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Mon Jul 28 12:22:00 SAST 2014

Companies want more bang for their sponsorship buck

CARLOS AMATO | 04 December, 2010 23:250 Comments

The sponsorship boom in South African sport has gone into injury time. While the big national teams continue to attract heavyweight corporate backers, they can no longer name their price in a tricky business climate.

Standard Bank recently ditched cricket and soccer as part of a cost-cutting drive, while Adidas may drop their R14-million-a-year kit sponsorship deal with Bafana Bafana.

And teams with small support bases are reduced to pleading for small change. Newly promoted PSL side Vasco da Gama - the conquerors of Kaizer Chiefs last weekend - will flog their shirt sponsorship for as little as R100000 a month.

"We are even thinking about advertising a charity for free, like Barcelona do for Unicef," said Vasco coach and financial director Carlos das Neves.

"Being a new PSL team is a risk factor, given the precedents for promoted teams going straight back down," says Das Neves. "But with two televised games coming up against Maritzburg and Celtic, we could give a brand out there good mileage for well below value in a two-game deal. At the moment we survive on our PSL grant, which is almost impossible."

Marketing analyst Chris Moerdyk says the sponsorship market has peaked. "We've come out of a number of years of high demand for sponsorship opportunities," he says. "So the cost has gone up considerably, and one can't blame sporting codes for pushing up the price to whatever the market will bear.

"But now sponsors are looking at the return on investment, and finding it's a pretty expensive exercise," says Moerdyk.

"Banks are not the most popular institutions known to man. So the fact that a bank has its name on a stadium, or at the bottom of the TV screen, is not going to make a fan think: 'Gee whiz, that's nice, the Boks are winning this match, therefore I will move my account to that bank!'

"The value of a sponsorship is directly relative to the brand loyalty it creates. So a lot of codes are going to be looking at what they're charging, and trying to entice sponsors back into the fold by adding value," says Moerdyk.

"They have to work a hell of a lot harder. A good example is the Nedbank Golf Challenge. The bank have complete ownership of that, and they wine and dine their clients during the tournament. So for a client, the decision to move your business from Nedbank loses you three or four great days at Sun City."

Standard Bank's exit from sport was a special case, necessitated by heavy job cuts. The bank could not be seen to be squandering money on sport while laying off workers.

By contrast, Absa are continuing to bet heavily on sport. The bank boasts title sponsorships of the PSL and the Currie Cup, along with a R50-million-a-year deal with Bafana and an upcoming deal with the Boks said to be worth R65-million a year.

But even Absa have trimmed their portfolio elsewhere - this year they dropped their naming rights to Kings Park rugby stadium and two rugby grounds in Kimberley and East London.

Adidas have the right of first refusal on the next Bafana kit sponsorship deal, and are in talks with Safa over a possible renewal. But Safa will battle to get Adidas to improve or even match the current R14-million-a-year deal, given that the 2010 World Cup hype (and shirt sales bonanza) is over.

South Africa's likely hosting of the Nations Cup in 2015 could be a bargaining chip in the talks - but Safa cannot guarantee qualification for the 2014 World Cup.

Both Nike and Puma made presentations to Safa before the World Cup, and in all likelihood will be invited to beat Adidas's final offer to Safa early next year.

Puma are the market leaders in sponsoring African national teams, with 13 teams in their portfolio. But Nike are also contenders, as they aim to build a foothold in the growing African market.

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