Football 50 2017 The annual report on the most valuable football brands June 2017 Foreword. Contents been integral to the league’s development. Foreword 2 When looking to improve match-day revenue, the first and often only recourse is to attempt to enlarge stadia. The Acknowledgements 4 extra revenue from the Premier League has allowed many Methodology 5 of its teams to do just that with Liverpool, Tottenham and Chelsea all in the process of increasing capacity at their Definitions 6 grounds. This is without doubt a worthwhile endeavour, however it is not always possible, certainly in the short term. Executive Summary 8 Focussing on the sorts of brand equity drivers that underpin the strategies of traditional commercial and retail Brand Finance Football 50 Full Results (USDm) 14 organisations can be a much quicker and more efficient Brand Finance Football 50 Full Results (GBPm) 15 route to take. Improving match-day experience within the stadium, optimising retail opportunities and engaging with Brand Finance Football 50 Full Results (EURm) 16 fans can reap rewards. Brand Finance Football 50 Full Results: Brand Strength Rank 17 Huge investments are already being made in the design, David Haigh, CEO, Brand Finance launch, re-launch and ongoing promotion of football Top Ten Profiles 18 Welcome to the 11th annual Brand Finance Football 50, brands. As we have established, this makes sense. Club Interview: Vfl Wolfsburg 28 the only study of its kind to analyse and rank football Unfortunately, most clubs fail to go beyond that, missing clubs by the value of their brands, providing a deep huge opportunities to effectively make use of what are often Understanding China’s Football Fans 32 understanding of the opportunities and challenges their most important assets. facing the industry. Sports Services 34 Understanding the value of brands is key. As with any asset, It is becoming increasingly important for clubs, no matter without knowing the precise, financial value, how can you Sports Services Clients 35 what their size, to recognise the value of their brands. know if you are maximising your returns? If you are Enduring fan loyalty, ever-increasing income from negotiating sponsorship of your brand, how do you know Client Case Study: Femexfut 36 what is a fair fee? As a sponsor, how do you know which broadcasting rights and the deep pockets of owners can Local Insight: Laurence Newell, BF Mexico 37 mean that brand is overlooked as an opportunity to organisations are worth associating your brand with? When maximise revenue by some major clubs. However, with the considering multiple sponsorships, how to you determine General Services 38 vast sponsorship deals agreed over the past couple of the funds to allocate to each? How do you best determine seasons such as Manchester United’s £52 million-a-year return on investment? Even players should take note. Few Contact Details 39 deal with Chevrolet, it is clear that harnessing your brand in will be as commercially successful as ‘brand Beckham’, but the correct way can be hugely beneficial in terms of image rights can be very lucrative and form a detailed part generating added revenue that can be invested into playing of contract negotiations. If you are intending to license your staff or infrastructure. personal brand, how can you know the correct price? Brand can be leveraged for financial gain across all three Brand Finance has conducted hundreds of brand and income streams, not just commercial (which includes branded-business valuations to help answer these sponsorship and merchandising). If we look at the questions. We have worked with companies of all shapes ‘broadcasting’ stream, the record-breaking Premier League and sizes, from blue-chip internationals such as Vodafone deal for the right to show games from the next three seasons and Shell, to football clubs and other sports franchises from reflects the strength of the Premier League brand. That Europe and the wider world. Whether you’re an owner, strength comes both from the shrewd management of marketer, director, sponsor, player or a fan, we hope you those in charge of the league, but also from the individual enjoy the Brand Finance Football 50 2016 and come away clubs themselves, whose mythology and iconography have with a better understanding of why brands matter and what they can do for you. 2. Brand Finance AustraliaGlobalAirlinesFootball 500 30 50100 30 FebruaryJune MarchFebruary 2017 20162016 2015 Brand Finance Football 50 June 2017 3. Acknowledgements Methodology Brand Finance is the world’s leading independent brand valuation and strategy consultancy. Brand Brand Finance calculates the values of the As brands have differing effects on different revenue Finance was set up in 1996 with the aim of ‘bridging the brands in its league tables using the ‘Royalty streams, these will each have their own respective gap between marketing and finance’. For over 20 years, Relief approach’. This approach involves royalty