Match of the Dayt

Imagine you are marketing a brand where you know customers will stay with you for life and only rarely defect to competitors. This is not a marketing utopia but the situation that many of the country’s top football clubs find themselves in. The affinity of fans to the brand image means clubs are earning revenue from areas they would never have considered a few years ago. One of these is credit cards and financial services.

The working class game has moved significantly upmarket since the launch of the Premier League and is attracting middle and higher salary earners who are happy to carry a Manchester United or Arsenal credit card or buy their car insurance or arrange a mortgage through Leeds United Financial Services.

The first affinity card was launched in this country in 1987 by Bank of Scotland for the NSPCC.

According to industry figures, charities still account for more than 50 per cent of the affinity cards in circulation, while sports clubs account for 15 per cent. Nearly 20 per cent of all UK credit cards are affinity cards and since 1987 more than 40m has been generated for various organisations (source: Datamonitor).

Interest among football clubs has grown since many teams were floated on the stock market, and analysts noted the rise in credit card spending.

Consumer expenditure on all types of credit cards reached almost 9.5bn in January (source: The Credit Card Research Group), a year-on-year increase of 13 per cent. Yet the number of banks and financial institutions offering affinity cards to sports clubs remains relatively small.

Bank of Scotland’s schemes are marketed on its behalf by affinity card consultancy Trans National. The other major affinity card players are the world’s largest independent credit card provider, the US-based MBNA, and The Co-operative Bank and Beneficial, which is now part of the HFC Bank.

Among the companies reluctant to enter the affinity card market are NatWest, the bankers for the country’s richest club Manchester United. It claims reward-based, co-branded cards, such as the one negotiated with British Airways, are more likely to be first out of a consumer’s wallet.

American Express has no plans to launch affinity cards in the UK despite running a successful scheme in Italy with one of country’s top soccer clubs, Lazio. MBNA is confident that the affinity card market in the UK will follow the US trend, where one in five credit cards – including 1.2 million for National Football League (NFL) fans – are linked with an organisation. This compares with only one in 20 in the UK.

MBNA has been aggressive in its marketing since entering the UK in 1993, and has persuaded the best supported club, Manchester United, to switch its affinity card business. The sports credit card sector is expanding because it is targeting people who are passionate about sport.

“Nothing is more important to many people than their favourite football team, and clubs are beginning to realise this,” says MBNA spokesman Peter Frank.

The attraction to most teams is that they receive a fee of between 2 and 10 when a fan subscribes to a card, and collect further payments at regular intervals.

The bank then donates a payment to the club of around 0.25 per cent on all purchases that are made using the card. The exact terms will differ depending on how a deal is structured and which party, the bank or the club, takes responsibility for marketing the credit card.

As a reward for loyalty, the supporter is given incentives, such as a discount on the price of a season ticket. Aston Villa receives a 2.50 fee and then 0.25 per cent of all purchases made by the 1,000 fans signed up to its MasterCard issued by the Bank of Scotland.

“We are giving our fans something that is credible and which does not harm the credibility of the brand,” says Aston Villa’s commercial manager, Abdul Rashid. He confirms the club is close to launching a new subsidiary, called Aston Villa Direct, which will offer a broad range of financial services.

One reason why football clubs have been slower than other organisations, such as charities, in realising the full marketing potential of affinity cards, is that they tend to operate a number of databases.

Trans National has negotiated card schemes for a number of clubs, including Arsenal, Bolton Wanderers and Norwich City. According to divisional general manager David Williams-Jones, it can help clubs focus on their most loyal fans.

“Many clubs have one list for lottery users, another for season ticket holders and one for fans who travel to away games,” he says.

“If one person is on every list, they are the most loyal and the most obvious targets for any affinity marketing campaign.”

One of the last Premier League clubs to introduce a credit card was Arsenal. The standard Arsenal card was launched in October 1997 and 6,000 are now in circulation.

The gold version – aimed at supporters earning more than 20,000 a year – was unveiled last May and the card now has 1,000 subscribers. The club advertises the scheme in the matchday programme and a 30-second commercial is shown three times during every home match on the large television screens inside the ground.

“We delayed the launch because we wanted the best deal for fans,” says commercial manager John Hazell. “We make it clear to supporters that they are helping the club, but it is the bank that donates the payment.”

