The Williams and Ferrari Formula One teams and golfer Tiger Woods join David Beckham, Manchester United, and the England and Brazil football teams in the premier league of global sports brands. This elite club of top-flight sports properties can command massive sponsorship deals and move merchandise worth tens of millions of pounds.
Converting competitive success on the field of play into brand loyalty and merchandise sales is still in its infancy. A number of marketing pioneers are demonstrating how the noble ideals of sport and the mass support enjoyed by clubs and stars can be turned into hard cash.
Peter Kenyon’s resignation as chief executive of Manchester United last week to take up the same post at Chelsea highlighted the role that business people and marketers have in building a sport, its players and its clubs into money- spinning international properties.
Kenyon has been a key mover in exploiting Man United’s iconic global status, aided by director of marketing Peter Draper’s focus on brand building and bringing the disciplines of consumer marketing into the world of sport. The two have worked together for many years, first at Umbro before moving on to Man United, where they struck a 13-year &£303m sponsorship and merchandise deal with Nike. They have also built the club’s fan base in the Far East and recently attempted to make the team popular in the US.
But Draper dismisses as “purely speculation” talk of him joining Kenyon at Chelsea.
Major players on-side
Some believe that Chelsea recruited Kenyon for his contacts in the G14 group of rich European clubs, of which he was a founding member. This might ensure Chelsea a place in any future European Super League, though there is speculation that Man United could block Chelsea’s accession.
While Rupert Murdoch, owner of the Sky network, is probably the most powerful man in the business of sport, many sporting organisations and clubs owe their financial success to the abilities of individual executives such as Kenyon.
Twenty-five years ago, Formula One consisted of little more than a few thousand people watching some battered old cars go round a track. Bernie Ecclestone changed all that, turning it into the billion-dollar business it is today. Many see Ecclestone as a consumate deal-maker, a trait they also attribute to Kenyon, but simply striking deals does not necessarily enhance those sports or give a better understanding of their customers when it comes to pitching for potential sponsors. FA Premier League chief executive Richard Scudamore has been hailed as a visionary in foreseeing the changes afoot in broadcasting, media coverage, political events and the European Union. He has been credited with turning the Premiership into an international property, popular across the globe.
But while Ecclestone cut his business teeth at a car dealership in Kent, and Scudamore developed his business skills as a group advertising director at publishers Thomson Corporation, other executives have come directly from marketing and brand-led advertising backgrounds, bringing their particular science of money- making practices to the sports arena.
Add some spin
Just as they flooded out of the packaged goods fields into retail, banking and services over the past two decades, marketers are now finding their way into the sports arena. They bring with them their own take on sports spectators and their methods of segmenting and measuring the fans’ emotional and rational attitudes to sport.
This understanding of the nature of a sports club’s fan base and how it can be expanded is crucial to bringing in sponsorship and selling merchandise such as replica kits. Real Madrid is reported to have already recouped the &£25m it paid for Beckham in sales of shirts in Asia. The Spanish club is milking the branding work that was put into the image of Beckham while he was at Man United.
Tim Crow, a director of Karen Earl Sponsorship, says many in sport have a short-sighted vision of what they can offer to brand owners through sponsorship, but he credits Man United’s Draper for introducing a modern approach.
“Rights owners tend to talk a lot about ‘outputs’ and the number of people seeing a sponsor’s logo. But brands are interested in how it will affect consumer behaviour. Peter [Draper] is driven by that and this sets him apart,” he says. Few football clubs invest much in consumer research or have a clear idea of what motivates their fans, he claims, but this is Man United’s strength.
Practice your aim
Draper, who worked at the English Basketball Association before joining Umbro and then moving to United, says: “We’ve thought fully about what this property means, what this team means, what its relationship is with its main customers. With any property, be it packaged goods or services like banking or telecoms, you start with the customer.
