Last week I had a discussion with a former colleague, asking if I would be interested in helping his sports property client find new sponsors. He lamented that Covid has caused a retraction in many current and potential sponsors’ interests in entering into or renewing sponsorships.
I find that odd; understandable, but odd, nonetheless.
If ever there was a time for brands to take a fresh look at their existing and potential sports sponsorships, it is now. But my caveat is this process cannot and should not be mercilessly opportunistic on the part of brands – in fact quite the opposite. Covid may indeed finally help our industry deliver on that often used but mostly misunderstood term, “partnership”.
The mistake would be to think that once we are all vaccinated, once the world returns to some sense of normalcy, everything will revert to as it was. It won’t. It can’t. Too much innovation has occurred in how we live, how we work, and how we play. The world of sport has changed, too.
Many observers have predicted a “great value realignment” in sports after Covid. I think that is true, but I also think no one really knows exactly what that means. There is a lot of pontificating, but no one really knows. The assumption is that sports properties’ value propositions will be challenged after Covid, and in a time of desperation for some or many of them, sponsors may attempt strongarm their way into cheaper deals.
That will probably happen and in some cases, it probably makes sense, but not in all. After all, who wants a “partner” that attempts to exploit you in challenging times? That’s not partnership, it’s mercenary. Those type relationships never, ever last and they never, ever produce the symbiotic value that each party desired.
Budgets are tighter, markets more unsure, and consumer behavior uncertain. And given public companies focused on the short-term, these realities do affect marketing budgetary decisions. But those market dynamics are also short-term. That is a reality that sports properties and brands need to better understand and adjust expectations accordingly.
Excellent examples to consider are the Fifa 2026 World Cup to be held in the USA, Canada, and Mexico, and the 2028 Olympic and Paralympic Games to be held in Los Angeles. Both properties’ “tier one” partnerships are hefty investments even in the best of times. And the teams selling those deals are trying to persuade C-suite decision makers who may not even be around for those events in 2026 or 2028.
That is why these properties have to (and are) building value propositions for their commercial partners that accrue and provide value starting now – right now – and through and up to their event’s hosting dates of 2026 and 2028 respectively.
LA 2028 partners, for example, obtain marketing rights to the US Olympic and Paralympic teams in the USA for the Beijing 2022, Paris 2024, Milan-Cortina 2026 and LA 2028 Games. That affords a lot of opportunity to both amortize costs and maximize promotional activities over a seven-year, four Olympic/Paralympic Games period.
But the longer brands wait the less activation (and amortization) opportunity they will have to make these sponsorship investments make sense for shareholders.
So, what to do after Covid? Pretty much the same as before Covid.
One, properties need to take a look at their templated (because that’s what they are – the base Olympic sponsorship agreements today are in many ways undisguisable from the Olympic TOP deals I helped sell and service 25 years ago) Partnership Agreements and realize that in today’s world of a kaleidoscope of sports entertainment options, one size truly does not fit all.
“Bespoke” is an overused term and not entirely possible for properties like the Olympics or World Cup, but there has to be room to adapt and tailor rights and benefits according to industry need. Not every brand sells soft drinks and not every brand makes computer chips – why should these two sponsors have the same set of go-to-market rights?
Two, brands cannot expect properties to understand and adapt to point #1 above unless they themselves are incredibly disciplined about what they are trying to achieve with the sponsorship and how they wish to go about doing it. I know this seems obvious, and it is, but I can assure you it is not the current model in many brands’ sponsorship review calculus.
As a former sponsor myself, our team spent more time planning the activation of our Atlanta 1996 Olympic Games sponsorship than activating it. At that time, I was impatient – I resented that approach – I was eager, young and…clueless. And it was the best lesson I ever learned.
Neither party will achieve even 50 per cent of the intended results of the relationship if they don’t understand the needs, possibilities, and as importantly, the limitations of what each can bring to the partnership.
But 50 per cent of anything is better than nothing, and nothing will be achieved unless brands understand that properties like the Olympic Games and the World Cup are not just marketing costs, they are brand investments. So, the sooner points #1 and #2 above can be rationalized, the sooner #3 becomes obvious: get going as soon as possible. Don’t wait.
There is a lot of uncertainty in the sports world right now (ask Tokyo 2020), but two things are certain: the Fifa World Cup will be in North America in 2026, and the Olympic and Paralympic Games will be in Los Angeles in 2028. The sooner brands seize upon these once-in-a-lifetime opportunities in their own backyards, the greater their opportunities for success.