AFL Sponsorship Report
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1 AFL Sponsorship Report
2 Sport sponsorship management, SP0712 Student: Tutor: Dr. Paul Blakey Hand in date: 30/01/2015 Word count: 2633/3000
3 Executive Summary The Australian Football League (AFL) is the professional Australian football association. The sport was created in 1857 in Melbourne. Nowadays the AFL consists of 18 teams. AFL is played in 53 different countries and a world cup is held once in every 3 years. As a brand and organisation the AFL is very healthy. With a revenue of Aus$446 million (in 2013), a brand value of (approximately) Aus$400 million, a sponsorship revenue of Aus$168 million, an average of television audience a week during the season and a total of attendants the AFL is the largest sport league of Australia. The AFL has a high brand value and 14 of the 18 teams are in the top 20 of teams with highest brand value. The average of the 14 clubs is Aus$23,83 million in brand value. The consumer attitude towards sponsorship is positive and they accept international companies as sponsor but they do appreciate sport/afl related companies. There are three recommendations for the AFL concerning there sponsorship approaches. - More global/european - Sponsors more affiliated to sport - Bigger sponsor deals More global/european Attract more European sponsors. This will create more affiliation with the European market/fans and increase the amount of consumers/fans. Sponsors more affiliated to sport The consumers/fans have shown that they prefer sponsors that are related to the sport or sports in general. By making sport affiliated organisations the main sponsors the AFL will have more authenticity and a bigger, more loyal fan base. Bigger sponsor deals The AFL has a brand value of Aus$400 million but only get Aus$168 million of revenue from sponsors. This shows that the AFL could and should ask more of the sponsors.
4 Key findings Australian sport industry generated Aus$15 billion of income and 107,256 employed (IBIS World, 2014) the AFL created revenue of Aus$446 million (Australian Football league, 2014). The AFL has a total revenue of Aus$ on commercial operations (sponsorship) (Australian Football league, 2014). Most AFL sponsors are car manufacturers and beverage companies. A brand value of Aus$400 million (Brand Finance, 2013) television audiences in each (season) week and a total of attendances (AFL, 2014). Australians are relatively positive towards sponsorship (fullerton, 2004)
5 Contents Executive Summary... 3 Key findings... 4 Introduction... 6 Methodology... 7 The AFL... 8 Sponsors... 8 Brand value Consumer attitude towards sponsorship Conclusion References... 16
6 Introduction The Australian Football League, also known as the AFL, is the professional Australian football association. Australian football was created around 1857 by Tom Wills, H.C.A. Harrison, W.J. Hammersley and J.B. Thompson (AFL, 2015). They formed the first football club in Melbourne (The Melbourne Football Club) on August 7, This was also the year of the first match, Scotch College against Melbourne Grammar School. The Victorian Football League was the first league to be established in In 1987 more clubs from other parts of the country joined, creating the Australian Football League. In 2011 it became an 18-team national competition (AFL, 2015). This report is about the sponsorship deals and value of the AFL. Smith (2008) explained sponsorship as a marketing tool and often seen as a part of promotion and personal selling. But sport sponsorship has developed to more than just a part of promotion and personal selling. It has grown towards a point that it is part of the marketing mix. Sponsoring can be on different levels; individuals and organisations (Smith, 2008). Both parties should benefit from the sponsorship. The sponsored sport organisation receives cash, goods, services or expert advice and the sponsoring company receives benefits such as promotional rights and marketing advantages. By sponsoring a sponsor wants to increase consumers awareness of their brand and increase their brand equity (Smith, 2008). As said this report will involve the sponsorship deals and value of the AFL. It answers the question: What can the AFL do to increase their sponsorship deals and value? The answer will be gathered by analysing the leagues sponsors, the brand value and the consumers attitude towards sponsorship.
