OC&C: Forget the WC: 3 alternative sponsorship options

06 June 2014 Consultancy.uk

As all marketers know, it is becoming increasingly difficult for a brand to find ways to cut through all the noise and communicate with its audience. Sports sponsorship has become one of the most effective ways for brands to reach consumers, with the unique ability to reach a truly global audience and build loyalty by tapping into people's passions. Crucially for advertisers, sport remains something that we enjoy in real time and from start to finish, ensuring (as much as possible) that their advertising messages are consumed, in real time, in full.

It's no surprise, then, that sports marketing remains very attractive to global brands, and is growing at double the pace of overall ad spend. In fact, sports sponsorship levels worldwide have surpassed $30bn for the first time.

While the mega deals and major events such as the World Cup remain the property of the world's largest brands – such as Nike, Pepsi, UPS and HP – there are three interesting trends emerging that provide attractive opportunities for potential sponsors, and at a much lower cost:

World Cup 2014

1) The new kids on the starting block
The "highest grossing" sports for sponsorship investment include Formula 1, major US leagues such as the NFL, and the Olympics – all of which attract $1bn of sponsorship per year. But sitting behind these behemoths are a series of emerging sports and events that are growing at significantly faster rates. Sky took advantage of this with cycling back in 2008, with a $10m sponsorship of the British cycling team. Since then, the growing popularity of the sport has seen sponsorship of cycling teams rise annually by 11% between 2009 and 2011 to $300m. Cricket is another example, with a 14% increase in sponsorship each year since 2006 up to more than $250m today. This has been driven predominantly by the increased commercialisation of the sport, as the Indian Premier League becomes more established, and the inception of the shorter Twenty20 format which has popularised the game. The rapid growth first seen in triathlon, and now in Ironman, is another example, providing a route to high-end consumers attracted to these kinds of events.

2) There's no "I" in team, but there's money in events
Many brands are moving away from sponsoring individual sports stars, and moving towards events, teams and organisations instead. This has resulted in event sponsorship increasing its share of the sports sponsorship market by 7% between 2006 and 2011 as brands focus on investing in high-impact environments, while reducing the risk of backing a single team or person. It's no longer just about the global events like the Olympics or the World Cup, but more events are being branded as the category increases in popularity with marketeers. The Flora London Marathon is a good example, as are many of Foster's lager's sponsorships. As a result, personality sponsorship has had a 1% fall in its share of the market over the same period.

Mostyn Goodwin - OC&C

3) The race to innovate
The days of simply having your name on the local football strip are long gone, with increasing levels of sophistication being shown both from sponsors as well as the sports themselves. There are countless ways to "activate" your sponsorship locally with fans, members and participants including promotions, hospitality, competitions and the use of social media to generate a real, long-term association between your brand and your message.

Looking ahead, it's clear we're going to continue to see an increase in spend in sports sponsorship, and an even greater variety in the sports receiving investment. While finding these opportunities will be financially worthwhile, it's vital that brands make the right decisions about where to invest to get the best cut through and deliver the greatest rewards. 

An article from Mostyn Goodwin, partner at OC&C Strategy Consultants. This article is based on OC&C's report 'Sporting Chance: emerging trends in sports sponsorship' which will be published in June. OC&C used contract-level data triangulated with third-party market estimates to build up a detailed historic view of the global sports sponsorship market.

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Champions League glory hard to buy for football’s economic elite

15 March 2019 Consultancy.uk

The thrills and spills of knock-out football can still be one of the sport’s great levelling forces, with the Champions League’s second round having shown that the biggest spenders aren’t always able to buy their way to glory. While a league format broadly favours the squad depth of the beautiful game’s richest teams, half of the tournament’s wealthier teams exited in the first one-on-one elimination round.

As the Champions League burst back into life in February, following an agonising winter break, only two of the 16 teams re-launching their Champions League last-16 bid were from outside the so-called Big Five football leagues. With the exceptions of Portuguese champions FC Porto and Dutch footballing powerhouse AFC Ajax, teams from the world’s biggest spending leagues monopolised the second round. As outlined by analysis from KPMG’s Football Benchmark, the Premier League was represented by four teams, with three clubs come from La Liga and the Bundesliga respectively, while Serie A and Ligue 1 both retained two clubs.

