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The Business of World Cup Branding and Sponsorship

After the 32 participating nations announced their World Cup squads and most domestic football leagues around the world wrapped up their seasons, the attention has turned firmly to the action that has now begun in stadia across Brazil this summer.

Cue the spectacular advertising campaigns put on by brands and companies the world over, in a bid to cash in on the World Cup. Traditional sportswear powerhouses like Nike and Adidas have gone head to head in the production of high-budget commercials and promotional projects featuring footballing superstars, while companies that by nature don’t have anything to do with football—take Pepsi and Samsung, for example—have built a roster of star players to feature in their campaigns.

From official “FIFA Partners” to “National Supporters,” from “FIFA World Cup Sponsors” to unrelated companies targeting the football-fan demographic, the World Cup this summer features a multitude of brands competing for their ideal target market—FIFA has even designed and implemented a three-tier sponsorship structure to amplify and increase the profitability of the marketing frenzy in their flagship tournament.

Even the footballing action is and will be dominated by sponsors: the flashing billboards adorning each stadium, the official live broadcast coverage partners, the athletic gear worn by the players—given the frenetic advertising environment, perhaps international football should receive some credit for not yet caving into the lucrative practice of featuring official sponsors of national team kits.

The nature of the World Cup, and the reverence with which its fans and participants treat its ultimate prize, mean that football will be the main star in Brazil this summer. But that hasn’t stopped—and won’t stop—the considerable momentum that the branding and sponsorship activities have built over the years in their evolution into a prominent sideshow to the tournament.

How It All Began

It wasn’t always this way. There was a time when the World Cup—even professional football altogether—was just about the sport. But the phenomenon of television changed things forever.

The impact of television on the World Cup’s worldwide commercial boom cannot be understated: According to TIME, the number of TV sets worldwide “increased more than twentyfold” from 1954 to 1986, “from a little more than 30 million to more than 650 million,” laying the foundations for a truly groundbreaking moment in football history.

While the first live World Cup games, broadcast in Europe for the 1954 tournament held in Switzerland, reached only a handful of audiences due to the low number of matches shown, the potential of television and TV advertising was already apparent. In 1974, new FIFA president Joao Havelange turned his organization into a modern international NGO upon taking office, as he put in place the infrastructure, people and income-drive of a corporation to conquer the world of football and reap the ensuing economic benefits.

After the rapid expansion of the World Cup tournaments under Havelange’s watch—he added eight participant slots to the tournament, while also introducing other versions of the World Cup, including the U-17 and U-20 iterations, as well as the Confederations Cup—came the idea of corporate sponsorship to help bear the costs of hosting a global tournament in one country.

Thus came money-spinning deals with Adidas and other big-name corporations like Coca-Cola to finance the tournament, while television advertising, which had grown to become a huge cash cow with the boom of TV, led to increased premiums for marketers to get their spots and campaigns onto World Cup TV screens.

The Golden Era of World Cup Sponsorship

The sponsorship boom that began under Havelange has been taken to unprecedented new levels during the tenure of current FIFA president Sepp Blatter. According to a UPenn study, the stellar lineup of corporate FIFA sponsors (otherwise known as their “partners”) for the 2010 World Cup in South Africa included Adidas, Coca-Cola, Emirates Airlines, Hyundai-Kia Motors, Sony and Visa—who were “guaranteed exposure in the tournament stadium” and would receive “direct advertising and promotional opportunities and preferential access to TV advertising.”

The cost involved in partner-level sponsorship of the 2010 tournament was a commitment of a minimum of between 100 and 200 million euros through 2014, while “FIFA World Cup Sponsors” would collectively invest around 50 million euros through 2014.

As a result, FIFA’s revenues from the South Africa tournament reached a staggering $1.022 billion, and FIFA was to provide $420 million to all participating national teams and the football league teams providing players to those national teams. $30 million would go to the World Cup-winning team (Spain), while first-round teams automatically qualified for $8 million each. $1 million in preparation costs were provided to each participating football association.

So, yes, it’s a sporting achievement and an indication of a country’s footballing proficiency to qualify for a World Cup—but it’s also a great way for national football associations to make money. Football—and the World Cup—can no longer be considered as its own entity, separate from the clutches of money. After a period of explosive growth and the influence of a few key players, the World Cup and money have become intimately intertwined.

