheless, one of the first actions the Winnipeg Jets accomplished after installing a foundation supporting the community in social activities, was to announce community relation engagements. Although the Jets could have chosen a smoother start for their business operations, they chose a marketing and communication tool which can be found especially in North America to a broad extent: Corporate Social Responsibility (CSR). Not only applied in regular business practices as early as the 1960s, this method of creating bonds by presenting themselves as members of the community also found its way to professional sports only a decade later.

This thesis firstly aims to outline the matter of brand building and Corporate Social Responsibility theoretically. Secondly it intends to apply this theoretical knowledge by suggesting further improvements for the professional sports organization of the Toronto Marlies Hockey Club having analyzed the current situation concerning the internal and external environment and shown the results in a TOWS-matrix.

Chapter two provides a brief introduction into the topic of brands and the brand building process, including as well a short overview of the history of professional sports in North America and unique characteristics of this respective sports system nowadays. Naming the benefits of a strong brand in the following gives a better picture of why companies and sports organizations today are enlarging their awareness of this topic. Using the example of a major league hockey franchise, the Ottawa Senators, a brand building process is outlined to bridge in the following to chapter three and Corporate Social Responsibility.

Hence, chapter three focuses on CSR in general businesses on the one hand and CSR practices in professional team sports on the other hand.

The first part of this chapter provides information about the history of CSR, CSR and brand building, the four ideologies, geographic levels and points to consider when establishing a CSR program. The second part aims to present CSR in professional sports by including the matters of the history of CSR in professional sports, obligations for a social engagement as well as advantages and possibilities.

Chapter two as well as chapter three close with a brief summary of the research findings.

Chapter four describes in an introducing part the approach of the analysis and outlines theoretical background information about the SWOT-analysis, the applied analysis tool.

In the second part of this chapter the practical analysis begins with an overview of the Toronto Marlies, providing information about the history and ownership situation.

The internal environment provides further information regarding the management situation, the marketing and branding strategy as well as the Marlies' current CSR scheme, whereas the external environment in the following presents information about the competitors' schemes, hockey and sports related current issues as well as social concerns and issues in Toronto and Canada.

Chapter four closes with the presentation of the results in a TOWS-matrix and provides suggestions for further improvement in the area of CSR for the Toronto Marlies.

Lastly, chapter five sums up briefly chapter two to four, allowing to compare the current situation in North America with the German sports market regarding that outlined topic and to make predictions about future developments in both systems mentioned.

Chapter Two: Brand and brand building in professional team sports

With an unique economic structure and legal framework, professional team sports in North America evolved into a major industry and has emerged as an important political, social and economic power (Harmon 1996, p. 119). This industry became a highly competitive market with organizations fighting for every fan or purchased merchandising article. In addition to that, franchises and their managements have to ensure financial stability to survive in the long-term. Building a strong brand in this context can insure the parties hereto against sporting failures which is nearly constitutional in leagues with thirty to thirty-two teams battling for the title. By creating a favourable image and positive reputation, fans and sponsors can be attracted in the long-term.

Chapter two of this thesis briefly outlines the fundamentals in one of the most important areas sports organizations still manage to struggle in: brand building. After providing definitions of the terms 'brand' and 'brand awareness', the vital importance of these expressions and their implementation in the North American sports team system will be outlined in the following. The benefits of a strong sports brand are described under point 2.3, followed by an example of a sports team branding approach out of practice, using the National Hockey League (NHL) franchise of the Ottawa Senators.

2.1 Definitions

A brand is a "name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name" (American Marketing Association 2011, p.u.).

Back in the mid-seventeenth century and before, using fences in ranching, branding had been a common way to keep one's herd separate from someone others by marking their cattle with a hot iron. The term developed as well through craftsmen at around the same time who wanted to leave an identifier on their works without distracting from the main message the picture was supposed to send.

Today, a brand does not only refer to a company or an individual through an unique logo or trademark, “it is used to create emotional attachment to products and companies” (Dolak 2003, p.u.). Companies need to provide brand experience and touching points for their customers by offering higher involvement. This creates intangible bonds between the consumer and the company, and implies a sense of a better service or higher product quality.

