Archive for the ‘sponsorship’ Category

Ice Hockey World Championships and the limits of globalisation

Unless you are from one of the mountainous countries in Europe or Canada, you may not be aware that the Ice Hockey World Championships conclude today in Slovakia.

The final pits Scandinavian rivals Sweden and Finland against each other at the end of a tournament involving the 16 best teams in the world and 17 days of competition.

There is a complication: the end of season play-offs are currently underway in the NHL, which means that some of the star players are not available. It is noticeable that Olympic finalists last year Canada and the USA were both knocked out in the quarter-finals in Slovakia.

Ice hockey is a very popular sport in a number of countries and one of the hottest tickets at the Olympic Winter Games yet its world championship struggles for global visibility. Of the 16 countries who qualified for this year’s event, 14 are from Europe, of which 11 have a population of 10m or less.

Climate, physical geography, culture, history and government support combine in unpredictable ways to determine which countries participate in which sports. While individuals can sometimes reach the top despite the lack of tradition in a particular sport in their country, in team sports it takes many years for also-rans to become serious contenders. As a result, few team sports can claim to be global.

A comparison of the teams who have qualified for the Ice Hockey World Championships with other sports events demonstrates this point. Canada is the only country which is competing in the ice hockey which also qualified for the recent Cricket World Cup involving 14 nations. Canada, France, Russia and the USA are competing in both the ice hockey and the 20 team Rugby World Cup later in the year but of these only France is currently in the top 10 in the rugby world rankings.

In all that makes 50 qualification spots in three of the major team sport events this year which have been filled by 40 different countries. The major markets not involved in any of these events include China, Brazil, Spain and Korea.

For sponsor brands which value an association with sport and are global (or wish to be), the limited reach of specific sports presents challenges. The FIFA World Cup and Olympic Games offer the broadest international audience but for a high price. Almost any other international sponsorship asset will be relevant in only a range of markets.

The ice hockey teams from Sweden and Finland deserve recognition for defeating the best that the rest of the world could offer but don’t expect South America, Asia or Africa to notice.  While sport is global, most sports are not.

Seve Ballesteros: sporting icons are not produced by systems

The sad death of golfer Seve Ballesteros is the lead story today in Spanish media such as El País, El Mundo and Marca. The glowing tributes appearing in media around the world (BBC, USA Today, L’Equipe and many more) prove his iconic status.

Ballesteros burst onto the scene as a 19 year-old, finishing runner-up in the British Open in 1976. Among dozens of tournament wins during his career were three Open titles and two US Masters. He was also the inspiration behind European success in the Ryder Cup from 1985 onwards after decades of American dominance. With his flair and sense of drama he probably did more than anyone else to popularise golf across Europe in the last 30 years.

Many sports governing bodies and sponsors try to extend the appeal of their events by supporting the development of young athletes in new markets. Through funding for youth programmes, training camps, wildcard entries and holding championships in developing countries, federations seek to broaden the pool of contenders. Occasionally it works, particularly when there is already an infrastructure in place within a specific market which can harness the international investment.

A successful example is the introduction of Italy into the Six Nations rugby tournament in 2000.  Although the Italian team has not yet been close to winning the title, it has been consistently competitive and achieved some notable victories.

But what sports federations and sponsors really crave is superstars from outside their core markets, athletes who can transcend their sport and appeal to an audience well beyond the traditional fan base. Those of a similar generation to Seve Ballesteros include the likes of Boris Becker, Roger Milla and Lance Armstrong.

While star athletes often have a strong family background in their sport – Ballesteros came from a family of golfers and Becker’s father set up a tennis centre – they rarely seem to be the product of official sports development programmes.

With some honourable exceptions (such as the US college sports system and the FC Barcelona youth academy), development programmes succeed in broadening the base of competitive youngsters but seldom unearth charismatic champions.

It may be that sports federations and sponsors should concentrate more on capitalising when they are fortunate enough to have a superstar in their midst and worry less about the very difficult task of producing the next one.

Ultimately it is the icons of sport who do more to inspire the next generation of stars than any well-meaning official intervention. At the US Masters last month Phil Mickelson said that watching Seve’s 1980 Masters victory as a 9 year-old influenced him to take up golf.

