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Football Sponsorship

There’s no question that football continues to dominate the global sports scene. Seemingly impervious to allegations of corruption and the off-field antics of some top players, audiences keep watching and revenues keep rolling in.
Topline data from the Germany 2006 World Cup, for example, shows that most major soccer nations came to a stand-still when their own teams were playing. Broadcasters in England, France, Italy and Germany all saw live audiences top the 20 million market - with share regularly hitting 75-80%. Emerging football markets such as the US and China also posted strong results - suggesting that the game is poised to break through in the world’s two biggest economies.
The fascination with football is evident in so many ways. Still with the World Cup, FIFA’s Germany 2006 website attracted 4.2 billion page views - up from 2 billion during Korea Japan 2002. There were also 73 million page views via mobile, 750,000 registrations for FIFA’s online Fantasy Football game and three million replica shirt sales from sportswear sponsor adidas.
Carry on down the football food chain and you find other positive indicators. European governing body UEFA, for example, has been attracting record revenues for its TV rights and expanding coverage of both the Champions League and European Championships across the globe (around 150 countries tuned into Euro 2004). The FA Premier League, meanwhile, has just clocked up its biggest ever TV rights deals (£1.7 billion for domestic rights over the next three seasons - up from around £1 billion).
And for all the talk of TV viewing affecting attendances, fans are still turning up at games in big numbers. Manchester United broke FAPL records in September when 75,595 watched the team lose at Old Trafford to Arsenal. Arsenal themselves are now attracting crowds of 60,000 to their plush new Emirates Stadium. Look further down the English leagues and the attendance story continues to be a positive one.
Not surprisingly, sponsors are keen to be part of this upbeat story. At every level of the game, 2006 has seen the demand for top soccer properties push prices to new levels. Any incumbent sponsor just about to enter renewal talks must be wondering how much more they’ll have to pay next time to hold on to their rights. At the same time, there have been structural alterations which promise to change the face of soccer sponsorship. Here, we survey some of the main changes affecting each level of the sport - and assess the strategic thinking behind them.

FIFA World Cup

FIFA raised around €1.9bn in marketing revenue and €700m in sponsorship from the Germany 2006 World Cup. It had 15 official partners who each paid around €40 million. Another six national partners (in non-conflicting business sectors) secured domestic rights for about €13m.
The fifteen official partners were Adidas, Avaya, Budweiser, Coca-Cola, Continental, Deutsche Telekom, Emirates, Fujifilm, Gillette, Hyundai, MasterCard, McDonald’s, Philips, Toshiba, and Yahoo!. For the most part they did well out of Germany 2006 in terms of exposure. But long before the event, it was clear that 15 partners was too many - with some overlapping in terms of their commercial exploitation programme.
So FIFA decided to reduce the number of top level sponsors to six. As a result, adidas, Coke, Emirates, Hyundai, Sony and Visa have signed up as global partners between 2007 and 2014 (a time period that covers the 2010 World Cup in South Africa and the 2014 edition in (probably) Brazil or Colombia. Coke, in fact, has gone further - signing up as a lead partner until 2022.
Each four year period is reckoned to have cost these sponsors around 100 million Euros. The major controversy came when Visa replaced MasterCard (which didn’t want to be replaced). But other losers in the mix are the likes of Philips - which has been usurped by Sony.
FIFA hasn’t cut its ties with the other global sponsors completely. In its attempt to keep everyone happy (and generate more revenue) it created a second tier of sponsorship with a narrower set of rights. Budweiser became the first company to sign up to this tier in June 2006 (also for 2007-2014). McDonald’s and South Africa-based telecom company MTN followed suit with three more expected to come on board.
The big question looking ahead is how this two tier system will work out. For most fans, the main contact they have with World Cup sponsors is through the TV ad campaigns, retail promotions, events and support sponsorships (eg broadcast) which reinforce the primary association. FIFA will have to ensure that its top tier sponsors don’t, in effect, end up subsidising the likes of Budweiser and McDonald’s. [NB - on the ground in South Africa it will be even more cluttered - with a further six major local companies to be signed up as national partners].

Returning to Germany 2006, most sponsors rode the wave of a successful European-based event. But there were a few areas of controversy. McDonald’s, for example, is under increasing scrutiny from the health lobby - which questions whether it is an appropriate sports sponsor. There was also the sorry story of the 1000 Dutch fans who were forced to remove their lederhosen at the stadium gates because they carried the logo of Dutch brewery Bavaria (a conflict with Bud).
More troubling is the increasing frustration experienced by fans who can’t get tickets. FIFA gave around one in six of its 3.1 million World Cup tickets to sponsors - leading to accusations that FIFA was selling fans short. This negative mood was exacerbated by the fact that FIFA seems incapable of controlling the black market in ticket sales (some tickets going for thousands of Euros). Sponsors need to ensure their brands are not adversely affected by this controversy.

