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Int. J. Sport Management and Marketing, Vol. 7, Nos. 3/4, 2010
Corporate support: a corporate social responsibility alternative to traditional event sponsorship Benoit Séguin* and Milena M. Parent Faculty of Health Sciences, School of Human Kinetics, University of Ottawa, 125 University St., Ottawa, ON, K1N 6N5 Canada Fax: 613.562.5497 E-mail:
[email protected] E-mail:
[email protected]
Norm O’Reilly David Falk Center for Sport Management, Syracuse University, Syracuse, New York, USA E-mail:
[email protected] Abstract: This study investigates an emerging alternative to event sponsorship based on corporate social responsibility (CSR), corporate support of major sporting events. The outcome of the 2005 FINA World Aquatic Championships presented a unique case of sponsorship and the purpose of this paper is to identify the factors which led to the development of corporate support as a viable alternative to sponsorship. Factors included the organising committee’s leadership, the positioning of the event (including the event/sport as a social cause, the benefits of hosting the event, CSR, and contextual limitations), and accessing corporate presidents directly. The cost of not getting involved and corporate peer pressure were found to moderate the event president’s decision to offer corporate support to the event’s organising committee. A model showing the interrelationship between the various factors is also proposed. Keywords: sponsorship; event sponsorship; corporate social responsibility; CSR; sport sponsorship; major sporting events; sport marketing; event marketing. Reference to this paper should be made as follows: Séguin, B., Parent, M.M. and O’Reilly, N. (2010) ‘Corporate support: a corporate social responsibility alternative to traditional event sponsorship’, Int. J. Sport Management and Marketing, Vol. 7, Nos. 3/4, pp.202–222. Biographical notes: Benoit Séguin is Associate Professor at the School of Human Kinetics, University of Ottawa, Canada. His area of specialisation is Sport Marketing. His work on sport sponsorship, ambush marketing and event management has been published in various journals and presented at numerous international conferences. He is actively involved in sports as a consultant and a member on numerous boards of directors for national sport organisations in Canada.
Copyright © 2010 Inderscience Enterprises Ltd.
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Milena M. Parent is an Associate Professor in the School of Human Kinetics at the University of Ottawa. Her primary research area relates to organisation theory and strategic management within large-scale sporting events. She has published articles in the Journal of Sport Management, Journal of Business Ethics, European Sport Management Quarterly, International Journal of Sport Finance, and Event Management. Norm O’Reilly is an Associate Professor at the David Falk Center for Sport Management in the College of Human Ecology at Syracuse University. He is also a Visiting Scholar at the Graduate School of Business at Stanford University. Former Director of the School of Sports Administration at Laurentian University and past Director of the Institute for Sport Marketing at Laurentian. He has published more than 40 articles in the sport management, finance and marketing literatures.
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Introduction
The 2005 FINA (Fédération Internationale de Natation) World Aquatic Championships (MONTREAL 2005) presented a unique and complex scenario in the hosting of major sporting events. After nearly three and a half years of preparation and approximately $35 million subsidies from all levels of government, the International Federation (FINA) made the unprecedented decision to pull the event away from Montreal only six months prior to the opening ceremonies because of a number of identified problems, including leadership and financial – specifically sponsorship, where only $500,000 of $9 million planned had been obtained (see Parent and Séguin, 2007 for more information). Faced with the possibility of wasting important resources and the potential of tarnishing the city’s image, a group of influential political and corporate leaders took it upon themselves to re-claim the event. This group used its influence to conceive of an alternative commercial approach to reach the sponsorship goals in a limited amount of time: corporate support. This approach differs from corporate sponsorship, where managers make sponsorship related decisions based on potential return on investment (O’Reilly et al., 2008), and is based on the concepts of civic engagement and social responsibility, where both city and corporate leaders are united in the financial support of an event. The purpose of this paper is to study the use of corporate social responsibility in a one-off major sporting event and, as a result, improve the financial contributions from the corporate sector for the hosting of events at all levels. A number of factors are identified as critical to the organising committee’s positioning an event as a ‘cause’ worthy of support. These factors are the organising committee’s leadership characteristics, the positioning, the corporate individuals approached, the corporate peer pressure felt, and the cost of not getting involved. This paper fills a gap in the event sponsorship literature for events that struggle to receive support from sport sponsorship. Moreover, this paper proposes that organising committees investigate the possibility of an alternative to the profit-driven form of traditional sponsorship towards the civic engagement of corporate and city leaders to finance events with the desire of being socially responsible and improving the community.
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This study uses stakeholder theory as a means to determine how the MONTREAL 2005 organising committee went about gaining corporate support and whether this strategy could work for other similar events. First, an overview of the literature of sponsorship and corporate social responsibility (CSR) is presented. Next, the setting, theoretical framework, data collection, and data analysis will be described. Results will then be presented and discussed, and a model of corporate support will be proposed. The paper will conclude with implications and future directions.
