Exploring the Power of Sports Sponsorship

Due to the evolving landscape of the consumers’ interest toward several sports in the world, sports sponsorship has grown exponentially across the world. Sponsorship has evolved from a matter of traditionally exposing a logo on a jersey of the players or stadium to a significant communication tool for companies nowadays. Sponsors and sports organizations take part in a transaction that allows them to exchange value for each other.

In today's global economic landscape, companies encounter intense competition, fluctuating consumer demands, a saturation of brands, and lots of misinformation from various multimedia channels and platforms. Thus, businesses are showing interest in sponsorships to provide meaningful brand visibility, information on products & services, and to proliferate sales. The global sports sponsorship market was estimated at $73,807.2 million in 2022, and is anticipated to reach $151,394.7 million by 2032, registering a CAGR of 7.1% from 2023 to 2032.

An understanding on why companies and brands are sponsoring sports

Sports sponsorship presents companies with an effective strategy to gain visibility among a vast and potentially lucrative audience base, making it an excellent choice for putting themselves in the spotlight. Such tactics to create brand awareness help sponsors generate higher sales heading to higher profits. These companies and sponsors are creating positive brand associations with the most popular athletes, sports teams, and events to improve their brands reputation in front of millions of consumers. It is also impacting the perception of customers when they see their favorite sports person is supporting the product and services of any company.

For instance, in January 2024, TATA Group secures the rights for the title sponsorship in Indian Premier League (IPL) for five years from year 2024 to 2028. The Indian conglomerate: TATA Group has renewed its valuable association with Board of Control for Cricket in India (BCCI) worth $300 million. The group aims to generate excitement among a vast and youthful consumer base by showcasing their brand prominently in stadiums and during live broadcasts, thereby setting their brand identity. As per the report published by Broadcast Audience Research Council (BARC) 2024, Disney Star- official broadcaster of the IPL has reached approx. 480 million viewers till 34th match of the tournament this year. This sponsorship will help TATA Group to diversify and expand among the target consumers and making their brand more attractive and impressive. The sponsorship is anticipated to assist the TATA Group in transitioning from a traditional image to a more contemporary and youthful brand.

Sports sponsorship can help businesses to expand into a new territory

While expanding any business into a new territory, the partnership of companies with local league teams, local sports events or an athlete promises a better way to announce a brands’ arrival and create brand awareness. Sports sponsorship is a very effective marketing tool to promote an expansion of any business into a new province by providing several opportunities to increase brand visibility, engagement with the local community, and build relationships with them. Sponsoring local sports teams provides a great exposure to the target audience in the new territory. This exposure and highlighting of brand can be through signage at target venues, logos during broadcasts, or other promotional activities which help to raise awareness of the brand among local customers.

The brands and rights-holders are actively seeking major trends to optimize the value and visibility of sports sponsorships within the broader landscape. For instance, Major League Baseball (MLB) has signed an agreement for its jersey patches. In this agreement, MLB has agreed to allow the teams to provide sponsor logo placed on their uniform. Under this agreement, San Diego Padres was the first team to come up with the new opportunity by signing a deal with Motorola in 2023 which was reportedly $10 million annually. The team received media coverage on national television which has come out to be even more beneficial for Motorola in the year through this sponsorship.

Brands are investing in partnerships to promote the growth and promotion of the women's game as they recognize the potential of women's football to reach a wide audience. Sponsors have excellent opportunities to interact with devoted fans and improve women's sports in this newly emerging area of football sponsorship. Sponsors are encouraged to invest in training sponsorship to find and develop promising talent. The key players such as Nike Inc., Adidas AG, PepsiCo Inc., and Red Bull GmbH are shaping the market growth and expanding their presence in the industry.

In June 2023, Anheuser-Busch InBev SA/NV extended its partnership with FIFA, which is an international association football competition, as the official beer sponsor of the FIFA Women's World Cup 2023 and FIFA World Cup 2026. Whereas, In March 2023, Castrol India Limited partnered with JioCinema, for streaming the 2023 TATA Indian Premier League. This partnership entails sponsoring the sporting event as an associate sponsor.

Sports sponsorship industry outlook

Companies benefit greatly from sports sponsorship. They leverage sports sponsorship to enhance their brand exposure, engage with a wide-ranging and varied audience, foster interactions with customers and enthusiasts, and align their brand with the positive emotions, values, and experiences associated with sports. To optimize their sponsorship endeavors, companies undertake promotional initiatives and campaigns termed as sponsorship activation. This encompasses strategies such as product integration, immersive marketing experiences, digital and traditional media advertising, active engagement on social platforms, and various other tactics.

Brands are diversifying their sponsorship beyond traditional sports leagues and teams. Brands are increasingly recognizing the value of capitalization in emerging opportunities such as esports, women's sports, niche sports, and individual athletes. Esports, in particular, has seen significant growth, expected to attract a massive and highly engaged audience of gamers worldwide. As women's sports grow in popularity, brands have a great chance to connect with this expanding market. Expansion of sponsorship portfolios to include these several opportunities, brands are focusing on new demographics to engage with passionate fan bases across various demographics.

The sports sponsorship industry is experiencing an impressive shift as digital innovation, global expansion, and the demand for purpose-driven initiatives are gaining popularity among the sponsors. Brands are focusing on digital channels to engage viewers and measure their return on investment (ROI) effectively. Sponsorship opportunities are expanding into emerging geography. Purpose-driven sponsorship is gaining popularity as brands are creating campaigns with social and environmental causes. Innovative partnerships between brands, sports properties, and technology companies are shaping creativity and replacing the model of traditional sponsorships with more effective sports sponsorship.

Here, it’s worth mentioning that due to the COVID-19 pandemic causing numerous sporting events to be postponed, canceled, or held behind closed doors, the sports sponsorship industry experienced a significant downturn in 2020. However, with the gradual return of sporting events and increasing fan engagement, the industry experienced a slow and steady recovery. Several emerging trends are now reshaping the sports sponsorship landscape. For instance, there's a growing trend of businesses investing in esports, sponsoring professional gaming teams or tournaments. Additionally, there's an increasing focus on sustainability and social responsibility in sponsorship endeavors within the industry.

Allied Market Research (AMR) serves as a trusted partner for vendors seeking to make the most of sports sponsorship. With our deep industry insights, tailored research reports, and strategic guidance, we empower vendors to identify, evaluate, and capitalize on lucrative sponsorship opportunities that align with their brand objectives and target audience. By using AMR's expertise, vendors can confidently handle the intricacies of sports sponsorship, enhancing brand visibility, and accomplishing their business objectives with precision and impact. For more details, contact our specialists today!

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