Licensing sponsored by talkSPORT 1089/1053 AM: Why sponsors are great fans of sport - From football to Formula One, the sports licensing business is now booming. Andy Fry looks at this growth market

Between now and October, sports fans have plenty to keep them glued to the television. They have alreadywitnessed a sparkling start to the Formula One season by Ferrari and, over the next two months, four English football clubs will compete for top UEFA honours in Europe.

Between now and October, sports fans have plenty to keep them glued

to the television. They have alreadywitnessed a sparkling start to the

Formula One season by Ferrari and, over the next two months, four

English football clubs will compete for top UEFA honours in Europe.



There is also the double whammy of football’s Euro 2000 championships in

Belgium and the Netherlands, and the Sydney-hosted summer Olympics.



Those two events alone will attract a cumulative global audience of more

than 25 billion viewers in 220 countries.



For marketers, the passion whipped up by such events is a prized means

of targeting consumers. Despite the Olympic movement’s corruption

scandal of the past year, the France ’98 World Cup ticketing fiasco and

the persistent trickle of drugs-related stories which afflict all major

sports, many clients will pay whatever it takes to get involved with big

events.



To varying degrees, major sporting events generate revenue from four

sources: television rights, sponsorship, licensing, and ticket

sales.



In the case of the Olympics, TV sales will account for 50% of the

dollars 3.5bn (pounds 2.1bn) generated between 1997 and the end of 2000.

Sponsorship adds a further 36%, tickets 11% and licensing/commemorative

coins 3%.



The poor showing of the latter category reflects the location of the

event. The success of Olympic licensing tends to be associated closely

with its venue, which is why the Atlanta ’96 licensing programme, based

in the sports memorabilia-hungry US, contributed 8% of the total Games

income.



Major soccer events, by contrast, make money wherever there is a fan

base with a team to support. ISL Marketing’s licensing chief, Gerhard

Prochaska, predicts that Euro 2000 will rake in dollars 300m (pounds

182m), compared with the dollars 200m (pounds 121m) generated by Euro

’96.



For brand marketers, the main way to unlock the power of sports events

is through an official sponsorship programme. Although some companies

achieve widespread media exposure without paying for title rights, there

are risks inherent in ambush marketing.





Ambush negatives



The International Olympic Committee (IOC) calls it ’a parasite activity’

and claims there is ’strong disapproval of those who attempt to

undermine official sponsorship activities’.



In a survey of public attitudes, ’respondents expressed negative

feelings toward companies that engage in the practice of ambush

marketing,’ claims the IOC.



The fact that streetwise brands such as Sony PlayStation (Euro 2000) and

Nike (Sydney Olympics) have sought official sponsor status speaks

volumes about the perceived advantage of being a legitimate partner.



While sponsorship is about building brands, TV rights, ticketing and

licensing are fundamentally intended to generate revenue for the rights

holder - although there are obvious overlaps. The eyeballs reached via

TV viewing and event attendance are, for example, a major part of any

sponsorship. Similarly, the ubiquity of licensed products in retail

outlets promotes awareness of events, which in turn benefits

sponsors.



If all a sponsor does is badge an event, it gets media exposure and

brand association with the event and other sponsors.



But if that’s where it ends, the sponsor is under-exploiting its

asset.



Karen Earl, managing director of sponsorship consultancy Karen Earl,

says sponsors ’must look at more than just name awareness if they want

to ensure a return on their investment. Seasoned sponsors such as

Coca-Cola are masters at exploiting events effectively.’



Octagon Marketing media director Sean Jefferson views sports sponsorship

as providing a theme around which clients can build a multifaceted

marketing programme. ’Depending on their objectives, clients need to

apply the same rigour to above-the-line, sales promotion,

business-to-business and internal communications as they would

normally,’ he says.



Octagon represents five of Euro 2000’s top sponsors - each of which has

paid about dollars 20m (pounds 12m), simply for title rights. In March,

the IPG-owned agency added Korean car giant Hyundai to a list which

includes Cereal Partners Worldwide, MasterCard, Pringles and Sony

PlayStation.





