In recent years, parts of the sport of sailing have engaged in programmes to create more value. The perception of value is important for a sport that has limited revenue streams apart from sponsorship.
Value creation sounds like a positive thing for the sport of sailing, but unfortunately it is hardly ever referred to as such. Instead – the accountants have more sway than the marketing folk programmes that are designed to encourage participation and deliver better returns for partners are undertaken under the banner of ‘cost cutting’.
A lot of these cost cutting measures have failed to attract more entrants to the highest level of the sport, but it could be worse. Many rich private team owners have been unaffected by the economic conditions and have continued to fund teams, especially in events like the America’s Cup where commercial viability plays second fiddle to ambition and glory.
Some rights holders have also been investing in growing the other side of the value equation by expanding the fan base, growing media coverage and paying more attention to the specific goals of partners over and above media value.
Despite an almost dogmatic quest to make sailing ‘cool’ to a younger fan-base, the audience hasn’t changed very much, which is probably good news for many sponsors. The core sailing fan is still more likely to be over 35, in a managerial position and more likely to have a high net worth or higher than average disposable income.
The net result is a sport untainted by sex scandals or doping, that has good environmental and sustainability credentials and that still offers access to a very desirable demographic.
In some cases, that access has an unjustifiable premium. Many sailing sponsorship seekers don’t know what the budget they are asking for would buy in other sports. However, the sport of sailing can offer activation in multiple global markets within the reach of many brands.
Unfortunately, telling the difference between the overpriced opportunities and the true value for money deals is not a simple process. The incredible diversity within the sport, coupled with a widening gap between professional and non-commercial platforms often relegates sailing to the too hard basket for many marketing directors.
At the very top, it is hard to compare the America’s Cup with the Vendee Globe or the Olympics. It is like trying to compare MotoGP with Formula 1 or velodrome based sprint cycling with the Tour de France.
The world governing body – ISAF doesn’t make it any easier to present the sport of sailing in a cohesive way. There are hundreds of one-design classes, start-up events compete with established platforms, clashes of egos play out at the expense of the sport as a whole and the development of new markets is left to economic forces. But the ‘light touch’ of ISAF in the sport outside of the Olympics can also lead to innovation.
So where are the best value deals? What’s working and what are the things holding the sport back? The answer, as any classically trained economist or PR spin guru worth their day rate is – it depends.
Stadium Sailing Looks Solid.
Despite the diversity of types of sailing, there are less than a handful of annual, global series run on a commercial basis. These platforms offer the best value for money in sailing and stack up favourably against comparable options in events like Motorsport.
Specifically, the Extreme Sailing Series and the Alpari World Match Racing Tour offer the ability to deliver annual, repeatable world class activation and hospitality with a predictable level of quality at events in multiple key markets. These events are also best placed to deliver ‘stadium sailing’ – a trend that brings the sporting action closer to the people.
This offer was also promised by the Americas Cup World Series (ACWS) as part of a drive to deliver an ongoing commercially viable competition for teams with ambitions to win the more infrequent, highly prized Auld Mug – however, there is a high level of uncertainty surrounding the ACWS product after 2013.
The cost-base for ACWS teams is several multiples higher than the WMRT or Extreme Series, but that is nothing compared to the cost of delivering the associated TV product including the much flaunted ‘liveline’ technology.
There is currently no visibility of what might happen to the America’s Cup World Series if the defender of the America’s Cup – Larry Ellison’s ORACLE Team USA were to lose, but without Ellison’s ‘angel’ investment it is hard to see a team like Emirates Team NZ continuing to fund the development of such a series.
Also in this category of annual international events are the ISAF Sailing World Cup and the RC44 Championship.
The RC44 Championship is not a spectator focussed event, but is organised in a way that it delivers value to the team owners. The Pro-Am nature of the event means that sponsorship is less of an imperative to teams which in turn means that deals can reflect the sponsorship value rather than having to cover the technical cost of running the campaign.
Created in 2008, the ISAF Sailing World Cup is an attempt to create an annual competition for athletes competing in Olympic classes, but it doesn’t have the agility or investment to innovate the same way that some of the commercial operations mentioned above can.
