Additional Information


Content

The rising admission price for football sponsorship

As sponsorship revenues play a bigger role in club finances, such tie-ins are reaching new levels on the world stage. What are the implications for brands seeking to sign up?

Share this article

It's not only the fans who are questioning the cost of following top-flight football. Brands, too, risk paying more for less as rights fees escalate and the space around the biggest clubs becomes cluttered.

An unintended consequence of UEFA's financial fair play (FFP) regulations has been price inflation. FFP requires clubs to live within their means and balance the books, adding pressure to raise more revenue from sponsorship. Suddenly, the scale of opportunity for all types of brands to align themselves with clubs has never been so great.

Earlier this month, Manchester United signalled that commercial deals would be more targeted, adding two brands from the lucrative market of China to its roster, taking its total number of partners to 36 (see below). The club's sponsorship department has led the way in carving out fresh rights categories, helping drive up commercial revenues by £14.2m to £117.6m for the 2011/2012 season (see box, right, click to enlarge).

As exclusive regional deals become a core part of football clubs' business models, the question emerges as to whether this presents brands with a more valuable platform to consider in the mix, or whether their visibility would be diluted among a burgeoning group of disparate sponsors.

Manchester United head of marketing Jonathan Rigby came out fighting on the topic of clutter around the club's brand. When the new deals were announced, he denied the club was over-extending itself with multiple sponsorship deals.

'There is nothing of what we know of our own brand that suggests that is the case,' he said earlier this month. 'We don't know how far we can go. We certainly don't think we are reaching a limit.'

Across town, rival club Manchester City also posted a spike in sponsor revenues for the 2011/2012 season, due mainly to its 10-year deal with Etihad Airways, worth about £400m.

However, the top clubs do not reflect the broader market, says Phil Carling, head of football at sports marketing agency Octagon: 'United has strong servicing structures and realises that a happy sponsor comes back. It is not alone, but absolutely stands out in terms of scale and number of partners.'

He adds that the rising price of deals with the biggest clubs has significant implications for brands seeking to use football as a marketing platform.

Steve Martin, chief executive of M&C Saatchi Sport & Entertainment, notes that prices are rising just as shirt sponsorship is showing its age as a marketing medium. 'The Premier League is full of bingo and betting brands seeking eyeballs and media-value numbers. But beyond the top six clubs, the market is unappetising for aspirational brands,' he says.

In this cluttered environment, sponsors are left to scrabble for share of voice, says Rupert Pratt, managing director of sports marketing agency Generate. Those with the highest activation budgets, and the most creative mindset, win the day.

'Signing a regionally specific sponsorship to a global partner is a smart move,' explains Pratt. You gain access to a global and prestigious rights-holder without the audience wastage, and therefore associated cost, of a global deal. But the inventory would be limited, mainly the right to use association. Simply "badging" does not really deliver the engagement, and therefore loyalty, that a true sponsorship activation platform can.'

Pratt believes that the dilution factor of multiple regional deals can be avoided if they are spread strategically, with only a limited number of sponsors competing for a geographic share of voice. The issue, however, is for the top-tier partners that have invested considerable sums for global penetration. 'Multiple partnerships erode this, as top partners are in competition with more and more sponsors, which often have a regionally focused budget. By comparison, the global partner has to spread itself far and wide,' explains Pratt.

The success of elite sports rights-holders such as Manchester United, and even LOCOG, in bagging brand deals could perpetuate the image of sponsorship as a numbers-driven industry. This, adds Carling, would be to the detriment of genuine brand engagement. 'The shame for rights-owners is that the growth could and should be so much better; there is evidence that the Olympics had a negative impact on perceptions of sponsorship among brands that paid huge fees for a questionable return,' he says.

Branded sports stars

Some sports marketers are asking a different question: why pay high rights fees to governing bodies and teams when brands can associate with sport by building a platform around the talent? 'The initial investment is lower, enabling more to be spent on IP,' says Martin. M&C Saatchi Sport & Entertainment recently acquired a 60% stake in agency Merlin Elite, which has Andrew Flintoff and Denise Lewis on its books.

