Gemba research reveals conflicts of interest in more than 40% of sporting sponsorships

New research by consultants Gemba has found a credibility problem for many sponsorships with conflicts of interest a concern for many big brands.

Released in the week that the Australian-founded independent advisory firm announced the integration of its Turnstile entity into an enhanced sponsorship practice, Gemba’s survey of employees within major sport sponsors reveals that conflicts of interest are a significant issue in the transaction process for 42% of respondents - stemming from agencies both selling rights and advising potential buyers.

This figure rises to more than half (52%) of people with 10+ years’ experience in the sector.

Just 10% of the people surveyed said that sport sponsorship does not suffer from any conflicts of interest. 40% of respondents believe that these conflicts impact the credibility of sponsorship more broadly, with only 16% thinking it has no impact.

The research reinforced that sponsors want to understand how their agency will deal with conflicts, with one in five (20%) stating that they won’t appoint an agency that also sells rights.

More than a quarter (28%) of the interviewees did not know whether their partner was involved in selling or not. A third (34%) of respondents believe that agencies selling and advising is an unsustainable position.

Commenting on the findings, Gemba’s Global Chief Executive, Rob Mills stated “our research clearly shows that the practice of agencies acting for both the buyer and the seller is unsustainable if we are to maximise the amazing potential of sponsorship.

“When executed properly sponsorship is a powerful enabler of business and brand outcomes. As governance and procurement practices increasingly impact sponsorship, we need to adopt models that have been standard in other industries for decades.

“The industry needs great sales businesses who are commissioned to sell rights for sport and entertainment properties. The industry also needs independent, and fan insight-led agencies to support the needs of brands and build the credibility of sponsorship as a marketing channel. But it’s going to be increasingly hard to do both,” Mills added.

Gemba launches new sponsorship division
In line with the ambition to build a premium best sponsorship practice and to meet the evolving needs of the market, Gemba has announced an increased investment in its sponsorship services.

This includes the hiring of additional staff and the development of new fan focused data tools to enhance the sophistication of sponsorship. The division will incorporate Gemba’s leading fair market sponsorship valuation solution, Turnstile.

Turnstile has evaluated over US$5 billion of deals and transformed how sponsorship is measured since its launch in 2018. Its holistic and independent valuation methodology helps brands and rights holders transact more efficiently, transparently, and sustainably.

Under Gemba’s new structure, Rob Mills will move from his current Chief Executive role for the Tenka Group to assume the position of Global Chief Executive for Gemba.

Andrew Condon and Claire Kelly will lead Gemba’s Asia Pacific and European & Middle East regions, respectively.

The Turnstile teams based in London, New York, Sydney and Munich will report to Kelly.

Click here to contact Gemba through their entry in the Australasian Leisure Management Supplier Directory.

Image shows the Gemba leadership team (from left): Andrew Condon, Rob Mills, Claire Kelly.