impact Beyond bottom line
Photo: IOC
Context
A traditional sponsorship deal in sport usually looks like this: the rights holder, i.e. the club or federation, is looking for partners to finance its daily operations. In return, the sponsors get access to the rights holder’s assets. They get logo presence on shirts, billboards, online or in printed outlets. They can get access to hospitality packages and in some cases they even get access to the team. In recent years, the partnerships have also been more widely communicated via social media. Sometimes in a very obvious fashion, sometimes more subtle. For years, though, this has been the dominant transaction: the club gets the money, the sponsor gets access and visibility. You can call this a typical “win-win” relationship. Sounds great, no? Well…
From “Win-Win” to “Win-Win-Win”
What the COVID crisis and the months of lock-downs, empty seats and stoppage of plays, as well as some recent examples have taught us is that we need to rethink the way we look at the relationships between rights holders and their sponsors. While getting money is still the number one priority for most clubs, federations or leagues, there are signs of a paradigm shift when it comes to the definition of these sort of partnerships. The term “Win-Win-Win” sponsorship has emerged from this conversation, addressing the need for a partnership to not only benefit the rights holder and the sponsor but also society as a whole.
I am convinced that purposeful sponsorships or sponsorships related to a specific cause will gain recognition and importance in the upcoming years and will change the relationships between properties and their partners.
A new Way of thinking
In order to break away from the traditional sponsorship agreements and move towards a three-win relationship, the parties involved need to address new questions:
What do the partners really want and look for?
Where does the value of the partnership come from?
What good for society is created by either party or even jointly?
What good for society could be created as a result of this partnership?
To what extent is the sponsor already involved in purposeful activities (with their own projects, initiatives, etc.)?
Can synergies be created from this involvement?
Are partners even willing to invest more if their financial contributions are tied to a meaningful, sustainable purpose?
Redefining Sponsoring Deals
If you add the component of doing good for society to the discussion you enter a new dimension in the rights holder/sponsor. It is one that is not only about logos on jerseys or air time on video screens. This one is about getting creative. It’s about finding common values, shared identities. It is about finding impact and purpose beyond the pitch and the stadium walls. It is about telling compelling stories, about not just touching the hearts of the community but improving the community as a whole.
Yes, this will require more from the rights holders than sending out a brochure with a Gold, Silver and Bronze sponsoring package to their potential investors. It will require for the two partners to come together and think about the impact they can have together and how to make it visible. And to think about how to measure the success of their relationship. As a consequence, the way sponsoring deals are monetized could change.
In a traditional sponsoring deal there may be a bonus clause tied to the performance of the rights holder. A championship win usually triggers additional payments from the sponsors for example. The type of agreements are based on performance or business metrics. They may also relate to KPIs such as the amount of sold-out games, the number of interactions on social media or the number of jerseys sold with a sponsor’s logo on them.
But in the context of a more holistic, sustainable sponsoring relationship we expect to see a second dimension of metrics to be added: impact metrics. What’s the impact a sponsoring relationship has on the community? And I’m deliberately not thinking about the “plant a tree” campaigns you often see. It should be more creative than that… More along the lines of: how many children’s lives were positively affected by a certain initiative the rights holder and the sponsors carried out? How many meals were saved thanks to a “no food waste” initiative? How many special jerseys were sold or auctioned thanks to the efforts of a club?
If a club performs better on these types of metrics it would get a higher financial contribution from the sponsors. Now that’s a new way of looking at success, isn’t it?
Examples of purpose driven Sponsorships
There are a number of great examples that show the potential and advantages of “Win-Win-Win” sponsorships. If you want to learn more about them, I recommend the book “3-Win Sponsorship: The Next Generation of Sports & Entertainment Marketing” by John R. Balkam. It focuses mostly on US examples, though. A few examples from his book as well as some more regional examples:
T-Mobile Homerun for Hurricane Relief Campaign
T-Mobile US asked Major League Baseball fans during the 2018 Play-offs to put a tweet out using the hashtag #hr4hr (Homerun for Hurricane Relief) to bring awareness to the devastating effects of Hurricane Florence in the US. For every tweet using that hashtag the company donated 1 USD and it eventually doubled that amount, which resulted in more than one million dollars worth of donations for the Red Cross USA. In terms of brand image this was a huge boost for T-Mobile. It was able to use the country-wide attention the MLB Play-offs get and connect it to a good social cause.
