Football Sponsorship & Commerce

Home , Arsenal TV, Big Three (Greece), Celtic TV, Daily Sport, Duncan Shearer, Errea

FOOTBALL SPONSORSHIP & COMMERCE

An Analysis of Sponsorship and Commercial Opportunities in Football

Louella Miles Simon Rines

A management report published and distributed by IMR Suite 7, 33 Chapel Street, Buckfastleigh TQ11 0AB

Tel: +44 (0) 1364 642 224 www.imrsponsorship.com email: [email protected]

Copyright © 2004 International Marketing Reports Ltd All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, photocopying or otherwise, without the prior permission of the publisher and copyright owner. While every effort has been made to ensure the accuracy of the information, advice and comment in this publication, the publisher cannot accept responsibility for any errors. The views expressed in this report are not necessarily those of the publisher.

i Authors

Louella Miles is a business journalist who has specialised in sponsorship for the past 20 years. Former managing editor of Marketing magazine, she is author of Perfect Marketing (Random House), Successful Sport Sponsorship: Lessons from Football (International Forum of Sponsorship) and What Price Corporate Reputation? (Management Today).

Simon Rines is author of the best-selling European sponsorship report Driving Business Through Sport. Following a career in the marketing communications industry and ten years as a marketing journalist, he is now publisher of International Marketing Reports.

Contributing author: Dan Micciche MBA (Football Industries)

The authors would like to thank the following for their help in the compilation of this report:

Adrian Hitchen, SponsorMetrix Alex Tielbeke Andrew Cullen, Norwich City Football Club BMRB Carlotta Calleri Zavanelli, 02 Chris Bates, TRBI Dan Jones, Deloitte & Touche David Berger, Yahoo! Dr Bill Gerrard, Leeds University Business School Ed Coan, Watford Football Club Gareth Roberts, Carlsberg Greville Waterman, The Sponsorship Consultancy Ian Riddoch, Aberdeen Football Club Michael Jackson Michael Saxton, Grappa PR Mike Lafkin, Sportcal Miriam Müller, St Pauli Football Club Nigel Empson, FMM International Peter Draper, Manchester United FC Peter Gandolfi, Nationwide Building Society Peter Jones, Plymouth Argyle FC Peter Miller, International Marketing Rights Phil Carling, Octagon Csi Rachael Church, Ark Sports Richard Arnold, Drivers Jonas Sport+Markt SportFive Starcom MediaVest Group Steve Sutherland, Charlton Athletic Football Club Steve Waggott, Charlton Athletic Football Club Tim Brill, Avaya IFM International

Cover image courtesy Action Images (www.actionimages.com)

ii FOOTBALL SPONSORSHIP & COMMERCE

Table of contents

EXECUTIVE SUMMARY 3

SECTION I: MARKET ANALYSIS 5

CHAPTER 1: WHY DO SPONSORS GET INVOLVED? 5 Universal objectives 6 Commercial history 6 Think global, play local 7 Longevity 8 Star qualities 8

CHAPTER 2: WHAT’S HAPPENING IN EUROPE 9 Introduction 9 Italy 9 Spain 10 England 12 Germany 13 France 14

CHAPTER 3: SHIRT AND KIT SPONSORS, PROFITABILITY AND TV INCOME 17 Television and turnover 22 Which is the world’s richest club? 23

CHAPTER 4: INTERNATIONAL RIGHTS AND TOURNAMENTS 26 Introduction 26 FIFA World Cup 26 Coverage 26 Sponsorship 26 European Championships 28 Coverage 28 Sponsorship 28 UEFA Champions League 30 Coverage 30 Sponsorship 31

CHAPTER 5: THE VALUE OF TOURNAMENTS TO SPONSORS 33 Broadcasting 33 Sponsorship 33 Endorsements 34 Ambush marketing 34 Conclusion 34

iv FOOTBALL SPONSORSHIP & COMMERCE

Table of contents

Case study: Hyundai 35 Objectives 35 World Cup 2002 35 Euro 2004 and World Cup 2006 35 Results 36 Case study: Yahoo! 36 Objectives 36 Implementation 36 Conclusion 37

CHAPTER 6: THE COST OF COMPETING IN EUROPE 38 Background 38 Financial investment 38 What does it take? 40

CHAPTER 7: CHAMPIONS LEAGUE REVENUE GROWTH 43 Payment splits 43 Impact on TV rights fees 43 Television coverage 44 Attendances 44 Conclusion 44 Federation sponsors 48

CHAPTER 8: THE MEDIA SCENE 49 Italy 50 France 50 England 50 Germany 50 Spain 50 The Netherlands 50 Switzerland 51

CHAPTER 9: BRANDING ISSUES 52 The essence of an identity 52 Brand creation 53 The golden rules of branding 54 Economic perspective 55

CHAPTER 10: PORTRAIT OF A FAN 56 Football trumps other sports 56 Club popularity 56 Media habits 65 Reactions to sponsorship 65 Categories of interest 65 Fans’ attitudes survey 65 Survey conclusion 71 Fans in the Far East 71

FOOTBALL SPONSORSHIP & COMMERCE v Table of contents

Latin America 76 Marketing and the elusive fan 79

CHAPTER 11: INDIVIDUAL RIGHTS 80 Registration of a trademark 80 Passing off 80 David Beckham 81 Team versus individual 81 Control of image rights 81 Impact of adverse publicity 81 Case study: Has adverse publicity affected Beckham’s sponsorship potential? 82

CHAPTER 12: OUTSOURCING 90 Outsourcing and SportFive 90 Hertha BSC 90 Hamburger SV 90 SportFive portfolio 90 The outsourcing relationship 90 Regional variations 91 Tickets and ticketing 91

CHAPTER 13: OVERSEAS MARKETING STRATEGIES FOR CLUBS 92 Background 92 Planning 92 Strategy 93 Market knowledge 93 Real Madrid’s Chinese experience 94 Successful tactics 94 Keijan’s sponsorship of Everton 95 Future prospects in China 95

REFERENCES 96

vi FOOTBALL SPONSORSHIP & COMMERCE

Table of contents

SECTION II: BUSINESS OPPORTUNITIES 97

CHAPTER 14: MARKETING A CLUB’S WARES 97 Case study: NEC Nijmegen 97 Background 97 Business strategy 98 Marketing for potential sponsors 98 How to work with sponsors 99 Balancing costs 99 Unique selling points 99 Achievements 99 Conclusion 100 Case study: Charlton Athletic 100 Background 100 Sponsorship marketing 100 Objectives 100 The sell 102 Conclusion 103

CHAPTER 15: HOW STADIA CAN BE EXPLOITED 103 Naming rights 103 Rethinking stadium usage 105 Case study: Juventus 105 Stadium project 106 Young World Project 106 Conclusion 106 Arsenal-Emirates naming rights deal 106 Benefits of new stadia 107 Points for the future 107 Stadium costs 108 Multi-faceted venues 108 Stadium pariahs 109 Revenue boosters 109 Stadium capacity 109 Revamp or new-build? 110 Future trends 110 Conference facilities 110 Case study: Leicester City Walkers Stadium 113 Background 113 Finance 114 Why build? 114 Conference facilities 114 Marketing 117 Occupancy 117 Conclusion 117

FOOTBALL SPONSORSHIP & COMMERCE vii Table of contents

CHAPTER 16: FOOTBALL AND ONLINE 118 E-commerce 118 Licensing and syndication 119 Advertising and sponsorship 119 Betting 119 Case study: Premium TV 120 PTV expertise 120 Football club joint ventures 121 E-commerce 121 Facts and figures 122 Future prospects 122

CHAPTER 17: MATCHDAY OPPORTUNITIES 123 Case study: St Pauli 123 Background 123 Objectives 124 Marketing offer 124 Implementation 124 Conclusion 125

CHAPTER 18: LEVERAGING BRANDS 127 Case study: Olympiakos CFP 127 Background 127 Marketing background 127 Licensing 128 Conclusion 130

CHAPTER 19: COMMUNITY SPONSORSHIPS 131 Case study: Watford Football Club 131 Background 131 Objectives 132 Strategy 132 Implementation 132 Corporate benefits 134 Conclusion 134 Case study: London Leisure College 134 Background 134 Educational offers 135 LCC philosophy 135 The vision 136 The academy 136 Club impact 136 Conclusion 137 Case study: Avon Insurance 139 Background 139 Sponsorship objectives 140 Contractual terms 140

viii FOOTBALL SPONSORSHIP & COMMERCE

Table of contents

Budgets 140 Programme execution 140 Conclusion 141 Sources of funding 143

CHAPTER 20: SECONDARY SPONSORSHIPS 146 Case study: Northampton Town 146 Background 146 Objectives 147 Strategy 147 Implementation 147 Sponsorship gains 161 Conclusion 164 Case study: Norwich City 164 Background 164 Commercial objectives 164 Implementation 165 Results 165 Broader commercial offerings 166

CHAPTER 21: FOOTBALL AND FINANCE 167 Traditional football business model 167 The nature of a fan 167 Performance impact on revenue 168 Future prospects for the football business 168 Case study: Aberdeen 169 Background 169 Financial objectives 169 Commercial objectives 170 Marketing tactics 170 New membership drive 170 New revenue streams 171 Conclusion 171

CHAPTER 22: TECHNOLOGY PARTNERS 172 Case study: Arsenal and 02 172 Objectives 172 Strategy 172 The competition 173 Target audiences 173 Further plans 174 Implementation 174 Benefits 174 Support 174 The future 174

FOOTBALL SPONSORSHIP & COMMERCE ix Table of contents

CHAPTER 23: DATABASE MARKETING 175 Direct marketing 175 Data recording 175 Case study: Plymouth Argyle 177 Executive summary 177 Background 177 Five-year plan 177 Implementation 178 Draft strategic plan for discussion 178 Supporter satisfaction survey 178 Method 181 Analysis 181 Summary of recommendations for action 190 Season ticket initiatives 191 Contact and direct marketing 191 Building a base for the future 192 Impact of success 193 Marketing moves 193 Going up 194 Pre-season activity 195 The future 195 Results 195 Conclusion 196

CHAPTER 24: VIRTUAL/PERIMETER ADVERTISING 196 LED perimeter advertising 197 Virtual advertising 197 FIFA regulations for the use of virtual advertising 198

CHAPTER 25: THE ROLE OF RESEARCH 200 Pre-sponsorship research 200 Essential information for sponsors 200 Measurement methods 200 Communications research 201 Research effectiveness 201 Modus operandi 201 Football specific research 202 Sponsorship’s benefits 202

CHAPTER 26: LEGAL ISSUES 203 Collective selling of broadcasting rights 203 Licensing of media coverage by clubs 203 Salary caps 204 Player transfers 204 New transfer rules 205 Player image rights 205 Legal issues for French clubs 206

x FOOTBALL SPONSORSHIP & COMMERCE

Table of contents

SECTION III: SPONSORSHIP IMPLEMENTATION 207

CHAPTER 27: FIFA WORLD CUP SPONSORSHIP 207 Case study: Nationwide 207 Background 207 Aims and objectives 207 World Cup predecessors 208 Marketing and the World Cup 208 Nationwide – the brand 209 Marketing activity 209 Results 212 Case study: Avaya 213 Background 213 Business partners 214 Sponsorship objectives 214 Marketing issues 214 Marketing tactics 214 Results 215 Update 216 Conclusion 217 Case study: Carlsberg 217 Objectives 217 Strategy 217 Implementation 218 Results 218 Conclusion 219

CHAPTER 28: MERCHANDISING 220 Fans’ attitudes 220 Merchandising strengths and weaknesses 221 Opportunities 221

CHAPTER 29: PUBLIC RELATIONS 223 Strategy 223 Crafting the message 226

CHAPTER 30: CORPORATE HOSPITALITY 227 Building attractive packages 227 Staff 227 Facilities 227 Presentations 227 Catering 227 Case study: MasterCard 228 Background 228 Objectives 228 Marketing support 228 Hospitality 229

FOOTBALL SPONSORSHIP & COMMERCE xi Table of contents

SECTION IV: THE FUTURE 230

CHAPTER 31: PROVIDING PLAYERS FOR THE FUTURE 230 Case study: Nantes-Atlantique 230 Background 230 FCNA training school 230 Financial considerations 231 Academy pros and cons 231 Conclusion 232

CHAPTER 32: AGENT FEES 232 FIFA transfer regulations 232

CHAPTER 33: ITALY BUILDS FOR THE FUTURE 241 Option 1: Re-develop existing stadium 242 Option 2: Re-locate to a new stadium 243 Areas for improvement 243

CHAPTER 34: TICKET PRICES 245 Future pricing 245 Pricing history 245 Growing audiences 246 Supply and demand 246 Corporate hospitality impact on pricing 246

CHAPTER 35: PLAYER WAGES 247

CHAPTER 36: TV RIGHTS 247 TV rights and the European Union 247 Overseas TV rights 248

xii FOOTBALL SPONSORSHIP & COMMERCE

Tables and charts

TABLES Table 1.1: FIFA corporate partners 5 Table 1.2: Serie A audience trends 10 Table 1.3: La Liga audience trends 11 Table 1.4: Premiership audience trends 12 Table 1.5: Bundesliga audience trends 13 Table 1.6: French audience trends 14 Table 1.7: European attendance averages 15 Table 1.8: England Premier League finances (to 2004) 18 Table 1.9: Bundesliga finances (to 2004) 19 Table 1.10: Serie A finances (to 2004) 20 Table 1.11: La Liga finances (to 2004) 21 Table 1.12: French Premier League finances (to 2004) 22 Table 1.13: Dutch League finances (to 2004) 23 Table 1.14: Deloitte Rich List 25 Table 1.15: Viewing summary of major championships 27 Table 1.16: Cumulative FIFA World Cup TV Viewing 1986-2002 27 Table 1.17: Total countries broadcasting FIFA World Cup 1986-2002 27 Table 1.18: Total broadcast hours FIFA World Cup 1986-2002 28 Table 1.19: Cumulative viewing by country of FIFA World Cup in Europe 1998-2002 28 Table 1.20: Cumulative viewing since Euro 92 29 Table 1.21: Countries broadcasting 30 Table 1.22: Total broadcast hours 30 Table 1.23: Cumulative viewing (millions) by country, Euro 2000 30 Table 1.24: Attendance totals 31 Table 1.25: Attendance by group stage 31 Table 1.26: Viewing 2002/03 31 Table 1.27: Extracts from the published 2001 accounts: profit and loss accounts 39 Table 1.28: Extracts from the published 2001 accounts balance sheet 39 Table 1.29: UEFA Champions League (Everton Fixtures) 40 Table 1.30: Everton fixtures quarter final onwards – financial effects 41 Table 1.31: Everton’s hypothetical Champions League progress 42 Table 1.32: UEFA Champions League distribution 2002/03 45 Table 1.33: Solidarity fees 2002/03 46 Table 1.34: UEFA Champions League vs European Big Five 46 Table 1.35: Champions League and centrally generated revenues 47 Table 1.36: Financial impact of Champions League on selected European clubs 47 Table 1.37: Champions League prize payments in 2000/01 48 Table 1.38: Federation sponsors 48 Table 1.39: National Soccer Leagues in Europe 2003/04 - specific programmes 49 Table 1.40: National Soccer Leagues in Europe 2003/04 - specific programmes free TV 49 Table 1.41: National Soccer Leagues in Europe 2003/04 - peak viewing figures 51 Table 1.42: National Soccer Leagues in Europe 2003/04 - total viewers 51 Table 1.43: Media consumption of football 57 Table 1.44: TV consumption of football 58

FOOTBALL SPONSORSHIP & COMMERCE xiii Tables and charts

Table 1.45: Internet consumption of football 59 Table 1.46: Attitudes to sponsorship in football 60 Table 1.47: Interest in product categories 61 Table 1.48: Awareness of brands 62 Table 1.49: Appeal of brands 63 Table 1.50: Usage of brands 64 Table 1.51: Premiership interest change in past five years 66 Table 1.52: Are traditional fans being priced out of football? 66 Table 1.53: Going to football is too expensive 66 Table 1.54: Professional footballers are overpaid 67 Table 1.55: How much should footballers be paid? 67 Table 1.56: Are there brand catergories you don't want to see on club strip? 67 Table 1.57: Footballers set a good example to children 68 Table 1.58: I would bring my family to a match 68 Table 1.59: Daughter marrying footballer 68 Table 1.60: Football clubs do enough for their community 68 Table 1.61: On pitch behaviour of players 69 Table 1.62: Off pitch behaviour of players 69 Table 1.63: Subscribers to football on Pay-TV 70 Table 1.64: Opinion regarding the price of Pay-TV 70 Table 1.65: Attitudes to subscription pricing among non-attending fans 70 Table 1.66: Attitudes to subscription pricing among attending fans 70 Table 1.67: Attitudes to subscription pricing among subscribers 70 Table 1.68: TV sport viewing preferences in England 72 Table 1.69: TV sport viewing preferences in Scotland 73 Table 1.70: Chinese preferences for televised sport 74 Table 1.71: Japanese preferences for televised sport 75 Table 1.72: Argentinian preferences for televised sport 77 Table 1.73: Latin America preferences for televised sport 78 Table 1.74: Unprompted awareness of Beckham endorsed brands 85 Table 1.75: Prompted awareness of Beckham endorsed brands – mobile phones 85 Table 1.76: Prompted awareness of Beckham endorsed brands – soft drinks 85 Table 1.77: Prompted awareness of Beckham endorsed brands – sunglasses 86 Table 1.78: Prompted awareness of Beckham endorsed brands – supermarkets 86 Table 1.79: Prompted awareness of Beckham endorsed brands – sportswear 86 Table 1.80: The damage to Beckham’s image from adverse publicity 87 Table 1.81: Purchasing intention as a result of Beckham’s adverse publicity 87

Table 2.1: Unprompted awareness in Germany of naming rights sponsors 104 Table 2.2: Juventus revenue breakdown in 2002/03 financial year 105 Table 2.3: Impact of moves to new stadia on audiences 107 Table 2.4: Conference room possibilities at Leicester 115 Table 2.5: PTV claimed share of online UK sports audience 120 Table 2.6: Top selling items online pre-Christmas 2003 online 122 Table 2.7: Avon Insurance requirements 139 Table 2.8: Avon sponsorship results 141 Table 2.9: Profile of responding supporters by ticket holding and attendance 182

xiv FOOTBALL SPONSORSHIP & COMMERCE

Tables and charts

Table 2.10: Plymouth Argyle supporters age profile 183 Table 2.11: Plymouth Argyle supporters age profile vs TGI and Premiership 183 Table 2.12: Plymouth Argyle supporters by gender and relationship status 184 Table 2.13: Plymouth Argyle supporters by employment status 184 Table 2.14: Overall satisfaction with the club 184 Table 2.15a: Satisfaction with club facilities 185 Table 2.15b: Satisfaction with club facilities 185 Table 2.15c: Satisfaction with club facilities 186 Table 2.15d: Satisfaction with club facilities 186 Table 2.16: Fans’ perceptions of club direction 187 Table 2.17: Fans’ attitudes towards transactional contact 187 Table 2.18: Fans’ attitudes towards proactive contact 187 Table 2.19: Membership category benefits 193 Table 2.20: PAFC financial performance 2001-03 194

Table 3.1: Nationwide and England sponsorship awareness pre-World Cup 208 Table 4.1: Nantes training cost factors 231 Table 4.2: Different revenue streams: English Premier League / Serie A 241 Table 4.3: Serie A vs English Premier League attendances 242 Table 4.4: New stadia potential for increasing income 243 Table 4.5: Relative costs of season tickets in Europe 245

CHARTS Chart 1.0: European attendance averages 16 Chart 1.1: Moving football from commodity to experience 55

Chart 2.1: Assessing media value 101 Chart 2.2: St Pauli sponsors and emblem 126 Chart 2.3: Olympiakos future merchandising and licensing 129 Chart 2.4: London Leisure College organisational structure 135 Chart 2.5: Premium growth year on year 142 Chart 2.6: Brokers involved – contribution to total premium income 142 Chart 2.7: Average yearly premium growth 1994/2000 143 Chart 2.8: Sponsor discounted values comparison graph 148 Chart 2.9: Northampton Town characteristics analysis: demographics 149-152 Chart 2.10: Northampton Town characteristics analysis: lifestyles 153-156 Chart 2.11: Northampton Town characteristics analysis: newspaper readership 157 Chart 2.12: Northampton Town characteristics analysis: behavioural classifications 158-159 Chart 2.13: Attribute profile of NTFC 162 Chart 2.14: Traditional football business model (FBM) 167

Chart 3.1: Awareness of Nationwide association May to June 2002 212 Chart 3.2: Carlsberg growth over past seven years 218 Chart 3.3: ‘Your country needs you’ 219 Chart 3.4: Santini/Spurs messages by favourability and volume 224

FOOTBALL SPONSORSHIP & COMMERCE xv xvi FOOTBALL SPONSORSHIP & COMMERCE FOOTBALL SPONSORSHIP & COMMERCE

An Analysis of Sponsorship and Commercial Opportunities in Football

FOOTBALL SPONSORSHIP & COMMERCE 1 2 FOOTBALL SPONSORSHIP & COMMERCE Executive summary

Executive summary

This report will inform readers about all aspects of football sponsorship and commerce, from a look back at the evolution of the World Cup and its attraction to sponsors, to the future of ticketing and broadcast rights. It has been compiled to provide an understanding, not just of why big brand names – in the UK and internationally – choose to associate themselves with the sport, but also of how clubs at all levels market themselves.

MARKET WITH STAYING POWER The worldwide sponsorship market continues to grow. Industry experts at IEG predict that in 2004 it will hit $28bn, up from $25.9bn in 2003. Indeed, IEG foresees an 8.7% rise in sponsorship spending, compared with a projected 5% rise in spend on sales promotion and 6.9% on advertising. In North America, sport is estimated to make up 69% of the sponsorship spend – some $7.69bn. So where does this leave football? To give some indication of its continued appeal to sponsors, it is worth pointing out that this report is being published just as London club Arsenal signs what is understood to be the second highest football sponsorship deal in the country, with Arab airline Emirates. FIFA, meanwhile, is having to institute measures to stop ticket touts from selling tickets for the 2006 World Cup illegally on the internet, before they have even been printed. Such is the attraction of the sport, both to consumers and brand owners. FIFA also quotes market research, conducted before and during the 2002 World Cup, which cites the competition as the “world’s greatest event” that “helps to bring different people together”. A sizeable majority also said that football had huge social significance for them. In Europe, the 2008 European Championship may be four years away, but bidders are already starting to line up for the TV rights. Euro 2004, broadcasters know, dominated European prime time in the summer, with 50% to 90% market shares across major TV markets for live match coverage. The difference now is the growing interest from the Far East. In Japan, for example, live audiences for the 2004 tournament reached more than seven million for the early kick-offs, despite it being aired at 1.00am there. The sport’s appeal at grass roots level holds good too, with brand names such as Carlsberg working out ways to help the multitude of amateur clubs around the country – many of whom derive most of their income from their bars – with their business strategy and implementation.

SPONSOR WARS The battle for the hearts and minds of consumers is increasingly being waged in stadia and over the airwaves. For many sponsors, the limiting factor is that the facilities inside grounds often fail to attract the very consumers that they have their eye on. The UK has a head start here. Following the publication of the Taylor Report in the late 1980s, the majority of stadia have been revamped, boosting their attraction to families, to older – and wealthier – men and, of course, to women. By contrast, Italy, which rebuilt many stadia for the 1990 World Cup, is having to rethink its desire for monoliths and consider reducing their crowd capacities to make room for improved corporate hospitality, catering facilities and banqueting. Bigger is not always best; nor does it make economic sense. Indeed, in this fast- changing world, hospitality facilities that can be converted into hotel rooms may – as happens in the UK – represent the best option yet. All eyes are now on Germany, which has started its refurbishment early and is even ahead of schedule as the 2006 World Cup approaches. The big sponsor names have already begun the marketing process, with the only two newcomers to the FIFA Corporate Partner roster – Deutsche Telekom and Korean Telecom/NTT – illustrating how important this industry views football as a mass market vehicle that also offers tailored business-to-business opportunities. The report indicates a number of sponsorship success stories, not just on a macro level, but also demonstrating the ability of soccer to target smaller audiences such as decision-makers in the lucrative commercial sector. It also asks whether the time is right for a change in business culture in continental Europe, where football corporate hospitality is not yet as well established as in the UK.

FOOTBALL SPONSORSHIP & COMMERCE 3

Executive summary

RISING COSTS Most teams aspire to compete in international competitions, but do not budget for failure. One club, Everton, devoted time to creating its own fantasy progression through the Champions League. It highlighted the successful strategies and finance necessary for international – and sustainable – success. The name of the game is to capitalise on all possible areas within the ground, whether through building bigger and better facilities or developing existing sites as economically as possible. It is not good enough to buy players at inflated prices and gamble on success. More than one club has been crippled by the ensuing wage bills. Clubs are contemplating a variety of ways to raise money and cut costs. These include outsourcing many of their activities, securing loans based on existing property, selling excess property (or players) and securitisation of future gate receipts (borrowing against future ticket income). Above all, though, these initiatives rely on the ability of clubs to produce a workable business plan. Case studies such as that of Plymouth Argyle highlight the impact such plans can have on the balance sheet: the club’s annual reports show that commercial progress is matching the on-field success. For 2003, club shop receipts rose to £962,667 and overall turnover nearly doubled in two years, from just below £2m to just below £4m. All this occurred while Football League clubs were suffering financially from the demise of ITV Digital.

MARKETING TO FANS Football fans represent a unique audience. They are more marketing savvy than those in other sports, more vociferous when their team is doing badly or they feel their views are being ignored, yet more appreciative of hard-working sponsors. For all the merchandise that a club sells, a trip to most games will reveal an audience wearing kit that can date back ten years or more. The evidence is the erstwhile sponsor’s logo on the front. Fans buy in to the team – not the sponsor – unless the sponsor makes an above-average attempt to communicate. The report looks at marketing tools that sponsors might have ignored in the past – such as fanzines – at a time when football magazines are feeling the pinch. It questions the lack of qualitative research into fans’ attitudes, despite the obvious exceptions carried out by certain clubs and federations. In an era when it is important to get closer to consumers, to pre-empt their needs so as to be able to commission the products and services they want, football is in danger of falling short.

THE FUTURE The outward aspect of football has changed dramatically in recent years. Kick-off times have been altered – in the UK at least – and upset a number of fans. The benefits to the clubs, however, have been overwhelming. The English Premier League, for example, is quoted as getting between €368m (£250m) and €412m (£280m) for its overseas TV rights. It will be in around 200 markets worldwide. By contrast, its nearest competitor, Spain’s La Liga, gets nearer €25m per annum, Italy’s Serie A around €20m and the Bundesliga a mere €6-8m per annum. Why? Because the Premier League was the first to realise the value of internationalising its rights. It has also gone out of its way to attract international stars from different markets – African, French, Italian and Spanish players – thus giving overseas viewers another reason to watch. Many Premier League clubs have also trail- blazed when it comes to developing their brand long-term in markets such as Asia and North America. As a result, there is a ready army of fans only too delighted to tune in to games. The Premier League has made this easier too: the reason that games now often kick off at lunchtime is that it is peak time in Asia, where huge audiences watch. By contrast, matches in Spain – where clubs have been reluctant to alter the times of games – are played at between 8pm and 9pm Central European Time, which is 3am and 4am in Asia. Small wonder that Premier League clubs now hold an unassailable lead in winning the hearts and minds of fans in Asia. They enjoy first mover status, and will capitalise on it to the full – from building on merchandise sales to opening up youth academies overseas.

4 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis

SECTION I MARKET ANALYSIS

Chapter 1: Why do sponsors get involved? Football commands passion, pulling power and mega bucks. If its attraction could be distilled as a scent and sold, it would outperform any perfume currently available. Sadly, or perhaps happily, that isn’t likely to happen. But just who are the big brands that have stuck with the sport through the years? A look at Table 1.1: FIFA’s corporate partners is revealing.

TABLE 1.1 FIFA corporate partners

WORLD CUP 2006 2002 1998 1994 1990 1986 1982 ADIDAS X X X AVAYA X X BUDWEISER X X X X X COCA-COLA X X X X X X X CONTINENTAL X DEUTSCHE TELEKOM X EMIRATES X FUJI FILM X X X X X X X FUJI XEROX X GILLETTE X X X X X X X HYUNDAI X X JVC X X X X X X KOREAN TELECOM/NTT X MASTERCARD X X X X MCDONALD’S X X X X PHILIPS X X X X X X TOSHIBA X X YAHOO X X CANON X X X X X SNICKERS* X X X OPEL X X X ENERGIZER X ALFA ROMEO X VINI D’ITALIA X BATA X CINZANO X R.J. REYNOLDS** XX SEIKO XX IVECO X METAXA X

WORLD CUP 2006 2002 1998 1994 1990 1986 1982

1990: Mars/m&m’s ** 1986: Camel/1982: Winston

FOOTBALL SPONSORSHIP & COMMERCE 5 Section I Market analysis

The list contains brand names that are now firmly entrenched in consumers’ mass consciousness – but they weren’t always. Take Canon, for example. When it opted to sponsor the English Football League in 1983, it was a Japanese camera company with ambitions to diversify into office equipment. Its involvement with the League lasted from the 1983/1984 season to that of 1985/86 and proved monumentally successful, boosting awareness from 18% to an estimated 80% over the three-year period. The UK sponsorship, though, backed up its involvement with the sport on the world stage. It was a FIFA World Cup corporate partner from 1978 to 1998 and worked with UEFA to sponsor the European Championships from 1980 to 1996. So what did this investment deliver for Canon?

UNIVERSAL OBJECTIVES Canon’s main aim was awareness, the means to inform its public, its suppliers and its business partners that it wasn’t just a ‘one product’ company. It became involved in the sport at every level, using all aspects of the game and thus creating a model that later sponsors have built on. In the UK alone it became involved with:

I youth soccer I football in the community I goal scoring awards I loyalty schemes for backroom staff I awards for clubs with good family schemes I sponsored football books, videos etc. I hospitality I sales incentives I advertising on perimeter boards, electronic scoreboards etc.

The relationship survived disasters such as the Heysel Stadium and even the fire at Bradford City’s Valley Parade ground. The range of activities described above would now be seen as commonplace, but in the 1980s each one broke new ground – particularly the ability of Canon to leverage its investment. Its relationship with the World Cup continued until 1998, when its involvement was seen to have come to a natural end. Canon is now moving into a new era of sports sponsorship. It has just signed up as an official sponsor of the UEFA Champions League, a deal worth more than £5m that will run to the end of the 2005/06 season. As such it will be the only official supplier sponsor to benefit from broadcast credits on live match broadcasts. The Canon brand name will feature on every match broadcast alongside premier partners Amstel, PlayStation, Mastercard and Ford, and with existing official supplier partners Adidas and Sharp. It will, in addition, supply UEFA with a range of products, such as digital cameras, printers, photocopiers and faxes and, in return, will be able to display the Champions League logo on all its products and advertising. The move is part of an ongoing international sports sponsorship strategy being pursued by Canon, which saw it become an official sponsor for the Euro 2004 tournament. It knows that its involvement with the sport works on the global stage, and at a number of different levels. The company announced plans to mount a £12m ad campaign to promote its sponsorship of the tournament, to air during live coverage in 25 countries across Europe and supported by a print advertising push. It also teamed up with Eurosport to promote football in more than 1,000 six-second break bumpers (introductions and exits to commercial breaks) running for the duration of the tournament, and used guerrilla marketing in bars, pubs and clubs. Some seven million branded beer mats were created to let fans play finger football, and more than 200,000 limited edition game packs were used as promotional gifts and competition prizes.

COMMERCIAL HISTORY The 1970 World Cup, held in Mexico, saw FIFA start to experiment with stadium hoardings – involving Gillette, still a sponsor, among others. Some eight years later, following an experiment involving Adidas and Coke, it helped establish the sports marketing agency ISL. The agency, which folded in 2001, helped global brands cash in on this premier event and others, like the Olympics. The setting up of category exclusive sponsorships was seen as a way of bringing money into the sport, and offering brands the opportunity to star on the international stage.

6 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

Budweiser, for example, has been involved with FIFA for over 17 years, with a brief hiatus as a World Cup sponsor in 1986. Anheuser-Busch, brewer of two of the world’s best-selling beers, has roots that are steeped in sport sponsorship, both in the US and foreign markets. Its strategy is to ensure that – when adult football fans think of a beer brand – Budweiser is top of mind. In the jargon of modern marketing, it aims to be part of the football experience worldwide, whether among fans enjoying a cold beer after playing a game or while watching their team on television. It achieves this by blanket saturation of the sport. Not only was it the official beer of the last World Cup, but it also happens to be the global marketing partner of FIFAworldcup.com, the official website of the world’s premier sporting event. Budweiser has proved a keen exploiter of sponsorship deals, even to the point of running a promotion in the 2002 World Cup that enabled it to track consumers down by satellite when they opened a special bottle of Bud. Its marketing activities at the time included

I Budweiser Man of the Match – an award given to the outstanding player of each game, as selected by the FIFA Technical Study Group I Budweiser Cup – a six-on-six recreational football tournament I Budweiser Challenge – an online game in which fans could win two tickets and a trip to the 2002 FIFA World Cup final in Yokohama in Japan.

THINK GLOBAL, PLAY LOCAL Budweiser is an ‘all-American’ brand, so it would seem a contradiction in terms for it to become involved in sports that embody the psyche of other nations. Yet that is what it has managed to do, using a theme that was first used at the World Cup in France, Le Mondial, in 1998. It revolved around the ‘One World, One Game, One Beer’ tagline, with an integrated global marketing programme behind it. The premise was that the World Cup allowed it to use one property to promote Budweiser at the local level. The company was quoted at the time as saying that its ultimate goal had always been to communicate a unique and consistent marketing theme across all regions, while customising its programmes to ensure local relevance. What makes its strategy work is communications, in all its forms: it uses email, conference calls and regular meetings to spread the message of what is going on, and employs its sales and marketing intranet to post information on marketing plans, approved logos and artwork for merchandising and best practice. St Louis is the hub for much of the promotional work, which is conceived and created there, but it is then translated and produced at a regional level at one of its many international offices, before being signed off centrally. That is not to say, though, that regional offices are discouraged from showing innovation. In the UK, it devised a sales promotion technology – as stated before – using GPS satellite technology in Bud bottle caps to track down the 25 winners. Above the line, Bud ads are always lauded for their humour and pertinence to the target market, while below the line it attempts to stretch the brand as far as it will go. It created a Budweiser Virtual Shootout – a virtual reality game that toured Britain’s bars – in which drinkers could experience what it would be like to take a penalty kick in a World Cup stadium without stepping outside. The emphasis in all this is on ‘experience’, whether it be as part of one of 700 pub teams from the UK alone competing in the Budweiser Cup, with the final played in Korea, or online – signing on to the Budweiser website, which again was themed to the tournament and featured a ‘Bud clock’. And that’s not counting the official FIFA package, which offers the brewing giant the use of:

I logos I thousands of tickets for consumer and on-pack giveaways I perimeter ads I access to hospitality I exclusive malt beer pouring rights in FIFA World Cup stadia.

Budweiser has shown, again and again, that it is capable of taking an All-American brand and enhancing its appeal to a universal audience by associating with a universal sport. The irony is that the one country where the sport has less appeal is America. In its home country it has, in the past, been involved with such native sports as American Football, but is now just as likely to be backing Lacrosse and snowboarding.

FOOTBALL SPONSORSHIP & COMMERCE 7 Section I Market analysis

LONGEVITY Coca-Cola is probably one of football’s oldest corporate fans. It has supported international football for more than 30 years, having been an Official Partner of FIFA since 1974. In the UK, in addition, it was a sponsor of ITV’s The Premiership, but wherever it finds itself in the world – like Budweiser – Coca-Cola sets out to enhance the drinking experience by leveraging its involvement. The company discovered some thirty or more years ago that the football rights it had bought gave it something of value that it could deliver to consumers, something that rival brands - those that hadn’t bought the rights – could not. It enabled fans, for instance, to step on the hallowed turf of Wembley and even play a match there. Nowadays, this would seem a natural, but in the early days of sponsorship this was a novelty. Over the years it has continued to innovate. In the past two World Cups, for instance, it selected teams worldwide to act as official flagbearers in pre-match ceremonies. Its offices in Japan and Korea chose Ball Kids in the 2002 tournament to take part in FIFA Cup matches. Coca-Cola also invited consumers in to liven up the corporate billboards that traditionally border the pitches. This was a first, on boards that normally feature only a sponsor’s name, logo or other trademark, part of a project labelled ‘Coca-Cola GO! Stadium Art Program’. It even teamed up with entertainment software giant EA Sports to get video games enthusiasts on board in 2002 via an international ‘Coca-Cola World Cyber Cup’ football competition. This culminated in a series of on-pitch contests on the giant screen before matches. The brand understands that fans want a piece of the action, and sets out to give it to them. This can be via its World Cup game, created in association with Yahoo! ® Sports, in which fans could venture online to predict the results of matches or to share and compare their forecasts with others, or via promotions that offer them the opportunity to come into contact with – or even win – balls from the tournament.

STAR QUALITIES The reason such brands choose to ally themselves with the sport is that it offers a package that can’t be obtained elsewhere. The sport offers:

I mass audience I excitement I global appeal I experience, to help sponsors leverage their investment

There is always a downside. Sponsors have to live with the problems of sports personalities whose actions could damage their brand, clubs that get into financial trouble, and media that fail to deliver the expected coverage. But as an industry, football is becoming more professional, even though there is still a struggle to balance the commercialism with the passion that fans want. It is the ultimate three-sided relationship: the sport/players, backers and fans. Yet as the industry evolves, there is more chance of keeping all three happy – and committed.

8 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

Chapter 2: What’s happening in Europe

INTRODUCTION Stadia may be growing bigger and better, but are the audiences out there to fill them? International Marketing Reports has compiled data on average attendances and trends up or down in key countries across Europe.

ITALY In Italy, the picture is one of huge fluctuations over the period covered. True, the make-up of Serie A has changed during this time, due to promotion and relegation, but the top clubs – as elsewhere in Europe – tend to retain dominance, and the small to medium ones suffer varying fortunes. What is interesting is the relationship between performance on pitch and audience numbers. Roma, for instance, won the Scudetto in 2000/01, and saw figures rise to 67,270 from 58,915. Sadly, it was back down to 59,402 the following season and, despite being runner-up in the Italian Cup in 2003, saw average attendances drop to 56,417. Contrast that with a club like AC Milan. Its performance on the pitch has been more consistent, winning the Scudetto 1998/1999, a runner-up in the Italian Cup the same year, and winning the Champions League in 2003. Its attendance figures show steady growth, apart from a blip in 2000/01, achieving a 5.83% rise overall from the 1990/00 season to that of 2002/03. Attendances at Milan’s ‘other’ club, Inter, have dropped steadily since 1998/1999, recovering marginally in 2001/02. Again, the reason is not far from home. It has won any major silverware since 1997/1998, when it was a UEFA cup winner. Since then, it managed runner-up in the Italian Cup in 2000, and league runner-up in 2003. A case of always the bridesmaid. The performances of three clubs – Lazio, Fiorentina and Parma – stand out. All three have seen a steady slide in attendances, closely mirrored by their financial problems. Lazio, in particular, lost momentum after it won the League and Cup double in 2000, overspending in a similar fashion to Leeds in the process, although it did pick up in the 2002/03 and 2003/04 seasons. At Juventus, too, there has been a downward trend, countered – in 2002/03 – by a marginal shift upwards. Fans never warmed to the Stadio delle Alpi, to which the club bought the lease and moved after its previous stadium proved too hard to fill. It then set about reducing capacity from 69,000 to 37,000, aiming to boost demand for premium priced seats. Another factor in lower attendances has been hooliganism at Serie A games, with violence spilling onto the pitch at times. There are constant question marks over policing abilities, and the Italian legal system in unable to address violence or to get clubs to bear a degree of responsibility for unrest. Television deals and widespread piracy of the digital signal have also contributed to dampen fans’ enthusiasm for attending games.

