Sport Business Operations
Sport Business Operations SMGT 4336
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SMGT 4336 Sport Business Operations Sport Promotion and Sales Management Chapter 8 The Promotional Role of Sport Sponsorship Pregame Introductions Sport 0 It would appear that the 1984 Summer Olympic Games hosted by the city of Los Angeles served as the catalyst for the recent phenomenal growth in American sport sponsorship Before the 1984 Games nancing had primarily come from government funding lotteries and donations Sponsorship of women s sport which has realized an increase of 100 in just the past ve years The inability of public funding to keep pace with the skyrocketing cost of sport as well as an unwillingness of taxpayers to increase public funds for sport has challenged sport promotion specialists to seek alternative means of generating revenue for sports ranging from those based in schools to those associated with the Olympic movement Consequently corporate sponsorship has emerged as one of the primary sources of income as well as means of reducing expenses In fact sponsorship accounts for nearly half of all revenue generated by major college athletic programs within the United States Corporate sport sponsorship has continued to thrive on the basis of a sponsorship s ability to serve as a platform for a speci c type of brand extension cut through the clutter of traditional media advertising and provide a cost effective businessbuilding technique Corporations freely spend thousands if not millions to nurture relationships with current as well as prospective clients at sporting events In fact data collected from customers entertained by Federal Express during the 20002001 Bowl Championship Series revealed that the opportunity to interact with the sales host signi cantly improved personal relations with the company thereby solidifying customers willingness to continue shipping with Federal Express Sponsorship Platforms The platform for sport sponsorship extends beyond events to include governing bodies teams athletes media channels facilities and speci c sports For example the NBA s Cleveland Cavs and WNBA s Cleveland Rockers are able to offer corporate sponsors team as well as facility sponsorship entitlements as the team and building owners are one in the same A Governing Body Sponsorship Governing bodies ranging from the International Olympic Committee IOC to local adult recreation leagues have secured sponsorship from corporate partners Similarly a corporate partnership with the NCAA provides a company the opportunity to af liate with any or all men s and women s national championships administered by the NCAA but renders no entitlement to af liation with member institutions Meanwhile sponsorship of the NBA and WNBA can allow for use of all league and individual team logos in national advertising campaigns B Team Sponsorship Depending on the limitations imposed by a governing body sponsorships may be offered in noncompetitive product categories or to local corporations For instance NFL teams are precluded from arranging sponsorships with direct competitors of sponsors of the league C Athlete Sponsorship 0 Such arrangements typically involve some type of endorsement of the sponsor s product by the sponsored athlete Athletes in individual sports e g golf tennis motor racing skiing tend to attract more sponsor interest often because they are able to generate a number of visible wellfocused sponsor impressions on television This accounts for the location of sponsor logos on the head and shoulders of most golf and tennis players and the need for all downhill skiers to appear on the post race interview with goggles on backward and tips of dismounted skis facing the camera NASCAR champions such as Jeff Gordon pose in Victory Lane drinking Pepsi and milk while wearing the appropriate sponsorlogoed cap during the postrace victory photograph sessions D Media Channel Sponsorship Many argue that such a tactic referred to as ambush marketing is intended to distort the media consumer s understanding of the sport content provider s existing corporate sponsors And annually PepsiCo purchases the largest amount of advertising time during the Super Bowl compared to that spent by any other company however Coke has purchased the rights to be recognized as the official soft drink of the NFL E Facility Sponsorship As sport facility management sought alternative means of nancing the notion of embedding a corporation s name into the facility s name emerged Examples of facility sponsorships often called naming rights agreements have included Coors Field in Denver home of the Colorado Rockies Salt Lake City s Delta Center home of the WNBA s Utah Staarz and Adelphia Stadium in Nashville home of the NFL s Tennessee Titans F Event Sponsorship 0 To some sponsorship is a term synonymous with event marketing as events account for a signi cant proportion of all sponsorship activity 0 This contention is supported by Brian Kelly director of event marketing for Sears Merchandise Group who stated that sponsorship of an event can extend and reach consumers while passive elements of the marketing mix such as advertising cannot 0 American college football games including the Tostitos Fiesta Bowl FedEx Orange Bowl and AXA Liberty Bowl perhaps best illustrate enthusiasm for event sponsorship in that all but one the Rose Bowl have secured a title sponsor Ambush Marketing 0 While we have already mentioned the procurement of broadcast advertising during a sporting event as one way a company can engage in ambush marketing a company can employ several other tactics to confuse the consumer regarding its affiliation status with a sporting event 0 Another is to sponsor participating athletes or teams rather than the event a practice frequently used by Wendy s during the Olympic Games to ambush the status of McDonald s as official sponsor 0 Still another tactic involves conducting advertising or promotional activities at or near the event as Nike did by creating a temporary Nike Town in Atlanta at the 1996 Olympic Games and in Paris at the 1998 Men s Soccer World Cup Sponsorship Levels 0 Typically sponsors should receive a menu of options for expressing the magnitude of their sport sponsorship affiliation o In fact the levels of sponsorship