Sport sponsorship and endorsement is rampant in today’s context. The mutual benefits that sponsors and beneficiaries can reap from a sponsorship are tremendous. So, how lucrative is sports sponsorship? Strictly referring to monetary assets, over $14.35 billion was invested into sport sponsorships in North America in 2014 and the revenue returned to the sponsors was $14.62 billion. Sponsors not only get to have their cash back; it even came back with an interest. On top of that, the sponsorship also increased the company’s brand equity and public awareness. Therefore, sport sponsorship can be seen as a good avenue for investment and is projected to experience steady growth in both the amount of money invested into sport sponsorship and also the revenue generated for the sponsors, over the next three years (Statista, 2015).
Benefits of sport sponsorship & endorsement
The question now is: what are the benefits for both the sponsor and beneficiary? In my opinion, these are the few benefits that both parties get to enjoy:
Increased awareness of the company brand name
Sport sponsorships and endorsements are fundamentally marketing effort through sports. Sponsoring companies are able to gain publicity and recognition through their association with the event/organization. It is arguably one of the most important perks for the sponsors as they rely on their beneficiaries to act as a channel to educate the public regarding the capability of the company, or increase awareness to the company brand (Mullin, Hardy, & Sutton, 2007).
Improving corporate image / image transfer
Sponsors also yearn to improve their company’s image via associating themselves with the sport property. Basically, sponsors hope that their sponsorship is able to transfer the positive image fans have of the sport property onto themselves, indirectly strengthening the company’s brand and credibility. Through endorsement, the process of image transfer is rather prominent. People tend to associate a positive “meaning” to sports celebrities based on their respect and idolization for the athlete and through endorsement, these “meaning” are being transferred to the product. It can be said that image transfer has occurred when people associate the “meaning” from the celebrity to the product, improving the masses’ perception regarding the product (McCracken, 1989).
Getting involved in the community
“Sport offers an opportunity for building relationships with other businesses, affiliates, and trade customers beyond daily business operations” (Irwin et al., 2008, p. 166). Many company used sport sponsorships as a platform to broaden their network and expose themselves to potential business opportunities. Sponsors for a certain event can get acquainted with other stakeholders and perhaps forge partnership & goodwill between each other. Also, sport sponsorships can also be a statement to show that the company is fulfilling its Corporate Social Responsibility (CSR). Studies have shown that consumer’s preference for a company’s products (Kim et al., 2010), brand choice (Barone, Miyazaki, & Taylor, 2000), and intention to purchase (Sen & Bhattacharya, 2001) share a positive relationship with the amount of CSR activities done by the company.
In some instances, a lack of sponsorship can be damaging to the credibility and reputation of a sport property. Failure to secure sponsorships can potentially serve as a statement against the event or athlete and they will be regard with little significance (Lamont & Dowell, 2007). Therefore, the ability to attain sponsorship has a direct impact on people’s perception of the sport properties.
Determines budget for events
Funding obtained from sponsorships can be regarded as a vital budget for operations of the event (Lough & Irwin, 2001). The operating budget for certain events are solely based on the sponsorship revenue, and the inability to secure sponsorships can potentially result in the event being canceled completely. An example is the cancellation of the 2011 Colorado Springs PRO XCT event, a profession mountain biking competition, due to a lack of monetary sponsorship (Bate, 2011).
Negatives that arises from sport sponsorship and endorsement
There is always 2 side to a coin; sport sponsorship does have its demerits.
Changing rules/traditions of the game
Some sponsors might insist on changing certain rules of the game or modify the gameplay in order to boost viewership or to make the event more interesting. The beneficiaries usually have no choice but to accede to their request. This can cause dilution to the sports culture and traditions. An example is the introduction of sudden death tiebreakers in tennis tournament which aimed to shorten the match and make it more stimulating for spectators. Demands from the sponsors also changed the tradition of wearing all white apparels to multi-coloured attire since coloured apparels are more appealing to spectators.
Overwhelming influence from sponsors
In certain sponsorship, the sponsor might possess a ridiculous amount of deciding rights of the team/athlete/event. Also, the beneficiaries are subjected to constant demands and pressure from their sponsors. For example, Nike who was the sponsor for Brazil national football team, possessed the right to determine who the national player will play with twice in a year (Berrett, 1993). Likewise, Air Canada who is a long term sponsor of National Hockey League(NHL) teams, pressurised NHL to resolve the issue of frequent injuries of players and threatened to withdraw their sponsorship should the problem persists.
The pros and cons of sport sponsorship and endorsement have been explored above and in hindsight, I personally believe that the benefits of sport sponsorship and endorsement outweigh the harm that can arise from this business agreement. It is an essential tool for marketing today and companies generate a significant amount of revenue from this channel. Likewise, events rely heavily on sponsors to sustain their operations and many athletes generate a huge portion of their income from endorsement and sponsorship. With proper matching of sponsors and beneficiaries, accompanied with fair expectations from both parties, I believe that sport sponsorship and endorsement is beneficial for both parties and that it brings about a positive effect on the society.
Statista. (2015). North American sports sponsorship spending from 2009 to 2015 (in billion U.S. dollars). [Figure]. Retrieved from http://www.statista.com/statistics/284687/sports-sponsorship-spending-in-north-america-2014/
Mullin, B. J., Hardy, S., & Sutton. W. A. (2007). Sport marketing (3rd ed.). Champaign, IL: Human Kinetics
McCracken, Grant (1989) “Who is the Celebrity Endorser? Cultural Foundations of the EndorsementProcess,” Journal of Consumer Research, vol. 16(3), p. 310-321.
Kim, Y. K., Smith, R., & James, J. D. (2010). The role of gratitude in sponsorship: The case of participant sports. International Journal of Sports Marketing & Sponsorship, 12, 53–75.
Barone, M. J., Miyazaki, A. D., & Taylor, K. A. (2000). The influence of cause-related marketing on consumer choice: Does one good turn deserve another? Journal of the Academy of Marketing Science, 28, 248–262
Sen, S., & Bhattacharya, C. B. (2001). Does doing good always lead to doing better? Consumer reactions to corporate social responsibility. Journal of Marketing Research, 38, 225–243.
Lamont, M., & Dowell, R. (2007). A process model of small and medium enterprise sponsorship of regional sport tourism events. Journal of Vacation Marketing, 14, 253-266.
Bate, J. (2011, February 23). Colorado Spring PRO XCT race axed. Retrieved from http.//singletrack.competitor.com/2011/02/news/colorado-springs-pro-xct-race-cancelled_13562
Berrett, T. (1993). The sponsorship of amateur sport – government, national sport organization, and corporate perspectives. Society and Leisure, 16(2), 323–246