As I settle down to pen this article there is one topic dominating the news in the sporting world – the FIFA debacle.
At all levels the game of football has been moved firmly into the spotlight and, as part of this focus, some parties are now looking towards FIFA sponsors for comment and pressure.
This got me thinking about the potential pitfalls in sport sponsorship and what, if anything, can be done by sponsors when events such as those happening in Zurich hit the headlines.
A little research soon brought up some interesting conflicts that have arisen in the sporting world over the last fews years.
But first some statistics;
In 2011, the worldwide total revenue generated through sport sponsorship was $35.13 billion (according to PriceWaterhouseCoopers) and was predicted to steadily increase to over $45 billion by today.
The principal of sports sponsorship is to transfer the goodwill that supporters feel for the sport to the benefit of a brands equity and therefore any dilution of this message is not welcome from a sponsors perspective.
Not quite perfection.
Lets take, for example the winning goal in the 2010 FIFA World Cup?
Germany’s Mario Gatze 113 minute winner was a dramatic conclusion to the event but bitter sweet for the sponsors – wearing adidas kit but Nike boots, neither brand was able to fully capitalise on this captivating moment and therefore exact images of the moment were not subsequently used by either brand.
Of course it would have been a very different story if Gatze had poked in the winner wearing Predators or if Germany had been wearing Nike kit.
Sticking with football, it comes as no surprise that most sponsorship conflicts tend to occur between player agreement and team agreements.
The Premier League model player contract (Form 26) contains provisions which obliges players to take part in official club events and promotional activities and attempts to anticipate how that should interact with the player’s own private endorsements.
One would anticipate that this ensures that the position is clear and that the player, whilst on club business, should wear the apparel relating to the club apparel sponsor, however in reality something as innocuous as a team photo can lead to direct conflict if a player has a separate apparel contract under their own commercial terms.
Neither party is in breach of contract, however there is no doubt that brand dilution and consumer confusion can occur in such circumstances.
Coca-Cola v Pepsi
Setting aside player versus club issues a 2013 Manchester United pre season friendly in Australia highlighted the importance of commercial sponsorships in football.
It appears, according to the Australian media, that Manchester United were willing to disappoint over 80,000 fans in Sydney in row over fizzy drinks.
Just 20 minutes before kick-off at the ANZ Stadium, United were refusing to take the pitch as long as the stadium’s giant screens were flashing up ads for Coca-Cola.
This was unacceptable to Manchester United’s commercial department who were on the brink of signing a multi-million pound sponsorship deal with Pepsi in the Asian-Pacific region.
The deal does not even include Australia, but United were not going to take any chances about offending Pepsi.
“Man U’s commercial department threatened that the team would not run out if the Cola-Cola sign stayed on the big screen,” an ANZ Stadium spokesman confirmed.
Coca-Cola are one of the main backers of the stadium which complicated the issue.
The Football Federation of Australia were even called in to help mediate proceedings and a compromise was finally reached where all Coke ads were replaced by ads for Mount Franklin water – another Coca-Cola Amatil product, but not a direct rival to Pepsi.
The Tiger Woods Scandal
In recent times the Tiger Woods scandal further highlighted the perils of brand association with disgraced athletes.
The Bedford Group recently reported on a US study following the breaking of the Woods story and the direct commercial impact that it had on two of the key sponsors that chose to stick by their man – EA Sports and Nike.
The study, conducted by Bruneau, C. & Crawford, A.(2010) concluded that, at initial release of the scandal, these two companies suffered the greatest cumulative stock loss of 5.55%.
The study shows that these two companies experienced the biggest initial negative impact from the scandal than the companies that chose to end their sponsorship deals with Woods.
In spite of this though, the study also shows that Nike and EA Sports appear to have recovered from those initial losses and that stock price reflects the perception of future profits and growth.
The case demonstrates that an athlete or team facing negative publicity can be forgiven by U.S. consumers in a fairly short time and overall, that the U.S. consumer public is relatively forgiving of companies that sponsor athletes or teams that incur the negative publicity.
Its clear then, that as sport and leisure becomes increasingly important, that sport sponsorship looks set to grow even further.
Being involved directly in the sport, many of us can recall the benefits of having the right athlete at the right time – think, for example, Freddie and KP for Woodworm or Nadal & Roddick for Babolat – sport sponsorships can clearly produce innumerable benefits but companies have to recognise that there are inherent potential risks.
Who knows what the FIFA fallout will be and it the likes of VISA, McDonalds, adidas and others will be forced to rethink their football sponsorship strategy.
What is clear is that companies should be sure to have a risk management strategy before entering a sport sponsorship agreement and be fully aware of the pitfalls that may arise.