Global Sponsorship to Take a 37% Hit

A new report from British Agency Two Circles is forecasting that global sports sponsorship rights-fees will see a 37 per cent decrease in 2020.

The financial fallout from the pandemic will result in a fall in cash terms from $46.1 billion in 2019 to $28.9 billion in 2020.

The 2020 projections include a 45 per cent year-on-year decrease in spend ($5.7 billion) from Financial Services companies, who are projected to contribute $6.9 billion by year-end.

Automotive, Energy and Airlines – three sectors like Financial Services which have been hit significantly by the Covid-19 pandemic – also ranked in the top 10 by sports sponsorship spend in 2019. Automotive, the second-biggest spender in 2019, will contribute $2.7bn in 2020 according to the projections, down from $5.9bn the previous year and representing a 55 per cent decrease.

The report suggests that most new sponsorship agreements around the world will be put on hold, and many existing agreements will be ended as a result of companies implementing major cost-cutting measures or going out of business.

Sponsors will also be given ‘makegood’ sponsorship collateral and cash rebates due to the postponement and cancellation of live sports, significantly reducing their financial outlay in 2020.

“As a marketing platform to reach passionate and emotionally-engaged audiences at-scale in brand-safe environments, sports sponsorship is unrivalled,” said Gareth Balch, Two Circles CEO.

“However, with live sports halted globally since March, the value that sports properties have been able to deliver brand partners has been limited, with cost-cutting in sectors that invest heavily in sponsorship also presenting a significant challenge in signing new deals.”

“Though every corner of sports is hurting, we remain certain that sports’ economy will thrive in the long-term, and when the impending recession bottoms-out, all sectors will rely on the best marketing platforms available to grow their businesses.”

“The sports properties that use this period to invest in their sponsorship propositions, moving away in particular from analogue-led logo exposure to digitally-driven, tangible audience engagement, will be those that thrive most post-Covid-19.”

The projections are based off a modelled 2020 sports calendar which factors in postponed, cancelled and modified schedules.

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