When the pharmaceutical giant Johnson & Johnson pulled out as a major sponsor of the Olympic Games last month, it sent organizers a loud warning shot: no matter how big and prestigious the Olympics may be, they’re not immune from a global recession. The organizers of the Vancouver 2010 Games need to raise $760 million in sponsorships, but with other major sponsors like Nortel and GM Canada struggling, hitting that number is starting to look like a Herculean task.
Major sporting attractions and professional sports were once thought to be insulated from economic downturns. Historically, they’ve pulled through minor recessions unscathed, says Bruno Delorme, a sports marketing professor at Concordia University. But the current crisis is deeper, he says, and there are signs they’re no longer immune.
GM, which has been staring down bankruptcy, has just abruptly ended its nine-year endorsement deal with golfer Tiger Woods. It has also pulled sponsorships from two NASCAR racetracks and the Masters golf tournament. It even announced that it won’t run a single commercial during the biggest, most sponsorship-heavy sporting event in America: the Super Bowl.
With big corporations turning off the taps, whole leagues are feeling the pain. The LPGA has said it will have to drop two or three tournaments and as much as $5 million in prize money due to the downturn. The NBA is cutting almost 10 per cent of its workforce and closing its Los Angeles office.
Delorme says this isn’t surprising. “Basketball, football and baseball are very much sponsorship-driven and they’ll really feel it,” he says. “The NHL will feel it a bit less, though, because it’s very much a gate-driven sport.”
And what of the ridiculous salaries sports stars currently enjoy? Delorme says many of those agreements were struck before the economic collapse, so it’s too early to tell. “But a lot of contracts expire at the end of the season,” he says. “And I suspect you’ll see a drop-off in the dollars being offered then.”