Sports sponsorship collapses
The cancellation of events or holding them in empty stadiums because of the Covid-19 pandemic has led to sponsorship budgets being cut in half, and few expect the landscape to be the same even after a degree of confidence returns
It’s likely to take upwards of a year before sports sponsorship in SA returns to normal. That’s the blunt assessment from the first Nielsen Sports SA "Sponsorship Outlook Report".
Close to 50% of those involved in the sector, including brands and owners of properties which rely on sponsorship for survival, say they will adopt a watch-and-see approach before getting involved again. That’s bad news not only for big-badge sports like football, cricket and rugby, but also second-tier sports, many of which depend completely on sponsorship money for survival.
Sports in SA take the lion’s share of overall sponsorship money, with over 60% of the total; 6% goes to arts and culture, 4% to good causes and the remainder to "other properties".
In the sports space, 60% of a brand’s spend then goes on purchasing the rights to association, and the remainder to leveraging the sponsorship and evaluating its success.
Since so many sports events the world over have been cancelled, curtailed or rescheduled due to the Covid-19 pandemic, severely limiting audience reach, it’s understandable that brands are holding back.
Even more concerning is that organisations expect a 46% decrease in their sports spend in their new financial year, and a 62% pullback in e-sports and gaming.
The report suggests that those venturing into sponsorships once a degree of confidence returns need to become more digitally focused in leveraging the partnership. This is more important now than traditional media coverage — as is ensuring that the sponsorship contract has flexibility built into it.
While almost 50% of survey respondents expect some normality to return at the end of next year, 14% say sponsorship will never be the same again. That is why Nielsen is pushing the importance of contract give and take.
Nielsen Sports SA MD Jean Willers says: "With an ever-changing media landscape, the growing impact of social media and digital, and on the heels of a pandemic [which has led to] events without spectators and a constrained market, it’s critical for rights holders to address the guaranteed delivery of a flexible set of rights."
Current entrenched sponsorship deals are also taking longer to negotiate as both the beneficiary and the sponsor look to maximise their positions. Sources tell the FM that talks around Castle Lager’s sponsorship of next year’s British and Irish Lions tour were "much more robust" than in 1997 and 2009. The tour will be called the Castle Lager Lions Series and the brand gets a full set of in-stadium rights including ticketing, hospitality and the exclusive sale of its product. Castle also gets kit branding and access to players and coaches from both teams and the creation of a Castle-branded logo for the series, which will be used across broadcasting, merchandising, digital and social media platforms.
SA is not alone when it comes to a decline in sports sponsorship. Globally, sponsorship looks set to fall 37% from $46.1bn in 2019 to $28.9bn in 2020 as a result of the pandemic. These projections, by international sports marketing agency Two Circles, suggest a 45% year-on-year decrease in sports sponsorship by financial services companies to $6.9bn. In 2019 they accounted for $12.6bn — 27.3% of the total. Automotive, the second-biggest spender in 2019, will contribute $2.7bn in 2020, down 55%, while energy and airlines will also significantly scale back on sponsorship.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.