Unofficial Partner Podcast
Unofficial Partner Podcast
UP486 The Buy Side: B2B + ROI = WTF?
B2B is big business for sports rights holders.
But why are business-to-business brands paying billions in sport sponsorship rights? From the IOC to Formula One, categories such as consulting, accountancy, logistics, financial services and tech are growing rapidly.
- In the IOC's programme, Deloitte and Allianz replaced Dow and GE as TOP Olympic sponsors.
- IBM's technology partnerships with Toronto sports teams, VMware's McLaren Formula One partnership, and Dell China's Chinese Olympics rowing team sponsorship.
In F1, major B2B partners include DHL (logistics), Globant (digital services), American Express (financial services), and TAG Heuer (luxury/precision timing) - Teams feature extensive B2B partnerships including Cognizant, Microsoft, Siemens, Aramco, and numerous technology and consulting firms
What are they buying, and how is sport targeting them?
Leigh Curyer, CEO and founder of NexGen Energy, explains why his company's partnership with Aston Martin Formula 1 team prioritizes technology transfer and investor access over brand visibility.
"Branding would be the last criteria for why we have that partnership."
Joining Leigh is Nick Djounov, Head of Valuation at Gemba London.
Together, they expose how B2B brands are finding arbitrage opportunities while B2C companies pay premium prices for billboard space.
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Yeah, there is intangible. But to quantify it, we would need less than 1% increase on a sales contract that we're negotiating. And it's more than paid for whatever the cost is. So if you couldn't identify with the intangible. You're still gonna be okay from a dollars and cents perspective. I don't think we would have that B2B opportunity necessarily with a Ferrari or a, a Mercedes-Benz or a red ball. And I've got huge respect for those teams. But it's, it's not something that they offer to the degree that, Aston Martin have.
That was Lee Coer, who was CEO and founder of NextGen Energy, uranium Mining Company, who sponsors Aston Martin? he's joined by Nick Joof of Gemba and Together we talk about B2B sponsorship This is one for sponsorship nerds. I think you'll enjoy it.
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Richard Gillis, UP:I'll start with Lee. Just give us a bit of bio what do you do all day? What's the job? And just give us a bit of setting for next gen.'cause again, it's an interesting category, which I've, I know very little if, if anything about.
Leigh Nexgen:Sure. Originally a chartered accountant. However, in 2011 I founded, NextGen Energy. We are a, exploration development company. In the northern part of Canada, and we have discovered what is currently the world's largest, highest grade uranium project. And, on the cusp of, permitting approval, which once we construct and start operating, will be around 25% of the world's uranium supply. So it's the fuel that, powers nuclear, power plants around the world. And that represents around 12% of the world's, energy, but entirely carbon free.
Richard Gillis, UP:Okay. Nick, same question for you.
Nic Djounoov:Tough. Tough to follow that one.
Richard Gillis, UP:I might understand your job more than
Nic Djounoov:Potentially, yeah, I'd be worried if you maybe didn't understand mine. But yeah. I'm Nick ov and I work at Denver, which is a strategy and insights agency in sports entertainment. And in my role as head of valuations, I lead our team across Australia, Europe, and the us. And we specialize in independent, fair market valuations, leveraging the turn store product.
Richard Gillis, UP:Okay. Right. Lee, give me a sense of, first of all, before we start talking about specifics, just the relationship between next gen and sport and sponsorship. Give us an idea of the portfolio. And then we'll get into the why and the what you do with it. All of those questions. But just paint a picture of where you are in this bit of the, the world.
Leigh Nexgen:Yes. We're in, Saskatchewan, which is Northern Canada. We have a number of, partnerships with various sporting entities, starting locally and then expanding out. The Saskatchewan Ruff Riders are a professional, Canadian football lead team. They do a number of, social programs, be it, the importance of reading or, anti-bullying, seminars throughout regional Saskatchewan. Our project is located, closely to a community of four and a half thousand. And so we partnered with them to, facilitate their, the importance of reading, and also anti-bullying programs in the schools. And, through that partnership, we've also had, kids from the local community, undertake mentorship programs. With the, the professional football players that then expanded nationally with our partnership with the Vancouver Canucks, which is, the, professional NHL side, whereby they, every year take 20 kids from the local community, take them to Vancouver. And mentor them as the players and the coaches, mentor them on the, the, the aspects of, you know, positive approaches in life. And, and so those players then mentor those kids throughout the entire year. And also visit the local rink in Northern Saskatchewan, to, you know, basically provide a. Mentorship to, to these kids.