Ticket offers



While Hyundai’s main aim will be to boost awareness and build image, the

likes of CPW, Pringles and Mastercard need to use Euro 2000 to sell

products and drive transactions. A key way of doing this is to offer

tickets to matches through competitions. ’Tickets will be like gold

dust. If you can offer something none of your rivals has, it will win

more shelf space from retailers. That helps increase your share of

sales,’ says Jefferson.



Some partnerships don’t look like obvious winners, but can be used to

great effect with a little imagination. Two good recent examples are

Sainsbury’s and BP, which became official retailer and official fuel,

respectively, of Team England at France ’98. Both acquired licensing

rights to support their sponsorships.



’You couldn’t walk into a Sainsbury’s store without knowing it was a

Team England sponsor,’ says CSS-Stellar vice-chairman Barrie Gill.



It had televisions on during the matches, gave out champagne when

England won and promoted tissues in case we lost.’



Sainsbury’s also stocked a range of soccer coins, posters, shirts and

mugs which, Gill claims, were popular with customers. ’There is no doubt

they drove traffic and sales during the event,’ he says.



BP’s approach was to back up its sponsorship with the licensing rights

to the official Team England World Cup book. Forecourt traffic was

boosted by a discount on cover price to customers in BP outlets.



Other clients support their sponsorships with highly visible,

on-the-ground activity. During France ’98, MasterCard gave away fold-up

maps, while at last year’s Rugby World Cup, Guinness introduced a wide

range of promotional devices in the vicinity of matches.



’Some of it can look quite bitty in isolation,’ says Jefferson. ’But

viewed as an integrated strategy, it is highly effective. Guinness was

pulling 150,000 more pints a day during the competition.’



As was the case for sponsors of Euro 2000, the 12 headline sponsors of

the Sydney Olympics, including Coca-Cola and Visa, have exclusive

worldwide marketing rights and opportunities within their designated

product category.



They can use Olympic imagery, appropriate Olympic designations on

products and take advantage of hospitality opportunities at the Games

themselves.



While the Olympic association has its attractions in terms of branding,

it is the control of tickets which allows sponsors to generate

business.





Lucrative licences



For licensees, meanwhile, the priority is to make revenue while avoiding

stepping on the toes of the major sponsors. Licensing for Euro 2000 is

managed by ISL subsidiary CPLG, which has signed up about 40 licensing

partners.



CPLG’s head of sport for Europe, Chris Protheroe, explains the exclusive

rewards licensees get for their money: ’Procter & Gamble’s Pringles have

the promotional rights to use the Euro 2000 marque on-pack, for

example.



So we wouldn’t enter into a licensing agreement with a rival snack food

company to produce Euro 2000 snacks. The same goes for

confectionery.’



The most lucrative area of licensing for Euro 2000 will be apparel. ’We

have a range of good quality fleeces, urban tops, socks and caps,’ says

Protheroe. ’The retailers demand quality because consumers expect

it.’



After apparel come games, pins, programmes, sticker albums, stationery,

balls, toys and a troll-like mascot for the competition called

Benelucky.



None of the Euro 2000 leisure apparel will have a prominent brand name

attached to it. But Adidas will provide a range of branded sportswear -

underlining the thin dividing line between some sponsorship activities

and licensing.



Although non-Adidas products are unbranded, they do have significance to

retail brands. ’Euro 2000 will be massive and retailers want to be

associated with it,’ says Protheroe.



’We know that licensed product drives footfall, because the market has

grown 20% worldwide between 1995 and 1998. It can also say something

about the character of your retail brand.’





Lack of exclusivity



For a troubled store chain, such as Marks & Spencer, events such as Euro

2000 present an opportunity to win back young customers. But the

drawback from a retailer’s perspective is lack of exclusivity. By the

very nature of its job, CPLG will seek to put Euro 2000 goods into as

many reputable outlets as possible.



