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The Six Stop Sponsorship Shop
Six things sponsors need to know before they embark on sports sponsorship
10/11/03 by Michael Smyth
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If you’ve read my article 8 Reasons Why Every Company with a Marketing Budget Should Consider Sports Sponsorship then you’ll now want to know what to look for in a sports sponsorship package. Maybe you concerned that you won’t get the return you're hoping for? Perhaps you wondering whether to renew your existing sponsorship package? If any of these situations apply to you, then you need to take a stroll through the six stop sponsorship shop.
Have you ever seen a Nun drive a red Ferrari?
Personally, I’ve yet to see it but I’d sure get a photograph if I did! The reason Nuns don’t drive red Ferraris is because it doesn’t suit their image. The car you drive is often a projection of the image you wish to portray about yourself.
In the same way the team or individual you sponsor should be sympathetic to your company’s branding. To take a simple example, Gillette, who specialise in producing men’s toiletries, probably wouldn’t sponsor the Silver Ferns; Tampax wouldn’t sponsor the All Blacks.
These are obvious examples but if you want to maximise your sponsorship you need to think carefully about who your target audience is and then find the sport with which your target audience most identifies. Sometimes the answer is not obvious so a bit of research is necessary (assuming your sports team hasn’t done the research to find you). If you’re not getting the return from your sponsorship that you had hoped, maybe you haven’t identified your target audience or your target sport. Once you’ve done the research, is it time to buy?
Sponsorship can be like a PC with no software
A friend of mine recently bought a PC. He wasn’t particularly computer literate but spent some time researching the best products on the market. He knew how much capacity he required on his hard drive, the modem spec and whether a DVD player was really necessary. The day came and he purchased his machine – a state of the art laptop for an immodest price. He got it home, unpacked it, plugged it in, ready to go….and then he realised: there was no software to enable him to do word processing, send emails, create spreadsheets etc. So he rang up the shop only to be informed that they came as extras which he had to buy. How frustrating is that!? – he had a state of the art PC sitting on his dining room table but there was little he was able to do with it.
If you are a corporate sponsor of a sports event, team or athlete, you may have had a similar experience. The mistake my friend made was that he didn’t know exactly what he was buying despite all his efforts at research. He became dazzled by the capacity of his PC’s wonderful hard drive but failed to appreciate that no matter how good your hard drive is, you still need software to run on it. Let’s look at what you’re buying…
Don’t get dazzled by the choice!
For commercial sponsors the choice is enormous. On a basic level you have a choice as to which sports you want to sponsor, or which athletes or teams within those sports to sponsor, and how much you want to spend (which may dictate who you sponsor). However, if you decide simply to sponsor a team, what exactly do you get? If you get your name on the team strip, are you certain that this strip will be worn for all major tournaments or will an event organiser forbid your sponsorship? What if individual team members obtain their own sponsorship? If this conflicts with your own brand, the value of your sponsorship may be diluted. Does your sponsorship deal require the players to turn up for photo shoots to promote your product or are you simply left with your name on the strip on match days? How big is your name on the strip and can it be picked out by cameras and spectators? The variables are endless so you need to check exactly what you buying.
Technology : a blessing in disguise?
Isn’t technology great? If you’re a sports fan like me you can follow your team’s success not only by going to see them play, but also by tuning in on TV, checking their results on the internet, possibly watching broadcasts over the internet, following matches on the radio etc. For fans it’s great, but for sponsors beware because it creates even more choice when it comes to purchasing your sponsorship package.
Say, for example, you have bought the broadcasting rights for all the home matches of a rugby team. What does broadcasting mean? Does it include just some, or all, of the following:
* Free to air TV
* Pay TV
* Interactive TV
* Video
* Video on demand
* Internet (audio visual)
* Internet (audio)
* Radio
* WAP and telephone coverage
Wait….. it doesn’t stop there! What about the time frame in which the broadcasts occur (live, delayed, highlights etc), the medium in which it is broadcast (cable, satellite etc), and the country in which the broadcast occurs? If you want all of these things its going to cost you big money but maybe you only want one or two media.
Don’t fall for the three card trick...
Ever heard of the three card trick? Pick the Ace of Diamonds and you’ll be a winner – only three cards to choose from. The odds sound good especially if you’ve seen the guy in front come out a winner. But are you sure the Ace is in the pack?
