The concept of Sports Sponsorship sounds too fancy to be older than a few decades. It comes as a surprise to many of us that Sports Sponsorships have been in existence since 300 BC. The transformation of Sports Sponsorships has led the industry to be worth around $46 Billion until the Covid-19 pandemic struck humanity. It is believed that the impact of Covid-19 could see half a billion people pushed into poverty. The impact may wipe out 30 years of economic improvement. It feels as a reset button has been pressed on Earth. With impact at such a global level, Sports Sponsorships, often seen as some sort of luxury have taken a major hit.
Over the past few decades, Sports Sponsorships have been one of the major reasons for creating a huge gap between teams. Teams with big Sponsorships have been able to flex their muscle and improve their infrastructure and sporting results, while the bottom dwellers have sunken deep with no hope of success. Under the current scenario, it can be said that the bigger teams will be able to sustain the loss of Matchday revenue. But, the smaller teams, who have always relied on Matchday revenue to go hand in hand with their broadcasting to attract sponsorships will face a mammoth task to keep themselves afloat. This can be called the operating circle of small teams.
While some teams have had the luxury of paying their players in full, other teams have resorted to incentives issued by their respective Governments during the Covid-19 Nightmare.
The effect of Covid-19 on Sports Sponsorships is not limited to teams or individual athletes, it has had a massive effect on various Tournaments. The most valuable cricket league in the world the Indian Premier League has had to face the brunt of the current pandemic. The sponsorship value for IPL in 2020 was expected to be $69 Million and but it is expected to see around 70% reduction from its sponsors like Vivo (smartphone brand).
The $46 Billion sports sponsorship industry is expected to see a 37% decrease. The projections for 2020 are that the number would be as low as $28.9 Billion. The industries which suffered the most during the pandemic like the financial sector, the automotive sector, the energy sector, and the airlines have been the top contributors for sports sponsorships. So, the major loss of sponsorships comes from these sectors. The financial sector which contributed around $12.6 Billion of the total sports sponsorships in 2019, expects a 45% drop and is projected to contribute $6.9 Billion in 2020. The second biggest sector of 2019, the automobile industry, is expected to reduce its sports sponsorship spending from $5.9 Billion in 2019 to $2.7 Billion in 2020, recording a massive 55% drop. Please find the 2020 projections for Sports sponsorship spending.
Author: Viswesh Achanta
