Monday, January 15, 2007

Visa Going Public? How Will This Affect Sports Marketing?

Maybe I am behind the eight ball here, but I recently learned that Visa announced in 2007 it’s going to create a public company called Visa, Inc. Most people in the sports marketing industry know how involved Visa is with sports sponsorships. The company’s sponsorships include NASCAR, IOC, NFL, U.S. Ski and Snowboard Association, USA Gymnastics, USA Track & Field and the Kentucky Derby.

Throughout the years, Visa has done an amazing job promoting its company through its sports sponsorships. Who cannot forget those Visa + Olympics commercials? I assume Visa has longstanding contracts with most of the sports industries.

Here’s my problem – once Visa goes public, sports sponsorships become a cost center and not a cost generator. That could become a serious problem to share holders and the Board of Directors. When a company looks at the bottom line at the end of the year, how do they quantify a dollar amount for the sponsorships? These sponsorships are for relationship building, generating company awareness, providing incentive opportunities to employees, etc. It’s tough to say the company secured X number of new cardholders because the sponsorships.

When things start to go south at public companies, what’s the first thing to go – sports sponsorships. You might say, “The company is committed since they have contracts.” I know from experience, you can buy your way out of a lot of contracts.
I know nothing about the inner workings of Visa’s sports marketing department, but it will be interesting to look back in two or three years to see how many sport sponsorship agreements the company still has.


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