A number of signs have appeared over the past couple of months pointing to the overall outstanding health of major sports leagues and governing bodies.
In particular, the NHL and Formula One recently released financial and other reports demonstrating nearly across the board increases in revenue and other key metrics.
For example:
• NHL commissioner Gary Bettman projected record revenues reaching about $5.3 billion for the 2021-22 season.
• That estimate, which Bettman termed “conservative,” would represent more than a 13 percent revenue increase from the NHL’s last full season in 2018-19.
• The league’s and its teams’ combined sponsorship revenue rose to a record $1.4 billion this past year.
• The NHL’s revenue figures include monies from the first year of its $1 billion media rights deal with ESPN and Turner Sports. The new contracts more than double what the league earned in its previous deals with NBC and ESPN.
• F1 owner Liberty Media reported the circuit’s second-quarter revenue grew to $744 million on the back of record attendance among both general-admission ticketholders and VIP attendees in the series’ Paddock Club.
• Beyond attendance, other quarterly revenue growth occurred across race promotion (sanctioning fees), media rights and sponsorship.
• Q2 profit for F1 was $65 million.
• Average U.S. television viewership has increased from 548,000 in 2018 to 1.4 million this year, with a 47 percent increase alone from 2021 to 2022. The Crypto.com Miami Grand Prix in May recorded average viewership of 2.6 million on ABC, the largest-ever audience for a live F1 broadcast on U.S. TV.
• F1 signed a three-year renewal of its U.S. broadcast rights deal with ESPN, reportedly worth between $75 million and $90 million per year, a gigantic increase over the current three-year deal’s $5-million-per-year terms.
• Netflix renewed the wildly popular Drive to Survive docuseries for a fifth and sixth season, while Apple has plans for an F1 movie starring Brad Pitt and a Lewis Hamilton documentary. Additionally, Hulu recently signed a deal for a scripted series in partnership with driver Daniel Ricciardo.
• For the first time, F1 will hold three races in the U.S. next year (Austin, Las Vegas and Miami). Another three events (Mexico City, Montreal and Sao Paolo) will occur in U.S. time zones.
What all this positive news means for brand sponsors depends on whether they are already aligned with successful leagues and teams, or are on the outside wanting to get in.
Clearly, current partners benefit from the increased exposure that comes with higher broadcast ratings. As NHL Chief Business Officer and Executive Vice President of Global Partnerships Keith Wachtel explained to The Athletic, “Turner and ESPN have attracted new viewership. For example, we have increased something along the lines of 66 percent in female viewership. So it’s not just the avid fan that has come back for those that missed it on ESPN. But it’s casual fans that are tuning in more and more to the NHL. The result of that is all of the league’s value grows and partnerships are more valuable.”
The same is true for F1, all of which means that if you’re not already a partner, the cost to become one just went up. As The Athletic article noted, “According to Wachtel, and seconded by multiple team sources, valuation for all sponsorship assets rose after the ESPN and Turner deals were signed. In-ice advertising, for example, became more valuable and desirable for sponsors when the number of potential viewers increased…
For the NHL, the belief is that this is the baseline, and will only serve as a launching pad for additional revenue in the coming seasons.”
So what should prospective sponsors do? One way to avoid premium pricing for high-flying sports is to explore partnerships with entities within those sports that are still facing challenges even as they rise with the overall tide.
In F1, that could be teams that are being outperformed by front-runners such as Red Bull, Ferrari and Mercedes. Similarly in the NHL and other leagues, teams that are struggling to win still offer fan loyalty and an association with a popular sport but quite possibly at a more reasonable price of entry.
Another alternative avenue is to look at deals with individual athletes within the sport versus team or league partnerships. One of the most valuable elements of sports as a marketing vehicle is the diversity of opportunities to become involved.