Hence, “in its simplest form, a brand is nothing more and nothing less than the promises of values you and your product make. These promises can be implied or explicitly stated, but none-the-less, value of some type is promised” (Grant 2009, p.u.).

Brand awareness is “the extent to which consumers are familiar with the distinctive qualities or image of a particular brand of goods or services” (Oxford University Press 2011, p.u.). Reaching a high brand awareness is vitally important for every company in any business, but does not do any good without having understood first what sets the business apart from the competition. Therefore, the uniqueness of the businesses product or service, often referred to as the Unique Selling Proposition (USP), and the company's core values need to be determined first as the essential distinction (Dolak 2003, p.u.). The USP and the core values have to be communicated afterwards to the targeted audience.

2.2 Importance of a brand for sports teams

“I cannot emphasize enough the importance of branding in this economy. In an era where consumers do not distinguish between broadcast and cable networks and there is so much competition among so many companies and mediums for consumer attention, it is critical that your brand serves as a beacon in a sea of choices” (Bodenheimer, quoted in A.u.(a) 2004, p.u). Chapter 2.2 provides firstly a brief overview and history of professional sports in North America, and outlines secondly the most important characteristics of this sports system. The main goal is to point out why brand building in this geographic area is so vitally important, possibly more important than in any other sports team markets in the world.

2.2.1 Brief overview and history of professional team sports in North America

Organized team sports in North America grew in the past two centuries from a bachelor culture of the tavern with cigars and the odour of beer and whiskey in the early nineteenth century and a generation of sportsmen in the mid-nineteenth who found outlets from professional lives in practising swimming or rowing to a multi-billion dollar business sector nowadays (Davies 2007, p. xv).

The development of the transportation system in the nineteenth century in particular boosted sports, especially in the new modern America (1913-present) at the east coast of the United States and at the border to Canada. Today, cities like Chicago, Detroit, Boston, Toronto or New York are called 'sports cities', a relict remembering the origins of professional sports and the importance of it in these metropolises.

Manufacturers and commercial organizations recognized early in the twentieth century the advantages being associated with sports. Consequently, investments rose in particular in the team sports sector.

In 1919, the National Football League (NFL) organization in Green Bay, Wisconsin was named after their first 'supporter', the Indian Packing Company. Having agreed to a $500 US dollar 'donation' the team was able to buy new uniforms for their first men team which saved the game operations. Almost one century later, the Green Bay Packers are today one of the most successful sports organizations in the world, full of enriching history.

Not much later during the 1920s and 1930s, sports leagues such as the NFL, NHL, National Basketball Association (NBA) or Major League Baseball (MLB) grew exponentially due to higher interest shown by the public and carried by the development of new media devices like radio, newspapers and television, in particular. Today, broadcasting rights occasionally reach triple-digit million to one-digit billion US dollar amounts annually as shown in figure 1, depending on the sports and its attractiveness. The numbers therewith represent occasionally even a larger amount than the gross national product of many third-world countries.

illustration not visible in this excerpt

Figure 1: Broadcasting revenues of the NFL, NBA, MLB and NHL 1995-2005

Source: Own illustration based on Vrooman, 2009, p. 26

It is important mentioning in this context as well that professional team sports in North America has created a new business sector, contributing the American and Canadian governments by paying tax and their societies by providing jobs and distractions from everyday life.

Cities especially in the US invested heavily in the past into sports venues and an improved infrastructure to accommodate franchises. Feeling confident in helping the city's marketing to renew the image and attract foreign business, the interest does also lie with the sports associations. The associations with its franchises moved and opened themselves to new markets on the North American continent aiming to generate more revenues. Leagues expanded and broadcasting rights are now sold globally as games occasionally even take place outside the United States or Canada.

