When assessing the well-known corporate brands like DHL, Smirnoff, and Toshiba, one may ask what they have in common? From a corporate sponsorship angle, they are all official sponsors of Manchester United and hence are associated with one of the sports industry’s strongest corporate brands. In that regard, Manchester United has done extremely well in terms of monetizing on its brand via an extension of its sponsorship portfolio. According to Deloitte’s ‘Football Money League’, Manchester United generated commercial* revenues of €145.4 mio. for the 2011/2012 financial year, symbolizing a growth of 14 % compared with the previous year. Suddenly, commercial revenues has surpassed broadcasting and matchday revenues in adding to the club’s total revenues. This reflects Manchester United’s capability to maximize its collaboration with commercial partners as exemplified by the training kit deal with DHL, which added significantly to the club’s innovative value creation approach in its commercializations efforts.
Basically, the club has been magnificient at communicating and negotiating on the premises of its marketable assets and hence at capitalizing on them. Being no. 1 in the Premier League, competing in the UEFA Champions League, and connecting with the marketability of stars like Robin van Persie and Wayne Rooney is ‘real time’ value for commercial partners, which also associate themselves with the proud traditions tied to Manchester United’s badge.
United has a wide variety of different sponsors, see here, and recently revealed the inclusion of Indonesian tyre producer ‘Multistrada’, Chinese soft drink brand ‘Wahaha’, and Japanese paint manufacturer ‘Kansai’. United has applied a strategy where the club strives to negotiate long-term sponsorship deals, which sends a positive financial signal. On top of these commercial deals, Deloitte’s ‘Football Money League’ report mentioned that “United’s ground breaking seven year shirt sponsorship deal with General Motors, worth $70m (€54m) in the first full season (2014/15) of the deal with small increases thereafter” will raise expectations for continued commercial revenue growth for the financial year to come.
This information is ‘good news’ in relation to the club’s listing on the NEW York Stock Exchange as the price ‘peaked’ in January 2013, see here. Displaying positive story telling about commercial deals and increased market valuations are important tools to enhance the club’s commercial development even further. Of course, Manchester United may share values (or sponsors may identify with the values of the club) but when all comes to all, extra income for both parties (the club and the sponsor) is what matters the most. Looking at the new deals signed by United, it will be exciting to see how the club’s new office in Asia can boost sponsorship sales in that growth market. As a result of this development, Forbes Magazine just valued Manchester United at more than $3 billion as the first professional sports team in the world to be valued beyond the $3 billion mark, click here for more information.
Now, what is the value for sponsors in terms of income? Nike sells a lot of football jerseys and will see the association with United rub off on their overall activities in football. Bwin has Bwin-branded betting outlets at Old Trafford. Singha has the opportunities to sell lots of beer at Old Trafford during each game. And finally (and not to forget), official sponsors have access to players for branding campaigns. The re-negotiation of Nike’s kit deal may also increase United’s commercial revenues in the years to come. So I expect that we will continue to see United growing the club’s commercial revenues in the years to come; there is room for that when looking at the markets in Asia, North America, Africa and Australia. That is also ‘good news’ for a top club as a result of UEFA’s financial fair play regulations. Complying with these regulations, clubs must manage to find the balance between costs and revenues and in doing so ‘commercial revenue growth’ is an obvious target for global football brands.
* Commercial revenue consists of sponsorship and merchandising revenues. In Deloitte’s ‘Football Money League’, Deloitte states that “for a more detailed analysis of the comparability of revenue generation between clubs, it would be necessary to obtain information not otherwise publicly available. Some differences between clubs, or over time, may arise due to different commercial arrangements and how the transactions are recorded in the financial statements, due to different financial reporting perimeters in respect of a club, and/or due to different ways in which accounting practice is applied such that the same type of transaction might be recorded in different ways.”