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- ESA challenges right holders to do more due diligence before agreeing to deals
- Confidence in industry’s health drops according to survey
A new survey from the European Sponsorship Association (ESA) has found that there is significant concern about partnerships with companies that operate in the cryptocurrency sector.
The latest ESA Sponsorship Sentiment Tracker (SST) polled 133 professionals working in sponsorships on the current health of the industry. Many of those surveyed feel hesitant about deals with cryptocurrency brands, or revealed they had already been negatively impacted by an agreement that did not last.
From a broader perspective, the survey found that there was a decline in confidence concerning the overall health of the industry. With survey respondents, recording a decline in confidence across the sponsorship sector.
In particular, according to the report’s findings, it was felt that cryptocurrency firms can be unstable partners, posing particular risks financially, as well as to fans, rights holders and the industry’s reputation. As a result, the ESA has challenged companies that sell sponsorship packages to do more to safeguard themselves from potential partnerships that could harm their finances or reputation.
Quentin Thom, co-founder and co-head of PerfORM Due Diligence Services, which specialises in assessing potential partnerships in crypto, blockchain or Web 3.0, said: “Recent events [including FTX] and a challenging ‘crypto winter’ market environment have served as a stark reminder to rights holders of the critical importance of transparency and robust due diligence to mitigate the reputational risk of bad actor association, plus financial loss suffered by them, and their fan base, as a result.
“The crypto space, and the firms that operate in it, are in a fast-growing industry, operating in a largely unregulated and volatile environment. Operational due diligence is an essential, new tool to sports, that can be used to understand what that crypto business is.”
The industry review also found 91 per cent of respondents agreed with the notion that rights holders should carry out more due diligence and risk assessments to protect both themselves and stakeholders from agreeing a potentially harmful sponsorship deal, in terms of both finances and reputation.
ESA chairman, Andy Westlake, said: “The results of Wave 16 of the Sponsorship Sentiment Tracker serve as a wake-up call for the industry and confirm what many suspected – that there is not enough due diligence taking place when vetting potential partnerships.
“Many organisations have suffered as a result of deals not materialising because of new partners collapsing or being unable to fulfil the terms of their agreement. I’m sure all rights holders in our community will take notice of the results of this survey and consider how they can protect themselves and their brand and agency partners when negotiating future deals.”
