Strategic Partnerships in Sport - Thematic Research

Strategic Partnerships in Sport - Thematic Research

Summary

An analysis of the different types of strategic partnerships within sport, including sponsorship agreements and athlete deals.

Key Highlights

• Among the most prominent examples of a strategic partnership between an athlete and a brand is the lifetime deal LeBron James signed with Nike. The deal initially began as a seven-year contract in 2003, when the 18-year-old James entered the NBA as a rookie. Touted as the best potential prospect in basketball since Michael Jordan, there were high hopes for James’ career, and it is now safe to say that he has either met or exceeded these expectations. Throughout his career, James has won four championships, four MVPs, and four Finals MVPs-in addition to becoming the second-highest scorer of all time, the highest-ever playoff scorer, and the seventh-highest assister of all time.
• Deals of this magnitude are somewhat rare in sports, given the sheer amount of money being invested in some of these athletes, and so they are generally reserved for truly historic players. James’ performances in high school ensured some basketball analysts were comparing him to Michael Jordan at the age of 18, which is almost unprecedented. A talent like this in professional sports is extremely rare, and it is fair to say that Nike struck gold in allying themselves with one of the world’s most recognizable and well-known athletes.
• The NFL’s blockbuster media rights deal, agreed in 2021, ensured that the league would more than double its media revenues to over $10 billion a season. The deal included giving Amazon exclusive rights to Thursday Night Football, starting from 2022. Amazon’s acquisition of these rights highlights their recent strength in acquiring major media rights, following on from their inroads into the Premier League and tennis rights markets.
• The explosion in cryptocurrency over the past 18 months has seen various sports teams look to capitalize on its increased popularity to make significant amounts of money. Many crypto brands have succeeded in striking lucrative long-term partnerships with teams. The most lucrative of these deals remains Crypto.com’s naming rights deal with the Staples Centre, which houses many of the city’s sports teams, including the Los Angeles Lakers and the Los Angeles Kings. The 20-year deal is worth a reported $700 million over its duration, at approximately $35 million a year. These numbers reflect just how much pulling power crypto brands have in the sponsorship world nowadays, but concerns still remain over the long-term stability and viability of cryptocurrency.
• China has become entangled in a series of controversies within the sporting world. A significant story took place in the summer of 2019 when the Houston Rockets’ general manager Daryl Morey posted a pro-Hong Kong tweet, which criticized China for imposing a law on the region that would ensure the extradition of criminal suspects to China, where the vast majority of trials end in a conviction. The introduction of the law sparked major anti-government protests in the region, some of which resulted in casualties. Morey’s expression of support for the protests was quickly responded to by Rockets owner Tilman Fertitta, who immediately distanced the organization from Morey’s comments, while star player James Harden also apologized to China. Morey later issued an apology, but not before Houston Rockets games were removed from NBA broadcasts in China. The NBA released a statement that many considered an example of the organization choosing its financial interests over human rights.

• Many different types of partnerships have proved to be beneficial in sport. While partnerships within teams and between players are often significant, agreements struck between brands and athletes, or between leagues and broadcasters, are more important than ever due to the significant financial incentives present in the current sporting world.
• The boom of cryptocurrency appears to have triggered a shift in strategy from sports teams, who now seem incredibly keen to move into an industry whose long-term viability is still in question. Many have questioned the stability of crypto, given the lack of regulation and regular fluctuations within the market.
• Another example of a type of partnership that could potentially be evolving is the relationship between organizations and broadcasters, which was highlighted through FIFA’s introduction of a new streaming service, FIFA+.
• The introduction of streaming services like FIFA+ could potentially prompt other federations into similar moves. Viewership habits among younger generations differ significantly, with many of them more likely to watch sports online rather than on traditional cable, as older generations are more likely to. If sports are keen to keep drawing in younger fans, then access to a vast library of games could be an important factor in keeping interest high.
• There are many long-term partnerships between high-profile athletes and brands. The most lucrative of these tend to be partnerships with sportswear brands, such as Nike, Adidas, Puma, and New Balance. The most prominent example of this is the lifetime deal between LeBron James and Nike, which is the rare example of a brand identifying a generational talent before his professional career had even begun. The partnership was so successful for both sides that the deal was later extended into a lifetime one.

• This report provides an overview of the history of partnerships in sport, and how increased commercialization has affected the nature of these deals.
• It identifies the key partnerships in the sporting world over the last thirty years, and where the future might be headed as the nature of these partnerships change.
• A look at how cryptocurrency has invaded the sports sponsorship with high-value deals, despite long-term concerns about its stability.
• A detailed look at the strategic partnerships value chain which highlights how athletes, teams and brands generate revenue.

• For those wanting an in depth analysis of how these types of partnerships, including the motivations of brands and the potential pitfalls that come with partnering with athletes and teams.
• Discusses some of the more prominent examples in recent years of outside factors (e.g. geopolitics) affecting long-term partnerships.
• GlobalData’s thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying the important themes early, enabling companies to make the right investments ahead of the competition, and secure that all-important competitive advantage.