“We use all the normal processes – research; being with the customers; using everything from anecdotal evidence to qualitative and quantitative research to find the relationship they have with the products, their levels of satisfaction and how they perceive the business.”
But he says that while in other fields marketers start with people’s rational perceptions of products and then attempt to build an emotional relationship between them, the process is reversed in sport. He also claims it is difficult segmenting Man United customers since they are so diverse – “from bin men to billionaires,” he says.
The research approach has helped Man United forge some of its most successful sponsorship deals. Draper cites a deal with Budweiser. Bud customers within the Man United fan base were researched before discussions with the lager brand were initiated. “We never pitch anybody cold,” he says.
Batting for the other side
Following Man United’s branding success, other sports organisations have hired executives from marketing backgrounds to bring some marketing magic to their sport. For instance, the Football Association’s former chief executive Adam Crozier brought in Paul Barber from Barclays, where he was director of marketing communications.
Elsewhere, Liverpool FC hired M&C Saatchi executive Davide de Maestri as brand director, and the Rugby Football Union recruited Paul Vaughan, former vice-president of sports agency Octagon Marketing, as commercial director in 2000, with responsibility for sponsorship, marketing, sales, merchandising and the RFU website. One source says that the profile of English rugby has risen dramatically since his appointment, though attributes this mainly to the success of England manager Clive Woodward.
“Sports marketers are an increasingly professional breed. It is has become a skilled area that has grown rapidly,” says the FA’s Barber. But he adds: “It is fair to say we are still a relatively young segment of marketing. Advertising has been around for a long time, but sports marketing has not got that depth of talent.”
Their own goals
Barber thinks the major difference that honing marketing know-how at the FA has made is the ability to offer sponsors detailed research about its market, data that was not available before. In the FA Partners Programme, each of the five sponsors is aimed at a different consumer segment. McDonald’s, for instance, focuses on community involvement, while Nationwide promotes women’s football and Pepsi pushes youth football.
Barber says this has been possible because the FA has used sponsorship research agency Sponsorship Science to segment the football fan base and identify brands that are relevant to the different fan segments. “The best way to convince people is to show them the scientific data that the market they are trying to reach is the same as the one watching the sport,” he says.
He is proud of the fact that the FA did not use any sponsorship agents to sell the deals, and thinks this is a sign of the growing maturity of sports brands. Usually, sporting properties promote themselves in the most basic terms, talking about viewing numbers rather than the deeper relationships fans have with sports.
Matthew Patten, chief executive of consultancy SP Active, says: “Ten to 15 years ago, sports sponsorship was viewed as a nice little add-on and didn’t exist as part of the main marketing mix. But advertisers have in recent times been able to capitalise on the passion surrounding sport and have invested huge amounts of money in it. This, in turn, has had a major impact on sport – people realise there are serious amounts of money to be made out of sport. However, that old proverb you can take a horse to the water but you can’t make him drink is very true in this case: the challenge for sports marketers is to persuade brands that a particular sponsorship is right for them.”
However, there are doubts whether it is the marketers who have opened up opportunities for sponsorship or whether they have been able to sit back and watch the deals flow in.
The business of sports marketing was founded in 1961 by lawyer Mark McCormack who went on to create IMG. But it is only in recent years that it has matured and started to behave like its older and wiser relations – advertising and brand marketing.
The big money brought in by sponsorships has tended to create a virtuous circle for the top sporting brands, with strong performance on the field attracting big sponsorship deals and enabling clubs to expand their fan base. The extra money brought in can then be reinvested in buying top players, so enhancing play performance again, and so on, so the top few teams continue improving. But this creates a very unlevel playing field for all the clubs involved in the sport.
And now there are fears that the consolidation that killed off brands in many of the packaged goods industries – from soap powders to computers – will be replicated in sports, leaving the world with one or two top performers in each area and a long list of also-rans. This all has worrying implications for sport in the future as competition takes a back seat and the top teams become a brand spectacle in their own right.
Additional reporting by Adam Grossman