Oil brand Castrol used M&C for the Cristiano Ronaldo-fronted launch of its Edge sub-brand. 'We felt we had a unique opportunity to put Ronaldo's skills to the test, pushing him harder and further than ever before,' says Paul Goodmaker, global sponsorship manager of Castrol. 'We knew this would be highly desirable content, giving fans a unique insight into one of the world's best players.'

Pratt notes that individuals offer a cost-effective means of above-the-line promotion, while team sponsorship delivers a broad range of inventory from brand exposure and hospitality to potential access to star players.

Regardless of brands' current business plans, or sponsorship bent, the number of these football deals is set to rocket as clubs seek ever-increasing revenues. From official global paint partner to the official motorcycle in Thailand, the opportunities are certainly there for brands. The question is whether such deals will prove their worth beyond the photocall.

 

BRAND VIEW: SHOOT FOR THE STARS

Simon Freedman, Brand director, Lucozade Sport

'If you had asked a footballer to define his "brand DNA" a few years ago, he would have looked at you and laughed,' says Freedman. 'Now, many more athletes are seeing themselves as brands.'

GSK-owned Lucozade Sport uses sports people such as athlete Mo Farah and England rugby union captain Chris Robshaw as brand ambassadors. According to Freedman, sponsorship has long been a central component of the brand's strategy, but it has become 'savvier' in the way it uses it.

'In the past, we focused a great deal on elite teams and famous personalities. Today, our sponsorship is much more aligned with brand strategy, which is targeting people in gyms and those playing sport at the grass roots,' he says. 'A lot of brands hover around football, doing it the wrong way. They buy assets for the glitz and glamour, without necessarily asking the big strategic questions.'

 

MANCHESTER UNITED: 36 SPONSORS AND COUNTING ...

  • Aon principal sponsor
  • AP Honda official motorcycle partner in Thailand
  • Bwin official online gaming and betting partner
  • Casillero del Diablo official wine partner
  • Chevrolet official automotive partner
  • China Construction Bank exclusive rights to produce the official Manchester United branded credit card in mainland China
  • DHL official logistics partner
  • Epson official office equipment partner
  • Hublot official timekeeper
  • Kagome official juice drink partner in Japan
  • Kansai (Japanese paint manufacturer) official paint partner
  • Mamee official noodles partner in Asia, Oceania and the Middle East
  • Mister Potato (Malaysian crisp brand) official savoury snack partner
  • Multistrada official tyre partner in Indonesia
  • Nike kit supplier
  • Singha official beer
  • Smirnoff official responsible drinking partner
  • Thomas Cook official travel partner
  • Toshiba official medical systems partner
  • Turkish Airlines official airline partner
  • Wahaha official soft drinks partner in China
  • Yanmar (Japanese engineering brand) official global partner - 'moving'

TELECOMS TIE-UPS

  • Airtel official telecommunications partner in India, Sri Lanka, Seychelles and Bangladesh
  • Airtel Africa official telecoms partner in Burkina Faso, Chad, DR Congo, Gabon, Kenya, Madagascar, Malawi, Niger, Sierra Leone, Tanzania and Congo - Brazzaville
  • Bakcell official telecommunications and broadcast partner in Azerbaijan
  • Beeline official telecommunications partner in Vietnam, Cambodia and Laos
  • Globalcom official integrated telecommunications partner in Nigeria, Ghana and Republic of Benin
  • Globul official telecommunications partner in Bulgaria
  • MTN official integrated telecommunications partner in South Africa,Zambia, Rwanda, Uganda, Swaziland and Botswana
  • PCCW official integrated telecommunications partner and official broadcast partner in Hong Kong
  • STC official integrated telecommunications partner in Saudi Arabia
  • TM official integrated telecommunications partner in Malaysia
  • Turk Telecom official integrated telecommunications partner in Turkey
  • Viva official integrated telecommunications partner in Bahrain
  • Viva Kuwait official integrated telecommunications partner in Kuwait
  • Zong official telecommunications partner in Pakistan

This article was first published on marketingmagazine.co.uk

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus

Additional Information

Latest jobs Jobs web feed

FROM THE BLOGS

The Wall blogs

TT not PC External website

by Ian Moore, 23/11/2014

 

Beer monsters External website

by Greg Taylor, 21/11/2014

 

Back to top ^