Richard Gillis, UP:Can I, can I just ask why? Why did you land on that area?
Leigh Nexgen:as a company operating in a remote location we are going to be in that community for many, many decades to come. We saw an opportunity to, work with the community on, on providing mentorship to the local kids. We do other programs not related to sport. Like, you know, we installed kitchens into every school, employed elders to prepare and cook the food with the kids. And, and as a consequence of that, absentee rate went right down, class marks went up. And, the, the scholarship programs that we offer kids are now, you know, going to university, are now actually working for next Gen. And so that's, that's our approach, like our whole mandate is create as much positivity as possible. Our mining project is the platform to, to help with that. And as a consequence, we're in, we're being, you know, doing these types of programs to. Work with the community, and, and get a better outcome. And I think in today's day and age, companies should be focused on not just the economics of their activity, but also the social impact as well. And, you know, we look to set the standard in in both of those aspects,
Richard Gillis, UP:my ignorance will be, revealed, but What's the general relationship to the community of a, you know, I'm sort of, so in my head I'm thinking, okay, a mining business, you're in the community. Is it controversial that you're there? what's the general response to a, you know, a company like yours coming to town and then obviously digging into the ground.
Leigh Nexgen:it, it's not controversial, our presence being there. We have an incredible relationship with the community. It's, it's an aspect which I think. You know, we we're gonna be so impactful in that community. We, we've used these programs as a platform, to demonstrate what our values are. And, that has resonated very, very strongly. And, and let's be clear, we don't have to do any of these programs. It wasn't incumbent on us, but we identified them and off offered them. To the community as an opportunity for, to get to know, to one, to get to know, to know one another. And, and that certainly facilitated that. And, you know, we're also building a future workforce and, we wanted, you know, to really convey staying in the area'cause it is remote, for these kids and that they can have a fantastic work life balance. With NextGen and so it, it's had a very long term, focus and you know, it is highly unique and, and, I, I would suggest, I dunno any other mining companies that do it to the extent that we do, but, you know, if you wanna look at it e economically or, you know, we have a very low turnover of staff. And we have, very strong community support for our project. And it is a mining project, like they are big projects that are impactful and, and so, I think it just really demonstrates the respect that we have for all stakeholders with respect to our operations, with the community being such an integral, stakeholder in, in those outcomes.
Richard Gillis, UP:And the just, threading that back to the sport sponsorships, and you've got Aston Martin
Leigh Nexgen:Yeah, so as I said, we, we do a number of these types of programs. Sport is a, is a big one'cause all the kids play sport and you know, I have a passion for it as well. Having played it my whole life, I still do. And, and I always have found it, the platform. To, to really provide an excellent, opportunity for, for kids who want to be positive, with respect to themselves and, and where they head in life. And I learned a lot of lessons from sport, life lessons and yeah. So I've got a personal disposition towards that as a good platform. To get great outcomes. And, and I, I think sport is the best reality show on tv. It, it is the, it shows the outcome of dreaming and thinking that it can be you. And for kids in remote op locations, maybe the opportunities aren't as great as what they are for kids in the city. And to kind of provide a window to these kids in the remote location that it can be them. It's something which myself and everyone associated with NextGen is, very proud of.
