The Changing Landscape of Strategic Partnerships in Sports

August 29, 2022
6 min read

Megan Allison is a Managing Director at underdog venture team and has built an impressive reputation for herself in the sports partnership space, leveraging the reach and passion of sports to build visibility and acquire customers for brands like PepsiCo and Advanced Auto Parts.

I recently had the opportunity to sit down and speak with her regarding the continued evolution of sports partnerships and sponsorships in the context of emerging technology. Here are my top five takeaways from our conversation. 

1. Exploring New Categories With Tech

Emerging technology is playing a role in reshaping every industry, and the world of sports is no exception. Megan elaborated on how new tech innovations are changing negotiations of sports partnerships today.

"It's unlocked a whole new subset of categories," she explains. "You're unlocking all of these new business verticals, which then means the properties are having to find new assets to help those verticals accomplish their objectives."

Traditionally, a sponsorship deal might include signage, hospitality, promotional and social media assets. Now, with more business channels to accommodate, brands are discovering new ways to make their presence known inside and outside venues. Because of that, Megan says it's essential that contracts give brands the flexibility and opportunity to collaborate and innovate.

Of course, with innovation comes gray areas around who owns what. Megan says contracts need to clearly define the rights brands have over intellectual property (IP) when developing new ideas. 

"Oftentimes, it will be owned by the property, but sometimes there are unique platforms that may be driven by a brand initiative. It comes down to the legal language," she affirmed. 

2. Chasing The Young Audience

Targeting younger demographics is crucial to sustaining a brand. Still, Megan emphasizes the importance of brands staying true to their core business and staying focused on the largest segment of their audience. This audience is the one that drives the most engagement and shouldn’t be left out, or feel pushed out, by attempts to reach other audiences. 

Still, when it comes time to reach a new audience (because it is a matter of when, not if), Megan believes custom data is central to making the right moves. Though she referenced creating surveys and deploying them yearly to understand changing trends and dynamics of target audiences, she noted that what you do with this information is equally as important. 

Since younger generations likely don't pay as much attention to traditional media, don't attend every game, and don't show up on the channels brands usually target, it is still critical that brands recognize there are new channels to tap into.

These new channels could help reach a younger audience in a way they'll find more engaging and more interactive, but, as she put it, "that's a juggling act. Whatever you do, you need to be strategic and thoughtful to avoid alienating your primary audience.”

3. Evaluating Long-Term Partnerships

As high-profile, long-term partnerships are winding down, Megan touched on what makes a partnership viable for the long haul. Central to success, she referenced, is a solid relationship, one where the brand and property take a collaborative approach where they're willing and able to work together.

As part of that collaboration, she said successful long-term contracts offer flexibility. “If a platform isn't working, the brand should have the power to step back, reassess, and shift to a new channel so they can find something that offers the results they want,” she said. 

Because of this, rigid contracts can be a recipe for disaster. If a brand cannot make the changes they need to make to realize returns on investments, the partnership won't last. Building options into contracts is crucial to ensuring you can hit your KPIs and develop a mutually beneficial relationship that both parties will want to continue beyond the original term. 

For brands seeking those long-term partnerships, they must always look and think ahead to account for future needs and goals, trends and technology. She added, “It also means building equity, which relies on your ability to create your positioning and lift it through channels and partnerships that fit your brand's strategy.”

Take Pepsi, a brand that headlined the Super Bowl Halftime Show for years, before stepping back earlier this year. They helped make this Show even more famous, ultimately living  at the intersection of sports and music. While they are stepping back from this sponsorship, they are confident of their position at this critical, high-profile intersection given their solid and robust brand strategy. Undoubtedly, other brands want to mimic their success.  

4. Investing in Women's Sports

It's been a little over  a year since Name Image and Likeness (NIL) legislation opened doors for many college athletes to profit from their personal brands, primarily through brand partnerships. Previously, college athletes could be disqualified from competing if they used their role as athletes to generate revenue. Megan says NIL is a great thing for athletes, even while recognizing that standards need to be developed and stricter regulations need to be enforced. 

“Thanks to NIL, brands now have the potential to form great relationships with college athletes, although it’s a different type of engagement—more akin to social media influencers.” 

Since most college athletes are unlikely to have a following at the national level, Megan suggests their reach can be leveraged if it fits a brand's strategy. She challenges brands to be thoughtful in applying an NIL-based approach but is enthusiastic about the type of deals NIL has unlocked for young athletes, especially in women's sports. “Countless female athletes have now earned NIL deals, which puts women's sports in a stronger position to negotiate sponsorships at a higher level,” she said. 

5. Keeping Up With Constant Evolution

The sports industry continues to evolve and change; this is primarily driven by the tech landscape, massive increases to club valuations and the continued emphasis on diversity and growth in women’s sports.  Megan sees great opportunity in that evolution, but stresses that, “in order to take advantage of this evolution, we need to push changes forward with intent and authenticity.” 

With very few traditional spaces anymore, a key area of evolution in sports will revolve around the new properties, categories, and channels emerging daily.

"There's so much happening; there's not one single thing I would say I'm tracking," she explains. 

She gave the example of new properties like Drone Racing League and believes other new properties will soon emerge. Since her work at underdog venture team puts her in touch with young founders, she gets to be on the cusp of some of those innovations and help shape the future of sports. 

As Megan referenced later, “we’re fortunate to get exposed to entrepreneurs and start up sports properties when they are in very early stages which keeps us out in front of what’s happening.”

Want to hear more about what Megan had to say? Listen to the complete interview here