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Australia
ISBN: 978-1-90568527-1
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Australia & New Zealand sponsorship data analysis report

Executive Summary

SPONSORSHIP INDUSTRY SIZE

Australia and New Zealand not only share a geographical region, a common language and a similar history but also a sporting culture in which rugby and cricket are major sports and soccer is becoming increasingly popular. Economically the countries are close trading partners and large domestic companies such as Holden, Lion Nathan and Sky City sponsor sports in both countries.

In both countries sport is a very important part of national culture and pride. However, there are some significant differences. In Australia, for example, the most popular sports code is Australian Rules Football, whereas in New Zealand it is rugby union.  In the modern era, both countries have punched above their weight (relative to population size) in a wide range of sports on the international stage.

Analysis of 1,662 deals in Australia (1,405) and New Zealand (257) shows that the two countries’ combined sponsorship rights income is US$734 million dollars. The deals analysed represent the main rights holders in major sports such as Australian Rules Football, rugby union/league, cricket, soccer, motorsports, tennis, athletics and horseracing.

Given that there will still be a considerable number of much smaller rights holders not examined, it is fair to estimate the total to be $880 million (Australia $735m / New Zealand $145m).

This total value is in line with expectations for major western economies given the relative size of the populations of the two countries. The United Kingdom, for example, with a population approximately three times the size of Australia, has an annual sports sponsorship rights spend in the region of $1.5 - $2 billion. The sum for Australia and New Zealand can be seen as a sign of a mature industry given that, unlike the UK, the two countries do not have the major global sporting brands of the English Premiership, which command high rights fees due to international exposure.

INVESTING INDUSTRIES

In most regions with advanced sponsorship industries the financial services sector is the dominant investor, accounting for approximately 20% of the market by spend. In Australia and New Zealand however, the sector accounts for just 15% of total spend. There are several reasons for this reduced proportion but the main reason is the significant investment from national Government to virtually every major sport in Australia. The payments are partly a result of the Government subsidising those sports which drop alcohol sponsorship in the so-called ‘Be the Influence’ programme. The Australian Sports Commission has also invested heavily in sport as part of its programme to improve the nation’s health and enhance the international image of the country.

Despite the government campaign, alcohol still accounts for 7.4% of sponsorship spend in the country, a higher total than Germany, Italy, Spain, Brazil or the USA and roughly equivalent to that of the UK, which was measured at 9% in 2007  (although this figure has since fallen).

The automotive sector in Australia is a high investor in sponsorship with General Motors’ Holden subsidiary, Ford, Toyota, Kia and Hyundai all major sponsors of sport. 

On the other hand telecommunications, traditionally a major sponsorship investor in western economies, spends relatively little on sport in either country with the only large deal being Telstra’s title sponsorship of rugby league in Australia.

MAJOR CHALLENGES IN AUSTRALIA

The sponsorship industry in Australia and New Zealand faces major challenges, in particular from the doping and match-fixing scandals that have rocked sports in Australia in recent months.

A major report from the Australian Crime Commission has uncovered evidence of performance enhancing and recreational drug use, the former run as a very sophisticated operation. Links to organised crime and match fixing have also been uncovered, and the inquiry has identified serious problems in most of the major sports in the country.

This is obviously of significant concern to sponsors (for example Telstra has stated that it is awaiting the outcome of full inquiries into the matters raised) and, given the complexities of modern sponsorship agreements, there is a very strong likelihood that sponsors affected could invoke ‘morality’ clauses to withdraw from their contracts if they felt the issues were damaging their brands.

Ironically the scale of the problem might offer some reassurance to sponsors. Because the scandal has affected so many sports, there is no one sponsor that stands out as being associated with ‘wrong-doing’. In commercial terms this could protect the sponsors and there might even be a legal argument to challenge any sponsor considering withdrawal if termination is based on the grounds that brand damage has occurred. At present, however, there have been reassuring noises from the major rights holders and big sponsors appear to be awaiting further developments before making their decisions.

Another significant challenge for the Australian sports industry is the performance slump at international level. The country’s Olympic team has not performed as well as expected in the past two Olympic Games; the national cricket team, for a long time the world’s best, has spent the past six years in decline and, in rugby union, Australia is eclipsed by the pre-eminence of New Zealand’s All Blacks. In tennis, no Australian has won a Grand Slam men’s tournament since Lleyton Hewitt won Wimbledon in 2002 and only one woman, Samantha Stosur (US Open 2011), has won a grand slam since Evonne Goolagong Cawley in 1980. 

Despite huge advances in Australian soccer over the past two decades, the national team is still a relative minnow on the international stage. Given that Australian Rules Football has no significant appeal beyond the national borders and that rugby league has only the English clubs to compare in stature, the international profile of Australian sport is at its lowest in the modern era.

This obviously has an impact on sponsorship and is witnessed by the huge discrepancy in sponsorship value for New Zealand’s rugby union team, the All Blacks, to that of the Australian national team. Admittedly rugby union is by far the pre-eminent sport in New Zealand and the All Blacks have a legendary status wherever rugby is played. Despite this, the difference is still significant.

NEW ZEALAND – RUGBY IS KING

In New Zealand rugby union is, as discussed, the most popular sport by far and the country’s All Blacks are a powerful symbol for the entire nation. As a result they have attracted very large sponsorship deals from both Adidas and AIG, although the latter is somewhat controversial given that it has introduced branding to the team’s jerseys.

Aside from rugby (both union and league), cricket and soccer are the key sports in terms of sponsorship value. The national soccer team, the All Whites, qualified for the 2010 World Cup for the first time since 1982 and, despite elimination in the first round, they were the only team not to lose in the tournament. This raised both the domestic and international profile of the team and the status of soccer within New Zealand. Whether this will deliver long-term commercial returns remains to be seen.

Because of the small population size of New Zealand, it is not home to major multi-national companies and a high proportion (72%) of sponsorship spend is derived from international companies. However, when analysed by deal numbers, domestic companies are ardent backers of sport with more than 60% of deals being from home-grown businesses.

When Adidas and AIG’s huge deals with the NZRU are r

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