Richard Gillis, UP:When we talk about sport and sponsorship and marketing, quite often people land on. You know the brand aspect, the awareness, the logos, formula One cars, you know, all of those sort of images in your head, and that's normally where the conversation goes. I'm wondering about what marketing is to a company like you and I'm getting to a sort of, there is a B2B. Focus, and we're seeing this across the board in sport and sports marketing and sponsorship. A lot of B2B brands are coming into sport and using it in different ways, and quite often they're sort of counterintuitive in that people assume that it's a sort of B2C play, but actually something else is going on and you're using it differently. So let's just talk about that, and I'll bring Nick into this in a minute, but just give us a focus on. What B2B marketing is and how
Leigh Nexgen:Yes. And, and look, the Aston Martin one is, is, a different element to those other two that I just mentioned. It's global. We are, and, and I, and, and I would say the branding would be the last, criteria or purpose as to why we have that partnership with Aston Martin. Firstly in mining, you're operating very sophisticated machinery and humans are interacting in, in challenging conditions. And that is very, very synonymous with, formula One. Motor racing, safety is absolutely paramount as it is in, in mining, and so we approached it, first of all to see what we could learn about the elite organization in the world when it comes to operate, interacting advanced machinery with humans. The safety, policies and procedures around it, but also the pursuit of excellence around reducing the opportunity for variability. And the thing about Formula One is they're never satisfied. They win a race and they're all immediately working on how can we get better. That is a philosophy that. We resonate very strongly with, and I thought the synergies between Formula One in that aspect and mining were very strong. And as a consequence of that, we are, you know, already developing remote operation of the machinery, that is underground from surface, possibly going as far as in the local, like a 50 kilometers way in a control center that's in the middle of the community, so they don't have to. Travel 150 kilometers every day and that will optimize efficiency product, profitability, but also, safety and, you know, formula One other, the leaders in really the remote operation of equipment. And, and, and, and they do that. And so from there, that was the main driver. Secondly, there's a lot of investment in, formula One from, other partners that have relationships with, mining and, and, and as a consequence of that partnership, we have been exploring a whole new investment, group. That, are now interested in, in our company and our project as a result of that. So, again, it wasn't the driver or was around, it was around that technology application to mining, and, which drove it. But there has been some subsequent commercial, outcomes which have been very beneficial to the company. I think from a branding perspective, there's no doubt that the trading liquidity in our stock on the New York Stock Exchange, increased with the, activation of that partnership. As I said, that's always very difficult for us to quantify and, and look Nick, is better tasked to, or, or experienced to, to help quantify that. But, it was really that technology innovation. Performance management, that led that initiative. And, and the Aston Martin team have been unbelievable. Every two weeks they're talking to our team, be it the engineering team, the safety team, even HR philosophies around employing the right people. And they do it differently. Like I, I think if you went to one of the major teams like Ferrari or, or Mercedes-Benz, I don't think that is something that they do, but Aston Martin. Do, do that. And, I think what it's also done is put a bit of a standard out there for anyone thinking about joining our company. They, it, it is very much a window on our pursuit of excellence and we're not for everyone. Coming to NextGen you, you know that you're gonna have to perform and, and really be innovative and confident in what you do.
Richard Gillis, UP:and just to clarify before I hand over to Nick, you, are you, you saying you saw a correlation with share price and the, the signing of the deal or the sponsorship? Is that, what? Is that
Leigh Nexgen:we saw a increase in trading liquidity. Now there's other factors that affect the valuation of a company, but there's no doubt the trading liquidity of, of, the stock increased. Around that same time we activated. That partnership. So,
Richard Gillis, UP:what's that an indicator of? Is that a, is that a just fame? Is that a, just a, a, an increase in awareness of the business that causes that liquidity.
Leigh Nexgen:people see a sign on the side of the car or, or on the sleeve of the driver and they look it up like, what's, what is that, what is that company? And then, you know, it's led them to our website and they've seen, you know, the, the story of what we're doing and the importance of, of, our project and the manner in which we go about it. And, you know, I, I, I think some retail. Investors have said, yeah, I like that story. And, uh, gotten on board or some major financial institutions have said, well, you know, I wasn't aware of that. I like the way those guys are going about it, and I like nuclear energy as well and, uh, and and so forth. So, that's as much as I can kind of like, determine on that particular impact.
Richard Gillis, UP:Right. Okay. That's interesting. Nick, let's bring you in. Let's just, let's talk about B2B sponsorship more broadly then. What's happening? What I like about the B2B thing is it is slightly counterintuitive. There is something going on here that isn't the usual Awareness logo thing. That sponsorship is always, that's central to it. Why are B business B2B brands looking at sponsorship in a different way?'cause you look across the lots of different sports and you see quite a lot of B2B brands coming in.
Nic Djounoov:Yeah, absolutely. I mean, if you look at tennis, golf, formula One, I think a great examples. You're seeing sovereign wealth funds, consultancies, tech companies, mining, as you say, increasing that level of sponsorship in, in recent years within these categories. And I think it's to a lot of points that, that Lee mentioned. It's about the association you can build with these brands has the potential to be an active tool for knowledge sharing for your business, getting into a room with other individuals to help discuss different deals. And I think this is increasingly the way of the way sport is becoming. It's, it's being able to get in the room with someone that can help you drive your business and it becomes something far. What a B2C would typically look for the benefits of sponsorship for, I found these anecdote, they're quite interesting around the trading price going up after the deal was activated. I think for specific brands, that's almost a credibility when you, when you plaster over the, a brand that people are aware about. While from a B2C perspective, you're able to leverage an engaged fan base to drive product sales from a B2B perspective that almost. Provides credibility in the market for your competitors or potential other industry players you wanna be competing with. So yeah, I think it's different objectives, but ultimately the same goal where we're really trying to build your awareness for your brands, but one side is looking at maybe more direct commercial outcomes, whereas the other side is looking more at knowledge sharing and, and potential improvements in that regard.
