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International Sports Federations

Executive Summary

Market Growth

Sponsorship of international sporting federations now stands at just above $2 billion per year. Although no previous figures have been put on the sector, it is clear that this represents a significant rise as new properties, such as Formula One’s global rights, have come onto the market and there have been major increases in the fees for properties such as UEFA’s Champions League primary rights.

Growth in rights values has come about mainly as a result of major properties realising higher fees in a sponsorship industry trend that is witnessing polarity in the market. Major properties, whether federations or clubs, have seen exponential rises in rights values in recent years. This is partly a result of competition – there are a limited number of ‘mega’ properties, but also because sponsorship is being increasingly recognised by major corporations as a tool for meeting global objectives.

Major brands understand that traditional media has fragmented and cannot offer two-way communication. To engage with the market now requires a more sophisticated approach, often using digital media. This not only allows communication across multiple media platforms and outlets, it provides an opportunity to vary content and interact according to the target market.

However, brands themselves do not necessarily own compelling content to allow this communication process.

The alignment with major sports properties therefore presents an opportunity to create content that is both compelling and of interest to the target audience. This, in short, is helping to drive up rights fees among the major properties.

Three federation giants

The figures show that there are three giants among international sports federations; namely UEFA, FIFA and the IOC, which between them account for $1065 million, just over half the total.

Obviously all three stage huge international events with global audiences. Leading earner, UEFA, has an estimated annual sponsorship income of $468m, as a result of running three different major events, two of which; the Champions League and the Europa Cup run annually for most of the football (soccer) season, whereas the IOC and FIFA are essentially restricted to events every two and four years respectively.

Soccer number one sport

Soccer is the leading sponsorship recipient among international sports federations. This is in part due to the inclusion of regional federations such as UEFA, Concacaf, Conmebol, AFC and CAF. Although other sports have regional federations, many are very small in terms of commercial activity and have not been included for this reason. When added to FIFA’s estimated annual sponsorship income of $366m, the regional federations bump up soccer’s total rights value to $1,058m, again a fraction over half the total value of federation income.

International motorsport series represent approximately $200m with athletics the next big recipient on $148m.

Figures for athletics, however, do not include the 2015 Pan-American Games in Toronto 2015 as most of the deals are yet to be signed. Tennis and cricket are the next big earners on $93m and $75m respectively.

Financial services biggest investor

In line with virtually every analysis of sponsorship industry sectors, the financial services industry is the biggest investor in international federations, accounting for 17% of total spend. The figure is slightly lower than that seen in many sports specific and regional surveys of sponsorship, where the sector normally accounts for between 20-25%. Other major investors are automotive, sports clothing, telecommunications, beer and airline companies, which collectively contribute 37% of the total.

Adidas biggest spender

Among companies, German sports clothing manufacturer Adidas is the biggest spender with an estimated annual investment of $106m across 11 deals. Second is Coca-Cola, a company which has long preferred federation and event sponsorships to major deals with individual teams, where pouring rights agreements (often with a sponsorship element) are the preferred option. McDonald’s, which is third on $69m, takes a very similar approach to sponsorship with in-stadia franchises more common than high profile team sponsorships. The next biggest spenders are Visa ($66.5m) and Emirates whose $55m spend is largely accounted for through its FIFA partnership.

The future

International federations face major challenges in the coming years in terms of attracting and retaining partners.

As discussed, sponsorship has changed from delivering brand awareness and media exposure to an ability to create interactive communication with consumers.

When linked to sport, there still needs to be a credible association, but this does not always require a link to a federation. Nike, for example, has successfully marketed around major events such as the FIFA World Cup and the Olympics without taking official rights to the events. Instead it has used athlete endorsements or team sponsorships as its platform.

The benefit of this approach is that it provides a strong emotional link to individuals, the people at the heart of the action, allowing the brand to ‘tell a story’. The huge cost of rights acquisition can instead be used on activation. Although Adidas, which generally prefers federation partnerships, tends to achieve higher awareness rates from the major events, the results aren’t always dramatically different and clearly both strategies fulfil brand objectives.

The Nike approach doesn’t necessarily work for all sectors. P&G’s very successful Olympic ‘Mums’ campaign in 2012, for example, could not have worked without a close association to the event. Apart from the need to use official Olympic video footage to create the content, it was necessary to use Olympic logos to give credibility.

The danger for major federations is that their rights fees might grow beyond a point that sponsors feel that the investment is worthwhile. If sponsors can find an alternative link, such as through personal endorsements, which offers an equally powerful outcome, the attraction of official rights diminishes.

It will therefore be vital for federations to ensure that they have content and social media programmes in place to help sponsors achieve their goals. Those that fail to do so risk losing financial investment as well as the power of major brands helping to promote their sport.

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