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COMMENT

07/09/2010
This week has seen two worrying reports of rights holders struggling to sell sponsorship and taking what appears to be drastic action to remedy the situation. On the one hand Tottenham Hotspur has announced a two-year shirt deal with software supplier Autonomy that is limited to the club’s Premiership matches. The club is still looking for a sponsor for its European and domestic cup competitions.

Similarly, Championship club Middlesborough has announced that it is offering its primary shirt sponsorship on a month-by-month basis because it couldn’t find a sponsor willing to take the rights for the entire season.

No matter how these offerings are dressed up as creative approaches from the clubs, the simple fact is that neither has pulled in the revenue that they wanted from the generally preferred option, to have a single primary shirt sponsor.

Tottenham had hoped to exceed online betting firm Mansion’s reported £8.5 million per year deal, which expired in May.

That contract, signed in 2006, was considered massively over-priced with the true market value at the time probably closer to £5 million. Even though Tottenham have now qualified for the preliminary stages of the 2010/2011 UEFA Champions League, the club’s current sponsorship value is unlikely to exceed £8 million judging by the rates achieved by competitors. Reports have suggested that the Autonomy deal is worth £10 million per year and this might well be true. However, it is an open secret that the reported value of deals is often exaggerated and includes every possible incentive clause such as a club winning every competition it enters.

To split the rights in the hope that the parts will, effectively, be worth more than the sum is a tactic that has been used by Italian Serie A clubs frequently in the past. The question is, how well will it work?

From a purely financial point of view, Tottenham’s model might actually bring in a larger amount than would be available from a single sponsor at present because brands are cutting marketing budgets.

However, slicing up the rights doesn’t say a great deal for the club’s aspirations to be among Europe’s elite. Ideally the club would surely be looking at a single major deal with a high profile international brand and one that it could work with to run joint promotions and communications to an international audience.

Instead, it has effectively got a partial primary sponsorship with a brand that most people have never heard of. This might work very well for the brand as an awareness builder, but does it really send out the right message about the club? For fans the different brands on the shirt will be confusing, especially when choosing to buy replica shirts and there is a potential of a minor backlash here if two different versions go on sale. Loyal fans might feel obliged to buy both and feel that this is the equivalent of the frequent shirt re-designs that caused a lot of fan disquiet in England in recent years. The other question is how committed will the new sponsors be if they are not granted exclusive rights? Will they really push their association as hard as they would if they were the undisputed primary sponsor and will they work hard with the club to meet mutual communication objectives?

These questions are especially important to Tottenham given that the club is planning a new stadium and seeking a naming rights deal to help finance it. Any signs of commercial weakness now will make landing such a key partner even more difficult over the next couple of years. If, however, the club can genuinely show that splitting the rights has resulted in major financial and communication advantages, then the deal(s) will look like an astute piece of business.

Middlesborough’s plight by comparison, looks fairly desperate. To offer sponsorship on a monthly basis is fraught with difficulty and the club must be preparing for a poor season commercially. The message that this sends out about the club overall is also damaging. It’s the sponsorship rights equivalent of a car boot sale: ‘come along and make an offer on this stuff we can’t shift, we’re really not looking for that much – but then you’re not getting that much’.

Quite simply, serious sponsors are not going to touch it with a barge pole and it suggests a lack of understanding of the market. Sponsorships generally run for a course of a minimum of two to three years. During that time the sponsor will develop a range of activation programmes to build relationships with fans and work towards achieving its objectives.

Apart from the fact that Middlesborough will have to spend a great deal of time selling each month’s deal, which in itself is a costly exercise, the club will probably have to discount heavily to do so – they’ve already effectively put out the message that they are desperate. On top of this, the club will receive no benefits from joint promotional activity with sponsors, which can be significant. Make no mistake, this is damaging to the club’s commercial standing and its brand.

It is of course not certain how deep these problems go. Is this the result of the clubs’ marketing strategies or the market conditions? Tottenham have certainly got a good reputation for marketing and, as discussed, the deal might turn out to be shrewd business to have two sponsors because there simply aren’t any major brands currently willing to spend well above £10 million for a primary deal despite the club’s progress on the pitch.

Middlesborough, on the other hand, is beginning to look like a club that hasn’t come to terms with relegation from the Premiership, where money tends to come a lot more easily.

The Championship is, however, a strong league with a lot of major clubs such as Leeds United, Nottingham Forest, Derby County, Ipswich Town, Norwich City, Sheffield United and QPR, all clubs that have a strong footballing pedigree and big fan bases. Last season the Championship had aggregate crowds greater than those in Serie A. Middlesborough itself is a big club, so it should not be too difficult to find a shirt sponsor that can see an opportunity from such a high profile offering.

Medium-sized sports rights holders have frequently been accused of being lazy, unimaginative and unprofessional when it comes to understanding and packaging their rights. With the global economy still very weak and marketing budgets under strain, it is now more important than ever for this to change. It is no good simply blaming the market when there is a lot more that can be done to make rights attractive. Unless rights holders take this message on board then the sponsorship industry as a whole is likely to suffer.

Related content:

Report: Activation & Case Studies - how to maximise sponsorship programmes

Report: Strategy & Research - measuring sponsorship and establishing rights values

 

 

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