Global sports sponsorship market predicted to fall by 37% this year
Global sports sponsorship rights fees are set to fall by more than US$17 billion (37% year-on-year) according to projections from data-driven sports marketing specialist Two Circles.
The fall, entirely attributed to the Coronavirus pandemic include a 45% decrease in spending by financial services companies, which, nonetheless, are expected to spend US$6.9 billion this year.
According to Two Circles, financial services was the biggest investor in sports sponsorship in 2019 with US$12.6 billion, equivalent to more than a quarter of the total.
A 55% year-on-year decline, from US$5.9 billion to US$2.7 billion (£2.2 billion/€2.5 billion) is expected in the automotive industry, the second-biggest spender in 2019.
Commenting on its findings, Two Circles advised "the COVID-19 pandemic has seen most new sponsorship agreements put on hold, and many existing agreements will be ended as a result of companies implementing major cost-cutting measures or going out of business.
"Sponsors will also be given 'makegood' sponsorship collateral and cash rebates due to the postponement and cancellation of live sport, significantly reducing their financial outlay in 2020."
The report comes just days after the International Olympic Committee (IOC) acknowledged that some of its sponsors might pay agreed sums later than originally anticipated, as a consequence of the postponement of the Tokyo 2020 Olympic Games forced by global pandemic.
A total of 14 multinational corporations have signed up for the latest edition of the IOC’s flagship The Olympic Partner (TOP) worldwide sponsorship program, covering the Pyeongchang 2018-Tokyo 2020 Olympic cycle.
The program is expected to generate more than US$2 billion for the IOC.
Among Olympic sponsors, accommodation website Airbnb is cutting 25% of its workforce, while Japanese carmaker Toyota last week forecast a collapse in operating income for its current financial year running to March 2021.
By contrast, Procter & Gamble, the giant United States-based household products company that is another TOP sponsor, disclosed last month it was experiencing a jump in sales of cleaning products.
Commenting on the current state of sports sponsorship, Two Circles Chief Executive, Gareth Balch stated "live sport halted globally since March, the value that sports properties have been able to deliver brand partners has been limited, with cost-cutting in sectors that invest heavily in sponsorship also presenting a significant challenge in signing new deals.
"Though every corner of sport is hurting, we remain certain that sport’s economy will thrive in the long term, and when the impending recession bottoms out, all sectors will rely on the best marketing platforms available to grow their businesses."
Image: The AFL's 2019 sponsorship deal with Toyota was the largest in Australian sport.
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