I’ve decided to kick off a multi-part series of posts on the ‘Commercialization and Business of Professional Sailing’ as a bit of a change from my typical ‘Life from the Nav. Station’ pieces. This has been a personal interest of mine for some time, but seems particularly timely given where we are with the VOR and America’s Cup timelines. In this first part I will establish a baseline for where 'we' are in the global sponsorship market place.
Let's dig in...
With the start of next Volvo Ocean Race two years away and the America’s Cup/Louis Vuitton Series, ostensibly, returning to life, we sailors are asking: “Who’s going to be on the starting line”. While some of the teams will be underwritten by wealthy ‘hobbyists’, both the Volvo Ocean Race and the America’s Cup have their eye on the commercialized sports level where F1 and NASCAR currently reside.
What does this mean?
There are a lot of corporate sponsorships that will need to be sold in the next 12-24 months. Consider that an America’s Cup team will spend at least $20 million, and a Volvo Ocean Race team spends about $8 million annually. With an idealistic, 12 AC and 12 VOR teams, there is at least a $336 million annual pipeline that must be filled to sustain each event. To add some perspective on what $336 million represents in the advertising industry, in 2008 $918 billion was spent globally on all forms of advertising; $16.8 billion was spent on sponsorships, and 69% ($11.6 billion) of those sponsorships were allocated to sports (IEG Sponsorship Report)Thus the America’s Cup and the Volvo Ocean Race teams should represent a 2.9% market share of global sports sponsorship.
By way of comparing the VOR or AC to other sponsorship properties:
- The title sponsorship of a week long PGA event has a price tag of $15 million.
- A full year (38 race) title sponsorship of a NASCAR team costs $18 million.
- Each ‘Gold Level’ sponsor of the 2008 Beijing Olympics spent $100 million.
- A top tier Formula1 team’s annual operating budget in 2008 was $400 million.
If you consider that, practically, none of the AC or VOR teams have financial commitments from commercial sponsors at this point in time, we have a long-long ways to go to reestablish professional sailing’s stake in the global sponsorship market. In the second post in this series, I will discuss (what I see as) the make up of a successfully commercialized sailing project. Please post comments and questions. I will post responses to each of them.