Richard Gillis, UP:So there's a sort of the, the return on investment is, difficult sometimes to ascertain in sponsorship and it, you get to marketing metrics of various kinds. What we're getting to here is actually real business being done. You're creating an environment and I'm wondering how that works and how that you then, if you're a rights holder, how you start to think about that and how you start to value your partnerships and how you package those. So Lee, do you see that? Do you, the, guess you would bracket under the hospitality element? What is it that's happening there? And do you see a real, you know, is that how you view return on the investment in, in the sponsorship?
Leigh Nexgen:There's, there's no doubt. And, and I can't be too specific given that some of these things, in, in, in process. But, it has opened up a whole new world of potential investment into the company that I, I did not even anticipate. And, to, to Nick's point, what, what I, I, I think I underestimated was that credibility that you get because with a, particularly with Formula One, they don't just take money from anyone. It's actually quite a rigorous vetting process. And, and if you are successful, particularly with a team like Aston Martin. It says that you identify with the highest levels of, of, business and social conduct. And, and, and I think that builds credibility with some organizations that you may not have. Come into your, your environment, unless you know you're associated with, with such an organization. And, I can tell you, there is some incredibly material outcomes, that are occurring. As a consequence of this partnership that we've had with Aston Martin. They've, they've just introduced us to some groups that, have then, learned about our story and, and, and, you know, possibly in the future will be partners with us directly.
Richard Gillis, UP:What's the, the implications Nick of, a B2B sort of cell, if you like. If you look, if you put yourself in the rights holder seat for a moment, how do you go about identifying sort of categories or useful categories or just areas that you think. cause you could start to oversell this, couldn't you? Because a lot of what Lee's saying there is that it's the room that you're in. The company we keep is always quite an interesting sort of idea around sponsorship. There is a, you know, a validity that's happening here also. But when you get to what I'm calling softer stuff, which is the sort of relationship
Nic Djounoov:Yeah.
Richard Gillis, UP:it's quite hard to then, because sponsorship's all about packages rights. What you can and can't do. You get to a price of a package, and how you play this quite messy conversation through a, the lens of what is then a legal contract.
Nic Djounoov:Well, I think it's, it's ultimately about purpose and planning when we speak to, right? So it's about, okay, let's understand what rights you have, your disposal, and then understand how we can package it up in, in different deals, noting that potentially. For a B2C brand, it's more important to have exposure locations. So in Aston Martin case branding on the car increase that brand awareness and drive that association. Whereas for potentially more B2B example, you can structure a deal somewhat differently, almost retaining some of those, let's call it premium exposure assets for the brands that want it. And for B2B organizations like NextGen. Where the benefit of the partnership is coming from building those relationships, and in fact, the brand awareness on a, on a race that maybe is not as important, you can structure a deal, which is weighted more towards hospitality, attending internal forum forums, knowledge sharing sessions where you sort of benefit from those individuals and that relationship building you want as part of the the sponsorship.
Leigh Nexgen:Yeah, Nick just articulated that, incredibly well. And that was the driver of this, this initiative by NextGen with Aston Martin because we're, we're also building a culture. and I think organizations should always focus on their culture and we're, ours is one of excellence and planning and executing seamlessly with reducing the opportunity for variability from those plans to execution. When you get that wrong in, in Formula one, it can be disastrous. You get that wrong in mining, same thing. And so it's all very much about the focus, commitment, attention to detail between machinery and humans. And it's exactly the same principle in mining. And, and, okay, whilst we're not racing cars, we, we are developing a mine and using sophisticated machinery with humans interacting and the plans from taking a drum of yellow cake from. Raw ore from 500 meters below the surface up processing it, keeping it safe, keeping everyone safe onto a truck to the nuclear reactor, is I would say, at the same scale of these organizations based in Silverton sending a car to 24 locations around the world and everything working the whole time, it's, it's pretty complex. And as mining is, and. We've learned a lot about human resource management, planning, testing those plans, and reducing variability, that is invaluable, which would far outweigh, the price of the, the partnership.
