Podcast Alert: Why Sponsorship Works

Transcript

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Charles Rolston: [00:00:00] Welcome to another episode of Navigating Sports Business podcast. I’m Charles Rolston, the VP of Consulting here at Navigate, and I’m joined once again by our founder, AJ Maestas. Today, we’re talking about the state of sponsorships in 2026. There’s more ways than ever to reach consumers, budgets are under pressure across the board, and sponsorship is often one of the first things that’s questioned and one of the hardest things to defend. 

For a long time, a lot of these deals were driven by relationships, the infamous chairman’s choice, and gut feel really more than actual measurement. So we’re digging into cutting sport sponsorship is actually a mistake, and how better data is starting to change the way brands think about sponsorship decisions, and that’s actually a really good place to start. 

Charles Rolston: So AJ, we’re coming up on Navigate’s 20th anniversary. Congratulations, by the way. And the business has really [00:01:00] evolved a lot since when you started it. Today, we support revenue strategy across the board in sports and entertainment, but we were founded originally as a sponsorship consultancy. So take us back for a minute, 20 years ago, what was the original problem that you were trying to solve when you founded Navigate? 

AJ Maestas: I really just wanted a job, but but but all joking aside, I went back to get a sports-specific MBA, and that afforded me the opportunity to go to a lot of industry conferences and hear from all these experts. Jim Kaler was the executive director of the program at that time, and he opened so many doors for me the National Sports Forum in particular. 

And so maybe five, six conferences I got to attend, and I got to see the best of the best out there talking about what was going on. And this very subject was really hot at that time, and everyone mentioned sponsorship ROI in pretty much any sponsorship-related panel or speech. Except what they would do is they would cite minutes and seconds of TV exposure. 

It was a little bit depressing cause I’m getting my MBA and I’m learning how to, measure true ROI, and people are claiming and calling it [00:02:00] ROI, and they’re really just talking about media equivalencies. So that was, a little light bulb, a little epiphany moment there that maybe this could be done better. 

My real intent actually was to marry together those sort of efficiency metrics like, exposure with effectiveness measures like custom market research and passive observation to see if people actually really went out and bought products because of that, right? If they actually, became a more loyal customer or what have you. 

But yeah, that was the beginning is believing the door was open to better measures because this silly practice of media equivalency couldn’t possibly, last. Now, of course, it has, and it has its reasons. But but yeah, that was the impetus, that it could and should be done better. 

Charles Rolston: Yeah, and what, that really resonates with me. I was also taught by the legendary Jim Kahler at Ohio, and also sent me to my first National Sports Forum, which I will be attending in two weeks in St. Louis. So if you see me there, please come up and say hello and tell me good things about how this podcast is turning out on the other side. 

But yeah, that disconnect between exposure metrics and real business [00:03:00] impact has always been part of the conversation, even when I was in grad school. In my work with CMOs here at Navigate, impression-based data is largely ignored. I see their eyes glaze over whenever we start talking about that, and what they really wanna understand is how sponsorship connects to sales attribution and ultimately impacts the top line. 

This is something that, we’ve been trying to come up with non-traditional methodologies, utilizing primary research for years and years to get closer to how sponsorship actually influences business performance. So let’s take a little bit of a broader view. When you zoom out and look at the industry as a whole, do sponsorships actually work? 

AJ Maestas: Yeah. They do when they’re done right, and that’s a really big caveat, right? When done right. But but it does get you into this really loyal, passionate community. Think of that, the halo effect of associating with that kind of loyalty, and where else in the world today do people get together en masse, in person? 

So there’s some pretty special things. When you think about crazy fan [00:04:00] behavior and that loyalty imagine transferring that to your brand. There’s very few places you can find that outside of sport and entertainment. It’s really effective. I think it has about a, in our measures, about an 80% lift in purchase intent relative to traditional advertising. 

