Sports’ survival centres on securing sponsorship

THE global financial crisis was a tough time for most businesses, none more so than sporting clubs that discovered the risks of choosing the wrong sponsor.

The scandal surrounding controversial fuel pill company, Firepower, illustrates how the fall of a naming sponsor can be the catalyst for the demise of a professional sports team.

When Firepower spectacularly collapsed in 2008 owing investors about $100 million, it put a massive dent in the National Basketball League’s profile and brought down the Sydney Kings basketball team.

In Western Australia, it reportedly left former Western Force playmaker Matt Giteau $1 million out of pocket in promised sponsor payments.

Giteau has since signed to play with the ACT Brumbies in 2010.

Similarly, the collapse of million-dollar sponsor Saville Australia almost brought the Jack Bendat-backed Perth Wildcats to its knees last year, before it signed property developer Diploma Group under a confidential three-year deal.

Wildcats chief executive Nick Marvin said despite the difficulties in obtaining sponsorship, they remained the lifeblood of sports organisations.

Arguably WA’s most successful sponsorship deal is the West Coast Eagles’ long-term arrangement with Hungry Jack’s and SGIO, which have been with the club since its inception in 1987.

“The main thing about sponsorship is building and keeping that relationship and ensuring that we’ve got long-term partnerships rather than those that only last for a few years, and that’s critical to who we establish our relationships with,” Eagles chief operating officer Richard Godfrey said.

The Eagles have also partnered with Mortgage Gallery, where the club seeks to find new customers for the mortgage broker through its members, and offers Mortgage Gallery clients deals on membership and merchandise.

Fremantle Football Club hopes to achieve long-term success with new major sponsor Woodside Energy, which signed a deal in September for the Woodside logo to feature on the club’s purple strip.

Woodside chief executive Don Voelte said the energy giant had synergies with the Dockers and looked forward to supporting the club for at least the next three years.

Other major sponsors and professional sports clubs spoken to by WA Business News all agree that the success of sponsorship rests on both parties’ capacity to develop and sustain long-term working relationships in which both entities benefit.

Diploma chief executive Nick Di Latte said sponsoring the Wildcats was more about social responsibility and sharing in the success of an iconic WA franchise, rather than growing its brand.

He said the construction company quantified the return on its sponsorship investment by evaluating tangible benefits, such as logo placement and corporate hospitality.

“But some of the greatest value is recognised in the areas which are much harder to measure, such as the time and resources committed by the club to encourage Perth kids to embrace a healthy and active lifestyle,” he said.

Private health insurer MBF, which sponsors both the Western Force and the Dockers, uses sponsorship to develop brand awareness in the marketplace.

MBF state manager Eric Granger said sponsorship was centred on developing long-term partnerships, where over time a sports franchise could find new opportunities for the business and new ways to promote its brand.

“The rationale behind it is that MBF is looking to establish its brand in a smaller, positive way in the WA market by attaching its name to well-known sporting brands,” Mr Granger told WA Business News.

“Obviously as a health insurer one of the things we look to do is attach our sponsorships to things which encourage healthy activities.”

Mr Granger said most sponsorship agreements began with a standard package, but were flexible, depending on what the sponsor wanted and its relationship with the club.

“Far too often organisations look at the corporate hospitality side, the corporate box ... but that’s not the major reason for sponsorship, although it’s part of the mix,” he said.

“The value you get out of sponsorship is the ability to entertain your own clients in a way where you can recognise their value to you.

“There’s also the opportunity to meet with other sponsors at the game who you might be able to forge business relationships with.

“When we measure sponsorship we look at the relationship built with the club, how flexible they were in working with MBF, how they had given us any opportunities, extra things not in the contract, things that don’t cost money but expose the company to potential clients, invite us to functions for networking and that sort of thing.”

MBF also capitalises by launching membership drives through both sponsored clubs’ databases, making special offers to their members.

RugbyWA chief executive Vern Reid said sponsorship from an organisation like MBF was essential to the bottom line of the Western Force, along with corporate hospitality and membership.

“All of those components of a professional sporting franchise’s revenue are very important, plus whatever funding you get from your parent body as to share television rights and national sponsorships,” he said.

“We all share those components in all sports, rugby included, and so it’s very important.”

International airline Emirates, which sponsors the Western Force for an estimated $3 million, among a host of other sports, believes branding is a major component of the sponsorship paradigm.

Emirates Australian vice-president, Stephen Pearce, said the company’s global sponsorship objective was to boost brand awareness in new and untapped markets, while increasing its international profile.

Last year, Emirates invested 1 per cent of its total revenue on sponsorship, promotions, events and media relations, with 65 per cent of that budgeted for sports sponsorship.

“The Emirates Western Force has proved to be a valuable addition to the airline’s stable of high-profile sporting associations across the globe and we were in no doubt the benefits for both organisations would continue to flourish into the future with a renewed naming rights deal,” Mr Pearce said.

“We believe sponsorships are one of the best ways to connect with our passengers. They allow us to share and support their interests and to build a closer relationship with them.

“Sponsorship is an integral part of our marketing mix – with advertising, promotions and PR – and over the years has proved successful in helping Emirates to increase awareness, strengthen its brand and support sales activities.”