Among the many types of sponsorship and partnerships possible, already discussed in the previous pages of this blog, certainly deserves a closer examination the technical sponsor.

Without any pretense of academicity, we can define technical sponsorship as the acquisition of marketing rights resulting from the association of a company producing goods and services with a sports property (team, event, or organization) and coinciding with the simultaneous provision of such goods and services to the property itself necessary for the performance of the property’s main sports project.

As you can see, there are several elements at play in this definition.

Let’s try to examine them

First of all, it is necessary to say that a technical sponsor is a sponsor in its own right, i.e., an entity that aims to obtain marketing and communication rights with the purpose of deriving economic benefit, positioning, visibility, and so on. This aspect, which is common to all types of sponsorship is fundamental, and is the central reason behind any sponsorship agreement.

Second, there is the provision of goods and services consequent to and contemporaneous with the sponsorship agreement. A technical sponsor uses its products or services as a key part of the sponsorship compensation. Giving an example, a clothing company that produces playing uniforms becomes a technical sponsor of a team at the moment that -through the sponsorship agreement- it also provides the uniforms in which the team takes the field.

Technical sponsor

This is the classic case with major sportswear brands such as Nike, Adidas, Puma, and Macron, which are technical sponsors of Juventus, Manchester United, AC Milan, and Lazio. But it is equally true, to name others, of D.I.D., which produces the chains for Ducati motorcycles in MotoGP, Brembo, which supplies brakes to Scuderia Ferrari, or Wilson, which creates the rackets gripped by Roger Federer.

It becomes crucial here, however, to make a distinction and clarify the part of the definition that reads “necessary for the conduct of the property’s main sports project.” Not all those companies that give goods (or services) to teams or athletes can be defined as technical partners: the distinction lies in providing items that are absolutely essential for the practice of the activity in question. Brakes and tires are necessary for those who race cars or motorcycles, just as it is required by regulation to play soccer with a uniform, or tennis with a racket. In contrast, manufacturers of pasta or oil, or general contracting companies that make hospitality and office facilities available, can hardly be considered technical partners.

Compensation, goods and services

Finally, nothing was said about compensation for this type of sponsorship agreement. If -traditionally- the compensation of a Main Sponsorship is almost essentially monetary, the matter becomes more complicated when at stake are goods and services as valuable as those discussed above. It is not inaccurate to say that, in the case of technical sponsorship, each case must be studied individually, taking into account the elements involved. Sometimes the mere provision of materials may be sufficient to compensate for the agreement, while in other cases it is necessary to accompany the goods with financial consideration.

A recent example is the agreement between Nike and Manchester City. The swoosh brand, in addition to having to supply all the material for players and staff, will pay the English club with a substantial check of 45 Million pounds per year. Similarly, the same American company, paid about a BILLION dollars for the agreement to supply the entire NBA Basketball Championship. Astronomical sums, one might say, but cui prodest?

Effectiveness and returns

The reality is that technical sponsorship is one of the most effective and most immediate returns. What is communicated with this type of agreement, wanting to get out of metaphor is, “My products are so good that they are used by the best athletes in the world. In all likelihood they will therefore be great for mainstream users as well.” Fans of a sport, especially practitioners, place great care in choosing the products that superstars use on the playing fields and do not hesitate to purchase the same equipment in the hope of elevating their performance.

It is not uncommon to see kids on the Sunday courts wearing the same cleats as Messi or Ronaldo, runners wearing the same glasses as Mo Farah, or tennis enthusiasts making sacrifices to sport Nadal‘s Babolat Pure Aero.

Mind you, and herein lies the great efficacy of sponsorship: it is not solely fashion (although of course it is a non-negligible element), but a real value passage clearly perceived by the user/user who immediately grasps the innate qualities of the product.

How much are technical sponsors worth?

The largest and most onerous technical sponsorships are found mainly in the world of soccer, although the gap with other sports has narrowed dramatically in recent years.

That being said, what is the economic value of technical sponsors concerning the world’s most important sports properties? More importantly, which are the most popular brands that adopt this type of sponsorship?

Here are some examples:

At the beginning of the 2017-2018 season, the American brand Nike signed an 8-year contract with the championship organizer of the American basketball league, the NBA. Several sources speak and attest that the contract between the parties is worth about $1 billion.

As for the world of soccer, leading the way are Barcelona and Nike and Real Madrid with Adidas, who lead this special ranking. The Blaugrana and the mustache signed a 10-year contract worth $178 million a year in 2018, while the Blancos and the German brand reached an agreement worth $169 million in recent months that will bind them for the next 10 years. Only, so to speak, tenth is Cristiano Ronaldo ‘s Juventus, which benefits from essential goods and services from Adidas for $51 million per season.

Dominating the ranking of the world’s highest-paid sportsmen is the Portuguese ace of the Old Lady, who receives an amount of about $18 million from Nike. A definitely huge sum when compared to other sports stars such as Lionel Messi, who receives 7 million from Adidas, and UFC fighter Conor McGregor, who is tied to American Reebok for 5 million dollars.

In the world of men’s tennis, multiple Swiss champion Roger Federer has even signed a lifetime contract worth 2 million annually with Wilson, a U.S. racquet and bag supplier. In the women’s field, Japanese tennis player Naomi Osaka represents at just 23 years old the highest-paid female athlete ever according to the famous Forbes magazine, thanks to the 8.5 million received from Nike each year, surpassing the far more famous Serena Williams and Maria Sharapova.

Finally, it is also important to note the exponential growth of technical sponsorship in virtual sports competitions. The largest U.S. cable operator Comcast’s Xfinity and German multinational T-Mobile have for several years been providing connection tools and digital platforms to support eSports, a growing market worth nearly $1 billion.

Let’s talk about engines

Probably the most effective example, once again, comes from the world of motoring. Those who use motorcycles with frequency and passion (and above all prudent awareness) are well aware of the importance of first-rate protective clothing and do not mind the euro when there is a need to buy the new back protector, glove, helmet or padded jacket. Brands such as Dainese, Alpinestars, AGV and Arai (and many others, of course) have made sports communication and sponsorship their main marketing asset, precisely because nothing inspires confidence like the same helmet worn by MotoGP (or SuperBike) riders during their extraordinary performances.

Then again, if Valentino Rossi trusts AGVs, why shouldn’t Mr. Luigi when he faces the commute to work on the road?

Technical sponsorship can thus prove to be not only an effective tool and capable of yielding important results in terms of communication or business-think of the number of replica Ronaldo jerseys that Adidas will sell until 2027-but also, in the case of materials used copiously by the sports property, extremely convenient for the supplying company, which will pay for part of its technical sponsorship agreement by using its own products instead of money.