5 KEY REASONS TO INVEST IN SPORTS SPONSORSHIP
5 Key Reasons to Invest in Sports Sponsorship: from taxation to exposure, opportunities for companies (from micro businesses to holdings).
For a long time now, sport has been conceived as an effective communication medium that succeeds in addressing relevant target markets both qualitatively and quantitatively.
Sports teams, athletes and sporting events are increasingly becoming true communication agencies interested in creating engagement with their supporters through content disseminated using new technologies.
In this article, we will analyze five key points that make sports sponsorship a profitable economic investment for a commercial company, whether it is a micro-business that decides to support its city’s team, or a multinational corporation with high spending capacity.
1. TAX ADVANTAGES
The first benefit is the deductions, for tax purposes, of the amount paid for a sports sponsorship.
Legislative Decree 36 of February 21, 2021, one of the articles of the Sports Labor Reform, provides clear guidance in this regard.
In Article 12 paragraph 3 in fact we read:
“The consideration in cash or in kind in favor of companies, amateur sports associations and foundations established by educational institutions, as well as school sports associations that carry out activities in the youth sectors recognized by National Sports Federations or Sports Promotion Bodies constitutes, for the disbursing entity, up to an annual amount not exceeding 200,000 euros in total, advertising expenditure, aimed at promoting the image or products of the disbursing entity through a specific activity of the beneficiary.”
Up to the amount of 200,000 euros, it thus appears that such expenses are fully deductible from business income. In fact, it is stated in Article 108 paragraph 2 of the TUIR that “advertising and propaganda expenses are deductible in the year in which they are incurred or in equal instalments in the same year and in the following four years.”
But it is also possible to deduct expenses in excess of 200,000 euros, reclassifying these additional expenses as entertainment expenses, the deductibility of which is, however, reduced (read this article for more on this topic).
Especially for an SME, it is a great way to invest money that would otherwise be spent on taxes.
In addition to being a fiscal benefit, sports sponsorships are also advantageous in terms of marketing.
Activating marketing initiatives even at the amateur level is a strategy that should definitely be taken into account in order to reach a large and targeted audience in a short time. The buying process must be careful in verifying that there is consistency between the key values of the sport under consideration and the profile that the company wants to propose to the market.
It is worth pointing out that the exposure of one’s brand through sports sponsorship is broader today than in the past. Today’s user is prosumer (at the same time producer and consumer of content) so, if the company’s current goal is to generate brand awareness, having its logo visible within a sports event, where the spectators present become producers of content that is visible to those who could not take part in the event, could be a relevant advantage.
Of course, as we move up to the professional level, communication campaigns become increasingly structured and strategic.
3. INVOLVEMENT AND EMOTIONS
With the increasing popularity of sponsorships, the novelty effect has been lost; one can no longer be satisfied with putting one’s brand on the spaces offered by sports clubs and associations, but it is important to try to achieve something more.
The sports ecosystem is aware of this, which is why the sponsee strives to implement initiatives that are more focused than just knowledge (sponsorship leverage).
Leaving aside the discussion of technical sponsorships, in which one’s own product or service is guaranteed by the commercial company in exchange for visibility, leverage activities range from hospitality to the possibility of organizing corporate meetings within spaces offered by the sports club.
With this in mind, it is worth considering the strong emotional component offered by the sporting spectacle: as mentioned earlier, from the investor’s perspective, it is not enough just to try to carve out space on a court-side led, but also to take advantage of the sponsorship to have experiences that are unlikely to be had elsewhere (see, for example, the Walk About experience contained in one of the packages offered by Virtus Pallacanestro on Chainon).
In this case, the limit is only the creativity of both parties.
4. DATA-DRIVEN DECISIONS
As mentioned earlier, companies and associations interested in receiving sponsorships are increasingly becoming true communication agencies.
This aspect is a huge advantage for commercial companies, which will receive a detailed quantitative and qualitative analysis of the potential target audience before deciding in which entity to invest.
Investment decisions based on available data enable companies to make informed and targeted choices.
Approaching the world of sports facilitates a positive, youthful, dynamic, loyal, winning perception. Doing so by making informed, data-driven choices is important for optimizing the return on investment in sports sponsorship.
In addition, this approach offers a significant advantage to Associations, enabling them to provide an additional service to investors, who can benefit from greater transparency and accuracy in assessing the impact of sponsorship.
Finally, it is important to note that companies engaged in sports sponsorship have the ability to effectively reach out to local communities. This aspect assumes a key role in the context of territorial marketing, a topic that will be explored in the following section.
5. TERRITORIAL MARKETING
Another point to consider is the possibility of connecting more with the sponsoring company’s target territory.
Sports associations often dialogue with institutions, either directly or indirectly through other representative bodies such as Federations, Leagues, Associations, Committees and others. This leads the sports organization to initiate collaborations with respect to certain geographical areas to be developed, specific sports or targets.
In this context, the inclusion of a company that contributes economically to the development of a sports activity automatically improves its perceived reputation by stakeholders such as fans, spectators, communities, media, companies, institutions, etc..
Considering the advantages just highlighted, it seems clear that it is possible to invest in sports even when not considering mind-boggling figures. However, researching and negotiating a sports sponsorship can be an onerous activity in terms of time and expense.
Chainon intervenes in this context: concluding a sponsorship agreement through Chainon involves an 80% reduction in research, negotiation, contracting, documentation and management costs.
Chainon wants to revolutionize, in Italy and around the world, the sponsorship market through a digital marketplace based on proprietary algorithms, artificial intelligence and blockchain that allows the matching of supply (organizers, clubs, testimonials) and demand (sponsors, broadcast, media centers), in sports.
All that remains is to sign up for Chainon and see what offers are currently for sale. Many sports clubs have posted sponsorship bids. Virtus Pallacanestro and Dinamo Sassari in basketball; Lube Volley, Cisterna Volley and Uyba Volley in volleyball; Gresini Racing and Team LCR Honda in MotoGP. These are just some of the companies available to start a sponsorship project.
Concluding a deal is easy, immediate and secure.