#SportsSponsorships #HowDoCompaniesMakeMoney #EmiratesAirline #Arsenal #RealMadrid #Milan
Sports sponsorships are a vital part of the marketing strategies for many companies looking to increase their brand visibility and reach a broader audience. Companies spend millions of dollars on sponsorships to associate themselves with popular sports teams, athletes, and events in the hopes of attracting new customers and driving sales.
###How Do Companies Make Money from Sports Sponsorships?
Companies can make money from sports sponsorships in several ways, despite the hefty investment involved. Here’s how they do it:
####1. Brand Awareness and Exposure
By sponsoring a sports team or event, companies can increase their brand awareness and exposure to a large and diverse audience. For example, Emirates Airline sponsors top football clubs like Arsenal, Real Madrid, and Milan, which allows them to reach millions of fans worldwide through match broadcasts, social media, and merchandise.
####2. Consumer Loyalty and Engagement
Sports sponsorships can help companies build a loyal customer base by creating an emotional connection with fans who support the sponsored team or athlete. When fans see their favorite team wearing the sponsor’s logo, they are more likely to develop a positive association with the brand and be more inclined to purchase products or services from that company.
####3. Reputation and Credibility
Aligning with successful sports teams or athletes can enhance a company’s reputation and credibility in the eyes of consumers. For example, a company sponsoring a championship-winning team like Real Madrid gains instant credibility and prestige by being associated with the team’s success on and off the field.
####4. Sponsorship Activation and Marketing Opportunities
Companies can leverage their sports sponsorships to create unique marketing campaigns and activations that engage fans and drive sales. For instance, Emirates Airline often offers exclusive discounts and promotions to fans of the teams they sponsor, encouraging them to book flights and travel with the airline.
###In Conclusion
While spending tens of millions on sports sponsorships may seem like a steep cost, companies like Emirates Airline see a significant return on investment through increased brand visibility, consumer loyalty, reputation enhancement, and marketing opportunities. By strategically partnering with top sports teams and athletes, companies can effectively grow their business and reach new customers in a competitive market.
Next time you see a company logo on your favorite sports team’s jersey, remember that there’s more to it than meets the eye – it’s a strategic marketing move that benefits both the company and the team.
I think you’re underestimating how impressionable people are. It’s all about getting your brand out there in front of as many eyeballs as you possibly can.
I can almost guarantee that they’re seeing an increase in revenue that matches the ad spend, or they wouldn’t spend the money.
Its called sports washing. Authoritarian goverments use companies like airlines to sponsor sports in western countries to influence the general publics opinion on these countries and have an influence on local and countries politics. Its basicly a form of bribing western populations to not see these countries leaders for what they acctually are or atleast ignore it. And it has been working incredibly well.
Every game that Madrid (and every major teams) plays in is televised and watched by millions. They also sell millions of jerseys, which are worn out and about, meaning millions of non sports watchers still see the logo. Every social media post by the team, or by a player of the team, or of a fan who bought the jersey shows the logo. It’s difficult to track quantifiable return on indirect advertising like that, but hundreds of millions of people see the logo on the jersey every year. It definitely has a return on the investment.
(Also a lot of Middle Eastern airlines are owned by the country, and they’re less concerned with the company being purely profitable, they’re more focused on sportswashing or funneling money to certain teams, but that’s a somewhat different topic.)
Marketing is a part of any company’s expenditure budget, and yes, the numbers can be staggering. Emirates is a bit of a special case as it’s Sheikh Mohammed bin Rashid al Maktoum’s vehicle for getting the name out there, so the return there is measured in more than in just Emirates Airlines profit.
Unrelated anecdote: the tallest building in the world got its name just a week before the grand opening. For the three years of construction, the name was Burj Dubai (Dubai Tower.) A week before the grand opening, the local paper, Gulf News, reported that Sheikh Mohammed was in a financial jam and would not be able to meet an upcoming payment to Dubai Investments, one of his companies.
