Is Allstate the Real Winner of the Sugar Bowl?
While Allstate is an established insurance company that operates across the US, sponsorship of the Sugar Bowl may help it garner market share and establish unique revenue streams.
Tonight, the University of Michigan and Virginia Tech are facing off in one of the most anticipated bowl games of the season, the Sugar Bowl. Spectators across the nation are eagerly waiting to see which team will end up victorious in the heated match-up.
Perhaps the spectacle will retain another winner, an organization that will win regardless of the football game's outcome. The Sugar Bowl's official sponsor, the Allstate Corp (ALL), may be the biggest winner of them all.
While Allstate is an established insurance company that operates across the United States, sponsorship may help it garner market share and establish unique revenue streams that could diversify its primary business model.
An insurance provider such as Allstate operates in a very niche industry with a high barrier of entry. Given the negative credit events that have occurred over the last three years, it is now more important than ever for these sorts of companies to diversify their businesses. The first way Allstate will gain revenues is via ticket sales. Tickets ran students several hundred dollars each and unaffiliated spectators even more. Ticket sales alone are likely to recover much of the initial investment that Allstate made in its sponsorship agreement.
Allstate will most likely have stations across the stadium that advertises its products. While many people may think that insurance peddling stalls are out of place at a football game, Allstate does not need a ton of business to produce sizable long-term revenue. For example, the Sugar Bowl is being held at the Mercedes-Benz Superdome in New Orleans, Louisiana, and can hold approximately 70,000 people. If Allstate can convert 1% of these attendees into long-term customers, it might boost revenues significantly.
Allstate may also achieve indirect revenues from the Sugar Bowl. During the televised game, announcers and commercials will feature Allstate consistently. The televised version of the game will also have much higher outreach than the physical event in New Orleans: millions of people will be watching the game on their televisions. Even if Allstate converts 0.5% out of 1 million watchers, that is 5,000 new customers, compounded with new customers from New Orleans. In reality, the numbers are likely to be a bit higher than those posited here.
Lastly, Allstate could gain invaluable goodwill simply because of the gesture. While it is sponsoring a football game rather than a charitable event, it is gaining positive public exposure in a time when financial institutions, including insurance companies, are despised in the public's eye. The leisurely event may be considered an intangible asset for the company, boosting its positive outlook in the public's opinion.
The 2012 Sugar Bowl is one of the most anticipated events in American sports. The University of Michigan and Virginia Tech are both storied franchises which will face off in hopes of being the sole winner of the game. However, Allstate Corp might be the biggest winner of them all, ultimately boosting its existing business model and diversifying its revenue streams as well. Investors should learn more about the company and should understand how football could improve its short-term and long-term outlook.
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