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Buffalo Wild Wings Investors Get Some Good News for a Change

By Rich Duprey – Oct 27, 2014 at 3:00AM

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Agreeing to sponsor college bowl games will allow the beer, wings, and sports chain to play to its strengths

The beer-and-wings joint will be able to kick off the new year with a new corporate sponsorship deal. Photo: Flickr via Mike Mozart.

Wings and sports chain Buffalo Wild Wings (BWLD) recently confirmed it was sponsoring the Citrus Bowl on New Year's Day as part of a multiyear deal with the college football game's promoter, Florida Citrus Sports. It's a welcome development for the restaurant's investors, who have been crying in their beer since the company reported second-quarter earnings that, while beating consensus estimates, left many feeling it will continue suffering from a World Cup hangover.

Corporate sponsorships
Some corporate sponsorships of sporting events appear to be a waste of shareholder resources. There's no logical connection between the business and the sport being sponsored, so the companies are simply hoping for a reasonably inexpensive increase in brand awareness, possibly international in scope, to make the pricey bet pay off, while giving executives and their favored customers a chance to rub elbows with some stars.

The World Cup was a kick in the grass for B-Dubs and other brands that found it difficult to translate a transient interest in soccer into sales. Image: Buffalo Wild Wings.

Other times there's just not enough of a special relationship to make it worthwhile. Coca-Cola (KO 0.29%) is estimated to have paid between $25 million and $50 million to be one sponsor of the 2014 World Cup games in Brazil , along with the vast sums paid to market the sponsorship, yet all that failed to lift its sales results appreciably.

Similarly, McDonald's (MCD 0.66%) paid between $10 million and $25 million, yet its business is still in free fall, and Arcos Dorados (ARCO 0.78%), its franchisee in Latin America, recorded 3.5% lower revenue for the second quarter that ended June 30. While that was only about two weeks' worth of World Cup games, even the build up to the event couldn't boost sales.

Even when there is a seemingly good matchup between the company and the sports fan base -- for example, rent-to-own leader Aaron's and the NASCAR average demographic -- it still seems unlikely that it will generate enough revenue to make the deal pay off.

Yet sometimes synergies are successfully realized in these sponsorships. Think of Nike's (NKE 2.12%) long sponsorship of Tiger Woods. You might not always be able to put a dollar figure to the payout, but the two have long been synonymous (the same couldn't necessarily be said of Buick's sponsorship of the golf great, though).

So, what about B-Dubs?
Buffalo Wild Wings and college football would seem to fit into that synergistic category. The restaurant chain is already associated with watching sports (though the World Cup didn't help it, either), and its new "stadia" model seeks to capture the thrill of being at an event itself by immersing customers in a 360-degree, big-screen viewing opportunity.

Although financial terms of the sponsorship weren't revealed, B-Dubs said it will receive national exposure through TV, radio, social, and digital media, along with various forms of advertising throughout central Florida and in-stadium signage.

While it's not on the roster of top bowl games, the Buffalo Wild Wings Citrus Bowl will host teams not in the college playoffs from the Big Ten and Southeastern conferences. It also serves as a replacement game for Buffalo Wild Wings, which lost bowl sponsorship in Arizona after talks with the Fiesta Bowl broke down. B-Dubs had naming rights for Fiesta's junior bowl game (PepsiCo's Tostitos brand owned the rights to the main Fiesta Bowl). 

Buffalo Wild Wings has been in the spotlight before with college bowl games. Photo: Flickr via U.S. Department of Agriculture.

There's been a bit of musical chairs with bowl names lately, with Northwestern Mutual taking over the Rose Bowl in Pasadena, Calif., replacing television maker Vizio, and Capital One Financial replacing Discover as the Orange Bowl's sponsor in Miami. Capital One had been the sponsor of the Citrus Bowl.

Sponsorships can be tricky plays, but B-Dubs' sponsorship of the Citrus Bowl at least puts it back in the game.

Follow Rich Duprey's coverage of all the restaurant industry's most important news and developments. He owns shares of Nike. The Motley Fool recommends Buffalo Wild Wings, Coca-Cola, McDonald's, and Nike. The Motley Fool owns shares of Arcos Dorados, Buffalo Wild Wings, and Nike and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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