Despite Massive Corporate Spending on Sports Sponsorships, Few Companies Measure ROI

Anheuser Busch

The World Advertising Research Center (WARC) has indicated that companies will spend $65.8 billion (+4.9% YoY, $24.2 billion spent in North America) on (mostly sports) sponsorship deals in ’18, but few are monitoring their efficacy. Research by MKTG revealed that just 19% of the 500 corporate sponsorship executives surveyed have a way to measure returns on their sponsorship investments. While surprising, 73% of those polled in MKTG’s survey said that “brand awareness”, not ROI, is the “main point of sponsorship.”

Howie Long-Short: Though just 19% of sponsorship execs surveyed are quantifying ROI, 37% are monitoring the sponsorship’s impact; often with a form of digital or social media analysis. That’s wise – at least for those with jersey patch sponsorships – because according to GumGum Sports, 76% of the media value received from that kind of sponsorship comes from social media (think: photos, highlights); compared with just 24% originating from the game broadcast. Live sports are often simply too fast to catch the sponsor’s name in real-time.

One company that is wisely measuring ROI is Anheuser Busch (BUD) and the increase in access to data has led to more efficient spending. In fact, BUD has begun using incentive-laden contracts (think: on-field performance, social media views on co-branded content, market share growth within city), as opposed to signing long-term pacts with fixed fees, for its pro sports partnerships. For the 73% of corporate execs content with brand awareness (from their sports sponsorships), I would say “those audiences can be found in less expensive ways, like through targeted digital media, which do not come with multimillion-dollar sponsorship fees”.

Fan Marino: Speaking of jersey patch sponsorships, the Italian Football Federation recently (August 28th) authorized Serie A clubs to pursue sleeve sponsorship partners for their game kits; a revenue stream afforded to teams in Bundesliga, Ligue 1, La Liga and the Premier League. Curious what kind of financial upside that could mean for a Ronaldo led Juventus (JVTSF) team? Manchester United (MANU, $26 million/season), Arsenal ($13 million/season) and Chelsea ($13 million/season) command more from their sleeve partnerships deals than any other European clubs. That’s a significant number for a club that’s projected to do just $442 million in ’18 revenue. Shares are up 30% since the open on August 27th, they’ll open at $1.84 on Thursday.

The Portland Trailblazers have become the 24th NBA team to add a patch sponsor, agreeing to a multi-year deal (no financial terms disclosed) with Performance Health. The logo for their product, Biofreeze (topical pain reliever) will adorn Trailblazer game jerseys and practice apparel.

There’s been little controversy over jersey patch sponsorship agreements in the U.S., but fans of the English futbol club Wolverhampton Wanderers F.C. (aka Wolves) revolted when the club decided to promote the payday loan firm – The Money Shop – (see: questionable ethics) from sleeve patch to main shirt sponsor. The team ultimately decided to terminate their relationship with the company early, not wanting to detract from the club’s ascension to the Premier League. The team has since inked a deal with the online betting firm W88, a 2-year agreement being marketed as the biggest deal in club history. Wolverhampton is owned by Fosun International, The Chinese multi-national conglomerate, which trades OTC under the symbol FOSUF, has businesses in a variety of sectors including; technology innovation and investment management.

Interested in Sports Business? Sign-up for our free daily email newsletter list, here!

Author: John Wall Street

At the intersection of sports & finance.

One thought on “Despite Massive Corporate Spending on Sports Sponsorships, Few Companies Measure ROI”

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.