The Power of Sponsorship in Sports: A Look at Relationships, Ad Space, and Costs

I was in a heated debate with some of my European counterparts about “attention” as an economic AND social utility. Huh? Too meta, Ron. Explain.

Well, we are a culture of consumption.

Smart phone scrolling, computers games, cable tv, streaming services, sports, live concerts and music, festivals, wine tastings, and the list goes on…

We are constantly filling our free time with leisure activities. And all of those things are essentially competing for our attention. And we are also competing with each other for attention. The coolest kids in school got all of the attention. The celebrities of today get our attention. Attention has both economic (advertising) and social utility.

We prioritize the things we enjoy the most into buckets and try to spend as much of our time doing this things as we can. Those buckets that we create are also impacted by the addictiveness of that activity.

Let me break it down.

PC games are addictive for 3 core reasons that are embedded into our core psychology:

1. competition – highly competitive people want to keep playing so they can win
2. marginal improvement – we get marginally better (hopefully) which fuels us to continue playing
3. social interaction – fulfills maslowe’s need for community and interaction

Let’s now shift over to Sports, which I think is one of the most interesting phenomena in humans.

Why is sports so addicting (there is some overlap with gaming)? To the point that we call people who like sports: fans or fanatics.

1. Deeply rooted loyalty that is often hereditary or based on proximity – My family were always Lakers fans and I was born in LA
2. Competition – wanting your team to win above other people (sense of pride)
3. Hope – the hope your team can lift the trophy at the end of the season
4. Social interaction – You share this passion with others and connect because of it

Sports have a vicegrip on their fans. I personally know people that have been lifelong fans of the same sports team who has never even sniffed a trophy.

If you think about sports as a product that fans purchase with their attention, the result hardly matters to a lot of people. It’s actually a very interesting examination of human psychology and we should commend the brilliance of sports teams in how they have facilitated this loyalty and passion.

This is why sponsorships are so lucrative for brands(what a segue). This is why brands are willing to spend millions of dollars to get their name on jerseys or on stadiums. Because sports have the most sticky customers imaginable. Once a fan, almost always a fan.

But sports sponsorships are a bit confusing to some and deals are not often publicized. In this blog post, we’ll explore how these partnerships are formed, how ad space is sold, and the costs associated with sponsorship deals and I will use soccer (or football for my metric system-using comrades) as an example.

First, let’s talk about ad space.

Selling Ad Space

When a brand “sponsors” a sports team, they are entering a mutual partnership where the brand pays money to be attached to the club. And clubs have what we call “advertising space,” or the available physical spots they can sell to brands to promote themselves. Because of digital, those ad space categories are growing.

Let’s list a few.

Sports clubs offer ad space to sponsors in various ways and places, including:

• Jersey sponsorships: Placing a sponsor’s logo on the team’s uniforms.
• Stadium branding: Utilizing signage, banners, and digital advertising within the stadium.
• Digital advertising: Displaying sponsor ads on club websites, mobile apps, and social media platforms.
• Matchday programs: Featuring sponsor ads in printed matchday programs distributed to fans attending matches.
• Player endorsements: Having players endorse sponsor products or services through interviews, social media posts, or other promotional activities.
• Fan engagement events: Providing opportunities for sponsors to engage with fans through activities like product launches, meet-and-greets, or interactive experiences.

These different avenues allow sponsors to maximize their brand visibility and reach a wide audience of sports fans.

Ad space is not all created equal and some is naturally more advantageous and visible. That will typically cost more. Let’s shift over to cost now.

Cost of Sponsorship Deals

The cost of sponsorship deals can vary greatly depending on the club’s popularity, success, and global reach. Big soccer clubs, like Manchester United, Real Madrid, or Barcelona, often secure multi-million dollar sponsorship agreements. For example, earlier in 2023, Manchester United signed a 3-year minimum deal jersey sponsorship deal with Qualcomm worth 60 million pounds per year.

These deals typically involve a combination of fixed payments, performance-related bonuses, and additional marketing commitments.

Let’s take a look at five more examples of big sponsorship deals for real soccer clubs:

1. Barcelona: In 2022, Barcelona signed a four-year kit sponsorship deal with Spotify worth 280 million euros total.
2. Liverpool: In 2019, Liverpool agreed to a new eight-year kit deal with Nike worth a reported £30 million ($41 million) per year.
3. Paris Saint-Germain (PSG): In 2017, PSG signed a five-year sponsorship agreement with AccorHotels worth €50 million ($55 million) per year.
4. Bayern Munich: In 2018, Bayern Munich extended their partnership with Deutsche Telekom for another four years, reportedly worth €900 million ($992 million).
5. Manchester City: In 2020, Manchester City announced a long-term partnership with Puma, estimated to be worth around £65 million ($90 million) per year.

