Sponsorships can wait

In the past few days we have seen all sporting events being canceled or postponed. The press spent hours analyzing what had happened and speculating on what was about to happen.

Following the news from the comfort of our couches, all of that seemed much more important than it actually was. The temporary absence of our favorite sport or pastime might be annoying, but it will not change our lives. For most people suffering from this pandemic, sports are the least of their problems.

Having said that, for those working in such a rich and diverse industry, a world without sports, even if only for a few months, has very real negative consequences that cannot be ignored.

The sport ecosystem is broad. It includes athletes, teams, clubs, leagues, event promoters, broadcasters and sponsors. Each of them is being impacted in a different way by this new reality.

As a general rule, the impact is proportional to the proximity of the events. When the leagues come to a full stop, all activities that depend on them are impacted too. Ticket brokers, players and their support staff, stadia employees, security companies, bar and restaurant owners and employees in and around stadiums, street vendors selling Coca-Cola and merchandising, etc. Many lost their jobs or had their wages cut. Right now, they are all concerned when the next payment will come.

To describe the impact on all these different constituents of the sports value chain, I would need more time and space websites and magazines can offer me. For convenience and experience, let me detail how many sponsors are facing this crisis and what it is teaching us.

It is important to make it clear that among all those who work with sports, sponsors will be the least affected by event cancellations. The absence of sports has a relatively limited impact on the performance of brands, especially in the short term.

In this moment where survival is the main concern of all companies, the focus of executives and entrepreneurs has become business continuity and the operation of their supply chain to continue to provide products and services to their customers. The best companies are also working hard to ensure that their employees are protected and healthy.

Sponsorships can wait.

But like any crisis, this one teaches us valuable lessons.

First of all, there is nothing more important in sponsorships than a good contract.

A well thought through out and well written contract with comprehensive clauses make all the difference. The negotiation can be more laborious, but the results easily pay off. Although it is impossible to anticipate such a devastating virus in our lives, there are ways to protect against unforeseen events.

The most traditional is the inclusion of “Force Major”, a simple consideration that creates protections for the sponsor in case an unforeseen event prevents the promoter of the event from executing it.

Another important characteristic among the most experienced sponsors is that, whenever possible, they develop long-term relationships.

When a company has a long-term partnership with a sporting organization or event, any short-term problem is easier to solve. Rights holders have more flexibility to deliver rights on a later year or edition of the event.

The brands that use the sport tactically and do not develop longer relationships with their partners, end up running out of options. If the event is canceled and the sponsorship ends, recovering the investment becomes much more difficult task.

Finally, there is the most challenging question for marketers: the dependence of sponsorships in brand communications.

Good brands and good campaigns do not rely on sponsorships. They use the association with the sport to be more exciting, but sponsorships are never the central message of the brand. They amplify and contextualize it. Campaigns must be able to exist with or without sponsorship.

But quite often, briefings are not clear enough and or marketers end up developing unnecessary and exaggerated dependence of their sponsorships. Without them, the communication simply doesn’t exist.

In time, everything will return to normal. But normality will not come without sacrifices.

When the next crisis comes - and it will come - remember today's lessons: good contracts, long term relationships and sponsorships to amplify and not replace campaigns. Your sponsor life will be much less painful.