The world of sport can be big business, so perhaps it comes as no surprise that there is a growing link between some of the most famous sports teams in the world and some of the most successful companies. But what is really in it for them? Can sports sponsorship really bring benefits to companies, or is it sometimes a case of business owners and entrepreneurs taking the opportunity to get involved with their favorite teams?
For companies such as Red Bull Racing, the motivations are clear. When the company purchased the Jaguar Formula One team in 2004, the move provided an opportunity to gain unprecedented levels of brand recognition to millions of motor racing fans all around the world. The team also runs a young driver program, and the high-energy world of F1 is clearly a good fit for the brand.
Roman Abramovich is a serial sports investor, who makes his purchases on the basis of sound financial principles. When he purchased Chelsea in 2003, it was because it presented the best investment deal on the market – he had previously been looking to buy local rivals Tottenham Hotspur – and the same reasoning was behind his investment in ice hockey teams.
Chinese investors are buying up European football clubs at an enormous rate and for the same solid business reasons.
Yet for other investors, the motivations are more complex. When Evangelos Marinakis chose to invest in Olympiacos and then started looking to add a British soccer team to his portfolio, sound business sense was only part of the rationale. He has an obvious love for the game, which appeals to his competitive spirit, and clearly wants to make a real difference to the success of his teams.
Good for business
From a business perspective, there are plenty of reasons why sport presents a sound investment. There can be few sectors that can claim higher brand loyalty, regardless of how well they perform – look no further than the massive global fanbase of the Cleveland Browns, despite years of under achievement for a case in point. Through bad times and worse, the dollars still follow the hearts.
Merchandising and brand recognition are also huge draws, particularly for B2C companies such as Red Bull, mentioned earlier, and Emirates, in its symbiotic relationship with Arsenal.
Good for the sport
Fans are often wary of commercial enterprises exerting too much influence on the teams that they love, and being such an emotive topic, this is an understandable reaction. Yet the cash injection that big business provides can only be good news for long-term growth and sustainability, not only of the teams but also of the whole sport scene.
Take rugby union as an example. The governing body is committed to growing the game beyond the traditional domains of Western Europe and Australasia, and is seeking growth in areas such as South America, Asia, and Russia.
The latest drive from big-business Chinese investors into the sport is the kick-start that has made this possible, with $100 million ploughed into grassroots initiatives that include university programs and a professional league.
Surely even the most cynical sports fans have to agree that this can only be good news for everyone.