These examples highlight the significant financial investments that sponsors are willing to make to associate their brands with top soccer clubs.

It’s important to note that sponsorship deals are unique to each club and sponsor, and the specific details and costs can vary significantly. The examples provided are real-world illustrations of the scale and magnitude of sponsorship agreements in the soccer industry.

These deals are massive. But how are they so massive. Well it’s like I mentioned earlier: the volume and QUALITY of attention that sports clubs garner is unmatched. The fans are loyal to the bone. They provide their undivided attention during matchday.

Metrics Considered by Sponsors

Sponsors love reach. They love to see that their brand will be seen by the most people that fit their persona and in positive ways.

A recent football executive told me: “some clubs have created a culture of winning. This is why they get the biggest sponsorship deals and can continue buying the most expensive players. It is a closed loop for them and hard for us to compete.”

However, sponsors consider several key metrics when determining which clubs to partner with and the value of sponsorship deals. Let’s explore some of these metrics:

Reach and Fan Base

Sponsors analyze the size and demographics of a club’s fan base, looking at factors such as social media followers, website traffic, and television viewership. Clubs with a large and engaged fan base offer greater brand exposure and potential customer reach, making them more attractive to sponsors. They use tools like social media analytics, web analytics, and viewership ratings to gather quantitative data on the reach and engagement of the club’s fan base. Sponsors track key indicators such as social media followers, website traffic, television viewership, and media value calculation.

Performance and Success

The performance and success of a club on the field can significantly impact sponsorship deals. Sponsors often seek to associate their brands with successful and well-known clubs that consistently perform well in their respective leagues. Clubs with a history of winning championships or participating in high-profile tournaments are more likely to attract lucrative sponsorship agreements. Sponsors analyze historical data and statistics, including the club’s past performance, records, and achievements. This information helps sponsors evaluate the club’s competitiveness and marketability.

Global Appeal

Sponsors and international brands look for clubs with an international fan base and a strong presence in multiple markets. Clubs with a global following offer sponsors the opportunity to reach a diverse and widespread audience, increasing brand visibility and market reach.

Sponsors conduct market research and audience analysis to understand the club’s popularity and following across different regions. They assess data on international fan engagement, social media reach in various countries, and brand visibility in global markets.

Brand Alignment and Values

Sponsors consider if the club’s image, values, and reputation align with their own brand identity. They aim to create a positive association with the club and its values, enhancing their own brand perception in the eyes of consumers.

Sponsors examine the club’s brand identity, messaging, and public perception to determine if it aligns with their own brand positioning and target audience. This analysis involves qualitative research, including surveys, interviews, and focus groups.

Marketing Opportunities

Sponsors evaluate the various advertising platforms offered by the club, such as jersey sponsorships, stadium branding, digital marketing, and player endorsements. They also consider the potential for promotional events, fan engagement activities, and collaborations to further enhance brand visibility and customer interaction.

These metrics, among others, help sponsors determine the value and feasibility of a sponsorship deal with a particular club. The more favorable these metrics are, the higher the likelihood of securing a substantial sponsorship agreement.

It’s important to note that these metrics are not exhaustive, and the specific priorities and considerations of sponsors may vary. Each sponsorship deal is unique and depends on the specific objectives and strategies of both the club and the sponsor.

Sponsors assess the club’s available advertising platforms and marketing channels. They consider the visibility and exposure offered by jersey sponsorships, stadium branding, digital marketing, and player endorsements. Sponsors may conduct market research to gauge the effectiveness of different marketing channels and platforms.

Overall, sponsors use a combination of quantitative and qualitative research methods to measure these metrics. They rely on data analytics, market research, brand analysis, and audience insights to make informed decisions about sponsorship opportunities. The specific measurement techniques and tools used may vary depending on the sponsor’s resources and objectives.

It’s important to note that sponsors may also collaborate with agencies and research firms specializing in sports marketing and sponsorship evaluation to gather data and insights for measuring these metrics accurately.

Sponsorship deals play a vital role in supporting sports clubs financially, while sponsors benefit from increased brand visibility and exposure. By understanding the dynamics of these partnerships and the metrics considered, both sports brands and sponsors can navigate the world of sports sponsorship successfully.

