Let's look at the numbers

The Volvo Ocean Race is a great place to dig into the numbers that show that sailing does, indeed, deliver for sponsors. It has a global reach that is incredibly unique in the sponsorship marketplace due to its 9 month duration and its physical touch points in most of the worlds major markets.

The preliminary numbers from the first half of the 2008-9 VOR are outstanding, both in their absolute size and also in their growth from the 2005-6 race.

• In the first 5 months of the race, 2.41 million unique visitors visited volvooceanrace.org, up 39% for the same period in 2005-6.
• In the first 5 stopovers, the total number of spectators to pass through the turnstyles of the race village was 2,350,392. This is a 250% increase over the first 5 stopovers of the 2005-6 race
• The pro-am race day in Alicante brought 68,400 people to the village, while the total stopover attendance was 937,000 people.
• Cochin India, by comparison, brought in a total of 811,677 people with a peak day attendance of 107,289. Yup over one hundred thousand people in the race village on a single day. You'd have to see it to believe it....From being there I can assure you that it was absolutely amazing.

Unfortunately we don't have data from the individual teams that participated in 2008-9 quite yet. However, we will look at two examples from 2005-6 to set a base line; Ericsson and ABN Amro. Here are some very top line results their sponsorships in 2005-6;

Ericsson 2005-6:

• Estimated their media value benefit at US$ 65 Million.
• Put on 500 B2B focused events where they entertained 4,600 decision making customers at the Executive, VP, and Senior level.
• Engaged employees through over 100 seminars and workshops focused around the race.
• Estimate their total value of sponsorship at close to US$100 Million, which is a 450-500% ROI.

ABN Amro:

• Estimated their media value benefit at US$ 77 Million.
• Entertained 35,000 key customers and clients worldwide
• Engaged employees and developed corporate pride as demonstrated by the 25 Million intranet hits that their employees generated on the team's website.
• Measured their tangible total economic return on investment at 600%

It's time to sell the sponsorship

The key to a selling a sponsorship proposal is the in-depth focus on designing activation programs for the sponsor. Before going into talk to a sponsorship opportunity I research everything that there is to know about the company that I’m presenting to. I read every annual report, SEC filing, analyst call, and executive interview that I can get my hands on. I study the strategies of their competitors as well. If they are growing into a new market, then I design it into the activation. If they are having employee retention or recruiting problems then I design the solution into the activation. Launching a new product? Want to demonstrate a technology? Purchasing a company? Launching a philanthropy project? Need a voice for a PR campaign? Redefining their brand? Whatever and where-ever the company wants to go I build the platform to catalyze their core business goals and relate it all to the property attributes of the sailing team. The sailing project is not the focus of the presentation; it is, instead, the base that the entire business case is built upon. It is also critical to show the sponsor that their investment’s returns will be both measurable and also be independent of the sporting outcome of the races. Ericsson Racing's VOR 2005-6 project is the perfect example of a measurable activation strategy, that was wildly successful, even though the sailing team was, arguably, not.

Think that putting a pitch presentation together sounds like a lot of work? Well... it is. Mainly because every pitch must be fully customized for every audience. This is why properly managing the sales cycle can help this process. Leads are fairly easy to generate. We all know people that know people. And there are always cold calls that can fill the pipe line with leads. However, the key is to properly qualify each of our leads into realistic opportunities. Opportunities are the leads where the where the activation case is strong once vetted through the qualification process. It is in the preparation for the selling stage where the research and creative planning happens.

We have a big job ahead of us. It is critical that we make sure that the sailing fan base has an accessible and entertaining America’s Cup 34 and Volvo Ocean Race in 2011-12 to enjoy. Hopefully we all can, collectively, light the imaginations of sponsors to join us as we transform the commercialized and entertainment side of our sport.

Again please leave your comments and questions for me to reply to. I've enjoyed reading and responding to all of the comments so far.... Also stand by for case studies in the next blog posts.