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Sponsorship and corporate philanthropy
While both sponsorship and corporate philanthropy offer sources of funds, resources, and in-kind services to organisations, they differ in the nature of what they expect in exchange (Howard and Crompton, 1995). Indeed, some scholars have suggested that sponsorship and corporate philanthropy sit at opposite ends of a donation continuum (O’Reilly and Madill, 2007). While, philanthropy involves altruistic donations that are made based on personal values and not on personal gain (Bennett, 1997), corporate decisions to sponsor sport properties are driven by business objectives although they may include intention to generate public goodwill (Howard and Crompton, 1995; Irwin, 1993; Kuzma and Shanklin, 1994; Sandler and Shani, 1993; Sleight, 1989; Wilkinson, 1993; Polonsky and Speed, 2001). The shift in attitude regarding sponsorship and philanthropy occurred when corporations began the search to receive a return on their donations to various associations (Meenaghan, 1991; Wilkinson, 1993). Corporations considered sponsorship less as a form of corporate social behaviour and more as a promotional tool (Sandler and Shani, 1989). This led to a substantial increase in resources allocated to sponsorship, meaning that sponsorship, once predominantly considered as ‘good social behaviour’, became increasingly recognised as a valid business expense that needed justification in the form of return-on-investment (Sandler and Shani, 1989). The following details sponsorship objectives and exclusivity, and corporate philanthropy and its theoretical basis, CSR.
2.1 Sponsorship objectives and exclusivity Sandler and Shani (1993) identified three groups of sponsorship objectives: broad corporate objectives, marketing objectives, and media objectives. Likewise, others have suggested that corporate image and/or public goodwill largely dominate categories of sponsorship objectives (Otker, 1988; Witcher et al., 1991; Kuzma et al., 1993). According to Irwin and Sutton (1994), there are several reasons that explain a corporation’s investment in sponsorship, including: to raise involvement with the local community, to increase general public awareness of the company, to enhance company image, to alter public perception, to block competition, to increase sales and/or market share, and to reach a target market. While these demonstrate that sponsors seek to achieve a number of objectives, Crompton (2004) proposed that enhancing profitability by generating additional sales remains the ultimate goal of a total communications strategy. Corporations view ‘exclusivity’ as being a key aspect to successful sponsorship programs. Townley (1993) suggested that whatever the sponsor is looking to get out of a sponsorship, the sponsor’s investment or continuing investment is ultimately determined
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by the ability to deliver exclusive rights. Exclusivity provides an opportunity for the sales-driven use of the sponsorship agreement and prohibits competitors from using the event, venue, product, or activity to transmit a message to the audience (Mullin et al., 2000). This limitation of communication avenues can improve the ability of the marketing message to increase sales, and may impact the profitability of both the sponsor and the competitor. Ludwig and Karabetsos (1999) reported that the most important objective for sponsors of the 1996 Olympic Games was having exclusive sponsorship rights in their product categories. The literature on sponsorship therefore seems clear; corporations offer funding to sport properties for commercial gains, not for philanthropic reasons. Successful sport properties are able to position themselves as desirable commercial entities offering numerous benefits to corporations. Yet, one perspective argues that through sponsorship, society perceives the sponsor as being a good corporate citizen, giving something back to sport while at the same time advertising their company name (Walliser, 2003). It is this good corporate image that many organisations attempt to transfer from sport. This philanthropic support has its roots in CSR.
2.2 Corporate philanthropy and social responsibility Some feel that the numerous benefits of corporate philanthropy could place sponsorship at a disadvantage because the relationship can be seen in a more positive light (Bennett, 1997). Love (2006) explained that contributing to the community can be good for business “as the health of the community system improves, so does the performance of the firm within the system” (p.61). This shows that the welfare of the company is closely linked to what is going on in the community. An example of such philanthropy is seen when businesses sponsor sport programs in order to make them more available and affordable for the public (Abratt et al., 1987). Although corporate philanthropy (i.e., donations or charitable activities with only minor consideration of corporate objectives) is an activity and CSR (the belief that an organisation needs to give back to society) is a business philosophy, corporate philanthropy is associated with CSR “where companies integrate social and environmental concerns in their business operations and stakeholder relations on a voluntary basis; it is about managing companies in a socially responsible manner” [Holland, (2003), p.226]. Here, a stakeholder refers to all individuals, groups and/or organisations impacted and being affected by the focal organisation’s actions (Freeman, 1984). Moir (2001, p.19) contends that the central question regarding stakeholder theory and corporate social responsibility is “whether stakeholder analysis is part of the motivation for business to be responsible, and if so, to what stakeholders…do managers pay attention”. It could be argued that stakeholders who represent the interests of economic expectations will garner the most attention from managers; however, attention will still be given, with various levels of consideration based on their place within the social responsibility categories, to stakeholders who represent the legal, ethical, and discretionary responsibilities (Carroll, 1979). With corporate philanthropy, companies are being asked to “accept costs and responsibilities which may well be remote from their commercial focus and from which there may not be any identifiable return in revenue” [Robins, (2005), p.99]. Carroll (1999) explained that a socially responsible firm should “strive to make a profit, obey the law, be ethical, and be a good corporate citizen” (p.290). The research by Carroll (1999) also noted that CSR will “remain an essential part of business language and practice”