Farewell Seve Ballesteros. Your legacy lives on.

Bahrain Grand Prix: what would you do?

Will the first Formula 1 Grand Prix of the season take place as scheduled or not? The race is planned for 13 March in Bahrain, where there have been violent clashes between protesters and the security forces in recent days, leading to several deaths and many injuries.

While the people of Bahrain may be preoccupied with their wider concerns, the race organisers both internationally and locally face a difficult dilemma just three weeks ahead of the race. There has been extensive media coverage of the story (see for example Reuters and Al-Jazeera English).

There are a number of questions to consider:
- If the race goes ahead, will it be safe for all concerned?
- What is the deadline for making a decision?
- What do the teams and other stakeholders think?
- What are the reputational risks of running the race/cancelling?
- What are the financial implications of going ahead/cancelling?
- If the race goes ahead will everybody participate?
- What kind of precedent is being set?

It will be very hard to know if the right decision has been taken even after the event. The race may pass off without incident but at the cost of reputational damage. Or, if the event is cancelled and the region is peaceful during the competition,  it could still be claimed that the Grand Prix would have provoked trouble.

From time to time team managers and other stakeholders do security assessments ahead of a sports event, as happened before the Commonwealth Games in Delhi. Although it is entirely responsible to listen to different points of view and survey the evidence, predictions are inherently unreliable – nobody knows what will happen in Bahrain. Whatever procedure is put in place for assessing risk, ultimately the decision will depend on the personal opinion of a small group of people.

When a significant perceived threat emerges in the lead up to a sports event there is a familiar pattern:
- The host country and organisers seek to reassure people
- The governing body or rights-holder will be supportive in public but frantically looking for an alternative in private
- Sponsors and TV broadcasters will wait to see which way the wind blows
- Athletes will look to their management for guidance and then make a decision based on their gut instinct
- Spectators will stay away if in any doubt
- The event will usually go ahead with less disruption than feared

In the specific case of the Bahrain Grand Prix the consequences of cancellation or postponement would be significant but not on a scale that would overwhelm Formula 1 as it begins a long season. In the context of a severe political crisis, an initial postponement seems likely.

What is the right decision? We will never know.

Winning the Ashes: how much celebration is too much?

Anybody in England or Australia who follows the news at all will be aware that the English cricket team has beaten Australia to retain the Ashes.

There has been blanket media coverage of the victory in recent days in print, broadcast and online media with the types of contrasting headlines you would expect:
England wrap up series win against Australia in style – Guardian
Fearless England have a ball as they pulverise Aussies – Daily Mail
Time for the axe, and chop from top down – Sydney Morning Herald
The pain of slow torture is almost over – Daily Telegraph Australia

Now that competition on the field is over, media analysis has quickly moved on to cover the celebrations.

When England beat Australia in 2005 for the first time in many years, the celebrations were legendary. Tens of thousands turned up to watch an open-top bus parade by the team in central London. However, the team then suffered a poor run of form, including a heavy defeat in the next series against Australia. Commentators claimed that the England team had become complacent, feeling they had achieved enough.

This time the tone is very different. Partly that is because the Cricket World Cup starts next month and partly because the Australian team is believed to have  declined: more challenges lie ahead. Apparently there is to be a reception with the Prime Minister but later in the year and it is clear that the kind of drunken antics seen in 2005 will not be welcomed.

The absence of high profile official revelry may open the way for sponsors to capitalise but careful judgement is required.

Planning celebrations is a difficult business. The Football Association faced an embarrassing situation in 2006 when plans for a victory parade in the event of England winning the World Cup leaked several weeks before the tournament started.  As football fans will recall, the Football Association’s advance planning was not enough to bring home the trophy.

On this occasion the England and Wales Cricket Board should be commended not only for their management and stewardship of the successful team, but also for judging the public mood. There is near consensus among media commentators that the right approach is for modest celebrations. By showing restraint in their moment of triumph, the governing body is demonstrating their long-term ambition.

What should 2018 sponsors be doing now?

