Sponsorship revenue for the 2014 Commonwealth Games in Glasgow will far exceed the £24m ($37.8m/€28.4m) target set in 2007 by the host city bid leaders, the event’s organiser told Sports Sponsorship Insider this month.
Glasgow 2014 deputy chief executive Ty Speer, who leads the commercial programme, said the target, set when Glasgow was bidding to host the Games, is “substantially below where we’re driving the programme.”
Speer, the former client services director at London 2012 and general manager of sales and commercial at the 2006 Commonwealth Games in Melbourne, would not disclose the expected sponsorship sales income, but said: “Compared to Melbourne we are seeing slightly fewer sponsors, investing more.”
Glasgow 2014 currently has four tier one Partners – watchmaker Longines, telco Virgin Media, airline Emirates and energy company Scottish and Southern Energy Group (SSE) – compared to Melbourne’s seven. One more Partner is expected to sign in the coming weeks. There is no limit on the number of Partner spots available.
Around A$100m (€71.7m/$95.4m) – or 41.6 per cent – of Melbourne’s operational income of A$240m came from sponsorship. As well as Partners, the Melbourne sponsorship roster included 15 tier two Sponsors and 30 tier three Providers. Operational income from Glasgow 2014 – which includes ticketing, sponsorship, media rights and licensing and merchandising – is expected to hit its target of £100m.
This will partially offset the event’s £524m budget, which is being funded by the Scottish government and Glasgow City Council. Glasgow 2014 will be the 20th edition of the Commonwealth Games.
Glasgow 2014 inventory is sold in three tiers – Partners, Supporters and Providers – mirroring the structure and nomenclature of the London 2012 Olympic sponsorship programme. But Speer said the Commonwealth Games sales model is “substantially more market-driven and more flexible” than London 2012’s.
Unlike London 2012, Commonwealth Games sponsorships are sold in an open market, with no sector-specific tenders or fixed price points per tier. The organising committee, moreover, is in full control of all its rights. London 2012 could only sell to companies from sectors that were not included in the International Olympic Committee’s global partner programme.
“We don’t approach brands on a fixed price basis,” Speer said. “All our deals are market-led in terms of rights and benefits and the sector the sponsors are in. Nor is rice a function of the deal duration. It is always locked into the benefits. It will never be the case that a brand can sign up super-late to get a fire sale.”
Because of the event’s smaller international footprint, Glasgow 2014 is doing many more deals with UK brands than London 2012. “We want to react to what makes sense for the brands,” Speer said. “We are listening to their needs and negotiating deals more like those made in the industry as a whole.”
Two of the top-tier Glasgow 2014 brands – Emirates and SSE – have existing naming rights agreements with venues that will be used at the games. Last year, Emirates signed a £4.5m, 10-year naming rights agreement for the ‘Emirates Arena’, a multi-sports facility that includes the Sir Chris Hoy Velodrome. In 2011, SSE agreed a £15m, 10-year deal to rename the Scottish Exhibition and Conference Centre, ‘The Hydro’. The venue will host gymnastics and netball at the Commonwealth Games.
Under the marketing rules of Glasgow 2014, tier one brands are allowed to make separate deals with the organising committee to maintain existing naming rights deals during the event. But these brands must first acquire tier one rights.
“With both brands, the primary decision was taken around their wish to be a tier one sponsor,” Speer said. “Once in the family, there is the opportunity for that flexibility on an existing asset. It’s not our job to sell naming rights to venues.”
If, for example, SSE had not agreed any deal with Glasgow 2014, ‘The Hydro’ would be known as the Scottish Exhibition and Conference Centre during the games. A similar flexibility is available to brands in relation to sponsoring particular sports. Virgin Media bought similar rights packages to the other tier one Partners, but chose to upgrade as a Presenting Partner of the athletics programme. This gives the company “greater visibility and brand assets in the stadium,” Speer said.
More deals to come
Seventeen deals across all three tiers have been signed so far (see table). Speer said another 30 to 40 are currently in discussion, and Glasgow 2014 hopes to get most of these finalised this summer and autumn.
Among the rights available are those that can be developed with either new partners or existing partners as upgrades. These include sponsorships around the
Queen’s Baton Relay and the Volunteers Programme, as well as Presenting Partnerships to all the sports except athletics, which Virgin Media has taken.
In April 2010, Glasgow 2014 retained the Australia-based agency Sports Marketing and Management (SMAM) on a 53-month contract – until after the 2014 games finish – to act as its commercial agent, handling the marketing management and promotion of the games.
SMAM, which was acquired by sports marketing group Lagardère Unlimited in September 2012, acted as the exclusive sponsor sales and service consultant for the 2006 Commonwealth Games in Melbourne.
The 20th Commonwealth Games will take place from July 23 to August 3, 2014.
Three objectives behind Virgin Media deal
UK telecommunications company Virgin Media told Sports Sponsorship Insider this month that there were three main objectives behind its tier one sponsorship of the 20th Commonwealth Games in Glasgow
in 2014, relating to the brand, customers and staff:
• Virgin’s broadband, telephone, cable-television and mobile phone brands will be promoted through the activation of the sponsorship.
• Customers will be rewarded and engaged using ticketing, hospitality and experiential inventory. “Scotland is important to us for a number of reasons,” said Luke Southern, programme director, Glasgow 2014 at Virgin Media. “It has a good cable infrastructure and Virgin Media has a good market share.”
• Virgin is “looking at ways to reward and recognise our staff through rights associated with the games,” he said. The company is a major employer in Glasgow where its main call centre has 800 workers. It also has two smaller call centres near the city.
Sports Sponsorship Insider understands that Virgin Media is paying around £3m for its tier one package. Value-in-kind forms part of the deal. Virgin Media is the Official Mobile Provider to the Commonwealth Games, supplying a mobile virtual network during the games for athletes, delegates and organising committee members. Virgin Media’s mobile offering will receive far greater prominence in all marketing communications in 2014, Southern said.
On top of its standard tier one sponsorship package, Virgin Media increased its investment by taking up the Presenting Partner of Athletics package. This will provide additional branding, ticketing and hospitality inventory at Glasgow’s Hampden
Park, which is hosting the athletics events. Athletics will feature on seven of the 11 Commonwealth Games competition days.
Virgin Media’s Commonwealth Games activation programme began with a press call and photo opportunity featuring 100 Virgin Media staff on June 19. Experiential activation and Games-associated advertising will increase as the event approaches, Southern said.
“One of my personal learnings from London 2012 was that a number of the activations were excellent, but it was quite hard from a consumer perspective to know what those brands were adding to the games,” he said. “Virgin Media will be working with the games to make sure it is clear what the company is adding to the event.”
Doing the deal
Virgin Media began talks on the deal with Sports Marketing and Management, the commercial agency for the Commonwealth Games, at the start of 2013 and concluded the Official Partner deal within about two months.
The talks were led by Southern, the then-head of sponsorship and partnerships at Virgin Media. The brand negotiated directly with Stephen Marsden, chief executive of Sports Marketing and Management UK & Europe.
After the deal, signed May 24, Southern became programme
director, Glasgow 2014 at Virgin Media. Leanne Parton, formerly
senior sponsorship manager at Virgin Media, has taken over the role of head of sponsorship and partnerships at Virgin Media.
The brand’s athlete ambassadors Usain Bolt and Mo Farah should continue to promote the brand’s broadband and other services in 2014.