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because it is consistent with what citizens expect from businesses today (p.292). Carroll (1999) offered another prominent addition to the conceptualisation of CSR from the 1980’s and suggested “that business ought to convert its social responsibilities into business opportunities” (p.286). Varadarajan and Menon (1988, p.59) referred to “enlightened self interest”, where corporations use their social responsibilities as an investment, which eventually leads to the realisation of long-term performance objectives, and which requires forward thinking and planning (Stroup and Neubert, 1987). This means that the relationship between a corporation and a social cause has, in many cases, taken on a strategic and symbiotic structure. The possible benefits to be gained by corporations have been described by Drumwright (1996) as being economic, non-economic, or mixed. In most cases, economic benefits include increased sales and image enhancement, while non-economic benefits include meeting corporate social responsibility goals. Mohr and Webb (2005) indicated that CSR had a positive impact on consumers’ evaluation of the company and intent to purchase. It is also important to note that, contrary to research in traditional sponsorship (Abratt et al., 1987), the issue of exclusivity in relation with good causes is not considered a major issue (Bennett, 1997). Companies have even joined with competitors to show social responsibility and ensure the necessary support (Bennett, 1997). The events that unfolded during the MONTREAL 2005 have hinted at the possibility of a new perspective on traditional sponsorship – one that would engage community and corporate leaders to financially support a sporting event in order to benefit the community. Supporting events in this manner could produce a combination of benefits for corporate stakeholders similar to those from traditional sponsorship and corporate philanthropy. This paper hopes to shed light on an emerging area of sport marketing/sponsorship study described as corporate support.
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Method
A case study of MONTREAL 2005 was conducted to investigate the use of CSR within the context of a one-off major sporting event. This research design was chosen because case studies have been shown to be an appropriate approach for providing in-depth knowledge of complex events as they unfold over time (Eisenhardt, 1989; Yin, 2003). As MONTREAL 2005 had already taken place when the data was gathered, we were able to examine an organisation (the organising committee of the event) from its inception to its end. Furthermore, case studies are appropriate when questions relate to events over which the researchers have little or no control, and they are preferable when researchers are seeking to develop new theoretical models (Eisenhardt, 1989; Glaser and Strauss, 1967; Yin, 2003). The general methodology follows that of Parent (2008) and is described below, after an overview of the setting and theoretical framework.
3.1 Setting In 2001, FINA chose Montreal, Canada to showcase its prestigious world championships. With more than 2,000 athletes from 160 countries, 1,000 team officials and 300 competition officials, MONTREAL 2005 was the largest gathering of young athletes since the 1976 Olympic Games for the entire province. Also taking part were 2,500 volunteers, 160,000 spectators, more than 1 billion television viewers worldwide, and a
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media contingent of over 1,300 journalists (Maguire, 2007). Six major stakeholder groups were involved, including the organising committee’s employees and volunteers, the sport organisations (FINA, FINA’s marketing agency, and the Aquatic Federation of Canada), the delegations (athletes and support staff), the three levels of government, the community, and the media. The direct economic spin-offs are estimated at several tens of millions of dollars: “The event generated a total estimated economic activity of $181.2 million in the Province of Quebec, including $136.8 million in the City of Montreal” [Canadian Sport Tourism Alliance, (2006), p.1]. MONTREAL 2005 was presented on five competition sites on Montreal’s Ste-Hélène and Notre-Dame Islands, from July 16 to July 31 2005 (see Maguire, 2007 for more information). Formed in 2001, the organising committee was led by a volunteer board of directors composed of stakeholder representatives (e.g., governments, Aquatic Federation of Canada, community members). This board determined the general direction of MONTREAL 2005 (i.e., vision, mission, policies, and business plan). In order to speed up decision-making, an executive committee was established. Following a number of problems, FINA decided to withdraw the Championships from Montreal in January 2005, despite the $35 million government investment already committed (see Parent and Séguin, 2007 for more information). One month later, FINA handed the event back to Montreal thanks to the efforts of the Mayor of Montreal and other key individuals. The Mayor became the event’s Co-President along with well-known businessman Norman Legault, promoter of the local annual Formula 1 race. They recruited René Guimond (former VP Marketing, Montreal Expos and President of a television network – TQS) as the Director General.
