Sport: a recession free zone?

While sport's emotional appeal makes it one of the more recession

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While sport's emotional appeal makes it one of the more recession resistant industries around, it is not totally immune to the knock-on effects of the meltdown.

In February this year, with the recession in full swing, Real Madrid offered the most expensive seats ever at the Bernabeu Stadium - a staggering RO440 each (they came with a free scarf and meal) - for its Champions League clash with Liverpool. Real spokesman, Javier Cano, even cited recession itself as the reason for the pricey tickets: they were aimed at corporates who could not afford a VIP box for the season.

Is it possible, then, that Planet Sport exists outside the normal rules of economics, immune to the effects of the global recession? Other facts would seem to support this theory.

The year 2009 kicked off with Brazilian footballer Kaka deciding that RO56mn, plus RO14mn a year in wages, wasn't enough to tempt him from AC Milan to Manchester City. In March, Chelsea were eyeing Danni, the most expensive player in Russian football and his Zenit teammate Pavel Pogrebnyak.

And it's not just football - England cricketers Kevin Pietersen and Andrew Flintoff were snapped up at the Indian Premier League auction in Goa in February - for RO560,000 apiece, making them the world's most expensive cricketers.

Speaking to journalists after his successful bid, team owner Vijay Mallya said he was actually prepared to pay more, so keen was he to get Pietersen.

Historically speaking, economic turmoil has had little impact on sports. We all need an escape from the daily grind and the general doom and gloom; something to dream about, something to lift our spirits and raise our self-esteem - something to belong to and identify with when everything else we rely on is falling apart. Sport even thrived during The Great Depression of the early 1930s.
But is this the full story? Is it possible that Planet Sport will be hit by the recession?

In recent months, we have seen Honda, Kawasaki and Subaru withdraw from motorsport. Tiger Woods has lost his five-year, RO3mn endorsement contract with Buick and the 2009 Indian Masters golf tournament has been cancelled.

On top of this, the US National Football League has signalled its intention to cut its workforce by ten per cent and Vodafone is not going to renew its RO2.4mn-a-year association with the England cricket team when it ends in 2010.

Indeed as the Deloitte 'Football Money League 2009' report has recently highlighted, the shirts of UK Premier League chronicle the credit crunch: West Ham United was without a logo for three months after its travel company sponsor XL went out of business.

Newcastle United is sponsored by nationalised bank Northern Rock and even the might of Manchester United is not enough to keep its RO31mn AIG (an insurance company now owned by the American government) shirt sponsorship deal.

As if these weren't enough, Dubai decided not to buy UK Championship side Charlton Athletic, citing the the worsening UK economic climate."

The new stadium for Liverpool FC has been put on hold and Barclays is reviewing its high profile sponsorship portfolio which includes the English Premier League's title sponsorship, golf, rugby union and tennis.

Clearly then, while sport's emotional appeal makes it one of the more recession resistant industries around, it is not totally immune to the knock-on effects of the global financial meltdown. A study by Professor Simon Chadwick, founder and director of Coventry University's Centre for the International Business of Sport and also a director of the University of London's Bareback Sport Business Centre has used a variety of data to examine the changing economic climate and sport.

Chadwick concludes that certain sports will suffer more than others. He sees recession placing increasing pressure on smaller professional clubs and sports where crowd sizes are already low, meaning they need to do more than ever before to survive, let alone thrive. He is of the opinion that teams with global brand appeal will fare best during the downturn, being still able to attract television deals and keep up sales of tickets and merchandise as well as sponsorship.

"In some ways, the downturn is not just a challenge. It is also an opportunity for the smartest sports, teams, companies and investors. Recession is forcing us to examine how things can be better run, better managed and better organised for a brighter future for sport," says Chadwick.

While sponsorship may be becoming harder to come by and spectator levels are going down, TV viewing of sport is on the rise - we may be sacrificing our season tickets but not our satellite subscriptions.

According to figures from the Centre for the International Business of Sport (CIBS), in the US the TV audience of Superbowl 2009 increased from 97.4mn to 98.4mn and advertising went up from RO71mn to RO79mn and the UK Premier League has signed a new live TV rights deal for RO996mn, exceeding its previous arrangement.

Further, CIBS figures indicate that participation in sport is also on the up. Following the Beijing Olympics, in the UK sales of bicycles went up by 20 per cent and sales of swimming equipment were up by 36 per cent. Items of women's sports wear increased by 27 per cent and energy bars and sports drinks sales rose by an incredible 155 per cent.

Here in the Gulf, sport in the community, grass roots sport, does not seem to be suffering unduly either - quite the opposite in fact.

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According to David Rogers, director of swimming at the British School Muscat and organiser of the 2009 British Schools of the Middle East (BSME) Swimming Championships, "We have had a healthy response to the BSME Swimming Championships with companies such as the Park Inn, Muscat Pharmacy, Global Scuba and the British Business Forum backing us. Qatar Airways has also stepped forward to support the squad we're taking to compete in the Qatar Foundation's Third Annual International Doha Meet.

"Insightful companies are using events like these to target their marketing and to reach out to particular groups.

"In my experience, if you are reasonable in what you demand from a sponsor and also show them what they can gain from the relationship, then there's no reason why they should not come on board. There's a lot of competition out there but if you have a quality offer and look to long-term relationships, then you'll have no trouble."

Gerard Rodrigues, country manager Oman, Qatar Airways, adds, "In today's marketplace, there is intense competition among companies and brands. For many people it is difficult to differentiate between the huge amount of products on offer. Sport sponsorships play a vital role to help a brand to stand out from the crowd and create a unique impression in the consumers' mind."

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Francois Galoisy, general manager of Muscat's newly opened Park Inn agrees. "Quality local sports events generate exciting print, web and TV coverage. This type of exposure creates brand familiarity for consumers which is important to businesses. The Park Inn's support of the BSME Swimming Championships is part of the company's corporate social responsibility. It is an excellent youth-oriented sporting initiative that offers us domestic and regional exposure and is a win-win for all involved."

These may not be the best of times to be looking for a sponsor for an F1 team or a new stadium. But the world of sport can take heart from that fact that it does seem to be less vulnerable to the current global financial turmoil than most industries.

In tough economic times people need their escapism more than ever and the businesses that are able to and continue to place a premium on their relationship with sport will win. And who knows, having been forced to re-examine how it organises and manages itself, sport may actually emerge fitter and stronger than ever."

Sport: a recession free zone?
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