Making Sense Of Military Sponsorship Spending

            An article in today’s USA Today highlights a new amendment to the annual $608 billion defense appropriations bill that would eliminate $60 million in spending on “professional or semi-professional motorsports, fishing, wrestling or other sports." Rep. Betty McCollum and Jack Kingston, the amendment sponsors, said that the sports sponsorship did not generate enough value for the government. Kingston reasoning for eliminating this spending is “"I think that [NASCAR] have been maybe touchy-feely or anecdotal in terms of, 'This is great because the people that go to these events are the type that like to join the Army and very patriotic. There's no metrics at all. When you're in debt the way we're in debt and the military budget is one of the big three — health care and retirement being the others — you've got to look at it with a lot of scrutiny.”

            This not the first time politicians have zeroed in on sponsorship dollars as a form of wasteful spending. At the height of the financial crisis in 2009, then Rep. Barney Frank stated, “I don’t think anybody has ever opened a bank account or decided to buy a CD because a bank’s name is on the stadium.” Just because Congress has been examining this issue for a long period of time, however, does not mean that it is right (this concept will be a big surprise to most readers). We would disagree with both Kingston and Frank on their assessments of sports sponsorship.

              Kingston first statement about NASCAR and other motor sports organizations only having anecdotal evidence to support the claims of delivering value to sponsorship is unlikely to be correct. One of, if not the, primary source of revenue for both NASCAR and it’s individual teams is sports sponsorship. Since the government is estimated to spend have its sponsorship dollars on NASCAR (approximately $30 million), we find it extremely unlikely that organization would not provide the government with any type of data or ROI metrics it would need to show it received value.   

            Frank’s statement is also misguided. Building brand awareness and establishing positive brand association is key element of any company’s marketing mix. In addition, males 18-34 are notoriously difficult for entities to reach using traditional marketing channels. Sports organizations provide a large number of impressions to a lucrative demographic with high discretionary spend to their corporate partners. To be fair to Frank, there can be better ways to activate a sponsorship than arena or stadium signage. Yet, signage is usually only part of a larger sponsorship used to attract potential clients. Being able to target customers in multiple channels using multiple different methods within a sports sponsorship deal provides companies with the best opportunity to generate new revenue.

            Yet, there is a bigger problem that Kingston and Frank statements and actions present to sports organization. There has long been a perception that sports sponsorship spend does not deliver tangible ROI to corporate partners. Kingston and Frank’s sentiments reflect that there is popular (and likely Congressional) support for this view. After all, Kingston is from Georgia. Why would he attack NASCAR when many of his constituents are NASCAR fans?

            More importantly, if politicians are making these statements based on their perceptions, it is not long before other corporate partners may make similar assessments to their sponsorship. Therefore, it is critical for sports organizations to be able to provide tangible and direct evidence that shows their corporate partners how it does deliver quantifiable value for sponsorship spend.

            Block Six Analytics provides the tools to make this happen through our Partnership Scoreboard™ service offerings. We work with sports sponsorships to identify how exactly corporate partners’ sponsorship spend will generate new revenue and meet marketing goals. In addition, corporate partners can track their valuation information throughout the course of a season or a year through our web based application. This increased transparency and accountability directly addresses the issues and concerns of politicians and corporate partners. Sports organization’s can no longer afford to not provide quantitative data to their partners or they run the risk of what is happening to NASCAR and its government sponsorship.