• by Ove Haxthausen , June 15, 2010

Last February, the America's Cup trophy returned to the U.S. for the first time in 15 years. It happened in Valencia, Spain, during races featuring two of the most advanced multi-hull yachts ever built for racing, taking the America's Cup match races to an entirely new level of technological sophistication and speed on the water. Yet, the 33rd America's Cup was a commercial failure by most measures. It also featured a car maker as key sponsor: BMW.

The event failed to attract media coverage, sponsors and spectators for several reasons: There were only two syndicates competing, making the event much shorter (with only two races) and less exciting; the event was preceded by extended legal battles between the syndicates; and the races overlapped with the Winter Olympics in Vancouver. As a result, sponsorships were down significantly from $200 million for the previous America's Cup in 2007 to $11 million, and the overall economic impact of the event is estimated to have been about one-tenth of the impact of the previous America's Cup.

The winning syndicate, BMW Oracle headed by Oracle CEO Larry Ellison, is estimated to have spent some $200 million on the project. While most of that money appears to have come from Ellison's own pockets, BMW was also a key stakeholder.

The idea of a car brand sponsoring sailing activities seems counterintuitive. And in the case of BMW, the yacht sponsorship activities seem especially odd in the context of BMW's dropping of its Formula One sponsorship activities. Formula One was an arguably closer fit with the brand, but it was also a much higher ticket item for BMW, estimated at above $300 million annually.

So why would BMW sponsor a U.S. America's Cup syndicate? There are a number of reasons:

• The 2010 America's Cup was all about technological innovation and speed performance, key elements for the brand producing the "ultimate driving machine." BMW has cited the opportunities for leveraging America's Cup innovations in its cars as a key driver of its involvement.

• BMW targets an affluent, well-educated, active group of potential customers, globally. This target not only has an interest in cars and motorcycles, but it also follows golf and sailing; as a result, BMW is involved in sponsorship activities covering all four sports categories.

• BMW, a prestigious brand, seeks affiliations with prestigious events. The America's Cup, which claims to be the oldest active trophy in international sports, still has significant prestige, despite recent controversies.

• Sailing is green, and all car companies, including BMW, seek a green image.

So while the 33rd America's Cup may not have yielded the best ROI for BMW, involvement in yacht racing appears to be a fit for the brand, as counterintuitive as it first may seem.

What can other sponsors learn from BMW's involvement in sailing?

• Don't be afraid to look for sponsorship opportunities in areas which appear to be a less obvious fit for the brand -- but make sure to have a clear, substantiated rationale behind your decision to go into it.

• Don't get discouraged by one poorly performing event -- identify the reasons for poor performance, and if they don't have to do with brand fit, don't drop the sponsorship -- instead, address what went wrong

Let's hope that the 34th edition of the America's Cup will generate more excitement. So far, Larry Ellison has announced his willingness to work with all parties towards that goal.