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SPP rethinks sports funding

Slovakia's athletes were dealt a major blow on August 9 when one of the biggest corporate sponsors in the country threatened to stop its sports funding because of government criticism of its expenditures.
State-run gas utility Slovenský plynárenský priemysel (SPP), due to be privatised at the end of the first quarter of next year, has been told by the government that it should cut back on its corporate sponsorship. In the first half of this year, SPP's profits dropped by 38% to 5.77 billion crowns.
SPP General Director Pavol Kinčeš told The Slovak Spectator that in light of recent criticisms from the Finance Ministry in particular - which said that as a state-run monopoly, SPP's promotional activities were not necessary - the tens of millions of crowns the utility pours into promotional activities, including cultural events and charities as well as sport, were being seriously reconsidered.


Corporate sponsorship of Slovak sport has been rocked by news that SPP may be cutting back its funding.
photo: TASR

Slovakia's athletes were dealt a major blow on August 9 when one of the biggest corporate sponsors in the country threatened to stop its sports funding because of government criticism of its expenditures.

State-run gas utility Slovenský plynárenský priemysel (SPP), due to be privatised at the end of the first quarter of next year, has been told by the government that it should cut back on its corporate sponsorship. In the first half of this year, SPP's profits dropped by 38% to 5.77 billion crowns.

SPP General Director Pavol Kinčeš told The Slovak Spectator that in light of recent criticisms from the Finance Ministry in particular - which said that as a state-run monopoly, SPP's promotional activities were not necessary - the tens of millions of crowns the utility pours into promotional activities, including cultural events and charities as well as sport, were being seriously reconsidered.

"Criticism of SPP for investing its financial resources into the building of its image and promotional activities has been strong recently, and we are considering a cancellation of these activities," Kinčeš said.

He added that decisions had already been taken to implement major cutbacks in the company's sponsorship activities. "In the past, SPP would give 300 million crowns [$6.4 million] in sponsorship for one event. The company's current management has not approved this amount even in total for this year."

The weight of the firm's presence in Slovakia's corporate sponsorship was evidenced by the reaction of the Slovak Olympic Committee to the news. Many of Slovakia's top athletes, heading for the Games in Sydney in September, have either directly or indirectly relied on SPP's sponsorship.

"If there is some chance that this [SPP's sponsorship] will change, it would be dramatic for sporting developments in Slovakia. It would be terrible. Even a monopoly company has to support sports. SPP is vital for supporting the preparation of our top athletes, and we need other top Slovak companies to support this too," said Martin Benko, General Director of the Slovak Olympic Committee (SOV).

Huge impact

SPP's possible pull-out from the sporting world has put the vital role many large firms play in supporting Slovakia's various sports leagues and athletes under the spotlight.

Still Slovakia's most popular sport, football attracts some of the largest sponsorship in the country from some of Slovakia's biggest firms. Inter Slovnaft Bratislava, current Superliga (premier league) champions, have built their success over the last 50 years on the back of massive financial co-operation with the oil refining giant whose name the club now bears.

"Slovnaft was the main reason for the establishment of this club," explained Inter spokesman Tomáš Král. He said that when Slovnaft first began putting money into the club, it was a tiny sports club which didn't even play football.

"It was from Slovnaft that the whole club really grew and got to the position we are in today," he added. "The company is vital for us. We call it our mother." Slovnaft currently pours around 30 million crowns a year into Inter Bratislava.

Another giant sponsor, state-owned savings bank Slovenská sporiteľňa (SLSP), is unlikely to follow SPP's lead, despite the fact that like the gas firm, it is nearing privatisation. Martin Barto, chief of strategy at SLSP, said that while he could not comment on the bank's exact sponsorship spending plans for the coming year, it would be continuing to support under-funded sports.

"SLSP should move towards sponsoring charities and education and put our money where it is most needed. That is certainly not to say that we would be ignoring sports, but what sports we do support should be those that are already lacking funding," he said.

SPP's case

SPP is determined that whatever the outcome of the current debate on its promotional activities, its role in sports sponsorship will continue. "We put only 0.1% of our revenues towards advertising. We want to discuss this, because SPP's sponsorship supports national teams representing Slovakia, for example sportsmen going to the Sydney Olympics. When our Olympians and sportsmen represent Slovakia and SPP, it's advertising abroad. We are an international company and that's why we need this kind of advertising," said Kinčeš.

The firm was due to sign an agreement on sponsorship with the SOV August 21.

Kinčeš also rejected government claims that the firm was a monopoly and did not need to promote itself.

"Every company operating on this market needs to build up its image. SPP is going to be privatised, and the government has been trying to find a significant foreign partner for SPP. Other foreign gas companies have also been working on the development of their image. There are sectors in the gas industry where SPP isn't a monopoly. For example, international activities and areas not connected with the distribution and sale of gas.

"It's difficult to say exactly where SPP is a monopoly and where it's not, and until this is made clear it is difficult to talk about unnecessary advertising. For anyone levelling this criticism, they should prove this with detailed analysis and not base it simply on common opinion," the company head said.

However, the Finance Ministry said its criticism has been prompted not by a review of SPP's spending on promotion, but a recent request by the firm that the government hike gas prices by 25%. The ministry has said that it would be better if the firm cut back on costs in promotion and withdrew its request for the price rises.

But the Economy Ministry, which has supported SPP's request for the price hike, said that any money saved from cuts to promotion expenditures would be a drop in the ocean compared to the increase in company related to soaring world oil prices. Kinčeš explained that his company is expecting a 13 billion crown dent in its profits for this year from the higher purchase prices it pays for gas, an "extreme" result that would "only partly be compensated by an increase in revenues, from both the sale and transit of gas."

"Even were SPP to cut spending on publicity or other such expenses, it would not save very much compared with the rises in the cost of gas," agreed Economy Ministry spokesman Peter Benčúrik.

The Slovak Olympic Committee's Benko, for his part, added that it was important for responsible corporate patrons to stand up and not listen to populist arguments that sponsorship by state firms was a waste of taxpayers' money: "A populist might say that a monopoly company doesn't need some sort of advertising campaign to promote itself. But the thing is that Slovak sport needs money."

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