Here’s the scenario: Your sponsorship has had a good run. You are on renewal and ready to give it a virtual rubber stamp on the basis of the fab returns you’re getting for your brand. Then you get the proposal – the same package you’ve had for the past three years, on an event or program with a steady audience, and the fee increase is 70%. It’s a real, “what the…” moment.

This really isn’t that common, but it does happen, and I’ve had several corporate clients dealing with this situation in recent months. Those sponsors are asking me what the sponsee is thinking, and it could be any number of things.

Your leverage program is so good, they’ve convinced themselves they’re indispensable

This is one of the downsides to being an exceptionally good sponsor. If your leverage program is really great and you’re getting fantastic results, some of your partners may be under the illusion that they are indispensable – that it is their event or program that is making the sponsorship great.

In fact, their event or program provided the opportunity, but your leverage is what really delivered the results, and if you can do it with that sponsorship, you can do it with another. I know it’s a pain in the bum to change over sponsorships, but no partner is indispensable.

You’ve got three choices:

1. Tell them they’re dreaming and counter-offer at a reasonable fee – something that is commensurate with the value they bring to the table.
2. Tell them that if you are going to entertain any substantial increase, they need to provide a benefits package to match. Make your expectations clear: Benefits must be strategic and creative.
3. Walk away and sponsor someone else.

Always keep in mind, there are a lot of fish in this sea.

They’re testing the waters

The sponsee may have higher sponsorship targets or they may have financial difficulties or they may have simply caught wind of another event landing a whopper of a deal, and have decided to pump up prices to see what happens. It’s a totally different situation than that outlined above, but the advice is the same: Counter-offer, tell them they’re not getting any increase without some bloody fantastic new benefits, or walk away.

They are playing on fear

Sometimes a sponsee knows their worth to you – in dollars – and wants a bigger piece of it. This is particularly the case for sponsors who are selling their product at the event or venue or to the sponsee organisation, and governments hosting events for economic development. This can also happen when they know a sponsor is investing primarily to block the competition.

In these cases, the sponsee thinks you are too afraid to risk losing the investment, so you’ll pay whatever they want. To an extent, that’s true, but even if it is, you can’t let yourself look like a chump.

If you’re in this position, you need to do two things well before you get to renewal:

• Make yourself as valuable to them as they are to you. Ensure your leverage program substantially adds to the sponsee’s marketing plan or helps them achieve some of their overall objectives. Then, they are much less likely to screw you to the wall and you have a good position to counter, as any new partner is unlikely to bring as much additional, uncontracted value to the table.
• Know your bottom line. There will be a number above which it is untenable. This may be a number relating to profit or simply a budgetary constraint you can’t get past. Be very upfront about this to your partner.

If all else fails, keep in mind that the time and effort it would take to sell to someone else is substantial, and there is no guarantee they’ll be successful, so you represent the easier option.

They were underpriced to start with

If you initially got the sponsorship at some crazy, fire-sale discount, you need to expect that the renewal will be substantially higher.

Do be sure that the benefits offered are still right for your brand, commensurate with the price tag, and fair market value. If so, don’t gripe about a price correction that was always going to happen.

That’s it – three long blogs about the games sponsorship seekers play, and how to play them. I hope they’ve been helpful!