7 Methodology To develop this sponsorship report several secondary sources have been used. The study focused on the sponsorship of the AFL. But also looked at the 18 clubs that where represented by the AFL. The main source was the annual report of the AFL. The most recent annual report was used, which is the report of Next to the annual report other important sources have been taken into account. Reports of companies such as Repucom, IBIS and the Australian government have been used. Also different news articles and independent studies have been used. All these sources have been analysed and used according to university standards. The value of every source will be discussed. The acquired information was used according to standards and was referenced. The analyses consisted of a comparison of different Figure 1 (Australian Football league, 2014) sources and the necessary information, for the different chapters, was valued and used. The used information was compared and following this comparison a conclusion was made. The information that was gathered was gathered through the internet. The first site and document that will be obtained is the library website of Northumbria University and the Annual report of 2013 of the AFL. If these sources did not give a source that provided the necessary information an extensive search through internet would be done. With the official AFL site, the Australian government site or the most accurate links through Google as main sources.
8 The AFL The Australian sport industry generated Aus$15 billion of income and has 107,256 employees (IBIS World, 2014). It can be stated that the sport sector in Australia is big, but there is no particular market leader. There are no organisations that holds more that 5% of the sector revenue (IBIS World, 2014). In 2013 the AFL created revenue of Aus$446 million. That is 2,9% of the total revenue of the sport sector but still makes Australian football one of the biggest sports in Australia (AFL, 2014). AFL is played in 53 different countries around the world (AFL, 2014) and with a stunning attendances per game (in 2013) the AFL Premierships season is the fourth highest average attendance per game in the world (Australian Football league, 2014). It can be concluded that the AFL is a healthy organisation with a good revenue, compared to the other Australian sport organisation, a worldwide fan base and many attendants per game. All of this together makes the AFL the biggest league in the Australian sport industry. Sponsors The AFL has several sponsors. The premier partner is Toyota. The Major partners are Carlton Daught, National Australia Bank, Coca-Cola (Gatorade) (AFL, 2014). Figure 2 shows all the official Partners. The AFL has a total revenue of Aus$ on commercial operations. Commercial operations are the sponsorship deals of the AFL. This is an increase of Aus$10 million in comparison to 2012 (AFL, 2014). Figure 2 (AFL, 2014) Table 1 shows the most important sponsors and their activities within the AFL. These are some of the most important sponsors to the AFL. Because they give a lot of money, do a lot of activities with and around the AFL season or/and because they have a special deal.
9 - $8million estimated deal (SportsPro, 2011) -Naming rights o Toyota AFL premiership season, o Toyota AFL finals series, o Toyota AFL grand final parade o Toyota AFL grand final. -$2.3 million to community football -$ to grassroots clubs in victoria, Tasmania and southern new south wales. -My Legendary Moment. o 2 tickets to the grand final o Overall winner wins a Toyota sr5 HILux o Witnessed by people and TV audience of +3.6million -Planet ark s national tree day -Association with the VFL -Toyota good for footy tour, 12 regional locations in Vic and SNSW - 2 years of 10-year contract. - Emphasis on consumer experience - Alcohol partner - Estimated $3 million sponsorship deal (SportsPro, 2011). - PowerAde - Non-alcoholic beverage partner - Ticket giveaways - Coke rewards - Prizes of $ $3million - Talent pathway programs o NAB Cup o NAB Under-16 and Under-18 championship o NAB AFL Draft o NAB AFL Draft Combine o NAB Footify FM o NAB AFL Rising Star o NAB AFL Auskicker - Media exposure of $5.28 million for the NAB AFL Draft. Virgin Australia is the official airline of the AFL. Table 1 (Australian Football league, 2014)
10 The data in table shows that the AFL has a lot of different sponsors from different countries, from Australia but also from other parts of the world, mainly from the USA and Asia. A large percentage of the sponsors are from American origin, but almost none of the sponsors are European or African. Brand finance (2013) shows that a lot of the sponsors are car manufacturers or alcohol/drinks companies. This is not only with the AFL but with most sports in Australia. It can be concluded that the AFL has a strong sponsorship deal position, with Aus$ and with 29 sponsors. It can be said that they are doing well and the Aus$10 million shows that the AFL keeps growing. But they still mainly have American, Asian and Australian sponsors and no European or African based companies. This means that a big sector is still untouched by the AFL. This means that they can keep growing.
