Economic indicators point to the fact that there are much money at stake for sports properties and their commercial stakeholders when betting on the ‘certainty’ that a specific sports property will succeed on the playing field.
Overall, football is the most popular and commercially developed sport in Denmark and in many other countries worldwide. Thus, it makes sense to illustrate my points by applying a few football examples. In the Danish Super League (football), there is much risk associated with relegation. Simply, the focus at the second best level does not reach that of the Super League. On top of losing significant broadcasting revenues, relegated or underperformning clubs naturally find it harder to secure other commercial revenues given the fact that ‘the total experience’ weakens. Corporate sponsors may no longer believe in the ‘at the time’ (with certainty) future winning streak and hence correlated commercial realization. Thus, future revenue streams will definitely suffer if the underperforming cycle does not come to an end.
At a national team level, there are always ‘good teams’ (especially in Europe), which do not qualify for profitable mega-events like the UEFA EURO or the FIFA World Cup. Sweden, Denmark, Bulgaria, Czech Republic, Serbia, Poland, Romania, and Ukraine are all relative good football nations that did not qualify for Brazil and that has a price. The Danish FA just announced (see here) an expected deficit of DKK3 to DKK4 mio. for the ongoing fiscal year, i.e. Nov. 1 2013 – Oct. 31 2014. Part of this process relates to investments in talent management, women’s football and general elite-oriented performance optimization but the FA is also negatively burdened by the fact that the men’s national team (the commercial train of the FA) did not qualify for the World Cup in Brazil in 2014. First of all, the popularity of the men’s national team does not correspond with the happy years of ‘Danish Dynamite’, i.e. attendance levels for the home games have not been good recently. Moreover, it will come back and bite the FA in its tail that the men’s national team did not qualify for the World Cup in Brazil. Corporate stakeholders have invested (or may consider investing) in what should be one of Denmark’s best sports brands and they do not prefer to see their investments converted into ‘unsecure gambling’.
Of course, the Danish FA will miss out on ‘direct revenues’ from World Cup participation but concerning the national team level it also serves a purpose to qualify for the big tournaments due to the fact that it will boost the entire business model of the FA. In professional sport, wining makes sense and has the strong capability of ‘adding some sunshine’ when sports properties strive to monetize on their commercial assets. Winning also leaves the sports properties with ‘BETTER OPPONENTS’ and ‘MORE IMPORTANT GAMES’ to play and that translates into better experiences for all stakeholders. The business model for national teams is also characterized by the fact that missing out on the World Cup or the EURO positions a team in a negative vacuum in the sense that there is a long period without any vital games to play. Whether or not that is the reason for the fact that the financial organization Danske Bank decided to back out of the commercial partnership with the Danish FA and the men’s national team is not the essence of this post but it does make sense to emphasize that Danske Bank’s investment is not as good as if Denmark had qualified for Brazil.
The big events in football illustrate the potential of the ‘attention economy’ and as a main sponsor Danske Bank does not get the same opportunities to engage with the national pride, hype and euphoria linked to football when Denmark is not be present in Brazil. The whole process of preparing for the World Cup, which includes factors like various events, pre-event matches and selection of the final roster, is an interesting sponsorship outcome in itself. World Cup participation would most certainly generate massive broadcast and print news consumption but the strength of the ‘attention economy’ from a sports perspective also concerns the emotional appeal of sports and the fact that modern sports news consumption via traditional media outlets is supplemented by increasing and very intense online consumption and the integration of telecommunication providers (Hutchins & Rowe, 2010; Lanham, 2006). More specifically, Hopwood (2010) indicates the economic effect that there is also a bridge to build from the ‘attention economy’ towards more fan involvement and the latter is easier to deal with if there is a good sporting product. Roberts (2009, p. 9) supports this by stating that “we have moved from an attention economy to a participation economy and successful (sport) brands will create those opportunities to participate… We have to involve fans in new ways… and by offering specialist content that builds on relationships and takes them into entirely new areas.”
All in all, negotiation of commercial rights in sports draws the lines for aggressive collaboration and/or competition between different stakeholders for the treasured attention of fans and audiences. In the cases above, it is exemplified how different stakeholders come out as losers when being associated with underperforming teams. From a media angle, there is a clear cohesion between sporting performance and the bottom line. Losing teams face minimized media revenues and media rights holders do not see the same effect if specific teams are left out of broadcasted games. Consider how it would impact Danish media rights holders if Denmark had qualified for the World Cup in Brazil or if Brøndby IF had been relegated from the Super League instead of Silkeborg IF or AC Horsens? And what does it mean for media rights holders and its advertising business if the absence of a specific team leads to damaged ratings? These scenarios are diverse but they each prove a point! What about the activation of Adidas and its merchandise sales on the Danish market? Wouldn’t that be healthier if Denmark had qualified for Brazil? Definitely….. The Danish FA and the men’s national team is one of Adidas’ flagship sponsorship assets in Denmark. Occasionally sponsorship activation for some sponsors may the same whether or not a team does well but even if that is the case there is no doubt that the marketing impact most likely will be less efficient.
From a broader viewpoint, what does it mean for Danish businesses even at a local level that Denmark did not qualify for Brazil? Surely, we may not engage in fan festivals (or meet up to watch a specific game) to the same degree. We may not spend the same amount of money on ‘special World Cup editions’ of merchandise, soft drinks or restaurant menus. We may not generate as much buzz through online and face2face contests and competitions and we may spend less on event traveling and consumption. This scenario definitely is fuel on a sponsor’s engine in relation to sponsorship negotiations and re-negotiations – the power balance shifts to the sponsor’s side of the table and it leaves even more room for contracts with specific performance-oriented clauses.
Sources:
Danish FA/DBU.
Hopwood, M. (2010). Sport marketing public Relations. Sport public relations and communication, (146), 55.
Hutchins, B., & Rowe, D. (2010). Reconfiguring Media Sport for the Online World: An Inquiry Into” Sports News and Digital Media”. International Journal of Communication, 4, 23.
Lanham, R. A. (2006). The economics of attention: Style and substance in the Age of Information. Chicago and London: University of Chicago Press.
Additional inspiration:
Check this story from the Guardian “The forgotten story of … Danish Dynamite, the Denmark side of the mid-80s”.
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