Sports Sponsorship Deals example essay topic

Sporting crises lay sponsors' most valuable assets, their brands, open to an associated fallout. How they can minimise its impact? Sport is never far from controversy. Whether it be alcohol-fuel led mis behaviour, allegations of drug abuse or inappropriate public musings on a thorny political issue, the national press is filled to the brim with sports stars dragging the image of their employers - and the sports they represent - through the proverbial mud. Such crises can have a major knock-on effect on existing sponsorship partners and the potential for attracting new income to the sport. The medium has only begun to prove its commercial viability in terms of return on investment over the past five years, and some believe that brands are being scared off by the inherent risks of sports sponsorship deals.

Football is the most obvious sport whose commercial value has been tainted by the actions of its players. While the game still attracts multimillion-pound investment from brands due to the massive media spotlight it enjoys, many are questioning the wisdom of their associations in light of a seemingly never-ending stream of negative headlines. The guilt of the player involved in many of these cases can be irrelevant. As one sponsorship industry expert says: 'A sports star may be cleared of any wrongdoing following the emergence of a scandal, but would you put him back on the road for your brand? I know I wouldn't.

' The flip side of any sponsorship deal is the knowledge that the sponsoring organisation's most valuable marketing asset, its brand, is exposed to the risks that are inherent in professional sport. The key issue is the strength of the link between shocks, crises and general bad behaviour of top-profile sports people, and the image and brand equity of sponsors. In short, when the mud flies, does it stick to the brands? According to David Abrahams, senior vice-president of Marsh Risk Consulting Practice and an expert in brand risk, there is often a demonstrable link between the way in which a crisis is handled by a company and what happens to that business and its associated brand. 'The way in which any crisis is handled becomes a visible test of management capability,' he says. 'If that crisis arises from a fundamental breach of trust or performance, the compound effect of the bad handling can be devastating.

' Crisis management The size of the problem faced by sponsors relates closely to an incident's shock value in media terms. For Alun James, formerly group managing director of Hill & Knowlton Sports Marketing, who recently left to set up Four Gritti Sports and Sponsorship, there are two distinct types of crisis in sports sponsorship. ' The first can be reasonably anticipated while the second is totally out of the blue,' he says. 'If you are a sponsor of a sport, such as sailing or motor racing, where accidents regularly happen, then it is straightforward to undertake scenario planning and have a rigorous and robust response prepared. ' The unexpected crisis, such as Gary Neville's observations on the obtrusive nature of commercialism in charity football initiatives (see box, below left), is more difficult to deal with. The impact can be mitigated by clear processes and lines of responsibility, even if the specific nature of the crisis could not have been anticipated,' James adds.

In these instances of crises that cannot be anticipated, he believes that logic takes over to a certain degree. 'In many ways, the laws of physics apply when in a crisis: every action should have an equal and opposite reaction,' he argues. 'If the crisis is serious, then the reaction of the sponsors should demonstrate concern and action. An overreaction can create an issue when little exists, while an under reaction can make the sponsoring company look indifferent, disorganised and out of touch.

' As the sponsorship industry has matured, so the inherent risks that come with the association a brand has with sport have been minimise d, primarily due to the importance placed on in-depth research prior to signing up to any partnership. ' Any form of marketing activity carries an element of risk, whether it be a sales promotion, PR activity or a new advertising campaign,' explains Stephen Curnow, head of marketing at SFX Sports Group. 'An association with a sports star is no different. The key to minimizing risk is thorough and proper research on the part of brand or agency into both the fit between the brand and the celebrity, but also a broad understanding of sports stars' own marketing and PR objectives. On the rare occasions where things do not go to plan, it is largely due to poor communication, research and mutual understanding on the part of brand and sports agency.

