With Leicester City snagging the Premier League trophy, there will undoubtedly be a short-term increase in revenue for the club. Estimates by sports data and marketing firm Repucom show that Leicester City are set for a potential £150m boost for winning the Premier League title, consisting of Premier League prize money, Champions League participation cash and increased match day revenues from ticket and hospitality sales.
To put this into context, Leicester City’s commercial and sponsorship income in 2012 was just £5.2m.
Increasing brand value and sponsorship opportunities
The football club’s win is also set to significantly increase its brand value. Brand Finance named Leicester City as the 42nd most valuable British football brand in last year’s Football 50. At the time of the ranking, the company set the club’s value at $100m. The value of a brand is calculated as the extra economic benefit as a result of the brand.
“We do expect a sharp increase in value,” says Richard Haigh, director at Brand Finance. “In terms of brand value and Leicester as a commercial entity, [the win] is astronomical. Its revenue streams include match day revenue, broadcasting revenue and commercial revenue such as shirts and sponsorships. All of those three aspects will be increasing this year.”
In terms of sponsorship opportunities, Leicester City can also expect increased interest from brands hoping to capitalise on the club’s newfound success.
“The club is still on the same sponsorship agreement with its owners since 2010, which is £1m a year. Comparatively, Manchester United earns £53m a year and Chelsea earns £40m, which is what the club is moving towards as a result of this win,” says Haigh.
“Whether they’ll end up achieving that, due to its main sponsor King Power getting them onto an arms length deal, is another thing. But that’s the sort of revenue generation that they’re now capable of given the position they’re in and the exposure they’d give to any sponsor.”
Growing its overseas fan base
Besides the increased income, there is also a growing fan base to tend to. Data from sports marketing agency Sports Revolution and sports data analysis experts Brandtix shows that in the past three months, 2.5 million new fans started following the club – more than half its entire social following to date.
While the club has already won more hearts at home, the real commercial win comes through an expanded fan base abroad, argues Reema Babakhan, deputy head of communications at Synergy Sponsorship.
“A global fan base can lend itself to a new approach to sponsorship – dividing up regions and sponsor categories to allow for the monetisation of countless deals. Manchester United has an official casual footwear partner for South Korea, Chelsea boasts an official whiskey partner in Myanmar, while Arsenal has an official telecommunications partner in Indonesia. Could we soon see these types of deals for Leicester?” she asks.
Building long-term commercial success
While the win will assist the club commercially in the short-term, there are doubts over whether it will be able to sustain its success.
“It’s all subject to on-pitch performance. They could be champions today but relegated next season.”
Rupert Pratt, director, Mongoose Sports & Entertainment
“With established clubs like Manchester United and Manchester City, their income tends to be able to weather on-pitch performance, as they have heritage and a long track record,” says Rupert Pratt, director at Mongoose Sports & Entertainment.
In terms of winning the hearts and minds of foreign fans, the brand has to focus its efforts to keep them engaged.
“You can’t be everywhere at once overnight. That’s what the likes of Liverpool and Manchester United do – you need to be on the ground in multiple geographies to maintain commercial interest. The issue for Leicester will be if they’re able to resource the business quickly enough to achieve this,” adds Pratt.
In April this year, it also came to light that the club is involved in an investigation by the Football League around its 2013 and 2014 income. The Guardian says Leicester sold sponsorship rights to a company called Trestellar and sold them back to its owners King Power, leading to questions around whether the club’s sponsorship income was legitimate.
However, Pratt believes this won’t affect the brand’s commercial success in the long run.
He explains: “Growing success brings increased speculation. It won’t affect them from a commercial perspective, it’s all about the here and now. [This scandal] won’t lead to them having any points deducted and be relegated back to the championship. By the time the situation is resolved the halo effect will be long gone, and Leicester will be back to its normal business.”
Premier League gets its shine back
Leicester City is not the only party to have benefited from its rise to the top. The Premier League, which is dropping its title sponsorship strategy from next season to make global communication easier, has undoubtedly seen its talkability increase. This is a positive development as it faces tough competition from the Spanish La Liga and the German Bundesliga.
“The Premier League was in danger of losing its shine. There is a lot of competition between the different leagues for the hearts and minds of a global fan base. [Leicester’s win] has added a sense of romance and warmth around the league but it’s also a huge talking point,” says Pratt.
Babakhan adds: “As the Premier League seeks global domination in search of more riches, stories like that of Leicester City can only help. Historically viewed as the flashiest, most commercial, most money-obsessed league in terms of wages and ticket prices, this season has turned this stereotype on its head. The authentic money-can’t-buy narrative will have brands falling over themselves to be part of it.”