When sports franchise executives convene in virtual boardrooms to discuss corporate sponsorship packages, the conventional dialogue revolves around quantity, not quality. Ironically, the teams who stand to benefit the most have a propensity to persevere the least in terms of maximizing added value for clients. Large-market franchises are routinely inundated with countless requests for sponsorships, but they fail to satisfy existing clients.
While sports executives undermine the saliency of giving sponsors the biggest bang for their buck, corporate constituencies are noticeably restless toward the diminishing marginal returns vis-:%$agrave;-vis stadium signs, promotional events and media advertising. These incipient rifts in the franchise-sponsor relationship reflect a condition of frenzy-feeding in a depleted reservoir. Simply put, there are too many corporate sponsors in each team's rolodex.
Rejection letters from franchises are infrequent so long as the capital expenditure for an indirect stake in the team is made in full. This transaction is ideal for the archetypal franchise. Middle managers, consumed with a provincial sales mentality, focus their responsibilities strictly on immediate results. However, team presidents should prepare themselves for the adverse effects of ignoring long-term product management.
As more sponsors become disillusioned with their affiliations in sport, franchises are eroding their economic base due to a blatant disregard for brand equity. Corporate sponsors are not inexhaustible assets. However, an emerging trend within front offices suggests that owners may equate corporate relations with collecting fees.
Indeed, there is more to this relationship than short-term financial incentives. These ventures set precedence for an image that both the franchise and its sponsors are trying to portray. The nurturing of their respective brands requires an enduring commitment to a mutual customer base. Sponsorships, when positioned properly, can create immense value for both parties. But, convincing owners of this notion necessitates a dauntless pursuit.
The crux of this potential problem revolves around team executives' unwillingness to identify a need for fewer clients, more attention. Although this placid notion may resonate familiarly from the quixotic "Jerry Maguire," there is a more critical issue at stake. Most franchises, even those owned by large conglomerates, lack the structural capacity to sustain multi-client satisfaction in the long run. The average marketing staff boasts scarce resources, the most integral of which is human capital.
Franchise owners, by not equipping their front offices with ample capacity, face an uphill battle in pleasing sponsors with a rewarding return on investment. Most corporate benefactors are skeptical when entering the first year of a contract and lukewarm when reaching closure of it. Yet, corporate wealth continues to soak the sports entertainment industry with exorbitant prowess. If there is one unfailing explanation to this paradox, it must be the veracity that owners manage their franchises disproportionately to comparable business operations. In a more narrow framework, the disparity between initial expectations and actual results of sponsorship deals has created two contrasting impressions - corporate sponsors feel perplexed and short-changed while owners remain heedless and indifferent.
Ask Jack Welch if he can even fathom treating General Electric's constituents in an equivalent fashion. Perhaps the heart of a winning organization is most aptly tested in its ability to demonstrate that the client supercedes all else.
In the business of sport, both the franchises and corporate sponsors are actively attempting new ways to pierce various segments of the consumer market. Unfortunately, the solidarity of sponsorship packages rests not only on a co-existing promotion for the target audience, but also a compatible link between the brand and the sport.
There is a reason why such companies as Coca-Cola, Visa, U.S. West, Xerox, United Parcel Service and Eastman Kodak have reevaluated their presence in the sports community. The organizations with the most comprehensive competencies in sponsorships are seeking more logical fits and demanding more substantial benefits. In essence, they are insinuating an ironically uncommon message to club owners - "You need us more than we need you."
If this implication comes to fruition, then owners will have succeeded in reversing their bargaining power. Conversely, if owners are willing to cultivate higher quality in their corporate sponsorships, then they can reserve the upper hand when considering future applicants.
The remedies for improving sponsorship packages may be imminent after consolidation has taken place. But, it all appears contingent on the macroeconomic decisions made in those virtual boardrooms.
[Originally Printed: PR Week, 7/24/00]
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