Usually when records are broken, they come as a shock to those who learn about or witness it. Sometimes that shock comes in the form of awe of the achievement like the kind that will occur when Peyton Manning breaks the NFL career touchdown record set by Brett Favre this season. Other times, it’s shock in the form of disbelief like when Fernando Torres moved to Chelsea for a then overall British record fee of £50 million or that his replacement at Liverpool was to be Andy Carrol who at the time of the deal became the most expensive British player at £35 million.
At the rate the transfer windows are going pretty soon no fan will be surprised to read a headline that begins with “Transfer Record Broken…”, but one set of records looks to already be at that point.
It seems as though every year one of the top teams in the Premier League is changing the company or organization they choose to display on the front of their home and away shirts. Today even the the once pure FC Barcelona can no longer ignore the kind of money being offered to have logos printed across the chest of teams’ shirts, or even underneath it.
Chelsea is the latest to make a change to this avenue of commercial revenue as their current deal with Samsung looks set to run out at the end of this season without a renewal, with the expected new sponsor to be Turkish Airlines who would likely bring along a healthy increase in sponsorship payments with them. While the mantel for most expensive shirt sponsorship will more than likely stay with the current record holders Manchester United and their Chevrolet deal, the expected Chelsea deal brought an interest to see how shirt sponsorships have developed over the past ten years.
Chelsea’s deal with Samsung was actually one of the longest deals still running in the Premier League having originally started in the 2005/2006 season and was renewed twice since. So that’s where we started, exactly 10 years ago, when Chelsea first signed with Samsung’s mobile division setting a new Premier League record for a shirt sponsorship deal, receiving a reported £10 million a year, beating out Manchester United’s then £9 million a year deal with Vodafone.
Part of the appeal for shirt sponsorship in general, regardless of the league, is exposure. For this reason, we only looked at the clubs who, since the 05/06 season, have had the maximum exposure by also competing in Europe’s elite club competition, The UEFA Champions League, which narrowed the list down to six clubs.
Chelsea’s deal with Samsung Mobile marked an industry switch for Chelsea, having previously been sponsored by Fly Emirates. The switch of industry to Electronics/Telecom from Airline/Tourism isn’t a phenomenon, quite the opposite in fact. Of the 17 new deals signed over the ten year period, 10 were changes to new sponsors and of those 10 changes, only two deals saw the new company operate in the same industry as the previous sponsor; Manchester United switching from AIG to Aon, and Manchester City switching from Thomas Cook Travel to Etihad Airways.
In total, the 18 different companies found a place on the front of the highest performing teams in England over the past decade and they represented 6 different industries:
- Airline/Tourism: 4 (Thomas Cook, Thomson Holidays, Fly Emirates, Etihad Airways)
- Finance/Banking: 5 (AIG, Aon, Standard Chartered, Investec, AIA)
- Electronics/Telecom: 6 (O2, Samsung Mobile, Samsung*, Autonomy, HP)
- Alcohol: 1 (Carlsberg)
- Gambling: 1 (Mansion.com)
- Automotive: 1 (Chevrolet)
Two notes about the industries: Samsung and Samsung mobile are both counted because part of the second renewal with Chelsea involved Samsung’s mobile subsidiary making way for the whole umbrella Samsung, which technically indicates two separate entities. The opposite is the case with Autonomy and Aurasma. Aurasma is a platform designed by Autonomy and also did not involve any renegotiation of the sponsorship contract, and because the two not separate entities they therefore count as one.
From the 06/07 season through to the current 2014/15 season the average shirt sponsorship deal or renewal, whenever it was signed, grew 121% on average. Even if you remove Arsenal’s almost staggering 445% renegotiation increase with Emirates Airlines, the average rate of increase per deal still sits at 105%, with an average of 1.7 deals per season.
The only deal that ever resulted in negative growth from the previous sponsor was Tottenham’s deal with AIA. This was a unique situation in that the previous deal was split between HP and AIA, with HP paying £13 million to sponsor the shirts worn during Premier League games while AIA payed £6 million to sponsor all cup compeition matches like the Europa League, Capital One Cup and FA Cup competitions. Technically AIA did increase their sponsorship amount when taking over completely from HP but overall did not fully make up or increase upon the previous combined total of £19 million.
Interestingly enough, almost every single company who has sponsored one of these six teams has either previously sponsored a sporting event/team or gone on to sponsor another sporting event/team after. The only exceptions are Autonomy and Standard Chartered. Autonomy had sponsored the Mercedes-Benz GP Petronas Formula 1 Team the same year they signed with Tottenham but both contracts have since run out and it doesn’t appear they’ve ventured further into sports sponsorship.
The reach of the Premier League is astounding. Last season alone drew an audience of 4.7 Billion viewers, reaching 643 million homes. Popularity of the league worldwide has driven television rights deals to skyrocket, and consequently marketers are paying more and more to tap into the growing exposure. Exposure though isn’t the only goal. Fundamentally of course, it makes sense to sponsor in sports in order to generate popular brand awareness in the hopes of consequently increasing sales figures. But another result is to build brand equity as well as awareness which takes a more tailored approach to the marketing mix. Additionally, a firm may look to directly compete and gain market share from a competitor who is in the same arena (no pun intended) like Etihad Airways and Fly Emirates.
The irony that Chevrolet now sponsors Manchester United when General Motors has pulled the Chevrolet brand from European markets, leaving Opel and Vauxhall as the remaining GM representatives is not lost. Many noted it, but the fact that Chevrolet no longer does business in Europe outside of Corvette and Camaro isn’t as much of a ‘face palm’ as people make it out to be. GM has identified South and Southeast Asia as major target markets, identifying India, Indonesia and Thailand as key markets in order to become the worlds largest automotive manufacturer as well as regain the top spot in the US. Incidentally, both of those markets also represent the two fastest growing and largest consumers of the Barclay’s Premier League. The Chevrolet bowtie Logo isn’t there for UK fans in the stands, it’s for everyone else watching on television.
On that note however, Autonomy displayed something in their history that very few companies do well in sports sponsorship, and that is to get out when sponsorship is not getting it done. Samsung, according to Business Insider, have greatly advanced their goal to become the most “loved” brand overall in the UK, and not just with mobile phones. While the reach of the BPL is staggering, shirt sponsorship deals effectively charge for the whole reach, not just what the company may be looking to target. If there is a gap between the two then it no longer becomes effective to pay those sums. Additionally, also pointed out by Business Insider, if the goal is overall brand equity growth, sponsoring one team in a league with numerous divisions and rivalries may not be the most effective appeal strategy.
Shirt sponsorship can be about building brand awareness. Standard Chartered’s deal with Liverpool achieved the desired results and they renewed that top tier deal. However, the price barrier to entry into the Premier League’s top performers is steadily increasing, both out of inherent growth in value and competition as well as the necessity to continue financial growth in the face of Financial Fair Play. As companies spend more and more money to be seen around the world they will need to be more effective in their marketing strategy to achieve specific marketing goals. That strategy will simply not cut it. Efficient measurement and appropriate planning is required if the money is to be considered well spent and deliver a strong return.