Not so football crazy

With ten of the top UK teams scrambling to find sponsorship for next season, insiders believe the spark may have gone out of football. Blame has been cast in many directions, from September 11 to over-inflated deals in the past. But one thing

The winter days are racing towards an unmissable spring deadline for ten of the UK’s top football clubs (see table). By April, these clubs must strike next season’s brand sponsorship deals so that factories across the Far East can swing into action to produce kits bearing their new sponsor’s name. The kits will go on sale to UK fans over the summer, bringing in funds for the clubs and promoting the names of brands eager to be linked with the national game.

“The clubs are absolutely desperate to close the deals so they can tell kit manufacturers by the beginning of April,” says Toby Hester, sponsorship manager for One 2 One, which has sponsored Everton for the past five years.

It emerged last week that Arsenal is about to strike a deal with BT Cellnet, which will change its consumer brand name to O2 in April or May. O2 will replace Arsenal’s existing sponsor, Sega (MW last week). But according to football insiders, this will not be the sponsorship deal Arsenal wanted. Instead of the £7m a year the club had been demanding, BT Cellnet is understood to have beaten Arsenal down to between just £2.5m and £3m a year – less than half the asking price – in a deal expected to last between three and five years. Arsenal refuses to comment on the deal and BT Cellnet, which at present sponsors Middlesbrough, says it is still in talks with a number of clubs.

Many believe that Arsenal’s experience will be repeated at the other nine clubs, and brands will slice millions off the asking price of the sponsorship. Hester believes the problem is that many clubs are looking at the deals struck by Manchester United, which two years ago signed a £30m, five-year sponsorship with Vodafone, and Chelsea, which struck a £24m four-year deal with airline Emirates last year. Hester says the danger is that the other clubs will use these as yardsticks by which to measure their own deals. He says: “Manchester United is a premier team and there is some substantial benefit there. But other clubs struggle to see a revenue return.”

One 2 One – which is rebranding as T-Mobile later this year – may not opt for a club sponsorship next season. According to Hester it may choose to sponsor a whole competition or sign up to be a Football Association partner instead as there are only considered to be a handful of teams in the UK that are worth linking up with.

However in Germany, One 2 One’s parent company, Deutsche Telekom, has just struck a £15m-a-year deal with Bayern Munich, which Hester says is exorbitant. But he believes many brands have failed to exploit their sponsorships. He says: “If you are not relevant to football, forget it. There are a lot of sponsors that haven’t got anything out of it.” Mobile phones, he says, are relevant to fans because they use them on the day of the match to talk to friends about the results.

Pay-less-per-view

This collapse in the value of shirt sponsorships adds to the growing impression that the UK football bubble has burst, or is at least deflating. The inflation in broadcast rights deals looks like it is coming to an end – since NTL walked away from its Premier League pay-per-view deal last year, it has been downhill all the way. ITV’s replacement for Match of the Day, The Premiership, signalled that football might not have the pull everybody thought it had, and ITV Sport is trying to renegotiate the terms of its £315m three-year deal for league matches.

Many expect the next round of UK television broadcast rights (live, highlight and pay-per-view), will go for less than the £2.3bn paid by broadcasters for the current deals, which run between June 2001 and May 2004. Against this, a report in yesterday’s (Tuesday’s) Financial Times suggests that BSkyB has a clause in its contract preventing it from bidding less than the £1.1bn it paid for the current Premiership rights – when the three-year deal comes up for negotiation – which would tend to shore up rights market prices. Nevertheless, many non-Premiership league teams are reported to be culling their workforces, including top players, to rein in sky-high wage bills. Others say many clubs face bankruptcy.

Football is in crisis, and there is a danger that this might infect some of the brands that have become closely associated with it. The question for brand owners is whether they can expect to get the same benefits – by associating themselves with the excitement and glory of football – at much cheaper rates, or whether the game has become a greatly diminished, over-used marketing property with a decreasingly important position in a brand’s communications armoury.

More evidence of football’s downfall as a media property came last week, when it was revealed that Granada Enterprises had failed to attract a single bid for the sponsorship of ITV’s coverage of the World Cup 2002 from any of the event sponsors. The sponsorship is now open to all comers (MW last week).

True, this World Cup is being played in another time zone, making it a less attractive television property. But it is still seen as the greatest marketing opportunity the world has to offer, and none of its sponsors has seen fit to milk the opportunity in the UK.

As one sponsorship expert says: “I think that wherever you look, the financial side of football is declining. It is not a bubble bursting and it is not falling off a cliff. We went over the peak a year ago and now we are coming down the other side.” He believes, though, that the game is still just as attractive to fans as ever. But the financial model has broken down, with fragmented viewing and sponsors unable to stand out in a cluttered market.

Nigel Waters, sponsorship manager of Tottenham Hotspur – which is seeking a replacement sponsor from next season for Holsten Pils – attributes the decline in sponsorship prices to the general downturn in the economy following September 11, and the resulting decline in the advertising market. He says: “I challenge anyone to say that the football balloon has burst. Clients have to question whether they are better off having a massive radio campaign, or sponsoring a club. The problem is not so much a downturn in sponsorship as in the advertising market. There aren’t too many properties that add sex appeal to your product or that can deliver the passion that football can. If the advertising market as a whole returns, football will once again rise.”

