New Dawn for the Business of Rugby

Global Calendar Offers the Chance to transform partnership approach

Daniel Maisey, Account Director

Rugby Union has grown exponentially in the 22 years since the game became professional. Sevens has seen an extraordinary rise in interest, which continues to grow after its inclusion in the 2016 Olympic Games, but what about 15s? The next major change in the original format, since the game became professional, is the introduction of the global calendar in 2019 - but what effect will this have on the business of rugby?

Overall Sponsorship Market
The total revenue in the global sports market is projected to hit $90.9 billion (US) by the end of 2017, up from $46.5bn in 2005. As the total revenue has increased, so too has sponsorship spend.  Since 2013, there has been an average year-on-year increase of 4.3% to take the total spend to $60.1bn, with a further increase of 4.5% projected from 2016 to the end of 2017.  The biggest projected increase lies in the Asia Pacific region, at 5.8%, demonstrating the growth of the Asian powerhouses in China, India and Japan.



If we look specifically at the rugby market, the positive trend continues. Between 2012 and 2015, global spend on rugby sponsorship increased by 21%, reaching £363m in 2015, which is 16.7% above the industry average.  In the UK alone, there was a 16% rise in rugby sponsorship spend in 2015, accounting for 8% of the UK and Ireland’s total sponsorship spend between 2012 and 2015.

Global Calendar
In March 2017, World Rugby announced an historic agreement on a new long-term calendar for the sport, which sets out the international schedule from 2020-2032. Whilst this does not mean the various league seasons across the globe will uniformly begin and end at the same time, having been discussed for the past 20 years, this represents a step in the right direction for the growth and development of the game worldwide.

This update will see the test windows moved to ensure that domestic competitions are less affected by a lack of top test players; further scope for Tier 2 nations, (such as Japan, Fiji and USA), to host tours; a 39% increase in the number of Tier 1 vs. Tier 2 fixtures taking place, and a reduction in the length of those tours occurring immediately after a Rugby World Cup, in the interests of improving player welfare.

Naturally, there will be a few teething issues as the rugby world adapts to its new timetable, but, for World Rugby Chairman Bill Beaumont, the main objectives are ‘prioritising rest periods, promoting equity for the sport’s emerging powers and harmonising the relationship between the international and domestic games.’ (https://www.worldrugby.org/news/232038?lang=en)

Issue
This all looks great for the game going forward, but what does it mean for sponsors? Whilst the sponsorship outlook seems positive, it’s not all plain sailing.  We have seen businesses act with more caution when considering sponsorships, limiting their willingness to commit additional money to partnerships. 

The Six Nations Championships, for instance, found it difficult to secure a replacement for former title sponsor RBS. It was as late as November of 2017 when they were finally able to announce a new one-year agreement with Natwest, (part of the RBS family), to take on the naming rights for the 2018 Championship.  Premiership Rugby in England, meanwhile, have signed on for a further year with Aviva having struggled to find another title partner. 

Issues such as political instability and a more general uncertainty over global and local economics are clearly having an impact on the outlook of businesses and their sponsorship decisions. That said, with the correct long-term strategy, the new-look global calendar has the potential to offer huge benefits for sponsors.

Implementation
Placing the emphasis not only on Return on Investment (ROI) but also Return on Objective (ROO) for businesses looking to go into sport, and giving something back to the shareholders and customers from the sponsorships they are involved in is critical.

By viewing sponsors as partners, where both parties get something from the relationship, rugby can offer many things to the businesses that support it, who, in turn, can help promote the game in exciting and previously untapped places.

This will mean forgoing the short-term approach we were used to seeing a few years back from governing bodies, and signing on to a longer-term, strategic partnership that works to meet both organisations’ objectives.

Conclusion
The global calendar offers potential partners an increased commercial opportunity.  There will be less fixture clashes - meaning more brand exposure over a longer period; more certainty that top players will be playing in every big game, and, with more match ups between Tier 1 and 2 nations, an increased global audience for partners targeting a broader geographical reach.

This will require the decision makers within these brands to be brave, to think differently and to continue to shake up the world of ‘sponsorship’ by moving away from the traditional model and committing to a longer-term approach with partnership in mind.
 
This offers an opportunity to challenge conventional norms, be curious and be collaborative with the rights holder to help drive revenue for both partners.  This is something we at CSM pride ourselves on. By sticking to these values, we have experience in providing viable solutions that add value by creating a two-way relationship between our clients and their commercial partners.
 
With the right focus on delivering for partners on their ROI and ROO, including quantifying their partnership using data sources and services that are available to us, the new global calendar is a golden opportunity to boost not only the business of rugby, but the business of its partners as well.
 
Sources
https://www.statista.com/statistics/370560/worldwide-sports-market-revenue/
http://strivesponsorship.com/2017/02/01/uk-rugby-union-commercial-opportunity-report-2016/
http://strivesponsorship.com/wp-content/uploads/2017/02/Nielsen-Rugby_Union-Whitepaper_2016.pdf
http://www.ey.com/Publication/vwLUAssets/EY-rugby-world-cup-final-report/$FILE/EY-rugby-world-cup-final-report.pdf
http://www.ey.com/Publication/vwLUAssets/ey-the-economic-impact-of-rugby-world-cup-2015/$FILE/ey-the-economic-impact-of-rugby-world-cup-2015.pdf
https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/sports-business-group/deloitte-uk-sbg-potential-economic-impact-rwc.pdf
http://www.sponsorship.com/IEGSR/2017/01/04/Sponsorship-Spending-Forecast--Continued-Growth-Ar.aspx