Richard Gillis, UP:So I'm always interested in arbitrage as an idea when you get to this in terms of what you buy and what is being sold and how you then identify. What's valuable to you? I'm just wondering because obviously again, you go back to the sort of IP question around sports sponsorship and a lot of the price comes with is, is a media, framing of logos. You know, the HP logo on the Ferrari car, controversial, it's blue and all of those questions, but it's massive and it's incredibly expensive, and it's a billboard that is going around, you know, every couple of weeks. It's a global ad buy essentially that's costing enormous amounts of money. But what you are saying is actually, I'm just wondering what the value of the logo presence on the car is relative to the overall value.
Leigh Nexgen:I, I think it's a trigger. In our case, it's a trigger for. People to ask, well, who are they? And, and what do they do? And then it feeds them to, to towards the answer. The, the branding is, is the least important to us. You know, as to Martin also offer all the, like we hardly go to, we, we go, I go to maybe two, three races a year, which are specifically targeted for certain purposes. I can say, look, I was at the Japanese, F1 and we took a number of the Japanese utilities with us, to the track. Now we're negotiating, you know, valuable offtake arrangements, contracts over many years, with those parties. What a, what a platform to have those negotiations, that works. But, you know, there's other aspects like, I don't, you know, we, we don't need. You know, the drivers or anything coming to our head offices with photo for photo opportunities that, that, that's not, important to us. So we don't need, say, track days, at Silverston, that type of thing, which I know others, partners of Aston Martin do. And, and, and that's how they like to entertain their clients. Ours is far more specific around company culture and the application of their elite performance. IP and, and parlaying that towards our company, given our stage of development.
Richard Gillis, UP:is winning or is performance on the track important? Obviously, you know from Formula, I'm not a Formula One fan, but I do know that you know, you've got Red Bull and. Mercedes and the product on the track. there's only a few of them that are winning. And in terms of, does Aston Martin's performance actually matter to you or is it, are you just buying association with the Formula One story more broadly and they're just a, they, they are a useful way
Leigh Nexgen:Yeah, it's an excellent question and, and the winning or the performance of the team is not a, material criteria for us whatsoever. I'm sure it is for other sponsors. No doubt about that. But it's not for us because our, our focus is on that, you know, that, that technology safety, performance management transfer. Philosophies into our, into our organization. That's where it starts. And, and so yeah, we want to see'em do well though. No. Like yeah, much rather see'em at the front of the grid than the back. But that in terms of our decision making does not have any bearing on that whatsoever.
Nic Djounoov:A and that's interesting Richard,'cause it's, it's probably more of an important point and was for a, the right shoulder and b for B2C brands, obviously as, as through our intellectual property methodology at Gemba. At the core of that is the size of your global fan base. As a property. So when we talk about ip, we are talking about the value of association that brands can leverage from a right towards engaged fan base in order to promote its products and services. Essentially. We know that as a, there's a few factors which could drive up that, that global fan base size and on track success, or in this case, winning races, winning world championships, signing. Can have a significant impact to that global fan base. So probably from a a right order perspective, of course you'll be doing well.'cause then you're able to commercialize IP to both B2B and B2C partners at a higher level. But also for, you know, you more B2C brands, you're able to engage with a larger fan base size as that, you know, increase in fans comes in with that success.
Richard Gillis, UP:So what, let's just pursue this then, in terms of the IP value it is not about Aston Martin or about any specific sponsorship. Just let's just talk about ip. A minute. Within it, there is a sort of intangible, there's an element that is there, but you are, what you are saying is that you can measure it. Is that, is that the argument that you are
Nic Djounoov:Yeah, EE, exactly that. And that's really at the core of the premise of why we created the term Star product almost 10 years ago. We recognize that in, in the industry, we, in some parts industry, intellectual property is long been classified as an intangible. Our methodology is slightly different to your traditional media agencies who, as you alluded to earlier, Richard would produce clemency number. And apply an arbitrary uplift to give you that intangible IP value. Whereas again, but we disagree with that premise and and believe that intellectual property is not only quantifiable and measurable, but it's something that we as an industry need to be articulating clearly through transparent and robust pricing methodologies in order to ensure we're able to commercialize successfully. I think in the industry, especially as we're, we're moving to a, a period where broadcast revenues and other revenue li s are stagnating. If we expect sponsorship to fill the gap in some senses, we need to be confident and comfortable with, with articulating that if, if I'm I right or, or, or a.
Richard Gillis, UP:So without revealing your sort of secret source, how do you go about doing it? How do you, so for example, a football, you know, a major European football team are you a b testing? Is that how you're doing it? You're saying, right, okay, here's, here's an ad or a piece of creative with or without the logo. And does that, is that you are looking at impacts? Are you.
