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In the previous article, we explained the concept of cost overrun. We also explained how cost overruns have a negative effect on the finances of the entire project. However, it is strange that despite being so harmful to infrastructure projects, cost overruns are still ubiquitous. It is common for more than 50% of megaprojects to […]
Open Banking – Meaning, Need, Advantages and Disadvantages
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Advantages and Disadvantages of Preferred Shares
In the previous article, we understood what preferred shares are and also paid attention to their characteristic features. In this article, we will take the conversation forward by understanding the pros and cons of investing in preferred shares. An analysis of the commonly stated pros and cons helps investors evaluate the use of preferred shares […]
Asian Financial Crisis of 1997
The Asian financial crisis was another major currency crisis that happened during the 1990’s. The crisis assumed epic proportions. This is because it started in only one country i.e. Thailand whose currency faced an attack from speculators. However, in a very short span of time the crisis had gripped the entire South East Asian region. […]
Hard Brexit vs. Soft Brexit
The British government has held a referendum wherein the majority of British citizens voted to leave the European Union. This phenomenon has been popularly named “Brexit” by the media. The fact that Britain will leave the European Union is certain. However, there is still a lot of uncertainty regarding the terms on which Britain 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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