Manchester United deal takes shirt sponsorship to new heights
LONDON (Reuters) - Manchester United's record deal to put the Chevrolet brand on its famous red shirts underlines the marketing power of the English Premier League which already commands the most lucrative TV contracts in world football.
Carrying a sponsor name is a highly effective if unsubtle form of marketing that has been a feature of European football since the 1970s. However, United's deal with General Motors (GM.N) is certain to drive up the sums other top European clubs demand for turning their players into moving billboards.
It will also influence a debate in the United States where NBA (National Basketball Association) teams are already looking at whether to allow logos on their players' vests in what would be a first for the biggest sports on the other side of the Atlantic.
United, owned by the American Glazer family and planning to list on the New York Stock Exchange this month, have been English champions a record 19 times and claim to have 659 million followers globally - more than any other club.
"Manchester United, as the world's biggest brand in the world's most popular sport, is going to be an attractive proposition," said Austin Houlihan of business services group Deloitte.
Having your name displayed on a team shirt gives sponsors 90 minutes of guaranteed exposure in matches that attract huge global audiences at time when large parts of the media have fragmented into niche markets.
"There is a much more valuable proposition being inside the programme on team shirts than advertising around it when viewers can tune out," said Danny Townsend, President for EMEA and South Asia at Repucom, the sports brand analysis company.
United and GM have not confirmed the value of a deal which will see Chevrolet replace U.S. insurance broker Aon (AON.N) as the brand on United shirts from 2014 under a seven-year agreement.
However, sources have told Reuters the deal will cost GM $60-70 million each year, plus a $100 million activation fee, taking its total value to nearly $600 million.
Spain's Barcelona currently enjoy the most lucrative shirt sponsorship in the world game, receiving 30 million euros ($36.5 million) each year from the Qatar Foundation, promoting the Gulf nation that will host the 2022 World Cup.
The increase in commercial income is particularly welcome when leading clubs are under pressure to ensure they avoid financial losses under new licensing rules introduced by European soccer's ruling body.
English soccer's Premier League is screened in more than 200 countries. TV rights for foreign markets are worth almost 1.4 billion pounds under a set of three-year deals to be renegotiated in coming months.
That figure looks certain to climb and already outstrips what other European leagues earn overseas, creating a virtuous circle for English clubs.
"The brilliance of the Premier League's global TV distribution deals are they give the clubs more money in direct revenue and more leverage from a sponsorship point of view," said Townsend.
Total revenue for Premier League shirt sponsorship last season was around 130.5 million euros ($158.68 million) from 20 clubs, according to data from Sport+Markt. The next highest was Germany's top-flight Bundesliga on 119.1 million euros.
A number of English Premier League owners also run U.S. sports franchises. The Glazers have the Tampa Bay Buccaneers in the NFL (National Football League), while the Fenway Group own Liverpool FC and baseball's Boston Red Sox.
Commentators said they believe mainstream American sport would ultimately follow the European model and tap into shirt sponsorship. Major League Soccer, the new kid on the block, already has done.
"It's only a matter of time before this happens in U.S. sport," said Simon Chadwick, professor of sports business at Coventry University in central England.
One hurdle was the way the finances of U.S. sport are often centrally controlled to maintain an even competition.
"The issue is how will they will manage this. How will revenues be distributed? But I don't see how they can resist this," Chadwick said.
(Additional reporting by Ben Klayman in Detroit; Editing by Jane Merriman, For all the latest Olympic news go to here)
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