Need to Diversify Unlimited Hydroplane Racing Sponsorship

We all love the adrenaline-pumping sport that is Unlimited Hydroplane Racing.  Heck, that’s why we’re here.  We enjoy not only the current races, but those that are to come.  We have people working hard to bring races back to locations that haven’t seen the rocket-boats for years.  We even have people who are working hard to bring boats to lakes that have never before seen them.

There’s considerable positive news about Unlimited Hydroplane Racing.  Just look at a recent snapshot of the Google News stories on the subject.

This says a lot about a sport that seems to be firing on all cylinders – or whatever turbines do.  However, just like the wind that caused havoc in Detroit, there may be some storm clouds building on the Unlimited Hydroplane Racing horizon.  Take a look at the final entry on this screen capture.

Air National Guard Could Discontinue Gold Cup Sponsorship

In a July 12 story in the Detroit Free Press, they talk about the potential of the Air National Guard discontinuing its sponsorship of the Gold Cup.  You can read more about the speculation in the story, and this isn’t intended to be a place to debate whether they will or won’t.  What i would like to suggest is that we consider a future where the important sponsorship template is a stronger, more diversified source of revenue.

Balance the Eggs in the Basket

We all know we shouldn’t “put all our eggs in one basket.”  That is sound financial advice to limit exposure in any one area and allow for more flexibility when investments need to be changed.  In my opinion, that model of diversification should be applied in the H1 world.

H1 should begin to diversify their sponsorship strategy. With any luck, the Air National Guard relationship will continue long into the future. Don’t misunderstand my intention. While we want that one particular company stock we hold in our 401(k) accounts to be the high-flier for years, we owe it to ourselves to develop a prudent, diversified investment portfolio. H1 should do the same thing with respect to sponsorship.

Here’s how it could look.


Let’s say the Air National Guard continues as the premier sponsor. Deep down inside, we all hope that will be the case for some time. But what about changing the sponsorship structure so that we have more than just a premier sponsor.  As such, the Air National Guard would continue to get top billing, with all the name recognition that comes with being a premier sponsor.

But in this new model, the entire pie is larger.  Although the Air National Guard’s slice is now just a part of the pie, since the entire pie is much larger, the ANG slice still occupies the same “real estate” for brand awareness.  The difference?  There are now many more (smaller) slices that become supporting sponsors.  In effect, these supporting sponsors are added as a base below the Air National Guard.

A Simple Example.

Let’s assume the current Air National Guard sponsorship budget is $1.  But let’s say that $1 now is what allows them to be the premier sponsor and 10 supporting sponsors (with corresponding ad coverage) pay 10¢ each.  With this simple change, the model now allows 11 diversified investments – AND – a sponsorship pool that has doubled.

A simple example, yes, but it would take a lot of work to transform the sponsorship model.  My opinion?  It would be worth the effort, and it couldn’t do much harm.  My rationale:

  • If H1 adds supporting sponsors and ANG stays for a long time the overall sponsorship budget/revenue has increased. Check.
  • If ANG stays for a long time and it takes a long time to build supporting sponsors, the overall budget grows slowly. Check.
  • If ANG scales back its involvement, but the supporting sponsors make up the difference, we’ve held our ground. Check.
  • If ANG must leave the Unlimited Hydroplane Racing world, and we have a base of supporting sponsors on which we have a head start in replacing that revenue, we’re a lot better off than just hearing crickets in the deposit line at the bank.

Diversify. It makes sense for today and it provides options and flexibility for the future.

How would you diversify the sponsorship base?  Do you agree we need to do so?  If not, how do we protect from a complete absence of our current sponsor?

Dave


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