CEO Conference - Financing sports

Welcome to the 2012

European Athletics

CEO Conference

Financing Sports

Professor Dr. Helmut Digel

Universität Tübingen

Presented: 20 April, 2012

Overview

1. Looking back

2. Today′s reality

3. Financing systems in the world of sport

4. Summary of financing possibilities

5. Economic logic – an outlook

1. LOOKING BACK

Financing Sports

1. Looking back

• Self-financing athletics

– Non-governmental

– Voluntary association

– Club regulations

– Membership fees

• Non-commercial athletics

• Amateur athletics

• Athletics – school sport # 1

2. TODAY′S REALITY

Financing Sports


• Athletics – a semi-professional sport

• Code of athletics: have // have not

winning // losing

• Athletics – an economic enterprise

• Athletics – a part of the entertainment industry

• Competition between all sports “survival of

the fittest”

• Decreasing relevance in public schools


• Federations are losing members (30%)

• Revenues from membership fees are

decreasing (31%)

• Only 12 out of 50 federations sell TV

broadcasting rights

• 9 federations have no marketing income

• 16 federations are depending on government

grants of more than 70% of their budget

• Only 18 out of 50 federations organise fund-

raising events

2. Today′s reality - Questionnaire


TOP 10 – Government support (in US $)

1) Great Britain 10.0 Mio.

2) Spain 9.07 Mio.

3) Greece 8.22 Mio.

4) Poland 6.46 Mio.

5) France 5.73 Mio.

6) Germany 5.65 Mio.

7) Turkey 5.15 Mio.

8) Romania 3.70 Mio.

9) Ukraine 3.68 Mio.

10) Russia 3.45 Mio.


TOP 10 – Total budget (in US $)

1) France 29.162 Mio.

2) Italy 24.716 Mio.

3) Spain 18.590 Mio.



6) Finland 10.660 Mio.

7) Turkey 9.731 Mio.

8) Netherlands 8.633 Mio.

9) Norway 7.075 Mio.

10) Greece 6.457 Mio.


TOP 10 – Marketing (in US $)



3) France 4.064 Mio.

4) Norway 3.213 Mio.

5) Sweden 2.656 Mio.

6) Russia 2.530 Mio.

7) Finland 2.340 Mio.

8) Spain 2.216 Mio.

9) Czech Republic 1.335 Mio.

10) Switzerland 1.250 Mio.


TOP 10 – TV sales 2011 (in US $)

1) Great Britain 2.177.215

2) Italy 1.049.397

3) Monaco 570.594

4) Finland 500.000

5) France 466.360

6) Russia 70.000

7) Spain 62.205

8) Netherlands 42.600

9) Norway 35.100

10) Sweden 32.656


TOP 10 – Membership (in US $)

1) France 7.006 Mio

2) Italy 5.426 Mio

3) Netherlands 3.966 Mio

4) Spain 1.608 Mio

5) Ireland 1.193 Mio

6) Switzerland 1.130 Mio

7) Finland .585 Mio

8) Sweden .510 Mio

9) Greece .426 Mio

10) Germany .300 Mio

3. FINANCING SYSTEMS IN

THE WORLD OF SPORT

Financing Sports

GLOBAL LEVEL

Financing systems in the world of sport

IOC Income 2008 – 2012

Broadcasting Rights $ 2,570 Mio 46%

TOP Sponsorships $ 866 Mio 16%

Domestic

Sponsorships $ 1,555 Mio 28%

Ticket Sales $ 274 Mio 5%

Licensing $ 185 Mio 5%

IOC TOTAL $ 5,450 Mio 100%

Source: Olympic Marketing Fact File 2010 Edition

FIFA Income 2008 - 2012 Event-related revenue $ 3,890 Mio 93%

TV broadcasting rights

Marketing rights

Hospitality rights

Licensing rights

Other

$ 2,448 Mio

$ 1,097 Mio

$ 120 Mio

$ 71 Mio

$ 154 Mio

63%

26%

3%

2%

4%

Other operating income $ 172 Mio 4%

Brand Licensing

Quality Concept

Penalties/appeals/match levies

Other (rental income, film sales)

