"Pain" as sponsorship changes hands

Western Bulldogs AFLW

Gage Roads Brewing’s excitement at winning a sponsorship deal with the Western Bulldogs’ AFLW team has been balanced by Two Bird’s Brewing ‘pain’ in losing the sponsorship after two years in partnership with the club.

Two Birds signed on with the Bulldogs for a first season in 2018, renewing it again for 2019 and co-founder Danielle Allen told Brews News that the deal was one that was “close to our hearts, being our local team and an opportunity for us both to raise the female voice across sport, beer and business”.

“We did have the AFLW Western Bulldogs Beverage partnership for the last 2 years, however, we did lose it to Gage Roads this year.

“Unfortunately, Gage’s sponsorship budgets are much larger than ours.

“It was quite an achievement to secure the deal in the first year, given the AFL is typically aligned to CUB, and we were very proud of the beer – ‘Trail Blazer Lager’ that we developed in collaboration with the Western Bulldogs.

Allen said that the Two Birds they knew they couldn’t “win them all” when it came to the sponsorship.

“We wish the Bulldogs the best of luck this season and hope to work with them again in the future,” she said.

“We’d also like to thank our local community and Bulldogs fans for their ongoing support of us.”

When it was announced that the Two Birds partnership would be renewed for another year in 2018, Bulldogs CEO Ameet Bains said the team were “fortunate” to have “enjoyed a strong first year working closely with Danielle and Jayne”.

“[They are] two locals who have done wonderful things with their business, which is based only a short distance from VU Whitten Oval,” Bains said.

“It was a proud moment for us to help launch Two Birds’ Trail Blazer lager for our AFLW games last season, and it was hugely popular with our members and fans.

“We’re excited to continue this partnership for another season and we look forward to building it even further.”

Western Australian brewer Gage Roads is looking to expand on the east coast with its Atomic Beer Project as well as a number of sports tie ups as part of its “brand in hand” strategy, which has seen it team up with ACT Brumbies and a number of other teams and venues.

According to the press release announcing the deal, it will sponsor a Gage Roads branded Garden Bar on the turf of VU Whitten Oval.

The suggestion one craft brewery has targeted another’s sponsorship has raised eyebrows in craft circles, though which party made the initial approach is unknown.

Gage Roads were unable to provide a comment by the time of publication, though industry sources suggest the Western Australian brewery was approached by the football club. The Western Bulldogs AFLW did not repond to a request for comment.

The business of sponsorship

Associate Professor Adam Karg said as a new competition there would be lots of uncertainty in the arrangements.

“Gage Roads has pourage rights [as part of other deals], so this is part of a history and a pattern of Gage moving into sporting properties and they’ve built up a pretty strong portfolio already,” he said.

“The Bulldogs wouldn’t have been able to tell you where they were playing their games three years ago, they wouldn’t have been able to offer pourage, there would have been a fair level of uncertainty [back then].

“And there is always that commercial aspect, particularly in AFLW where their broadcasting deal is still modest, they don’t pay in, and it is under pressure to become more commercialised.”

With increasing numbers of craft brewers partnering with sports teams and events, it’s become more important to understand how deals work, as well as how to negotiate and maintain them.

Professor Karg said that there is always uncertainty at the beginning of a sponsorship deal.

“New properties come with that uncertainty, and no one knew what this deal would look like initially. It’s not likely that in the first two years it will meet everyone’s expectations, some will overperform and some will underperform.

“Making sure that really there is a line in the assets to achieve the goals that they want is the key point, and being aware that if a sport is doing well, more parties will be interested and the costs will go up.”

He said we should expect to see more deals in the craft beer and sporting sponsorship space.

“It’s a reflection of where the diversity of the market and consumer tastes are [that craft beer is getting involved with sport]. Combined with an understanding that the live sport experience has to be more customised, it is changing to make sure its maximising its potential in terms of getting people in the door.

“Big brewers won’t be worried until the Marvel and MCG Stadiums go, they still have the pourage rights there and they will for the foreseeable future, or until we find a time when teams have their own stadiums.

“But in a US football or baseball game, sports teams have their own grounds and you [as a spectator] you have so much choice. A lot, if not all of the food and beverage offering is localised.”

Professor David Shilbury of the Department of Management at Deakin Business School said it was an interesting space because the cheaper price point of an AFLW sponsorship will attract smaller brands, but the sport’s growing popularity will see more movement in the sector.

“[AFLW sponsorships] will cost less for sponsorships compared with AFL or other major men’s sports, they cost an arm and a leg because of the reach of men’s games.

“AFLW is a nice niche opportunity for smaller niche products, so the cost is more accessible.”

Negotiating sponsorship deals

Professor Shilbury said anyone entering into a commercial partnership should be aware of the practical and pragmatic demands on the company.

“It’s a commercial negotiation, if they can obtain more money from another sponsor and it meets their needs and their return on investment, they will. It happens all the time.”

He said brewers should make sure they have the teams locked in with protection agreements, with usual terms being around three to five years.

“Absolutely [they need agreements in place]. This is what happens when you’re working with professional sport. Obviously both the commercial sponsor and team needs to engage in good legal practices.

“[Agreements vary] but three years is often the norm and sometimes you can get five. There’s no point doing it for less than three, you need time to build the brand with continuity and leverage and do things over that period.

“If you were shopping and changing all the time you would never build that leverage.”

Associate Professor Karg said there needed to be a time investment in the partnership as well.

“It takes time to build a relationship with a team or event’s fans. It takes multiple years to become aware of the brand, understand the characteristics of the brand, some people like that its environmentally friendly, like the brand itself or its ambassadors or the taste.

“To teach a fanbase, that takes time. Being clear strategically about what you want to get out of the partnership from a brand perspective and making you have a long term working relationship with a team are the main points.”

In terms of what else brewers need to be aware of when it comes to commercial sponsorships, Shilbury said it varied.

“It depends on the nature of the partnership, the deal and the length of time. You obviously have to agree on the dollars, you need to agree on the contra deals.

“The brewing companies will provide quite a bit of contra, they want people using the product, it depends on the deal in terms of use of players and intellectual property, how much time the sponsor will be involved in operations – all that will be negotiated.

“Then from the sponsors point of view, if you’re spending on a sponsorship, you’ll need to spend more money to leverage it. TV advertising time, marketing.

“What you’re really buying the sponsorship with the club is right to access, you’re not necessarily buying TV time or anything like that unless it’s negotiated as part of the deal.

“The AFL itself, they’re very used to commercial arrangements. They won’t be allowing deals to roll on where they won’t be maximising investment they could be getting. Welcome to the big league.”

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