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The Big Debate: Sponsor Spotlight

Should sponsors step out of the shadows and have more say over how major sports events are run?

With a brand’s relationship to its consumer living and dying on the strength of its reputation, are major sponsors doing more harm than good by sitting back and not taking a stand when controversy affects the major events they have spent tens of millions of dollars to be a part of?

Whether it is civil unrest around the recent FIFA World Cup in Brazil, corruption allegations against world football’s governing body or anti-gay legislation in Russia negatively impacting the 2014 winter Olympics, the calls for sponsors to leverage their influence on rights-holders has grown louder over the last 12 months.

Typically, major brands have been the last to put their head above the parapet for fear of damaging their multi-million dollar relationship with the rights-holder. However, as the balance of power is shifting, will the influence be shared?

For event organisers like FIFA and the International Olympic Committee, the big concern is not only partners coming forward and telling them how to do their job, but if the negative publicity reaches the point of no return, whether the brands will be put off sport altogether and look for another way to reach their consumers.

Whenever scandal breaks around a major event or player, sponsors are quick to put out stock PR releases saying they are “monitoring the situation closely”, but will we ever reach the stage where commercial partners feel they have the authority to have real influence over their rights-holding partners?

We asked four experts what they thought the sponsors’ role should be, and here’s what they had to say:

Keld Strudahl, Former marketing director, Carlsberg

In normal business, the more money you invest in a property, the more influence you will have.

I definitely think sponsors should take more responsibility in ensuring properties deliver not only from a sporting point of view, but also on ethical, moral and business codes of conduct.

With the huge sums of money involved in today’s mega events, sponsors owe it to themselves and their stakeholders to play a more active role. The irony or paradox is that in normal business, the more money you invest in a property, the more influence you will have.

That doesn’t seem to be the case in mega events like the FIFA World Cup. To some extent I don’t think it is the rights-holder’s fault, more the sponsors who still have a far too respectful and humble approach to the authority of FIFA and similar powerful organisations.

We are living in the 21st century; sponsors are very successful companies that deal in a very competitive environment where strong opinions and influence is vital, but when it comes to taking more responsibility – or asking for more influence – in the biggest sports events in the world, their engagement is somewhat less impressive and very passive.

For many years we [Carlsberg] talked about how important exploitation and activation is when you become a sponsor of an event. I think that you can focus on taking more responsibility as a sponsor and show your stakeholders, and the world in general, that sponsors also have a voice when it comes to running a successful event, both from a sporting and an ethical standpoint.

As an example, I suggest that one of the first tasks for sponsors is to ask whether these mega events have become too expensive for a host country. UEFA has taken the lead with its 2020 European Championship, where cost is split to a number of host cities across Europe. I think that is showing responsibility and good business ethics, which sponsors should take to FIFA and other major events for future discussion.

Karen Earl, Chairman, European Sponsorship Association

To pull any meaningful weight, sponsors must join forces

Sponsors and major partners don’t buy into sporting or other events to become event managers or administrators. Therefore, they don’t seek to become involved in how events are organised. That’s the role of the appropriate governing body.

What sponsors do buy into events for is the association with that event’s business and brand. So, if the event is badly organised or, in the case of FIFA’s 2022 World Cup bid, attracts accusations of malpractice, sponsors are concerned because that negativity may well rub off on them and their brands.

It has been reported that five out of the six major FIFA sponsors have voiced their concern over the process behind the decision to grant Qatar the 2022 World Cup. The only sponsor not to comment so far is Emirates.

When one sponsor makes a public statement, a governing body can get away with turning a blind eye. When two or more complain, most would take notice.

In this case, all but one of six have publicly called for FIFA to address the accusations of malpractice. But, what they haven’t said is that they will pull out of their sponsorship deals, because that’s not what they want to do.

You pay huge money to be a FIFA sponsor because of the advantages of being associated with events like the World Cup. They’re doing so for many business reasons but, inevitably, one important reason will be to steal a march on their competitors. Withdrawing from an agreement with FIFA would hand an opportunity to those competitors.

To pull any meaningful weight with FIFA, those sponsors must join forces and, together, put the maximum amount of pressure on FIFA president Sepp Blatter and his colleagues to conduct a transparent enquiry and demonstrate some professional governance – something that has been singularly lacking from the FIFA executive to date.

Mark Hopkins, UK Marketing Director, KIA

Sport is always going to be enormous for consumer participation and viewing, so brands will always readily be prepared to engage in that as well.

When you go into a sponsorship arrangement there is an awful lot of due diligence, collaborative discussions and meetings that build it into a property that both parties are happy with.

If you go through that process in great depth and detail, you would normally end up with a platform that the brand and sponsorship provider can use to appease both parties.

Of course you are going to get occasions where things can go wrong for 1,001 reasons, but hopefully you will have built the due diligence into the agreement to cover that. If that is the case, I think it is very difficult for brands to start getting involved with running the event, particularly when they are just sponsoring and don’t own it.

Sport will always be an enormous opportunity for brands as you have huge levels of engagement with consumers.

It’s interesting that entertainment is mentioned as an alternative outlet for major brands to partner with. From my perspective, sport is fusing more and more with the entertainment world, so effectively someone like us can be a brand partner to both areas.

Sport is always going to be enormous for consumer participation and viewing, so brands will always readily be prepared to engage in that as well.

Richard Page, Manager, PWA (Professional Windsurfing Professional) World Tour 

What is often right for the sponsor is not always in the best interests of the sport

You can always do more as an event organiser, and a lot of time what that takes is extra budget.

Sponsors don’t want to just sit there and shell out their money without getting some significant return for it. From a sponsor’s perspective, in terms of getting value for their money, there is a balance to be struck which is very important when promoting an event; you have to get it right between the promotional value and the purity of the sport.

What is often right for the sponsor is not always in the best interests of the sport. That’s particularly true when you are talking about minority sports, where you don’t always have big team followings and fanbases.

Try comparing the Rugby World Cup – where you have more than a hundred years of rules and regulations already in place – with [TV franchise] Ultimate Wipeout where people run over foam and get hit in the face. One of them is an easy sell while the other is attractive because of the purity of the sport. However, when you are in the middle ground like us, part of the challenge is to ensure that our athletes are not being unreasonably exploited purely for the sponsor’s gain.

You could imagine a situation, for example, where a sponsor could ask you to make the competitors race with the Turkmenistan flag painted on their face to satisfy the customers that brand is trying to reach. We aren’t performing clowns, we are performing athletes.

It is about making sure that the event is fair while still delivering an exciting product that the media and fans will enjoy. You have to find the right balance.

Each trade-off you make has to be in line with the purity of your sport.

 

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