Economic Impact of Professional Sports

Subject: Economics
Pages: 6
Words: 1680
Reading time:
6 min
Study level: PhD

The economic impact of professional sports

Sports are a good means of creating a distraction away from stressful aspects of our lives. Sporting events have their own roles in different cultures and have a way of bringing the people together. Advertisers and sponsors have seen this as an opportunity to bring people together as well as sell their brands by sponsoring various sporting activities. This paper aims at discussing how managers and advertisers have used a variety of strategies in order to promote their products during sporting events as well as contributing their resources in order to make the sporting events successful (Crimmins, 1996).

History of sponsorship

It is difficult to identify when the word “sponsor” was first used but the meaning of the word goes back to 1984 during the Los Angeles Olympic Games. They were the first games to be privately sponsored. Resources were financed by cooperation that made it clear they were financing the games. They were then given the name official sponsors. However, there soon came up a category of sponsors who were known to do an “ambush”. An ambush is whereby a competitor would indirectly want to link themselves as the official sponsor of the games in hopes of gaining the same benefits as the official sponsor.

As soon as the official sponsors identified these strategies, they immediately set up meetings with the officials of the sporting events in an effort to promote their products exclusively. They decided that during sporting events, there would be only one company advertising their phones or their beer brands. This resulted in the officials for sporting events demanding higher prices from potential official sponsors so that they can be given the opportunity to monopolize their products (Grohs, 2004).

The main aims of sports sponsorship are very different from those of other sponsorships which focus on doing good for the community. These kinds of sponsorships enhance the overall image of the promoting company so as to sell their brand.

There are many advantages to these kinds of sponsorships. These may include gaining a loyal audience for the sporting events, being able to have a link, and accessing sporting fans through emails and databases. Managers can take advantage of these sponsorships and hire sponsorships for their official products so as to influence the expectations of individuals by informing them of the firm’s marketing activities. The consumer’s view of the brand may be greatly influenced by how they perceive a particular brand by linking it to an official sporting league. Their attitudes towards the brand may also be influenced by how the brand presents itself in the sporting leagues.

Cases of effective sponsorship

There are three distinct elements that support the relationship between the sponsorship of sports and effective communication (Erickson, 1985).

Source congruency and consumer response

A proposed sponsorship has to be able to attain the communication goals if it is going to become a sponsorship investment that is appropriate. A sponsorship proposal will be analyzed according to its potential to reach out to the market and portray its brand image. The link between the sponsor and the activity that is being sponsored contributes greatly to delivering the communication goals of the company given its level of functionality towards the target market and also the image of the brand. The congruency of the market that is being targeted represents a standard that has to be met in order to have successful communication in sponsorship.

The consumer market can be categorized into various segments all of which share the same attributes of product preferences and needs. In order to remain relevant in the competition, firms have to develop some sort of marketing strategy that relies on the various categories of product preferences and needs. Take for example the Toyota Lexus car model. It was promoted and priced in a manner that meets consumer needs. Sponsorship can only be relevant if it creates an awareness of a brand and promotes an image brand that is favorable. Some of the successful sports sponsorships include:

  • The rugby world cup in 1999 was sponsored by Guinness. This was a good example of a relevant sponsorship that created an image for itself. The market that was targeted was already defined geographically because of the global appeal of events and the particular needs of regions such as Great Britain and Canada.
  • The US women’s soccer team was sponsored by The California Dried Plum Board because the organization believed that the sponsorship would help to create awareness towards the health and nutritional benefits of plums that are dried especially among mothers that do their own grocery shopping. The target market was the women who attended the women’s world cup.
  • The Lincoln financial group aims to reach the segment of lifestyle living in their sponsorships. They have sponsored America’s Cup which is a prestigious and popular yachting event (Brokington, 1999).

Image congruency

In order for a firm to have its product set apart from other brands in the market, it has to have its image’s perception set in its customer’s minds. Consumers are more likely to respond to a product that is favorable to them and relevant. Sponsorship communication helps to create a link between the brand and the activity that is being sponsored in the mind of the customer (Currie, 2000). Brands that are sponsored are sponsored in the hope that they will promote an image of sophistication among other values. However, in order for the customer to relate to the brand, it has to provide a constant image to the customer. Sponsorships that have been successful in image congruency include:

  • The Visa card has been associated with sponsoring the Olympic Games which is a major sporting event. The image portrayed is that of the Visa Card is the form of payment that is leading and its association with the Olympic Games enhances this image.
  • PGA golf has been associated with the Cadillac for a long time now and is considered to be a strategy devised by the company to uphold the sophisticated image.
  • Gillette was associated with the British cricket sport. The company changed its position from an American firm to a UK one.

Functional congruency

Commercial interests are the main measures of the level of familiarity when it comes to the sponsor being identified with the sponsored activity. Functional congruency can be given by the sponsorship association directly or indirectly. Functional congruency that is indirect happens when the products are used by participants (Cornwell, 2001). These may include shoes, clothing, etc., during the activity that is being sponsored. The indirect one occurs when the production of activity is implemented by the contribution of a service or an event. An example of indirect congruency is when companies such as Kodak or Xerox offer their services to the Olympic Games thereby helping to put the event together. Functional similarity helps to create favorable associations for the user and the usage of the product. Examples of these sports sponsorships include:

  • When Tiger Woods was endorsed by Nike, he helped the company to enhance its image against other brands such as Taylor Made. This helped Nike to sell its product as a sophisticated one and suitable for professional golf. The product was also associated with professional players.
  • Lance Armstrong Discovery channel team was sponsored by Trek and helped the company to sponsor its equipment as one of high performance and thus was able to attain international success.
  • The 2000 winter Olympics were sponsored by Seiko which provided timers. This is a sport that requires accurate data so as to determine the results of the competing parties. By providing equipment that could be used for this purpose, Seiko was able to showcase its high level of technology.

Sponsorship leverage and consumer response

Promotional sponsorship activities have to be properly chosen so as to create a link to the sponsorship association. In this case, there will be three issues that will be discussed: motivation, ability, and opportunity. Motivation is the ability to make the consumer notice the product while the opportunity is the amount of exposure the sponsoring association is getting. Lastly, there is the ability which measures the extent to which the interpretation of promotional messages contributes to the customer’s perception of their product or brand (Bloxham, 1998).

Motivation general

Motivation is the ability of an individual to pay attention to a stimulus and act upon it in order to achieve an end desire such as satisfaction. Advertising has adopted a variety of techniques in order to attract the consumers’ attention and get them curious enough to use their products. Sponsors contribute to events in a number of ways so as to motivate the consumers to buy their products. Examples of sponsorships that have succeeded using this strategy include:

  1. The PGA golf tournament was sponsored by America West Airlines. The Airline attained increased awareness more than the other sponsors in the tournament. Due to the high temperatures at the event, they issued cold water to the fans at every hole.
  2. During the world cup rugby in 1999, Guinness sponsored the event by giving away free tickets to the fans through media outlets. This established a bond with the consumers of the product and also helped them to gain more consumers.
  3. One of the official sponsors of the NASCAR Daytona 500 race was Gatorade which gave the opportunity to one of its largest retailers to use the official pace car that was to be in the race. Through this, they were able to gain a point of purchase display and placement that was far much better.

Opportunity generated

The opportunities of a sponsor being identified as a partial sponsor of sporting activity are numerous. The total coverage of the media and how the product appears in the media is one of the strategies used to measure opportunity. The media plays a great role in making the consumer aware of the company that is sponsoring the sporting events as well as the products that they are promoting. The more a product is viewed in the media the more sponsorship leverage it acquires.


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