Sponsorship Or Donations - Understanding Sports Financing

Often than not, we confuse it. We say "We need sponsor for our upcoming sport event" - to mean we need some corporate body or individual to fund the upcoming event.

When sports organizers approach us to help them get a sponsor, I often ask them what seems to be a startling question:

why should a company sponsor your sport event?

Does your event have the reputation, the right audience size and media reach large enough for a sponsorship investment?

Indeed, not every sporting event can attract sponsorship as not every external funding can be regarded as sponsorship in its real sense.

What some sporting event may afford and should go for is philanthropic donations!

Sponsorship Or Donations - What's the difference anyway?
Voluntary exchange is the central concept underlying both sponsorship and donations. The concept requires something of value to be offered in exchange for something else of value. Before an investment or donation is made the contributor is likely to ask two questions
1. What is in it for me?
2. How much will it cost me?
The trade off is weighed between what will be gained and what will be given in exchange.

Both sponsorship and philanthropic donations offer sources of funds, resources and in-kind services to sport organizers, but differ in the nature of what they expect in exchange or in return.

SPONSORSHIP is a business relationship between a provider of funds, resources or services and sports event or organizers which offer in return some rights and association. that may be used for commercial advantage.

The distinctive terms that differentiate sponsorship from philanthropic donations are business relationship and commercial advantage.

PHILANTHROPIC DONATIONS are more or less altruistic. Although donors may offer similar type and amounts of support, the benefits they seek in return for their contributions are different. The key motive in philanthropic donations is the satisfaction of knowing that good is being done with the donated resources.

The motives underlying philanthropic donations are altruistic rather than commercial, because the donors are concerned with humanistic or community good rather than with a commercial return on the investment. Most often what donors seek to gain is more or less goodwill of a target audiences or community.

But Corporate Sponsors seek to gain commercial values that may directly or indirectly increase their brand profitability. So they will demand that their sponsorship investment have a clear and measurable objectives the sports event organizers must deliver in return - such as increase awareness of their brands, image enhancements, Hospitality opportunities, product trials or sale opportunities...

First, before any company may decide to go into sponsorship partnership, the sports event must have the right audience size and media reach.

The sports event audiences must have the same demography (age, sex, location, income...) as that the company want to reach. Then the size of onsight attendances must be large enough and the media reach (size of tv viewers, radio listeners as well as publications on newspapers and online social media platforms. How popular is the sports event (how much free mentions it gets on both mainstream and social media news and programs.

Second, the sports event must have the reputations that the sponsor company and brand will like to associate with. The sport event must be free of scandals or any negative reputations.

Therefore, it may be difficult for a sports event to attract sponsorship in its median show or for the first two to three years, unless, off course, they have top management excutive or respected person championing the course. The reason being that the event doesn't yet have a verifiable evidence of the type of audiences or media reach they can use to attract and convince any company to make a sponsorship investment.

As I said earlier, not every sports event have what it takes to attract Corporate Sponsorship. Therefore, the sport organizers should concentrate on getting philanthropic donations.

CORPORATE SOCIAL RESPONSIBILITY (CSR): At best they can seek for a company who may want to underwrite their sports event as a CSR.

Corporate social responsibility of any company is more or less a social relationship effort with commercial values. It is in the realm of Public relations. Often, a company undertakes a CSR effort, may invest in your sport event without demanding a direct business return or exchange.

For instance, an oil exploration company may invest in a sport event in the Niger-Delta community of Nigeria, not to demand commercial derivatives from the sports organizers, other than goodwill messages to the people of the community.

The oil exploration company may not be seeking direct profitability, but to gain a cordial relationship with the community and in return a peaceful work environment. They do this to avoid uprising and unwanted destruction of company's property and lives.

CSR stand between Sponsorship and philanthropic donations as sources of financing sports events. But strategy to attract companies are quite different. This is reason you should understand the one to go for whether Sponsorship, Philanthropic donations or Corporate Social Responsibility.