Sport Commercial Sponsorship - Assignment Example

Provide a critical analysis of the article’s title.

Sport finds commercial sponsorship a tougher game in today's climate

Over the period of time and the development of capitalistic markets around the globe and especially in the United States and Europe, competition has grown extensively. Many companies find themselves with products and services that are no longer much different than their competitors. Moreover, the boom in the consumer industry has led to many companies divert their funds more into the product and marketing more than what has actually been the need. Still the sports market has developed to grow to be one of the largest around the globe with companies sponsoring players and teams to fund the costs related to major events (Milne et al, 1999).

The sports market has developed along with the consumer market. The sport events are larger and at a much bigger scale than they used to be before. Where many events may have used to attract a few thousand viewers, today these events may attract a relatively higher number and may reach tens of thousands. Sporting arenas have been developed to accommodate an exponential growth in the turnover of the viewers and sports have been tailored to entertain more of these people every day (Milne et al, 1999).

However, this increase in the development of sport events has led to huge costs involved in the maintenance of the facilities as well as the compensation packages of the management and players of the sports. The flair added by the companies in sponsoring events and players and their teams has been hiked up so much that now many of the same companies feel that it is hard to crunch out their advertisement budgets to meet the sponsorship amounts every year or season (Masterman, 2004).

The budget crunches have made it hard for the sponsorship planners to justify the huge financial costs applied towards supporting of such events and making it commercially viable for the company. This financial crunch for the companies has not just been because of the increased budget requirements by the teams and events. The downward trend in the consumer market has made many companies to cut their advertising budgets as many consumers are now not as actively spending as they used to globally. Since the team financial costs have been covered by these companies as much as up to three fourths of their total, it amounts to a huge burden on the sponsoring companies. Furthermore, with decreased revenues and increased costs, the companies operations managers or higher management is finding it more and more difficult to justify these spending to the stakeholders of the companies (Masterman, 2004).

However, although the budget cuts may seem to be the only reason for such a change in the marketing mixes of the companies, it is however influenced by many other factors. These factors may include a shift in the choice of sport of companies to sponsor- as many new sports have come into the arenas over the last decade. Extreme sports for the new generation and induction of many snow skiing and surfing sports have shifted the balance from the ever-present car racing and other sports of the type (Andrews, 2001).

Viewers may have switched their preferences to different sports for many reasons as well. One of them may be that as the present sports activities have been shadowed a lot by the corporations and influencing the way teams operate, their fans may have found the sports redundant and not entertaining any more. The sponsorship may influence the contracts of the players as well making the team selection and the plays seem biased towards the company. This redundancy may allow viewers to adjust themselves to a newer sport rather than sticking with the same (Andrews, 2001).

One of the many examples of such a switch is the higher ratings of golf on networks and its progressively developing fan following across the globe. Whereas this sport attracted just enough people as players at one time it has now become a recurring international event- as popular as tennis at one time. Many corporations have turned their focus on this sport and have helped in projecting it as an international event (Andrews, 2001).

Support of new sports form the companies may have made way to a new path for advertising managers as they may now spend within their budgets. Furthermore, corporations are also getting more image conscious and are planning to relate their image to more neutral images than focusing on a sport such as football where their brand name may be related to vandalism and profanity. This switch in advertising preferences has made many sports managements break down their initial high demands of reserved space and now more and more focus is given on the sponsor than the sport itself. Team names are less visible than the sponsor name on the shirts and kits of all players. Many viewers may have been put off as loyalties to respective teams may be switched and even to the extent where the sport is now not as interesting as it used to be (Amis & Cornwell, 2005).

However, it may not be sufficient to analyse these reasons for the lack of sponsorship present at this time. For many decades the events have been possible due to the participation of alcohol and tobacco industry. These corporations along with their huge hundreds of million dollar budgets have been key players in the development of all sports and a prime example is Formula one. The tobacco companies have engineered this sport since its initial commercialisation and have helped develop better teams and better cars in collaboration with other companies that manufacture technology (Amis & Cornwell, 2005).

However, as the legislations and laws have been amended and passed across the globe to discourage and bar advertisements form tobacco and alcohol industries. This has impacted a lot on the sport marketing as the major chunk now has to be picked up by many more sponsoring companies and where there used to be one tobacco company sponsoring the entire team, now there are a few grouped together to manage the same financials. This has led to lesser gains from the advertising spaces that are available as the uniforms and other placements of the brands are getting cluttered up with many different messages (Slack, 2003).

Over the years as a lot of companies had jumped into sport sponsorships, it has affected the overall outlook of the game. Players have been demanding more and more money than the sponsorship is actually worth to endorse different brands. Teams have been over paid by these sponsors in millions of dollars and euros to support one corporate image and another. Sport arenas have expanded to accommodate minimal brands with higher price tags attached to the sponsorships. The media has been employed to support advertising activities and cover these events extensively and had hiked the price of airtime rented for these events (Slack, 2003).

The above factors have influenced in a balloon effect in the sport industry. However, as many corporations have moved away from mainstream sports as the number of viewers have decreased substantially out of boredom or over presence of sponsorships in these events, these sports now have limited resources to grow and even conveniently complete their main events. The companies have also suffered due to these as these events have been set for high budgets and have increased the ticket value for presence in these events. The consumers have reduced to show up more as the extra funds have to be generated by increasing the money value of the entrance fee to these events (Slack, 2003).

Overall, the sport marketing industry has to face a lot of challenges in the coming years as they have to shift and balance out their budgets with the absence of the tobacco and alcohol industry especially after their more aggressive global bans in the advertising markets. Other type of companies will find it hard to manage on their own to sponsor such a big event on their own and the entire sponsorship may eventually look like more than brands playing with each other rather than players (Samaranch, 2004).