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CEO Conference - Financing sports

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  • 1. Welcome to the 2012 European Athletics CEO Conference
  • 2. Financing Sports Professor Dr. Helmut Digel Universität TübingenPresented: 20 April, 2012
  • 3. Overview1. Looking back2. Today′s reality3. Financing systems in the world of sport4. Summary of financing possibilities5. Economic logic – an outlook
  • 4. Financing Sports1. LOOKING BACK
  • 5. 1. Looking back• Self-financing athletics – Non-governmental – Voluntary association – Club regulations – Membership fees• Non-commercial athletics• Amateur athletics• Athletics – school sport # 1
  • 6. Financing Sports2. TODAY′S REALITY
  • 7. 2. Today′s reality• Athletics – a semi-professional sport• Code of athletics: have // have not winning // losing• Athletics – an economic enterprise• Athletics – a part of the entertainment industry• Competition between all sports  “survival of the fittest”• Decreasing relevance in public schools
  • 8. 2. Today′s reality• Federations are losing members (30%)• Revenues from membership fees are decreasing (31%)• Only 12 out of 50 federations sell TV broadcasting rights• 9 federations have no marketing income• 16 federations are depending on government grants of more than 70% of their budget• Only 18 out of 50 federations organise fund- raising events
  • 9. 2. Today′s reality - Questionnaire
  • 10. 2. Today′s realityTOP 10 – Government support (in US $) 1) Great Britain 10.0 Mio. 2) Spain 9.07 Mio. 3) Greece 8.22 Mio. 4) Poland 6.46 Mio. 5) France 5.73 Mio. 6) Germany 5.65 Mio. 7) Turkey 5.15 Mio. 8) Romania 3.70 Mio. 9) Ukraine 3.68 Mio. 10) Russia 3.45 Mio.
  • 11. 2. Today′s realityTOP 10 – Total budget (in US $)1) France 29.162 Mio.2) Italy 24.716 Mio.3) Spain 18.590 Mio.4) Great Britain 16.736 Mio.5) Germany 11.525 Mio.6) Finland 10.660 Mio.7) Turkey 9.731 Mio.8) Netherlands 8.633 Mio.9) Norway 7.075 Mio.10) Greece 6.457 Mio.
  • 12. 2. Today′s realityTOP 10 – Marketing (in US $)1) Great Britain 9.103 Mio.2) Germany 5.200 Mio.3) France 4.064 Mio.4) Norway 3.213 Mio.5) Sweden 2.656 Mio.6) Russia 2.530 Mio.7) Finland 2.340 Mio.8) Spain 2.216 Mio.9) Czech Republic 1.335 Mio.10) Switzerland 1.250 Mio.
  • 13. 2. Today′s realityTOP 10 – TV sales 2011 (in US $) 1) Great Britain 2.177.215 2) Italy 1.049.397 3) Monaco 570.594 4) Finland 500.000 5) France 466.360 6) Russia 70.000 7) Spain 62.205 8) Netherlands 42.600 9) Norway 35.100 10) Sweden 32.656
  • 14. 2. Today′s realityTOP 10 – Membership (in US $)1) France 7.006 Mio2) Italy 5.426 Mio3) Netherlands 3.966 Mio4) Spain 1.608 Mio5) Ireland 1.193 Mio6) Switzerland 1.130 Mio7) Finland .585 Mio8) Sweden .510 Mio9) Greece .426 Mio10) Germany .300 Mio
  • 15. Financing Sports3. FINANCING SYSTEMS INTHE WORLD OF SPORT
  • 16. Financing systems in the world of sportGLOBAL LEVEL
  • 17. IOC Income 2008 – 2012Broadcasting Rights $ 2,570 Mio 46%TOP Sponsorships $ 866 Mio 16%Domestic $ 1,555 Mio 28%SponsorshipsTicket Sales $ 274 Mio 5%Licensing $ 185 Mio 5%IOC TOTAL $ 5,450 Mio 100% Source: Olympic Marketing Fact File 2010 Edition
  • 18. FIFA Income 2008 - 2012Event-related revenue $ 3,890 Mio 93% TV broadcasting rights $ 2,448 Mio 63% Marketing rights $ 1,097 Mio 26% Hospitality rights $ 120 Mio 3% Licensing rights $ 71 Mio 2% Other $ 154 Mio 4%Other operating income $ 172 Mio 4% Brand Licensing $ 37 Mio 1% Quality Concept $ 33 Mio 1% Penalties/appeals/match levies $ 14 Mio *) Other (rental income, film sales) $ 88 Mio 2%Financial income $ 127 Mio 3% Interest $ 51 Mio 1% Foreign currency gains $ 64 Mio 1,5% Income from financial assets $ 12 Mio *)FIFA TOTAL INCOME $ 4,198 Mio 100%*) share in FIFA TOTAL INCOME below 1 % Source: FIFA Financial Report 2010
