Investment in the sponsorship market, in the Republic of Ireland, specifically fees paid, decreased by an estimated 14.8% to €160.6m in 2020, bucking the trend of sustained growth over recent years. This was the lowest spend level since 2016.
The decrease in fees was not as great as anticipated with many sponsors supporting rights holders and showing solidarity by continuing to pay agreed fees. However, most rights holders were pressed to offer contract extensions, additional assets or added value to compensate for curtailed competition schedules, less TV coverage and fewer activation opportunities. Music and event fee levels were among those impacted most with all concerts and festivals postponed or cancelled.
If everything goes as planned, we have a feast of sport to look forward to in 2021 including a rescheduled Olympic Games, the UEFA European Football Championships and a Lions Tour.
However, despite this, we estimate that investment will decrease by a further 5% to €152.5m in 2021. Short-term brand decision making is prevalent. Also, uncertainty over sports scheduling and a continued pause on music events are contributory factors. Major new deals are likely to be scarce, and the FAI is still seeking to replace Three as its main sponsor as we enter a new World Cup qualifying cycle. Retaining existing sponsors while protecting revenue levels may be the priority for many rights holders – especially those smaller to mid-sized.
The Northern Ireland market decreased by circa 18.8% in 2020. We estimate the value of the market was £10 million (€11.2 m). An added factor here was some knock-on impact from UK sponsorship activity – Covid-19 and Brexit related. We forecast that the NI market may recover a little faster than the Republic in 2021 but remain static overall at £10 million (€11.2 m).
Sponsors and rights holders have continually proven to be particularly resilient and creative over the past 12 months. While many relationships have improved due to stronger communications, and extensive scenario planning, it is likely that this will be tested again. A successful vaccination rollout will help accelerate a return of fans to sporting, music and cultural events. However, we are not likely to see the full benefit of this, or a return to increased investment, in either market, until 2022.
There are green shoots emerging though; as we look beyond Covid-19, we predict sustainability will become increasingly influential in sponsorship investment decisions and activation.
A recent example here is SSE Airtricity’s announcement of an energy partner programme for clubs as part of its new title sponsorship of the Women’s National League and its renewal of the SSE Airtricity League. This is an excellent opportunity for rights holders to attract additional sponsorship revenue, as it recovers from this uniquely challenging time.