Sports Business: Global Sports Sponsorship to witness 37% drop due to Covid19

Sports Business,Sports Business News,Global sports,Global sports sponsorship,Covid19,Gareth Balch

Global sports sponsorship rights-fees will fall from $46.1bn in 2019 to $28.9bn (37% year-on-year decrease) in 2020 as the result of the Covid-19 pandemic according to projections by Two Circles.

The 2020 projections include a 45% year-on-year decrease in spend ($5.7bn) from Financial Services companies, who are projected to contribute $6.9bn by year-end.

The Financial Services sector, one of the hardest hit by the Covid-19 pandemic, was the biggest investor in sports sponsorship in 2019 with $12.6bn (27.3%) of total global spend. Just under $5.3bn of this was spent in the United States. With the financial services sector being one of those likely to feel the impact of the pandemic most acutely, its contribution to sports sponsorship expenditure is expected to fall by 45 per cent to $6.9bn. In 2019, its spend of $12.6bn represented the highest of any individual sector.

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Automotive, energy and airlines also ranked in the top 10 in sports sponsorship spend in 2019. Automotive, the second-biggest spender in 2019, will contribute $2.7bn in 2020 according to the projections, down from $5.9bn the previous year (a 55-per-cent decrease).

The Covid-19 pandemic has seen most new sponsorship agreements put on hold, and many existing agreements will be ended as a result of companies implementing major cost-cutting measures or going out of business. Sponsors will also be given ‘makegood’ sponsorship collateral and cash rebates due to the postponement and cancellation of live sports, significantly reducing their financial outlay in 2020.

The figures do not include spend on partnership activation, often non-contractual expenditure which will also be significantly impacted by cost-cutting measures.

Gareth Balch,  Two Circles CEO, said: “As a marketing platform to reach passionate and emotionally-engaged audiences at-scale in brand-safe environments, sports sponsorship is unrivaled/  However, with live sports halted globally since March, the value that sports properties have been able to deliver brand partners has been limited, with cost-cutting in sectors that invest heavily in sponsorship also presenting a significant challenge in signing new deals.”

Automotive, Energy and Airlines – three sectors like Financial Services hit significantly by the Covid-19 pandemic – also ranked in the top 10 by sports sponsorship spend in 2019. Automotive, the second-biggest spender in 2019, will contribute $2.7bn in 2020 according to the projections, down from $5.9bn the previous year (55% decrease).

Balch, however, believes innovation that will take place to deliver value for brands during the Covid-19 lockdown period – and a sustained period of spectator-less sport – will strengthen sports sponsorship as a marketing platform post-pandemic.

He added: “Though every corner of sports is hurting, we remain certain that sports’ economy will thrive in the long-term, and when the impending recession bottoms-out, all sectors will rely on the best marketing platforms available to grow their businesses. The sports properties that use this period to invest in their sponsorship propositions, moving away in particular from analogue-led logo exposure to digitally-driven, tangible audience engagement, will be those that thrive most post-Covid-19.”

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