$ 37 Mio

$ 33 Mio

$ 14 Mio

$ 88 Mio

1%

1%

*)

2%

Financial income $ 127 Mio 3%

Interest

Foreign currency gains

Income from financial assets

$ 51 Mio

$ 64 Mio

$ 12 Mio

1%

1,5%

*)

FIFA TOTAL INCOME $ 4,198 Mio 100%

Source: FIFA Financial Report 2010

*) share in FIFA TOTAL INCOME below 1 %

IAAF Income 2010 Television rights income $ 27,172,403 61%

Royalties IAAF BV

IEC (Europe)

TWI ATHLETIX

$ 7,000,000

$ 20,000,000

$ 172,403

16%

45%

*)

Sponsorship income $ 15,250,000 34%

Samsung Diamond League Title Sponsorship

DENTSU Contract

Continental Program

$ 2,500,000

$ 11,000,000

$ 1,750,000

6%

25%

4%

Financial income $ 706,003 2%

Other income $ 225,826 1%

Other income from activities $ 880,024 2%

Sale of publications & videos

IAAF permit fees

Affiliation fees

IOC contribution for RDC

Airlines travel refund

Identity card

IAAF certification system

$ 54,888

$ 9,850

$ 42,600

$ 182,500

$ 2,293

$ 63,500

$ 524,393

*)

*)

*)

0,5%

*)

*)

1%

IAAF TOTAL INCOME $ 44,234,255 100%

Source: IAAF 2010

*) share in IAAF TOTAL INCOME below 1 %

NATIONAL LEVEL


DOSB Income 2010

Membership fees € 4,429,948 10%

Financial support € 9,776,244 23%

Government subsidies

IOC

Other (for DSJ)

€ 6,889,541

€ 444,174

€ 2,442,529

16%

1%

6%

Marketing € 10,158,986 24%

Olympic Marketing

Other Marketing

€ 9,702,231

€ 456,755

23%

1%

Lottery income from “Glücksspirale” € 6,367,920 15%

Other income € 2,456,465 6%

Interest

Rental income

Other

€ 30,495

€ 497,570

€ 1,928,400

*)

1%

5%

Earmarked funds (for specific projects)

Trainerakademie, Führungsakademie, Integration

durch Sport, DSJ, Dt. Bundesstiftung Umwelt

€ 9,374,371 22%

DOSB TOTAL INCOME € 42,563,934 100%

Source: DOSB 2011

*) share in DOSB TOTAL INCOME below 1 %

DLV Budget 2011

Sponsoring Income € 2,225,000 63%

Membership fees (DOSB fees included) € 245,000 7%

Financial support € 40,000 1%

European Athletics

LSB Rheinland-Pfalz

Department for Foreign Affairs

€ 15,000

€ 5,000

€ 20,000

*)

*)

*)

Licensing € 105,000 3%

Manager Licenses € 11,000 *)

Other income € 98,900 3%

Interest

Rental income

Badges

Fines/Anti-Doping income

Other

€ 1,000

€ 26,400

€ 60,000

€ 5,000

€ 7,500

*)

*)

2%

*)

*)

Income from events € 794,000 23%

DLV TOTAL BUDGET € 3,518,900 100%

Source: DLV, 2011

*) share in DLV TOTAL INCOME below 1 %

REGIONAL LEVEL


WLSB Income 2010

Financial support (state government) € 23,315,114 54%

Trainers

Construction of sports facilities

School & club cooperation

Social services

Education

Disabled sports

Institutional aid WLSB

Institutional aid member associations

Glücksspirale

Landesjugendplan

€ 6,726,582

€ 6,109,917

€ 685,700

€ 1,575,000

€ 3,930,028

€ 143,629

€ 1,604,495

€ 1,566,509

€ 599,859

€ 373,395

16%

14%

1%

4%

9%

*)

4%

4%

1%

1%

Revenues Sport School Albstadt € 3,323,704 8%

Membership fees € 10,358,268 24%

Other income € 2,864,334 7%

Reserves € 2,954,686 7%

WLSB TOTAL € 42,816,106 100%

Source: WLSB 2010

WLV Income 2011 Financial support + Lottery “Glücksspirale” € 450,832 25%

Events € 1,030,181 58%

Fun Runs

Corporate Runs

Event licenses

Registration fees regional championships

€ 835,258

€ 155,448

€ 2,001

€ 37,474

47%

9%

*)