This followed a grimly predictable group phase, which had seen the two most expensive squads progress in all but one of the eight collections of four teams. The one team to buck that trend, Ajax, had last won Europe’s premier club competition in 1995, but those halcyon days have long since faded into memory, and Ajax had failed to progress beyond the group stage in 13 years. With the second youngest squad in the tournament, what now seems to be an awakening football giant had some shocks in store for the second round too.

Group Stage values

Despite an impressive Europa League run which saw the team reach the final two years ago, Ajax had not progressed in a Champions League knockout stage tie since the 1996-97 campaign. That all changed this time, as Erik ten Hag’s men overturned a first leg deficit to trounce Real Madrid 5-3 on aggregate. Having felt hard done by in a 2-1 defeat at the Johan Cruijff ArenA, the Amsterdam club cruised to a 4-1 victory at the Santiago Bernabéu, a result which saw the tournament’s fourth most expensive squad crash out to the third cheapest remaining team.

The supremely expensive team, which had won three Champions Leagues on the trot, had crashed out in spectacular style. For many footballing purists, the end of the seemingly invincible Galacticos would have been enough to restore some of their faith in the sport – but there would soon be more schadenfreude to revel in, as a succession of Europe’s most bank-breakingly costly teams would soon join Los Blancos in their exit.

The pick of the bunch was unquestionably Paris Saint-Germain, who forfeited a 2-0 first leg advantage to somehow crash out of the Champions League. The team, who are fast becoming known as the foremost bottlers in Europe, faced a grim dissection in the French press following a 3-1 defeat by Manchester United at Le Parc de Princes. While it would be over-egging it to paint United as ‘giant killers’, the Red Devils squad is worth markedly less than the club bankrolled by Qatari oil money. PSG hold two of the most expensive players of all time in French World Cup winner Kylian Mbappe and Brazilian playboy Neymar.

Second Round values

Elsewhere, the round’s cheapest squad proved further that money is not everything, as Porto overcame Roma (the Italian club has since parted ways with manager Eusebio Di Francesco in the wake of this humbling) – while Juventus battled back to beat Atlético Madrid. The most ‘balanced’ tie of the round, there was a squad value difference of only €22 million between the two squads, in favour of the Spanish giant. With that being said, €113 million of Juve’s price-tag came from the summer acquisition of Cristiano Ronaldo. Ronaldo’s tie-settling hat-trick went to show that money spent in the right place ultimately makes the difference.

Spending wisely

At the same time, there were also four teams which lived up to their large price-tags. Manchester City pummelled Schalke over the course of two legs, hammering the German team 7-0 in the second game. With the largest squad market value in the tournament, the Citizens showed that their spending had not merely been a frenzy provoked by having large amounts of money to throw about – a la PSG – and that every penny had in fact been used to craft one of the continent’s most well-balanced and dangerous teams, to ultimately contend for the title.

Tottenham Hotspur similarly brushed off Borussia Dortmund, while Liverpool eventually overcame Bayern Munich, to leave no German teams in the tournament. Meanwhile, Barcelona similarly did for the French contingent of the Champions League, bundling out Olympique Lyonnais 5-1.

Operating Revenues

Going forward, the humbled economic superpowers of European football will take solace from the fact that their huge operating revenues will allow them to buy up talent which has emerged in this year’s Champions League. With Real Madrid having re-installed Zinidine Zidane as Head Coach, the club has already committed itself to spending big in the summer, cashing in some €50 million of its €743 billion revenue stream from last year to sign Éder Militão from Porto – who has impressed in this year's Champions League – in the summer.

Whether the PSG project is financially sustainable in the long-term remains to be seen, meanwhile, but with a huge portion of commercial revenues including shirt-sales from the club’s array of superstars, it will likely also seek to bring in more big names in the summer. The club was reportedly in the running to sign Ajax star Frenkie de Jong, before Barcelona finally secured his services from the end of the season.

The likes of Ajax will meanwhile face an uncomfortable wait, as a range of its new crop of outstanding players inevitably attract the attentions of Europe’s top spenders. With the lowest operating revenues of any team left in Europe, the club will face an uphill struggle to hang on to the likes of teenage captain Matthijs de Ligt. However, it would not be the first time that the club has been plundered for its top talent, and what Ajax and clubs of its size can take forward is that with the right eye for lower-key recruitment, they can rebuild, and still challenge Europe’s elite.