3.2 Theoretical framework As with issues management, stakeholder theory (see Clarkson, 1995; Donaldson and Preston, 1995; Freeman, 1984; Mitchell et al., 1997; Post et al., 2002; Wolfe and Putler, 2002) stems from corporate social performance, within which we also find CSR (Wood, 1991). Stakeholder theory is concerned with examining the relationship between a focal organisation (e.g., an organising committee) and its stakeholders (Freeman, 1984). Stakeholders can have a great influence on the focal organisation’s actions; their desires and needs can often be found in the outputs of the organisation. It also considers the management of multiple stakeholder relationships and the management of particular stakeholder relationships. The stakeholder literature highlights the varying approaches which stakeholder theorists can take including: a descriptive/empirical approach (e.g., Donaldson and Preston, 1995), an instrumental approach (e.g., Phillips, 2003), and a normative approach (e.g., Szwajkowski, 2000). Donaldson and Preston (1995) explained that the descriptive/empirical approach presents descriptions of the nature of the organisation, the way managers think about managing, how board members think about the interests of stakeholders, and how some organisations are managed in reality. The instrumental approach identifies connections between stakeholder management and the desired objectives of the focal organisation, traditionally, a competitive advantage typically found in the form of financial benefits. The normative approach presents moral/philosophical guidelines for the operation and management of organisation and has been used to analyse its functions (Donaldson and Preston, 1995). This study combines all three approaches as it will be descriptive in nature yet present a normative approach to the
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financial support of events (through CSR), which – it is believed – ultimately leads the event toward financial success. Stakeholder theory allows researchers to design their studies in such a way as to obtain and present data from the perspectives of all involved in a particular issue of interest (cf. Parent and Foreman, 2007). Thus, we use stakeholder theory as a theoretical framework to guide our methodology.
3.3 Sample and data collection In order to develop the case study, we used multiple sources of information from all six stakeholder groups of the organising committee. More precisely, interviews were conducted with and archival material was obtained from, the organising committee and bid team members, the sport federations, the governments, the media, the delegations, and sponsors (part of the community stakeholder group) (Yin, 2003). Researchers used a combination sampling strategy (purposive – certain documents/stakeholder representatives were pre-determined as being necessary to this research – and snowball techniques) to build the case study. Data collection came to a close once we reached saturation. The archival material consisted of over 75 documents totalling more than 500 pages, including: organising committee internal documents, stakeholder documents, and commemorative material. In turn, 25 semi-structured interviews were conducted (ten by phone and 15 in person) with 22 representatives of all six stakeholder groups (with three follow-up interviews) to understand the perspective of those involved with the event. The majority of interviews lasted between 60 and 90 minutes. Appendix A presents the interview questions and Table 1 offers an overview of the interviewees. Interview transcripts were returned to the interviewees for validation. Field notes were taken throughout the data collection phase and included in the data analysis (cf. Miles and Huberman, 1994; Parent, 2005; Yin, 2003). All data collected were converted into electronic format for subsequent analysis. Interviews were professionally transcribed before analysis. Table 1
Interviewee details
Organisation / Stakeholder group Organising committee
Titles/Responsibilities Director General (Senior staff) VP Technical (Senior Staff)* VP Finance and Administration (Senior Staff)* Bid and organising committee president (top volunteer) Co-president
Note: *Follow-up interview done.
Length of involvement 6 months 4 years
4 years
1 year
3 years
Individual’s background Professional sport and media Consultant for Sport Canada; CEO of major national sport federation Financial and accounting in private sector Private sector (performing arts); Sport (provincial / national sport organisations) Sport and mega-events (national and international levels)
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Interviewee details
Organisation / Stakeholder group Canadian Governments
Community
Sport organisations
Delegation
Media
Titles/Responsibilities
Length of involvement
Federal
2 years
Civil servant, sport (provincial and national sport organisations), event hosting
Provincial (Québec)
4 years
Civil servant (policy development)
Municipal (Montréal) (two participants)
4 years
Civil servants (policy development and implementation for sports), sports (high performance coach, international sports)
Sponsor
4 years
National and international events
Promoter
7 years
National and international sporting and event expertise
International (two participants)
4 years
Sport (national and international sport federations)
National sport federations – aquatics sports (three participants)
4 years
Sport (national sport organisations, international level)
Aquatic Federation of Canada (three participants)*
1 to 4 years
Sport (national sport federations, international sport, events)
Delegation chef de mission
2 years
Sport (Olympian, national sport organisation)
Athlete
4 years
Sport (Olympian)
Broadcaster
4 years
Media
Individual’s background
Note: *Follow-up interview done.
3.4 Data analysis The analysis was a combination of inductive content analysis and pattern matching in order to iterate and integrate between theory development and theory testing (Miles and Huberman, 1994; Yin, 2003). The analysis was done with the help of the data analysis software ATLAS.ti 5.0. The authors highlighted and then extracted passages relating to sponsorship and corporate support for further analysis. Two of the authors independently analysed the passages for patterns and any other key findings. After analysing the passages, the authors discussed their individual findings, and they were found to be in agreement on the key components of corporate support and their interrelationships.