rate applicable to them. The royalty rates are we have helped companies and organisations of all estimating the likely future sales that are derived by looking at comparable agreements and types (including clubs, sponsors, leagues and attributable to a brand and calculating a royalty through in-house analysis. governing bodies) to connect their brands to the bottom rate that would be charged for the use of the 3 Calculate royalty rate. The brand strength score is line. brand, i.e. what the owner would have to pay for applied to the royalty rate range to arrive at a royalty the use of the brand—assuming it were not rate. For example, if the royalty rate range in a brand’s We pride ourselves on four key strengths: already owned. sector is 0-5% and a brand has a brand strength score of 80 out of 100, then an appropriate royalty rate for The steps in this process are as follows: • Independence the use of this brand in the given sector will be 4%. • Technical Credibility 4 Determine brand specific revenues estimating a 1 Calculate brand strength on a scale of 0 to 100: the • Transparency proportion of parent company revenues attributable to BSI captures the ability of clubs to drum up popular • Expertise a specific brand. interest and then convert interest into support and 5 Determine forecast brand specific revenues using a custom. The BSI covers three broad topics of: brand Brand Finance puts thousands of the world’s biggest function of historic revenues, equity analyst forecasts investment, equity in the form of emotional connection brands to the test every year, evaluating which are the and economic growth rates. harboured by a brand, and bottom line commercial most powerful and most valuable. The Football 50 is 6 Apply the royalty rate to the forecast revenues to performance. just one of many annual reports produced by Brand derive brand revenues. 2 As brand has differing effects on each source of Finance. 7 Brand revenues are discounted post tax to a net income, we then split revenues down into three present value, equal to the brand value. For more information, please visit our website: streams: match-day, broadcasting and commercial. brandfinance.com Brand strength Brand Brand revenues Brand value index ‘Royalty rate’ Contributors (BSI) Brand Finance: External: Strong brand Brand Match-day Andy Moore Thomas Röttgermann - investment Chloe Wetherall Managing Director, Vfl Clementine Riblet Wolfsburg David Haigh Brand Commercial Declan Ahern equity Finn Dowley Designer: Hugo Hensley Adrian Taylor Brand Weak brand Joslyn Pannu Clementine Riblet performance Konrad Jagodzinski Joslyn Pannu Broadcasting Laurence Newell Maria Temporal Brand strength BSI score applied to an Royalty rate applied to Post-tax brand Richard Haigh expressed as a BSI appropriate sector historic and forecast revenues are Robert Haigh score out of 100 and a royalty rate range. revenues to derive discounted to a net letter grade on a scale brand values. present value (NPV) of AAA+ to D. which equals the brand value. 4. Brand Finance Football 50 June 2017 Brand Finance Football 50 June 2017 5. Definitions Definitions Effect of a Brand on Stakeholders + Enterprise Value – the value of the E.g. entire enterprise, made up of City multiple branded businesses e.g. Fans Football Potential City Football Group owns Players Group Customers ‘Branded‘Branded Manchester City FC, Melbourne Enterprise’ Enterprise’ City FC etc Existing ‘Branded Directors ‘Branded E.g. + Branded Business Value – the Customers Business’ Business’ Manchester value of a single branded business City FC operating under the subject brand ‘Brand’ Contribution’ Influencers Brand Technical E.g. + Brand Contribution– The total e.g. Media Staff Manchester economic benefit derived by a City FC business from its brand ‘Brand Value’ Trade All Other Channels Employees E.g. + Brand Value – the value of the Manchester trade marks (and relating Strategic Debt City FC Allies & marketing IP and ‘goodwill’ providers Suppliers attached to it) within the branded Investors business Brand Brand Contribution Brand Strength Brand Value In the very broadest sense, a brand is the focus The brand values contained in our league tables Brand Strength is the part of our analysis most Brand value is calculated using the ‘Royalty for all the expectations and opinions held by are those of the potentially transferable brand directly and easily influenced by on pitch Relief’ approach. For each brand a royalty rate customers, staff and other stakeholders about an asset only, but for marketers and managers performance, publicity and brand management. is set. This is based on the % of revenues that organisation and its products and services. alike. An assessment of overall brand In order to determine the strength of a brand we would have to be paid for the use of the brand if However, when looking at brands as business contribution to a business provides powerful have developed the Brand Strength Index (BSI).