offered by the sport organization are limited only by the sport promotion specialist s creativity 0 For instance within a college postseason bowl game title sponsorship may be attached to any number of the surrounding festivities such as the parade various social functions and pep rallies in addition to the actual game 0 Even within the game itself elements such as pregame halftime timeouts and touchdowns lend themselves to serving as sponsorship platforms 0 Typically we would divide sponsors into the following categories title sponsor major or presenting sponsor cosponsor and trade or in kind sponsor an inkind sponsorship is an arrangement typically resulting from the provision of product or services by the sponsoring company in lieu of cash payments 0 Federal Express s title sponsorship of the FedEx St Jude Golf Classic an annual stop on the PGA TOUR provides the company event broadcast advertising slots extensive oncourse signage a corporate hospitality pavilion on the fairway of the 18Lh hole print media advertising including pairing sheets and souvenir tournament guide and variety of admission passes Marketing Plan Review 0 It appears that corporations use sport sponsorship as a means of supplementing rather than replacing traditional marketing communications Setting P 1quot Critical to the effective management of a sportsponsorship is determining what it is the sponsor desires to achieve as a result of the partnership It therefore behooves corporate sponsorship decisionmakers to prepare a list of desired outcomes before entering into the sponsorship and Prioritizing Sponsorship Objectives Once the organization has decided that sponsorship makes sense the next step is to establish a set of clearly defined objectives for engagement as is usual with all promotion mix components These sponsorship objectives are in turn used to guide the sponsorship proposal screening As shown in figure 86 corporations engage in the sponsorship of sport for diverse purposes ranging from demonstrating good corporate citizenship through support of civic events to achieving product or brandrelated outcomes such as direct communication with a specific target market through leisure or lifestyle activities Corporation Related Sport Sponsorship Objectives Companies use a sport sponsorship to achieve a broad range of objectives Several of these objectives relate to the company engaging in the sponsorship Increase public awareness of the company and its services Sport has proven to be highly effective as a communication medium for increasing public awareness When Phillips an electronics company sponsored the Soccer World Cup event sponsorship it had as one of its objectives the improvement of public awareness for both the company and its products Which along with the international coverage of the World Cup was implemented to generate international name recognition for Philips Z Enhance company image 3 Sport is associated with a healthy lifestyle this association can be good for the sponsor and was the rationale that led Campbell Soup Company to sponsor the physical fitness testing programs in American schools For example companies often become involved with major international sporting events such as the Olympic Games in order to enhance their global 1mage Alter public perception A longterm commitment is required in order to effectively alter public perception and build a strong corporate image through a sport sponsorship as it takes longer to change an already established public perception than to maintain an existing one Nike s attempt to portray itself as a soccer company is an excellent example of an attempt by an organization to alter its public perception The company entered into a sponsorship arrangement with the Brazilian Football Federation Brazil at the time held the Men s Soccer World Cup and was also the most successful team ever in the competition having won on three occasions Nike was attempting to convince a skeptical global market that its soccer product was good enough to be worn and used by the most successful and famous soccer nation on earth 4 Involvement with the community a It is often part of a company s good citizenship effort to contribute to the local and the surrounding community Regional state and local championships involving teams within a targeted geographical drawing radius provide an excellent opportunity to enhance a company s involvement and recognition within a community Such was the case for Farm Bureau Insurance when it became the exclusive sponsor of the Indiana State High School Athletic Association 5 Build business and trade relations and goodwill The opportunity for potential customers to be present as well as the provision of guest hospitality accommodations such as choice reserved or skybox seating special receptions and corporate hospitality tents is unique to sport sponsorship programs and has become a priority 6 Enhance staff and employee relations and motivation For instance Piedmont Airlines sponsoring an entry in car races found that employees were inspired to follow and support the company s car and thus the sponsorship enhanced the employee motivation and pride in the company Another desirable sponsorship feature is the ability to use the hospitality accommodations at a sponsored event to reward employees and staff B Product and Brand Related Sport Sponsorship Objectives 0 Sport sponsorship often serves as a platform for promoting a specific brand or product 0 Objectives that may be achieved range from increasing awareness within a defined market segment to increasing sales and market share of a particular product 1 Increase target market awareness Thus the demographics of the participants or spectators size of the immediate spectators and extended media audience and the strength of the audience s association with the sport are important evaluation criteria for companies seeking to increase awareness within a specific market Sharp achieved such recognition when it entered into a shirt sponsorship with Manchester United By having its name on the front of the Manchester United shirts Sharp achieved market awareness virtually overnight Identify and build image within the target market positioning Sportsponsorship is a valuable tool for creating or altering the image of a product For instance