The halo effect

When Manchester United signed up US Insurance giant AIG in 2006 as its main sponsor, it was the biggest deal in football history, worth 56.5m over four years, or 19m per season. It served to underline Man United’s credentials as the biggest brand in football, and particularly its popularity in growing economies such as China and the Far East.

Since then, new records have been set by Bayern Munich’s agreement with T-Mobile and Juventus’s with Fiat, both thought to be worth a staggering 22m per season.

Now the world’s most prominent soccer brand is looking for a new commercial partner, following the collapse of AIG amid the credit crunch, and subsequent termination of its sponsorship. AIG will not renew its sponsorship, which runs to May 2010, and is in “active discussions” with the club regarding its current deal.

It has led to speculation that Man United will have to downgrade its expectations in the face of a global economic slump, but industry experts say not.

They argue that the Man United brand is Teflon coated against the recession that has so far claimed its 100-year-old insurer sponsor, not to mention the likes of Lehman Brothers and holiday company XL, which was the shirt sponsor of West Ham United.

Rupert Pratt, managing partner at sponsorship agency Generate, points to the unrivalled global brand power that the Red Devils enjoy. “Man United will not struggle,” he says. “In terms of global brand building, the level of promotion it delivers is unrivalled. It has shown again and again that it delivers. Vodafone, for several years, topped all recall leagues because of its sponsorship of Man United. We call it the ‘Man U’ effect. For years after, Vodafone still benefited from that association. Brands don’t just get an immediate impact, they also get tremendous longevity.”

AIG’s objective, with its record-busting sponsorship to break into Asia, where Man United is by far the biggest football brand, was delivered before it was crunched and swallowed by the bear market.

Man United has arguably been the biggest and most successful brand in English football since the 1950s, when it first came to prominence. In the 1960s, its striker George Best became the first real superstar footballer in the modern sense, and United was the first English team to win the European Cup, now Champions League, in 1968.

Although it suffered something of a drought on the pitch until 1989, the club still managed to retain their pre-eminence in English football, with the exception of Liverpool. Yet its rejuvenation, in terms of winning competitions, tied in with the creation of the Premier League and the Champions League, two of the biggest changes for English and European football, particularly from a commercial level.

The 1998-99 season for Man United was the most successful season in English football history, as they became the only English team to scoop a particular treble – winning the Premiership, FA Cup and UEFA Champions League in the same season.

The creation of the Premier League gave the top division the chance to negotiate rights for TV coverage and to keep all the proceeds. BSkyB had just been created and saw football as a loss leader to build its brand, and so paid enormous sums for exclusive live coverage.

International TV exposure launched Man United and its modern stars, inparticular David Beckham, into the global stratosphere, and this has proved irresistible to brand marketing directors with deep enough pockets, eventually leading to the record-breaking deal with AIG.

The creation of the UEFA Champions League meant the top few teams from each league joined the competition, rather than just the champions as before. The move ensured the continent’s biggest brands qualified most years, with a guaranteed number of matches each season, and consequent high TV revenue and exposure.

Coverage of the English Premier League is enormously popular in the Far East, and Man United has exploited that market – via regular tours and player visits and signings – hence the Manchester City chant “you’re the pride of Singapore”.

Despite this being the first season for many years when two clubs – West Bromwich Albion and West Ham – played each other with no shirt sponsorship because their sponsors had either pulled out or gone bust, it looks like hungry young brands emerging out of India and the Middle East economies will ensure Wayne Rooney and Cristiano Ronaldo’s chests are emblazoned with expensive branding for years to come.

It recently emerged that one of the companies Man United commercial director Richard Arnold has written to regarding potential sponsorship is the Sahara Group, an Indian conglomerate with interests in finance and media among other sectors.

Existing commercial partner Saudi Telecom are also understood to have been approached. However, sponsorship experts recommend not putting too much store on names coming at this early stage.

The darlings of football will, however, have to accept that “flat is the new up” in terms of the likely value of their new deal in these straitened economic times, according to specialist consultant Octagon head of Football Phil Carling, who was previously commercial head at Arsenal and then the Football Association.

Carling says the football club may experience slightly more competition than usual due to other big sport sponsorship offerings currently up for grabs, including the 2012 London Olympics and “quite possibly” the Premier League title sponsor.

Facts and figures

Manchester United FC

” Man United Football Club was founded in 1878 as Newton Heath L&YR FC. It changed its name in 1902
” It has an estimated 330 million supporters worldwide – almost 5% of the world’s population
” The club was a founding member of the Premier League in 1992 and has played in the top division of English football since 1938, excepting the 1974-75 season
” Man United is the reigning English, European and World Champion
” It is currently ranked as the richest and most valuable club in any sport, with an estimated value of 897m as of September 2008 (Forbes).