The inundation of competing companies within the various verticals has only increased through the years. Incumbents have to maintain their respective market share as startups vie for the top position. Technology, naturally, has served as the gateway for direct penetration, especially as the barrier to entry is minimal due to software developments. The number of users on a given platform rises daily, building the base and loyalty grows over time–some faster than others. The dependency for simplicity, arguably above all else, stands as the initial standard expected by the masses.
With the surplus of vendors and customers out there, the trend to centralize everything under a single umbrella becomes an attractive proposition.
Yesteryear’s battle among the tech giants for search engine supremacy looms as the trickle down effect.
Google versus Microsoft.
The former would pit its Chrome browser against the latter’s Internet Explorer. Followed by the Android smartphone operating system against Windows Mobile. Later Microsoft having the audacity to launch Bing to compete against Google’s vital core, its search engine.
Nevertheless, none of this back-and-forth means much to either of their respective bottom-lines. Google makes a google from upselling online ads juxtaposed to its search results. Microsoft has relied on their Windows and Office products as primary revenue streams. Both of them, by and large, lose money on their other ventures. They remain unfazed from these losses because they can afford it.
And while it’s in their nature to want to eliminate the other as its competition, there’s a silver lining: neither would completely eradicate the other because it’s a conflict of interest for either company to go that far.
In the same vein, the reality behind this premise crosses over to the other industries out there. It wouldn’t be prudent to immediately come in and pose a threat to established players, particularly when the previous work laid propels the overall marketplace and the legitimacy for new startups to emerge in the space. Rather, oftentimes startups need the help, assets, or learn from others to scale in their own right.
Consequently, the combination of search and filtering numerous options under one outlet, with design considerations, have sprouted among startups looking to disrupt different arenas. This model supports that new companies can coexist with older ones and their properties, just taking a small percentage for the simplified service. SeatGeek and Hipmunk are two examples of startups that have gained traction through this fashion for the ticketing and travel spaces, respectively.
Yet, in the sports sponsorship landscape, nothing substantively has really changed whatsoever.
According to a report by Pricewaterhouse Coopers, global revenues derived from sports sponsorship are projected to reach $45.3 billion this year, which has seen a steady uptick of 5.3 percent annually since 2010. Sponsorships, of course, intend to target specific market segments and enhance a brand’s recognition by aligning themselves with a notable sports entity. Despite the growth, the way in which this transaction is consummated happens to be inefficient, virtually antiquated. The volume of sale proposals that corporations receive outnumber the deals that actually get done. And in the sports industry, there’s only a select group of vendors and buyers that conduct business for the top-tier properties.
Leave it to a former sports agent, Ishveen Anand, to find a loophole and navigate the back channels in this system…
She previously dealt with selling rights for teams and athletes as well as representing major international brands, both while being based in India and the United Kingdom. Once she moved to New York City a few years ago, however, she realized how difficult it is to remain in this sector unless there’s a close relationship with one’s respective contacts. Now being in a tech epicenter like New York–where technology is a routine part for any mundane matter–it became increasingly perpetuated that gap that exists during her sports sponsorship dealings, where cold calling and e-mail continues as the rudimentary process to do business.
Her startup, OpenSponsorship, opens up the possibilities within the sports sponsorship world as an entry point solution towards communication practices.
One initial experience that Anand mentions to SportTechie that exposed her to these problems was when a large Indian corporation that spends a lot in sport asked her to find opportunities in Columbia. From NYC, she traveled to Columbia to conduct meetings with several soccer teams, where she had to find an English-speaking official they had to translate in Spanish the business venture then head out to India to explain it. The cultural differences and sponsorship methods–not to mention the time changes and continual to and fro exchanges–amplified the wastefulness involved.
Anand states an overarching issue in the sports sponsorship process, on top of time windows for transactions hardly aligning: “Why is a brand–I am the one that has the money–why can’t I find out who is selling right now and what’s of interest for me?”
Internally, the sports sponsorship space, in some respects, can feel Jerry Maguire-esque, in terms of being an esoteric, who knows who environment, with formed relationships taken privately from one company to the next.
These deals shouldn’t related or constrained to the person, but determined by the opportunity, itself.
“I believe the market should set the rate,” James Mayo, Co-Founder of SOS Rehydrate, an electrolyte beverage brand that’s registered on OpenSponsorship, tells SportTechie.
“Too often rights holders have an over-valued opinion of their worth. Especially in the current environment, where consumers are looking for actual belief in brands and where rights holders have to do more than just put a name to something to let it sell. They are now much more part of a whole sponsorship and marketing approach, which includes generic social media,” added Mayo.
Beyond the conflict of interests that pervades this arena among individuals, sports sponsorship competes with the media sphere as well, in terms of where money gets allocated. Some brands tend to choose one avenue over the other for their marketing spend, with some opting for a mix of both. There’s more creativity and analytics involved with the countless media platforms as oppose to conventional sports sponsorship constructs, which has limited the latter’s ability for greater exponential growth than the aforementioned 5.3 percent year over year rise.