Bud Light sponsored the Ironman Triathlon in Hawaii a combination of swimming cycling and running as an effective means of promoting a healthy lowcalorie image for the product Increase sales or market share It is therefore necessary for the sponsorship promoter to develop a sponsorship incorporating sales enhancement opportunities Companies often do this using on site product sales opportunities a tactic frequently employed by soft drink vendors in store promotions sponsorship linked coupon campaigns or customer entertainment opportunities such as on site corporate hospitality or auxiliary social functions These provide sales executives a forum for interacting with invited business guests and often discussing if not negotiating deals on behalf of the host firm 4 Block or pre empt competition Frequently companies can use sport sponsorship as a means of fighting the competition Categorical exclusivity is extremely crucial for achieving this objective because this strategy prevents the competition from entering into a particular sport whose exposure is large and whose demographics fit the industry s target market The continued support of the IOC s TOP program by credit card company Visa keeps American Express Visa s archrival from achieving any connection with the largest multisport event in the world Setting Sponsee Objectives As in the case of the prospective sponsor the sponsee must establish a defined set of objectives or benefits to be achieved as a result of the anticipated partnership In fact it is highly advisable for sponsees to share these objectives with prospective sponsors and include them in submitted proposals Generally speaking the sponsorship promoter seeks to achieve one or more of the following from a corporate partnership 0 The provision of financial resources 0 The provision of media exposure 0 The provision of in kind product or services It is important to note that a majority of sponsorships are noncash exchanges These sport businesses can design inkind sponsorship packages aimed at reducing operational expenses through the procurement of products or services used on a regular basis Trade agreements are typically more attractive than cash agreements in that they enable a sponsor to partner with a sport organization without signi cant capital outlay yet provide the sponsor a real costsaving tactic Sport Sponsorship Proposal Criteria and Entitlements 0 Research involving corporate sport sponsorship decisionmakers has revealed that the most highly desired sponsorship inventory criteria are classi ed as those relating to image projection audience pro le and media exposure 1 Image Projection 0 Although image enhancement no longer ranks as the primary motive for general or mature sport sponsorship involvement imagerelated issues become critically important in the proposal analysis process 0 Corporate sport sponsorship decisionmakers remain genuinely interested in having the proposal re ect the sponsee s image an objective that is far more easily stated than met 0 For instance should the proposal target a multinational industryleading computer services company it may be necessary to project an upscale image using highresolution photography and imported graphics if not computerized virtual demonstration program 0 According to a director of athletics at a small American college Our proposal is intended to look a little cheap so that the prospective sponsor is not offended and clearly understands that we need their help 0 Then how can a rm successfully identify which sport or event will contribute to or match up with the rm s current or desired image 0 Perceptual mapping as used by Martin is one means a sponsor or sponsorship promoter can use to assess the market s image of each party 0 The results of Martin s analysis indicate that a rm seeking to project an image of speed would explore sponsorship opportunities in basketball or football whereas one seeking to project an image of precision would pursue golf 0 This type of imagematching process contributed to FedEx s decision to secure the Championship Auto Racing Team series title sponsorship in 1998 o Followup research with customers has validated the sponsorsponsee image match for such attributes 2 Audience Pro le 0 Information of greatest interest to prospective sponsors is a demographic description of the audience immediate those in attendance as well as extended those consuming through the media where appropriate 0 Additionally partnering corporations will be interested in receiving information pertaining to audience lifestyle characteristics as well as sponsorship impact data 0 Tables 82 83 and 84 display event patron information collected annually by the NCAA and used to maintain as well as to solicit sponsors o A prospective sponsor can review the information and assess the potential consumer fit for its particular market Equot Media Opportunities 0 An integrated sport sponsorship proposal will give the sponsor guaranteed as well as nonguaranteed media exposure opportunities 0 Guaranteed media opportunities are those under the control of the sponsorship promoter such as public address announcements facility signage print and media advertising and onair broadcast mentions o For instance placing corporate signage in high visibility areas such as the scoreboard scorer s table or dasher boards will generate the greatest volume of media impressions for the sponsor 0 Therefore early on sponsorship promoters should familiarize themselves with a prospective sponsor s sponsorship objectives to learn about the company s desired outcome 0 Once familiar with the prospect s objectives the sponsorship organizer has a paradigm for customizing the sponsorship packages and incorporating criteria most desired by corporate sponsorship decisionmakers 0 Table 86 presents the individual and collective criteria that may be expected to match a prospective sponsor s desired objectives 0 For example when ShasCo Inc makers of Shasta beverages sought to expand their market west of the Mississippi the company elected to become involved with the Women s Tennis Association Tour in Los Angeles the Los Angeles Marathon the Freedom Bowl and a number of fairs and festivals in Arizona California and Hawaii 0 In fact trade networking has been found to be the most important sport