UEFA: Champions League and Euro 2008

As mentioned above, UEFA is making good money thanks to the popularity of its big event franchises. The fact that it favours free-to-air TV distribution means it was no real surprise to see so many of the governing body’s Champion’s League sponsors sign new deals for the period 2006/07-2008/09. Renewals include adidas, Ford, Heineken, MasterCard and Sony - which will use this season’s tournament as part of a high-profile launch for its PlayStation 3 console.
More of a surprise was the news that Vodafone was switching out of club sponsorship (Manchester United) into the UEFA fold. In a sign of the unique position that mobile networks hold within the sponsorship sector, Vodafone is designated as official partner and official mobile network of the UEFA Champions League - meaning it can offer video clips to its subscribers as part of the rights package. One beneficiary of the new deal was UK consultancy BrandRapport - appointed by Vodafone UK in September to support its Champion’s League activation work.
One of UEFA’s smartest moves with respect to the Champions League is to insist (as part of TV rights contracts) that sponsors also appear as broadcast sponsors during live coverage - a requirement that minimises the risk of ambush marketing and increases the value of the package to clients.
Euro 2008 sponsors include the likes of adidas, Continental and MasterCard - which can all look forward to a high-profile event. Hosted by Austria/Switzerland with the world’s top teams participating (bar Brazil/Argentina), it is reasonable to assume that Euro 2008 will attract the kind of TV audiences seen at Germany 2006.

FA Premier League

Having bagged huge revenues from broadcasters for the period 2007/08-2010/2011, the FA Premier League will presumably look to do the same with sponsorship. Incumbent Barclays currently pays £17 million a year for the title sponsorship of the league. Expect the next three-year deal to break the £20m a year mark.
The FAPL is primarily a domestic property but its popularity in Asia makes it a useful platform for brands with multi-market ambitions. The only proviso in this respect is whether the FAPL (like UEFA) has created space within its international TV contracts for sponsors to thrive. In Asia, it’s a moot point whether fans feel a stronger connection with the FAPL, the leading clubs (Liverpool, Manchester United) or individual players. To truly make FAPL work hard in Asia, sponsors would probably require a deal (either independently or through the league) with broadcast partner ESPN Star Sports.
The new UK sponsorship contract will probably be agreed in mid-2007 - which means brands will jockey for position in the post-Christmas period. Barclays (and other banks) remain front-runners while beers, betting companies, mobile and IT companies may also be in the frame.
Mobile companies might be less inclined to bid now that Pay-TV broadcaster BSkyB has won mobile rights as well as TV rights. This precludes the possibility of a sponsorship/mobile deal - with any resultant cross-platform activity. That said, the fact that Sky can now show live games across TV, internet and mobile means it represents an interesting media sponsorship opportunity for someone (particularly when bundled with promotions via News Corp-owned newspapers). Will Ford (Sky’s long-term incumbent) be faced with a hefty challenge?

Football Association, FA Cup and England

The poor old FA tends to carry the can for a number of things that aren’t its fault - bung allegations, a mediocre England team and the ongoing delays at Wembley Stadium. But true to his word, FA commercial director Jonathan Hill has put such matters to one side and pulled off a range of high-profile sponsorship deals.
Hill turned his back on the old FA sponsorship structure which attempted to share out key properties (the FA Cup and England team) between a number of sponsors. Instead, he has brought in power company E.ON as the FA Cup sponsor and Nationwide building society as the England sponsor (something of a surprise given that Nationwide had announced that it would be cutting its ties with soccer from this season).
The challenge for Hill has been to generate as much revenue as possible while giving all of the FA’s commercial partners a real sense of ownership in the FA’s sponsorship programme.
So having set up specific deal opportunities around the FA Cup and England team, he also introduced a tier of “official supporters” - companies which can have a connection to both or either main franchises but without the media rights that accrue to E.ON and Nationwide.
This means, in effect, that a pool of 5-7 companies will still able to use the FA’s marques in their marketing activities - but that there is not the same level of on-screen advertiser clutter. E.ON, for example, will be the only FA Partner to get perimeter boards during rounds 1-6 of the FA Cup - when games are played at club grounds up and down the country. This is not only good for E.ON - but for sponsors attached directly to clubs. As for the Final, E.ON will certainly get good cut-through - particularly since the competition has been on the way back in ratings terms during the last couple of seasons.
Among the sponsors signed up for the second tier are Carlsberg, Umbro and McDonald’s - which has signed a new deal which will see it create another 8000 soccer coaches. In addition, FA sponsors also have the option of linking their sponsorships to Wembley. Although Wembley commercial deals are negotiated at arm’s length from the main FA portfolio, Umbro and Carlsberg have taken advantage of this option.
As a final observation, Hill and his head of sponsorship Mark Osikoya were also keen to ensure that each sponsor also took responsibility for an area of FA development. E.ON for example, has put its name to schools football while Umbro has bagged small-sided football. Nationwide becomes disability football partner.

