Two Circles buys TRM to create ‘through-the-line’ sponsorship service
By Simon Ward
Two Circles, the international digital-focused sports agency owned by Bruin Sports Capital, has moved into the rights management business with the acquisition today of another UK-based operation in sponsorship sales specialist TRM Partners.
Under the deal, understood to be worth $45 million, TRM will be integrated as Two Circles Rights Management, with founders Harry Horsley and Leo Thompson serving as co-presidents of the arm.
The pair, both former commercial executives at top English soccer club Manchester United, launched TRM in London in 2014, and it has served as an external sales team for rights holders, negotiating deals worth some $700 million over that time.
These have included agreements for Uefa with Visa and Pepsi, for the European soccer body's women’s soccer packages, for Chelsea with Japanese tyre maker Yokohama, and for the likes of AC Milan, the International Cricket Council and the NFL.
There is considered to be a strong synergies with Two Circles, which will now be able to offer a “through-the-line” service having built its reputation on first-party data on consumers, which has helped rights holders to package offerings and activate and measure the effectiveness of deals.
The agency has experience working with 300 rights holders, including Uefa, England’s Premier League, World Rugby, the NFL, Formula 1 and the Wimbledon tennis championships.
Speaking about the transition into rights management, Gareth Balch, the chief executive of Two Circles, told Sportcal: “Our clients have been asking us for quite a while to do this… We've been advising for some time around how you prepare digital-first rights packages, but then not selling.
“It’s a very highly skilled area doing this [selling] well, and we recognise our core competency, and therefore our belief was always that we would most effectively do this through acquisition as opposed to organic growth, and that became a focus for us.
“We’ve been aware of and known TRM for a number of years, but started talking over the summer, and it was a very simple and straightforward conversation once we got through the philosophy of what we thought the industry was going to do, and it became quite clear to both of us that it would be dynamite for our clients.
“The extension to that, and what we were also motivated by, was that it would be amazing for our people, and create amazing career opportunities.”
Horsley agrees that the integration with Two Circles will help the erstwhile TRM capitalise on prevailing trends, saying: “I think we've got a shared view on the direction of travel for our industry. If you look back to around 2012, 15 per cent of total global ad spend was on digital channels and 85 per cent was on conventional analogue channels like television, outdoor and print.
“Today it’s a 50-50 split between digital channels and analogue channels and all forecasts suggest that towards the middle or end of the next decade, the split will be 85:15 in favour of digital marketing spend.
“Two Circles, for the last several years, has pioneered preparing rights holders for the digital era and to be able to sell their rights in a digital-first way. We feel that putting that together with our proven sales approach is going to be very impactful in terms of delivering incremental value for brands who are looking to invest and ultimately increase rights fees for our clients.”
Furthermore, it is claimed that offering a one-stop shop for sponsorship services will simplify the process for rights holders and brands alike.
Horsley said: “I think it helps having the sales team involved in the packaging from the beginning. It is only going to improve the sales offering. Frequently we’ve found that our clients might well be separately engaging with Two Circles regarding these services, but buying them as one bundle enables an integrated approach, which will deliver good results for our clients.”
Balch added: “Ultimately, we all want it to be simple and straightforward. While there are teams within teams at Two Circles, this is one team and one place where you can have a through-the-line service, which we believe is how buyers have wanted to buy in the analogue era, and will be the same in the digital era.”
Both parties are also committed to ensuring continued investment in emerging and developing sports, with TRM having been responsible for the marketing of sponsorship packages for Uefa women’s competitions such as the Women’s Euro and Women’s Champions League since 2018, and having also developed Rugby X (pictured), the five-a-side version of the sport set to be taken global in 2021, and in which Two Circles has now acquired a majority stake.
Balch said: “There’s two parts to it – there’s the part about being pioneers, and TRM have been pioneers and pioneered how rights have been sold, and the type of rights that have been sold, and diversity in sport, and that’s a massive attraction. Equally, we are deeply motivated by creating a sports industry that’s representative of the fans, and not of the administrators that it once was, and together we’ll make that more true and plausible.”
Horsley said of its association with female sport: “There are huge commercial opportunities as well. This isn’t just a case of being involved in women’s sport because it’s the right thing to do. It’s both of those elements that make us enthusiastic about that as a focus area.”
The integration of agencies such as Two Circles and TRM is expected to become more commonplace in a sponsorship market irreversibly impacted by the coronavirus pandemic, albeit Horsley claimed its business had not been as affected as others, with deals worth a combined $50 million having been secured in 2020, including Vodafone’s three-year title sponsorship of test cricket in Australia, and renewals with Uefa, AC Milan and the Mercedes-Benz EQ Formula E team.
He said: “We’ve been surprised how well sales have held up for our clients through Covid. We’ve done six multi-million-dollar-per-annum sponsorship agreements since it struck in March, and I think that’s shown us that the biggest and most popular rights holders are also the most resilient ones.
“We’re lucky that’s how we’ve focused our business over the last six years, and as such the impact of Covid on the sales that we’ve done on behalf of our clients has been relatively modest.”
The acquisition of TRM tallies with Two Circles’ stated ambitions to be a more competitive player globally, with a differentiated offering, when it was bought by Bruin, the USA-based sports and entertainment investment firm, in a deal last December that valued the company at $42 million.
Two Circles, which was founded in 2011, and owned by WPP from 2015 to 2019, has offices in London, New York, Los Angeles, Paris and Bern.
Balch said today: “This [pandemic] is a challenge to our industry, and ultimately a challenge to the analogue oil tankers. We think there’s a better way, and Covid’s only accelerated that. There’s a lot of jeopardy in the market right now, and we believe those that innovate will prosper and win big.
“We’d love to help properties who want to rewire what they sell and move on from the simplistic packaging there has been for years and get into the business of selling audiences and guaranteeing that performance to brands and broadcasters, and we think we can usher in that new era.”
He added: “There have been a lot of digital speedboats in response to the analogue oil tankers and ultimately the industry will consolidate around those to create new capabilities. Not necessarily in a rush over the next few months, but over the next couple of years, I believe we’ll see collaboration amongst agencies to create simpler service offerings that represent the future of the industry rather than the past.”
In a statement, George Pyne, the founder and chief executive of Bruin, said: “The growth of the sports marketing industry will be directly correlated to a marketer’s ability to definitively quantify the value of an investment across an ever-growing set of platforms. Two Circles has just put itself at the forefront of all of this by creating an end-to-end, data-driven resource for sponsors and properties to create value and transparency for marketing programs that few can match.”