Soccer clubs, the perfect home ground for brand sponsorship?
Nani of Manchester United in action at the launch of the new adidas Predator Lethal Zones football boot. The boot, designed with five deadly zones for the ultimate ball control and to maximise power and accuracy, was unveiled on May 1, 2012 in Manchester, England. Visit www.adidas.com/football
(April 30, 2012 - Source: Getty Images/Getty Images Europe)
Which soccer fan wouldn't want to wear a Jordan brand to the field to support PSG in the UEFA Champions’ League? Which fashion enthusiast wouldn't want to spend one freaky Friday in Neymar's sneaker collection?
It is no secret that investing in soccer clubs has become the hottest global trend. Multiple organizations, betting companies included, that never used to sponsor soccer are flooding into the field. With the famous basketball based brand, Jordan’s transition from the court to the field, it has become apparent that soccer clubs are the new home ground for brand sponsorship. Every club's success is being pinned on the type of brand they wear, with individual players claiming a greater part of the influence.
History of brand sponsorship in soccer clubs
Various brand sponsorships have either made or broken teams over the years. The most notable sponsorships have undoubtedly been for Manchester United, FC Barcelona, and Real Madrid's pockets. Forbes list of the richest soccer clubs ranked Real Madrid at number 1, Barcelona at number 2 and the Red Devils took the third place in 2019.
It has been said that "When the right club jersey meets the right sponsor, it can result in aesthetic perfection in a football shirt." The perfect football shirt is key to a large fan base and motivation on the field. Now we will explore the relationship between brand sponsorships and some of the biggest clubs in world football.
Paul Pogba of Manchester United celebrates scoring to make it 2-1 with team mate Marcus Rashford during the Premier League match between Manchester United and West Ham United at Old Trafford on April 13, 2019 in Manchester, United Kingdom.
(April 12, 2019 - Source: Michael Regan/Getty Images Europe)
Manchester United
English football fans have the word SHARP embedded in their memory. The partnership between the appliances company and Manchester United ended in 2000 after 18 happy years together, but the jersey left a huge mark!
At the moment, Manchester United rests at the top of the Premier League when it comes to shirt sponsorship agreements. In a massive deal with General Motors, United are paid a remarkable £47m per season to wear the Chevrolet logo on their kit. The deal is the largest of its kind and runs until the 2021 season.
The Red Devils' revenue also speaks volumes about the weight of their sponsorship. They have managed to stay in the top three Forbes list of richest clubs since 2007. The Red Devils who were holding the lead for the past two years enveloped the top three this year. In 2017-2018, the club lost 8% of their value compared to the previous season. Now Manchester United is valued at $3.81 billion and surpasses its competitors by the amount of operating income in value of $238 million.
FC Barcelona– $779.4 Million
Revenue in 2019: €690.4 Million (£611.6 Million or $779.4 Million)
Previous Revenue: €648.3 Million
Total Valuation: €3.6 Billion
With revenue of €690.4 Million this year, Lionel Messi’s club Barcelona earned the second spot on the Richest Football Clubs 2018/19 list. Sponsorship deals with kit supplier Nike and the shirt sponsor Qatar Airways guaranteed them that position, although they lost to rivals - Real Madrid. In the 2019/20 season, €223 Million was raised through their broadcast rights. An increase in ticket sales also led to the matchday income reaching €144.8 Million. While the £200-million sale of Neymar did not have any impact on the club’s 2019 revenue, it increased a significant amount of the club’s total valuation to €2.98 Billion.
Gareth Bale and Luka Modric of Real Madrid chat during a promotional event by the German carmaker Audi at Carlos Sainz Center on November 4, 2016 in Madrid, Spain. Audi, who are the official Sponsors of Real Madrid, has given each player a new Audi car to promote their brand as part of the sponsorship deal.
