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The biggest sponsorship deal in the world this year happened in early June and yet it seemed to barely register on the sports marketing Richter scale in America.
Chicago-based insurer Aon Corp. has committed more than $125 million over four years beginning in 2010 to be the new primary sponsor of English soccer club Manchester United. At a time when the financial services industry in this country is essentially hiding behind the sofa until Barney Frank (D-Mass.) goes away, Aon’s move is quite stunningly aggressive — and smart.
Why on earth should an American company pay the equivalent of about 50 cents a year for every one of the 60 million people in the United Kingdom to sponsor an English soccer club that most Americans have never heard of? Because the global audience is the key.
Combine the Yankees, Lakers and Cowboys in the United States and project that to a global stage and you have Manchester United, easily the most popular and well-known sports club in the world — just not in the United States. Consider some facts and figures based on research conducted by Man U:
More than 300 million people worldwide claim to be fans of Manchester United, the equivalent of nearly every man, woman and child in America.
Nike sells almost 7 million replica Man U shirts a year. Unlike all major professional sports in the United States, soccer shirts have the sponsor’s logo prominently displayed on them. That’s 7 million walking billboards from Seoul to Sydney and San Francisco for Aon.
I spent two months at rEvolution doing a research-based consulting project on Man U for one of the companies that bid on the sponsorship. Our client, a huge global corporation, commissioned us to do two major studies and make a recommendation to them on whether they should pursue Man U and how much they could reasonably pay while maintaining positive ROI. The studies covered:
1. Global exposure valuation. How much air time did the shirt logos and perimeter signage that outgoing sponsor AIG received generate? What was the value of that air time had it been bought as advertising?
2. Consumer-research-based ROI evaluation in the U.K. of the impact on the sponsor’s brand image and sales for the sponsors of Man U, Liverpool, Chelsea and Arsenal (the Big Four U.K. clubs).
The results were fascinating. Here are a few highlights:
Based on their price, none of the deals makes financial sense when viewed just for their ability to move brand image and drive sales in the U.K. The major clubs know that most of the sponsorship’s value is based on the exposure for the sponsor outside the U.K. As the EPL and Champions League have built their global TV distribution and reach over the past decade, their ability to reach a global audience has increased dramatically. That’s why clubs like Man U have been able to increase their sponsorship prices by a factor of four in less than a decade. Since the U.K. population hasn’t quadrupled in the past decade, it’s obvious that the value proposition for Man U’s sponsor, like its Web traffic, is about 70 percent outside the U.K.
While the sponsorship in the U.K. had a positive impact on Man U fans, among fans of other clubs there was a neutral or slight negative reaction. I remember when I was a kid in England, my father, a die-hard Arsenal fan, would never buy a Sharp product since they sponsored Man U, whom he hated. Now that’s an extreme reaction, but we saw shades of that for each sponsor. Even if you sponsor Man U, which is the most popular club (20 percent of fans said it’s their single favorite club), there are many more fans who don’t like you (29 percent said Man U is their most disliked club).
The global TV exposure generated by Man U and the other Big Four clubs averaged close to $90 million a year each, almost triple the amount Aon has paid, and that doesn’t even include the value of all those replica shirts. Again, about 30 percent of that total came from the U.K. That’s why the deal makes sense: Any time you can get a 3-to-1 return on your investment, you’ve made a smart deal.
Our recommendation to our client was that the deal made sense for it based on the initial offering price (around $22 million). However, as new bidders entered the market, the price started to increase dramatically, and ultimately the asking price exceeded its budget.
Some might wonder why Aon’s deal doesn’t start until 2010 when surely AIG (in reality, we U.S. taxpayers) would have taken a buyout of the $22 million it’s paying for 2009-10 and Man U would get another year from Aon at closer to $30 million. The answer may lie in Beaverton, Ore. Nike had no interest in pulping millions of AIG replica shirts, which would be on sale on eBay for $5 apiece as soon as the new sponsor was announced. They need a year to get rid of their inventory, so the taxpayer gets stuck with AIG’s deal for this year.
Isn’t that something for Barney Frank to moan about?
Darren Marshall (email@example.com) is senior vice president at sports marketing agency rEvolution.