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Sports Sponsorship Growth to Be Slowest in 7 Years, Report Says

Bloomberg, January 26, 2009

By Danielle Sessa

Jan. 26 (Bloomberg) -- Sports-sponsorship spending will have the slowest growth in seven years with companies cutting back because of the recession, according to IEG Sponsorship Report.

Companies will spend $11.6 billion this year on sports marketing agreements, a 1.8 percent increase from 2008, IEG said. That’s the least amount of growth since the industry expanded at a 1.25 percent rate in 2002. Sports deals rose 14.7 percent last year to $11.4 billion, the sponsorship consulting and research company said.

The Olympics and professional sports have attracted corporate partners even during economic slowdowns because the deals were viewed as “safe bets,” said Jim Andrews, IEG’s editorial director. With the deepest recession since the Great Depression gripping the U.S., corporations are eliminating the marketing agreements that are the most costly.

“They think that even if we like the sports deals, even if they are performing for us, they are so expensive, we have to get rid of some of them,” Andrews, who has been following the industry for 20 years, said in a telephone interview.

General Motors Corp., MasterCard Inc. and Anheuser-Busch InBev NV are among the companies that are trimming sports sponsorships to curb costs. GM’s Buick division ended its deal with golfer Tiger Woods one year early and the automaker bypassed an opportunity to advertise during the National Football League’s Super Bowl on Feb. 1.

Largest Share

Entertainment, arts, festivals and charity sponsorships will have faster growth than sports, rising as much as 4.4 percent, Chicago-based IEG said in an annual report to subscribers. Still, it said, sports will account for 68 percent of the $17 billion North American sponsorship market.

Companies are hesitant to sign new deals because they can’t predict how long the recession will last, Andrews said. Caterpillar Inc., Sprint Nextel Corp. and Home Depot Inc. were among the companies that today announced at least 72,500 job cuts because of a worldwide recession that may last through 2009.

Companies also want to avoid possible backlash for putting their name on a stadium at the same time they are firing workers, Andrews said. Citigroup has endured criticism from New York politicians and news media for paying $20 million a year to the New York Mets to name its new ballpark Citi Field while accepting billions from the U.S. government to help save its business.

“There’s a reluctance on the part of companies to sign a new multimillion-dollar sports deal because of the public perception that in some ways these are boondoggles,” Andrews said. “Everyone is frozen right now.”