Finance & Business

No sign of cooling – football’s appeal to sponsors

FRANCE’s top division will have a new name for the 2019-20 season, the Uber Eats Ligue 1,  after the US online food ordering and delivery service agreed to sponsor the league until 2021-22.

This naming rights deal, making Ligue 1 sound a little like an English non-league competition, will yield € 32 million for the French league, a significant increase on the previous deal with Conforma. The announcement has, predictably, sparked a wave of mockery from fans, notably around the plan to have the matchball for every Ligue 1 game delivered by an Uber Eats driver.

The French deal comes just a few weeks after the Football Association announced that BT will provide £ 50 million of sponsorship over a five-year period. The corporate world continues to find football attractive. Each summer, clubs announce major new deals with the business fraternity, most of whom have identified the potential of the world’s most popular sport. And as well as using major competitions like the FIFA World Cup and the UEFA Champions League, corporates are constantly gravitating towards football’s big names.

According to CSM Sports & Entertainment, Manchester United are the leading European club for sponsorship, receiving around € 269 million, just ahead of Barcelona (€ 261 million). CSM estimated that the market across the top five European leagues (England, France, Germany, Italy and Spain) is worth around € 4 billion, with the Premier the top competition with € 1.2 billion.

Shirt sponsors in some leagues are now sharing their space with the recently-added area of sleeve advertising. For example, Arsenal’s shirt sponsor is Emirates, while its sleeve sponsor is Rwanda. 

Football sponsorship brings multiple benefits to companies eager to break into new markets. This may result in some corporates being very generous in order to accelerate their expansion programmes. AIA, who describe themselves as a “pan-Asian insurance group”, paid a considerable sum – £ 100 million over five years – to sponsor Tottenham Hotspur, but market observers assumed this was in order to take the AIA name to the UK.

There is little doubt, however, that a blanket approach to sponsorship can quickly raise awareness of the corporate name. One very obvious example is Gazprom, the Russian energy company that has not only entered into the shirt sponsorship market, but their association with the UEFA Champions League – notably their graphic and somewhat sinister TV advertising – has made them something of a household name across Europe.

Some see Gazprom’s blanket approach to football sponsorship as an expression of Russian passive aggression, although the company itself is clearly using the game to soften its image. When Gazprom sponsored Schalke 04 it coincided with the construction of the NordStream 1 international pipeline, a deal that was supposed to signal heightened cooperation between Germany and Russia. Gazprom is now one of the leading backers of football and includes Zenit St. Petersburg, Schalke 04 and Red Star Belgrade among its shirt sponsorship contracts.

Similarly, Emirates, the world’s fourth largest airline, has entered into a number of sponsorships, including shirts and stadium rights in a bid to become closely linked with the world’s leading football clubs. Emirates have some big names in their shirt sponsorship portfolio, including Real Madrid (€ 70m per season), Arsenal (€ 31m), Paris Saint-Germain (€ 25m) and AC Milan (€ 18.5m)

Barcelona surprised many people with their shirt sponsorship deal with Japan’s Rakuten, but the agreement, totalling €55 million per season, was one of the most lucrative in football and has the potential to raise public awareness of a relatively unknown company. Rakuten have said that their involvement in sport has proved to be beneficial for revenue generation.

Chevrolet is far from unknown, but its long-standing relationship withManchester United, with a € 71 million per year shirt sponsorship agreement, has undoubtedly made their name more visible in the UK and Europe.

Etihad, the sponsor of United’s neighbours, Manchester City, has a number of touch points that obviously assist recognition. Etihad is the shirt sponsor (€ 45.9m), but also has the stadium naming rights. In addition, the complex that includes the stadium has a dedicated tram stop, Etihad Campus, that also takes the name to the Manchester public.

The football industry’s appeal has certainly caught the imagination of gambling brands, particularly in the English Premier League where almost half of all shirt sponsors are betting entities, casinos or other forms of gambling. Gambling and football have long been related although there is a school of thought that the sport is over-saturated with link-ups with the sector.  Gambling is an area that is very liquid, appeals to the football demographic and has expanded considerably due to the growth of online offerings and new technologies. However, there is something of a moral dilemma here that contradicts many of football’s social responsibility activities. Gambling is a growing problem, often classed as an addiction or a form of illness. Is this an industry that is appropriate for a pastime that attracts huge numbers of children and young people?

Financial services account for 20% of shirt sponsors in the Premier League and across the top five European leagues, have spent more than € 300 million. Airlines and Automotives contribute 10% apiece to the Premier. Interestingly, Germany’s Bundesliga has not followed the same path and has a broad range of shirt sponsors.

With match attendances high in the leading football leagues, particularly the Premier League and Bundesliga, and broadcast coverage at an all-time high, sponsors will undoubtedly continue to seek to exploit football as a market opportunity. Indeed, clubs themselves are constantly seeking new ways to monetise the broad appeal of the game. While some sceptics see football as a classic bubble waiting to burst, there is no apparent sign the appetite is waning. If there is a word of caution, it should be that the global economy is due for a downturn. With football increasingly reliant on income streams that represent discretionary spending, the effect of another financial downturn cannot be underestimated.

At the moment, though football, due to the mass appeal of the game and its ever-expanding global footprint, remains a magnet for big business. For how long, you might ask?

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