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Spending, sponsorship and sport

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Ever since the Global Financial Crisis the discretionary spend of businesses both large and small has come under increasing scrutiny. Justifying sponsorship for sporting teams or individuals, let alone attempting to quantify the expected return on investment, has become increasingly problematic.

At some point almost all business leaders will have sponsored an employee, or employee’s children, in any manner of sporting endeavour. While this gesture is in many respects written off in the accounts, the return on investment as measured by employee goodwill can often greatly outweigh the commitment of a modest monetary sponsorship.

At the big end of town, where decisions can involve many millions of dollars, sponsorship is the subject of far greater scrutiny. These decisions are increasingly viewed through the lens of return on investment heavily moderated by considerations of risk. Take for example Australian Tennis.

To their very great credit, since 2002 Kia Motors have been a sponsor, and for many years a major sponsor, of the Australian Tennis Open. To be associated with what is universally recognised as a quality international event has certainly done the KIA brand no harm making decision on continuing sponsorship relatively easy. However, if a company had directed their limited sponsorship dollars towards Australia’s latest up and coming superstar they would probably now be scratching their head.

In a fleeting “brain fart” (I am assured the Oxford dictionary recognises this as acceptable nomenclature) he delivered a disgraceful, unjustifiable sledge, which I am sure he now regrets. That led respected commentators such as Peter FitzSimmons of the Sydney Morning Herald to suggest:

                  ‘And if I was one of their sponsors, I would run
                  screaming from the room, tear up the contract,
                 and burn the clothes I was wearing at the time
                of signing,
Peter Fitzsimmons

On the other hand, if the suspended penalties that the Association of Tennis Professionals has applied are successful in changing Kyrgios’s behaviour, sponsors who abandon Kyrgios now will have egg on their faces. They have some hard decisions to make.

The messages are simple. Sport Associations of nearly any flavour require sponsorship. If businesses, both small and large, are to continue to direct discretionary spends towards sporting endeavours they will need some sense of return on their investment along with the strongest assurance that potentially brand damaging risks are understood and being actively managed.

 

Andy Gregory

 

 

 

 

 

For more information, contact Andy Gregory is Chairman of Yabba.Guru
on 0439 972 6453 or go to www.yabba.guru

 

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