Commercial secrecy surrounds Commonwealth Games suppliers
Supplying a government-backed sporting event is less risky than sponsoring one, but firms working for Glasgow 2014 have strict limitations on what they can say about it
One wise businessman known to this writer likes to compare investing in a football team with burning banknotes in its car park, concluding that the latter is the preferable investment strategy. Any involvement with sport often involves gambles far in excess of those normally taken in business.
Investing directly is probably the riskiest option, but sponsorship is a gamble too. Rupert Murdoch’s 21st Century Fox got a good deal for the £13.4m it pumped into its Team Sky cycle team in 2012 (nearly two-thirds of the team’s £21.4m budget): it funded Britain’s first Tour de France winner Bradley Wiggins, who accepted the trophy in Paris with Sky’s logo on his chest.
But this year, a similar amount of money is funding a poor year in the Tour for Sky, with its 2013 winner Chris Froome retiring hurt on its fourth day. Yorkshire may have got marketing value for money from the Tour’s first weekend, but Sky may be less delighted.
For firms that are not focused on marketing to individual consumers, the better way to make money out of sport is to supply them, particularly big events backed by governments such as the Commonwealth Games that start next week in Glasgow. Glasgow 2014 Limited, the organising committee, has made hundreds of direct contracts over the last couple of years, using public sector procurement channels including Glasgow City Council’s business portal, Public Contracts Scotland and the Official Journal of the European Union.
But while such work may appear to be a way to catch some sporting glamour along with some paid work, the terms of business generally stop that being the case. If you are wondering why very few firms are boasting about their involvement with such a prestigious event, the answer is that most have been banned from doing so, under the terms of their contracts.
These terms are public: suppliers can refer to supplying Glasgow 2014 Limited (not the Commonwealth Games) only where they list at least five other clients, do not place special emphasis on the name of the organising committee company – it must be in the same size of text and be in alphabetical order – and use no more than 40 words to describe the work they are undertaking.
Furthermore, they cannot use the brands of the Games, talk to the media about the work without permission, make any reference to it at conferences or create job titles such as ‘Chief Commonwealth Games Building Engineer’.
There are exceptions – specifically, the companies providing goods and services at reduced or no cost through a sponsorship deal. One of Glasgow 2014’s corporate supporters is Atos, supplying management and information systems for processes including accreditation, registration and the communication of results and other data.
This is familiar territory for the firm: Atos has been acting as IT partner for the Olympic and Paralympic Games for two decades, and in February agreed to extend this to 2020. The terms of the deal are secret, but in total the 11 ‘top Olympic partners’ including Atos paid the International Olympic Committee $957m (£560m) in cash, goods or services in 2009-12. For Atos, its services to sport are meant to demonstrate that it has the wherewithal to handle similar work elsewhere, not least in the public sector.
Whether as a conventional deal or a sponsorship one, working on sporting events has particular pros and cons for suppliers. Even if it has to be downplayed publicly, staff may well enjoy contributing to a big public event, and that can help with retention. But there are big reputational risks for a supplier of something which is late for, or goes wrong during, an event.
It has been known for executives, particularly male ones, to lose their critical faculties when it comes to working with sporting teams and events, particularly if a few tickets and athlete meet-and-greets are part of the deal. The best advice is to evaluate such work coolly, whether on straight commercial grounds or on the marketing usefulness of a sponsorship deal.
The firms supplying the Glasgow Games on a non-sponsorship basis are presumably grateful for the business – although who knows, given they have had to keep virtually schtum about it.
The finances of Team Sky (Inner Ring cycling blog, October 2013)
Victors and spoils: the business of the Olympics (Economist, July 2012)
The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of The Information Daily, its parent company or any associated businesses.
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