Sponsors keep events on their mettle…

The baseline for many sporting, business, entertainment, cultural and arts events is that the world stops, the merry-go-round ain't so merry, without sponsors. That’s where the money is if the product is right, here is yet more real evidence that the adage holds – for top tier, top engagement and top exposure properties and franchises, there is sponsorship money. Albeit that overall the picture is one of a tougher and much more ROI-focused environment.

Here are some interesting recent snippets that each reshape an important part of sports sponsorship and thus the presentation, fans engagement and viability of sporting organisations, their events and sports themselves – and illustrate some changing patterns that are occurring:

Real Madrid has become the first club in any sport to surpass the €500 million revenue threshold in a single year, according to the 16th edition of the Football Money League from Deloitte (business advisers).  The Spanish club achieved a €33.1 million (7%) increase in revenue to €512.6 million, and in doing so has claimed the top position in the Money League for a record equalling eighth year, matching Manchester United’s reign from 1996/97 to 2003/04.

At the same time, the total combined revenues of the top 20 football Money League clubs in Europe has increased by 10% to €4.8 billion. The combined revenues of the top 20 clubs have quadrupled since Deloitte began their analysis in 1996/97. Combined, the 20 Money League clubs contribute over one-quarter of the total revenues of the European football market.  The top 20 can be expected to generate over €5bn between them in 2012/13.

Manchester United in China: Man U has agreed a three-year sponsorship deal with one of China’s most prominent banking groups, China Construction Bank (CCB) and a deal with Chinese soft drinks manufacturer Wahaha. CCB will hold the rights exclusively to produce the official Manchester United branded credit card in mainland China.

And according to Forbes, Premier League giants Manchester United have become the first sports club to break the $3 billion valuation barrier.

Rushmans Destination Sochi: UK-based Rushmans consultancy has formed a joint venture with Destination Sochi to create the ultimate resource for broadcasters, teams (NOCs), sponsors and others working in the Black Sea city during the 2014 Winter Olympic and Paralympic Games and future events. 

REPREVE, maker of fibres from materials including post-consumer plastic bottles will be a first-time sponsor of X Games Aspen, which will take place later this month.

The IOC has appointed Audi as official automobile provider through to end 2016, in place of Mercedes Benz.  Last year the IOC appointed Nike as official sportswear supplier in place of Mizuno of Japan – Mizuno was supplier since 1995.

Longines, Swiss watch-maker and part of the Swatch Group, has been ‘on a roll’. The company has become the first top partner of the International Equestrian Federation (FEI), replacing long-standing sponsor Rolex. The deal is purportedly around Euros 120 million over 10 years, an astonishingly long period for an initial contract. In the wake of Rolex, there have been some suggestions that the FEI is over-influenced by its growing Middle Eastern connections. Longines has entered into a strategic business partnership with the Qatar Racing and Equestrian Club furthering the company’s presence in international horse racing, including the Melbourne Cup Carnival, the races at Ascot and Royal Ascot, the Prix de Diane Longines, the Dubai World Cup, the Longines Singapore Gold Cup and the Kentucky Derby. And Longines has become the Glasgow 2014 Commonwealth Games' 'official partner for timing, scoring and results'.

Omega is also one of The Swatch Group's 18 watch brands. The Swatch Group Ltd. is a long-time worldwide Olympic supporter and licensee that has provided time pieces and timing services for the Olympic Games – with only three exceptions – since Los Angeles in 1932. The Swatch Group Ltd. became a Worldwide Olympic Partner by joining the TOP Programme in 2004. The company's Worldwide Olympic Partnership extends through the 2020 Olympic Games and Paralympic Games.

Meantime, Rolex has become the third official gold partner of the ATP World Tour, joining Moet & Chandon and Enel; and has become major long-term partner of Formula 1 as Official Time keeper and Official Timepiece. Rolex, long associated with golf, tennis, yachting and the arts, including the Sydney to Hobart and US Sailing, will continue as an international sponsor of the Davis Cup beyond 2013. You can see the Rolex moniker at the Australian Open. The brand has served as the official timekeeper for the Wimbledon tennis tournament since 1978 but during London 2012, Omega was given display and presentation rights at the Olympic tournament, as official Olympics timekeeper for some 80 years. Remarkable in that sponsors naming is generally kept out of the Olympic sports arenas. Indeed, Omega’s brand regularly appears on timing equipment throughout the Olympic Games.

Emirates Airlines and Arsenal have agreed a new £150m sponsorship deal, described as "one of the biggest ever struck in the world of football". Arsenal will earn £30m a year from the Middle East airline, who have extended their shirt sponsorship by five years until the end of the 2018-19 season and secured the stadium naming rights, which were due to expire in 2021, until 2028. Emirates has become the official airline of the ATP World Tour, in place of South African Airways, and becomes the ATP World Tour's presenting sponsor of the trophy ceremonies and the annual ATP Newcomer of the Year award.
This is still somewhat short of the deal last July by Etihad Airways and Manchester City, valued at £400m, making it the largest deal of its kind in sport and reinforcing City's position as a football club with unprecedented financial power. The 10-year agreement includes City's ground being renamed the Etihad Stadium and a 10-year shirt sponsorship.
"Back on the Block" has previously brought you news about Emirates and Etihad, airlines who are extending their sponsorship reach and influence across many sports.

 Etihad Airways and the Sydney Opera House have partnered to develop a range of joint initiatives to promote tourism, culture and the arts to a worldwide audience. This complements the recent $6 million marketing agreement the airline signed with Tourism Australia. Etihad’s suite of sponsorships in sports, arts and culture in Australia now extends to the Melbourne Recital Centre, the Biennale of Sydney, the Arab Film Festival Australia, the Islamic Museum of Australia, V8 SuperCars as well as Melbourne's Etihad Stadium.  Etihad started operation in November 2003. It is estimated that the airline spends about one-third of the US$182 million that Emirates spends each year on sponsorships/rights fees.

And Korean automotive company Kia has extended its sponsorship of the Australian Open tennis grand slam. The company will remain the Open’s top commercial partner through to 2018 – making for a 17 year relationship.

In Australia, broadcast rights, particularly for TV, are the vital revenue stream for sports…and these are in the throes of recent negotiations, renegotiation, negotiations being advanced – while the 'going is good'. Last year's National Rugby League deal with Channel Nine put a stamp on $1.025 billion. Channel Seven / Foxtel / Telstra secured the country's AFL rights for five years with a $1.253 billion deal. Channel Seven recently squeezed V8 Supercars to about $18m per year for two years, much less than the previous deal.  Football Federation Australia scooped $160 million from FOX SPORTS, Foxtel and SBS. The Australian Rugby Union agreed Network Ten as the new Free-to-Air broadcast rights holder for Qantas Wallabies Test matches from 2013-2015. This year will see intense negotiations for cricket, horse-racing, the 2015 Asian Football Cup and a number of car racing fixtures – although car racing events seem to becoming more reliant on government support.

Footnote – No sooner had this last item been initially published in "Back on the Block", 22 January 2013, The Australian on 31 January 2013 revealed Channel Nine in Australia is set to significantly reduce its staffing due to a serious downturn in advertising…and noted the pressure this will place on Cricket Australia in their quest for raised TV broadcast rights fees. We've seen this position unfold with the TEN Network and undoubtedly the pressures are extending across the TV and broadcast rights businesses.

Eric Winton

Director, New Millennium Business

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