Media: Sports sponsors play for a bigger stake in the game

Media: companies seek more say in the events they support to counter th e impact of branded TV broadcasts Companies that have only just started taking sponsorship seriously would have t o make a big leap to regard it as intrinsically linked to business strategy
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The Independent Online
FORD means football for soccer fans with satellite dishes. No one watching live and exclusive Premiership coverage on Sky Sports can ignore the fact that the motor company sponsors the programming. But the success of some heavily branded broadcast sponsorships is bad news for sports event sponsors, who fear television will dilute the value of their deals. Attention is now turning to how event sponsors can protect their investment.

This month the Institute of Sports Sponsorship will distribute a pro forma contract advising its members on what should be covered in any sponsorship deal. The initiative follows the publication of a 10-point voluntary code of conduct, which includes a call for members to turn down television deals unless the event sponsor has been approached first, and to ask broadcasters to invest a proportion of sponsorship money in developing the sport concerned.

"Companies get involved in event and programme sponsorship for very different reasons. Television offers one-off awareness; event sponsorship is more about long-term image-building," says Mike Scott, director of the ISS. "Both are capable of living happily side by side. But we want to ensure event sponsorship is protected, as it is the life's blood of many sports."

The balance of power within sports is undoubtedly shifting. In the past, sports authorities received most of their funds from event sponsorship; now television rights can be more lucrative, and broadcasters have more clout. Event sponsors need media exposure to promote their brand association. But broadcast sponsorship deals - like those struck by ITV with Panasonic for its World Cup '94 coverage, or with Sony for the last Rugby World Cup - can smother event sponsors' activities.

In the US, a growing number of broadcasters are taking over the management or co-ownership of sports events themselves. Although this is yet to arise in the UK, it comes a step nearer this spring with the European launch of the new World League of American football, sponsored by Reebok. World League is a joint partnership between the National Football League and Fox Inc / News Corporation.

The immediate "threat" posed by TV sponsorship depends on whether event sponsors also have the first option to buy the television sponsorship, says Graham Bridgwater, marketing director at the sports sponsorship consultancy CSS. "It is essential to address such key issues at contract stage," he explains.

Should the event sponsor choose not to take up the television sponsorship, the broadcaster should be encouraged not to offer it to a direct competitor. "This is starting to happen in a number of sports, certainly cricket, which is effectively dealing with such potential problems at source. Sports governing bodies are getting more professional."

Another way of ensuring the event sponsor enjoys the full value of its association is to adopt a more considered approach to the way sponsorship money is distributed, suggests Richard Glynn, partner and founder of the specialist sports unit at solicitorsNicholson Graham & Jones. "We now try to encourage our clients that rather than paying, say, a £2m sum, they should break it down into specific amounts - such as for facilities for spectators, for field hospitals, for security guards," he says. This will ensure the range and quality of benefits provided match the sponsor's requirements. "To run something successfully you must take responsibility."

Greater responsibility cuts two ways, Mr Glynn explains. It benefits the sports governing body and the sponsor. By improving the live experience for spectators, a sponsor can secure community benefits unrivalled by television sponsorship. It is about long-term relationships, and structures are now being developed to encourage these.

"There is no doubt that the return derived from event sponsorship is declining seriously," Mr Glynn adds. "To operate effectively in this new market, the governing bodies, sponsors and media companies should have expertise not only in traditional revenuegenerators such as sponsorship, merchandising and licensing, but also TV contracts, multimedia, stadium management and construction, tax and pensions advice, as well as litigation."

One way to achieve this is with a joint venture partnership which could unite sports organisation, sponsor, management agent, financier and even broadcaster. Each would contribute its own area of expertise. And should the sponsor subsequently decide to end its association, it could sell its shares and the purchaser would receive more than just another sponsorship.

The formalisation of informal relationships is welcomed by Ian Spero, managing director of the sponsorship consultancy Spero Communications. "One is still seeing - in arts and sports sponsorship - situations where the process is managed by enthusiastic amateurs whose hearts are in the right place but who have insufficient time to do the job efficiently," he says. "Some sort of strategic alliance, maybe a joint venture, makes perfect sense, as it offers the potential for a situation where the sum of the parts is greater than the whole."

Such a structure would only be viable for the larger international events and big corporations, Mr Glynn believes.

"Companies that have only just started taking sponsorship seriously would have to make a big leap from recognising sponsorship as a separate entity from advertising to regarding it as intrinsically linked with their business strategy."

Nevertheless, Nicholson Graham & Jones is now discussing the viability of joint ventures on behalf of a number of interested parties."Those who say, `No, all these factors won't affect us or our sponsor,' are in danger of being left behind," Mr Glynn wa r ns. "The real risk is to do nothing. If sponsors don't move to position themselves correctly with governing bodies, the Rupert Murdochs and Kerry Packers will."