The Future of Sports Sponsorship

Marketing, July 25, 2012 | Go to article overview

The Future of Sports Sponsorship


This Olympics year was tipped to be a defining time for sports sponsorship, so has it changed the rules f or deals to come?

If the size of the cheque is a barometer of health, then these appear to be heady days indeed for sport sponsorship.

Brand money in the form of rights fees has helped pay to stage the London 2012 Olympic Games, to the tune of more than pounds 750m. Other recent eye-catching deals play to the idea that sport has moved to the centre of many companies' strategy: Barclays agreed to renew its title deal with the Premier League for pounds 120m over three years, a 45% increase on the previous package. Last week, Marketing reported RBS had held off a bid from rival HSBC to remain title sponsor of rugby union's 6 Nations Championship, although the bank remains tight-lipped.

The pounds 44m, four-year deal, from 2014 to 2017, is up from pounds 26m over the previous four-year period.

Yet, below these big-ticket, headline deals, the picture becomes more nuanced. Much of the pre-London 2012 media coverage has focused on the role of sponsors, and not in a good way. Despite the investment, there has been a marked lack of gratitude flowing back toward the companies supporting sport.

Lord Coe, the chairman of LOCOG, put this down to an issue of communication. The public, Coe told Marketing, needs to be educated about the benefits of sponsorship. He said: 'The job of (publicising sponsors' contribution) is partly LOCOG'S, of course. (But) not all the brands have explained it well on their own behalf. There is a very good story to tell and they're not always the best communicators in this market.

He added: 'I have been saying to them, we all need to tell this legacy story. Government, the organising committee, the London boroughs, the individual competitors and yes, (sponsors) need to be able to have a compelling narrative.'

The marketing industry also has lessons to learn from this Olympic year, according to Sally Hancock, director of the London 2012 partnership at Lloyds TSB. Whether the sponsorship industry will take any notice, however, is another matter. 'I've seen limited innovation in the way rights are activated. Sponsors are still perceived as a necessary evil by some in the public and even by some rights-holders. But there is a need for a new dialogue around major events,' she says.

Hancock contends that the role of category exclusivity clauses within rights contracts has to be reassessed. 'When exclusivity is detrimental to the fans' experience, it becomes self-defeating. Rights-holders have to look at the trade-off from the revenue to how it affects the event,' she adds.

Visa's monopoly on card-payment services has attracted much criticism, and the policing of McDonald's rights to serve fast food in and around Olympic Park - the so-called 'Chipgate' controversy - made for perfect Twitter fodder.

Striking a balance

Alistair Macrow, vice-president of marketing at McDonald's, argues that it is difficult to strike the 'right balance'

when negotiating the scale and reach of sponsorship agreements. 'We're a polarising brand and there are always going to be people who challenge the decisions we make, but for us the most important thing is continuing to listen to and focus on what our customers want. Category exclusivity is an asset of event sponsorship, but it is by no means the lead asset,' he says.

Running parallel to debates about exclusivity is a question fundamental to the future of sponsorship: how far can sponsors seek to commercialise event partnerships, with more concrete criteria for measuring ROI?

'For too long, equivalent media value has been the favoured benchmark for return on investment,' says Rupert Pratt, managing partner of Generate Sponsorship. 'It has resulted in an output-oriented, rather than an impact-oriented, approach. The lack of branding within an Olympic sponsorship is an excellent opportunity for the UK market to reconsider how it evaluates sponsorship. …

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