FOOTBALL SPONSORSHIP & COMMERCE 9

Section I Market analysis

TABLE 1.2 Serie A audience trends

CLUBS 1998/ 99 1999/00 2000/01 2001/02 2002/03 2003/04 2003/04 AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF % OF ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY CHANGE INTER MILAN 68,459 79.88 66,546 77.65 55,582 64.86 62,434 72.85 61,704 72 58,352 69.73 -5.43% AC MILAN 57,760 67.4 58,522 68.29 52,304 61.03 58,616 68.4 61,933 72.27 63,245 75.58 2.12% ROMA 54,309 65.98 58,915 71.58 67,270 81.73 59,402 72.17 56,417 68.54 55,413 68.79 -1.78% LAZIO 53,184 64.62 51,956 63.12 47,492 57.7 42,684 51.86 45,414 55.18 49,341 61.25 8.65% JUVENTUS 47,164 68.31 42,229 61.17 41,273 59.78 40,687 58.93 42,224 61.6 34,365 51.12 -18.61% FIORENTINA 35,037 74.1 35,683 75.47 29,463 62.31 18,835 39.86 N/A N/A 25,887 54.75 N/A SALERNITANA 32,218 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A BOLOGNA 28,848 73.44 28,492 72.54 25,786 65.65 22,843 58.15 23,915 60.88 23,062 58.55 -3.57% PARMA 24,328 84.52 20,938 72.74 19,008 66.04 17,956 62.38 17,803 61.85 15,904 55.26 -10.67% UDINESE 23,384 56.07 20,391 48.9 20,613 49.43 15,809 37.91 17,519 42.01 17,642 43.11 0.70% CAGLIARI 21,422 89.26 16,934 70.56 N/A N/A N/A N/A N/A N/A 12,111 67.28 N/A BARI 21,227 36.43 20,802 35.7 13,833 23.74 N/A N/A N/A N/A N/A N/A N/A SAMPADORIA 20,463 48.82 N/A N/A N/A N/A N/A N/A N/A N/A 26,224 65.37 N/A PERUGIA 17,157 64.68 13,194 49.74 11,119 41.92 10,456 39.42 10,251 38.65 N/A N/A N/A VICENZA 16,143 77.17 n/a n/a 15,193 72.62 N/A N/A N/A N/A N/A N/A N/A PIACENZA 11,816 54.2 10,763 49.37 N/A N/A 9,533 43.73 8,179 37.52 N/A N/A N/A EMPOLI 11,292 56.9 N/A N/A N/A N/A N/A N/A 9,228 46.5 N/A N/A N/A VENEZIA 10,919 9,545 N/A N/A 8,367 N/A N/A N/A N/A N/A REGGINA N/A N/A 24,158 87.02 24,113 86.85 N/A N/A 23,095 83.19 14,868 38.17 -35.62% TORINO N/A N/A 21,857 31.66 N/A N/A 19,002 27.52 14,874 21.54 N/A N/A N/A LECCE N/A N/A 19,278 47.02 18,117 44.19 15,594 38.03 16,409 40.03 N/A VERONA N/A N/A 18,141 43.03 17,777 42.17 18,381 43.59 N/A N/A N/A ATLANTA N/A N/A N/A N/A 18,662 70.06 16,522 62.02 16,350 61.38 11,680 44.01 -28.56% BRESCIA N/A N/A N/A N/A 16,261 59.03 15,165 55.05 16,262 59.03 13,807 50.12 -15.10% CHIEVO N/A N/A N/A N/A N/A N/A 16,061 35.88 17,096 38.2 14,868 38.18 -13.03% COMO N/A N/A N/A N/A N/A N/A N/A N/A 7,614 50.76 N/A N/A N/A MODENA N/A N/A N/A N/A N/A N/A N/A N/A 13,770 79.6 N/A SIENA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 11,142 83.15 N/A PALERMO N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 23,599 63.78 N/A MESSINA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 10,488 24.39 N/A LIVORNO N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 10,643 58.64 N/A AVERAGE ATTENDANCE 30,841 29,908 29,598 26,019 25,474 25,833

SPAIN The Spanish La Liga, by contrast with Italy, has witnessed more of an upward trend in attendances. The performance of the upper tier, headed by Real Madrid, is hardly surprising. Its audiences have grown in the main over the past three seasons, backed by its performance on the pitch. The La Liga table showing all clubs that have featured in this league since the 1999/00 season reveals that 11 saw average attendances rise from 1999/00 against 2002/03. In the case of Malaga, attendances have risen since 2000/01, but have still not returned to the giddy heights of 1999/00 when the average was 27,526. Clubs like Real Madrid, whose performances on a national and continental level continue to sustain them, are likely to outstrip their rivals for the foreseeable future. Even Catalan rivals Barcelona, whose attendances fell in the 2001 season, face a hard fight to attain similar levels – despite the presence of a new and energetic

10 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.3 La Liga audience trends

CLUBS 1999/00 2000/01 2001/02 2002/03 2003/04 2003/04 AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF % OF ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY CHANGE REAL MADRID 59,316 78.74 64,475 85.59 63,645 84.5 69,232 91.91 69,203 91.87 -0.04% BARCELONA 65,526 66.86 62,632 63.91 54,211 55.32 66,058 67.41 67,583 68.96 2.31% VALENCIA 40,368 73.4 42,737 80.64 45,211 85.3 45,773 86.36 46,263 87.29 1.07% REAL BETIS 38,684 81.44 N/A N/A 36,842 77.56 34,646 72.94 32,713 68.87 -5.58% ATHLETICO BILBAO 34,474 85.54 32,105 79.66 33,211 82.41 34,256 85 32,579 80.84 -4.90% SEVILLA 29,353 53.37 33,158 60.29 34,758 63.2 35,289 64.16 1.53% DEPORTIVO LA CORUNA 27,211 76 28,921 80.78 29,368 82.03 28,079 78.43 26,061 56.04 -7.19% REAL ZARAGOZA 22,000 63.59 25,053 72.42 25,013 72.3 N/A N/A 29,632 N/A N/A REAL SOCIEDAD 25,221 78.82 25,000 78.13 24,885 77.77 27,743 86.7 26,190 81.82 -5.60% CELTA VIGO 22,711 71.42 21,684 68.19 21,553 67.78 19,732 62.05 19,211 60.41 -2.64% ESPANYOL 18,900 34.36 18,500 33.64 19,984 36.33 23,587 42.89 23,911 43.47 1.37% OSASUNA N/A N/A 17,260 88.27 16,861 86.23 15,549 79.52 15,260 78.04 -1.86% REAL MALLORCA 16,384 61.83 16,637 62.78 16,726 63.12 16,921 63.86 16,513 62.31 -2.41% TENERIFE N/A N/A N/A N/A 16,684 69.52 N/A N/A N/A LAS PALMAS N/A N/A 17,235 16,456 N/A N/A N/A VILLARREAL N/A N/A 15,368 90.4 16,137 94.92 17,126 100.74 15,920 93.65 -7.04% MALAGA 27,526 83.41 15,789 47.85 16,000 48.48 19,773 59.92 20,675 62.65 4.56% DEPORTIVO ALAVES 17,158 87.99 13,984 71.71 13,740 70.46 14,516 74.44 N/A N/A N/A REAL VALLADOLID 13,326 50.26 13,253 49.99 13,116 84.62 12,587 47.48 14,711 55.49 16.87% RAYO VALLECANO 9,737 62.82 9,079 58.57 11,061 71.36 12,637 81.53 N/A N/A N/A ATLETICO MADRID 35,211 61.24 N/A N/A N/A N/A 47,261 82.19 44,368 77.16 -6.12% RACING SANTANDER 15,820 70.63 15,684 70.02 N/A N/A 15,832 70.68 15,538 60.44 -1.86% REAL OVIEDO 11,705 23,421 N/A N/A N/A N/A N/A N/A N/A NUMANCIA N/A N/A 9,337 N/A N/A N/A N/A N/A N/A N/A RECREATIVO HUELVA N/A N/A N/A N/A N/A N/A 17,579 87.9 N/A N/A N/A ALBACETE N/A N/A N/A N/A N/A N/A N/A N/A 15,456 N/A N/A MURCIA N/A N/A N/A N/A N/A N/A N/A N/A 11,391 N/A N/A AVERAGE ATTENDANCE 26,984 24,408 26,193 28,593 28,650

president. While Real Madrid’s performance on the pitch – and its financial acumen off the pitch – is likely to drive attendances still higher, the jury is out on Barcelona. The club witnessed a shaky start to the season on the pitch. Despite this, it attracted fans pre-season and at initial matches – even with late evening kick-offs. Fans have kept faith with the club through its struggles, and it is unlikely to suffer any fall-off, given its continued progression up the table. The violence associated with Italian football does not seem as endemic in Spain, although a Real Sociedad fan was stabbed outside Atletico Madrid’s Vincente Calderon stadium back in the late 1990s. Clubs have countered by making barriers, fences and moats permanent fixtures at stadia.

FOOTBALL SPONSORSHIP & COMMERCE 11

Section I Market analysis

ENGLAND In the England Premiership, attendance trends are generally up since 1998. Instances of growth in excess of the overall trend are often due to enlargements of existing stadia or moves to new and bigger ones. West Ham’s increase, up 34.06%, is due to the rebuilding of the West Stand, Newcastle likewise to enlargements, and Southampton to its move from the Dell to St Mary’s. The problem in trying to draw conclusions from such data is the impact on crowds when clubs move to new stadia, as Leicester did, or decamp while alternative premises are supposedly being prepared (Fulham). Attendances patterns vary in London, a city that boasts 13 clubs in various divisions (Wimbledon relocated to Milton Keynes in 2003). Floating fans, since they are spoilt for choice, tend to opt for the most successful clubs. For example, Chelsea and Charlton rarely have empty seats; Fulham rarely sells out, even against top clubs.

TABLE 1.4 Premiership audience trends

CLUBS 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2003/04 AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF % OF ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY CHANGE ARSENAL 38,024 98.76 38,033 98.79 37,975 98.64 38,044 98.82 38,042 99.81 38,079 0.10% ASTON VILLA 36,935 84.46 31,697 74.2 31,597 73.96 35,012 81.96 34,975 81.87 36,622 4.70% BIRMINGHAM N/A N/A N/A N/A N/A N/A N/A n/a 28,831 96.07 29,076 0.70% BLACKBURN 25.764 82.14 N/A N/A N/A N/A 25,976 82.81 28,831 96.07 24,376 -7.10% BOLTON N/A N/A N/A N/A N/A N/A 25,097 90.02 25,017 89.73 26,795 7.10% BRADFORD N/A N/A 18,030 71.73 18,511 73.64 N/A N/A N/A N/A N/A N/A N/A CHARLTON 19,825 n/a N/A 20,023 24,165 90.51 26,256 98.34 26,293 0.10% CHELSEA 34,751 34,532 34,700 39,030 91.95 39,784 93.72 41,234 3.70% COVENTRY 20,797 88 20,809 88.05 20,582 87.09 N/A N/A N/A N/A N/A N/A N/A DERBY 29,195 86.9 29,351 87.36 28,551 84.98 N/A N/A N/A N/A N/A N/A N/A EVERTON 36,203 90.12 34,828 86.7 34,135 84.98 33,530 83.47 38,491 95.82 38,837 0.90% FULHAM N/A N/A N/A N/A N/A N/A 19,550 16,707 87.25 16,342 -2.20% IPSWICH 22,532 74.36 24,426 80.61 N/A N/A N/A N/A N/A LEEDS 35,845 89.16 39,155 97.4 38,974 96.94 39,752 98.86 39,120 97.3 36,666 -6.30% LEICESTER 20,469 19,827 20,452 19,835 30,983 6.00% LIVERPOOL 43,321 95.5 44,074 97.16 43,699 96.33 43,389 95.66 43,243 95.33 42,706 -1.20% MAN CITY N/A N/A N/A N/A 34,058 96.76 N/A N/A 34,565 98.2 46,834 35.50% MAN UTD 55,188 58,014 67,490 98.99 67,558 99.1 67,602 99.16 67,641 0.10% MIDDLESBORO’ 34,389 98.11 33,393 95.28 30,747 87.73 28,459 31,025 88.52 30,398 -2.00% NEWCASTLE 36,665 36,333 51,309 98.26 51,373 98.39 51,923 99.44 51,966 0.10% NOTTS FOREST 24,415 79.78 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A PORTSMOUTH N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 20,108 6.40% SHEFF WEDS 26,745 67.1 24,855 62.36 N/A N/A N/A N/A N/A N/A N/A N/A N/A SOUTHAMPTON 15,133 15,132 15,115 30,633 30,680 95.88 31,669 3.30% SUNDERLAND N/A N/A 41,375 85.66 46,791 96.88 46,744 96.78 39,698 82.19 -100.00% TOTTENHAM 34,174 94.31 34,912 96.35 35,195 97.13 35,001 96.6 35,897 99.06 34,876 -2.80% WATFORD N/A N/A 18,544 89.15 N/A N/A N/A N/A N/A N/A N/A N/A N/A WEST BROM N/A N/A N/A N/A N/A N/A N/A n/a 26,731 95.46 N/A N/A N/A WEST HAM 25,684 25,093 25,697 31,570 90.06 34,432 96.59 N/A N/A N/A WIMBLEDON 18,235 17,157 64.99 N/A N/A N/A N/A N/A N/A N/A N/A N/A WOLVERHAMPTON WANDERERS N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 28,874 12.20% AVERAGE ATTENDANCE 30,588 30,757 32,907 34,448 35,464 34,978 -1.61%

SOURCES: European Football Statistics, Football Insider, original research

12 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

GERMANY The league that is worth watching is the Bundesliga. Here attendances have grown progressively since the news that Germany is to host the 2006 World Cup. The football industry in Germany, with the backing of the national football authorities, has been supporting initiatives to provide clubs with bigger, better, state-of-the-art stadia. It has resulted in brand new stadia being built at Hamburg, VfL Wolfsburg, Schalke and Bayern. This is in addition to extensions and improvements at VfB Stuttgart and Dortmund. All of this – with bigger capacity stadia attracting bigger attendances – means that average crowds consistently top those of the English Premiership. Dortmund, for instance, despite a lacklustre season in 2003/04, is still attracting average home crowds of nearly 78,000 by virtue of its new 83,000-seater stadium – up on its previous 66,000 capacity home. Football in Germany is now becoming a very hot ticket. As Andreas Kroll, head of the 2006 World Cup Cities and Stadiums Department, pointed out in November 20031, ‘rapid modernisation’ of the stadia is the main reason why Germans are flocking in ever greater numbers to football matches. Bigger, safer, larger video screens, better roofs, more comfort and wonderfully improved ‘rest room’ facilities all contribute to its attraction, injecting more warmth into the relationship between fan and club. The ticket prices, too, are more user friendly compared with top English clubs. The most expensive seat at Dortmund is £29, but at most German stadia tickets are available for £10 or less.

TABLE 1.5 Bundesliga audience trends

CLUBS 1999/00 2000/01 2001/02 2002/03 2003/04 2003/04 AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF % OF ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY CHANGE ARMINIA BIELEFELD 19,823 74.52 N/A N/A N/A N/A 23,269 87.47 N/A N/A N/A BAYER LEVERKUSEN 22,441 99.74 22,471 99.87 22,412 99.61 22,500 100 22,500 100 0.00% BAYERN MUNICH 52,588 76.15 48,471 70.19 52,765 76.4 52,471 75.98 55,471 80.32 5.72% BOCHUM N/A N/A 19,603 60.05 N/A N/A 24,593 75.33 27,189 83.29 10.56% BORUSSIA DORTMUND 64,535 94.07 63,729 92.9 65,700 95.77 67,894 98.97 79,647 96 17.31% BORUSSIA MONCHENGLADBACH N/A N/A N/A N/A 30,187 87.49 28,991 84.03 32,276 93.55 11.33% ENERGIE COTTBUS N/A N/A 16,935 80.64 16,402 78.1 13,144 62.59 N/A N/A N/A HAMBURGER SV 41,534 74.17 42,893 76.6 43,853 78.31 45,621 81.47 48,275 86.21 5.82% HANNOVER 96 N/A N/A N/A N/A N/A N/A 36,496 66.26 23,443 42.56 -35.77% HANSA ROSTOCK 16,153 53.84 15,159 50.43 18,140 60.47 19,847 66.16 22,026 73.42 10.98% HERTHA BERLIN 47,401 86.18 40,337 73.34 34,913 63.48 42,064 76.48 40,920 74.4 -2.72% KAISERSLAUTERN 40,204 96.69 39,404 94.76 38,642 92.93 36,230 87.13 38,620 92.88 6.60% 1860 MUNICH 32,653 26,971 24,953 26,312 N/A 28,200 42 7.18% NUREMBERG N/A N/A N/A N/A 29,418 65.96 28,238 63.31 -100.00% SCHALKE 04 39,885 64.22 45,623 73.46 60,429 97.3 60,584 97.54 61,141 97 0.92% STUTTGART 29,853 58.35 26,657 52.1 27,456 53.66 32,742 92.8 43,270 84.57 32.15% WEDER BREMEN 30,202 85.6 30,042 85.15 30,130 85.4 19,415 64.72 37,495 95 93.12% WOLFSBURG 17,188 57.3 15,599 51.2 14,382 47.94 33,218 64.92 23,025 76.75 -30.69% EINTRACHT FRANKFURT 35,485 58.03 29,694 48.56 N/A N/A N/A N/A 26,362 42 N/A SC FREIBURG 24,711 98.84 24,882 99.53 24,847 99.39 N/A N/A 24,556 98 N/A SSV ULM 1846 21,841 N/A N/A N/A N/A N/A N/A N/A N/A N/A MSV DUISBURG 15,244 50.62 N/A N/A N/A N/A N/A N/A N/A N/A N/A SPVGG UNTERHACHING 9,535 10,906 N/A N/A N/A N/A N/A N/A N/A FC KOLN N/A N/A 34,251 30,706 N/A N/A 40,035 87 N/A ST PAULI N/A N/A N/A N/A 22,379 N/A N/A N/A N/A N/A TOTAL 561,276 553,627 587,714 613,629 674,451 AVERAGE ATTENDANCE 31,182 30,757 32,651 33,974 36,513

1. Guardian Unlimited, Sunday 2 November 2003, John Carlin

FOOTBALL SPONSORSHIP & COMMERCE 13

Section I Market analysis

FRANCE The French League 1, by comparison, appears – after the initial high from the 1998 World Cup – to have been on the slide. In no other league among those covered is the link between performance, at least on the national stage, reflected in attendance trends of the top clubs. Chart 1.0 on page 13 showing average attendance shifts in key European markets displays the downward trend quite clearly. Since the 2000 season, average gates have slipped down to –5.1 in 2001/02, to –7.9 in 2002/03 and the prospect for 2004/05 looks little better. Clubs that have seen a radical shift downwards, comparing average attendances in 1999/00 to 2002/03, are Auxerre, Monaco and Troyes. Those that have seen a marked improvement over the same period are Nantes, Rennes and Sedan.

TABLE 1.6 French audience trends

CLUBS 1999/00 2000/01 2001/02 2002/03 2003/04 2003/04 AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF AVERAGE % OF % OF ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY ATT CAPACITY CHANGE AC AJACCIO N/A N/A N/A N/A N/A N/A 5,488 51.48 3,413 32.02 -37.81% AUXERRE 12,125 51.67 10,912 46.5 12,206 52.01 10,481 44.66 12,906 54.99 23.14% BASTIA 6,911 68.56 7,133 70.76 6,848 67.94 7,580 75.2 5,910 58.63 -22.03% BORDEAUX 29,347 86.09 30,061 88.19 28,143 82.56 26,785 78.58 23,485 68.89 -12.32% GUINGAMP N/A N/A 12,701 70.4 11,991 66.47 14,547 80.64 14,720 81.59 1.19% LE HAVRE 12,719 78.51 N/A N/A N/A N/A 12,057 74.43 -100.00% LENS 37,969 89.76 38,625 91.31 37,279 88.13 37,052 87.59 34,726 82.09 -6.28% LILLE N/A N/A 16,859 64.45 17,581 83.72 15,579 74.19 15,104 71.92 -3.05% LYON 34,467 82.06 34,084 81.15 34,005 80.96 36,601 87.15 35,997 85.71 -1.65% MARSEILLE 48,836 81.4 48,508 80.85 48,481 80.8 51,324 85.54 51,649 86.08 0.63% MONACO 9,824 49.12 7,559 37.8 7,213 36.07 7,835 39.18 10,394 51.97 32.66% MONTPELLIER 13,553 38.18 13,876 39.09 12,761 35.95 11,977 33.74 -6.14% NANTES 26,368 59.52 29,373 66.3 32,512 73.4 32,538 73.45 30,778 69.48 -5.41% NICE N/A N/A N/A N/A N/A N/A 13,562 86.05 11,934 75.72 -12.00% PARIS SG 43,180 88.98 42,586 87.76 41,763 86.06 38,579 79.5 38,811 79.98 0.60% RENNES 13,687 57.93 19,211 81.32 17,626 74.61 18,247 77.24 17,268 73.09 -5.37% SEDAN 12,415 52.38 14,199 59.91 16,036 67.66 15,076 63.61 N/A N/A N/A SOCHAUX 16,357 81.76 15,254 76.27 16,507 82.54 8.21% STRASBOURG 8,253 20.02 13,299 32.26 14,800 35.9 16,556 40.16 11.86% TROYES 13,531 74.22 14,484 79.45 14,031 76.96 11,241 61.66 N/A N/A N/A SAINT ETIENNE 28,712 27,606 N/A N/A N/A N/A N/A N/A N/A METZ 18,535 69.42 18,569 69.55 17,485 65.49 N/A N/A N/A N/A N/A NANCY N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A TOULOUSE N/A N/A 21,265 N/A N/A N/A N/A 19,937 N/A N/A FC LORIENT N/A N/A N/A N/A 12,707 75.15 N/A N/A N/A N/A N/A LE MANS N/A N/A N/A N/A N/A N/A N/A N/A 12,721 N N/A TOTAL 370,432 407,034 386,140 397,387 384,793 AVERAGE ATTENDANCE 21,790 22,613 21,452 19,757 19,944

14 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

Overall attendances at matches in the main European countries have risen in the years since 2000, but not by a large degree. Germany has overtaken England as the country with the highest average gate, and England is beginning to see a reduction in average match attendance. This is partly down to large clubs such as Leeds United, Sunderland and West Ham United being relegated and replaced by smaller clubs such as Norwich City. But attendances are also down in other clubs in the English Premiership at the start of the 2004/5 season. Smaller leagues such as the Netherlands and Portugal have seen fairly static attendance figures since the turn of the millennium.

TABLE 1.7 European attendance averages

AVERAGE ATTENDANCE EUROPEAN MARKETS 2000/1-2003/4* SHIFTS IN KEY LEAGUE SEASON AVERAGE GATES % CHANGE HIGHEST ATTENDANCE FRANCE LIGUE 1 2003/04 19,944 0.9 56,207 2002/03 19,757 -7.9 56,529 2001/02 21,452 -5.1 58,000 2000/01 22,613 3.4 55,000 ITALY SERIE A 2003/04 25,833 1.4 77,921 2002/03 25,474 -2.1 78,843 2001/02 26,019 -12.1 81,691 2000/01 29,598 -1 81,954 SPAIN PRIMERA DIVISION 2003/04 28,650 0.2 92,524 2002/03 28,593 10.4 98,152 2001/02 26,193 7.3 95,000 2000/01 24,408 -9.5 98,000 ENGLAND PREMIERSHIP 2003/04 34,978 -1.4 67,748 2002/03 35,464 3.1 67,721 2001/02 34,448 4.7 67,688 2000/01 32,907 7.8 67,637 GERMAN BUNDESLIGA 2003/04 36,513 8 81,500 2002/03 33,794 3.5 69,000 2001/02 32,651 6.2 69,000 2000/01 30,755 -1.4 69,000 NETHERLANDS DIVISION 1 2003/04 15,879 -2.3 51,344 2002/03 16,255 4.7 50,777 2001/02 15,529 0.8 45,757 2000/01 15,407 9.6 52,200 PORTUGAL 1 DIVISAO 2003/04 7,934 13.2 65,000 2002/03 7,012 -13.4 54,000 2001/02 8,098 9.7 80,000 2000/01 7,382 -14.5 80,000

*data incomplete for current season Source: www.European-football-statistics.co.uk

FOOTBALL SPONSORSHIP & COMMERCE 15 Section I Market analysis

CHART 1.0 European attendance averages

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0 2000/1 2001/2 2002/3 2003/4

FRANCE LIGUE 1 ITALY SERIE A

SPAIN PRIMERA DIVISION ENGLAND PREMIERSHIP

GERMAN BUNDESLIGA NETHERLANDS DIVISION 1

PORTUGAL 1 DIVISAO

16 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

Chapter 3: Shirt and kit sponsors, profitability and TV income

The onset of the 2001/02 season appeared to mark a watershed in football sponsorship. Back then, the £30m five-year deal struck between Manchester United and Vodafone, and the £24m Emirates four-year deal with Chelsea looked to be the exceptions rather than the rule. The figures on the current charts make for more sober reading. In the UK, for instance, clubs like Liverpool managed to attract a respectable £15m over three years from Carlsberg, and Newcastle between £3.45m and £6.9m over two years from Northern Rock – but elsewhere in the Premiership the average was nearer £1m. On the European continent again, clubs have faced an uphill struggle. In Germany, for instance, Bayern Munich’s deal with T-Mobile (€17m over eight years) stands out from the crowd, with the norm closer to €1m or less per season. Juventus stands out as the key earner in shirt sponsorship in Italy in total value, with two companies named, Sky and Tamoil. It is closely followed by Milan, with €9m from Opel, and Lazio, whose €8.9m deal with Siemens expired in 2004. Car companies, or those with a motor industry connection, appear to have a liking for the sport in Italy. In Serie A such sponsors include Pirelli, Opel, Toyota, LPR Brakes and Mazda – more than in any other league in Europe. The norm is for two or three such names to appear. It’s the two big Madrid teams, Real Madrid and Athletico Madrid, that have attracted the big shirt sponsorship deals in Spain. Real’s is with Siemens, Athletico with Sony, both for €12m a year. The difficulty for clubs, however, is that unless they can resolve their shirt sponsorship deals, kit deals cannot swing into action. By April of each year the new deals need to be on the table if factories in the Far East are to start churning out kits bearing the relevant names. Again, as with shirt sponsorship, kit sponsors have been able to dictate their terms for all but the richest clubs. Nike’s £55m (13-year) deal with Arsenal (£4.2m a year) and its 13-year, £302.9m one with Manchester United (£23.3m a year), and Reebok’s £100m package with Liverpool (£16.6m a year) are again the exceptions to the rule. Contracts for under £1m in the Premiership are not unusual, proving just who has the whip hand when it comes to dictating terms. On the Continent, kit sponsorship deals are still lower – with even those at the top end of the scale often failing to meet the sums attained in the UK. In the Bundesliga, for instance, Nike’s €9m deal with Borussia Dortmund stands out – and is due to run until 2009. In Italy, Nike again has signed a sizeable €156m deal with Juventus until 2015, working out at around €13m a year. At the other end of the scale, however, Bologna’s arrangement with Macron was for a mere €0.5m. What do such kit deals mean for the future? As will be discussed elsewhere in this report, much will depend on the global market for a team’s activities, its performance on pitch, and the marketability of its players. Adidas, for instance, knows that a star team such as Real Madrid – which performs on the world stage – will open up previously untapped markets worldwide. Likewise, Nike with Arsenal and Manchester United, and Umbro with Chelsea. Clubs that are unlikely to play outside their home countries – those in the lower tiers – are likely to have to work that much harder to boost their appeal. This can involve as little as helping a new sportswear brand break into their local market, or allowing its players to be used as a marketing tool. The harsh reality, though, is that such clubs will never have the power to attract the megabucks of clubs in the upper tier.

FOOTBALL SPONSORSHIP & COMMERCE 17 Section I Market analysis ACITY % CAP VERAGE 20108 A ATTENDANCE ATTENDANCE ACITY CAP 68,174 67,641 99% 19,148 16,342 85% 42,719 36,62231,367 86% 24,37626,700 78% 26,293 98% 47,500 46,834 99% 52,218 51,966 100% 30,009 29,07627,879 97% 26,795 96% 40,170 38,837 97% 35,049 30,398 87% 36,236 34,876 96% 32,000 31,699 99% 45,362 42,706 94% 38,500 38,079 99% 42,449 41,234 97% TION 4 3 4 3 4 2 4 3 4 6 13 10 13 10 (02/03) (YEARS) DURA 2005 2004 2004 2006 2007 2004 2004 2005 2006 2005 2009 2011 2011 EXPIRES ROLLING ROLLING UE * 1 7 4 1 1 55 40 AL 0.5 6.5 0.5 1.5 100 V 0.5-1 2007 302.9 2015 TIF A A KIT ISD NIKE NIKE JOMA PUMA PUMA KAPP KAPP ERREA ADIDAS UMBRO REEBOK REEBOK REEBOK PROTON DIADORA DIADORA HUMMEL SPONSOR (EUROS) LE COQ SPOR TION 2 3 1 1 1 2 4 3 6 2 1 1 2 2 1 1 2 2 2 (YEARS) DURA 2006 2007 2005 2005 2005 2006 2008 2007 2010 2006 2005 2005 2006 2006 2004 2005 2006 2006 2006 EXPIRES ROLLING UE 5 1 1 2 6 5 1 9 1 5 1 AL 1.1 0.3 1.5 0.7 0.5 2.5 0.5 0.75 0.33 V P/YR ( € M) TES TS YBE WS TY O2 HAS D FL -MOBILE REEBOK THERN ROCK 888.COM T Y EMIRA THOMSON DABS.COM VODAFONE ALLSPOR CARLSBERG CHANG BEER FL T SPONSOR (02/03) THOMAS COOK NOR PROTON & LOTUS FRIENDS PROVIDENT SHIR England Premier League finances (to 2004) England Premier A ACE CHURCHILL INSURANCE AL TON TON TON UB AL P CL TSMOUTH ACKBURN BOL FULHAM CHELSEA ARSENAL EVER MAN UTD MAN CITY NORWICH CHARL LIVERPOOL NEWCASTLE WEST BROM BL TOTTENHAM ASTON VILL BIRMINGHAM POR SOUTHAMPTON CRYST ABLE 1.8 MIDDLESBOROUGH T

18 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis ACITY 100 74.4 % CAP VERAGE A 79,647 40,035 26,362 24,556 28,200 61,141 37,495 ATTENDANCE ACITY CAP 22,50069,060 22,500 32,645 55,471 27,189 80.32 34,500 83.29 32,276 93.55 56,00055,078 48,27530,000 23,443 86.21 55,000 22,026 42.56 41,582 40,920 73.42 38,620 92.88 51,164 43,270 84.57 30,000 23,025 76.75 T A O KIT NIKE NIKE NIKE NIKE NIKE NIKE JAK KAPP ADIDAS ADIDAS ADIDAS ADIDAS REEBOK UHLSPOR 2006 2007 2008 2006 EXPIRES SPONSOR UE 7 2 3 5 3 3 17 10 AL 1.5 2.5 4.5 6.5 2.5 5.5 V TUNG Y A USIVE ON VW CH FOR RWE ADIG E- T JEVER T SPONSOR (EUROS) M TUI.DE ARCOR -MOBILE DEBITEL VICTORIA T VITA COL VITA DEUTSCHE Y TV RIGHTS, LIQUI MOL MA USIVE RIGHTS TO YOUNG SPIRIT YOUNG BUNDESLIGA 2 PA ACKAGE & 1 LIVE NON EXCL SHIR WS INVESTMENTS INC GERMAN CUP P D HIGHLIGHTS RIGHTS EXCL TO THE BUNDESLIGA 1 VERMOGENSBERSTUNG VERMOGENSBERA BROADCAST HIGHLIGHTS T ADBACH USEN T TMUND UTERN UB OGNE TS & MEDIA Bundesliga finances (to 2004) CL THA BERLIN BOCHUM COL FREIBURG HAMBURG WOLSBURG STUTTGAR YERN MUNICH SCHALKE 04 1860 MUNICH HANNOVER 96 YER LEVERK HER HANSA ROSTOCK BA KAISERSLA WERDER BREMEN BA BORUSSIA DOR EINTRACHT FRANKFUR ABLE 1.9: BORUSSIA MONCHENGL T MEDIA RIGHTS INFRONT SPOR PREMIERE

FOOTBALL SPONSORSHIP & COMMERCE 19 Section I Market analysis DTT* MEDIASET MEDIASET MEDIASET MEDIASET MEDIASET MEDIASET MEDIASET MEDIASET TELECOLM UE 6 7 5 50 65 32 52 24 42 AL 6.4 7.3 ( € M) 13.4 12.9 V ALIA ALIA ALIA ALIA ALIA ALIA ALIA ALIA ALIA ALIA ALIA ALIA ALIA TELLITE Y IT Y IT Y IT Y IT Y IT Y IT Y IT Y IT Y IT Y IT Y IT Y IT Y IT SK SK SK SK SK SK SK SK SK SK SK SK SK GIOCO CALCIO GIOCO CALCIO GIOCO CALCIO ACITY SA % CAP VERAGE (03/04) A ATTENDANCE ATTENDANCE ACITY CAP 26,54239,387 11,68027,547 23,062 44.01 18,000 13,807 58.55 38,948 12,111 50.12 47,282 14,868 67.28 83,679 25,887 38.18 58,352 54.75 69.73 41,00018,150 16,40943,000 10,643 40.03 83,679 10,488 58.64 37,000 63,245 24.39 23,599 75.58 63.78 28,78338,948 15,90480,558 14,868 55.26 40,117 55,413 38.17 13,400 26,224 68.79 40,919 11,142 65.37 17,642 83.15 43.11 2115 67,229 34,365 51.12 2005 80,558 49,341 61.25 EXPIRES UE 30 AL 156 V (EUROS) TIFF A A KIT OTTO OTTO OTTO NIKE NIKE ASICS ASICS ASICS ASICS PUMA L L L LEGEA KAPP KAPP A-LINE ADIDAS ADIDAS MACRON DIADORA CHAMPION LE COQ SPOR 2005 2006 EXPIRES SPONSOR UE 1 5 9 M AL 7.5 V 10/4.5 A TECH ANI Y A D'ORO AMOIL OMBARDA ASCHIVIT SK UL ERG ALERMO OPEL Y/T T SPONSOR (EUROS) MAZDA PIRELLI PA CHAMPION ARMACOTTO SK DI P PROMA P TERRA SARDA FONDIARIASAI SHIR MONTEP BANCA L SALENTO D'AMORE GRUPPO BANCA CARIGE elevision Serie A finances (to 2004) A AN UB ANT OGNA AZIO ARMA CL L ROMA SIENA INTER LECCE TL MIL P CHIEVO BRESCIA A UDINESE LIVORNO MESSINA MISCEL REGGINA CAGLIARI PALERMO PROVINCIA REGIONALE BOL ALIA MEDIA JUVENTUS SAMPDORIA FIORENTINA IT ABLE 1.10 T * Digital Terrestrial T * Digital Terrestrial

20 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 EXPIRES UE 10 52 36 39 72 30 AL ( € M) V 366.6 2008 390.6 2008 AL) AL) AL AL AL ALENDIANA ALENDIANA ALENDIANA AL Y TV TV3 TV3 TV3 AL (VIA DIGIT PA UDIOVISU UDIOVISU UDIOVISU INDIVIDU SOGECABLE SOGECABLE A A A UDIOVISU A (CANAL SATELLITE DIGIT (CANAL SATELLITE RADIO TELEVISAO V RADIO TELEVISAO V RADIO TELEVISAO V 60 75 29 23 40 36 25 23 22 24 36 25 27 ( € M) 169 293 126 14,2 TURNOVER ACITY % 02/03 CAP VERAGE A 15,456 11,391 29,632 ATTENDANCE ACITY (03/04) CAP 40,300 32,579 80.84 31,800 19,21155,000 60.41 23,91126,500 43.47 16,51319,553 62.31 22,400 15,26047,500 13,538 78.04 32,713 60.44 68.87 32,00826,512 26,190 14,711 81.82 55.49 53,00017,000 46,263 15,920 87.29 93.65 2005 57,5002009 98,000 44,3682004 67,583 77.16 35,800 68.96 2007 26,061 33,000 56.04 20,675 62.65 2008 75,328 69,203 91.87 2111 55,000 35,289 64.16 Y Y A KIT NIKE NIKE NIKE JOMA JOMA KAPP KELME ADIDAS UMBRO UMBRO UMBRO UMBRO ASTORA DIADORA SPONSOR EXPIRES JOHN SMITH VE A € 252M ARRA ASTORA US ALL V A AR PICTURES UBS HA OT UBS (E.G. REST Y ANAIR ADESA T SPONSOR TO F PIKOLIN SP CITROEN SIEMENS CAJAMURCIA DON QUIJOTE TERRA MITICA (NO SPONSOR) (NO SPONSOR) (NO SPONSOR) (NO SPONSOR) (NO SPONSOR) (NO SPONSOR) SHIR ABRIA GRAN RESERVA TC (F) NGS TECH (B) TC COLLECTIVE DEAL CON CAJA NA UMBIA TRIST OF PRIMERA PL VITEL MOBILE PHONES FIA SEGUNDA CL CANT 30 OTHER CL WITH SOGECABLE) = La Liga finances (to 2004) ANDER A OL ONA ADOLID A CORUNA AGA ORCA UB AREAL A VIGO ANY ALL CL ALENCIA MURCIA SEVILL MAL OSASUNA V ALBACETE TIVO L ESP VILL MALL CELT REAL BETIS BARCEL REAL MADRID MEDIA RIGHTS REAL SOCIEDAD REAL ZARAGOZA THLETICO BILBAO THLETICO MADRID COL REAL V A A RACING SANT ABLE 1.11 DEPOR T

FOOTBALL SPONSORSHIP & COMMERCE 21 Section I Market analysis

TABLE 1.12 French Premier League finances (to 2004)

VALUE KIT AVERAGE % TURNOVER CLUB SHIRT SPONSOR (02/03) (EUROS) M SPONSOR CAPACITY ATTENDANCE CAPACITY (€M) (02/03) (03/04) 02/03 AC AJACCIO GEANT PUMA 10,660 3,413 32.02 48 AUXURRE PLAYSTATION 2 KAPPA 23,467 12,906 54.99 22.8 BASTIA NOUVELLES FRONTIERES UHLSPORT 10,080 5,910 58.63 20.9 BORDEAUX SIEMENS/LG ELECTRONICS ADIDAS 34,088 23,485 68.89 55 GUINGAMP BRIT AIR/SECMA ADIDAS 18,040 14,720 81.59 21 LE MANS 12,721 LENS ORANGE NIKE 42,300 34,726 82.09 50.3 LILLE ING DIRECT NIKE 21,000 15,104 71.92 20 LYON RENAULT TRUCKS/CONTINENTAL 4.5 UMBRO 42,000 35,997 85.71 100 MARSIELLE 9 TELECOM ADIDAS 60,000 51,649 86.08 52 METZ C 18,052 MONACO FEDCOM PUMA 20,000 10,394 51.97 MONTPELLIER TEDDY SMITH NIKE 35,500 11,977 33.74 20.4 NANTES SYNERGIE/LOXAM LE COQ SPORTIF 44,300 30,778 69.48 60 NICE RICA LEWIS JEANS PUMA 15,761 11,934 75.72 12 PARIS SG THOMSON 4.5 NIKE 48,527 38,811 79.98 78 RENNES CONFORAMA UHLSPORT 23,625 17,268 73.09 28 SOCHAUX ESSO CHAMPION 20,000 16,507 82.54 30 STRASBOURG STEELCASE/TRYBA CONSULT UHLSPORT 41,228 16,556 40.16 20 TOULOUSE SUD RADIO 19,937

TELEVISION AND TURNOVER In the Premiership there is wide gap between the top earners and the lower earners from TV. At the top end are clubs such as Manchester United (£19.85m in the 2002/03 season), joined by Arsenal (£18.11m), Liverpool (£18.11m), Chelsea (£14.63m) and Tottenham (£14.48m). At the lower end are clubs like Southampton (£11.64m) and Charlton (£11.94m). Will matters improve for the less wealthy? Well, it is all a matter of degree. Clearly it helps to have a rich benefactor in the shape of Roman Abramovich, the billionaire oil tycoon, who bought Chelsea in the summer of 2003. When a club benefits from this type of money, its directors hope to see a corresponding impact on the performance on the pitch – higher broadcasting income should reflect the team’s progress through the various tournaments at home and abroad. For clubs without wealthy benefactors, there is a need to control wages and maximise turnover through a professional approach to commercial opportunities. In Italy, the picture is less clear. Here, broadcasting revenue often accrues from pay TV partners. The trend, for the majority of teams in Serie A over the 2001/02 and 2002/03 seasons, has been downward. Piacenza, for instance, saw its revenues drop by 18.13%, Those of A.C. Milan, albeit from a bigger base, fell by 12.24% over the same period. There are two clubs that have defied the trend here: Inter Milan and Juventus. The former enjoyed a 10.6% rise (to €49m in 2003), while Juventus grew by 9.26% (to €54m). Their income from pay TV outstripped those of all their rivals in Serie A. Only Lazio and A.C. Milan came close, notching up €32m and €49m respectively. In Spain, two clubs again stand out. Barcelona has a €366.6m contract with Audiovisual over five years, beaten only by that of Real Madrid with Canal Satellite for €390.6m for a similar period. At the other end of the scale lies Athletico Bilbao, which has settled for a €10m TV contract with Sogecable, which will take it up to 2006. The rest of the clubs in La Liga hover between the €10m and €24m-a-year mark.

