By The Capital Sports Report Staff
If you watch soccer, horse racing, golf or motor racing, you can most likely name one or more notable sports sponsorships. You might have also noticed that many of the brands are often involved in similar industries, such as banking, online poker, global airlines and financial services.
So, why do they invest millions of dollars in sponsoring? It may not be what you think. Keep reading to find out why brands sponsor sports teams.
The History of Sports Sponsorship
Liverpool F.C. was the first professional football team to sign a jersey sponsorship deal. In 1979, Hitachi sponsored the English soccer club for £50,000 per year. The two-year sponsorship allowed the club to promote the brand during untelevised games, which did not feature in the FA Cup or in Europe.
It ultimately paved the way for major sponsorship deals within the Premier League. However, the sponsorship deals are a far cry from the £50,000 fee in 1979 that saw Manchester United signing a £47 million per year deal with Chevrolet, and Chelsea signing a £40 million per year sponsorship with Yokohama.
Nowadays, sponsorship is prevalent on the jerseys in many major sports across the world as well as football. In the U.S., the NBA is also one sport moving more toward jersey sponsorship. The 2017-18 season was the first of a three-season trial that allows sponsorship logos to appear on a player’s jersey, with the aim of generating greater revenue for teams. Before then, NBA teams had never worn sponsorship signage on their jerseys.
The first team to secure a jersey sponsorship deal was the Golden State Warriors for $20 million a year over three years with Rakuten, a Japanese commerce and internet company. Now, more than 14 NBA teams have jersey sponsorship deals.
However, the likes of the NFL do not feature sponsorship on their jerseys or shirts. Still, many professional brands sponsor their stadiums, events and teams.
It is commonplace for gambling companies to sponsor teams within the Premier League, with nine out of 20 clubs featuring a gambling company on their jerseys in the 2018-19 season. However, until recently, no one had heard of gambling sponsorship in the NFL.
While the NFL was once against sports betting, they appear to have had a change of heart. After the Supreme Court removed a federal law that banned commercial sports betting, the NFL, NBA and MLB, inked sponsorship deals with various gambling companies who offer poker online.
The NBA was the first major sports league in the U.S. to strike a deal, as they agreed to a $25 million partnership with MGM Resorts International, but now, the NFL is in on the act. More recently, the NY Jets have announced a sponsorship deal with a reputable online poker company, who provide games such as Texas Hold ‘em and Omaha Hi-Lo, giving them the opportunity to now follow in the footsteps of various well-known brands sponsoring NFL teams, such as PepsiCo, FedEx, Barclays, Microsoft, Mars and Gatorade.
A Unique Opportunity
The biggest reason why companies affiliate themselves with professional sports teams is due to a boost in brand recognition. While spending millions of dollars to secure a sponsorship deal, a partnership might provide companies with a unique opportunity to reach millions of people in one instant. Take the NFL for example, which reportedly attracts 17.6 million viewers per game. In doing so, it will provide a brand with direct access to their target audience.
An Attractive Form of Advertising
Another reason why brands and sports teams choose to partner is due to the mutually beneficial agreement. Not only will the sponsorship deal provide a club/team with financial support, but it can also make a team and a company more appealing to fans. That we already know thanks to a 1995 Premier League survey that found that three out of 10 fans believed products associated with a club to be more attractive. As a result, it can increase confidence in both a brand and a team.
However, many brands fail to utilize data to choose the right club for a sponsorship, often basing many sponsorship decisions on a company’s marketing budgets, gut feeling or the team or player who seemingly has the cool factor.
How Data is Powering Sponsorships
While brands fail to use data to make key sponsorship decisions, many sports teams utilize key stats to sign, retain and upsell sponsors to maintain fan satisfaction. One example is the Carolina Panthers, who reportedly collecting data via social authentication, gated Wi-Fi and gated content on their fan newsletters. They then use this information to partner with brands that are closely connected to their customer demographics and brand affinity.
The Indiana Pacers are also using both first- and third-party data to identify changes in their audience throughout the years. So, when they select a beer brand sponsor for a specific portion of the stadium, the accumulated data can indicate if there is an increase or decrease of interest in the beer.
Sponsors Powering Sports Teams
Without sponsorships, jaw-dropping stadiums and attractive jerseys, securing star players might not be possible. The NFL alone has reported that the total sponsorship spend in the 2018-19 season rose by a whopping 5.1 percent, reaching $1.39 billion. Meanwhile, the top six teams in the Premier League alone have secured £300 million in sponsorships deals, many of which are online poker brands that provide games such as Texas hold ‘em.
Although sports sponsorship has existed since 1979, the partnerships have undoubtedly evolved throughout the decades. Nowadays, professional sports clubs can demand millions of dollars for a sponsorship deal, with brands fighting it out to appear on a team’s jersey and across their stadiums. With the rules also scrapped and data utilized to help the top professional sports teams to grow from strength to strength, it’s no wonder why brands vie to partner with them to boost their recognition, reputation and revenue.
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