Strategies sponsors use to get the best of sports sponsorship

In strategic management, investment decisions must consider the trade-off between the cost and benefit. An investment is valuable when its benefits outweigh the cost while it is a liability when it costs more than it benefits. This is why organisations must carefully weigh the value of their sports sponsorship events before making the commitment. In expensive leagues such as the English Premier League, the sponsorship amounts are often huge. An example is the recently signed £900million deal between Nike and Chelsea. Nike is expected to have gone through the motions of the decision making process and determined that sponsoring Chelsea in this £900million deal was the best way to maximise benefits over the period of the sponsorship.

The main considerations made by brands before undertaking sponsorship are: evaluating the performance of the organisation, the size of the fan base, and the passion and commitment of these fans. The size and passion of the fan base is a direct determinant of the level of sales that are likely to be realised when their fans buy the club clothing supplied by the sponsor. This is in reference to a kit sponsorship deal where the sponsor commits to provide the team with kits and also supply clothing to be sold to fans. But the benefit of making revenues from the clothing sold to fans is much lower when compared to the value of publicity and media coverage.

Sports are popular events and it is quite common to have them being watched by millions of audiences and fans around the world. This is especially true in the English Premier League which is among the most popular Leagues in the world. The logos of these brands are displayed on the kits of these players. This means that throughout the duration of the specific game, the audience watching from across the world will be having their attention diverted to the brand regularly. This is very effective considering that the games often take long: over 90mins for football games. The publicity given to these brands help to keep them in the minds of the consumers at all times. This makes it easy for them to remember these brands whenever they are shopping for products that are sold by them.

Research indicates that an average consumer is twice more likely to pick a product sold by a brand they can recognise than one they cannot recognise. In other words, when a consumer is faced with the choice of two brands, they will almost certainly go for the one they recognise. Brand recognition is therefore very valuable. In such cases, the real competition would be between brands that are recognised while the little known brands are badly disadvantaged. Sports sponsorship can therefore be diagnosed as being very important to the organisation and a prudent strategy for strategic managers. It increases brand recognition and this in turn increases the level of sales that the organisation can raise at a given time.