Sunday, July 15, 2012

Dollars & Sense - Armed Forces Sponsorships

Last Thursday in his weekly Real Talk column, Seth asked me whether the dollars spent by the Armed Forces in sports sponsorships make sense.  Initially I was going to answer his question in the comments section, but it really got me thinking.  Do these really make sense?  Here is my attempt to explain what I think about these types of sponsorships. 

The Armed Forces, which for our purposes will include the Army, Navy, Air Force, and National Guard, is more or less funded by donations and tax payer dollars.  Tax payers, naturally, want to see their tax dollars spent wisely by their government.  It seems that much of the backlash over the Armed Forces buying sports sponsorships is that tax payers feel that sports sponsorships are not a wise way of spending tax dollars.  You can easily point out areas of tax dollar waste and inefficiency, but this is a sports business blog and frankly I’m not interested in anything pertaining to politics.  Anyhow, I think I speak for many when I say that the points of contention with these types of sponsorships are at least valid and worth looking into. 

As we all know, sports sponsorships ain’t cheap.  It is reported that the Army paid about $500,000 per race for their sponsorship of Ryan Newman’s car before they pulled their sponsorship last week (SBJ, 2010).  They sponsored Newman’s car for 15 races per year, which puts their total annual sponsorship tab around $7.5 million. And that’s just for one car!  Did I mention that sports sponsorships ain’t cheap?
Seth mentioned last Thursday that a lot of the issues raised with the Army’s sponsorship deals are that it lacks any tangible return on investment.  Do they really have a solid figure of how many new recruits that they are bringing in from this?  Do they have a dollar amount on new donation dollars coming in?  It’s tough stuff to measure, which I’m sure they have realized over the past few years.

The Armed Forces are just like any other business in that they have to get their brand name out there and they have to get people involved.  However, the Armed Forces face the challenge of trying to convince people to donate not only valuable time and money to their country, but possibly their life in the process.  That’s an element that many businesses do not face because consumer products and services typically are not actively taking lives.  The nature of the commitment to the Armed Forces naturally makes it difficult to get people involved. 

There is a strong stigma against the current war that we find ourselves engulfed in.  Even though the nation is in the process of pulling out, the stigma of the war seems to have been cast over the Armed Forces in general.  Patriotism is certainly not what it used to be.  We are not that “one nation under God” anymore.  We are a country of individuals.  It is tough to get people involved in risking their life for their country when they are simply living in the country.  These people aren’t “living” their country anymore.  It’s simply a different time with a different attitude and perception of the Armed Forces.

A point of the sponsorship that I think is tough for the Armed Forces is the activation of the sponsorship.  The activation can be a very sensitive subject.  The Armed Forces must be gentile in approaching people about enlisting.  It is inherently much different to be approached about buying a product than it is to risk your life.  People (hopefully) value their lives greatly, so having a government organization asking you to risk your life can be tricky.  The Armed Forces must tread lightly when it comes to activation.  The problem here is that any under-activated sponsorship is bound to fail at some point. 

Although the money spent on advertisements makes the tax payers cringe, it is a necessary bullet in the Armed Forces business plan (pun intended).  Whether they are spending money in sports or elsewhere, the dollars are inevitably going to be spent somewhere.  Clearly, the Armed Forces see what all other businesses and companies see in sports.  They see a passionate group of fans jumping at the chance to show their loyalty.  Completely understandable. 

The Sense

It is hard to make sense of this one.  The different divisions of the Armed Forces obviously feel the same way considering the Army recently pulled their NASCAR sponsorships and the National Guard said that they were sticking with Dale Earnhardt Jr.   
Sports sponsorships are expensive; there’s no secret about that.  Additional to the price tag of a basic sponsorship, the activation of the sponsorship costs big money.  Sometimes the quantity of activation can be a big question mark.  How are the Armed Forces supposed to hammer their message home to their target market, while also treading lightly as to not force government entities upon people?  The government and the Armed Forces already have a strong stigma that is weighted heavily against them, so over-activation could only alienate the people further.  With this much tip-toeing around how much activation is the right amount of activation, how in the world are they supposed to perfect the quality, innovation, and creativity of the activation.  It is close to impossible.

It is important to remember that if the money isn’t spent in sports, it will be spend somewhere else.  Sports sponsorships may not produce the tangible results that marketers, and in this case politicians, look for, but would another type of sponsorship offer a clearer outlook?  I would say that’s doubtful.   Sports sponsorships may be expensive, but there is proven reason.  Advertisers play off of the passion and loyalty shown by sports fans.  The Armed Forces is just trying to jump on the bandwagon.

Overall, I think there is still some sense in the Armed Forces spending their sponsorship dollars in sports.  Tax payers may see it differently, but there are plenty of other ways Barry Obama can waste your money so don’t take this one too personally.  It just happens to be a bit more visible.  Sports sponsorships may not be an exact science, but seriously what sponsorship is?  Regardless of tangible results, there is some kind of method to the sponsorship madness in sports.  Otherwise, there wouldn’t be the incredible demand that there is now. 
This may just be speculating or generalizing, but I feel that NASCAR is a good fit for the Armed Forces.  Typically NASCAR is a southern dominated sport, and stereotypically the south is further behind in the times which could make them more susceptible to being stuck in the American pride type ways. 

I think that given the sensitivity of the Armed Forces sponsoring anything, they have done a pretty good job in their approach.  Although they spend tax payer dollars, sports may be the best option for them because of the targeted audiences and passionate fan bases.  For now I say that the Armed Forces sports sponsorships make sense.  But the jury is out because after all, sponsorships aren’t an exact science.


  1. Great answer kev! haha. I find that I agree with you. It's a tough call && tough to measure...but the dollars are going to be spend anyway && I can't think of a better product or consumer base to sponsor than that of sports and sports fans. The exposure of and dedication to sports is seemingly unmatched by other industries.

  2. I figured it was a bit much for a comment on your post haha. Just hope I got the point across that even though sponsorship in sports is expensive, there is a reason for the high price tag... They usually work when done right. Unfortunately, many people only see that 6 to 8 figure price tag.