Wednesday, November 23, 2005

MU and Vodafone split as shirt sponsorship soars

Vodafone and Manchester United have agreed to cut short their shirt sponsorship deal from the end of this season, a move that concludes a relationship that began when Vodafone took over as shirt sponsor from Sharp in early 2000. The €52 million, four-year deal was only renewed by the mobile telecom last Northern summer and Ben Carter of Brand Republic speculates that the football club's new owners, the Glazer family, did not want to continue to work with Vodafone.

On its official website, Manchester United confirmed that it would be looking for a global sponsor and that initial discussions with international brands had proved that there was interest in such a deal. Chelsea already changed its shirt sponsors from Emirates Airlines to Samsung as the latter had a "global footprint".

"The Manchester United shirt is the most iconic in sport. The club feels that, in the current market, there is a genuine chance to attract significant additional investment," Andy Anson, MU commercial director, said.

Vodafone said it has signed a three-year agreement to sponsor the UEFA Champions League from July 2006. The deal will see Vodafone become both an Official Partner and the Official Mobile Network of the league. Companies spend about US$ 36 million to tie their wares to the Champions League, the richest club tournament in world soccer, according to Sportbusiness International magazine quoted by Bloomberg. The competition's other partner sponsors are Heineken, Mastercard, Ford Motor Co and Sony's Playstation. UEFA, the sport's ruling body in Europe, plans to have another sponsor in time for the 2006-07 competition.

The seventh edition of the SPORT+MARKT European Jersey Report, just released, confirms that for the second consecutive year the prices paid by shirt sponsors in the key European football markets of the UK, Germany, Spain, Italy, France, and the Netherlands for the 2005-2006 season grew.

The total sum derived from shirt sponsorship from the clubs in the top division of the six key European markets (England, France, Italy, Germany, Netherlands and Spain) for the 2005-06 season grew by 3% on last season’s total, the report found, rising from €333.1m to €343.4m.

Compared to five seasons ago, the total is almost 40% higher. This increase was despite a significant club such as AS Roma in Italy still going without a main sponsor three months into the season. Furthermore, with two significant shirt sponsorships in Spain (FC Barcelona and Athletic Bilbao) yet to be struck, despite the clubs getting permission from their members to seek such deals, there is scope for a further increase in the size of this market in the near future.

"With greater marketing spend likely to be directed towards football and football-related activity in the coming 12 months due to the 2006 FIFA World Cup in Germany, it is not surprising to see continued growth in this area of sponsorship. However, there still seems to be a gap between the values that clubs which participate in the UEFA Champions League are able to generate from jersey sponsorship, and those that do not, and the values outside of the English Premier League top six clubs remain comparatively low when other markets are viewed," Oliver Butler, communications manager at SPORT+MARKT told Asian Football Business Review.

Juventus retained the No 1 spot it held with its 2004-05 deals with Sky Sport and Tamoil. Under the new sole deal from this season with the Libyan-owned oil company Tamoil, its annual revenue has jumped €3.5m to €22m. The €17m deal between Deutsche Telekom and Bayern Munich remains unchanged in second spot, but Real Madrid’s €14m deal with Siemens is now edged into fourth spot by the new deal signed between Chelsea and Samsung Mobile, which at €14.5m, also makes it the biggest in England. The deal it usurps, between Vodafone and Manchester United, dropped to fifth in Europe.

These five deals now total €80.5m, meaning that 23.6%, or almost a quarter, of the European total is concentrated among these five clubs from four leagues.

After a decline in the two previous seasons, shirt sponsorship in the EPL has returned to growth climbing 4% from €60.8m in total to €63.2m. However, this is largely thanks to the improved deal that Chelsea struck with Samsung ... which also managed to increase the wealth gap between the average of the Top Five deals and the Bottom Five deals in the Premiership.

While the average of the Bottom Five (West Bromwich Albion, Sunderland, West Ham United, Portsmouth, Blackburn Rovers) did edge up to €600,000 per year, that of the Top Five (Chelsea, Manchester United, Newcastle United, Arsenal, Liverpool) climbed to €9.5m.

In fact when the next best deal (Tottenham Hotspur-Thomson) is considered, these six deals take up 81% of the FAPL total of 19 deals (Wigan’s deal with JJB is discounted due to the relationship between sponsor, club and the mutual owner).

Looking at the different industry sectors that are spending their marketing budgets in shirt sponsorship, whereas in the number of deals banks and financial services clearly lead the way with 29 deals (almost double the next sector, travel/tourism) the leader in terms of the money spent is easily the telecommunications sector with €82.4m, an average of around €5.9m a club and a quarter of the total spend. The energy supplier sector spent the most per club, at €9.7m on average a deal, thanks largely to the Juventus/Tamoil deal.

Further information at www.sportundmarkt.com.

UPDATE

Businessweek reported: "Nabbing the Real Madrid sponsorship, for an undisclosed sum, is the latest move in BenQ's attempt to pull off a brash corporate transformation. For years, Taiwan's electronics manufacturers made pretty good money as outsourcing specialists for Western or Japanese companies with big-name brands. But with margins shrinking as customers continually demand price cuts, the Taiwanese -- especially the island's computer makers -- are struggling to eke out a profit even as their sales soar ..."

"We don't want to fall into the same trap as the PC business," K.Y. Lee, BenQ's chairman, told Businessweek. With a strong brand of its own, he said, BenQ will be able to command higher margins and better control its destiny. "We must be able to promote our brand name," he said.

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