  • 19. IAAF Income 2010Television rights income $ 27,172,403 61% Royalties IAAF BV $ 7,000,000 16% IEC (Europe) $ 20,000,000 45% TWI ATHLETIX $ 172,403 *)Sponsorship income $ 15,250,000 34% Samsung Diamond League Title Sponsorship $ 2,500,000 6% DENTSU Contract $ 11,000,000 25% Continental Program $ 1,750,000 4%Financial income $ 706,003 2%Other income $ 225,826 1%Other income from activities $ 880,024 2% Sale of publications & videos $ 54,888 *) IAAF permit fees $ 9,850 *) Affiliation fees $ 42,600 *) IOC contribution for RDC $ 182,500 0,5% Airlines travel refund $ 2,293 *) Identity card $ 63,500 *) IAAF certification system $ 524,393 1%IAAF TOTAL INCOME $ 44,234,255 100%*) share in IAAF TOTAL INCOME below 1 % Source: IAAF 2010
  • 20. Financing systems in the world of sportNATIONAL LEVEL
  • 21. DOSB Income 2010Membership fees € 4,429,948 10%Financial support € 9,776,244 23% Government subsidies € 6,889,541 16% IOC € 444,174 1% Other (for DSJ) € 2,442,529 6%Marketing € 10,158,986 24% Olympic Marketing € 9,702,231 23% Other Marketing € 456,755 1%Lottery income from “Glücksspirale” € 6,367,920 15%Other income € 2,456,465 6% Interest € 30,495 *) Rental income € 497,570 1% Other € 1,928,400 5%Earmarked funds (for specific projects) € 9,374,371 22%Trainerakademie, Führungsakademie, Integrationdurch Sport, DSJ, Dt. Bundesstiftung UmweltDOSB TOTAL INCOME € 42,563,934 100%*) share in DOSB TOTAL INCOME below 1 % Source: DOSB 2011
  • 22. DLV Budget 2011Sponsoring Income € 2,225,000 63%Membership fees (DOSB fees included) € 245,000 7%Financial support € 40,000 1% European Athletics € 15,000 *) LSB Rheinland-Pfalz € 5,000 *) Department for Foreign Affairs € 20,000 *)Licensing € 105,000 3%Manager Licenses € 11,000 *)Other income € 98,900 3% Interest € 1,000 *) Rental income € 26,400 *) Badges € 60,000 2% Fines/Anti-Doping income € 5,000 *) Other € 7,500 *)Income from events € 794,000 23%DLV TOTAL BUDGET € 3,518,900 100% Source: DLV, 2011*) share in DLV TOTAL INCOME below 1 %
  • 23. Financing systems in the world of sportREGIONAL LEVEL
  • 24. WLSB Income 2010Financial support (state government) € 23,315,114 54% Trainers € 6,726,582 16% Construction of sports facilities € 6,109,917 14% School & club cooperation € 685,700 1% Social services € 1,575,000 4% Education € 3,930,028 9% Disabled sports € 143,629 *) Institutional aid WLSB € 1,604,495 4% Institutional aid member associations € 1,566,509 4% Glücksspirale € 599,859 1% Landesjugendplan € 373,395 1%Revenues Sport School Albstadt € 3,323,704 8%Membership fees € 10,358,268 24%Other income € 2,864,334 7%Reserves € 2,954,686 7%WLSB TOTAL € 42,816,106 100% Source: WLSB 2010
  • 25. WLV Income 2011Financial support + Lottery “Glücksspirale” € 450,832 25%Events € 1,030,181 58% Fun Runs € 835,258 47% Corporate Runs € 155,448 9% Event licenses € 2,001 *) Registration fees regional championships € 37,474 2%Education and training – participation fees € 53,455 3%(High performance sport and sport for all)Publications € 79,970 4%(WLV vor Ort, WLV Yearbook, Running CalendarBaden-Württemberg, Brochures & books)Starting passes / badges € 34,896 2% Starting passes € 19,455 Running and Walking passes and badges € 3,945 Multisport badges € 10,164Other income € 140,697 8%(Licenses, other Marketing, donations)WLV TOTAL INCOME € 1,790,031 100%*) share in WLV TOTAL INCOME below 1 % Source: WLV, 2011