Due to the scale of the biggest sports events, host cities and countries now tend to be chosen about 7 years ahead. Where do you see yourself in 2018?

If you’re a football fan you may be thinking of visiting Russia for the World Cup. Winter sports enthusiasts will know within a few months whether they will be headed to Annecy, Munich or PyeongChang for the Olympic Winter Games in 2018.

There are a number of industries that have to plan many years ahead, ranging from construction to financial services and military defence. But sport is unusual because the precise timing can be predicted with a fair degree of confidence. The opening ceremony of the Olympic Games in Rio will take place on 5 August 2016. Are you busy that day?

The work programme and life-cycle for organising committees are now well-established as a result of studies by the International Olympic Committee and others who have documented the process from setting up a bid to winding up the year after the event. Even if the local culture, political environment and level of development have a major impact on the way of working, the ultimate deliverables will be similar from one event to the next. Hence Rio 2016 has just started construction of the Olympic Park whereas London 2012 has just completed the venue for canoe slalom.

For sponsors and other stakeholders, by contrast, there is less in the way of formal guidance. While the types of activity which sponsors will undertake during an event are well understood (advertising, media relations, client hospitality, internal communications and so on), there is no obvious template to advise sponsors what to do 7 years, 4 years or even 1 year in advance. Given that sponsors of mega events are now often signed up a long time ahead, this is an important matter.

Having committed large sums of money over several years, sponsors should look to make the most of the association and (difficult as it may be) set aside budget to do so. It’s clear that awareness will be low at the start of the event life-cycle and that there will probably be more promotion closer to the competition. It’s also predictable that organising committees will look for incremental revenue by offering set piece opportunities to partners along the way but this does not amount to a systematic or documented programme which can be effectively replicated.

Although sponsors compete with each other and are understandably secretive about their commercial plans, almost all of them fit into a handful of categories in terms of objectives (generate more sales, enhance brand, stakeholder engagement, internal engagement etc.).

It should therefore be possible to provide some guidance on best practice for sponsor activity several years ahead of the event. Ultimately it would be in the interests of rights-holders and organisers to do what they can to steer commercial partners through the event life-cycle because happier sponsors will pay more money.

Until that guidance comes, 2018 seems as far off for sponsors as it does for spectators.

Sport’s virtuous circle of funding

The governing bodies of six sports in the UK have heard this week that they will receive more funding to support athletes in preparation for London 2012.

The additional resources, which result from better than predicted Lottery sales, will go to hockey, gymnastics, boxing, taekwondo, rowing and canoeing. British athletes in all of these sports have made significant progress in the last two years. There was also a boost for some of the winter sports.

UK Sport, the high performance sports agency which grants Lottery funds to governing bodies, has the objective of maximising British success at the Olympic and Paralympic Games. The difficulty is that sports which lack resources and profile in the UK are less likely to see good British performances than their better known peers. As a result those who are doing well will have their funding increased while those who really need the help will lose out.

This time round several sports had their grants reduced, including the winter sports of figure skating, skiing and snowboarding.

International sport is a tough, unforgiving environment. With many demands on its resources, UK Sport has to give priority to funding sporting disciplines which offer a realistic chance of medals in the near future. However, the situation is not hopeless: if there are improvements in performance and management the rewards will follow.

Of course sporting success boosts the potential value of sponsorship for athletes and their governing bodies. Unfortunately, quite a few Olympic and Paralympic sports struggle to attract sufficient sponsorship income to make a real difference to their elite training programmes.

Other types of commercial income, such as membership fees, potentially offer a more reliable revenue stream. Dave Edwards from British Ski and Snowboard, speaking to BBC Sport, urged British recreational skiers to sign up for £3 to become members to help replace the Lottery funding that has been lost.

Online tools and payment systems make it easier than before to collect modest sums of money from larger numbers of people. The great marketing challenge for governing bodies is to provide a service which casual fans will pay for, not just the active participants in the sport.

If any of the smaller governing bodies can find a way to earn a few hundred thousand pounds extra to fund elite training, they might just be able to enter the virtuous circle post 2012.

