Sailing has traditionally found much of its sponsorship from financial institutions and banks. With many of these companies in financial difficulty, some even being funded by taxpayer money, sailing will probably lose funding.
Sailing will have to work harder and become more professional to lure money from sponsors. As other sports lower their prices, sailing will also have to prove it still offers the value for money that it has shown in recent times.
The following article from the UK’s Independent highlights how sport sponsorship will be affected by the current climate.
James Bates, director for media at Deloitte, said:
“In this market everyone in the boardroom will be looking hard at the sponsorship agreements.”
Few sponsors have publicly admitted to cutting back their programmes, but hardly any – with the possible exception of BSkyB – are increasing budgets. One executive who heads up sponsorship for one of the largest investment banks in Europe said:
“Expansion is not a word we are using right now.” Many with big sponsorship programmes admit to reviewing the contracts “on a regular basis”.
Sponsorship of the arts and sport is usually undertaken as a multi-year contract, with payments spread out along the life of the deals, and the contracts coming up for renewal a year before they finish. While there is talk of a few sponsors paying a break fee to end their commitments, experts believe that most will simply refuse to renew existing sponsorship.
In sport there has already been a string of examples. Vodafone is to drop its sponsorship of the England cricket team when the £4m-a-year deal comes up for renewal next year, ending a 12-year association. The troubled car group General Motors has scrapped a $7m deal with Tiger Woods; Magners has ended its four-year association with London Wasps; and motor sport has seen a series of corporations curtail their spending.
In cash-rich football, Manchester United are looking for a replacement for the US insurer AIG when its sponsorship lapses next year, worth about £14m a year as well as an additional £5m, and there is even talk that Barclays could pull its sponsorship of British sport’s jewel in the crown, the Premiership.
So why do banks still do it, beyond maintaining legacy contracts? There is some residual sponsorship money to be spent, and Barclays recently signed a five-year $38m contract to sponsor the ATP World Tennis tour, and continues to sponsor the Scottish and Singapore Open. It also has a 20-year agreement to give its name to the stadium of the New Jersey Nets basketball team in the US.
Graham Hales, a spokesman for the marketing group Interbrand, said:
“Any brand investment is having to work harder and in a more targeted way. It is certainly a difficult time to be renewing sponsorship events.” But he added: “Companies use sponsorship to demonstrate citizenship. It shows the issues it is interested in and what values it wants to be associated with.”
RBS has long seen an affiliation with sport as a crucial way to build up its brand. It also sponsors the Williams Formula One team, and through NatWest, sponsors the Pro 40 county cricket tournament.
Other sports that rarely struggle for sponsors include the Ryder Cup golf tournament. As one insider said: “Blue-chip companies are reluctant to let go of big events,” and KPMG is already on board for 2010. A spokesman said:
“We have always been quite selective, but we feel there are good synergies with the brand.”
As the financial crisis deepens, however, some previously untouchable sports are feeling the pinch. Financial groups have long seen Formula One as a crucial sport to associate with. The Dutch bank ING, for example, went for sponsorship of the motor sport because it is watched by 850 million people and is broadcast across the world. It sponsors the Renault team, and awareness as a consequence has soared, according to the research group Sports Marketing Surveys. Santander sponsors Williams, and has used Lewis Hamilton in extensive marketing campaigns to raise the Spanish bank’s profile in the UK following the acquisition of Abbey, Alliance & Leicester and parts of Bradford & Bingley.
Yet the sport, so associated with glitz and glamour, has lost its sheen as Honda dropped out and sponsorship has plummeted. Notable names to have headed for the pits include Credit Suisse, Petrobas and the computer giant Dell.
Nigel Geach, a director of Sports Marketing Surveys, said:
“It [sports sponsorship] is an extremely effective marketing tool. Given the current circumstances, however, they may have to focus on where that sponsorship goes. Spending hasn’t gone up, but there hasn’t been a dramatic fall-off either.”
One banking insider said that more immediately than a collapse in sponsorship, corporate hospitality budgets had really been hit.
“Entertaining has just dropped off a cliff,”