2.2.2 Unique characteristics of the North American professional team sports system

As mentioned earlier, North American sports has developed into a major business sector while providing an unique system with special characteristics compared to other sports markets. Each sports league in this context is represented by a leagues association whose primary purpose is to “promote the sport, negotiate national TV broadcast rights, negotiate national sponsorship agreements, and protect the interests of the sports franchise owners and the sports league as a whole” (Department of the Treasury y.u., p. 1-1).

The mentioned sports franchises are not only members of the respective league association, they are moreover indirectly owned by the leagues themselves. Licenses are dispensed by the league and the other franchise holders to provide geographic exclusivity among all league members guaranteeing no interference regarding sponsorship deals and broadcasting rights. This franchise licensing system is often referred to as a syndicate since “all teams are owned by the league, operated by individuals, with profits shared by the operators” (Fort 2000, p. 431). Franchise holders are mainly individuals or business corporations and in almost every case the organization is firstly profit-orientated and secondly sporting success-orientated.

A growing vexation from this system are the so called lock-outs. The owners and the leagues have the chance to lock the players out from the leagues operations as these do not have a direct contract with the team they play for due to the special labour situation. In 2011, the NFL did not start the training for the new season until August, one month later than usual, as both parties had to negotiate a new Collective Bargaining Agreement (CBA). This CBA mainly defines the percentage distribution of the league revenues between the league and the owners on the one side and the players on the other.

The NHL for example still has to suffer from the cancelled 2004/2005-season when both parties were not able to negotiate a CBA for one whole season. Until today, the league and the teams are not able to close broadcasting or sponsorship deals of the same value they did before the lock-out. This non-favourable incident damaged the reputation and image of everyone involved with the NHL for many years.

A derived characteristic which is given from the franchise system and the fact that the league associations are holding all the power is the so called closed-league system which does not allow either promotion nor relegation from its leagues.

Changes of a franchise location, called relocation, or an expansion of a league need to be decided by voting of the respective representatives of the association. Buying a financially struggling organization in this context is nowadays becoming the most common procedure when thinking about installing a professional sports team.

As leagues with thirty to thirty-two franchises are considered to be inflated in the competitive North American sports team market, further expansions consequently are hardly possible. The most recent relocations of professional franchises happened in July 2011 as the NHL franchise of the Atlanta Thrashers had to move to Winnipeg due to absence of revenues, lack of community support which resulted in insurmountable financial difficulties (Burnside 2011, p.u.). This change of location caused another relocation as the minor league team of the Manitoba Moose had to leave Winnipeg. With a NHL team back in the city it became obvious that a second professional hockey team would be doomed to failure in a growing area with just 650,000 inhabitants and a limited number of financially strong businesses to support them. Vitally important community support, political backup and revenues through sponsorships could not be guaranteed anymore to the needed extent.

This example leads to another characteristic: the terms majors and minors in North American professional team sports. The majors in this context represent the premier league such as the NHL. The minors like the American Hockey League (AHL) or the East Coast Hockey League (ECHL), just to name the two most important ones, can be considered as second or third leagues of their respective sports.

These minors serve more young prospects to develop or injured major league players to regain their skills in a competitive and highly organized environment. Minor league teams are usually located in smaller urban cities with manageable sized arenas and humble budgets compared to their major league counterparts. Major league teams on the contrary are mainly located in North American metropolises, such as New York, Chicago, Los Angeles or in densely populated regions, like the east coast of the United States.

Owing the franchise system and the closed-league framework, contracts between the major and minor league organizations exist, clarifying the relationship regarding player development, drawing players from and passing them down to the minors. Each of the 30 NHL franchises for example has a so-called affiliation in the AHL and with a few exceptions also with a third franchise in the ECHL (see attachment 1, p. 51).

Although these minor league organizations are in most instances financially and administrative independent, the league and the teams link themselves consciously with the NHL and their major league affiliation, aiming to be associated with their brand and the image of the best hockey league in the world, how the NHL is often referred to.

