Tuesday, May 10, 2011

Chapter 16: Did you say sponsors?

Ahh the sponsors.  A sponsor here... A sponsor there.

Back in the days when I had an opportunity from Jean-Pierre Nicolas, Peugeot Motorsport boss, to drive a Peugeot 307 WRC in 2006, I interested myself on finding a sponsor related to the car industry.  While visiting the Rallye du Var service place, on a cold november day of 2005, I met a gentleman who had a company which dealt with used car warranties.  It turned out he would later become a good friend of mine.  I did not know at the time, but the used car warranty business has a very important role in the auto industry and therefore he enlightened me on the topic.  He was basically an insurance broker and had around 5.000 contracts in his portfolio.  Business was ok for him, but he was looking to extend. 

His main advantage over the competition was about the software he was using to manage his system.  The guy had a very good friend, who was CEO of an important software company.  This friend of his offered to develop a software dedicated specially for the warranty business and in return he could get some shares of his company.  So, it was a win-win deal.  This software allowed my friend to manage everything from A to Z much faster than any system that existed and in turn needed less manpower.

So, we discussed possibilities together, I opened up my small address book and he opened up his.  It turned out I knew JP Nicolas quite well, and my friend happened to know that both Peugeot Italy and Peugeot Spain were about to look into the renewal of the current warranty deals they had running.  Perfect moment for us to step in, try to get a deal done with the Peugeot importers, and therefore get access to big markets right?

If it worked, this deal had the potential to fund my whole season so it was well worth the try.

My first task was to call JP Nicolas and tell him of the project.  He liked it and supplied me with all the necessary contacts to get this thing rolling.  He told me we could openly bid for the contracts and was proud to explain that Peugeot had an official policy of transparency when making invitations to tender.

I contacted both the Peugeot Italy and Spain bosses, who were french natives.  I speak fluent french, so, why not.  Anyway, the Italian boss was nice and invited us to participate in the bid together with some other companies.  Turns out, later, they awarded the deal to the Groupe Courtois, from France.  Oh well, we tried.

As far as Spain was concerned it was a bit different and much funnier.  I got the Spain boss on the phone and he sounded rather uninterested, right from the start, as if I was annoying him.  I stayed polite and he said I should write him an e-mail.  I thought that was a bad first step but lets try anyway.  No pain no gain, right?
I sat down together with my friend and we managed to write an e-mail telling about his company and what it could bring Peugeot Spain in terms of quality in the warranty handling and the subsequent plus it would bring to used car sales.  We thought it was rather concise, around a page long.  Ok, off it went. 

Later, we got an answer. 

Basically the guy said that our proposal was not on par with what they were looking for, period, nothing more.  Impossible, I thought, we had done our homework.  We knew what they needed and made our offer specially tailored for them.  Either we were completely crazy or the guy just didn't read the email or he had another agenda.  Not a good sign. 

Facing this, I started having some doubts about the whole thing and whether it was worth wasting more time and energy on.  I decided to answer him, just to test my theory, with something that looked like this:

"Hello Mr Peugeot Spain boss,
If you choose our company, we will return some of our profits to Peugeot Spain.
Best regards,"

So, in other words I said give us the contract and we'll pay Peugeot a kick-back for it.  I thought that if my e-mail was a sentence in length, he would have to read it and to hell with all the formalities and other crap.  Let's just get to the point, right?

Right!  The guy answered, from his phone, within 2 minutes. 

He said: "...ok, please contact mr xxxx, he will take it from there..."

So, in light of this, we decided to give up.  My friend wasn't prepared to go down that track.  He had a company to run and bills to pay.  He couldn't spare cash on kick-backs.  I concluded, from my first ever try at finding budget from business to business type sponsoring deals, that you have to be prepared to give kick-backs. 

I had a few other tries at securing sponsorship deals.  I noticed that sponsoring deals are sometimes about people wanting to do some tax deductions in exchange for some motorsport action or about kick-backs.  Either way, such deals will only happen if the people involved trust each other, and therefore probably know each other from somewhere.  Obviously, here we are speaking of relatively "small" sponsors in the grand scheme of things, in the order of 1 or 2 million Euro or less.  I am pretty sure it will be more straight forward business deal if Apple computers decides to sponsor Williams GP, for example. 

The fact of the matter is that, in a sport like Rally, a given company whose logo is on a car probably doesn't get much return from investment unless it is accompanied by a hard core PR campaign.  What I am saying is that investing 2.500.000Euro on a driver so he can do the season won't help your company.  This will be barely enough to finance the car...And then what?  The TV won't film you unless you pay them.  Or crash.  You won't get in the press because factory teams are too hard to beat and you won't get on the podium.  What is the point?  Who cares if a Mexican farmer sees your sponsor logo on the rally car as it passes by, scaring the heck out of his donkeys?

On the other hand, investing 2.000.000 Euro on a driver so he can do a handfull of popular events with a top car and another 500.000 Euro on some proper PR like paying the TV to film you, inviting business guests on events and giving them the full treatment, having a friendly chat and more with journalists just to make sure they include you in the next issue... All this will definitely get the company name out there.

source: Image Library

1 comment:

  1. Sadly this is how things work in the world...