Exploring the Advantages and Various Types of Sports Sponsorships in Today’s Sports Industry

Key Takeaways:

• Introduction
• Benefits of sports sponsorships
• Types of sports sponsorship agreements

A few weeks back, Nike, one of the biggest sportswear brands, announced a split with Tiger Woods, arguably the best golf player of all time. This split marks the end of probably the most successful sport sponsorship and partnership in the history of sport. Over the years, many sportsmen have become synonymous with certain brands owing to successful sports marketing campaigns and sponsorship agreements. Nike’s agreements with Roger Federer and Micheal Jordan, MRF’s sponsorship agreement with Sachin Tendulkar, Emirates’ sponsorship with Real Madrid, etc., have been touted by sports marketing experts as shining examples of successful sponsorship agreements.

Why is sport sponsorship an essential element in today’s sports industry?

There’s a reason why sports brands opt for the sponsorship route and sign agreements with sports players and teams. First and foremost, by signing with a popular sport team or player, brands can make themselves visible to sport enthusiasts, especially to the fans of the team or player. The main aim behind increasing the visibility is to take the brand to a larger audience, which might help to expand the sales. Secondly, any sport is generally associated with values such as teamwork, discipline, integrity, and dedication. Hence, brands which sponsor sport teams automatically create a positive image about themselves. This, in turn, helps sports brands to increase customer engagement and enhance direct sale opportunities.

Thirdly, sports mostly attract youth and middle-aged people; this age group, being the working population, accounts for most of the consumption in an economy. Brands by sponsoring teams, players, or sport events, can, thus, engage in targeted marketing. The next big advantage of sponsorship agreements is that media exposure to such partnerships and collaborations is huge. The advent of social media platforms has further helped in widening the reach of sports brands. Apart from all these advantages, a unique benefit of sports marketing and sponsorship is exclusivity. This means sports brands, in their agreements with teams or players, generally add a clause which refrains the team or player from endorsing products or services of any of its industry competitors. This is the reason why sports jerseys or player merchandise feature just one sports brand. Exclusivity helps sport brands to gain a significant lead over their competitors in the industry.

What are the popular sport sponsorship types prevalent in the industry?

The sport sponsorship industry has evolved tremendously in the past few years. The growth of the industry in Mexico, Canada, and India, have played a vital role in this evolution. The Mexico sport sponsorship industry is anticipated to be the fastest growing with a CAGR of 9.2%, while Canada and India are expected to bag the second spot jointly, with a CAGR of 8.6% by 2032. Due to this evolution, different types of sport sponsorship agreements have come up in the industry.

Sports athlete sponsorship is one such type of sponsorship agreement. This type of sponsorship agreement mainly revolves around an individual sportsperson or athlete. Usually, sport brands sign a contract with an athlete for a specified period. During this period, the brand might ask the athlete to feature in commercials, do press conferences, endorse products on social media, and wear branded apparel. In return, the brand provides the athlete with personalized kit, apparel, along with fees and other perks. This type of sponsorship agreement, though mainly popular in individual sports and athletics, is getting significant traction in team sports also, especially for signing popular sports stars. Currently, almost all famous sports players and athletes such as Usain Bolt, Lionel Messi, Cristiano Ronaldo, Virat Kohli, LeBron James, Magnus Carlsen, Novak Djokovic, etc., have signed individual contracts with one or the other sport brand.

Sports organization sponsorships is another type of sponsorship wherein the sport brand signs a deal with the sports team or the organization itself, instead of individual players. For instance, just before the Men’s Cricket World Cup 2023, Board of Control for Cricket in India (BCCI) and Adidas signed a deal; the deal made Adidas, the official sponsor of Indian Cricket Team. Under the agreement, Adidas will provide match jerseys, practice kits, and accessories to both Indian men and women cricketers. Similarly, Adidas also signed deals with Real Madrid and Manchester United, two of the most followed soccer teams. In some cases, corporate brands also sponsor leagues or stadiums; Barclays English Premier League, Tata IPL, Manchester City’s Etihad Stadium, are some examples of corporate sponsorships.

The third type of sports sponsorship is event sponsorships; in this type, a brand sponsors the entire event. Brands target sports events that are globally popular, such as the Olympics or FIFA World Cup. Through event sponsorships, brands cover the expenditure associated with hospitality, catering, media publicity, and event management. In turn, they earn revenue through ticket sales, merchandise, and branding.

To sum it up, sport sponsorship has become an indispensable component of the modern sports industry. As the passion for sports increases, the value of sport sponsorships is bound to rise. Furthermore, the changing dynamics of the sports industry call for different types of sports sponsorship agreements which cater to the various needs of sports players, teams, and events.

To have deeper understanding of the different aspects of the sport sponsorship industry, talk to our experts today!

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