SPORTS MARKETING

Football S
ISBN: 978-1-905685-00-4
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Football Sponsorship & Commerce

Executive Summary

This report will inform readers about all aspects of football sponsorship and commerce, from a look back at the evolution of the World Cup and its attraction to sponsors, to the future of ticketing and broadcast rights. It has been compiled to provide an understanding, not just of why big brand names – in the UK and internationally – choose to associate themselves with the sport, but also of how clubs at all levels market themselves.

MARKET WITH STAYING POWER

The worldwide sponsorship market continues to grow. Industry experts at IEG predict that in 2004 it will hit $28bn, up from $25.9bn in 2003. Indeed, IEG foresees an 8.7% rise in sponsorship spending, compared with a projected 5% rise in spend on sales promotion and 6.9% on advertising. In North America, sport is estimated to make up 69% of the sponsorship spend – some $7.69bn. So where does this leave football?

To give some indication of its continued appeal to sponsors, it is worth pointing out that this report is being published just as London club Arsenal signs what is understood to be the second highest football sponsorship deal in the country, with Arab airline Emirates. FIFA, meanwhile, is having to institute measures to stop ticket touts from selling tickets for the 2006 World Cup illegally on the internet, before they have even been printed. Such is the attraction of the sport, both to consumers and brand owners. FIFA also quotes market research, conducted before and during the 2002 World Cup, which cites the competition as the “world’s greatest event” that “helps to bring different people together”. A sizeable majority also said that football had huge social significance for them.

In Europe, the 2008 European Championship may be four years away, but bidders are already starting to line up for the TV rights. Euro 2004, broadcasters know, dominated European prime time in the summer, with 50% to 90% market shares across major TV markets for live match coverage. The difference now is the growing interest from the Far East. In Japan, for example, live audiences for the 2004 tournament reached more than seven million for the early kick-offs, despite it being aired at 1.00am there.

The sport’s appeal at grass roots level holds good too, with brand names such as Carlsberg working out ways to help the multitude of amateur clubs around the country – many of whom derive most of their income from their bars – with their business strategy and implementation.

SPONSOR WARS

The battle for the hearts and minds of consumers is increasingly being waged in stadia and over the airwaves. For many sponsors, the limiting factor is that the facilities inside grounds often fail to attract the very consumers that they have their eye on. The UK has a head start here. Following the publication of the Taylor Report in the late 1980s, the majority of stadia have been revamped, boosting their attraction to families, to older – and wealthier – men and, of course, to women.

By contrast, Italy, which rebuilt many stadia for the 1990 World Cup, is having to rethink its desire for monoliths and consider reducing their crowd capacities to make room for improved corporate hospitality, catering facilities and banqueting. Bigger is not always best; nor does it make economic sense. Indeed, in this fast- changing world, hospitality facilities that can be converted into hotel rooms may – as happens in the UK – represent the best option yet.

All eyes are now on Germany, which has started its refurbishment early and is even ahead of schedule as the 2006 World Cup approaches. The big sponsor names have already begun the marketing process, with the only two newcomers to the FIFA Corporate Partner roster – Deutsche Telekom and Korean Telecom/NTT – illustrating how important this industry views football as a mass market vehicle that also offers tailored business-to-business opportunities.

The report indicates a number of sponsorship success stories, not just on a macro level, but also demonstrating the ability of soccer to target smaller audiences such as decision-makers in the lucrative commercial sector . It also asks whether the time is right for a change in business culture in continental Europe, where football corporate hospitality is not yet as well established as in the UK. 

RISING COSTS

Most teams aspire to compete in international competitions, but do not budget for failure. One club, Everton, devoted time to creating its own fantasy progression through the Champions League. It highlighted the successful strategies and finance necessary for international – and sustainable – success.

The name of the game is to capitalise on all possible areas within the ground, whether through building bigger and better facilities or developing existing sites as economically as possible. It is not good enough to buy players at inflated prices and gamble on success. More than one club has been crippled by the ensuing wage bills.

Clubs are contemplating a variety of ways to raise money and cut costs. These include outsourcing many of their activities, securing loans based on existing property, selling excess property (or players) and securitisation of future gate receipts (borrowing against future ticket income). Above all, though, these initiatives rely on the ability of clubs to produce a workable business plan.  

Case studies such as that of Plymouth Argyle highlight the impact such plans can have on the balance sheet: the club’s annual reports show that commercial progress is matching the on-field success. For 2003, club shop receipts rose to £962,667 and overall turnover nearly doubled in two years, from just below £2m to just below £4m. All this occurred while Football League clubs were suffering financially from the demise of ITV Digital.

MARKETING TO FANS

Football fans represent a unique audience. They are more marketing savvy than those in other sports, more vociferous when their team is doing badly or they feel their views are being ignored, yet more appreciative of hard-working sponsors.

For all the merchandise that a club sells, a trip to most games will reveal an audience wearing kit that can date back ten years or more. The evidence is the erstwhile sponsor’s logo on the front. Fans buy in to the team – not the sponsor – unless the sponsor makes an above-average attempt to communicate.

The report looks at marketing tools that sponsors might have ignored in the past – such as fanzines – at a time when football magazines are feeling the pinch. It questions the lack of qualitative research into fans’ attitudes, despite the obvious exceptions carried out by certain clubs and federations. In an era when it is important to get closer to consumers, to pre-empt their needs so as to be able to commission the products and services they want, football is in danger of falling short.

THE FUTURE

The outward aspect of football has changed dramatically in recent years. Kick-off times have been altered – in the UK at least – and upset a number of fans. The benefits to the clubs, however , have been overwhelming. The English Premier League, for example, is quoted as getting between €368m (£250m) and €412m (£280m) for its overseas TV rights. It will be in around 200 markets worldwide. By contrast, its nearest competitor , Spain’s La Liga, gets nearer €25m per annum, Italy’s Serie A around €20m and the Bundesliga a mere €6-8m per annum.

Why? Because the Premier League was the first to realise the value of internationalising its rights. It has also gone out of<

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