One brand owner says that he has been approached by teams that had sponsorship deals worth more than £1m a year, which are ready to accept less than £500,000.

The Football Association’s (FA) Partners sponsorship programme plans to shake-up its sponsorship packages, cutting the current ten sponsors, which each pay £2m a year, to five, each paying £10m. However, many industry insiders doubt that brands will pay even half this much, and the partners are estimated to pay as little as £3m to £5m, rather than the benchmark £10m. As with any mature market, consumers (in this case the brands seeking sponsorship deals) should expect far greater service from the suppliers (the clubs), as well as lower prices. Sponsorships will have to be more than just names blazoned across a shirt and a few perimeter board advertisements.

But clubs have been poor at offering added value, which usually consists of a few extra corporate hospitality seats.

Value for money

It raises the question of whether many of the brands that have tied up with football have managed to exploit the link. Some believe it has become a way for unimaginative marketing directors to give the impression they are building their brands, when in reality they are telling their consumers very little about their brand values. Sponsorship is a blunt instrument and there are few tie-ups that really are meaningful in terms of brand building. It is a “mute” form of communication – for similar sums of money brands can run creative ad campaigns through TV, radio and posters, which deliver specific messages.

The FA’s Partners sponsorship programme promises to “return the FA Cup and England team to the country”, and is recognition of the fact that football sponsorship has, to an extent, ruptured the relationship between the fans and the game. It also aims to avoid some of the clutter associated with football sponsorship. This week, sportswear company Umbro announced an eight-year deal as an “elite pillar” FA sponsor and Nationwide is expected to follow suit. Financial services company AXA has been dropped as an FA sponsor.

It appears that FA chief executive Adam Crozier, the former Saatchi & Saatchi boss, has recognised that sponsors must have a clear association with the game or risk being seen as opportunists with no real commitment to football.

As Michael Wall, a partner at ad agency Fallon – which handles Umbro’s advertising – believes that many sponsoring brands do not even “scratch behind the surface” of football. He says: “Sponsorship does a number of easy things. It is high profile and makes you less stuffy. Football’s appeal is obvious, but to own it and appropriate its values you have got to work hard. For some it is easier to make an association than others.”

He criticises financial services companies getting involved as sponsors – in the case of Barclaycard’s sponsorship link with the Premiership, he says: “It is a bit strange. I imagine there’s a sponsorship department and a marketing department [at Barclaycard] and never the twain shall meet.”

Green Flag, the roadside rescue company, sponsored England for many years, yet few people ever became aware of what service it was offering – though the company insists it helped build name recognition. Vauxhall Motors pulled out of football sponsorship altogether. Nike, Umbro and Adidas all have good reasons for having a link with football, and there is a clear connection between the game and beer brands. But financial services? Most electronic goods manufacturers? Soft drinks brands? Supermarkets?

Brands may have been gullible in accepting the arguments of the clubs and their sponsorship agents about the power of football. And some clubs have even fallen for their own hype, which is why they are still asking exorbitant prices from brands. Karen Earl Sponsorship director consulting Tim Crow says that trying to leverage football sponsorship deals is hard for brands, because the “footprint” of the sponsorship tends to be quite small. He says: “If you go beyond a 25-mile radius, you won’t find too many fans of a particular club. In the area, the team is huge, but beyond that they are not. Leeds United won’t sell you much in Birmingham.”

But he believes that the biggest clubs and properties will be protected should the slide in the commercial value of football prove to be permanent. He says: “The bottom line is that it is only at the top end of the market where prices are holding firm. Too many people are claiming to be at the top end when they should be settling for a little less.”

He believes that the £15m Bayern Munich/Deutsche Telekom deal shows that top clubs can still command big sponsorships.

The collapse in football sponsorship values will bring tie-ups with the game back into perspective, though many believe that even after the clubs’ expectations about the value of deals are slashed in half, football will still be too expensive. But lower prices may attract more brands into the game

Stephen Pearson of Sportacus says: “There has never been a better time to use this type of platform. You can tie up an international agreement at similar prices to four or five years ago.”

But however cheap it gets, brands need to make clear the reasons behind the sponsorship or risk wasting their money. Spanish club Barcelona, a top European team, does not accept any sponsorship, yet is still one of the richest in Europe and has a close relationship with fans. Football’s business model is being turned upside down. But this could ultimately be for the benefit of the game, the fans – and brands themselves.

<b>UK football clubs seeking sponsors </b> Club Sponsor Arsenal Sega Aston Villa NTL Blackburn Rovers Time Everton One 2 One Fulham Pizza Hut Manchester City Eidos Middlesbrough BT Cellnet Sunderland (?) Reg Vardy Tottenham Hotspur Holsten Pils Wolverhampton Wanderers Good Year

UK football clubs seeking sponsors

Source: Marketing Week

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