Nic Djounoov:so maybe two, two slightly different points there on, on the IP points. We measure that through looking at contract values, and once we understand the value of the tangible rights, we unpick the benefits and the exposure value. It leaves a residual, which we understand to be the intellectual property, and we understand there's a correlation between the size of that residual in an actual contract and a sports property's unique fan base. What we do in order to determine an IP rate per fan is apply that residual and divide it down by that fan base, which we understand for that property. Now, one individual IP rate per fan point is, is an individual contract point. However, over the last 10 years, we've run$5 billion worth of of sponsorship contracts through the turns model and. It's enabled us to build up a good picture of how the market's transacting, aggregate intellectual property across different sponsorship tiers, different asset types, and also enable some interesting trends such as how we understand that certain brand categories, again, typically your endemic. Sportswear brands, alcohol brands, et cetera, have a high print to pay for ip. And, and that's how we measure it. And yet, as, as, as you said, the second part of our intel report, which also covers Lee's B2B example, was assessing can intellectual property itself as a, as a medium for marketing be effective in driving not only awareness, but also bottom of the funnel metrics such as brand purchase consideration.
Richard Gillis, UP:So just take me through then. So it is, depending on the category, so an airline, a car. A bank, the IP value, that intangible is more or less impactful depending on category, is it or the type of.
Nic Djounoov:category dynamics is a, is a key factor of it. We often look at a few different variables that could impact the IP value up or down. Some key ones are the competitive tension within a category, so are there a lot of categories, brand categories? Competing within a particular sport. So an easy example here is gambling companies in, in the Premier League, let's say the second one is beginning to look into that B2B B2C lens, where, what is the ability of a brand to generate direct sales through this particular sponsorship? And this is where we see some of those alcohol brands, sports brands start to move away and, and, and above B2B brands typically because of that ability. To generate direct sales. And the final one is around that cleanliness of sponsoring environment. Recognizing that if you are one partner in a relatively small pond and you get a, a cleaner share of voice, that cleanliness of brand exposure, brands are willing to to pay larger when it comes to. It's fairly nuanced in in different sports and it's quite interesting. Looking at that picture might look differently for football versus Formula One, I think into the example of we're seeing more B2B brands of a certain.
Richard Gillis, UP:It's quite interesting, isn't it, Lee? Because you, you sort of get to, I mean, I always think about the Olympics when you talk about IP because you don't get much, the package is very expensive'cause it's the Olympics and it's a massive IP halo. But actually the rights you get, you don't get, you know, there's no in brand, there's no natural logo presence like there is in Formula One They have to work very hard to make an impression. if you are not Nike or you know Adidas or you're not on, people aren't using your product actually in the arena. And I'm just wondering, as sponsorship evolves, your story is becoming increasingly central. So you've got a, you've got a load of brands who just want the logo and the media. That's always gonna happen. But actually. The B2B play in here is a more, I guess it's a more sophisticated use of sponsorship and there'll be a lot of brands that won't, or a lot of companies that just assume that sponsorship is about the brand and the logo and the presence, and you measure it by awareness. But actually what you are saying is no, that that's not what you are using it for. And so it sort of opens up a whole load of categories
Leigh Nexgen:Yeah, you, you're completely right. And look, we had an element of our, shareholder base that thought it was about branding. And had trouble identifying, why, you know, the larger, you know, our top 10 shareholders who I, you know, I'm very close to, et cetera, who I spoke to about it, were incredibly, impressed and thought how clever it was, and, and, huge supporters of it. So, look, I, I, I got it. You know, that, that some people thought it was about branding, but you know, this is evolving. You've got sophisticated, well, I can only tell you from Formula One and, and, the Saskatchewan Rough riders and, and the Vancouver Canucks, you know, they're all different. They all have a very core purpose to our business objective and, and executing on that successfully. And that's the way we've approached it. And, and yeah, you mentioned the soccer team. I can't see a circumstance how we would look to be on the front of say, PSG or something, or say a golfer. That would be much, much different. I, I can't see the relationship for us there or the purpose to our actual business activity and, and executing on that. But, you know, with the RAF riders, encourage, you know, encouraging reading and anti-bullying in schools where we operate. The Vancouver Canucks, also mentoring kids on a national scale, has been incredibly impactful. And then Formula One on, that transfer of knowledge around elite performance. The interaction on safety programs and lessons learned between machines and interacting, that all works. Also opening up an investor base that we would not have normally tapped, as well has been, an aspect which I, I had underestimated. Going into it, but has, you know, incredible ramifications for us. And, and I, so I think it is evolving, on a more B2B basis than, than, what p people had previously thought was the value of, sponsorships. We, I call'em a partnership. And as I said, you know, I don't Aston Martin's unique on the grid. They're doing a lot of things differently. I don't think we would have that B2B opportunity necessarily with a Ferrari or a, a Mercedes-Benz or a red ball. And I've got huge respect for those teams. But it's, it's not something that they offer to the degree that, Aston Martin have.