22 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.13 Dutch League Finances (to 2004)

VALUE KIT AVERAGE % CLUB SHIRT SPONSOR (02/03) (€M) P/YR SPONSOR CAPACITY ATTENDANCE CAPACITY (03/04) AJAX ABN AMRO 6.8 ADIDAS 51,342 49,006 95.45 ACKMAAR ACTUS NOTARISSEN 0.8 UMBRO 8,372 7,737 92.42 ADO DEN HAAG HOMMERSON CASINOS 0.4 7,215 BREDA GARCIA JEANSWEAR/PRINCESS 0.5 JAKO 16,564 12,654 76.4 FEYERNOORD STAD ROTTERDAM VERZEKERINGEN/FORTIS 4.5 KAPPA 51,177 41,726 81.53 GRONINGEN BEAUFONT PREFAB SKELETBOUW 0.5 UMBRO 13,000 12,214 93.95 HEERENVEEN UNIVE VERZEKERINGEN 1.2 UMBRO 14,593 NEC AG NEOVO LCD MONITORS 0.6 12,265 PSV EINDHOVEN PHILLIPS 7.5 NIKE 35,270 32,853 93.15 RODA ENECO 1 UMBRO 19,500 13,069 67.02 ROOSENDAAL BURGROEP 0.35 TREPO 5,000 4,981 99.62 TWENTE ZWANEBERG 0.75 UMBRO 13,350 13,059 97.82 UTRETCH AMEV 1.5 PUMA 18,925 17,356 91.71 VITESSE SUNWEB 0.7 UHLSPORT 29,000 18,864 65.05 WAALWIJK VHS ONROEREND GOED 0.6 TREPO 7,500 5,900 78.67 WILLEM II INTERPOLIS VERZERKERINGEN 1 UMBRO 14,750 12,807 87 VOLENDAM AFAB GELDSERVICE 0.45 5,180 ZWOLLE FALABELLA DESIGN FOR MEN 0.4 HUMMEL 6,834 6,250 91.45

WHICH IS THE WORLD’S RICHEST CLUB? Football may be attracting new investors, such as Chelsea’s Russian supremo, but the impact on the balance sheet will have to wait for the next financial year. There has been little change in the Deloitte Rich List: Manchester United again tops the list, based on its income from the 2002/03 season. It generated an income of over €250m, placing it well ahead of its rivals and in the top slot for the seventh successive year of the List’s existence. This does not mean that Manchester United has no commercial problems, since any company knows that to stand still is to fall behind. Its challenge, it admitted on the release of its half-yearly results in March 2004, is to strike a balance between the commercial urge for more corporate hospitality at its stadium and its desire to provide extra seating for supporters. Its chief executive, David Gill, unveiled plans to spend £45m expanding the stadium to 75,000 seats so as to double the size of the area set aside for corporate entertainment. More than 50%, he said, would be for fans although he has not yet divulged the exact split. This came after reporting pre-tax profits of £26.8m on a turnover of £92.4m for the six months to January 2004. The need for expansion is driven by the fact that the club is turning away people at the gates, which it wants to address urgently. The top European clubs appear to be generating more income than ever before. In the UK, in spite of the collapse of ITV Digital, it comes mainly from broadcast income. One of the Rich List’s authors, Deloitte Sports Business Group director Dan Jones, said that despite predictions of a fall in media values this appears unlikely. “At the same time, many of football’s leading clubs have great, and as yet underused, opportunities to significantly develop other income streams, particularly from their stadia,” he said. “For instance, Manchester United’s matchday income of €101m is over three times greater than its closest Italian rivals.”

FOOTBALL SPONSORSHIP & COMMERCE 23 Section I Market analysis

The clubs in the top 20 by income are all from Europe. English and Italian teams fill 12 of the slots and there are three from both the German Bundesliga and the Spanish Primera Liga. The French and Scottish top divisions fill one slot each. Italian clubs Juventus and AC Milan fill the second and third slots respectively, boosted by their huge broadcast incomes plus appearances in the 2003 Champions’ League Final. They appear ahead of Real Madrid, whose income is some €59m short of the leader, Man Utd. There is only one newcomer to the list: Schalke 04, which makes its entry at number 14, thanks to its stadium development programme and a strong domestic performance. Gerry Boon, partner in the Sports Business Group at Deloitte, warns that although many clubs have seen the value of generating significant income from their stadia on both matchdays and non-matchdays, they still need to do more. “Clubs are much more commercially focused than they were a decade ago,” he says. “There is, however, still a lot more that clubs in Continental Europe could do strategically to improve the venues and facilities that they operate, their stadium utilisation and also the income yield they generate from their fan base.” Determining financial muscle is always a tricky affair. Income is the most readily available benchmark, but a more realistic one is the amount a club chooses to spend. The essential challenge facing most clubs is to achieve a better balance between income and costs. As Jones comments: “It’s a paradox that the top 20 includes a couple of clubs that are having some financial difficulty – but their income is among the highest worldwide, so the source of that difficulty doesn’t lie with the revenues they earn.” The football industry is, however, getting its house in order. Regulation is a growing theme in European football and from the 2004/05 season the first stages of the UEFA Club Licensing system will be in place. This will incorporate a requirement for clubs to meet certain key financial criteria. Signs that this is a long overdue development – albeit possibly not tough enough – came from a police raid in February 2004 of Italy’s top football clubs and administrative bodies as part of a probe into suspected accounting fraud. It followed allegations that four clubs used false documents to gain admission to this year’s championships. Italian clubs already have to have their accounts checked to prove that they are solvent and can survive in order to qualify for each new season. This was insufficient to stave off disaster due to the financial collapse of the owners of such clubs as Parma and Lazio. Parma has been put up for sale by scandal-hit Parmalat, while Lazio is controlled by the collapsed food group Cirio. Roma’s debt-laden owners are said to be attempting to find a buyer, while Serie A was reported earlier this year to have a combined operating loss of €948m in the 2000/02 season. The Italian Government has passed a law allowing clubs to spread their losses over a period of 10 years instead of the three permitted in the rest of the EU, although this has been challenged in Brussels as an unfair use of State aid. In the UK, although clubs are looking to exploit commercial opportunities, there is still too much reliance on banks. The second Accountancy Age/PFK football finance report, released in August 2003, showed that just under half – some 43% - of the finance directors interviewed across the Premiership, First Division and Scottish Premier League (SPL) have increased their bank facility over the previous 12 months. It was, however, the First Division clubs that suffered the most, with 80% saying that they had increased their facility, because they were in urgent need of short-term cashflow after the ITV Digital collapse, which was exacerbated by overspending. Financial difficulties continue to plague top tier clubs, even those that feature in the most recent Rich List. Two Serie A clubs, AS Roma and SS Lazio, feature in the top 20, despite the problems noted earlier. Leeds United, at number 16, is in financial trouble, even though its difficulties have been eased slightly by a takeover. It just serves to underline the dangers of relying too much on turnover to judge a club’s inherent financial strength.

24 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.14 Deloitte Rich List

RANK (LAST YEAR) CLUB INCOME MATCHDAY BROADCAST COMMERCIAL EUROS (M) 1 (1) MANCHESTER UNITED 251.40 101.4 83.6 66.4 2 (2) JUVENTUS 218.3 22.6 116.7 79 3 (4) AC MILAN 200.3 32.4 110.2 57.7 4 (6) REAL MADRID 192.6 58.2 66.2 68.2 5 (3) BAYERN MUNICH 162.7 65.2 (MATCHDAY/BROADCAST) 97.5 6 (12) INTER MILAN 162.4 32.9 92.6 36.9 7 (8) ARSENAL 149.6 40.1 74.9 34.6 8 (5) LIVERPOOL 149.4 41.2 65.7 42.5 9 (13) NEWCASTLE UNITED 138.9 47 60.2 31.7 10 (7) CHELSEA 133.8 43.8 43.2 46.8 11 (10) AS ROMA 132.4 41.2 61.9 29.3 12 (15) BORUSSIA DORTMUND 126 17.9 49.9 58.2 13 (9) BARCELONA 122.4 41.8 42.6 38 14 (NA) SCHALKE 04 119.5 32.2 37.9 49.4 15 (16) TOTTENHAM HOTSPUR 95.3 36.7 35.3 23.3 16 (11) LEEDS UNITED 92 17.6 31.5 42.9 17 (14) LAZIO 88.9 21.4 48.5 19 18 (17) CELTIC 87 43.8 22.4 20.8 19 (20) LYONS 84.3 12.5 51.7 20.1 20 (NA) VALENCIA 82.5 19.4 48.2 14.9

SOURCE: Deloitte Football Rich List

FOOTBALL SPONSORSHIP & COMMERCE 25 Section I Market analysis

Chapter 4: International rights and tournaments

INTRODUCTION There are three main international competitions marketed to international sponsors and broadcasters. Other competitions exist, but are seen – in Europe at least – as not mainstream enough to warrant coverage on the major broadcasting channels. The big three, therefore, are:

I FIFA World Cup I European Championships I UEFA Champions League.

FIFA WORLD CUP This is the top global tournament for all national teams, played every four years. Qualification is through regional group stages and play-offs before progressing to the tournament final. The last World Cup was held in Japan and South Korea in May/June 2002. The next one will be held in 2006 in Germany.

COVERAGE The UK television rights to the finals of the 2006 competition are split between the BBC and ITV. They are worth £160m for the 2002 and 2006 games combined.

SPONSORSHIP A list of World Cup sponsors through the years is shown on page 3, but for the next World Cup they are:

I Adidas I Avaya I Budweiser I Coca-Cola I Deutsche Telecom I Philips I Toshiba I Yahoo! I Gillette I McDonald’s I Hyundai I Continental I Emirates I Fuji Film I Mastercard

26 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

National suppliers include:

I EnBW I Hamburg-Mannheimer I Versicherungs I OBI AGO

Official sponsors for the 2002 World Cup are said to have paid under £30m for their packages. The accompanying charts show how TV coverage over the years has depended, particularly in Europe, on how well individual teams have fared and the impact of time differences.

TABLE 1.15 Viewing summary of major championships

EVENT EURO WORLD CUP EURO WORLD CUP EURO WORLD CUP '92 '94 '96* '98 2000 2002 HOURS OF COVERAGE 3,109 16,539 6,886 29,700 10,687 41,435 NUMBER OF COUNTRIES BROADCASTING 137 188 192 196 170** 213 CUMULATIVE TV VIEWERS (BILLIONS) 4 32.1 6.7 33.4 7.05 28.8

* championship format expanded from 8 teams/15 matches to 16 teams/31 matches **ESPN International had boosted territories in 1996, but deal not renewed for 2000 SOURCES: Sponsorship Research International/FIFA Marketing

TABLE 1.16 Cumulative* FIFA World Cup TV viewing 1986-2002

1986 MEXICO 13.5BN VIEWERS 1990 ITALY 26.7BN VIEWERS 1994 USA 32.1BN VIEWERS 1998 FRANCE 33.4BN VIEWERS 2002 JAPAN/KOREA 28.8BN VIEWERS

SOURCE: Sponsorship Research International/FIFA Marketing * cumulative audience for each event

TABLE 1.17 Total countries broadcasting FIFA World Cup 1986-2002

1986 MEXICO 166 1990 ITALY 167 1994 USA 188 1998 FRANCE 195 2002 KOREA/JAPAN 213

SOURCE: Sponsorship Research International/FIFA Marketing

FOOTBALL SPONSORSHIP & COMMERCE 27 Section I Market analysis

TABLE 1.18 Total broadcast hours FIFA World Cup 1986-2002

1986 MEXICO 10,000 1990 ITALY 14,700 1994 USA 16,539 1998 FRANCE 29,700 2002 KOREA/JAPAN 41,435

SOURCE: Sponsorship Research International/FIFA Marketing

TABLE 1.19 Cumulative viewing (millions) by country of FIFA World Cup in Europe 1998-2002

1998 2002 % CHANGE FRANCE 411,687 241,589 UK 470,542 385,941 GERMANY 615,960 572,043 HOLLAND 160,780 152,110 SPAIN 230,023 282,121 ITALY 464,910 454,153

SOURCE: Sponsorship Research International/FIFA Marketing

EUROPEAN CHAMPIONSHIPS This is a tournament played every four years and open to the major European national teams. They qualify for the final session via group stages and play-offs in a similar way to the World Cup. The Euro 2004 finals were played in Portugal, while Euro 2008 is being co-hosted by Switzerland and Austria. Again, like the World Cup, it has a multi-sponsor format.

COVERAGE The UK television rights for the Euro 2004 finals for the whole of Europe were sold by UEFA to the European Broadcasting Union (EBU) in 2000 for CHF800m (continuing the policy of free-to-air broadcasting for this event, but for the first time the EBU had to take part in a competitive tender to get them). The rights were split between the BBC and ITV, until 2004, for £48m.

SPONSORSHIP There is a certain amount of overlap between sponsors of the World Cup and the European Championships. Indeed, many are the same blue chip names that are also likely to pop up in the Olympics. For the 2004 finals, they included:

I McDonald’s I Carlsberg I Coca-Cola I JVC I Canon I NTT Com/Portugal Telecom I Hyundai

28 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

The official suppliers (estimated to have spent around £15m for the sponsorship rights) were:

I Galp Energia I Portuguese Institute of Foreign Trade I Portuguese Post Office I CTT Correios I Portucel Soporcel I BPI I Adidas

Euro 2000 attracted the following sponsors:

I Carlsberg I Coca-Cola I Fuji Film I Hyundai I JVC I MasterCard I McDonald’s I Philips I PlayStation I Pringles I PSINet I Portal

Official suppliers included:

I Adecco I Adidas I Cisco Systems I Connexion I KLM I Lever Fabergé I Nashuatec I Nestlé Cereals I Telfort I Total Fina

TABLE 1.20 Cumulative viewing since Euro ‘92

EURO 1992 4.0 billion EURO 1996* 6.7 billion EURO 2000 7.0 billion

* Championship format expanded from 8 teams/15 matches to 16 teams/31 matches SOURCE: Sponsorship Research International

FOOTBALL SPONSORSHIP & COMMERCE 29 Section I Market analysis

TABLE 1.21 Countries broadcasting

EURO 1984 c.100 EURO 1988 119 EURO 1992 137 EURO 1996* 192 EURO 2000 170**

* Expanded format: 8 teams/15 matches to 16 teams/31 matches ** ESPN International boosted territories in 1996, but deal not renewed in 2000 SOURCE: Sponsorship Research International

TABLE 1.22 Total broadcast hours

EURO 1992 3,112 EURO 1996 6,886 EURO 2000 10,687

SOURCE: Sponsorship Research International

TABLE 1.23 Cumulative viewing (millions) by country, Euro 2000

FRANCE 202,041 GERMANY 253,007 SPAIN 108,529 ITALY 225,724 HOLLAND 98,998 UK 208,642

SOURCE: Sponsorship Research International

UEFA CHAMPIONS LEAGUE This is the world’s most prestigious club tournament. It involves European league champions and top runners-up from all the individual leagues. Winners of two group phases (played September/November and November/March) then progress to the final eight. Quarter and semi-finals are played in two-leg knockout format. The English Premiership, the Italian Serie A, and the Spanish La Liga are the sole countries to be able to enter four teams, but only the top two from each league qualify automatically. The third and fourth have to take part in qualifying rounds before they can enter the Champions League proper. Those teams that fail at the third qualifying round are able to enter the UEFA Cup. The final of the 2004 Champions League was held in Germany. This tournament, like the World Cup and the European Championships, adopts a multi-sponsor format.

COVERAGE The UK television rights are split between ITV and Sky Sports, ITV has the pick of the best two Tuesday matches, and paid £120m for the rights between 2003 and 2006. Sky Sports paid £129m, over the same period, for access to the other six Tuesday matches and all Wednesday matches. The two broadcasters share the quarter and semi-finals and both will show the final.

30 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.24 Attendance totals

CHAMPIONS LEAGUE ATTENDANCE TOTALS SEASON TOTAL AVERAGE 1992/1993 873,251 34,930.04 1993/1994 1,202,289 44,529.22 1994/1995 2,328,515 38,172.38 1995/1996 1,874,316 30,726.49 1996/1997 2,093,228 34,315.21 1997/1998 2,868,271 33,744.36 1998/1999 3,608,331 42,450.95 1999/00 5,490,709 34,972.67 2000/01 5,773,486 36,773.80 2001/02 5,417,716 34,507.75 2002/03 6,444,709 41,049

TABLE 1.25 Attendance by group stage

2000/01 2001/02 2002/03 GROUP STAGE 1 TOTAL 3,156,555 3,085,409 3,378,442 GROUP STAGE 2 TOTAL 1,621,617 1,622,568 2,202,787 GROUP STAGE TOTAL 4,778,172 4,707,977 5,581,229 QUARTER FINAL TOTAL 414,829 398,429 506,336 SEMI FINAL TOTAL 263,587 260,811 293,929 FINAL TOTAL 80,000 50,499 63,215 TOTAL ATTENDANCE 5,536,588 5,417,716 6,444,709 AV. ATTENDANCE/MATCH 35,265 34,508 41,049

TABLE 1.26 Viewing 2002/03

VIEWING COVERAGE 21,000 HOURS CUMULATIVE TV AUDIENCE 4.8BN NATIONAL COVERAGE 200+ COUNTRIES AND TERRITORIES LIVE MATCHES AVERAGE TV MARKET SHARE 28% ACROSS WESTERN EUROPE VIEWING HABITS 100 MILLION WATCH LIVE MATCHES ACROSS EUROPE EACH MATCH WEEK AUDIENCE WORLDWIDE 280 MILLION PER MATCH WEEK

SPONSORSHIP The four main sponsors of the League are:

I Amstel I Ford I Mastercard I Sony

Each of the above sponsors is reported to have spent around £60m for the rights between 2003 and 2006.

FOOTBALL SPONSORSHIP & COMMERCE 31 Section I Market analysis

Ford and Destination Football Ford’s commitment to the sport has grown over the past ten years of its involvement. Its support starts at grass roots level and rises to an association with football at the highest professional level. Its key message is that football can be for everyone, which has led it to develop strong links with Special Olympics football week, UEFA’s football academy and many other football development bodies. More recently, this has evolved into a new campaign entitled Destination Football, dedicated to bringing fans and the game closer together. Ford vehicles now help to transport players, officials and fans to games, while it hosts special events to bring the action into the heart of the community. Such events are designed to give fans a chance to experience the sport’s essential spirit, and the opportunity to get transported all the way to the big match. The Destination Football website lists its special events and commitments to football, and also provides information on the UEFA Champions League. It enhances the experience for fans by inviting them to play challenging football games and win UEFA Champions League related prizes. The site’s TravelZone provides fans with a travelogue on the home cities of the competing teams and travel details, in addition to features on matches, players and related news. Finally, it lists fixtures and results. The aim is to provide a one-stop shop for all football fans, tying them in to the brand for the long term.

Amstel and its hat Amstel Beer, like Ford, is a long-standing sponsor, and 2004 marks a ten-year relationship between the brand and UEFA. It cites this relationship as a key factor in its position as the number two beer brand in Europe, having increased awareness and established an affinity with consumers across Europe. Possibly the most recognisable feature of its sponsorship is the Amstel hat, on which it focuses many of its promotions. Over the years, the company has distributed more than 500,000 hats among European football fans, and the headgear is now linked inextricably to international football culture. Heineken, which brews Amstel, considers that it is now perceived as the most fitting beer brand for football fans. It sums up its bond with fans and football using the term ‘Fanship’ which, it says, embodies Amstel brand values of ‘Friendship, Fun and Freedom’. Heineken believes its sponsorship of the UEFA Champions League takes it far beyond the supply of beer and the placement of advertising in stadiums and on television: it sees sponsorship as cementing links with fans and the sport. In the 2003/04 Champions League Competition, the Amstel logo was expected to be visible for an average of more than 20 minutes at each of the 125 matches. Amstel also broadcast specially developed TV spots before and after the matches throughout the nine months of the tournament. These so-called ‘break bumpers’ were to be shown in 170 different versions. They were supported by Amstel’s ‘Fanship’ messages via an integrated campaign using above the line advertising, sales promotion, new media, tailor-made newspapers, sampling of Amstel hats, live events, public relations and so on. Amstel Beer is the sole beer available at stadiums where UEFA Champions League Matches are played.

PlayStation2 Competition The amount of money that big brands stump up for the privilege of sponsorship of the major international tournaments is only part of the battle for the hearts and minds of their consumers. They know that real benefit comes through leveraging their investment. One way that Sony chooses to do so is by competitions. For the 2003/04 Champions League season, it offered registered members of PlayStation.com the opportunity to compete for a place in the commentary box at one of the matches. This was a prize that money could not buy. The winner would get behind-the-scenes insight into the League and the chance to meet the venue team, attend the TV pre-production meeting and learn about what goes into bringing the games to the small screen. The benefit for Sony is in the number of names it accumulates for database marketing in the future – and again the opportunity to link its customers with a sport that they feel passionately about.

32 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis

Chapter 5: The value of tournaments to sponsors

Are the major tournaments worth the investments of broadcasters, sponsors and clubs? For many, the question should be phrased differently. Can they afford to ignore the tournaments – because if they do, their competitors will step in and steal a march? This report will show how some sponsors – albeit high profile in their own right – don’t sign up to the big international opportunities because they feel they get better value from mounting their own related campaigns. Sometimes they risk the wrath of the football authorities if they tread the ambush marketing route – but they have got cannier over time. The 15 sponsors who signed up to the 2002 World Cup didn’t just spend $30-40m each for the rights. So are these tournaments worth it?

BROADCASTING As the accompanying data shows, total broadcast TV hours have risen for the World Cup. No other event, apart from the Olympics, is guaranteed such saturation coverage for the four-week duration: the 2002 World Cup reached 213 countries and accounted for over 41,435 hours of dedicated programming. It achieved an in-home audience of 26.3 billion viewers and a further 2.5 billion out-of-home. The World Cup is one of those tournaments that rotates, visiting different continents in turn. The European Championship, likewise, is hosted in a different country each time. The host nation/continent is always likely to account for the majority of coverage, and sponsors can plan well in advance how they can exploit their involvement. Asia, for instance, accounted for over 40% (11.2 billion) of the audience that tuned in to the 2002 World Cup. The two host nations registered their highest ever cumulative audiences for a sporting event, 1.2 billion for Japan and 983 million for South Korea. For national brands, such as Hyundai (see page 33), which wished to showcase their products, there could have been no better opportunity. Fears that the time difference between the main TV markets for soccer and of the host countries also proved less of a problem than predicted2. Only the UK of the main European territories saw a major dip, while audiences in Italy and Spain actually rose from those in 1998. German audiences for matches shown by ARD and ZDF, the public service broadcasters, were 6.4% down on the 1998 figure of 10.22 million. This figure, however, needs to take into account the fact that they only broadcast 26 matches in 2002 compared with all 56 in 1998. The time difference did, however, act as a deterrent to potential programme sponsorship. ITV was forced to drop the price of its World Cup coverage package due to this, and also because of the late injury to David Beckham that threatened his involvement. It was sold, eventually, to Travelex for £3m, and delivered 958 TVRs3, which would have set it back £3.703m if it had bought it as straight advertising, thus representing a saving of £703,000.

SPONSORSHIP A sponsorship is only as good as the amount of work (and money) that goes into leveraging it. In the 1980s and 1990s, the rule of thumb was that – at least as far as the major tournaments were concerned – companies had to spend as least as much again to promote their involvement. Now the 1:1 rule has been superseded by as much as 2:1 and, on occasions, even more. Seasoned sponsors such as Coca-Cola, FujiFilm, MasterCard and Budweiser have their involvement down to a fine art. They have become integral to major tournaments. If they were to step down, their main rivals would step in, so it becomes a virtuous circle. The potential value is undeniable. NOP World carried out research which indicated that 40% of the people questioned within the 15-24 age group would feel more confident about a brand if it was seen sponsoring high profile events such as the World Cup. It had also forecast that those brands targeting the youth market – including Adidas and Coca-Cola – would benefit most from their association. The signs six months prior to kick-off, however, were not encouraging. At the time, 75% of the audience was unaware of which brands were sponsoring the tournament, and some that weren’t sponsors – such as Nike – were being linked to it. After France ’98, 66% of those questioned could not remember the names of sponsors, nor of those which held official FIFA status. 2 Sportcal.com, The World Cup Report, post-2002 Supplement 3 MediaVest Worldwide

FOOTBALL SPONSORSHIP & COMMERCE 33 Section I Market analysis

Adidas forecast a rise in sales of 5% in 2002 from €6.1bn in 2001, according to industry analyst Datamonitor. This was despite a 7.1% drop in net profit for the first quarter of the year, to €43m. Its chief executive, Herbert Hainer, claimed after the tournament that it had “fulfilled or exceeded all our expectations” and had resulted in a soccer fever in Asia. He predicted that Japan would prove to be the company’s most important market after the US, having shown a 34% rise on 2001. Its sponsorship of individual teams also proved profitable, its involvement with the Japanese national squad leading to sales of 600,000 replica shirts and a profit of $2.4m, plus sales of seven million Adidas World Cup balls.

ENDORSEMENTS The World Cup 2002 saw a very heavy use of player endorsement. This strategy proved to have its problems, and shows the value of investing in personalities whose appeal is not limited to sport. For instance:

I Only seven of the 49 players sponsored by Nike and Adidas actually scored during the event. I Seven-Up used Roy Keane as the lynchpin of its biggest ever campaign – but he never made it to the tournament. I Renault tried to market its Clio model to a more male-oriented market – but Thierry Henry, its figurehead, was red-carded and played just 115 minutes of football. I Likewise, Luis Figo, Zinedine Zidane and Francesco Totti didn’t live up to their star billing.

AMBUSH MARKETING FIFA has become much more circumspect about policing when it comes to protecting its rights and those of its sponsors. It still encountered problems, though. Pepsi ran foul of FIFA through the launch of an advertising campaign that suggested a ‘presumed sponsorship relationship’ between Pepsico and the FIFA World Cup. As a result of using a combination of imagery, famous footballers and the phrase ‘Tokyo 2002’, it was forced to pull the ads by an Argentinian court. Samsung upset the authorities by issuing Samsung hats to fans who came to the Chinese national team’s tournament matches. These were red, the same colour as the team’s strip. No attempt to confiscate them was made, however, for fear of causing a disturbance. Nike fended off criticism for using several top footballers in a $15m ‘Scorpion’ ad campaign. Its ads continued, with Nike protesting that it was entitled to use in promotional material athletes who it sponsored and who were using its products at the World Cup. Research carried out for Starcom MediaVest Group by NOP a week after the tournament ended showed that Nike had the second highest level of spontaneous association (11%, behind Coca-Cola with 14%), despite the fact that it was not an official tournament sponsor.

CONCLUSION Involvement with major tournaments does bring kudos – but at a price. For companies like Coca-Cola, the benefits far outweigh the pain of the cost. Consumers buy in to the length and depth of its association with football. Not surprisingly, it comes top in spontaneous awareness every time. Big brands can, however, reap the benefits of association without becoming an official sponsor. Nike exploits its unofficial association with the sport via through-the-line activity and advertising. Indeed, it has a consistent policy of not sponsoring sports events. However, sponsorship is not just an up-front cost. The NOP research showed that, despite the fact that Fujifilm and JVC are long-term sponsors, neither made the top ten in awareness terms in 2002 because they didn’t support it in the UK. Pepsi’s ads may have fallen foul of FIFA on occasion, but the company placed 50% of its UK TV advertising in World Cup coverage – featuring Roberto Carlos and David Beckham – and achieved the fifth highest recall of any brand. The writing on the wall is clear. Sponsorship of major tournaments needs to be leveraged to the full – or else it is not worth the initial investment. This is particularly true of the World Cup, which is experiencing sponsorship ‘clutter’.

34 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis

CASE STUDY: HYUNDAI

The Hyundai Motor Company decided early on to establish a corporate image that was tied closely to football, signing up to FIFA’s principle of contributing to world peace through the sport. It signed up to sponsor Euro 2000, the Gold Cup 2000 for North and Central America, plus various World Cup qualifying rounds. Then it went for the big one, as an official sponsor of the 2002 FIFA World Cup Korea/Japan, and went on to announce plans to support 10 FIFA events between 2003 and 2006, including the 2006 World Cup in Germany, where it has been chosen as an official partner. To the outside world, there appeared nothing to mark Hyundai out from the rest of the World Cup sponsors. Indeed, involvement in the tournament was seen by many as the car company just putting its toe in the water. It was, however, part of a long-term marketing strategy to be seen as a car manufacturer with global ambitions. The brand is available in over 150 countries, far outstripping other sponsors such as Budweiser. Perception, however, was a different matter, and this is what it hoped to alter with its football sponsorship.

OBJECTIVES First and foremost, Hyundai wanted to build the brand’s credentials internationally. In 2002, it claimed a 2.5% market share worldwide. One year on, it stated, it wanted to be in the world’s top five auto manufacturers by 2010. This, it said, would be facilitated by a range of marketing activities, including sports marketing, aimed at improving its brand image, plus the technological enhancement of its vehicles.

WORLD CUP 2002 The challenge to get the most out of its involvement with the World Cup was as much logistical as a matter of budget or creative input, given that Hyundai works through distributors in virtually every market. In the UK, for example, it formed part of Lex and had access to a 17-strong team handling PR, research, product planning and brand communications. Its local agency, Leagas Delaney, based its campaign on the theme ‘The strongest squad in this year’s World Cup doesn’t even play football’. Hyundai’s Korean parent contributed to the overall budget, and Octagon was hired to run its below-the-line global marketing. It came up with three key initiatives to spearhead the campaign. First, it appointed Johann Cruyff as a global ambassador for the brand, even to the point of using him in certain ads. Secondly, it mounted an international five-a-side tournament in each of the competing 32 countries, and finally it revived the ‘goodwill ball’ tour, first used in Euro 2000. The tour involved giant 4.5 metre footballs going on a roadshow to each country involved, with local people being encouraged to sign their national ball. The UK version attracted some 250,000 signatures. Each ball was sent to Korea for the final, and they were used for one of the official opening ceremonies. The highlight for Hyundai, however, was its borrowing of the World Cup trophy for promotional purposes. In the UK, through determined and early lobbying, it managed this even before Coca-Cola, the only other UK FIFA partner to get agreement to use it in Britain. As is self-evident, signing up to the sponsorship (said to be an estimated $40m for a four-year deal) is just part of the package. According to its deputy general manager, Cho Rae Su, Hyundai budgeted for spending nearly $100m to promote its models. “We’d like to make the event emblematic of the tremendous changes in Korea and Hyundai Motor, particularly in terms of offering quality goods and services,” he said.4

EURO 2004 AND WORLD CUP 2006 For Euro 2004, Hyundai provided 399 vehicles to transport reporters, referees and VIPs attending the event. It also hosted a smaller version of world football competition for amateur football lovers worldwide. This took the form of a Mini World Cup, with 16 individual amateur national teams each playing five matches, in order to select the champion. The tournament was supported by an 11-strong marketing squad, which comprised a joint team from Hyundai Motor and its sister company Kia Motors. The team also backed Hyundai’s involvement with the 2004 Olympic Games. Dutch legend Johann Cruyff was again used as the company’s football ambassador.

4 BusinessWeek, April 1, 2002, Brian Bremner in Tokyo and Moon Ihlwan in Seoul

FOOTBALL SPONSORSHIP & COMMERCE 35

Section I Market analysis

As the next World Cup bandwagon gets rolling, Hyundai has signed up to supply FIFA with a fleet that could exceed 600 vehicles in its role as an ‘Official Partner’. The Organising Committee estimates that it will require a fleet of between 600 and 800 vehicles. Hyundai and the Organising Committee have already started talks with German bus operators on handling the task of transporting teams, VIP guests and journalists. The rationale for its involvement with the next World Cup, and indeed with Euro 2004, is still the same. It notches up the value of each bit of footage of a famous player getting in or out of its cars, and sees it as boosting its brand power and building a healthy corporate image. The prestigious nature of the tournament is seen to help it rid itself of the tag of cheap and standardised car producer. Its role as official supplier hasn’t, however, been universally well received. The German news media reported its economic minister as saying it was a shameful moment in the history of the world’s strongest auto country.

RESULTS The mere fact that Hyundai is continuing its involvement with football shows that it considers the benefits outweigh the cost. It says: “Considering the effect of the sponsorship, the costs that Hyundai will bear to provide its vehicles to the football festival are not big. Sponsoring the 2002 World Cup helped us generate some 6.2 trillion won, or $5bn, in advertising impact. We gained much more than our investment of 100 billion won.”5 Its research also indicated that brand awareness rose 10% because of the 2002 World Cup. Hyundai undertook a survey of local dealers in 190 countries, and recorded a three to four point rise in satisfaction up to 6.7 points out of a possible seven after the tournament.

CASE STUDY: YAHOO!

Yahoo! broke new ground at the start of the Millennium when it signed up to be a sponsor of the 2002 FIFA World Cup.

OBJECTIVES Its reasons, says Yahoo Sports spokesman David Berger, were simple. It is one of the world’s premier sporting events, and an excellent way for sponsors to reach a qualified audience of sports fans. “Yahoo!’s partnership with FIFA stemmed from the fact that we are the only Web company in a position to offer a complete, global solution to support an event the size of the FIFA World Cup. Incorporating multiple Yahoo! properties (Yahoo! Shopping, Yahoo! Mail etc.) our network is able to deliver a cutting-edge experience for fans, advertisers and marketing partners.” The experience proved so successful, that Yahoo! is back in the frame for the 2006 World Cup, having managed to leverage its involvement to the full. Back in 2002, says Berger, its involvement consisted of being an official worldwide partner of FIFA, producing, hosting and marketing FIFAworldcup.com, the official website of the Men’s and Women’s World Cup.

IMPLEMENTATION “Since September 2001, Yahoo! has been one of the 15 official FIFA partners worldwide, and the current agreement lasts through the 2006 FIFA World Cup in Germany,” Berger says. “As part of its continued relationship with FIFA, Yahoo! will have certain exclusive uses of the FIFA World Cup trademarks and emblems for use in online and offline Yahoo! promotions and marketing initiatives. In addition to its official Partner status for the 2003 FIFA Women’s World Cup, Yahoo!’s marketing rights extend to the 2006 FIFA Men’s World Cup in Germany and at additional FIFA events.” The company played host to the multi-lingual official FIFA site, which became one of the most successful sports event websites ever. Managing director of Yahoo! UK & Ireland Martina King felt that its success owed much to the fact that fans at work could follow the progress of their team from wherever they found themselves 5 The Korea Times, Bae Keun-min, 25 December 2003

36 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

in the world. According to the BBC6, she said: “We have absolutely tapped into the passions that exist for each of the local fans that we have across the world. We can build the global, and we can absolutely look after and support the local.” The portal did, however, take the brave step of making fans pay a subscription for the privilege of watching the highlights (four minutes were available online two hours after the match). General manager Tonya Antonucci told Reuters that she expected the number of fans willing to pay the $19.95 fee would reach six figures globally. Four years on, the organisation is unwilling to disclose whether it hit its target, but the growth of broadband worldwide – plus its performance in 2002 – has encouraged it to repeat the exercise in 2006. Improved picture quality is likely to make a big difference, as is the fact that fans can tune in at work if they don’t have access to a television. As for the Word Cup site itself, it proved a big hit with web surfers. On day eight of the 2002 tournament, when England defeated Argentina, it saw a staggering 106 million clicks. At the end, it exceeded the record held by the Salt Lake City Olympic Games website, which recorded 350 million page views over the course of the games. The majority of page views came from the English-speaking section of the FIFA site, with the Japanese section coming second. Unicef’s football memorabilia online auction site proved to be one of the most popular sections of the website with the first auction – for an Italian team jersey signed by the team – going for £1,900.