FIFA has ridden on this wave to further corporatise and globalise itself. Since introducing the World Cup in the United States in 1994, a move that proved to be a stunning success (USA 1994 still holds the total attendance record and average all-time attendance record), the World Cup has since traveled to Asia (2002), Africa (2010), and will go to Russia in 2018 and the Middle East in 2022. According to the Telegraph, Blatter has even entertained the idea of hosting the 2022 tournament across several countries in the Gulf region, which would multiply the brand and advertising exposure for FIFA’s partners across geographies.

To Sponsor or Not to Sponsor?

It’s not only the football that wins, however—after all, there has to be an inherent attraction to becoming a World Cup sponsor in the first place. Otherwise, brands wouldn’t be tripping over themselves to secure eye-watering contracts with national teams, players and the tournament itself.

So grand is the World Cup stage, that even smaller brands and smaller teams involve big sums of sponsorship money. Spain’s Joma sponsored Honduras in 2010 for $2 million a year, while China’s Hongxing Erke Group paid $7 million a year for the North Korean team.

But the battle is always at its most intense at the top of the footballing hierarchy, simply because a brand’s association with a team’s success will do wonders for its own brand performance, not least in terms of direct revenues. The UPenn study cites forecasts that the Adidas’ sales in the domestic Spanish market would grow by 8% if Spain won the World Cup in 2010 (they did), which would mean an overall 50% increase in Adidas’ sales from previous forecasts for 2010.

A continued association with success is also the driving force behind Nike’s contract with high-profile teams like Brazil, Portgual and the Netherlands, which guarantees a high level of visibility for the million-strong World Cup audiences around the globe. As the apparel hits stores worldwide ahead of, during and after the tournament, money will flow into the coffers of these high-profile brands, and even more so if their sponsored national teams perform well.

This explains the recent trend of new national team kit designs almost once a year: Brazil, England, Germany, Spain, Argentina and France are all examples of world-famous teams who have launched high-profile events and flashy marketing campaigns in conjunction with big-name sportswear companies and top international stars. And there are still those companies outside the sports arena that have allocated major funds and expensive campaigns to up their branding and advertising ante with the World Cup on the horizon.

Without doubt, the growth in sponsorship opportunities have provided many an ambitious brand to take advantage of World Cup to reach out to bigger audiences and rake in the ensuing benefits. But this path must be treaded properly.

The danger is that new kit launch events and over-the-top advertising campaigns have become hype machines that serve no purpose, and the risk is that the ever-expensive replica kits—one of the many inevitable products of the evolution of branding and sponsorship into World Cup sideshows—have become out of reach financially for that most important demographic when it comes to the most famous football tournament on earth.

For what is the World Cup without the common football fan?

 

This article first appeared on Outlook India, as “The Branding Business: How branding and sponsorship have evolved into a prominent sideshow to the World Cup.”

The Business of Football Kits: Sponsorships, Technology, Branding and Beyond

As we enter the final few months leading up to this summer’s World Cup in Brazil, the national teams taking part in the tournament have been unveiling their new kits to ride on the wave of growing interest in international football.

Brazil, England, Germany, Spain, Argentina and France have all released new kit designs for the summer, with various big-name sportswear companies and top international stars at the helm of high-profile launch events and flashy marketing campaigns. (The Mirror has a collection of some newly released kits here.)

As with most commercial activity in football, however, not all the recent kit launches have been met with universal acclaim: Ben Curtis’ article on the Mirror is a cynical rant at the hype machines that these events have become, while Lizzie Parry’s on the Daily Mail highlights just how expensive replica kits, launched over increasingly short time periods, have become.

In February, we explored the importance of stadiums in the overall commercial strategies of football clubs. As top-level football increasingly becomes big business and a huge revenue generator, let’s take a look at another money-spinning side to the sport: football kits.

 

Vincent Yu

 

Sponsorships

One of the first things that comes to mind when football kits are mentioned these days is the staggering amount of money they can generate for football clubs, both from the merchandising side and from the corporate sponsorship side.

While club merchandise is generally dependent on the popularity and on-pitch success of the clubs themselves—and the annual Deloitte Money League results generally attest to that—the larger context is the money that sportswear companies actually pay to be the official kit providers of football clubs.

