Disadvantages of Product as a Service (PaaS) Model
There is no doubt about the fact that the Product as a Service (PaaS) model is being adopted by companies on a large scale. This is because of the various advantages that the model has to offer. These advantages have already been discussed in the previous article. However, just looking at the advantages provides a […]
The 4 Basic Types of Derivatives
In the previous articles we discussed about what derivative contracts are and what are the uses of such contracts? However, one important point needs to be noticed. Today, if a new person wants to buy a derivative contract, they will be bewildered at the sheer amount of choice that they will have at their disposal. […]
Why College Education Should Not Be Free?
President Ronald Raegan had once famously said that “Big government is not the solution to the problem. In fact, big government is the problem?” This line is remarkably applicable to the current situation surrounding the student debt crisis. The student debt crisis in the United States has reached epic proportions. The total loans outstanding are […]
Yield To Maturity (YTM)
Yield to maturity is a fundamental concept which every bond investor must be aware of. The term yield to maturity might sound complex and intimidating. However, in reality, the concept is quite simple. In this article, we will have a closer look at what yield to maturity is as well as the manner in which […]
Accounts Receivable Turnover Ratio
Accounts receivable are a very important part of the current assets of any business. Like inventory, accounts receivable are considered a necessary evil to do business. Large companies hardly conduct any transactions on cash basis with their wholesalers and distributors. The transactions are largely conducted on credit and therefore lead to the existence of accounts […]
In the previous articles, we have already seen what sponsorship is and what are the various advantages and disadvantages which are associated with sponsorship. However, up until now, we have been assuming a one-to-one relationship between sponsors and the sporting league.
However, it is possible to have multiple sponsors which sponsor the same league. This is generally made possible by having a tiered or layered approach to sponsorship.
Most large events across the world follow this approach. This is because of the fact that sporting events nowadays require large sums of money and it is not possible for a single sponsor to be able to bear the expenses.
In this article, we will have a closer look at how tiered or layered sponsorship works and what are the benefits that result from implementing such sponsorship levels.
Traditionally, one sporting event was associated with a single brand. However, over the course of time, the budgets required to conduct sporting events have gone through the roof. As a result, it is no longer possible for a single brand to be able to meet all the expenses required by the league.
As a result, sporting leagues have now come up with tiered arrangements which allow them to take money from various sponsors.
Instead of committing to one sponsor, the management of the sporting league creates various categories of sponsorships. Each of these categories provides a differentiated value proposition as compared to the other.
Hence, it becomes possible for multiple brands to be associated with the same event. Sporting leagues have to plan the event in such a manner that the benefits provided to the different sponsors of the league do not overshadow each other.
In short, layered sponsorship is the process of breaking down the spectrum of economic benefits which can be derived from a sporting league and selling them bundled as packages to different organizations instead of selling all the rights to a single partner.
It is important to realize that not every event is suitable for tiered sponsorship. There are some kinds of events wherein both the sponsor and the sponsored entity are worse off if they use tiered sponsorship arrangements.
The common characteristics of events where tiered sponsorship can be used have been listed below:
Sporting events across the world have started adopting sponsorship levels. This is because of the fact that this arrangement provides several advantages Some of the advantages related to this model have been mentioned below:
Having multiple levels of sponsorship leads to a reduction in the ticket size of the sponsorship agreement. This means that a larger number of corporate entities can now afford to sponsor the event. This also means that sponsors are now able to derive similar benefits with a smaller investment. This means a higher return on investment for the sponsors as well.
The bottom line is that a level based or a tiered approach to sponsorship can be very useful for certain specific types of sports events. Hence, the management of the sports league should introspect about their capabilities as well as requirements before rushing to implement this system.
Your email address will not be published. Required fields are marked *