An alternative approach for retailers is to take a sponsorship or

supplier position. In February, M&S unveiled a ’Gold Club’ sponsorship

with the British Olympic Association. As part of the deal, it will

supply fashionable formal wear to the British Olympic Team - working in

partnership with Karen Earl.



Unlike licensed product, this deal gives M&S an exclusive position.

According to sponsorship manager Sean Curtis, the partners are

complementary. ’We are still the largest supporter of UK manufactured

goods in the retail sector and this is a major opportunity for us to

support the best of British,’ he says.



Most sports property owners are looking for ways to generate incremental

revenue from licensing. In the process, some are also seeking to

establish themselves as brands in non-core businesses.



The Licensing Company was recently handed the task of creating a brand

extension programme for Royal Ascot. The core activity centres on a

range of exclusive clothing, dubbed The Royal Ascot Collection, which

will be available exclusively to Selfridges, London, from April.



Track and field governing body UK Athletics has also moved into the

licensing field by appointing MTC to handle a licensing and promotional

programme.



MTC’s managing director Jonathan Marks says: ’Licensing introduces the

image of a sport to new audiences and we have high hopes of introducing

a back-to-school range for kids.’ Other areas of ancillary activity

could include timepieces, publishing and CD-ROMs.



Marks adds that the timing is perfect given that UK Athletics now has a

four-year television deal with the BBC which involves live coverage of

between ten and 12 events a year. He also expects some rub-off from the

hype surrounding the forthcoming summer Olympics.



There are blurred areas where some brands cut across traditional

commercial models. Computer games manufacturer Electronic Arts is a

classic example.



Having sold seven million copies of its FIFA 98 game, it is now

producing a game for Euro 2000 which is likely to be the top-selling

title of the summer.



Not only does this generate royalties for UEFA, it acts as a

brand-building exercise for Electronic Arts in a way that is

conceptually different from other licensing arrangements.



The emergence of dotcom sponsors is also forcing a reappraisal of the

typical commercial blueprint. At the moment, it is unclear whether

dotcoms should be treated as a category of their own for major events or

as directly comparable to bricks and mortar companies.



Dotcoms have the potential to be more than just sponsors. Sportal, which

is rumoured to be a Euro 2000 sponsor, can offer the event sponsorship

money and, potentially, a new distribution outlet. At Euro 2004, for

example, a company such as Sportal might pay a reduced sponsorship fee

in return for providing a new media platform for viewers and a

distribution outlet for licensed product.



There are similar resonances in Manchester United’s pounds 30m

sponsorship deal with mobile phone giant Vodafone. Vodafone’s commercial

director, Paul Donovan, made it quite clear when the deal was signed in

February that it is more than just a title sponsorship. Branded phones

and the delivery of sports news to Manchester United fans via

WAP-enabled phones are two possible applications which may spin out of

the deal.





Making music pay



The dynamic relationship between sport and fans plays a key role in

inspiring marketing innovation. A classic example is the work that music

marketing agency Music & Media Partnership (M&MP) has done in developing

relationships between sponsors and the music that accompanies sports

events.



M&MP’s managing director, Rick Blaskey, has produced theme tunes for

three Rugby World Cups and football’s France ’98 and Euro ’96. He is now

working on an album of football chants for Euro 2000. According to

Blaskey, musical themes such as the Lightning Seeds’ Euro ’96 anthem,

Three Lions, can do three jobs: generate revenue, brand events and

provide a sonic logo for use as part of a sponsor’s marketing plan.



During Euro ’96, the event theme played a key role in Coke’s

activities.



’This time we are working with Coke, McDonald’s, Pringles, MasterCard

and Electronic Arts to find ways of using the music to help them,’ says

Blaskey. ’Anything from using the theme in TV ad executions to

organising a Euro 2000 concert is a possibility,’ he adds.



’When you pay this much money, you have to find ways to tap into the

passion and excitement across media channels to reach the target

audience,’ he says.



