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Published 10 October 2009

By Gary Rice, Beauchamps Solicitors

There has been some comment regarding the use of public money for sports sponsorship by financial institutions in receipt of Government money. Interestingly, Bank of America chief Kenneth Lewis has moved to defend spending on sports sponsorship insisting that it can be justified, even in an economic slowdown.

He claims that sports sponsorship is effective in generating sales and profits for companies. There has been some comment regarding the use of public money for sports sponsorship by financial institutions in receipt of Government money.

Interestingly, Bank of America chief Kenneth Lewis has moved to defend spending on sports sponsorship insisting that it can be justified, even in an economic slowdown. He claims that sports sponsorship is effective in generating sales and profits for companies. He said “I was never inclined to pump big sums of money into sports marketing until I saw the facts and the numbers. In general terms, for every dollar we spend on sports marketing, we get 10 dollars in revenue and 3 dollars in earnings.” That would explain the continuing spend on sports sponsorship then. He defended any charge of bias by saying he doesn’t even like sport.

Bank of America is in receipt of billions of bailout dollars from the US Government and is the sponsor of America’s National Football League, Major League Baseball and NASCAR motor racing. Bank of America had been involved in negotiations for the naming rights deal to the redeveloped New York Yankee Stadium, but has put an end to those negotiations. Also in the US, CitiBank has received a lot of criticism over its 20-year $400 million naming rights deal for the new baseball stadium of the New York Mets. But if the Bank of America chief is right, maybe we should all invest in Citibank...

German authorities have proposed a ban on programme sponsorship on public service broadcasters ARD and ZDF. However, sport looks set to be exempted from the proposed ban. The ban must be seen in the context of a continuing debate in Germany over the level and function of the licence fee (one that seems to be going on in Ireland as well) in a continuously evolving and fragmenting broadcasting world. The ban means that programme sponsorship (except sport) will not be allowed after 8pm Monday to Saturday, or at all on Sundays. German regulators have recognised that programme sponsorship is sometimes tied to the acquisition of top sports rights and allowed sport the exemption.

Magners has extended its title sponsorship of rugby’s Magners League for two years until May 2011. The 2009/2010 season will also see the start of a play-off structure for the Magners League. This is an interesting match-up - rugby is not generally a summer game and cider (whether you want to call it Bulmers or Magners) is often considered a summer drink and has taken a hit over the past number of summers with the seemingly never-ending bad weather. Also, negotiations between Celtic Rugby Limited (the Magners League tournament organizers composed of representatives of the various Unions involved) and the Italian Rugby Federation are ongoing regarding the inclusion of Italian teams in the Magners League. The board of Celtic Rugby Limited has given its approval to two Italian teams taking part commencing in the 2010/11 season. It will obviously involve extra fixtures and the existing teams have made it clear that there must be commercial value to the deal and no decrease in current revenue streams. Ultimately, the Italians will have to bring in a TV partner. Meanwhile, in a story totally unrelated to sponsorship, a complaint to the Advertising Standards Authority in the UK regarding a Magners advert has been upheld. A television advert depicted a man walking into a pub (this isn’t a joke). The voiceover says “The perfect ice-breaker. Making sure the conversation flows, in the time it takes to create a cool, crisp pint. No ice, just pure, premium taste”. A single viewer complained that the advert suggested that an alcoholic drink could boost confidence and lead to social success. Advertising suggesting products give us certain characteristics totally unrelated to the product, really?

Speaking of booze, owners of teams in American football’s National Football League are reported to be considering dropping their ban on alcohol sponsorship. Due to the economic slowdown, the team owners are discussing permitting alcohol and lottery sponsorships. That’s right, when things get tough turn to the booze and gambling!

Article obtained from www.beauchamps.ie, the website of Beauchamps Solicitors. Article reproduced with their kind permission.

For more information, contact Gary Rice
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