Arsenal insists its card will have no annual subscription fee and a competitive APR (at the end of February its rate for purchases was 19.9 per cent compared with 21.7 per cent for both the Celtic FC card and the ChelseaCard).

While there are obvious benefits to brands with such loyal customers, it would be easy for football clubs to exploit that loyalty. Fans who want the name of their favourite team on their credit card or choose car insurance or a pension from a company associated with that team, may not be purchasing the most suitable financial product for them.

There is also concern about the effect on a fan’s relationship with a team, if an application for a financial product is rejected because of a poor credit rating.

The clubs are aware of these worries, and insist that they ensure any terms negotiated with third parties on their fans’ behalf are competitive. Improved database marketing should also ensure that only supporters most likely to be accepted are targeted.

Mike Pearce, chairman of customer relationship marketing agency TSM UK, says there is a risk. Supporters must separate their affiliation with a particular club for the need to get the best financial deal. “Fans have an insatiable appetite for anything related to their favourite team, so clubs have a huge responsibility not to exploit them. The wider social demographic that watches football nowadays means clubs can relate different products towards different supporters.”

One financial service popular with many fans is the football affinity savings account, offered by numerous building societies. Yet the only reward for the supporter can be an uncompetitive interest rate. Using data from MoneyFacts Online on February 23, the highest gross interest rate for instant branch-based building society accounts with a minimum balance of 1 was the 4.75 per cent being offered by the Woolwich, the Marsden Building Society and CIS. This compared with just 0.25 per cent from the Darlington Building Society on its Quaker/Pool Supporter Instant Account which pays one per cent of the average total balance to either Darlington FC or Hartlepool United.

Other poor payers included the Yorkshire Building Society, whose Yorkshire Terrier Instant Account donates one per cent to Huddersfield Town but only paid the club’s fans an interest rate of 1.55 per cent. Supporters of other clubs were getting a slightly better deal. Fans of Manchester United, Stoke City, Ipswich Town and Port Vale were earning 3.75 per cent in February through instant affinity savings accounts with the Britannia Building Society, while Nottingham Forest supporters received 3.70 per cent if they had money in a Nottingham Imperial Building Societies’ Nottingham Forest Savings Instant Account.

The Football Supporters Association (FSA), which will relaunch its own affinity credit card to members in a few months’ time, urges fans to be careful. “Supporters must ask themselves if the interest rates, loan terms, pension or credit card rates are the best they can get, or are they only taking them because of the association with their team. It is another example of clubs treating supporters purely as consumers,” says Sheila Spiers, who sits on the FSA national committee.

According to Mark Taylor, senior manager at the Co-operative Bank which produces affinity cards for Chelsea and Celtic, many teams have discovered the cards have not brought in the level of income imagined. He adds that clubs must time the launch of a card or financial service carefully to ensure the marketing campaign does not coincide with a dip in the team’s form when the fans’ feelgood factor is waning. The market needs revitalising and he expects the introduction of smart cards to give the sector a boost.

The technology is being developed that would give fans one card which combines a credit card and a season ticket and which can accumulate loyalty bonus points when merchandise or refreshments are purchased. The points could be redeemed for discounts on tickets and products.

Chelsea is understood to be launching a smart card in time for next season. Edinburgh-based card technology company TeamCard unveiled its multi-functional smart card to football clubs last month. Called the TeamCard, it is not a credit card, but it uses a point-of-sale terminal sited at the turnstile, food outlet, ticket or lottery office for fans to accumulate points in various incentive schemes. The first clubs to introduce the card are expected to be announced in April.

It is not only the biggest clubs which can benefit from introducing affinity cards. In lower divisions, they can bring in vital income, even if the sums generated are relatively small. Third division Scunthorpe United introduced a credit card a year ago, although take-up has been slow. “We only have about 50 cardholders but something like this takes time to be accepted,” says chief executive Don Rowing. “We do offer discounts on season tickets but we must strike a balance between incentives and the revenue we earn.”

The marketing potential to generate extra income from supporters who already spend hundreds of pounds every year following their team is huge. The fans appreciate the benefits too and are happy to buy into new services so long as the club does not take advantage of their loyalty.