Sports sponsorship becomes a weapon of mass disruption

September 26, 2018 14:27
Dalian Wanda chairman Wang Jianlin (second from right) and FIFA representatives attend an event announcing the strategic partnership between the Chinese group and FIFA. Photo: Reuters

Sports sponsorship has long been a commercial battlefield, and a global arms race has emerged over recent decades. Corporations from across the world have spent ever-increasing sums of money on the right to be associated with sporting events, teams athletes, venues and a seemingly endless number of other properties.

Commercial warfare is evident in the current value of sports sponsorship industry size, which one estimate values at US$44 billion per annum. In some countries, sports accounts for as much as 90 percent of total sponsorship expenditure. Football is typically a leading recipient, although the likes of motor racing and events such as the Olympics are also major beneficiaries.

The value of deals continues to proliferate (for example, some observers have speculated that Toyota may have spent more than US$1 billion on its recently agreed Olympic Games contract), which implies something about the strength of sponsorship. Although doubts remain about the influence it has upon sales, the medium nevertheless remains a very powerful way of raising brand awareness, and building image.

As if further evidence was needed of sponsorship’s power, this summer yet again witnessed innumerable ambushes link to the FIFA World Cup in Russia. Sponsorship ambushes typically involve rival brands seeking to deflect attention away from official sponsors without them actually paying anything to an event owner (Bavaria Beer’s heists at the 2006 and 2010 World Cups are particularly notable). If commercial sponsorship wasn’t effective at what it does, then presumably ambushing wouldn’t take place.

However, the presence of several specific sponsors at the 2018 World Cup suggests the reality of 21st century sports sponsorship is changing. Among the usual roster of McDonald's, Coca-Cola, Adidas and so forth were Chinese companies such as Wanda, Vivo and Mengniu. In addition, Qatar Airways was prominent, although it was a Russian sponsor that particularly stood out from the crowd.

Gazprom is a state-owned company involved in the extraction, production, transport and sale of natural gas. More importantly, unlike McDonald's or Coke, it doesn’t sell anything to domestic consumers. Hence, for most people across the world, Gazprom’s sponsorship activities are likely still to be a mystery to them. Indeed, as many fans of UEFA Champions League football (which Gazprom also sponsors) will surely attest, they know the name but know little about the company or what it does.

This is no surprise, as the Russian gas giant is in the business of selling gas to countries, not household gas consumers. The gloss and glitz of Gazprom’s sponsorships are therefore directed at politicians and high-level national decision-makers which, one assumes, often takes place in the corporate boxes of football stadiums across Europe in particular.

The problem is that Gazprom appears to have been having a rather more profound impact upon Europe countries than merely selling them gas. It has proved to be a divisive, sometimes disruptive, influence in places including Poland and Ukraine, often threatening to withdraw or regulate gas supplies from these countries unless they capitulated to the company’s (that is, Russia’s) demands. As a case in point, as the World Cup kicked off in Russia last June, the Ukrainian government and Gazprom were embroiled in a legal battle over such matters.

US President Donald Trump earlier this year castigated Germany for its growing dependence upon Russian gas, which he sees as a strategic threat to security in Western Europe. His concerns came as the government in Berlin agreed a deal with Gazprom to construct a second gas pipeline (Nord Stream 2) connecting the two countries.

Nord Stream 1 was previously inaugurated in the mid-2000s, a development marked by Gazprom signing a shirt sponsorship deal with German Bundesliga team FC Schalke 04. One of the oldest teams in Germany, Schalke is also located in the country’s Ruhrgebiet region. This is old domestic industrial heartland, a place where mines and steel plants have traditionally dominated. The deal was therefore hugely symbolic, but also one which seemed to mark Germany’s growing industrial dependence upon Gazprom-supplied Russian gas.

In spite of Trump’s apparent bromance with Russian President Vladimir Putin, the United States continues to impose sanctions on Russia. These may even strengthen in the coming months. This implies an important impending question: Gazprom’s deal with FIFA finishes at the end of this year, but will it seek to renew the deal? Answers to this question offer all kinds of possibilities.

One of them is that Gazprom seeks to renew and extend the deal, perhaps until the 2026 World Cup. This would cover the 2022 tournament in Qatar, which Gazprom may see as being an important disruptor. Qatar is currently second only to Russia in being one of the world’s largest gas suppliers, though the government in Doha has plans for Qatar to have become the world’s largest supplier by 2024. In addition, Qatar is invested in Gazprom’s "arch" Russian rival, Rosneft.

Gazprom may therefore view the prospect of its promotional and sponsorship activations saturating the streets of Doha as being an enticing, and possibly essential, prospect. A deal to 2026 is possibly even more attractive, with the World Cup set to be staged in North America. This would mean that in Washington DC, New York and Los Angeles, Gazprom’s name (as well as the presence of its officials) could become ubiquitous. One senses that Russia might see the opportunity for such an antagonistic and disruptive move to be compelling.

This all suggests that sponsorship is mutating into something that is significantly different to conventional notions of it. No longer does it seem to be a medium where the sole purpose is to sell burgers, soft drinks or, for that matter, cars or credit cards. Rather, sponsorship appears to have been appropriated for political purposes by governments, many of which are Asian. This may not seem like warfare as we conventionally know it; however, as industry trends have shown, sponsorship does have the power to become a weapon of mass disruption.

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Vivo is an official sponsor of the FIFA World Cup for 2018 and 2022, as announced by FIFA secretary general Fatma Samoura (left) and Vivo senior vice president Ni Xudong. Photo: Reuters
Gazprom, the Russian gas giant, made a strong presence at the 2018 World Cup as an official sponsor. Photo: Reuters
Toyota Motor's JPN Taxi bears the logo of the 2020 Tokyo Olympics. The company is rumored to have spent more than US$1 billion as sponsor of the games. Photo: Reuters

Simon Chadwick is Professor of Sports Enterprise at Salford University Manchester in the UK, where he is Co-Director of the Centre for Sports Business. He is also a Senior Fellow of the University of Nottingham's China Policy Institute.