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Global crisis lays boot into sponsors

Discussion in 'Rugby League Forum' started by deadlyeagle, Oct 29, 2008.

  1. deadlyeagle

    deadlyeagle Member

    +11 /0
    Global crisis lays boot into sponsors

    Simon Canning and Stuart Honeysett | October 20, 2008


    SEVERAL top-line football clubs may be forced to drop their asking price in the hunt for sponsors as the business world tightens its belt amid the global financial downturn.

    NRL premier Manly and wooden spooners the Bulldogs are so far without major sponsors for next year while in the AFL, Richmond, Melbourne and the Western Bulldogs are in the same condition.

    Experts say while the Australian economy has been protected to a certain extent from the full force of the market meltdowns in the US and Europe, the timing could not have been worse for those without major sponsors.

    Just three weeks ago Manly celebrated a premiership win and was pondering the possibility of upping the worth of its main sponsor from $1million to $2m after club owner Max Delmege reduced his personal financial contribution.

    While rugby league insiders say Manly won't have any problems finding a backer, the $2m target is perhaps ambitious. At the same time the Bulldogs are hunting for a new major sponsor.

    Yesterday, Bulldogs chief executive Todd Greenberg conceded the club's last-placed finish and the global financial downturn had made the search for corporate support difficult.

    The Bulldogs have been hunting for a new major sponsor ever since electronics giant Mitsubishi Electric ended its six-year association with the club this season.

    "We're absolutely concerned," Greenberg said.

    "We're on the back of a wooden spoon, and looking for sponsors in the current economic climate is really difficult.

    "It just makes it all the more problematic given what's happened in worldwide events and the economy in the last month or two."

    With those Sydney rugby league clubs reliant on grants from their leagues clubs already feeling the effects of an increase in poker machine tax, Greenberg forecast even more difficult times for the game.

    "NRL clubs would be silly to think it won't hurt us," Greenberg said. "That goes by both sponsorship and gate takings next year. Discretionary spend for people in the current climate is going to be really tough.

    "It's going to be hard for families to afford a day at the football."

    In the AFL, Melbourne lost major sponsor Primus, the Australian Finance Group parted ways with Richmond and LeasePlan cut ties with the Western Bulldogs.

    Martin Hirons, a specialist following the impact of sports sponsorship for 20 years, has seen the impact of several economic cycles.

    "Everything is cyclical and you have to take that into account," said Hirons, the head researcher at Sport Business Partners.

    "We have seen in Australia sponsorships ebb and flow over time. You just have to have a look at the recession in the early 1990s and there was a paring back of sponsorship then.

    "I think the thing that will change is that there will be greater scrutiny of marketing across the board and sponsorship will be a part of that."

    Hirons said sponsors looking at the AFL and NRL are seeking leverage that will generate a quantifiable return.

    He believes second-tier sports such as netball, domestic soccer, motor racing, basketball and golf will struggle for the corporate dollar.

    Hirons sees the biggest impact on sponsorship where companies use it for client entertainment.

    "As far as corporate entertainment, any of the excess will be one of the first things to go," he said.

    David Gallop, chief executive of the NRL, said he believed the league was well positioned for the future with long-term contracts with major sponsors.

    At the same time he said clubs themselves had long grown used to tight financial markets thanks to changes such as loss of revenues from leagues clubs.

    "The rugby league clubs have been cutting their suit to fit their cloth for a number of years now, so that is a bit different from what other sports might be feeling," Gallop said.

    If the US is the bellwether of the world economy then those trying to present a positive outlook to the Australian sports sponsorship situation had better watch out because the storm has barely begun brewing.

    At the ticketing level, some sports are already hurting.

    "We're not just competing for people's entertainment dollars any more," said Brett Yormark, chief executive of the National Basketball Association's New Jersey Nets. "We're going up against milk and orange juice."

    But at the corporate level, the stakes are far higher, particularly where sponsors are expected to underwrite the building of key sporting infrastructure such as stadiums.

    The fabled Dallas Cowboys can't find brands to back its new $US1.1billion stadium, while both the New York Giants and Jets are struggling to find sponsors willing to spend $10m to brand their stadiums.

    And then there is the Olympics.

    The closure of the Beijing Games also meant the end of dozens of corporate deals that the stakeholders in London must now chase for 2012.

    Hirons sees it as the London organisers' Mt Everest

    "The ability of the Olympics to be sold is second to none," he said. "I think the ability of the organisers to sell the London 2012 games is most under threat.

    "I think in this environment it is going to be critical for all sports seeking sponsorship to show key performance indicators and be able to measure return on investment - it's going to be all about accountability."


    Hadn't heard any news relating to our new major sponsor for a while or developments in it. Good to hear that we should get a $1 mill + sponsor. Speaking Hypothetically had we the premiership 2 years ago and we were without a major sponsor makes you wonder how much we could have gotten in good economic conditions other than the current economic climate.

    It also makes me wonder on the length of the new major sponsors contract, should it be short term contract then the club considers that in a couple of years when all this credit crisis boils over that they will be able to get an even bigger sponsor IF we are still a dominate team,  or if they go for long term for financial stability (obvious choice).

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