Anti-Money Laundering Activities at Commercial Banks
In the previous article, we have already seen how commercial banks inadvertently help anti-social elements in laundering money. We have also seen why commercial banks are preferred by anti-social elements when it comes to laundering money. We know that commercial banks have already put in place a lot of processes to stop this money laundering […]
How Corporate Taxes Impact Corporate Behaviour?
Corporate taxes form a significant portion of the expenses borne by multinational corporations. These corporations are almost obsessed with efficiency. They continuously try to reduce their expenses so that their profitability can be increased. This is the reason why these companies are very sensitive even to minor changes in the tax regime. In this article, […]
Quick Ratio – Meaning, Formula and Assumptions
The quick ratio is a variation of the current ratio. However, a quick ratio is considered by many to be a more conservative estimate than the current ratio. This characteristic fetches it the nickname of being the “Acid test ratio”. The difference between the current ratio and the quick ratio is the fact that quick […]
How Business Cycles Affect Start-Up Companies
Start-up businesses are affected by a wide variety of factors. Macroeconomic factors such as business cycles affect start-up organizations as much as they affect any other businesses. In fact, since start-ups are in a nascent stage, they face a bigger impact from these business cycles. Start-ups that face recession or slowdown early after their inception […]
Understanding Tax Terminology: Tax Rates
In the previous article, we discussed about how tax base calculations work. However, tax base calculations are just one part of the story. The other part of the calculation is the tax rate. Tax base and tax rate are multiplied to arrive at the tax amount owed by the organization. In this article, we will […]
In the previous article, we have already seen that sponsorship is one of the predominant ways in which a sports league can generate revenues. However, it is important to note that sponsorships can happen at various levels.
For instance, sponsorship can be given to an individual, a team, or even an entire sports league. In each of these cases, the types of sponsorships and the types of events will vary.
For example, individual sponsorship is more prevalent in individual-led games such as tennis. It is common for high-ranking individual players to get sponsorship when they play in tournaments such as Wimbledon.
In this article, we will have a look at the various types of sponsorships given to individual players as well as how it impacts the overall finance of the league.
Many times, sponsors pay individual athletes to use the jersey with their logo and branding. This is beneficial to the sponsor since their brand gets exposed to a large audience both on television as well as live in the stadium. Jersey sponsorship is the most basic form of sponsorship agreement which takes place in sporting events.
For instance, it is common for car companies to sport expensive equipment such as cars and driving equipment in exchange for having the right to place their logo on this equipment in Formula One. Such type of sponsorship is also common in team events such as football and rugby.
Many times, manufacturers of sporting bicycles have also sponsored famous cyclists in order to undertake cross-country biking expeditions. Manufacturers of sports equipment around the world are interested in sponsoring key athletes in big events since it gives increased visibility to their products.
The brands obtain positive publicity in front of a concentrated target market. On the other hand, individual sponsors are able to focus on training and practice without having to spend money on their nutritional needs.
In such cases, corporate sponsors may be ready to bear the expenses of the athlete in exchange for having the right to use the athlete’s name and brand image for marketing purposes.
The fact of the matter is that individual sponsorships have the lowest economic value. Over the years, individual sponsorship has largely been replaced by brand endorsements which will be discussed later on in this module. This is because of the fact that individuals do not have as much bargaining power as a team or a league.
Hence, it is common for corporations to offer very low compensation during negotiations. The athletes are unable to negotiate a higher compensation since they have limited bargaining power. However, individual sponsorships are good for budding athletes who have not yet proven themselves and have become a well-known brand name.
It also needs to be understood that even though individual sponsorship is a direct contract between an individual and a league, it is common for leagues to get involved.
Many times, franchisors of sporting leagues oversee the sponsorship process and take a commission of the proceeds. Athletes do not seem to mind this arrangement since the presence of the league as a mediator helps them obtain a better sponsorship deal.
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