The League has been in talks with potential candidates ever since its exclusive negotiating period with the energy firm ended last October. It is understood organisers want £10m per year, a 43 per cent increase on the annual £7m npower is said to have paid.
Commercial director Richard Heaselgrave, who joined the organisation in 2011, is leading the negotiations. He is thought to be reluctant to budge on the revised value and is prepared to go beyond a self-imposed deadline of March to secure the right deal. But brands including npower have been unwilling to meet the new asking price to-date, according to sources close to negotiations, and are concerned that the additional outlay will leave them with less to invest in grassroots initiatives and marketing campaigns.
A League spokesman says discussions with “a number of interested parties” are “progressing well”, but refused to confirm how close it was to securing a new sponsor.
Sources close to the matter told Marketing Week it is “unusual” for serious negotiations with a preferred backer to not have started so close to next season’s fixtures lists being published in June. One observer added the impasse could potentially damage the future value of the League as well as the financial stability of some clubs if it continues into the 2013/14 season.
Clifton Asset Management marketing director Kevin Peake, who was npower’s marketing director when it struck the deal with the League in 2010, believes it will sign a sponsor, but says potential backers will see their position strengthen the longer negotiations go on.
He adds: “Every sponsorship director wants to get more money but there is always the danger of stretching things too far and leaving yourself open to clients turning around after the first year and saying it is not delivering acceptable ROI.
“If you’re a sponsor that needs a big online platform and looking for online traffic then the Football League could be quite good for you. If you’re looking just for pure brand awareness then its a harder sell. I think npower were already paying a premium price for a premium product that was never undervalued. The Football League will sign a sponsor but the longer they leave it the more chance the price will go down.”
The Football League currently enjoys its highest profile on TV with deals with both BSkyB and the BBC, but the match-day attendances and income for its member clubs are dropping. The League, which distributes the money it collects from sponsors and broadcasters to its 72 member clubs, has stepped up efforts to boost its commercial income over the last 18 months. Last May, it agreed a three-year deal with the BBC to continue showing highlight coverage of its three divisions as well as both the League Cup and Johnstone’s Paint Trophy.
The continued coverage gives greater exposure to sponsors and without it, could dent the value of future commercial deals. Additionally, the League signed a three-year deal with BSkyB, worth £65m a season, last year. Despite being less than year into the current agreement, organisers are planning to make an early start on negotiating the next TV deal following the emergence of BT into the sports rights market.
As part of the commercial drive, Organisers are focused on growing the League’s international appeal signing US financial firm Capital One last June as replacement for Carling as the title sponsor of the League Cup.
Michael Woodburn, chief marketing officer at Capital One told Marketing Week the US financial firm had not been in talks with the League about replacing npower, despite hailing the success of its League Cup deal in raising the profile of the brand in the UK.
He adds: “If I was in the Football League’s position I would be thinking about unbundling some of the assets out to make it more attractive to sponsors. [The deal] is mostly about the Championship and I wonder if there’s activity they could do with the first and second divisions to make it more interesting as well do more with the playoffs. The playoffs are a great asset but I think they’re a bit under leveraged.”