Biggest is not always the best

With the FIFA World Cup in Germany about to start, sports sponsorship is “front of mind” for many UK marketers – and for the vast majority of UK consumers, too.

The more high profile the event, the more sports sponsors have to spend to achieve a decent return – but can minority sports offer comparable benefits for less investment? By Martin Croft

With the FIFA World Cup in Germany about to start, sports sponsorship is “front of mind” for many UK marketers – and for the vast majority of UK consumers, too.

According to the European Sponsorship Association (ESA), the latest estimate for the total spent on sponsorship globally during 2005 is $30.4bn (&£17.4bn). Sport accounts for 85% of all sponsorship.

Sports sponsorship is big business, and it is still dominated by a relatively small number of sports with huge pulling power, such as football. But few marketers have the sort of budget needed to participate in these more popular sports on a national or international scale.

The official FIFA worldwide sponsorship deals for the World Cup cost between $30m (&£17.2m) and $50m (&£28.7m), and FIFA is apparently talking about future deals involving a minimum of $150m (&£86.1m) for two consecutive tournaments.

Spiralling costs

Even on a national level, the deals with the Football Association involve multi-million pound annual budgets, and a company is likely to be looking at &£1m a year for a shirt sponsorship deal with a relatively successful Premiership or League club. Early in April, for example, US insurance company AIG signed a &£56m four-year deal to be the shirt sponsors for Manchester United, replacing Vodafone. As Nigel Currie, chairman of the ESA, says: “Sponsorship values are increasing dramatically – Manchester United was &£6m a year in 2000, and now it is looking for &£15m.”

As a result, many marketers are beginning to explore less well-known sports as potential beneficiaries of their budgets – helped, of course, by the London 2012 Olympics, which will showcase many sports which don’t normally get much coverage in the UK. The current proportion of total marketing spend across Europe allocated to sponsorship is 8%, according to the ESA, which predicts this should double by 2012.

Currie says: “One of the key elements for any sponsorship programme is the media, and the likely levels of exposure that the property will receive. This has always been the drawback for minority sports.” But that calculation is changing, he says, because of media fragmentation: “The increased number of sports channels on terrestrial and digital television, and greater coverage in newspapers and magazines now enable most sports to attract high levels of media exposure. Many sports have, or are developing, their own channels and this will undoubtedly continue.”

Experts agree that the London 2012 Olympics will be a major boost for minority sports. Karen Earl, of Karen Earl Sponsorship, says: “Popularity ebbs and flows for Olympic sports in which the UK has the potential to do well. Hockey benefited when Great Britain won a gold medal in Seoul in 1988, but the lack of success since has not helped the sport’s quest for sponsorship. With 2012 coming up, potential sponsors will be looking at Olympic sports in which Britain has a serious chance of success. Equestrian sports, for example, should be using the lead up to 2012 to attract sponsorship from brands willing to invest in potential success in six years’ time.”

As Jeremy Clark, European managing director of MEC Sponsorship, says: “With the 2012 Olympic Games, there are massive opportunities for brands to gain value without having to spend huge amounts of money. The national governing bodies of the Olympic sports in Britain are, for the most part, underfunded and almost wholly reliant on UK Sport and National Lottery money to compete. There will be more sponsorships of these governing bodies – Norwich Union, for example, has announced a &£50m injection into UK Athletics as the dominant Olympic sport. However, there are other sports that can offer a niche for the right sponsor at a relatively modest price.”

Look for synergy

Although marketers should not completely abandon the big money sports such as football and rugby, Clark says: “Budget is not the ‘be all and end all’ of sport sponsorship. The relevance of the property is arguably more important, and can make the money work much harder for the brand.” He cites as an example MEC Sponsorship’s work with Specsavers on sponsoring referees, which works well because of “the obvious synergy and humorous link between the brand and the property.”

However, Mike Hall-Taylor, a director of Haygarth Sports Marketing, argues that marketers should not rule out big name sports. Overall, he says: “A lot of minority sports are becoming less popular, while the more obvious larger sports are increasing in popularity exponentially. This polarising trend is likely to continue as more and more money is ploughed in to support the big sports at all levels. The bottom line is that the bigger sports are still ’emerging’, and this is where I would spend my money.”

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