-Matt out
37 48.0N
122 26.6W

Creating real value for sailing's sponsors

To start off the second posting in this series, I want to quickly discuss the partners that make up a Volvo Ocean Race or America’s Cup team:

The Sponsor: The sponsor is the end customer. The sponsor’s key competence is aligned with their core business, whether it be manufacturing cars, writing software, consulting businesses, banking or designing handbags. The sponsor makes decisions on building new factories, hiring employees or launching marketing programs, based on that project’s investment yielding a positive Net Present Value (NPV).

The Activator: This is typically an events agency such as Momentum, Octagon, or IMG. They work for the sponsor to build all of the auxiliary activities upon the sailing property platform.

The Property: This is the sailing team. It provides the base for the activator to build a positive NPV business development program targeted at the sponsor’s core business. The end goal of the sailing team is to manage the sporting operations, while supporting the activator’s plan.

I’ve read a lot of team sponsorship proposals over the past 5 years: Volvo Ocean Race, America’s Cup, World Match Racing Tour, European IRC, and Med Cup teams... Most sponsorship proposals lose sight of, both, the customer and the product. When I read most sponsorship proposals, generally, my first thought is ‘Hey, I’d love to sail for this team. This is going to be fun.’ The proposals talk about the race, adventure, prestige, competition, sailing team members and the program’s management structure - all of the key elements to winning a sail boat race. While this type of presentation does have a place in the sales cycle, it does not focus the product to the customer. The product that we are selling is a platform for corporations to leverage their core business goals.

Remember, we are selling the activation plan, and not the sailing team. The reason for this is straight forward; If a sponsor only financed the sailing property and did not make a further investment into activation, they would, most likely, just barely recover their costs of the property's sponsorship cost. However when the property is coupled with a sophisticated activation program, then 2 things happen; Not only is the activation the source of the most significant returns on investment, but also, the activation, through network effects, brings more attention to the sporting property, thus increasing the returns that the sporting team generates. The following illustration gives a basic insight to this principle.

Since we've examined the marketplace (in part 1), understand how commercialized sailing projects are structured, how sponsors financially justify their investments, and where the real value is generated we are now ready to look at the sell cycle....stay tuned for part 3 of this series.

Thanks for posting questions and comments, I'll continue to post responses.

-Matt out
37 48.0N
122 26.6W

Filling the Sponsorship Pipeline

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.

-Matt out
37 48.0N
122 26.6W

Starry Starry Night

The sun has set, and the moon has not yet risen. 

 

After a week of sailing across the Pacific Ocean we, finally, have a cloudless night.  The stars are just about as clear and numerous as any of us have ever seen.  It’s a great night to be out on the ocean.

 

I’ve spent quite a bit of time staring into the sky today.  Part of the TransPac requirement, for Navigators, is to resolve 4 lines of position based upon celestial navigation.  It’s been about 10 years since me and my college buddies Ben, Eric, Hans, and Shannon sat in on a ROTC Navy Navigation course at the University of Michigan.  I only remember one thing about the celestial navigation part of that course; always remember to pack a hand held GPS and a bunch of extra batteries, just in case the boat’s GPS goes on the fritz…

 

In the spirit and tradition of the race I spent a couple hours today, relearning the details of how to plot position fixes using a sextant, a watch, the sun, and a computer based set of sight reduction tables….oh, there was also the text book that Brad Avery brought along that served as my crutch throughout the whole process.  Without its guidance I, definitely, would not have gotten very far.  My first fix took about an hour and a half to resolve. The fix was 124 miles off from our actual position (as compared to our GPS which gives position accurate to less than 2 meters, updated 5 times per second).  With the process now streamlined and my work flow sorted out, I was able to resolve my next position in about 40 minutes and was about 55 miles off from our actual position. 

 

We have 231.81 miles left to go in our journey across the Pacific.  We are in a parade now. Our goal of finishing in the winning position is an impossibility.  Fortunately, tonight, we have great conversation, an endless supply of jokes, a sky full of stars, an upcoming moon rise, warm winds and perfect sailing conditions to keep our spirits high….Sammy’s freshly baked brownies, paired with a glass of cold milk, add quite a nice touch to the evening too…

 

-Matt out

 

22 50.940 N

153 14.134 W

(precisely)

Instrument's meltdown?

