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IT’S potentially the difference between life and death.
The words of a “hugely frustrated” Lynn Calder – the head of Ineos Automotive, the car company owned by Manchester United minority shareholder Jim Ratcliffe – when talking about the impact that United States tariffs would have on the business.
With its manufacturing based in France, the company now faces the prospect of 25 percent tariffs being imposed on vehicles exported to the crucial American market, with Calder admitting it was “vulnerable to tariffs” and needed “direct and urgent political intervention”.
Her stark warning was a reminder of the effect that the duties introduced by US President Donald Trump will have on the wide range of industries linked to sport through investment or sponsorship. Global stock markets have fallen as investors reacted amid fears of inflation, but beyond the wider economic turmoil, how else could the ripples of a trade war affect the world of sport?
Sponsorship
The US is set to stage some of the world’s biggest sports events over the next few years, including the 2026 World Cup and 2028 LA Olympics and Paralympics.
These events are meant to provide overseas businesses with a key opportunity to raise their profile and boost sales in the US.
Korean car manufacturer Hyundai Group, for instance, will look to take advantage of its sponsorship deal with football governing body FIFA during the Club World Cup this year, and then the World Cup in 2026. But could Trump’s aggressive trade policies make such businesses think again?
“I suspect some sponsors are now re-assessing how they ‘activate’ such deals in the US, given the trade barriers that have now been imposed,” says John Zerafa, a sports event bid strategist.
“Why would a sponsor spend millions of pounds doing so if it is now prohibitive to sell in America?”
Many sports teams and athletes are also sponsored by sportswear brands.
With most of these companies relying on materials and manufacturing in Asia – where Trump has directed some of the highest tariffs – it is no surprise that shares in the likes of Nike, Adidas and Puma have all fallen sharply, with fears that higher importing costs would be passed on to consumers.
However, sports finance expert Kieran Maguire says the impact should be limited.
“For a US$100 (£76,36) replica sports jersey sold in the US, manufacturing costs are likely to be in the region of US$12-15 dollars at source, and maybe even lower,” he says.
“So even if there’s a 40 percent tariff when the goods are imported to the US, that’ll only be around US$4 more.
“Consumers are used to paying premium prices in sports retail. The manufacturer and retailer should absorb some of this, and it shouldn’t impact on the amount being sold – or the commissions being earned by clubs that sell merchandise.”
The European Sponsorship Association told BBC Sport that it was “monitoring the situation closely and will actively seek the views of the sport sponsorship community”. – BBC Sport.
Online Reporter