The Role of Digital in Sports Sponsorships

There has been a general shift from analog to digital in sports sponsorships which has been driven by the overall shift in consumer habits and the desire of brands to engage with a wider audience. With the rise of digital platforms and streaming services, consumers now have more control over their viewing experience and can access sports content anytime, anywhere. This shift has created new opportunities for brands to reach their target audience through targeted digital advertising and sponsorships. Brands recognize the power of digital platforms in reaching a global audience and are investing in digital sports sponsorships to align with consumer preferences and maximize their brand exposure in the digital age.

At Liquiditeam, we are building Unyfy, which is our way of addressing the need for digital solutions that embed into existing sponsorship and fan engagement goals. It’s a way for sports clubs to add more digital inventory, gain more control of fan data and insights, and build direct-to-consumer business streams.

In the following sections, I will discuss how digital fits into sports sponsoring and specifically how Unyfy fits into each category.

Fan Apps and Dedicated Platforms

There is a signification shift from analog to digital rights

One aspect of how digital technology is shaping sports sponsorships is through the use of fan apps and platforms. Sports clubs are developing their own dedicated apps or partnering with existing platforms like Unyfy to create immersive and interactive experiences for fans. These apps serve as a central hub where fans can access exclusive content, engage with their favorite teams and players, and participate in various activities. Sponsors can take advantage of these fan apps by securing digital inventory, such as banner ads, sponsored content, or interactive features that allow fans to directly engage with their brand. For example, in Unyfy, clubs can launch votings, AMAs, and user-generated campaigns where fans can win exclusive merchandise or access to special events by interacting with sponsor content.

See how Borussia Dortmund gave away a sweet limited edition black jersey from a fan voting here

Gamification

Another emerging trend in sports sponsorships is the integration of gamified experiences. Sports clubs and sponsors are using gamification techniques to create interactive and entertaining experiences for fans. This can include virtual games, challenges, or contests that fans can participate in through digital platforms. By incorporating gamified experiences into sponsorships, brands can capture the attention and enthusiasm of fans while increasing brand visibility and engagement. For instance, a sponsor may create a mobile game where fans can compete against each other to win prizes and earn points redeemable for exclusive discounts on their products.

In Unyfy, users can be awarded for their behavior within the app. This means you can setup automated daily rewards just for logging in, commenting, boosting, participating in votings, etc. Those rewards can be tokens, NFTs, and more. This serves to increase activity and retention of your userbase, which is increasingly seen as an important metric that dictates sponsoring deals.

Direct to Consumer

Furthermore, the direct-to-consumer (DTC) model has gained traction in the sports sponsorship landscape. Digital platforms and e-commerce channels have made it easier for sports clubs and sponsors to directly connect with fans and consumers. Sponsors can leverage DTC strategies to offer personalized promotions, exclusive merchandise, or subscription-based services to fans. This direct engagement allows sponsors to build stronger relationships with their target audience and gain valuable insights into consumer preferences and behaviors.

With Unyfy, the entire platform is Direct-to-Consumer. You own the fans and the data. You aren’t borrowing their attention from social platforms. And consequently, you can offer your sponsors lucrative activations that reach them directly and in very creative ways.

Blockchain

The rise of blockchain technology and non-fungible tokens (NFTs) has also brought new possibilities to sports sponsorships. Blockchain allows for secure and transparent transactions, enabling the creation and trading of digital assets like NFTs. Sports clubs and sponsors can leverage NFTs to offer unique and exclusive digital collectibles that merge with live events.

These collectibles can range from digital artwork or virtual memorabilia to access tokens for special events or experiences. By associating their brand with these digital collectibles, sponsors can tap into the growing market of NFT enthusiasts and enhance their brand value. For example, a sponsor may collaborate with a sports club to create limited edition NFTs featuring memorable moments from the team’s history, which fans can collect and trade.

Closing Thoughts

In conclusion, the world of sports sponsorships is a dynamic and multifaceted landscape. Sponsors carefully consider various metrics, including reach, performance, global appeal, brand alignment, and marketing opportunities, to determine the value and feasibility of partnering with a sports club. By analyzing data, conducting market research, and leveraging audience insights, sponsors can make informed decisions about sponsorship opportunities that align with their brand objectives.

Remember, attention is a valuable commodity, and sports have a unique ability to captivate and engage fans like no other. Whether it’s the thrill of competition, the deep-rooted loyalty, or the hope of victory, sports have an undeniable impact on our lives. As sponsors and brands, it’s essential to harness the power of sports sponsorships to forge meaningful connections with fans and elevate our brand presence.