ABSTRACT
In 2000, DVAG, a German asset management company, paid Michael Schumacher £5 million for a 10-centimetre-wide space on the front of his cap – a cap that he wore whenever he was in the eyes of the media after winning a Formula 1 championship race, which, at the time, was often. Such was his bargaining power that his Ferrari team was able to attract an estimated £60 million worth of sponsorship, which included branding space on the rest of his racing attire (Henry, 1999). Today, Fernando Alonso, the Ferrari team’s lead driver, generates up to C8 million in personal sponsorship via sponsors such as Santander, Puma and Tag-Heuer. Schumacher left the sport but then returned in 2010, and yet despite only achieving one podium place in nearly three years, he still managed to receive up to C6 million in personal sponsorship annually (Yallaf1, 2013). Sponsorship revenue is clearly important to the running of Formula 1 teams, and today you do not have to look too far to realize that to some teams this income is critical for survival. In recent times both the Prost and the Arrows teams have departed the Formula 1 motor racing scene with financial problems. Such problems in Formula 1 motor race events are ongoing and a constant source of concern about the reshaping of a motor sport events industry that has grown economically in ten years from £1.7 billion to £6 billion in the United Kingdom alone. Of that total, £1.7 billion is annually turned over in the marketing, public relations, sponsorship and events management support services for this industry (Motorsport Industry Association, 2013). Motor sports ably demonstrate how sports sponsorship is now a highly developed communications tool, with much of the spending being focused on sports events. Global spending on sponsorship spending has risen each year since 1999, and although growth rates have
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
■ understand the importance of the role that sponsorship plays in the sports event industry
■ identify the objectives that sponsorship can achieve for sponsors ■ identify the critical success factors in the production of sponsorship
programmes
Photo 11.1 The importance of sponsorship for all scales of event continues to be critically important. Here, City of New York Parks and Recreation secured a range of sponsors for a beach volleyball event at Coney Island. Without the sponsor ship from ADT, Brooklyn Burger and Snapple, this event would not be pos sible. (Image courtesy of City of New York Parks and Recreation.)
declined, 4.2 per cent growth was still expected in 2013, with expenditure at US$53.3 billion. In the North American market, the largest, the projected expenditure for 2013 was US$19.9 billion, and sports sponsorship amounts to 69 per cent of that. However, the arts, music, broadcast, cause-and community-related and education sectors are all developing, and with more communication choices like these available, there are key implications for the sports event industry (IEG, 2013). Since 2008, worldwide economic difficulties have affected growth, particularly in Europe, where growth dipped from 4.7 per cent in 2012 to a projected 2.8 per cent. However, with increased spending the expectations of sponsors increase, and with fewer new deals there are fewer sponsors to go around. In order to achieve competitive advantage, therefore, it is critically important that event managers focus on what those expectations are. There are essentially five key generic areas that sponsors’ objectives fit into: to drive sales; to increase awareness and build brand image; to increase awareness and build corporate image; to develop internal relations; and to achieve competitive advantage (Masterman, 2007). What sponsors are looking for, therefore, is a return on their investment, clearly showing that sponsorship has moved on from the times when sponsorship decisionmaking was more philanthropic than it was strategic. This chapter first of all sets the scene by putting sponsorship into a historical perspective and demonstrate how sports event sponsorship has developed. The direction of this development is then considered by looking at the types and levels of sponsorship and how sports event sponsorship programmes are structured. A strategic approach to the process of achieving successful sports event sponsorship is introduced. This consists of four key areas: targeting, building relationships, rights exploitation and evaluation. In particular, there is a focus on the role of ‘function’ in the development of sponsorships. Finally, the chapter discusses two important issues: ambush marketing; and the question of ethics, and how ethics affects the further development of sponsorship.