Sheikh Mohammed ended up visiting his cousin, Sheikh Khalifa, ruler of Abu Dhabi, about 100 miles down the coast. Abu Dhabi’s ruler is also President of the UAE, by virtue of the Golden Rule: he who has the gold, rules. Abu Dhabi has all the oil, Dubai has none. The cities are rivals, as Dubai is a successful international business centre and Abu Dhabi wishes it was.
So Sheikh Khalifa asks his cousin how much he needs.
“Ten billion dollars.”
Khalifa figures that’s about 100 days of oil revenue, yes, he can manage that.
But the tallest building in the world, The Burj Dubai, became the Burj Khalifa.
I was living there then. Hilarious.
You can never overestimate the price people will pay to have their egos massaged. There are oil rich Arabs in the Emirates and Saudis who just like seeing their names alongside those of Western nations and they will pay anything for that.
My current company sponsors a golfer (logo on the hat) and we look at it for client retention. As part of the package, we get luxury box seats at a number of tournaments and he is committed to a couple of pro-ams (usually we get 9-holes and another sponsor gets the other 9), and a few private clinics that he puts on for ours (and other sponsor’s) clients. We send our best clients and then wine and dine them afterwards. They have a great time and ideally increase their spend. No one is buying our product because they saw a logo on the hat.
A big client for us spends about $5MM a year and the hat sponsorship isn’t even 10% of that.
Emirates does that on a way, way, way larger scale. There are only a few airlines that fly to the Middle East from London (and I assume other parts of Europe) – Emirates is the largest. There are a lot of people from the Middle East living in the UK (and around Europe). There are a lot of business people going back and forth too. They want those eyeballs and they want those people to think Emirates when they have to go to the region for work. So branding is probably 1/4 of that sponsorship spend.
Back to my tiny (in comparison) golf sponsorship, Emirates can lock in more corporate clients (big company that has an office in London and an office in Dubai and commits to 1,000 flights a year or something), and more profitably, corporate freight (Emirates Sky Cargo) with their biggest clients (think FedEx but for that region). They can wine and dine their clients like crazy. Don’t like soccer? That is okay because Emirates seems to sponsor anything that you’d like.
In 2020, Amazon spent $13B on shipping (that is a figure that blows my mind – just showing this to show what large clients spend on shipping). If I’m a large freight shipping client with Emirates (maybe spending $100MM+ per year), you know that they want to keep me around. There are other clients like me too. It is easy to keep me spending that money annually if you take me out to a few games, wine and dine me, let me get a photo with Saka, take me golfing in Dubai, etc. I’m going to stick around and keep giving Emirates SkyCargo my shipping spend.
Emirate Airlines revenue is 32 billions US Dollar, says wikipedia. Spending 100 millions in marketing is spending 0.3125% of their annual revenue. After all expenditures they pocket 3 billion per year as profit.
If that marketing campaign increased revenue by 0.4% it’s bringing more than it costs.
Sponsorships also include things like access to box suites or exclusive access to events. Want to woo a potential client or investor? Bring them to watch a game in a suite and invite them to come meet some players after.
Freakonomics did an interesting podcast on advertising. IIRC there is very little research done that proves advertising works at all and what sort of ROI it gets.
People are talking about sport washing and the relation with oil barons. Which is true.
However there are other sponsorships, and one of the reason for sponsorships is that some companies sell products that have competitors. For years Manchester United was sponsored by Vodafone. Any economic activity that have competition and that profits by selling products to millions of people (such as cell phones) will benefit in sponsoring a sports team. The only question is how much they will pay for it.
Brand awareness is very powerful, and lack of brand awareness is difficult to overcome, even with a superior product. The only reason I’ve ever heard of Emirates is because of the soccer team, and I’m not even a soccer fan lol. That’s how powerful it is.
If it didn’t work, companies wouldn’t invest the money. They do it because it works. Your brain works on associations. If you see the logo frequently on things that you like, the product will seem more appealing to you. Emirates is a massive airline with billions in revenue.
Emirates Airlines had $33B in revenue. The £100m expenditure you mentioned is the same as spending 40¢ out of a $100 bill.