Another aspect worth mentioning is the inequality regarding television broadcasting time and area, the today's biggest revenue source. The NHL as the major hockey league generates, based on a 3-year national television deal with The Sports Network (TSN) in the United States and the Canadian Broadcasting Corporation (CBC) in Canada, combined

$148 million US dollar annually (Vrooman 2009, p. 26). The minor leagues whereas only generate revenues through local media broadcasting which needs to be considered as a fractional amount (Wong 2009, p. 89).

The less broadcasting time for a league and its teams, the more important other revenue sources become, in particular locally, such as individual team sponsorship deals. These areas of income are not shared with the other teams of the league and remain with the franchise (Department of the Treasury y.u., p. 1-2).

Revenues from stadium box seats and general game admission are handled differently from sports to sports and leagues to leagues. The NFL splits its gate revenues 66-34, which means that sixty-six percent go to the home organization, the other thirty-four percent remain for the visitors. The MLB in contrast shares thirty-one percent of all local revenues equally under the thirty franchises (Vrooman 2009, p.u.).

Lastly, the need for a city in a professional sports organization and the linked financial power and political backup provided by American and Canadian cities need to be mentioned. In the past American cities offered seeking franchises inducements like publicly- founded state-of-the-art arenas with luxury boxes and other modern amenities, beneficial facility leases and millions of dollars as bonus for a relocation of up to $20 million US dollar (Crothers 1995, p.u.). Professional sports teams in Canada on the other hand still has to suffer from tax burden by both the Canadian federal and the provincial government (Schmoll 2003, pp. 1029-1030).

This unequal handling finds its consequence in the list of Canadian professional sports franchises. The 'motherland of hockey' is represented by now seven teams out of 30 in the NHL. In the other four most important major leagues Canada is represented by one out of 30 teams in each the NBA and MLB and none out of 32 in the NFL.

2.3 Benefits of a strong sports team brand

An organization and its brand once properly built and managed can preserve against financial struggles which lead to abandonment and relocation of the whole organization considering the unique sports system as described under point 2.2.2 and like the many examples in the past have shown.

First, strong brands in general have the power to influence the buying process and making the purchasing decision easier. Sports brands in particular benefit economically and financially by attracting spectators and sponsors. Consequently revenues can increase through higher attendance, more valued broadcasting deals and purchased merchandising articles (Richelieu/Pons 2007, p.15). As an example, the NFL can be mentioned. Due to the leagues' and franchises' brand efforts over last decades and their lived philosophy to put the fans before shareholder profit-maximization, the NFL generated 25 times more revenues than the NHL for the 2010/2011 season thanks to their national broadcasting rights (Vrooman 2009, p. 26).

Second, justifying a ticket price increase and/or commanding a premium price can be more edged down and explicable (Dolak 2003, p.u.). The Toronto Maple Leafs for example called as an average $88.32 US dollar for a 2007/2008 NHL regular-season home game ticket, whereas the St. Louis Blues only asked for $25.48 US dollar. The league average during that period of time was $48.72 US dollar (A.u.(b) 2007, p.u.). The Maple Leafs, also a founding member of the NHL, can justify this way-above average ticket prices because they have build the most valuable hockey franchise in the world (Badenhausen 2011, p.u.).

Third, a strong sports brand has the potential to create psychological connections and to transcend the sports arena by building a whole new community and reputation for the sports product in general (Richelieu/Pons 2007, p. 15). Manchester United or the FC Barcelona have more than twenty million friends on the social network platform 'facebook', offering news, videos, polls, and much more around the clock. The NBA and the Los Angeles Lakers as the most popular North American major league association, respectively franchise can call meanwhile slightly over ten million their 'friends', as to date November 2011. Facebook, but also other social-media platforms such as twitter or YouTube provide a valuable and vital base for interaction, involvement and connection.

Fourth, sports brands accompany fans in every phase of their lives, and in many cases for their whole life. People do not easily change their favourite team and loyalty to sports teams is way more common than to a specific car brand or fashion label. The real fans purchase merchandising articles as soon as they are available, try to attend as many as possible home games and watch their team at home via television or other broadcasting devices.

