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Sponsorships in a Global Pandemic: Determining Lost Value, Make-Goods & Next Steps Post-COVID
sponsorships in a global pandemic
During these unprecedented times, brands with existing sponsorships are asking the same questions.  How do we calculate the lost value in our sponsorships due to COVID-19? Can we get our money back?  How can we get value without live events?  What should we do with our sponsorships during the COVID-19 crisis?  Do we need a new approach post-COVID?
Unfortunately, there is no singular answer for any of these questions, and in very few situations is the answer simply to take a close look at the contract and simply ask for money back.

Where to Begin

To begin to answer these questions will require brands to consider the reasons they entered into the sponsorship in the first place.   What do we mean by that?  When the brand was assessing sponsorships in general, what were the stated objectives; to drive awareness; to connect with a new audience; to drive consideration; to drive value for retail partners?   Chances are those objectives still exist.
When the brand was looking at specific sponsorships, did the potential partners within sports or entertainment have a similar mission as the brand to help it connect with consumers in a meaningful way?  Chances are that shared mission still exists, and when live events return, your partner will be looking to collaborate in delivering benefits to their fans more than ever.
When the brand entered the sponsorship, was the property’s fan base the same as the brand’s target, or represented a segment of the population with which the brand hoped to connect?  Chances are that audience is still the same and they’ll be even more passionate when their favorite artist goes back on tour, or their favorite team begins playing again.
Because of those reasons, the short-term answer of asking for a refund is probably not the right one.   In most situations, the brand entered into a sponsorship for sound reasons, and those reasons still exist and will continue to exist when we re-emerge from COVID-19.  So then, what to do?

A Disciplined Process Wins the Day

First of all, don’t rush to judgment.  Most, if not all, sponsoring brands are currently faced with a myriad of circumstances as it relates to the impact on value they receive through their sponsorships and the potential “make-good” scenarios for consideration.  The most important step you can take is to arm yourself with information from through disciplined process.  As such, we have developed a 7-step Lost Value and Make Good Planning process, which includes contract analysis, lost value calculations, and path forward recommendations.  Since each brand portfolio is different, the effects of the current cultural shutdown are different for each, and of course, every brand has its unique perspective and objectives on how to proceed.  Our approach provides a detailed analysis, clear information, and thoughtful options in an effort to prepare for the many conversations to come with property partners.
If you are looking for support in determining lost value on your sponsorships or need guidance on a make-good approach for your brand, please don’t hesitate to reach out to me; Josh Ellovich, Senior Vice President – Sponsorship Consulting at 203-354-7552 or josh.ellovich@advantagemrktg.com.