The most common ratio used in sports sponsorship is cost per thousand impressions
(CPM). CPM is also the most common relative metric used in other advertising or marketing
channels. Here is the formula to calculate a CPM: CPM = Cost of Sponsorship / (Impressions /
1000). Different sponsorship categories will have different CPM rates. The CPM rates vary
because of the ease of generating impressions in the channels and the value of people within
those channels. Digital and mobile typically have the lowest CPMs because it is relatively easy
to generate high number impressions while having lower level of measured engagement in these
channels. Luxury / hospitality suites are typically on the opposite end of the CPM spectrum.
These CPMs are often higher than the average CPM but these often occur with the most lucrative
Does that mean that digital and mobile channels are less valuable than other forms of
sponsorship? Not necessarily. In fact, many corporate partners are shifting resources to
sponsorships focused on digital, social, and mobile activations because they can obtain detailed
engagement metrics. Digital media also enables advertisers to more easily reach younger
consumers that can add significant long-term value to companies and are often difficult to reach
in other channels. This can make digital sponsorship more valuable while still having a lower
price point than traditional media. This helps to show how understanding CPM rates can provide
a good framework for discussing value across different channels.
Sport organizations typically utilize comparable valuation to value corporate
sponsorships. Comparable valuation is examining the value of an asset relative to similar assets
in a category. For sport organizations, this means pricing sponsorship inventory in ways that are
similar to other teams in the league or geographical area. The reason sport organizations use this
approach is because of fear that a corporate partner will purchase inventory from another team or
league if the team’s prices are higher.
There are a couple of problems with this approach. First, it is not always clear what the
prices for sponsorship items should be. Sport organizations are often private enterprises that are
not required to share the prices of their sponsorship inventory items with other teams or leagues.
Even public high schools and universities often refrain from sharing prices. That means sport
organizations often rely on estimates or corporate partners to obtain pricing information.
The second issue with focusing on comparable valuations is that organizations primarily
compete on price instead of value. It implies that sports sponsorship is solely a commodity where
buyers will look for the lowest price. Sport organizations potentially compromise revenue when
evaluating inventory in this way. Each sports team and league will have different abilities to
target specific demographics. For instance, the PGA Tour typically targets older, male fans while
the National Women’s Soccer League (NWSL) focuses on a younger, female demographic.
Different partners will prioritize different demographics and receive varying levels of value by
working with either the PGA Tour or NWSL based on their business model and objectives.
Another factor is the marketing goals of corporate partners. Larger brands will often
focus on customer acquisition and customer retention because people already know what service
offerings these companies provide to consumers. Therefore, large companies typically want to
find sponsorship inventory that either impacts their bottom line or creates better engagement
with customers. In addition to generating revenue, smaller companies often use sports
sponsorship to help increase awareness and perception of their brands. Sport organizations often
have large, passionate followings in the region in which they compete. Smaller corporate
partners then use sports sponsorships to communicate to a large number of new customers about
their presence in the market using the sports team they follow as the vehicle.
Sport organizations are advised to use all three types of valuation models when
completing sponsorship valuation. Using an inherent valuation approach enables properties to
determine quality and quantity of impressions. Employing a relative valuation enables sports
organizations to communicate impressions using a metric that corporate partners are already
familiar with when examining advertising spends. Finally, a comparable valuation benchmarks
valuations with other organizations’ price points factoring in the considerations discussed in this
chapter. Sport organizations do not need to assign the same weight to each valuation type.
However, using a combination of each approach will ensure that a property achieves a fair