Sports sponsorships may be getting cheaper because of the global recession, alerting at least one bank to bargains.
Barclays Plc, which backs English Premier League soccer and golf in the U.S., Europe and Asia, might consider new deals as prices decline, said Tim Peat, head of marketing and sponsorships. Britain's second-biggest bank will also sponsor the Masters Cup men's tennis season finale in London from 2009.
``We'll always look at new opportunities, no question,'' Peat said in an interview at the Barclays Singapore Open golf tournament last week. ``There will be opportunities at a much lower price than before and that's worthy of consideration.''
Professional sports are bracing for cutbacks amid the financial crisis, possibly ending a boom in sponsorships that reached a record $37.9 billion in 2007, according to IEG's annual sponsorship report. The LPGA Tour yesterday dropped three events from its 2009 schedule, citing the economic decline.
``I'm sure if I go to the market now I'll get a good deal,'' Giles Morgan, head of sponsorships for HSBC Holdings Plc, said in an interview at the HSBC Champions golf tournament in Shanghai this month. ``But for us it's not about `let's rush in and go for cheap.' We're not out shopping massively for sponsorships.''
The financial industry, among the most prominent paymasters in sports, is grappling with $966 billion in writedowns and losses since the start of 2007. More than 150,000 banking jobs have gone in the same period.
`Extraordinary'
``You'd be naive to say you shouldn't do anything other than expect financial services will be cutting back exposure to sports,'' said Seamus O'Brien, chief executive officer of World Sport Group, which matches sponsors to golf, cricket and soccer events in Asia. ``These are extraordinary circumstances.''
UBS AG, the Swiss bank that got a $59.2 billion aid package from the state and central bank, will review its golf commitments next year, said Oliver Bertschinger, head of sponsorship for UBS Asia-Pacific. UBS backs the $2.5 million Hong Kong Open, which began today, and an event in Japan.
``To sponsor golf is not cheap, it's an investment and the return must be right,'' he said. ``But there's no strategy or plan to discontinue; Asia remains one of UBS's most important growth markets.''
The benefit of involvement in sports events grows during uncertain times as clients seek reassurance, sponsors said. Three hundred and fifty people attended Barclays' Asia forum in Singapore during the $5 million golf tournament, an increase of 130 from last year. The bank had feared clients would stay at their desks amid turmoil in the markets, Peat said.
No Waste
``The time for not knowing what on earth will happen next seems to have passed and people are now out looking for views, advice, consensus,'' Peat said in the Barclays Pavilion that overlooks the 18th hole at Sentosa Golf Club's Serapong course. ``Having an event like that around the golf works very nicely.''
HSBC's Morgan said shareholders will expect the company to justify its outlay on the $5 million HSBC Champions and other sponsorships, which he declined to disclose. Golf endorsements can cost twice as much as the prize money at tournaments.
``We're trying to build a business and grow particularly in tough times,'' Morgan said at the $5 million HSBC Champions tournament. ``If this is a profligate waste of money, it won't happen. And face time with customers is more important now than it's ever been.''
Asian Tour golf officials said they aren't concerned about a reliance on banks at their biggest tournaments.
Long Term
``They want to keep their exposure and there's no indication that they're cutting down,'' Asian Tour Chief Executive Officer Kyi Hla Han said in an interview. ``Asia's a growing market, everyone's hoping this crisis is short term and all these golf sponsors are going for the long term.''
Not every golfer is convinced. India's Jeev Milkha Singh, who collected $792,500 for winning the Barclays Singapore Open four days ago, expects professional golf to suffer.
``We haven't hit rock bottom right now and we will probably see more cuts in another year or so,'' Singh told reporters. ``The way the financial world is going, it will hit every golf tour in the world.''
(Source: Bloomberg)
