Sports sponsorships. How do companies make money when spending 10s of millions on sponsorship?

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Question came from thinking of Emirates Airline who sponsor Arsenal, Real Madrid and Milan (and others). This costs them over £100m, surely they cannot be seeing a return on that investment?

In: Economics

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Anonymous 0 Comments

Marketing is a part of any company’s expenditure budget, and yes, the numbers can be staggering. Emirates is a bit of a special case as it’s Sheikh Mohammed bin Rashid al Maktoum’s vehicle for getting the name out there, so the return there is measured in more than in just Emirates Airlines profit.

Unrelated anecdote: the tallest building in the world got its name just a week before the grand opening. For the three years of construction, the name was Burj Dubai (Dubai Tower.) A week before the grand opening, the local paper, Gulf News, reported that Sheikh Mohammed was in a financial jam and would not be able to meet an upcoming payment to Dubai Investments, one of his companies.

Sheikh Mohammed ended up visiting his cousin, Sheikh Khalifa, ruler of Abu Dhabi, about 100 miles down the coast. Abu Dhabi’s ruler is also President of the UAE, by virtue of the Golden Rule: he who has the gold, rules. Abu Dhabi has all the oil, Dubai has none. The cities are rivals, as Dubai is a successful international business centre and Abu Dhabi wishes it was.

So Sheikh Khalifa asks his cousin how much he needs.

“Ten billion dollars.”

Khalifa figures that’s about 100 days of oil revenue, yes, he can manage that.

But the tallest building in the world, The Burj Dubai, became the Burj Khalifa.

I was living there then. Hilarious.

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