In recent years, just in the Premier League, we’ve seen many instances of eye-watering commercial deals involving kit suppliers. Liverpool’s 2012 deal with Warrior Sports, the latter’s first foray into football, would, according to Andy Hunter of the Guardian, net the club at least £25 million a year.

Just this January, Arsenal announced they would be changing their kit maker from Nike to Puma, in a five-year deal reportedly worth more than £30 million a year, per the BBC. And, as ever when it comes to business deals, Manchester United shocked the world this March with their world-record 10-year deal with Nike, which, according to Simon Mullock of the Mirror, will see the Old Trafford club earn more than £60 million a year.

Besides contracts with sportswear makers, the other big player in the football kit boom is the corporate sponsorship deals that have taken center stage in recent years. This 2013 J.J. Colao article in Forbes listed Manchester United, Barcelona, FC Bayern Munich, Liverpool and Real Madrid as the biggest shirt sponsorship deals in the world.

Another interesting marketing tactic has been employed by Tottenham Hotspur this season, as they featured different sponsors on their shirts in different competitions, with Hewlett Packard their Premier League front and AIA their cup shirt partner. According to Kevin Palmer of ESPNFC, however, even Tottenham will revert to the traditional “principal partner” model at other big clubs, having agreed a lucrative £20 million-a-year deal with AIA for the next five years.

 

Richard Heathcote/Getty Images

 

Technology

But with all the money that goes into the kits, and their burgeoning price tags, do those who get to wear them actually benefit?

Specifically, do the footballers themselves get anything out of the constant kit changes, or are they just excuses to step in front of a camera for yet another photo shoot?

Just ask the Italian national team stars. According to the BBC, the high-tech football shirts they will be wearing at the World Cup this summer will be able to deliver massages during the game. The shirts contain a special tape that provides “micro-massages” for their wearers and “maximise muscle power” by allowing the body to recover from exertion more quickly.

Away from the luxury options provided to footballers these days, far more important is the shirts’ ability to keep their wearers warm in extreme cold temperatures. This article from PRNewswire.com lists a few examples of temperature-regulating technologies that are present in football shirts on the market.

Different sportswear manufacturers—the same who enter into the lucrative long-term contracts with football clubs and will rely on such technology to win such bids—integrate different functions into their shirts, but the underlying principles are the same: adding layers onto shirts that keep players comfortable, dry, warm or cool depending on the surrounding weather conditions.

With the digital space increasingly at the center of the football fan experience, besides featuring on shirts themselves, technology has also crept into the marketing side of football shirts and kit launches, so much so that organizing such events can be considered an industry in itself.

See, for example, this analysis on Liverpool’s new kit launch in 2012 on Dan McLaren’s TheUKSportsNetwork.com. Liverpool’s multichannel marketing and promotion strategy, across different social media platforms, was all about putting out a united front for the kit launch, which also had to match the club’s corporate branding.

But, as they’ve tended to do so in social media in general, Manchester City will take home the technology and marketing hybrid approach for football kits as well.

They’ve since switched to Nike as their main shirt sponsor, but City’s launch of their Umbro kits for the 2012/13 season, as covered here by SoccerBible.com, took fan engagement to a new level when they invited fans to decide how the new kit would be officially launched.

 

Ray Stubblebine

 

Branding

Using a new innovative campaign to bridge the marketing and technology worlds with branding in football was yet another Manchester City-affiliated project, New York City FC.

Since their official announcement in 2013, New York City FC have caught the attention with their cutting-edge digital-marketing campaigns despite the MLS outfit not yet officially competing in the U.S.’s highest-tier domestic football league.

NYCFC put their fans truly at the center of their business and branding strategy by inviting them to submit ideas for an official club crest, which was met with widespread acclaim and culminated in a win-win scenario where the club also got their hands on an excellent winner, shown here on the MLS official website.

An example of how the football kit itself has become more than just one of the components of a football club’s identity; it’s evolved into an integral part of the football club’s business strategy on the whole.

So eager have clubs and affiliated sponsors wanted to tap into their fanbase for merchandising dollars that they have begun creating hype cycles out of kit launches to boost profits and increase circulation among their followers—at the risk of straying into grey areas and stirring controversies.

