Tottenham, AIA And Tiered Shirt Sponsorship

Almost two weeks ago, on August 15th, Tottenham Hotspur announced a new corporate sponsorship with AIA Group Limited, a pan-asian insurance services provider.  At first glance the deal seems like just another partner to add to the seemingly endless list of corporate sponsors that clubs are amassing in an effort to build their sponsorship portfolio and consequently their revenue stream.  With Chelsea having an official Asian whiskey partner in Grand Royal Whiskey, and Manchester United having an official noodle and diesel engine partner, the trend doesn’t seem to be slowing down.

Though the assertion that this deal is simply for revenue is not wide of the mark, what is incredibly interesting about the deal is that AIA has signed on as shirt sponsor.  This announcement surely confused some fans considering that Tottenham recently signed a deal with Hewlett Packard to be their home and away jersey sponsor for this 2013/14 season.

Tottenham Release Event

Photo Courtesy of Soccerbible.com

These deals do not conflict with each other because AIA has become the sponsor for the tournaments in which Tottenham are competing in outside of the Premier League.  Those tournaments include the FA Cup, The Capital One League Cup, and the UEFA Europa League, leaving the fourth and arguably the largest competition, the Premier League, in the representational domain of HP.

In the past, teams have traditionally maintained one primary shirt sponsor, with Manchester United deviating slightly by having DHL sponsor their training gear. The positive financial potential for this move are relatively straight forward.  With Chelsea last season demonstrating the ability of a team to participate in six different competitions (Premier League, FIFA Club World Cup, Capital One Cup, FA Cup, UEFA Champions League and UEFA Europa League) it could be argued that having a different sponsor for each competition could possibly multiply the amount of revenue received.  Another potential for tiered sponsorships like this can be found in the examples of AC Milan and Real Madrid.

Both teams have recently signed sponsorship deals with Dubai based Emirates Airlines.  Prior to these agreements though, both clubs maintained Bwin as their shirt sponsor.  Bwin is a European online betting website and had been a partner of Real Madrid for close to six years. Recently though, an issue arose when the club competed in the UEFA Champions League around Europe as some EU nations had introduced laws prohibiting online games of chance resulting in a prohibition on the marketing of those organizations as well.  This legal conflict, specifically in Turkey, prevented Real Madrid’s and AC Milan’s use of the Bwin logo during matches in those nations and the clubs consequently went without a logo on display.

Real Madrid v Galatasaray Champions League - Photo Courtesy of theguardian.com

Real Madrid v Galatasaray Champions League – Photo Courtesy of theguardian.com

Though Emirates Airlines doesn’t create the same issues that Bwin did, Tottenham’s deal with AIA might have provided a unique solution.  Using the same concept, Real Madrid could have signed a deal for Champions League sponsorship with one company, while maintaining a second sponsor for La Liga and domestic competition.  With the Champions League sponsor selected based on eligibility in all potential destinations, the tiered sponsorship would represent a flexibility not found when using one primary sponsor.

Despite this positive potential, it is possible that an agreement such as this could in fact have a negative impact.  Chelsea played a record 69 games last season, each of which had Samsung prominently displayed across the front of Chelsea’s Adidas supplied kits.  They recently extended this partnership with Samsung until the end of the 2014/15 season with an undisclosed increase in the revenue from the deal.

The increase in value of the deal begs the question that if Chelsea had told Samsung that they wanted to have another company on their shirts for Champions League competition, but maintain Samsung for Premier League and domestic ties, would Samsung have offered the same amount of money?  Probably not. In fact, it would be far more likely that the Korean electronics manufacturer would have reduced their deal due to the reduced visibility that the company would receive. As the number of opportunities for the company to be seen in games decreases, in principle, so does the overall value of the agreement.  The potential for loss exists for the club in the risks it takes that the second sponsor offers enough money to compensate for the loss taken in the other agreement.

It should be noted that both Tottenham’s AIA and HP deals are for this 2013/14 season only, after which the club will be searching for a new deal again. The values placed on each deal were not released so only the club knows whether financially the two deals combined are worth the value of one singular sponsor.  [This is in fact the second occasion that Tottenham have used the dual sponsor model as from 2011 with Aurasma and Investec Bank, lending further argument to the efficacy of such a model.]

Whatever the case may be, the north London club is innovating in the shirt sponsorship model space, and should the innovation prove successful, there could be more interesting intricacies worked in to take advantage of the flexibility offered in such a model.  Clubs should be wary though that in the face of increased revenue, signing multiple sponsors could dilute the image of the club, and consequently the value of its brand in the long run.

 

[Update 8/27/13 11:27 AM PST It had been pointed out that Tottenham had a deal with two shirt sponsors in the previous two years as well with two different companies prior to HP and AIA]

Reporting on the business side of the world's game.