Super Bowl 50
The organizers of the Super Bowl 50 in San Francisco in February 2016 publically announced that 25% of their sponsoring revenues would be re-invested into social causes that would improve the Bay Area. Several educational, environmental and social projects were supported. By making that pledge they were also able to attract new sponsors that previously didn’t sponsor the event because they wanted to be a part of this social programme. Eventually their total net sponsoring revenues were the highest in Super Bowl history.
SC Freiburg with ROSE Bikes (Germany)
The German Bundesliga Club partnered with ROSE Bikes in 2020. As part of the collaboration, ROSE gave free bikes to the players which they used not just casually but also for their training. But ROSE and SC Freiburg think beyond just a product-for-logo partnership. Together they are also putting more pressure on local administration to promote cycling in the community, provide bike parkings and support initiatives that help people make the switch from taking the car to using their bikes for shorter commutes leading to a positive impact on the health of Freiburg’s citizens.
Vfl Wolfsburg with Duden (Germany)
Because of the engagement and the work that the club has shown over the years, Duden decided to get involved with the Wolfsburg’s CSR team and today they together host a writing competition as well as publish a paper that focuses on the 17 UN SDGs and shows kids what they can do to “save our planet”. It’s a great example of how a club can find partners to create purpose-led initiatives. This is not about “eyeballs, billboards and ballparks”. This is about creating stories together, having a positive societal impact and strengthening brands in an authentic way.
IOC with Airbnb, P&G and Deloitte
The International Olympic Committee (IOC) is looking to recognise National Olympic Committees (NOCs), International Federations (IFs) and Olympians and Paralympians for impactful projects to address climate change, by launching the Climate Action Awards. The Awards are aimed at supporting NOCs, IFs and athletes in their efforts to manage their carbon emissions and understand their impact on the environment. The Awards focus on three categories of actions, each supported by a relevant TOP Partner:
Climate Action x Sustainable Travel, supported by Airbnb: recognising innovative action and advocacy to travel more sustainably within the framework of the sports calendar.
Climate Action x Athlete Advocacy, supported by P&G: celebrating commitment to citizenship with a specific focus on climate advocacy aimed at getting people and communities to take action.
Climate Action x Innovation, supported by Deloitte: recognising innovation and education efforts focused on reducing emissions to create a more sustainable future.
AXA with Women’s Super League (Switzerland)
In August 2020 AXA became the first partner in the history of the highest Swiss women's league. Since then, the best women's teams in Switzerland have been playing in the "AXA Women's Super League" and the Cup Final is now called the "AXA Women's Cup Final". AXA’s support has enabled the clubs to further professionalize their women’s programmes and has given players a much brighter spotlight on the national level. AXA has been able to promote itself as an enabler and door opener and a supporter of women’s sport. All coming at a price that was highly attractive to the global insurance giant (though official numbers are not publicly available).
What's next?
Sponsors continue to play a key role in sports. They should demand clubs to do more on causes they care about. But they should also be more proactive in identifying opportunities for impactful collaborations. Given that more and more companies are required to account for their commitments and engagements in their annual reports (through sustainability or CSR reporting), they should invest more time looking for ways to leverage the rights holders’ platforms. At the same time sports organizations should strive to set themselves up in a sustainable manner so they can increase their attractiveness to potential sponsors.
I am convinced that there are companies that have so far kept their hands off sport because it has not been compatible with their own value system. Because there hasn’t been a common ground to start from. I’m thinking about plant-based food producers, energy companies, waste and recycling companies or other clean tech companies.
Given the developments in our world, these are future-proof companies with a bright outlook for the next decade. And these are potential sponsors that clubs and federations should look towards. But they need to put themselves in a position where they are actually attractive to become a partner. They need to show that they want to contribute to societal challenges, that they care about the community they act in.
Sports still connect societies, overcome indifferences, create emotions, touch hearts and provide visibility in a way no other element of our society does. And it does so on a global scale. Sports can be a force for good and sponsors can act as an accelerator and amplifier. But to really create a “Win-Win-Win” situation, it takes two strong partners to come together to create something larger than the sum of its parts.