You’re getting access to this really valuable intellectual property that you can leverage if you activate correctly. Direct response campaigns, we’ll see two to five times, five X, the response rate or whatever the intended outcome is in response when you have those sports entertainment marks and logos as a part of that campaign, and this is test versus control when you would do it otherwise, with versus without those marks and logos. 

There’s incredible B2B hospitality. It’s a driver of many, of these type investments, but, where else can you bring people to such a special and emotional experience? There’s so many assets and elements and benefits that are powerful and amazing. Earned media it’s a premium, and we’re gonna get into that, But when done right and you catch that lightning in the bottle moment, you can get incredible [00:05:00] exposure value because, the world is paying attention to these very special moments. 

Reputational stuff it can drive distribution. If you’re if you’re a CPG, you’re in the retail business, if you have pass-through rights, there’s pretty incredible things you can do to get distribution and shelf space. Employee engagement, esprit de corps recruiting. There’s so many mediums in the marketing world that a well-done sponsorship can touch, and yeah, it works when done right. But again, that doing it right, that’s a high hurdle. 

Charles Rolston: AJ, we love to celebrate our clients here at Navigate. Can you share an example of a client who’s really doing this the right way and what they’re doing differently? 

AJ Maestas: I’m gonna use something a little dated so that I’m not giving away someone’s, current strategy. But T-Mobile’s at the very top of our list along with two or three other brands that I would say very seriously look to match their investments with their business strategy, not what they think is fun, not copying the competition and what they’re doing. For T-Mobile, this [00:06:00] is, and we recorded a podcast with Amy Azzi that you can listen to maybe we can link that here in the notes, where their goal at the time was rural America, with, poor connectivity. 

These are more price-sensitive customers. It’s not a target audience you hear people going after very often. And their filter, looking at the sports, that reach that audience, Major League Baseball, SEC, sports and football in particular. What I see with them is incredible discipline and a filter that sort of says, “What is on strategy? What is our business objective? Who are our customers?” And that’s who we’re gonna speak to. 

Charles Rolston: I’m glad that you brought up that activation ratio. It’s so important. We’ve seen countless sponsorships fail for brands that are just buying the rights and buying the assets, but not activating on top of that. 

And that takes, a fairly large incremental spend, often more than how much the rights actually cost. And one thing that I’ve seen consistently is that when sponsorships work, it’s doing multiple jobs at once. It’s not just marketing and impressions and brand [00:07:00] awareness. It’s sales, it’s relationship, it’s brand all rolled together into one. 

So let’s take a look at the flip side for a second. For what sort of brand or business would you suggest steering clear of sponsorships altogether and maybe investing more in social advertising, search, et cetera, where the direction of traditional advertising is heading today? 

AJ Maestas: Yeah. If you don’t have your house in order, it’s so complex, it’s so difficult, it’s so hands-on compared to a sort of set it and forget it, media buy that I wouldn’t touch it if you didn’t have your house in order. If you can’t eloquently and quickly describe business objectives and how you’re going to measure it and if you buy the wrong assets for the wrong price against the wrong target audience, good luck driving positive ROI. Fit really matters. And it’s a shockingly large percent of brands and investments that really haven’t put it through that kind of rigor or that filter. 

Clearly defined business objectives. You’d be amazed at how many marketers can point to something like awareness or engagement they’re trying to drive, but they don’t actually have [00:08:00] a strong understanding of lifetime customer value, true actual bottom-line profit. They cannot connect engagement or awareness to lower sales funnel measures. 

And so if you really can’t picture the entire sort of need for your business, including the employee stuff and things like that I mentioned you should probably stay away. Strong measures in place, good research, supporting this. Expertise. Very few brands have that expertise in-house so I’d recommend most brands should be using an agency or an expert to negotiate and choose these deals. 

It’s if you’re just fielding inbound proposals and picking the ones that you sponsor, you’ve got a problem, right? It’s not necessarily the right investment that’s finding you. You really would want to, look at the entire array of possible investments and choose from that. So these are really difficult things that a shockingly large amount of brands and C-suite decision-makers and again, marketers aren’t doing or it’s hard to do and so don’t if it’s hard. 