“Hey Matt. The instruments aren’t working.  Can you reset the system?” was the call I heard from on deck

 

“Strange. I have data coming into my computer.  Must be an ondeck display problem”, I thought to myself. Let’s try turning the instruments off and on again.

 

A flip-flop of a switch later …..

And, still, nothing. 

 

It was blowing 22 knots, it was cloudy, the sun had just set and the moon had not risen yet. It was pitch black on deck and the guys were, literally, sailing blind.

 

“This is not good” I thought.

 

I went for the low hanging fruit again;

Flip -flop…

Nothing.

 

“Crap. This is not good”

 “It must be some sort of connection problem.”

 

I traced out the cable that connects the on-deck instrument displays to the system down below and set out, in a form of triage, to remove all possible ‘points of failure’. Clip- clip -clip went the wire cutters and I spliced a bundle of cables together. I then hit them with some solder to hold the wrangled mess of wires together.

 

“That might do it. Lets check”

 

“Crap.  I have NOTHING now?!’,  Not even my computer was getting data anymore.

“This is REALLY not good”

 

“Hey Matt.  We can’t see where we are going.  Hurry up!”  the cries echoed, repeatedly, from on deck.

 

“Oh boy, where to start?  This could be ‘a major’.  We might have a full on instrument melt down here. “

 

My buddy, Sammy, was now by my side helping me figure out the problem.  He handed me a cordless drill and we dismantled the panel that contains the electrical, instrumentation and computer systems, revealing a mess of wires of different colors going into and out of a menagerie of boxes.”

 

“Let’s start with the basics.  I wonder if the instruments are getting power.  They aren’t responding to anything and we aren’t getting any sort of output…. How is this thing fused?’

 

‘ … ah.  I see one of e2’s power/ network junction boxes back in there. Got a philips head screwdriver Sammy?   Let’s look in there.”

 

Sure enough; A blown 5A fuse. With luck on my side, I found  a spare fuse taped to the inside cover of the box.  The question was, however, what caused this fuse to trip?  This might be the only fuse that we have, who knows, and I don’t want to turn on the power and have it kick again.”

 

I kept probing. 

 

“Ah ha!  Found it. We are out of the woods. It’s a loose network wire.”  This would explain the initial network problems and then the eventual blown fuse.  I reconnected the wire into its rightful home and flipped on the instrument power.

 

Full systems go….whew…that was a close one.

 

Now let’s see if we find just as much luck with a couple wind shifts to claw our way past a couple boats. 

Humm…. that could be a bit more complicated…

 

-Matt out

24 18 N

145 03 W

Pacific Ocean Sleigh Ride....Finally

18 knots of wind, clearing skies and great sailing today…more importantly, significant gains on our entire fleet with every hourly position report.  Great news and spirits are high.

 

We are half way through the race. It’s now less than 1200nm, before we’ll be sipping on our first Mai Tai on the docks in Honolulu.  Thus it was a perfect time for me to break out my ‘finish time contest’.  This morning I posed a series of factoids on my bulletin board. The notice read:

 

As of 1200 (noon) Hawaii Local time today:

Distance to finish: 1200nm

Previous 24 hour run: 300nm

Wind Forecast: 12-20 knots, 40-70 TWD, periods of squalls

Bearing to Finish: 250 degrees

Router time to finish: 4d 8h

Router distance to sail to finish: 1300nm

 

Everyone submitted ‘secret’ entries, until everyone had a chance to enter, then I posted the entries on the wall of the nav station.  There is plenty of consensus for a Tuesday afternoon arrival. However Bruce Nelson, Sam Heck and Brent Ruhne picked times on Monday.  While everyone is excited about winning the bottle of rum that goes along with winning the contest, we are focused on the real prize- beating the other Sleds to  the finish line.

 

-Matt out

25 29N

138 33W