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Business case study | The British & Irish Lions

  • 75 per cent of revenues come from sponsorship
  • Lions have tried to introduce regional segmentation to partnerships
  • 2013 tour estimated to have generated profit of £6m

First established in 1888 and now held every four years, the British & Irish Lions Tour of the Southern Hemisphere has long been regarded as one of rugby union’s most iconic events. But in the last decade its popularity has hit extraordinary new heights.

All told, around 35,000 die-hard British and Irish rugby fans are expected to travel to New Zealand for the 2017 Tour, which takes places from June 3 to July 8. Millions more will watch the games back home on Sky Sports, which secured exclusive live rights following a bidding war with pay-television rival BT Sport.

This enthusiasm for the Lions tour will undoubtedly be shared by New Zealand-based fans. But it’s also apparent that the Lions are building a strong global fan base. The 2013 Tour to Australia, for example, was watched by a cumulative TV audience of 18.3 million in 100 countries. With 120 countries tuning in to see the current crop of Lions take on the 2011 and 2015 Rugby World Cup champions, that figure is sure to rise again.

PICTURE: All Blacks captain Kieran Read at the heart of a pre-tour event (Getty Images)

Commercial success

Not surprisingly, given the Tour’s growing popularity, the last few years have also seen the Lions emerge as a commercial success story. Media rights, sponsorship and merchandising are all booming – while the New Zealand tourism industry is anticipating bumper revenues as a result of the six-week tour.

There is, however, a slight catch. As the Lions always play away from home, the lucrative media-rights revenues generated by the tour go to the host union – not the touring team. In 2013, the Australian Rugby Union is reckoned to have made between £50m (€59m/$65m) and £60m from the Tour, a figure that helped it wipe out mounting debts. No figures are available for the 2017 Tour, but in this case the big beneficiary will be New Zealand Rugby.

The Lions’ chief operating officer, Charlie McEwen, is philosophical about this state of affairs.

“The Lions is a very bright star that shines for a short period of time once every four years,” he says. “We have to keep in mind how we fit into rugby’s complex matrix of global commercial rights. It’s worth noting, for example, that the four home nations (England, Ireland, Scotland and Wales) benefit from the Southern Hemisphere sides coming to play the autumn Tests.”

Notwithstanding the lack of media-rights revenues coming into the Lions, McEwen says that the Tour has a “really good profitable business model. About 75 per cent of our revenue comes from sponsorship and another 20 per cent from hospitality and travel, which we generate via a joint venture with Mike Burton Group called Lions Rugby Travel. The remainder comes from areas like licensing and merchandising and use of our content archive.”

The 75 per cent figure quoted by McEwen is much higher than any other rugby properties – where sponsorship typically accounts for 30 to 50 per cent of revenue. So it’s no surprise the Lions commercial team has placed a lot of emphasis on growing this piece of the pie.

On the eve of the 2017 New Zealand Tour, for example, the Lions have a total of 16 partners, ranging from financial services firm Standard Life Investments to automotive giant Land Rover. Others on board include the likes of Qantas, Gillette, Doom Bar and Canterbury, which saw off tough competition from Under Armour to become the official kit supplier to the Lions.

PICTURE: Lions captain Sam Warbuton and coach Warren Gatland (Getty Images)

“At the end of every tour we reflect on what we’ve learned,” McEwen says. “And the thing that came out of the 2013 tour was the importance of taking greater ownership of the Lions brand. We needed to articulate who we were and what we stood for. At the same time, we wanted to move away from one dominant sponsor. HSBC was a great partner in 2009 and 2013, but we have now created more distinctive opportunities for sponsors. So in addition to the jersey and kit sponsorships (now held by Standard Life and Canterbury respectively), we have structured our content and segmented our rights in a way that has allowed the likes of QBE and Land Rover to tell their stories.”

The Lions have also looked at ways to introduce a degree of regional segmentation to the sponsorship strategy. “We’re not on the scale of a team like Manchester United,” says McEwen, “but we have dipped a toe in the water with regional suppliers where it makes sense. For example, Doom Bar’s sponsorship is mainly about the UK and Ireland, so we have a separate relationship with Diageo to supply fan villages in New Zealand.”

Sponsors

Like any sponsorship provider, the Lions need to be careful about clutter, particularly when you consider there will also be broadcast sponsors, New Zealand-based sponsors and ad hoc partnerships such as the one between Specsavers and World Rugby related to referees. However, there’s no indication as yet that the current crop of sponsors are concerned about this.

