Athletics, Speed Skating Each Lose Major Sponsor Amid Financial Crisis

Wednesday, April 10, 2013

Two major Olympic sports are in the hunt for new sponsorship deals after key commercial partners announced the end of their partnership right in the middle of the global economic slump.

The IAAF world athletics federation lost South Korean electronics giant Samsung as the sponsor for its series of top Diamond League track meets at short notice following last year’s London Olympics. The International Skating Union is forced to look for a new multinational after Dutch energy supplier Essent said it would end its long-standing backing of speed skating following the 2014 Sochi Winter Games.

“To be honest, it is not easy,” ISU President Ottavio Cinquanta said in a telephone interview. “The international market is not in the very best condition. One has to admit, there is some problem. We will have to pay attention to what to do.”

Football still has the money-making abilities in times of crisis as Manchester United proved over the weekend when it clinched a major eight-year sponsorship deal with insurance firm Aon estimated to be worth $230-million. But annual sponsorship commitments like Samsung or Essent are counted in a few million dollars annually. It doesn’t make the income any less essential though.

The ISU was lucky in a way, too, since Essent gave it a full year’s warning that it was ending a 16-year relationship.

“Of course, we were not on the market (before) looking for another sponsor,” Cinquanta said.

Europe is a prime market for both athletics and speeds kating but the continent has been hit for the past three years by a government-debt crisis that has pushed many nations into recession and high unemployment as companies struggle to make ends meet.

Often sponsorship is an obvious cost-cutting division, making the hunt for new sponsors in a bad economic climate even thougher. Especially for a niche sport like speed skating, that can only count on global attention when the Winter Olympics come around every four years.

Both Essent and Cinquanta refused to say how much the annual sponsorship of international competitions cost, but the Dutch newspaper Volkskrant estimated Essent’s involvement in the sport at 4 million euros ($5.2-million) a year.

When it comes to timing, the IAAF faces a tougher task. The Diamond League kicks off in Doha May 10, with more meetings set later that month in Shanghai, New York and Eugene, Oregon.

“The Diamond League and the IAAF are confident that another title sponsor will be secured in the near future,” said Nick Davies, a spokesman for the IAAF.

Almost at the same time, Samsung announced a sponsorship partnership with Usain Bolt, “who is, above all else, a symbol of the sport of athletics,” said Davies.

Sponsorship experts saw the Samsung deal as a hardheaded business decision that could be based on the idea that it could get bigger exposure from a straight affiliation with Bolt rather than the Diamond League, where the name of the overall sponsor was sometimes trumped by an individual meet promoter.

Sporting federations like the IAAF and the ISU have also been advised to look further to Asia, where the economy is still in relatively good health compared to Europe.

“When you look at the overall sponsorship market, it is still growing by about 4 per cent,” said sports management professor Wim Lagae of Leuven University.

And for a federation like the IAAF, losing Samsung should not be such a major hassle, he said.

“It is only one of several categories, and if you lose sponsorship, even if it still is an important issue, it is not the end of the world, because you still have TV rights, ticketing, and other diversification income.”

The IAAF has guaranteed income from TV until 2018 and from marketing until 2019, as well as increased revenue from the International Olympic Committee following the success of the London Games. Reserves for the next five years are estimated to stay above 50 million euros ($65-million).

For Essent’s commitment too, Lagae said it was only normal to show some speed skating fatigue after 1 ½ decades of sponsorship – a notion echoed by the company itself.

“As sponsor, we reached the ceiling of our possibilities,” said Essent Chief Executive Erwin van Laethem.

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