Show me the money
Major sport depends on sponsorship to make it happen. Anna Healy Fenton investigates a multibillion-dollar industry
Whilst Hong Kong might struggle to live up to the ambitious title "Events Capital of Asia", there are still a handful of annual events that catch the public's imagination - and which sponsors find equally appealing. Signature events such as the Hong Kong Rugby Sevens attract loyalty from their sponsors and corporate supporters matched only by the devotion of rugby fans who make their annual pilgrimage to Hong Kong Stadium. Other events such as the Hong Kong Open golf tournament, the Macau Grand Prix and the Hong Kong International Races at Sha Tin all draw sponsorship from a range of companies. But in uncertain economic times, can the sponsorship dollar be justified and what are sponsors hoping to get out of an association with a sporting event?
The Rugby Sevens is easily the hottest ticket in town, and entices not just sponsorship from two of Hong Kong's most recognisable brands, Cathay Pacific and HSBC, but is also a catalyst for other companies to roll out the corporate hospitality red carpet. Most of the major banks, together with companies from other industries, compete for corporate boxes in what has become a must-attend event for locals and overseas visitors alike. One veteran organiser of a major bank's Sevens hospitality is conscious of the sensitivity in spending on what is seen by many attendees as one big party.
"You have to think carefully about how stakeholders perceive your company and the way you spend money. There must be a very strong business rationale to justify client entertainment, with plenty of approval processes before you can go ahead.
"The Sevens is more of a networking and bonding opportunity. Business may come out of it eventually - the atmosphere is not conducive to long serious business discussions, more to relationship building, but this is Hong Kong's biggest annual event and it's an ideal platform for all international corporations to have a presence and show their support for Hong Kong."
Cathay Pacific's John Slosar may only have taken over the chief executive's role at Hong Kong's airline in 2011 - just after that year's Sevens - but will continue the airline's involvement as sponsor while he sees clear value in the partnership, not least because it puts passengers on planes. "Events like the Sevens offer us an opportunity to promote Hong Kong and give the world an irresistible reason to travel here. That is the underlying reason for our sponsorship. We've maintained an association with the Sevens right from the start in 1976." Cathay also sponsored the Hong Kong International Races for a number of years before that sponsorship was assumed by Swiss luxury watchmaker Longines. Did the association with that event meet expectations? "Our sponsorship of the Hong Kong International Races was very successful. It is another world-class event and it worked well for us. From our perspective the audience was similar. Maybe one set of people preferred rugby to horse racing, but they shared a common desire to travel, enjoy a world-class event and hopefully fell in love with Hong Kong in the process."
Getting the message across to both key clients and a broader audience plus linking in with the community are vital components to a successful sponsorship. Dan Parr, a director of Fast Track Asia, part of a global sports and entertainment marketing agency, helps clients generate value from their sponsorship investments. Parr clearly distinguishes between the benefits certain events offer different sponsors.
"As an investment bank, UBS was primarily interested in building relationships with a relatively small number of key clients, most of whom follow golf. The Hong Kong Open was a perfect platform to do this via on-course hospitality, pro-am events and star player clinics.
"Client relationship building is also crucial for HSBC and the Sevens is a fantastic engagement platform. However, HSBC also has a retail presence and as an institution, is part of the fabric of Hong Kong. The broad appeal of the Sevens communicates with the bank's customer base - both local and expatriate - and also provides a great platform for engaging the community in which HSBC operates."
Justification and activation of sponsorships are areas Parr advises clients on. "When times are tough, sponsorship is often an easy target. However, a sponsorship should always be made as a hard business decision with clear deliverables and business benefits. In economic slowdowns, this is even more important. The money a sponsor spends on fees and activation needs to reflect the prevailing economy, and overspending in times of uncertainty - or at any time for that matter - is not a good business decision."
So what are the do's and don'ts when it comes to maximising a sponsorship agreement? Absolutely critical is investment in activation. Too many sponsor brands sit back and expect the benefits to magically manifest themselves. Investing in leveraging the sponsorship through PR, hospitality, community involvement and brand activation is how the best sponsorships deliver most value. Experienced sponsor brands understand the value of activation and invest accordingly, often spending several times more than the amount they paid in rights fees to make it work. "Sponsorship without activation is like a toy without batteries," says Parr.
