PLATFORM:To say sponsorship has no value and banks shouldn't do it is populist nonsense, writes RICHARD GILLIS
JOAN BURTON TD is a smart cookie. She alone has brought down the curtain on a debate that has long tested the brightest business minds from Soho to Madison Avenue. That question is: does sponsorship work?
Burton thinks it doesn’t, and thinks Anglo Irish Bank should discontinue its sport sponsorship programme now that it is de facto a Government department.
In the Dáil last week, Minister for Finance Brian Lenihan responded to the Labour TD’s parliamentary question on the subject: “I am informed that Anglo is not sponsoring the Novice Hurdle at Cheltenham this year, nor will there be any corporate sponsorship.”
Burton's lack of enthusiasm for this form of marketing will doubtless cause consternation among the famously stupid marketing department of Nike (sponsorship spend in 2008: $922 million (€720 million). Source: World Sponsorship Monitor), which, along with Adidas, Samsung, Coca-Cola and McDonald's, had until now thought it a useful multipurpose platform for its brand.
Think of the dismay that must now pervade the headquarters of General Electric, which agreed to pay the International Olympic Committee to sponsor the Olympics last year, an investment that opened doors to the decision-makers within the Beijing government, and which led directly to the US conglomerate signing $150 million worth of Olympic- related contracts last year.
Given her insight into all things marketing, we eagerly await Burton’s take on other areas of Anglo’s marketing strategy: the effectiveness of television advertising or direct mail, and her treatise on the merits of search engine optimisation. After all, on average, sponsorship accounts for no more than 15 per cent of total marketing spend. But my bet is that she will let these pass, safe in the knowledge that, beyond the wonks of the research industry, nobody gives a toss.
Sponsorship, however, is different. It is linked to the stuff we care about, which is why the companies do it in the first place. Burton’s lack of understanding is partly down to the sponsorship industry itself; like a teenage boy, it is obsessed with measuring itself, and always exaggerates the results.
It is a similar story in the US, where former presidential nominee John Kerry is attempting to get a Bill through Congress restricting bailed-out banks from sponsoring sport.
Kerry believes Northern Trust, a bank that accepted $1.6 billion in troubled asset relief programme (Tarp) funds last year despite being well-capitalised and profitable, should no longer sponsor a golf event – the Northern Trust Open, a PGA Tour event. “Kerry’s Tarp taxpayer protection and corporate responsibility act,” ran the senator’s press release, “would prevent any recipient of Tarp funds from hosting, sponsoring, or paying for conferences, holiday parties and entertainment events.”
A bank found guilty would be forced to pay back their share of the bailout. Any form of sponsored corporate hospitality would require a waiver from US president Barack Obama’s own treasury secretary, who would then have 30 days to issue what the Wall Street Journal labelled, a “golf and Chardonnay diktat”.
In Britain, Royal Bank of Scotland (RBS) has slashed its sports sponsorship funding by half to £100 million (€108 million), including its contracts with the Williams Formula One team.
The bank, backed by chancellor of the exchequer Alistair Darling, will investigate the role sport played in the regime of Sir Fred Goodwin, the former chief executive. City law firm Linklaters will examine whether “all expenditure was good value for shareholders”. This report will make interesting reading, as there is a good chance they will find quite a bit of value was achieved.
Take away any reference to the Six Nations and RBS is just another dull, faceless finance house. Similarly, how many knew of AIG before they appeared on Manchester United’s shirt? As with Anglo, that these businesses were badly run is hardly the fault of sport sponsorship.
To say sponsorship has no value and banks shouldn’t do it is populist nonsense, a stance that may come back to bite Burton where it hurts – in her constituency. If you follow the logic to a conclusion, the banks will withdraw from sport completely, leaving a hole in the sports economy every bit as big as that left by the tobacco industry a decade ago.
But the kicker is this. It is not sport’s own fatcats – the Fifas and Formula Ones – which will most feel the pinch: they will remain popular through the downturn.
It is the smaller local sports clubs, leagues and events – the ones that live outside the TV rights market and depend for their very existence on sponsor money. It is they who will go to the wall over the next few years.
As the economic crisis continues, there are plenty of things for politicians to get angry about. The value of sport sponsorship isn’t one of them.
