15.5 Sponsorship

As noted in Section 15.1 above, 'direct' advertising of tobacco products was phased out by federal legislation between 1973-1976, but 'accidental or incidental' advertising was permitted. This resulted in extended, prime-time exposure on television for cigarette brands.

Following the passage of the legislation, the tobacco companies rapidly bought out most major Australian sport. In 1980 the three major tobacco companies then operating in Australia (Philip Morris, Amatil and Rothmans) were also the three largest sports sponsors in the country.(40) In 1989 the tobacco industry was believed to account for $20 million of the approximately $90 million provided to sport through private corporate sponsorship (around 22%).(30) The largest sponsorship packages in Australia were those of Winfield (Rothmans) and the New South Wales Rugby League (reportedly worth $14 million over five years), and the Benson & Hedges (Wills) and Australian Cricket Board deal (said to be worth $15 million over five years).(41)

These arrangements have enabled extraordinarily cost effective advertising, as a number of analyses have shown. The televising of test cricket over the summer of 1980-81 gave the sponsors Benson & Hedges at least 72 hours of coverage. This included 40,000 exposures of the name Benson & Hedges on a single channel.(40) More recent studies have shown that during a day's play of a Benson & Hedges sponsored cricket match televised from Sydney in 1988, the Benson & Hedges name received a full 88 minutes of the day's coverage.(42) By comparison, the sponsor of a top rating television program could expect to get about seven minutes of coverage in an hour.(43) The media coverage arising from Benson & Hedges' $15 million, five-year investment has been estimated to be worth $7 million each year.(34) (According to WD & HO Wills, makers of Benson & Hedges, radio and television coverage of the 1992 World Cup of Cricket was beamed to 29 countries(44)). Tobacco company sponsorship of race teams in the 1992 Tooheys 1000 Classic touring car race resulted in an estimated $9.6 million worth of television exposure and accounted for more than one-third of airtime.(45)

An analysis of the Adelaide 1989 Grand Prix showed that Marlboro gained exposure for up to 36% of the broadcast time, through coverage of the Marlboro sponsored racing vehicles, and perimeter advertising. The author of this study noted that:

This repeated exposure, even for relatively short periods, of the name or logo is likely to have a significant impact on the viewers' subsequent responses to it. The psychological literature on so-called 'mere exposure' effects is both extensive and consistent. It reveals a powerful association between exposure to an object and the development of positive sentiments towards it.(46)

Of course, good coverage is not solely dependent on winning the race. Simply finishing the race, having a big crash that is replayed often, or even having continual mechanical problems can all contribute to heightened brand exposure. Further, apart from immediate benefits of sponsorship through attendance and live coverage, advantages are extended by replay in overseas highlights, news reports, newspaper articles, and magazine and radio coverage.(47)

Prosecutions and court actions

As shown above, television promotions for tobacco brands continued to flourish following the direct ban on tobacco advertising, via sponsorship agreements with sporting and other bodies. Provided that such exposure could be deemed as 'accidental or incidental' to a broadcast, and that the licensee (television or radio station licence holder) did not receive payment or other valuable consideration for broadcasting the advertising matter, then promotion material could be broadcast without penalty.

However the excesses of tobacco advertising shown in association with some televised programs, particularly sporting events, gave rise to criticism and formal complaints about the nature of and intent of tobacco sponsorships.

During 1983(48) and 1984,(49) the Australian Broadcasting Tribunal (ABT) clarified its interpretation of the legislation. During this process the ABT concluded that a number of television broadcasts, including the 1982 telecast of the New South Wales Rugby League (NSWRL) Grand Final (sponsored by Winfield), and promotional exposure associated with Benson & Hedges' sponsorship of the Australian Ballet and test cricket, were in breach of the Act.

The tobacco companies responded with a legal challenge of the ABT's authority to reach such a ruling. Proceedings commenced in the Federal Court of Australia in 1984,(50) and the decision, which favoured the ABT on most issues, was the subject of an appeal by the tobacco companies.(51)

On 20 March 1985 the Full Bench of the Federal Court dismissed the appeal. In their decision, the Chief Judge and Justices reconsidered the sequences of advertising under question, and the contractual arrangements between the tobacco companies and the sponsored agencies.(52) The court noted that the agreement made between Rothmans (Winfield) and the NSWRFL stated that 'the league has agreed to assist Rothmans in the advertising and promoting of Rothmans' products upon the terms and conditions and for the consideration hereinafter expressed.' The NSWRFL's contractual obligations included:

The flying of Winfield flags at all competition matches.

The playing of Winfield theme music at all competition matches 'where appropriate'.

That the terminology 'Winfield Premiership' be adopted by the league in all material relating to the competition including public announcements, interviews and press releases.

The assistance of the league in obtaining prominent advertising space at all grounds. 'In particular, the league will assist Rothmans in obtaining advertising space at the Sydney Cricket Ground including the painting of the Winfield logo on the grass playing area during the competition finals series'.

