SPORTS MARKETING

ISBN: 978-1-905685-06-6
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European Sports Marketing Data

Executive Summary


Growth

The sponsorship industry in Europe has followed global trends in its growth rate in this decade with expenditure on rights fees growing from an estimated €5.6 billion in 2000, to €7.7 billion in 2007.

That growth has primarily been driven by expenditure on sports properties with the major international rights in particular witnessing large gains in acquisition costs.

The cost of sponsorship rights to The Champions League, Olympic Games, World Cup and Formula One has grown by around 25% during this period.

For club properties too, rights costs have shown significant growth. Juventus’s recent New Holland deal for €30 million dwarfs its previous deal and sets a new high for European football clubs.

At the other end of the scale growth has been less dramatic with some rights holders struggling to increase sponsorship income despite the expanding media opportunities for buyers. Those rights holders with a professional approach to the discipline, however, have been able to achieve higher fees, and with more compatible sponsors, than those that fail to offer sponsors a compelling business case.

Maturity

The industry can no longer be labelled immature given the level of professionalism demonstrated by many of Europe’s leading sponsors, agencies and in some cases rights holders.

Many of the world’s leading brands invest tens of millions of euros into acquiring and activating sponsorship in Europe and use sophisticated multi-disciplined campaigns to leverage their investment. Such companies use research throughout the process to ensure that their participation is with the right property and that performance of the sponsorship is maximised to meet their objectives.

As a result professional support services have emerged, particularly in northern Europe, to help brands and property owners to exploit their rights to the full.

There are, however, many examples of sponsors and rights holders failing to take advantage of the potential that sponsorship offers and at board level there is still a lack of understanding of the discipline in many organisations.

Cross Border Differences

There is no doubt that cross border differences are apparent in the culture of sponsorship in Europe. On the whole the northern European countries, such as Germany, the UK, the Netherlands and Scandinavia, show the most professional approach to the use of sponsorship. It is no coincidence that, overall, rights owners in these countries achieve higher for like-for-like rights fees and that sponsors tend to receive a greater return on investment. The so-called Latin countries are, however, catching up as their domestic infrastructure improves and these countries have the advantage of access to knowledge of best practice from northern Europe.

There are, however, inherent cultural differences in marketing overall in Europe. In Germany, for example, expenditure is much higher relative to GDP than in the UK. This is largely down to a different approach to below-the-line marketing in Germany where sponsorship and the use of, for example, exhibitions as a communication tool are considered more important than in the UK which has a preference for direct marketing and sales promotion.

In southern Europe, sponsorship is much more heavily utilised by food and retail brands and is seen more as an extension of advertising.

Industry Sector Analysis

The report demonstrates conclusively that the financial services sector is the leading investor in sports sponsorship in Europe. This is true for almost every country and most sports. The sector has used sponsorship both to enhance brand awareness and to drive new business through the direct communication channels with sports fans that their rights packages allow.

Similarly, the telecommunications sector has enjoyed considerable success in its association with sport, in part because of the ability to host and deliver branded content to its key consumer and B2B target audiences.

Traditionally high spending sectors, such as alcohol and automotive, are still major investors, but their spend tends to be limited to specific sports. The automotive sector, for example, invests mainly in motorsports, whereas alcohol is particularly strong in Rugby Union.

Growing sectors include airlines, mainly through Emirates’s large international deals, gambling and energy. Energy companies have used sponsorship largely because of industry deregulation which has increased competition in the sector. Gambling, on the other hand, has been driven by the growth of internet-based operations which have needed to drive awareness and receive the direct benefits of offerings on rights holders’ web sites.

The Media Environment

A key issue for sponsors remains the media environment through which the majority of fans consume sport. The report demonstrates that the trend towards rights migration to pay-television has continued although there is evidence to suggest that exclusive deals are becoming less common. Of Europe’s five main territories, for example, the prime live televised football content is exclusive in only two countries (Germany and France). Rights to major international competitions are still generally protected and on free-to-air television, although in many cases pay-TV operators also have some live rights.

TV rights acquisition fees, however, show no signs of slowing down. In Spain and the UK in particular, new rights deals for prime football have broken records by a large margin and overseas rights to prime content in particular are being exploited.

Pay-TV operators in many countries have little choice than to pay premium rates for sport because their business model depends on such content to drive and retain subscriptions. The result is that free-to-air channels find it increasingly difficult to compete for prime content other than those events that are protected by legislation and a general fall in peak viewing figures for sport is apparent.

This is, however, balanced by dedicated sports channels screening increased amounts of high quality sports programming to dedicated followers.
The print media is often overlooked as a medium through which to exploit sponsorship. The report demonstrates that throughout Europe there are publications with high circulations offering a highly targeted outlet for sponsors. Many such publications also host web sites which have become the default news source for sports fans.

Sports Popularity

The final two sections of the report demonstrate the popularity of sport through declared interest and live attendance. On the whole live attendance is climbing in most sports such as football, rugby, tennis, cricket and motorsport. Despite the massive competition for leisure time in Europe, sport has managed to improve facilities and the overall experience of its product to facilitate such growth.

The popularity of sport remains strong with an average of 66% of the population of the major markets declaring to be either ‘very’ or ‘quite’ interested in sport.

Football is significantly above all other sports in overall interest with an average of just below 50% of the population declaring a liking for the sport. Formula One is second on 30% and tennis third on 23.6%.

The research demonstrates, not surprisingly, that men are significantly more interested in sport than women and that the higher the socio-economic grouping, the more likely individuals are to be interested in sport.

 

 

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