Multiple screen media opportunity for sport

The fact that British consumers squeeze nine hours of media use into seven hours each day demonstrates a clear opportunity for the sports industry.

A report published by UK communications industry regulator OFCOM has highlighted the fact that the British population, especially 18 to 24 year-olds, spend two or more hours each day multi-tasking with different media and communications devices. This is particularly due to the rise of smart phones and the mobile internet.

While TV and radio remain popular, watching and listening are often combined with internet surfing. Reality shows with live voting are credited for increasing the popularity of media multi-tasking but sport also plays a significant role. Although the data comes from a UK survey, it’s likely that the pattern is replicated in many countries.

Arguably, South Africa 2010 was the first dual-screen World Cup, where spectators watched matches on TV (or live streaming) while simultaneously chatting with friends, checking statistics and commenting on Twitter. The Guardian tracked Twitter coverage of every match.

Broadcasters face a challenge to keep their audience’s attention during sports events and may need to use Facebook and other tools to do so. If they succeed, there are further opportunities for sponsors and rights-holders to reach consumers.

However, the opportunity is probably bigger for media other than broadcasters who for the first time can claim a significant audience share during live events. Activity such as live text commentary, which CricInfo and others have done well for a number of years, was previously a “second best” option for fans unable to watch live on TV. Now various extra value online services are complementary to live broadcasts.

Newspapers, online gambling and fan sites are well-placed to benefit, if they can get their offerings right. As I mentioned in a previous post, there may be new attempts to establish paid-for sports content or sports news operations may merge to create scale. Services could target TV viewers, spectators at venues, office workers and various other audience segments.

ESPN has taken the plunge and launched a paid-for iPhone App showing Premier League goals soon after they are scored. Major League Baseball provides a comprehensive video, audio and stats service for iPad users. Others are sure to follow.

Meanwhile the demand remains for match reports and highlights after the event (preferably available online at any time). However, the bigger opportunity is to find ways to reach the multi-tasking audience during live events.

The opportunity of international name recognition

While visiting Argentina it is noticeable that many of the sporting stars who appear daily in the national media are very familiar to a British sports fan. This instant name recognition brings an opportunity which may not be fully recognised.

In the 21 October issue of Olé, the popular national sports newspaper, there were stories about Barcelona icon Lionel Messi, the Argentinian rugby team preparing for their forthcoming tour of the UK, rising tennis star Juan Martín del Potro and numerous pages previewing the weekend’s local derby between Boca Juniors and River Plate.

The focus for sponsors and rights-holders is often the country where a sporting competition is taking place but the media coverage can spread much further, depending on the nationalities of the participants. This has long been appreciated in Formula 1, where the nationality of drivers is a significant factor when teams decide who to hire. Football and basketball clubs are also well aware that a star name from overseas can help the fan base to grow in a new market - consider Beckham at LA Galaxy or Park Ji-Sung at Mancheter United.

However, the potential is much greater. It is perfectly plausible for a sponsor or rights-holder to create an event featuring hand-picked athletes or teams from specific markets. More often it seems to happen the other way around: the fact that a particular athlete or team is involved suddenly makes an event more attractive for a potential sponsor. Purists will understandably be concerned that qualification might be determined by a sponsor’s needs rather than on merit. Clearly there needs to be a balance between open and invitation-only competitions because fans will readily ignore meaningless contests.

At a time when many sporting bodies are under economic pressure, sponsors can be a little bolder in their negotiations. Even if they don’t go as far as creating their own event they may be able to influence  qualification criteria to increase the chances of key athletes or teams participating. 

For governing bodies and other rights-holders, uneasy at the prospect of having sponsors closely involved in their events, it is more important than ever to increase the depth and range of potential winners. If they succeed they will have a much stronger proposition to offer international brands. Unfortunately it’s easier said than done.

Football, rugby, tennis, basketball, volleyball and golf are therefore fortunate that the strength of Argentina’s athletes assures interest in their national media. However that doesn’t stop the Brazilians poking fun at their rivals’ struggle to qualify for the FIFA World Cup.

