David Prosser: Sports sponsorship has never been so complicated

Outlook: Tesco is now shelling out £5m a year on a partnership with the Football Association, while Sainsbury has signed up as a sponsor of the Paralympics

Tuesday 14 December 2010 01:00

With the greatest respect to Morrisons and its Canadian chief executive Dalton Philips, it seems unlikely that its hints of legal action against Fifa's decision not to give England the World Cup will prove to be anything more than bluster. But what Mr Philips has achieved in his public rebuke of Fifa is a spot of publicity that might give his supermarket group a boost. Though it has apparently spent hundreds of thousands of pounds supporting England's 2018 bid, this association hasn't generated an obvious marketing payback so far – and there's no harm in a bit of flag-waving.

There is also a wider context to the row. Many in the business world – and not just in Britain – are frustrated by the way that Fifa and the International Olympics Committee (IOC) sign global sponsorship deals that prevent them exploiting opportunities with tournament organisers. Had England won the bid for 2018, Morrisons would have found options at the tournament itself strictly limited by Fifa's long-standing sponsorship deal with Coca-Cola, the terms of which effectively prevent the supermarkets doing similar deals, even on a much smaller scale (Coke wouldn't like the idea of the World Cup logo appearing on the grocer's own-brand fizzy drinks). Still, Morrison's rivals in thegrocery sector are doing their best to dream up alternative strategies. Tesco is now shelling out £5m a year on a partnership with the Football Association, for example. Sainsbury's has signed up asofficial sponsor of the London 2012 Paralympics. That deal, in particular, is seen as highly significant in the sponsorship sector because it exploits a loophole in Coca-Cola's deal with the IOC, which is similar to the Fifa agreement. Others may now try to get round IOC contracts with sponsors of the Olympics via deals with the Paralympics that will, in any case, be cheaper.

It isn't just potential sponsors that have been frustrated by the exclusivity of deals such as Coke's – they are also limiting for tournament organisers. In selling sponsorship for London 2012, the games organisers have found a number of large companies, all attractive would-be sponsors, off limits because of agreements signed elsewhere.

Let's put a stop to ageism in the right way

There was some predictably angry outbursts yesterday in response to the call by the Confederation of British Industry for the Government to postpone the abolition of the default retirement age (DRA) by year. But those who attacked the CBI as old-fashioned and scaremongering rather missed the point: the employers group is not calling for the DRA to be retained in perpetuity. The case for delay is a familiar one to employment policy veterans. Having made a headline-grabbing announcement that from next April, employers will no longer be able to require staff at call it a day at the age of 65, the Government has failed to publish the detailed framework of how the reform will work in practice.

There will be, for example,certain loopholes in the regulation so that employers do not have to continue paying staff to do jobs for which they are not fit, yet the tests for these have not been published. Other detail is similarly lacking.

No-one now thinks age discrimination is acceptable – or that employers should be allowed to save money on redundancy pay-outs by compulsorily retiring older staff. With an ageing population that has made inadequate provision for old age, many more people are going to need to work for longer than they might previously have expected – and be perfectly capable of doing so.

However, employers needcertainty as they work out how to comply with the new regulations. There has already been a very sharp spike in the number of employment tribunals concerning age discrimination and the lack of clarity about the new regulation may inspire even more litigation.

This is a vital change to the law that recognises a social imperative. But it requires the support of employers and it is worth taking a little time to get right.

Is the M&A boom on its way back?

You could call it M&A Monday. So many mergers and acquisitions were announced yesterday – both British companies buying foreign concerns and vice versa – that it almost felt as if the credit crisis had never happened.

And, while it was partly coincidence that five deals were formally unveiled yesterday, the mini M&A spike does reflect improving confidence on the capital markets. Several of the deals will require significant borrowing or fund-raising.

In fact, British companies are unusually well-placed to think about M&A activity – having spent the past three years paying down debt rather then risk having to refinance it in a difficult market, UK plc's balance sheet is remarkably robust.

The position in Europe is similar, with leading companies sitting on around £450bn of cash, 16 per cent more than prior to the crisis.

No doubt there will be further deals as companies' confidence improves and they feel less of a need to hold cash.

And yet. Note that the deals announced yesterday were in sectors such as oil and gas and pharmaceuticals, which have been more resilient than most. Nor is there universal confidence that the financial crisis is over – in part, the rush to complete so many deals before Christmas may reflectanxieties about what the New Year might bring – the eurozone saga, for example, could yet lead to further volatility.

In Christmas party season, bankers will no doubt be rubbing their hands with glee in anticipation of an M&A boomlet.

But there is no guarantee of a hangover-free January.

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