Richard Gillis, UP:It's quite often, I always think that the internal audience, however defined, you know, whether it's it's people working there, or as you say the shareholder base, the stakeholders in the company, I think it's very underestimated how sensitive the CEO or the owner is to that audience when it comes to sport and sponsorship.'cause quite often it's framed. It's framed in the media sometimes as an extravagance, isn't it? Sponsorship is, you know, splashing money on rights in a way that they wouldn't in in terms of, okay, as an ad campaign. They wouldn't start questioning that. But sponsorship comes with that. It's always had that challenge. I remember talking to people who were sort of running programs for banks around the Olympics, and the internal audience was very skeptical until they then said, no, look, we're, we are making a lot of money from this. You know, so there's a sort of, it has to be a maybe, I'm wondering if it has to be a more. Concrete return that you are demonstrating to that audience.'cause it's a very, you're very sensitive to that audience.'cause you
Leigh Nexgen:yeah, exactly. And look, I'm a chartered accountant and, and you know, we'd with, watching every dollar. The, the, and I founded the company and I'm, I'm also one of the major shareholders and, and, I'm, I'm, ruthless in terms of the allocation of capital, so I. You know, if I'm getting that wrong, it's directly negatively impacting me. So I, I guess our situation's a little or, or next gens. And given my ownership of it, the fact that I incorporate the company and the, what the company does is a reflection on me and my values. You know, I, I'd say, you know, I put a lot of energy and thought and strategy behind it. And it wasn't just me, it was also the board. That also represent our major shareholders as well and have a, you know, a diverse skillset. So, it, as I said, I, I go to two, maybe three races a year. It's not like I'm going to all 24 and, and, and, uh, we're not splashing any money. It's different, but yeah, you're quite right. It has, you know, at the early, when we first did it, it did. I did get some comments like as though that was the purpose of it, but, um, everyone's clearly aware now and, and you know, even before launching it, our major shareholders were very aware and thought it was incredibly astute.
Nic Djounoov:That's interesting. Yeah.'cause I think Richard, we often talk about, we are seeing exactly that from the market, right? How do you justify sponsorship where in often cases, maybe for B2B is quite pertinent, you're not necessarily getting higher value, tangible rights in return. You are, you are paying for that association for some people lack better almost than that, that ip. And how do you, how do you put a price on. What we are seeing, it's quite interesting. We're seeing increased of our increased number of our work is coming through procurement teams. I think since COVID, all businesses are operating in an era of less where the percentage of your marketing budget you can spend on sponsor size is, is forever diminishing. And that's why we're so passionate about ips because we, we understand there that there is a positive story to tell for both brands and rights. You know, for brands you're purchasing. A passion point enable you to tell stories or achieve set of objectives. And for a rights office, you, you have to commercialize an asset which is very much quantifiable, but doesn't, you know, required to deliver an increased cost of sales'cause you're not necessarily delivering more rights.
Richard Gillis, UP:It is interesting this, so procurement is one of those words where it sends shivers down my spine. they the sort of fun police, are they, are they instinctively against sport sponsorship? Do you think? You're gonna have to come with a very, you know, an argument for sport and sponsorship to get through procurement. That's my framing.
Nic Djounoov:I would, I wouldn't look at it as in terms of against, we, we, we are seeing an increased number of the, the brands that we are working with engage with procurement from the start. I think it's just the way that the, the industry is being to transact where, as opposed to. I wanna sponsor this particular property or athlete running with that idea and then getting to the end for an approval and not having a a strong business case. There's an understanding that given this is gonna be going into a balance sheet into a p and l, there needs to be rigor and understanding, okay, how much is gonna cost the US and how much value do we expect for us to return? And I think the involvement of procurement or you know, this rigor from the outset ultimately ensures a, a smoother process. And especially with then negotiating with a, with a rights holder, you can sit there very clearly with numbers on both ends. You know, we've had clients who have both come prepared, understanding the value of what they're willing to pay or sponsorship, and it means there's a, there's a quick and easy handshake and you can move away from discussing. Is the zero hero or there, and, and, and really understand how do we make this a as least at a successful partnership, not, not a sponsorship.