I’d point to the activation thing that you just brought up. I believe the average brand spends about 25 cents in activation for a dollar in rights fees, but there’s a bunch that spend [00:09:00] zero. I’m just giving you the average. And our research tends to show you don’t even reach a point of diminishing returns until about 50 cents on the dollar, and this is one of those metrics that varies a great deal based on the complexity of what service or product you’re selling, so it could be much more than 50 cents on the dollar. 

But the point is on average, people are investing about half as much as they should in activating. So if you don’t have a lot of extra budget above and beyond the original investment, you shouldn’t be doing sponsorships. I’d say I appreciate you starting with why not just buy social media or digital or what have you. 

That’s right. Someone should have exhausted the very dynamic, flexible, easy-to-measure digital investments before you even think about getting in this business, right? If you don’t understand those or you’re not in that world, don’t start with sponsorships. It’s for experts. It’s for expert marketers. 

I think about 850 billion globally is spent on marketing, and about 600 billion of that is on digital. So the majority far and away is digital. Only about 100 billion of that globally is on sponsorships. So if you kinda use that ratio and say, oh, 12, 13, 14% of marketing budget, on [00:10:00] average goes to sponsorships, you don’t get into that bucket until you’ve mastered the basics is what I’d say. 

Final comment I’d say is it’s expensive. You pay a premium to get this loyal, passionate audience to play this game. So again, if you lack the expertise, if you lack all the things I just mentioned don’t even dip your toe in that water. You’re not ready. Yeah but let me ask you, Charles you sold for years, right? 

At IMG and before going back to get your MBA. Having been on the sales side of this, what would your advice be? When would you tell a brand to do a sponsorship and to not do a sponsorship? 

Charles Rolston: Yeah. Firstly, I just wanna respond to something that you mentioned near the end there, but, sponsorship is really for experts because you are paying that premium. 

It’s not a forgiving marketing investment. The margin for error is a lot smaller, unlike digital that you can just tweak weekly and hope that it improves. You’re locked into these sponsorships sometimes for 10, 15 years, and really the opportunity to adjust the asset mixes doesn’t come until you have a three or five-year look in, and it depends how the property on the other [00:11:00] side is open to adjusting your assets or if they’ve sold it because they have already a finite inventory. 

So I think just having that structured plan before a proposal comes across your desk and your CMO says, I love baseball. I wanna get into this.” Having that structured plan in place is just super important for how not only you’re going to come up with the budget to be able to cover the rights, but activate beyond that and integrate all, facets of the business and the organization together to really work in one line towards the common goal and all of your business objectives. 

But to answer your question, I’d push back a little bit. You touched on this, but I’d say that treating sponsorships purely as a marketing investment is, is a fool’s errand. From my time at IMG, some of the best deals that we secured and we saw for our brands, the results and the outcomes didn’t live in a dashboard. 

They worked because they opened doors, they helped sales teams do their job more effectively. They built credibility for the brand that media alone couldn’t, even if they were [00:12:00] buying, a Super Bowl advertisement for $10 million, as we saw from last week. I th- I think the real problems, show up when the role isn’t clear up front, and this goes back to what I was saying about having that structured plan, is that if you force sponsorship to behave like pure media, it’s just not gonna work for your brand. 

It either gets defended with these soft metrics like impressions, eyeballs, time on screens, or it’s undervalued altogether because it can’t be defended effectively, to somebody who’s in a CMO or senior leadership role. At seven and eight million sorry, seven and eight-figure levels for a sponsorship investment, it has to be framed properly to senior leadership. 

Why are we doing this? What are the outcomes gonna be? What type of business objectives are we gonna be hitting with each of these assets alongside the funnel? It requires, a considerable buy-in across multiple business functions, and not just buy-in, but really action beyond that marketing. 

