China becomes a big sponsor of global sporting events {writer: Fanie Heyns}

Yingli Green Energy, one of the world’s largest manufacturers of solar panels, was unveiled as the first Chinese company to sponsor the Fifa Soccer World Cup in February 2010.

Also the first renewable energy company to back soccer’s showpiece event, Yingli became the seventh event-specific sponsor of World Cup South Africa 2010, which takes place from 11 June to 11 July this year, reported Reuters.

“The announcement of Yingli Green Energy as the first Chinese company to be a global sponsor of the World Cup marks a historical moment,” said Fifa President Sepp Blatter, in a video message to a news conference in Beijing.

“I want to commend Yingli on this sponsorship and their commitment to helping us build a better future, which is one of our most important missions.”

China is emerging as a favourite hunting ground for sporting organisations seeking new sponsorship, particularly after the successful marketing campaign for the 2008 Beijing Olympics.

Despite an ongoing match-fixing scandal and the arrest of the head of the Chinese Football Association in January, the world’s most populous country remains an attractive proposition for Fifa.

“China is a given, China is one of the powerhouses of the world,” said Fifa’s marketing director, Thierry Weil, to Reuters.

“Yes, there are some scandals in football and Fifa is fighting against that corruption.

“But that has nothing to do with every football fan you have in this country. This is a massive sport, it is a sport liked in China.

“Fifa cannot do without China, and that is why we are extremely proud today to welcome the first Chinese company to be part of the World Cup,” said Weil.

The financial details of the sponsorship deal were not disclosed, but Yingli will equip all 20 of Fifa’s “Centres for 2010” – one of the soccer world governing body’s main legacy projects in Africa – with solar panels.

“We look forward to using our expertise, along with Fifa, to do something good for football,” said Liansheng Miao, Yingli’s chairperson and chief executive.

Weil also defended the environmental record of Fifa and the World Cup. “We implement slowly, but for sure we implement clean energy,” he said. “The world is slowly changing and... we cannot go faster than the world in general – but as soon as we are provided with them, we will provide those sorts of energies.”

Fifa made $253 million from marketing deals in 2008, the last year for which figures are available – representing about a quarter of its revenue, the remainder of which comes largely from the sale of television rights for the World Cup.

The Fifa Partners programme has attracted six well-known international brands -- Adidas, Coca-Cola, Emirates airline, Hyundai/Kia, Sony and Visa.

The six other sponsors of this year’s World Cup tournament are Budweiser, McDonald’s, Castrol, Continental Tyre, MTN mobile communications, and Indian-owned Mahindra Satyam – an information technology services company.

Weil said that Fifa hoped to find one more in this category. (Source: Reuters, February 2010)

According to a report circulated in February by the website Project 2010, Fifa expects to make a marginal loss on the event.

Quoting a report in The Guardian, it said this is in contrast to the £178-million profit it made in the 2006 tournament year.

A senior Fifa source told the newspaper that the governing body expects to be called upon to underwrite “a few thousand dollars” in overall losses in South Africa this year. “But that is a much happier picture than the one Fifa painted eight months ago, when releasing its accounts for the 12 months to the end of 2008.”

To guard against financial risks, Fifa has been hoarding cash since the 2002 World Cup and by January 2009, it had exceeded its £500m equity target by £63m.

A statement with those accounts also quoted in the report read: “At the halfway stage in the 2007 to 2010 period, Fifa had already achieved its objective of increasing equity to at least £500m by the end of 2010.

“Nevertheless, a definitive assessment of Fifa’s equity can only be carried out once the 2010 World Cup has been successfully staged.”

At that point, Fifa was concerned about the financial impact of the potential postponement or relocation of the tournament. The source stressed that this was only a possible financial consequence and that enormous losses are “out of the question” now.

The true picture of Fifa’s finances will be made clear within the coming weeks with the release of the 2009 accounts, but the source underlined that the organisation’s equity is now “far above” the £500m target.

This no doubt will come as a considerable relief to football associations around the world. (Sources: www.news24.com, The Guardian)

According to Reuters, Fifa, which ploughs back all its profits ($184m in 2008) into soccer, is budgeting for a loss this year because of the cost of putting on its showpiece tournament and main revenue earner.

Two percent of Fifa’s total income

Michael Goldman, senior lecturer in Marketing at the Gordon Institute of Business Science of the University of Pretoria, said he estimated that the sponsorship of Yingli Green Energy amounted to $65m, or R488m.

It is almost 2% of Fifa’s total income of $3.5bn from the tournament, added Goldman. (Additional source: Beeld, February 2010)

If you look at Fifa’s World Cup revenues, as well as the ticket sales of two million before the last round opened, and 400 000 more tickets purchased from the final million that remains, it is difficult to imagine that Fifa or the local organising committee would be making a marginal loss, said Goldman in an interview with Service.

Add to that the strong hospitality numbers, good licensing and sponsorships that are sold, it is difficult to comprehend that Fifa would be in the red.

The fact that it is in a position to slash ticket prices, demonstrates that Fifa probably already has reached its budget on ticket sales.

The broadcasting time of 8 p.m. is a very favourable one for Fifa, as well as the accumulative TV audience of 26 billion people around the globe. All these factors could contribute to an increase in prices for broadcasting rights.

What is in it for Yingli?

Yingli Green Energy is the first Chinese and green sponsor for a Soccer World Cup, which announces a great shift in the business of the World Cup, said Goldman.

Yingli spoke in its press statement about the strategic marketing initiatives worldwide and how it plans to position itself. It is strong in the United States, as well as in Western Europe and Asia, and it is about to launch in South Africa.

“There is nothing like a World Cup to catapult them onto the global stage, to give them a global strong brand position. But the leveraging would be vital,” said
Goldman. They have left it late in announcing the sponsorship.

“Leveraging that budget spent, means that they might have to budget for another $60m to tell potential customers and clients they are the sponsors, and what they do. It is about communicating effectively through advertisement campaigns who they are and what their business is about,” he added.

Yingli is an emerging company that is privately run and is competing with European and American global brands. There is no better way to position itself and brand itself than through a World Cup, said Goldman.

“But buying rights are only opportunities. It means zero if you do not leverage it and make sure the brand, and what it stands for, is communicated well.”

Green sponsors and big sporting events

Andrew Winston, co-author of Green to Gold and author of Green Recovery, said that every year, major sporting events become greener and the goals for renewable energy use, carbon neutrality or zero waste are tougher.

The Vancouver Olympics featured a large range of greening activities.

In their bids for the 2016 Olympics, not only did Chicago describe its games as “low-carbon”, but Tokyo claimed its event would be “carbon negative”.

Winston said green sponsorships help to build a brand and sell new products.

“There’s no bigger or more passionate audience than live and TV-viewing sports fans.

“For a World Cup, for example, US Soccer expects roughly five million fans through the gates, another 10 million at fan ‘fests’ nearby, and a cumulative audience of nearly 26 billion (multiple views for each of the billions of fans) watching around the world.

“Companies fight to get these coveted spots and use them,” added Winston.

These big sporting events serve as a testing ground for new products, processes, and ways of doing business.

Coca-Cola recently announced its aggressive targets for Vancouver – zero waste and carbon neutrality.

The tactics behind these goals include employing new refrigerants to eliminate greenhouse gas emissions, deploying hybrid delivery fleets, the use of Coca-Cola’s new “PlantBottle”, and the purchase of carbon offsets as a matter of course, said Winston.