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Results and discussion
Supporting an event philanthropically rather than as a traditional sponsorship emerged as an important component of corporations’ involvement in MONTREAL 2005. Our data highlights the core factors which lead to the success of the corporate support approach to financing the event: the organising committee’s leadership characteristics, the positioning, the corporate individuals approached, the corporate peer pressure felt, and the cost of not getting involved.
4.1 Leadership characteristics The data highlighted the importance of the organising committee’s leadership characteristics in being able to argue the cause of corporate support. More precisely, the leadership team – the Mayor of Montreal, the owner of the Formula 1 car racing event in Montreal (the two co-presidents), and the Head of a major television station (the Executive Director) – complemented each other in terms of the political and business networks they could access. “Access to resources is impacted by who the leadership team is, their network, their credibility. Respect and credibility are key in accessing resources. In the [pre-loss] group, the leadership was not able to maximise resources while with the [final] group, it was a crisis situation and the combined network of the team that made it happen.” (Government official)
Although both co-presidents are credited with having important levels of credibility and rich networking circles, the Mayor is seen to have had the principle role in opening doors with the corporate sector by selling organisations on the notion of corporate support. “Well, I think that the majority of people who gave money subsequent to the involvement of the Mayor would not have given money had he not been present” (Government official). These findings support research by Ingerson et al., (2002), which recognised the importance of having political support as a success factor in the bid process for hallmark sporting events. “It seems that event infrastructure and event management (including political support) are the most important elements in the process of ensuring a successful hosting of the event” [Ingerson et al., (2002), p.320]. Additionally, the importance of having a ‘champion’ supporting your cause is critical. Since these individuals will likely have established contacts with prominent individuals in corporations, the appeal can be made directly to the individuals who hold the purse. In the case of MONTREAL 2005, the Mayor of Montreal became this ‘champion’ and was successful in recruiting other well known individuals as co-champions (Guimond and Legault). These three individuals had strong community ties, which allowed them to convince corporations, media, and the public at large of the importance of the event to the community, the region, and the province.
4.2 Positioning In order to successfully use corporate support as a source of financial resources for an event, the organising committee’s leadership must position the event differently than for corporate sponsorship. It must be sold as a social cause using the benefits associated with
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hosting the event. The event’s leadership must also sell the idea of corporate social responsibility, of doing it for the greater good. However, contextual limitations (such as time, cultural issues and contemporary issues – like the simultaneously occurring sponsorship scandal, see Appendix B for more information) help frame the event’s positioning for corporate support.
4.2.1 Social cause To gain financial support by the corporations, the event had to be sold as a social cause. By buying into this concept, corporations were able to create a connection with the community incorporating city marketing and putting Montreal on the proverbial map. This type of attention helps to reach larger audiences and to attract tourists to the area to experience other benefits the city offers (Ingerson et al., 2002). Social cause, described as wanting “to help the country in this national effort to put on successful games” was identified as one of the key reasons the majority of Grand National sponsors supported the 2004 Olympic Games [Apostolopoulou and Papadimitriou, (2004), p.186]. One of the sponsors even reported that sponsoring the Olympic Games did not fit their corporate goal regarding international exposure: “for us, what is important is the intangible benefit and not the financial [benefit]. For us, our participation is symbolic; it is a matter of honour” [Apostolopoulou and Papadimitriou, 2004, p. 187].
4.2.2 Benefits of hosting the event Positioning the event as a social cause was related to using the benefits of hosting in securing corporate support. As seen in the following quotes, benefits included the impact on the city’s image and the pride felt by hosting such an event: the event “did a wonderful job to put Montreal back on the map and to make Montreal feel proud of itself in terms of being back on the world stage in sport” (Organising committee member). “[T]his notion of ‘it’s for the city, it’s for us, it’s for our image’, we need to work on it from that perspective, and from the very beginning” (Organising committee member). Other benefits of hosting the event included economic impact and improved infrastructure. A government representative indicated that “economic impact, sport development, legacy of installations, and community development” were aspects to consider. An organising committee member added that “the cities do benefit, whether its economic benefits, or at least that would be the opinions of some that there is economic benefits, infrastructure. I mean[…] it’s good for Montreal”.
4.2.3 Corporate social responsibility Although there are many economic benefits to the city and the community, it is important to emphasise that in this case, a company was seen as contributing to a social cause, and was not looking to benefit from the event. A member of the organising committee indicated that the Mayor was able to emphasise this for the MONTREAL 2005 event: “You’re in Montreal, this is too important to Montreal. You, as a corporation or business, have to help. By now, there’s no sponsorship opportunity and you know these things, major companies have to be planned, seasons and sometimes years, a year ahead of time. So there’s no time to maximise value other than being good Montrealer.”