Explaining the appeal of the Lions, Kevin Vandrau, director at CSM-owned sponsorship consultancy Essentially, says: “The Lions commercial team has done a great job of turning the Lions into an attractive and distinctive brand. The idea of four competing nations coming together as one is almost unheard of in sport – the closest comparison is golf’s Ryder Cup. It means you’re dealing with a best-of-the-best scenario; a group of players who are at the pinnacle of their profession and are going to the Southern Hemisphere to really compete.”

If there is a challenge for sponsors, it’s that the Lions squad (a total of 41 players) is not named until about six weeks before the Tour. So it is impossible for sponsors to activate their rights around the current squad of Lions players until pretty much the last moment. “But there are solutions to this,” Vandrau says. “The Lions have placed a lot of emphasis on the idea that once you are a Lion, you’re always a Lion. So there is scope to work with some of the legends from previous tours. Also, the unique structure of the tour means that the very process of selection becomes a key opportunity for brands to activate against.”

The excitement around selection is a key reason why Essentially client Robert Walters is a two-time Lions sponsor. Johnny Durrant, a senior account director at Essentially, says: “The selection debate is a natural subject for Robert Walters, which is a leading UK recruitment consultant.”

PICTURE: The Lions tour of Australia in 2013 (Getty Images)

In order to fully maximise the activation period, Robert Walters doesn’t just focus on the scrum of activity around player selection. “The Lions selection story continues to run all the way through the tour with the unexpected injuries or last-minute strategic changes,” Durrant adds. “But isn’t just about the players. It’s also about the way every element of the tour is put together, including the coaches, the back-room staff and the wider logistics. So that provides opportunities to activate in other ways.”

For example, the company is planning to hold private dining events for clients with two-time Lions tourist Phil Vickery – also a winner of TV cooking show Masterchef. “This allows us to talk about selection and make a play on the idea of ingredients of success – and what it takes to be successful on tour,” Durrant adds.

For 2017, Durrant says that the client is keen to make more noise from a fan perspective alongside the more client-based entertainment. “So we recently ran a fan competition, with the aim to recruit the Ultimate British & Irish Lions fan and reward them with a trip to New Zealand,” he adds. “The ‘Apprentice-style’ process was judged by three ex-players and has created some engaging content for launch in late May on social media.”

Content

Not surprisingly, content creation and digital engagement are big themes ahead of this year’s Tour. Visit the Lions website and you’ll find dozens of behind-the-scenes videos sponsored by Standard Life and QBE. Also of note is the new My Lions mobile app, launched by Lions digital/analytics partner EY.

And once the Tour begins, New Zealand-based content will be created via a partnership between the Lions and Land Rover. “Being able to offer fans in the UK and other rugby markets the opportunity to feel involved with the tour is an important objective for Land Rover,” says Rob Taylor, an associate director at CSM. “Land Rover will be working with The Lions to produce a content series that will be hosted by global Land Rover ambassadors and offer fans a real insight to the Tour.” This will be supported by “real-time digital activity during matches.”

PICTURE: Lions ambassador Shane Williams (Getty Images)

Aside from the digital content outlined above, Land Rover has a more traditional role to play as Official Vehicle, providing the Lions with a logistical fleet of vehicles in New Zealand. There will also be classic activations such as ambassador media interviews, fan competitions, hospitality and grassroots events. “The Lions partnership is a continuation of Land Rover’s successful ‘We Deal In Real’ campaign for Rugby World Cup 2015 where grassroots rugby was put at the heart of the partnership,” he says. “In the build-up to the tour, Land Rover has been running a grassroots competition to reward the real legends of the game from grassroots rugby.”

This is Land Rover’s sixth Lions tour, but a number of the current sponsors are Lions first-timers. Canterbury has dislodged adidas as kit provider while SLI is the new jersey sponsor, replacing HSBC. For SLI global head of marketing and client relations Nuala Walsh, the attraction of the Lions is not really about rugby, “but about the Lions team’s values.” Walsh adds: “It’s their commitment to performance excellence that appealed to us, because it’s one of the first principles of business and a perfect fit for our brand. It works very well alongside the Ryder Cup in our sponsorship portfolio.”