Lastly, a brand can be considered as an intangible asset to a company, offering the unique characteristic that it can contribute positively to the company's revenues on the one hand, but cannot be taken away or stolen by others on the other one (Dolak 2003, p.u.). Competitors may copy product designs or service ideas, but a brand is like the character of a human being: unique and incomparable. Especially in sports, where thirty to thirty-two franchises per league compete against each other not only on the field, but also off the field trying to convert people into fans and to gain more revenues, the behaviour and success in doing so makes an organization special and favourable, or to the contrary.

2.4 Building a sports team brand – The Ottawa Senators approach

After providing an overview of the North American sports market, outlining consequently the importance for the franchises to build their brands and pointing out the benefits a strong sports brand can have, this chapter gives an understanding of the brand building process.

As various organizations in different sports leagues nowadays still believe that a brand results from their marketing activities, it is essential understanding that it is in fact the other way around. “Marketing actions are supposed to reflect and enhance both the identity and positioning of the team” (Richelieu/Pons 2007, p. 22).

This three steps approach as shown in figure 2 was executed in the past successfully by the Ottawa Senators, a Canadian NHL franchises aiming to create a bond with the local inhabitants by installing a community-close scheme which enhanced the clubs reputation.

illustration not visible in this excerpt

Figure 2: Three steps brand building process of the Ottawa Senators

Source: Own illustration based on Richelieu/Pons 2007, pp. 13-27

The first step, building brand awareness, identifies firstly the company's quality product (Richelieu/Pons 2007, p. 18). For professional sports organizations this is most likely the service of offering professional team sports. The players as professional athletes exercise throughout the whole year on their relevant sporting conditions. During games they show their skills aiming to win championships, but also to entertain the spectators on-side or on television. Secondly, the unique selling proposition needs to be defined and through, thirdly, properly planed activities the brand has to be positioned in the marketplace (Dolak 2003, p.u.). A possible USP could be for example that only local or native players are on the roster, the main goal is to develop the next big superstars for its affiliate or that for the organization besides sympathy also social conscience is of importance as in the case of the Ottawa Senators. Positioning the brand properly in the marketplace, the targeted audience as well as the right communication canals need to determined.

The second step is enhancing the brand image. Building and marketing the image is an ongoing and accompanying long-term task sports organizations should unconditionally take care of. A huge number of sports managers are still lying their main focus on ticket sales and other short-term areas, being grossly negligent working on long-term strategic issues such as branding (Richelieu/Pons 2007, p. 15). Activities particularly in the community, executed successfully by the Ottawa Senators, create the vitally important and intangible bonds and “trigger a sense of belonging to the team” (Richelieu/Pons 2007, p. 18).

In the third step, conveying a personality, the organization lives the message and controls their activities (Richelieu/Pons 2007, p. 18). Delivering and sticking to the promises the sports organization did is important as the whole franchise would loose credibility and create bad reputation if they did not. A brand is, like provided earlier under point 2.1, nothing more and nothing less than delivering the promises of values you make.

In sports this can be applied for off-the-field but also on-the-field performance, which could give a negative backlash if an organization promised records and championships, they fail to achieve. That is why various mission statements of sports organizations had been composed more neutral regarding sporting achievements, focusing more on general or community related impacts.

Measuring the activities and continuing to build and refine the brand are indispensable in the today's fast paced world. Through a variety of different market research methods like surveys, online polls and a solid analysis of online social platforms an organization can conceive data about their current image (Dolak 2003, p.u.). These information can be used consequently for further adjustments regarding marketing and branding strategies.

2.5 Summary

To sum up chapter two it can be outlined that due to the development of the professional sports system in North America and the most recent examples regarding franchise relocations, brand building has become one of the most important aspects sports managers have to look after more consciously.

Higher expenses than revenues, and lack of political and community support lead to financially struggling franchises which are not an exception any longer in today's sports business world. The relocation of the whole organization can be found consequently at almost every franchise's ending.

