WHEN BUSINESS magazines publish power lists, they’re fun to read but don’t carry much gravitas. Looked at over a period of time though, you can start to piece together who is well regarded and who was a “here today, gone tomorrow” type.
Tony Ponturo has been a feature of these lists for as long as sport appeared on the radar of business editors, marking the sudden growth in money flowing into the sector. Businessweek listed him one place above Philip Anshutz, founder of AEG, and just below LeBron James, the Tiger Woods of basketball. Forbes, likewise, routinely lists Ponturo in its top 10.
The source of Ponturo’s power is that for 25 years or so, he presided over the sports marketing budget of Anheuser-Busch, the number-one selling brewer in the US.
The company’s devotion to sport is shown by the fact that before its takeover by InBev in 2008, A-B’s sports marketing spend represented two-thirds of the company’s total marketing budget, with some estimates suggesting the Budweiser brand paid $378 million (€264 million) in sports marketing annually. When InBev moved in, Ponturo moved out, setting up his own New York-based consultancy. If anyone knows the pros and cons of “Official Partnership” it is Tony Ponturo, which makes his comments all the more surprising.
“Over the last few years we started to pick up something from our sponsorship research that said the consumer more than ever questioned the whole concept of Official Partnership,” says Ponturo. “There was a time when they felt that because a brand was the official mobile phone or the official beer of the league, that it said something special about you. But now they realise it was something that was purchased. It doesn’t mean you are the best or that the league or team values you: you were just the guy who ponied up the money”.
A brief glance at the commercial structure of every major governing body operating in today’s marketplace shows the official-partnership model is the blueprint for the industry, and as such is the cornerstone of the sports economy. It has been this way since Coca Cola bought the rights to the 1978 World Cup in Argentina, when Horst Dassler, heir of the Adidas empire, saw the benefits of selling sponsorship by market category, with each sponsor buying a carefully laid out set of rights that are exclusive to their business.
Event-based sponsorship accounts for over half of total spend in the sector and research by World Sponsorship Monitor/Sports Marketing Surveys shows rights fees commanded by elite events, such as the Olympics and World Cups, is outstripping the rest of the market.
“The power of big sports events will be there forever and they are becoming more, not less, important,” says Sir Martin Sorrell, chief executive of WPP. “There is a growing pool of money that wants them and a very limited number of sufficient quality and size. What companies are looking for are mass events that have a very strong appeal worldwide.”
To sponsors, the value of live events will increase as viewers’ habits change. “In a world where you can download anything, you can’t download live sport,” says Greg Dyke, former managing director of the BBC. “Anything live becomes more important. The price paid for it will continue to go up.”
The evidence from the sponsorship rights market supports this view. Fifa’s roster of top level partners is based on the principle of “less is more”. The structure for 2010 and 2014 reduces the number of top-tier World Cup sponsors from 15 to six. The enlarged product categories cost up to €200 million, dwarfing the average €40 million paid by Fifa’s sponsors for the 2006 World Cup in Germany.
In this way, sports sponsorship has been commoditised, enabling sports governing bodies such as the IOC, Fifa and GAA to offer brands a cleaner marketing environment, free of their competitors’ logos. That’s the theory anyway. Ponturo, however, says the package deals have led to a selling culture within sport that has affected its image to the detriment.
“I think that the way in which sponsorship has been sold historically has damaged its reputation as a marketing tool,” he says. “The last five years has seen the demand for sponsorship and its price rise dramatically. Money was plentiful all down the line. Sports properties kept raising the price and getting the money. That led to a laziness being built into the culture, and that has weakened the product. It also means the come down is even harder as the market dries up.”
The other implication of this selling mentality is that the leagues and clubs came across as greedy, he says. “They were saying that in order to keep moving forward they need more and more money. But their image is now out of tune with the times. Now the whole community of sport is getting a lesson in real economics.
“There has been little work done to help a brand use sport to form the basis of a marketing strategy, other than saying, ‘We want $30 million for the front of the shirt because . . . well, just because.’”
That approach, says Ponturo, simply doesn’t work anymore, but what replaces it is less clear. One trend is for brands to move from sponsoring events to creating and owning them outright. Red Bull are a good example of how this can work: with spectacular air shows that tie in with their “Red Bull Gives You Wings” strapline.
By doing this they remove the restrictions imposed on them by sports rights holders who govern precisely what they can and can’t do at the venue or in terms of media support. For the same reason, music festivals offer similar levels of flexibility and are growing in popularity as an alternative to sport.
This bespoke form of sponsorship is on the rise, as it offers a value for money alternative. Whether FIFA or the IOC are worried is another matter. Despite Tony Ponturo’s misgivings, the top of the sports market is still a big money game.
Budweiser and sport
Beijing Olympics 2008:Budweiser was the official international beer sponsor of the games and of the national Olympic teams in 25 countries; Anheuser-Busch was the exclusive alcohol and non-alcohol, malt-based beverage of the telecast on NBC, Telemundo and cable properties.
American Football:Budweiser and Bud Light are the official beer sponsors of 28 NFL teams, and Budweiser is the official beer sponsor of the NFL in Canada; Anheuser-Busch holds exclusive alcohol beverage and non-alcohol, malt-based beverage sponsor rights for the Super Bowl telecast until 2012 and of the Bowl Championship Series until 2010.
Soccer:Budweiser and Bud Light are the official beer sponsors of Major League Soccer and its 13 teams; Budweiser is the official beer sponsor of the FIFA World Cup in South Africa in 2010 and in Brazil in 2014.
Baseball:Budweiser and Bud Light are the official beer sponsors of Major League Baseball and 26 teams; Budweiser is the official beer sponsor of Major League Baseball in Panama.
Golf:Michelob is the official sponsor of the PGA Tour and the Champions Tour, and golfer Sergio Garcia; Michelob Ultra is the official sponsor of the LPGA and golfers Lorie Kane, Grace Park and Natalie Gulbis.
Basketball:Bud Light is the official beer sponsor of the National Basketball Association and 26 teams; Budweiser is the official beer sponsor of the National Basketball Association in China, and Bud Light is the sponsor for that association in Mexico.
Hockey:Bud Light is the official beer sponsor of the National Hockey League and 21 US teams.
Horse racing:Budweiser Select is the official beer sponsor of Churchill Downs, the Kentucky Derby and Kentucky Oaks.
Nascar:Budweiser is the official beer sponsor of the Daytona International Speedway and the Daytona 500 and the exclusive telecast rights of the Daytona 500 until 2010 on Fox.