Exhibiting floats and displays advertising Rothmans products during the Grand Final.

A feature of the Winfield and other contracts reviewed was an 'escape' clause for the tobacco companies from the sponsorships if the type of advertising they sought were restricted or banned by government or other authority. The Court agreed that 'the sponsorship arrangement was intended as an advertising opportunity rather than an act of sporting philanthropy.' This was further underlined by the fact that in some of the contracts, as much as 75% of the sponsorship funding was earmarked for advertising and promotional purposes, leaving only 25% of the funds for the actual recipients of the money.(53) According to evidence given by the tobacco companies before the Federal Parliament's House of Representatives Standing Committee on Finance and Public Administrations inquiry into sports funding and administration,(30) of the estimated $20 million provided by the companies to sporting sponsorship in 1989, $12 million (60%) was for the sports groups and $8 million (40%) for promotional activities).

Despite the legal battle concerning Winfield's sponsorship of the 1982 Rugby League Grand Final, the broadcast of the 1984 Grand Final had contained prominent advertising, including an opening ceremony called 'The Winfield Spectacular', featuring dancers and the familiar Winfield theme music (a passage from Tchaikovsky's Fifth Symphony). Mr Brian McBride, acting for the Non-Smokers' Movement of Australia (NSMA), 'laid information' (alleged that a breach of the law had taken place) that the United Telecasters (Channel 10) was in breach of section 100(5a) of the Broadcasting Act in that it televised direct advertising matter.

The committal hearing began on 6 May 1985.(54) After a review of the evidence presented by the NSMA, it was decided that United Telecasters had a case to answer. However the magistrate ruled that he could not consider multiple breaches, and that the NSMA must choose a single segment. The NSMA selected the 'Winfield Spectacular', to which the subsequent hearings were confined.

The trial was eventually heard in September 1987 in the District Court in Sydney, with the Director of Public Prosecutions (DPP) taking the NSMA case. The jury reached a guilty verdict, a finding which was promptly appealed by United Telecasters on a number of technicalities. A re-trial was ordered, and the decision was quashed. The DPP then appealed to the High Court and was successful; in February 1990, more than five years after the telecast, Channel 10 was convicted of televising a cigarette advertisement.

Out of frustration at the delay in their first case, the NSMA launched a second action in 1989, again about the Winfield sponsored Rugby League Grand Final, but this time concentrating its efforts on perimeter advertising. The entire telecast was accepted by the Magistrate as evidence. Although a committal was obtained for early 1990, the case never proceeded, as it coincided with the High Court's verdict on the earlier case.

Tobacco promotion or corporate philanthropy?

In public defence of their sponsorship of sporting and other events, the tobacco companies typically claim that their sponsorship is not advertising; that it has no effect on children or overall consumption. There is ample evidence to the contrary, even from the tobacco industry itself, as one American tobacco executive has put it:

We made it clear from the day we announced our sponsorship of the Grand National division that we were in the business of selling cigarettes, not the racing business. We felt that stock car racing was a very good avenue for us to market our products and we are even more convinced of that today.(55)

In Australia, the Rothmans Sport Foundation was established when the threat of broadcast media bans became imminent. As minutes from a Rothmans management meeting held in November of 1970 state:

Discussing smoking and health, Mr Watson [general manager] advised that we can expect more severe attacks on the industry in the near future. In Canada and the USA, advertising restrictions are pending, and in the UK, there is no cigarette advertising other than press. We can expect similar restrictions here within the next few years. This is the reason for the existence of the Rothmans National Sport Foundation and our sponsorships which are being developed in anticipation of restrictive advertising action in Australia.(56)

Evidence given in a New South Wales District Court in early 1990(57) has given further insights into how the tobacco companies -- in this case, Rothmans -- have capitalised on their sponsorships. The presiding Justice made the following comments on Rothmans' sponsorship procedures:

The company's main concern in all this however would seem to have been to circumvent the ban placed upon the advertising of tobacco products on television not only by having events assume the company's brand name but also by ensuring that the advertising signs were transmitted on television. No-one seems to have questioned the legality of all this, a question which perhaps would now have to be reconsidered in the light of the High Court's decision, the DPP v United Telecasters Sydney Limited (which was decided only on 15 February last). The company was obviously prepared to pay large amounts of money in this sponsorship and exploitation.

Note: the matter brought to trial was alleged fraudulent activity by a Rothmans executive who had responsibilities in the area of promotions. Information on Rothmans' sponsorship procedures was aired, but ultimately peripheral to the matter being tried. The trial found the executive guilty, but the case was re-opened on a point of law unrelated to the sponsorship issues and the conviction was eventually quashed.