You can’t just be buying spots and dots and hope that the impressions are increasing your brand awareness. [00:13:00] You really have to get other departments within your organization to utilize the hospitality assets effectively. Track those through non-traditional primary research to see how did those hospitality sessions, the three hours that you spent at a ballpark or a stadium together with one of your top clients, because of the rights that you hold and the sponsorship that you invested in, lead to, a larger account value or longer tenured client, it’s the clients who are satisfied with the services that you’re providing them. 

It has to be supported by that primary research and non-traditional measurement because, again, as I said before, the CMOs do not care about impressions, eyeballs, marketing equivalency value, how good of a deal that you got versus what another brand did for a similar type of asset. 

There’s so much nuance in that. What they’re really trying to figure out is, for our particular organization, is this leading to more top-line value? Are we getting more sales because of this? And are we building more brand loyalty and customer lifetime value with our current customers? 

AJ Maestas: So I love that. [00:14:00] I love everything you just shared there. But what percent of the time would you say when you were a seller did one of your clients, one of those buyers approach what you just described versus what percent of the time was it you mentioned earlier in our conversation chairman’s choice. 

Someone’s a huge fan, they got pitched, they like the idea of, being on the sidelines of the game and having a convenient parking spot, and they force that deal through, and now the marketing team’s dealing with, dealing with it and trying to make the most of it. J- what would your just gut instinct be? 

Charles Rolston: Yeah. This was 10 or 15 years ago, so at 0% to 10%. Now it’s hopefully getting better. Because you’re comparing your sponsorship investments not against TV, where it’s hard to measure. You’re comparing it against digital, where it’s very easy to see that attribution. 

Somebody saw an ad, they click through to your website, they purchase something within 30 days. That’s a very clear link between the marketing investment and the sales and ROI that it actually obtained. It now there’s certainly more scrutiny, but still, I’d say how much have we moved the needle on that [00:15:00] 0% to 10%? Are we still within the kinda 15% to 25% range? I don’t know. What do you think? 

AJ Maestas: Yeah. I think it’s higher, but I really appreciate your honesty because I think maybe 15 years ago that, that was probably right. You could justify it as media. People were buying more linear. I think digital passed linear TV about 10 years ago, so you know, it was just a different era, and to your point, it was kinda hard to measure TV too versus digital. 

But yeah the reason I bring that up is… let me put it this way. As I understand it, most CMOs get fired for being out of alignment with the C-suite, in business objectives and not being able to prove the ROI of what they’re doing. And this is a career killer. This gets people fired. 

Now, if you’re the seller and you’re looking for a long-term deal like naming rights, that won’t even be the CMO sitting in that seat, when it comes up for renewal. But for more regular deals that are one, two, three-year deals, yeah, I think it’s it’s awfully riskl- risky for CMOs and often they weren’t even the decision-maker, right? 

This comes down from upon high, chairman of the board, CEO, what have founder of the business kinda [00:16:00] thing. But I appreciate the honesty. Okay. All right. I’m probably being too negative. One more question for you, if you don’t mind. Can you share with our audience some of the trends. Just give us a feel for growth, where are things trending around sponsorships? 

Charles Rolston: Yeah, it’s talked about ad nauseam, but as you mentioned, 2017, I think, was the year that digital marketing investment, surpassed a typical linear television investment. It’s really just continuing to widen that gap every single year. 

It dominates marketing budgets right now, and we see linear TV continuing to decline because it’s harder for linear TV to solve for that attribution link where digital and streaming can actually do that. And, with connected TV, it’s easier for streamers to understand who exactly is sitting on the couch watching this program versus, something that’s blasted over nationally. 

And again the trends that we’re seeing and the impact of that on sponsorship is that it’s becoming more premium and a more scrutinized spend. I mentioned this before, but we’re not competing against TV anymore. We’re competing against [00:17:00] something that is easy to see the attribution link towards sales, which has a down downstream effect on sponsorship, where they’re going to be demanding the same thing, because if you can’t prove that, it doesn’t make any sense for a CMO to allocate a significant amount of the budget towards something that is intangible when they have tangible options right now. 

