Sports and Branding

Sports sponsorships happen when companies decide, often after careful brand research,to support to an athlete, a league or a single event. Some companies sponsor by offering products, but most pay for the rights to display their name prominently throughout the event. Sponsorship is big business, and sometimes it’s the determining factor in whether an event happens. In this article, we’ll discuss the pros and cons of corporate sponsorship of sports.
The benefits:

• Name recognition. Whether it’s Nike and Serena Williams inking a contract, or Proctor & Gamble sponsoring the 2012 Olympic Games, sponsoring sports helps increase brand recognition. P&G will get years’ worth of publicity from this sponsorship, as its logo will be displayed at a variety of events.
• Finance: At the end of the day, it all boils down to money. The US NFL has the largest sponsorship package in sports- it made $870 million two years ago. Not every league needs that kind of cash; local sponsorships provide teams with the facilities and equipment they need.

Companies can also benefit from sponsoring events and athletes; in some cases, athletes hand over awards to be displayed at the sponsor's headquarters. Some charity events are sponsored as a way for companies to get a big tax deduction.
While sponsorships are great for professional athletes and companies looking to build their brand, they can be a drawback for amateurs. They can inhibit college sports eligibility; while in the US, the NCAA (National Collegiate Athletic Association) allows athletes to receive some non-monetary items, anything that could be construed as a performance payment could make the athelete forever ineligible to participate. Here are some of the other potential ‘conditions’ of sports sponsorship:

• Relinquishment of control: As part of the compensation package, sponsors may have requests that result in the beneficiary losing some control. It could be as simple as requiring a sports team to place a logo on their uniforms, or it could be as far-reaching as an agreement that would prevent a team from gaining more sponsors.
• Unintentional endorsement: Just because a company sponsors a team or an event, does not mean that the team or event committee is endorsing the product or brand. While this is largely irrelevant to teams, it can be an issue for athletes who are becoming prominent and therefore being associated with a brand name. Involuntary endorsements can lead to moral conflicts, and they can be especially problematic if the sponsor or team/athlete becomes embroiled in a scandal.
• Higher pressure: When an athlete or team earns a valuable sponsorship, they will likely be under higher pressure to succeed. Most companies are willing to get behind winning teams, but they will withdraw their sponsorship if the team begins to perform poorly.
• Decreased credibility: Some established sports are full of sponsorship deals, but newer athletes and sports can face criticism for earning company sponsorship; it’s seen as being a sellout. Agreements call for athletes and teams to do things that may be difficult to align with the way they were perceived before the deal was signed.

Sponsorships allow companies to build brand recognition and to break into new markets. Having operating costs and other expenses paid is a definite upside for teams and athletes, but sponsorship also has some disadvantages. Contracts can be complex and restrictive, and before a team or a brand gets involved, they should do their brand researchand be aware of both the benefits and the risks.

Written by James Harper on behalf of Hall and Partners: experts in brand research. Read more about branding here.

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