Last week at SportAccord, the annual gathering of international sports federations which this year took place in Bangkok, Matt Smith, the chief executive of World Rowing, suggested that the reason that sponsors are currently shying away from the world of sport was the corruption scandals that are dogging it.
“It’s a very tough environment for sports organisations, with recent corruption scandals in sport,” he told Sportcal. It’s easy to see which organisations Smith was referring to, with Fifa, the IOC and the UCI all having questions asked of them in recent years. However, perhaps perversely, all of those organisations have retained and increased the revenue they receive from sponsors. So is it really the spectre of corruption that stops brands signing up with other sports organisations – or is the problem the offer that they present to the market?
Unveiling its new strategy for attracting sponsors, World Rowing has focused on providing a ‘new value proposition’ for sponsors to help attract them to the sport, with the stated aim being to bring on a presenting partner, plus another four or five brands. Given that this new strategy was developed by an outside agency, namely Octagon, should we be asking whether federations and rights-holders actually understand the brands they are speaking to?
Sponsorship in sport has long been seen by some as little more than a badging exercise. Brands were expected to hand over ever-increasing sums of money in exchange for a logo or some branding at an event or within TV programming
Sponsorship in sport has long been seen by some as little more than a badging exercise. Brands were expected to hand over ever-increasing sums of money in exchange for a logo or some branding at an event or within TV programming. However, this trend has been severely challenged in recent years by brands taking a much closer look at the return this exercise provides. Fragmenting audiences, increased competition from the fringes and new activities, such as eSports, have challenged the old guard and new models are being created to understand this new world, with Anheuser-Busch and its ‘payment-on performance’ model a prime example.
Over the past 12 months, numerous sporting properties have either climbed down from some rather unrealistic targets for title sponsorships or abandoned the idea completely, with McLaren Formula 1 supremo Zak Brown even going as far as to suggest that title sponsorships are a thing of the past.
The landscape in rugby has been particularly tough, with both the annual Six Nations Championship and Premiership Rugby, England’s top-tier domestic league, having struggled to attract new sponsors, and being forced back to existing partners to agree renewals for less money. Premiership Rugby has solved that issue for next season by partnering with US insurance firm Gallagher, while the Six Nations has been ominously quiet in terms of a new title partner.
Before the 2017 Six Nations, it emerged that a six-year deal worth £100 million ($138 million) was the target but, despite employing agency CAA Sports and holding talks with over 150 companies, organisers were unable to tie down a long-term replacement for long-term partner Royal Bank of Scotland. Instead, NatWest, a subsidiary of RBS, gave its name to the 2018 edition.
While rugby has had some issues in the past 12 months regarding player welfare, these scandals haven’t really impacted the top of the game. So why are they still struggling to get new partners while new deals are signed every day across other sports? Is the answer to be found less in the way scandals impact on the reputation of sport and more in the way that the value of a partnership for sponsors is articulated?
Rugby, despite its growth in recent years, is still nowhere near the level of soccer or Formula 1 in terms of audience, so asking brands to pay an equivalent sum to be a title sponsor in rugby isn’t likely to be well received by many procurement managers. In his interview with Callum Murray in last week’s Sportcal Insight, Giles Morgan, ex-global head of sponsorship at HSBC, suggested that, with all the new technologies we have developed in recent years, we are on the brink of a golden age of sponsorship in which both rights-holders and brands will be able to fully realise the benefits of their association.
To reach that promised land, sponsorship as an industry needs to embrace this brave new world and understand that all sport does is provide access to an audience
Yet to reach that promised land, sponsorship as an industry needs to embrace this brave new world and understand that all sport does is provide access to an audience. It is then up to rights-holders to articulate the benefit of their particular audience to the partner brand. That audience might be the most passionate, devoted, even rabid audience anywhere, but perhaps because of that emotional connection, brands have to work even harder to cut through and show how that partnership provides a benefit.
The search for provable ROI in the digital age is starting to shake up the advertising industry across the board, as evidenced by the recent changes at the top of WPP, so it should be no surprise that those same questions are being asked with respect to sports sponsorship. Simply asking for a cheque in exchange for a piece of inventory won’t wash any more. The suspicion that greets non-endemic brands in eSports should serve as a cautionary tale to anyone involved in sports sponsorship that proving why that association is in place is as important as establishing the relationship in the first place.
As technology improves transparency across the board, rights-holders have nowhere to hide, so if they cannot provide tangible benefits to partners, it’s fair to say that someone else will.