The Real Value of Sponsorship Assets – Two Ways to Calculate

As I noted last week, I have been on a whirlwind sponsorship and sport marketing speaking tour of our great country. I have eight more events to attend in the next five weeks in Regina, Halifax, Montebello, and Saint John—events such as the Federation of Canadian Municipalities Convention, the annual Canadian Public Relations Society Conference, the Marketing Association of Credit Unions, Imagine Canada’s Summit and others. I figure there will be some of the same reactions from small organizations about “having stuff to sell” and “the big properties get all the sponsors.” But one other reaction I am seeing is the recurring statement that “my assets aren’t worth anything.”

In most cases, I do not agree. When you find assets that are more than a logo inclusion or a banner hanging, you will find value. But I must admit that sometimes the real market value is not there. Yes, you heard me say it. Sometimes the real market value is not there. The perceived value in the marketplace is sometimes actually higher than the real market assessed value. This is coming from a guy who makes a living from assessing the assets that properties own and applying real market value to them.

So, in addition to our work helping to identify assets for properties, mentoring them to build internal capacity and working with brands on activation plans, property investments, negotiation and ROI measurement, we provide asset market valuation for properties. And yes, sometimes we have to say, “Don’t value your assets based on real market valuations and industry standards.” Go with one of the traditional approaches to valuation such as “what the other guy gets,” “what I think it is worth,” “what I think I can get” or even “cost recovery” sponsorship. We don’t say this very often, but every once in a while we have to. It is the right thing to do. It is the ethical thing to do. Down the road, they will need to go to real market valuation, but at the point in time we are addressing, sometimes this is the best approach.

Some properties’ assets just do not have great real market value. Their reach may be small, their data bases poor, their visibility low, their actual assets few and far between, their brand unrecognizable and many of their assets intangible or unique, but with low market value. On the other side, the property may have fantastic goodwill or may already be getting very good sponsorship revenue. My answer to them is this. If you value the assets according to industry accepted standards and find that the value of your package is only worth $2,200 and you are presently getting $6,500, you are ethically and professionally obligated to let the sponsor know. That is just where I stand.

But if you do know the real market value, you can continue to provide value and a great program to sponsors who are happy with their investment. We don’t do it very often, but over the last decade in business, we have probably directed four to six clients to go this route. It is the right choice at that time.

So, would I recommend that organizations not do market valuation? Absolutely not! But for those select few at a certain point in time, where perceived value is higher than anticipated market value, don’t do a market valuation. However, you need to ensure that you have an in-depth, comprehensive inventory of assets to offer sponsors the right benefits to achieve their goals. Eventually those properties must conduct a market valuation…it is just going that way.

My thought is that if you have a highly detailed and comprehensive inventory of assets, you will be able to build up the value you are offering and eventually do it right.

These are just one person’s thoughts. What have you seen to be successful?

by Brent Barootes

 

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