A strong sports brand can have a vitally supportive influence into aspects of a sports organization such as community support, political backup and increasing revenues through sponsorships or local broadcasting rights.

Community activities and socially responsible acting as shown on the example of the Ottawa Senators are nowadays one, if not the most valuable strategy to promote the brand and create psychological connections. The brand presents itself in this context as touchable and community-orientated, caring about people's lives and situations. Increasing attendance and sold merchandising articles, higher local television viewer figures as well as raising sponsorship deals can be named as example for a positive outcome.

Chapter three in the following provides further information about this business-related area which already developed in the late 1800s, but became presentable for companies as recently as the 1960s and 1970s: Corporate Social Responsibility.

CSR aimed in the past to fill in for struggling or more liberate governments to provide the public with general health care or educational programs. It also has developed into a tool which, once properly planned and executed, can change not only the society and the people but also build or refine the image of a whole organization.

Chapter Three: Corporate Social Responsibility

Priorities of business enterprises have changed over the last centuries due to an advanced development in technology and in mass media accessibility and distribution in particular. In a nowadays globalized world where information are shared in a never seen amount and velocity, businesses cannot isolate themselves any more from their environment. An important requirement is to watch the interests of shareholders on the one side but also to serve stakeholders on the other as businesses are closely being watched by them at the same time (Vassileva y.u., pp. 13-14). Both laws and norms exist in our society to make it a better place to live in. Those who do not adhere to these simple rules may experience lower customer loyalty or have greater difficulty in attracting and retaining those.

Chapter three provides firstly a brief overview of Corporate Social Responsibility on the corporate business level. Not only the term and related expressions, but also current criticism are outlined. The four ideologies and three geographic levels CSR can apply to will be pointed out in the following. The first part of chapter three finds closure in important points that need to be considered when establishing a CSR program. The second part of this chapter attends to Corporate Social Responsibility in professional team sports and provides a brief overview of the history of CSR in professional sports, obligations for organizations to engage themselves socially and given possibilities to have a positive influence.

3.1 Corporate Social Responsibility in corporate businesses

Corporate Social Responsibility has been practised at least in the USA since the late 1800s. Back that time, benefiting shareholders in the form of donations or charities were mostly on the agenda of those that could afford it.

With Henry Ford (*1863 - †1947) who once said that “a business that makes nothing but money is a poor kind of business”, today's understanding of Corporate Social Responsibility essentially changed. Nevertheless, the development in the USA to go more profoundly voluntarily beyond their legal obligations cannot be recognized not until during the 1960s (Simcic Brønn/Belliu Vrioni 2001, p. 208).

Today, companies are investing more money than ever in CSR only making occasionally wide-reaching organizational changes such as installing an own CSR department subordinated to the chief executive of marketing (Hansted Blomqvist/Posner 2004, p. 33). Therefore a relationship between socially responsible acting and the company's marketing department can only be recognized at a very small number of businesses.

The vitally important integration of social activities into the business as well as marketing strategy has been grossly neglected (Hansted Blomqvist/Posner 2004, p. 33). In addition to that, misuse of shareholder's equity was made more and more public over the last years. Consumers and interest groups investigated and later on accused these businesses for promising more than they actually delivered through their CSR programs.

Considering these two circumstances and picking up that a brand is nothing more and nothing less than delivering the promises of values, many companies lost ground and created an unfavourable reputation.

3.1.1 Definitions

Corporate Social Responsibility (CSR) (emphasis mine) is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations” (Pandey/Nirgudkar 2008, p. 2). Companies' operations and the society they are interacting in and with are so closely interlocked to a never seen extent.

