Just as the 2020 holiday season got underway, the Drone Racing League received a gift from mobile telecom giant T-Mobile in the form of a multi-year partnership that not only includes a sponsorship component granting the brand official status as the DRL’s exclusive U.S. 5G wireless partner, but also an undisclosed investment in the league through the T-Mobile Ventures fund.
Although not a model that will be widely adopted by brands and rights holders, expect to see more interest from sponsors in having “skin in the game” as a way to tap into people, practices and innovations they ordinarily would not have access to; share in the success of property partners; and gain a voice not afforded mere marketing partners.
Rights holders considering such arrangements should be mindful that relationships with this new breed of sponsor/stakeholder will be significantly different than with traditional marketing and promotional partners. Depending on the level of investment and other structural factors, these brands’ seats at the table will likely see them weighing in on other sponsorships and other decisions impacting potential revenue generation, fan engagement, etc.
Additional recent trends regarding investors and rights holders also will have ramifications for sponsorships. In Europe, private equity firms have purchased or are targeting large stakes in rugby union’s Guinness Pro14, the Williams and McLaren F1 teams, Toulouse FC, and the media and tech businesses spun off by the Bundesliga, La Liga and Serie A.
In North America, Dyal HomeCourt Partners, the first private equity fund approved to invest in NBA franchises, reportedly has term sheets ready for investments in six teams across the league, while Arctos Partners and CVC Capital Partners are seeking approval from the NBA, with the latter already said to be in talks to buy a minority stake in the San Antonio Spurs.
At the same time, more than a dozen special purpose acquisition corporations (SPACs)—often called “blank-check companies”—were formed in 2020 with the purpose of acquiring sports properties and related businesses.
These new breed owners (and the need for returns on their investment) will likely have a major impact on the monetizing of sponsorship, media, and other rights and services offered by the properties they invest in. In some cases, they may push to further professionalize commercial operations beyond what previous owners required. In others, they could look to radically alter the structure of sponsorship agreements and terms to maximize earnings. In both cases, new developments could trickle down throughout the sponsorship business.