In tandem with the ongoing, controversial narrative that football is becoming more and more middle- and upper-class and moving away from the traditional working-class fanbase that gave the sport its following and popularity, clubs and corporations have rushed into a branding frenzy and become eager to associate themselves as “premium” titles.

A major recent example was that of Adidas, who, according to Anna White of the Telegraph, may refuse to supply Sports Direct, one of the biggest sports retailers in the UK, with a variety of World Cup football kits due to concerns over its stores and customer service.

Said Adidas, “Like all manufacturers, we regularly review, season by season, where our products are distributed. We determine distribution channels for all products based on criteria such as in-store environment and customer service levels.”

In other words, sportswear manufacturers are eager for their football kits to be treated as premium consumer goods—indeed, the mooted £140 price tag for the new England kits by Nike almost automatically price themselves into that category—and they’re not afraid to incur the wrath of fans and middlemen retailers to achieve their commercial goals.

Charlie Crowhurst/Getty Images

 

Prior to the World Cup row, Adidas also landed themselves in hot water with Sports Direct over their treatment of Chelsea’s official club kit. In light of the public spat, Matt Scott of InsideWorldFootball.com put together an excellent and in-depth analysis of the changing role of the football kit itself.

Linking the state and rationale of Chelsea’s commercial and branding activities with the area’s wealthy and exclusive reputation, Scott consolidates a list of the London club’s highest-profile official sponsors, who all pride themselves on their elite stature within their respective industries.

The ever-changing face of the football kit, then, is not just an evolution of modern shirt design and an extension of clothing technology into sport, but is a reflection of a shift in the status of merchandise and football itself in the eyes of football clubs, manufacturers and sponsors.

And with seemingly unstoppable momentum behind money-spinning sponsorship deals, it seems that football kits will continue to be at the center of football’s paradigm shift. One only hopes that it doesn’t one day become only limited-edition items due to their exclusivity.

 

This article first appeared on Bleacher Report.

Manchester City: Building a Global Football Empire from the Etihad Stadium

The rise of Manchester City Football Club in recent years has been nothing short of astonishing, and since Sheikh Mansour and the current ownership team took over, they have gone from strength to strength, establishing themselves as a Premier League powerhouse.

Manuel Pellegrini’s impressive setup at the Etihad Stadium had—for a good few months—his City team the runaway top scorers in England, which are currently looking to secure a domestic double with the League Cup already in their hands.

From the outside, City seems like the archetypal sugar-daddy story: After all, didn’t Chelsea, Paris Saint-Germain and now AS Monaco go down the same path of sudden fame, fortune and success because of mega-rich owners?

That City’s newfound prestige—and that their starting XI boasts the likes of Vincent Kompany, Yaya Toure, David Silva and Sergio Aguero—is down to the money injected into the club by their Abu Dhabi owners is undeniable, and in some quarters perhaps spoken of negatively and cynically.

But a quick look at their off-field projects, initiatives and business developments suggests City aren’t just in this for the short term, and they’re not just around to pick up a few trophies.

Manchester City mean business, and they’re well on their way to building a global footballing empire.

Michael Regan/Getty Images

Building a City around their fans

From their well-known support of the club even during their lowly third-tier days to their fanatical celebration of a first-ever Premier League title after a 44-year drought, Manchester City fans have long been famous for their undying support.

So it was only right for any City management to focus on their fans—and to their credit, this is exactly what they’ve done.

As fan engagement started to go digital and social media started to take off, City were one of the first clubs to fully embrace these new channels, and as such became one of the pioneers in this arena among the football industry. (Michael da Silva of Alpha Magazine has more in this excellent write-up.)

Along the way, they’ve picked up their fair share of accolades, and for good reason.

Besides their long-admired Twitter channel, they have also become known for offering one of the most comprehensive YouTube librariesin all of football: Their “Inside City” and “Tunnel Cam” series are a rare breath of fresh air in an industry where much of the behind-the-scenes content remain proprietary and available only on paid subscriptions.

By putting their fans in the center of an all-inclusive, fun and interactive social media strategy, Manchester City have hit the jackpot—and their success has encouraged them to strike up innovative and interesting partnerships to take such marketing and fan engagement methods to the next level.

