Tag Archives: sponsorship

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.”

Liverpool the Business: A Beginner’s Guide

Ever since Kenny’s return to L4 at the beginning of the year, ever since Luis Suarez walked through the Shankly Gates in place of El Nino, ever since we turned around our league form to come within an inch of finishing the season among the European places, most of what we’ve heard about Liverpool Football Club has been on the pitch. Rightly so, given the traditional “Liverpool Way” of focusing only on the next game and leaving everything else to the side.

A year ago, we were struggling with the Hicks and Gillett regime. “Finance” (or, more accurately, “refinance”) was probably the word that we Liverpool fans dreaded the most. Liverpool the business was hampering Liverpool the football club. We didn’t like Liverpool the business; we just wanted our football club back. Business and football were the last two words we wanted to see together ever again.

Oh, how a year has turned things around. Now, we can’t go a week without hearing an ex-player or someone in the Liverpool hierarchy sing the praises of the way FSG has revolutionized Liverpool as a business. Behind the scenes, the reality is that the business side, the “everything else” of our football club has undergone as radical a change, if not more so.

Let’s go all the way back to the Standard Chartered sponsorship deal. Now, before we fans got any wind of this partnership, we were cruising along perfectly content with the Carlsberg logo splashed across the front of our shirts. Sure, we saw O2 on the shirts at Highbury, and we saw vodafone, and subsequently AIG, at Old Trafford, and then we saw Ashburton Grove renamed as the Emirates Stadium. Those corporate sell-outs. Carlsberg: the best beer in the world. Liverpool: the best football club in the world. End of story.

But then, one fine (or cloudy, or rainy, I forgot which) day in 2009, the news came through that we struck the largest shirt sponsorship deal in football history. I very clearly remember that day. That was the day that made me sit up and take notice of what we were capable of achieving as a company. That day, on the back of a successful Premier League season, as I saw Rafa Benitez, Steven Gerrard and Fernando Torres swapping shirts and posing for pictures with the Standard Chartered management, I realized that our club still had an amazing appeal to it.

This, remember, was a financially unstable club with rumors about our long-term financial stability. Amidst ownership struggles behind the scenes, we managed to pull off a deal like that. I almost immediately started idolizing Christian Purslow (and latterly Ian Ayre, when I read that he was the Commercial Director then). When it was first established that we had genuine financial concerns going forward, I didn’t panic. We even appointed Martin Broughton from the British Airways. Despite his outspoken Chelsea links, here was the chairman of one of Britain’s most famous corporations, brought in to “save” our club.

We would’ve been forgiven for thinking that ousting Hicks and Gillett was the final piece to the financial jigsaw.

But there are bits and pieces to the journey that cannot, and should not, be ignored. We saw Rafa overhaul the Academy. Yes, the headline news was that we want to go back to our famed traditions of graduating top players to our first team. But we didn’t just see Rafa take full control of our youth development. He restructured the Academy and brought staff in to take up managerial positions. He brought Kenny back to spearhead our youth recruitment drive and latterly as a Club Ambassador. These were all new roles. What Rafa noticed was not just that we were falling behind as football club; we were also falling behind as a company, a business, a corporation. And these were his first steps to establishing a structure at Liverpool, to the greatest extent he possibly could.

And when FSG recruited Damien Comolli and gave him the position of Director of Football (later renamed as the fancy Director of Football Strategy), it was not just a signal of our intent to bring in the world’s top footballing talent; it was our owners’ way of further instilling business organization and structure to Liverpool the corporation.

Outside the club, FSG helped us establish links with LeBron James, one of the biggest stars in modern basketball (and indeed in modern sports), in the process linking us with the Boston Red Sox. FSG and Standard Chartered put together our Asia tour this past summer with great aplomb, complete with a tour-specific website, extensive media coverage of all the players’ football and sponsorship activities, and a chance for our Chinese Reds to win a meet-and-greet with LeBron James. The express plan for our summer activities next year is a money-spinning trip to the US: imagine the fervor that would greet Gerrard, Suarez and co. as they run out onto the Fenway Park pitch.

But it’s not just the dollar signs and star brandnames that show our transformation as a corporation. Look at the way we have been catered to (in business terminology: customer experience) – comments in almost every LFC.tv article, expansion in the LFC.tv forums, the Bootroom Sports Cafe, our first ever official Supporter’s Committee, The Kop fan blogs and social network…

Oh, and don’t forget that key business buzzword: corporate social responsibility. For all the corporations that might have skeptical motives behind such activities (for example, a tobacco company sponsoring a health clinic), our family- and community-oriented traditions makes CSR a perfect fit for our promotions. Here’s an observation: have you noticed a significant increase on LFC.tv in the promotion of free football clinics in the Liverpool area? Coaching sessions in Korea? Summer camps for disabled children both in Asia (while others were promoting our business interests) and in the UK? We’re beginning to hear a lot more of these campaigns that are a win-win-win combination: they sustain our image and reputation within the footballing community; they help our players and staff understand the community better and thus form a stronger bond with Liverpool Football Club; and they bring us commercial opportunities in previously untapped areas. We are already in talks to establish Liverpool-themed cafes and lounges in India after setting up our academy there.

And on I ramble.

During my short working career, I’ve been exposed to the way businesses and corporations are run on a strategic and institutional level, and I hope I was able to give you some basic insight on the good work being done by FSG, and to help you make some sense of the commercial operations and developments that might sometimes slip under our radars.

I will wrap things up with a quote from Ian Ayre: “The absolute reality – in the case of Liverpool, not everyone – is that this is a global brand, one of only a handful of clubs that are truly globally recognized and supported.”

Liverpool as a business: I personally have been very excited about the way our management team has driven commercial growth and organizational change. Keep up the good work, gentlemen.

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If you’re interested in further reading, here’s a list of articles that I’ve referred to in this post:

http://www.managementtoday.co.uk/news/1068601/Ian-Ayre-transformed-Liverpool-FCs-commercial-fortunes/

http://businesstoday.intoday.in/story/liverpool-fc-cafes/1/18199.html

http://www.bizjournals.com/boston/news/2011/08/04/lucchino-liverpool-football-club.html

http://www.bitc.org.uk/community/communitymark/communitymark_companies/liverpool_football.html

http://www.liverpoolfc.tv/corporate/charter

http://www.liverpoolfc.tv/corporate/lfc-is-listening

http://online.wsj.com/article/SB10001424052748703280904576246640754493456.html

http://www.timesonline.co.uk/tol/sport/football/premier_league/liverpool/article6831489.ece