The Carnage of COVID-19

The Carnage of COVID-19

There will be casualties as a result of COVID-19. Some we have already seen. One out of two Canadian small businesses will not be around at the end of this. The cost to an average small business, not lost revenue but accumulated costs, will be $320,000. This will put more and more people out of work than the over one million who already are because of COVID19. Many are in our sector, and sorry to say, there will be more job losses.

The return to normalcy will be slow and graduated. Most predictions are that, once all the restrictions are lifted, it will be 6-18 months before operational normalcy returns. Economic normalcy will take even longer. The most common predictions are that the beginning of normalcy will be in September, but then we have to await the second hit of COVID19. Until there is a vaccine, we are not returning to real normalcy.

For our industry, CSLS and others such as IEG are predicting that there will be a 30-45% decrease in sponsorship rights fees and activation dollars will decrease even further. As noted, the return to normalcy will take even longer, so the return of these sponsorship dollars will be 18-24 months or more down the line.

I know this sounds gloomy and is not the uplifting message you might have hoped for this Tuesday morning, but it is a reality check. Back in mid-March, one of the sector’s great leaders, Paul Alofs, expressed the thought that, as a result of COVID19, there will be a surge, purge, and merge in our industry, and especially in the charitable sector. He noted that there will be a huge surge in the need for services from social and health agencies, and also that many charities, non-profits, and others will not make it through COVID19 (just like businesses), and hence, the purge. In order to survive, many will merge. These words have been accurate.

In many of the sessions I am delivering and with some clients. I am talking about the need to merge so that they do not become part of the purge. Many smaller sport organizations, charities, and non-profits will end up having to declare bankruptcy just due to lack of cash flow. Sponsors may not return. They may not have the insight, human or financial capacity, or the capability to “pivot” to the new digital and virtual world of sponsorship (or operations overall) in the “new norm.” They will not be able to operate. I am not talking about surviving through the summer, but access to cash flow operations for the next 6, 12, or 24 months.

So before that happens, they need to work with like-minded and mission-similar organizations to amalgamate or even just amalgamate their sponsorship programs. Just last month, the Boys and Girl Clubs of Calgary and the Aspen Family and Community Network merged their operations. Also, last month on a webinar we delivered to CSTA, I spoke about the possible need for sport organizations to look at merging events such as provincial or national tournaments, or events with two or three factions of a sport and providing better ROI numbers for sponsors and opportunities for engagement. Or where a sport runs three different national events based on three disciplines within their sport, they might run one event with all three at the same time. I know many will say, “we cannot do that because…”

It is time to think differently. Organizations that have egos too large or boards that cannot change will be the ones that end up being part of the purge. As I also quoted last month, perhaps Charles Darwin said it best: “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”

For insights, feedback, and tips on managing your sponsorship program during COVID-19, during the recovery, and post COVID-19, check out our videos page on the Partnership Group – Sponsorship Specialists® website. There are several short clips, some longer ones, and full-blown webinars on COVID-19 and your sponsorship programs. Access is 100% free.

Please continue to practice social distancing, stay home when you can, stay in touch with others, and stay healthy.

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  1. Hi Brent!

    What are your thoughts on discounting assets and fees during these slower economic times?

    Perhaps charge normal valuation fees for items, but include a couple “cheaper” assets at no charge to build goodwill?

    My fear is that the property will give a discount for rights, and the brand will push back when renewal time comes around. Unless you specifically state in your PA that the discount is applied for this year ONLY?

    Thanks, as always!

    • Josh, good question. I think it is critical to keep the integrity of the value of your assets. I don’t see GM or Toyota or others discounting the value of their cars because of the pandemic. But like you suggested, they are creating incentives. And yest those incentives in a sponsorship agreement need to be clearly identified as “1 time” or for the term of the agreement or as a “signing bonus”.


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