How Can Sports Organizations Value Assets In The Future
When investment banks, private equity firms, or venture capital firms evaluate companies
or assets to purchase, they primarily use three valuation approaches—inherent, relative, and
comparable valuations. Inherent valuations analyze the dollars or profits generated by a company
or asset to determine its overall value. Relative valuations analyze ratios to determine value. The
most common type of relative valuation is a price to earnings ratio—the price of a company
compared to its earnings. Comparable valuations examine the price of similar assets to determine
value—for example, what the prices of comparable companies are within an industry.
Sport organizations can employ a similar approach when determining values for sports
sponsorship inventory. This can start with an inherent valuation.
For sponsorship inventory, companies analyze the number of impressions generated
rather than dollars. What are impressions? Impressions are the number of people who consume a
piece of sponsorship inventory. This usually means how many people can see sponsorship
inventory in one of the sponsorship categories. Let’s examine how impressions are measured in
each sponsorship category.
• Venue, Jersey, and Event: The most common measure is the number of fans that attend a
game or competition. Most sport organizations use the number of tickets sold as the
number of impressions generated. In addition, broadcast viewable signage is an important
factor in the calculation. The more a sign can be seen on television or digital streams the
more potential value it has for a corporate partner.
• Traditional Media: Television and radio ratings provided by Nielsen, Arbitron, and
Rentrak are the most common sources that are used to provide the number of people who
watch or listen to sports content. Daily circulation numbers are used for newspapers.
• Digital and Mobile Media: Organizations often use page views or the number of unique
visitors to count impressions. Page views count the number of total impressions
consumed while unique visitors only count distinct individuals. This means that if a
person returns to a page multiple times it only counts as one unique visit. One issue with
this approach is that page views do not always mean engagement. For example, a social
media post is not read by all people who like, follow, or subscribe to an account. Many
partners are now focusing on engagement (i.e., how many people consume content)
rather than solely examining page views or conversion rates.
The challenge with measuring impressions is that not all impressions are created equal.
More specifically, conventional wisdom is that the more impressions that are generated the
greater the value of the sponsorship inventory should be. Super Bowl television commercials
cost so much because over 110 million people watch the NFL’s championship game—the
highest rated television program of the year. The Super Bowl is also consumed live, unlike like
many other non-sports programs, which can have time-shifted viewing (i.e., watching a program
on a DVR) where viewers can fast forward through advertisements.
Are all 110+ million viewers of equal value to companies? Oftentimes, the answer is no.
For example, many companies are business-to-business enterprises rather than business-to-
consumer companies. That means these companies need to target specific decision makers that
make enterprise-wide decisions. For example, Oracle is a Fortune 500 company that primarily
sells enterprise resource planning, database software, cloud applications, and data center
operations service offerings. A significant portion of people watching the Super Bowl would not
be buying these products. Therefore, it is easy to make the case that spending money on the
Super Bowl is an inefficient use of Oracle’s marketing and advertising dollars. Instead, Oracle
could target channels that focus on that people that are more likely to make a purchasing decision
for their business for Oracle service offerings. Sponsorship impressions that target this
demographic should be more valuable to Oracle because they are more likely to be viewed by the
The quality, and not just the quantity, of impressions is a critical concept for sport
organizations. More specifically, smaller sports teams or leagues do not need to generate
hundreds of thousands or millions of impressions to create value for sponsors. The sports=
organizations that can effectively communicate how they reach customer demographics to their
corporate partners will achieve sponsorship success.
Corporate Partners Go Loony For Minnesota United’s Sponsorship
Since InBev acquired Anheuser-Busch in 2013, the company has more closely examined
sports sponsorship. In particular, the newly combined company wanted to see where it was
getting value for its sports sponsorship dollar and reduce spending when it was not. Head of
Media Connections Lucas Herscovici articulated this strategy when he said, “It’s not about
signage, logos and doing defensive [property] deals. It’s about choosing the right partners and
the right passion points to drive the convergence of media, content and experiences” (Lefton,
Minnesota United (whose mascot is the Loon) clearly understood the company’s goals
when it began working with the sports sponsorship and analytics company Block Six Analytics
(B6A) to show AB-InBev how it was one of those right partners. The North American Soccer
League (NASL) team had an existing partnership with the alcoholic beverage company and felt it
was delivering value. However, it did not know how to calculate and communicate this value to
AB-InBev and risked losing its sponsorship without this capability.
Minnesota United accomplished these goals by using B6A’s Software as a Service (SaaS)
platform called the Partnership Scoreboard. First, Minnesota United used B6A’s Corporate Asset
Valuation Model to show how AB-InBev achieved its revenue and brand goals across different
channels with a single ROI metric. This includes showing every calculation in the model and
evaluating how each activation element delivers value based on the unique ways that AB-InBev
conducts business. Second, Minnesota United provided AB-InBev with access to the Partnership
Scoreboard’s dashboard that updates every time a sponsorship activation occurs. Rather than
waiting for the end of the season to see results, AB-InBev could log into the Partnership
Scoreboard and see updates in real-time.
The ROI outputs in the Partnership Scoreboard almost exactly matched AB-InBev's
internal calculations of the sponsorship’s value. Equally important was that Minnesota United
could communicate clearly by using a technology that presented the information in an easy,
digestible way to an important corporate partner. This provided the foundation for AB-InBev to
renew its sponsorship with Minnesota United because it knew that team valued its partnership in
ways that align with company’s brand and revenue goals.