Sports Sponsorship Valuation and Value

With the increased interest in the valuation of sports sponsorships, it’s time to ask whether valuation or value is the right measure to drive sponsorship spend.

To be sure, objective financial valuation of each sponsorship can help sponsors justify their investment and measure and compare their returns, particularly when the total value of each sponsorship is based on the values of the individual assets and other components of the deal. Armed with this granular data, sponsors can move beyond the “relationship value” negotiations that many properties have traditionally preferred to use in pricing their sponsorships.

But the question remains whether financial valuation alone is enough, even when multiple financial factors are aggregated to achieve a single valuation figure. For many sponsors, other rating factors can play important roles in determining both the overall value delivered by a sports sponsorship and the level of management support for the relationship. These other factors typically vary from sponsor to sponsor, but may include rankings based on guest experience surveys at sponsored events, geographic location of properties and events, micro-demographics and asset activation opportunities and costs. In reality, both financial valuation and these other factors are necessary to deliver an overall picture of the relative value of a sports sponsorship to a particular sponsor. The key is capturing and comparing these multiple components and filtering them to determine which factors deliver the best assessment of relative value to the sponsor.

Author: Charlie Harris CEO Playoff Technologies LLC