Rise in Foreign Exposure Drives Increase in Sponsorship Revenue for European Clubs

The globalization of soccer has been a heavily discussed topic in the industry over the last several years, and the impact of the rise in exposure and popularity of the sport as well as some of the bigger clubs has shown through in many ways. One of the most talked about parts of the industry where the impact of globalization in soccer has been quite visible is jersey sponsorship, especially in the European leagues.

Repucom, an industry expert in market research and sponsorship, recently released it’s annual “European Football Jersey Report” for this year, and has found that a rise in investment from foreign firms in the sponsorship of European clubs’ jersey’s has led to a 20% increase in jersey sponsorship revenue for clubs versus the previous season, coming in at €687mn ($780.9mn). Manchester United’s record deal with American automobile manufacturer Chevrolet worth an estimated $70mn certainly played a big part in the rise in revenues of European clubs for this revenue stream, however there was an increase in level of investment across the board, particularly from foreign companies looking to get their piece of the very attractive European soccer pie.

The below figure illustrates the top 6 countries in terms of jersey sponsorship investment this year:

Euro Shirt Sponsorship by Country 2015

Data from Repucom 2014/15 European Jersey Sponsorship Report. Analysis by Business of Soccer.

If you need evidence of the spread of soccer across the globe and the rise of the influence of foreign investment in the industry, look no further than the Middle East.

Read: Follow The Money: Middle Eastern Influence in Global Soccer (Part 1 & Part 2)

The UAE represents the single largest source of jersey sponsorship investment in European soccer, as a country, and at €160mn it represents about 23% of the total jersey sponsorship dollars in those leagues. When you add Qatar into the mix with its €39mn contribution to the overall total, the two countries combine to account for 29% of all jersey sponsorship dollars invested in European soccer. Germany used to hold the spot atop the rest as the largest source of jersey sponsorship investment, and maintained that position for over ten years, according to Repucom. When you consider that the UAE was contributing next to nothing in the European soccer jersey sponsorship market in 2005/6 and now is the single largest contributor, it’s a rather impressive feat considering their current dominance of the market and having taken control of it in such a short period of time.

There are other factors playing into the increase in investment and resultant revenue in jersey sponsorship in top soccer leagues across the world other than just increased interest of companies in the industry, however.

Read: Digital and Social Media + Globalization Equals #Growth for Soccer Clubs

The digital and social media boom combined with the exponential growth in mobile and second-screen viewing technologies have led to a massive new bargaining chip for leagues and soccer clubs alike in negotiating both with TV rights deals, as well as sponsorship partners. Over the last several years, these technological advancements enable clubs to increase their global exposure and fan engagement to whole new levels that the industry has never come close to seeing before. As clubs’ exposure increases so too does the value of having your brand plastered across the chest of its players.

In conjunction with this trend, the addition of UEFA’s Financial Fair Play regulations has put a lot of pressure on clubs to curb their net losses within the allowable limits (-€45mn), and as the price tag of top talent continues to escalate, along with other club expenses such as new stadium development, etc. clubs need to come up with extra revenue to offset their historically large spending appetites. The globalization of the game and top clubs has helped aid this cause in giving clubs a very valid reason to increase the value of their partnership deals for jersey sponsorship. Also with globalization comes more competition for the same space, which also has contributed to the higher price point of these deals, as competitive bidding will tend to do.

We have seen record deal upon record deal announced across the board within the soccer industry across all types of revenue in the last couple of years, and especially in the broadcasting and commercial sectors. The growth seen in the European soccer jersey sponsorship market is but one effect from the globalization of the beautiful game, and as the industry continues to evolve, that growth will only increase.

 

*currency conversions via Google Finance on 2/25/2015 

What do you think about the growth in investment in jersey sponsorship in European soccer? Let us know in the comments section below, or via Facebook or Twitter.

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