Top rights fees rising - opportunities at the bottom?

Top rights fees rising - opportunities at the bottom? EDITORIAL Editorial Professor Michel Desbordes, Université Paris-Saclay, France Email: desbordes_michel@orange.fr Top rights fees rising – opportunities at the bottom? The subject of inflation in the sponsorship industry has that received by the English Premier League’s lowest been discussed before in this column, most notably the earning club, Burnley. Yet Burnley has to play Chelsea, observation that rights fees are polarising between the Man Utd, Arsenal, Liverpool and the rest twice each big properties with international appeal and all of the season in matches that are televised worldwide. The rest, where values have stagnated. brand exposure is huge. In the past two months, we’ve seen two massive Simply taking the on-shirt branding, however, might deals in particular: Toyota and the IOC ($80m p.a.) not do a lot for brands, except to generate a degree of and Yokohama and Chelsea ($60m p.a.) as well as a awareness. But given the low cost of rights acquisition, series of domestic deals for the Tokyo 2020 Olympic it is a mystery why some challenger brands are not Games that are each worth an estimated $125m taking these rights and really going to town with their between now and the event. activations. It would be very interesting to see a brand What is becoming clear is that major companies are with global resources and a sponsorship budget of say willing to spend tens of millions of dollars to link their $8m, spend $.5m on rights and $7.5m on activation. brands to sport, whereas in the past the commitment The potential for success is enormous if the sponsor ran into the millions. While marketing directors have were to work with the rights holder to position each as, been convincing their boards about projected return on for example, the friendly but cheeky ‘upstart’. There investment, the boards have no doubt had to struggle are plenty brands for which such a strategy could to convince both shareholders and, occasionally, the work. Red Bull, for example, spent its formative years public that this is good business. Indeed a paper in sponsoring ‘characters’ in given sports rather than the this issue considers the impact of sponsorship on most successful stars. It cost less and it worked. stock prices and shows a mixed response from the To date the same approach hasn’t really been investment community and a strong sense that it has applied to team sports. It certainly couldn’t be a yet to fully understand our industry. widespread phenomenon as it would quickly become Brands concentrating on fewer assets can gain huge cliched, but there must be a brand out there willing global exposure and focus their activation resources to do something different. Remember the old saying: to making those sponsorships work. The argument ‘Everyone loves an underdog’. Surely we don’t want goes that if you spend $80m on one major rights it changed to ‘Everyone loves an underdog – except holder, rather than $1m each on 80 (smaller) rights sponsors’? holders, you might have less overall brand exposure, but you will have a more consistent message and you won’t have to split your internal team into 80 units to manage each property. This rationalisation by major companies is contributing to lower rights fees among smaller properties, but does that provide a real opportunity for other brands to make a disproportionate impact to the amount that they spend? For example, Chelsea’s new deal is approximately 80 times greater than l l APRIL 2015 International Journal of Sports Marketing & Sponsorship 1 SMS16.3 intro KT.indd 159 17/05/2015 10:17 http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Sports Marketing and Sponsorship Emerald Publishing

Top rights fees rising - opportunities at the bottom?

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1464-6668
DOI
10.1108/IJSMS-16-03-2015-B001
Publisher site
See Article on Publisher Site

Abstract

EDITORIAL Editorial Professor Michel Desbordes, Université Paris-Saclay, France Email: desbordes_michel@orange.fr Top rights fees rising – opportunities at the bottom? The subject of inflation in the sponsorship industry has that received by the English Premier League’s lowest been discussed before in this column, most notably the earning club, Burnley. Yet Burnley has to play Chelsea, observation that rights fees are polarising between the Man Utd, Arsenal, Liverpool and the rest twice each big properties with international appeal and all of the season in matches that are televised worldwide. The rest, where values have stagnated. brand exposure is huge. In the past two months, we’ve seen two massive Simply taking the on-shirt branding, however, might deals in particular: Toyota and the IOC ($80m p.a.) not do a lot for brands, except to generate a degree of and Yokohama and Chelsea ($60m p.a.) as well as a awareness. But given the low cost of rights acquisition, series of domestic deals for the Tokyo 2020 Olympic it is a mystery why some challenger brands are not Games that are each worth an estimated $125m taking these rights and really going to town with their between now and the event. activations. It would be very interesting to see a brand What is becoming clear is that major companies are with global resources and a sponsorship budget of say willing to spend tens of millions of dollars to link their $8m, spend $.5m on rights and $7.5m on activation. brands to sport, whereas in the past the commitment The potential for success is enormous if the sponsor ran into the millions. While marketing directors have were to work with the rights holder to position each as, been convincing their boards about projected return on for example, the friendly but cheeky ‘upstart’. There investment, the boards have no doubt had to struggle are plenty brands for which such a strategy could to convince both shareholders and, occasionally, the work. Red Bull, for example, spent its formative years public that this is good business. Indeed a paper in sponsoring ‘characters’ in given sports rather than the this issue considers the impact of sponsorship on most successful stars. It cost less and it worked. stock prices and shows a mixed response from the To date the same approach hasn’t really been investment community and a strong sense that it has applied to team sports. It certainly couldn’t be a yet to fully understand our industry. widespread phenomenon as it would quickly become Brands concentrating on fewer assets can gain huge cliched, but there must be a brand out there willing global exposure and focus their activation resources to do something different. Remember the old saying: to making those sponsorships work. The argument ‘Everyone loves an underdog’. Surely we don’t want goes that if you spend $80m on one major rights it changed to ‘Everyone loves an underdog – except holder, rather than $1m each on 80 (smaller) rights sponsors’? holders, you might have less overall brand exposure, but you will have a more consistent message and you won’t have to split your internal team into 80 units to manage each property. This rationalisation by major companies is contributing to lower rights fees among smaller properties, but does that provide a real opportunity for other brands to make a disproportionate impact to the amount that they spend? For example, Chelsea’s new deal is approximately 80 times greater than l l APRIL 2015 International Journal of Sports Marketing & Sponsorship 1 SMS16.3 intro KT.indd 159 17/05/2015 10:17

Journal

International Journal of Sports Marketing and SponsorshipEmerald Publishing

Published: Apr 1, 2015

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