Sponsors blow whistle on easy cash for sport

PLATFORM:In lean times, sporting organisations will have to get clever about attracting money, writes Richard Gillis

THE FAI is facing the €32,000 question: when will it be okay to be seen in the corporate seats at a big football match?

FAI chief executive John Delaney told Emmet Malone in this newspaper that the number of corporate seats sold for Lansdowne Road ahead of its re-opening in 2010, was "into four figures already", and that they would need to sell "500 a month to see the stadium sold out in total". Others believe the figure, at prices ranging from €16,000 for behind the goals up to €32,000 on the halfway line, to be considerably lower than Delaney's claim.

These "super seats", along with the corporate hospitality boxes, are fundamental to the FAI, and IRFU, business plan for the 50,000 capacity stadium, the cost of which is currently set at €410 million. But for sports like football, rugby, GAA and golf, corporate tickets and hospitality are also the most vulnerable part of their inventory as the economy slows. They are synonymous with a previous, more indulgent time.

Recently, senior executives at RBS found themselves on the front page of the Sun due to "a secret £150,000 junket at a five-star hotel", a few days after the bank benefited from a £15 billion bailout by the British government. Come the spring, how many of those executives will feel comfortable sitting in the posh seats during the Six Nations, of which RBS is title sponsor?

This goes far beyond a few tickets at Lansdowne Road: it affects how sport is viewed as a marketing tool at a time when many sports are standing on the edge of a cliff. Don't believe the guff about waiting for the new year before sponsors make a decision, in many cases whole categories of previously free-spending brands are leaving and they won't be coming back for a long time. These are companies whose money is critical to sport at all levels, not just in Ireland but across the world.

Nobody is immune. Even Tiger Woods, the greatest endorsement vehicle of all time, lost a key sponsor last week when General Motors pulled its $8 million a year deal Buick deal. They deemed it inappropriate at a time when they, along with the rest of the "Big Three" of the US car industry, are going cap in hand to the Federal Reserve for upwards of $25 billion.

From Tiger down, sports will now be looked at more critically, and many will be found wanting. What is the sponsor getting in return for their rights fee? What are the tangible business benefits? These are questions that some more enlightened sports governing bodies have confronted, whereas others have ignored them, content to take the money in the sponsorship and TV rights bull market of the past 10 years.

There are parallels with those who criticise governments for not doing more during the good times to ready the public finances for a downturn. How many of the governing bodies, with their bloated staff rolls, sat back content to let the money roll in? How many acted to innovate then, to drive their sport forward and secure revenues for the grass roots, which, amid the PR messaging and corporate ego, is why they exist in the first place.

Those sporting organisations that survive, or even thrive in the new environment will be one of two types: the big and the clever. Last week, LG, the Korean electronics firm, signed a 10 figure deal to partner Formula One. And Coca Cola's head marketer suggested the company's huge investment in top-end football - they are a Fifa partner and also sponsor the Champions League and European Championships - would remain in place despite the treacherous trading conditions. President of Coke's European division Dominique Reiniche, said the drinks giant may trim sponsorships but "we don't see ourselves as sponsors, but as partners".

The big problem is in the middle market, which tends to include national sports governing bodies, teams and leagues, which offer only national reach and a traditional set of benefits, such as perimeter board advertising, corporate boxes and match tickets. This is where genuine innovation is required. A number of have shown real flair in the face of declining audiences and apathy from the media. Cricket, until recently the most conservative of pastimes, created Twenty20, a shortened, sexed-up version of the game aimed at a younger audience. It has worked extraordinarily well, to the extent that the game is fighting off broadcasters around the world to pay them for content.

Likewise, small sailing events, unable to get TV coverage, have used digital media to great effect. The Vendee Globe Ocean race made a star of Ellen MacArthur, and her sponsors, via the internet.

Faced with this landscape, the FAI and other governing bodies will be beaten down on price and, more significantly, will be asked some uncomfortable questions as to how far are they prepared to go to create value. Whether that includes seats at €32,000 a pop, time will tell.