Strings Attached: When Sponsorship Wins Business Contracts
How much weight should sponsorship carry when awarding new services contracts?
That's the question that critics were asking LOCOG (London Organising Committee of the Olympic Games) and the ODA (Olympic Delivery Authority), the body responsible for developing new venues and infrastructure around the 2012 games, earlier today. This all came about when architects and politicians questioned Crystal's appointment to do visualisation work for the games, after signing on as a 2012 sponsor. Critics claim that sponsors had an unfair leg up in bidding against smaller companies without an official LOCOG affiliation. In reality, all Olympic organizing committees, and even Olympic bid committees have a long list of corporate partners - well before the event ever gets awarded in fact. Take for example, Madrid 2016 and their 54 corporate partners. Do these companies get involved early in the process for the logo designation and leadership positioning alone? Perhaps... in some instances. However, wouldn't it be a little naive to believe that their early involvement has nothing to do with finding ways to assist in the enormous infrastructure and services challenges that *could* lie ahead?
Tying sponsorships directly to new business and value-in-kind (compensation of sponsorship fee in services) generally makes good business sense. Does it really make sense for an airline to sponsor a team that flies to away games on a competing airline? Ok, maybe that is a bad analogy, but you get the point. Many airlines, in fact, go a step further and tie charter revenue to team sponsorship deals (contractually or otherwise). How about pouring rights for a stadium? This isn't unfair is it? In today's environment, sponsors are looking to draw a direct line to real business outcomes and properties should do everything possible to help them in this effort.
With all this said, in my mind there are a few litmus tests, and perhaps more, that need to be taken into consideration.
1. Are tax dollars being spent?
2. Are you being open and transparent about the bidding process?
A third classic question that all sponsorship professionals debate is when to use best of class product vs. sponsor product (if it is not your natural first preference). Product integration pros and producers debate it. Artists and artist managers debate it. GM's and corporate sales professionals debate it. What happens if use of a sponsor's product materially effects the integrity of the event or even, endangers attendees and athletes? If that's the case, you probably should not have accepted the sponsorship in the first place or at least made clear that VIK was not an option early in the negotiation.
Back to today's story. LOCOG has repeatedly talked up the open bidding process over the past couple of years. So what gives?
A LOCOG spokesman had this to say:
“Where we identify significant areas of expenditure, we look at whether there is an opportunity to create a sponsorship category.”
Personally, I agree with this business philosophy - sponsors should absolutely demand the opportunity to showcase and/or where possible sell their products and services, but public organizations of every size, from the local high school to the Olympic organizing committee, must maintain transparency around the influence that sponsorship plays. I'm not saying they didn't, but rather using today's debate to raise a larger discussion.
Is there a line that sponsorship sellers should not cross to secure sponsorship and if so, what is it? Sponsors, is there a line you would not cross to secure a business services contract and/or how would you feel about a services contract being awarded to your competitor? At the end of the day, are those lines in the same place?
