Corporate sponsorship of sporting events will become more targeted and less “one-dimensional” as major companies look to cut costs during the recession, according to one of the country’s leading sports lawyers.
James Earl, an associate in the sport team at Top 50 law firm Clarke Willmott – which has offices in Birmingham, Bristol, London, Southampton and Taunton – says a “sponsorship crunch” is now underway as financial support for sporting events comes under ever closer scrutiny in UK boardrooms.
“It’s definitely a buyer’s market at the moment,” says Mr Earl, whose firm represents several of the country’s leading football, rugby and cricket teams.
“AIG has just announced it will not be renewing its shirt sponsorship deal with Manchester United while Credit Suisse has pulled out of its deal with the BMW Sauber F1 team. Meanwhile in the case of West Ham United, the club was forced to look for a new shirt sponsor after XL Holidays went into administration.
“The downturn is trimming the fat from corporate budgets and every spend is being much more closely scrutinised than it was even six months ago, in order to gain maximum value.
“Sports sponsorship will become much more targeted and highly leveraged, and less one-dimensional, in terms of the traditional routes which have been used such as corporate hospitality and advertising hoardings.
“In the current climate it is not enough for companies simply to find a six to eight figure sum – they will want to do far more groundwork to gain a clear understanding of the demographic they are trying to reach in order to increase brand awareness. This is also a real challenge for rights holders, who will have to be increasingly ‘savvy’ to deliver return on investment for sponsors.”
Mr Earl says sporting institutions will also be looking for new sources of sponsorship cash in regions such as the Middle East and Far East over the coming years.
He commented: “In general terms wealth is moving east, and this is also where the markets are growing fastest.
“Of course this process began before the global economic downturn, but what has happened recently in football with the takeover at Manchester City, and in cricket with the formation of the Indian Premier League, merely reinforces the fact.
“However despite the changed circumstances, when an arrangement works very well, major deals will continue be renewed, as we have seen with RBS’ extension of its Six Nations rugby sponsorship. Likewise an iconic global brand such as Manchester United will never struggle to find a sponsor.”