Why Do Sponsors Fund Teams in Sports Leagues?

In the previous articles, we have already seen that the sponsorship of sports teams can happen at multiple levels. We have also seen how the sponsoring of individual athletes works and how it provides benefits to the sponsor as well as the athlete.

It is important to note that sponsorship can happen at levels which are higher than individual sponsorship. It is possible for sponsors to sponsor an entire team which is participating in a sports league or even an entire league itself.

In this article, we will have a closer look at how the sponsorship of sports teams works as well as the advantages and disadvantages of sponsoring a team.

Types of Team Sponsorships

Not all types of team sponsorships are the same. Team sponsorships can be divided into three major categories based on the type of funding.

1. Kit Sponsor: The first and the most commonly known type of sponsor is called “kit sponsor”. Kit sponsors pay money to teams in lieu of having their logo embossed along with the team name.

   For instance, the insurance company AIG, sponsors Manchester United. In this case, all the sports equipment required is provided by the kit sponsor. In such cases, kit refers to sporting equipment, team uniforms as well as other products which are commonly used while training as well as during match day.

   It is also common for kit sponsors to pay huge sums of money in order to obtain these rights. This is because of the fact that the benefits that accrue to sponsors can be quite large when the sports team is a well-known brand.

   The sports team is known to have the upper hand when it comes to kit sponsor negotiations. This is because, there are many brands trying to associate themselves with popular teams which evoke positive emotions in their minds of consumers.

   It is for this reason, that popular sports teams are known to associate themselves with multiple sponsors. The logos of these sponsors may be present in the same team uniform or in different team uniforms.

   For instance, some teams are known for using a different kit when they play at home and a different kit when they play away. The sponsors for each of these kits can be different. This is the case for several teams.

   

   There are many other variations of such multiple sponsorships. For instance, there are teams which have a different kit sponsor when they play in the English Premier League and a different sponsor when they play in the Champion’s League. Alternatively, it is also possible for multiple sponsors to be present on the same uniform.

2. Title Sponsor: Title sponsorship is method using which a sponsor can engage with the entire team. It needs to be understood that here we are discussing title sponsorship in relation to the team itself.

   The title sponsorship of the entire league is an entire subject which will be discussed later. Team title sponsorship means that the sponsor will obtain the naming rights of the team in return for sponsoring the team.

   For instance, Royal Challengers Bangalore (RCB) is a cricketing team based in India which gets its name from the product Royal Challenger. Royal Challenger is a popular mineral water as well as alcoholic brand in India.

   Similarly when energy company Petronas participated with Mercedes in order to sponsor a Formula One team, the team was renamed to Mercedes GP Petronas Formula One team. These brands have paid a huge sum of money to the team so that their name is associated with the team at a fundamental level. This is a form of co-branding which immensely benefits the brand if the team does well in the league. This is the reason why title sponsorship is quite expensive as compared to other forms of team sponsorships.

3. Venue Sponsor: It is possible that the teams may have already obtained sponsorship from other companies with regards to their kit and naming rights. However, that does not mean that they cannot raise more funds via sponsorship.

   There are many sporting teams in the world which partner with corporates in order to sell them the naming rights of their venue. Venue sponsorship works just like title sponsorship. However, in this case, the item being sponsored is not the team but instead the venue.

   For instance, Kia Motors has partnered with the Surrey County Club and as a result their venue is known as the Kia Oval. There are many such instances of renaming of sports stadiums worldwide.

   Another example is the renaming of the home venue of Dallas Cowboys to AT&T stadium in 2013. Similarly, in soccer as well, the home stadium or Bolton club was renamed to Reebok stadium and later to Macron stadium. Naming right of stadiums are relatively inexpensive since they do not provide the same level of exposure.

   However, it is important to note that the name of the stadium is mentioned several times in the commentary as well as by fans. Hence, there is some level of exposure for which sponsors are willing to pay the team.

Hence, the bottom line is that there are several ways in which the brand image of any sporting league team can be used to benefit the brand image of a corporation. It is for this reason that there are several ways in which sports teams can sell sponsorship to brands.

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