“What’s important to remember is that there’s always going to be demand for innovation – cricket’s probably been the most innovating sport in the last 10, 15 years. I think it’s about creating a product that’s going to be relevant to the target market,” Richard Dunn, from Playmakers Sponsorship, told CNBC Africa on Friday.
“There’s always opportunity – it’s how you protect your other existing events in the market place. Often what happens, these cannibalise each other, so you’ve got to be aware in terms of the overall market.”
Sports sponsors are looking to more cost-effective mediums like the internet and social media, and sponsorship spending in South Africa has grown from 63 million rand in 1985 to 4 billion rand in 2011.
Growth over the past 10 years alone from 2002 to 2012 averaged 12 per cent per year, well above CPI rates, but since 2006 the leverage ratio has fallen more than 30 per cent.
“We’ve always had a large amount of commitment in terms of the sponsorship spend. The leveraging space, that’s the money you effectively put behind your sponsorship to make it work,” Dunn explained.
Direct sponsorship however, is the initial investment needed to basically acquire commercial rights.
Dunn added that where you would traditionally go and buy the broadcast deal from the broadcaster, you now, in some cases, might get a broadcast deal included in your rights deal.
“You’ve got to have a leveraging budget which effectively allows you to develop plans to commercially deliver on your objectives at the end of the day. Normally that would include buying the broadcast packages,” he indicated.
“What you find now though, in the last year or two, the leveraging spend has gone down. What’s happened is that rights holders are trying to commercialise and vertically integrate their businesses better, and own the broadcast.”
While innovation is encouraged in sport, in this day and age, Dunn believes that the days of massive sponsorship growth are coming to an end.
“The market is stable at the moment. The 2010 World Cup was a bubble that kind of protected the industry. At the moment I think the industry is in a reasonably comfortable place, but I think the glory days of growth in the sponsorship industry have been curtailed.”