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Corporations viewed their contribution to the event as a donation of goodwill, knowing that they also sacrificed little financially. By supporting a social cause for the benefit of the city, the corporations created favourable connections with the community, which should positively impact their organisation: “I have rarely seen a project bring together the business community like this one. Never seen it, never seen it, never, never! But we did it, we rallied the business community. We picked up, what, nearly 9 million in sponsorship, in four months … I talked about corporate support, about doing this for Montreal, doing it for the public, for the city’s image.” (Organising committee member)
Previous studies on sponsorship also resulted in similar findings. Kuzma et al. (1993) found that community responsibility was the most important reason companies sponsored Olympic type events such as the Special Olympics. This was also the case of half the Grand National sponsors of the 2004 Olympic Games (Apostolopoulou and Papadimitriou, 2004).
4.2.4 Contextual limitations Findings indicated that for corporate support to succeed for MONTREAL 2005, certain contextual limitations were present. First, there was a sense of urgency to the situation. FINA agreed to give the event back to Montreal less than five months before the opening ceremonies, thus providing very little time for organising committee members to obtain financial support. “The corporate community came on board in a short period of time, in a big way, because the Mayor was there and it was a crisis. Corporate Montreal wanted to save face. Without the crisis, I am not sure that it would have been the case.” (Government representative)
The second contextual limitation was the impact of the Canadian, federal sponsorship scandal (see Appendix B). The federal sponsorship program was a Federal Liberal Party initiative to promote Canadian unity, and especially to promote Canada within the province of Quebec. However, certain major marketing and promotions companies receiving funding from this program significantly mismanaged the files and pocketed much of the money. Faced with mounting public and media criticisms, the program was officially cancelled in December 2003 (CBC News Online, 2006). Not only did non-profit organisations like multi-sport events see their funding source cut, but sponsorship deals were now seen in a negative light by the Canadian – and especially Quebec – public. The reluctance of people and corporations to be sponsors in the traditional manner pushed the organising committee leaders to be innovative in accessing financial resources. “The word ‘sponsor’ has become taboo. When you call, you need ‘corporate support’; it’s the word that replaced [‘sponsorship’]” (Organising committee member). A third contextual limitation was the marketing and sponsorship parameters set by the international sport federation. Many interviewees felt that while the original organising committee knew what the marketing and sponsorship parameters were from the outset, FINA’s parameters were still restrictive. A government representative felt that the influence of FINA was detrimental to the development of sponsorship deals for the Championships:
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“FINA’s marketing was […]restrictive in their categories and in the cash payment schedule the fact that it was early in the organising committee’s life meant it was hard for them to properly establish themselves before going out to get sponsors and pay FINA back. Cash flow was a problem early on and yet, FINA was demanding a percentage of dollars promised.[…] FINA was more concerned about money coming in than in assisting [the] organising committee in making the event a success.”
A fourth contextual limitation found in the data related to cultural issues and stemmed from having the event held in Montreal, Quebec. Some cultural issues included the popularity of amateur versus professional sports issue and the Canadian bilingual language issue. A delegation representative explained that organisers of amateur sport events, especially in Montreal where the National Hockey League’s Montreal Canadians are very popular, have a challenge in building support. Not only did this Montreal context impact the ability to attract spectators, but the broader Canadian context also impacted the management of the organising committee and its decision-making processes. Most notably, the French-English language issue came to the forefront. As one government representative noted: “The other issue that was particular was the board of directors’ meetings: they happen in English, in French, they are all over the place.”
4.3 Corporate presidents As previously mentioned, leadership was mentioned as a prime factor in leading to corporate support, given the networks available to the leaders of the organising committee. This network allowed the organising committee to access the leaders of the business community in Montreal, not simply the directors of marketing. Thus, by meeting with the presidents of the companies, decisions could be made quickly, as the budget code for the requested amount would not have been in the sponsorship budget but the philanthropic budget – typically left to the discretion of the president. While the corporation presidents or CEOs make the decision to support (or not) the event, there are two moderating factors which can impact the decision: the cost of not getting involved and corporate peer pressure.
4.4 Cost of not getting involved In a situation where the mayor of the city or a highly-placed business member approaches a corporation president and asks for financial support, the president will consider the cost of not getting involved, as the following section of an interview with an organising committee member highlights (interviewer = Q; respondent = R): Q: You get to a point where you question what the cost of not being there is R: Yes Q: It is a political cost? R: Exactly… If you say no, what is the cost of saying no? ... That really is the question to ask. If I say no, what will happen? That’s it, right there. When the Mayor calls you and asks for $100,000, you can say yes or you can say no. It’s a
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B. Séguin et al. choice. What will the 100,000 be worth for the next ten years? Will the Mayor be re-elected next year? That’s the question you ask yourself.