Take their collaboration with GoPro—known for their work with Red Bull Stratos and Felix Baumgartner’s record-breaking free fall from the edge of space—last year, for example.

Announced in August 2013, the GoPro tie-up was a groundbreaking look into “what it’s like to train and play like a professional footballer.” A slight exaggeration, perhaps, given that players wouldn’t have worn the cameras during competitive games—but their viewer numbers of more than two million to date have more than paid off.

Prior to that, their May 2013 partnership with Cisco and O2 turned the Etihad Stadium into the “Premier League’s most technologically fan-friendly stadium,” allowing fans to fully immerse themselves into the digital world while watching a live match unfold before them.

Shaun Botterill/Getty Images

Transforming the City of Manchester

The City of Manchester means a lot to the football club in two different ways.

The first is obvious: Their landmark deal in 2011 with Etihad Airways, which, according to Daniel Taylor of the Guardian, was worth awhopping £400 million, renamed the City of Manchester Stadium to the Etihad Stadium it is known as now.

It was also the largest sponsorship deal in sports at the time and showed the financial powerhouse that Manchester City Football Club were becoming—and the raw commercial potential they had in abundance.

But while the sponsorship arrangement was momentous, arguably more important was what the owners and related stakeholders had in mind for the city of Manchester itself.

The £400 million partnership had significant funds earmarked for the continued development of the Etihad Campus, an area of land around the stadium including a fans’ village and other training facilities. When they put pen to paper on the landmark deal, the landscape and the immediate vicinity was instantly changed.

Two-and-a-half years since he announced the deal, Taylor revisited the topic and wrote more extensively on the “changing football landscape” in Manchester this February (via the Guardian).

With the Etihad Campus due to start its operations within six months and the redeveloped area to include “16 other pitches, accommodation for players, apartments for relatives, a medical center, a boardman, a media theater,” this is truly the beginning of an exciting new era at Manchester City. (The Telegraph have more on the training facility plans here.)

In conjunction with this is the vision at the boardroom level, where Mansour set out a model to incorporate a sustainable future in his plans for the club, which led him to the long-awaited appointment of Txiki Begiristain and Ferran Soriano, both instrumental to Barcelona’s dynasty under Pep Guardiola.

The Barcelona blueprint was instrumental and central to Manchester City’s own footballing approach, according to Sid Lowe of the Guardian, and has begun to work its magic. As reported by the Independent, Patrick Vieira, the ex-Arsenal legend, was chosen last summer to move from his position as football development executive to head up City’s new elite development squad, who have been flying high in the under-21 Premier League this season.

Ray Stubblebine/Associated Press

Cities abroad: A global empire

As Manchester City’s youth players go through a one-club development philosophy and prepare to graduate to first-team level, City’s groundwork has been laid at the local level. Prepare to arm Manuel Pellegrini with a squad that can compete at the top of the European game in the coming years.

Whenever it comes to empire building, the next logical step after sorting out the local setup is to look global.

And City first hit the headlines for their worldwide ambitions with their foray into the United States’ Major League Soccer, joining up with Major League Baseball team, the New York Yankees, to establish New York City FC as MLS’s 20th franchise, as confirmed via SI.com.

Besides forming a fresh new local rivalry with the New York Red Bulls, New York City FC will also be commissioning a brand new football-specific stadium in the Bronx area, according to the Guardian, while also boasting the highly rated American coach Jason Kreis as their first manager.

They weren’t content with moving to just one continent, either, and in January this year, City confirmed, via the Guardian, they would be dipping their feet into the Australian market with their acquisition of A-League side Melbourne Heart.

These two acquisitions and expansions have been branded as “strategic” investments in two of the fastest-growing football nations: City will have had one eye on their revenue streams and profit margins when they decided to move ahead with these bold ventures.

But just as they’ve done at home, City also have a one-of-a-kind opportunity waiting in front of them, the kind of opportunity that will only present itself to those with the resources and long-term vision to make it happen.

If Mansour and his management team continue their good work in the city of Manchester and decide to invest in boosting the footballing infrastructures in both New York and Melbourne, not only will they develop their new football clubs, but they might also have a defining say in the footballing growth of the US and Australia.

The potential and the possibilities of a Manchester City football empire are as tantalizing as they are awe-inspiring.

