Olympics and World Cup fuel soaring sports market as it hits $30bn
LONDON - A bright future for sports sponsorship is on the cards, according to the latest research, as the value of the market soars by over $6bn in the last three years to hit $30bn.
The economic turbulence felt in the world economy as a result of the Iraq War in 2003 has not translated in a weaker global sponsorship market as many commentators had predicted.
According to the International Events Group, the value of the global sponsorship market is estimated to have grown from $24.4bn in 2002 to $30.5bn in 2005 -- an increase of $6.1bn or 25% over the last three years.
For the last full year (2004-2005), reported global spending on sponsorship increased 9.3% or $2.6bn from $27.9bn to $30.5bn.
In comparison, global advertising expenditure over the same period (2002-2005) was reported by global media services group ZenithOptimedia to have grown from $359.2bn (2002) to $406.2bn (2005) -- an increase of $47bn or 13.1% over the past three years.
On this basis, the growth of sponsorship is almost twice that of advertising over the same period.
This highly optimistic outlook is consistent with the sample of 1,753 sponsorship deals analysed by The World Sponsorship Monitor and published by Sports Marketing Surveys in 2006.
TWSM recorded an increase in terms of deal volumes and values: from $6.4bn (2004) to $10bn (2005), an increase of $3.6bn or 56.2% in sponsorship deal value.
However, in the context of advertising expenditure, sponsorship is equivalent to just 7.4% of the global advertising market in 2005.
Such comparisons are, of course, difficult to make given that sponsorship expenditure is a mixture of rights acquisition and activation costs, whereas advertising is a straight marketing expense. Nevertheless, the two are not mutually exclusive and virtually all major sponsorship programs involve an advertising component.
What is certain, however, is that the relative growth rates in the acquisition of sponsorship rights demonstrates an overwhelming confidence amongst brand owners in using sponsorship as a key brand communication platform.
On the basis that sports sponsorship accounts for around 80% of global sponsorship activity year on year, the value of sports sponsorship market in 2005 is estimated to be worth $24.4bn, up from $19.5bn in 2002, an increase of $5bn or 25% over the last three years.
According to IEG, the global sponsorship market will record double-digit growth of 10.8% to $33.8bn in 2006, with the greatest increase in growth coming from Europe, at around 13%.
With the prospect of a packed sporting calendar of global events in 2006 including the Torino Olympic Games and the Fifa World Cup in Germany, sports sponsorship looks set for continued substantial growth over the next 12 months and beyond.
Ardi Kolah is author of SportBusiness Group report Maximising the Value of Sponsorship and the forthcoming report Sponsorship: Strategies for Maximising Return on Investment.
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