Sponsorship And Event Profitability

Slide 1: Sponsorship and Event Profitability Dr Stephen Dann Sparten R&D

Slide 2: To make an event profitable • Earn more than it costs to run the event • Two income streams – Sponsors • Increase perceived value of being involved so they are willing to pay higher rates – Participants • Increasing volume of participation not cost of attendance

Slide 3: Costing less than you earn • Key Business Considerations – Calculate break even – Can the Event be cancelled? • When do you have to make break even to ensure the event will go ahead? • If the event can’t be cancelled, what alternative revenue stream has been set aside to cover the shortfall?

Slide 4: Financial Factors • Costs – Knowing fixed costs (event costs) – Knowing fixed income (sponsorship) – Assess previous events variable costs – Assess previous events variable income – Calculate case scenarios • Worst case scenario • Realistic revenue • Better than Usual Case

Slide 5: Sponsorship revenue should cover… • Cost of servicing the sponsorship • Insurance • Sound system • Venue hire • Printing • Overheads • Advertising • Any fixed event costs

Slide 6: Sponsorship Breakeven • $(Sponsorship Revenue) - $(Fixed Event Cost) = $(Buffer to handle variable costs) • If the sponsorship handles the fixed costs, then the event is less vulnerable to the variables of the event days

Slide 7: Lock in • Non-refundable pricing – Pre Sell Non Refundable Tickets • If they don’t show up, it’s not your responsibility – Offer Early Bird registrations

Slide 8: Different Needs • Sponsors • Participants – – Good day out Financial gain – Access to markets – Goodwill – Sales – Etc… Both want value for money

Slide 9: Managing the Event for Sponsors

Slide 10: Managing the Whole of the Event • Manage the sponsors • Manage the Event Day – Business relationship – Managing the people on the day – Non attendee sponsorship – Controlling the event day – Pre-event • Event Day Hospitality • Manage the pre-event – Have a place for the expectations sponsors to be treated as – Explain the event VIP – Show the event from – Sponsor Host to look after previous year the sponsors

Slide 11: Case • Local bakery offers $500 in cash and $200 of buns and bread rolls • Local bakery won’t be attending due to work commitments • How do you show at least $700 of value from the event day to the baker?

Slide 12: Options 1. Photographs as Proof 1. The product in context 2. The signage 3. People using the product 4. People eating the product 2. Discount Coupon Sponsorships 1. Trade $50 of event day buns for $50 of “Buy one, get one free coupons” 2. Give the coupons to the people who eat the event day buns 3. Measures how many people went to the baker after sampling the product, brings in more business. May not actual cost $50

Slide 13: Mandatory Options • Standard Pre Event Day – Sponsor logos on website, flyers, brochures • Standard Event Day – programs, maps, any printed material • Be sponsored by a printing company • Double side photocopy – main information and key sponsor on the front – Every other sponsor on the back, including coupons and vouchers

Slide 14: Mandatory Options II • Say Thank You – Before the event – During the event – After the event • Send them a Christmas Card

Slide 15: Options • Post Event – Follow up quickly – Thank the sponsor in writing for their support – Provide the physical evidence of photographs as close to the event date. – Thank the sponsor again in person / on the phone – Ensure event staff and club delegates use the coupons as far as possible

Slide 16: Practical Issues

Slide 17: Practical Keys to Success • Trust and Transparency • The Business Relationship • What does it cost to deliver the sponsorship? • Pre-emptive Crisis Management Strategy

Slide 18: Trust and Transparency • If transparency is the word of the day for both government and corporations, then trust is the word that defines the relationship between a corporation and an event. It’s a partnership in every sense of the word. The essence of profitable corporate sponsorship http://www.prcanada.ca/WHATIF/ESSENCET.HTM

Slide 19: Transparency in Event Sponsorship • Promise what you can deliver • Separate business investments from charitable donations • Have clear record keeping

Slide 20: Promise what you can deliver • Prove your offering • Ensure the offer is – Specific, Measurable and Realistic • It makes it easier for you to know you’ve met the sponsor’s arrangement

Slide 21: Organisational Commitment Sponsorship Duration Renewal Option? Yes / No / Not Specified Specified Amount Yes / No $ Base Financial Commitment Negotiable Range Yes / No $ Price on Application Yes / No n/a Sponsorship Property Characteristics Type of Property Exclusivity Yes / No Benefit Types* Fully Negotiable Yes / No Partnership with Organisation Yes / No Preset Specified Benefits Yes / No Specified Benefits (if any) Anticipated Exposure* Television Yes / No *This is an estimation of the likely types of Print Yes / No exposure each property may receive over the life of the sponsorship, and is not a Radio Yes / No guarantee. Match Day / Venue Yes / No Corporate Website Yes / No Annual Report Yes / No Other Club Exposure Yes / No

Slide 22: The Business relationship • The key is to work with the corporation to satisfy the key sponsorship objectives: – To enhance image – To sell products or services directly – To reach specifically targeted market segments – To be involved in corporate community development and community service – To obtain positive media exposure – To enhance customer and VIP relations – To contribute to community economic development

Slide 23: Business or Charity? • Business • Charity – Sponsorship is an – Sponsorship is done investment for altruistic purposes • Outcomes • Outcomes – Return on investment – Feeling good – Extension of corporate – Giving back to the communication sport/event/community – Measurable gain – Event success

Slide 24: Business of Sponsorship • Your event is a business • Sponsorship is a business transaction • Your role – Give value to the sponsor – Work with the sponsor to deliver an outcome – Manage the sponsor’s expectation

Slide 25: Have clear record keeping • Know how much was brought in on sponsorship in cash and in kind • Know how much was spent servicing the sponsorship • Ensure you know where the sponsors in kind goods are, and where they will be used on the event day.

Slide 26: What does it cost to deliver the sponsorship? • Make it clear who pays the costs involved in the sponsorship • Event Signage – Do you pay for it to be painted, or does the sponsor? – Or do you get a signage company as sponsor?

Slide 27: Pre-emptive Crisis Management Strategy • What if something goes wrong? – More importantly, how will you manage when something goes wrong? – Defending sponsorships from criticism – Dealing with sponsors who don’t want to be associated with you any more

Slide 28: Best Pre-emptive Strategy • Have a good working relationship with the sponsor, and have clear benefits for their ongoing involvement in your event and organisation

Slide 29: In it for the long haul

Slide 30: Extending the Relations • Transactions – One time, short term, single event • Relationships – More than one time – Ongoing series of transactions that intentionally build up over time

Slide 31: • Transactions – Discount hire of sound system in exchange for signage on the speakers • Relationships – Multiple year sponsorships – Collaborative ventures and promotions which extend outside of the event time – Longer the relationship, the cheaper each transaction becomes

Slide 32: Deliverable Properties • Ongoing Joint benefits – Offering an opportunity cost (eg riding lessons) in exchange for sponsorship of the event – Prizes that involve participation in the organisation’s non-event day activity – Event and organisation information at the sponsor’s business outside of the lead up to an event

Slide 33: Questions?