CONCLUSION Yahoo! took a brave step when it signed up to be a World Cup sponsor. The range of initiatives it launched was wide and varied, and it could have been a spectacular failure, operating as it did on a global stage and tied to the world’s premiere single sporting event. Instead, it took plaudits. The site notched up a record number of hits, and justified the venture. Yahoo! had, however, become involved for a number of reasons, one of which was the fact that its global advertising sales had been hit at the time – along with the worldwide downturn in ads – so it needed to diversify. One of these ways was to focus more closely on other options such as online content. As King said at the time: “We are absolutely committed to the advertising revenue stream, but at the same time reducing our dependence on it and looking for lots of new opportunities.” In 2004, shopping on the net has never been more popular. It has led Yahoo! to take over price comparison site Kelkoo, given that it claims a third of all searches are e-commerce related. If Yahoo! can attract consumers in to the FIFA site, and persuade them to buy, it will count itself well satisfied. And if they should then move on to another of its links, so much the better.

6 BBC News, 11 June 2002

FOOTBALL SPONSORSHIP & COMMERCE 37 Section I Market analysis

Chapter 6: The cost of competing in Europe

The composition of the Champions League is usually stacked full of familiar names. There maybe the odd former Eastern bloc club, but this is the exception. The UEFA Cup is a different matter: it is seen as the poor relation, for financial reasons if nothing else. As the 2003/04 season has shown, with Millwall’s entry for the first time, Europe is beckoning the unlikeliest of contenders. So, do the rewards justify the efforts? In 2002, Mike Cheston, financial controller at Everton FC, embarked on a theoretical exercise. He looked at the club’s current financial status, then plotted what might happen should it make it to the Champions League.

BACKGROUND Everton is a club with a proud history. It is a nine-time winner of the old English First Division and has won the FA Cup five times (1906, 1983, 1966, 1984 and 1995). It also lifted the European Cup-Winners’ Cup in 1985. It has never, however, played in the Champions League in its current format. In 2004, the club turned 126 years old. The 20th century had been good to it: over a hundred years it managed to accumulate more first division points than any other club. It also bears the distinction of being the first club in the world to have played in its country’s top division for over a hundred years. It is a private company with no media partner and has a close rivalry with Liverpool. In recent years it has been nearer the bottom of the Premiership than the top, and in the 2003/04 season is again flirting with relegation. Since 1995, League attendance has averaged between 34,000 and 36,000, although it hit 38,500 in the 2002/03 season, of which around 21,000 has been season ticket holders. The club employs 200 permanent staff on work days, which rises to 1,000 on match days.

FINANCIAL INVESTMENT For the sake of argument, Cheston looked at two clubs alongside Everton – one of which, with hindsight, might not have been the best example. He presented extracts from the published 2001 Profit and Loss Accounts of Liverpool, Leeds and Everton. All three, at the time, were recording operating losses, substantial funds were due creditors – in the case of both Everton and Liverpool – within one year. They were all, Cheston pointed out, operating from a very low base point and would have to generate funds to compete with the top clubs. There is, he said, always an incentive to compete in Europe, but there is also always the fear of relegation – and the pressure points come from finance. It can become a case of robbing Peter to pay Paul. Competition at this level requires a team with the strength and depth to progress in the Champions League. Yet if expenditure on a squad of this type fails to produce the desired results – as happened with Leeds – the club is set for a fall, and probably from one division to another. For clubs competing in the UEFA Champions League at that time, the market pool distribution was split 50:50. Half would depend on the value of the TV market of each team’s league and its position in that league in the previous season. The remaining portion would depend on the number of games played by the club in the competition. Nowadays, there would be four fewer games played, since the second qualifying round has been abandoned in favour of a knock-out (with the obvious downward effect on revenue for the clubs). Still, for Everton’s hypothetical progression in the Champions League, the club swiftly started to pull in the money. This started with the €1.7m qualification prize, and €16.4m for its share of the first market pool distribution. As the accompanying charts show, it fended off the likes of Panathinaikos and Mallorca to head into the next round, ending up with prize money of €21.8m and estimated gate receipts and commercial income of €4m. As it progressed, so the sums increased, with the club ending up with a total of €33.3m in its coffers by the end of the second group stage (now defunct). Having beaten Real Madrid in the final – a very satisfying coup – it realised €7m in prize money, €14.8m as its share of the second market pool distribution, leading to a grand total – including gate receipts – of €65.4m.

38 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.27 Extracts from the published 2001 accounts: profit and loss accounts

EVERTON FC LIVERPOOL FC LEEDS FC EUROS (M) EUROS (M) EUROS (M) TURNOVER 55.9 139.7 146.5 COST OF SALES/OPERATING COSTS/OTHER* 77.6 -147.1 -156.2

OPERATING PROFIT (LOSS) -21.7 -7.4 -9.7 PROFIT/(LOSS) ON DISPOSAL OF PLAYERS' REGISTRATIONS 18.2 9.7 2.9 PROFIT/(LOSS) BEFORE INTEREST AND TAXATION -3.5 2.3 -6.8

NET INTEREST PAYABLE -2.7 -1.5 -6.1

PROFIT (LOSS) FOR THE YEAR BEFORE TAX -6.2 0.8 -12.9 * INCLUDES AGGREGATE PAYROLL COST 39.3 83.1 73.6 PLAYER REGISTRATION AMORTISATION 16.3 25.2 24.3 55.6 108.3 97.9

OTHER 22 38.8 58.3 77.6 147.1 156.2

SOURCE: SMi Conference/Everton Football Club

TABLE 1.28 Extracts from the published 2001 accounts balance sheet

EVERTON FC LIVERPOOL FC LEEDS FC EUROS (M) EUROS (M) EUROS (M) INTANGIBLE ASSETS 42.7 70 108 TANGIBLE ASSETS 24.5 70 67.3 TOTAL ASSETS 67.2 140 175.3

CURRENT ASSETS 13.5 28.1 36.4 CREDITORS DUE IN LESS THAN ONE YEAR* -50.2 -63.4 78.4 NET CURRENT LIABILITIES -36.7 35.3 42

CREDITORS DUE AFTER ONE YEAR* -19.9 -20.1 73.3 OTHER CREDITORS/PROVISIONS -4.3 -4.6 NET ASSETS 6.3 80 60

TOTAL CREDITORS < 1 YEAR 50.2 63.4 78.4 TOTAL CREDITORS > 1 YEAR 19.9 20.1 73.3 70.1 83.5 151.7 *BROKEN DOWN AS FOLLOWS: BANK LOAN/OTHER LOANS 50.3 23.6 74 ACCRUALS AND DEFERRED INCOME 5.5 29.1 20.6 OTHERS 14.3 30.8 57.1 70.1 83.5 151.7

SOURCE: SMi Conference/Everton Football Club

FOOTBALL SPONSORSHIP & COMMERCE 39 Section I Market analysis

TABLE 1.29 UEFA Champions League (Everton fixtures - all figures in Euros)

FIRST GROUP STAGE MATCH RESULT PRIZE EST. GATE ACCUMULATED MONEY RECEIPTS AND TOTAL RECEIPTS COMM INCOME TO DATE QUALIFICATION PRIZE 1,750,000 1,750,000 1ST MARKET POOL DISTRIBUTION 16,408,000 16,408,000

MALLORCA V EVERTON 0 - 0 525,000 525,000 EVERTON V SCHALKE 2 - 1 700,000 1,327,500 2,027,500 PANATHINAIKOS V EVERTON 1 - 0 350,000 350,000 SCHALKE V EVERTON 0 - 2 700,000 700,000 EVERTON V MALLORCA 1 - 0 700,000 1,327,500 2,027,500

TOTAL RECEIPTS TO DATE 21,833,000 3,982,500 25,815,500

SECOND GROUP STAGE ACCUMULATED TO DATE 21,833,000 3,982,500 25,815,500

EVERTON V BORUSSIA DORTMUND 1 - 0 700,000 1,327,500 2,027,500 ROMA V EVERTON 1 - 0 355,000 350,000 EVERTON V NANTES 1 - 0 700,000 1,327,500 2,027,500 EVERTON V ROMA 2 - 1 700,000 1,327,500 2,027,500 BORUSSIA DORTMUND V EVERTON 0 - 0 525,000 525,000 NANTES V EVERTON 0 - 0 525,000 525,000

TOTAL RECEIPTS TO DATE 25,333,000 7,965,000 33,298,000

WHAT DOES IT TAKE? Few would quibble with the desire to play in the Champions League, but what would it take to get there? A successful football team is the first requirement, leading to the first drain on finance. A quick look at the wage bill of the top clubs shows the scale of the mountain to climb. In World Soccer’s survey of club finances it shows Real Madrid outlay on wages in 2001/02 as €140m, Manchester United as €98.3m, Juventus as €103m and Arsenal, by comparison, a mere €84.5m. As for net transfer spending, again for the same clubs over 2001/02 and 2002/03, this amounts to €95.6m for Real Madrid, €79.9m for Manchester United, €41.8m for Juventus and €33.7m for Arsenal. Given the state of Everton’s profit and loss accounts at the time, the scale of the problem becomes clear. Even with the Leeds wage bill of €74m at the time, the writing was still on the wall.

Cheston set out the following strategies for raising finance:

I successful football team I sound commercial trading I brand development (complete with customer relationship management initiatives) I loans – secured mortgages I investment in the club’s Youth Academy I share issues I new stadium I player sales I securitisation of future gate receipts (borrowing against future income) I sale of property/training ground etc.

40 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.30 Everton fixtures quarter final onwards – financial effects

ACCUMULATED TO DATE 25,333,000 7,965,000 33,298,000

QUARTER FINALS EVERTON V MANCHESTER UNITED 1 - 0 2,800,000 1,327,500 4,127,500 MANCHESTER UNITED V EVERTON 0 - 0

SEMI-FINALS EVERTON V LIVERPOOL 2 - 0 3,500,000 1,327,500 4,827,500 LIVERPOOL V EVERTON 0 - 1

FINAL EVERTON V REAL MADRID 1 - 0 7,000,000 1,327,500 8,327,500

SECOND MARKET POOL DISTRIBUTION 14,840,000 14,840,000

TOTAL RECEIPTS TO DATE 53,473,000 11,947,500 65,420,500

SOURCE: SMi Conference/Everton FC

The club had already expanded its revenue generating activities, but as Cheston admitted, there was always more that needed to be done. Income from the Internet, for instance, had grown, but other sources, such as publishing, had suffered. It had dabbled with smart cards, database capture and related schemes. He mentioned a loan on the stadium, the sale and leaseback of players, and investment of between €8m and €9m in the Youth Academy, which the club was thinking of restructuring. Everton has already taken advantage of share issues, one of €17.7m in October 1994 and another, of €26.5m in October 1996, but as Cheston says, this is not something that you can carry on doing every two years. The club was, at that time, contemplating a move to The King’s Dock, given the limitations of its current stadium. This has a capacity of just 40,000, is badly designed and in a residential area, some 1.5 miles away from the nearest station. It was looking to generate income from parking, catering development and hotels at the new site, which it envisaged would be multi-purpose, offering a range of ball games and including a retractable pitch and roof. The hope was that this would open up a whole new range of income streams and that it could be used outside of match days. This, he said, would bring a new set of audience requirements since those attending a pop concert would be totally unlike – in age and demographics – those going to a game. The most recent news is that, though the King’s Dock venture may not come to fruition, Everton officials have held talks with Liverpool FC and the Northwest Development Agency (NWDA) and Liverpool City Council late in 2003 to investigate the possibility of a ground share between the two clubs. It released a statement saying: “The Northwest Development Agency, together with Liverpool City Council, has asked Liverpool FC and Everton FC to discuss the economic development and regeneration benefits of building a new, world class football stadium in Liverpool. Discussions are taking place between NWDA, Liverpool City Council and the two football clubs. No early outcome is expected.” So would it ever have the money to contemplate a trip to Europe? Cheston would never shut the door on the idea, but is realistic. “We are more aware than most of the financial restrictions that prevent us from doing what we would like to do,” he said. “But a football club can’t be judged solely on its financial performance. The need to provide good financial figures at the expense of performance on the pitch can’t be reconciled. You can’t guarantee everything.” And with what surely turned out to be remarkable foresight, he concluded: “A ground share with Liverpool might not be a popular decision, but now would be a good time to consider this.”

FOOTBALL SPONSORSHIP & COMMERCE 41 Section I Market analysis

TABLE 1.31 Everton’s hypothetical Champions League progress

UEFA CHAMPION'S LEAGUE 1ST GROUP STAGE A-D GROUP A GROUP B GROUP C GROUP D SPARTA PRAHA ROSENBORG OLYMPIQUE LYONNAISE LILLE SPARTAK MOSCOW AEK ATHENS BAYER LEVERKUSEN DEPORTIVO LA CORUNA CELTIC JUVENTUS FENERBAHCE FEYENOORD PORTO BARCELONA MANCHESTER UNITTED BAYERN MUNCHEN

1ST GROUP STAGE E-H GROUP E GROUP F GROUP G GROUP H ANDERLECHT DYNAMO KIEV MALLORCA GALATASARAY AJAX BORUSSIA DORTMUND EVERTON LAZIO REAL MADRID LIVERPOOL SCHALKE NANTES ROMA BOAVISTA PANATHINAIKOS PSV EINDHOVEN

2ND GROUP STAGE GROUP A GROUP B GROUP C GROUP D REAL MADRID ROMA CELTIC PORTO LIVERPOOL BORUSSIA DORTMUND JUVENTUS DEPORTIVO LA CORUNA LAZIO EVERTON BAYERN MUNCHEN BARCELONA SCHALKE NANTES MANCHESTER UNITED BAYER LEVERKUSEN

QUARTER FINALS MATCH AGGREGATE SCORE EVERTON V MANCHESTER UNITED 1-0 REAL MADRID V ROMA 2-1 LIVERPOOL V PORTO 1-0 BARCELONA V JUVENTUS 3-2

SEMI- FINALS EVERTON V LIVERPOOL 3-0 REAL MADRID V BARCELONA 2-1

FINAL REAL MADRID V EVERTON 0-1

42 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis

Chapter 7: Champions League revenue growth

The UEFA Champions League is viewed by many as the sixth ‘big’ European league, joining the likes of the national leagues in England, Italy, France, Spain, and Germany. A description of the current revenue split is given below and in the accompanying charts, but this is set to change from the 2003/04 season as the structure of the competition changes. At its most simple, however, clubs (and associations) benefit from two main sources of income. The first – broadcast and sponsorship rights – is marketed centrally by UEFA and its partner TEAM and then apportioned to participating clubs. One slice goes under the heading of solidarity payments, paid to national associations, and funds many UEFA development activities. Secondly, clubs themselves accrue monies from gate receipts, sponsorship and other commercial activity but this, of course, depends on how far they get in the tournament.

PAYMENT SPLITS The 32 clubs that took part in the 2002/03 UEFA Champions League group and knockout stages were awarded €475 from the revenue that Europe’s blue chip tournament generates. The payments, made on the basis of fixed bonus payments, performance bonuses and market pool shares, were as predicted at the start of the season. Each of the 32 received €1.62m for taking part, plus €325,000 for each fixture in the first and second group stages. A maximum of €3.9m was awarded to clubs who qualified for both. In the group matches, clubs were paid €325,000 for a win, €163,000 for a draw, up to a maximum of €1.95m per group stage. This gives a maximum total of €3.9m. Each of the quarter finalists was awarded €2.6m, with the four semi-finalists getting €3.25m. AC Milan, the eventual winner, came away with €6.5m, with Juventus, the runner-up, awarded €3.9m. The clubs, in addition, receive a share of the market pool. This is split according to the value of the TV contracts for the countries of the relevant clubs. The amount also depends, when associations have more than one club competing, on how many matches were played in the 2002/03 Champions League tournament and on the where the clubs finished in the previous season’s domestic championship. There were some interesting anomalies in the amounts that clubs gained from the market pool. Juventus, for instance, gained more from it than the eventual tournament winner, Milan, because it ended the 2001/02 Italian domestic season as champions whereas Milan finished fourth. Clubs were not the only beneficiaries. More than €25m in solidarity payments from the 200/02 Champions League went to UEFA’s 52 member associations and some of their clubs. A total of €195,000 went to each association, while those clubs eliminated in any of the three qualifying rounds or in the UEFA Cup qualifying round received €52,000 per round played. Those clubs eliminated in either of the first two UEFA Cup rounds received an additional €52,000, while domestic champion clubs who failed to qualify for the Champions League first group stage each received €98,000.

IMPACT ON TV RIGHTS FEES The restructuring of the championship’s format, eliminating the second group stage in favour of a knock-out, has had an impact on rights fees in the 2003/04 season. According to a study by Lehman Brothers7, TV rights deals in France, Germany and Italy have fallen by at least 20% in each country. The UK, in fact, was the only one of the big four to have seen an increase, with ITV estimated to have paid €80m a year compared with €60m for the previous contract. Germany was particularly badly hit, with Sat.1 cutting payments by 57.1% to €30m a year. This downward movement is partly due to the competition format having shrunk – by some 25% – but also because of the way the packages are now constructed and sold.

7 Football Insider, August 2003

FOOTBALL SPONSORSHIP & COMMERCE 43

Section I Market analysis

TELEVISION COVERAGE The 2002/03 Champions League scored well in terms of television coverage. It attracted some 21,000 hours, with a 4.8 billion cumulative TV audience. The tournament was screened in over 200 countries and territories, with live matches scoring a 28% average TV market share across Western Europe. The live matches were watched by some 100 million viewers across Europe each match week, while the Championship attracted a 280 million audience per match week around the world.

ATTENDANCES The continued success of the Champions League is reflected in increased stadium attendances for the 2002/03 campaign. More than 6.4 million spectators attended group stage and knockout matches in European club football’s most prestigious competition last season. This represented an increase of one million on the 2001/02 season. An average of just over 41,000 fans attended each match, with the Quarter and Semi Finals attracting an impressive attendance average of nearly 67,000 spectators. The stadiums themselves were 82% full on average for the overall competition, while out of the 20 teams who competed in the Champions League in both the 2001/02 and 2002/03 seasons, 14 enjoyed improved attendances. This resulted not just from the calibre of the games, but also because certain clubs with large capacity stadiums – such as AC Milan, Inter, Real Madrid, Barcelona and Manchester United – remained in the tournament until the later stages. This contrasts with the 2003/04 season in which smaller clubs such as Monaco, Deportivo La Coruna and Porto reached the semi-finals.

CONCLUSION It is important for a club to stay in the tournament for as long as possible, since upwards of a fifth of its annual income can come from its participation. The danger, however, lies in investing too heavily in a team that only makes the first few rounds. Deloitte & Touche’s Annual Review of Football Finance8 looks at the accounts of four teams – Borussia Dortmund, Juventus, Liverpool and Real Madrid – and attempts to show the impact of the tournament on club finances. It concluded that it had a significant impact on operating profits. Borussia Dortmund’s profits fell by almost two thirds if revenue from the Champions League was excluded, while Liverpool’s €22m profit was transformed into a €14m loss. As for Juventus, its €14m loss grew to almost €50m, and Real Madrid’s €60m loss rose to €100m-plus. Deloitte admits that its analysis is simplistic, with cost-savings obviously reducing the impact, but the analysis echoes the point made elsewhere in this report: it is dangerous to invest too heavily in players with high guaranteed salaries. The more prudent route is to look at performance related pay. Clubs from the small European countries can reap even more of a relative benefit from participation than some of their larger counterparts. Rosenborg is a case in point, with participation accounting for almost half of its total revenue. This, in turn, has funded its domination of the Norwegian league for the past 11 years. For many clubs, though, participation in European football has become as key a revenue stream as that from matchday, broadcasting and commercial activities. Preparation for such tournaments, in terms of business planning, is just as vital as that of preparing the team. It is not an exercise to be undertaken lightly, as clubs like Leeds and Lazio would testify. UEFA is taking steps to ensure that clubs do not overstretch their finances. Its chief executive, Lars-Christer Olsson, has confirmed that clubs that fail to honour their financial commitments and build up huge debts will not be allowed to enter UEFA competitions.9 It is introducing a club licensing system, based on a series of sporting and administrative criteria, that clubs will have to sign up to if they wish to compete in the UEFA Champions League from the 2004/05 season. This way it hopes to ensure that clubs focus on their long-term – rather than short-term – future and avoid situations where they can end up unable to pay their debts or even, in certain instances, players’ salaries.

8 Deloitte & Touche Annual Review of Football Finance, July 2003 9 The Independent, Andrew Warshaw, 20 February 2004

44 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.32 UEFA Champions League distribution 2002/03

GROUP MATCHES FINAL ROUND TEAMS 1 2 3 4 5 6 7 TOTAL CHFm CHFm CHFm CHFm CHFm CHFm CHFm CHFm GROUP A BORUSSIA 2.5 3 1.75 3 1.75 34.669 46.699 AUXERRE 2.5 3 1.25 17.403 24.153 PSV 2.5 3 1.25 3.158 9.908 ARSENAL 2.5 3 1.75 3 1.5 20.825 32.575

GROUP B SPARTAK 2.5 3 0 0.739 6.239 VALENCIA 2.5 3 2.75 3 1.75 16.106 4 33.106 LIVERPOOL 2.5 3 1.5 13.508 20.508 BASEL 2.5 3 1.75 3 1.25 1.924 13.424

GROUP C MADRID 2.5 3 1.75 3 2 17.152 9 38.402 GENK 2.5 3 1 1.428 7.928 AEK 2.5 3 1.5 2.249 9.249 ROMA 2.5 3 1.75 3 1 16.627 27.877

GROUP D LYON 2.5 3 1.5 25.56 32.56 ROSENBORG 2.5 3 1 3.756 10.265 INTERNAZIONALE 2.5 3 2 3 2 13.747 9 35.247 AJAX 2.5 3 1.5 3 1.75 5.376 4 21.126

GROUP E NEWCASTLE 2.5 3 1.5 3 1.25 13.086 24.336 FEYENOORD 2.5 3 1 2.343 8.843 JUVENTUS 2.5 3 2.25 3 1.25 22.713 15 49.713 DYNAMO 2.5 3 1.25 0.293 7.043

GROUP F LEVERKUSEN 2.5 3 1.5 3 30.591 40.591 MAN UNITED 2.5 3 2.5 3 2.25 14.493 4 31.743 M HAIFA 2.5 3 1.25 0.929 7.679 OLYMPIACOS 2.5 3 0.75 2.486 8.736

GROUP G LENS 2.5 3 1.5 22.297 29.297 BAYERN 2.5 3 0.5 16.315 22.315 DEPORTIVO 2.5 3 2 3 1.25 13.596 25.346 MILAN 2.5 3 2 3 2 14.29 19 45.79

GROUP H BRUGGE 2.5 3 1 1.292 7.792 LOKOMOTIV 2.5 3 1.25 3 0.25 0.934 10.934 GALATASARAY 2.5 3 0.75 4.393 10.643 BARCELONA 2.5 3 3 3 2.75 11.713 4 29.963

TOTAL 80 96 48 48 24 366 68 730 CHFm = Swiss Francs (millions)

1: starting fee; 2: match fee; phase 1, 3: performance bonus, phase 1; 4: match fee, phase 1; 5: performance bonus, phase 1; 6: market pool; 7: final round: quarter-finals CHF4m, semi-finals CHF 5m, beaten finalists CHF 6m, winners CHF 10m SOURCE: UEFA

FOOTBALL SPONSORSHIP & COMMERCE 45 Section I Market analysis

TABLE 1.33 Solidarity fees 2002/03

COUNTRY €M ISRAEL 0.587 ALBANIA 0.179 ITALY 5.106 ANDORRA 0.176 KAZAKHSTAN 0.176 ARMENIA 0.176 LATVIA 0.176 AUSTRIA 0.334 LIECHTENSTEIN 0.176 AZERBAIJAN 0.176 LITHUANIA 0.176 BELARUS 0.176 LUXEMBOURG 0.176 BELGIUM 0.723 MACEDONIA 0.178 BOSNIA & HERZEGOVINA 0.179 MALTA 0.181 BULGARIA 0.19 MOLDOVA 0.176 CROATIA 0.188 NORTHERN IRELAND 0.176 CYPRUS 0.185 NORWAY 0.659 CZECH REPUBLIC 0.203 POLAND 0.251 DENMARK 0.237 PORTUGAL 0.48 ENGLAND 4.223 ROMANIA 0.194 SPAIN 4.438 RUSSIA 0.643 ESTONIA 0.176 SCOTLAND 0.476 FAROE ISLANDS 0.176 SLOVENIA 0.181 FINLAND 0.205 SAN MARINO 0.176 FRANCE 4.946 SERBIA AND MONTENEGRO 0.188 GEORGIA 0.179 SWITZERLAND 0.663 GERMANY 6.183 SLOVAKIA 0.181 GREECE 0.875 SWEDEN 0.237 NETHERLANDS 1.341 TURKEY 0.849 HUNGARY 0.2 UKRAINE 0.539 REPUBLIC OF IRELAND 0.207 WALES 0.176 ICELAND 0.179 39.627

TABLE 1.34 UEFA Champions League vs European Big Five

COUNTRY LEAGUE AVERAGE RANK ESTIMATED DOMESTIC RANK ATTENDANCE 2001/2 BROADCASTING REVENUE (2001/2) € M ENGLAND FA PREMIER LEAGUE 34,324 2 640 1 ITALY SERIE A 25,945 4 515 2 FRANCE PREMIERE DIVISION 23,245 5 260 5 SPAIN PRIMERA LIGA 21,737 6 N/A N/A GERMANY BUNDESLIGA 31,047 3 300 4 UEFA CHAMPIONS LEAGUE 34,361 1 420 3

*Champions League attendance figures do not include qualifying round attendances. Broadcasting revenue data by country applies to distributions to clubs in the top divisions only, covers only domestic rights, and includes only highlights, pay-tv and pay-per-view rights. Champions League broadcast revenue estimated at 80% of total revenues distributed to clubs participating in the Champions League group stage, in order to exclude sponsorship revenue. SOURCE: UEFA; Deloitte & Touche Sport analysis

46 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.35 Champions League and centrally generated revenues

STAGE PERFORMANCE BONUSES BROADCAST REVENUES CLUB SPECIFIC EFFECT

QUALIFYING CLUBS ELIMINATED RECEIVE CHF 0.08M (€) BROADCAST RIGHTS FOR GATE RECEIPTS - UP TO ROUNDS PER QUALIFYING ROUND REACHED. CLUBS QUALIFYING ROUND MATCHES ARE € 1.5M PER GAME, CAN MARKET THEIR OWN BROADCASTING ESTIMATED TO GENERATE € 0.8M FOR A 'BIG DEPENDING ON THE SIZE RIGHTS (HOME MATCHES ONLY) FIVE' CLUB; € 0.3M FOR A CLUB IN SMALLER OF ATTENDANCES AND MARKETS (THOUGH A DRAW WITH A 'BIG' ADMISSION PRICES; CLUB CAN GENERATE AS MUCH AS € 1.5M) SPONSORSHIP BONUSES

1ST GROUP STARTING BONUS: CHF 3.031M (€ 2.1M); VARIABLE AMOUNT, RANGING FROM € 5.3M AS ABOVE STAGE MATCH BONUS: CHF 3M (€ 2M); TO € 21.7M. THE AVERAGE AMOUNT PERFORMANCE BONUS: UP TO CHF 3M (€ 2M) RECEIVED BY CLUBS IN 'BIG FIVE' MARKETS FROM THE TV POOL WAS € 13.5M.

2ND GROUP MATCH BONUS: CHF 3M (€ 2M); IN SMALLER MARKETS THE AMOUNT VARIED AS ABOVE STAGE PERFORMANCE BONUS: UP TO CHF 3M (€ 2M) FROM € 0.2M TO € 4.6M, THE AVERAGE CLUB RECEIVING € 2.1M

QUARTER BONUS CHF 4M (€ 2.7M) FOR ALL 8 TEAMS PART OF TV POOL DISTRIBUTION ABOVE AS ABOVE FINAL

SEMI FINAL BONUS CHF 5M (€ 3.4M) FOR ALL 4 TEAMS AS ABOVE AS ABOVE FINAL BONUS CHF 10M (€ 6.8M) FOR WINNER; AS ABOVE AS ABOVE CHF 8M (€ 4.1M) FOR RUNNER-UP

*UEFA Champions League payments are distributed in Swiss Francs. The exchange rate used is at 30 June 2002 to convert these payments into Euro (Exchange Rate CHF1 (Swiss Franc) = €1.4698). As in other parts of the section, club revenues have been converted to euros using the exchange rate on the same date. In the Group stages, clubs receive a CHF 0.5m match fee for each game played, and a performance bonus of CHF0.5m for a win, and CHF0.25m for a draw, depending on the result of each match played. The TV pool is allocated according to the proportional value of the broadcast market in each UCL country. Each country's TV pool is then allocated. Half is according to a club's performance in the previous season's domestic Championship; the other half is according to number of matches played in the Competition. Clubs in 'big five' countries received 88% of the total market pool in 2001/02.

SOURCE: UEFA; Deloitte & Touche Sport analysis

TABLE 1.36 Financial impact of Champions League on selected European clubs

ALL FIGURES IN €M BORUSSIA JUVENTUS LIVERPOOL REAL MADRID DORTMUND STAGE REACHED 1ST ROUND 2ND ROUND QUARTER FINAL WINNER UEFA CENTRAL BROADCAST/SPONSORSHIP DISTRIBUTION 13 26.1 22.5 37.1

ESTIMATED DIRECT CLUB REVENUE FROM UEFA CHAMPIONS LEAGUE MATCHDAY 2.9 3 7.6 7.2 SPONSORSHIP 6.2 5.7 5.9 3.9

TOTAL ESTIMATED UEFA CHAMPIONS LEAGUE REVENUE 22.1 34.8 36 48.2

TOTAL CLUB REVENUE (2001/02) €M 111.7 175 153.6 152.2 ESTIMATED UEFA CL REVENUE AS A % OF TOTAL CLUB REVENUE 20% 20% 23% 32%

CLUB OPERATING PROFITS/(LOSSES) 2001/02 WITH UEFA CL REVENUE 34.1 -13.8 22.4 -59.7 WITHOUT UEFA CL REVENUE 12 (48.6 -13.6 -107.9

*Data based on 2001/02 season. Liverpool matchday revenues are estimated to be €1m per match, Real Madrid €0.9m per match; Borussia Dortmund €0.9m per match; and Juventus €0.5m per match. Sponsorship revenue estimations are based on estimated value of sponsorship deals and allocated European element. Real Madrid had no shirt sponsor in 2002 as it was celebrating its centenary. The operating profit analysis is illustrative and pessimistic assuming no cost savings would accompany the loss of UEFA Champions League revenues Source: UEFA central broadcast/sponsorship distribution - UEFA; Estimated matchday and sponsorship income - Club Annual Reports; Deloitte & Touche Sport Analysis

FOOTBALL SPONSORSHIP & COMMERCE 47 Section I Market analysis

TABLE 1.37 Champions League prize payments in 2000/01

REP.PRIZE PAYMENT TO PARTICIPATING CLUBS (ALL FIGURES IN EUROS)

BAYERN MUNICH WINNERS 49.7M VALENCIA RUNNERS-UP 28.7M LEEDS UTD SEMI FINAL 26.3M REAL MADRID SEMI FINAL 27M

FEDERATION SPONSORS It is all too easy to ignore the role of federation sponsors in the midst of talks of leagues and championships, but it is probably fair to say that no federation in today’s marketplace could exist without one sponsor – if not a raft of them – on board. The money they provide helps them not just to embark on activities that would previously have been impossible, and to improve existing services, but also enables them to tap into sponsors’ infrastruc- tures and expertise. Federations which a few years back would have chosen to avoid the sponsorship route, now could ill afford to do so. The table below shows the range of companies involved.

TABLE 1.38 Federation sponsors

FEDERATION MAIN SPONSOR(S) KIT SPONSOR SECONDARY SPONSORS DEUTSCHER FUSSBALL-BUND (DFB) MERCEDES-BENZ ADIDAS E.PLUS+, COCA-COLA, BITBURGER, POSTBANK, FUJITSU, SIEMENS, ENBW DIE ENERGIE-AG, SIEMENS, MCDONALD'S FEDERAZIONE ITALIANA GIUOCO CALCIO (FIGC) TIM PUMA PUMA, ULIVETO, LE MARMOTTE, PASTA AMATO, BERETTA, PERONI, DBTEL, FUJIFILM, FERRERO, VALLEVERDE KONINKLIJKE NEDERLANDSE VOETBALBOND (KNVB) NATIONALE- NIKE HEINEKEN, SHELL, NEDERLANDEN MASTERCARD, ING, PRICE WATERHOUSE COOPER, STAATSLOTERIJ, NUON, ADECCO THE ENGLAND FOOTBALL ASSOCIATION (FA) CARLSBERG, UMBRO MG ROVER, SAINSBURY, NATIONWIDE, ARMANI, BRITISH AIRWAYS, MCDONALD'S, UMBRO, WALKERS PEPSI FEDERATION FRANCAISE DE FOOTBALL (FFF) ADIDAS, CANAL+, ADIDAS CARREFOUR, COCA-COLA, LA POSTE, LU, SFR REAL FEDERACION ESPANOLA DE FUTBOL (RFEF) ADIDAS, ADIDAS EL CORTE INGLES, SANTA MONICA SPORTS, TELEVISION ESPANOLA (TVE), TERRA MITICA, MAHOU (SAN MIGUEL)

48 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

Chapter 8: The media scene

Television has, of course, been a key driver of football growth since the early 1990s. Since the advent of pay- television, broadcast revenues have fuelled the football economy with most major clubs earning between a quarter and a half of all income from TV. The benefit to clubs is that television money is effectively free in that up front costs are negligible. Some clubs experience reduced gate receipts when live matches are televised but this is offset by the large sums received for TV rights, which are further inflated by the large sponsorship deals that national TV exposure helps to bring in. Although comprehensive TV data for all European leagues is not readily available, German-based media monitoring agency, IFM International, analysed the key European Leagues for the 2003/04 season in their home TV markets. Both subscription and national free-to-air TV channels were included. The analysis helps to give a comparison between the major European Leagues and provides cumulative audience figures, average audience per programme and peak viewing data.

TABLE 1.39 National Soccer Leagues in Europe 2003/04 - specific programmes

NATIONAL SOCCER LEAGUES IN EUROPE 2003/04 SPECIFIC PROGRAMMES

CUM. AUDIENCE BROADCASTING NUMBER OF AVERAGE AUDIENCE COUNTRY LEAGUE (IN MILLIONS) TIME (HH:MM:SS) BROADCASTS PER PROGRAMME (IN MILLIONS) ITALY* SERIE A 2003/04 548.93 892:09:06 18406 2.38 FRANCE PREMIÈRE DIVISION 2003/04 171.49 210:49:11 2699 1.30 UK PREMIER LEAGUE 2003/04 455.48 542:01:11 17318 0.47 GERMANY** 1. BUNDESLIGA 2003/04 896.84 264:59:21 16120 1.12 SPAIN PRIMERA DIVISION 2003/04 118.69 242:10:04 2396 0.50 SWITZERLAND SUPER LEAGUE 2003/04 11.14 180:10:17 483 0.08 NETHERLANDS* EREDIVISIE 2003/04 283.45 301:50:13 2617 1.03

SOURCE: IFM International * no audience data available for Sky Sports Italy, Canal+ blauw (Netherlands) and several time slots for Canal+ (France) ** without Pay-TV channel Premiere

TABLE 1.40 National Soccer Leagues in Europe 2003/04 - specific programmes free TV

NATIONAL SOCCER LEAGUES IN EUROPE 2003/04 SPECIFIC PROGRAMMES FREE TV

CUM. AUDIENCE BROADCASTING NUMBER OF AVERAGE AUDIENCE COUNTRY LEAGUE (IN MILLIONS) TIME (HH:MM:SS) BROADCASTS PER PROGRAMME (IN MILLIONS) ITALY* SERIE A 2003/04 548.93 86:39:11 4031 2.38 FRANCE PREMIÈRE DIVISION 2003/04 118.59 24:54:29 1050 1.45 UK PREMIER LEAGUE 2003/04 327.60 78:13:37 2672 1.77 GERMANY** 1. BUNDESLIGA 2003/04 896.84 264:59:21 16120 1.12 SPAIN PRIMERA DIVISION 2003/04 83.29 68:47:25 1085 0.81 SWITZERLAND SUPER LEAGUE 2003/04 11.14 180:10:17 483 0.08 NETHERLANDS* EREDIVISIE 2003/04 283.45 98:41:49 1669 1.03

* no audience data available for Sky Sports Italy, Canal+ blauw (Netherlands) and several time slots for Canal+ (France) ** without Pay-TV channel Premiere

FOOTBALL SPONSORSHIP & COMMERCE 49 Section I Market analysis

ITALY In Italy, the bulk of Serie A coverage was shown on the Pay TV channels of Sky Sport Italy, and this included live pay-per-view matches. Figures are not released, but are high. Theses high audiences are partly down to the fact that Italy has been at the forefront of pay-television for football in Europe. Although its channels have not had the commercial success of, for example, BSkyB in the UK, the country had seen two rival broadcasters, Telepui and Stream, develop the market before the entry of Sky. Viewers have therefore become used to the pay-TV format and subscription levels are high, especially for pay-per-view, which is the primary driver of income. The peak viewing figures are from the national broadcaster RAI uno’s 90° Minuto programme, which is accessible by a larger proportion of the population than is Sky Sport.

FRANCE Canal+ was the main channel for the French Première Division in 2003/04, and broadcast live French league matches. Coverage was also significant on Free TV Foot 3, France 3, Téléfoot and TF1. Although Canal+ is measured in several time slots, there are many for which audience data is not available.

ENGLAND The English Premier League is predominantly shown on Sky Sports, which has exclusive rights to live transmis- sions of both subscription services and pay-per-view. The success of the subscription-based Sky Sports is such that it is the only pay-TV offering that has enough subscribers to be continually measured by audience analyst, BARB. Besides Sky Sports, ITV also had significant coverage of the Premier League with its ´The Premiership´ and ´Premiership on Monday´. ITV’s coverage was, overall, considered to be less than successful. It first used a peak time Saturday evening slot for its highlights broadcasts, but failed to attract the predicted large audience. The channel switched to the more traditional late Saturday slot, but its offering never really recovered and, in the next rights negotiations, the BBC won the main highlights package, which started at the beginning of the 2004/5 season.

GERMANY In Germany, Pay TV channel Premiere is the prime rights holder, and covers the Bundesliga live, but was not included in the IFM International analysis. ARD generated the bulk of the total audience with its programme ´Sportschau´ on Saturday and the live coverage of two matches. However, with more than 200 hours of programming, sports channel DSF also screened a large amount of the total football broadcasting time. This can mainly be attributed to the high quantity of repeats of the DSF programme ´Bundesliga Pur´.

SPAIN Only three channels, (Canal+, TVE 1, TVE 2) of the analysed national channels covered the Primera Division in specific programmes. Pay TV channel Canal+ had the largest share of the coverage of the Primera Division and broadcast live matches. However, there are a lot of regional channels, such as ETB1, Canal 9 and TV3 Cat, that also broadcast the Primera Division. Added to these channels, there are several Pay TV (e.g. Sportmania) and Pay-per-view (Taquilla) channels not analysed here that also broadcast Primera Division content.

