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For regular readers of The Captain’s Broadside or subscribers to the international sports business podcast Are You Not Entertained, you will know that I have been bullish in the past three years on the future growth and potential of sponsorship investment in the sports industry.
Whilst sponsorship has always been a core pillar in the traditional funding architecture of sport, historically it has been undervalued and misunderstood by rights holders and brands alike. As a corporate investment for companies to drive and measure direct business sales, sponsorship’s true value is only just being unearthed and realised.
Why the step change? Traditionally, rights holders have been selling the corporate marketplace a fairly formulaic cake recipe based largely on a generous measure of spurious, assumptive and inexact television data. The cake was then spiced, laced and drizzled with a dash of hyperbole and PR assumption. As the piece de resistance, it was decorated with an icing of corporate hospitality and then finally sprinkled with a magic dusting of VIP access and privilege.
And the recipe worked. For years. Until the dawn of the age of corporate governance, accountability and regulation came into the world almost a decade ago. Almost overnight, the sponsorship model looked fragile to the scrutiny of the grey suits who lurked in the darker recesses of company headquarters.
But at the same time, the dark forces of dystopia were amassing in their legions to douse the flames of corporate frivolity. So too were the gallant knights of technology emerging from the valleys of Silicon to save the day, their digital wizardry providing a golden opportunity for smart-thinking rights holders to connect sponsors directly to their most valuable asset: their owned and managed fanbase. Empirical data detailing demography, geography and socio-economy, with a data and digital trail of how and when the fans engage through multiple digital touchpoints. This data-led approach has become the new lingua franca of the sports industry. Rights holders have at last something tangible – and far more valuable – to sell.
But whilst the proposition of sponsorship investment may at last be changing, the foundation stones and principles from the old school of thought need to be well heeded by rights holders and sponsors alike. Good marketing has always been a blend of the science and art. Whilst data provides the science so urgently needed to make a definitive and measurable case for business investment, the arts of sponsorship that have been honed over 50 years are still essential. That is fundamentally about understanding human connection; the emotional bond between fans and their passions.
Brands such as Crypto.com are increasingly making their presence felt in sport
In my view, the most fundamental sponsorship canon of all (no piratical pun intended) is the emotional connection that can be forged between two brands working in lockstep. It is this connection that lies at the heart of all good sponsorship relationships. A marriage that creates a resonance that benefits and elevates both parties. And, most critically, a partnership that resonates and engages with the most important constituent of all: the fan.
I bring this up because, in the past month, we have seen a number of cryptocurrency deals emerge in the world of sport. Cryptocurrency is the darling of the business pages rights now. The ultimate disruptor, it is manna from heaven for futurologists, a growth sector that seems to be either adulated or scorned by economists and financiers alike. It is polemic. And still figuring itself out.
It is these and other new brand sectors in an ever-growing tech world that require careful navigation by rights holders considering new partnership deals. On the one hand, these new sectors are coming to the sponsorship table in their droves, with suitcases of cash (or bitcoins, possibly) from their investors. Funds that are hugely tempting to the beleaguered industry, always hungry for revenue. On the other hand, many of these companies are young brands in new sectors whose business models are still being tried and tested, and which have little resonance and emotional connectivity with consumers.
Which means that we, the humble fan, are either uncertain, undecided or sceptical about what these emerging industries are and who the legitimate runners and riders are. And this is important. Because creating strong sponsorships is about creating strong foundations. Partnerships that the fan understands and can get behind. Brands that the fan trust. Authentic brands. Because inauthenticity in sport is the thing fans hate more than anything.
Because crypto is still in its nascence, the recent Crypto.com Arena deal in Los Angeles has been much lauded by some and much ridiculed by many. Equally, the collapse of Manchester City’s partnership with 3Key Technologies and FC Barcelona’s with Ownix has created more consumer uncertainty about this growing sector, which is damaging to both clubs.
The commercial agreement with Ownix is terminated with immediate effect.
— FC Barcelona (@FCBarcelona) November 18, 2021
More info: https://t.co/oSRHearxzO pic.twitter.com/0cUuwlGjoX
It is often said that business hates uncertainty. Well so do fans. These two deals serve as a reminder to all rights holders quite how important it is who they do business with. The lesson for the industry is quite how important due diligence actually is and the need to undertake thorough and bespoke risk assessment when considering sponsorship partnerships.
It is the wise rights holders who remember that their greatest value lies in their connection with fans at an emotional and authentic level, which is the most precious relationship of all. That means everything they do commercially needs to be done with the fan at the heart, which includes being selective and mindful of the partners they chose to align themselves with.
The sports industry is awash with examples of sponsorships that have diminished the image of the rights holder. Some partnerships are just unwieldy. I once was involved with the Enjoy Jakarta HSBC Indonesian Open, a mouthful of words that served nobody very much and was soon consigned to the annals of history. Nascar once enjoyed the gloriously named Goody’s Headache Relief Power 500. Apt in so many ways – whilst it lasted.
Or there are the partnerships that just attract ridicule. The Cialis Western Open (never up, never in?) and the Waste Management Phoenix Open (a shit tournament?) are my two favourite examples from the world of golf. But the Tax Slayer Bowl and the San Diego County Credit Union Poinsettia Bowl are two belters from across the pond as well. Soccer, unsurprisingly, is peppered with bizarre examples of misjudged unions: Scarborough FC and Black Death Vodka, Everton and Danka, and my own personal favourite – Scunthorpe United and Pleasure Island. I have never been able to get to either, sadly.
The point is, rights holders need to be mindful about who they take their money from. Consumer loyalty, trust and advocacy is the holy grail for marketeers. Many sports – by virtue of history and tradition – have these embedded in their ecosystem. Fan loyalty is an emotional commodity that must be cherished and protected. Seeking partners with common values and shared aspirations can demonstrate a solidity and strength, will reap huge rewards for rights holder and sponsor alike, and earn the respect and affiliation of the fan as well.
As the proverb attributed to Aesop says, a man is known by the company he keeps. He could have said it about sport.
About the author: A global sports industry consultant and veteran, Giles Morgan is a pirate-podcaster on the ‘Are You Not Entertained?’ podcast and data oilman for Pumpjack Dataworks. He is also head of sponsorship and partnerships at investment and asset management company abrdn.
