Credit crunch to force 'flight to quality'

Investmentin the UK sports industry is seizing up in the current economic climate, inline with shrivelling investment in other sectors and territories, according toindustry analyst San Datta, formerly of boutique sports investment advisoryfirm Hermes Sports Partners.

However, where money is going into sport, whether in relation tobroadcast rights, sponsorship, investments in properties such as competitionsor teams, or other areas, Datta predicts a “flight to quality”.  

BlueRiband UK sports sponsorship and broadcast rights properties will remainextremely attractive, at least in “the slightly longer-term,” Datta toldBritSport Weekly.

“Youhave to look at the sports industry on a case-by-case basis,” Datta says.“Certain sports sectors will be affected more than others. For example, SkySports would be unlikely to have to pay any less for English Premier Leaguerights if they were up for sale.
 
“Where investment does happen, and currently it is only very marginal, premiumteams and premium rights will do better.”
 
Datta agrees that the changing landscape of the financial services industrycould hit the big sponsorship revenues that have come out of the sector inrecent years.  However, he says that the return on investment in sportssponsorship for these companies will always be attractive.
 
“Sports sponsorships offer an easy route into the consumer marketplace. Youdon’t see a brand like AIG on the High Street, and it is unlikely that you willsee them pulling their Manchester United shirt sponsorship,” Datta toldBritSport Weekly.
 
However he adds that consolidation within the financial services industry willmean fewer companies competing for sponsorship properties and hence downwardpressure on sponsorship revenues.
 
The recent flurry of ownership changes among Premier League clubs is oneobvious bucking of the trend of shrinking investment in sport. But Datta saysnon-financial reasons go some way towards explaining the deals.
 
“I can’t see the economic rationale for the Manchester City deal, not like Icould have for buying Liverpool or Manchester United, which are much biggerbrands.
 
“The motivations behind such investments must be personal vanity, and a desireby foreign business to enter the British market and to uplift home markets.”