Talking to a lot of people in the Asian motorsport industry from drivers, parents and promoters, it seems there is a lot of misconception about the sport sponsorship game, but nothing that can’t be fixed with a little guidance and advice.
There are a lot of books about how to raise sponsorship, how to draft a sponsorship proposal and the steps to targeting and negotiating with prospective partners. What is written below is not a ‘how to’ instruction manual, but more of an insight and explanation on three main points that determine the success of generating ‘strategic partnerships’, as we prefer to say at AMD.
One vital process a lot of people miss out on during their sponsorship crusade is that they don’t put themselves in the other person’s shoes. Doing this can be the best form of SWOT analysis. “Would I give money to fund this?” “What am I getting out of it?”, “What is the purpose of this?”
- INVESTMENT NOT CHARITY
Or another way to say that is ‘strategic partnership’ not ‘sponsorship’?
Seeking sponsorship is just like asking for charity. You may get some friend’s, family or close business associates to hand over a few thousand dollars each to sponsor your cause. That’s ok for the immediate time, and if you get dozens of people doing that, then you may survive the season. But you’ll have to start over from scratch and do the same thing next year, and the year after that, causing much unnecessary stress and not developing your career professionally.
Forming strategic partnerships and offering an investment proposition is going to fund your career for the long term, with multi-national corporations.
The biggest mistake seen from drivers and parents is that they have the perception that it’s all about asking a company for money as sponsorship to fund their racing. There is no investment proposition.
No matter how many races and championships you’ve won in the past, or how much faster you are than the competition, no corporation is going to give any amount of money to something that doesn’t have a strategy to produce a return on investment.
Just because a multi-national corporation is an industry leader with billions of dollars, doesn’t mean they spend that money freely and are prepared to throw even $100,000 at something. They didn’t become a multi-billion dollar company by giving their money away.
The return on investment doesn’t necessarily need to be financial gain, but it needs to be something that helps the investor grow their business.
“It is a fundamental philosophy that McLaren has never encouraged the use of the word ‘sponsor’, as this may imply an act of charity. Instead the word “partner” is preferred, as each of these partners are making an ‘investment’ in the team and looking for a tangible return.” Peter Burns, former Senior Marketing Manager at McLaren
- ASIAN MOTORSPORT IS 99.55% BUSINESS AND 0.45% SPORT
So whether it’s your hobby or you’re really trying to make a career out of racing, make sure you run it like a business.
This means make yourself and team look professional and operate professionally from dressing, to behaviour. Sitting with the CEO talking about a strategic partnership is no different to sitting for a job interview.
Image and professionalism can make or break a deal. Approaching a prospective partner with a gmail or yahoo email (email@example.com) is not going to be taken seriously. Have a sleek website, business cards, PR and media strategy, and most importantly a business plan. Raising funds for your racing is no different to seeking finance from a bank or investor for your new business.
Most people in motorsport know that it’s a business first and a sport next. But I’ve taken it further to find out how much more of a business it really is.
Taking into consideration that when cars are being raced on the track it is then known as a sport, and from the time the cars stop and are parked, then it’s a business, I have calculated a more precise picture of how much more Asian motorsport is a business. There will be some people reading this who have more capacity for mathematics, but I have kept this as simple as possible for the purpose of making an understandable point.
Calculating the average time race cars are on the track during 10 of the major series in Asia I have found the following:
Amount of time that racing is a sport over an average race weekend:
- Free Practice x2 = 60 mins
- Qualifying x1.5 (30mins avg) = 45 mins
- Race x2.2 (40 mins avg) = 88 mins
193 minutes total.
For the purposes of keeping the business aspect as real as possible I am using a 12-hour work day (8am-8pm). So a race weekend consists of 36 hours or 2,160 minutes. Therefore:
On an average Asian race weekend, motorsport is 8.94% Sport and 91.06% business.
During a week, motorsport is 3.83% sport and 96.17% business.
A whole year with an average of 6 race weekends (1,158 mins), motorsport is 0.45% sport and 99.55% business.
This goes to show how important it is to run your racing as a business, look and behave professionally, with integrity, and be entrepreneurial in your strategic partnership proposals.
3.TIME & RESEARCH
The importance of research and timing cannot be emphasised enough. And unfortunately it is a part of fund raising that most people do not understand.
Forming strategic partnerships is all about building and maintaining relationships, and this doesn’t happen overnight. If you are seeking a six-figure investment you can expect to work on the deal for 6 to 12 months at least, and more for larger sums. Again, no corporation is going to invest large sums of money into motorsport without getting to know you, and the opportunity. Then the marketing department has to run your proposal through a number of management levels and the board, which takes time. And don’t rule out having due diligence done on you either.
Going back to the first point about offering an investment and not asking for charity; don’t treat your proposal, or your target cheaply. Wine and dine them. Get to know them outside of the boardroom, be different to the hundreds of other people who are asking for their money. This will also take time, but remember that you have to make an investment yourself to win the deal.
One last important fact about time that people must understand is that companies plan their marketing budgets in advance. The key is to get in front of them before, or as they are planning their budgets so they can include your proposal. Most companies in Asia will start planning their next year’s budgets around September-December the year before. Some companies, depending on their size and strategy will plan in the first quarter of that year. It is rare that a company will have extra funds by June/July to spend on new opportunities that come up, and I’m sure a lot of you have had the reply from prospective partners that they “just don’t have the funding at this time”.
Something that you need to do which will help form your proposal and investment proposition for a prospective sponsor, and that covers everything written above, is conducting research.
You will have a nightmare finding sponsorship if you play the numbers game, that is sending your standard proposal to as many companies as you can and sitting back to wait who bites. Plus it’s not very professional and doesn’t make you stand out from the rest of the people looking for funding.
Companies will only invest in opportunities that fit within their business strategy. So develop your proposal to fit their needs. The only way to do this is to research your target company. If they are listed on the stock exchange you can download their company prospectus and annual reports to learn about what they do and what they are aiming to achieve, their target markets and whether they are proactive in supporting sponsorship.
A better way to do this is to talk to a marketing director or anyone else of importance in the company. Explain why you are contacting them and ask if they do consider sponsorships. If they do, continue to ask them questions about what kind of partnerships they consider and what their marketing objectives are. A conversation on the phone, no matter how long, is the first step to bringing awareness to your cause and will make it easier for you to get a proposal to the right person. And if you act fast, they will still remember who you are when they receive your proposal in the mail.
Researching your prospective partner and developing a business strategy for them based around your racing will broaden the scope of the types of companies you can approach and also increase your chances of getting a meeting with them. You don’t need to approach car related businesses to sponsor your racing. Have the right plan and strategy for them and you could attract funds from any industry.
Raising funds for your racing career and forming strategic partnerships doesn’t have to be stressful and impossible. If you take some time to properly plan your career and build your operation to a professional level, it’s then only a matter of understanding your prospective partner’s needs and developing an attractive business strategy that will give them a return on investment.
Have a strategy for yourself. Have a strategy for your partner. And most importantly stick to it for the long haul no matter how downtrodden you become. Your sponsors will be impressed.