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Sports Management
07 Mar 2016 issue 115

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Leisure Management - Sponsorship

Brand Power


Are sponsors who plough huge sums of money into sport becoming too powerful as they seek a return on their investment?

Tom Walker, Leisure Media
Simon Chadwick, professor of sports business at Salford University
FIFA’s anti-ambush activities at the 2010 World Cup included legal threats
Adidas has voiced its displeasure at the playing style of Man U this season
US Olympian Sanya Richards led athlete’s protests about the IOC’s Rule 40 which prevents them endorsing non-Olympic sponsors on social media

Manchester United manager Louis van Gaal has had his critics this season. The cautious playing style he’s instilled at the club – which saw the Red Devils score just eight goals at Old Trafford between October and January – has been described as “turgid, boring and lifeless” by both fans and the media.

While he might be within his rights to ignore the stick he’s received from supporters and journalists, there was one critical voice that could yet prove significant to his future at the club. Van Gaal was told off by the man who provides his team’s shirts.

“We’ve sold more shirts than expected,” Herbert Hainer, CEO of Adidas, told German paper Süddeutsche Zeitung, before adding: “Even if the way United play is not exactly what we want to see.”

Shot across the bow
Hainer’s remark could be dismissed as a throwaway comment, but for Simon Chadwick, professor of sports business at Salford University, it betrays how the relationships between sponsors and the properties they invest in are changing.

“A senior employee at Adidas will know precisely what such a statement means,” Chadwick says. “You might be tempted to ignore it as an off-the-cuff remark, but in reality it’s a shot across the bow.”

Chadwick says the sponsorship market has changed markedly since the economic downturn, with sponsors increasingly reassessing the way they spend money. Many are looking for ways to gain more control of their investments, while applying closer inspection to the value they’re receiving from them.

“Prior to the 2008-9 crash, it was a case of sponsors paying the money, sticking the brand name on a shirt and hoping everything worked out,” Chadwick says. “That’s no longer the case, however, as sponsorship budgets are increasingly being scrutinised and challenged by corporation executives.

“There’s more pressure now to achieve a tangible payback from these deals. Sponsorship teams are constantly asked to show the numbers to prove that the investments made are giving a good return.”

In Adidas’s case, it’s understandably expecting substantial returns – the sports giant agreed a world-record £750m, 10-year kit deal with Manchester United, starting from July 2015. To put the deal in context, the sum involved is only £40m less than United’s owners, the Glazer family, paid for the entire club when they took it over in 2005.

It’s an ambush
While a sponsor attempting to influence a football club’s playing style is definitely a first, athletes and fans have long been affected by another sponsor-related issue – the efforts to combat ambush marketing. The practice of companies displaying “guerilla” brand messages and getting associated with major events – without actually paying sponsorship fees – is a threat for genuine event partners looking to maximise their exposure.

The rights holders’ anti-ambush strategies can at times seem extreme. When a Dutch brewery smuggled in 36 fans – wearing brightly coloured outfits associated with its premium beer brand – to a 2010 FIFA World Cup game, it led to arrests and threats of legal action from FIFA. During the London 2012 Olympic Games, Team GB athletes were famously given strict guidance on which breakfast cereals were acceptable to mention in social media posts.

Some athletes have fiercely opposed the International Olympic Committee’s “Rule 40”, which prevents participators from using their name or picture for advertising purposes during an Olympic Games. During London 2012, dozens of athletes – led by Team US runner Sanya Richards-Ross – posted their objections via Twitter using the hashtags #Rule40 and #WeDemandChange.

For Bill Sweeney, CEO of the British Olympic Association, ambushing is potentially a big problem – although the organisation’s preference is to take a flexible approach to companies who have separate, individual deals with successful Olympic athletes. “If it’s a sports sponsor saying ‘congratulations’ and it doesn’t have the expressed intent of ambushing, we’d probably just let it go. If it’s a company –  sportswear comes to mind – that makes a really well-considered ambush approach, then clearly we’d have to take action or we’re not protecting our real sponsors.”

Moral issues
The recent scandals at world governing bodies FIFA and IAAF have also shown the power of the sponsor.

Led by the now disgraced Sepp Blatter, FIFA refused to accept that action was needed on the corruption allegations leveled at it – until key sponsors Coca-Cola, Visa, Budweiser and McDonald’s threatened to terminate their contracts. Their intervention spelt the end for Blatter and ushered in reform.

IAAF too found out how sponsors can act on questionable governance. In January it was reported by the BBC that Adidas, its biggest sponsor, was going to terminate its sponsorship deal four years early, as a result of the doping scandal sweeping the sport.

Chadwick says the way sponsors were called to act on both the FIFA and IAAF scandals has cast them in a new role as governors of ethics – one which they probably didn’t asked for.

“The public seems to think that sponsors should be moral arbiters when it comes to sport,” he says. “In one sense I feel for the sponsors, because they’re being put in the uneviable position of being expected to carry the can for the misdemeanours of sports governing bodies around the world.

“That’s somewhat unfair and my view is that we’re all complicit in it, even consumers, who can influence the way these things go by the choice of kit they buy: If you don’t want a particular brand to sponsor the IAAF, then don’t buy their products – but don’t expect that brand to be your personal moral arbiter.”

Long term consequences
Chadwick believes the revelations at IAAF and FIFA – as well as the intervention by Adidas on playing styles at Manchester United – show how the sports sponsorship landscape is changing very rapidly.

The changes could have long-term consequences for the way commercial deals are drawn up in the future: “It means that sponsors are being challenged to think much more carefully, strategically and professionally about their sponsorship programmes,” he says.

“Companies will increasingly approach sponsorship as a business solution – not just as advertising or marketing communications. And when any business buys a solution to a problem or a challenge it faces, it expects the problem to be solved,” he says.

“In Manchester United’s case the problem isn’t being solved – the team’s style of play isn’t attracting a positive reaction from fans. In that sense the business solution Adidas thought it was buying to get income from isn’t actually there.”

Are sponsors becoming too powerful?
“When you have a situation where a sportswear company criticises the way a club it sponsors is playing, with the expectation of changing it, then I think we’re moving into an era in which sponsors are starting to have too much power,” says Chadwick.

Originally published in Sports Management 07 Mar 2016 issue 115

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