Even though PepsiCo has agreed a sponsorship deal with the NBA, it may still be losing ground to its archrival Coca-Cola. Back in June, Coke outbid Pepsi for the sponsorship rights to college basketball - which is a far bigger business than it sounds. With college basketball on its books, Coca-Cola may be able to build greater brand equity than PepsiCo.

For anyone outside the US, it may appear that PepsiCo holds the trump card in basketball sponsorship: it was confirmed as official sponsor of the National Basketball Association (NBA), including the Womens' National Basketball Association (WNBA) last week. However, Coca-Cola may have stolen a march on its rival.

People familiar with college sports know that college basketball is one of the highest-rating television sports events in the US - so Coca-Cola will not be limiting the audience that it exposes its brand to. The deal also has another advantage, in the consumer groups that it will reach.

Coca-Cola's $500 million, 11-year deal with the National Collegiate Athletic Association (NCCA) saw the firm outbid PepsiCo, the sponsor since 1995. PepsiCo stated that Coca-Cola had paid too high a price - but while making Gatorade the NBA and WNBA's "Official Sports Drink" will win mindshare, Coca-Cola is doing far more.

Not only is it promoting its brand in front of enthusiasts who watch both the NBA and college basketball, it is also supporting the game at a grass-roots level - where there will be a high proportion of young consumers involved (or watching) who are a core consumer group for soft drinks.

PepsiCo says its NBA deal will also expand commitments at the grass-roots level, but at collegiate level there are more young supporters, and it will be much easier for Coca-Cola to position itself as a real champion of basketball's development - not just another media attention-seeking sponsor.

Coca-Cola clearly felt that it was worth outbidding PepsiCo to win the college basketball prize. While PepsiCo may get a slightly bigger media splash with the NBA, Coca-Cola gets to reach a core user group while building its image as a force for good in basketball. This should build brand equity significantly.

Related research: Datamonitor, "Best Practices in Drinks 2002" (DMCM0078)