sponsorship objective dimension for food and beverage companies 0 Therefore it would appear that cosponsorship opportunities as well as other matching criteria would be desirable inventory criteria for proposals targeted to prospective sponsors in this industry category 0 Additionally sponsorship promoters may allow for enhanced pricing scales if a proposal accurately matches what the potential sponsor is seeking o Proposals engineered to fit corporate shopping lists could warrant more serious consideration and receive funding at a higher level than proposals designed without the benefit of this process 0 It is imperative that the sponsee establish a means e g personal contact questionnaire of appraising a potential sponsor s objectives and determining how these indicators affect the chances for successful solicitation SPORT SPONSORSHIP SELECTION o In particular they found that social networks in the form of personal friendships of highranking officials and interlocking directorships thought to have been outdated in uenced a number of sponsorship selection decisions Unfortunately it appeared that this frequently led to irrational decisions warranting the use of objective screening and selection processes 1 A Sponsorship Proposal Screening Tool Equot M The sport sponsorship proposal evaluation model SSPEM was developed in an effort to address the need for a screening tool The instrument shown in figure 89 consists of 42 potential sport sponsorship criteria positioned within 11 sponsorship management dimensions It allows the evaluator to weight or prioritize preferable criteria on a scale of 1 low priority to 10 high priority depending on the corporation s predefined sport sponsorship objectives Once approval is given for a sponsorship program it is vitally important that the terms and conditions be set out in the form of a written legally binding sponsorship agreement It is critical that the obligations of each party be specified as well as remuneration nonperformance and earlytermination Implementation and Execution Before during and after the sponsorship review and selection process discussion must focus on the concept of sponsorship linking To achieve the prescribed marketing or sponsorship objectives a sponsor may choose to link a sponsorship with the company a product line or a specific brand General Motors GM the official corporate partner of the NCAA has chosen to link different car models with preselected NCAA championships depending on the audience profile and host community For instance GM chose to target Buick at the 2000 Women s Final Four while opting to target Pontiac at the 1999 Women s Soccer Championship Participatory sponsorship also gives the sponsoring corporation a means of leveraging the initial sponsorship investment In fact on average for every dollar spent on sport sponsorship a sponsor spends another five on sponsorshiplinked marketing efforts including television radio and print advertising hospitality and other forms of corporate promotion The most popular supplemental sponsorship activities are listed in table 88 Sponsorship Evaluation As sponsorship evolved from its philanthropic roots to its contemporary commercial orientation so too has the need for sophisticated postsponsorship evaluation measures As with all other elements of an organization s promotion mix sponsorship should be subjected to heavy analytical protocol The most popular means of postevent assessment are shown in table 89 From this table we can hypothesize that the evaluation measure closely corresponds with the established sponsorship objective Likewise table 810 presents the most common grounds for discontinuing sponsorships Sponsorship promoters should prepare a summary report that documents the entitlements provided and impressions generated for each sponsor The Cleveland Cavs of the NBA give team sponsors a detailed yearend evaluation including a listing of all contractual elements and veri cation and description of ful llment When necessary sponsors receive videotape or photograph veri cation for game related promotions Any valueadded features such as extra radio television or public address spots tickets or a promotion that extends beyond the contractual obligation of the club is documented as well While this documentation is typically provided in summary format frequent status reports are shared with sponsors Organizations can generate supportive evidence on sponsor awareness recognition and recall through consumer surveys Respondents may be asked to identify participation sponsors from a list aided recognition or requested to supply the names of companies they believe sponsored a particular activity or organization unaided recall Because a sponsorship program is a complex promotional strategy assessments may be more effective if they involve a comprehensive analysis by highly trained thirdparty professional agencies that can be called on for specialized services For an assessment of its Corporate Partner Program the NCAA commissioned the services of the International Events Group to undertake a total program critique The purpose of the evaluation was to analyze the current program relative to other available sport sponsorship opportunities develop speci c objectives for the NCAA and its corporate partners and develop strategies and tactical plans aimed at achieving these objectives As a result of the assessment there have been numerous changes in the Corporate Partner Program most notably moving sponsorship servicing and ful llment in house PREPARING THE PROPOSAL Although there is no standard format for a sport sponsorship proposal the following information should be provided by the sales staff to sponsor prospects 0 Objectives of the sponsorship program Pro lebackground of the sponsee Sponsorship criteriaentitlements available Levels of involvement available Fee structure 0 Evaluation methodology Bear in mind that sponsorship decisionmakers receive hundreds of sponsorship proposals annually and that the initial stage of proposal evaluation may consist of a brief content review In such cases the proposal must begin with an executive summary containing a brief description of the six elements just listed Where necessary a second component of the proposal provides details for each element as found in gure 814 0000