Forbidden Finance

The death knell has sounded so many times for tobacco sponsorship that the rest of the marketing community appears to have become deaf to its toll. But a concerted attack on sponsorship freedom by several EU member states now threatens millions of pounds-worth of alcohol sponsorship and valuable sponsorship of education programmes.

“After tobacco, there’s a real threat that alcohol could be next,” says Karen Earl of the eponymous sponsorship consultancy.

Newcastle United discovered just how real that threat is when they played in France earlier this year. French legislation – while far more lenient on selling alcohol to children than UK legislation – bans all advertising of alcohol. Newcastle’s strip, which bears the name of their sponsor, Scottish Courage brand, Newcastle Brown Ale, therefore contravened France’s Loi Evin, and the French authorities refused to allow the team to wear it during the game.

This is not the only time Scottish Courage has suffered at the hands of the French law-makers. It holds the UK licence to brew Budweiser, whose US owner, Anheuser-Busch, was one of the 12 official sponsors of the World Cup. Because of the Loi Evin, Budweiser was prohibited from running perimeter advertising at any of the ten grounds where matches were played.

Arthur Bernier, vice-president of sponsorship consultancy Advantage International, explains: “Budweiser tried to petition the European courts to have the football grounds declared international property during the World Cup. This failed and the European Commission ruled that stadia in France fall under French law.”

Undefeated, Budweiser sold the rights to its perimeter signage, worth an estimated 10m, to timing equipment company Casio, while keeping hold of its other rights as a sponsor – its ticket allocation, hospitality perks and the use of its logo on official World Cup material.

Arguably, Budweiser found itself 10m richer when it was deprived of its hoardings. It spent the money from Casio on boosting its World Cup marketing in other countries, such as TV advertising and promotions in Scottish & Newcastle retail outlets in the UK. However, being forced to take funds away from sponsorship activity restricts commercial freedom and deprives sport of valuable income.

At worst, it could deprive children of a rounded education. Helen Day, who chairs the European Sponsorship Consultants Association’s international liaison committee, explains: “The Greeks and Swedes are against sponsorship and advertising aimed at schoolchildren. Greece bans the advertising of products for children during breaks in children’s TV.”

While the threat of such restrictions being imposed in the UK is distant, ESCA wants to pre-empt any tightening of the rules by emphasising the good that is done by sponsors.

Earl, who is also a member of ESCA, says: “The minority has the loudest voice, because the majority don’t wake up and realise it should be saying something. Everyone is mindful of the danger of hitting schoolchildren with advertising messages, but some of the best works carried out in education are sponsored.”

Day highlights the contribution sponsorship makes to children’s health: “Kellogg sponsors the Amateur Swimming Association awards scheme, which helps children learn to swim, and Lloyds TSB sponsors youth athletics.”

Clive Gillinson, managing director of the London Symphony Orchestra, outlines the impact a sponsorship ban would have on the LSO’s activities: “Almost every arts establishment has a huge educational element. Music used to be a core curriculum subject but it isn’t any longer, so music has to come into schools in other ways. We do a huge number of educational projects, including projects for the disabled and workshops in schools, most of which are sponsored.

“A ban on sponsorship would wipe out a substantial percentage of that work. It could wipe out the work being done by arts organisations across the UK. In other areas of Europe, people get public funding for projects such as ours, but that’s not so here. I assume these moves are conceived by people who are not so dependent on sponsorship for their income.”

ESCA’s Day spells out the danger: “This minority could aim to whip up support in other countries. It could grow like the tobacco lobby and then get imposed on us.”

Like Greece and Sweden attacking sponsorship aimed at children, France is pushing to impose its stringent rules on alcohol further afield. Diageo has already felt the effects of this when France refused to televise rugby matches sponsored by Guinness that were played in Ireland.

“Televised events are usually subject to the laws of their country of origin,” explains Day. “But France is imposing the Loi Evin on sports events held elsewhere that are televised in France. It is putting pressure on events elsewhere to abide by French laws. If France can get away with imposing its laws outside, then other countries might also try to get away with it.”

ESCA is lobbying hard to ensure that the European Commission continues to respect the rights of individual countries to write their own laws. “We’re trying to move the argument away from ‘Is alcohol good for you?’ to ‘Does France have the right to impose its own laws on other countries?'” says Day.

“The new Green Paper on commercial communication aims to encourage cross-border marketing and trade, and concludes that countries can have their own restrictions but the laws to abide by are those of the country of origin,” she adds. So far, so safe.

Sean Jefferson, sponsorship director at Western International Media, believes that drinks companies will remain out of danger for some time “if they are responsible in the ways in which they attach themselves to sport and don’t promote excessive drinking”.

Keith Green, Advantage International group director for Europe, also reckons that outside France there is no immediate cause for concern. “The alcohol industry has handled its PR much better than the tobacco companies,” he says. “There is no public clamour for a ban and no votes to be gained. It’s not a political football in the same way as tobacco.”

However, there are still no grounds for complacency. “Tobacco is a done deal,” says Green. “But if beer and spirits are affected, this will have an impact on every major sport right across Europe, from rugby and soccer to the Boat Race, the Grand National and down to local events sponsored by local breweries.”

When the European ban on tobacco sponsorship was announced, the directive stated that existing contracts – typically three years – should be allowed to run their course. In the UK, Formula 1 was given an eight-year exemption and other sports given five years to set up alternative revenue streams, but the gloomiest predictions suggested that it would take seven or even ten years to find new sponsors.

If this is the case, then perhaps events sponsored by drinks companies should already be investigating alternative sources of cash.

“Sports that rely heavily on tobacco sponsorship have failed to find other sponsors so far,” says Earl. “It’s not always that easy. We are trying to replace tobacco money with money from other sources, such as information technology companies, but a hole will appear somewhere as everybody moves up the scale.”

Jefferson takes a more bullish view. “If there was no alcohol sponsorship, it would free properties that previously weren’t available, so that other brands could go for them. Computers, financial services and clothing companies would take their place,” he believes. “If a property is strong enough, it will still pull in sponsors. If not, they will have to work harder and improve their sell. And if they can’t go to a brewer, they might target others more effectively.”

He thinks the greatest loss would be the wealth of experience offered by the drinks sponsors: “We would lose some of the best examples of how to manage sponsorship and lots of people who are very good at this game. The Carling deal, for example, has been as good for the Premier League as it has been for Carling.”

Jefferson argues that other areas of marketing would benefit from an increased slice of alcohol budgets. “The drinks companies would still need to invest in their brands,” he says. “They would have to be more clever in the way they use the forms of marketing left to them, such as point of sale.”

Marketers are, by their very nature, adaptable and have already demonstrated some novel ways of working within the bounds of existing restrictions. Marlboro has tried to sidestep the rules on tobacco branding of Formula 1 cars by painting the vehicles’ roofs in its unmistakable red, and when the Davis Cup was held in France, the tournament’s sponsor, Heineken, used its hoardings to advertise a non-alcoholic beer brand.

However, no one enjoys being creative in a corner while the competition has the run of the pitch. It would be foolish for alcohol firms to merely sympathise rather than empathise with tobacco companies – they may soon find themselves in a similar position if they don’t take action now.

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