Sponsorship Snacks
Week 12
Introduction
Who would have ever thought that a boat can be that interesting? Well, after the “Ever Given” blocked the whole Suez canal, it quickly won over the internet.
If you have a bad day, treat yourself with some boat memes. Times are aboat (Yes, this is a boat pun) to get better, as specialists already got the giant ship partially floating again. Let your inner boat captain, use this tool to get the “Ever Given” unstuck in those waters closest to you. But don’t forget, over 90% of the global trade market is delivered via ships, so make sure to remove it before you create another global economic crisis.
At the end of the week, the ship drama received a happy ending. The Suez Canal has opened back up, and the “Ever Given” will float happily ever after.
Miami Heat’s new cryptocurrency Arena Sponsor
The start of this week’s edition is all about naming rights sponsorships. FTX will become the first cryptocurrency exchange to sponsor a major US professional sports venue (Source).
For the stadium owners Miami-Dade County, this agreement is a relief, because the arena has been without a naming sponsor for two seasons. That is interesting when we consider that the Miami Heat paid the $213M construction cost for the arena back in 1999. In return, Miami-Dade County gifted the team the plot of land. But the unique thing about this partnership is the revenue sharing agreement.
The contract was constructed in a way that allowed the Miami Heat to deduct various past costs from the profits. Consequently, this means that the Heat only had to pay around $257K to the county. Considering their great success between 2011–2014 (two championships, four finals appearances), that sum seems ridiculously low.
The FTX deal will pay the county approximately $5M in annual profit. As part of the deal, FTX receives premier access to Miami Heat home games, including four courtside seats and a luxury suite. Most importantly, it will finally bring much-needed cash to the county.
We discussed cryptocurrency sponsorships in a previous edition (Week 9) and already forecasted that more crypto companies will enter the sponsorship market.
Extreme E ensures broadcasting with Chinese Tencent deal
Extreme E, the all-electric SUV series, has announced that the 2021 will be streamed on Chinese giant Tencent’s platforms. Some behind-the-scenes documentaries like ‘Climate changers’ will be available. The new documentary corresponds to one of the Extreme E’s: to shine a light on the climate crisis and encourage change (Source).
The chief marketing officer at Extreme E shared his optimism and called the Chinese market a ‘vital region’ and see in the Tencent deal an opportunity to promote their electric race format. It allows them to bring their environmental messages to over a billion people. The interest is mutual here. The general manager of Tencent also wants to promote electric car racing in China (Source).
Our data experts confirmed that sustainability has become a focus for the Chinese sports fan. Between 2019 and the end of 2020 the interest for sustainability of Chinese sports fans nearly doubled. 95% of sports fans in China stated that sustainability is a topic of interest for them. The percentage for Chinese Formula1 (96%) and FormulaE (97%) fans is even slightly higher.
Sustainability has become an important topic for the sports industry in the last few years. 62% of executives consider a sustainability strategy necessary to be competitive today, and another 22% think it will be in the future (Source). Sustainability is closely linked with another major trend: Digitalization. 65% of the younger generation sports fans consume sports on their mobile devices. The link between sustainability and digitalization will be an even more important component in the future as these trends continue to rise.
#NorvegiaOut — Will the WC 2022 be a Qatar-strophy?
When some Norwegian soccer clubs first requested a boycott of the world championship (WC) in Qatar, they were mostly dismissed because their protest does not impact the mega-event (Source).
But the boycott calls have started an avalanche in the Scandinavian country. This week, the Norwegian national team warmed up in a jersey that read “Respect- On and off the pitch”. The reason for the boycott threats are reports that show that more than 6,500 migrant workers from India, Pakistan, Nepal, Bangladesh, and Sri Lanka have died in Qatar since it won the right to host the World Cup 10 years ago (Source). Amnesty International calls the upcoming event “the world cup of shame”.
