Tuesday, February 9, 2016

Weak forecast for corporate sponsorships in 2009

Companies will be looking to hold the line on spending on sponsorships given the recession. That could leave lots of public events scrambling.

Weak forecast for corporate sponsorships in 2009

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College bowl season is usually the time of the year we’re most aware of the pervasiveness of corporate sponsorship.

Can’t wait for the Konica Minolta Gator Bowl on Jan. 1? How about the Papajohns.com Bowl or Meineke Car Care Bowl?

While sports is the dominant vehicle for corporate sponsorship, all sorts of nonprofit organizations count on business to pony up for public events, and sometimes bail them out when funds run short.

After all, look at the great save from this past year: When bankrupt Boscov’s Department Stores dropped its sponsorship of Philadelphia’s Thanksgiving Day parade, producer 6ABC was able to win support from Ikea. So Santa made it to the Art Museum once again.

But the recession may make such miracles hard to duplicate in 2009.

IEG L.L.C., a Chicago consulting firm that specializes in corporate sponsorship, foresees just 2.2 percent growth in spending by North American companies next year, the smallest growth rate in the 24 years it has been issuing annual forecasts.

U.S. and Canadian companies spent $16.61 billion on corporate sponsorship in 2008, up 11.4 percent from $14.91 billion in 2007, according to IEG. It adds that sports, which attracted 69 percent of the largesse, looks to be particularly vulnerable in the downturn.

We’re already seeing some pullback with last week’s announcement by General Motors that it won’t renew its sponsorship of the New York Yankees. (The automaker has said it will honor its deal with Phillies.) And dwindling corporate sponsorship was one factor that caused the Arena Football League to cancel its 2009 season.

Now think of all the corporate logos associated with concert tours, art exhibitions, 5K runs and even the Philadelphia Flower Show.

While IEG doesn’t see the total amount of corporate sponsorship dollars falling, you can already see in our region how demand is increasing, especially from events that have depended on city support.

The Mummers Parade may be on for New Year’s Day, but the Philadelphia Mummers Association will have to raise hundreds of thousands of dollars for the 2010 strut.

Plans for 2009’s Welcome America festival are likely to be scaled back from the usual nine-day celebration around the July 4th holiday. However, the city eliminated the jobs of three people who worked on Welcome America in August.

Last June, the local producers of the Philadelphia International Championship said that 85 percent of the up to $2 million it costs to put on the annual professional cycling race comes from corporate sponsors. David Chauner<NO1> cq<NO>, of Pro Cycling Tour, said before the race that it was “increasingly difficult” to sell sponsorships.

As companies continue to lay off workers and cut costs in response to the recession, I have to believe it’s even harder now.

Quotable

“I think this provides us with a significant runway to get to profitability based on our current assumptions. We feel pretty good about that.”

- Armando Anido, president and CEO of Auxilium Pharmaceuticals Inc., referring to a strategic partnership with Pfizer Inc. that provides the Malvern drug developer with $75 million immediately and up to $410 million in potential payments.

Inquirer Columnist
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