In two weeks Simon Curtis, the sponsorship manager for financial services group Save & Prosper, will meet executives from the Rugby Football Union (RFU) to renegotiate its 12-year sponsorship of the home of English rugby, Twickenham.
The reason for the talks is straightforward. Last year, the rights to show live coverage of the England team and club rugby exclusively, moved from the BBC to BSkyB in a deal worth 87.5m over five years. This deal makes a broadcast rights hat-trick. Sky already has a deal with Premier League football (640m over four years), and League soccer (125m over five years).
These telephone-number sums may be good for the sport, but are the sponsors getting value for money?
When the BBC shows Five Nations matches it attracts viewing figures of 8 million. Save & Prosper thinks that these figures will drop to around 1 million on Sky Sports.
Curtis will look for increased signage and hospitality around the ground, and a significant reduction of its sponsorship fee expected by the RFU if his company, which has pumped 10m into the ground, is to stay involved.
Re-negotiations of original deals like these have become commonplace as Sky, Channel Five, and other broadcasters with smaller audiences buy sports rights exclusively.
The onset of digital TV, which is scheduled to launch on satellite TV at the end of this year, and on terrestrial channels in the middle of next year, will further add to the fragmentation of broadcast media.
Richard Dean, account director of consultancy Sponsorship Science, thinks that the proliferation of broadcast media will increasingly concentrate minds. “This is one of the single biggest issues facing sponsorship,” he says. “These kinds of sponsorship reach a more focused audience, but there are fewer numbers. Sponsors will ask what value they are getting from the deal and not just look at these packages in terms of raw exposure.”
The impact of digital TV could mean that sponsors have to go back to the drawing board to make sure they get a good return on their investment.
Clifford Bloxham, group account director at sports management agency Advantage, says: “Digital could be bad news for sponsors. More choice simply means that sponsors have to work harder to get their message across. “
Bloxham says that the idea of showing 30-camera interactive Formula One races is a case in point. If viewers choose to focus on staying with their favourite driver they will largely avoid the other sponsors connected with the race.
Unsurprisingly, commercial director at Sky, Mark Wood, has few qualms about multi-channel TV, particularly as his station led the way in this area.
Sky currently shows 14,000 hours of sport a year, spread over 50 different sports.
He says: “Our priority is to get the best sports on Sky, and show them as often as possible. Where there are conflicts between advertisers, we can be far more flexible than terrestrial broadcasters when reaching an accommodation.”
By way of example, he says that both Ford, which sponsors the station’s football coverage, and Bass, whose Carling lager brand sponsors the Premier League, are happy with the way that Sky covers the sport. The league is referred to on air as the Carling Premier League and in the run-up to big games the Fordsponsored show will get as many as 200 promotional spots across the satellite network in a week.
Wood is equally sanguine about digital TV. He comments: “It would be a mistake to assume that things currently watched by millions of people will only be watched by thousands of people in the future. Digital will not mean the decimation of mass media TV.”
However media buyers are not so relaxed about this trend. Media director at Saatchi & Saatchi Mike Gorman says: “Sky gets big events but it does not get big audiences. It is still a fact of life that most of the top 100 advertisers want to reach most of the people. The continued fragmentation of the broadcast audience could mean the top brands have to pay more to reach the same number of people they reached previously.”
Increasingly, advertisers are combating the problem of a diluted broadcast message by sponsoring a sports league of some kind, or better still creating their own sports events.
A carefully negotiated sponsorship agreement can do wonders for a company’s marketing strategy. The Carling Premier League is widely regarded as a model of its kind.
But there are some other promising examples. At the start of this year, Nike signed a 250m deal over ten years with the Brazilian national football team. The team will play five games a year and Nike will have the broadcast rights to them.
Pepsi has reached a similar arrangement with the Argentinian national side. In the UK, Coca-Cola has said it is looking at the possibility of having the English and Scottish Coca-Cola Cup winners playing against each other.
The rationale here is simple. If your brand creates the event, there is little chance of the message being lost, regardless of which channel broadcasts it.
Since the advent of Sky TV money has driven sport. Advertiser-funded events and teams may well be a way for mature sponsors to shift the balance back in their favour.