Club Sponsorship

One of the most dynamic areas of development has been the club sponsorship sector. This season saw no less than three high-profile deals commence in the FAPL - Manchester United and US bank AIG, Arsenal and Emirate Airlines and Tottenham and online gaming business Mansion. The AIG deal topped the price range - coming in at around £14 million a year over four years.
When you also factor in partnerships such as Chelsea/Samsung, Liverpool/Carlsberg and Everton/Chang, it’s clear that big clubs are now seen as an opportunity to build rapid brand awareness on a global stage. In the case of top FAPL clubs, global exposure via domestic league coverage, Champions League and overseas pre-season tours means sponsors have plenty of ways of connecting with international audiences. It’s a scenario replicated in other top leagues like Spain’s La Liga and Italy’s Serie A. In the latter case, Juventus signed the biggest ever shirt sponsorship deal with Libyan oil giant Tamoil (£76 million over five years) - then got relegated to Serie B for match-fixing.
Other points of interest at club level include Arsenal’s decision to sign a shirt/stadium naming rights deal with Emirate Airlines. Naming rights has not been a major issue in the UK - mainly because it works best with new-build stadia which have no legacy name to overcome. However with Liverpool and Tottenham both looking at the feasibility of new stadia, more deals of this kind may soon be on the horizon.
Typically, naming rights deals are signed for longer periods than shirt sponsorships in order to achieve the desired cut-through (shirt sponsors tend to have a more direct emotional association with clubs). Stadium sponsors also have to accept that sometimes they will be required to defer their rights in favour of other commercial interests. During Germany 2006, for example, FIFA temporarily renamed seven out of 12 stadia because they carried the names of companies not associated with the World Cup.
Perhaps a bigger issue in club sponsorship has been the rise of the online gambling sector. A few years ago, gaming companies might not have been viewed as appropriate title sponsors for soccer teams. But as the sector has moved mainstream and become better capitalised, so Mansion (Tottenham), 888 (Middlesbrough) and Bet24.com (Blackburn) have seen soccer sponsorship as a way of gaining exposure fast.
Rapid awareness build is crucial if these brands are to hold their own against traditional betting brands (such as high street bookmakers). So they have been paying full prices - mainly to clubs with the potential to play in Europe. Blackburn and Spurs, for example, are in the UEFA Cup this season while Middlesboro is a recent finalist.
The rise of the online betting brigade is evident across Europe (and, for the record, across sports). Most ambitious has been Austria-based Betandwin (aka Bwin). Having signed up as title sponsor of the Portuguese soccer league, it recently took the unusual step of acquiring international rights to German Bundesliga soccer for three seasons (TV, online and mobile). Betandwin plans to stream the games live to an international audience on its online platform - thereby driving interest in its gaming service.
More conventionally, betting companies are queuing up to become official gaming partners for clubs. Although this doesn’t necessarily win them shirt sponsorship status, it gives them a presence on club websites, in stadia and in marketing materials (eg programmes). Bwin, for example, is online gambling partner to clubs like AC Milan, Juventus and Barcelona. Ladbrokes is a partner for FAPL side Manchester United.
If there is a problem with club sponsorship it is that it may be seen to be partisan in nature. Possibly this is why Vodafone pulled out of United. But instinctively, this issue doesn’t seem to matter quite so much for betting companies.

