Hitting a home run: Why sponsors of axed sporting events shouldn't lay low

The Tokyo 2020 Olympic Games has been postponed to 2021 as a result of the COVID-19 pandemic, after increasing pressure on the International Olympic Committee (IOC) to delay the Games. The news comes shortly after Canada and Australia withdrew from the Games earlier this week.

While multiple media reports yesterday quoted IOC member Dick Pound saying the Games will be postponed to summer 2021, the IOC and Tokyo 2020 Organising Committee release a joint statement that same evening saying that the Games must be rescheduled to a date beyond 2020 but not later than summer 2021. This is to safeguard the health of the athletes, everybody involved in the Games and the international community, the statement said.

According to the Tokyo 2020 Olympic Games website, majority of the income covering expenditures related to the operations of the Games and programmes for Japanese athletes are expected to come from the Tokyo 2020 marketing programme. The programme includes sponsorship, licensing, and ticket sales, among others. "The Tokyo 2020 Sponsorship Programme plays a vital role for the Games as it accounts for an extremely high percentage of the budget which will contribute to the projected income," the website added. The pie chart on its website showed that 55% of the budget comes from local sponsors, while ticket sales form 14%. Licensing, on the other hand, makes up 2% of the Games' budget. Among the list of Tokyo 2020 Olympic Official Partners include Japan Airlines (JAL), All Nippon Airways, Kikkoman, Cisco, and Nissin. Meanwhile, worldwide Olympic partners include Airbnb, Coca-Cola, Alibaba Group, Samsung, Bridgestone, and Toyota.

While Airbnb's spokesperson did not comment on Marketing's queries on what the cancellation means for its sponsorship, Marketing understands that Airbnb's sponsorship is over nine years for five Games and should not be impacted in the long run. 

"We support the IOC’s decision and our community stands ready to support the Olympic and Paralympic Games in Tokyo in 2021," the spokesperson added. Meanwhile, JAL declined to comment on Marketing's queries.

Besides the Games, a series of sporting events have either been cancelled or postponed as a result of COVID-19. In the US, the National Basketball Association (NBA) initially suspended its season earlier this month, but commissioner Adam Silver later said the league is on a 30-day hiatus. 

A spokesperson for Japanese eCommerce site Rakuten, which sponsors both the NBA as well as the Golden State Warriors basketball team, told Marketing in a statement that it is "working very closely with" the NBA in this unfortunate situation and will continue to deliver the latest NBA-related news and information on NBA Rakuten. NBA Rakuten is its one-stop service for viewing NBA games, reading news, accessing official statistics, as well as holding live chats with other fans. When asked if Rakuten plans on extending its sponsorship since the NBA season is currently on hiatus, the spokesperson said it is also working closely with the organisers on this front. "The season may be on hold, but we will continue to work with the NBA and pick up request from users, and work to deliver past NBA games that the fans want to see," he said.

The spokesperson added that Rakuten is currently in discussions about the distribution of NBA games and a variety of other content on NBA Rakuten, including the League Pass, Team Pass and Basic Pass. 

Despite the hiatus, Rakuten certainly does not plan on laying low during this period. Instead, it is distributing additional viewing content to NBA Rakuten subscribers.

According to the spokesperson, the content added varies per subscription plan. NBA Rakuten also has original programming such as Daily9 and Oretachi no NBA created by the eCommerce company. It is also distributing a series titled "Special Conversation with Yuta Watanabe x Yudai Baba". Both Watanabe and Baba play in NBA's minor league, G League.

"We will continue to pour our efforts into this original programming and deliver engaging and entertaining content to basketball fans in Japan during the season suspension.

The NBA declined to comment on Marketing's queries about its plans on the brand sponsorships. Other NBA sponsors including New Era Cap, Mastercard, Qualtrics, and Fitbit did not respond to Marketing's request for comment. Separately, Bloomberg recently reported that NBA teams are still receiving payments from their broadcast partners despite the hiatus. NBA's network partners include Turner, ABC and ESPN.

Meanwhile, the governing body of football in Europe, Union of European Football Associations (UEFA), has indefinitely postponed the finals of UEFA Women's Champions League, UEFA Europa League, and UEFA Champions League. Before the official postponement announced on 23 March, UEFA's spokesperson told Marketing that it will discuss the respective sponsorships with each sponsor but in general, the contracts allow for an extension in these exceptional circumstances. "Our partners are important to us and we want to continue the relationship we have with them," the spokesperson said.

The fate of Singapore Grand Prix?

Meanwhile the Formula 1 (F1) races have also not spared from the impact of COVID-19. It cancelled the season opening race in Australia, followed by Bahrain, Vietnam, Holland, Spain, Monaco and most recently its race in Azerbaijan. In a statement to Marketing, F1's spokesperson said it is working closely with all its partners as well as affected promoters during this time, as well as sports association Fédération Internationale de l'Automobile to establish the best feasible time frame for rescheduling races. "Our partners fully understand the recent global developments and their relationships with us are annual or longer term and not race by race," the spokesperson explained.

When approached by Marketing for comment, Singapore Grand Prix (SGP) organisers and SIA which is the title sponsor of the race, deferred to F1 for an official comment. "We do not comment on speculation, and we continue to monitor the situation closely," SIA's spokesperson said.