  • 26. WFV Income 2009Administration € 1,763,759 21%Game operations € 921,169 11%(league participation fees, administrative charge,additional fee for clubs – 1/3 each)Justice € 1,089,093 13%(Penalties, procedural costs, fines for missingreferees)Youth Sport € 516,523 6%(Youth camps, administrative charge , financialsupport DFB)Other income € 2,203,652 27%(grants, bfv/wfv magazine, reserves, surplus from categories above)Business operation € 564,641 7%(Sponsoring: € 428,708,rental income, GmbH revenues, advertisements)Sports hall Wangen € 1,269,135 15%(utilization fees, grants)WFV TOTAL INCOME € 8,327,972 100%*) share in WFV TOTAL INCOME below 1 % Source: WFV, 2011
  • 27. Financing systems in the world of sportsLOCAL (CLUB) LEVEL –EXAMPLES
  • 28. Example 1 – BudgetTV Wattenscheid 01 LA e.V. 2011/2012 Main Sponsor (Energy) 45% Financial support 32% Support State of NRW, LSB, LV 17% Support City of Bochum 10% Grants DLV 5% Revenues Half Marathon 11% Equipment supplier 10% Membership fees 2% TV Wattenscheid TOTAL > € 1,000,000 100%
  • 29. Example 2 – Budget LAV Tübingen 2011Booster Club € 60,000 60% Membership fees € 40,000 40% Events (Tübingen City Run) Sponsors DonationsMember clubs € 20,000 20%Title sponsor ASICS (until 2011) € 10,000 10%Financial support 10%(City, State, LSB, LV)LAV Tübingen TOTAL € 100,000 100%
  • 30. Financing systems in the world of sportSPONSORSHIP EXAMPLES
  • 31. Sponsorship examples Sale of rights• Competition support • Car exhibition• Podium medal ceremony • Start and finish• Promotional announcement • Athlete′s apparel during event • Official′s apparel• Big screens • Photographer′s apparel• Scoreboard • Technical personnel apparel• Bags • Competition equipment (Paul• Track surface vault and high jump mat,• Flower lanyards hurdles, electrical equipment)• Mobile cameras • Drinking stations• Umbrellas • Canopy• Perimeter boards (rotating, • Product placement digital, virtual boards)• Bibs• Camera carpet
  • 32. Examples Perimeter boards
  • 33. ExamplesJerseys
  • 34. ExamplesGraphics
  • 35. Examples Tattoos
  • 36. ExamplesCamera carpets & Virtual boards
  • 37. Examples Websites/Internet
  • 38. Example SEIKO
  • 39. Example SEIKO
  • 40. Example SEIKO
  • 41. Example SEIKO
  • 42. Financing Sports4. SUMMARY OF FINANCINGPOSSIBILITIES
  • 43. 4. Summary of financing possibilities Sources of revenue for sports organisations• Financial support / grants • Sale of publications & video • Government • National/international/regional • Merchandising federations • Ticket sales• Sale of broadcasting rights • Membership fees• Sale of marketing rights • Registration fees• Sale of licensing rights • Lottery / Betting• Sale of hospitality rights• Sale of equipment supplier rights
  • 44. 4. Summary of financing possibilities Sources of revenue for sports organisations• Donations • Educational programs• Financial income • Education training programs • Asset management • Interest • Further training• Rental income • Transfer revenue• Deposits and borrowed funds • Penalties / appeals / fines• Financial support / grants • Certification system • Government • National/international/regional • Etc. federations• Manager licenses• Income from events
  • 45. 4. Summary of financing possibilities Sources of revenue for sports organisations Membership fees Ref: SV 1899 Vieselbach e.V.
  • 46. 4. Summary of financing possibilities Sources of revenue for sports organisations New membership possibilities Ref: SV 1899 Vieselbach e.V.
