For Manchester United, Sponsorship Deal Gets Complicated With Premier League Win, Ronaldo and Tevez Talks
Manchester United’s quest to replace AIG as its main sponsor became more complicated on Saturday as the team clinched the English Premier League title on points following a 0-0 draw against Arsenal F.C.
AIG will exit the £56 million deal at the end of 2010. Normally, such a win would make the club more expensive to sponsor, but the economy has dampened the enthusiasm of corporations to spend money on football teams.
BNET noted earlier that despite Man Utd’s popularity its debts and expenses have left the club making a loss. This would suggest it needs more than the £19 million a year that AIG paid. In a normal economy the club would have gotten such a sum following Saturday’s win. But, as the Financial Times notes, the market for soccer sponsors has softened.
Man Utd’s costs, however, could decline dramatically if the club loses two of its star strikers, Cristiano Ronaldo and Carlos Tevez. Tevez’s contract costs £32 million; Man Utd could make a profit on his sale. Tevez waved goodbye to fans and was seen weeping in the stand during Saturday’s game. Asked on the pitch afterwards if he was staying or going, Tevez replied “It’s difficult.”
Ronaldo’s price is about €100 million (Real Madrid is allegedly interested in securing his services) and again, Man Utd could make money on a sale. The club would seek to replace both players, but replacements would probably cost less and in the meantime the team retains the fearsome talents of Wayne Rooney, Dimitar Berbatov and 17-year-old Federico Macheda.
Further down the table, it is surprising how undervalued a football team sponsorship can be. The FT reported that gambling firm 1888BET paid Bolton Wanderers F.C. £750,000 a year and Wigan Athletic F.C. £650,000 a year in new sponsorship deals. That’s pocket lint in soccer-nomics. Those deals are down from £1 million.
Also in the market are Chelsea F.C., who want £11 million a year to replace/retain Samsung; and Liverpool F.C., who need £7 million a year or more to replace/retain Carlsberg.
What is surprising here is how low (Man Utd aside) these numbers are. For those sums, sponsors get 90 minutes of free advertising during every game, plus millions of shirt-owning fans walking around with the brand on their chests all year. If sponsors paid for that exposure in traditional media time, the cost would be multiples of those prices. It is not clear why clubs fail to realize that value.
In the FT:
Phil Carling, of sports marketing group Octagon, said: “The interesting thing will be to see if this decline in value transfers to the bellwether elite shirts like Manchester United, Liverpool and Chelsea who are all in the market right now. The intelligence suggests that proportionately these properties are off their target prices set last year.”
Side note: Man Utd has an interesting strategy of signing several smaller sponsors in addition to its main shirt sponsor. The team has a £10 million mobile deal with Airtel in India and Saudi Telecom sponsored a commemorative vintage 1909 shirt.
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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