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Is Sport Sponsorship a Game Changer?

We’re big rugby fans at CRM and excitement levels are building this month with the start of the Rugby World Cup in Japan. All the talk of rugby got us thinking about sport and other sponsorship opportunities and how it’s not just for global corporations. Forging a partnership through sponsorship can benefit businesses with a more modest budget. We also know a thing or two about the tax implications, so let’s take a look.

 

What are the advantages of sponsorship?

  1. Brand awareness – regardless of the size of your sponsorship deal, the visibility and awareness of your company brand will increase as you promote your products or services to a new audience.
  2. Profile raising – sponsorship opens up new opportunities for promotion via online and offline routes. You can share your passion with the fans and connect with the local community, building an ongoing relationship.
  3. Differentiation – make your voice heard in a crowded market. Sponsorship helps you stand out and be recognised more readily, at the events and on social media.
  4. Targeted demographic – you’ll get to know the audience demographics of the fan base so that you can target communications and get more cut-through with your marketing. The closer your customer demographic is to the team’s fans, the better the return on income.
  5. Corporate hospitality – for business to business marketing, this is a great way to thank clients and grow prospective leads away from the office in a memorable setting.

 

What to sponsor

The key consideration is whether the audience of the sports team or event fits your brand. The closer the alignment, the more likely the campaign is to succeed. It’s worth taking the time to assess how the team or event complements your brand message and identity. There are some obvious fits, like a car parts company sponsoring a motorsport event, but for others, it might be more challenging to find the right fit.

 

Can I claim tax relief on sponsorship?

To get a tax deduction, the sponsorship must be ‘wholly and exclusively’ for the purposes of the business and not be capital expenditure, such as cars or horses. Entertaining costs are also not allowed.

 

If the main beneficiary of the sponsorship is a family member HMRC may challenge your claim but there are circumstances where supporting a family member is acceptable if:

  • It is not in excess of the figure another party might invest
  • The amount is no more than your other advertising expenditure
  • You can prove that your business obtains advertising exposure and increased sales

 

So if you’re thinking of sponsoring an event, a sports team or even financing your child’s passion, do your research and make sure you understand the full range of benefits and know the tax and other impacts on your business. CRM would be happy to offer advice and guidance along the way. Contact the team on 01865 379272 or visit www.crmoxford.co.uk.

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