With the U.S. economy in recession and forecast to show only very modest growth in the near future, sponsorships and donations that normally bolster philanthropic organizations run by professional athletes are coming under pressure.
Of course, some of these sponsor-donor relationships between major corporations and the athletes’ foundations remain intact. In many instances, however, sponsorships have been cut in half or have completely disappeared.
Marlon Evans, executive director of All Stars Helping Kids, a nonprofit organization that helps athletes raise funds for their philanthropic efforts, commented on this state of affairs in an interview with The Network Journal. “Everybody realizes that right now there is a need more than ever, but they can’t do as much,” he said. “We have heard all the reasons for the smaller donations, and while some are still giving money, it is not at the same high level that it was before.”
Such relationships between companies and the off-the-field interests of athletes benefit the companies in two key ways: they offer marketing opportunities for the companies’ products and raise their profile in the communities they serve. However, many companies today are trying to stem the fallout from the nation’s economic crisis, leaving athletes to face the unwelcome challenge of self-financing their charitable interests or scaling back these projects.
During the 2008 football season, New York Giants defensive end Justin Tuck pledged $1,000 for every “sack” of a quarterback and ended up raising $100,000 for his R.U.S.H. (Read, Understand, Succeed and Hope) for Literacy foundation through a matching funds challenge. While individual company donations to Tuck’s foundation were in the $10,000 range last year, today, they are at $5,000 or less. The foundation was scheduled to host a fundraising billiards tournament on July 13 in New York City, with the cost for a presenting sponsor ranging from $30,000 to $60,000. All Stars Helping Kids, which handles R.U.S.H.’s day-to-day and fundraising operations, organized the billiards tournament. At presstime, Subway Restaurants and Hewlett-Packard Corp. had signed on as presenting sponsors and a number of private donations had been received.
In its most recent forecast, IEG L.L.C., a sponsorship consulting firm in Chicago, predicts that North American companies will spend more on sponsorships in 2009 than they did in 2008, but only by a measly 1.1 percent. IEG’s forecast puts total sponsorship spending in the United States and Canada at $16.79 billion this year, against $16.61 billion last year.
The recession is also increasing pressure on companies to spend more prudently on community programs. IEG’s analysts say companies worry about a public backlash if their spending appears to be too lavish or extravagant at a time when many consumers are facing uncertainty in their jobs. Citigroup Inc., for example, became the subject of public outrage after it paid $400 million for the naming rights to the New York Mets new stadium even though it was receiving billions of dollars under the federal government’s Troubled Asset Relief Program to keep it from going bankrupt.
“Our numbers for the projected sponsorship growth are the smallest that we have seen in twenty years,” William Chipps, senior editor of the IEG Sponsorship Report, told TNJ. But banks and other companies still have to market their products and now they feel the need to support the local communities where they operate and sponsorships is a way to do that.”
In its midterm update report, IEG projected that sponsorship spending for community causes would reach $1.55 billion in 2009, up 2.2 percent from 2008. That’s a smaller increase from the earlier annual forecast, which put such spending at $1.57 billion this year, up 3.1 percent from last year. “Banks and the automotive industry have taken a huge hit and they were the big sponsors,” Chipps said. “This year they were wiped off the table, but they still have to find ways to market their products and ser-vices [although] they will be more conscious of whom they sign deals with.”
As he prepared for his 6th Annual Celebrity Charity Golf Classic in Barbados, where his parents are from, Kevin Weekes, a goalie with the New Jersey Devils hockey team, is counting on more than the marketing needs of companies for a successful tournament. As before, the beneficiaries of the proceeds from the July 2 through 6 tournament will be Toronto-based Sky’s the Limit and The Phoenix Academy in Barbados. Sky’s the Limit donates refurbished laptops and computers to urban children. Last year, it donated 687 computers. The Phoenix Academy is an all-boys school in Barbados that also offers after-school and Saturday programs.
Despite the turbulent economic environment, Weekes has managed to pull in substantial sponsorships for his golf tournament, which attracts 50 to 60 guests from the United States and 40 from Canada. His sponsors include the Barbados Tourism Authority, which came in with $150,000; Nautica, which came in as product sponsor with $12,000 to $15,000 worth of apparel; and the National Hockey League, $5,000. Weekes gave a personal donation of $7,000. At the time he spoke to TNJ, he was still negotiating with Bank Beer and Mount Gay Rum, both of Barbados, to be sponsors.
“A lot of people from the corporate sector said that their budgets were frozen, donations have been decreased or that we missed the deadline for donations,” Weekes said. “Many people are concerned about losing their jobs or have lost their jobs, and we have heard a lot of [reasons] ‘why not’ for sponsorships. But we are still focused on the why they are needed.”
Early in the planning for this year’s tournament, with less-than-expected sponsorships and donations coming in, Weekes considered canceling the event. He also considered funding the entire tournament himself, but that proved too great a financial commitment. Still, he is content with the response that the tournament has received, given the global economic picture. “Next year we will begin the sponsorship process earlier and not rely too much on good faith,” he said. “But given the needs of the people we are supporting, [going forward this year] is the right thing to do.”