Is your latest sponsorship deal a risk to your reputation?

Every business trades on its reputation, an intangible piece of intellectual property that takes years to develop. The trust of customers, clients, staff and suppliers requires hard work, attention and patience. But it can be thrown away in an instant with a single misstep.

What’s in a reputation?

The most immediate consequence of an organisation losing its good reputation is financial. While rebranding and repairing relationships can be costly, the immediate loss of business from a PR disaster can be enormous. And the loss of reputation might be impossible to put right, meaning that the consequences can be permanent. Just look at the disaster which befell Ratners in the early 1990s which sunk the jewellery business for good.

In the corporate world, conducting thorough due diligence is standard practice when it comes to mergers and acquisitions, raising capital and IPOs, but it is far less common in sport sponsorships and partnerships. And yet, the potential reputational damage from a poor choice of partner can be serious and long lasting.


Risk in sports sponsorships and partnerships

Reputations are the lifeblood of success – whether you’re representing an athlete, a football club, or you’re a rightsholder involved in sports sponsorships and partnerships, reputation plays a pivotal role in your brand’s long-term success.

The actions and behaviours of athletes, teams, and sporting events can profoundly impact the perception of your brand. One misstep by a sponsored athlete or a scandal involving a partnered team can reverberate across media platforms, swiftly eroding trust and credibility.

Consider the fallout from controversies involving doping scandals, athlete misconduct or organisational corruption. These incidents not only tarnish the reputations of the individuals and entities directly involved but also cast a shadow on their sponsors, who find themselves caught up in the ensuing public backlash.

Sport itself relies on integrity and transparency and due diligence is one way to ensure that those values are upheld.


Due diligence can mitigate risk

There is usually always a level of risk with any sport sponsorship or partnership deal but a thorough investigation evaluating the potential partner’s background will enable you to make informed decisions about the alignment of values and the level of risk you are willing to accept.

A good due diligence provider will build a complete picture of a third party whether that is an individual, an organisation, a city or even a country:

Comprehensive research will use all available resources, including online databases, media reports, industry contact and, where necessary, on-the-ground investigation, to gather information about potential partners

Confirming the legitimacy of a partner’s claims is essential to verify its financial stability, track record, reputation within the industry and how it is viewed by consumers and the wider public

An analysis will identify red flags or areas of concern that could impact your brand’s reputation, such as legal issues, financial and other controversies, human rights questions, conflicts of interest and much more

The team at InsightX has been delivering in-depth intelligence to European football clubs, Formula 1 teams and international federations since 2014. We are very different to standard due diligence providers because we are blessed with a network of journalists who perform on-the-ground inquiries in every major jurisdiction – ensuring those verification checks are confirmed by humans. Our model also enables you to see contextual information while other providers will provide you solely with machine-driven data pulled from databases.

Without context and additional checks, you could still be in the dark about the partnership you’re about to sign, resulting in an agreement with an entity that may have engaged in unethical or controversial behaviour, have serious financial issues or be led by executives with poor track records. In all of these cases, you risk tarnishing your image by association.


Building mutually beneficial partnerships

Due diligence is a proactive approach to minimise the likelihood of reputational damage and build sustainable, mutually beneficial relationships with sports industry partners.

For example, the partnership between adidas and Parley for the Oceans shows the power of aligning with partners who share a common vision. By collaborating on products made from recycled ocean plastic, adidas has not only enhanced its brand reputation in the sustainability space, but also contributed to positive social and environmental impact, strengthening its position as a leader in the industry.

Reputations in sport are as important as they are in any other form of business, therefore safeguarding them is paramount. By implementing due diligence, you can reduce the risks of reputational damage and build sustainable relationships that drive long-term success. It takes years to build a reputation, therefore it’s essential to invest the time and resources necessary to protect what you’ve worked so hard to build.

Leading brands, clubs, agencies, rights holders and institutions trust us to guide their decisions when partnering with suppliers, considering player transfers, activating sponsorships, using endorsers and influencers and in mergers and acquisitions. If you would like to see how InsightX’s approach can help you make better decisions please get in touch.

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