There is probably not a single industry that has gone unaffected by the pandemic
‘As bookmakers we were faced with a sharp reduction in the amount of bets we could offer due to the cancellation of sporting events,” – Alexey Khobot, an expert in the betting industry, claims. Thus, betting companies did not have a big choice of matches to offer. Alexey Khobot points out that most of the bookmaker companies decided to focus on eSports and even organised their own eSports tournaments.
The second challenge came mainly from a marketing perspective as sports was paused due to the pandemic. To find a solution to this issue Alexey Khobot suggests we look at global practice. According to the European Sponsorship Association, 72% of brands continue to look towards expanding sponsorship assets. This shows that sports sponsorship remains a sought-after advertising channel.
As for the major partnerships of brands with the Olympics in Tokyo and Euro 2020, at the moment no sponsor has walked away from the contract they have in place. The organisers kept the year ‘2020’ in the title of both events, primarily to save cost on the production of promotional materials and souvenirs.
However, in the most affected sectors such as tourism, some companies backed out of sponsorship agreements. There are similar cases in many airlines sponsorship contracts.
How did companies react to what became ‘advance payments’ due to the suspension of various competitions?
Alexey Khobot explains that most sponsors wanted cash compensation, while the relevant sporting entities are only interested in compensating for the loss of bonus options written into the contracts.
I suggest a sponsor chooses a variant with additional options for the next season and support sports. First of all a company should make sure that the value of additional options exceed the advanced payment.
What will change in sports sponsorship as a result of the pandemic?
Sofia Machulsky, investor in betting projects, highlights two main changes sponsorship contracts and their activation:
Firstly, companies will carefully write force majeure and risks into contracts, as well as include all options in the cost sheet. Sofya Machulsky explains that a sponsorship contract is often formed as a whole package for a single price, where it is impossible to individually separate the cost of LED-minutes, 3D-coverings or naming rights. And if any of these options cannot be implemented, then the partners will progress into a new round of negotiations. I think brands will now structure the detailed cost in advance.
Secondly, we are already seeing a sharp shift in focus towards social and digital activations. Sport’s suspension period has shown both sides that we are too dependent on physical media such as signs and advertising hoardings. Sofya Machulsky admits, that it’s important for sponsors to work with CRM, fan bases, collaborative content, and audience engagement.
Companies that adopt such a strategy will have no problems concerning sponsorship rights in the event that sport is once more suspended in such a fashion.