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Performance-Based Sponsorships: How Data Is Changing The World Of Sponsorship

November 19, 2018

Sponsorships have always been an important revenue source for all sports properties. They are also one of the fastest growing revenue segments in sport, with a growth rate of 4.8% and climbing. The sponsorship landscape is undergoing many changes, the most important of them being the shift to performance or incentive-based sponsorships.

Defining Performance-Based Sponsorships

A performance-based sponsorship is built on incentives for performances by athletes, teams and leagues both on and off -field. For example, in this type of sponsorship model, an appearance by a team/athlete in the playoffs (on-field), or a digital/social promotion that engages fans and leads to increased brand awareness (off-field) will lead to additional incentives from the sponsor. Performance-based sponsorships in the context of this article refers to incentives provided by the sponsor to its sponsoring properties based on their off-field or digital performance in promoting that brand.

Traditional sports sponsorships

Revenue sources for sports properties can be classified into 4 major groups:

  • Ticketing & gate revenues
  • Media and broadcasting rights
  • Sponsorships
  • Merchandise sales

Among these, media rights and sponsorships have been the two biggest revenue sources for sports properties. With change in media consumption among younger fans, media & broadcasting has been undergoing a major upheaval.

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