The recession reaches sports sponsorship
When spending on all other forms of marketing is being slashed, it is not surprising sports sponsorship is struggling. Some of the best deals came from sponsors that could not afford them.
Manchester United is thus looking to replace the £19m a year received from AIG, the insurer bailed out by the US government. West Ham’s sponsor was the failed travel group XL. English cricket falsely banked on Sir Alan Stanford.
The financial-services sector has been one of the greatest sponsors or sport. Northern Rock backs both Newcastle United and Newcastle Falcons rugby team; Barclays sponsors the English Premier League and Clydesdale its Scottish equivalent; Friends Provident and NatWest pay to put their names on one-day cricket; Royal Bank of Scotland backs the Six Nations rugby, Nationwide the Football Association.
Now that such companies are belatedly trimming their sponsorship budgets or have been forced out of the bidding entirely, prices for naming events and teams are tumbling. Only at the last minute did Epsom find a replacement for Vodafone to sponsor the Derby and 188Bet, an online gaming company that doesn’t even operate in the UK, has agree to sponsor two UK Premier League clubs at knockdown prices.
188Bet is paying Wigan and Bolton about £700,000 a year each to put its name on their shirts but a year ago that fee could have been 50 per cent higher.
That typically works out at about £20,000 a match or less than 50p per supporter, which might look cheap compared with some forms of marketing, but for most products, aiming at football fans is a crude way to target a marketing message.
Further, there is a lot of competition. Not only will 188Bet’s team face 11 players in other companies’ shirts, but tournaments and even stadia have their own sponsors, as do individual aspects of the game. Manchester United’s shirts carry AIG’s name but the club is also sponsored by Nike, Betfred, Budweiser, a watch company, a tyre firm and the Korean city of Seoul.
There is even the risk of alienation in sponsoring teams. Do Everton fans shun Carlsberg because the brewer backs rival Liverpool FC?
Some companies like Coca-Cola can still afford sponsorship, but with firms dropping out or offering less – and with TV rights, also dependent on advertising, also under pressure - the solution is for sport to cut its costs. Formula 1 has take the lead in restricting teams’ spending, and other sports should follow. The consequence of lower sponsorship fees ought to be falling transfer costs.
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