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Unit 402Funding Sponsorship in Sport
402.1Sources of funding and sponsorship available
402.2Advantages/disadvantages of sources of finance
402.3Potential stakeholders
402.4Issues to be considered for a funding and sponsorship arrangement
402.5Positive/negative outcomes
402.6Processes in producing a funding and sponsorship package
Unit 402- Learning Outcomes
Unit 402- Tasks to CompleteIn order to successfully pass this unit, all candidates must complete the following tasks:
Task A –Plan
You are a leisure facility manager tasked with introducing a new feature (eg water slide, soft-playarea, sports turf, multi-use games area, outdoor gym area) at your facility as part of an on-goingrefurbishment programme. Directors have advised you that this must be funded through bothinternal and external mechanisms to ensure the project is feasible.Produce a matrix summarising the sources of funding and sponsorship available that could beavailable for the new feature. It must cover:
• sources of funding and sponsorship available• advantages/disadvantages of sources of finance• potential stakeholders• issues to be considered for a funding and sponsorship arrangement• positive/negative outcomes• processes in producing a funding and sponsorship package• evaluation process of a funding and sponsorship bid.
Why is sponsorship so important in
football?
Topic Ice Breaker
Write down as many examples of sponsorship, how it is used and where football clubs get sponsorship money from?
Why Sponsor?
1. A company will usually get involved in a club for charitable reasons – to show they’re supportive of the local community – or to get a trading advantage, e.g. they can sell more goods or their service by having a link to your club. The company will be looking to associate themselves with a reputable club that offers a valuable service in the community. Using your Three Lions association and showing your community profile will make your club an attractive proposition.
2. Many businesses sponsoring football clubs will have a link to the club, such as the owner’s son or daughter playing for the team. Your members are a good first port of call for making contact with potential sponsors.
3. Deals with sponsors are usually only one or two years long. It can take a while to get a sponsor signed up and good sponsors are hard to find, so it’s worthwhile working hard on keeping them. It’s much easier to keep a sponsor than find a new one!
Sponsorship Process
How do clubs attract sponsors and sell advertising space?
What can you sponsor in football?
Group Task 1
Check your answers using the following pictures……..How many did you get?
1.) Manchester United- Chevrolet | $80 Million
2.) Barcelona- Qatar Airways | $38 million
3.) Bayern MunichDeutsche Telekom | $37 million
4.) LiverpoolStandard Chartered | $33 million
Chelsea have signed a new 10-year deal with adidas that is reportedly worth a mammoth £290million in what the Blues describe as 'the biggest deal to date'.
Liverpool have a £25m-a-year kit deal with Boston-based company Warrior Sports — a record for English football and twice what adidas offered
What are the sources of funding availible?
• Companies- local & National
• Charities- Unicef
• Private Organisations
• Public Organisations- Sport England, Football Foundation
• Donations and Self-Funding
• Local Authority & Government- Grants and Loans
Case Study 1- Sports Match Funding
What are the advantages and
disadvantages of seeking funding?
Group Task 1
Advantages to seeking Funding
Afford more expensive Facilities May be interest
Free
More Funding=Higher
profile= more success
Most Funding does not need to be paid back
Attracts more sponsors
Free Money!!!
Encourages Community Cohesion
Dis-advantages to seeking
Funding
Could involve an expensive
Repayment Plan
Terms of sponsorship may require other teams
using facilities
Sponsorship from parents may result
in increased expectations and
pressure
Delays in receiving money = delays in
construction Sponsors may pull out if
terms are not met
Heavy reliance on funding stream
Group Task 2- Stakeholders ‘Stakeholders are people who funds a club or sports team with their own business to
support and try generate enough money to keep the club going.
Who are the Potential
Stakeholders willing to invest in Football?
Local business – Can invest in a share or a stake to have a say and a part in the club. If they don’t like what’s going on they can withdraw their share at anytime.
Local sponsors – Local sponsors are vital because they give you most the funding towards the sports facility, most local companies want to invest in local sport ventures.
Fans/ parents – Parents and fans help bring money to the community and club by;
• Buying tickets• Player sponsorship• Kit Sponsorship• Donations• Fund Raising
Sponsorship Stakeholders
Group Task 3- Sponsorship Issues
What issues are there in relying solely
on Sponsorship?
Proof of Funding- Due Diligence Testing
Their needs to be proof of funding from the stakeholder in order for the sponsorship to be ratified and agreed by the FA, Football League and Club
Stake holder Financial Problems = Club Financial Problems
If the stakeholder business suffers financial problems then this will effect the club and any potential sponsorship, this could lead to administration or liquidation E.g. Portsmouth FC , Aldershot Town FC or Hearts FC
Project costs can change during construction
The demands might change during the process of the build resulting in more funds being needed, some stakeholders may be reluctant to part with more money which results in incomplete projects.
Sponsorship Issues
Case Study 2- Sponsorship Issues- Hearts FCWhy did Hearts apply to enter administration?
Put simply, Hearts cannot pay their bills. Their debts to parent company Ukio Banko Investicine Grupe (UBIG) and Ukio Bankas total £10m and £15m respectively. Ukio Bankas hold the club's Tynecastle Stadium as security over that debt. UBIG itself is claiming insolvency in Lithuania, Its assets have been frozen and they have been declared bankrupt.
Hearts in financial trouble•Feb 2005 - Vladimir Romanov takes a controlling stake at Tynecastle •Season 2005/06 - Hearts finish second in the SPL •Hearts win Scottish Cup in 2006 & 2012 •Wage delays become a regular feature from 2011 on •Nov 2011 - Romanov seeks a buyer for club, saying he has invested more than £50m •October 2012 - SPL imposes registration ban for repeated late payment of salaries •May 2013 - Ukio Bankas declared bankrupt •May 2013 - UBIG unable to meet its liabilities •May 2013 - Hearts avoid points deduction as SPL rules UBIG has not suffered an insolvency event •June 2013 - Hearts enter administration
Group Task 4- Sponsorship Process
What is the process in obtaining
sponsorship?
Sponsorship Process
Business Plan to Market
and Advertise the
club
Meet with Interested
Parties
Negotiate Type of Sponsor
Sell to highest
bidder or best deal
Choose the most
profitable deal
Unit 402 Plenary Questions- What have I learnt?
1. Why is Sponsorship so important in football?
2. What can you sponsor in football?
3. What are the sources of funding available?
4. Who are the potential Stakeholders willing to invest in football?
5. What issues are there replying solely on sponsorship?
6. What is the process of applying for a sponsor?
Questions?