(Nov. 3, 2016 - Source: Denis Doyle/Getty Images Europe)
Real Madrid – $847.7 Million
Revenue in 2019: €750.9 Million (£665.2 Million or $847.7 Million)
Previous Revenue: €674.6 Million
Total Valuation: €3.8 Billion
After spending almost six seasons at position 2, Real Madrid leveled up. With total revenue of €750.9 Million this year, Real Madrid currently holds the top spot in the list of Richest Football Clubs in the world.
They earned a total of €315.5 Million through the commercial deals with their jersey sponsor Emirates and kit supplier Adidas. Broadcast rights generated €251.3 Million and ticket sales generated €143.4 Million. The departure of super-costly footballers such as Cristiano Ronaldo seemed to not have diminished the club's glory!
Another notable club sponsorship is that of Arsenal and Adidas. In 2018, Arsenal's 5-year contract with Puma came to a close with Adidas coming in to take over their kit supply. This is an annual £60m deal that guarantees Arsenal the third place in the most lucrative kit deals in football, behind Barcelona’s contract with Nike and Manchester United’s contract with Adidas which are worth £140m-a-year and £75m-a-year respectively.
Arsenal last wore an Adidas strip between 1986 and 1994 during which they lifted two league titles. Nike then sponsored the club for two decades until 2014-15, before losing out to Puma. Arsenal are now in their first year with Adidas as their new kit manufacturer. The relationship has gotten off to a good start with fans already going crazy over the new shirts on social media.
Role of social media in brand sponsorship frequency
"The rise of social media in the professional sports domain can be described as revolutionary" (Larkin, fink and Tail, 2015)
Social media has been used as a flexible way to access fans and customers for soccer clubs and brands respectively. Various social media platforms have offered immediate access to information for soccer fans. Tracking and interacting with your favorite soccer club has become much easier. For companies sponsoring soccer clubs, assessing the fan base and therefore the potential market for their products also became easier. Thus business organizations have had no choice than to be responsive to the huge impact social media has on their brand awareness.
Performance tolerance of fans can be easily accessed through social media, it refers to the level of engagement fans seek with their favorite team in highs and lows. This concept has become a huge influencer of sponsors' decision to invest in a club. In essence, social media allows sponsors to track a club's success on the field, in terms of revenue and influence on their fan base. This allows sponsors to pin their brands on a club they know will raise their brand awareness and offer a guaranteed lucrative partnership. Soccer clubs with a large and resilient fan base like Manchester United, FC Barcelona, and Real Madrid have found themselves in the pool of big sponsorship deals!
Neymar of PSG in action during the Group C match of the UEFA Champions League between Liverpool and Paris Saint-Germain at Anfield on September 18, 2018 in Liverpool, United Kingdom.
(Sept. 17, 2018 - Source: Julian Finney/Getty Images Europe)
Is brand sponsorship dependent on success on the field??
"Success means winning trophies. That target and standard has never changed for Manchester United. The progress we have made on the business side underpins the continued investment in the football side" -Ed Woodward, Manchester United Executive
As much as the Red Devils believe in success lying in winning the game not sponsorships, a different view cannot be evaded. We definitely cannot run away from the notion that success on the field and brand sponsorship are two dependent variables.
With Manchester United's recent poor results came a huge depression in their monetary value. The team's failure to qualify for this year's Champions League (Europe's most prestigious club competition) was a major blow. Manchester United then projected its revenues at £560 million to £580million this season. This is their first income reduction in over a decade.
Manchester United also find themselves in the 12th position in the premier league having not won in 11 games and scoring just 7 goals in their last 10 outings. Manchester United have begun to search for a new shirt sponsor due to rising speculations that Chevrolet, the US car brand that is paying $559 million in a seven-year deal for its logo to be emblazoned on the team’s shirts, is highly unlikely to renew the contract when it elapses in 2022.
Can it get worse for Manchester United? Well, it never rains folks, it pours!
United’s knitwear deal with Adidas, worth £750 million over 10 years, contains a penalty clause which states that failure to reach Europe’s top competition for two consecutive seasons will see Manchester United being paid £21 million less for each year outside the tournament.
Fellow fans might just want to look at this as a simple dry spell for Manchester United and not an indicator of their dependency on sponsorship on success in the field. However, Liverpool's story throws our consolation into the dip.