2%

Education and training – participation fees

(High performance sport and sport for all)

€ 53,455 3%

Publications

(WLV vor Ort, WLV Yearbook, Running Calendar

Baden-Württemberg, Brochures & books)

€ 79,970 4%

Starting passes / badges € 34,896 2%

Starting passes

Running and Walking passes and badges

Multisport badges

€ 19,455

€ 3,945

€ 10,164

Other income

(Licenses, other Marketing, donations)

€ 140,697 8%

WLV TOTAL INCOME € 1,790,031 100%

Source: WLV, 2011

*) share in WLV TOTAL INCOME below 1 %

WFV Income 2009 Administration € 1,763,759 21%

Game operations

(league participation fees, administrative charge,

additional fee for clubs – 1/3 each)

€ 921,169 11%

Justice

(Penalties, procedural costs, fines for missing

referees)

€ 1,089,093 13%

Youth Sport

(Youth camps, administrative charge , financial

support DFB)

€ 516,523 6%

Other income

(grants, bfv/wfv magazine, reserves, surplus from

categories above)

€ 2,203,652 27%

Business operation

(Sponsoring: € 428,708,

rental income, GmbH revenues, advertisements)

€ 564,641 7%

Sports hall Wangen

(utilization fees, grants)

€ 1,269,135 15%

WFV TOTAL INCOME € 8,327,972 100%

Source: WFV, 2011

*) share in WFV TOTAL INCOME below 1 %

LOCAL (CLUB) LEVEL –

EXAMPLES

Financing systems in the world of sports

Example 1 – Budget

TV Wattenscheid 01 LA e.V. 2011/2012

Main Sponsor (Energy) 45%

Financial support 32%

Support State of NRW, LSB, LV

Support City of Bochum

Grants DLV

17%

10%

5%

Revenues Half Marathon 11%

Equipment supplier 10%

Membership fees 2%

TV Wattenscheid TOTAL > € 1,000,000 100%

Example 2 –

Budget LAV Tübingen 2011

Booster Club € 60,000 60%

Membership fees

Events (Tübingen City Run)

Sponsors

Donations

€ 40,000

40%

Member clubs € 20,000 20%

Title sponsor ASICS (until 2011) € 10,000 10%

Financial support

(City, State, LSB, LV) 10%

LAV Tübingen TOTAL € 100,000 100%

SPONSORSHIP EXAMPLES


Sponsorship examples Sale of rights

• Competition support

• Podium medal ceremony

• Promotional announcement

during event

• Big screens

• Scoreboard

• Bags

• Track surface

• Flower lanyards

• Mobile cameras

• Umbrellas

• Perimeter boards (rotating,

digital, virtual boards)

• Bibs

• Camera carpet

• Car exhibition

• Start and finish

• Athlete′s apparel

• Official′s apparel

• Photographer′s apparel

• Technical personnel apparel

• Competition equipment (Paul

vault and high jump mat,

hurdles, electrical equipment)

• Drinking stations

• Canopy

• Product placement

Examples

Perimeter boards

Examples

Jerseys

Examples

Graphics

Examples

Tattoos

Examples

Camera carpets

&

Virtual boards

Examples

Websites/Internet

Example SEIKO

Example SEIKO

Example SEIKO

Example SEIKO

4. SUMMARY OF FINANCING

POSSIBILITIES

Financing Sports

• Financial support / grants • Government

• National/international/regional

federations

• Sale of broadcasting rights

• Sale of marketing rights

• Sale of licensing rights

• Sale of hospitality rights

• Sale of equipment supplier

rights

• Sale of publications & video

• Merchandising

• Ticket sales

• Membership fees

• Registration fees

• Lottery / Betting

4. Summary of financing possibilities Sources of revenue for sports organisations

• Donations

• Financial income • Asset management

• Interest

• Rental income

• Deposits and borrowed funds

• Financial support / grants • Government

• National/international/regional

federations

• Manager licenses

• Income from events

• Educational programs

• Education training programs

• Further training

• Transfer revenue

• Penalties / appeals / fines

• Certification system

• Etc.


