Sponsorship and Event Profitability

Dr Stephen DannSparten R&D

To make an event profitable

• Earn more than it costs to run the event

• Two income streams– Sponsors

• Increase perceived value of being involved so they are willing to pay higher rates

– Participants• Increasing volume of participation not cost of

attendance

Costing less than you earn

• Key Business Considerations– Calculate break even

– Can the Event be cancelled?• When do you have to make break even to ensure

the event will go ahead?

• If the event can’t be cancelled, what alternative revenue stream has been set aside to cover the shortfall?

Financial Factors• Costs

– Knowing fixed costs (event costs)– Knowing fixed income (sponsorship)

– Assess previous events variable costs– Assess previous events variable income

– Calculate case scenarios• Worst case scenario• Realistic revenue• Better than Usual Case

Sponsorship revenue should cover…

• Cost of servicing the sponsorship• Insurance• Sound system• Venue hire• Printing• Overheads• Advertising• Any fixed event costs

Sponsorship Breakeven

• $(Sponsorship Revenue) - $(Fixed Event Cost) = $(Buffer to handle variable costs)

• If the sponsorship handles the fixed costs, then the event is less vulnerable to the variables of the event days

Lock in

• Non-refundable pricing

– Pre Sell Non Refundable Tickets• If they don’t show up, it’s not your responsibility

– Offer Early Bird registrations

Different Needs• Sponsors

– Financial gain– Access to markets– Goodwill– Sales– Etc…

• Participants– Good day out

Both want value for money

Managing the Event for Sponsors

Managing the Whole of the Event

• Manage the sponsors– Business relationship– Non attendee sponsorship– Pre-event

• Manage the pre-event expectations– Explain the event– Show the event from

previous year

• Manage the Event Day– Managing the people on

the day– Controlling the event day

• Event Day Hospitality– Have a place for the

sponsors to be treated as VIP

– Sponsor Host to look after the sponsors

Case

• Local bakery offers $500 in cash and $200 of buns and bread rolls

• Local bakery won’t be attending due to work commitments

• How do you show at least $700 of value from the event day to the baker?

Options1. Photographs as Proof

1. The product in context2. The signage3. People using the product4. People eating the product

2. Discount Coupon Sponsorships1. Trade $50 of event day buns for $50 of “Buy one, get one free

coupons”2. Give the coupons to the people who eat the event day buns3. Measures how many people went to the baker after sampling

the product, brings in more business. May not actual cost $50

Mandatory Options

• Standard Pre Event Day– Sponsor logos on website, flyers, brochures

• Standard Event Day– programs, maps, any printed material

• Be sponsored by a printing company• Double side photocopy

– main information and key sponsor on the front– Every other sponsor on the back, including coupons and

vouchers

Mandatory Options II

• Say Thank You– Before the event

– During the event

– After the event

• Send them a Christmas Card

Options

• Post Event– Follow up quickly– Thank the sponsor in writing for their support– Provide the physical evidence of photographs

as close to the event date.– Thank the sponsor again in person / on the

phone– Ensure event staff and club delegates use the

coupons as far as possible

Practical Issues

Practical Keys to Success• Trust and Transparency

• The Business Relationship

• What does it cost to deliver the sponsorship?

• Pre-emptive Crisis Management Strategy

Trust and Transparency

• If transparency is the word of the day for both government and corporations, then trust is the word that defines the relationship between a corporation and an event. It’s a partnership in every sense of the word.

http://www.prcanada.ca/WHATIF/ESSENCET.HTM

The essence of profitable corporate sponsorship

Transparency in Event Sponsorship

• Promise what you can deliver

• Separate business investments from charitable donations

• Have clear record keeping

Promise what you can deliver

• Prove your offering

• Ensure the offer is – Specific, Measurable and Realistic

• It makes it easier for you to know you’ve met the sponsor’s arrangement

Organisational Commitment

Sponsorship Duration

Renewal Option? Yes / No / Not Specified

Base Financial Commitment Specified Amount Yes / No

$

Negotiable Range Yes / No $

Price on Application Yes / No n/a

Sponsorship Property Characteristics

Type of Property

Exclusivity Yes / No

Benefit Types* Fully Negotiable Yes / No

Partnership with Organisation Yes / No

Preset Specified Benefits Yes / No

Specified Benefits (if any)

Anticipated Exposure**This is an estimation of the likely types of exposure each property may receive over the life of the sponsorship, and is not a guarantee.

Television Yes / No

Print Yes / No

Radio Yes / No

Match Day / Venue Yes / No

Corporate Website Yes / No

Annual Report Yes / No

Other Club Exposure Yes / No

The Business relationship

• The key is to work with the corporation to satisfy the key sponsorship objectives:– To enhance image – To sell products or services directly – To reach specifically targeted market segments – To be involved in corporate community development

and community service – To obtain positive media exposure – To enhance customer and VIP relations – To contribute to community economic development

Business or Charity?

• Business– Sponsorship is an

investment

• Outcomes– Return on investment– Extension of corporate

communication– Measurable gain

• Charity– Sponsorship is done

for altruistic purposes

• Outcomes– Feeling good– Giving back to the

sport/event/community– Event success

Business of Sponsorship

• Your event is a business• Sponsorship is a business transaction• Your role

– Give value to the sponsor– Work with the sponsor to deliver an outcome– Manage the sponsor’s expectation

Have clear record keeping

• Know how much was brought in on sponsorship in cash and in kind

• Know how much was spent servicing the sponsorship

• Ensure you know where the sponsors in kind goods are, and where they will be used on the event day.

What does it cost to deliver the sponsorship?

• Make it clear who pays the costs involved in the sponsorship

• Event Signage– Do you pay for it to be painted, or does the

sponsor?– Or do you get a signage company as

sponsor?

Pre-emptive Crisis Management Strategy

• What if something goes wrong?– More importantly, how will you manage when

something goes wrong?

– Defending sponsorships from criticism

– Dealing with sponsors who don’t want to be associated with you any more

Best Pre-emptive Strategy

• Have a good working relationship with the sponsor, and have clear benefits for their ongoing involvement in your event and organisation

In it for the long haul

Extending the Relations

• Transactions– One time, short term, single event

• Relationships– More than one time– Ongoing series of transactions that

intentionally build up over time

• Transactions– Discount hire of sound system in exchange for

signage on the speakers

• Relationships– Multiple year sponsorships– Collaborative ventures and promotions which extend

outside of the event time– Longer the relationship, the cheaper each transaction

becomes

Deliverable Properties

• Ongoing Joint benefits– Offering an opportunity cost (eg riding lessons) in

exchange for sponsorship of the event

– Prizes that involve participation in the organisation’s non-event day activity

– Event and organisation information at the sponsor’s business outside of the lead up to an event

Questions?