Monday, April 26, 2010

where are the sponsors...

Toyota, Microsoft, Visa, Omega… these are just a few big brands that formed the sponsorship league of the 2006 Melbourne Commonwealth Games. The Games caught the attention of not just the international sporting community but corporate entities as well. In all, Melbourne had eight partners and 15 sponsors for the Games, which with a budget of $1.1 billion, was the most expensive Commonwealth Games held till then.

Circa 2010. With an estimated $1.6 billion to be spent on the 2010 Commonwealth Games (CWG), Delhi might walk away with the tag of being the most expensive CWG ever, but with just six sponsors in its kitty, of which four are public sector entities, the road to recovery of the astronomical amount being spent doesn’t look easy. Leave alone the big international brands, for whom an event like this presents an ideal opportunity to reach out to audiences far and wide at one go, even the domestic ones do not seem too excited about the Games.

This when the 2010 CWG beginning on October 3 is the biggest multi sporting event in India’s history. What further complicates the picture is that while overall sponsorship has been going slow, international companies have already started inking deals with individual teams. A case in point: Adidas is the clothing partner for the England team. So why are brands shying away from the opportunity here? Clearly, there is more to it than what meets the eye.

Among those who have hopped on to the Games till now is the Indian Railways which as the lead partner brings in the highest sponsorship sum of Rs 100 crore. Air India, as the official carrier, and NTPC, as the official power partner, has paid Rs 50 crore each. Central Bank of India won the official banking partner title for Rs 51 crore. While Hero Honda paid Rs 38 crore for the partner tag, Coca-Cola India won the official beverage partner title for Rs 15.8 lakh. Together, the six sponsors have brought in Rs 300 crore only.

The Organizing Committee (OC) of the Delhi CWG, headed by Congress Party politician and Indian Olympic Association chairman Suresh Kalmadi, which is responsible for the planning, management and execution of the Games, had initially asked for Rs 767 crore for the Games from the government. This was increased to Rs 1,620 crore late last year. The money has been provided as a loan to the committee. Kalmadi, at a press conference last month, claimed that the OC will be able to recover all the money and there will be no burden on the government.

According to OC secretary general Lalit Bhanot, the principal sources of revenue for the government are sponsorships, sale of telecast rights, ticketing and merchandise. As per government estimates, the biggest source of revenue will be sponsorships at Rs 960 crore. There are four categories of sponsors which include two lead partners, 10 partners, 12 sponsors and a number of co-sponsors. With only about Rs 300 crore in, it is not going to be easy for CWG to secure a major chunk of its annual budgets.

An obstacle course

Advertisers are certainly not too enthused with the Games. “Right now they are too occupied with the Indian Premier League (IPL). It’s not on the top of their minds. And going ahead, there are other sporting events like the T20 World Cup, FIFA World Cup, etc., which are likely to be on the marketers’ radar,” says Sandeep Goyal, chairman, Dentsu India.

What also is killing advertiser interest is the negative coverage of the event, prominent among them being the delay in readying the venues. Companies would not want to risk their brand image in such a situation. But the OC argues that this is not an issue. “A lot of stadiums have already been completed and others will meet the April 30 deadline. I don’t see any cause to worry. All the events which were planned till now have been held,” says Bhanot.

As of now, there is little clarity on what a company will get if it signs a sponsorship deal. “Unlike IPL where I know down to the last detail how I can utilize the property, there is very little clarity on it,” says the official of a company which is among the major sponsors of IPL. He did not want to be identified.

Advertisers are also concerned over the popularity of sports other than cricket. Even though India has been performing well at the Commonwealth Games and therefore audience interest is likely, the advertisers are adopting a wait-and-watch policy. “We have to look whether an on-ground sponsorship gives a better return on investment or an on-air sponsorship,” says Sanjeev Tripathy, director-marketing, HDFC Standard Life Insurance. All CWG events will be aired by public broadcaster Doordarshan in India and depending on the performance of the India.

team, money might be spent on commercials during the matches. Even the on-air promotion part is tricky, as some companies have apprehensions about the quality of telecast.

The Commonwealth Games is not the Olympics and therefore not all brands are likely to be as aggressive. “It’ll largely be brands which are headquartered in the UK,” says Goyal. He further adds that since the event is in Delhi, and there’s very little or no activity in other states, the response from other regions is also debatable. The OC, though, is confident of getting more sponsors on board by the time the Games actually start. “Even if you look at the Melbourne Commonwealth Games, most of the deals came in the last six months. We have a number of proposals and we’ll be signing the deals soon,” says Bhanot. A deal with sportswear maker Reebok among others is in the pipeline, he adds.

The sponsorship tangle

The current controversy around OC-appointed Sports Marketing and Management (SMAM) which is negotiating all sponsorship deals is adding to the confusion, leaving advertisers wary. The Singapore registered SMAM is “the sole and exclusive negotiator and procurer of sponsorship and licensing contracts and as its exclusive supplier of sponsorship management and licensing services” as per the agreement between OC and SMAM.

As laid out in the contract, SMAM gets a commission of 15%-22.5% on all sponsorship deals.According to a report published by The Indian Express, an internal note prepared by a top revenue official of the OC points out that the agency has achieved, “practically nil” results. The note further questions the rationale for giving SMAM a commission in deals with government owned bodies.

“Even the private deals have been done by the OC and not SMAM,” says an official associated with the Commonwealth Games, on condition of anonymity.

The OC, however, says it is satisfied with the work done by SMAM and they have brought in a lot of sponsors with whom discussions are on currently. When asked about who brought in the public sector units, Bhanot says, “the government sponsors are directly from the government. I don't think SMAM is involved”. He further adds that they will be meeting the SMAM official later this month to talk about a host of issues including compensation.

All calls/emails to Michael Bushell, group director, SMAM, from this paper remained unanswered. The company does not have a website. This is rather intriguing considering its core business is marketing. Part of the reason why too many sponsors have not come on-board certainly rests here.

Beacon of hope

The six sponsors who have signed on are, however, sure of getting their money's worth. For Coca-Cola India, which has paid Rs 15.8 lakh, the sponsorship entitles them to exclusive marketing and supply rights for all its beverages at all the competition and non-competition venues. The company today has a wide range of products including health and energy drinks and therefore sees synergies between the games and the company. “Coca-Cola has always believed in promoting a healthy, active lifestyle through sports. Our association with the Olympics, the FIFA World Cup and now with Delhi 2010 Commonwealth Games, reaffirms this same commitment,” says the spokesperson from Coca-Cola India.

Hero Honda which has been associated with various sports events apart from cricket, the latest being the World Cup Hockey, sees synergy between what Hero Honda stands for and the games. The motorcycle maker, which is the presenting sponsor for the Queens Baton Relay, is planning to do massive ground-level activation in about 60 cities, involving customers, channel partners, local community leaders, and brand ambassadors in the baton relay as it traverses almost 20,000 km through more than 100 cities in India.

“The association with CWG 2010 is an attempt to promote the sporting culture in India and also to be associated with the largest sporting event in the world after the Olympics,” said the Hero Honda spokesperson.

The government and the OC will be hoping that more corporate entities follow Hero Honda and Coca-Cola into the Games. Otherwise, in a few months from now, we could be seeing more public sector entities and government backed bodies being cajoled to pitch in, in the name of public interest.

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