Minnesota companies team up with America's biggest sports leagues. It's expensive, but worth it.

For the past six years, Minneapolis-based smart bed maker Sleep Number has been the official sleep and wellness partner of the NFL, the biggest sports league on the planet.

The paid sponsorship deal — with a league worth nearly $163 billion — offered a built-in customer base with roughly 1,800 NFL players. Even more than that, though, it created an emotional connection between Sleep Number's brand and the league's vast fan base of roughly 200 million people worldwide.

Sleep Number officials declined to share the partnership's impact on sales. But, during the first five years of the NFL agreement, the company's annual net sales increased from $1.53 billion in 2018 to $2.1 billion in 2022 even as demand in the overall bedding industry was falling.

The company and several other Minnesota-based businesses are investing in professional and collegiate sport sponsorships as a way to ingratiate themselves to passionate groups of consumers.

Winona-based Fastenal Co., a seller of construction and industrial supplies, is a sponsor of the National Hockey League. Great Clips, the hair salon based in Bloomington, sponsors NCAA. U.S. Bank sponsors the WNBA, and Optum, a subsidiary of Minnetonka-based UnitedHealth Group, is a sponsor of the PGA.

On a global scale, Nielsen marketing research finds that sponsorships drive a 10% lift in purchase intent among an exposed fanbase. A recent Nielsen survey found 40% of fans visited a brand's website after seeing the sponsorship. Nearly a third of them actually bought from the brand because of its attachment to sports, and almost 70% said they are more likely to remember a company name if it sponsors a sport they are interested in.

On average, a 1-point gain in brand metrics, such as awareness and consideration, yields a 1% increase in sales, but with sports fans, that purchasing probability is much higher.

"There's really no advertising outlet as a brand that reaches as many people, as many passionate people, as a sports deal or a league deal," said Matt Balvanz, senior vice president of analytics and innovation at Navigate, a Chicago-based sports and entertainment consulting firm. "They drive the impact a lot more than any traditional marketing type or advertising platform, by far."

Going where the consumers are

Sleep Number early on saw the value of sports as essentially the only category of live broadcast events today's consumers are willing to pay for. Of last year's 100 most-watched TV broadcasts, 93 were NFL games, according to Nielsen.

"I could see what was going on with the onset of streaming," Sleep Number chief marketing officer Kevin Brown said. "It was early, but you could see the shift and linear television wasn't going to be where we needed to be. We needed to be out in front as an innovation company. We have to be where consumers are."

Sleep Number, while unique, competes in a low interest, commoditized mattress category, Brown said.

For the past two years, bed manufacturing has operated at "recessionary levels," Chief Executive Shelly Ibach recently told analysts, with mattress demand at its lowest level since 2015.

That's where the NFL can help. It offers a platform to amplify a message about sleep improvement in a way mattress and bed competitors can't.

"What we weren't looking for in a partner was someplace to put our logo or someplace to put the shield," Brown said. "We wanted to impact the players' lives and we know that if we did that awesomely, they would tell the story organically."

NFL player testimonials is what's driving new sales. Sleep Number's in-house research concluded 65% of consumers looking to buy a new mattress were likely to buy a Sleep Number bed because of its NFL partnership. A higher percentage —79% — wanted to buy a Sleep Number bed because Minnesota Vikings receiver Justin Jefferson is a spokesperson for the brand.

Along with the league itself, Sleep Number has five individual partnership deals with five NFL teams — the Vikings, Dallas Cowboys, Los Angeles Rams, Cincinnati Bengals and one of this year's Super Bowl contenders, the Kansas City Chiefs.

Ahead of the big game, Sleep Number launched a digital campaign using testimonials from Jefferson and Cincinnati Bengals star receiver Ja'Marr Chase, Brown said. And with thousands of credentialed media in Las Vegas covering the Super Bowl, 10 players will be on site for interviews about how the smart beds play into their training, Brown said. Snippets of those interviews will be used to help drive sales for President's Day weekend, one of the busiest shopping days of the year for retailers.

Targeting a next generation of clients

Great Clips, which has 4,425 franchise-owned salons in 50 states and four Canadian provinces, penned a multiyear sponsorship deal with the NHL in 2018. This has increased brand awareness among an international fan base, said Lisa Hake, Great Clips' vice president of marketing and communications.

The NHL partnership includes digitally displaying the company's logo on the ice during televised and streamed games. Even greater success, however, has been its in-person events and online campaigns around stylish hockey hair, motivating fans to use the company's app to book their next hair cut.

Great Clips is also the official hair salon of the NCAA and its more than 90 national championships and the College Football Playoff. In addition to the college football championship, Great Clips aired commercials during 30 televised college football bowl games this past season.

The relationships with NCAA and the College Football Playoff unlocks more exposure to college-age consumers and loyal college graduates alumni. March Madness, the NCAA's trademarked name of the men's and women's college basketball tournament, has become Great Clips' top driver among college sports fans, Hake said.

"It's definitely a young audience that we are trying to growth with," Hake said. "It's a great way to reach that 18- to 24-year-old college fan, but also the alumni spread across the U.S."

While Great Clips and Sleep Number use these partnerships to directly market consumers, Fastenal is using the NHL relationship to bolster credibility with other businesses, turning hockey arenas into remote board rooms for closing deals.

"There's no better way to kickoff or sustain a relationship than by catching a sporting event together and take in a game of hockey," said Casey Severson, brand marketing manager for Fastenal Severson. "It's great to just go out there and advertise yourself and say this is who we are, and a brand like the NHL can attest to that. It can have a huge impact that's more than advertising can get you."

Creating a new playbook

Sports sponsorship deals are becoming more expensive though, said Balvanz of the sports consultant firm. With rising prices for media rights and streaming deals, some deals at the league level, like the NFL, can cost more than eight figures a year, he said.

Companies that are currently renewing their deals, or have in recent years, have done so at much lower rates than companies now trying to enter the space. "Think of it as a stock,"Balvanz said.

About 20% of Great Clips' annual working media budget goes to its CFP, NCAA and NHL agreements, company officials said.

Sleep Number, which recently extended its partnership with the NFL for another five years, has not disclosed the cost for its NFL sponsorship deal. In 2022, media expenses associated with promotions, including television and online streaming, represented 14.6% of the company's net sales.

If it wasn't an effective marketing tool, the company wouldn't have renewed the financial commitment, Brown said.

"We're happy with the returns we're getting," Brown said.