GEM: a new phase in the globalisation of sport

This week’s print edition of The Economist contains no fewer than four articles specifically on sporting themes which relate to Brazil, the USA and Poland. Sports business stories seem to be originating from an ever wider range of countries, which is a sign that a new phase in the globalisation of sport is well underway. It could be called the GEM phase – gravitating to emerging markets.

While the high profile political dimension of modern sport dates back at least to the 1930s (the Bodyline Tour of the English cricket team to Australia in 1932-3; the 1936 Olympic Games in Berlin) and the economic significance at least to 1984 (the Olympic Games in Los Angeles), the true globalisation of sport arguably only arrived in the mid-1990s with the Bosman ruling which opened up the free movement of footballers within the European Union.

The new GEM phase, which has its origins in about 2001, relates to the deliberate targeting by sports rights-holders and sponsors of emerging markets such as the so-called BRIC and Next 11 countries (Brazil, Russia, India, China; Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam).

In retrospect the IOC’s decision to allocate the 2008 Olympic and Paralympic Games to Beijing was perhaps the key catalyst for this new phase of development. Between them the BRIC countries are hosting an edition of the Olympic Games in 2008, 2014 and 2016. The odd one out is India but New Delhi will host the 2010 Commonwealth Games and an Olympic bid may follow. The hosting of the FIFA World Cup in South Africa next year and the gradual shift of Formula One Grand Prix races to emerging markets also fit the pattern.

When it was announced last month that Standard Chartered Bank would sponsor Liverpool FC for four years the press release explicitly stated that the partnership would help drive the bank’s brand awareness “across core markets in Asia, Africa and the Middle East”. Promotion can also work the other way around: Chinese computer manufacturer Lenovo sought to promote the brand in Europe and North America through its Olympic sponsorship deal.

With its global remit and free-market focus, The Economist is well-placed to chart how the GEM phase progresses. I expect to see more sports business stories soon about BRIC and Next 11 countries, including companies from these markets signing up for global sponsorship properties. The tendency for international sport to gravitate towards emerging markets could turn out to be one of the most significant legacies of Beijing 2008.

Ferrari and change: the only constants in Formula One

After today’s Fuji Television Japanese Grand PrixBrawn GP have all but won the Formula One Constructors’ Championship, which is a remarkable result in their debut season. Their drivers Jenson Button and Rubens Barrichello also head the individual standings with two races left. 

Brawn GP, led by Ross Brawn, was created in March from the Honda team which withdrew from Formula One at the end of last season. It’s not the only team to have changed since last year. In fact, four of the ten teams on the starting grid have at least a different name and several more changes are expected for next season.

Ferrari is the only team still active which was involved in the first year of Formula One in 1950. It is also the most successful with 15 constructors’ titles. Car manufacturers such as BMW, Honda, Toyota, Renault and Mercedes-Benz have dipped in and out of Formula One over the years while independent teams have also come and gone. A useful chart shows that Ferrari, Williams and McLaren are the three long-standing teams, each with over 30 years of continuous involvement. 

And it’s not only the teams which vary from one year to the next. Abu Dhabi will host its first ever Grand Prix in four weeks. In 2010 there will be races in Bahrain, South Korea and Canada, none of which are on the calendar this year.

As for sponsors and drivers well, you get the idea. Formula One lives in a constant state of change, which is perhaps inevitable given the fundamental role played by technology. It’s potentially confusing for fans, who can at least support individual drivers even if they move around from one team to another on a regular basis.

In the last six months Formula One has had to deal with numerous crises both on the track (life-threatening accidents, a deliberate crash) and off it (ill-advised comments from leading figures, a narrowly-averted threat by the teams to break away). Mercifully, the serious accidents are rarer than they used to be but the political and financial crises seem to be becoming more common. Nevertheless, Formula One rumbles on from one circuit to the next every couple of weeks from March to October, year after year. 

There’s little doubt that a new combination of teams and drivers will be back next season driving their modified cars on a different range of circuits. 

Faced with such contant change, the companies trying to benefit from Formula One need persistence and deep pockets. The likes of Ferrari, Bridgestone and Santander have strengthened their brands over a period of years by making big investments and by staying the course. Those who wish to join them should take note.