' Essential research Curnow's point is supported by Ben Wells, account director at sponsorship consultancy Red mandarin, who believes that sponsors must take time to understand what turns the audience off as much as what turns it on. Past practice has seen brands attracted to the heightened media exposure of sports and the obvious loyalty tie-ins they create as opposed to the exact sponsorship proposition on offer. ' Good sponsorship complements the emotive values of the important things in people's lives, but it is a double-edged sword - by failing to appreciate the nuances of those people's interests it is easy to turn a positive into a negative,' he says. 'This point is illustrated in research we conducted recently, which found that only half of European sponsorship decision-makers reported that they conduct primary research into their target audience prior to committing to a sponsorship. By going into a sponsorship blind, sponsors leave themselves open to costly errors that could undermine their entire sponsorship.'s sophisticated investments Nigel Currie, director of sports marketing agency GEM Group, believes that the majority of brands are getting it right and that sponsorship howlers are few and far between. ' The industry is now worth close to lb 900 m a year in the UK and, despite the size and scale of the industry, it is not easy to think of too many sponsorship programmes that have been a disaster,' he says.

'The major deals now involve such significant financial investment that sophisticated contracts accompany them to protect the parties involved. ' With regard to the Nike / Gary Neville debate, Nike is not only a sponsor. Primarily it is a kit manufacturer that has its branding on show. The company is in a unique position and is able to produce specialist kit for different circumstances.

However, the criticism that Nike received was really a PR problem rather than one that should be levelled at any particular sponsorship activity. ' The sports sponsorship medium has advanced well beyond the simple corporate hospitality opportunity that it represented in years gone by. And as part of this advancement, sponsor companies have learned how to minimise the number of crises their association has to go through and consequently are providing a greater level of return on investment. In 2005, sponsorship is as much about research, media relations and PR knowledge as it is about exposure. Sport will always dominate headlines, and in some cases not for the most positive of reasons.

But the more sophisticated sponsors have learned that such bad news does not necessarily have to affect the overall aim of their associations. GARY'S OWN GOAL, 2005 Manchester United defender Gary Neville claimed Nike's anti-racism ads cheapened football's own campaign. Nike denied the accusations. Neville is believed to have been reprimanded by his club; its 10-year sponsorship and merchandising deal with Nike is worth lb 300 m. TIGER'S LOST BALL, 2003 Nike entered the golf market with a five-year lb 90 m deal with Tiger Woods. It came unstuck at the first hole of the 2003 Open Championship at Sandwich.

Using the new Nike driver, Woods lost his ball with his first shot. He later reverted to his old driver, made by rival Titleist. THE RACE, 2000 Team Philips' lb 4 m catamaran broke its hull just after the start of The Race, a non-stop around-the-world yacht race starting from Barcelona on 31 December 2000. The sponsor's plight was not helped by having the phrase 'Let's make things better' emblazoned on the boat.

SALT LAKE SCANDAL, 2000 The Olympic rings were dragged through the mud by Salt Lake City's 'votes for favours's scandal in the run-up to the 2002 Winter Olympics. The incident led to sponsors questioning their investment's value and forced changes in the way bidding cities can promote themselves. FREDDY'S NIGHTMARE, 1998 Freddy Shepherd, director of Newcastle Football Club, got drunk and opened his heart to the News of the World. Shepherd was quoted mocking Geordie fans for buying the club's shirts. Sales of the Adidas club shirts plummet ted overnight. TOUR DE FRANCE, 1998 The Festina team was thrown off the Tour after the arrest of masseur Willy Vo etwas.

French customs officials had discovered performance-enhancing drugs in his car four days before the start of the race. A third of all teams in the race withdrew or were expelled due to drug abuse. Fact file: Agency view o Most respondents reported that thorough preparation and research was undertaken prior to taking the decision to sponsor. o Only half the respondents said they had conducted primary research on their target audience prior to the decision to sponsor; only a quarter used independent research companies. o Many practitioners also used secondary sources. While this is better than nothing, the challenge is matching off-the-shelf research reports with a specific target audience.

The two approaches are hard to reconcile.