Do Properties Really Want "Partnerships?"
We've been through the sponsorship vs. partnership debate several times so I won't rehash again, but an article coinciding with the PGA Tour's Deutsche Bank Championship this weekend really has me thinking:
Do properties really know what they're getting into when sponsorships look more like "partnerships?"
That is, with all of the talk about developing "partnerships of equals," are properties ready to reward (read: give up some of the compensation they're used to) for the value that sponsors create? In such a way, that compensates partners like partners and not cash sponsors. More importantly, are the revenue models properties rely on ready?
Deutsche Bank CEO Seth Waugh, who had good things to say about the PGA's efforts in this advertorial, took a tougher negotiating stance with the media this weekend. When asked if he would be seeking to renegotiate his two-year option on the title, Waugh replied with some choice words.
“Everything in the world costs less now than it did two years ago, it just does,” Waugh said. “I’m not trying to negotiate with you guys, but yeah, if some value can be created in that, we would welcome talking about that.”
Waugh cited “Cash for Clunkers” and discount hotel reservation Web sites, to point out that sponsors, like consumers, want a deal. He also questioned the fact that the tournament's purse was increased by $500,000 this year with the Bank's sponsorship fee slated to increase in future years.
“We have created a lot of value,” Waugh said. “We took a dead [Labor Day] date, delivered Tiger Woods, delivered a world-class event. I don’t mind paying for that, but I also don’t want to get charged for the value I created.”
With that said, Waugh is optimistic about renewing the deal. This, however, brings up a critical question for all properties - not just golf. With everybody raving about seeking "true partnerships" rather than sponsorships, are properties ready to structure sponsorship terms, including fee structure, like true partnerships?
More specifically, can the traditional revenue models that properties are comfortable with support the idea of a true partnership?
If a sponsor provides value to the property in any number of forms including activation, media or simply brand name validation, should they be quantifiably rewarded for delivering enhanced value to the property via more favorable terms? Will the traditional property revenue model support this?
The old sponsorship model was clean, the partnership one is a lot more messy. Talking about it is one thing, but when it comes down to actually negotiating terms, are properties ready to walk the walk?