The reign of Spain – Real and Barca top the Brand Finance table

REAL MADRID have not only been crowned La Liga champions, they have also topped Brand Finance’s rankings for the most valuable football brands.

Real’s league title win, their first since 2017, partly compensates for the club’s relatively poor 2018-19 campaign when they were knocked-out of the UEFA Champions League earlier than usual and went through three coaches.

It is not out of the question they could win back the trophy they last won in 2018, but they are a goal behind in the round of 16 and have to negotiate a tough second leg at Manchester City

Real, despite being the top brand valuation at € 1.419 billion, lost around 14% of their value. Barcelona, their fierce rivals, are now just € 6 million behind them thanks to their strong and diverse revenue generation.

However, Barca were embroiled in internal politics in 2019-20 and sacked their manager in mid-season, which many commentators heralded as the start of a significant crisis at the club.

Both Real and Barca always had the dilemma of dealing with the post Ronaldo/Messi world. Ronaldo left Real in 2018 and the season that followed his departure was very difficult. The club appears to have adjusted the loss of CR7, but Barca still have that problem to come.

Real and Barca have both attempted to be more creative in their offering to fans and partners. Real have broadened their business offering by launching an innovation brand, Real Madrid Next, which aims to work with tech-orientated start-up companies.

How Spanish clubs fare in Brand Finance’s Football Annual

Pos  Club 2019 +/- BST
1 Real Madrid 1 1
2 Barcelona 3 +1 2
13 Atlético Madrid 14 +1 12
32 Sevilla 35 +3 22
36 Valencia 48 +12 15
40 Athletic Bilbao 45 +5 26
44 Villareal 47 +3 47

Source: Brand Finance
Table is Brand Value rankings
BST= Brand Strength

Barca may have lost their league title, but their recent record remains impressive – seven of the last 11 league titles.

Away from the field of play, Barca are on track to become the first club in Europe to reach the landmark of € 1 billion in annual revenues, partly due to a strategic decision to take merchandising in-house.

Global ambitions

Spanish clubs, with the exception of Real Madrid who maintained their position, all improved their ranking in the Brand Finance table.

There’s little doubt that Real and Barca are likely to have politics and over-expectation weighing them down at times. Atlético Madrid, who have been in the ascendancy for the best part of a decade, are in transition. Now in their third season at their very impressive Wanda Metropolitano stadium, Atléti have been reducing their high level of indebtedness, much of which accompanied the construction of the gleaming new ground close to Madrid airport.

Their brand value fell slightly, but the gulf between Atléti and the big two in Spain is still very substantial. The club’s strength is in their relative stability – Diego Simeone has been coach at the club since 2011.

Atléti remain Spain’s number three club in many ways, but they underlined their credentials when they beat Liverpool, the reigning European champions in the UEFA Champions League round of 16 just before the pandemic lockdown.

Real and Barca, and indeed Atléti to some extent, are strong global brands and have little difficulty attracting fans and sponsors around the world, but other Spanish clubs are clearly trying to expand their footprint to win followers in Asia, Africa and the Americas.

Sevilla, five times winners of the Europa League, are committed to grassroots development in emerging markets, such as in India where they are hosting soccer schools for young children. They are also planning to expand their iconic Ramón Sánchez Pizjuan stadium beyond its current 43,000 capacity.

Valencia’s new stadium, which has sat unfinished for more than a decade, is set to be completed via a new project that will take them away from the Mestalla, the oldest ground in La Liga. With a reputation as one of Spain’s best-run clubs, Villarreal are expanding their presence in other parts of the world and have launched Villarreal Melbourne and established the first academy run by a Spanish club in Australia. The club also has academies in the US, Puerto Rico and Sweden.

Similarly, Real Betis, one of the best supported clubs in Spain, are aiming to build a more global franchise and have targeted North America as a market that could support brand expansion and attract global sponsors.

Athletic Club Bilbao, meanwhile, remain one of the most unique clubs in Europe in that they only recruit local players from the Basque region. That in itself makes them appealing to football fans around the world.

La Liga remains one of the most ambitious leagues in the world and is constantly looking at new ways to expand such as exporting games to other continents. This may be controversial but it does show the league recognises the need to broaden its appeal in order to compete with the Premier League and Bundesliga. Having two of the world’s biggest clubs in your stable certainly helps that cause.

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Corporates still line-up for football

FRANCE’s top division will have a new name for the 2020-21 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?