THE NETHERLANDS Canal+ Blauw was prime rights holder and broadcast live matches from the Dutch Eredivisie in 2003/04. The company was also the main channel for broadcasting football news and highlights. The largest audiences, however, were generated by public broadcaster Ned 2 with its programme ´Studio Sport´. In terms of peak audience share this programme performed better than similar offerings across Europe with peak audience figures reaching 3.38 million viewers, just under 55% of market share and at peak programming time.

50 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

SWITZERLAND Because Switzerland is split into three different language regions, the total broadcasting time is relatively high. However, the audiences are extremely low since Switzerland has few inhabitants and the interest in football is not on the same level as in other countries. There were five channels that covered live matches of the Super League 2003/04.

TABLE 1.41 National Soccer Leagues in Europe 2003/04 - peak viewing figures

PEAK VIEWING FIGURES SPECIFIC PROGRAMMES

AUDIENCE COUNTRY CHANNEL PROGRAMME DATE TIME (IN MILLION) MARKET SHARE (%) ITALY RAI UNO 90° MINUTO 1/18/04 18:14 6.94 35.5 FRANCE TF 1 TÉLÉFOOT 3/7/04 10:49 2.72 40.4 UK ITV THE PREMIERSHIP 12/6/03 22:32 4.10 25.2 GERMANY ARD SPORTSCHAU 5/8/04 18:10 7.46 38.3 SPAIN TVE 2 ESTUDIO ESTADIO 5/23/04 22:55 1.20 8.6 SWITZERLAND SAT 1 FOOTBALL 11/23/03 16:00 0.34 n.a. NETHERLANDS NED 2 STUDIO SPORT MAGAZINE 10/26/03 19:00 3.38 54.9

Monitoring period: August 1, 2003 - May 31, 2004; national TV channels Sources audience figures: BARB, Eurodata TV, GfK / AGF pc#TV aktuell, TV Channel

The peak viewing figures are of particular interest to sponsors because they represent the mass market that is reached by football. In most cases peak figures are achieved on free-to-air channels, and mass audiences can be reached in Italy, Germany and the Netherlands in particular. As discussed, the UK’s Premiership programme on commercial free-to-air ITV channel, never lived up to expectations, with only 25.2% market share and an audience of just above four million. Despite having a high market share of 40.4%, France’s Téléfoot programme is screened fairly late at night and consequently gets an audience of just 2.72 million, hardly a mass market offering. Although Spain’s Estudio Estadio programme received relatively low audience figures for its league coverage, the popularity of football in Spain is better demonstrated by the viewing figures for the Copa Del Rey, UEFA Champions League and international matches, as well as by what is arguably club football’s biggest encounter, Barcelona v Real Madrid, screened on the Forta channel. An analysis of such figures shows that during the 2003/4 season, football took nine of the top ten slots in the Spanish broadcasting calendar and underlined the huge popularity of the sport in the country. Only the soap opera Los Serrano stopped football from making a clean sweep of all ten most watched broadcasts.

TABLE 1.42 National Soccer Leagues in Europe 2003/04 - total viewers

PROGRAMME CHANNEL TOTAL VIEWERS (MILLION) SPAIN V PORTUGAL TVE-1 10.24 REAL MADRID V ZARAGOZA COPA DEL REY FINAL EXTRA TIME TVE-1 9.7 REAL MADRID V ZARAGOZA TVE-1 9.1 REAL MADRID V BAYERN MUNICH TVE-1 8.46 LOS SERRANO T5 8.19 BARCELONA V REAL MADRID FORTA 8.14 PORTUGAL V ENGLAND EURO 2004 PENALTY SHOOT OUT TVE-1 7.77 NORWAY V SPAIN TVE-1 7.51 REAL MADRID V BAYERN MUNICH HIGHLIGHTS TVE-1 7.36 SPAIN V PORTUGAL PREVIEW TVE-1 7.32

FOOTBALL SPONSORSHIP & COMMERCE 51 Section I Market analysis

Chapter 9: Branding issues

The subject of branding and football has been bubbling nicely over the years. Fans of old had their own personal views on what their club stood for. In a good season, this hopefully coincided with what the board did, too. In an even better season the players also signed up to this vision. These were simpler times, when the search for a shirt sponsor went little further than a local supplier or retailer. It might even be as basic as the chairman arm- twisting a business contact or another board member. But that was then and this is now. And as Michael Willmott and William Nelson suggest in their book Complicated Lives, society is growing increasingly dependent on brands. The downside is that, for both young and old, brands will mean different things to different people. The question for football clubs and federations, with respect to the national team, is whether to be courageous in adopting a ‘take it or leave it’ attitude with respect to their brand or to be so subtle that punters can elicit their own meanings from it.

THE ESSENCE OF AN IDENTITY Identifying a club’s branding demands an honest and realistic appraisal of a club’s history, its current activities, its core values and its perception by both internal and external customers. This can take the form of an internal audit, carried out by the club or an external agency, which asks such questions as:

I What does the club stand for? I Who are its customers? I How is it perceived at home and abroad? I How do fans, and fans of other clubs perceive it? I How do suppliers and sponsors perceive it? I How do staff perceive it? I Is there a discrepancy between how its different audiences perceive it, and what it claims to stand for? I Is its image consistent across all marketing material? I What impact does club/team activity have on its reputation with each of its target audiences?

Take a club like West Brom in the UK. It had limited funds, but under the stewardship of its then marketing director, Trevor Field, wanted to improve its marketability. It called in Cre8, a design and marketing consultancy, initially to look at its matchday programme. Danny Lake, the consultancy’s creative director, undertook an audit of the club’s marketing material. He discovered inconsistencies in the way the WBA brand appeared in promotional literature. “We were faced with two crests, which looked a little tired,” he says, “while the club wanted to bring in new elements.” Sadly, no two typefaces used were the same; and there was no brand consistency – a recipe for confusion. “We took it upon ourselves to come up with a brand new look for a sub-brand, Albion, with a silhouette icon of the football,” says Lake. “The crest remains, but the silhouette is stronger.” Cre8 also put together a very basic corporate identity manual and is continuing to develop the brand and to keep it consistent. The next step is to develop the crest and modernise it. The feedback has been positive. And as Field says, when combined with a closer examination of just who the club’s fans were – by cleaning up its database and profiling it using Mosaic (a lifestyle database analysis tool) – it had a much stronger proposition when it came to negotiating with sponsors. He cites companies such as Cadbury, Volvo and Coors, which came on board as partners in 2003, after the rebranding, and which wouldn’t have looked twice at the club when it was in the Premiership a couple of years earlier. It also signed up Diadora, and a major credit card deal with Creation Financial Services, again as a result of knowing the importance of branding, the nature of the audience, and making all this clear both internally to staff and externally to fans and potential business partners.

52 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

The rebranding has now bedded in at the Hawthorns. It appears:

I at the stadium I on the big screen when the line up is announced I on corporate literature I on programmes I on fax paper I on corporate hospitality boxes and internal signage I partially on the web I in the club shop

It is also gradually being implemented on merchandising (on swing tags, labels and cuts) and on kit labels, and on shorts for the 2004/2005 season. The process has been a gradual one, says Lake, driven by the need to keep costs at a reasonable level. By focusing first on WBA’s programme, then branching out to non-programme literature, the club was able to see the benefits of their initial investment – and the potential. It might not have lifted programme sales, but when the price went up from £2.50 to £3.00, there was very little loss of sales and revenue actually increased.

BRAND CREATION Can a brand be created? Of course, otherwise most manufacturers would face ruin. Can a football brand be created from scratch or brought up to date? Well, unlike in the US, where franchises can be bought and sold, in some sports (e.g. baseball and American football), football clubs in Europe tend to be longstanding. The need to invent a new brand has not therefore arisen (although this is occurring elsewhere in the world, notably on the African continent). Corporate identity specialists, however, argue that familiar names can lose their way and need to reinvent themselves. According to John Williamson, a board director at Wolff Olins, there are four kinds of brand:

I those that people ignore I those that do what they’re meant to I those that bring a smile to people’s faces I those that enhance people’s lives.

What is often necessary is to go back to a brand’s roots, reassess its values, and work out how to make them pertinent to an existing and potential audience. Manchester United is often cited as the ultimate brand that other clubs should aspire to. Yet even its identity has been tweaked over the years, for a variety of reasons. Its original crest was a variation of the city of Manchester’s own. With the onset of piracy in the 60s, the sport’s governing body advised clubs to register their crest as trademarks – hence its revised emblem. Indeed, the ship above the lion with trident is the only part of the original crest left, symbolising the Manchester Ship canal. It was introduced in 1998, when the words ‘Football Club’ were removed from the badge. This, say disenchanted fans, is because directors thought it no longer fitted in with the company’s ‘global branding’, given its Public Limited Company status. To be fair to Manchester United, though there may be some truth to this statement, it is no longer just a ‘Football Club’. It was one of the first to become less reliant on its team’s weekly score for attendance and income. In the 2002/2003 season, while £67.5m (40%) of its £167.4m turnover came from matchday income, another £55.7m came from broadcasting rights and another £44.2m from commercial activities. In the context of UK clubs, Manchester United’s dependence on matchday income is relatively high. Arsenal, for instance, saw just 26.7% coming from matchday income, 72.8% coming from broadcasting and commercial activities combined. Even Chelsea and Tottenham Hotspur looked for only 29% of income from matchday, 60% from broadcasting and commercial.Still, due to the expertise of Manchester United’s marketing team, the club has accrued an impressive list of sponsors and partners. This includes a £303m merchandising deal with Nike and a £36m shirt sponsorship deal with Vodafone.

FOOTBALL SPONSORSHIP & COMMERCE 53 Section I Market analysis

The line-up is the envy of its Premiership rivals, and gives it an edge in the profitability stakes. It includes:

Vodafone – its principal sponsor and telecoms and equipment services partner. A new four-year contract was signed in December 2003. It has helped the club devise a new umbrella brand, MU Mobile, which delivers exclusive content to fans. Wilkinson Sword – its official male grooming partner, a new category for Manchester United. Lycos – its official internet partner, which is using its expertise to mould its international fan base into one with which it can build long-term relationships, particularly those in non-English speaking parts of the world such as South East Asia. Century Radio – its official radio station, which transmits games to a 5.1 million population based in the North West, and hosts phone-ins. Budweiser – its official beer, which has had pouring rights at Old Trafford since the 2002/2003 season. It receives on field and concourse signage, and can use the official marks in advertising, promotions and packaging. Ladbrokes – its official betting partner, which provides betting services at the stadium and online via ManUtd.com. Dimension Data – its official business solutions partners, which helps ensure that Manchester United’s customers, partners and fans get worldwide access to the information and services the club has to offer. Fujifilm – its official imaging partner, plus official sponsor of its museum and stadium tour. Fujifilm has the worldwide exclusive rights to sell the club’s images and imaging products.

Success on the pitch has a large part to play in a club’s attraction to sponsors – but a club’s branding is more than that. It is, in essence, the sum of its parts. Increased coverage on satellite, terrestrial or pay-TV will also boost its profile – and its ability to sell merchandise.

THE GOLDEN RULES OF BRANDING Clubs or federations that wish to get more value from their brands should remember the ten golden rules:

I Look beyond the scoreline for income from your brand. As the Manchester United example shows, commercial income can account for a high proportion of turnover – in the case of Chelsea and Spurs some 31.2% in 2002/2003. I If your branding is too weak to win sponsors, enhance it. Use the stadium as an extension of your brand, encouraging fans to come earlier and stay later. I Listen to your audience. If the match experience doesn’t match up to expectations, look at ways of altering it. Look at things like communication material, customer relationship management, and facilities. I If your product is outdated, refurbish it. This could mean a new build or a revamp, whichever is financially viable, but should integrate the heritage of the brand with its new surroundings. I If your audience is too limited, change your image. Football knows it has to appeal to a broad audience, ranging from key corporate and political decision formers, the local community and ethnic minorities, to existing fans and families. Just what will it take to expand your appeal? I Brand positioning needs to be flexible. Think not so much, what can a sponsor deliver to the club, but how the club can help the sponsor’s business. Sounds simple, but all too often clubs fail to do their research. I Don’t count your chickens. A new stadium, with a new name or even a shirt sponsorship can fail to deliver because of factors over which the club has no control, such as economic recession or mismanage- ment at its sponsor. Be prepared to rejig other parts of the marketing mix, such as pricing and packaging. I Don’t keep your sponsor at arm’s length. Successful sponsorship needs to be a partnership, one that is constantly renewed. I Research, research, research. The needs of a club’s audience, and its sponsors, are subject to constant change. Ensure that you keep up to date.

54 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

ECONOMIC PERSPECTIVE The turnover of the top European clubs may be the envy of those lower down the divisions, but it doesn’t make them other than medium-sized businesses. They are punching above their weight, in PR terms, but they are also often failing to exploit fully their brand potential. Manchester United, for instance, can claim a high share of mind but a low share of wallet. In 2002 it was extracting an average of just £3 from fans around the world – a feat which Williamson claimed was just an “indulgence, not a business”. Williamson highlights the amount being paid on wages and how this translates into team performance, but even with this big spending by the clubs, the financial results in 2002 were disappointing:

I 15 were profitable I 75 broke even I 150 were unprofitable

Football needs to adapt to a changing world if it is to compete as a business, Williamson concludes. It requires a rethink. The sport is not just about fans any more, but exists in a changing world, where football must move from being a commodity to an experience (citing a Harvard business paper). These changing values might be represented by:

exclusive > inclusive national > global legacy > choice game > entertainment community > business

CHART 1.1 Moving football from commodity to experience

PREMIUM/ VALUE

EXPERIENCE ENTERTAINMENT

SERVICE CUSTOMER FOCUS

PRODUCT EFFICIENCY FOCUS

COMMODITY

GO FROM DIFFERENTIATION

FOOTBALL SPONSORSHIP & COMMERCE 55 Section I Market analysis

Chapter 10: Portrait of a fan

Is there an average fan? Maybe in time gone by, when the game had not achieved its universal prominence. The game, after all, had its roots – at least in the UK – in the ‘working class’, and was played on a Saturday afternoon when fans were more likely to have time free. Across Europe, and in the Americas, expatriates often founded clubs, and the same culture could well have applied. Studies of the make-up of fans – at home and abroad – started to become more sought after only as more money poured into the sport, from the mid-80s. So who are these fans and how do they vary from country to country? They have certain things in common. If they have a very high interest in the game, they scan the sports pages, they keep up to date by watching television, listening to radio or keeping track online – more so than fans of other sports. A survey of European Football produced by SportFive estimates that 58% of the population in Europe, some 137 million adults, are interested in the sport. It also found that 83% of fans declared support for a club in their own country, while also displaying a strong interest in international championships. It categorised those with an interest in the game as falling into four categories: the largest (34%) were called the ‘Euphoric’. It’s probably safe to say that these comprise the football ‘fanatics’, for whom the game is their lifeblood. This group is then followed by the ‘Football Fan’, which has a 29% share – i.e. those who follow the sport, but not to the exclusion of all else. These are followed by those ‘Capable of Enthusiasm’ (22%) and the ‘Unemotional’ (15%). Here, we’re falling into the territory of ‘fair weather fans’. It would, however, be dangerous to dismiss the penultimate group. They may be armchair pundits, but 42% of them watch games in their national league at weekends. They also scan the media for information on a regular basis. They just wouldn’t claim to be ‘experts’, or at least 13% wouldn’t. This also happens to be the group that comes down the hardest on encroaching commercialism and its impact on the sport. SportFive’s survey also highlights a remarkably high proportion (41%) of fans who are female. They tend to appear in the ‘Unemotional’ group, with the highest average age at 45.4 years. This is a trend that has been growing, given the sport’s desire to attract families, and recognition that it is now safer to attend games. Sponsors know that it is often these fans who have control of the purse strings. Such fans are likely to support a club but have little interest in international championships – apart from the World Cup.

FOOTBALL TRUMPS OTHER SPORTS Football’s popularity over other sports is undeniable, across the five countries covered by the study – England, France, Germany, Italy and Spain. Elsewhere, in the US, for instance, sports such as American Football or baseball may dominate, but in Europe and South America, people identify with soccer. In terms of TV view, the survey ranks football above tennis, Formula 1, athletics, basketball, cycling, figure skating, rugby, swimming and gymnastics in each country. In most other countries the top five are the same, but in England, rugby ranks over basketball; in France, cycling, figure skating and rugby rank higher than Formula 1, athletics and basketball; and in Spain, swimming and gymnastics rank higher than Formula 1 and athletics.

CLUB POPULARITY The top five clubs, says SportFive, in awareness terms across the whole population, are Real Madrid, FC Bayern Munchen, Juventus, AC Milan and FC Internazionale. It is only when you get down to the next five that some of the more familiar names – such as Barcelona, Manchester United, Liverpool and Lazio feature. Awareness, however, shifts naturally according to the country surveyed. Spain, for instance, allocates Real Madrid a 100% score, just 85% to Man United. France, by contrast, is more aware – or gives a higher score – to Italian, Spanish, Dutch and English teams than to its own.

56 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis HIGH 8 13

TION* MEDIUM 9

ALIFICA

LOW 50 YEARS + YEARS 50

* Self rated academic qualification level

YEARS 30-49 30-49

11 11 10

29 YEARS 29

UP TO TO UP 9 9 7 9 9 6 MALE

5 8

21 20 17 11 18 14 15 20 17 17 12 16 15 13 17 13 13 12 18 12 18 12 12 12 12 15 10 12 FEMALE

9 9 8 6 4

18 TOP 2 TOP

4 1 6 2 2 3 4 4 3 5

3633 1933 16 3923 18 3619 24 12 34 25 32 25 33 29 32 17 29 28 27 20 21 32 32 20 28 23 27 22 28 25 17 24 19 18 16 16 21 10 23 19 17 17 18 19 15 10 NOT VERY NOT

5 4 4 4

38 14 10 10 11 12 10 11 10 11 12 14 QUITE

7 2 7 2 6 1 6 1 7 2 2 1 8

31 35 16 28 13 23 18 19 18 18 25 VERY

26 22 22 15 SPAIN

9 3 6 5

10 25 ITALY

31 GERMANY 8 9 6 1 9 14 18 11 11 21 20 21 30

COUNTRY INTEREST IN FOOTBALL GENDER AGE QU FRANCE

4 9 7 8

16 16 15 ENGLAND

8 TOTAL

463541720526842347221231310213321222220231300212221221 8 8 3 111100003010111111010100000000000000 3222332242334322243 5 1 8 0 0 0 1

18 1956 2730 5527 21 31 5627 51 13 3119 57 34 2416 50 43 26 60 24 18 31 30 22 19 48 30 28 20 12 17 80 27 17 80 44 15 46 17 43 44 22 18 12 42 16 56 29 67 17 26 13 39 35 70 39 55 33 57 44 56 18 57 57 52 15 28 18 11 13 13 4320 4310 19 35 12 36 42 17 16 48 11 50 18 47 52 21 49 39 47 41 44 44 43 45 40 18 19 27 21 13 50 30 20 80 44 56 26 35 39 33 44 18 18 17 1830 1954 34 2711 49 33 21 10 54 32 13 10 47 26 50 11 60 22 30 11 64 38 20 11 49 26 80 11 63 17 44 51 33 56 54 26 26 56 33 35 51 29 39 53 32 33 53 29 44 54 30 18 55 30 54 28 52

MILLIONS TOTAL IN IN TOTAL 22 13 1.2 4.4 100 100 100 6.92 3.18 2.51 73.7 0.44 5.76 95.67 50.85 46.53 45.95 32.27 26.52 25.72 22.12 33.41 17.68 14.23 29.97 50.93 91.39 18.15 170.63 170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 170.63 170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 170.63 170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 TION Media consumption of football APER(S) ANCES APER(S) AINT TISFIED Y TISFIED TION Y TISFIED OCAL NEWSP THER ARL ACTION WITH T ALL SA TS MAGAZINES Y Y L CHING FOOTBALL ON TV CH PROGRAMMES T TIONAL NEWSP Y TV TISF ABLE 1.43 ROJECTION IN MILLIONS ROJECTION IN MILLIONS PROJECTION IN MILLIONS SHARE (%) REGUL TV DAIL NA FRIENDS/ACQU DON'T KNOW/NO ANSWER S OURCE: port Five MEDIA USED TO GA FOOTBALL INFORMA T SPOR INTERNET/ONLINE SERVICES TELEPHONE INFORMA RADIO VIDEOTEXT PA MA SERVICES (INC SMS) TELEPHONE MESSAGE SERVICE WAT P SHARE (%) DAIL ALMOST DAIL 1-2 TIMES PER WEEK 1-2 TIMES PER MONTH SELDOM NEVER DON'T KNOW/NO ANSWER SA FOOTBALL COVERAGE ON TV P SHARE (%) VERY SA QUITE SATISFIED NOT VERY SA NOT A

FOOTBALL SPONSORSHIP & COMMERCE 57

Section I Market analysis HIGH

TION* MEDIUM

ALIFICA

LOW 50 YEARS + YEARS 50

* Self rated academic qualification level

YEARS

30-49 30-49

29 YEARS 29 UP TO TO UP

10 12 16 14 12 13 MALE

16 15 13 10 13 11 11 17 15 14 10 12 14 12 FEMALE

7 8

18 TOP 2 TOP

1 5 1 3 3 3 3 3 3 9 2 8 2 4 4 5 5 4 5

15 16 23 13 25 27 19 16 18 22 20 NOT VERY NOT

2 7

11 16 QUITE

8 2

15 40 11 22 12 15 16 18 18 14 20 15 35 10 21 10 13 15 17 15 14 18 14 28 1115 20 28 10 12 14 16 17 12 14 VERY

8 7 9 6

19 19 10 SPAIN

5 ITALY

8 4 GERMANY

COUNTRY INTEREST IN FOOTBALL GENDER AGE QU

FRANCE

ENGLAND TOTAL 3 2 3 6 2 2 0 2 5 4 5 7 4 2 1 4 000000000000000000230260233232223322 18 1916 2769 1912 21 61 10 18 13 76 11 11 50 68 20 15 30 70 25 20 69 80 73 44 75 56 48 26 74 35 66 39 71 33 68 44 69 18 69 67 73 64 6813 68 11 73 10 61 18 67 15 72 73 72 47 72 63 71 68 67 68 68 68 65 15 17 12 14 14 21 1453 2620 51 1013 11 58 11 13 21 53 11 11 22 48 16 15 27 58 13 14 58 12 27 54 17 38 57 49 56 52 55 52 52 55 52 1827 1972 54 27 46 34 21 66 18 13 81 13 50 87 24 30 76 36 20 64 21 80 79 15 44 84 30 56 69 23 26 76 31 35 69 32 39 68 31 33 69 21 44 78 28 18 72 26 73 26 74 26 4731 36 3727 1934 36 40 12 19 28 16 22 32 32 19 36 41 22 23 20 44 40 49 12 27 30 36 30 18 11 21 21 41 36 14 30 64 23 31 30 27 38 18 29 47 45 34 21 24 32 40 25 20 22 30 26 30 27 17 26 47 33 27 40 34 26 33 31 30

170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95

MILLIONS TOTAL IN IN TOTAL 100 100 20.5 5.07 7.92 0.79 3.86 27.99 22.04 25.04 24.36 90.63 33.68 21.97 46.65 44.67 53.31 46.42 58.16 123.19 117.07 115.13 170.63 170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 170.63 TV TV AY- TV consumption of football T T FRIENDS , THA CH ON P ANCES T TV TV A AY- AY- AINT T HOME ABLE 1.44 PROJECTION IN MILLIONS SHARE (%) DOMESTIC FOOTBALL TOO MUCH JUST RIGHT NOT ENOUGH NO ANSWER/DON'T KNOW EUROPEAN COMPETITIONS TOO MUCH JUST RIGHT NOT ENOUGH NO ANSWER/DON'T KNOW FOREIGN FOOTBALL TOO MUCH JUST RIGHT NOT ENOUGH NO ANSWER/DON'T KNOW SUBSCRIPTION TO PAY- S OURCE: port Five PROJECTION IN MILLIONS SHARE (%) YES NO NO ANSWER/DON'T KNOW FOOTBALL MA AMOUNT OF FOOTBALL ON TV T YES, ON P I/WE HAVE SUBSCRIBED I/WE HAVE TO A YES, ON P OR ACQU YES, IN A BAR/PUB OR LARGE PUBLIC VENUE NO NO ANSWER/DON'T KNOW

58 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis HIGH 9

TION* MEDIUM 14 32 10 11 10

ALIFICA LOW

10 11 12 50 YEARS + YEARS 50 5 6

* Self rated academic qualification level

YEARS

30-49 30-49 9 9 7 9 9

29 YEARS 29

UP TO TO UP MALE

1513 15 12 10 11 13 13 FEMALE

5 7 5 TOP 2 TOP

14 12 12

NOT VERY NOT QUITE

44 0 3 3 0 10839767776 VERY 16 13 12 15 11 17 23 18 18 16 16 12

32.12 15.61 10.43 47.73 21.92 36.24 23.06 24.17 10.93 12.36 25.64 17.63 SPAIN

7 8

55 27 18 82 38 62 40 42 19 21 44 30 ITALY 9 7 6 7 7

12.3 5.07 GERMANY 16 15

17.64 COUNTRY INTEREST IN FOOTBALL GENDER AGE QU FRANCE 9 5

8.55

ENGLAND TOTAL

334513432424931245100200111111111011 7 9 3 7 7 6 675743841756656756553741720635635653542581710535446553442523521424433433333522521424433433333411510314325323221331302222222321 211412300212213222220311310222123311

1814 19 15 27 13 21 19 13 13 50 30 20 80 44 56 26 35 39 33 44 18 26 39 15 29 26 16 29 21 24 26 22 28 38 30 13 18 24 43 65 53 74 60 66 78 62 69 68 64 70 61 47 59 83 77 65 42 25 15 30 21 11 13 11 11 11 12 10 10 10

MILLIONS TOTAL IN IN TOTAL 5.7 1.1 100 100 5.74 1.37 6.56 6.18 3.85 3.31 2.62 2.59 2.05 1.96 1.55 1.18 1.02 24.09 43.54 111.1 58.16 58.16 14.61 170.63170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 C) TION TS Internet consumption of football CHES TION T ABLES TION/ T SCHOOL CH REPOR T Y (FRIENDS, CAFÉ ET ARL TS/MA T HOME T WORK/A TS BETTING CH FIXTURES/T TS/NEWSGROUPS T ABLE 1.45 YPES OF INTERNET NO DON'T KNOW/NO ANSWER T SERVICES USED FOR FOOTBALL INFORMA PROJECTION IN MILLIONS SHARE (%) REGUL YES, A YES, others CURRENT NEWS MA PROJECTION IN MILLIONS SHARE (%) YES, A RESUL S OURCE: port Five ACCES TO THE INTERNET T BACKGROUND INFORMA EMAIL/NEWSLETTERS PICTURES FROM MA LIVE TICKER CHA VIDEO/VIDEO CLIPS AUDIO INFORMA CLIPS/RADIO ONLINE SURVEYS SPOR SHOPPIING/ORDERING, E.G. MERCHANDISE

FOOTBALL SPONSORSHIP & COMMERCE 59

Section I Market analysis HIGH

TION* MEDIUM

ALIFICA

LOW 50 YEARS + YEARS 50

* Self rated academic qualification level

YEARS

30-49 30-49

29 YEARS 29

UP TO TO UP

MALE

FEMALE

TOP 2 TOP

NOT VERY NOT

QUITE

VERY

AIN SP

ITALY GERMANY

COUNTRY INTEREST IN FOOTBALL GENDER AGE QU

FRANCE

AND ENGL TOTAL

18 19 27 21 13 50 30 20 80 44 56 26 35 39 33 44 18 45 4854 42 46 46 7332 28 49 34 69 41 34 4953 70 29 43 60 60 26 36 5621 57 45 47 45 23 36 39 42 42 1541 59 30 47 71 25 42 51 19 45 59 16 42 57 36 4637 51 26 40 61 30 43 35 38 26 35 53 35 45 46 56 18 51 51 34 46 39 46 14 47 53 32 39 29 58 23 40 57 31 35 54 20 28 50 34 36 50 22 44 32 39 54 20 36 28 35 54 22 45 37 53 20 41 37 48 23 40 37 19 42 35 20 41 38 43 38 37 37 38 37

MILLIONS TOTAL IN IN TOTAL 100 76.09 92.14 55.05 89.58 35.74 70.18 63.16 170.63 170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 UBS AS FOR T CL T OF A Attitudes to sponsorship in football UB , IF IT W THER CHOOSE A , THEN THE WHOLE TISING SHOULD BE UB WERE TO CHANGE ITS OWED ON REFEREES' TEMENTS ABOUT AL BRAND IF PRICE AND ALITY WERE THE SAME ADIUM AS AN ADDITIONAL ABLE 1.46 SPONSORING IN FOOTBALL STA UNAPPEALING THEN I TEND TO REJECT THEIR SPONSORS' PRODUCTS IF NAMING RIGHTS TO THE LEAGUE WERE SOLD TO A SPONSOR LEAGUE WOULD BENEFIT IT WOULD NOT BOTHER ME IF A CL NAME AS A RESUL ARE ABLE TO SELL THE NAMING RIGHTS OF THEIR ST SOURCE OF INCOME IF I FIND A CL SPONSORSHIP BENEFIT THE CLUB'S SPONSOR'S PRODUCT THAN A RIV QU I FIND IT GOOD THA PROJECTION IN MILLIONS SHARE (%) ADVER ALL JERSEYS ARE I FIND BRANDS THAT ACTIVE IN SPONSORSHIP APPEALING I WOULD RA S OURCE: port Five T

60 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis HIGH

TION* MEDIUM

ALIFICA

LOW 50 YEARS + YEARS 50

* Self rated academic qualification level

YEARS

30-49 30-49

29 YEARS 29

UP TO TO UP

MALE

FEMALE

TOP 2 TOP

NOT VERY NOT

QUITE

VERY

SPAIN

ITALY GERMANY

COUNTRY INTEREST IN FOOTBALL GENDER AGE QU

FRANCE

ENGLAND TOTAL

2480 2356 83 22 4850 7873 29 58 42 80 68 1546 62 44 7929 74 32 33 51 58 85 2632 76 27 45 61 5257 81 26 28 66 26 4923 55 52 36 8240 32 32 82 24 53 14 59 47 70 82 31 2725 35 77 27 51 19 56 5244 69 81 40 33 18 35 74 2235 42 24 56 56 32 46 85 37 31 35 30 73 26 45 50 3849 66 49 55 55 76 43 32 1949 38 76 25 26 47 16 40 46 69 4354 57 79 56 29 25 51 34 73 27 3849 45 24 50 50 30 37 45 62 8140 41 31 32 43 31 73 21 25 37 63 24 51 6440 57 55 52 54 80 35 41 29 26 44 36 82 19 46 56 29 24 49 53 34 52 43 57 59 81 43 39 29 28 58 27 77 25 41 46 33 24 55 53 42 45 47 52 59 80 40 41 26 23 53 38 65 29 35 49 49 22 61 59 39 50 45 69 54 78 32 43 29 27 52 53 64 34 57 52 24 50 55 39 52 45 60 64 52 38 30 27 50 37 78 38 47 52 18 44 45 45 51 58 58 42 44 30 24 51 16 79 35 54 47 25 57 39 37 56 51 43 39 24 29 51 22 35 50 35 24 43 40 41 59 54 38 39 28 25 53 36 53 50 25 55 41 40 52 61 43 41 26 45 43 35 57 24 67 40 48 57 53 39 45 25 63 24 40 20 55 48 44 67 41 31 28 49 35 56 32 30 45 57 41 21 41 37 49 38 47 40 44 41 49 31 44 56 40 45 38 52 48 54 35 60 36 44 53 39 60 44 42 42 40 35 62 56 60 69 58 67 63 64 66 63 76 48 79 63 52 56 68 62 3233 5843 46 36 3744 26 32 47 4148 33 1462 46 50 41 2930 18 44 37 43 57 30 21 40 73 47 39 48 46 21 31 66 54 45 38 30 38 27 57 44 49 60 25 26 37 65 34 46 50 40 42 24 58 50 41 52 21 33 40 68 34 48 47 45 31 42 60 53 38 51 39 29 32 62 50 50 44 36 32 25 68 43 63 52 26 28 28 55 39 51 39 30 32 30 56 40 25 56 33 26 41 64 47 30 47 37 33 62 40 49 45 29 59 57 53 30 64 45 30 59 28 18 20 27 21 14 36 22 14 58 51 49 24 35 40 36 41 21

MILLIONS TOTAL IN IN TOTAL 94 40 50 37 52 29 22 47 42 37 45 34 45 58 43 25 34 42 44 100 76.7 59.7 56.88 173.8 68.56 54.28 95.78 83.49 94.48 94.02 75.09 77.49 146.3 70.66 190.97 133.32 119.24 109.71 134.37 104.31 116.15 117.02 129.05 116.06 147.92 237.76 237.76 42.25 48.07 63.83 49.35 34.26 85.64 51.33 33.66 136.97 122.16 115.6 57.92 83.82 96.02 85.67 96.45 50.72 101.94 103.52 114.52 TION/ A ASHING Interest in product categories TATION TES A TEGORIES VEL OGISTICS TICLES/LEISURE ARCEL AINMENT Y/TRA Y FUEL PROVIDER T T AR AL/P CHES/JEWELLERY VEL/TRANSPOR TICLES ABLE 1.47 INTEREST IN PRODUCT CA PROJECTION IN MILLIONS SHARE (%) ALCOHOLIC BEVERAGES/SPIRITS BEER CARS/CAR ACCESSORIES COMPUTER/COMPUTER ACCESSORIES CONSTRUCTION/RENOV TELECOMMUNICATIONS/MEDIA TRADE/SHOPPING MALLS TRA WAT S OURCE: port Five AR SWEETS/CHOCOL T DIY/BUILDING HOUSES DAIRY PRODUCTS ENERG ENTER POWDER INSURANCE INTERNET PROVIDER/ONLINE SERVICES NON-ALCOHOLIC BEVERAGES OIL PETS/PET FOOD POST SERVICES/L MEDICINES SNACKS SPOR ELECTRONICS FASHION/CLOTHING FINANCIAL SERVICE PROVIDER FOOD FURNISHING/FURNITURE HAIR CARE/COSMETICS/ PERFUME HOLIDA HOUSEHOLD CARE/W

FOOTBALL SPONSORSHIP & COMMERCE 61

Section I Market analysis HIGH

TION* MEDIUM

ALIFICA

LOW 50 YEARS + YEARS 50

* Self rated academic qualification level

YEARS

30-49 30-49

29 YEARS 29

UP TO TO UP

MALE

FEMALE

TOP 2 TOP

NOT VERY NOT

QUITE

VERY SPAIN

15 32 25 22 29 24 31 28 31 25 17 32 41

Y AL IT

8 GERMANY 96 99 99 98 98 96 98 98 98 99 98 97 98 98 98

COUNTRY INTEREST IN FOOTBALL GENDER AGE QU FRANCE

100

ENGLAND TOTAL

1894 1958 96 2764 76 9898 21 96 7053 94 98 13 63 34 62 9128 50 60 43 6579 92 15 30 3681 89 49 91 95 1164 20 76 96 67 4792 91 95 70 76 80 73 94 55 41 95 69 9090 58 44 59 55 40 61 96 7292 95 96 41 56 50 8987 63 49 92 76 94 93 94 8281 26 68 82 94 48 38 87 82 9555 95 82 76 95 35 55 86 96 66 57 90 81 95 85 98 90 73 9080 39 71 80 70 64 43 93 69 91 7077 97 90 59 66 86 33 69 70 8958 64 61 92 81 79 33 94 89 92 49 81 8259 44 71 84 92 94 49 64 89 75 94 42 87 90 90 68 81 78 95 18 55 74 87 58 55 62 92 82 92 59 57 96 82 58 85 81 30 58 86 88 32 57 37 90 85 87 63 77 97 91 69 81 72 53 63 86 83 55 65 43 93 85 93 52 79 87 80 71 84 64 73 86 87 68 55 97 69 89 41 81 92 73 84 79 58 73 85 69 68 94 73 94 59 77 96 47 78 73 68 80 88 51 86 81 95 48 66 95 64 84 82 52 80 90 42 88 85 94 61 79 81 65 93 77 49 83 88 62 93 88 73 73 85 64 89 82 62 83 50 95 88 63 80 91 66 88 53 87 64 93 36 91 94 77 85 64 86 73 96 51 83 82 70 69 87 64 55 62 86 73 66 43 60 72 83 47 58 78 87 59 56 81 55 58 66

MILLIONS

AL IN IN AL TOT 100 99.2 90.17 98.99 47.46 94.02 170.63 170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 160.48 109.44 167.02 134.29 138.08 109.81 156.52 152.79 156.78 147.56 138.28 136.37 130.98 101.13 wareness of brands A ATION UXHALL) A YST AQ A ARENESS ABLE 1.48 PROJECTION IN MILLIONS SHARE (%) ADIDAS AMSTEL CARLSBERG COCA-COL COMP E.ON EUROCARD/MASTERCARD HEINEKEN KAPP MCDONALD'S NIKE OPEL (UK VA PHILIPS REEBOK SEGA DREAMCAST SIEMENS SONY PLA UMBRO VODAFONE S OURCE: port Five AW T

62 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis HIGH

TION* MEDIUM 13 14

ALIFICA LOW

7 50 YEARS + YEARS 50

* Self rated academic qualification level

YEARS

30-49 30-49

29 YEARS 29

UP TO TO UP

MALE

FEMALE TOP 2 TOP

11 11 11 10 12 11 NOT VERY NOT

QUITE VERY

21 1412 11 11 18 13 20 21 20 11 14 17 22 SPAIN

3418 27 35 17 23 11 18 23 31 15 22 26 34 25 32 24 31 15 23 23 30 18 24 22 30 13 26 18 12 23 17 23 33 23 10 23 18 18

Y AL IT

5 6 5 5 1 1 5 GERMANY 35 22 13 15 28 20 16 25 22 24 28 26 17 28 18 22

COUNTRY INTEREST IN FOOTBALL GENDER AGE QU FRANCE

6 ENGLAND

4 2 TOTAL

11 1863 1921 77 2728 41 6567 21 67 2017 77 79 13 18 13 27 36 69 50 32 19 53 74 30 23 69 46 20 59 64 80 53 69 44 65 67 56 59 59 26 65 68 35 73 66 39 66 67 33 53 74 44 58 70 18 66 59 64 64 69 63 3238 4327 65 3342 44 42 43 65 2758 29 13 4342 20 79 2745 19 52 52 23 5543 28 64 34 18 3720 28 61 75 44 51 33 29 62 49 35 43 4733 34 50 24 45 21 2537 22 53 42 40 27 2027 34 42 27 14 60 18 64 23 2623 40 37 66 30 37 46 41 30 56 33 56 60 37 47 29 33 44 39 33 24 47 49 17 43 45 13 31 42 37 21 30 61 41 15 43 40 14 35 42 43 30 39 56 32 36 40 46 23 29 57 38 42 31 60 46 32 32 43 34 28 45 45 35 17 72 40 30 39 46 22 33 31 41 25 28 64 46 34 35 46 17 36 41 41 39 27 44 57 31 38 46 30 44 43 32 28 57 48 35 43 23 40 40 40 59 31 37 44 30 43 56 58 44 35 43 40 43 40 42 30 47 31 21 45 29 16 35 35 31 38 39 24 34 25

MILLIONS

AL IN IN AL TOT 100 48.2 76.3 18.57 35.35 28.63 57.06 53.76 64.11 46.82 72.28 99.26 71.48 74.14 34.84 62.49 46.51 39.27 170.63 170.63 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 106.83 113.43 Appeal of brands ATION UXHALL) A YST AQ A ABLE 1.49 APPEAL PROJECTION IN MILLIONS SHARE (%) ADIDAS AMSTEL CARLSBERG COCA-COL COMP E.ON EUROCARD/MASTERCARD HEINEKEN KAPP MCDONALD'S NIKE OPEL (UK VA PHILIPS REEBOK SEGA DREAMCAST SIEMENS SONY PLA UMBRO VODAFONE S OURCE: port Five T

FOOTBALL SPONSORSHIP & COMMERCE 63

Section I Market analysis HIGH 10

TION* MEDIUM

ALIFICA LOW

18 18 17 23 15 15 19 10 12 50 YEARS + YEARS 50 9 9 8

* Self rated academic qualification level

YEARS

30-49 30-49 7 3 7 6 6

29 YEARS 29 UP TO TO UP

10 MALE

19 17 18 10 15 14 17 FEMALE

9 TOP 2 TOP

16 NOT VERY NOT

QUITE VERY

17 14 14 16 13 17 13 16 16 15 16 16 24 21 24 23 21 24 22 25 21 16 26 30 16 11 12 14 13 14 19 17 SPAIN

7 9 7 28 18 13 12 26 17 14 23 15 26 24 23 17 23 18 21

Y AL IT

8 28 16 22 15 12 19 15 20 28 20 1218 13 24 14 10 20 14 21 30 20 GERMANY 6 9 8 5

COUNTRY INTEREST IN FOOTBALL GENDER AGE QU FRANCE

9 4 2 4 8 5 3 7 4 8 2 7 ENGLAND

13 TOTAL

322610232323332233 78887285675889448 6 1854 1915 65 27 23 57 21 16 58 13 43 50 42 30 61 20 49 80 43 44 56 56 48 26 58 35 73 39 62 33 34 44 46 18 58 60 2177 53 80 15 77 18 24 7139 33 8118 53 30 75 25 52 29 79 14 19 14 77 51 13 70 21 25 78 42 25 76 40 20 77 30 25 89 41 23 83 31 26 63 45 20 74 43 29 80 43 23 77 32 20 39 25 37 32 41 48 714915 50 6450 22 51 4634 56 13 35 44 62 62 20 31 49 36 43 12 50 40 23 51 47 55 29 37 44 45 25 50 49 38 39 51 48 51 31 47 48 45 26 50 70 51 36 49 54 74 33 50 28 56 36 47 43 25 50 53 51 44 41 49 51 51 18 49 51 35 51 34 50 34 2326 1318 43 14 50 31 45 17 19 20 20 17 31 24 16 28 21 29 43 30 11 25 28 22 14 36

MILLIONS

AL IN IN AL TOT 4.2 100 24.8 41.5 31.27 33.06 46.84 36.51 22.95 85.62 51.35 33.66 136.97 75.11 95.52 43.99 59.72 66.92 55.87 75.84 30.95 91.35 35.58 11.48 66.29 30.22 84.97 82.16 82.69 26.18 58.25 10.58 44.13 39.05 30.86 23.44 130.76 Usage of brands ATION UXHALL) A YST AQ A ABLE 1.50 UMBRO VODAFONE PROJECTION IN MILLIONS SHARE (%) ADIDAS AMSTEL CARLSBERG COCA-COL COMP E.ON EUROCARD/MASTERCARD HEINEKEN KAPP MCDONALD'S NIKE OPEL (UK VA PHILIPS REEBOK SEGA DREAMCAST SIEMENS SONY PLA S OURCE: port Five APPEAL T

64 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

MEDIA HABITS Fans are avid consumers of media, although the nature of the media more commonly used to gather information varies by country. Television is watched by fans more regularly than other media, but local newspapers come next in line for German and French fans, national newspapers for the English, match programmes for the Italians and radio for the Spanish. Changes, however, are afoot. In the English Premier League’s survey of its fans for 2002/2003, it charts the growing penetration of satellite and cable TV among fans. Its study reveals 51% penetration of satellite TV among season ticket holders, and 50% among non. 21% of season ticket holders have access to cable TV and just 1% less among non-season ticket holders. Some 72% claim access to a sports channel, up from the 64% of fans who stated in the previous survey that they subscribed to live TV coverage of football. Of those with access to sports channels, 67% have bought pay-per-view services. It is elsewhere, however, that media patterns are really changing. Levels of internet access among fans has risen to 82%, up from 73%. This is verging on saturation, but is more popular among younger fans, numbers dropping dramatically among fans aged over 65 years.

