Published March 14, 2009

Sponsors call time on sports

In a season of belt-tightening, many companies walk away from the game

By NISHA RAMCHANDANI

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HUGE cutouts of Manchester United players like Cristiano Ronaldo used to stare at drivers in the Raffles Place area till recently. Insurance giant AIG has taken them down for now and, come May 2010, such images will vanish for good. That is when AIG puts an end to the US$100-million shirt deal with the club - among the most high-profile and expensive in sport.

NO MORE LOGOS Was it just a coincidence that Sweden's Henri Stenson stripped to his underpants to play a shot out of the mud on Thursday at the WGC-CA Championship in Miami, Florida? Many players and tournaments have been deserted by sponsors facing the global credit crunch

As companies look to cut costs, their sports sponsorships are among the first to go.

The Royal Bank of Scotland (RBS) used to spend some £200 million (S$430.9 million) a year sponsoring sport. It plans to slash that figure in half this year. No surprises there, given that RBS posted a £24.1 billion loss last year and is currently 70 per cent owned by the British government post bail-out.

In a different kind of bailout, one of RBS's seven global ambassadors, three-time Formula One champion Jackie Stewart, has agreed to forgo one year's payment while tennis star Andy Murray - whom RBS first sponsored in 2004 - is willing to renegotiate his contract in a gesture of gratitude to the bank.

Swiss giant UBS, meanwhile, has decided to end its five-year sponsorship of the Hong Kong Open after the golf tournament ends in November. As title sponsor, UBS contributed US$2.5 million in prize money last year.

Corporate logos are also disappearing from F1's starting grid.

Dutch bank ING - currently in the final year of a three-year sponsorship deal with Renault - is cutting its global F1 sponsorship spending by 40 per cent this year and will pull the plug on its Renault sponsorship once the 2009 season is done. RBS recently said that it plans to bow out as well, once its estimated £10 million (S$21.5 million) per year contract with the Williams team expires at the end of the 2010 season.

Earlier this year, Credit Suisse opted not to renew its sponsorship of the BMW-Sauber team, while Honda pulled out of the race in December, and has since sold ownership of the Honda team to former manager, Ross Brawn. Meanwhile, speculation is rife that Toyota may also make an exit, given the dismal vehicle sales amid the economic downturn.

A little closer to home, it appears that companies are a lot more cautious when it comes to signing on the dotted line.

Singapore lost out on the chance to host the first leg of the International Triathlon Union World Championships in May, a Straits Times report said, due to lukewarm sponsorship response. The season opener, which would have required some $2 million in funding, will instead take place in South Korea.

Sponsorship discussions for the 2010 Youth Olympic Games (YOG) are also taking longer to conclude because of the economic crisis. 'The level of uncertainty has prolonged decision-making,' Catherine McNabb, who heads the sponsorship team of the YOG organising committee, said in a BT report earlier this week. Companies from sectors such as financial services and oil and gas are also treading more cautiously. Conversely, lower occupancies and passenger loads in the hotel and aviation industries has resulted in offers of sponsorship from an airline and a hotel group.

Meanwhile, the HSBC Women's Champions and the HSBC Men's Champions - with purses of US$2 million and US$5 million respectively - are in the final year of their existing contracts.

'We have made no decisions about the future. We will look at the objectives . . . and consider. We are looking for a return on investment,' said Giles Morgan, group head of sponsorship and group marketing for HSBC. Last year's Women's Champions, he emphasised, was an 'unqualified success'.

However, Mr Morgan also acknowledged that some of HSBC's smaller sponsorships may well see a 'spring cleaning'. 'If objectives are not hit, sponsorships shouldn't happen. That's good business practice,' he said, adding that the bank monitors its sponsorships annually to see if targeted objectives are being met.

Still, rather than pull-out completely, there are those that are trying to stretch their corporate dollar to get more bang for their buck. For instance, fringe activities related to the Mercedes-Benz Tour have been 'fine-tuned'. The golf clinic - where professional golfers give guests pointers - was cancelled for the Singapore leg. 'In these challenging times, we will work closely with partners to ensure resources are utilised at the most optimised level,' said Daimler (SEA) CEO Wolfgang Huppenbauer.

But at the same time, the prize money for the opening event has increased from US$50,000 to US$60,000 - an increase which also applies to the Malaysia and Indonesia rounds. The season-ender in Vietnam has seen the purse bumped up to US$80,000. 'Golf is an ideal way for the brand to connect with customers and potential customers,' added Mr Huppenbauer.

Companies are also mindful of the benefits that sponsorships bring, and are using the sponsorship deals to their best advantage. Great Eastern Life Assurance Co has come on board as the new S League co-title sponsor in a three-year deal that is expected to help the insurance company net new business opportunities and raise its visibility.

However, Great Eastern stressed that the business environment required it to be 'discriminate' in selecting sponsorships that are 'value-for-money'.

'We will be working closely with S League to leverage on the sponsorship to garner as much mileage as possible,' said Great Eastern managing director Tan Hak Leh. Apart from being co-title sponsor, Great Eastern is also the official insurer of the S League.

Standard Chartered, which practically doubled its sponsorship to $2 million for last year's Standard Chartered Singapore Marathon, views the event as a platform for engaging staff, business partners and customers.

And as far as OCBC is concerned, the $1 million channelled toward OCBC Cycle Singapore 2009 was well worth it. The bank engaged the community and also managed to sign up more bicycle retailers through its credit cards.

But on two wheels or four, the road ahead looks rocky. After all, if Buick can pull the plug on its sponsorship of Tiger Woods, the world's biggest sporting draw, then who's safe?