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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.
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