Volkswagen Scandal Will Have Impact on Company’s Sponsorship Deals, Say Experts

The world’s biggest automaker by sales has admitted to U.S. regulators that it programmed its cars to detect when they were being tested and alter the running of their diesel engines to conceal their true emissions.

As a result, Volkswagen chief executive Martin Winterkorn resigned on Wednesday.

iSportconnect asked experts in sports business if the scandal will have an impact on VW’s sponsorship deals.

Speaking exclusively to iSportconnect, Nigel Currie, Sponsorship and Marketing Consultant said: “It is bound to have a major impact on VW’s sponsorship agreements.  

“This is such a huge scandal that every aspect of this giant company will be affected. At a time like this they will be restricting their marketing activity and waiting to see what happens over the coming weeks.

“Sponsorship will be seen as a very low priority at this time, and as such, existing sponsorships will probably receive less support and there will be little consideration for new sponsorship programmes.

“In the long term there may have to be a complete rethink and if things turn out to be as bad as it looks at the present. If I were advising VW I would urge them to abandon a lot of their existing activity in favour of a series of major environmental programmes.  

“By major I mean long term multi national environmental programmes designed to in some way make up for the deception that has occurred.”

Professor Simon Chadwick, Professor of Sport Business Strategy and Marketing at Coventry University said: “VW has a large sponsorship portfolio and many of the properties that form part of this portfolio will surely be extremely mindful of the potential consequences which may result from this week’s revelations.

“With such large sums of money being set aside by VW to mitigate damage caused by the emissions scandal, it seems almost inevitable that some sponsorship deals will be hit, possibly even terminated.

“That said, the last things VW needs right now is the reputational and brand damage that might be caused should some properties fall into financial difficulty following a withdrawal of sponsorship funds.

“Furthermore, at a time of crisis one view within VW could be that maintaining or even increasing sponsorship expenditure might contribute to brand restoration by engaging and deepening relationships with key target audiences. Over the coming weeks and months, we will no doubt get a greater sense of which scenario is likely to prevail.

“In the meantime, this is likely to be a somewhat uncertain and turbulent period for sport organisations with which VW has relations.”

VW’s most notable sponsorship deal in sports is with hometown club VFL Wolfsburg in Germany, which includes naming rights to the club’s stadium, the Volkswagen Arena. It will be interesting to see if the scandal affects their relationship with the Bundesliga side.

The car brand also expanded into Spanish football recently with a sponsorship deal with Valencia.

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