Wednesday, August 7, 2013

How Much Influence Should Sponsors Have?

Sponsors are integral partners for many sport properties. Corporate sponsorships represent a revenue stream that brings in valuable financial resources. In a sport like auto racing, sponsors are more than additional revenue; they can be the difference between a racing team being able to enter races and having to sit out because of lack of funds. When it comes to the highest levels of auto racing, the commitment required to sponsor top teams is in the neighborhood of $20 million, and that does not include additional marketing spending to support the sponsorship. With stakes this high, sponsors cannot be blamed if they have high performance expectations.

Up in Smoke
The question of how much influence sponsors should expect to have with their sport property partners surfaced this week when NASCAR Sprint Cup star Tony "Smoke" Stewart suffered a broken leg in a race. What makes Stewart's injury problematic is that it did not occur on his "day job" as a Sprint Cup Series driver. He suffered the injury during a sprint car race in Iowa, far removed from the bright lights of NASCAR's top series. For Stewart, racing is more than his occupation; it is his passion. Stewart regularly races at local and regional events in a variety of classifications for one simple reason: He loves racing. But, racing inevitably entails risk, and Stewart finally lost his stare down with danger. Tony Stewart's two broken bones all but assure that any chances he had for winning his fourth Sprint Cup Series championship this year will not happen.

What are Sponsors' Rights?
Tony Stewart's affinity for racing not only cost him a chance at another championship, but it also put to an end payoffs his sponsors could have enjoyed had Stewart remained in contention for a championship. Had Stewart made the Chase for the Cup playoff, he and his team would be assured of gaining added exposure in racing broadcasts and shoulder programming. Now, rather than being one of the 12 drivers contending for a championship and appearing in the spotlight, Stewart's #14 Chevrolet will be relegated to also-ran status as a replacement driver will compete in the season's remaining races. Such a predicament is not what Stewart's sponsors signed up for.

Should sponsors' interests weigh into a partner's decisions such as what athletes are allowed to do during their off time? Sponsorship and endorsement deals typically contain morals clauses that protect companies from athletes' bad behavior. But, are sponsors entitled to greater protections that reduce the possibility that situations like Tony Stewart's broken leg will not occur? The general question of sponsor influence cextends to other issues. Would NCAA, SEC, and Texas A&M sponsors like to see Johnny Manziel play every game this year? Absolutely. Will sponsor interests have any sway on possible penalties coming out of Manziel allegedly being paid for autograph sessions? Should sponsors even be a consideration?

Sport properties like to refer to their sponsors as partners. As sponsors write larger checks for rights fees, will they have greater expectations that their investments will be protected? - Tony Stewart is Mortal After All