Football club sponsors get shirty

9 October 2008

Although the world of millionaire footballers is inhabited by huge houses (sans mortgage), fast cars and diamond earrings big enough to eat your dinner off, the football industry is bankrolling these excesses like a parent promising their kids the KFC family feast when all they’ve got in their wallet is enough for a 99p mini fillet burger.

Football clubs are increasingly looking over their shoulders to make sure their shirt sponsor hasn’t gone bust and with even last season’s Premiership champions Manchester United experiencing a wobble, no–one is safe. The red devils’ sponsor, US insurance giants AIG, had to get their government to bail them out to the tune of an $85 billion rescue plan, so that AIG could honour the remaining two years of their £102.9 million deal.

Gordon Brown joked in Parliament recently that the Federal rescue makes the US government the shirt sponsors of Man U. He went on to quip that the British government therefore was Newcastle United’s sponsor, after their sponsor Northern Rock was nationalised last year.

George W Bush, Alistair Darling and co–inspired insignias featured on new Manchester and Newcastle United football strips doesn’t sound like the smartest marketing move –  although Newcastle’s black and white shirts match Darling’s eyebrows–hair combo a treat.

Implausible shirt designs aside, other teams aren’t so fortunate as to enjoy government backing when their sponsors go down the proverbial. West Ham received the first year’s £2.5 million of a three–year £7.5m deal with travel company XL Holidays, before the sponsors went bust, leaving West Ham with a £5m shortfall. Adding to the club’s woes is the fact that their Icelandic chairman Bjorgolfur Gudmundsson is one of the guarantors of a £163 million bank loan given to XL travel, not to mention his 40% stake in Landsbanki.

Shortly after the XL announcement the east London club had to play against West Bromwich Albion – who also don’t have a shirt sponsor and have been searching for one since the end of last season when decided to terminate their sponsorship. Bradford City is sponsored by Bradford and Bingley – so how long that sponsorship deal will last is unclear; likewise the length of Britannia’s sponsorship deal with Stoke City is in question. Wigan’s shirt sponsor JJB sports has reported financial difficulties as have sat–nav makers Garmin, sponsors of Middlesborough and Kcom, owners of Hull City’s shirt sponsor Karoo, is also in trouble.

Shirt sponsorship makes up 20–25% of a club’s commercial revenues, according to sports marketing consultant Sports Markt, and is especially important for the smaller clubs who can’t expect as much revenue from merchandise sales and high gate numbers or a Russian mafia boss– oops steel tycoon sweeping them of their feet in a flurry of cash (always with the threat of said owner getting bored and wanting a new team to play with mind).

With news of new financial institutions and businesses collapsing faster than Jamaican sprinter Usain Bolt chasing the bus, even if a club does secure a deal it doesn’t follow now that that deal will run the course. Aside from companies collapsing, less cash to splash on advertising means that many companies will sponsor a team for a short while to get some exposure rather than sign up for a lengthier contract – West Brom and former sponsors being an example of this.

To avoid the whole hassle, Aston Villa have followed the example of Barcelona (who gave their shirt sponsorship rights to Unicef) and have chosen a local Birmingham charity, Acorns children’s hospice, to be their shirt sponsors. Everton are also launching a pink shirt, which will donate part of shirt sales profits towards the Breast Cancer campaign as well as the NSPCC and local charity Everton in the Community.

As well as doing their bit for charities these teams are showing some savvy too: they won’t have the worry of sponsorship deals falling through and the subsequent hassle of pulling kit lines from the shops, which loses a club extra income.

Of course football clubs could start paying their players lower  – and more reasonable salaries, swiping the need for shirt sponsorship all together. However, that’s a whole other blog…  


Nathalie Bonney is editorial assistant at Moneywise