Liverpool’s revenues are set to rise further from the £455 million earned in 2018 after the team won the Champions League last season. Various companies are even taking extraordinary measures for the right to be associated with Liverpool. In September, US sportswear group New Balance began legal action against the European champions in a last-ditch attempt to prevent the club from signing a new shirt manufacturing deal with Nike worth £70 million a year.
"I have seen for many years, in particular, sponsors who are a big part of United’s business; they go after the hot teams. All my clients want to talk about Liverpool because they are top of the league and won the Champions League.” -Tim Crow, an independent sports marketing advisor
So I guess, on-field success does drive off-field success after all. However, Manchester United will likely remain the wealthiest club in England for the foreseeable future. The Red Devils have managed to stay in Forbes' top 3 richest clubs for more than 5 consecutive years already.
“Performance tolerance of fans can be easily accessed through social media, it refers to the level of engagement fans seek with their favorite team in highs and lows. This concept has become a huge influencer of sponsors’ decision to invest in a club. In essence, social media allows sponsors to track a club’s success on the field, in terms of revenue and influence on their fan base. ”
Are individual players the major source of big sponsors??
Okay, so this is the most crucial question: "who draws big sponsors in, the best team player, the fan base or the club as a whole??
Teamwork is indeed the dream work and for clubs like Manchester United and PSG to be part of "the list" they had to have the best team not just the best team players. A fan base with a high-performance tolerance is closely related to a high brand following. This highly influences a sponsor's decision to invest in a club. However, we cannot deny that "one man can change the world". Manchester United is a great team but Ferguson brought in more sponsors than the team's teamwork can manage now.
"United has come at a time of decline on the pitch, with the club struggling to get to grips with the post-Sir Alex Ferguson era." -Tyrone Marshall
One football finance expert mentioned that United could have been looking at the first £100m-a-season shirt sponsorship deal if they were still enjoying the success of the Ferguson years.
Looking at PSG's new partnership with Jordan, it seems apparent that Neymar was the drive. In 2016; Neymar collaborated with Jordan for a football boot, sneaker, and apparel. His collaboration with Jordan earned him great recognition in street fashion for his sneaker collection. He also earned a huge consumer chain for Jordan from his huge fan base. So when Neymar moved from FC Barcelona to PSG in 2017 the PSG-Jordan collaboration became inevitable.
Mesut Ozil of Arsenal celebrates after he scores his sides first goal during the Premier League match between Arsenal FC and Leicester City at Emirates Stadium on October 22, 2018 in London, United Kingdom.
(Oct. 21, 2018 - Source: Clive Rose/Getty Images Europe)
Future prospects
It looks like soccer clubs are going to stay in the major lucrative sector for sponsors for a long time. More sponsors that were never part of the field gamble are taking their chances with soccer as well. The most notable brand is Jordan, which recently started sponsoring PSG. Although Jordan is new to the whole soccer sponsorship field, its entrance has been certified by the most decorated player in the history of the sport, Dani Alves. With the Jordan collection cementing PSG's reputation as street wear’s hottest football club, it is no doubt that they will produce the best on-field gear as well!
The Premier League clubs stand to earn a record £349.1m from shirt sponsorship deals in the coming season, a rise of more than 10% compared to £315.6m in 2018-19 from gambling company sponsorship. As a result, half of the Premier League’s shirts will be emblazoned with a gambling company’s logo during the 2019-20 season.
"Betting’s dominance is even more pronounced in the Championship, where 17 out of 24 club shirts will show a betting logo, meaning 27 of England’s top 44 clubs have agreed to do so." -Rob Davies
"Soccer clubs around the world are welcoming to the myriad of sponsorships. In the digital world, soccer organizations are looking to sign deals with globally recognized brands, despite the product or purpose of the sponsor. Interested companies looking to sponsor soccer teams are paying large sums of money in hopes that fans will associate their favorite team with a sponsor’s business and thus raise profits". -Scott Phillips