And we saw ridiculous numbers out of the advertising revenue that is generated off of Instagram Reels, YouTube it’s an insane amount of money that’s continuing to grow year over year, and if we wanna see those type of CAGRs in sponsorship, this is something that needs to be solved, and it needs to be solved fast. 

I’d say that the other- trend that we’re seeing is obviously as it relates to media fragmentation. It’s increased sponsorship strategic value, I would say, because nearly half of TV viewing is now streaming. Audiences are scattered across platforms. We know how hard it is for consumers who wanna watch a full season of sports, including their local and national [00:18:00] broadcast. 

But I think what you said before is really important, and that sponsorship, in the way that the asset mix is set up across so many different marketing channels, it really aggregates that passion, that trust and attention into one place, and you can have in-person interactions with them. You can have digital interactions with them. 

You can have one-to-one hospitality interactions with the people who are actually controlling budgets and impacting your top line significantly. The trade-off to that and that, that fragmentation, which is, just becoming more and more rampant year over year, is that value is harder to defend without be-better data. 

You need to understand who your consumer is, how they’re being reached, how they’re being impacted by this sponsorship across your key KPIs, even if it’s the big six or beyond that. You need to do primary research to figure out how this is actually working, and if it’s not, how do we work with our properties to adjust the asset mix, adjust the quantity and the frequency to make this, a more effective spend? 

Again, it’s just too [00:19:00] easy for digital investment to be placed with YouTube and Instagram or a TikTok, and to see real ROI, week over week, rather than just a recap that you get about a sponsorship at the end of the year. But I don’t know. Do you have any other opinions that CMOs and brand leaders would be interested about, the trends and directions of things that are heading within the sponsorship space? 

Well, one of your early  

AJ Maestas: comments about fragmentation sparked something for me. I remember when David Chipulo was at the center of the sales organization at Infront, and they’re selling sponsorships, across every border, every corner of the world. And he was sharing with me, and I never thought of it as an efficiency buy, sponsorships are such a premium, but his point imagine doing the advertising creative in a language doing the trafficking, reporting, distribution measurement across all these different nations, languages, and different broadcasters, to reach a, let’s say even just a pan-European audience. 

But you do a jersey deal or a sponsorship on one of those globally popular football clubs, [00:20:00] and your logo and your message, travels instantly across all that. And so yeah, when you start to think about the increasingly global economy and for soccer, sport football like that, and a very visible deal, yeah, that’s a very good point. 

It’ll find the customer because, passionate people are gonna find their favorite athletes and their favorite sports independent of what medium and what subscription they’re on. Yeah.  

Charles Rolston: Yeah, and what? It probably lands somewhere in the middle, as with most things, and I do wanna give more credit to our audience here who’s listening to this, but, they are getting smarter and more intentional with their budgets, and certainly the way that they measure their sponsorships, the plans that they have in place before they go and invest seven figures or eight figures into a team. 

So let’s actually turn this into some type of actionable advice and a “so what” for our audience. What do you predict for sponsorship in the next 12 to 24 months? You go, and then I’ll go after you. 

AJ Maestas: Oh, God. I feel like I’m such a skeptic lately, but I would say, and by the way, you wanna be wrong in this life, make future [00:21:00] predictions, especially long, far out in the future predictions. 

But I have a bad feeling about the economy in general. I think there’s some pretty clear macroeconomic indicators, things that would create risk that, challenge this very consistent 15-plus years of growth, earnings growth, stability, especially here in the US for corporate profits. 

And so I’m sensing a flat decade or a slowdown or something along those lines. And if I’m right there would be a lot of scrutiny on sponsorships because of the difficulty in measuring them, and there’d be a lot of scrutiny on linear. And what I would say is the CAGR, the compound annual growth rate, projections that you shared, and most, other sources beyond Navigate indicate similar numbers, like 6 roughly percent per year compounding. 