  • 47. 4. Summary of financing possibilities Sources of revenue for sports organisations Ticket sales
  • 48. 4. Summary of financing possibilities Sources of revenue for sports organisations Television rights
  • 49. 4. Summary of financing possibilities Sources of revenue for sports organisationsSponsorship rights
  • 50. 4. Summary of financing possibilities Sources of revenue for sports organisations Hospitality
  • 51. 4. Summary of financing possibilities Sources of revenue for sports organisations Merchandising
  • 52. 4. Summary of financing possibilities Sources of revenue for sports organisations Naming rights(venue; e.g. right to bear name, right of access,right of use)
  • 53. 4. Summary of financing possibilities Sources of revenue for sports organisations Donations • donations are tax-deductable • possible forms of donation  financial  material  services • donors receive a donation receipt
  • 54. 4. Summary of financing possibilities Sources of revenue for sports organisations Grants & Subventions 1. material 2. financial • National / international Federations • Federal government • State government • City
  • 55. 4. Summary of financing possibilities Sources of revenue for sports organisations Asset management  Interest
  • 56. 4. Summary of financing possibilities Sources of revenue for sports organisations Deposits and borrowed funds • Bond issues • Loans • Credit
  • 57. Financing Sports5. ECONOMIC LOGIC –AN OUTLOOK
  • 58. 5. Economic logic – an outlook The cycle of supply and demand Costs Supply Demand Costs
  • 59. 5. Economic logic – an outlook The economic cycle of TV systems Audience Securing/ Securing/ Increasing Increasing Programs Market share Guarantees Structuring Procurement market Advertising revenues Competitiveness
  • 60. 5. Economic logic – an outlook Marketing Relationships Sport Consumer Businesses MediaRef: WALLISER, B.: Sponsoring. Bedeutung, Wirkung undKontrollmöglichkeiten. Wiesbaden 1995, 75.
  • 61. 5. Economic logic – an outlook Marketing instruments (4 Ps)Product Pricing Promotion Placement Corporate Identity Policy Media Advertisement Sales Promotion Direct Marketing Public Relations Event Marketing Sponsorship
  • 62. 5. Economic logic – an outlook Sponsors′ goals Psychological goals: degree of popularity image sympathy Economic goals: volume turnover gainsRef: WALLISER, B.: Sponsoring. Bedeutung, Wirkungund Kontrollmöglichkeiten. Wiesbaden 1995, 80.
  • 63. 5. Economic logic – an outlook The AIDA model – 3 effects of sponsorship Attract Attention on the sponsoring product Arouse Interest and Desire respectively for the product Induce to a purchase ActionRef.: Walliser, B.: Sponsoring. Bedeutung, Wirkung undKontrollmöglichkeiten. Wiesbanden 1995, 80;Ref.: Das Werbewirkungsmodell AIDA (ROGGE 1990, 50)
  • 64. 5. Economic logic – an outlook Marketing options – Sports sponsoring from a business point of view Research & Development Production Marketing(goals) Finances Human resources Product Price Promotion (goals) Place Direct Advertisement Sponsoring (goals) PR Sales Promotion Communication Sports Cultural Social Environmental Programme Sponsoring Sponsoring Sponsoring Sponsoring Sponsoring Athletics Formula 1 Football Competitive Sport Amateur Sport Age group EventsIndividual athletes Teams Clubs/associations
  • 65. 5. Economic logic – an outlook Preference for sportsCountry Athletics First place Second placeGER 3rd place Football Formula 1ITA 7th place Football Formula 1UK 4th place Football RugbyUSA 14th place American Football BasketballJPN 8th place Baseball FootballRSA 5th place Football Rugby
  • 66. 5. Economic logic – an outlook Decisional dimension of sport sponsoring engagementOrganisational level Sport Sport Ice hockey organisations Luge Horse riding Sport Biathlon federations Judo Sport clubs Ice skating Basketball Sport event Swimming Tennis Sport teams Golf Soccer Individual Athletics athletes Professional High level Mass Youth Performance sport sport sport sport Ref.: Bruhn, M. „Sponsoring“ 2003, p. 41
  • 67. 5. Economic logic – an outlook Future perspectives of sponsorship in sports• Considerable changes of structure in media and communication markets• Diffuse losses and reaction problems with traditional communication instruments• Cost explosion at attractive sports events• Problems with analysing and measuring of effects and efficiency• Development of interactive marketing and communication “instruments” through multimedia• Necessary new orientation of the company′s integrated communication strategy
  • 68. 5. Economic logic – an outlook The future of sport sponsorshipThe development of sport sponsorship is influenced by: • more professionalism • better planning • a higher quality of communication • relevance for the core business • more credibility & effectiveness • long term agreements