Repucom’s latest European Football Club Income Stream Report shows Manchester United are leading the way in capitalising on new localised sponsorship deals, generating over 350% more income via this new strategy than the next biggest earner, FC Barcelona.
The report examines a selection of 20 of the biggest revenue generating clubs in Europe, whose combined cumulated income totals approximately €5bn*. Alongside the traditional match day, broadcasting, licensing and retail revenues these clubs continue to produce, there is a growing trend towards capitalising on localised sponsorship strategies.
The jump in income generated through this approach, where a club sells its commercial rights locally within a specific market instead of globally and exclusively, is now producing significant returns. It is a strategy Manchester United were one of the first to adopt (that being the 2008 deal with Diageo’s Smirnoff vodka brand as their ‘responsible drinking partner in Asia-Pacific’), and are executing better than any other team.
During the 2013/14 season, 84 localised sponsorship deals accounted for over €54m in income for European clubs. Over 59% of that revenue was generated by Manchester United alone, totaling approximately €32m through 38 deals.
Other clubs in Europe to take advantage of this approach last season were Chelsea FC (13 deals), FC Barcelona (11 deals), Arsenal FC (eight deals), and Manchester City FC (six deals).
It is however a strategy growing in popularity.
Andrew Walsh, Repucom’s football expert, said:
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.
In the 2012/13 season, Man Utd signed 13 regional sponsorship deals, adding over ten more the following season. Ahead of the 2014/15 season, new and lucrative deals were also signed by FC Barcelona’s with Tecate, as their official beer in Mexico, Liverpool FC with ComeOn!, their official betting partner in Scandinavia and Manchester City FC with Saigon Hanoi Commercial Joint Stock Bank as the club’s official debit card partner in Vietnam, Laos and Cambodia. According to Andrew Walsh, these agreements show that this new strategy is continuing at pace:
The approach to segment and localise commercial assets is something we are seeing more and more of in football as clubs look to both generate additional income and make increasingly engaging partnerships, tailored to that specific market.
It’s an important strategy for clubs of all sports to take note of, especially as their global profiles rise. Understanding local market forces is vital in realising the most valuable partnerships available to them in order to utilise a commercial strategy which is only just beginning to be tapped in to.