Additionally, companies have to deal with regulatory framework regarding labour treatment and carbon foot-printing to prevent further pollution of the environment. Owing to this movement, CSR developed from a 'single-bottom-line' which only based on financial performance in the early beginnings. Managers also included social and environmental factors within the modern understanding of Corporate Social Responsibility which leads to the 'triple-bottom-line', an unique CSR identifier (Allouche 2006, p.u). Based on this triple- bottom-line, today CSR covers five main areas (Hansted Blomqvist/Posner 2004, p. 34):

- Environment activities are directed to benefit the environment by alleviating or preventing pollution, recycling and conservation of scarce resources like water or oil
- Community activities primarily benefits the general public through socially-oriented activities, such as donating, attending and/or financing various charitable programs
- Employee welfare favours the well-being of the company-own employees, for example by improving working conditions and reward schemes
- Corporate governance benefits the employees, but also the society and company's business partners through a mission statement in place and fair business principles
- Financial performance includes for example access to financial statements, aiming to satisfy shareholders' and stakeholders' needs

Figure 3 classifies the five areas as mentioned within the triple-bottom-line for a better illustration and understanding. Environment and community activities are contributions which the company can make to worthwhile social causes. Employee welfare, corporate governance and financial performances can be recognized as matters of business ethics (Kotler 2005, pp.144-145). These three areas have a direct influence on the behaviour of the company's employees, their identification with the company as well as their shown commitment.

illustration not visible in this excerpt

Figure 3: The triple-bottom-line and the five CSR areas nowadays

Source: Own illustration

3.1.2 Benefits and criticism

Investing more money and personnel into this long-term strategic planning, impacts from these efforts became consequently compulsive and valuable. An obvious connection that can be seen easily is that Corporate Social Responsibility can contribute well to the business' overall financially outcome through a good reputation. Reputation or image helps a business to attract new customers, whereas bad reputation can lose or alienate them. Hence, building and managing the companies image is closely related to brand awareness (Simcic Brønn/Belliu Vrioni 2001, p. 209). The USP and core values need to be communicated properly through carefully and correctly chosen canals. Beneficial publicity with its purpose to connect the targeted audience with the company helps in this context to maintain or refine the company's reputation.

What is more, the formula applies that the greater a businesses contribution to social welfare, the better is its reputation (Fombrun/Shanley 1990, pp. 233-259). Moreover, people like to purchase products or use services from companies “that care about the environment where they are acting in, as long as no major differences exist in their products or services, quality, or price” (Kotler 2005, p. 142).

Another benefit to name is volunteerism. Community confidence in a company often succeeds by having created first a supportive community relationship. Attracting and engaging people to help for a good cause is eligible context for brand awareness and can lead to good brand reputation. Furthermore, it implies that the company does not only want to make money, but also care about improving people's life in the community.

Employees as well can benefit enormously through CSR schemes in place. Better working conditions, reward schemes or just the feeling that one of the companies goals is changing the environment in various ways could create satisfaction and pride. Satisfied and proud employees in turn have the power to improve company performance by showing higher commitment and dedication to their work.

Despite benefits a company can gain from installing a proper CSR program, there will be always remaining doubts about some companies' social engagements. That is the reason why it is often considered to be one of the, if not the most delicate area in the field of marketing and brand building as each activity can cause immense negative backlash. “Go too far one way and consumers believe you are using the charity, go the other way and they will not even know of your involvement” (O'Sullivan 1997, p. 24).

Worth mentioning as well is that many companies installed CSR programs in the past after fatal incidents. A proceeding scepticism towards implementation and the companies' motives is undeniable and in many cases justified as these organizations' aim is to 'buy out' their way from negative publicity (Werbel/Wortman 2000, p.u.).

The expression of a 'new modern age branding tool' is one of the most common critics regarding CSR and for-profit enterprises. Other expressions which can be found frequently as well are 'public relation invention', aiming to 'greenwash' past corporate business practices to attract new customers (Breitbarth/Harris 2008, p. 182).

No matter how CSR is called, a change in the stakeholders' perception happened with them looking more carefully on the organizations' practices and relationships as the “CSR-concept is of value, because it has real consequences in the business world” (Breitbarth/Harris 2008, p. 182). The concept often equals retreating governments and societies lacking in public support in areas such as general health care and public education. Companies may gain a more favourable image and monetary benefits, but at the same time these companies try to be a good citizen by showing social commitment willing to change their environment.

