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Arabian Gulf approach to Sport Sponsorship ‘needs to change’

Arabian Gulf approach to Sport Sponsorship ‘needs to change’
May 17, 2010

Sports sponsorships in the Gulf Cooperation Council (Arabian Gulf) nations is challenged by the absence of regulations in the media and marketing industry and a persisting old mindset towards organising sports events, according to Emirates airline’s, Divisional Senior Vice-President of Corporate Communications Boutros Boutros.

Boutros told Emirates Business 24/7 that the lack of a governing body or system for the sports marketing industry in the Gulf Cooperation Council (GCC), the Middle East free trade area established in 1981, has led to the emergence of fly-by-night agencies that are damaging all stakeholders.

Boutros believes that sales gimmicks used by agencies to lure more sponsors to cover an event are not helping the growth of sport.

"We have been receiving proposals for sponsorships with designations of sponsors' categories such as gold, silver and bronze," explained Boutros, adding "as a sponsor, I am not gratified by such offers, because at the end of the day my intention is to stand out and have a voice.

"Seeing my logo, however, along with 50 other logos of brands and companies does not serve my strategy to distinguish the name of my brand. I don't see any benefit.

From an agency perspective, such offers are seen as a sales gimmick to lure more sponsors to cover an event, while taking into consideration the limitations of budgets, especially since the marketing budgets started to tighten in the past year.

Boutros adds “our understanding of sponsorship needs to change. In general, sponsorship should not cover more than 5% of the total cost of an event. Events organisers in this region, however, believe that they are to cover the entire cost of their event through sponsorships. Sports events, in particular, are expected to cover a major portion of the costs from audience attendance and tickets."

"Our sponsorship of (English Premier League club) Arsenal represents 3% of the club's total expenditure. I am not expected to pay the players. It is up to those clubs to manage their revenues and multiply their revenue sources. Some complain that certain sports have no field audiences, yet, we have had experiences where we were able to attract thousands of fans to sports fields, by running professional event organisation."

In addition to its sponsorship of Arsenal, Emirates has spearheaded sponsorships of international and GCCC sporting events including the FIFA World Cups in 2010 and 2014. In Australia, Emirates sponsorship includes Cricket Australia, The Melbourne Cup and the Western Force.

Meanwhile, Boutros understood the challenges facing the sports community in the local and regional markets. The lack of TV rights rob sports events of a major revenue source.

"I think our industry as a whole needs to be reshaped and revisited. It needs good governance be it in the advertising sector or the in sport club management. Regulations for collecting TV rights are yet to be put in place."

Boutros believes that aside from football, which is probably the best governed sport by its governing body and the nations and clubs within FIFA membership, sports do need support and are in great need for funds. "Instead of expecting the private sector to lend them those funds, in the more developed markets, sport is being supported by governments. Unfortunately for us, governments in the (GCC) region and in most developing countries don't look after small sports events. Most sports are either developed by individuals or companies.

“That is why we see very few stars, very few prominent teams which even when qualifying for the international events we stand no chance of getting through the initial rounds. What most of the governments in the developing countries overlook is that sport can generate revenues and offer societal benefits."

In the absence of such options, Boutros sees Emirates airlines as being regarded as the ‘Father Christmas’ of the sports community, because it has been one of the few well-organised and structured companies.

As Boutros adds "people's expectations are so high that at a certain point it becomes unfair to the company. At the end of the day, we are a commercial company responsible for 38,000 employees. We are answerable to our top management. Our budget is limited and we have to ensure efficiency and achieve ROI."

"Emirates is on its way to become a global brand, we believe we are getting there, but this goes neck to neck with our expansion. We cover the globe, but we still have a lot of destinations that we don't cover, so hopefully we are growing at the same pace in corporate communications as the company is growing."

"His Highness Sheikh Ahmad bin Saeed Al Maktoum, President of the Department of Civil Aviation and Chairman of Emirates Group, has announced that we were looking for sponsorships in Spain, because we are flying to Spain. In our sponsorship strategy, we are usually where our markets are. Emirates is growing and will continue to grow, with five or six new destinations to be launched this year, and our sponsorships are alligned with our efforts to be is major markets where our target audience is, and to raise awareness of our brand in place we don't fly yet."

Meanwhile, Boutros noted that the 50:50 sponsorship-advertising spend ratio maintained in international markets is increasingly inclined towards spend on sports and cultural sponsorships. The UAE sees a ratio of 70:30, with the majority of spend going to sponsorships.

According to Boutros, the total marketing and communications budget is equivalent to 1% of the airline's revenue.

"We support UAE referees, the sports council, cricket and rugby, in addition to offering tickets and money. If you look at our expenditure on sponsorships in the UAE, it is much more than what we spend on advertising, and we even go beyond our commercial need to sponsor local events, as we consider it our pay to our home base."

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