Corona Virus, The Effects On Sports Sponsorship, & How To Prepare.

I held off on writing this because I really didn’t want to incite panic on what might happen and drive clicks if it wouldn’t actually bring value and was all based on the scare.

I also held off because of the seriousness of the consequences… I feel that promoting the scare to drive clicks can do a lot more harm than good as we are somewhat seeing on the various social and news media outlets. The same can be said about under-reporting as well.

Well, we’re here. I am seeing real effects start to pop up for us in sponsorship that we need to address and be cognizant of. The effects of the virus are hitting us in our stadiums, in the marketing budgets that make up our revenue, and will in many more places than we thought of.

It is still early, but very real concerns are starting to be voiced by some of the sponsors, through our teams, that we work with. These concerns almost all lead to pulling out of at least some of their spending with a team.

Again, my goal here is not to be an alarmist…but to prepare us for what is starting to transpire and help us build a plan for if it does get worse so we can help our sponsors and teams survive whatever comes down the pipeline.

First, the markets are in free fall… which means sponsorship budgets will shrink

As with any recession, brands will panic and see their marketing budget drop with turmoil in the markets.

And really what this means is they won’t spend on items that they see as “extra” or “risky”. I’m not saying sponsorship is either of those things…but sometimes for sponsors, it is seen as a ‘nice to have’ and ‘luxury’.

I have written about this before, but anything that doesn’t prove value is usually the first to go, a lot of these items are ones that build brand & awareness…which is something that we have a lot of in our sponsorship packages.

78% of brands report the pressure to validate the financial results of sponsorship initiatives has increased in the past two years according to research conducted by Forbes.

Marketing Accountability Standards Board (MASB). 60% of CMOs are under increased pressure from the CEO to communicate, measure, and grow the financial impact of their long-term sponsorship portfolio investments on shareholder value and financial performance.

If the CMO is under pressure before this Pandemic…then they will really be feeling it now.

With this, they will look to cut the fat and advertising platforms that can’t fully prove an ROI metric…and we have a lot of these assets in our packages. Understanding this and that you will come under more pressure to deliver & prove ROI in the coming months will be vital.

Second, because sports are event-based and people aren’t coming to events…the first thing they will cut is in-stadium sponsorship

In sports, we are hit hard because most of our sponsorship value & dollars come from our in-stadium experiences.

We’ve seen some leagues in Europe cancel attendance at games and have them play in fan-less stadiums. This is a real scenario for us in the states as well.

With the uncertainty comes brand uncertainty that they should spend their money with us if there is no one in the stadium to see their signs. And it is a valid argument, why spend money on something that people won’t see (minus the social media reach of the 3 seconds while watching a game)?

I think you will see a domino effect similar to what we are seeing with conferences. Once one team does it…the others will start as well.

With March Madness on the verge of no attendance…this would be the big first domino to fall to start this chain reaction in my opinion…The other being the Olympics.

If this happens you will see more concern and uncertainty with your partners in renewals or new business.

Be ready for this thinking as you are in renewals. It is something that we are seeing brands start to have concerns with while talking with some of our teams.

Third, and this is the sleeping giant, customers can’t get their product in many cases…so what is the point of advertising

This is what makes the corona recession worse for us than others. Most of our consumer product brands get their inventory made in China. As most of you are aware…not much is coming out of the country.

And it isn’t just China, many other countries are slowing down production as workers are being asked to stay home to avoid the spread.

To add to this, airlines are canceling flights. A lot of inventory is shipped on the airlines you fly with below your feet and with flights being canceled less opportunity to ship products is driving rates up and the ability to transport down.

What we’re hearing is sponsors are hesitant to advertise and sponsor our teams because what is the point of advertising if there is no inventory to sell.

You can push back with the value of branding…but I think that won’t be enough to keep many deals.

We are hearing from some of the organizations that we work with that same concern with sponsoring teams that comes with the above issue. No access to inventory coming in means they have little to sell. So why should they sponsor and advertise? (an answer below on that).

Okay…now some solutions

I gave you the reasons for concern…but I don’t want to end there without any solutions…because what good would that be?

Below are some solutions to what you see above. Some may work, some won’t, but I think we have a shot at surviving if we think about responding with the below.

If your sponsor comes to you with budget restraints…make sure to remind them that businesses that invest in marketing in recessions survive.

Again, we’ve written about this before, but brands that spend more on marketing in recessions come out on top statistically (sales) than those that don’t.

As with any recession scare, educate them on this and mitigate the fear in order to open the budgets. Let them know that your goal is to have them be the company they write about who came out on top at the end of it.

If you can do this, the confidence in your solution as the right one to go with will increase for your partners. It shows you’ve thought through the situation, have a plan, and are ready to implement successfully with the partner.

If the ‘no attendance’ policy hits…our audience has just shifted their attention from in-stadium to online.

Really in sponsorship, we are selling attention. Attention is in our stadiums, on social, and in our streaming.

If we go to fan-less stadiums we simply have to shift our assets to where attention will be.

This means opening up more inventory on our streams…more reads, contests, and ways they can reach what should be a double or tripling of the streaming audience. Opening up new digital, social, and broadcast assets to mitigate the lost value of your in-stadium ones will be more important than ever.

And don’t forget about social media, if fans can’t go to games many of them will be deprived of that connection with the team. Increase in-depth social posts and link sponsors to these new pieces of inventory.

If you explain to them that attention has simply just shifted and you can open up new assets for them to engage in different mediums, this will relieve a lot of their concerns and ensure your product as an advertising tool is still valuable to them.

For the “no inventory” issue, dive into the inventory they have left

This point is a tough one as we have little control over it..but there is a way to solve as with all issues.

The first thing I would let the sponsor know is our goal is to help them sell all the inventory they have, in particular the items they haven’t been able to move.

I would ask which inventory they do have, focus on a plan to sell it to our fans, and build that into the shift in attention.

An example, offer a pair of tickets with each purchase of their product, again focusing on the items they have been having trouble selling. Fans will be ticket hungry and it is a great way to get their products into the hands of fans. This will drive sales.

The goal should be to help them grab cash now to survive the wave with products they have had trouble selling in the past. This extra revenue they weren’t expecting can make up for the revenue they are losing by not having access to new inventory.

Overall, create solutions for the changes, ensure you are in this for the long run and be the stable & flexible solution.

Right now there is turmoil in your sponsor’s lives right now. A lot of unknowns & speculations. The best thing we can do right now is to be the flexible and stable partner for our sponsors

If we can come to them with solutions where others haven’t, we’ll build long-term relationships with the people who are feeling the pressure. We want to be a relief, not a burden, at all times to our customers. If we can be the relief during a tough time…we’ll earn their trust and build a great relationship for the future.

This virus has brought chaos and tragedy to the world…let’s make sure sponsorship is the bright light in the turmoil.

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