Global Rights Holders Miss Out on 16 Billion Euro Sponsorship Money

The global sports sponsorhip market will grow to 41 billion Euro in 2019. But due to outdated rights packages, a further 16 billion remain unrealised revenue.

Sponsorships are an undeniable pillar of the sports ecosystem. Football clubs around the world rely on deals with companies that ensure revenue, while those brands expect to gain viewability. These synergy effects simply cannot be underestimated regarding the growth of clubs, leagues or associations. Therefore, sponsorhip opportunities are leveraged more and more emphatically. Be it sleeve sponsors on shirts or branding on training wear. Now, a report shows the ongoing growth of sponsorhip value, but points to missed opportunities as well. While there are threats to sponsorhip income, data could lead the way to more spend eventually.

16 billion Euro: The amount that rights holders are missing

Once, sponsoring used to be rather easy. A company wanted to be connected to a specific sports team, athlete, league etc. and paid an agreed sum in order to be seen, with their logo sported on shirts, shown on perimeter boards or what have you. Actually, in football it’s still extremely important to be seen on a kit or inside the stadium. But the opportunities have become much more differentiated. The viewability is there, if your company features on the shirt twice.

Furthermore, brands are integrated into apps, for example, to present starting line-ups or substitutions. They also need to be seen on Social Media or in the context of the various other outlets of clubs.

In a way, sports clubs and even leagues have to carry a self-image as brands rather than sports consortia and will need to grow revenue every single year to stay competitive. That seems even more important, since super rich investors put some proportions in the football ecosystem off the balance. So, sponsorhip deals are greatly important to clubs like the FC Barcelona – who earn 55 million Euro a season from kit sponsor Rakuten alone – and SC Freiburg as well, who get just over 2,5 million a year from Schwarzwaldmilch. Barcelona will even receive 1,5 million Euro extra from Rakuten for winning La Liga and could pocket another 5 million if they win the Champions League – which doesn’t seem unlikely at the moment. Thus, the Spanish giants contribute a lot to the 41 billion Euro, which Two Circles have anticipated will be gained by global rights holders in 2019 as sponsorhip revenue in the sports universe. This will mean the revenue will grow by four per cent. Yet, Two Circles estimate that a staggering 16 billion Euro more could be gained – if it wasn’t for outdated rights packages.

Modern standards will have to be set for sponsorhip packages

The brand spend for sponsorships in sports has grown steadily over the years and will reach about 58 million Euro in 2024. But the unrealised sponsorship value is growing, too.

Two Circles estimate that the global rights holders’ packages are actually worth 57 billion Euro this year. That means 16 billion of worth are not leveraged. Gareth Balch, Two Circles’ CEO, explains:

Most rights-holders continue to package and sell sponsorship just as they did 20 years ago – offering brand exposure through linear broadcast coverage as the main benefit for brands. Globally we’re spending more time consuming entertainment on digital platforms; we consistently see a disparity between what brands need to reach an audience effectively and quantifiably, and what digital assets rights-holders are able to offer in their sponsorship packages.

Therefore, the company have found that the rights holders have underachieved financially, not leveraging the potential of 14 billion Euro a year on average ever since 2014.

In order to take advantage of that huge financial potential, rights holders like clubs and leagues will need to factor more aspects into their sponsorship plans, such as Social Media or OTT reach. Additionally, it could be worthwile to lure new kinds of brands to the sponsorship table in the long term. For the sponsors pie right now – at least in the UK – is pretty much dominated by proven players such as financial services (19 per cent), automotive (14 per cent), airline (13 per cent), gambling (12 per cent), alcohol (9 per cent) or soft drinks (7 per cent). Other categories account for 26 per cent.

But there might be changes in the sponsorhip landscape sooner rather than later, if you look at the UK. Mind you, some gambling companies plan to restrict their marketing on football kits, during broadcasting and on perimeter boards – and they demand that other companies follow suit.

Gambling operators have a key role to play in protecting people from harm and identifying potentially risky betting behaviour,

said UK’s Gambling Minister Mims Davies MP. If gambling was excluded from main sponsorhips, the UK sports market with its rights holders would suffer straight away, you may reckon. Yet, it would also open up new possibilities to integrate new brands for which it might have become more lucrative to sponsor sports teams these days. To find out which brands are a good fit, clubs and leagues alike turn to up-to-date data measurement. Balch says:

Rights-holders are adapting to this new world and we predict a sports sponsorship correction: by embracing the power of data and digital to create sponsorship assets that better satisfy the objectives of brands, rights-holders will realise the true value of their sponsorship businesses. This will drive greater spend from brands in all sectors, not just the ‘traditional’ sectors for sport such as financial services, automotive, airlines and gambling.

His stance cannot be too surprising, given Two Circles offer sponsorship measurement solutions as well.

Taking advantage of altered circumstances

But brands can indeed leverage the power of data to determine whether sponsoring a certain club would be worth it. Even for Twitch, a coming platform for different sports, mainly eSports, but football as well, there are new measurement solutions these days.

So, sponsorship spend does grow, but it could grow even bigger. And while in sports it shouldn’t be the ultimate goal to just earn as much money as you can, this somehow is the big incentive for competitive brands. That’s why more sponsorhip opportunities will arise. A new kind of reception, a whole new level of sports wear and merch and more and more different international audiences offer the chance to augment sponsorship income in the long term. Data will help assess the approach and findings like the study from Two Circles certainly could be regarded as an incentive for rights holders and brands alike. Will all those sponsorhips bear down the sports experience somehow? Maybe; but we’re all part of it and we as the sports audiences create that space where billions of sponsorship money are spent to keep the sports ecosystem intact.

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