11 Brand value According to a report of Repucom (2011) the average value per sponsor per team is approximately Aus$ With 18 teams in the AFL that should come to a total of Aus$ of value for all the AFL teams combined. But a report of Brand Finance, The top 20 most valuable Australian sports brands, shows very different numbers. This report shows that 14 of the 18 AFL clubs are in the top 20 of most valuable sport brands. Figure 2 shows the top 20 teams brand value. It can be stated that the AFL is the most valuable league in Australia with 14 teams in the top 20, even though they do not dominate the top 3. Most of the clubs get a rating of AA or higher with a couple of teams that even have an AAA+ rating. This is a rating in equity and other measure ratios. That means that it is an extremely strong brand. The 14 teams that are listed have a combined brand value of Aus$334 million (Phelan, 2013). That is an average of Aus$23,83 million. That would mean that the AFL is approximately Aus$400 million worth. Figure 3 shows the brand value of the clubs in the states of Australia, from the AFL and the NRL (National Rugby League). This shows that the AFL s brand value is a lot more that the NRL s but also that the amount of brand value is not evenly spread across the different states. This is because the majority of the teams are in Victoria and there is no AFL Team in the state Northern Territory. An
12 important aspect that shows the brand value is the equity and revenue of an organisation (Brand Finance, 2013) but also the audience per game/week/season is important, because that is of a value for the sponsor. The AFL has an average of TV audiences in each (season) week and a total of attendances, at matches, for the 2013 Toyota AFL premierships season. The season ended with the grand final between Hawthorn and Fremantle with attendants and average national TV audience (Australian Football league, 2014). With all the clubs combined the AFL has club members (Australian Football league, 2014). It can be concluded that the AFL has the highest brand value of Australia, being Aus$400 million. And the quality that is given to the AFL teams shows that they have future potential. The 4 million weekly television audiences and six million total attendants make the AFL a valuable company for sponsors, showing that there is a lot of future potential.
13 Consumer attitude towards sponsorship The attitude of the consumers and therefor fans towards sponsorship is affected by a range of variables. This includes the duration of the sponsorship deal and the commitments of the AFL fans to the club/organisation (McDonald, 2005). According to McDonald and Shaw (2005), one in 16 AFL fans actively seek out and use the sponsors products and around 28% of the ALF fans use the sponsors product if they have the choice. But 58% of the fans pay only little attention to the sponsors (McDonald, 2005). According to Fullerton, Morgan and Garland (2014) 80.8% of their respondents agree that sports sponsorship represents a good way for a company to achieve a sustainable competitive advantage. Next to that 75.4% believes that sponsorship exhibits good community relations. But Fullerton et al. (2014) show that on the other side 43.9% thinks that companies should spend less on sponsorship and more on social programs and that a big part of the fans thinks that sponsors should be companies that are affiliated with the sport. As Taylor and Fullerton (2004) said it can be concluded that Australians are relatively positive towards sponsorship. Combined with the results of the research of Fullerton et al. (2014), which shows that foreign companies are accepted as sponsors of Australian sport properties, and the conclusion of McDonald and Shaw (2005), it can be stated that the consumer attitude towards sponsorship in Australia and the AFL is positive and the consumers/fans appreciate it but that they do think the sponsors should be affiliated sport or the AFL.
