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Clubs feel sponsorship squeeze

Brisbane Times  October 19, 2012

The Bank of Queensland's decision to sever its sponsorship of top Queensland AFL teams has underlined the tough economic environment facing all sporting clubs, according to a specialist in the field.

BOQ has posted a full year loss of $17.1 million, the first full-year loss by an Australian bank in 20 years.

    It's a lot of hard work to gain and maintain sponsors

The loss for the year to September compares with a net profit of $158.7 million in the previous 12 months.

Against this backdrop, the Bank of Queensland ended an 11-year sponsorship relationship with the Brisbane Lions – a decision announced at the club's recent champions' dinner.

The bank decided against renewing its major sponsorship deal with the club for 2013 after a review.

“Most notably the upgrade to co-major sponsorship from season 2010 has been instrumental in supporting Bank of Queensland's re-brand to BOQ,” a spokesman said.

A Brisbane Lions spokeswoman confirmed yesterday Conergy – the other major sponsor – had also decided not to renew its sponsorship arrangement for next season.

No announcement about new sponsors had been made, she said.

The Bank of Queensland was also a “ball sponsor" for the Gold Coast Suns for the past four years but has decided not to renew the arrangement after this season.

Both the Lions and Suns sponsorship contracts were up for review at the end of the 2012 season and both were deemed to have reached a “natural conclusion", according to the bank.

“Both partnerships have been extremely successful and achieved the desired objectives for BOQ," a spokesman said at the time.

The decisions highlight the tough economic conditions confronting sporting clubs – from local football teams asking a neighbourhood butcher to buy their jerseys to top-level teams seeking a major financial backer - according to Danya Hodgetts.

Dr Hodgetts is a Central Queensland University academic who specialises in sports management, marketing, participation and sponsorship.

“It's a lot of hard work to gain and maintain sponsors," she said.

Sport sponsorship and marketing dollars were usually the “first things to go" when money was tight regardless of the size of the business.

There was no good time to lose a major sponsor but all sporting clubs were operating in a hard economic environment.

Dr Hodgetts believed luck and good timing determined whether clubs could find a new financial backer.

BOQ had forecast the result, which was caused by its exposure to the struggling southeast Queensland property market and other one-off items.

BOQ chief executive Stuart Grimshaw said the bank was profitable in the second half of its fiscal year, and the next 12 months should be more positive.

"We've addressed the basics to become operationally fit and are focused on delivering better services for our customers and profitable growth for shareholders," he said in a statement issued yesterday.

"I believe we have reached a crucial turnaround point and I'm looking forward to the next 12 months."

Mr Grimshaw said the bank's asset quality and risk management had been addressed.

"We have seen a fall in mortgage arrears over the past few months. However, we continue to be prudently provided for, hence the top-up of our collective provisions," he said.

BOQ raised its provisions for bad debt expenses in the second half of its fiscal year, which contributed to the full year loss.

"We are seeing stabilisation in the commercial portfolio with no new large impaired exposures in the second half," Mr Grimshaw said.

There are also some early signs of consumers returning to the housing market, he said. However, the wider economic conditions remained challenging, with consumers still cautious and demand for loans subdued, Mr Grimshaw said.

BOQ's normalised cash profit in the year to August, which excludes one-off items, was $30.6 million, down from $176.6 million in the previous year.

BOQ declared a fully-franked final dividend of 26 cents per share, taking the full year dividend to 52 cents per share, down from 54 cents in the previous year.

Last modified onTuesday, 28 May 2013 07:10

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