They’ve already gone back to their roots: In a classic fan-centric move, New York City FC have released two winning designs for their club badge and put them up for a public vote among their fans.

We can’t wait to see what’s next.

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League, and occasionally on football business.

The Football Business Column: Enhanced TV Tech, Total Immersion and Video Games

New season, new technology

It’s a new season in the English Premier League. For American fans, this season’s experience should be vastly different from previous years: NBC has taken on the exclusive broadcasting rights to the English top flight in a way that has revolutionized coverage of football in the US; the marketing efforts that have gone behind promoting this whole new offering, as well as the degree of professionalism and thought put into assembling a top-notch broadcasting team, deserve mention and full credit.

But there have been more subtle improvements in Premier League broadcasting that new EPL fans in America would perhaps have taken for credit. The first is the introduction of goal-line technology. In what’s been a considerable (and frankly surprising) turnaround, the higher powers in the game have approved its use, and HawkEye technology—which is known for its use in tennis—has been installed across EPL grounds this season, and it was immediately put to use on Saturday when Hull City goalkeeper Allan McGregor parried a shot off the line against Chelsea. No goal was given, but a long overdue addition of some simple technology in the game: The lack of emotional and irrational debate on online forums in its immediate aftermath was welcome.

liverpool v stoke city

Courtesy of SI.com

And just like TV viewers will have been able to see the HawkEye analysis and replay of McGregor’s decision, so they too were treated to another simple data set on Saturday. When Liverpool’s Daniel Agger handled inside the box and Stoke City midfielder Jonathan Walters prepared to take the penalty, a brief infographic of Walters’ previous penalty attempts flashed onto the bottom of the screen. Walters had a tendency to shoot towards the keeper’s right, and it turns out that Simon Mignolet had the same information as we all did—just that he’d had it prior to the match—and dived onto his right. A little additional feature for viewers: Nothing too major, but some helpful graphics are always welcome.

GoPro goes pro

In the new era of Manchester City, they’ve been one of the quickest in European football to adopt and embrace the latest in technology. Their social media presence and YouTube features have won rave reviews for their interactivity with fans and depth of coverage, and their latest partnership proves that City are once again on the frontier when it comes to technology in football.

On August 21, City announced that they will be partnering up with California-based video camera-maker GoPro to go even more in-depth into the lives of professional footballers. GoPro has been popular amongst extreme sports enthusiasts, and will now be used to film exclusive behind-the-scenes happenings in and around the football club. Players will be wearing it in training (and have done—see the promotional video) and pre-match routines, similar to Nike’s highly-rated “Take It to the Next Level” commercial series.

With Google Glass the newest hype in American sports—the discussion now is on whether referees in the NBA should wear it on the court—how long will it be before the latest technology is widely adopted in the English game? Exciting times.

The business of football games

Football fans can be divided into two camps: The ProEvo camp (Pro Evolution Soccer, or Winning Eleven) or the FIFA camp. It’s not surprising that EA Sports, the developers behind FIFA, have seized on the world’s most popular game as a huge business opportunity, but it wasn’t always that way. In fact, there were once major doubts at Electronic Arts whether to develop the game at all. For a fine, fine piece of journalism marrying video games and football, check out this piece on the story of FIFA.

So how best to capture the worldwide football fanbase? EA Sports have recently entered into partnership deals with Manchester City (yup, them again), Liverpool and Everton to act as the clubs’ official video games partner, which means that their coverage on the FIFA games will be even more extensive. Everton’s Goodison Park will be eligible for selection as a stadium in-game, and the EA Sports team have traveled onsite to capture the likenesses of their players to deliver a more authentic representation of the teams in the game. (Here’s a video of Liverpool players getting their images captured.) And of course, there will be EA Sports-sponsored corners in the stadiums for fans to play with each other—and for EA to promote their FIFA games.

Oh, and there’s a final category of football fans. That all-encompassing category—Football Manager. Take it from me: It is a magnificent game, but be warned, for you might end up spending hours on it. That is, if you’re not already an FM fan. Here’s another fine piece of writing covering the FM mania.

 

This piece was my first instalment of my new biweekly column for SWOL.co, in which I discuss some of the latest news, trends and developments on the business side of football—everything including marketing, strategy, technology and finance.