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Right Formula’s Fenwick: Motorsport driving hardest bargain in sponsor renegotiations

Robin Fenwick, founder and chief executive, Right Formula.

Motorsports stakeholders and more prominent rights-holders are tending to drive the hardest bargain in the renegotiation of sponsorship contracts during the Covid-19 pandemic, according to the head of a leading sports marketing consultancy.

Robin Fenwick, founder and chief executive of Right Formula, told SportBusiness that his agency has been involved in multiple discussions across a variety of sports to rework sponsorship payments and rights agreements since the virus struck, and said some properties are proving less accommodating than others.

He said: “As we work for both rights-holders and brands, naturally some sports are easier to work with than others. Take golf, for example, which [during this pandemic] has adopted a super-flexible approach [to rights discussions].

“Football has been more half and half, depending on who you’re speaking to. Motorsport, meanwhile, is noticeably driving a hard bargain in any discussions. Naturally, however, it does differ depending sport by sport, series by series and team by team.”

Fenwick said his agency has tried to assist businesses in achieving fair value for money by placing an objective value against assets that have been used and assets that have been unavailable during the crisis to determine what is a reasonable request for brands to make.

He continued: “There are some brands that are asking for a significant reduction, which might seem unfair, but the rights-holders have to decide how tight the contractual agreement is and perhaps the importance of that company to them.

“Most brands are negotiating reasonably, and in most cases the rights-holders are being extremely flexible and supportive of their partners, but a few are digging their heels and not budging an inch.”

Fenwick added that the position taken by rights-holders often depends on what assets have been lost due to Covid-19, as some sports have been more heavily affected than others. More generally he thought top-tier sports also tended to be more uncompromising than others.

He noted: “The more successful or prominent rights-holders are typically being less flexible, perhaps because they don’t value their partnerships as much – maybe because they are easier to come by.

“It also depends on the contractual assets the brand has purchased. Branding for example may not be so affected, but of course hospitality rights are impossible to receive right now, so the value should reflect the delivery of those rights.”

Fenwick warned that it was better to make short-term sacrifices to protect deals in the longer term, stating: “How businesses behave during this time will be remembered and there could be irreparable long-term damage done if negotiations are not undertaken in the right manner.

“If approached correctly, both parties can benefit; a simple example would be to agree to a reasonable discount this year in return for an extension of the contract. It’s all about give and take.”