The strategy to forego one of sponsorship’s most important benefits (i.e., exclusivity) did contribute to corporate support as opposed to sponsorship. While a typical approach to sponsorship would have been to sell category exclusivity, the leaders decided to sell corporate support by ‘category’. This is why MONTREAL 2005 had nine financial institutions supporting the event. A number of authors have suggested that ‘blocking’ the competition is oftentimes an objective of sponsorship when exclusivity is offered (Irwin and Sutton, 1994; Mullin, et al., 2000; Shank, 2005). In this case, the event was positioned as a cause and received support from various companies, some of which were competitors. Thus, the cost of not being involved had a different meaning than blocking the competition and as such put pressure on corporations.
4.5 Corporate peer pressure Given that “corporate Montreal wanted to save face” (Government representative), the organising committee leaders approached corporations in Montreal, one at a time, to obtain their financial support. This had a snowball effect on other like-corporations: “We wanted to rally the business community behind a cause, the city of Montreal … so I would go out to meet with the President of companies, sometimes it would be the Mayor that came with me, at other time it was Normand Legault who was with me, or someone who had better contact within the company than I did. And to be honest, not many companies said no. I think at one point, we were at 70 companies and we had something like 68! It was like I said, I have never seen anything like it. At one point, I went home and had a flash, it would be great if we had a press conference with all of the banks [financial institutions] supporting the event. So I met with all seven of them, the Presidents and CEOs of the companies. I did the same thing with the grocers in the city. And I would present our case, the importance of getting their support for the event, we are doing this for Montreal, the citizens, the image of the city, save face, and to put on a first class show we needed their support. And, you meet with the bosses of these companies and you tell him that you are on your way to meet his competitor for the same thing. Listen, these guys wake up in the morning to hate each other! And you, you are telling them – I will take your money and then go see your competitor. He tells me no, you don’t understand … and I tell him, oh yes, I understand, and not only will I go see the other one but I will go see the other six as well! It got to the point where they did not want to be the ones saying no. All seven banks signed on and all three grocers said yes and it was the same the whole time. It started at $50,000, then up to $100,000 and up again to $150,000 and we went all the way to 9 million, one case at a time with more than 90 companies. It got to a point when they [the companies] did not want to say no as they did not want to be perceived as non-supportive.” (Organizing committee member)
The leaders (e.g., co-presidents and director general) of the organising committee were able to rally the corporate community behind a common cause: Montreal. The concept of exclusivity, identified as a key benefit in the literature, was not an issue as corporations were solicited by product categories (banks, grocers, automobiles, etc.). Then, as a number of companies in each category rallied behind the event, the organisers were able to use the corporate peer pressure to their advantage.
Corporate support Figure 1
Proposed model of event corporate support
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A proposed model for corporate support Comparing the above to Carroll’s (1979, 1999) CSR aspects (economic, legal, ethical, and discretionary), findings are clearly associated with an economic viewpoint – corporate support being built around the idea of gaining funding for the event from a range of companies. However, legal and discretionary aspects are also evident. The organising committee must operate within the (legal) international federation parameters set within the host city agreement, but corporations must also operate within the legal context of their country and/or region. Yet, a discretionary aspect is unmistakable for corporate support. It is the corporate president’s (or CEO’s) discretion as to whether or not to support the event. Based on the preceding findings and discussion, a model presenting the relationship between the above factors is proposed in Figure 1. In the model, it is suggested that the political and business network of the organising committee leadership is key to the positioning of the event as a cause. In the case of MONTREAL 2005, the leadership team was made of three influential individuals including the Mayor of the city and two well-known business executives within the community. They brought important levels of credibility and rich networking circles which helped in the creation of a brand for the event and its subsequent positioning within the community. The positioning of the event in order to garner corporate support should include the positioning of the sport and/or event as a cause, the noting of the benefits of hosting the event, CSR rhetoric, and contextual limitations. In this study, the cause was directly linked to the image of the city and the benefits associated with the event. In addition, the contextual limitations (time, sponsorship scandal, etc.) contributed to the positioning of the event. Given the credibility and vast networks (political and business) of the champion(s) (i.e., leaders), direct contact to Presidents and CEOs of corporations within the community is desired in order to gain corporate support. As the leaders begin to obtain corporate support, other corporation presidents/CEOs must contemplate the potential costs of not getting involved with the event, and to some extent, of not supporting the leaders in their efforts (e.g., potential negative public opinion, impact on future business relationships). Together, these factors lead to a form of financial support that may not be achievable if only corporate sponsorship is considered as an option or if all factors are not present. In the case of MONTREAL 2005, more than $9 million dollars was raised in the form of corporate support.