An effective form of advertising

Advertising via sponsorship is an effective way of increasing brand awareness. Studies have demonstrated that brand recall is heightened among children following viewing sponsored sport.(58,59) Children, especially those who smoke, are adept at recognising edited, simple or even cryptic tobacco advertisements,(60,61) and are able to identify tobacco advertisements appearing out of their usual contexts.(62)

A relationship has been found between tobacco sponsorship of sport and brand choice among Australian children. A national survey undertaken in 1984 to measure the smoking habits of schoolchildren found different brand preferences between states. In New South Wales and Queensland, far more children smoked Winfield -- where Winfield received high exposure through sponsoring the major winter sport, rugby league. Escort dominated the young adolescent market in South Australia, where Escort sponsored the Australian Rules Escort Cup (football). The numbers of children smoking Escort were negligible in all other Australian states. In Victoria, Peter Jackson was most popular, followed by Winfield. Both of these brands were heavily advertised at that time through Victorian league football.(63)

In some events, advertising by tobacco companies has reached the point of saturation. Even if sponsorship were completely banned, it has been observed that the bond between the Marlboro name and colours and the McLaren Formula One racing team would endure.(64)

Benefits of sponsorship to the tobacco industry

Apart from providing extended, cost efficient coverage of brand and company names, sports and cultural sponsorship delivers a number of other important side benefits to the companies involved.

It enhances the corporate image of the company involved. Far from emphasising the commercial benefits the company might receive, sponsorship tends to be seen in the light of charity, and recipients of funds commonly express gratitude for the beneficence of the 'donor' company.

It associates cigarettes with the sponsored event, ensuring that the 'image' of the event is inextricably linked with the brand name. Hence Benson & Hedges is elevated by association with the Australian Ballet; Marlboro's international image is enhanced by association with Formula One racing; Winfield's all-Australian image is fostered by linkage with rugby league football. It is particularly insidious to link tobacco with activities which require peak physical fitness.

It spawns a base of support for continued tobacco advertising, in the event of threatened bans. Organisations which regard themselves as dependent on tobacco funds for survival form a vocal, powerful and diverse lobby group for the tobacco industry in times of hardship.

It effectively gags sporting and other personalities who might otherwise be logical and willing supporters of health education campaigns. One example of this was the disciplinary action taken by the Australian Cricket Board (recipients of Benson & Hedges sponsorship) against cricketer Greg Matthews following his appearance in an anti-smoking advertisement in May 1992, in which Matthews was photographed crushing a Benson & Hedges pack. The Australian Cricket Board has since reworded its player contracts to prevent team members from damaging the reputation of its sponsor.(65)

Closing the legislative loophole

Since the passage of the Victorian Tobacco Act (1987), a number of states and territories have moved to discourage or restrict tobacco sponsorship, some establishing health promotion foundations funded by tobacco licence fees to assist organisations requiring an alternative source of financial support. The federal Tobacco Advertising Prohibition Act 1992, passed in December 1992, is now in force in all Australian states and territories, ensuring the phasing out of sponsorship of sport by tobacco companies, with limited exemptions.

With the announcement of the proposed legislation on 1 April 1992, the government informed sporting and cultural bodies that sponsorship contracts with tobacco companies were not to be renewed, nor new contracts entered into. Contracts in force prior to that date would be allowed to run their course, but alternative sponsorship was to be in place by 1995. As a special case, the Australian Cricket Board could see out its contract with Benson & Hedges until the end of the 1995-1996 season. Ministerial exemption may be granted for events of international importance which might otherwise not be held in Australia due to the ban.(66) In September 1994 the Federal Government announced that it would permit the South Australian Formula One Grand Prix to proceed, allowing limited tobacco advertising to occur during a six-week period encompassing the build-up to and broadcast of the event.(67) Advertising on cars, drivers' uniforms and on pit signs was permitted, but display advertising outside the immediate track area was almost totally banned. The conditions of the 1994 exemption were far more narrow than those stipulated by the government in previous years.(68)

The imposition of uniform national legislation has stymied tobacco industry attempts to subvert state legislation. The tobacco companies had responded to state legislation by negotiating large contracts with motor sport and yachting, with the intention of making any attempted government intervention likely to cause public anger. The major swing into a wide range of motor sports was calculated to maintain the support of the Confederation of Australian Motor Sport for tobacco sponsorship, and to provide leverage to continue the staging of events as they wished.(69) Further, while the states had differing (or no) controlling legislation in force, they were vulnerable to industry threats to move events from one state to another, the most obvious example of which being the movement of the Motor Cycle Grand Prix from Victoria to New South Wales and back again between 1989 and 1992, instigated by a bitter and protracted dispute over the display of tobacco advertising.(70,71)

Sports sponsorship will still be seen on Australian television screens in years to come, but in greatly reduced volumes. Presumably, events exempted under provisions of the Tobacco Advertising Prohibition Act (1992) will be broadcast, with their attendant (albeit tightly restricted) tobacco advertising, and transmission of tobacco sponsored events from overseas is allowable.


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