Stakes in sponsoring SA sport hit major league
Companies say the cost is too high, but there is no shortage of top spenders, writes MARCIA KLEIN
Exorbitant costs could have been behind various changes in major sponsorships, including SA Breweries' withdrawal from the national rugby team.
According to BMI Sport Info, companies spent R522-million on sport sponsorship in 1996, up from R418-million in the previous year, R207-million in 1991 and a meagre R87-million a decade ago. Sponsorship spend has grown at an average compound growth rate of 21% a year, higher than the growth in more traditional advertising spend.
But research which BMI conducted among the top 100 sponsors showed that 63% felt sport sponsorship was becoming too expensive and 20% felt it was already too expensive. The remaining 17% still saw sponsorship costs as reasonable.
Clive Grinaker, executive chairman of Grinaker Sport Management (GSM), said sponsors thought they were getting excellent value for money in 1993, and now the scales had swung around. "But in 1993 there was no international sport to talk of, and now they are being offered major events with dollar-related prices." But as one sponsor pulls out, others are always waiting in the wings.
SA's major sponsors include SA Breweries and other drinks companies, financial services groups, the motor industry, oil, telecommunications, food, sporting goods and tobacco companies. Most sponsorship money goes to sports.
While SAB remains SA's major sports sponsor, backing a host of major events, it recently withdrew its sponsorship of the national rugby team "in the light of increasing financial demands in the sponsorship arena". Nike raced to take up the sponsorship in a deal said to be worth $5-million over four to five years. Pay channel M-Net, which has secured broadcast rights for a number of major sports events, recently took stakes in the Free State Rugby Union and the Boland Rugby Union in deals worth R55-million.
Benson & Hedges pulled out of its cricket sponsorship, and Standard Bank swiftly took its place with a R50-million five-year sponsorship (which is believed to have since increased to R100-million).
Rivals Vodacom and MTN have emerged as major sports sponsors. Vodacom recently announced a R100-million, five-year sponsorship of the SA PGA tour. It said this included all broadcast rights, including the SA Open which was sponsored by MTN last year. The two competitors are currently locked in battle over who owns what in the SA golf stakes.
SA companies' biggest sponsorship opportunities lie in international events.
GSM has negotiated over R120-million for the SA Olympic Movement. Cape Olympic bid sponsors, who have each committed R10-million to the bid alone, include Mercedes-Benz, Unifruco, Caltex, Nedbank, SA Airways, Sun International, Pick 'n Pay and Telkom. GSM is also looking for R60-million in sponsorship for the 7th All Africa Games, to be held in Johannesburg in 1999.
In July last year Olympic gold medallist Penny Heyns scooped the biggest single sponsorship of an individual SA sports star, a contract with Vodacom worth more than R1-million.
But in October Olympic marathon champion Josiah Thugwane beat her record when he signed up with Coca-Cola in a deal worth R10-million.
Other major recent announcements include Total's R12-million, three-year sponsorship of Kaizer Chiefs and MTN's R10-million tennis sponsorship.
Ivan May, chairman of the sponsorship portfolio of the Association of Marketers, says sponsorship has been largely sports oriented because that is where the biggest audience is and where there are heroes. It is an industry which understands the business value of sponsorships. He says SA has taken the lead in terms of sports sponsorship in many respects. Sponsors can back a team, individual, league, tour, developmental sport and broadcast or staging of an event.
He says most events would never take place without substantial investments by sponsors and most international stars would not come to SA without the backing of a sponsor.
Sources in the industry say a major threat is pressure on, and possible legislation against, sponsorships by liquor and tobacco companies. They say these companies have already pulled out of many events, possibly anticipating such action.