New England Patriots played against the Tampa Bay Buccaneers at last year’s annual NFL game at Wembley Stadium
Spending on media rights for ongoing events is forecast to be healthy as they are less susceptible to near-term economic developments
Sponsorship: smaller brands facing an uphill battle Globally, sponsorship is the second biggest component of the sports market, although there has been a shift in sponsorship trends since 2008. At the top end of the market, the big- gest sports brands with global reach and pulling-power have achieved record deals as seen for both Manchester United and Liverpool – in respect of their shirt sponsorship deals with Aon and Standard Chartered. However, the mid-level brands have found it harder to attract
major sponsors, while sponsorship of the smaller local sports brands has been hit by potential backers reducing discretionary spend in the economic downturn. For example, after the rescue of the Royal Bank of Scotland by the UK government,
Sector share of total global revenues 2009
Merchandising 16%
Gate revenues 38%
the bank announced a 25 per cent reduction in sponsorship outlays for 2009 with a further 25 per cent in 2010. These cuts resulted in the bank ending its sponsorship of the Williams Formula 1 team. Alongside this shift, sponsors are also demand- ing more clarity and specific measurement of the value they get in return for their investment and the bigger sports brands are generally more able to provide this.
Gate revenues – striking the right balance The gate revenue market varies widely from country to country, reflecting local economic factors including disposable income, economic confidence, and the strength and competitiveness of the sports and leagues on offer. In some countries, such as the US and UK, attending live sport is an integral part of the cul- ture; in others, especially emerging markets where tickets are less affordable, far fewer people go to events. Failing to understand local economic and cultural factors can result in sports bodies setting prices too high for the local economy when entering new geographical markets. A further challenge facing the global gate revenue market is
Sponsorships 26%
Media rights 20%
Issue 4 2010 © cybertrek 2010
how to strike the right trade-off between charging premium prices for seats (including those for corporate hospitality) and attracting higher attendance at games. The corporate hospital- ity market is a vital source of gate revenues for Formula 1 and tennis in developed markets, and is sometimes used to subsi- dise affordable seats in football. But corporate hospitality is underdeveloped in many – especially emerging – countries. More generally, attempts to boost gate revenues by raising
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PIC: EMPICS SPORT
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