REACTIONS TO SPONSORSHIP Fans are realistic about sponsorship. They know that it is a necessary part of today’s game – and that clubs cannot survive on gate receipts or TV rights alone. They are, however, sufficiently marketing savvy that they can spot those brands only paying lip service to the sport. As Mark Cooper, director of sports marketing at Edelman, whose sponsorship clients include Microsoft, Kraft, Visa and IBM, said in The Guardian in February 2003: “The real way to get value out of sponsorship is to earn the respect of the fans involved in the game. “You have to be seen to be making a real contribution to their enjoyment of the sport before you can really expect them to start altering their perceptions of whatever product or service that you are hoping to sell to them.” Fans, if they find a club unappealing, are likely to reject the sponsor’s projects, whichever it is. Somewhat surprisingly, though, they are open to new forms of commercialism – such as advertising on referees’ jerseys – and their attitudes towards brands improve if sponsors turn out to be enthusiastic. On the whole, fans with a high interest in football have much greater awareness of sponsoring brands than those quite interested who in turn have greater awareness than those not very interested in the game, Overall, this pattern also translates into brand appeal and brand usage, giving clear proof that sponsorship does, ultimately lead to sales.

CATEGORIES OF INTEREST Fans are no different from the rest of the population. They are interested in the product categories that impact on their everyday lives. Food tops the list in the SportFive survey, followed by fashion and clothing and dairy products. Sponsors in this area would always achieve resonance with fans, although the sponsorships might not set the world alight. There are, however, categories that are fast rising up the list. These include construction and house building, telecoms, and computers. Computer firms would fare particularly well as sponsors in France, for instance, housebuilders likewise in Spain. Telecoms score particularly well in Germany and Spain. The survey underpins Barclaycard’s rationale for sponsoring the Premiership in England, and points to similar opportunities in Italy. It also highlights the opportunities for DIY retailers in France and for utilities in Germany.

FAN ATTITUDES SURVEY A survey undertaken by International Marketing Reports in the summer of 2004 analysed the views of fans to some of the more controversial issues surrounding the game at present. The survey, based in towns and cities across England, looked at such areas as the cost of attending matches and how this contrasted with fans’ views about player wages. It also polled people on players’ behaviour and whether footballers and clubs were really setting a good example and working to help their communities. The first question analysed whether interest in the Premiership had grown in the past five years. Overall, respondents were fairly evenly divided between those who were more interested and those less so with a slight leaning towards being less interested.

FOOTBALL SPONSORSHIP & COMMERCE 65 Section I Market analysis

TABLE 1.51 Premiership interest change in past five years

MY INTEREST IN THE PREMIERSHIP HAS GROWN IN THE PAST FIVE YEARS. AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 6% 33% 14% 40% 6%

Those who professed to be occasional attendees of live football, however, were the most likely to agree with the question. 76% of such respondents either agreed or agreed strongly. Those who fell into the category of ‘supporter who doesn’t attend live matches’, however, disagreed with the statement in larger numbers with 39% disagreeing. It is this group that the Premiership needs to continue to attract if it is to retain current TV revenue income and for clubs to target with merchandising offers. Since the survey was finished, the Premiership has seen a fall in live attendance figures in the first few months of the 2004/5 season and although this doesn’t necessarily mean it is time to panic, there is a definite sense that football’s popularity in England could well have seen a genera- tional peak. The fact that only three clubs, Arsenal, Chelsea and Manchester United, are now seen as contenders for the Premiership title, coupled with a more defensive style of play by several clubs, is beginning to take its toll on interest levels.

TABLE 1.52 Are traditional fans being priced out of football?

THE TRADITIONAL FAN IS BEING PRICED OUT OF GOING TO FOOTBALL AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 10% 42% 41% 7% 0%

With only 7% disagreeing with this statement the clear answer, according to the public, is yes. The only good news for the football industry is that only 10% agreed strongly. Among occasional and regular (10 matches per season or more) attendees, the level of agreement with the statement was 72% and this backs anecdotal evidence that the fan base for Premiership football has seen a socio demographic shift towards the middle classes. On the one hand this might be seen as good news from a revenue point of view, because the middle classes can afford the higher ticket prices and might spend more on a matchday in bars and on catering. There is, however, a downside to such a premise. First, the standard of service provided by most clubs is not compatible with the expectations of such a socio-economic group. The speed and quality of service and product at football stadia, for food and drink in particular, is still below that experienced in the general retail environment. This part of the matchday experience is unlikely to generate loyalty so it is arguably only the hype surrounding football that has retained the interest of such a group. Should the ‘football product’ start to falter, and the signs are that this could be happening, the socio-economic group that the Premiership now depends on could look to the numerous other options in an increasingly competitive and sophisticated leisure market. Even if fans retain their interest in football, it should, for example be borne in mind that the cost of attending English Premiership matches is so high that in some cases it is cheaper to take a low budget airline to Spain and buy a ticket to see Barcelona play than it is for a London- based fan to see one of the top London clubs.

TABLE 1.53 Going to football is too expensive

GOING TO FOOTBALL IS TOO EXPENSIVE AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 26% 42% 27% 5% 0%

66 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

With only 5% disagreeing with statement, it is clear that almost all respondents believe the cost of tickets is too high and underlines the points made about traditional fans being priced out of football.

TABLE 1.54 Professional footballers are overpaid

PROFESSIONAL FOOTBALLERS ARE OVERPAID AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 47% 32% 6% 13% 1%%

Not surprisingly, given the responses regarding the cost of going to football, 79% of the sample agreed with the statement with only 14% disagreeing. The responses varied slightly depending on whether the respondent was a football fan or not, with occasional football fans being the most likely to disagree (25%) and non-fans least likely to disagree (8%).

TABLE 1.55 How much should footballers be paid?

WHAT IS THE MAXIMUM THAT THEY SHOULD BE PAID PER WEEK? LESS THAN £5,000 £5,000 £10,000 £20,000 £50,000 £75,000 £100,000 MORE THAN £100,000+ 29% 18% 15% 14% 9% 2% 2% 6%

62% of respondents believe that footballers should earn no more than £10,000 per week and only 19% believe that they should earn more than £50,000 per week. The results are not surprising given the dissatisfaction with the price of attending football, because most fans realise that ticket prices go almost exclusively towards paying wages. Again, it is those with no interest in football (47%) who believe most strongly that wages should be kept below £5,000 per week. Occasional supporters gave a very mixed response on the question with 38% believing wages should be below £50,000 per week and 54% believing that they should be either £50,000 or above. Regular supporters and season ticket holders, however, were less likely to believe that wages should be so high.

TABLE 1.56 Are there brand categories you don’t want to see on club strip?

ARE THERE ANY BRAND CATEGORIES YOU DON'T WANT TO SEE ON A CLUB STRIP? SOFT ALCOHOLIC SPORTS- TECHNOLOGY FINANCE CONSUMER CONFECTIONERY CHILDREN'S FAST SHOULD BE DRINK DRINK WEAR GOODS BRANDS FOOD NO BRANDS ON STRIP 0% 53% 1% 1% 8% 1% 8% 23% 22% 9%

The analysis of attitudes towards commercialisation of football considered the brand categories that respondents felt comfortable with as team sponsors. By a significant margin alcohol, at 53%, was the category that people were most against seeing on players’ shirts. Given that high profile English clubs, such as Liverpool and Leeds United, as well as the Carling Cup, have alcohol as primary sponsors, it suggests that such rights holders might find a need to consider public opinion in future. Football, especially in the UK, has been tainted by alcohol related incidents concerning both fans and players, and endorsing alcohol brands is clearly not viewed by the public as a good way to set an example. Interestingly, the responses to this statement were very similar among football fans and non-football fans. Respondents also felt a degree of unhappiness (23%) with teams’ endorsement of children’s’ brands and fast food (22%) although confectionery and soft drinks were not seen as a problem, despite the fact that health concerns have been voiced about the high sugar content of such products. In terms of an overall view on commercialisation of the game, only 9% stated that there should be no branding on club strips,which suggests that sponsorship per se is now readily accepted among the public.

FOOTBALL SPONSORSHIP & COMMERCE 67 Section I Market analysis

TABLE 1.57 Footballers set a good example to children

ON THE WHOLE FOOTBALLERS SET A GOOD EXAMPLE TO CHILDREN AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 0% 40% 22% 34% 4%

The sample was split pretty much down the middle on this statement, but it is telling that when the figures were rounded to the nearest percentage point, 0% agreed strongly with the proposition. Non-supporters disagreed in much larger numbers (44%) than supporters (25%) which suggests that lurid tabloid reporting of incidents of questionable behaviour have influenced the views of those not particularly interested in the game overall. With 25% of football fans disagreeing, however, it is clear that football has no room for complacency on this issue if it is to appeal to a wider section of the community.

TABLE 1.58 I would bring my family to a match

I WOULD BRING MY FAMILY TO A MATCH AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 1% 55% 19% 24% 1%

Overall, respondents are happy with the idea of bringing their family to a match, with the overwhelming majority of fans (95%) supporting the statement. Non-fans, not surprisingly, made up the majority of those who disagreed with the statement.

TABLE 1.59 Daughter marrying footballer

I WOULD BE HAPPY FOR MY DAUGHTER TO MARRY/LIVE WITH A PROFESSIONAL FOOTBALLER AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 9% 42% 21% 21% 6%

The sample was again split on the proposition of having their daughter marry a footballer. Nearly 50% agreed with the statement and 27% disagreed or disagreed strongly. There was not a major difference between fans and non-fans with 28% of non-fans disagreeing or disagreeing strongly with the statement, almost identical to the views of the fans. Interestingly only 14% of female respondents disagreed/disagreed strongly with the statement, compared to 33% of males.

TABLE 1.60 Football clubs do enough for their community

FOOTBALL CLUBS DO ENOUGH FOR THEIR COMMUNITY AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 0% 20% 59% 20% 1%

The sample is split fairly evenly between those who agree and disagree with this proposition, but the most significant response is the high level of Don’t knows (59%). This suggests that clubs, many of which have developed significant community programmes (as seen elsewhere in the report), have failed to communicate the scope of those efforts. Interestingly, non-fans disagreed with the statement in relatively low numbers (14%) and it was the fans who don’t attend live matches (30%) who disagreed/disagreed strongly more than any other category. A possible explanation for such a finding is that this group would not be exposed to the activities of the

68 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

community programmes via attending matches. The group might be more likely to consume media via television than, for example, local newspapers, which are more likely to have information on community programmes. Dedicated fans and indeed non-fans might have a higher interest in local affairs than ‘armchair football fans’.

TABLE 1.61 On pitch behaviour of players

THE ON PITCH BEHAVIOUR OF FOOTBALLERS IS WORSE NOW THAN IT HAS EVER BEEN AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 2% 22% 42% 32% 2%

The stronger profile of football in the media has meant that the behaviour of players is under increasing scrutiny. The increasing number of cameras used to televise football also means that any foul play is much more likely to be picked up and screened. The combination of these facts has resulted in many controversial incidents being highlighted in both football programming and in national television news coverage. As a result, it could be assumed that there would be a high level of agreement with the statement. Surprisingly, however, this is not the case with only 24% of respondents agreeing or agreeing strongly. Of those respondents above the age of 45 there were, unsurprisingly, fewer don’t knows, with 50% disagreeing while 31% agreed. Such respondents would have experienced the days of footballers such as Tommy Smith, Norman Hunter, Ron Harris etc who played in the 1970s and had a reputation for ‘taking no prisoners’.

TABLE 1.62 Off pitch behaviour of players

THE OFF THE PITCH BEHAVIOUR OF FOOTBALLERS IS WORSE NOW THAN IT HAS EVER BEEN. AGREE STRONGLY AGREE DON'T KNOW DISAGREE DISAGREE STRONGLY 9% 43% 28% 20% 0%

Perhaps more revealing of the image of the game among the public is the off pitch behaviour of players, where 52% of respondents found that behaviour is worse than ever, with only 20% disagreeing. 58% of respondents above the age of 45 agreed with the statement, whereas only 12% of the group disagreed. This is, again, in line with anecdotal evidence in the media about how the effect of money has changed the lives of players. Most ex- professional players point out that they used to be part of the local communities in which they played, and they would visit local bars and mix with fans and live in those communities. Professional footballers are now courted by upmarket nightclubs, which encourage them to attend free of charge so that their celebrity status attracts other customers. The players no longer live among the local ‘fan’ communities, because their salaries mean that luxury housing is easily within their grasp. Players thus have little to connect them to a normal lifestyle for someone under 35 years of age, and the trappings of money and fame mean that temptations are thrown at them at every turn. Mix these factors with the fact that footballers tend to be fit, energetic and at an age when testosterone levels are at their highest, and it is little wonder that incidents of ‘misbehaviour’ are considered to be on the increase. It should, however, be borne in mind that any misbehaviour by players is now much more likely to attract the attention of the tabloid media in particular. A good story involving a top player can significantly boost sales of a tabloid paper, and those who inform the paper have a high financial incentive to do so. 25% of respondents subscribed to football on pay-TV suggesting that the sample was representative of the national population.

FOOTBALL SPONSORSHIP & COMMERCE 69 Section I Market analysis

TABLE 1.63 Subscribers to football on pay-TV

DO YOU SUBSCRIBE TO FOOTBALL ON PAY-TV? YES NO 25% 75%

TABLE 1.64 Opinion regarding the price of pay-TV

THE PRICE OF SUBSCRIPTION FOOTBALL ON TV IS TOO HIGH FAIR LOW DON'T KNOW 36% 17% 2% 45%

The overall impression regarding the price of football on pay-TV is that, like actual match tickets, it is too high with 36% claiming that it is too high and only 19% saying that it is either fair or low. When football fans were analysed, however, the picture changes.

TABLE 1.65 Attitudes to subscription pricing among non-attending fans

SUPPORTERS WHO DON'T ATTEND LIVE MATCHES TOO HIGH FAIR LOW DON'T KNOW 34% 20% 5% 39%

Supporters who don’t attend live matches and, therefore, have a high propensity to use television as their primary means of football consumption, find that subscription levels are too high (34% of respondents). 20% believe that the price is fair while 5% believe that it is low. The 39% who do not know are likely to be casual fans who have not really considered taking out a subscription because their commitment is not high enough.

TABLE 1.66 Attitudes to subscription pricing among attending fans

SUPPORTERS WHO ATTEND LIVE MATCHES TOO HIGH FAIR LOW DON'T KNOW 47% 29% 6% 18%

Among fans who attend matches, there is an even greater sense that television subscription prices are too high with 47% agreeing with the statement. Interestingly, however, 29% believe that the price is fair, a much higher proportion of fans than think that ticket prices to live matches (see Table 1.53) is a reasonable cost.

TABLE 1.67 Attitudes to subscription pricing among subscribers

RESPONDENTS WHO SUBSCRIBE TO TELEVISED FOOTBALL TOO HIGH FAIR LOW DON'T KNOW 52% 36% 4% 8%

70 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

Among those who subscribe to televised football, there is a majority (52%) who believe that prices are too high but a large number (36%) believe that prices are fair. Very few (4%) believe that prices are low and ‘don’t knows’ run at a low level (8%). This suggests that there is a danger that should the ‘product’ of football lose its appeal, there is a case that price sensitivity could trigger a significant drop in subscriptions.

SURVEY CONCLUSION Overall the survey points to a lot of negative feelings among the public about football. The game is seen as overpriced in terms of both live attendance and subscription television packages, and there is a definite sense that traditional fans are being priced out of going to football. Players are seen to be overpaid and, off the pitch, they are behaving worse than they ever have. Football has either failed to make an impact in terms of the work it does in the community or the perception is that this is the case. The findings offer some crumbs of comfort in that most people feel happy with the idea of taking their family to a match, suggesting that the scourge of hooliganism has largely been defeated. A significant number of people still believe that footballers set a good example to young people and, on the whole, on pitch behaviour is not considered to have got worse. Finally, there is little opposition to the prospect of having a daughter marrying a footballer – but then, with the wealth that footballers have, many people would suggest that their daughters should jump at the opportunity. The survey does suggest that those involved in football, be they associations, clubs, broadcasters or players, need to have a serious review of where the game stands at present. The game has been through a golden period in terms of exposure and income. Claims that the financial bubble has burst are exaggerated, certainly among the top clubs, which have generally increased turnover year on year despite racking up losses. The real danger, however, is that the popularity bubble will burst and the survey points to a number of factors that could give momentum to such a scenario. The ultimate test for football fans is the quality of their experience. If the standard of play deteriorates, or indeed becomes less exciting (not necessarily the same thing), and the fans consider that they are being overcharged, this in itself represents a danger. Major aggravating factors are the sense that they are paying for inflated salaries of footballers who give poor value for money and abuse their position in society. In any other business, such a situation would cause alarm bells to ring. In football the powers that be have tended to turn a blind eye and have assumed that the good times will continue. This could be a costly mistake.

FANS IN THE FAR EAST Some of the biggest commercial opportunities – for clubs and sponsors alike – are in international markets, and the spotlight has been on Asia for some years. Research house BMRB has carried out various surveys in this area, as part of a multi-national study on attitudes and demographic breakdowns of fans towards different sports. The tables below can act as a benchmark to illustrate football’s popularity as viewing fodder compared to other sports in England and Scotland. In China, BMRB interviewed individuals aged between15 and 64 in some 30 cities. It avoided rural areas since they were less likely to have access to televisions. In Japan, it started with 12-year-old respondents and went up to 69-year-olds. Football was the top sport watched on television in China, by some 63% of the population, with women proving nearly as enthusiastic as men. It was ahead by around a 13% margin of its nearest rivals, basketball and table tennis. In Japan, professional baseball is still the perennial favourite, attracting a 45.5% share of viewers, with the marathon in second place. Football manages to trail in at only third, with a 22.7% share of viewers. The largest number of Chinese respondents was in the 25-29 age group, some 16%. Many respondents didn’t earn a monthly income (20.99%), but a sizeable majority (16.79%) earned the equivalent of between €96 and €143 a month in 2002. This group tended to take part in football, go to games and watch it on television more than any other. In age terms, the 15 to 19-year-olds were more likely to take part, their slightly older brethren to watch it on TV. The Japanese, however, despite co-hosting the last World Cup, have a slightly more laissez faire attitude towards football. Some 14% said they would continue to watch or attend professional (J-League) football in the future, with 22.7% saying that football programmes were top television viewing fodder.

FOOTBALL SPONSORSHIP & COMMERCE 71 Section I Market analysis

TABLE 1.68 TV sport viewing preferences in England

ENGLAND BASIC BASIC DEMOGRAPHICS: DEMOGRAPHICS: ELEMENTS SEX: ALL MEN SEX: ALL WOMEN ALL ADULTS TOTAL SAMPLE SAMPLE 20235 9097 11138 20235 (000) 40,577.50 19,866.80 20,710.70 40,577.50 VERTICAL 100.00% 100.00% 100.00% 100.00% HORIZONTAL 100.00% 48.96% 51.04% 100.00% INDEX 100 100 100 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 6639 4183 2456 6639 TEAM SPORTS: (000) 13,998.60 9,360.96 4,637.61 13,998.60 LIKE TO WATCH ON TV: FOOTBALL VERTICAL 34.50% 47.12% 22.39% 34.50% HORIZONTAL 100.00% 66.87% 33.13% 100.00% INDEX 100 137 65 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 5501 3132 2369 5501 INDIVIDUAL SPORTS: (000) 11,147.80 6,652.76 4,495.03 11,147.80 LIKE TO WATCH ON TV: SNOOKER VERTICAL 27.47% 33.49% 21.70% 27.47% HORIZONTAL 100.00% 59.68% 40.32% 100.00% INDEX 100 122 79 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 4496 3132 1364 4496 INDIVIDUAL SPORTS: (000) 9,530.76 6,810.75 2,720.01 9,530.76 LIKE TO WATCH ON TV: CRICKET VERTICAL 23.49% 34.28% 13.13% 23.49% HORIZONTAL 100.00% 71.46% 28.54% 100.00% INDEX 100 146 56 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 4393 2828 1565 4393 INDIVIDUAL SPORTS: (000) 9,441.41 6,548.00 2,893.41 9,441.41 LIKE TO WATCH ON TV: MOTOR RACING VERTICAL 23.27% 32.96% 13.97% 23.27% HORIZONTAL 100.00% 69.35% 30.65% 100.00% INDEX 100 142 60 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 4101 2795 1306 4101 TEAM SPORTS: LIKE TO WATCH ON TV: (000) 8,577.81 6,149.26 2,428.56 8,577.81 RUGBY UNION VERTICAL 21.14% 30.95% 11.73% 21.14% HORIZONTAL 100.00% 71.69% 28.31% 100.00% INDEX 100 146 55 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 3863 1816 2047 3863 INDIVIDUAL SPORTS: (000) 8,450.33 4,348.67 4,101.66 8,450.33 LIKE TO WATCH ON TV: TENNIS VERTICAL 20.83% 21.89% 19.81% 20.83% HORIZONTAL 100.00% 51.46% 48.54% 100.00% INDEX 100 105 95 100

SOURCE: GB TGI/BMRB Int 2002

72 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.69 TV sport viewing preferences in Scotland

SCOTLAND BASIC BASIC DEMOGRAPHICS: DEMOGRAPHICS: ELEMENTS SEX: ALL MEN SEX: ALL WOMEN ALL ADULTS TOTAL SAMPLE SAMPLE 2738 1149 1589 2738 (000) 4,136.51 1,986.42 2,150.09 4,136.51 VERTICAL 100.00% 100.00% 100.00% 100.00% HORIZONTAL 100.00% 48.02% 51.98% 100.00% INDEX 100 100 100 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 818 528 290 818 TEAM SPORTS: (000) 1,366.59 943.475 423.11 1,366.59 LIKE TO WATCH ON TV: FOOTBALL VERTICAL 33.04% 47.50% 19.68% 33.04% HORIZONTAL 100.00% 69.04% 30.96% 100.00% INDEX 100 144 60 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 703 386 317 703 INDIVIDUAL SPORTS: (000) 1,039.98 625.07 414.909 1,039.98 LIKE TO WATCH ON TV: SNOOKER VERTICAL 25.14% 31.47% 19.30% 25.14% HORIZONTAL 100.00% 60.10% 39.90% 100.00% INDEX 100 125 77 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 540 316 224 540 INDIVIDUAL SPORTS: (000) 865.301 581.467 283.834 865.301 LIKE TO WATCH ON TV: MOTOR RACING VERTICAL 20.92% 29.27% 13.20% 20.92% HORIZONTAL 100.00% 67.20% 32.80% 100.00% INDEX 100 140 63 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 520 301 219 520 INDIVIDUAL SPORTS: (000) 846.467 557.131 289.336 846.467 LIKE TO WATCH ON TV: GOLF VERTICAL 20.46% 28.05% 13.46% 20.46% HORIZONTAL 100.00% 65.82% 34.18% 100.00% INDEX 100 137 66 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 532 329 203 532 TEAM SPORTS: LIKE TO WATCH ON TV: (000) 838.623 573.983 264.641 838.623 RUGBY UNION VERTICAL 20.27% 28.90% 12.31% 20.27% HORIZONTAL 100.00% 68.44% 31.56% 100.00% INDEX 100 143 61 100 SPORTS AND LEISURE ACTIVITIES: SAMPLE 435 198 237 435 INDIVIDUAL SPORTS: (000) 656.969 358.181 298.788 656.969 LIKE TO WATCH ON TV: TENNIS VERTICAL 15.88% 18.03% 13.90% 15.88% HORIZONTAL 100.00% 54.52% 45.48% 100.00% INDEX 100 114 87 100

SOURCE: GB TGI/BMRB International

FOOTBALL SPONSORSHIP & COMMERCE 73 Section I Market analysis

TABLE 1.70 Chinese preferences for televised sport

CHINA ELEMENTS TOTAL SAMPLE BASIC DETAILS: BASIC DETAILS: SEX: MALE SEX: FEMALE TOTAL SAMPLE SAMPLE 76284 38815 37469 POP 70,337.00 35,912.50 34,424.40 VERTICAL 100.00% 100.00% 100.00% HORIZONTAL 100.00% 51.06% 48.94% INDEX 100 100 100 SPORT & LEISURE ACTIVITIES: SPORTS ACTIVITIES: SAMPLE 45320 27898 17422 WATCHED ON TV: FOOTBALL POP 44,256.50 27,100.10 17,156.40 VERTICAL 62.92% 75.46% 49.84% HORIZONTAL 100.00% 61.23% 38.77% INDEX 100 120 79 SPORT & LEISURE ACTIVITIES: SPORTS ACTIVITIES: SAMPLE 39536 21128 18408 WATCHED ON TV: TABLE TENNIS POP 36,385.50 19,526.20 16,859.30 VERTICAL 51.73% 54.37% 48.98% HORIZONTAL 100.00% 53.67% 46.34% INDEX 100 105 95 SPORT & LEISURE ACTIVITIES: SPORTS ACTIVITIES: SAMPLE 39566 23365 16201 WATCHED ON TV: BASKETBALL POP 35,479.90 21,139.00 14,340.80 VERTICAL 50.44% 58.86% 41.66% HORIZONTAL 100.00% 59.58% 40.42% INDEX 100 117 83 SPORT & LEISURE ACTIVITIES: SPORTS ACTIVITIES: SAMPLE 32437 17158 15279 WATCHED ON TV: VOLLEYBALL POP 29,575.40 15,727.00 13,848.40 VERTICAL 42.05% 43.79% 40.23% HORIZONTAL 100.00% 53.18% 46.82% INDEX 100 104 96 SPORT & LEISURE ACTIVITIES: SPORTS ACTIVITIES: SAMPLE 26667 12991 13676 WATCHED ON TV: SWIMMING POP 24,464.10 11,971.30 12,492.80 VERTICAL 34.78% 33.34% 36.29% HORIZONTAL 100.00% 48.93% 51.07% INDEX 100 96 104 SPORT & LEISURE ACTIVITIES: SPORTS ACTIVITIES: SAMPLE 16714 9882 6832 WATCHED ON TV: CAR RACING POP 15,445.20 9,166.67 6,278.53 VERTICAL 21.96% 25.53% 18.24% HORIZONTAL 100.00% 59.35% 40.65% INDEX 100 116 83

SOURCE: TGI CHINA/BMRB Int. 2002

74 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.71 Japanese preferences for televised sport

JAPAN ELEMENTS BASIC DETAILS: BASIC DETAILS: SEX: MALE SEX: FEMALE TOTAL SAMPLE SAMPLE 8842 4432 4410 POP 43,590.00 22,029.00 21,561.00 VERTICAL 100.00% 100.00% 100.00% HORIZONTAL 100.00% 50.54% 49.46% INDEX 100 100 100 ATTITUDE TOWARD CONTENTS: SAMPLE 3971 2763 1208 FAVOURITE TV PROGRAMS: PROFESSIONAL BASEBALL POP 19,815.60 13,946.10 5,869.49 VERTICAL 45.46% 63.31% 27.22% HORIZONTAL 100.00% 70.38% 29.62% INDEX 100 139 60 ATTITUDE TOWARD CONTENTS: SAMPLE 2339 1398 941 FAVOURITE TV PROGRAMS: MARATHON POP 11,691.20 7,023.51 4,667.65 VERTICAL 26.82% 31.88% 21.65% HORIZONTAL 100.00% 60.08% 39.92% INDEX 100 119 81 ATTITUDE TOWARD CONTENTS: SAMPLE 2079 1481 598 FAVOURITE TV PROGRAMS: SOCCER (FOOTBALL) POP 9,892.80 7,231.92 2,660.89 VERTICAL 22.70% 32.83% 12.34% HORIZONTAL 100.00% 73.10% 26.90% INDEX 100 145 54 ATTITUDE TOWARD CONTENTS: SAMPLE 1829 1230 599 FAVOURITE TV PROGRAMS: SUMO POP 9,316.49 6,298.51 3,017.98 VERTICAL 21.37% 28.59% 14.00% HORIZONTAL 100.00% 67.61% 32.39% INDEX 100 134 65 ATTITUDE TOWARD CONTENTS: SAMPLE 1575 1382 193 FAVOURITE TV PROGRAMS: PROFESSIONAL BOXING POP 7,792.39 6,870.05 922.341 VERTICAL 17.88% 31.19% 4.28% HORIZONTAL 100.00% 88.16% 11.84% INDEX 100 174 24 ATTITUDE TOWARD CONTENTS: SAMPLE 1281 1023 258 FAVOURITE TV PROGRAMS: GOLF POP 6,507.65 5,218.73 1,288.92 VERTICAL 14.93% 23.69% 5.98% HORIZONTAL 100.00% 80.19% 19.81% INDEX 100 159 40 ATTITUDE TOWARD CONTENTS: SAMPLE 963 872 91 FAVOURITE TV PROGRAMS: MOTOR SPORTS POP 4,812.18 4,345.54 466.647 VERTICAL 11.04% 19.73% 2.16% HORIZONTAL 100.00% 90.30% 9.70% INDEX 100 179 20

SOURCE: TGI/BMRB International

FOOTBALL SPONSORSHIP & COMMERCE 75 Section I Market analysis

LATIN AMERICA Given ongoing discussions about the Free Trade Area of the Americas, the Washington-backed deal that would create a free trade zone stretching from Alaska to the southern tip of South America, this is another zone that is experiencing increased interest from sponsors. Most of the major markets have experienced economic problems, with only Mexico seeming to be in a period of relative stability, mainly due to its growing ties with the US. There is perceptible improvement, however, in Latin American advertising, economics and politics, and this is serving to whet the appetites of many big brand names. So how does the population of the countries in the region regard football? Just under half (44.24%) watched it on television in 2003, compared with only 6.73% who attended a game of any sort. They are more interested in local or national coverage than that broadcast from elsewhere in the globe, with the World Cup proving the exception. Respondents in Argentina, Columbia, Ecuador, Mexico, Venezuela, Chile and Panama are more likely to play the game, often more than twice a week, thus providing a regular market for items such as sportswear, food and drink. The sport’s appeal, meanwhile, appears to take off among 20 to 24-year-olds, peaking among 25 to 34- year-olds. Their ability to spend money on their favourite sport is, however, likely to be limited. Many fans earn less than $400 a month, although sponsors can still look to target a reasonable number with a higher earning power. Some 8% fall into the $500 to $599 monthly income bracket, 5% into the $600 to $699 bracket, 7% into the $700 to $799 bracket and a final 5% earn more than $800 a month.

