Is sports sponsorship as we know it under threat?

The sports industry is in global turmoil as sporting codes battle accusations of corruption, match fixing and bribery. Will brands investing in the sponsorship of major sporting events still reap the same benefits as they have in the past?

International Association of Athletics Federations president Lamine Diack has been arrested in France for corruption, money laundering and concealing positive drug test results of Russian athletes. Fifa finds itself in the worst crisis in the history of the organisation, with 41 individuals and entities charged with corruption-related offences and the banning of its president, Sepp Blatter. In the world of tennis, there has been uproar around match fixing even though top players such as Roger Federer and Novak Djokovic deny that this takes place at the highest levels of the game. And on our own doorstep, former South African cricketer Gulam Bodi has been found guilty in a match fixing scandal that puts a stain on the local cricketing fraternity.

With the Rio Olympics and the Uefa Euro 2016 football tournament in France scheduled to take place this year, the industry is questioning the role of brands in sports sponsorships. How should they be reacting to instances of corruption? Marketingweek.com recently reported that Visa had threatened to “reassess” its sponsorship of the World Cup if Fifa did not take “swift and immediate steps to address concerns within the organisation”. It reports that Coca-Cola, too, repeatedly expressed concerns about the allegations against Fifa. The two brands, together with McDonald’s and Budweiser, subsequently called for the resignation of Blatter.

Have we reached an era where brands must take a new approach to sponsorship and act to bolster trust in an environment rife with mistrust?

On a global level, an increased interest in digital media has affected sports sponsorship to varying degrees. There is a greater emphasis on content that can be used to engage audiences on digital and social media than on the free media coverage generated via sports event sponsorship. On the up side, sponsorship agencies

The local sports sponsorship industry is faced with its own challenges. Rights fees have increased, while marketers’ available budgets remain under increasing pressure. Many marketers are therefore looking for opportunities with lower production costs that have the same capacity to build brand recognition. In fact, existing sponsors may have to review the renewal of their rights as fees increase above inflation levels.

The issue of declining stadium attendance is another concern. Empty stadiums during big matches means sponsors can’t actively engage with their target markets, an increasingly important objective. As sports sponsorship becomes prohibitively expensive, brands may start considering more cost-effective sponsorship opportunities, such as lifestyle events and music festivals.

The big take-out: With corruption and scandal rife among sporting codes and their regulating bodies, as well as increased costs associated with sponsorship rights and stadiums lying empty during big matches, where does the future of sports sponsorship lie?