Chelsea chief executive Peter Kenyon’s declaration last week that he plans to build the club into the world’s foremost commercial football property by 2014 has met with considerable scepticism among many observers.
They doubt he will be able to replicate the success he had as chief executive of Manchester United, and point out that Chelsea lacks his former team’s history and loyal fan base around the world. They add that matching the media rights deals struck by a top club such as Barcelona will be a tall order.
Since Kenyon was lured to Chelsea from Man United in September 2003 by owner Roman Abramovich, the pair have revived the club’s on-pitch fortunes and reached new commercial milestones.
Last year, Kenyon struck a landmark five-year shirt sponsorship deal with Samsung worth £50m alongside a lucrative kit sponsorship deal with sportswear giant Adidas, worth an estimated £100m over eight years – replacing Umbro, whose contract was terminated five years ahead of schedule at a cost of £24.5m to the club.
However, some wonder how far Chelsea can go in building an international brand. Chelsea Digital Media managing director Casimir Knight says: “We accept there is a more entrenched mature market of football followers in the UK than in other markets.” The club’s focus is, therefore, centred on capturing “the style of London”, he explains, while also attracting the younger demographic as “Manchester United has successfully done in the past”.
Chelsea is ranked fifth in the Football Money League with an income of £149.1m, about £17m behind Man United and almost £30m behind Real Madrid, the world’s richest football club, according to figures compiled by accountancy group Deloitte based on the 2004-2005 season.
Media rights for both premier and champions league tournaments constitute a key part of the revenue for the club. However, Phil Carling, head of football at sports marketing agency Octagon, argues that even if Chelsea increases its success on the pitch it will struggle to compete financially with the likes of overseas clubs such as Barcelona and Real Madrid, which recently sold its media rights for £107m annually, because of the UK’s centralised rights model.
Chelsea’s aggressive expansion strategy centres on the continued extension of the brand into markets such as the US and Far East, a region that presents opportunities for global expansion, but also challenges in capturing the allegiances of an unpredictable fan base. “The opportunity to create a fan base in fickle markets is that much greater, but does rely on Chelsea continuing to win titles,” says Carling. Digital media will play an increasingly prominent role within its marketing mix as shown by the recent relaunch of its official website, which was developed in partnership with Premium TV. This allows for video messaging and social networking among its fans. Moreover, Chelsea has partnered with digital media company Sina to develop a Chinese language website, to be launched next year, with further tie-ups to follow.
Chelsea’s Knight says at a global level it will continue to form long-term media alliances in its target markets, with the club currently exploring opportunities across both radio and mobile. “We have an aggressive vision of where the football club can be within a short space of time and we recognise that we need to do things a bit differently to other clubs.” Beyond brand extension plans Kenyon also has to contend with domestic challenges, including repeated criticism over its exorbitant spending power. Many blame Chelsea for distorting competition in European football with deals such as the record £30m purchase of Ukraine striker Andrei Schevcheko from Milan last summer. Chelsea has spent an estimated £375m on transfers in the past three years. “People associate Chelsea with success that has been bought,” one sports sponsorship agency source says. “Once it is seen to be creating its own success rather than just buying it, people’s emotions will shift.” With two consecutive premiership titles under its belt, Chelsea will remain a force to be reckoned with for some time.