Richard Gillis, UP:the procurement people, I mean, I'm obs you know, I'm interested in this procurement, they don't trust intangible value. Is that true? they wanna see the sort of rights and the benefits explicitly. laid out, which is again, when you get to a the sponsorship question, you've got the media assets rightly or wrongly, you know, the media measurement of those. And we can question how valid or how robust those are over the years. But we'll park that for a minute. And then you've got this other bit that's intangible. If I'm the, and procurement presumably. Needs to see evidence. That's what their job is.
Nic Djounoov:And I think that comes through an articulate methodology, right? That's all. As agencies in this space who work on these independent, fair market valuations. I think we can recognize that intellectual property is a thing. You know, there's a reason that a club like Manchester United is able to sustain such, you know, high annual contract values when they're not performing at their, the level they were 10 years ago. It's because of the fact when you are securing a sponsorship with them, you are buying into that decades of legacy, of being one of the biggest clubs in the world. You know, clients, whether it be football or elsewhere. And we show them the valuations. Everyone's keen to understand how are other clubs comparing when it comes to IP against us? I think there's a, there's an understanding there of how you drive that IP value, and in order to get that procurement on board, it's being able to articulate exactly how you're determining IP value and how that relates to the specific property in question you're trying to sponsor.
Leigh Nexgen:Point Nick, and it's also how do you, at what, over what time period do you assess it? Sometimes it's not immediate. Sometime it is, it, it does take time to resonate and, materialize. I think when, you know, like you look at brands like, Louis Vuitton and all of that, and I, you know, growing up I used to think, geez, how, how do they have so many stores right across the world? And Rolex for example, and you know, I understand from my friends you can't get a Rolex walk into a store and buy a Rolex. At the moment there's no stock yet. They sponsor so many things and would cost so much money to, to sponsor. I don't, if it wasn't working and maybe the procurement people who are so black and white, show me immediate impact. Maybe don't understand the value of it over time and the fact that it's identifying with a legacy such as Manchester United when they're not playing so well. But Manchester United stands for so much more than just how they're performing this season. But you look at any of those real successful, world iconic companies who do market or, have partnerships or sponsorships in this manner. They are continually like the world's biggest companies and, getting bigger. So, you know, to, to me, if you can't put it or measure it down to the dollar, I think there is still value there, either tangible or intangible. And, you go into it not having a result guarantee. But you go into it with a, understanding that, it might take time to resonate or materialize. But over time I think it's undoubted. All the world's major companies have been incredibly successful through sponsorships or, or, partnerships as, we approach'em.
Richard Gillis, UP:And presumably they don't want the intangible quantified. It's actually in their favor to have this halo, and it's not. Measurable. there was always the worry and still, in the digital era. I remember the, the conversations being, this idea that you're gonna get complete under understanding of the, of the customer and the brand and the relationship.'cause actually there's a bit, quite a large chunk of it. And those companies that you mentioned, a massive chunk of it, their value is in the dream. It's in that relationship that we have with them in our heads and we are projecting onto these brands. And actually, if you start to then quantify that, there's a great quote from someone who had an early conversation with Google saying, you know, he was an ad advertising guy saying, look, you, you're fucking with the magic, just keep away from the intangible.
Leigh Nexgen:Yeah, quite, quite right. And so with respect to the way we approached it, Yeah, there is in, intangible. But to quantify it, we would need less than 1% increase on a sales contract that we're negotiating. And it's more than paid for whatever the cost is. So for those who have gonna focus on that, I presented tho that figure and it then really spoke for itself. So if you didn't, you know, you couldn't identify with the intangible. You're still gonna be okay from a dollars and cents perspective.
Richard Gillis, UP:You get behind it. That's a good, you know, that's a pretty good argument. Listen, I've really have enjoyed the conversation. Thank you so much, both of you for your time and uh, I'm gonna keep an eye on the Aston Martin team. I have no, no skin in the game in Formula One. I never have done, but I'll keep a, I'm now, I'm now engaged
Leigh Nexgen:No, please do. It's a, it's, it's a fascinating story. Lawrence strolls Canadian and we're a Canadian company and, he's certainly innovative and, wants to be the best, at what he does. And, and that's very similar to what we're doing at NextGen.
Richard Gillis, UP:Okay, brilliant. So Lee and Nick, thank you very much for your time.
Leigh Nexgen:Terrific. Absolute pleasure.