SLI’s intention is to reach both B2B and B2C markets via the sponsorship. “We’ll use all elements of the marketing mix and are looking to integrate it into internal events,” Walsh says. “Content creation is important and we’ll be working with partners like Bloomberg, Wall Street Journal and Sky, over and above our TV campaign.”

Walsh says the company is making use of Lions ambassadors and has no concerns about the short window of access to current players. “The players on tour don't have much time for sponsors, so the emphasis is really on Lions veterans,” Walsh explains. “But I can tell you that the likes of Martin Johnson and Shane Williams still have an amazing aura and mass appeal among fans.”

Authentic

SLI is supported by Synergy, a consultancy that has a wealth of experience with the Lions. “The agency worked with NTL and BA on past Tours,” says Synergy chief strategy officer Carsten Thode, “and this time with SLI, Canterbury and QBE.” Echoing his peers, Thode says: “The Lions is a great opportunity for brands to tell authentic stories. I don't think you have to be a rugby fan to be pulled along by the unique narrative. The switch from being rivals to allies is a story that is rarely found in sport and carries over into the fan experience. You really can’t go on a Lions tour without the jersey, so one of the great sights in sport is the sea of fans in red jerseys at the tour matches.”

Thode says the Lions narrative usually runs for about eight months, starting with the autumn internationals the year before the tour. “That’s when you begin to see who is capable of competing with the Southern Hemisphere,” Thode says. “Then you get into the Six Nations and the battle between players for a place on the plane. After that it’s squad selection and the tour itself. The best activations are the ones that get as close as possible to the pub conversation around the team and react in real-time.”

PICTURE: The 2017 Lions squad (Getty Images)

While SLI and QBE have found strong positions around process-led concepts such as ‘performance excellence’ and the ‘team behind the team’, Canterbury’s approach has been to lock onto Lions folklore. “There’s this thing within rugby about players not touching the Lions shirt until they get selected – so as not to tempt fate,” Thode adds. “We used that insight to create the idea of the ‘untouchable jersey’ for Canterbury. It’s a powerful idea which we’ve been using to inform all our activity – including the launch of the shirt when it was revealed as a hologram.”

While some Lions sponsors are already multinational giants, others are using the tour to take their business to the next level. A good case in point is beer brand Doom Bar, another newcomer to the Lions family. “Doom Bar is a young brand that has grown up mainly through word of mouth,” says Jim Dowling, managing director of the brand’s consultancy, Havas Sport & Entertainment Cake. “It started in Cornwall and then worked its way up through Devon and Bristol until it reached London. Now it’s the number one cask ale in the UK.”

Doom Bar already knows it has a decent fan base among rugby union fans, says Dowling, so linking up with the Lions is a strong fit. “But what we also like is that rugby fans are more loyal than, say, football fans – so they tend to stay supportive even when their team is losing,” Dowling adds. “Our observation is that this loyalty also extends to the brands that are supporting the tour.”

Dowling adds that there is “a kind of passion and integrity about the Lions fan base that we think aligns well with Doom Bar. They are also less tribal than football fans, so it’s a safer bet for brands wanting to build a dialogue with them.”

Fans of the Lions set up say McEwen’s team do a lot to protect their sponsors from ambush marketing, merchandise and events. “They’re also passionate about what they do, which we like,” says SLI’s Walsh.

If there’s one potential issue for the Lions’ financial sponsors, it’s the Bribery Act 2010 – and how it might impact adversely on corporate entertaining. CSM’s Vandrau acknowledges that a number of sports sponsors have been rethinking their approach to ensure they stay on the right side of the law, but he doesn’t see it as a problem in the context of the Lions.

“Financial compliance rules have made it more difficult to use the B2B elements of sponsorship, but I think brands have responded by using their other assets more effectively,” Vandrau adds. “Instead of badging properties, they are delivering great stories and experiences.”

Profits

In terms of where the Lions profits go, they are generally split between the four home nations, irrespective of how many players each provides. Scotland, for example, is only contributing two players this time. McEwen notes, however, that there is a new innovation this time around – which has meant some of the surplus will be channelled back into the Lions.

“In March we launched a programme called ‘Pick of the Pride’, which is about the retention of young players aged between 14 and 21 years old, and will involve young ambassadors heading to New Zealand during the tour to live, learn and share grassroots experiences,” says McEwen. “For us, it’s very exciting that the Lions is being used by the home nations to lead this grassroots programme.”

