How to Handle a Sponsorship Break-up

November 20th, 2018 Posted by

For various reasons, commercial partnerships end from time to time. What happens, however, when a break-up occurs mid-season or you are notified with a full year to go that a sponsor won’t be renewing?

  • How do you make the most of what time you have left together?
  • How do you complete the partnership on positive terms?
  • Possibly most importantly, how and when do you start the replacement process of this partner?

Right now, it’s springtime in the Southern Hemisphere. The winter sports season has recently ended and we are fast moving into the traditional summer sports. As such, we are starting to see some long-term partnerships end and some rights holders are having that dreaded non-renewal discussion.

Why has it ended?

It is crucial to be asking the right questions to really delve into why a partnership has ended. A set of questions, both internal and external, should be asked to help understand what could or should have been done differently. These include:

  • Was it a shift in marketing strategy by the brand?
  • Was it a shortfall in outcomes from the partnership (ROI or ROO)?
  • Was it the emergence of a new competitor in the market that offers greater access to their key audience?

The response to your questions will definitely help inform the next steps when it comes to filling the soon to be vacated partnership as well as how you look to finish off the term on a high.

Finish off the term on a high!

This may be easier said than done, but a few points that might help ensure the relationship is still a positive one at the end of the term include:

  • ensure you have identified their objectives for the final term;
  • ensure you have identified how the assets or benefits they have access to can help them achieve those objectives;
  • identify when and how often your partner would like contact; whether it be reports, meetings, phone calls, etc; and
  • Check-in at key periods to help ensure the objectives and expected outcomes are on track.

Make the most of the rest of the term!

Once again, it sounds really simple, but often it can be too easy to get caught up in trying to replace the partnership or focus your energy on those that may be renewing.

There are, however, lots of useful things you can extract from the final term including:

  • Feedback on overall experience – make sure this is documented, even if it’s not overly positive.
  • Possible referrals to other brands – especially in the case where the partnership has concluded on a positive note.
  • Positive elements – pull out some really positive elements of the partnership, whether they be a particular activation or piece of content, and create a small case study.
  • A positive impression – by leaving the current partner with a positive impression, you increase the chances of any future relationship being reignited (see Hungry Jacks and West Coast Eagles for example). Also, don’t discount that you may work at another rights holder and have a relationship with the brand there.

When can you start shopping around?

It is often quite difficult trying to balance the need to see out a current partnership and the requirement to sign a replacement partner in that category. As such, when is it OK to announce a new signing or start shifting focus?

A few things to be conscious of here include:

  • Diligence – ensure you have been diligent with the exclusive negotiation period and have covered off your legal obligations. After this, as long as you have been respectful of the current partner, go for gold in looking to replace the category.
  • Transparent – be transparent where possible. Give the current partner some notice of any new relationship beginning, especially if they are a direct competitor.
  • Announcement – make an announcement around the completion of the current partnership (possibly only to be done when it has ended on a positive note).
  • Open – be as open as possible with the new partner as to why the previous partnership may have ended. This will demonstrate your ability to learn from previous experiences.

The completion or break-up of a partnership does not have to be a completely negative experience. Hopefully, there are a few gems you can take away from the above to help with any future possible break-ups you may go through and some of it may just help avoid a repeat.

 


Sam Irvine // GM, Australasia

Sam is passionate about helping organisations maximise their sponsorship programs and has worked with brands and rights holders at all levels. Sam is always looking for ways to improve himself and loves working with people who give as much as they take.


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