COVID-19 had a weaning effect on the sports sponsorship market due to a temporary halt on all sports competitions. A drop of 35% in apparel sponsorship deals was recorded between January and March 2020 compared with 2019. The figures also suggest that sponsorship deals from apparel brands have declined by 50% between January and February 2020 due to the negating effect of COVID-19 on the apparel industry, according to GlobalData, a leading data and analytics company.
Sportswear brands including Nike, Adidas, Under Armour and New Balance will continue to invest post COVID-19, as for these brands, sports sponsorships are central to their overall marketing strategy. Meanwhile, for fashion brands, sports sponsorship is likely to be deemed less essential and thus, investment into the marketing tool will be re-evaluated.
Ankita Roy, Retail Analyst at GlobalData, says: “The sports sponsorship market in the Asia-Pacific (APAC) region is not as popular as in Europe and North America. While Europe leads the market due to a large number of increasingly profitable and globally recognizable sports clubs which command huge rights fees, North America also holds significance driven by large rights fees for centralized sponsorship deals with big pro leagues and a large number of high-profile athletes with endorsements.”
However, as brands reel under the economic effect of the COVID-19 pandemic, they will be forced to dictate a more profitable deal model stimulating a shift towards more pay-for-performance contracts and moving away from big up-front cheques.
Ms Roy concludes: “The sports sponsorship market is under immense pressure with every sporting event currently either being cancelled or postponed. The only way forward is to look for effective strategies aimed at minimizing the potential impact of the crisis. Given the uncertainty ahead, fashion brands like Uniqlo have the opportunity to revaluate their investment plans on sports sponsorship portfolios. However, GlobalData believes COVID-19 to accelerate the appeal of e-sports to apparel brands enabling them to target newer audiences previously not exposed to them. We also expect a pandemic- induced shift in the kit supply market as brands start to dictate their business terms.”