In light of the recent successes in South African sport, sponsorship is reaching new heights, reports Simon Segal
South African sport has rapidly become a mega- business. With the success of the national rugby, soccer and cricket teams and the advent of 24-hour international television sports channels, local sport has caught up with world trends.
Barry Smith, marketing director of South African Breweries (SAB), by far South Africa’s largest sports sponsor, reckons the cost of TV rights has increased five-fold over the past two years, while sponsorship has also gone up dramatically. However, sponsors are becoming selective as costs rise.
All manner of new corporate sponsors have entered the sporting arena, in the belief that they can link its marketing to South Africa’s reconstruction and development. Says one sponsor: “Firms that have not had previous interest are now using sport to get into government’s good books.”
United Cricket Board of South Africa (UCBSA) managing director Ali Bacher notes that the international TV rights to coverage of next summer’s cricket tours by both the Indians and Australians have been sold for four times the amount of the recent England tour.
Rupert Murdoch’s Star TV has bought the Indian tour rights and his Channel Seven has bought the Australian tour rights for what is believed to be R20 to R30-million.
Bacher says no package has been arranged with Murdoch. “Each tour is negotiated separately. We have no long-term agreement.”
Television is by far the largest revenue earner in cricket, compared with the recent past when gate receipts and sponsorship contributed more. Total gate revenue from the five test and seven one-day international series against the English was R12,9-million despite losing almost eight days (owing to rain and the early finish to the Newlands test). Some 250 000 spectators watched the tests compared with 170 000 who watched the three Australian tests in 1993/94.
Of the revenue from the cricket tests, 20% goes to UCBSA’s development programme, 10% to UCBSA and 70% to the provinces.
Cricket is bigger than soccer, which relies more on gate receipts than sponsors and TV. But this could change, following the victory of the South African team at the African Cup of Nations.
The tournament had gate receipts of R6,6- million from 370 000 spectators. Its total revenue was R23-million. In addition to the gate receipts, R8-million was from government, R4-million from TV rights, R3-million from the Confederation of African Football, R2,3- million from seven suppliers and R600 000 from licence royalties.
Total costs amounted to R22-million, leaving a R1-million surplus for the South African Football Association. The costs included R5- million for marketing, R4-million for accommodation, R4-million for the 1 900 media contingent and 6 000 other accredited officials (including R1,6-million for media facilities); R2,5-million for security; R2,4- million for travel; R2-million for the hire of the four stadiums; and R1,7-million for internal transport.
But the biggest sport in South Africa is still rugby. By comparison, the Rugby World Cup made around R133-million profit on earnings of R270-million (60% of which was from the commercial programme) and expenses of R140- million. Of the profit, R26,5-million went to the South African Rugby Football Union (the rest to the Rugby World Cup), which in turn is committed to putting 40% of its portion into development of the game.
Bacher is not prepared to disclose cricket’s sponsorship and TV revenue (the latter is thought to be R8-million for the England tour). He adds the figures are not audited in a manner that reflects any profit/loss from tours. “UCBSA takes 10% to cover our costs. We do not accumulate proceeds.” UCBSA has R10- million in the kitty.
Local cricket’s windfall is expected to come from hosting the 2003 World Cup. The present World Cup is expected to yield a $50-million profit for unions of the three host countries — India, Pakistan and Sri Lanka.
To cover the costs of the South African team taking part in the current World Cup, it receives R1,475-million which includes the player and management salaries.
As for the players, participating in the national teams means substantial wealth — top rugby players can earn R1-million/year excluding sponsorships; top cricketers about R750 000, including private sponsorships; and soccer players around R200 000.