How much does sponsorship cost you? I am not talking about the times you sponsor your son, daughter or neighbours children to walk a mile or have a sponsored silence. I am talking about a serious amount of money, not pennies. Think again, how much does sponsorship cost you?
Think about your favourite sports stars and the big houses they live in and the expensive cars they drive. Think of the major sports leagues and competitions that have famous brands associated with them. What about the promotions and free giveaways, running alongside the major tournaments. Well, who do you think pays for them? The major companies fund these deals from their marketing budgets but, where does this money come from?
Take Gilbert for example. They are the biggest brand within the world of rugby. They have deals, with most of the top rugby playing nations, to supply them quality rugby balls and equipment. These sponsorship rights vary greatly in value, depending on the exposure within each country. The deal with the RFU is reportedly worth around £500,000 per year, compared that to the deal by Webb Ellis with the WRFU, which is ten times smaller.
What about golf? How much money does Nike spend on player sponsorship deals? When you look at how many players they sponsor, the sums involved are quite staggering. Tiger Woods, back in 2001 reportedly signed a five-year deal worth in excess of $100 million. $100 MILLION and that is just one contract for one player. When you add the money spent on other players within golf and then add that to the players sponsored in football, cricket, basketball, etc........ I think you get to realize how much this could be costing you and me.
Lets look at it by using an example, as it is easier to understand the costs involved. Lets set up a boot company, retailing footwear for sportsmen and women in the UK. The company has many endorsements with sports stars across a whole range of sports including, rugby, football and cricket. It spends around £25,000 per endorsement and currently has in excess of 200 players using their boots. The cost of the endorsements are valued at around £5 million pounds over a 3 year period. They will be looking to sell as many pairs of boots, to maximise their return. The rrp of each pair of boots is £80. They can sell 80,000 pairs per year and 240,000 over the 3 year deal.
So how much more expensive are these boots because of the endorsements? Divide £5,000,000 by 240,000 pairs and it works out at £20.83 per pair. That is an incredible 25% cost that could be wiped off immediately from the rrp. This would ensure that clubs and players would have more money to spend on other products.
We understand that some of these products, would be less attractive if Tiger Woods, David Beckham, Kevin Pieterson and others, hadn't worn them. But is their value really worth a 25% increase in your costs.
There are companies that try to keep the costs of products down, to ensure their customers are paying a realistic price. Companies like Lusum and Willostix do not spend money on sponsoring players, clubs and leagues. They approach the retail market with better quality products but then offer them at a saving of.........25%. Isn't that how much it costs you to sponsor players? Next time you are looking at buying the latest, heavily endorsed product, ask yourself this question....How much is sponsorship costing me?
Stuart Cardy is a keen sportsman and has played a variety of sports since the age of 5. Reaching County standard in some and has enjoyed a fair degree of success.
Stuart has helped develop a company called Lusum, which has produced Lusum rugby balls, at up to 25% cheaper than other leading brands, without compromising the quality. Lusum do not sponsor clubs, leagues or players ensuring the money not spent on sponsorship is taken directly off of the cost of the products. This enables clubs to benefit directly, without having to go through a lengthy grant applications to create a spending budget. 25% cheaper balls, mean clubs are spending 25% less money on equipment, allowing valuable funds to be put to other use.
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