Businesses have always jumped at the chance to sponsor America’s Cup teams. And with this year’s competition held in Valencia – close to the major consumer markets of Europe and in a convenient time zone for the world’s media – brands in a variety of sectors have been clamouring to get involved.
Swiss bank UBS occupies this year’s most coveted position, on the boat of defending champions Alinghi. The Cup has traditionally attracted the rich and famous, so it is obviously a great marketing platform for the bank – one of the world’s leading specialists in wealth management. Furthermore, Alinghi are clear favourites to win the competition again. Ernesto Bertarelli, the syndicate head, has spent a great deal of time and money maximising their chances.
Yet, for some sponsors, being on the winning yacht is less important than establishing a long-term relationship with the competition and its fans. For example, French company Areva, which builds nuclear power stations (and sponsors the Areva Challenge team), sees the Cup as a means to educate the public about its business. It knows there is still considerable public resistance to nuclear power, but it also knows carbon emissions are a pressing concern. Yacht racing is a high-technology sport that produces no carbon emissions, so it echoes the beneficial effects that Areva’s work can have on the environment.
In the run up to the 2003 America’s Cup in New Zealand, Areva’s yacht was attacked and seriously damaged by a Greenpeace dinghy, while moored in Lorient harbour. Yet the sponsor has stayed loyal to the competition and says its decision to participate again this year is already “delivering results”.
Areva Challenge is a clear outsider. It has not invested the heady amounts of money that teams such as BMW Oracle or Alinghi are reported to have thrown at their campaigns. By its own admission, victory is unlikely. However, unlike big team sponsors such as Emirates, the Dubai-based airline, or TIM, the Italian telecoms provider, it does not have to worry about any short-term impact on sales resulting from brand-exposure during the competition. Areva operates in a highly strategic sector, absent from the mass consumer markets that require constant promotion of their products and services, and has only a handful of competitors such as General Electric of the US and Japan’s Toshiba.
Some luxury brands, by contrast, see the Cup as a means to associate their products with the high-performance technology on the water. Swiss watchmaker Hublot, for example, has forged a partnership with this year’s Italian challenger Luna Rossa, the boat of Prada’s Patrizio Bertelli. It has developed a watch that will be sold not only through the Swiss company’s traditional network but also for the first time in Prada boutiques.
The America’s Cup is also becoming increasingly international, with teams from China and South Africa now taking part. It is, therefore, offering far wider exposure to sponsors in new markets. Areva, for example, believes it will help in the tendering process for new-generation nuclear plants in China.
In spite of the ever-increasing cost of racing technology, sponsorship fees are not as high as you might think. For example, in the 2003 competition, Areva invested €15m. But the company claims that to achieve a similar return in terms of image and awareness, it would have had to spend €75m in conventional advertising. This year, it has invested €12.5m and claims it has recouped the equivalent of €5m in equivalent advertising from the early races in May and June last year.
Compared with the sponsors of the Cup favourites, Areva has put a relatively modest sum on the table. But it has done so as an exercise in image-projection rather than winning. The short-term gains may come without champagne and glory, but the long-term gains could be huge.
Paul Betts is the FT’s European business correspondent based in Paris