76 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.72 Argentinian preferences for televised sport

ARGENTINA ELEMENTS BASIC DETAILS: BASIC DETAILS: SEX: MALE SEX: FEMALE TOTAL SAMPLE SAMPLE 11009 4858 6151 (000) 17,290.20 8,242.33 9,047.91 VERTICAL 100.00% 100.00% 100.00% HORIZONTAL 100.00% 47.67% 52.33% INDEX 100 100 100 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 5645 3228 2417 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 8,877.53 5,438.20 3,439.33 SOCCER (ANY) VERTICAL 51.34% 65.98% 38.01% HORIZONTAL 100.00% 61.26% 38.74% INDEX 100 129 74 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 5167 2999 2168 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 8,180.68 5,023.37 3,157.30 SOCCER – NATIONAL VERTICAL 47.31% 60.95% 34.90% HORIZONTAL 100.00% 61.41% 38.60% INDEX 100 129 74 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 2712 1819 893 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 4,362.14 3,105.93 1,256.21 CAR RACING (AR,CL,MX,PA,PE,VE)* VERTICAL 25.23% 37.68% 13.88% HORIZONTAL 100.00% 71.20% 28.80% INDEX 100 149 55 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 2114 1644 470 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 3,429.01 2,747.08 681.935 SOCCER – EUROPEAN VERTICAL 19.83% 33.33% 7.54% HORIZONTAL 100.00% 80.11% 19.89% INDEX 100 168 38 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 1653 1231 422 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 2,709.14 2,096.56 612.582 SOCCER – OTHER LATIN AMERICAN COUNTRY VERTICAL 15.67% 25.44% 6.77% HORIZONTAL 100.00% 77.39% 22.61% INDEX 100 162 43 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 1782 1272 510 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 3,041.53 2,164.37 877.157 BOXING VERTICAL 17.59% 26.26% 9.70% HORIZONTAL 100.00% 71.16% 28.84% INDEX 100 149 55 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 1885 1136 749 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 2,812.93 1,753.95 1,058.98 TENNIS VERTICAL 16.27% 21.28% 11.70% HORIZONTAL 100.00% 62.35% 37.65% INDEX 100 131 72

SOURCE: TGI/BMRB International * AR,CL,MX,PA,PE,VE = Argentina, Columbia, Mexico, Paraguay, Peru, Venezeula

FOOTBALL SPONSORSHIP & COMMERCE 77 Section I Market analysis

TABLE 1.73 Latin America preferences for televised sport

LATIN AMERICA - TOTAL ARGENTINA, BRAZIL, CHILE, ELEMENTS BASIC DETAILS: BASIC DETAILS: COLOMBIA, MEXICO SEX: MALE SEX: FEMALE TOTAL SAMPLE SAMPLE 52639 23950 28689 (000) 135,536.00 65,558.00 69,978.20 VERTICAL 100.00% 100.00% 100.00% HORIZONTAL 100.00% 48.37% 51.63% INDEX 100 100 100 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 23256 13818 9438 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 59,954.70 36,713.00 23,241.70 SOCCER (ANY) VERTICAL 44.24% 56.00% 33.21% HORIZONTAL 100.00% 61.24% 38.77% INDEX 100 127 75 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 18105 10767 7338 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 45,298.80 27,763.00 17,535.80 SOCCER – NATIONAL VERTICAL 33.42% 42.35% 25.06% HORIZONTAL 100.00% 61.29% 38.71% INDEX 100 127 75 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 7172 4206 2966 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 17,446.50 10,343.80 7,102.70 TENNIS VERTICAL 12.87% 15.78% 10.15% HORIZONTAL 100.00% 59.29% 40.71% INDEX 100 123 79 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 6489 4481 2008 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 17,434.60 11,944.50 5,490.11 BOXING VERTICAL 12.86% 18.22% 7.85% HORIZONTAL 100.00% 68.51% 31.49% INDEX 100 142 61 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 7012 4523 2489 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 16,796.30 11,032.30 5,764.01 BASKETBALL (TOTAL) VERTICAL 12.39% 16.83% 8.24% HORIZONTAL 100.00% 65.68% 34.32% INDEX 100 136 66 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 6570 4737 1833 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 15,520.50 11,171.50 4,348.98 SOCCER – OTHER LATIN AMERICAN COUNTRY VERTICAL 11.45% 17.04% 6.22% HORIZONTAL 100.00% 71.98% 28.02% INDEX 100 149 54 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 5205 2783 2422 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 14,530.80 8,002.90 6,527.92 VOLLEYBALL VERTICAL 10.72% 12.21% 9.33% HORIZONTAL 100.00% 55.08% 44.93% INDEX 100 114 87 SPORTING EVENTS (ATTENDED OR WATCHED ON TV): SAMPLE 6349 4972 1377 TYPES/12 MONTHS: WATCHED ON TV/LAST 12 MONTHS: (000) 12,885.40 10,414.00 2,471.37 SOCCER – EUROPEAN VERTICAL 9.51% 15.89% 3.53% HORIZONTAL 100.00% 80.82% 19.18% INDEX 100 167 37

SOURCE: TGI/BMRB International

78 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

MARKETING AND THE ELUSIVE FAN In October 2004 Arsenal announced its new shirt and ground sponsorship deal with Emirates. Beyond the media hype and sports analyst sound bites, it is worth noting the reaction of actual Arsenal fans. Firstly there are the giddy armchair fans that never get to Highbury despite living in London, and perceive the deal simplistically as a huge transfer kitty. The second type represent the more cautious who see the deal as a necessary evil. Arsenal’s new stadium is one huge financial burden to take on at a time when perhaps football has already peaked. They welcome the money but are still wondering how the club plans to fill 60,000 seats considering that, even in the 2004/2005 season, some matches have seen tickets go on general sale rather than being scooped up by Arsenal club members. The disillusioned make up the third type. These are people with a long and deep emotional bond to the club who have attended matches since before Arsenal started playing entertaining football. These people are the heart and soul of football. They see the move as a sell-out of nearly a century’s worth of history. A ground name that meant something in English football will now be that of an airline from a country they couldn’t find on a map. A part of their club has been lost. The club’s ground is now a billboard for raising awareness of a brand with no link to the club or the game. The fact that it will probably never be called ‘The Emirates Stadium’ by match-going fans doesn’t soften the harsh reality that money now rules the game and fan loyalty is being bought and exploited in a rather crass way. In our fragmented media age, marketing loves football for being a key means of guaranteeing a broad audience. Being a football fan is far from being a member of an exclusive club and there is not one single, simple typology. Media coverage allows everyone some level of informed opinion, but within the world of fandom, a clear hierarchy does exist, based around factors such as attendance, knowledge of the club and game and the ability to see the faults of a club and players beyond blind deference. The sheer number of brands marketing via tenuous links to the game is staggering. During Euro 2004 was it possible to see an ad without some reference to football? Much marketing activity goes for the broad football audience, often overlooking the match-goers, but it is these heart and soul fans who most often ask the question ‘What’s the benefit to me?’ as another game shifts from 3pm on a Saturday. Has the flood of money into the game made their match day cheaper or better? Have commercial alliances strengthened their bond with the club? Or made it a little bit weaker? Average ages of match attendees are creeping up as the game becomes more expensive at many grounds, thus alienating the next generation of match goers, who often can’t pay on the day or sit with their friends. English football is exciting, but certainly not a high quality product. The national team’s recent record in Europe speaks volumes, as does the behaviour of many players off the pitch who spend ostentatiously and moan about fatigue after two matches in a week. Where the real quality in football lies is in the fan culture, which challenges the status quo and sees the ‘them and us’ gap broadening in the game. Football’s rise has been reflected in the health of magazines about the sport. In fact, several have gone under in recent years. The spin, over-elaboration and rumours of the newspapers are enough for many with an interest in the game that begins and ends at the remote control. Meanwhile, club fanzines retain healthy loyal circula- tions, some selling 10-12,000 copies ten times a year. Sponsors are aware that these are an undervalued means of reaching an elusive male audience, but none, as yet, has developed sponsorship via this route. There are undoubtedly concerns at board level about the irreverent editorial of these publications and about the fact that fanzines don’t feature on TGI data. This leaves the odd local radio station or record label to benefit from associations with fanzines at grass roots level. If brand owners want to stand out from the clutter in football, they need to consider jumping off the corporate bandwagon and going for some credibility with those at the top of the football fan hierarchy. Siding with the fan – rather than the club – could enable them to break the mould.

FOOTBALL SPONSORSHIP & COMMERCE 79 Section I Market analysis

Chapter 11: Individual rights

When David Beckham left Manchester United for Real Madrid, all the talk was of the value he would bring to the club – both on and off the pitch. Now that he looks likely to move again, how much control will he have over his ability to negotiate individual rights? Could it, in the end, depend on which country and club he moves to? The concept of rights in a personality’s image is not one that exists per se throughout the world. In Canada and the US, for example, individuals have exclusive control over any publicity involving their image, voice or likeness. In Australia, celebrities can claim compensation in the form of endorsement fees if their reputation is misrepresented. As for the European continent, there are statutory publicity rights in France, Italy, Germany and the Netherlands. In the UK, the situation is less clear. Here, there is no recognition of image rights as such, so individuals who wish to control the commercial exploitation of their name, signature and likeness have to follow a different route. The lack of a general right from publicity means that individuals must look to a variety of means to protect their rights, as discussed below.

REGISTRATION OF A TRADEMARK Registration allows the owner, whether an individual or a club, the exclusive right to use this mark for set goods and services. If these marks are licensed, they can produce a sizeable income from fees and royalties. As Arsenal FC learned to its cost, however, pursuing trademark infringements can be a costly and time- consuming process. It took a street vendor to court on the grounds that it was selling ‘unofficial’ Arsenal FC merchandise. It led to a High Court ruling in 2001 that the vendor was within his rights to sell merchandise with the Arsenal badge, which was then picked up by the European Court, which disagreed with the ruling. To complicate matters further, the UK High Court decided that the European Court had exceeded its authority. Arsenal launched an appeal against the ruling, which eventually brought the matter to a close. The Court of Appeal decided that the real issue was whether the selling of unofficial merchandise was likely to damage the trademark, or jeopardise the guarantee of ownership that ensued from the mark. It decided, on balance, that the sale of ‘unofficial’ merchandise infringed Arsenal’s trademark.

PASSING OFF There are three main components of the laws that might apply concerning ‘passing off’:

I If an individual or company tries to pass off goods or services as another’s without their consent, thus profiting from a brand, reputation or goodwill, and I they put the reputation of the trade, goods or mark in question, I the misrepresentation leads to deception or confusion in the mind of the consumer...

... damage then results. For instance, Formula One driver Eddie Irvine successfully sued when his picture was manipulated to promote Talksport. The court found that “Manufacturers and retailers recognise the realities of the marketplace when they pay for well known personalities to endorse their goods. “The law of passing off should do likewise. There is no good reason why the law of passing off in its modern form and in modern trade circumstances should not apply to a case of false endorsement.” Damages were assessed based on actual loss, standard fee and ‘reasonable royalty’. This was clearly a case of false merchandising endorsement – but it might not have been such a clear-cut case if Irvine’s image had been used purely to decorate a product, and not to suggest that he endorse it. This would have come under the heading of character merchandising.

80 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis

DAVID BECKHAM Any footballer with an eye to the future will seek to capitalise on his celebrity status. A logical conclusion would be for their advisors to set up a company that is assigned the image rights: to license out his/her name, nickname, signature, voice etc. At the time of his first move, Manchester United was reporting to be paying him, through his image company, some £33,300 a week for the right to use his image on club merchandise. Still, his fan appeal in the end proved of secondary value to the club. One of the main reasons why Beckham was let go by Manchester United had nothing to do with his playing ability, his altercations with his manager, or a feeling that he had come to see himself as bigger than his club. It was the signing of its £300m deal with Nike, over a period of 13 years, which lessened its reliance on its number seven. From the signing of the deal in November 2000, the club was no longer reliant on sales of No.7 shirts with Beckham’s name on the back. Merchandising is now Nike’s problem, not Manchester United’s, with the deal having a ceiling above which all profits are shared.10 The sales of individual players’ shirts no longer has the same importance.

TEAM VERSUS INDIVIDUAL Addressing the needs of players and those of their club or federation simultaneously is always liable to be a delicate balancing act. England rugby and football squads cannot use players for commercial purposes without individuals receiving a fee, but tend to use three or more at a time in any commercial venture. This is because individuals will have varying appeal, so featuring a star with two lesser known players will spread the benefit more equally and result in parity in pay. Discussions between player representatives and federations can be lengthy, however, with both sides angling for the best possible deal. The England Rugby Union, for instance, has had to contend with the fact that the commercial income coming from matches has not delivered the levels of payment that the players wanted. It hopes to remedy this with a new deal, which will last until after the 2007 World Cup and which will include image and intellectual property rights, bonuses and other elements. The fact that the formula for payments already agreed has proved to be inadequate shows just how problematical it can be when planning for the future.

CONTROL OF IMAGE RIGHTS The question, however, will inevitably be who should end up with ultimate control of image rights. If a player does set up their own company, it can be tax efficient for both parties, a revenue generator and – if negotiated correctly – result in control over commercial activities being agreed mutually. If a club pays for the right to exploit the image of a player, it can make payments to that player’s company without suffering any National Insurance because it is paying for promotional services – as opposed to playing services. When Beckham moved to Real Madrid, he came with baggage in the shape of previous agreements with companies such as Adidas, Brylcreem and Police sunglasses. The deal was, said Real Madrid, that the club should manage his image rights, but that previous agreements would be respected. This, it appeared, had also occurred with Ronaldo and Zinedine Zidane. Real Madrid went on to manage their image rights and share the revenue with them. There is only one certainty in this area, and that is that professional footballer associations, footballers, clubs and federations will continue to battle for ultimate control. In the short term, the balance of power seems to lie with the players (and their agents) – but in the long term it will be seen as a test case for football’s ability to run its affairs in a mature and businesslike manner.

IMPACT OF ADVERSE PUBLICITY Brand owners can always operate a tight control over their advertising. Unfortunately when it comes to sponsoring a team – or an individual in Beckham’s case – life is not so simple. In the summer of 2004, just months after signing what is reported to be the biggest endorsement deal ever - £40m with Gillette – David Beckham’s personal life took a battering. Newspaper reports linked him with not just one but several women. So just what was the impact on his sponsorship value? In the short term it appears that his earning potential is still as strong. Figures released in October 2004 show that he earned almost £1m each month in 2003 from his off- pitch activities, including advertising and promotional deals.

10 Daily Mail, Steve Curry: The Deal that made David disposable

FOOTBALL SPONSORSHIP & COMMERCE 81

Section I Market analysis

The figures have been revealed by Footwork Productions, a company that handles the provision of Beckham’s services. It reported a turnover of £10.4m in the eight months ending 31 December 2003. Beckham, as its sole shareholder, awarded himself a salary of £7.9m over the eight-month period, a significant increase on the £4.9m of the previous financial year.11 How the publicity affected Beckham’s commercial potential is revealed in a major piece of research undertaken by the International Journal of Sports Marketing & Sponsorship shortly after the allegations were first made. The research, as can be seen below, suggests that on the whole, Beckham has emerged without suffering significant commercial damage.

CASE STUDY: HAS ADVERSE PUBLICITY AFFECTED BECKHAM’S SPONSORSHIP POTENTIAL?

EXECUTIVE SUMMARY David Beckham, the world’s most famous football player, was the focus of a series of media allegations in April 2004 relating to extra-marital affairs. Beckham and his wife Victoria (Posh Spice) had nurtured an image as the perfect superstar couple. This was further enhanced following the birth of their two children, with David Beckham being portrayed in the media as the ideal father. With his good looks, penchant for designer clothing and celebrity lifestyle, the Real Madrid star is one of the hottest commercial properties in sport. He has signed a series of very lucrative personal endorsements with Adidas, Vodafone, Pepsi, Police and high street retailer Marks & Spencer. In late May 2004 Beckham agreed the biggest deal ever for a football player, at a reported £40 million, to endorse Gillette. The research hypothesis focuses on two issues. First, it questions the level of awareness among the UK population of the player’s key sponsors. Then it asks whether or not Beckham’s image has been harmed by the media allegations and whether this would lead to consumers being less likely to buy the associated products. In terms of awareness of his commercial endorsements, Beckham has achieved very high levels in both unprompted and prompted categories. Unprompted awareness of brands that he endorses peaked at 43% for his association with Pepsi. When prompted, this figure rose to 67%. Awareness rates for Marks & Spencer were the lowest among his sponsors, with public recognition running at only 7% unprompted and 16% when prompted. Presented with the statement suggesting that Beckham’s image has been harmed, 29% of respondents agreed. However, only 1% agreed strongly; 51% disagreed and 3% disagreed strongly. The remaining 16% had no opinion. As to whether the effect on his image would make people less likely to buy products that he endorses, 12% agreed that it would, of which 2% agreed strongly; 64% disagreed with the statement, and a further 9% disagreed strongly. The results of the survey suggest that damage to his image has not been serious and only a small proportion of those interviewed would be less likely to buy the products that he endorses. Given that the survey was conducted at the height of the adverse reports, the negative reactions are likely to fall even further over time, suggesting that in the long term, Beckham’s sponsors might not suffer significantly from the reports.

INTRODUCTION Since his recent reported £40 million personal endorsement deal with Gillette, David Beckham has topped the league for football (soccer) player commercial earnings. The Gillette deal, signed in late May 2004, put him ahead of Real Madrid team-mate, Luis Figo, who is thought to earn in the region of £30 million per year from endorsements. Beckham’s other major deals include contracts with Vodafone (£1m), Adidas (£3m), Pepsi (£5m), Marks & Spencer (£1m) and Police (£1m). There has been speculation that such earnings could be under threat

11 Beckham brand still strong, mad.co.uk, 8 October 2004

82 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

following press allegations in April 2004 that Beckham had an affair with business adviser Rebecca Loos. A key concern for sponsors with large investments in individual endorsements, however, is the danger of the player being portrayed in a negative way. In the Euro 2004 soccer tournament, Italian midfield player Francesco Totti was banned for three matches for spitting at a Danish opponent in the opening game – hardly an image with which sponsors want to associate. In this respect, is important to bear in mind that the key to effective sponsorship in many cases is not solely about generating awareness. Certainly, awareness of the link between brand and property is essential to create a platform to exploit the sponsorship, but simply generating brand awareness is of little use to many sponsors. Relatively few people on the planet are unaware of Pepsi, for example, and in the markets targeted by Beckham’s sponsors, all the brands in question, arguably with the exception of Police (sunglasses), have had high awareness levels for a considerable time.

Image transfer The reason for the endorsement with Beckham, therefore, is image transfer. Beckham’s carefully nurtured image as a style icon, bringing with it the attributes associated with playing for the most successful and glamorous sporting club in the world, while also captaining the England national team, can be transferred to the brands that he endorses. If, on the other hand, his popularity and image take a hit, then so too can the brand. Most brands protect themselves against such eventualities in two ways. First, they install incentive, rather than punitive, clauses into the contracts. Thus a player who performs to the maximum on the pitch, fulfils his contractual obligations and brings no adverse publicity on himself will receive the maximum level of fees the contract allows. Where any of these elements is missing, the sponsor has a right to withhold part, or all, of the payment schedule, depending on contract. The alternative, a punitive contract, would be more difficult to enforce: it would see the sponsor asking the player for a refund, which could lead to damaging publicity and might even end up in the courts. It is also possible for brands to take out insurance cover against damage caused by the actions of those with whom they have contractual agreements. Beckham himself is no stranger to adverse publicity. When England was knocked out of the 1998 FIFA World Cup, the young player was made a national scapegoat for being sent off in finely balanced and crucial game against Argentina after he retaliated to a foul. The England team had to play the remainder of the game with 10 men and revert to defending; eventually they lost in a penalty shoot-out. At the time, Beckham had yet to attain the superstar status that brought with it public forgiveness. He was fully exonerated by the English public more than three years later, after an extraordinary performance against Greece in a FIFA World Cup qualifying match. This saw him earn almost single-handedly the vital point that England needed (although some would argue that the England goalkeeper, Nigel Martyn, deserved equal credit) through a tireless work-rate and a last minute goal. His popularity soared to further heights in the finals of the 2002 FIFA World Cup, when England were drawn against Argentina in the group stage of the competition. Beckham took his revenge, scoring the only goal of the game with a first-half penalty. His football talent, good looks, devotion to his children and willingness to portray an almost androgynous image through his fashion choices, have endeared him to women. His popularity has also transcended sport and made him popular among many people with no previous interest in football. Beckham's celebrity wife, ex-Spice Girl Victoria, is arguably a mixed influence on his personal image, although she has helped him to gain unprecedented levels of exposure for a footballer. The two have courted publicity, including selling the rights to their wedding to celebrity profile magazine OK and undertaking commercial tours to Japan and the US. In April 2004, however, allegations started to appear in the British tabloid press about Beckham having had affairs with two women. The media reports were described by Beckham as ‘scurrilous’, but no point blank denial was actually made. Beckham has effectively become a mini-industry that is dependent on huge amounts of favourable publicity. So what impact would the press allegations have on his commercial commitments? So far no contract has been cancelled and no sponsor has been keen to stick its head above the parapet. In such a situation, no sponsor wants to be seen to be attacking the golden boy of world soccer. But at the same time, the sponsors have to evaluate the potential damage any adverse publicity could do to their brand. The International Journal of Sports Marketing & Sponsorship commissioned independent research to assess the levels of awareness among brands that Beckham endorses. It also asked if the publicity had damaged Beckham’s image. Finally, it asked if the publicity had any effect on whether the respondents would buy the products that he endorsed.

FOOTBALL SPONSORSHIP & COMMERCE 83 Section I Market analysis

METHODOLOGY In a street survey in three cities (London, Birmingham and Sheffield) and two towns (Milton Keynes and Watford) in England, a random sample of men and women, 288 adults, was questioned. A greater number of males (68%) than females (32%) were interviewed, because the survey sought to poll the views of football fans in some depth, and football fans are predominantly male. The respondents’ answers were broken down by gender, age group and whether or not they were active football fans, interested in football or had no interest in football. Interviews took place from 26 April to 8 May 2004, within a month of the peak of the adverse publicity. On the whole, extreme reactions (agree/disagree strongly) were very low in this survey. In many cases, when the results were rounded to the nearest percentage point, those results came out at zero. The size of the survey, at 288 people, is not particularly high, and some statistical anomalies could well occur when responses are broken down into smaller bands such as age groups. However, the accuracy of the results overall is not thought to have been affected by the relatively low sample size because of the very clear and consistent patterns that have emerged, in line with expectations.

RESULTS The first question asked respondents whether they could name (unprompted) any products that Beckham endorses. Pepsi came out on top scoring very highly at 43%. The company had recently launched a TV advertising campaign in the UK featuring Beckham, which is likely to account for the high showing. A surprising second place went to Police, which also had a very high overall positive response rate of 42%, rising to 59% among women questioned. Police has only recently been developed into a big brand in England and has used Beckham for several years to build awareness. Police has, however, had high levels of success in its Beckham-related PR campaign and he is featured strongly in company advertising. Vodafone also scored highly, at 35%, a rating that might have been boosted by the fact that the mobile phone giant is club sponsor at Manchester United FC, Beckham’s former club. Adidas received 28%, although to be fair to the brand, its marketing activity tends to peak around the time of the big summer international tournaments. The noticeable, and perhaps predictable, findings concerning Adidas were the high levels of awareness in the younger age groups and, being a sports brand, among those who attended football matches, half of whom were aware of the endorsement. Retail chain Marks & Spencer featured badly, with only 7% awareness despite high levels of publicity when the initial deal was announced. It has been argued that the fit between Beckham and the retailer – seen as a very traditional outlet for food and clothes (particularly underwear) in the UK – is not fully appropriate. Marks & Spencer is trying to modernise its image, but is the endorsement from Beckham a step too far? To be fair to the retailer, the endorsement mainly concerns children’s clothing, so it is not suggesting that Beckham endorses its products across the board. The variation in awareness levels for Marks & Spencer shows that it is older age groups, females and non- football fans that have the highest awareness of the sponsorship. Although females will obviously be a key target, given that they are most likely to be buying children’s clothing, the age groups with the highest awareness are not those who tend to buy such items. It is therefore questionable whether the link is really working for the group. It is interesting to note that males have much higher awareness of what are arguably predominantly male brands: Adidas and Vodafone. These two brands are also more closely associated with sport than the other brands that Beckham endorses. Vodafone’s branding might be considered more male than female (mobile phones are electronic gadgets which usually appeal more to males). Also, a key part of the company’s marketing strategy is sponsorship of male dominated sports such as football (Manchester Utd), cricket (England national team) and Formula One (Ferrari). For Vodafone, 16% more males were aware of the Beckham endorsement than females, and for Adidas the difference was 20%. For the less gender-specific brands, it was females who had the greatest awareness. Although unprompted awareness rates for Beckham’s endorsements showed high results, the prompted levels were very high. Significantly the results also suggest that there was very little confusion among the public between brands that he endorses and those that he does not. Only 1% believed that Beckham endorses either of the listed major competitors to Vodafone, and this figure is boosted mainly by those not interested in football. The high profile of O2 as an Arsenal (English Premier League Champions 2003/04) sponsor has not clouded the

84 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis

TABLE 1.74 Unprompted awareness of Beckham endorsed brands

BASE: ALL 288 (FIGURES ROUNDED TO NEAREST PERCENTAGE POINT) CAN YOU NAME ANY PRODUCTS THAT BECKHAM ENDORSES? (UNPROMPTED)

MARKS VODAFONE & SPENCER POLICE PEPSI ADIDAS ALL 35% 7% 42% 43% 28% MALE 40% 6% 34% 42% 34% FEMALE 24% 10% 59% 45% 14%

AGE 16-25 40% 6% 52% 52% 42% 26-35 43% 8% 32% 43% 32% 36-45 46% 6% 54% 46% 31% 46-55 45% 7% 75% 48% 22% 56+ 9% 10% 17% 22% 9%

SUPPORTERS WHO ATTEND 38% 2% 44% 44% 50% FOLLOW FOOTBALL BUT DON'T ATTEND 43% 7% 41% 52% 27% NOT INTERESTED IN FOOTBALL 25% 11% 42% 31% 19%

TABLE 1.75 Prompted awareness of Beckham TABLE 1.76 Prompted awareness of endorsed brands – mobile phones Beckham endorsed brands – soft drinks

BASE: ALL 288 BASE: ALL 288 (FIGURES ROUNDED TO NEAREST PERCENTAGE POINT) (FIGURES ROUNDED TO NEAREST PERCENTAGE POINT) CAN YOU NAME ANY PRODUCTS THAT BECKHAM CAN YOU NAME ANY PRODUCTS THAT BECKHAM ENDORSES? ENDORSES? (PROMPTED) (PROMPTED)

VODAFONE ORANGE O2 PEPSI COCA-COLA SEVEN UP ALL 68% 1% 1% ALL 67% 2% 0% MALE 72% 0% 1% MALE 63% 1% 0% FEMALE 24% 3% 0% FEMALE 76% 3% 0%

AGE AGE 16-25 85% 0% 0% 16-25 88% 0% 0% 26-35 74% 1% 0% 26-35 68% 0% 0% 36-45 77% 0% 1% 36-45 61% 0% 0% 46-55 80% 1% 1% 46-55 81% 0% 0% 56+ 26% 1% 0% 56+ 29% 11% 0%

SUPPORTERS SUPPORTERS WHO ATTEND 91% 0% 0% WHO ATTEND 69% 0% 0% FOLLOW FOOTBALL FOLLOW FOOTBALL BUT DON'T ATTEND 74% 0% 0% BUT DON'T ATTEND 77% 2% 0% NOT INTERESTED NOT INTERESTED IN FOOTBALL 47% 3% 3% IN FOOTBALL 53% 3% 0%

FOOTBALL SPONSORSHIP & COMMERCE 85 Section I Market analysis

TABLE 1.77 Prompted awareness of TABLE 1.78 Prompted awareness of Beckham endorsed brands – sunglasses Beckham endorsed brands – supermarkets

BASE: ALL 288 BASE: ALL 288 (FIGURES ROUNDED TO NEAREST PERCENTAGE POINT) (FIGURES ROUNDED TO NEAREST PERCENTAGE POINT) CAN YOU NAME ANY PRODUCTS THAT BECKHAM ENDORSES? CAN YOU NAME ANY PRODUCTS THAT BECKHAM ENDORSES? (PROMPTED) (PROMPTED) MARKS & POLICE RAY BAN ARMANI SPENCER TESCO SAINSBURY ALL 59% 4% 8% ALL 16% 1% 1% MALE 52% 4% 10% MALE 15% 1% 0% FEMALE 76% 3% 3% FEMALE 17% 0% 0%

AGE AGE 16-25 64% 4% 5% 16-25 16% 2% 1% 26-35 68% 4% 10% 26-35 18% 0% 0% 36-45 77% 2% 8% 36-45 15% 0% 0% 46-55 75% 1% 2% 46-55 13% 0% 0% 56+ 17% 8% 17% 56+ 17% 0% 1%

SUPPORTERS SUPPORTERS WHO ATTEND 75% 2% 6% WHO ATTEND 15% 3% 0% FOLLOW FOOTBALL FOLLOW FOOTBALL BUT DON'T ATTEND 59% 5% 7% BUT DON'T ATTEND 14% 0% 0% NOT INTERESTED NOT INTERESTED IN FOOTBALL 53% 3% 11% IN FOOTBALL 19% 0% 3%

TABLE 1.79 Prompted awareness of Beckham endorsed brands – sportswear

BASE: ALL 388 (FIGURES ROUNDED TO NEAREST PERCENTAGE POINT) CAN YOU NAME ANY PRODUCTS THAT BECKHAM ENDORSES? (PROMPTED)

ADIDAS REEBOK NIKE ALL 39% 1% 2% MALE 45% 1% 3% FEMALE 24% 0% 3%

AGE 16-25 64% 0% 4% 26-35 46% 0% 0% 36-45 31% 8% 0% 46-55 25% 0% 0% 56+ 6% 0% 6%

SUPPORTERS WHO ATTEND 63% 0% 0% FOLLOW FOOTBALL BUT DON'T ATTEND 41% 0% 2% NOT INTERESTED IN FOOTBALL 25% 3% 3%

86 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

TABLE 1.80 The damage to Beckham’s image from adverse publicity

BASE: ALL 288 (FIGURES ROUNDED TO NEAREST PERCENTAGE POINT) THE RECENT PUBLICITY SURROUNDING DAVID BECKHAM HAS HARMED HIS IMAGE.

AGREE DISAGREE STRONGLY AGREE DON'T KNOW DISAGREE STRONGLY ALL 2% 28% 16% 51% 3% MALE 1% 30% 15% 51% 3% FEMALE 3% 24% 18% 52% 3%

AGE 16-25 4% 32% 14% 44% 4% 26-35 1% 18% 17% 64% 0% 36-45 1% 23% 14% 62% 0% 46-55 0% 25% 13% 63% 0% 56+ 0% 44% 17% 28% 11%

SUPPORTERS WHO ATTEND 0% 31% 13% 50% 6% FOLLOW FOOTBALL BUT DON'T ATTEND 1% 30% 9% 57% 2% NOT INTERESTED IN FOOTBALL 3% 25% 25% 44% 3%

TABLE 1.81 Purchasing intention as a result of Beckham’s adverse publicity

BASE: ALL 288 (FIGURES ROUNDED TO NEAREST PERCENTAGE POINT) THE PUBLICITY MAKES ME LESS LIKELY TO BUY PRODUCTS THAT BECKHAM ENDORSES.

AGREE DISAGREE STRONGLY AGREE DON'T KNOW DISAGREE STRONGLY ALL 2% 10% 15% 64% 9% MALE 3% 10% 15% 61% 10% FEMALE 0% 10% 14% 69% 7%

AGE 16-25 0% 11% 4% 73% 12% 26-35 0% 4% 18% 68% 11% 36-45 4% 15% 15% 62% 4% 46-55 0% 3% 13% 72% 13% 56+ 6% 22% 33% 33% 6%

SUPPORTERS WHO ATTEND 0% 6% 6% 75% 13% FOLLOW FOOTBALL BUT DON'T ATTEND 3% 10% 17% 59% 11% NOT INTERESTED IN FOOTBALL 1% 14% 16% 64% 6%

FOOTBALL SPONSORSHIP & COMMERCE 87 Section I Market analysis

perception of fans either. In line with the unprompted question in the mobile phone category, males named the correct sponsor by a large margin relative to females, and football fans had an extremely high level of accuracy. In the soft drinks category, the prompted awareness of Pepsi overall was very high at 67%. Here more females correctly identified the sponsor than males and this follows the pattern that where brands are not sport-related, it is females who tend to be more accurate. Again, those brands that do not sponsor Beckham have received little or no perceived awareness of the endorsement, with the slight exception being that Coca-Cola picked up 11% of the oldest age group surveyed. This group tends to have the highest level of inaccuracy, and it is not surprising given that they are least likely to access the media in which the sponsorships are promoted. They also represent the age grouping least likely to be interested in Beckham per se. The prompted figures for sunglasses show a much higher level of confusion regarding the brand endorsed. Both Ray-Ban and Armani score relatively highly. Armani’s level could well be to do with the fact that it is first and foremost a designer clothing brand and Beckham is closely associated with such products. Ray-Ban is also the most established designer brand for sunglasses in England and, again, Beckham's association with designer products is likely to have had an effect. Table 1.78 shows a high level of consistency among age groups in terms of correctly identifying the sponsor. Sainsbury had been expected to register a little higher because it is official supermarket to the England national football team, which allows it to use images that include Beckham. The company’s football-related activity, however, peaks every two years around the time of major international competitions such as Euro 2004 and the FIFA World Cup. At the time of the survey, Sainsbury had not run a major England team promotion for nearly two years. For Marks & Spencer, the table underlines the fact that even among respondents who were prompted, the company has not made a significant impact with its Beckham endorsement. Responding to the suggestion that Beckham’s image had been damaged by adverse publicity, a small majority (51%) disagreed; 3% disagreed strongly. Overall, 28% did agree that his image had been damaged. There were few strong opinions, except in the older age group in which 11% disagreed strongly. However, the older age group agreed with the statement in larger numbers, 44% saying that his image had been harmed, 39% disagreeing. There was some consistency among the middle range age groups representing respondents between 26 and 55. These three age bands averaged 63% in their disagreement with the statement, which is significantly higher than both the younger and older respondents.Interestingly, males agreed with the statement more than females. It was, however, the females, who at 3% had the highest number of those who agreed strongly, and many of those respondents declared that they were not interested in football. Football fans were keener to express an opinion than those not interested in the sport, who gave a high level (25%) of ‘don’t know’ responses. This led to a polarising of football supporters’ opinions with a total of 31% of those who attend matches thinking that Beckham’s image had been harmed and 50% disagreeing. The results for those who follow football but don’t attend matches were 30% and 57% respectively. Asked whether the adverse publicity has made respondents less likely to buy products that Beckham endorses, the clear answer is that there has been some effect. A total of 12% stated that it has made them less likely to buy the products. The age band that felt most strongly about this was the 56 plus group, 32 percent of whom said that they were less likely to buy endorsed products. Strong agreement with the statement, however, was rare, perhaps reflecting the fact that few respondents in Table 1.80 agreed strongly with the premise that Beckham’s image had been harmed. The good news for Beckham’s sponsors is that in the key age groups, between 16 and 35, the respondents showed little inclination to change buying intentions as a result of the publicity. For example, 85 percent of 16-25 year olds suggested that they were no less likely to buy endorsed products. There was also very little difference between men and women regarding this issue. Fewer football followers stated that they were less likely to buy endorsed products than non-followers of the sport.

88 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

DISCUSSION The research findings clearly show that Beckham’s endorsements have very high levels of public awareness. It is arguable that because of the unprecedented levels of publicity at the time of the survey, this period would also deliver peak sponsorship awareness figures. (Many of the press reports listed his sponsors or showed him in sponsor branded apparel.) It is, however, clear that Beckham delivers the awareness levels for the sponsors to build effective leverage into their campaigns and the endorsements appear to be good value to most of his sponsors. There has been some damage to the player’s image from the newspaper allegations. Yet the intensity of feeling is clearly very low, with the overwhelming majority of those saying that his image has been damaged falling into the ‘agree’ rather than ‘agree strongly’ category. With public attention focussing on the more positive side of his life at Euro 2004, and with Beckham’s marriage appearing to have survived the crisis, there is every likelihood that the harm to his image will wane and lasting damage will be minimal. The same is likely to apply to the brands that he endorses. Very few respondents stated that they agreed strongly with the statement that the publicity surrounding Beckham had made them less likely to buy products that he endorses. The survey was confined to the UK and in countries with a more conservative approach to marital infidelity, Beckham’s image might have been harmed more. Press coverage of the allegations, however, seems to have been most widespread in England. The key to Beckham’s image in the period following the allegations may have been how he performs on and off the pitch in the future. A poor end to the season at Real Madrid and a muted performance for England in Euro 2004, including two penalty misses, have led to the first media questions being asked about his suitability to be England captain. It is extremely unlikely that England manager Sven-Goran Eriksson would do anything other than stick by his captain for the foreseeable future. Whether a fickle media will take the same attitude is open to debate.

FOOTBALL SPONSORSHIP & COMMERCE 89 Section I Market analysis

Chapter 12: Outsourcing

The term outsourcing and football usually come together in only one form, as in ‘outsourcing is a hot political football’. This, sadly, should not be the case. Football – as any other industry – should be open to the merits and potential pitfalls of a form of business management that has transformed many corporations. After all, if organisations ranging from banks to pharmaceuticals to local authorities can look to external firms to handle those services that don’t pertain to their core function – such as manufacturing, call centres, cheque processing, database management, payroll, facilities management, security, IT support etc. – why shouldn’t football? In the US it is thought a sufficiently high priority that it is included in the list of issues taught in the Stanford Graduate School of Business’s ‘Program for NFL Managers’, launched in July 2003. The NFL, whose 2002 $4.8bn revenue is tipped to grow by £1bn in the next three years, underwrote the programme. It views issues such as outsourcing as key in a market where heightened business acumen is vital – given much the same problems as soccer faces: salary caps, stadium financing rights, player transfer rights and balancing the books.

OUTSOURCING AND SPORTFIVE One of the pioneers in this area has been SportFive. It has an outsourcing relationship with six clubs: five in Germany and one in Turkey. The history of its partnerships differs, however. It presents two very different examples.

HERTHA BSC The company sees its co-operation with Hertha BSC, which dates back to 1994, as the corner stone of its comprehensive marketing programme. Hertha, then at the bottom of the second division, was in need of a marketing makeover. SportFive was able to make the club’s marketing more professional, thus providing the basis for subsequent sporting success, its promotion to the first division and even enabling it to enter international competitions.

HAMBURGER SV SportFive’s co-operation with Hamburger SV was shaped by the imminent construction of its new stadium. SportFive provided the concept and secured the financing. Its expertise in stadium development and its design of marketing-oriented facilities has, in turn, won over other clubs as to the value of an outsourcing partnership. Experts and club officials have been quick to see the advantage in dealing with a single partner with the necessary expertise to provide all the marketing services from a single source.

SPORTFIVE PORTFOLIO SportFive is lucky in that it can offer a one-stop shop for football clubs. This ranges from stadium advertising – including classic advertising tools such as perimeter boards, video screen etc. – as well as newer developments such as cam carpets to hospitality programmes. This can include the marketing of VIP boxes, business seats and catering. Since it is in a position to administer all available rights, it is also able to bundle individual sponsorship packages for the club sponsors. It sees to the needs of the individual sponsoring groups by developing a structured pyramid of sponsors, starting with the main shirt sponsor at the top and then down to smaller circles of regional sponsors at the bottom. Its subsidiary SportFive Tixx, has developed a Web-based ticketing system for clubs.

THE OUTSOURCING RELATIONSHIP The financial side of any relationship is negotiated on an individual basis, with SportFive as a rule receiving a proportional commission on successful deals. The company tends to focus on offering marketing benefits – i.e. stadium or club rights – rather than taking over responsibility for maintenance, security or payroll. It claims its strategy is best underlined by the success of its relationship with Hertha BSC. In 1994, when SportFive (then UFA SPORTS) teamed up with the club, it was stuck at the bottom of the second division. After it restructured its marketing arrangements – followed up by subsequent investment by the club in the team – it was promoted to

90 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

the first and, within four years, multiplied its marketing income by a factor of 16. The club’s marketing income is now 25 times higher since the start of its co-operation with SportFive. Its day-to-day working relationship with the club is close – but not too close. There are usually joint meetings held at least once a year to define goals and agree on the best marketing strategy to conform with the brand positioning of the club. In addition, SportFive negotiates and signs off all sponsorship contracts in close co- ordination with the partner club.

REGIONAL VARIATIONS The service that SportFive offers would not be suitable for all clubs, largely due to how sophisticated the relative business environment is. It considers, for example, that sponsorship is viewed with a varying degree of significance from one country to another. In Germany, for example, it is now an accepted part of the marketing strategy for companies who want to benefit from the emotional experience of the world’s most popular sport. Elsewhere, however, it regards many countries as being some way from reaching that point. In most cases, it explains, the clubs lack a professional approach to marketing and fail to provide the necessary structures to win the confidence of sponsors.

TICKETS AND TICKETING Attitudes to ticket prices, covered in this report under Future Issues, are viewed by SportFive as varying from one country, too. In Germany, for instance, the spectators – i.e. fans – are seen as the essential part of the emotional experience that football is. Gate receipts are considered a secondary source of income compared to sponsorship or TV rights. It sees its role in this context as helping to develop database technologies for the clubs it partners. Its ticketing subsidiary, SportFive Tixx, for example, offers an integrated system of Customer Relationship Management. This system provides the registration of all customer data from ticketing to consumer activities by means of a centralised database. Clients obtain a personalised chip card registering all transactions which may serve to develop a more targeted approach and provided added value to the customer by the introduction of bonus systems etc.