5
Conclusions, implications, and future directions
The special circumstances regarding financial support for MONTREAL 2005 has provided a basis for developing a model of corporate support for major sporting events. Both academia and all levels of government support the idea of hosting sporting events as a way to promote a city’s image and reputation, as well as incur positive financial and infrastructure returns for the community. The data analysed in this study re-affirms the
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notion that the community as a whole benefits from hosting sporting events and sheds light on the role that corporate sector enterprises can play in ensuring the success of such events. The type of involvement seen here is corporate support. The findings also illustrate the important role of leadership and higher levels of political and networking skills in acquiring financial support from the corporate sector. Furthermore, this research indicates that significant levels of political and business networking skills can also help add credibility to the event. Other factors include the positioning of the event (including the event/sport as a social cause, the benefits of hosting the event, corporate social responsibility, and contextual limitations), and accessing corporate presidents directly. We found that the cost of not getting involved and corporate peer pressure moderated the corporate president’s decision to offer corporate support to the event’s organising committee. Although the model implicitly entails the need for a leader with specific political and business networking skills, interviewees also raised the question as to whether or not this role should be fulfilled by the Mayor of a hosting city. While this discussion was beyond the scope of this paper, researchers should examine this question in greater depth. Arguments were made equally for and against the appointment of a mayor on the organising committee of a major sporting event, with reference to examples in the field. For example, the 2004 Athens Olympic Games was led by municipal leaders whereas the 2010 Vancouver Olympic Games will not be. The unique situational factors associated with the event, while difficult to predict or control, proved to be important in the sponsorship outcomes. As a result, organising committee members and city leaders must have a good understanding of the external environment, as any situational factor could become an obstacle and hinder their attempts to achieve corporate support. The model of event corporate support presented in this paper is an alternative to traditional sponsorship. There may be resistance from the corporate world when being exposed to these alternative ideas of financial support. This study does not suggest that traditional sponsorship should be completely eliminated from an event’s financial support; rather, we propose this model as an option for other major sporting events similar to the FINA World Aquatic Championships. Events that do not have strong brands like the Olympic Games and the FIFA World Cup and who struggle for financial backing could benefit from this type of support. Corporate support can offer a less expensive alternative to these high profile events where organisers “charge premium prices for sponsorship rights” [Hoek and Gendall, (2002), p.72]. Even smaller regional or national events, such as the Canada Games, could potentially incorporate this model into the event bidding to ensure the city and its leaders are behind the event. There is even the possibility of combining traditional sponsorship and corporate support in the same event. As long as the parameters are clearly set in advance between the organising committee and the sponsors, there is no reason why the benefits associated with both methods could not ways to gain enough financial support. Future research now needs to directly test the relationships proposed in our corporate support model, as well as examine the possibility of there being other factors impacting corporate support for different types of events such as festivals and conferences.
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Acknowledgements We thank the following University of Ottawa graduate students for their contribution: Sandra Campbell, Mathieu Larose and Kara Yessie.
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Appendix A Interview questions 1
What was your role in relation to the 2005 FINA World Championships?
2
What are three words that come to mind when you think of the image of FINA 2005 before January 2005? After February 2005? a
As a stakeholder for FINA 2005, were you aware of the vision for OC? Mission? How did this impact your perception of the image of Montreal 2005?
b
What was the importance of the leader in creating these images of the OC?
c
What were some of the key differences making it better or more difficult? Why?
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d
In your opinion, how does leadership impact brand creation?
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What are some challenges for an OC when creating a brand? What would you recommend?
What were the influences of FINA’s marketing policies on the organising committee’s ability to generate marketing revenues? a
How was the event positioned and presented to potential sponsors before the restructuring?
b
How did the change in leadership impact the sponsorship program?
c
Did the federal sponsorship scandal impact the organising committee’s ability to generate funds?
What are the key differences between ‘sponsorship’ and ‘corporate support’? a
How important is category exclusivity in each case?
b
What role does leadership play in formulating sponsorship decisions? i
Did these roles and impacts change over time?
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What role(s) did pre-established relationships between the organising committee’s leader(s) and the leaders within the corporate community play in gaining sponsorship/corporate support?
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How does leadership impact the event’s promotion to stakeholders and their desire to associate themselves with the event? i
e
Were there differences over time?
As a stakeholder in the event, were you made aware of the sponsors’ objectives and activation plans?
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How was the return on investment measured by the organising committee and stakeholders?
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Do you have any recommendations for the leadership of future similar events?
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Do you have any recommendations for the sponsorship of future similar events?
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Is there anything else you would like to mention?
Appendix B The sponsorship scandal The sponsorship scandal originated from an initiative (sponsorship program) created by the Government of Canada to provide organisations with financial resources to support cultural and community events in exchange for visibility (e.g., Canada wordmark), thus promoting federalism in the wake of the 1995 referendum on Quebec sovereignty. From 1997 to 2003, the Government of Canada spent about $250 million to sponsor 1,937 events. Following the Auditor General’s 2004 report, it was discovered that $100 million
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(40% of total expenditures) was paid to various communication agencies in the form of fees and commissions for little or no services. Then Prime Minister Paul Martin asked Justice John Gomery to head the Commission of Inquiry into the Sponsorship Program and Advertising Activities. A number of Liberal Party officials and loyal supporters from Quebec were found to be involved in what became known in Canada as the ‘sponsorship scandal’.
