Sports Sponsorships in the Post-Recession Era

by Emmett Jones

The recession, if nothing else, changed the way money flowed in the sports business industry.  Sports entities themselves were less willing to spend money, even laying off workers and cutting costs to keep their heads above water, and others were less than willing to invest money in sports markets because they were unsure of a positive investment on their return.

But now, we seem to be seeing some signs of a turnaround, and the big question is, “What will the sports sponsorship industry look like in the future?”

Bridgestone sponsored the NHL's Winter Classic, which is arguably the crown jewell of the Hockey Season.

Its not surprising that we’ve seen some new comers in the sponsorship pool.  Right now, some of the prices are at such a discount that even the most risk averse consumer has considered a media buy or two.  It is also not a surprise that many of the old stalwarts have stayed in the sponsorship market; they know the sports sponsorship market is lucrative, and they aren’t willing to potentially lose a premium position due to an 18 month slow-down.  That being said though, the one pattern that does seem to be developing is that idea of a shorter-termed sponsorship deal.  Yes, even the most consistent sponsorship buyer is a little leery of signing a 20 year $100 million dollar deal in 2010 (I know, it shocked me as well.)  Examples? Bridgestone has a year-to-year sponsorship deal with the NHL and NFL, the recent deal by Sun Life Financial to obtain the naming rights to the previously named Dolphin/Landshark stadium is reportedly only for 5 years and $20 million dollars (compare to Reliant Stadium down in Houston or Fed-Ex field in Washington)).

But where do we go from here?  Was the recession so damaging to the sensibilities of companies looking to invest in sports that the days of the 20 year sponsorship deal are never to return again?  The recession was clearly a reminder that no investment, no matter how appealing, is completely safe and there is nothing to prevent another recession happening in the long term, let alone the short term.

For now, we’re definitely in a wait-and-see mode.  But I think we will see sponsorship deals return to near pre-recession levels.  Its pure demand.  One company will realize that adding a year or two to a deal will make them more appealing than another company, another company will realize that adding a few more years will get them picked over that other company…and pretty soon we’re back to pre-recession standards.  Is it the most prudent choice of action when a recession could be right around the corner?

…I guess it all depends on exactly how far away we are from the next recession.