When you are dealing with sponsorship some things aren’t up for sale. However, that may not stop people trying to sell them to you. In legal terms there is no such thing as a ‘right’ unless it has some form of legal foundation. When people talk of TV rights it is a little bit of a misnomer. For example, there is nothing stopping me walking up Queen Street one day and filming the traffic. If I could find a buyer I could sell my film. However, the buyer would soon realise that with the necessary degree of skill, he or she could do exactly the same thing for no cost.
What makes sports events different is the ability of the club or event organiser to restrict entry to the sporting arena to only those people it gives permission. In other words, TV rights are essentially based upon the law of trespass! By restricting entry in this way the club or event organiser has created a saleable product – a ‘right’.
...and watch out for the joker
Another way of creating a right is through the use of copyright and trademarks. Trademarks, for example, can be used to protect logos. Copyright may protect these as well, but also video and audio coverage of an event. However, not all things can be protected legally as intellectual property. For example, match results and statistics may not be covered, which explains the multitude of web sites which currently offer such information services but have no connection with the event organiser or teams whatsoever.
Another way of creating a right is to exercise some control over event partners by way of contract. A good example is that of a league who wants to sell the TV rights over all the league’s matches to a broadcaster. The league itself doesn’t have any right to do this because legally it cannot stop individual teams negotiating their own deals. It therefore needs the agreement and participation of all the teams and once it has that, a ‘right’ is created.
So the lesson for all sponsors is to check that whatever is being offered has some degree of legal exclusivity which in turn gives it commercial worth.
Are you ready to show the colour of your money?
Only when you have fully worked out what you are buying can you ask the question “what is it worth?”. This is a matter of commercial judgment and there are no hard and fast rules about what you may be prepared to pay. However, there is one more thing you need to bear in mind before you commit your dollars and that is a concept called ambush marketing.
At the 1996 Atlanta Olympic Games VISA spent US$40million to be the exclusive credit card company. In a poll carried out within one month of the Games, respondents were asked to name companies associated with the Games. 54% named American Express and 74% named VISA. Whilst the figure is confidential, American Express probably paid less than US$40 million for its 54%. They did it legally by ambush marketing: find out more about this by reading my article Is Your Sponsorship Missing The ‘View Factor’? – How to make your sponsorship package work for you.
Would a Nun buy a Ferrari without a manual?
OK, so most people who buy a car know how to drive. But, just because you know how to drive doesn’t mean you would buy a car that didn’t have a manual. All cars are different. You want to know where the fuse box is if the electrics go, how to change the oil etc. Even if you don’t do these things yourself you need to have the manual so your local mechanic can do it for you.
So, if you are going to invest in sponsorship it makes sense to have a sponsorship contract. Each party to the sponsorship arrangement needs to know how the sponsorship is going to work and how to fix it if it goes wrong. With a sponsorship contract each party knows exactly what is involved, what they have to do to make it work and what they get out of it. Don’t leave it to chance – this is a serious business decision.
It all adds up to the six stop sponsorship shop
Here is my checklist of things you need to consider before embarking on any form of sponsorship package. I’ve conveniently called it the Six Stop Sponsorship Shop so its easy to remember:
1. Research the sport which is most likely to hit your target audience.
2. Once you have worked out which sport(s) you want to sponsor, work out what package will work best for you – there are lots of choices out there for the discerning sponsor so work out by proper research what is going to give your company the best pay back.
3. Check that what is being offered is capable of legal protection.
4. Ask what measures are in place to minimise ambush marketing – you’ll need to read ‘Is Your Sponsorship Missing The ‘View Factor’?’ to find out about this one.
5. Put a value on what is being offered in terms of what it is worth to your company – remember you can’t do this until you have completed steps one, two, three and four.
6. Put your agreement in a contract – having worked out everything you need, you must make sure that there are some legally enforceable obligations on the provider to come up with the goods and there needs to be some agreement as to the apportionment of risk if things don’t turn out right.
Sportscounsel can help with your sponsorship quest in the following ways:
- Assessing a sponsorship proposal
- Targeting potential sports teams and individuals
- Negotiating sponsorship deals
- Drafting sponsorship contracts
- Advising on strategies to retain sponsorship links
- Advising on strategies to minimise the risk of ambush marketing
© Michael Smyth 2003. If you would like reprint rights to this article, perhaps for your own newsletter, then please contact us and we would be happy to provide them.
PS. If you want to read more about this topic then take a look at these free articles:
Are You Failing to Apply Apartment Block Logic in Your Hunt for Sponsorship
Is your sponsorship missing the view factor?
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