With the news that consumers face a 2% levy on all non-life and health insurance policies to help fund a €720 million shortfall at Quinn Insurance the second edition of RTE’s Late Late Show of this season will run on Friday with Quinn-Direct as the high profile programme sponsor. In the wake of the details of the Insurance (Amendment) Bill 2011 being published the sponsorship market in Ireland sees the state broadcaster, already under pressure for its inflated cost structures and over reliance on state subsidy, flaunt a sponsor that may now send shivers down the spine of consumers – all of whom must now bear the costs of Sean Quinn's former company.
Surely the pragmatic thing would have been for RTE to renege on the second year's money, not only in the interest of good taste, but as part of its contribution to the new era of austerity.
It seems that that €720 million will now be needed by the fund, of which and €280 million will be advanced by the exchequer in the fourth quarter of this year to meet the requirements of Quinn Insurance. The Government envisage that the levy, which will indirectly be charged to consumers through their insurance providers, will raise about €65 million per year - as in 1984, following the collapse of PMPA the previous year.
At that time there was insufficient money in the fund to meet liabilities so a levy of 2 per cent was paid by all non-life insurers until the end of 1991. This was then reduced to 1 per cent for the following year.
With consumers now facing household charges and already paying for a TV licence the new Director General at RTE failed to use any imagination in the second year of the Quinn Direct sponsorship deal, and demonstrate they too are prepared to face real market forces in 2011. Choosing instead to accept the funds from an organisation now on a state life support subsidy.
The history is that the Quinn group signed up to the two-year contract, following on from the previous sponsor, Halifax, which at the time RTE claimed was worth more than €1m over two years - and vital addressing the estimated €68m advertising shortfall projected in 2010.
Meanwhile at another one of the those state companies, where staff are demanding 'disturbance money' to move just three kilometres to new offices, Bord Gáis, bought the naming rights to the Grand Canal Theatre in Dublin’s Docklands, run by Harry Crosbie and Live Nation.
The deal is understood to be for six-years with suggested estimates in the region of €400,000 a year, despite Harry Crosbie seeking €1 million for those same rights in advance of its opening.
At the same time earlier this month Bord Gais customers learned that they will pay nearly 22% more for their home gas supplies from next month after the Commission for Energy Regulation approved the price rises for residential customers. Indeed, as far back as July, Bord Gáis had applied for an increase of 28 per cent in prices, but in the end the approval was for 21.7 per cent.
In a sector where the state multiple is a dominant supplier the need for high cost branding and consumer visibility would appear negligible and of limited strategic value - in an internal domestic market - even if it was for sale sometime in the future. Apparently Bord Gáis believes it is engaged in a competitive three-way battle with ESB and Airtricity for market share in the gas and electricity sectors. In contrast Airtricity sponsors the League of Ireland and the figures suggested for that deal are closer to 25% of those Bord Gais secured for the Grand Canal Theatre.
The expense also comes on on the foot of securing 460,000 electricity subscribers from the “Big Switch” marketing campaign in the past two years with Lucy Kennedy of RTE - which was exceed all marketing forecasts - and more that paid for itself.
On the other hand the venue naming rights game is an expensive business and has proved so in Ireland in recent years, replicating experiences overseas, with private companies like Mobile operator O2 sponsoring the former Point Depot, and Aviva securing the rights to the new Lansdowne Road stadium.
In golf it is Failte Ireland who are the main sponsors of the national championship with the re-named 'Irish Open presented by Discover Ireland' failing to attract a commercial title sponsor for this year’s event at Killarney Golf and Fishing club.
The claim is that last year’s Irish Open provided the perfect global marketing platform for Ireland as over 82,000 fans flocked to Killarney to create one of the highlights of Ireland’s sporting calendar. Given that Fáilte Ireland is a long-term investment partner with The European Tour they chose to build on the success of last year’s tournament reaching an agreement to rename the event at a cost of €1.5 million event as ‘The Irish Open presented by Discover Ireland’.
As experts in the area of Sports Sponsorship the question is why should a company be interested in sponsorship in the first place at these rates?
The answer in theory is it should offer significant opportunities for distinct marketing and competitive advantages, as well as showing support for an event. A successful case in point being the 2006 Ryder Cup at the K Club, albeit that was hosted at the peak of the Celtic Tiger when affordability was not an issue on any one's radar.
In short though sponsorship is a financial or in-kind support for an activity, used primarily to reach specified business goals and according to IEG’s Complete Guide to Sponsorship is explained as follows "Sponsorship should not be confused with advertising. Advertising is considered a quantitative medium, whereas sponsorship is considered a qualitative medium. It promotes a company in association with the sponsee."
In addition sponsorship allows you reach specifically targeted niche markets without any waste and is a powerful complement to other marketing programmes. It can also have a dramatic influence on customer relations as often companies are looking to improve how they are perceived by their target audience. By sponsoring events they can appeal to a market that are likely to shape buying attitudes and help generate a positive reaction.
Sponsorship can also be geared to driving sales and offers a potent promotional tool in creating positive publicity or heightened visibility for a brand.
Not sure which of the above apply to the decisions made by Quinn Insurance, RTE, Bord Gais or Failte Ireland - which are all state funded - by a state that is by any normal business definition, insolvent - borrowing daily to meet its current budget overspend.
However a key fundamental parameter to all the sponsorship programmes is simple affordability. And there in lies the question about these decisions. Seems like it is sports sponsorship Irish style.
Also known as pay for it now and hope they will come in the future.
First published 2011