But the big question for any sponsor or licensee at an event such as

Euro 2000 is what happens if England flops. Octagon’s Jefferson reckons

that a poor England performance could cost Euro 2000 about 10%-15% of

its UK audience. Success will result in the 25 million audiences who

witnessed Euro ’96 and France ’98.



ISL’s Prochaska makes a similar assessment. But, he argues, in licensing

terms, a failure in one territory means a success in another. With

sponsorship and licensing programmes at Euro 2000 designed to work

across borders, a downturn in one country is often balanced by an upturn

elsewhere.



That said, UK sponsors would rather see an England versus Germany final

than Norway versus the Czech Republic. For Sainsbury’s, at least, it

would be another chance to roll out the Kleenex.





SPORTING CHANCES



- Euro 2000 kicks off on June 10. The 12 sponsors, which have paid about

pounds 12m each for title rights are: Carlsberg, Coca-Cola, Fuji Film,

Hyundai, JVC, MasterCard, McDonald’s, Philips, Sony PlayStation,

Pringles, PSINet and Sportal. The event is expected to reach a

cumulative audience of seven billion in 210 countries.



- The commercial side of the event is being handled by ISL and its

licensing subsidiary, CPLG. Product lines from 40 licensees are expected

to generate pounds 180m, compared with pounds 120m for Euro ’96, when

there were 100 licensees.



- ISL has already started work on World Cup 2002, which will be held in

Japan and South Korea. Despite the time difference from Europe, a drop

in licensing revenue compared with France ’98 is not expected. It is

rather seen as an opportunity to open up the Asia-Pacific market.



- The Sydney Olympics will be held between September 15 and October 1.

It is not clear how many viewers will tune in because of the time

difference. Atlanta achieved 20 billion cumulatively compared with 16.6

million at Barcelona 1992.



- Between 1997 and 2000, the Olympics will have made pounds 3bn. The

lion’s share comes from the sale of TV rights - including pounds 800m

for Sydney and pounds 310m for the 1998 Winter Games in Nagano. It also

managed to extract pounds 190m from 12 major sponsors: Coca-Cola, John

Hancock, Kodak, IBM, McDonald’s, Panasonic, Samsung, Sports

Illustrated/Time, UPC, Visa and Xerox.



- For the run-up to Athens 2004, six sponsor companies have signed up so

far: Coca-Cola, Gateway, SEMA, TIME/Sports Illustrated, Visa and John

Hancock. The sponsor programme is forecast to generate in excess of

pounds 365m in financial and technical support.



- Licensing at Atlanta secured pounds 30m, compared with pounds 27m for

Sydney. As was the case for Euro 2000, the Olympic movement decided to

reduce the number of licensees for Sydney. About 60 were appointed,

compared with 100 for Atlanta. Some 12% of tickets are to be made

available to overseas visitors.



- Historically, Olympic licensing programmes have been short-term,

focusing on Olympic Games memorabilia. The IOC is now working to develop

a licensing programme that can enhance the overall image of the Olympic

Movement and the Games.



2000’S SPORTING HIGHLIGHTS

April 2

Climax of Lloyds TSB Six Nations Rugby

April 8

Martell Grand National

April 16

Flora London Marathon

April 23

British Grand Prix

May 4

Badminton Horse Trials

May 5

Sagitta Guineas Festival

May 18

First Test England vs Zimbabwe

May 20

FA Cup Final

May 27

Tennent’s Scottish Cup Final

June 1

Monaco Grand Prix

June 10

Vodafone Derby

June 10-July 2

Euro 2000

June 15

First Test England vs West Indies

June 20-23

Royal Ascot

June 26-July 9

Wimbledon Tennis

June 28

Henley Royal Regatta

July 20-22

British Open Golf

July 29-August 5

Skandia Life Cowes Week

August 1

Glorious Goodwood

August 6

One2One FA Charity Shield

Sept 15-Oct 1

Olympic Games

Oct 28-Nov 25

Rugby League World Cup

Source: Hollis Business Entertainment Yearbook



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