Summer travel is coming back. But despite the positive outlook, GlobalData reports that there’s been no obvious evidence of a spike in tourist board sports sponsorships—odd considering sports sponsorships have proven to be among the most effective tourism drivers. In fact, the number of newly signed deals in 2021 (52) and the annual value of those deals ($12.97 million) are both down dramatically from their 2019 levels (175; $58.65 million). Conrad Wiacek (head of sport analysis & consulting, GlobalData) attributed the decline in deal volume to a reduction in the number of new events announced: “In January 2019, 39 event bids were awarded. In January 2020, there were 50 events awarded. In January 2021, there were seven.” Fewer events simply means fewer sponsorship opportunities.
Our Take: If “event hosting has always been a way of driving sports tourism, and sports tourism is a significant driver of the whole tourism economy,” as Wiacek said, then it’s reasonable to wonder why more destinations haven’t announced events for Q3 and Q4 2021. The GlobalData executive explained that unlike in the United States, where events are being scheduled for later this year, event organizers in Europe (where the bulk of sports tourist board spending occurs) are still unsure when fans will return to stadiums en masse. Promoters without lucrative broadcast deals are understandably hesitant to hold events with attendance restrictions in place.
Wiacek expects “event hosting will be one of the strategies used in [Europe’s] post-pandemic recovery,” once venues can once again be packed to capacity. The London-based sports sponsorship professional suspected the anticipated flood of “mass participation event” announcements would begin “later this year.”
Then, the tourist board sponsorship deals are sure to follow close behind. In fact, Wiacek does not expect there to be any dropoff from 2019, in the number of deals done or in deal value. “A lot of these governments will be thinking in terms of the additional revenue tourism brings [and that they] need to spend money to attract people to come,” he explained (see: Switzerland Tourism's newest spot with Roger Federer and Robert De Niro).
Because most of the sports tourist board sponsorships are signed by destinations in Asia and Africa and the deals are government-funded, the pandemic shouldn’t negatively impact deal volume moving forward (as opposed to the airline sector, where marketing spends are expected to be decimated). “Governments with oil fields will still be able to apply money to sponsorship agreements,” Patrick Kinch (analyst, GlobalData) noted. Tourism boards may also have an opportunity to pick up some of the sponsorship classes vacated by the airlines too (think: team’s official travel partner).
It’s worth mentioning that while the number of transactions is expected to return to pre-pandemic levels in tourist-reliant countries, “the value may fall to account for high pandemic borrowing,” Kinch said. “This is dependent on rights holders accepting lower sponsorship value, however.”
Of the 52 tourist board sponsorship deals signed in 2021, only nine were inked by a U.S. destination. By contrast, 17 locales in Asia-Pacific agreed to a deal with a sports rights owner this year. Kinch says that makes sense considering most of the spend over the last several years has come from Asia and Africa. “Europe is a massive tourist destination right next door to Asia, right by Africa,” he reminded.
The reason you don’t see American cities marketing themselves in European leagues (or anywhere else abroad for that matter) is because domestic tourism boards are primarily focused on attracting domestic tourists (see: Explore Boone and the Memphis Grizzlies). With about 330 million people, the U.S. market is vibrant enough in and of itself.
While Americans are planning to travel again this summer, the same can’t be said for many in Europe and elsewhere. Wiacek pointed to weak vaccination rates across Europe (which is why new events are not being scheduled in the first place). As a result, he does not “expect to see much international travel across [the continent].” The lack of travel helps to explain the depressed deal values.
Long-haul destinations like Rwanda and Malaysia (two countries with a large sponsorship presence in English soccer) are even less likely to see European tourists for the remainder of 2021, making it difficult for their respective tourist boards to achieve a positive ROI on the sponsorships this year. Of course, for some countries (including Rwanda), the sponsorship is as much about a change in perception as it is attracting tourists.
For the record, new deal volume increased in 2020 (despite COVID-19 hitting in Q1), because some tourism boards saw the pandemic as an opportunity. Remember, while volume was up, the size and scope of deals signed last year declined roughly 30% YoY (from $58.65 million to $42.98 million). Considering deal values have fallen another 70% (to $12.97 million) in 2021, the opportunity is seemingly still available.