14 Conclusion All the analyses conclude to three recommendations as answer to the question, what can the AFL do to increase their sponsorship deals and value? The three recommendations are, more global orientation, use sponsors more affiliated to sport and make bigger sponsor deals. These will be explained in the following chapter. More global As the analyses show, the AFL is already engaged with several largely international companies. But it also shows that most of these companies origins are Australian or American. More interaction with the European or African market will attract more sponsor possibilities, fans, and it will have a huge benefit for the current sponsors. This will give the AFL a larger brand value because more people will watch and follow the AFL. AFL is already played in 53 (AFL, 2014)countries across the world and 20 countries in Europe (ALF Europe, 2014). This shows that AFL is already growing in Europe for the past 10 years (AFL Europe, 2014). And because the consumers/fans in Australia are open for foreign sponsors there will probably be no complications about originality or commitment. A sponsorship deal with several European companies will create benefits for both sides. The AFL will, as said, gain more brand value, create a bigger market by entering a new one, have a diversity of sponsors and create more revenue and/or income. But it will also be a strategic step for the European companies. Because sponsoring the AFL will be the most effective deal to reach the biggest part of the Australian market. But they can also use the sponsorship in Europe. This will position them as a new, strong and manly company. Sponsors more affiliated to sport As the analyses of the consumer attitude showed, the consumers/fans of the AFL feel positive towards the sponsors and they think that the sponsors contribute to the development of the sport and league. But they also mention that they think that a sponsor should have an affiliation with the sport or league. Possible sponsors would probably be clothing manufacturers/brands, sport stores/brands (possibly with an affiliation to the AFL), training facility real estate or Fitness companies. By committing to main sponsors that are directly affiliated to sport (and AFL in particular), the AFL will obtain several benefits. One of the main benefits will be the authenticity. Having and keeping authenticity can be a huge benefit for an organisation because this can and will create more fan loyalty and eventually will attract more sponsors because authenticity is a good promotional tool.
15 And in extension of the authenticity the loyalty of the fans will increase. An increase in fan loyalty will mean that the AFL is more attractive to sponsors and the brand value will increase. But besides benefits there will also be some disadvantages that the AFL will have to deal with. One of the main disadvantages is the decreased variety of possible sponsors. That might mean that the AFL will have to settle for lower sponsorship deal, but not necessarily. There are many big sport related companies that have big sponsorship deals and marketing budgets, some examples are Nike, Adidas or Sports Direct. Bigger sponsor deals The analyses show that the AFL has an (approximate) brand value of Aus$400 million. In total they receive $ This means the AFL only gets half of their estimated brand value in sponsorship deals. This means they can and should ask more money for their sponsorship deals. The increase of Aus$10 million on sponsorship income in 2013 shows that they are developing better deals.
16 References AFL. (2014). Corporate partners. Retrieved 01 23, 2015, from AFL.com.au: AFL. (2014). Annual reports. Retrieved 01 19, 2015, from AFL.com.au: AFL. (2015). History of Australian Football. Retrieved 01 19, 2015, from AFL.com.au: AFL Europe. (2014). About us. Retrieved 01 24, 2015, from AFLeurope.org: ALF Europe. (2014). Join a Club. Retrieved 01 24, 2015, from AFL Europe: Australian Bureau of Statistics. (2013, October 24). Sport schores goals for aussie economy. Retrieved 01 19, 2015, from Value of sport,australia, 2013: Australian Football league. (2014). Annual report Melbourne: AFL. Brand Finance. (2013). The top 20 most valuable australian sports brands. Sydney: Brand finance. fullerton, S. a. (2004). Sports sponsorship: a comparison of attitudes held by australian an american university students. SMAANZ Proceedings, Goldpaper, S. (n.d.). The First Game. Retrieved 01 09, 2015, from NBA Encyclopedia: IBIS World. (2014, June). Sports in Austraila: Market research reports. Retrieved 01 19, 2015, from IBIS World: McDonald, S. (2005). The relationship between AFL season-ticket holders satisfaction and sponsorrelated behaviour. Melbourne: Deakin University. Morgan, F. G. (2014). A Contemporary Snapshot of Consumer Attituedes to Sport Sponsorship in Australia. Queensland: University of Southern Queensland. Phelan, J. (2013, 12 09). AFL clubs lead way in most valuable sporting brands. Retrieved 01 22, 2015, from AFL.com.au/News: Repucom. (2011) REPUCOM International 10th Annual Football Benchmarking report Australia. REPUCOM. Smith, A. C. (2008). Introduction to Sport MArketing. London: Elsevier. SportsPro. (2011, July 01). News. Retrieved 01 20, 2015, from Sportspromedia.com: ralian_sport
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