Covid continues to reshape the sports ecosystem and affect every part of the sporting value chain in the first quarter of 2021 according to research undertaken by GlobalData’s Sports Intelligence Center. And as Douglas Blakey reports, the financial services sector is the most active sector in the entire sports sponsorship ecosystem
Some 930 sponsorship deals in all were signed in the first quarter of 2021 with brands estimated to spend just shy of $1.3bn on sport sponsorship. Despite the challenges of the pandemic, 609 deals signed were new deals, generating $809.71m in sponsorship revenue for rights holders, while 35.5% (321) were renewals with an overall value of $489.36m.
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According to the European Sponsorship Association (ESA) and Nielsen Sports, the sponsorship market dipped 23% in 2020, marking the first time the market had declined in over a decade. But as lockdowns end around the world and economies begin to recover, there are grounds for optimism that major sports sponsorship is in recovery mode.
Despite the pandemic continuing to stretch the finances of both rights holders and sponsors, some significant deals have been signed in the first quarter of 2021. For example, FIFA signed up Qatar National Bank as a regional sponsor of the 2022 World Cup in a deal valued at $50m.
Financial services brands sign 111 deals in Q1
Indeed, financial services brands were the most active sector in the sponsorship market in the first quarter of 2021, signing 111 deals. Next comes airlines and gambling firms, with 84 and 54 deals respectively.
However, just 7% of the airlines deals were new deals, suggesting that for many airlines marketing budgets have been unsurprisingly slashed and there is a reluctance to enter new sponsorship agreements in the current climate. Renewals accounted for 93% per cent of the sector deals in Q1, and many of these were extensions for delayed events, such as the Tokyo Olympics.
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By GlobalDataBut the pandemic highlights a significant switch in the type of financial services firm signing sports deals. Specifically, the sector’s high volume of deals has largely been driven by the growth of fintech brands such as online trading platforms, online payment services and cryptocurrency exchanges.
Together, they account for 55% of all financial services sector sponsorship deals in Q1, while traditional financial services brands such as banks and insurers have played a less prominent role with just 45% of the sectors deals.
Non-bank competitors prominent among the most enthusiastic supporters of sport include California-based loanDepot. Its current annual sports sponsorship spend is around $15m. In particular, it is the official mortgage provider and partner of Major League Baseball in the US.
Turkey-based blockchain and crypto-trading platform Bitci signed four new sports deals in the first quarter. In particular, it signed a deal with the Spanish Football Federation and is also a partner of the McLaren F1 racing team.
The growth of tech-based firms within the sector is a trend that depicts the pandemic’s impact on many industries in the global economy.
Subhead: Soccer remains the most attractive sport for sponsors
Soccer remains the most attractive sport for sponsors in the first quarter of 2021, which has seen the sport secure the highest volume of deals and the biggest sponsorship revenue by some distance. It illustrates the sports enduring commercial appeal and its global reach like no other.
In the first quarter, there were 209 soccer sports sponsorship deals signed, worth $353m in total. Motor racing ranked second, with 104 deals worth $288m in total.
Among the most significant bank sponsorship deals signed amid the pandemic was Russian digital bank, Tinkoff, acquiring naming rights and sponsorship for the Russian Premier League.
But even soccer has been impacted by Covid, with broadcasters losing advertising revenues and subscription numbers. This has led to a depreciation of media rights across the sporting ecosystem with three of the big five European football leagues suffering a decline in the value of their domestic media rights for upcoming rights cycles.
NFL bucks the trend
By contrast, the NFL has bucked the trend, almost doubling the value of its domestic media rights revenues for its new 11-year broadcasting rights deal from 2023 to 2033. The increase in media rights value comes after a decline in viewership in 2020 and reaffirms the league’s status as the most lucrative sports league on the planet.
Four global brands in the financial services sector standout in terms of their annual sports sponsorship spends. Mastercard currently invests around $123m in total ahead of peer Visa’s expenditure on sports sponsorship of $70m. In the banking sector, Santander spends $101m per year while insurer Allianz is committed to annual sports sponsorship spend of $87m.
