14 Apr 2020
Posted in Coronavirus
COVID-19 outbreak sees number of sponsorship deals fall by 40% in just two months
Since COVID-19 outbreak, there has been widespread disruption to the global sports calendar. The ensuing economic crisis continues to impede on upcoming sponsorship contracts, with March seeing a 40% drop in the number of sponsorship deals, according to Sportcal, a GlobalData company.
Will Candy, Sports Analyst at GlobalData’s Sportcal, comments: “In times of economic hardship, sponsorship of sport is often seen as a luxury by brands and consequently budgets are cut. The effect of such cuts in the past has had a more gradual negating effect on the size of the sports sponsorship industry, just like after the 2007/08 financial crisis.”
However, with the decimation of the sports calendar, the impact on sports sponsorship has already been telling. GlobalData’s Sportcal has recorded a 40% drop in the number of sponsorship deals announced in March, compared to in January when the outbreak began. In the same time last year, there was a 33% increase in the number of deals announced.
Candy adds: “Significant retractions in sports sponsorship, a $46bn industry, will be added to a long-list of problems for properties within sport, who are already suffering from losses in other means of revenue, including broadcasting fees and gate receipts.”
While properties across sports have lost out on sponsorship revenues as a result of the COVID-19 outbreak, those within esports have bucked the trend. GlobalData’s Sportcal has recorded an overall 53% increase in the number of sponsorship agreements signed so far in 2020, compared to the same time frame last year.
Candy continues: “A significant increase in the number of sponsorship deals recorded for esports in January compared to last year already illustrates the rising popularity of the space for brands that have become enticed by high viewership figures and the opportunity to reach a millennial demographic.”
Although a drop off in deals signed between January and February this year was to be expected, because of both the initial virus impact and the annual nature of esports contracts, esports actually experienced a slight increase in the number of deals recorded between February and March. While sports across the board are seeing sponsorship depreciate, esports sponsorship remains intact. This is crucial to the space, as sponsorships make up approximately 57% ($630m) of entire industry revenues.
Candy concludes: “Esports has been able to cope better with the impact of the virus outbreak, and even has opportunity to capitalise on gaps in the sporting calendar. Developers have taken the luxury of moving their competitions to online formats, for example the newly franchised Call of Duty League, in a time when they are also able to build their presence among sports fans who ordinarily would be consuming other content. As such, brands are still receptive to signing deals in the space, even at a time of extreme short and long-term economic uncertainty.”