I think those will be challenged. I think it’ll be challenging in a world where instead of when it was competing with linear TV, you now have an incredibly measurable, very flexible digital investments. And one of the first places the C-suite looks for cost cuts [00:22:00] beyond labor, is marketing budget, and inside that marketing budget you’re going to cut what you can’t prove works. 

And if our projections on the very small percent of people that are doing really intelligent, smart measures, and it would be one of those, the money will flow to the big winners. You want the biggest and best athletes, influencers, platforms, leagues teams, and it’ll get hard when you’re down there in B and C properties. 

Yeah what would you say? What, Charles, what, like what is your prediction so we can make fun of you being wrong just the way I’m gonna get made fun of here? 

Charles Rolston: Honestly, that, that was a perfect conclusion to, to your answer because I think we’re stepping into an era of bifurcation. I don’t necessarily think that sponsorship investment will go down. I think maybe the CAGRs will stagnate year over year. But I think what we’re gonna be seeing, and what we’re already seeing but not necessarily in the sponsorship space, is a bifurcation of smart properties and properties who are a little bit lagging behind the times. We see this [00:23:00] bifurcation in the college athletics level with the Power Two, the SEC, and the Big Ten. 

They’re getting massive increases from from their broadcast partners despite all the instability and chaos that has been going on within the broadcast space, and the broadcasters are saying, “Hey, this is something that’s scarce. It’s a premium resource. We need to spend appropriately to to lock in those rights. But where are we gonna cut? We’re gonna cut on the B and C properties.” Is the NFL, when they go back out to rights, gonna f- see some type of stagnation? No. They’re gonna set records once again because, it is the most scarce TV resource, virtually on the planet when it comes to sports and entertainment. 

So I think we see the same s- thing in the sponsorship realm, and I’m not just talking about, A properties versus B and C properties in terms of professional leagues versus challenger leagues. I’m talking within the ecosystem of specific leagues. It’s properties that are, able to advertise their sponsorships and their asset mixes with real data, [00:24:00] clear audience definition, activation that’s actually baked into the deal. 

Make it easy on your partners. Don’t just say, “Hey, you’re buying these rights, and then we’re gonna require you to spend two or three X the amount in order to grow the impact of the sponsorship.” We wanna be thinking proactively about how we can partner and collaborate on activation ideas outside of the ballpark, outside of media, that could really have an impact on top-line revenue. 

So I think everything else is gonna be pressured. It’s not the time where, rising tides lift all boats. We’re definitely gonna see some of those boats sink while others, set sail to, to greener pastures, and it’s gonna be, it’s gonna be a massive era. Sure. I was trying to find the right analogy. 

But I think, what we’re gonna be seeing is that era of bifurcation. So it just depends on what side of of the ball that you wanna be on. Do you wanna be on the smart property side, or do you wanna be on the one that’s lagging behind the times? I don’t know. 

AJ Maestas: When you look at the league distribution you would expect something that looks like a bell [00:25:00] curve and what you see basically is, the whatever, the blockbuster concept, right? 

These high-end outliers that yeah, that’s a very good point. There’s going to be haves and have-nots. Okay. 

Charles Rolston: We got our predictions locked in a couple years from now. Again, we can revisit all of these podcasts and we’ll tally up who is more wrong, AJ or myself. But that’s it for today’s episode of Navigating Sports Business. 

Sponsorship, as AJ said, is often the first thing that’s questioned and the first thing that’s cut. But as we discussed, when it’s evaluated with the right data and activated intentionally, it can be one of the most powerful tools in your marketing mix. So you know where to find us, www.NVGT.com. 

You can always reach me and I’m always welcome to get your emails at Charles@NVGT.com. Again, if I’m going to see you in St. Louis, please come and say hi at NSF. I would love to talk with you about any of these topics or anything beyond that outside of it that [00:26:00] are keeping you up at night. But yeah, if you’ve made it this far, thank you so much for listening to the full thing and we’ll see you next time.