What has happened in the last 10 years that has seen such a slide in a once abundant multi-million dollar sponsorship deals? How is it that, the sponsorship industry can't seem to fathom the greatest asset available to them is an experienced salesperson that can identify and source new sponsorship income?
For me it's clear that incremental sponsorship revenue is the holy grail for rights holders; Boards and CEO's of sporting businesses are in desperate need of revenue to fund long-term development of their sports at elite and grass root levels. It astonishes me that leaders in sport now prioritise employment of sponsorship service managers, marketing coordinators, social media planners and brand managers. All these roles certainly have their place in the bigger sporting businesses such as the AFL, Cricket Australia and Rugby codes BUT not at the expense of the sponsorship salesperson. Surely the highest priority for rights holders must be to secure new income? It's highly unlikely Australian rights holders have no sponsorship inventory left to sell, and no successful business I know has ever hung out the 'sold out' shingle. An experienced sponsorship salesperson simply identifies and develops more inventory to meet demand.
We all know the appetite of Australia's top 500 businesses to showcase their cause-related activity to their consumers and shareholders, and attributes such as environmental sustainability, diversity activities and community and grass roots engagement are common in the asset register of most sporting businesses. Corporate demand for creative ways to reach audiences that are passionate about sport and the arts hasn't disappeared either.
It wasn't all that long ago that in my role as Sales Director of IMG I had the pleasure to lead a national sales team of 20 first class sponsorship salespeople. This team's charter was to sell sponsorship across a portfolio of Australia's leading events and sporting teams including The Wallabies, The Socceroos, The Bathurst 1000, Gold Coast Indy, The Australian Golf Open, Australian Fashion Week and the list goes on. In any one year, the IMG team would sell up to $100 million in sponsorship sales on behalf of rights holders.
Within the period between 2002 and 2008, the ground shifted from a sales-generated business to an account management/retention business. WHY? Rights holders became greedy - IMG and other experienced sponsorship agencies were so successful that the sports they were representing felt that the sales requirement was redundant!! They felt increasingly uncomfortable about paying big commissions on long-term sponsorship contracts that were now firmly entrenched with their respective sports. They introduced a new model based around account management which could be brought in-house, saving millions in commission fees. For a few years this decision did save some dollars to the bottom line, until the time came for the sponsorship to be renewed. And this is when the Shit Hit The Fan
Here's a typical scenario. A multi-million dollar sponsor decides to take a new direction in marketing and declines to renew their Naming Rights sponsorship. The rights holder says "No problem". They prepare a shiny new sponsorship proposal and charge into the market. This is where the wheels come off. The problem is that the highly capable account manager that replaced the redundant sponsorship sales executive has absolutely no idea about the sales process required to uncover new partners. They don't have wide corporate sales networks and relationships that open doors built over 15+ years; not to mention the sales skills needed to bring a new prospect to the negotiation table. This impact is magnified when you have a cluster of sponsors expiring at the same time; the equivalent of Armageddon in the rights holders' world. I can think of a dozen Tier One sports that have found themselves in this exact predicament. And to this day have still not recovered.
How many multi-million dollar sponsorship assets from 10 years ago do we see selling for a fraction of their once lofty price ranges? I don't buy into the excuse that the purchasers of sponsorship assets are moving into a plethora of new media options. Sponsorship remains one of the most creative, integrated, innovative, and content-rich ways to connect with audiences in Australia's increasingly fragmented media landscape.
For me, it's a simple matter that the once abundant supply of highly talented sponsorship salespeople has all but disappeared and the ability to show the unique value proposition that sponsorship can offer our Australian brands is being poorly portrayed. Mark McCormack the founder of the IMG and the global sports management industry would be turning in his grave.