Understanding Corporate Sponsorships: Moving from a $100 Ad Purchase to a $1,000 Sponsorship Agreement

Article excerpt

During the past two decades, funding for school-sponsored activities for children, including interscholastic athletics, has diminished. Tighter budgets, decreasing governmental allocations, and ever-changing educational programming priorities are among the many reasons for this phenomenon. These funding reductions have led to a number of challenges for athletic directors, coaches, students, and parents. A corporate sponsorship program, built on an appropriate knowledge base, can help bridge the funding gap that exists between the costs to field teams and the decreasing budget allocations in interscholastic athletics.

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The primary expenses of interscholastic athletic programs include equipment, uniforms, transportation, and facility maintenance and upgrades (Bundrick et al., 2010; Danzey-Bussell & Pierce, 2011). To supplement budget allocations in order to meet these expenses, administrators have traditionally used three strategies: (1) generate revenue through gate receipts, (2) participate in fund-raising activities, and (3) utilize booster organizations. Unfortunately, these three strategies, as a general rule, have been unable to meet the financial demands in interscholastic athletics that have resulted from reduced government allocations. Therefore, many administrators have had to take drastic fiscal measures, including eliminating or scaling back participation opportunities and, where legal, implementing the "pay-for-play" funding model. These reductions in and barriers to participation opportunities have been linked to increased dropout rates, criminal activity among students, and childhood obesity (Spanberg, 2011).

Corporate investment in interscholastic athletics through sponsorships is a funding strategy that is gaining traction at the secondary level. Although corporate sponsorship of scholastic activities at local, regional, and national levels is not new, these arrangements are becoming more common and acceptable. According to a 2010 poll conducted by Turnkey Sports and Entertainment, 88% of high school sport fans viewed corporate sponsorship as an "important source of funding for local high schools" (Spanberg, 2011). Because broad-scale increases in governmental funding for school-sponsored activities are not on the horizon, and in lieu of alternative viable solutions, it appears that corporate sponsorship is here for the foreseeable future.

To help readers establish a firm foundation upon which to maximize corporate interest and investment in their activities, the purpose of this article is threefold. First, readers should better understand sponsorship in its truest, most effective form as a business concept. Next, readers should understand the value that their athletic department provides to sponsors. Finally, readers should understand what prospective sponsors want and need from sponsorship agreements (see Figure 1).

Understanding Sponsorship

Howard and Crompton (2004) define sponsorship as a "business relationship between a provider of funds, resources, or services and a sports event or organization, which offers in return specific rights that may be used for commercial advantage" (p. 434). Immediately, this definition should restructure what many researchers and practitioners at the interscholastic level think about sponsorships conceptually. Much of the research and many of the sponsorship activities at this level equate sponsorship with advertisements placed in game programs or on venue signage (e.g., ads on scoreboards or outfield fences). Although such advertising can be an aspect of sponsorship, "advertising" and "sponsorship" are not synonymous. Consider that in 2012, corporate spending on sponsorship deals in North America was $18.9 billion (International Event Group [IEG], 2013). IEG also reports that of every dollar spent on sponsorship in North America, approximately 70 cents were spent on sport-related deals. For businesses to invest at these levels, sponsored teams and events need to provide activities that lead to sponsor business development. …