As expected, the Norwegian executives are not in favor of the boycott. Yet, the possibility of a boycott still stands. On June 20th, the Norwegian Federation will vote whether they will take part in the upcoming WC. Norway is not alone, organizations from other countries like Germany or Denmark have also pressured the national teams to boycott.
Sponsors are also affected. Arbejdernes Landsbank, the main sponsor of the Danish national team, has stated that they will immediately cut ties with the team if they are playing in Qatar. If consumers support companies that focus on social and environmental sustainability, these companies will also become potential sponsors in the longer term. It will be intriguing to see how other sponsors that keep their partnership through the WC choose to activate and communicate it.
The center of this debate is the country of Qatar, but the problems are not new. Boycott threats have been a problem since the Olympic Games in 1956. Brazil also suffered several human rights violations at the 2014 World Cup and the 2018 Olympic Games.
LA Sparks ink first-ever beverage sponsor deal in the history of the WNBA
Chicago-based Molson Coors will be the first beer-partner of the women’s basketball team. Women’s sport is picking up pace, and sponsors are jumping on the bandwagon. Viewership and TV coverage of women’s sport is growing fast, yet the prices are still low. ESPN pays US$25 million for its TV deal with the WNBA. They also have an existing deal with the NBA where they pay US$2.6 billion. That’s quite a few zeros less on the Check (Source).
Big brands like Barclays, Budweiser, and PepsiCo have all signed major sponsorship deals, and other brands are taking notice. As we have discussed in Week 9, women teams are increasingly looking to sell their rights packages. Contrary to men’s teams, which mostly have long-term (and often outdated as we saw in the Miami case) sponsorship deals in place, women’s clubs can get more creative in the activation of the partnership.
That is a great opportunity for middle-sized companies like Molson Coors to raise awareness for their brand. Also, they can position themselves as a first-mover company that invests in women’s sports, and it allows them to reach female fans and female staff members.
Lastly, the big sporting brands such as Nike, Adidas, or Puma have already acknowledged the potential of women’s sportswear. For women’s clubs and their sponsors, jerseys offer huge potential. Keep in mind that the USA women’s soccer jersey has broken sales records in 2019 (Source). If the jersey sales of the LA Sparks continue to increase sponsors can benefit from the increased exposure.
Saints and Caesars close to $200M naming rights deal
Betting companies have been a constant staple of our snacks. This week is no different. The casino company Caesars Entertainment is set to acquire the naming rights of the New Orleans Saints’ Superdome worth a stunning $200M.
The existing deal with German car manufacturer Mercedes-Benz, worth between 50 and 60 million USD, is coming to an end after ten years in 2021 and will be succeeded by Caesars (Source). Starting from the 2020 season, NFL franchises can have deals with sportsbook operators (Source). The Saints are the first to sell the naming rights of their stadium to a betting company.
While the betting partnerships are still new in the US market, they have been established for a long time in Europe. In fact, alongside the financial benefits of partnering, sport betting companies allow clubs or teams to ensure compliance by ensuring rules for gambling (Source). With sports betting establishing itself in the US market, traditional sponsors must lookout as the market gets more competitive. Betting companies are pushing into the market, and they are willing to pay big money to get those deals. For existing sponsors, this ultimately means a thorough valuation of their sponsorship deals is a must. Soon, they may be caught between paying a premium or dropping the property.
Betting companies are currently on a sponsorship conquering crusade. But what is unclear is if their sponsorships can generate more betting interest in sports fans. Internal data analysis revealed that the interest in betting of sports fans of all five continents has stayed constant between 2019 and 2020. The pandemic has encouraged risk-averse behavior around the world, and betting is the exact opposite. Yet, there is a slight trend in the data that shows that gambling interests are starting to rise. Nevertheless, betting sponsors must be aware that their sponsorships might only pay off in the future when humans are ready to risk again.
For more expert insights into sponsorship data & analytics visit us on Advanced Sponsorship Insights. Or write us directly
fabian.vermum@advanced-sponsorship-insights.com
jack.goodloe@advanced-sponsorship-insights.com