This is indicative of a wider point as well, which is that the home nations see the Lions as having a crucial ambassadorial role for the sport. “We all want the Lions to win in New Zealand, but the four unions also see the Lions as being an embodiment of the values of the game,” says McEwen. “So all the players in New Zealand are also expected to be good citizens and engage with local communities.” If anything, it is this elevated ethic that explains why the Lions is so special.

PICTURE: The 2017 Lions tour logo (Getty Images)

EXTRA: Future Prospects

Although the Lions is one of the most iconic brands in world rugby, its future prospects will depend to some extent on how well it fits in alongside other elements of the global game.
To cite one particular bone of contention, the Lions squad will jet off to New Zealand almost as soon as Europe’s club rugby seasons have finished. On the one hand, this means there is little time for proper preparation. On the other, it means some leading players are forced to rule themselves out of the Tour because of club commitments – as was the case with Jonny Wilkinson in 2013.
Lions chief operating officer Charlie McEwen says: “Our current relationship with the three major Southern Hemisphere sides (South Africa, Australia and New Zealand) is governed by an agreement with Sanzar that was put in place 12 years ago. Since then a lot has changed in the world of club rugby, so we are all conscious that a debate needs to take place.”
That agreement with Sanzar – which changed its name to Sanzaar in 2016 following the addition of the Argentine Rugby Union to the administration – ends after the New Zealand tour, so there is scope to address the issue. Options might include shifting the tour dates or reducing the number of games played during tours (currently 10 matches in six weeks). McEwen won’t pre-empt the discussion, but there is certain to be a robust debate.
Speaking in the Guardian, Mark McCafferty, Premiership Rugby’s chief executive, said: “We have been fairly outspoken. At the start of the season we said we were unhappy about the intensity of the schedule that had been signed up several years ago and it needs to change. To go through this kind of programme in the future is not feasible. To be playing 10 matches in a six-week period is too much and our views on that have not changed.”
However, this needs to be balanced against the needs of the Sanzaar teams. Australian Rugby Union (ARU) boss Bill Pulver has called the 2013 tour a “phenomenal success”, stressing that Australian rugby has survived financially on windfall gains from the Rugby World Cup and Lions tour games played at home. The most likely compromise is a five-week, eight-game schedule, to be introduced when the Lions visit South Africa in 2021.
On a separate note, international interest in the Lions does raise a question about whether the team could play a fixture in a different location – maybe at the start of the tour or at a different time of year. “The appetite is there,” says McEwen. “But it's a question for the world rugby family and the coaches. We explored this in 2014 and had 13 locations tender to host. But it was decided it wouldn’t work for rugby reasons.”
McEwen stresses however that global expansion doesn’t necessarily require the team to play in new locations. “Sponsors like EY and Thomas Pink are showing that it is possible to drive engagement with the Lions through sponsorship activations taking place around the world,” he says.

EXTRA: Data

There are no official published figures on Lions tour revenues. However, the generally-quoted cost of touring is about £20m. Of this, about £2.5m to £3m is paid out to the players in wages (the higher figure includes a win bonus). In New Zealand, each individual player will earn a basic £70,000 – up from £50,000 for the Australia 2013 tour. In addition to this, home unions are paid £70,000 per player as compensation for releasing them.
It is estimated that the 2013 Tour to Australia resulted in a £6m surplus for the home nations – i.e. £1.5m each. If this is correct, it suggests a total revenue pot of around £25-£30m in 2013. Media reports put the value of HSBC’s 2013 sponsorship as £7m, and under the new 2017 structure, where there’s less emphasis on a single overarching sponsor, it’s difficult to imagine any one individual partner paying much more than that. Even so, the signing of six principal partners and 10 sponsors/suppliers suggests the Lions will generate a substantially bigger profit this time round. It’s not clear how this figure might be affected if the 2021 tour is shorter.
About 400,000 fans will watch the 10 matches in the 2017 tour – similar to the figure in Australia. In Australia the tour is reckoned to have had an economic impact of about Aus$150m and analysts predict a similar figure for the latest tour. TV rights are unlikely to generate as much revenue as 2013 because New Zealand’s domestic broadcast market is much smaller than Australia’s – though the lower domestic figure will be offset to some extent by growth in international and the fact that Sky had to outbid pay-television rival BT Sport in the UK to secure the live rights.

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