Manchester United leads the way in localized sponsorship deals
Club dominates this market with Asia-Pacific region its strongest
Other clubs such as Barcelona stepping up activity in this area
Man Utd hopes Louis van Gaal can restore its fortunes
Paint, wine and noodles – three things which won’t help Manchester United on the football pitch, but are helping swell the club’s bank balance.
While Louis van Gaal’s team lost its opening English Premier League game of the 2013-14 season to Swansea, some consolation for United is being provided by its innovative sponsorship deals and partnerships with companies around the globe.
The Old Trafford team’s strategy of capitalizing on its worldwide appeal by targeting localized sponsorships and partnerships has generated $42.6 million (€32m) across 38 separate deals.
It’s a strategy that began six years ago when United signed a deal with Diageo’s Smirnoff vodka brand as its “responsible drinking partner” in Asia-Pacific.
In Malaysia, TM is its official telecommunications partner, while in Saudi Arabia it’s STC – and the list is growing.
United is now generating over 350% more revenue through these type of deals than its nearest challenger Barcelona, according to a report published by sports market research company Repucom, though in comparison to television revenue the income from these deals is still relatively small.
Having started in the 2013-2014 season , the Premier League’s current three-year television deal is worth $9.4 billion – $5.7 billion for domestic rights, the rest for overseas.
By way of comparison 84 localized sponsorship deals accounted for over €54m ($72m) in income for 20 top European clubs In the 2013-14 season.
Even so, other top clubs are upping their game, with Barcelona appointing Tecate as its official beer in Mexico, while United’s archrival Liverpool has ComeOn! as official betting partner in Scandinavia.
United’s neighbor Manchester City, recently sanctioned by UEFA for breaching Financial Fair Play rules, is acutely aware of the need to raise additional sponsorship income and did six deals – including one with Saigon Hanoi Bank as its official debit card partner in Vietnam, Laos and Cambodia.
“Whilst broadcast rights remain the biggest income stream for clubs in Europe, commercial activities are the second largest contributor, accounting for 29% of all revenues made. Identifying new ways to increase the value of these deals is incredibly important,” Repucom’s football expert Andrew Walsh told CNN.
United’s efforts to capitalize on its global following gathered pace after the late Malcolm Glazer and his family took control of the club in 2005.
The Glazers, who already owned an NFL franchise, quickly realized the potential for established brands to become associated with the success of the EPL club under former manager Alex Ferguson .
Back then, most clubs’ principal sponsor had its name emblazoned across the teams’ strip, and it remains a key source of income.
General Motors will be paying United $80 million per season for seven years to have the Chevrolet logo displayed on the kit, but the marketing operation now extends across some unlikely areas.
Casillero Del Diablo is United’s official wine, there’s an official medical partner – Toshiba Medical Systems – and even an official noodle partner, Nissin Food Groups.
Underneath these overarching global deals come the local and regional partners, with the Asia-Pacific region the most fertile.
But other territories offer great potential for further exploitation, and the growing popularity of football in North America is a case in point.
“Markets such as the U.S. pose as a great opportunity for these clubs too in developing this trend, as leagues such as the Premier League become more influential in North America,” said Walsh.
Astute marketeers are also keeping in touch with the latest developments in social media, where individual fan loyalty can be tapped, again with a local offer.
“Increasingly, companies are focusing more on the individual consumer, not just a general population, tailoring products and services to better suit the end user,” added Walsh.
“The trend we are seeing with Europe’s top football clubs illustrates that perfectly through the way they segment their commercial assets for specific, localized markets and in turn, that market’s fan base.”
But for the strategy to be fully exploited, it’s necessary for the clubs to achieve success on the pitch, so for United the season ahead under van Gaal is crucial.
David Moyes’ reign was abruptly cut short by the Glazers as results failed to meet expectation, with United finishing seventh in the EPL and failing to win a trophy other than the preseason FA Community Shield.
Van Gaal is charged with restoring the club’s fortunes to ensure the cash keeps coming in from commercial activities but will also be hoping that his transfer budget reflects that continuing success story.
So as United looks to raise funds for player purchases, it won’t stop at noodles and wine.