Monday 18 May 2020 8:09 pm

Coronavirus crisis set to wipe $17bn off sports sponsorship market

Global sports sponsorship revenue will fall by $17.2bn (£14.1bn) this year as a result of the coronavirus pandemic, new forecasts have revealed.

Total spend is expected to reach just $28.9bn in 2020 — a 37 per cent fall year on year — as scores of live sporting events have been scrapped and businesses look to conserve cash.

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The decline in revenue is set to be particularly marked for financial services firms, whose contribution is forecast to plummet 45 per cent to $6.9bn.

The sector was the biggest investor in sports sponsorship last year, contributing $12.6bn — or more than a quarter of total spend, according to sports marketing firm Two Circles.

The Covid-19 crisis has led to most new sponsorship agreements being put on hold, while many existing deals have been scrapped as firms try to save cash or go out of business.

Sponsors have also been offered so-called makegood collateral and cash rebates to compensate for the postponement or cancellation of live sport.

The figures do not include spend on partnership activation, which is often non-contractual expenditure and will also be significantly impacted by cost-cutting measures.

“As a marketing platform to reach passionate and emotionally-engaged audiences at-scale in brand-safe environments, sports sponsorship is unrivalled,” said Gareth Balch, chief executive of Two Circles.

“However, with live sport halted globally since March, the value that sports properties have been able to deliver brand partners has been limited, with cost-cutting in sectors that invest heavily in sponsorship also presenting a significant challenge in signing new deals.”

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Aside from financial services, other major sports sponsors such as the automotive, energy and airline sectors are also set to cut their spend drastically. 

Automotive — the second biggest spender in 2019 — is expected to decline 55 per cent year on year to contribute $2.7bn in 2020.