How profitable are sponsorship deals with Football clubs for independent firms?
Introduction
If you had ever by any chance even stumbled across a game of Football on your television screen, you would have noticed that most teams have a name of a certain company stuck on the front of their shirts. The majority of those companies have very little to absolutely no connection to the game at all. The question at hand is - are sponsorship deals with Football clubs that lucrative? In this article, we are going to be looking at the most “generous” deals between the most elite clubs in World Football and their front-of-shirt sponsors, and evaluate just how much of a beneficial partnership it is for those sponsoring companies.
Which firms and industries sponsor Football clubs?
To answer this question very vaguely, just about anyone. Airlines, betting companies, mobile phone service providers, commercial banks, music and film streaming services, and many more, all of which are involved in the commercial side of the Footballing industry. The purpose of those companies forking out large sums of money every single year to the Football club they’ve struck a sponsorship deal with, is counting on the possibility of the popularity of such an extremely and globally popular game generating interest and greater engagement among the viewers who had come across the company name while watching a game of Football. For those who had been unaware of the concept of Football sponsorship deals, and the benefits that are in it for both parties, more questions may arise. Questions such as: Are the barriers to entry high for firms who wished to be sponsored by well-known Football teams? The answer to this question would be a resounding yes, extremely big. However, are the costs of those companies seeking to strike with a big-time club in World Football worth the potential benefits. The answer would also be a strong yes. Most of the time, at least.
How much do those companies invest into Football clubs?
Source: Footy Headlines
The chart above shows the clubs with the highest annual revenue stream from their respective sponsors (shown to the right of the total figure). Three of the companies in this list are in the Aviation industry. This does not come across as much of a surprise, either. There is a separate group of tourists known as “sports tourists”. The type of tourists who travel across the world for the sole purpose of attending a sporting event is Football. Bearing this piece of information in mind, many companies in the aviation industry use sponsorship with Football clubs as a targeted marketing strategy as a means of using their worldwide reach, increasing the popularity of the brand, and their yearly profits. The effect of this is apparent. Let’s take a look at Fly Emirates, who have been sponsoring Arsenal Football Club for almost two decades now. According to an article published by Sports.ru regarding a similar topic, there were only 6 flights conducted by Emirates Airlines a day on average to the UK at the beginning of 2000s (before the emergence of Fly Emirates in Football). In the present day, Emirates are providing eight flights every day to London (the city Arsenal is based in) alone, a large reason for this being the increase in the amount of traveling sports tourists wishing to see a game of Football in the region. This is an example of Fly Emirates, a company in the aviation industry, successfully increasing the demand for their services by marketing their brand to a particular audience (sports tourists), through their close business ties to elite football clubs. Let’s take a look at the revenue streams of Fly Emirates at the beginning of the century, and now. Before Arsenal, Fly Emirates had struck a four-year, 24 million Pound sponsorship deal with Chelsea Football Club in 2001. Much like Arsenal, Chelsea is also based in London. Before the agreement of the sponsorship deal in the summer of 2001, the operating profit of Emirates as of March 31, 2000 was 301 million AED. 20 years later, long after Fly Emirates had established itself as a firm which has had a lot of success with integrating itself into the world of Football, the company’s operating profit had amounted to 6.5 billion AED. That is a 2059.47 % increase in the operating profit over a 20 year period for Fly Emirates, which can be partially attributed to the airline’s successful marketing of their brand through a particular audience.
Outlawed industries in Football
The industry most affected by laws preventing companies from being advertised in the public domain in certain areas of the world are betting companies. Real Madrid was sponsored by a betting company Bwin from 2007 through 2013. On numerous occasions during this six-year period “Los Blancos” were forced to wear sponsoless shirts not featuring the Bwin brand name on them due to laws which prohibit betting firms from being advertised. Two of the most notable examples are the club’s Champions League clashes against Zurich, Ajax and Galatasaray due to anti-gambling laws in Switzerland, Netherlands and Turkey respectively. For every game which the sponsors were not allowed to be showcased by the club, their potential global-reach was restricted which limited both monetary and commercial growth for the firm. Furthermore, England, the host country of arguably the best, most popular Football League in the world, the English Premier League, recently passed on a law which prohibits all professional clubs across the country from placing betting companies on the front of their shirts for sponsorship purposes starting from the 2026/2027 season. This leaves the betting firms who are currently sponsored by Premier League clubs (six of them currently) with three years to salvage as much amount of growth as possible in the remaining time that they have left to use Football sponsorship marketing tactic.
Is Football a valuable marketing tool for all industries?
Despite the benefits which companies in the aviation industry reap as a result of their partnerships with the world's Football elite, It is important to note that Football is in fact not the best marketing instrument for every industry in the entrepreneurial field. A sponsorship deal with a top Football club does not guarantee commercial success for the sponsors, and if that is the case for a particular sponsor, then their company is likely to encounter larger costs than profits, especially given the large sums companies from a variety of different industries pay to top Football clubs for wearing their brand name on the front of their shirts. For example, an American insurance organization AIG who were sponsoring Manchester United from 2006 through 2010, needed a $150 million bailout from the US government in 2009 in order to avoid bankruptcy, symbolizing that not every partnership with a Football club, even as big as Manchester United, guarantees to be a commercial success for the sponsoring company. This is not exactly the case of a marketing strategy not working out, as the need for the cash injection mostly occurred as a result of a credit crunch of 2008, but that is probably why companies who are largely reliant on fluctuating markets should not be pursuing partnerships with Football clubs which as we have discovered, cost a lot of money. That being said, all in all sponsorships between independent firms and Football clubs (albeit expensive) prove to be extremely lucrative for those firms largely due to the popularity of the game, which exponentially increases the worldwide reach of the companies with enough funds to be able to afford a sponsorship deal with the world’s elite.
Written by Arsen Ashlayev | Proofread by Yasmin Uzykanova