Last year, the 12th edition of the F1 night race in Singapore drew about 268,000 spectators, according to event organisers. The 2019 race set a new record for the second highest attendance in its 12-year history, overtaking the previous one set last year at 263,000 fans. In response to Marketing's queries, Singapore Tourism Board's (STB) director, Ong Ling Lee, said it is in regular discussions with race promoter SGP about this year's night race. As the situation is dynamic, STB will continue to keep a very close watch on the developments. 

 
"Currently, there are no plans to cancel or postpone the Formula 1 Singapore Airlines Singapore Grand Prix 2020. STB is also working closely with SGP to ensure that the necessary measures as advised by the Ministry of Health are put in place, to safeguard the well-being and safety of everyone involved such as patrons, fans, spectators and volunteers," Ong said.

She added that STB expects visitor arrivals to "remain depressed for a protracted period of time" even if the situation in Singapore improves, especially as more countries implement lockdowns and travel bans.

"While there have been cancellations and postponements of our sporting events, the fundamentals that make Singapore an attractive location for business and leisure events remain unchanged," she said. While this is an incredibly challenging period for the events industry, Ong encouraged companies to use the downtime to explore new formats and ideas, and leverage on STB’s various schemes. These include the Kickstart Fund and Leisure Events Fund, to bring their ideas to life when the situation improves.

"In the meantime, we will continue to stand by our industry to get through this period. As part of our engagement with the industry, we formed the Tourism Recovery Action Task Force last month to develop and implement strategies to support the tourism industry and position Singapore for recovery. This includes feeding good ideas into STB-led campaigns and strategies," she explained.

Navigating choppy waters


Other sports league that suspended its season include LaLiga and the National Hockey League, while Major League Baseball and the Indian Premier League both pushed back their season openings. Given there is no precedence regarding what is currently happening in the world of sports globally, José Colagrossi, Kantar Sports' global chief operating officer said the whole situation proves to be a "new territory to everyone" from sponsors, event organisers, and media owners, to right holders, fans, and athletes.

Although the full extent of the crisis and its consequences is still unknown, social responsibility should be the highest priority, Colagrossi said, and protecting the integrity of sports should come next. "What we have learnt so far based more on evidence than factual research, is that postponing tournaments, as opposed to just cancelling them, appears to be the best alternative for several reasons," Colagrossi said. He explained that statistics are very important to sports and fans. A season without a champion, a VIP player, or the interesting side stories "make a temporary problem, permanent". He added:

It is easier to deal with contracts on a postponed and/or shorter season as opposed to a cancelled one.

Also, sport is fuelled by passion and not having a season leaves "an empty space" in this passion. Therefore, Colagrossi said ideally, postponing a season, even at the cost of running it shorter, is a better alternative.

Although it is devastating for fans to see their favourite sporting events getting axed one after another, sponsors should do anything but lay low during this period. Prakash Kamdar, CEO, Dentsu Aegis Network Singapore said brands have an opportunity, even an obligation, to demonstrate leadership, empathy and positivity to their audiences and to the larger global community during times like these.

"They can do so by creating and amplifying content that spreads the right messages through themselves or brand ambassadors. One example of a brand that has done this is Nike, which recently encourage consumers to practice social distancing and quarantine themselves via an Instagram post. The post said: "If you ever [dreamt] of playing for millions around the world, now is your chance. Play inside, play for the world."

Also weighing in on the issue is Thanendran Thanesvaran, head of sports marketing, Reprise Digital Malaysia, who said the first action is to embrace a "worst-case scenario" mindset and plan plan counter-scenarios and activities to embark on.

Start by itemising all event-related sponsorships and prioritising them by a combination of date, attendee size and broadcast.

He also explained that TV revenue, which is a huge income, pretty much determines sponsorship value. As such, organisers and sponsors alike will elect to postpone events to leverage on the eyeballs.

Currently, Malaysia is under a two-week Movement Control Order which will naturally see consumers have more time on their hands to consumer media. Thus, media consumption, especially for streaming services, video conferencing, TV and indoor activities via social, will see an uplift. "Digital mediums will come even more to the fore as a method to engage fans through content," Thanesvaran added.

But of course, the reality remains that commercial sacrifices must, and have already been made for the cancellations, which is the right thing to do on the humanitarian front. According to Ian Loon, CEO, Publicis Media Singapore, everyone has to acknowledge that the situation is "extremely delicate" given how this humanitarian and economic threat will continue to evolve in weeks and months to come. Consumers are increasingly concerned with a balance between resuming their lifestyles and managing inconveniences for the purpose of public and personal health safety, he added.

"There will be millions of disappointed fans, some more understanding than others. It is important for these companies to recognise their part in influencing millions of their fan following, relaying content and messaging that promotes the right social behaviours to contain the viral spread, frustration and negativity surrounding the matter," Loon said.

Related articles:
A class act: Why LVMH is ditching its premium packaging for practicality
SXSW to be cancelled due to growing COVID-19 fears
Mobile World Congress 2020 cancelled after firms pull out amidst virus outbreak
Coca Cola channels SG$4.2m ad budget towards COVID-19 measures in Philippines
SG govt asks citizens to 'be steady' with Phua Chu Kang COVID-19 rap song
Visit Malaysia 2020 campaign axed due to COVID-19
Cannes Lions postponed to October due to COVID-19