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Is sports sponsorship still worth the risk?

Sponsorship is becoming an increasingly risky business. Doping and corruption scandals are making weekly headlines and sponsors are moving rapidly to distance themselves from those involved.

At the end of 2015, Coca-Cola, AB InBev, Adidas, McDonald’s and Visa grouped together to write an open letter to Fifa’s executive committee urging them to "embrace positive changes" ahead of the reform meeting. The pressure from the sponsors had continued to grow after the scandal came to light last May, illustrating that even the glamour of world football could lose its shine for sponsors when scandal hits.

Tennis has been the most recent to be hit by doping and corruption scandal. Stories of alleged match fixing as well as Maria Sharapova’s high-profile fall from grace leading to Nike and Porsche suspending relationships.

Brand sponsorship directors must be asking themselves if it’s worth it? The collateral damage of being associated with a high-profile scandal has significant impact on sponsor brands.

There was a time when sponsorship was a simpler business. Before brands became adept at close and intimate brand activation, sponsorship was often nothing more than a badging exercise. Simple physical association of the brand to the sponsorship property was seen to have value.

Sponsorship is built on ‘borrowed interest’. Sponsorship properties have fans, and brands can build a closer relationship with these fans by aligning themselves with the properties through close sponsorship. This enhances the fans experience and turns them into customers of the brand.

However as brands become better at activating their sponsorship deals, weaving together brand, property and customer experience, so the risks become higher if one party should behave poorly.

In 2005 Nestlé entered a five-year sponsorship deal with the IAAF Kids’ Athletics programme, one of the largest grassroots development programmes in world sports. In light of the recent negative publicity associated with allegations of corruption and doping in sport made against the IAAF, Nestlé announced it had taken the decision to end its sponsorship with ‘immediate effect’.

It’s been a very bad year for the IAAF with Nestlé being the second notable sponsor to leave after Adidas decided to abandon its sponsorship in January 2015, breaking a deal that was due to run until 2019.

It is testament to the believability of the relationship between brand and sponsor that this all matters so much. And it also underlines the role that brands play (or at least think they play) in people’s lives. More so now than ever before, sponsorship is a two-way deal, the brand is sharing their values and their purpose with the property as much as the property is sharing theirs. On that basis, both parties need to be confident that those values are aligned.

Sponsors need to build this value alignment into their sponsor agreements so that if the sponsored individual or organisation deviated from this agreement, the sponsors would have some protection.

And of course the closer the sponsor can get to having an active role in the decisions that will effect their reputation, the more they can look after their own interests.

Sean Kinmont is founding partner and creative director of 23red

SK

Sean Kinmont

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