Sam Warburton, Lions captain and their best player during an agonisingly narrow defeat by the Wallabies in Melbourne last week, will remain with the tour as it reaches its climax in Sydney on Saturday, but misses out on what promises to be a tumultuous occasion. The 6ft 3in Welsh back-row forward has relished his role as one of the tour’s ‘faces’, proudly donning the famous red shirt, as he attempted to become only the fifth man in 125 years to return home a victorious Lions captain.
He may yet do so, having come within a last-minute penalty kick of clinching the series last weekend, but the odds are stacked against his men lifting themselves to triumph in Sydney; for the first time in the series, Australia are favourites to win.
Coach Warren Gatland has made a number of changes for Saturday’s pivotal duel, but whatever the outcome, this tour is already guaranteed to go down in history as the Lions’ most profitable, comfortably surpassing the £4 million net profit made on the tour of South Africa in 2009.
Considering that the series’ substantial broadcast rights income is shared among southern hemisphere rugby unions and not with the British and Irish Lions, a wholly-owned subsidiary of the four home unions, the likely reporting of substantial profits is a remarkable achievement.
Reliable estimates put the cost of a Lions tour at a shade over £14 million, but they have been easily covered by a combination of the sale of official tour packages to approximately 30,000 Lions supporters and corporate sponsorship, which accounts for almost 70 per cent of the enterprise’s income.
Prior to 1991, no Lions tour had ever reported a profit, but following a significant £4 million deal with HSBC four years ago, it became clear that properly-structured, well-managed international rugby tours did not have to lose money.
The bank’s involvement has, once again, proved critical, for while 2013 sponsors, such as Land Rover, Microsoft and Adidas, have stumped up substantial sums, HSBC is believed to have paid £7 million to act as principal Lions tour sponsors.
Peter Houghton, a director of rugby marketing agency XRXX, says international rugby tours no longer carry the commercial risk they once did.
“Primarily, this is attributable to television scheduling. While the Lions, unusually, forfeit a share of broadcast revenues, its corporate management has a strong say in when games are played because they’re acutely aware of the need to ensure tour sponsors can maximise their exposure back home.
“Nevertheless, a Lions tour is still risky from a sponsor’s perspective. They’re much shorter than they used to be and sponsors must be absolutely confident of a return on investment unless they wish to incur the wrath of shareholders.” The sentiment is echoed by Charles McEwen, the Lions’ sales and marketing director, who describes a Lions tour as “a star that shines very brightly for a very short period.”
Of course, banks in particular have to be extremely careful when it comes to spending money on sports sponsorship.
Bankers who presided over the collapse of their institutions have been the subject of angry, prolonged (and in some cases justified) attacks on their competence.
Former RBS chief Fred Goodwin was stripped of his knighthood and in April, HBOS chief executive James Crosby offered to renounce his honour, plus a third of his pension.
With hindsight, most commentators believe the banking crisis occurred as a result of banks accepting far too much risk on their balance sheets; they simply did not have sufficient capital to absorb the losses when they arrived.
Yet accepting ever-increasing levels of risk, often without undertaking essential due diligence, was the flip side, or perhaps a necessary evil, of rapid expansion. In many respects, high-profile sports sponsorship formed part of an expansionary template. It was deemed ‘essential expenditure’, a reflection of an organisation’s global ambitions.
At one point, RBS was committed to spending £200 million on sponsoring golf’s Open, Formula One and the Six Nations Championship, among other sports, as it sought to “raise global awareness” of its profile. This was before it was bailed out by taxpayers in 2008 to the tune of £45 billion.
Lloyds Banking Group was contractually obliged to spend £80 million sponsoring last year’s Olympic Games (and an estimated further £15 million on activating its sponsorship) before being rescued with £20 billion of taxpayers’ money.
The bank’s head of Olympic marketing, Gordon Lott, claimed his employers’ sponsorship had “transformed (their)] reputation, built our brand and made a large amount of revenue. The money we made off the deal covered more than the (sponsorship) rights.”
Banks are tentatively moving back into sports sponsorship, especially as the cost of sponsoring virtually every sport has fallen dramatically over the past five years.
Clydesdale Bank, for example, is sponsoring the Yorkshire Bank 40, the Sunday afternoon cricket tournament which reaches its climax at Lord’s in late September.
At the other end of the scale, from next month, Barclays are committed to spending £120 million over three years sponsoring the Premier League, a 46 per cent increase on the annual £27.3 million it paid under the terms of its previous deal.
So, does global ambition continue to drive banks’ sponsorship of sport? In cases such as HSBC, the answer is probably ‘yes’, but banks’ interest in sport was growing well before many of their number became architects of their own downfall.
For more than a decade, sport has been considered a more gentrified affair. Stadia are newer, seats comfier – and pricier – while crowds are, despite recessionary conditions, probably richer.
Indeed, high-profile sports sponsorship undoubtedly works, particularly if a bank is intent on opening a new market.
Becoming a sport’s ‘official bank’ and creating partnerships with several teams can generate almost immediate retail custom through affiliated retail and debit card sales, together with cash dispensing machines dotted around a stadium.
It also opens the door to managing the wealth of a team’s owners (and players), or possibly to arranging the finance for a new stadium.
In addition, banks receive match tickets, a hospitality box where it can entertain clients and plenty of marketing opportunities with its name featuring on advertising hoardings around the ground.
Gauging returns on investment from sports sponsorship is not that difficult, although they do not arrive all at once. Nevertheless, there are banks that got carried away with themselves and some sports sponsorship deals were undoubtedly driven more by vanity than properly analysed for their potential benefits.
However, outfits such as HSBC are well versed in maximising the return on sport and, frankly, £7 million expenditure is a drop in the sponsorship ocean for a corporation with a market value of £125 billion.
Irrespective of Saturday’s outcome in Sydney, therefore, it would be a major surprise if HSBC were not the Lions principal sponsors for many more tours to come.