3.1.3 CSR and brand building

Due to the development of the regulatory framework, the ongoing globalization causing a faster circulation of news and global business outsourcing models, companies have to look more carefully into social and environmental issues and their administrated practices than ever before. In doing so, businesses can furthermore decide autonomously on the use of three different approaches to integrate their activities into the brand building process and making these public to fully gain the expected benefits and minimize critical analysis. A previous assessment of the purchase drivers and the business strategy can help determine the approach as they range from fully-integrated to invisibly linked as shown in figure 4. Grappling with these possibilities it can avoid uncoordinated, misleading and (further) reputation damaging handling of situations and communications.

illustration not visible in this excerpt

Figure 4: The three approaches to aligning brand and CSR

Source: Hansted Blomqvist/Posner 2004, p. 34

In the integrated approach the brand and Corporate Social Responsibility scheme perform simultaneously. The company, the brand and the CSR strategy are directly and visibly linked with each other (Pandey/Nirgudkar 2008, p. 10).

Telling a single poignantly story to their environment and in doing so reaching many boundary points, the integrated approach therefore needs to have the right business model. For companies whose core values already are 'responsibility' and 'commitment' this approach will work best (Hansted Blomqvist/Posner 2004, p. 34). Another requirement would be a consistent acting in all the five areas CSR covers nowadays.

“A core advantage of the selective approach (emphasis mine) is that it can provide an effective means of differentiation in a crowded market, while shielding the parent brand from any customer stakeholder backlash” (Hansted Blomqvist/Posner 2004, p. 35).

Corporate Social Responsibility manifests itself in the selective approach in a very specific and targeted way. It can be effective for companies not willing and/or not being able to serve all five CSR components to fully support the integrated approach but still aiming to attract a certain area of the targeted market which reacts positively to socially responsible business practices (Pandey/Nirgudkar 2008, p. 10).

In the invisible approach, CSR activities play a much more understated role and become rarely public through company's external initiatives. Social responsibility may be a basic and guiding point in doing business and can play a strategic role. Nevertheless it will never be part of their mainstream communications activities as these companies rather use CSR to absorb potential bad publicity by bolstering trust in their company and brand (Hansted Blomqvist/Posner 2004, p. 36).

3.1.4 Four ideologies

With the growing importance of CSR for companies and the three approaches to aligning brand and CSR, there also has been developed four ideologies of how companies execute their CSR program to achieve better welfare. So called 'dominant lines' can be identified at almost every company's strategies governing its acting.

In the political approach the company pleads its constitutional right of involvement in the community in the idea of corporate citizenship (Thorne McAllister/Ferrel/Ferrel 2005, p.u). The use of an organization's reputation and power can influence decision-making processes in politics, as well as engage people to fight for their right and make grievance public.

The integrative approach outlines the idea of focusing on the stakeholders social demands, outbalancing these in the interest of all and to gain an overall benefit (Breitbarth/Harris 2008, p. 181). The power and influence of a company can be seen a result of the density of the stakeholders network and the centrality of the organization itself (Rowley 1997, p.u).

In the ethical approach the business aims 'to do the right think' and to achieve common good in doing so (Breitbarth/Harris 2008, p. 181). This principle can be applied to several areas such as employee and customer treatment or environmental and social issues.

[...]

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Details

Title
Sports Team Branding through Corporate Social Responsibility in North America
Subtitle
An analysis of the Toronto Marlies' social activities scheme
College
University of Applied Sciences Braunschweig / Wolfenbüttel; Salzgitter  (Sportmanagement)
Grade
1,7
Author
Year
2011
Pages
81
Catalog Number
V230535
ISBN (eBook)
9783656464693
ISBN (Book)
9783656467489
File size
2729 KB
Language
English
Tags
sports, corporate, social, responsibility, north, america, toronto, marlies
Quote paper
Marcus Grosche (Author), 2011, Sports Team Branding through Corporate Social Responsibility in North America, Munich, GRIN Verlag, https://www.grin.com/document/230535

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