The annual, close to shore, ‘stadium sailing’ events are not the only options for companies looking to promote to sailing fans. The big ‘offshore’ events, which operate on a longer cycle and require bigger budgets, are playing the value game too.
The Volvo Ocean Race has announced that their cost cutting measures will be centred around a new one-design regime. No longer will sponsors have to take a gamble on which designer has drawn a better boat. The skill of the athletes will now drive the success or failure of a campaign.
The move to a one-design model may only reduce the total campaign costs by 10 to 15%, which means that the investment is still significant.
However the Volvo Ocean Race, which benefits from the stability provided by Volvo Group also benefits from lessons learned from repeatability. The product is known and the changes from the point of view of an outsider relatively cosmetic.
There is a risk though that the Volvo Ocean Race will become too corporate -that the sponsoring brands consume the personalities. The first team to sign up for the next edition of the race has a sponsor, but doesn’t have a named skipper, which begs the question – where will the fans of the team come from and why will they follow the story?
This is not a problem for the Vendee Globe. In November, the legendary round the world race began with 20 boats on the start-line cheered on by a physical crowd of hundreds of thousands.
This is an event that has a simple story – one athlete per boat – one lap of the world without stops or assistance. This is a race that stands for adventure as much as competition and while the boats have names like Hugo Boss and Banque Populaire, the sailors are household names – if only in France.
Every four years, the world gets a taste of the passion that sailing can inspire via the Vendee Globe, but translating that passion into a sponsorship presentation for a board-room of London, Shanghai or Chicago is something that even the best sailors struggle with
Keeping the ‘Open 60’ campaigns afloat between the Vendee Globe is something that IMOCA has tried to tackle internally for over a decade, but recently appointed Sir Keith Mills to look into the commercial aspects of the class.
There is another business model. The Clipper Race combines the human interest element of the Vendee Globe with the crewed, round the world with stopovers format of the Volvo Ocean Race. Non-sailors pay to join teams which, for the last couple of editions, have been named after destinations – cities which usually host the stops along the way.
This is an event that doesn’t just get people to ‘like’ sailing with the click of a mouse – it actively increases participation. The Clipper Race also helps fans and the media to engage with the participants by aligning them with a place.
The America’s Cup was once about place, but like many modern professional sports – the provenance of the mercenary players matters less than the place name on their shirt these days.
In 2013, San Francisco will host a very expensive experiment. The brand value of the America’s Cup has been leveraged against an ambitious format that is designed for a TV audience that is presumed to be young and easily bored.
The America’s Cup has the potential to be one of the biggest sporting events in the world in 2013. There will be no Olympic Games or Football World Cup. Millions of locals will get to see the giant wing-sails on the bay from their office windows and the organisers hope that millions more will tune in live on NBC.
As a one off event, the 2013 America’s Cup offers the chance to engage with a large number of educated, wealthy sports fans who will tune in because it is the America’s Cup. There may also be a new generation of fans that connect via the video game graphics or social media – but then what?
Unfortunately, the America’s Cup has a huge impact on a lot of the sport of sailing. The rules are that the winner gets to write the rules, which means that this time next year; everything might be different – again.
Whoever wins the America’s Cup will have value creation in mind. There are only so many wealthy individuals who can afford a Cup team as a hobby and there are only so many markets where an America’s Cup team can raise tens of millions of dollars in sponsorship.
There is significant growth potential in emerging markets, but it will take a while to wean parts of the sport off the government handouts that had been provided by European countries before the financial crisis.
The Oman Sail project continues to go from strength to strength and is seen by countries in Africa and elsewhere as a model for developing the sport. Chinese cities are competing for sailing to be part of their events portfolios and Russian teams and events are on the increase.
Elsewhere in the sport there are signs that value creation will come from consolidation, sharing costs and pooling promotional budget. There are also signs that sailing fans are willing to buy tickets to watch racing as demonstrated by the London Olympics and the America’s Cup World Series.
The next 12 months will be important for the sport. How many IMOCA 60 teams will continue after the Vendee Globe? How many teams will sign up to the new One-design Volvo Ocean Race? Who will win the America’s Cup and what will they do with it? Will there be an Olympic effect on grass roots participation? How will the sport maximise its value?