Alexey Khobot, a leading specialist in the field of betting and software development, spoke about sponsorship contracts in times of a global pandemic
The COVID-19 pandemic affected the global economy and virtually every sphere of business. The main issue faced by the betting industry was the cancellation of sporting events. Naturally, this led to a significant reduction in the volume of bets placed. The product offered by betting companies to their customers suffered.
The second problem was the early completion of leagues and competitions sponsored by betting companies. To find a solution, our company began to study global practices. According to the European Sponsorship Association (ESA), 72% of brands continue to consider the acquisition of sponsorship assets. This means that the sponsorship of sports is still seen as an important advertising channel.
Speaking about major partnerships with brands, for example, the Summer Olympic Games in Tokyo and the 2020 UEFA European Football Championship, it is worth noting that, as things stand, not a single sponsor has backed out of contracts linked to the sporting events. The organisers have kept 2020 in the names of events primarily to save the cost of production of advertising products and souvenirs.
As for the most affected business sectors, such as tourism, some companies have walked away from their sponsorship contracts. There are similar cases in the Russian Federation.
Aleksey Khobot believes that companies should consider compensating for losses through bonus contract options.
How will the pandemic change sports sponsorship going forward?
According to Alexey Khobot, it will undergo two important changes.
Firstly, companies will be more carefully to write force majeure and other risks into contracts, and will also start to include all eventualities within the cost sheet. Often a sponsorship contract is formed as a whole package for a single price, where it is impossible to individually separate the cost of LED-minutes or naming rights. And, if any of these options cannot be implemented, partners will move on into a new round of negotiations. Alexey believes that brands will now look to structure such cost in more detail.
Secondly, from a marketing perspective we are already seeing a sharp shift in focus towards social and digital activations. The quarantine and resultant suspension of sports has shown both sides that we are too dependent on physical media, advertising hoardings being a fine example. Therefore, as we move forward, it's important for sponsors to work more closely with CRM, fan bases, audience engagement, and collaborative content.
Companies that adopt such a strategy which takes into consideration all of the above will have no problems as regards sponsorship rights in the future, that is, in the event that sport is suspended in such a fashion once more. This is something Alexey hopes we won't experience in the near future.