Sunny Day Savings: Properties Should Reserve Dollars for Activation

There is a great deal of buzz right now surrounding the best ways for MLS clubs not named Inter Miami to take advantage of Messi mania. Commissioner Don Garber himself put out a call for MLS teams to capitalize on the league’s new superstar during an ESPN interview at the Leagues Cup championship match Saturday night in Nashville (which to no one’s surprise was won by the seven-time Ballon d’Or winner and his teammates).

Whichever route MLS clubs choose to take to promote Messi’s visits to their home venues, whether ticket promotions, specialized content, media events, etc., such programs will lend themselves perfectly to partner activations.

But that is where golden opportunities often run into business realities. Most sponsorship agreements are not set up to allow marketers to jump on unforeseen developments like the world’s greatest player joining your league mid-season. The nature of the corporate beast is that brands need to gain budget approval and make their commitments in advance of contracts being signed and seasons getting underway.

When something momentous happens, it is not lack of desire that keeps sponsors from seizing the day. It’s usually the more mundane fact that money has already been allocated to other things and “finding more” is not an easy task and becomes increasingly difficult the later in the budget year it gets.

However, there is a solution that some rights holders have employed that helps to avoid frustration on both sides when sponsors say they are tapped out and there is nothing they can do.

Often termed an activation set-aside or savings account, the property takes the initiative to literally set aside some of the money it receives from a sponsor, specifically for the purpose of allocating it later on for an unplanned activation program.

We all know that income from corporate partnerships is a vital revenue stream for all rights holders. When money arrives per the payment schedule, there is typically no shortage of places to apply the much-needed funds. Taking some of those dollars—typically no more than five percent of the total sponsorship commitment—and essentially returning them to a sponsor is not a step taken lightly.

But for those properties that can manage it financially, it represents a smart investment in the future of their partnership programs and has the potential to increase sponsor spending down the road.

Enabling a partner to take advantage of a slam-dunk promotional opportunity it otherwise would have to miss—one that could deliver positive results for both brand and property—could well be the difference between securing that relationship for the long term versus losing that partner come renewal time.