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LTA agrees reduced value deal with Aegon, expands second tier to make up ground

The UK’s Lawn Tennis Association agreed a reduced-value renewal with its top sponsor Aegon last month, as the life insurance and pensions brand acquired a smaller package of rights for the 2014 to 2017 cycle.

Industry sources said Aegon’s new deal is worth between £3m (€3.5m/$4.5m) and £4m per year. It pays £5m per year in the current cycle, 2009 to 2013.

The fall in value is linked to Aegon dropping the youth participation programmes it sponsors in the current cycle. These have involved events in 217 parks and 16,000 primary schools across the UK.

The LTA is putting the rights to associate with these programmes into a new second tier Community Partner sponsorship position, which will soon be put on the market.

The LTA declined to comment on the value of the Aegon deal when contacted by Sports Sponsorship Insider this month, but said it expected continued growth in its ‘commercial revenue’ stream, which covers its sponsorship income, in the new cycle.

“We are projecting steady growth in the next three or four years and we hope to go through the £10m mark in 2014 and beyond,” Lawrence Robertson, the association’s commercial director, said.

Commercial revenue for the LTA covers sponsorship, hospitality and some media rights income, and will generate £9.5m in 2013, of which between £7.5m and £8m is thought to be from sponsorship. Commercial revenue has grown by over 440 per cent in the last six years, from around £1.75m in 2007.

In 2012, commercial revenue was the third biggest of the organisation’s revenue streams. The top stream was a share of the profits from the Wimbledon tennis championships, worth £37.75m. The LTA also generated £9m from its ‘major events’, which covers media rights income and ticketing revenue from its main annual tournaments, including the Aegon Championships at The Queen’s Club. Another £9.8m came from other sources.

Second tier grows

To drive commercial revenue higher, the LTA will expand its Official Partner second tier of sponsorships from two to a possible five brands in 2014-17.

The new Community Partner will be one of the new additions. One of two brands that were interested in taking over Aegon’s Lead Partner sponsorship is now looking closely at the Community Partner role, and there are one or two other brands also interested, Robertson said. A consumer-facing brand is being sought.

Sportswear brand Nike, a current third tier Official Supplier, will expand its deal to move to the second tier in 2014-17.

A fifth Official Partner is being targeted from the technology sector, which has opened up after media company Thomson Reuters declined to renew its Official Statistics and Information Partner contract, which ran from 2010 to 2012. Thomson Reuters remains a sponsor as an Official Supplier.

The current Official Partners are bank BNP Paribas and mineral water brand Highland Spring, both of which are expected to renew for the next four years.

Official Partner deals are each worth a seven-figure sum over the term of the deal, and a six-figure sum on an annual basis.

In the 2009-13 cycle, the LTA has one Lead Partner and 12 Official Suppliers, alongside its two Official Partners. This was the first cycle in which this sponsorship structure was used. It was introduced as part of a commercial programme launched in 2008.

The LTA has moved to a four-year cycle in 2014-17 to align its major sponsorship deals – Lead and Official Partners – with its domestic television deal with UK public-service broadcaster the BBC. Official Suppliers have contracts of varying lengths and durations.

New tournament

Aegon has secured the title sponsorship of a new women’s grass court tournament organised by the LTA which will be added to the WTA Tour in 2015, as part of its renewal.

A change to the international tennis calendar which will see Wimbledon played three weeks, instead of two weeks, after the end of the clay court season, has opened up a week in June at the start of the grass court season for the new tournament.

In this extra week, the men’s ATP Tour will travel to Stuttgart, Germany, to play in the Mercedes Cup – which has changed from a clay court event to a grass court event – while the WTA Tour will go to the UK for the new competition. The venue for the tournament has not yet been decided.

Aegon’s Lead Partner deal covers title sponsorships of three other grass court tournaments: the Aegon Championships, the Aegon Classic in Birmingham, and the Aegon International in Eastbourne.

Technology partner targets

The LTA is looking for the new technology Official Partner to help it in three areas, Robertson said. Firstly, it wants to use mobile and tablet devices to drive participation. “That might include helping people to locate and book courts on a mobile or tablet, or helping people find others who wish to play tennis – almost like online tennis dating,” he said.

Secondly, the organisation wants help from a technology brand to analyse and present performance data to players and coaches.

Thirdly, it wants to enhance fan experiences of its events with mobile and tablet applications, in-stadia wireless internet, and different ways of presenting scoring, statistics and Hawk-Eye data.

Official Suppliers renew

All but one of the Official Suppliers are likely to renew their contracts for 2014-17. One brand is currently reviewing its position in sport overall and has indicated to the LTA that it will renew if it continues with sports sponsorship.

Current Official Supplier deals are a mixture of cash-only and cash plus value-in-kind. Each is worth between £125,000 and £175,000 per year, inclusive of value in kind.

“We have in-kind contributions where there’s a real budget-saving for the organisation, such as with Babolat who provide tennis equipment or with InterContinental Hotels Group who meet part of our accommodation requirements – these all make a contribution to the bottom line of our business,” Robertson said.

Reducing reliance on Wimbledon

Reducing its reliance on a hand-out from Wimbledon is a major goal for the LTA. At the same time, it is also speaking to Wimbledon organiser the All England Lawn Tennis Club (AELTC) about working more closely together when signing sponsorship deals, including targeting the same sponsors.

Wimbledon’s commercial rights are owned by the AELTC. The LTA assists in the organisation of the event. The AELTC distributes the profits from the tournament to the LTA, to be spent on developing and promoting tennis in the UK.

“One of the objectives when Roger Draper came in as chief executive of the LTA in 2006 was that we reduce our reliance on the surplus that we generate from our involvement with the Wimbledon Championships,” Robertson said.

The LTA and the AELTC have discussed the possibility of Wimbledon sponsors becoming LTA sponsors in future, and vice versa. However, it is expected that the sponsorships will continue to be sold separately by each organisation.

“We’re hopeful that in the next few years we’ll see more brands looking at both entities and seeing the opportunity to align with tennis in Britain more broadly,” said Robertson. “It would complete the picture in some ways that a brand could be involved with Wimbledon for two weeks of the year and also have an investment and interest in British tennis throughout the rest of the year with the LTA.”

Co-operation in some sectors will have to wait until current partnerships expire, due to the presence of rival brands in the two organisation’s portfolios. HSBC bank, for example, is a major sponsor of Wimbledon, while BNP Paribas is a major partner of the LTA. Bottled water brand Highland Spring is a partner of the LTA, while French water brand Evian sponsors Wimbledon.

LTA partners currently have access to Wimbledon through LTA sponsor suites, but have no official relationship or visible association with the tournament.

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