Significance of Professional Sports & Recreational Sports in Advertising, Sponsoring and Media Rights.

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1 Significance of Professional Sports & Recreational Sports in Advertising, Sponsoring and Media Rights. (I C /10) Results Report (summary) December 21 th, 2011 Authors: Iris an der Heiden, Frank Meyrahn, et al. 2hm & Associates GmbH

2 The Federal Ministry of Economics and Technology authorised a sample-based survey within the scope of a research project and under the guidance of 2hm & Associates GmbH (Mainz) in order to collect and analyse data regarding the magnitude of advertising, sponsoring and media rights in sports since the volume and structure, of such, is paramount for the future satellite account for sport. The project was tasked to answer the following questions: How large is the total volume for sport-related advertising, sponsoring and media rights, and who spends what amounts? To this end maximum insights were acquired at reasonable costs from a combination of CATI-Surveying (Computer Assisted Telephone Interview) and personal expert interviews. Approximately 2,000 telephone interviews with a call duration of 15 minutes on average, and approx. 60 expert interviews with an interview length of nearly 30 minutes constitute the basis of the research. Existing information sources were used to augment and validate the obtained results. The project concludes that in the year 2010 the total volume for advertising, sponsoring and media rights expenditures amounted to 5.5 billion. Professional and recreational sports play a significant role in the areas of advertising, sponsoring and media rights in the German economy. 33% of the company basis reports a connection to sport either directly via the manufacturing of goods for sports and the provision of sport services or via sponsoring and sport-related advertising. 5% of all surveyed companies manufacture or provide goods and services for sports. These are also the primary supporter of sport-related advertising. In addition to advertising 73% of the manufacturers and service providers are involved in sport sponsoring. Table 1 illustrates the total expenditure volume for advertising, sponsoring and media rights. Sport sponsoring maintains the largest share of total volume with 2.5/2.7 billion (2010/2008). Sport goods manufacturers and service providers do not form their own industry branch. In order to provide a frame of reference for the advertising expenditures of these entities the figures can, however, be compared with advertising activities of other branches: with a volume of million the advertising expenditures of sport goods manufacturers lie between the pharmaceutical branch (# 6 among the largest advertisers with million in 2009) and the chocolate and confectioneries branch (# 7; million ). Source: ZAW, I C /10 Results Report (summary) Page 2

3 Tab. 1: Total Volume: Advertising, Sponsoring, Media Rights 2010/2008 (all data: without value-added tax) Data in millions Sponsorship of Sport Organisations: 2, ,733.9 Sponsorship Activation in Total: 1, ,215.6 of this; activation via companies/ sport-related advertising within scope of sponsorships of this; activation via clubs of this; activation via associations of this; activation via professional leagues Sport goods related advertising Media rights: 1, Total economic significance of recreational and professional sports in advertising, sponsoring and media rights: 5, ,804.5 Expenditures for the further development of acquired sponsorship rights often denoted as activation amount to 1.1 billion (2010) and 1.2 billion (2008). Within these numbers are expenditures, which occur on both the companies side, as well as on the side of the sport clubs or leagues, in order to secure the rights to use. This equates to approx. 45% of the sponsorship volumes being used in order to develop and implement the sponsorship. This indicates that the activation expenditures are significantly less than previously assumed. The expenditures for media rights have a share of 20% of the total sport-related advertising in Owing to the increasing significance of sports broadcasts, as well as the economic crisis driven reduction in advertising and sponsorship volumes, this share is appreciably higher than in In 2008 media rights comprised merely 15% of the total volume. In terms of absolute sums recreational sports are sponsored more heavily than professional sports Collectively companies sponsor recreational sports with approximately 2.1 billion ; and professional sports receive 1.1 billion (including activation). It is important to note that the sponsorship volume for recreational sports is divided among nearly 90,000 recipients (mostly clubs); whereas the sponsorship volume in professional sports is split among few recipients. The greater part of recreational sport sponsoring is amassed from a broad company basis (1.9 billion ). Companies with higher sponsorship volumes actively engage themselves in professional sports in an increasing manner. I C /10 Results Report (summary) Page 3

4 Primary supporters of sponsorships are smaller-sized companies The total sponsorship expenditures of companies (including activation) has subsided 9% from 2008 to Diagram 1 shows that the decline in sponsorship expenditures from 2008 to 2010 is attributed to those companies with revenues in Germany under 2 million in taxable revenue. In the classes of larger companies, sponsorship amounts have even slightly increased. total under 2 mill 2 till 50 mill 50 mill and more Diagram 1: Sponsorship expenditures of companies (incl. Activation) 2008/2010 by revenue class (in million ) Regardless of the post-2008 development it is clear that large companies, despite their large sponsorship budgets, do not provide for the largest share of sponsorship volume. The primary sport sponsors are much rather the smaller and medium-sized companies which make up 75% of the total sponsorship expenditures. Sport goods and service-related advertising Sport goods and service-related advertising is independent of advertising within the scope of sponsorships, even though many sport goods manufacturers and service providers (73%) grant direct sport sponsoring. The sport-related advertising volume from 2008 to 2010 has greatly reduced from million to million. This corresponds to general developments within the advertising market (ZAW, 2010). It is important to note the trend, however, that sport goods manufacturers over the last few years are reallocating an increasingly larger share into internet advertising (including social media) and that advertising costs here are comparatively economically priced. Manufacturers of sports apparel account for the most important branch of trade with 104 million (2010) for sport goods related advertising (14% of total sport-related advertising volume). I C /10 Results Report (summary) Page 4

5 Media Rights The volume for media rights in Germany amounts to 887 million in 2008 and 1.1 billion in The increase relates primarily to the 2010 FIFA-Football World Championships for men. The sums contain the costs for secondary and third-party rights, inasmuch as a special right was required. In essence the total sum is comprised of rights which must be paid for the broadcasting of men s football (rights of the German Football League, the German Football Association, and UEFA), motorsport (Formula 1), the Olympic Games, for selected winter sports and boxing. In order to meet the requirements of the various sports, and to fulfil the information obligations of the broadcasting corporations of the Federal Republic of Germany, a socalled 33 Contract between ARD, ZDF and 33 sport federations has been created. By these means ARD, ZDF and their associated stations are authorised for event broadcasting. These media rights are also included. A media right consists as a general rule, of broadcasting rights for channel television, radio and online services (IP). The costs for rights of the Deutsche Telekom for the IP-broadcasting of Bundesliga football are explicitly considered. It may be assumed that a greater commercialisation (separate) of online rights will occur. I C /10 Results Report (summary) Page 5

Economic Value of Sport in England 1985-2008

Economic Value of Sport in England 1985-2008 c August 2010 Sport Industry Research Centre Sheffield Hallam University Contents Definitions Page iii Executive Summary iv Chapter 1: Introduction 1 1.1: Terms