Ref: SV 1899 Vieselbach e.V.

Membership fees


Ref: SV 1899 Vieselbach e.V.

New membership possibilities


Ticket sales


Television rights


Sponsorship rights


Hospitality


Merchandising


Naming rights

(venue; e.g. right to bear name, right of access,

right of use)


Donations

• donations are tax-deductable

• possible forms of donation

financial

material

services

• donors receive a donation receipt


Grants & Subventions

1. material

2. financial

• National / international Federations

• Federal government

• State government

• City


Asset management Interest


Deposits and borrowed funds

• Bond issues

• Loans

• Credit


5. ECONOMIC LOGIC –

AN OUTLOOK

Financing Sports

Supply Demand

Costs

Costs


The cycle of supply and demand


The economic cycle of TV systems

Audience

Market share

Advertising revenues Procurement market

Programs

Securing/

Increasing

Structuring Guarantees

Competitiveness

Securing/

Increasing

Ref: WALLISER, B.: Sponsoring. Bedeutung, Wirkung und

Kontrollmöglichkeiten. Wiesbaden 1995, 75.

Consumer

Businesses Media

Sport


Marketing Relationships

Product Pricing Promotion Placement

Corporate Identity Policy

Media Advertisement

Sales Promotion

Direct Marketing

Public Relations

Event Marketing

Sponsorship

5. Economic logic – an outlook Marketing instruments (4 Ps)

Ref: WALLISER, B.: Sponsoring. Bedeutung, Wirkung

und Kontrollmöglichkeiten. Wiesbaden 1995, 80.

Psychological goals: degree of popularity

image

sympathy

Economic goals: volume

turnover

gains


Sponsors′ goals

Attract Attention on the

sponsoring product

Arouse Interest and Desire

respectively for the product

Induce to a purchase Action

Ref.: Walliser, B.: Sponsoring. Bedeutung, Wirkung und

Kontrollmöglichkeiten. Wiesbanden 1995, 80;

Ref.: Das Werbewirkungsmodell AIDA (ROGGE 1990, 50)


The AIDA model – 3 effects of sponsorship

Individual athletes Teams Clubs/associations

Events

Marketing(goals) Research &

Development Production Finances Human resources

Promotion (goals) Product Price Place

Sponsoring (goals) Advertisement PR Sales Promotion Direct

Communication

Sports Sponsoring

Environmental Sponsoring

Cultural Sponsoring

Programme Sponsoring

Social Sponsoring

Athletics Football Formula 1

Competitive Sport Amateur Sport Age group

5. Economic logic – an outlook Marketing options – Sports sponsoring from a

business point of view

Country Athletics First place Second place

GER 3rd place Football Formula 1

ITA 7th place Football Formula 1

UK 4th place Football Rugby

USA 14th place American Football Basketball

JPN 8th place Baseball Football

RSA 5th place Football Rugby


Preference for sports

Athletics

Soccer

Golf

Tennis

Swimming

Basketball

Ice skating

Judo

Biathlon

Horse riding

Luge

Ice hockey

Performance

Organisational level

Professional

sport

High level

sport

Mass

sport

Youth

sport

Individual

athletes

Sport teams

Sport event

Sport clubs

Sport

federations

Sport

organisations


Decisional dimension of sport sponsoring engagement

Ref.: Bruhn, M. „Sponsoring“ 2003, p. 41

Sport

• Considerable changes of structure in media and communication

markets

• Diffuse losses and reaction problems with traditional communication

instruments

• Cost explosion at attractive sports events

• Problems with analysing and measuring of effects and efficiency

• Development of interactive marketing and communication

“instruments” through multimedia

• Necessary new orientation of the company′s integrated

communication strategy


Future perspectives of sponsorship in sports

The development of sport sponsorship is influenced by:

• more professionalism

• better planning

• a higher quality of communication

• relevance for the core business

• more credibility & effectiveness

• long term agreements


The future of sport sponsorship

Travel

CEO Conference - Financing sports