Wednesday, September 25, 2013

Racing - Getting A Sponsor

It's that time of year, the time when clubs and races need to re-up for next year. Some racers/riders even start thinking about starting up their own club/team/race. Inevitably the whole topic of money comes up. It costs money to hold a race. It costs money to buy race kits. It costs money just to buy club jerseys.

So the question is, can we get sponsors to help offset the costs?

Well, that's a good question.

Okay, first off, sponsors can give you either money or merchandise or discounts on merchandise you buy. Money sponsors are the Holy Grail - that's what makes teams and clubs work. Merchandise sponsors, not as much. If it's a shop that's offering a discount they're losing potential profit but as long as the riders pay whatever they're supposed to pay there usually isn't any cost to the shop, especially if the shop makes an agreement with their vendor/s.

This isn't to undervalue shop sponsorships, it's just pointing out that selling stuff at close to cost is very, very different from giving that stuff away, and significantly different from writing a check.

Clubs, especially the larger ones, may work out a deal with the custom clothing companies to get a break on price. Such discounts can be passed on to the members, saving the members money.

That's all good but there will still be costs. Typically you'll need to do some artwork, they may/will be some legal/federation fees to make the club/team official, and you may want to start up a website (domain and hosting fees).

To pay for that stuff you either need to charge dues, make money for the club/team through some kind of activity (bike race, bike ride, bake sale, whatever), or find a money sponsor.

Money sponsors come in two flavors:

1. Loves cycling, just wants an excuse to spend money to see their logo/name on a kit.

Usually this is a rider who also happens to own a business, or whose employer decides that part of that employee's expense could be some money thrown at a bike team. Typical are the sponsors of a club I ran many years ago - the car place was owned by a rider's dad. The tooth place was owned by a rider. A clothing designer (Alexander Julian) designed the colors - he was a client of a team member.

The jersey described above.

The sponsor doesn't expect to get anything out of it. This kind of sponsor might be good for a small club, where it's relatively small amounts of money, $500 here, $1000 there. In our case we needed to cover very expensive artwork fees. Any leftovers went to reducing the cost per piece to the members. The clothing wasn't free but it was certainly less expensive than it could have been.

These charitable sponsors also works for ultra-huge teams, like BMC (Andy Rihs, CEO of Phonak, also owns BMC) or Mapei (whose owner was a cycling fanatic). High Road was personally sponsored by Bob Stapleton; Slipstream is Doug Ellis. These people have money and passion and decided to put some of their money up to do what they wanted to do, what they thought was right, or because they wanted a bike team.

It's sort of like a cheap version of sponsoring an F1 driver - some drivers have personal sponsors to the tune of millions of Euros. Currently at least one of those drivers is sponsored by his dad, and since his dad is essentially buying the team, the son may/will get one of the two cars in 2014.

2. Actual business sponsor. This kind of sponsor wants a return on their money.

You don't need to know the sponsor - you just need to make them a lot of money. Sometimes a sponsor may be a combination of both, but a charitable sponsor won't be as demanding as an actual business sponsor.

How do you attract an actual business sponsor?

Show them the money.

Go to your local bank, ask for $10k in sponsorship. They'll ask you, what will you get me? If you can show them that you'll get, say, 10 times as many eyeballs on their logo if they give you the $10k instead of taking out 10 ads in local papers then they might give you the money. Figure around here a typical newspaper might have a 100,000 circulation number, so 10 ads is 1,000,000 pairs of eyeballs (at least in terms of marketing).

Now think of how you'll get 1,000,000 pairs of eyes on the bank's logo if they gave you the $10,000. If you figure that out with a cycling club and you can prove it to the bank then you'll probably get sponsorship. A long time ago a friend tried getting sponsorship from a bank and that's the response he got from an understanding manager.

Another example - go to a large corporation, like a GE or similar. A lot of times they'll give you, say, $50k, no problem, with one catch - you have to donate the same amount to a charitable organization. It's not really sponsorship, right? Or is it? It's basically seed money to earn more than $50k so you can use the change to cover costs or even make money. This is how it worked a little while ago, in a city chock full of big corporations. They were very free with their "charitable" money but I had to donate that amount to a charity to get the money. Since I couldn't really do much with the money if I had to give it all away I decided not to pursue that avenue.

So how do you get sponsorship?

First you need to think small or big. I'm defining small as anything under $10,000, and realistically anything under $5,000. Big is anything over $10,000 and realistically anything over $30,0000. For some reason I never hear of a sponsor that gives $10,000. It's either $1,000 or $30,000. That may be me, though, so don't take it as a rule chiseled in stone.

Anyway, if you're thinking small then it's not too bad. Find a cycling nut who can throw $500 or $1000 your way. The guy that drives the S8 to the group ride might want to put his favorite business on the jersey, or maybe just a bird or his son's artwork or something. Whatever, if you can make it work then so be it.

For example one of our sponsors was a nightclub owned by a really serious mountain biker. He didn't like TV so he had a "No TV" logo (TV with the red circle and slash through it) on our jerseys. That's what he wanted and he paid for it. I should point out he had logos on the side of our jersey but those, too, were hard to figure out.

The "No TV" symbol on my shoulder, sometime between 1989 and 1992.

If you want something a bit more then you need to do some work. Figure out what kind of market your club would appeal to and go to those business. For example, the guy that shows up on the club ride driving his landscape business pick up truck, see if he'll sponsor the club. See if there are riders who use a landscaping business for their home or business and see if they'll switch.

Do you meet at a coffee shop every Saturday morning? See if they'll throw something your way. Ask them to pay for the artwork (usually it's a major unexpected-to-new-clubs cost), maybe help pay for some of the kit. If you're looking for a merchandise sponsor this may be the thing - can they give you free coffee with every egg sandwich?

Look around the parking lot when you do a club ride. Do you see a lot of Lexus/Acuras? Pick up trucks? Big SUVs? Start thinking creatively. Approach a Chevy dealer, tell them, "Look, when I look around our group ride parking lot I used to see a lot of Suburbans but now I'm seeing cars like the Prius. You want to sponsor our club? $1000 cash to the club to be on our jersey plus a substantial discount on Suburbans or any other Chevy if a club member buys one. We all ride $3000-10,000 bikes so a $50k Suburban is not out of reach, it's just they need an excuse to buy one. What do you say?"

Think of how much money the dealer makes. If they get one sale out of it they'll pay for their sponsorship. Maybe you should ask for more!

Seriously, though, you need to consider the sponsor's side of the equation. If you can make the sponsor at least as much profit as they're giving you (so if they give you $1000 then you sell enough stuff that they make $1000 profit), it makes it easy for the sponsor to give you money.

Heck, if someone said to you, "Hey, if you front me $1000 I'll make you $1500 by the end of the summer," it'd be worth thinking about.

Well, as long as that someone isn't in Nigeria.

If you're thinking big then you have a lot of work ahead of you. Since I'm not qualified to address big sponsorship deals (I'm saying anything into the 5 digits, and definitely 6 digit range) I really can't say much about it.

It's easy to get sponsorship if you make that business money. It's harder if you can't show that they'll make way more money back then they give you.

1 comment:

Anonymous said...

A+ Max Chilton reference