One brand which became inextricably linked with a particular sport is Gulf Oil. In the 1960s, Gulf began to use motor sport as a platform to promote their range of lubricants. More than 40 years on, the blue and orange colours remain one of the most recognisable liveries in the sport, thanks in part to their association with the Ford and Porsche sports car teams in the late '60s and early '70s, which culminated in Hollywood legend Steve McQueen starring as a Gulf Porsche driver in the 1971 film Le Mans.
Gulf still use motor sport - and Le Mans - as part of their marketing strategy, but remarkably, several race teams participate in Gulf colours in both contemporary and historic racing with no direct sponsorship from Gulf. The company is constantly licensing products such as watches, luggage, clothing and models featuring their logo and which trade on the company's heritage as one of the most recognisable sponsors in any sport.
With so many people willing to actually pay to promote the brand, what keeps Gulf involved? Sam Cork, global brand manager for Gulf Oil International, sees the benefit of an ongoing direct involvement: "Gulf is very proud of its motor sport history, but a brand that rests only on past glories eventually dies - it needs to keep that vitality and innovation to ensure it remains current and relevant. A deliberate brand strategy is behind all Gulf's marketing initiatives, of which our motor sport programmes are a focal point."
Gulf's specialist marine lubricants business, headquartered in Hong Kong, uses the Macau Grand Prix as a sponsorship opportunity specifically focused on clients from the shipping industry, providing both corporate hospitality and a high-profile involvement with a leading team. Despite recent competition from Singapore's Grand Prix, Cork clearly sees value in Asia's oldest motor sport event.
"Our involvement with Macau last year was a solid investment. The Singapore Grand Prix is definitely one of the most exciting events on the calendar, but Macau delivers in a more intimate and personal atmosphere. The venue provides an excellent opportunity to strengthen existing relationships and develop new ones - all in a relaxed yet thrilling environment."
What about further down the sporting ladder where crowds are thin and media coverage almost non-existent? Get out to a rugby club or playing field on any Sunday morning and you will see enthusiastic children and their fathers participating in mini-rugby. Many of these teams have company names emblazoned on their shirts - with local law firms being prominent supporters. These sponsorships, which typically involve supplying team kit to the young players, are hardly part of a global brand-building exercise, but community involvement at grass-roots level, some fun and even helping secure one of those elusive Sevens' tickets are easy ways to justify the outlay.
Whilst rugby kit might not be big expenditure, there are plenty of sports which even at the lower levels need significant financial investment, but struggle to attract sponsorship due to their lower profile. No sport guzzles cash quite like motor racing and without a wealthy patron (usually a father), getting to the top can be a struggle. While Grand Prix racing pulls in enviable television ratings and gets brands massive global exposure, a junior category car race at Ordos in Inner Mongolia is a tougher sell to potential sponsors. Dan Wells is a personable 21-year-old British racing driver who came second in the UK finals of one of the major single-seater series last year - and found himself with no money to progress. Bereft of options, he left the UK and headed to Hong Kong, in hope of sourcing funds to compete in the Formula Pilota series in China, one of the lower rungs of an emerging Asia-based "staircase of talent". Part of the Twitter generation, Wells has used social media in his campaign. "Without Twitter, I would not be racing this year. I promoted myself constantly on Twitter and set up a 'gofundme.com' site. In three months, I had raised over HK$100,000, which at least enabled me to start the year. I became known as the 'Twitter-powered racing driver'.
"My biggest selling point is that I am the only British racing driver who is winning on the single-seater ladder in Asia. The opportunity for British companies to raise awareness and access Asian markets through an association with my racing, and also for Chinese companies to gain exposure in the UK is huge."
Hong Kong might lag behind Singapore in hosting big sporting events, but there is an appetite from companies to use sport as a marketing tool. What we need is more world-class events. As Parr says: "A mega event is a Grand Prix, not Symphony Under The Stars."