Sponsorship fee revenue at World Sailing, the sport’s international governing body, is forecast to hit £1.35m (€1.54m/$1.72m) in 2019, a 91-per-cent rise on the figure reported in 2018.
However, lower-than-expected sponsorship revenues over the four-year cycle from 2017 to 2020, coupled with non-recurring investment costs of £1.7m, have raised the possibility of cash flow shortages in the middle of 2020.
Value-in-kind (VIK) sponsorship is expected to hit £641,732 in 2019, up 13 per cent on the value of goods and services provided by sponsors to World Sailing in 2018.
The sponsorship rise has helped forecasted overall revenues the international federation to hit £3.69m in 2019, a 12-per-cent uplift on 2018.
Speaking at World Sailing’s Annual Conference in Bermuda, Jan Dawson, the federation’s vice-president, attributed the sponsorship upturn to new sponsors coming on board in multi-year agreements. The jump came despite the loss of Volvo as a sponsor following the Sweden-based automotive group’s decision last year to give up control of the Ocean Race series it previously gave its name to.
Looking ahead at projected sponsorship revenues in 2020 and beyond, Dawson remarked: “We are optimistic that the pipeline for sponsors continues to be strong. But we are also realistic that the time from proposal to contract unfortunately continues to be longer than we expected given the global slowdown.”
World Sailing has five Global Partners in the shape of Rolex (Official Timepiece), SAP (Official Technology Partner), Hempel (Official Coatings Partner), Zhik (Official Technical Clothing Partner) and GAC Pindar (Official Marine Logistics and Freight Partner).
A lucrative agreement with Russian energy giant Gazprom was due to run from 2014 to 2019 but was terminated at the end of 2017.
Dawson referenced figures presented in 2017 that had originally forecast a total of £11.7m in sponsorship fees and VIK for the quadrennial period between 2017 and 2020. She observed: “Almost €4m [$4.4m] of the expected cash revenue from a tier-one sponsor was terminated just one year into the quad [and] out of the four-year expectation.”
Of the projected £11.7m sponsorship figure, only £6.7m has been received over the four-year period.
World Sailing presented challenges over its cash flow predicament, chiefly the result of a total of £1.7m in non-recurring costs, during the Annual Conference in Bermuda.
These investments during the current four-year cycle comprise costs of £1.1m – including capital expenditure – associated with the move of World Sailing’s headquarters from Southampton to London, a “digital re-platforming” spend of £300,000 and the same spend again on governance reforms.
As a result, sailing’s world body is in the process of finalising a temporary overdraft facility to cover the expected cash fall in the middle of 2020, and before Olympic revenues kick in. The facility is to be secured against the assets of World Sailing Investment Trust.
World Sailing has forecast an overall deficit of £2.29m in 2019 (before foreign currency fluctuation and taxation), which follows on from a £4.66m deficit in 2018.
Dawson said: “The reduction reflects the focus on improving World Sailing revenue performance as well as managing our costs effectively.”
It is normal practice for the international federation to report deficits in non-Olympic years as funding during an Olympic year helps to fund its programme in the subsequent years.
Indeed, Olympic revenues of £12.24m are forecast in 2020 (with no Olympic revenues recorded in 2017, 2018 or 2019).
Event income in 2019 is forecast to come in at £988,453, boosted by sanctioning fees received for the America’s Cup, the Ocean Race, the Star Sailors League and the new SailGP series. There was event income of £1.16m in 2018 but this higher figure was largely attributable to the hosting of the Sailing World Championships in Aarhus, Denmark.