Sports Sponsorship Sport Sponsorship Analysis of Event  Essay

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  • Subject: Business - Management
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Excerpt from Essay :

Sports Sponsorship

Sport Sponsorship

Analysis of Event, Sponsor, Consumer Relationship

Private organizations may be enticed to provide a share of the funding necessary to design and construct a sport facility or support the planning and operational phase of an event until the first revenues arrive. Companies may become involved in financing for three chief reasons. First, the company may seek to provide a facility within which to deliver its own products or services or its own major event. This is essentially a method of vertical integration.

Event

A sport organization may wish to construct a facility that can be used to house its own events: The Rugby Sevens. The relationship can also work the other way around: for example, a facility might independently organize events to help contribute towards better- capacity utilization. Many larger multi-purpose arenas not only solicit the interests of event promoters but also operate their own event departments, which develop and run new events (Quinn, 1982).

Key Sponsor: HSBC

Sponsor Attributes

Clearly, their margins in these events are excellent because of the fixed venue costs. Most facilities, however, do not seek managing events as their core business. Alternatively, a television network may supply money for a stadium in order to secure exclusive rights to televise the hosted activities. Or a company may contribute to a sport facility's construction in order to obtain advantageous associations as well as carefully positioned exposure. This sponsor- ship option may include naming rights to the facility and advertising and signage space around the facility, including the scoreboard (Abratt, et al. 2007). Second, companies may commit financial support for no other reason than as an investment opportunity. Sometimes this comes in the form of joint ventures between the real estate developers involved in different aspects of the project. For example, some might specialize in hotel or night club developments, and can be enticed to invest in a new facility. A third option is to raise money by selling portions or shares of the facility to the general public (Bagozzi, 2009).

This has rarely if ever been attempted with sporting events, although in theory the idea has merit for the same reasons that it works with a facility. The only troublesome issue is that the legacy of an event does not have the same tangibility as that of a facility. Larger events companies, rather than any single event, have been publicly listed. The mechanisms governing company 'floats' are sophisticated, varying from country to country, and will not be discussed here.

Node Structure Attributes

The growth and professionalization of events has meant that these now serve a multitude of agendas, reflecting government objectives, regulation, media requirements, sponsor needs and community expectations, among others (Baldwin, 2006). A number of stakeholders are present in the event, all with various needs and conflicting demands. The success of an event can be achieved through the way in which these needs and demands are balanced. The event bidding process is also faced with this range of stakeholder expectations. With this diversity of stakeholders, there are a number of ways in which the event bidding team can be presented and structured.

Different structural types such as simple organizations, functional or divisional groups, matrix organizations, networks as well as other configurations are also present. Although event bidding teams may be formed with particular structures that suit one of the above possible types, it is worth looking at the network aspect of the event bid team process in more detail (Bagozzi, 2009).

Fig. 1.1 Node Organizational Structure

This is because major events predominantly epitomize a virtual corporation in which, though relationships may be ongoing, they remain more informal, less structured, and thus more dependent on consistent performance to ensure recontracting in the future. Some events can be seen as an extreme form of virtual organization because the participants come together, literally, only once a year to stage the event and then immediately part ways until the following year (Waite, 2002). At the more extreme end, the participants come together once and then disband the organization completely (which occurs with the Olympic Games). This virtual corporation relationship is true of event bid commit- tees, where the level of interdependence of partners is substantial, with organizations coming together to support and enhance the bid, ensuring a high degree of resource and competency sharing. After the bid process these organizations disband the relationship formed and develop or seek new arrangements.

Sponsor Node Structure

As for events, it is clear that these involve a comprehensive network of partners as a key requirement for success. Wallendorf & Arnould (1991) posited a typology in which the relationship types present in an event network were developed. The event network represented a focal (dyadic) relationship between two principal actors: a primary relationship involving participants with direct ties to the dyad partners, a secondary relationship representing organizations that influence each other in their relationships with a dyad partner, and a tertiary relationship relevant to only one dyad member. The focal relationship exists between the key partners in the network, usually represented by the event bidder and the owner (promoter) who owns the event on behalf of groups such as the sport-governing bodies including the IOC or FIFA. Equally, an event agency such as IMG might own the event. The network begins to emerge through the decisions of this event owner in seeking tenders for the right to host the event. These tenders may extend to a facility directly, or to a host country or other like partner (Bagozzi, 2009).

The result of this 'host-seeking' tends to be the formation of several bidding teams that become responsible for establishing committees. Ultimately, the event owner will narrow down several potential networks to identify the one with the successful bid. The other focal partner in the dyad then emerges as event host, and will initially begin at the other end of core focal relationship as event bidder. This network partner might represent such groups as the facility, the sporting organization or the community. This basic relationship is one in which initial administrative power rests largely with the event owner. The event owner is in the position of deciding on the successful bid applicant. The event owner determines where the event will be held and can set the rules by which the final choice will be made (as shown in the IOC application document example previously) (Bagozzi, 2009). Given that there exists this significant administrative imbalance in the focal relationship, the bidding team is required, almost by default, to present a highly specialized network of relationships to the event owner. In order to strengthen its position, the event bidder must seek to enter into relationships with other organizations in order to provide resources and ties that will benefit its bid.

The event-bidding partner must seek to become attractive to the event owner, not only as a result of the bid team composition and technical expertise gathered but especially through the micro-network of other already established relationships that it is able to offer to its partner (Wakefield, 1995).

Consumer Market Segments

Incorporating the key success factors identified by Bagozzi, (2009) internally the bid team can maximize its composition through the inclusion of key experts in order to convince the event promoter that there is sufficient expertise and capacity within the bid team to successfully develop the requirements relating to the event. Technical expertise reflecting equipment and staff knowledge is an important element in the bid presentation. Externally, the bid team can develop political support and access to major infrastructure projects in support of the bid. The introduction of these key resources through relationships with key individuals and organizations strengthens the relationships that the bid team is seeking to form with the event owner. Primary relationships associated with the event bidding team clearly emerge when analyzing the network process (Wakefield, 1995). These primary relationships often include the integration of the event owner and event bidder into groups such as the national sporting organizations (NSOs), state sporting organizations (SSOs) and even event participants. Primary connections enable enhancement of the focal relationship. For example, a bid team forming an alliance with organizations representing athletes such as players' unions or athlete management companies would do so in order to strengthen its organization with high-profile identities to place its bid at the forefront in political, media and profile terms.

Secondary connections, involving links between key dyad partners, can also be formed. Secondary relationships can be represented through such groups as sponsors and the media. The capacity for these groups to develop relationships within and across boundaries is an important process in the development of a successful bid. Local media brought in by the event bidder and international media brought in by the event owner may represent such a secondary relationship. Media and sponsor groups representing the local community have a clear role to play in their tertiary relationship with the bid team (Wallendorf & Arnould, 1991). Positive involvement of the media will have an effect on the communication and exposure that a…

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