Manchester United, has struck the U.K.'s most valuable shirt-sponsorship deal, worth $99 million (£56.5 million) over four years to carry the name of insurer American International Group on its jerseys. But did the club get top dollar for turning its players into moving billboards?
United had been casting around for a replacement for its $16.6 million-per-year deal with Vodafone after the two agreed last year to part ways early at the end of the current season, with the mobile phone transferring its sponsorship dollars to Europe's top club competition, UEFA's Champion League.
Industry gossip says the club's new owner, U.S. billionaire Malcolm Glazer wanted a new sponsor with a global brand and had been doing the rounds of companies such as Google, Yahoo! ,IBM ,Sony , LG, Coca-Cola and Levi Strauss. Glazer is also said to have wanted a deal that would not only be the biggest in England--which he got--but one that would equal the biggest in the game--which he did not get.
Advertisers pay a lot for shirt sponsorships. The most lucrative deal is Juventus's agreement with Tamoil. The Lybian oil company pays the Turin team $22.5 million per year for the placement as part of its broader $113.8 million sponsorship. Tamoil recently reupped the contract and will be paying $27.8 million next season.
Tamoil can expect to reach even deeper into its pockets than that. Most such deals include bonuses for on-field success, particularly advancement in top competitions such as Europe's Champions League. Deutsche Telekom reportedly paid Bayern Munich $3.8 million in bonuses last year on top of its contracted $21.5 million, thanks to the German club's good season.
Embedding advertising in content is an advertiser's dream. Televised soccer offers an unparalleled opportunity; two 45 minute halves of continuous play in each game plus countless highlight replays lets advertisers keep their names in front of audiences for long periods.
Better still, the camera tracks the heart of the action--the players performing in the thick of things. So where better to place a company logo than on a team's shirts? As a bonus, millions of fans around the globe act as walking billboards when they show their colors by donning their team's replica shirts. If they think about it, fans put up with shirt advertising because it is preferable to having games repeatedly interrupted so television can show advertisements.
The demographics of the game and consumers of mobile communications make telecoms companies and European football clubs go hand in hand. Though there are more clubs sponsored by banks and financial-services companies, such as ABN Amro's backing of Ajax Amsterdam, the big deals have mostly been with telecoms.
As well as Bayern Munich, Real Madrid ( Siemens Mobile) Chelsea ( Samsung Mobile) Manchester United (Vodafone Arsenal ( Telefonica's 02) FC Porto ( Portugal Telecom) and Borussia Dortmund ( E.On) are among the teams on our list of the most valuable clubs with shirt sponsors from the telecom industry.
These sponsorships go beyond mere labeling and association. The companies look to promote multimedia services such as video clips of games, gaming and goal alerts and results services via their network or devices, while the clubs seek to develop media businesses.
Asia has both advanced telecoms services and many followers of European football. From the 2006-07 season, Real Madrid's famous white shirts will add the name of BenQ, the Taiwanese consumer-electronics group that recently bought Siemens' Mobile Devices subsidiary. BenQ's Munich-based global mobile handset brand is BenQ-Siemens. Real Madrid has been able to up its fee for carrying the name for four years from $17.1 million per year to more than $25.3 million.
Even Real's Spanish arch rival, Barcelona, long the sole holdout from shirt sponsorship among Europe's big clubs, has struck a deal with the Chinese government to promote the 2008 Beijing Olympics and the 2010 Asian games in Guangdong. The shirt sponsorship is worth a reported £14.0 million per year for five years.
Chelsea, a Johnny-come-lately to the global-marketing game but one which is making rapid advances thanks to ex-pat Russian owner Roman Abramovich's billions, replaced its shirt sponsorship with airline Emirates with a five-year, $91 million deal with South Korea's Samsung Electronics, the richest deal in England before the Manchester United-AIG agreement.
Emirates, in turn, has moved its moniker across London to Arsenal, with which it has struck a 15-year sponsorship deal worth $166.9 million, kicking off in the 2006-07 season. Naming rights to Arsenal's new stadium are included, but the shirt sponsorship component is valued at $10.1 million per year for eight years.
Beer and football have long gone together. Liverpool's ties with Danish brewer Carlsberg, which were recently renewed for an additional two years at $8.9 million per year, has been running for 13 years--the longest shirt sponsorship in England's top flight. Neighbor Everton's blue shirts are emblazoned with the name of Chang Beer. The Thai brewery has a negligible market share in the U.K, but English games are shown widely on television in Asia.
Close association with alcohol can have branding problems. Muslim groups and those that campaign against underage drinking have criticized Celtic and Rangers, two Scottish clubs that have a joint sponsorship with Molson Coors Brewing's Carling beer. Both clubs now sell versions of their replica kits without their sponsor's name. Liverpool has also removed the Carlsberg logo from its youth and children's jerseys.
Liverpool's unexpected crowning as European champions in 2004-05 was the catalyst of their renewed deal with Carlsberg. Clubs that don't constantly do well in that competition, which gets a cumulative global TV audience of 4 billion each season, are quickly becoming the have-nots of shirt sponsorship.
With Chelsea's current dominance of its domestic league and only four slots in the all-important Champions League available for Premiership teams, sponsorship values for English clubs must be discounted for not qualifying for the competition (see: " A Kick In The Bottom Line").
England is the only of Europe's top six soccer markets where average shirt-sponsorship values are not growing. Manchester United was not able to top the new deals Juventus and Real Madrid struck, despite being an iconic name in the game. It did, though, turn down a better offer from Mansion, a Gibraltar-based online casino, reportedly because it did not want to be the first Premiership club to take on a gaming-company sponsorship.
But Manchester United was able to avoid the fate of AS Roma, which started this season without a shirt sponsorship in place. And it is much better off than West Bromwich Albion, which will be relegated from the Premiership at the end of this season. The West Midlands club gets just $316,000 per year for parading the name of Deutsche Telekom's international arm, T-Mobile.
Perhaps the Baggies, as Albion is nicknamed, should move to Germany, Europe's biggest media market. There the average shirt sponsorship for a team in the bottom five of the top league is $2.9 million per club