Title Sponsorship and its Disadvantages
We already know that modern sponsorship has evolved into a complex endeavour. Earlier, there used to be just one type of sponsor who would be associated with the entire league. However, now there are various types of sponsors who are trying to engage with the audience and derive economic benefits at various levels and price points.
It is common for sports leagues to have multiple sponsors. For instance, Indian Premier League (IPL) which is a cricket league based in India had nine sponsors who were associated with the league.
However, title sponsorship is the most important and prestigious type of sponsorship amongst the list of sponsors.
Title sponsors are also known as presenting sponsors or even anchor sponsors. They have a very important role to play as far as the finances of the sports league are concerned.
In this article, we will have a closer look at what title sponsorship is and what are the disadvantages that accrue to title sponsors as a result of sponsoring the event.
What is Title Sponsorship?
As mentioned above, a title sponsorship is the most expensive and therefore the most prestigious way to get associated with a sports league. A title sponsor gets the name to be associated with the name of an event.
For example, Tata Group which is a large Indian multinational organization, based in India is the title sponsor for the Indian Premier League (IPL). As a result, the sporting league is now known as the Tata Indian Premier League.
Tata Group has exchanged to pay close to $10 million per year to be able to associate their name with the title of the league. It needs to be understood that the inclusion of the name in the title of the league is not the only benefit which sponsors derive. However, it is clearly the most important one as far as branding and marketing point of view.
It is also important to know that title sponsors are amongst those commercial entities which are associated with the event at a very early stage. This is because they are associated with the very name of the event and hence need to be present from the start.
All other marketing activities related to the league are generally done in consultation with the title sponsor. If a sporting league begins marketing activities without the actual involvement of a title sponsor, then the potential sponsors begin to lose interest.
Disadvantages of Title Sponsorship
Even though title sponsorship is very expensive and is considered to be very prestigious, there are still some issues which make title sponsorship a difficult value proposition.
- High Cost: The first and foremost problem associated with title sponsorship is the high cost involved. It needs to be understood that title sponsorship runs into hundreds of thousands of dollars for an annual event.
The benefits of the sponsorship can be short lived i.e. the organization which is sponsoring the event may only witness a rise in their publicity for a short period of time.
Also, a lot of these benefits are intangible and can be difficult to measure. This makes it difficult for corporate executives to justify making such large expenses to corporate shareholders.
- Scandals: Sports leagues have been associated with many kinds of scandals. For instance, there have been leagues which have been associated with racism, match fixing and even sex scandals.
Any kind of sponsor who is associated with such leagues is bound to face an economic downside because of loss of reputation. However, when it comes to title sponsors, their name is likely to be most prominently associated with the sporting league even if it is in relation to a scandal.
Also, title sponsors spend an exorbitant amount of money in order to get associated with the event. Hence, their tolerance for negative events is particularly low.
- Strong Past Associations: It has been observed that the title sponsors of sports leagues tend to change every two three years. This can be problematic for title sponsors. This is because over a period of time, consumers build a strong association between a brand and an event.
Now, if the brand sponsoring the event is changed suddenly, the old association does not break immediately. It takes a certain amount of time for viewers to associate the new brand with the event. Hence, in the first year of title sponsorship, the benefits which accrue to the brand may be less than expected.
- Works Over Long Periods of Time: Last but not the least, title sponsorship is not effective if it is done as a one-time activity. Instead, it is most effective when it is done for long periods of time.
In some cases, where this co-branding has been done well, viewers have a close association between a brand name and the name of the event. This means that the brand has to spend money for a long period of time in order to obtain maximum utility for their investment.
The fact of the matter is that title sponsorships continue to be the most prestigious form of sponsorship. It is true that cash rich firms across the world queue up in order to associate themselves with sporting events. However, it is also true that there are certain downsides to this arrangement which need to be taken into account.
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