News Analysis: In the shadow of the Olympics?

Attracting big-name sponsors to the Glasgow 2014 Commonwealth Games could prove tough.

The news that Glasgow had won the right to host the 2014 Commonwealth Games was met by an outpouring of national pride in Scotland. At the city's Old Fruitmarket on the night of the announcement, beamed live from Sri Lanka, more than 1200 Glaswegians danced as The Proclaimers belted out their 80s hit, Five Hundred Miles, which had become the bid's theme tune.

In these early years of devolved government, the chance to showcase Scotland to an international audience has been grasped by its politicians. First minister Alex Salmond described his vision of the event as a 'commercially attractive but not commercially cluttered Games that everyone in Scotland can access and enjoy'.

However, as the euphoria dies down, the true nature of the task in hand begins to emerge. The initial budget for the Games has been set at £288m, of which Glasgow 2014 Team Limited expects £50m to come from TV revenue, tickets, merchandising and sponsorship.

The bid phase was supported by six commercial partners: Highland Spring, O2, Clydesdale Bank, Diageo, First Group and BBC Scotland. However, their rights ended on the night of the announcement.

The commercial structure for the 2014 event will be introduced once the organising committee is in place, with the roles of chair and chief executive announced in the new year. In the meantime, a three-tier sponsorship for the Games has been announced, with £12m coming from the top level, £8m from the second and £4m from the third.

Highland Spring marketing director Sally Stanley says the chance to be associated with the bid was 'irresistible'. 'Having such a prestigious event in our own back yard was a once-in-a-lifetime opportunity,' she says. She is keen for the company's role to continue, confirming that Highland Spring will be bidding to become 'the official water' for 2014. In a fiercely competitive product category, the Commonwealth Games represents good value for money, particularly when compared with London 2012. 'The Olympics is too pricey for us,' adds Stanley.

The London Olympics may yet play its part in determining the appetite for Glasgow's event. On the positive side, it is possible that its halo effect could be extended for a further two years. Brands that have supported so- called 'minority sports', for example, will be able to leverage their involvement still further, according to Alun James, managing director of sponsorship agency Four Sports, Arts and Sponsorship. Siemens and Norwich Union, which are backing rowing and athletics respectively at London 2012, are two cases in point.

The downside is that the sheer scale of the Olympics may crowd out the smaller event. The London Organising Committee of the Olympic Games (LOCOG) will be selling its top-level partnerships for the next 18 months. LloydsTSB, Adidas and EDF Energy have each paid between £50m and £100m for these packages. Once the top level is sold, the second and third tiers will go to market. LOCOG hopes that up to 50 companies will sign up for London 2012.

Some fear that the glamour of the Olympics will leave its poorer cousin in the shade. Steve Martin, chief executive of M&C Saatchi Sport & Entertainment, says: 'There is a lack of stardust about the Commonwealth Games.' He describes Glasgow 2014 as a 'tough sell' for property which is 'very much second tier' and will struggle to get national UK brands on its roster.

A key challenge for the organising committee will be how to create a set of rights that appeals across the whole UK market, according to Niels de Vos, the chief executive of UK Athletics, who was commercial director of the Manchester 2002 Commonwealth Games.

De Vos says that to generate the minimum £25m required, it will be vital to present the Games as a genuine UK proposition. 'How many Scottish firms have the desire and capability to fund what will be seen as a Scottish campaign?' he asks. But access to the personalities will offer something to build on in the run-up, he adds, allowing brands in sectors such as retail or consumer goods to exploit their association fully.

The Manchester Games in 2002 drew support from blue-chip brands such as Cadbury and Microsoft, with the latter using the event as a platform for new product development. Nonetheless, while the price of top-level sponsorships for the event was initially set at between £2m and £3m, brinkmanship on the part of some brands drove the final price down to a fraction of this. One source close to negotiations for an elite-level partner said the final rights fee it paid for the Games was about £600,000.

With the Ryder Cup also heading to Scotland in 2014, the nation has every reason to celebrate its status as a host of major sporting events. Now it merely has to persuade the rest of the UK to join the party.

DATA FILE

COMMONWEALTH GAMES

In 1986, the last time that the Commonwealth Games was held in Scotland, Edinburgh reported a £3m deficit on a £27m budget.

By 2002, the cost of staging the 'Friendly Games' had risen to more than £300m - £170m for capital projects and £130m for operating expenses. Manchester 2002 came within hours of insolvency before being saved by a government rescue package worth £105m. This took public spending to £250m, which equates to a subsidy of more than £300 for each ticket sold.

Manchester 2002 sponsors

The 2002 Manchester Games was supported by a series of blue-chip sponsors, including Manchester Airport, Adecco, Guardian Media Group, Microsoft, Cadbury, Cussons, Asda, BUPA and Rover.

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