OpenSponsorship intends to serve as the conduit to bridge different segments together, including smaller companies–like sports bars that have a few chains but have just divested in local media ad spending over having the budgets for major sponsorship–and international brands–like from Africa that have interest in American sports teams or athletes.
Anyone who is selling sports sponsorship can sign up to OpenSponsorship for free and list its opportunity as available. It’s a very structured form, where the user can select up to the 14 pre-defined rights along with the monetary value of a certain package. As an all-inclusive platform, rights holders can register at their discretion and it’s not monitored. In the end, the brands are the ones that will reach out and contact any rights holder within OpenSponsorship.
This video breaks down the steps a new user would go through initially:
Again, Anand points out that rights holders cannot see brands. They’ve done this one-way prism on purpose because, surely, most rights holders will want money from any brand; and this functionality eliminates brands from receiving a bevy of messages. OpenSponsorship does, however, validate each of the brands beforehand to confirm and ensure confidential information is accurate and private. The brands can then determine the search criteria to their liking when it comes to rights holders.
“We are not an agency that gets in the middle. We are not trying to close the deal for you. We don’t want to influence you. We just want to connect you guys. And if the deal is worth doing for both parties, then great; you do it and we get three percent,” says Anand.
There are currently 200-plus rights holders on OpenSponsorship, spanning more than 20 different sports and over 30 countries, with packages fees ranges from $5,000 to $10 million.
In terms of attracting new users, both rights holders and brands, Anand explains how she has scaled the platform thus far: “As you can imagine, it’s a little bit of the chicken or the egg. You need the rights holders to get the brands. Then you need the brands to get the rights holders. And it keeps going in a circle. After reaching 200 rights holders, our focus now is on brands. We have about 30 brands, so it’s close to 10 percent, which is a good number to be at because brands are a little more scared; they only sign up when they are looking for opportunities.”
With the process of sports sponsorship remaining the same for so many decades, it’s quite difficult to change people’s habits. A subscription-based service wouldn’t work because it would negate adoption. The free access enables a more conducive model, where they bank on the success of its platform insofar as only being monetizable when deals take place. The three percent fee is fair, considering the user’s convenience of not doing cold calls and direct connection to numerous brands housed in one outlet.
Likewise, there are two key categories that would benefit the most from utilizing OpenSponsorship–tech enterprises aside.
The very small, but important rights holders, like all the tennis players participating at Wimbledon outside the top five-ranked in the world. These athletes may not command the kind of endorsements that the upper-echelon group receive, but being in the global platform that’s Wimbledon, they warrant attention from brands outside of their respective local market.
In fact, one sports agent on OpenSponsorship, James Kennedy, Founder of Smart Athlete Sports Marketing, who represents the likes of the 56-ranked ATP tour player Donald Young Jr. and former Los Angeles Lakers Kareem Rush, informs SportTechie about the difficulty surrounding this business being a numbers game, where finding brands that have a need for an athlete coupled with the budget compound matters.
“The bigger agencies don’t really work for their athletes; so they are more of an inbound call center, waiting for opportunities to come to them. We take the opposite approach,” says Kennedy.
“We target a minimum of 100 brands per week, per athlete; and reach out to each and every brand, whether it is by e-mail or phone call. This is obviously time consuming; and besides doing research on the brand to see if there is a fit via key market, demographic, or geography, it is hard to know which company may be interested in having a specific player represent them in the marketplace,” Kennedy continued.
Another would correspond to the particularly big properties that are internationally appealing, but lack maximizing its global revenue. Manchester United stands as the benchmark that other organizations would like to reach, with 20 partners coming from abroad. The resources to fulfill similar aspirations may not be there; this medium can assist with this process without the initial fixed costs.
“In a few months time, we can, basically, tell a property: ‘Hey, your direct competitor were being clicked upon and you weren’t. Maybe that’s because you didn’t list social media mentions as a right or maybe you were slightly pricier. The data that we’ll have will be amazing,’” says Anand, in terms of how previous and future transactions will be extracted based on analytics across different deals for any user to be informed by.
This data gathering would, in time, likely benefit the rights holders more so than the brands, per se. These users remain nebulous or uninformed enough on what brands are looking for, especially as virtually every asset changes in valuation rapidly. On OpenSponsorhip, they’ll have a better idea of geographics and cross-vertical search queries by these brands. They can plan their sales pitches better and targeted accordingly.
Sports sponsorship will perpetually be predicated by networking, but people and location shouldn’t be detriments to access viable business opportunities. Some rights holders and brands don’t get enough exposure, but that doesn’t mean that they both cannot mutually grow together. Although there are competitors attempting to fill the void of connecting these two parties, like SponsorPitch, OpenSponsorship offers an all-inclusive platform for the sundry of vendors and buyers in the sports sponsorship space, which is open about budgets insofar as enabling new players to enter the market and receive the most value from a limited budget.
Regardless of the sport, there’s heighten interest virtually across the board, where the global nature of any league or athlete should be matched by brands–no matter where they are based–that want to tap into this affinity.
“If we can help athletes of all sports–in our own little way–raise sponsorship money, then it makes the sport richer. And then the fans benefit by the sports putting that money for better quality production,” Anand believes.