Opinion
Assertions
10/6/08:
Accenture is
not renewing its
title sponsorship of the
Chicago Triathlon, but is interested in maintaining a
lower level position, most likely as “official technology provider,” continuing to supply its popular alert system that allows friends and families to track their favorite participants, among other benefits. Don’t be surprised if the company makes the
same decision soon around its title of San Francisco’s
Escape from Alcatraz Triathlon. In fact, look for other naming rights or high level sponsors to explore the option of
downgrading. More than outright dropping of existing deals, downsizing may be one of the
main effects the current
economic crisis will have on sponsorship in the short-to-mid term. In good times, a company may be willing to spend the extra dollars for the
presumed prestige of having its name on an event or venue, but smart sponsors recognize that most of their
returns are earned around
activation–and leveraging
rarely hinges on title status. Given that fact, the
fees many properties charge for naming rights are
disproportionate to the
benefits, particularly for well-established brands that don’t need exposure and sponsors targeting niche markets.
Other
likely impacts of the financial, credit and housing crises and the overall
economic malaise will be a
reduction in activation spending (because it is easier to cut those budgets than completely exit sponsorship agreements) and a
lengthening of the time it takes to get deals
negotiated and
approved.
A
change made by Congress to the
tax code could require
a little more work from the folks responsible for sponsorship at
nonprofit organizations. The change
does not effect the
regulations regarding
sponsorship revenue. Rather, it relates to potential penalties imposed on those who
prepare tax returns. The upshot for preparers: The IRS will now hold them
more responsible for the positions taken in tax filings, including determinations of whether specific revenue streams are taxable as unrelated business income. The upshot for nonprofit sponsorship personnel: Your
preparers will be paying closer attention to how your organizations determine whether your sponsorship revenue falls under safe harbor or cannot be excluded from UBIT. So don’t be surprised when they
start asking to see sponsorship contracts, and
be prepared to make those documents available and to answer questions about specific benefits and valuations.
Tire giant
Continental is crediting its sponsorship of
FIFA World Cup and
UEFA soccer with helping the company become the
global market leader in passenger tires for the
first time in its history, earning a 25 percent market share as of the beginning of the year. Continental’s
primary objective for the 2010 World Cup is more
focused: “become one
of the top three premium replacement tire brands in the growth regions of Eastern Europe, Russia, Asia and South America.” Secondary goals are: “Charge the image of the…brand with even greater emotion through its association with…football; set the brand apart from its competitors through
product exclusivity; and forge close ties between football sponsorship and
business customer relations.” The company showcases its soccer sponsorship activities at
ContiSoccerWorld.com.
Jim Andrews