Coca-Cola Championship/Carling Cup

In February 2004, Coca Cola surprised a few people when it beat off Nationwide for the right to sponsor the Football League - the governing body responsible for Divisions One, Two and Three. Although Coke has never publicly put a figure on the value of its deal, it is reckoned to have paid £15m for a three-year sponsorship. Coke has done well out of the deal by being brave. Spearheaded by a bold rebranding of Football League Division One (aka The Championship), it has backed up its sponsorship with innovations that show a good understanding of the lower league fan mentality. A good example is the on-pack promotion which gave fans the chance to win their club a player.
The lower leagues have seen attendances rise during Coca-Cola’s term. So it’s reasonable to assume that renewal, which is likely to come in late 2006/early 2007, will cost Coca-Cola more. If anyone is to wrest the competition away from Coca-Cola, it is likely to be the usual suspects - banks or beer brands which would see value in a competition which touches so many regions within England.
Coors-owned Carling, for example, is the kind of company that might be tempted - though it already has its own franchise: The Carling Cup. Like Coca-Cola, Carling is a long-term soccer sponsor and recently renewed its relationship with The Carling Cup. It is now linked to the event until 2009 and is reckoned to have paid around £4.5m a year (up from around £3-3.5 million for the previous contract). During Carling’s time, the competition has grown in appeal. Initially viewed as a poor imitation of the FA Cup, the fact that the eventual winner secures a European place has made it popular among mid-table Premier League sides. It has also gained profile as a result of the big clubs using it to try out young emerging talent in competitive fixtures.
On top of this Carling has always been known for its expertise in the field of PR. It creates clever stunts and works well with the media to ensure that information gatekeepers in press and broadcast buy-in to its sports sponsorships.

Broadcast sponsorship/Miscellaneous

The most interesting development in broadcast sponsorship was ITV’s decision to sign up two sponsors for its coverage of the World Cup - as opposed to the usual one. That decision was presumably made easier by the fact that UEFA’s CL has been running multiple sponsor brands for years. If there was a disappointment for the two sponsors, EDF and Budweiser, it would be that most of the audience migrated to the BBC for the final (17 million watched France vs Italy on the BBC compared to just 3 million on ITV).
The main problem with broadcast sponsorship of big events is that creative work can become repetitious. Budweiser, for example, extended its “you do the football, we’ll do the beer” strategy by basing its sponsorship credits around two annoying US hosts. Unfortunately, the joke wore thin quite quickly - perhaps acting as a health warning against the use of humorous executions.

Under the heading miscellaneous comes Wembley - now expected to open in mid-to-late 2007. Next season’s FA Cup will not be held there (which may cause some upset at E.ON) but at least the venue has some sponsors in place. As explained earlier, Wembley sponsorship is sold separately from FA sponsorships by WNSL (Wembley National Stadium Ltd) - a 100% owned subsidiary of the FA. Partners include Umbro, Carlsberg, Microsoft and npower. It’s also a sign of how far the gambling industry has come in recent years that the new Wembley will also have a designated betting partner (Betfred).
Finally, one of the most novel soccer sponsorships of recent years has been Specsavers Opticians’ link up with referees. A smart fit, which plays on the idea that referees need glasses, the link up has given Specsavers a remarkable position at the heart of the sport. This season, it renewed its relationship with Scottish Football Association referees, ploughing a further £600,000 into the coaching and development of referees. In a new development, a Specsavers hearing aid unit was also given the job of providing refs with specially-designed ear-pieces so they can talk to other officials.

Europe

It goes without saying that soccer deals are being done all across Europe as well. But perhaps one of the most interesting is imaging company Canon’s decision to sponsor Russia’s Premier Football League. Canon has long been a supporter of soccer - backing events like the Champions League and Euro 2004. But it has not always succeeded in transferring financial support into brand awareness/connectivity.
This deal, however, looks like a strong platform in one of the world’s key emerging markets. Broadcast coverage of the League is expected to reach a cumulative TV audience in excess of 38 million per year - at a time when Canon is reporting 37% year-on-year growth in Russia. On match days, Canon branding will be displayed on perimeter boards, managers’ dug-outs, photographer bib branding and post match press room back drops at the stadiums of all 16 league clubs - reaching three million fans. The deal also includes supporting TV, radio and print advertisements and presence on the websites of each participating club. Akio Ito, VP of Canon Europe says: “Our goal is to hold the premier position in Russia within three years. Football is the perfect vehicle to promote Canon products.”
Back in the heartland of Western European soccer, research company Sport+Markt has just released a survey which shows how significant the Champion’s League is in terms of boosting a club’s fanbase. After winning the Champions League final, Barcelona put on 15 million new fans according to Sport+Markt. Runners-up Arsenal added 7m.
Perhaps the most interesting finding from Sport+Markt is that the two most cost-efficient sponsorships in European soccer during the survey period (based on price paid and exposure achieved) were O2/Arsenal and Opel/AC Milan. Why is this interesting? Because both sponsors have been replaced by Emirates (Arsenal) and Bwin (Milan) this season. When Sport+Markt’s next survey comes in, it will be fascinating to see if these sponsors achieve similar results - or if there is something about the departing brands that gives them cut-through in a cluttered space.

Articles written by Hollis correspondent Andy Fry.

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