FOOTBALL SPONSORSHIP & COMMERCE 91

Section I Market analysis

Chapter 13: Overseas marketing strategies for clubs

BACKGROUND There are many reasons for clubs to look overseas for growth, not least the fact that they may have reached saturation point in their home market. These reasons may or may not chime with those of a global multinational. A corporation, for example, is just as likely to want to offer its products to consumers in, say, the developing world as it is, often, to secure low cost manufacturing. This is unlikely to be the case for a club, which tends to commission merchandise from suppliers, then badge it. For a corporation, though, providing local employment opportunities will both endear it to the community and to political decision-makers. It will smooth the route of product to market, and make marketing budgets work harder. Back in the world of football, a club or a sponsor often opts to set up an academy in a developing market. This will provide both employment and, possibly, a ready source of players. For companies on both sides of the fence, though, their objectives and their strategy need to be clear. As Fiona Gilmore, author of Warriors on the High Wire12, points out, consumers are becoming much more savvy about the social implications of global capitalism. Corporations – and clubs in this context – need to have clear policies that mitigate the negative impact. They “will also have to develop specific communication programmes that ensure that their corporate brand stands high in the consumers’ minds for their ethical behaviour and their cultural sensitivity,” she says. The one market that is proving to have an irresistible allure for clubs is China. There are a number of reasons for this. First and foremost is its size and value. The Chinese retail market is reported to be worth around US$450bn, of which foreign companies have an approximate market share of 2.5%. In addition, China is the world’s largest exporter of sporting goods – US$8.4bn per annum – and one of its foremost manufacturers.13

PLANNING The hard work for a successful overseas marketing strategy tends to be in the planning. Nigel Empson, CEO of FMM International, a global football industry expert with specific expertise in the Chinese football sector, advises clubs to be realistic about what they can achieve on their own. “Even the largest football company is minute compared to a conventional multinational or global corporation,” he says. “They therefore don’t have the same level of resources – either capital or human – to take their brand into these different markets. “They have to look at developing partnerships and using local expertise. They can’t do it all themselves – although they do have the choice as to how much to use partners. “A number of football clubs look to delegate pretty much everything, but retain a high degree of control and monitoring of what’s going on. To some extent it depends how deep your roots already are in these markets. The deeper your roots, the more confident your networks will be, the more confidence you will have in those networks and so on.”

The factors to take into account include:

I market conditions I economic circumstances I alien culture I local brand awareness I local brand predisposition I regional variations.

12 Fiona Gilmore, Warriors on the High Wire, The Balancing Act of Brand Leadership, HarperCollinsBusiness 13 Football in China, Eaves, N.; Empson, N.; Fletcher, D.; FMMInternational/SportBusiness (2003) p22

92 FOOTBALL SPONSORSHIP & COMMERCE Section I Market analysis

It is never going to be feasible to take a conventional business model, a club’s standard branding and product range, and just launch these into a foreign market. It is essential to be sensitive to differences in culture, taste and pricing.

STRATEGY There is a huge variation in the approach of clubs to marketing overseas. Some are very professional and undertake, through using organisations such as FMMI, extensive research in order to ensure that they have all the knowledge they need to support the decisions that they intend to take. Others, of similar size, appear to do it on a wing and a prayer. There is no doubt that it is very difficult to mount a comprehensive strategy to exploit overseas markets, particularly those like India and China, which is one of the reasons why most clubs are still testing the waters. Differences in culture and the way people do business concern clubs, as do the huge variations between regions. “Some take a fairly long-term view of it, recognising that, if you’re going into a foreign market, you’re going to have to go through the process of building the brand and putting the investment down,” says Empson. “Getting revenues back, meanwhile, requires a long-term commitment and perspective. Others look at it as a short term venture: go over, play a couple of matches, make a quick profit and then fly out and do nothing for three years then go back again.” The advice therefore is to:

I think long-term I research the market extensively I devise a detailed business plan I appoint local partners and/or specialists I incorporate a communications strategy into the overall plan I offer the most appropriate products and pricing structures.

FMMI’s solution, when working with clubs, is to develop a long-term integrated strategy that will include things like developing a solid club partnership, raising the brand profile and putting in place the foundations on which to build revenues in the future. This includes getting sponsors involved with all different aspects of the relationship. “In general terms,” says Empson, “the first thing that almost any club needs to do in going into China or Asian markets generally is to work hard at raising its profile. I know of one major UK club that went to China and despite being a club that most people in Europe would know, found that nobody in China had ever heard of them. And many European clubs would fare the same.”

MARKET KNOWLEDGE China has proved a step too far for some clubs, for a variety of reasons. Counterfeiting, for example, can be a major problem but is – to some extent – a Catch 22 situation: if there is a demand for a product in China which isn’t met, a counterfeiter will step in. This, says Empson, happens particularly with the major European clubs. “It’s fair to say that there are parallel markets,” he says. “Those who can afford branded merchandise will buy it. Those who can’t are more likely to buy counterfeit goods. So you have to make a decision as to whether or not you want to step in, provide merchandise for those who want to buy and accept that, at a lower level, some people will profit from selling cheap counterfeits to those who can’t afford your branded product.” Clubs can also look to different avenues to market their product. Sport publishers Titan, for instance, carried a promotion with some official Real Madrid branded T-shirts, prior to the Beckham signing, which proved very successful. Real Madrid agreed that Titan could sell its shirts – but a more basic replica kit version, rather than the more expensive bespoke replica version – at a price that was relative to the Chinese market. The sheer size of the different continents can also prove daunting. It is unwise, for example, to employ the same business strategy for Shanghai and Beijing – huge, prosperous and dynamic cities – as for more rural areas. As Empson puts it: “The less affluent the area, the more a club will face different competitors with different strategies that they will use against you. Equate China to Europe: you couldn’t have one strategy for both Eastern and Western Europe.”

FOOTBALL SPONSORSHIP & COMMERCE 93 Section I Market analysis

REAL MADRID’S CHINESE EXPERIENCE

In July 2003 Real Madrid toured Asia. It was shortly after David Beckham signed for his new club, and the team met with a tumultuous welcome when they landed in Kunming, China. They were greeted not just by colourfully dressed, drum-banging members of Yunnan province’s ethnic minorities, but also by four elephants. On the face of it, the Real Madrid authorities had got their strategy right. They brought along all the big stars, they stayed a decent length of time, they did some training, they attended a few banquets, they undertook some coaching – but, through lack of a clear communication strategy, they risked losing the PR battle. They were castigated in the press for:

I leaving a meticulously prepared banquet, arranged in their honour, after a mere 15 minutes I disappointing eager ticket-holding spectators who wanted to watch the squad’s first official practice session I disappointing spectators again when they chose to practice on a neighbouring field with no viewing facilities I restricting media access to the squad I charging inflated prices to watch the squad train.

Real’s side of the story was rarely heard:

I The team had a strict dietary regime and was unable to eat the prepared food. I The initial practice session had never been confirmed with the organisers. I The next session had to be moved because the ground was waterlogged. I Confusion about scheduling and strict regulations regarding access to Beckham hampered the Chinese media’s job. I The money from training is reported to have been donated to earthquake victims.

It has been argued that Real Madrid could have been looking to earn too much from the three-week promotional stint. Some estimates have the club seeking $9.1m from the tour. Yet it is also clear that it was looking to put something back, too. Some of the problems were not necessarily of the club’s own making. Although the crowds loved the spectacle, Real Madrid didn’t play the best Chinese team available. The opposition was more of a celebrity squad, full of players past their peak. The club and its advisors could have chosen more demanding opposition, but the reality is that a Chinese team was always unlikely to beat a full-strength Real Madrid – even though a full Chinese team has drawn with Brazil. Real Madrid is, however, forging closer links with China by developing an academy in Beijing.

SUCCESSFUL TACTICS China may be a complex market, but it is worth pursuing. Any club looking to make inroads should take on board certain simple measures. It will need to:

I raise its profile I demonstrate that it is there for the long term I show a willingness to give as well as take I show that it is prepared to work, to some extent, on the terms of the Chinese I demonstrate respect for the people, their culture and their understanding of their market.

China’s recent history shapes its dealing with foreign potential business partners. It has been fairly isolationist, says Empson, and is now looking to develop its national brand. “It wants to be accepted, respected, valued and treated as an equal,” he says, “all of the things that any nation would want – but particularly so if you have been isolated for a period.” China’s way to return to the international community is through its national sports teams. It has been quite successful at the Olympics, at basketball and specially at table tennis. But football is a global game, and as such an area where it would really like to make progress.

94 FOOTBALL SPONSORSHIP & COMMERCE

Section I Market analysis

“That’s why anything that a Western football club or organisation could help them with in achieving that target of becoming competitive on a global stage would be appreciated,” says Empson. “A lot of it is about presentation, which comes from motivation.”

KEIJAN’S SPONSORSHIP OF EVERTON Clubs should look to the process of forging links with China as being a two-way street – as Keijan’s sponsorship of Everton, which ended in 2004, has proved. It is a mobile phone manufacturer, which sought to raise its profile in its country of origin – China. It did not have any product in Europe. Keijan could have sponsored a top club there for the same cost, but its profile and repositioning as an aspirational brand would not have been as successful as it would have been through its link with Everton. The coverage that the English Premier League gets in China, and the prestige of being associated with one of its member clubs helped transform the image of its mobile phones from ‘functional’ to ‘aspirational’ and drive up sales from 1.2 million in 2001 to 2.5m in 2002. The signing of initially two Chinese internationals, and the success and retention of one of these was a bonus that significantly increased awareness of and interest in Everton FC (and so the visibility of Kejian) in China. Research by FMMInternatioina/Titan Sports suggests that the signing of Li Tie has increased support for Everton by around 250%.14 Keijan used its association with Everton to promote itself in China in all conventional ways. The key thing, however, says Empson, was the exposure that the brand received there on television. Every time that Everton played – for the 90 minutes of the match, plus reviews at half time, etc – the Keijan name was displayed to viewers as a glamorous brand and that exposure, coupled with the Li Tie connection, proved the main driver of its success in repositioning the brand. The Li Tie factor was also valuable. Prior to Everton’s signing of the player, the club’s profile was not particularly high in China. The novelty of seeing a national star playing in the Premier League added to the potential ‘glamour’, which is why Keijan was prepared to bankroll his signing.

FUTURE PROSPECTS IN CHINA The Chinese are already swamped with expressions of interest with regard to club partnerships and other potential opportunities, so it will prove difficult to achieve ‘cut through’. There can also be difficulties in that Chinese clubs seeking sponsors want to be associated with glamorous brands, which sometimes runs counter with what the Europeans are trying to achieve. When profound differences of language and culture are thrown into the equation, it is hardly surprising that relationships don’t always work out quite as well as they might. There is no doubt, however, about the potential interest of consumers in Western football. A poll of 6,000 Chinese football fans by FMMI/Titan Sports, shortly before David Beckham’s transfer from Manchester to Madrid, found that 50% chose Serie A as their favourite foreign league, with 33% preferring the Premier League. Of clubs, the poll showed that AC Milan (28.3%); Real Madrid (18.6%); Manchester United (11.3%); Inter Milan (11.0%) and Arsenal (10.7%) were by far the most popular, although 72% of Chinese fans ‘supported’ more than one team.14 China and India combined, moreover, make up a third of the world’s population and, with Japan, present any club or organisation with a very lucrative mass market. The problem, points out Empson, is that the clock is already ticking in markets like China. It has already seen a huge process of elite events heading there, having already hosted the World Cup and with the Tennis Masters Series in Shanghai, Formula 1, Superbikes and the Olympics to follow. “In terms of football it is already a fierce competitive market,” he says. “I am not saying that unless you get there in the next two years you have had it, but for those who want a competitive advantage, they really need to do something fairly quickly because we are already working with a number of clubs who are going to do just that.” For those who wish to enter this market, the message is to hurry. Late entrants will, as ever, find it difficult to compete with those clubs or organisations that are already established.

14 FMMInternational/Titan Sports (2003)

FOOTBALL SPONSORSHIP & COMMERCE 95 96 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

SECTION II BUSINESS OPPORTUNITIES

Chapter 14: Marketing a club’s wares

There has been a great deal of variation in the professionalism of clubs’ marketing activities over the past two decades. Indeed, in the early 1990s, the English Football League launched its first two-day conference geared to bringing club commercial managers up to speed on such issues as database marketing, sponsorship, hospitality, sales skills, licensing and the like. In 2004, there is still disparity in how clubs market their wares. Football, like any industry, is guilty of looking to short-term gains at the expense of long-term profitability. This can be seen in its attitude to the marketing of broadcasting rights – where BSkyB still holds sway – and where ultimately the sport will suffer. As soon as BSkyB rids itself of potential rivals for the rights – which it has nearly done – the price it is prepared to offer will drop. Where will that then leave the footballing authorities? The signs are already there. The first report on media trends by British regulator Ofcom announced that subscriptions had overtaken advertising revenue as the main source of funding for broadcasters. But that, to a large extent, is in the hands of the football authorities. What about the clubs? The list of items that a club can market is described in this chapter. It varies from a keyring in the club shop at one end of the scale to its stadium at the other. The sales success rate for both will depend on standard marketing criteria: the right product, in the right place, at the right price and with the right promotion. Even such basics, however, do not always score in football. The following two examples, NEC Nijmegen in the Netherlands and English Premiership club Charlton, are examples of clubs that – though not necessarily in the top flight – know how to market their wares and attract sponsors.

CASE STUDY: NEC NIJMEGEN

How can a club just below the top flight attract sponsors, retain its players, and keep the bank manager happy? At NEC Nijmegen, the answer has been to play very safe.

BACKGROUND The club’s initials stand for Nijmegen Eendracht Combinatie (for those seeking links with the electronics giant with the same initials). In Holland, it has an unusual pedigree. The club was founded in 1900, at a time when football, though popular in the Netherlands, led to clubs being seen as a rich man’s toy. The sons of rich indus- trialists and retailers, for example, founded such clubs as Sparta, Vitesse and UD. By contrast, NEC Nijmegen was more a community co-operative venture. Its founders came from a relatively poor neighbourhood where soccer was played on the street rather than on grass. A glance at the club’s website, of which a substantial portion is in English, explains that neighbourhood boys funded their new club, called Eendracht (Unity), and introduced a contribution of two cents a week. This was not the only club to emerge from the Nijmegen slum area and, three years later, a Nijmegen Football Association was set up. Eendracht progressed swiftly from local to county to national league. In 1910, Nijmegen, another local club, merged with Eendracht and so became the Nijmegen-Eendracht Combination. The club, however, continued to be handicapped by its humble origins. Lack of money, and no

FOOTBALL SPONSORSHIP & COMMERCE 97

Section II Business opportunities

rich members or contacts within the Church or local authorities meant it was unable to purchase its own ground or training field. This, in turn, reduced the money it accrued from gate receipts. Despite all this, at the start of the Second World War, NEC was considered to be a top national club. Sadly, it fared less well in the following years and the introduction of professional football in 1954 came at a bad time for the club, which by then faced problems both on and off the pitch. The reorganisation of the national league by the Royal Dutch Football Association (KNVB) nearly saw it reduced once more to the amateur ranks. Slowly, the club’s fortunes improved, however. The city of Nijmegen threw its weight behind the club, lending financial support, and 1967 saw it finally achieve promotion to the Premier League. The period up to the 1973 season was its heyday. Its ground, called the Goffert Stadium, attracted an average attendance of 14,000 per game. The club became adept at scouting and training up young players, who were then sold on for a profit. It may not have won any major prizes, but it was always thought to be a tricky opponent. The tide turned in 1974, when NEC was relegated; then followed two decades of alternate promotion and relegation. Uncertainty caused attendances to fall and budgets to shrink still further. It took the foundation in 1994 of the OSRN, NEC’s business club, by its then president, Mr van de Water, to start to get the club back on its feet. Since then, the club has remained in the Premier League, ending up in fifth place in the 2002/2003 season, although down to fourteenth in 2003/2004. It is now installed in a refurbished Goffert Stadium, with covered seating and modern catering facilities.

BUSINESS STRATEGY So what has made the difference? Over the last four years, the club has experienced explosive growth. A young and ambitious management, and much hard work, increased NEC’s income by some 400%. Its then general manager, Alex Tielbeke, who has now moved to the Dutch First Division, puts this down to the fact that the job is 40% inspiration and 60% perspiration. The club’s ambition is to be the top of the non-elite teams in Holland, and it is on its way. It ended up in ninth place in 2001/2002 and exceeded Tielbeke’s ambitions the following season. He was aiming at seventh and finished fifth in 2002/2003, but the club still has considerable ambitions for the future. Between now and 2005 it wants to play European football and hopes to achieve this by increasing income by 10% a year. This season, growth will be about 2%, but the same economic problems are affecting all clubs.

MARKETING FOR POTENTIAL SPONSORS Tielbeke’s tips for approaching potential sponsors are short and simple:

I Know your business and be smart. I Adopt a targeted rather than a broad brush approach. I Define the markets that could be interested in business-to-business or business-to-consumer via sponsoring football. I Analyse whether those markets are financially stable enough to support a sponsorship. I Make your own database. I Research facts and figures about your new sponsor. I Analyse their problems – not just what they’re doing right – and then write a proposal. I Let the sponsor feel that you are well prepared and that you have done your homework. I Most important: be very original! Provide examples. Use your commercial staff and the PR office to undertake some brainstorming as to what your suggestions and examples could be. I Any examples should use drawings, storyboards or computer images – give them a feel of what you are proposing. I Don’t bet on just one horse: until the signature is dry on the contract, search for captains of industry, lobbyists and parliamentary members who can introduce you to their business networks. Listen and be alert. I Look for new business. Read financial newspapers, look for multinationals introducing new labels etc. and be the first club with a good proposal.

98 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

HOW TO WORK WITH SPONSORS Tielbeke’s advice in this area is equally succinct, but no less commonsense. He advises clubs to:

I Do what you promise. Give them what you sold. This is not an area where it is permissible to make mistakes. I Be a good host. Let them feel comfortable in your club. Create a good atmosphere and offer high quality service. I Be there yourself. Sponsors want to see the chairman and director. Keep the lines of communication open and if they have problems, solve them fast. I Use your players and training staff as hosts. It is important to mingle and the sponsors appreciate this. Educate players and staff on how important this is. I Keep them interested with new experiences. Start with football matches against the first team, and then offer conferences with well-known speakers, business meetings on topical subjects etc.

Growing, says Tielbeke, is all about keeping what you have.

BALANCING COSTS No club is exempt from the problems of trying to balance the books. At NEC the policy is to:

I Provide a transparent accounting system, where the books are always open to inspection. Tielbeke advises giving members of staff their own budgets, thus reinforcing the importance of their role within the club. I Keep track of the budget on a daily basis, if not more frequently. I Provide up-to-date estimates and make plans when costs are rising or income is decreasing.

UNIQUE SELLING POINTS Even if a club has a local monopoly, if it is competing on a national level for sponsors, the going can get tough. NEC counts two USPs in its favour:

1.Fans and sponsors are attracted by the club’s entrepreneurial reputation, and its ambiance. 2.It is a very young and ambitious club, with hard working staff – something which people see and appreciate. If Tielbeke is to be believed, it’s the “Club of the Year for this season”.

ACHIEVEMENTS Tielbeke’s strategy has been effective in attracting sponsors. For the 2003/2004 season, the club actually had the luxury of playing with two shirt sponsors: AG Neovo and Setpoint, one on the front and the other on the back. AG Neovo is a flat plan display (LCD monitor) manufacturer, whose products are distinctive for their innovative design and reasonable price. McDOS International BV, whose name appears alongside AG Neovo’s, handles the company’s marketing and distribution in the Netherlands. Its contract with the club is for two years, with an option on a third. Setpoint, meanwhile, is a national menswear chain. It retails designer names such as Van Gils, Peter van Holland, Pierre Cardin and Strellson, and more casual lines such as Dimaggio, Alberto, State of Art and Paul Stuart. The sponsorship also has synergy in that Setpoint’s headquarters is based in Andeslt, within easy reach of Nijmegen. Its sponsorship contract is for one year, with an option on another two. The revitalised stadium has won over fans and the community alike, despite its reduced capacity (some 12,500). It is an all-seater, adhering to the requirements of the Taylor Report, with the pitch separated from spectators by a promenade, where refreshments are available. For those who like watching matches in comfort, the stadium is not only covered but also benefits from under pitch heating. This means matches can be played in inclement weather, with the heat also vented into the stand to keep spectators’ feet warm.

FOOTBALL SPONSORSHIP & COMMERCE 99 Section II Business opportunities

CONCLUSION NEC is known as a club that has, with scant resources, turned itself around at a time when many other clubs in Europe have found their balances in the red. Much of the improvement is attributed to Alex Tielbeke, who has been determined not to let the club overspend but to generate its own resources. It may not be a return to the time when the club depended solely on its ability to find young players, train them up and sell them on, but this is obviously still a part of the strategy. The NEC case study has many parallels with Charlton in the UK: the determination to set up a successful and innovative business strategy while maintaining its relationship with fans. Like Charlton, NEC is keen to play in European competitions but finds it difficult to attain the level of success where its dreams will become a reality. The future will depend not just on its performance on the pitch, but on the continued implementation of its business strategy to squeeze costs and increase turnover. If the club’s reputation is anything to go by, NEC stands at least a fighting chance of success.

CASE STUDY: CHARLTON ATHLETIC

BACKGROUND The 2004/2005 season represents a major milestone for Charlton Athletic Football Club, as it celebrates 100 years of its existence. Life has been good to the club in 2004: it finished seventh in the Premier League – although the club claims it could have done better. Charlton has had its fair share of problems, though. Back in the 1980s, it became homeless for only the second time in its history, and was forced to share with local rivals Crystal Palace. The Valley, Charlton’s ground, lay desolate for over a decade, beset with financial uncertainty and lack of direction. In 1991, however, supporters bought a ten-year season ticket that raised £1m of funds and helped Charlton return to The Valley. The club gained promotion to the Premier League in 1998, but its stay was a short one. It soon returned, however, finishing mid-table in the 2000/2001 season, fourteenth the following year and twelfth in 2002/2003. In 2001, meanwhile, 40 supporters raised another £1m to rebuild the North Stand.

SPONSORSHIP MARKETING The club’s approach to its marketing – as with all its business activities – is realistic and commonsense. It understands the need to spend within its means if it is to continue playing in the Premier League, and it acknowledges that it does not have the sex appeal of a Chelsea or a Manchester United. Yet this does not preclude it from attracting big name sponsors, nor building successful partnerships with them over time. The 2002/2003 season saw Charlton in need of a new sponsor. The deal with its then partner, venture capital firm Red Bus, had finished unexpectedly a year earlier than scheduled, so the club needed to compile a new package in record time. Steve Sutherland, assistant to the chief executive, decided to formulate a comprehensive package that could be tailored to individual sponsors’ needs using a template that could be easily shown in presentations. The prerequisite was to make potential sponsors understand the Charlton history, and the depth of community feeling towards the club, but also to highlight the opportunities that sponsorship presented.

OBJECTIVES Charlton was looking for a sum that many sports agencies turned down out of hand. The club was being marketed at a time when sponsors felt that they had regained the upper hand in negotiations, when clubs outside the top tier of the Premiership appeared to have lost their lustre. The money being sought was to enable Charlton to continue making strides both on and off the pitch. “Sponsorship income is good to have, but it’s not earmarked for a particular project,” says Sutherland. “It will just help us to progress the club, to enable the board to make better decisions as to what it can afford to buy as and when necessary.”

100 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

STRATEGY The club strategy was to create a package of benefits that sponsors could easily identify with, and once a presentation was finalised, Sutherland set about marketing it in the capital. Agencies that viewed it included SportFive, Drum, Carat, Grey Worldwide, Broadmind, OMD, IMG and Sports Media (the former Sportsworld). On offer was a four-year partnership, up to and including the centenary season of 2004/2005. It was with Sports Media, whose client was leading sports retailer all:sports, that the offer started to click. The presentation made clear that the deal worked on a number of different levels. First, there was the advertising equivalent value, worked out using industry standard evaluations to back up the price that the club was charging. These amounted to:

Venue sponsorship per season £2.0m Shirt sponsorship per season £1.8m Total per season £3.8m

The fee demanded was worked out upon a realistic market assessment, leading to proven value in the media marketplace by looking at:

CHART 2.1 Assessing media value

AVERAGE PROGRAMME AUDIENCES

VENUE SPONSOR EXPOSURE (SECS) GROSS MEDIA VALUE ADVERTISING MARKET COSTS

ADVERTISING EQUIVALENT FACTOR

NET MEDIA VALUE

Sutherland demonstrated to Sports Media what Charlton could offer all:sports in addition to media exposure. The company would not just become the shirt sponsor, but could take up the mantle of the biggest brand within the stadium. In essence, although Charlton’s stadium would never be called anything but The Valley, all:sports was virtually being offered the chance to become a venue sponsor. It was able to achieve cut-through by taking 55% of the available advertising.

THE PACKAGE So what was on offer? The four-year package enabled the potential sponsor to piggyback on the successful Charlton brand. The club was, for example, the winner of the 1998 play-off final (voted by football journalists as one of the greatest games ever played at Wembley). It was also Division One Football League Champion in 1999/2000 with a record-breaking 12 consecutive victories. The club had embarked on a massive refurbishment of The Valley, meanwhile, and proposed to offer the incoming sponsor a complete ‘stadium wrap’ involving:

I West Stand I North Stand I concourses I vomitories I revolving TV site pitch perimeter boards I dug-outs

FOOTBALL SPONSORSHIP & COMMERCE 101

Section II Business opportunities

That was just the potential for visibility within the stadium. In addition, it offered:

I in-store club promotions I promotions via its database I possible club superstore rebranding I exclusive centenary range I showcase of new shirts I website sales

In essence, what was being marketed as a premium package offered all the essentials:

I shirt sponsor I venue sponsor I category exclusivity I CAFC marks I branding (team wear, pitch-side, publications, tickets, stadium wrap and website) I merchandise I hospitality I stadium

Then there was the added carrot of participating in the club’s centenary season, with all the kudos and publicity this would bring.

THE SELL After an initial presentation to all:sports’ agency, the retail giant’s chief executive visited the club and the exercise was repeated. It turned out, at the press conference to launch the sponsorship, that he had decided within five minutes that Charlton was the club he wanted to work with. “All:sports was impressed by our presentation but also by our standing within the game, for our innovative work in the community relating to education, anti-racism and in the promotion of the club as a family brand,” says Sutherland. “Once we presented the club, showed them its history and our vision of the future, they made an offer. We came back with a counter proposal and, once it was agreed, it proved the most painless that we have ever signed.” The club had been told by other agencies that the deal was over-priced. Sutherland, though, claims it was merely realistic, and the club has been vindicated over time. All:sports was looking to target three specific areas – Scotland, the South-East and Wales – and initially thought it could only afford a Division One club. Charlton proved it wrong. The deal was adjusted so that in the first year the sponsor need only commit £500,000. In the second year, when its electronic perimeter boards kicked in (which themselves cost in the region of £150,000-£200,000), it signed up to pay £4.3m over three years. That sum would reduce if the club were relegated, with bonuses on offer if they won the FA Cup or reached Europe. Both all:sports and Charlton voiced a desire for the retailer to get involved in all aspects of the club. There has been an ongoing dialogue to get it involved in women’s football, youth football and in its college. As for Charlton’s centenary season, the club will look for all:sports involvement in all its community courses, football in the community, coaching courses and the like – promoting them through its branches. The sponsor supported all of Charlton’s summer shows in its first year by supplying the club with goody bags to give away. The end contract was tailored to the company’s needs and all:sports reached agreement on the maximum it could afford. So the deal was signed. It works for Charlton on a number of fronts: it provides the club with a number of new outlets to build into its retail strategy; and when negotiating kit deals, it also helps to have the biggest independent sport retailer on your side. All:sports set out to identify branches to carry Charlton Athletic branded merchandise. These would become the exclusive outlets outside of the club’s own stores.

102 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

CONCLUSION Pricing is a key issue for clubs, in whichever league they find themselves. The knack is being able to prove the value of the deal on offer, being flexible enough to tailor it for the needs of individual sponsors, and then being able to grow the partnership. All:sports had originally set its sights on a Division One club, believing it could not afford one in the Premiership. Yet given the buyer’s market that existed at the time (another Premiership club signed a sponsor for between £400,000 and £500,000 around then), the sports retailer could well have found itself a bargain. For a sponsorship to work, however, both club and sponsor have to be prepared to give 100% to the relationship. In this case, all:sports was comfortable with Charlton dovetailing with its brand in the South-east. Hearts Football Club had fulfilled the same function in Scotland and St Helen’s Rugby Club has done so in Lancashire. Charlton has eliminated the advertising clutter that used to bedevil its stadium – The Valley now has a far more organised and structured feel. The club also gained the security to be able to forward plan for its centenary. It may not be the biggest club in the Premiership, but it is up there with the big boys in terms of its professionalism, attention to detail and pride of working within budget. The Charlton presentation, using simple slides to show the history of the club, its milestones and various demographics, proved to be a sponsorship winner, and it is a presentation that is not beyond the capability of any lower division club.

Chapter 15: How stadia can be exploited

NAMING RIGHTS The earning power of stadia in terms of naming rights was first realised in the US. Some of the biggest deals include: the $300m 32-year deal signed by Reliant Energy for the Reliant Stadium in Houston, home of the NFL Texans; the $205m, 27-year deal signed by FedEx for the FedEx Field, Landover, home of the NFL Redskins; and the $195m 30-year deal signed by American Airlines for the American Airlines Center, Dallas, home of the NBA Mavericks and NFL Stars. Those stadia appealed to brand owners for a variety of reasons. They were seen as a way of getting closer to their target audience, of firming up links with the community and key decision makers, and of making a statement about a brand’s longevity.

Setting a value In Europe, the market has been slower to take off, but it was boosted by Portugal’s hosting of Euro 2004 and the fact that Germany is to host the 2006 World Cup – both countries having stadia in dire need of renovation. The challenge, however, has been in setting a fair price for a stadium deal. In 2004, this situation was made easier by sport communication research specialist Sport+Markt, which achieved a first by developing a price evaluation model for naming rights that has been implemented outside of the US. This model was applied in the Bayern-Allianz deal in Germany, and sought to anticipate market development, and the various club and sponsor variables. Sport+Markt conducted research on both sides of the Atlantic in order to come up with a price that was seen as fair for both parties. It looked at existing deals in the US, analysing the effect on target audiences, and then built an element based on the law of supply and demand at that particular time in the marketplace. The deal is thought to be worth in the region of €92m to Bayern Munich, and overtakes the five-year agreement between AOL and Hamburg SV for the naming rights to the 65,00-seater AOL Arena. The Allianz deal is for 15 years, whereas the Hamburg deal ends before the 2006 World Cup, due to FIFA rules that ban stadium sponsorships during such events, to eliminate possible conflicts with FIFA’s marketing programme.

FOOTBALL SPONSORSHIP & COMMERCE 103 Section II Business opportunities

The value on both sides of the Atlantic will, at its most basic, depend on exposure. Stadia in Europe do appear to be undervalued since, while football games are aired on an international basis, the audience for many US sports is largely home grown. There are signs, though, that the benefits of media exposure could be exceeded by the ability of a naming rights deal to achieve cut-through in the minds of ever-more cynical consumers. A brand can thus become synonymous with a club via such a deal, partly by virtue of its longevity and partly by dint of how it leverages its investment, so that it can even overshadow other forms of sponsorship.

Benefits for a naming rights sponsor A venue sponsor is likely to have enough to spend to guarantee sizeable benefits. Over and above the brand’s name on the stadium itself, this might include any or all of the following:

I signage in and around the stadium I category exclusivity where other advertising is sought I logo placement (on all forms of promotional material, say, to include programmes, literature, the website, ticketing, plus uniforms and other elements of incidental infrastructure) I media opportunities I corporate hospitality opportunities (use of venue on matchdays and for in-house sporting and business occasions, plus discount ticketing)

Impact on awareness Fans in Europe are becoming more comfortable with naming deals. Indeed Reebok, which has been Bolton Wanderers’ stadium sponsor since 1997, achieved the highest recall score in a survey by Sport+Markt of 600 British football fans aged 15-69. Some 40% of them, when asked to identify a naming rights sponsor, picked Reebok – a greater proportion than the number who talked of Vodafone’s sponsorship of Manchester United. Other UK naming rights sponsors to get a mention included the Walkers Stadium of Leicester City (picked by 25%) and the JJB Stadium (mentioned by 9%), used by the Coca-Cola Division One Club Wigan Athletic and Rugby League club Wigan Warriors. In Germany, the market for – and the response to – naming rights deals has really taken off. The sponsors of five stadia there comfortably exceeded the performance of UK stadia.

TABLE 2.1 Unprompted awareness in Germany of naming rights sponsors

AOL 56% ALLIANZ 26% VOLKSWAGEN 14% BAYER 11% GOTTLIEB DAIMLER 8% AWD 6% GEW RHEINENERGIE 4% NO ANSWER/DON’T KNOW 26%

Football-Monitor Germany 2003/2004, 3. Wave 2/04 Germans who are interested in watching football on TV

SOURCE: Sport+Markt

Leveraging investment Like any sponsorship, naming rights deals are only as good as the brand owner’s passion and ability to make them work. AOL, for instance, decided to make full use of the perimeter board advertising available at Hamburg SV games to get its message across, while placing ads in selected titles and contributing editorial to specialist magazines. The cornerstone of its success, however, lies in the fact that it put in place an extensive PR programme, integrated into the marketing mix.

104 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

Financing stadium development When Bayern Munich sought to build its new stadium, its first initiative was to form itself into a limited company, thus enabling sporting goods giant Adidas-Salomon to buy a 10% stake for an estimated 75m. This contributed to the cost of the redevelopment, with rivals TSV 1860 Munich, who also use the stadium, splitting the cost. Sponsor Adidas thus became a strategic partner, and Bayern Munich did not have to risk a stock exchange listing.

RETHINKING STADIUM USAGE As will be shown elsewhere in this report, a stadium can be much more than just a venue for watching and playing football. Clubs have introduced sport and leisure facilities, hotels, conference facilities, banqueting – Charlton FC even hosts a full-time college, which reverts back to normal club use at weekends. Juventus, as the following case study demonstrates, is going one step further.

CASE STUDY: JUVENTUS

Juventus was formed in 1897, when students from D’Azeglio of Turin, keen to embrace a sport that was growing in popularity, banded together to found a club. Despite coming up against more experienced sides, Juventus won the first Italian championship in history in 1905 after a three-way final against Genoa and Milanese. Over the years its players have contributed to successful Italian teams, and gained international experience, reaching the semi-finals of the old European Cup (now Champions League) on four occasions. From the mid-1990s onwards, however, when legislation was passed allowing sports clubs to start making a profit, Juventus has slowly made the transformation from a football club into a business. Television rights sales have enabled it to modify its revenue streams, exploiting the mass market for football. In June 2004, for instance, it signed a contract with the Mediaset Group for the pay-TV rights for home games involving terrestrial digital, cable and ADSL systems for the 2004/2005 to 2006/2007 seasons, with an option for the following season. It also has options on home games in the European cups for the 2007/2008 to 2009/2010 seasons.

TABLE 2.2 Juventus revenue breakdown in 2002/2003 financial year

TELEVISION, RADIO AND TELEPHONE RIGHTS AND UEFA CHAMPIONS LEAGUE REVENUES 56.9% SPONSORSHIP, COMMERCIAL AND OTHER RELATED ACTIVITIES 25.3% TICKET SALES 10.5% OTHER 7.3%

Revenues for 2002/2003 were €215.4m, up 22.9% on the previous year, and income from TV, radio and telephone rights, plus UEFA Champions League revenues, contributing around €122.4m to the total. This aspect of revenue has shown an annual growth rate of 26% over the past seven years. The club, however, is keen to grow at an even quicker pace, to build the brand on an international basis while enhancing shareholder value. It is looking into a programme of revenue diversification projects. These will look beyond its core business into the fields of entertainment and leisure. The club also intends to leverage team activities during the week and not just at official sports events. Many of the Juventus initiatives will be familiar to other clubs. For instance, it hopes to carry on bringing young players up through the ranks, to promote the Juventus brand worldwide through participating in international tournaments, and to go after blue chip sponsors that will add value to the club’s profile. Over and above all this, however, are its plans to transform Juventus from a sports company into an entertainment and leisure brand that will enhance the activity of its team.

FOOTBALL SPONSORSHIP & COMMERCE 105 Section II Business opportunities

STADIUM PROJECT Juventus has ambitious plans for its stadium, and on 15 July 2003 signed the notary agreements with the City of Turin for a 99-year lease of the Stadio Delle Alpi and adjacent land. This should enable the stadium to be restructured to provide a better view of the games and an improved reception area for visitors. It will also make 17,000m2 of gross floor area available for commercial activities related to sport business, another 5,000m2 for company headquarters and some 32,000m2 for related services. On the surrounding area, there are even plans for a multiplex cinema and entertainment complex to be built (on some 5,000m2), and another 20,000m2 of gross floor area can be dedicated to commercial activities.

YOUNG WORLD PROJECT Two years before signing the deeds with the City of Turin, Juventus had acquired control of Campi di Vinovo, a company owning land to the south of Turin. Some 150,000m2 of this property will be the site for the new Juventus Football Club S.p.A. Training Centre, dedicated to the preparation and training of all teams associated with the club – from the First Team to the Football School – and will, in addition, provide auxiliary service, medical/health facilities and infrastructure. Some 85,000m2 of land there will also be for entertainment, leisure and retailing (boosted by the presence of the team during the week) and for promoting brand awareness. On 9 January 2004, the Vinovo town council approved the draft agreement for the Progetto di Studio Unitario and the creation of the Juventus training centre. Agreement for the centre’s construction was signed on 29 March 2004, simultaneously with building permission being granted. The finance plan to back the venture is currently being finalised, but the funds will come from either the club’s own resources or via a low-interest long term loan provided by the ‘Istituto Credito Sportivo’.

CONCLUSION Clubs like Juventus understand the need to diversify – but within reason. The club is working from the inside out, building new stands inside the ‘Delle Alpi’ stadium structure, on the track. The scheduled capacity is 40,000-41,000 seats, with inauguration set for the 2006/2007 season. Juventus’s financial health also depends on the performance on the pitch, and thus their ability to attract sponsors, and gate receipts – all of which will impact on funds available for the team and for capital projects. In this respect Juventus has been exercising good housekeeping, with operation costs down 5.4% in the first nine months of the 2003/2004 financial year, from €133.1m to €125.9m. Revenue for the same period rose from €149.1m over the previous year to €151.5m, mainly due to increased income from matches, television, radio and telephone rights, plus income from sponsorship. This was despite a reduction in revenues from the UEFA Champions League and other sources. Juventus is working to spread its training method through schools, thus ensuring a pool of talent, while opening up opportunities for fans and the local community to tap into its new positioning as an entertainment and leisure centre. Time will tell whether its ambitious plans can secure a more stable and varied source of income for the club in the future.

Arsenal-Emirates naming rights deal Arsenal completed its long-awaited stadium naming rights deal in October 2004, signing up Dubai-based international airline Emirates in what is seen as the second biggest sponsorship deal in the history of English football. Emirates is said to be paying £100m over 15 years to display its name across the ‘Emirates Stadium’, and will become Arsenal’s shirt sponsor for eight years from the 2006/2007 season (leaving Chelsea at the end of the 2004/2005 season). Emirates obviously considers it is getting value for money – the airline paid Chelsea £20m for its five-year shirt sponsorship contract – and industry experts back this up. Sport+Markt’s Andrew Walsh, quoted in the London Evening Standard16, claims that Arsenal, because of its regular participation in the Champions League, has built up a fan base of more than 11 million in the key five EU countries – UK, France, Germany, Italy and Spain. Such fans represent a target group for Emirates, so to get a deal for both the jersey and naming rights at around £6m a year represents, he says, a good business deal for the airline. Arsenal could, he says, have held out for £5m a year for the naming rights and £6m a year in shirt sponsorship if they had conducted the negotiations separately.

106 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

The Arsenal-Emirates deal is unusual in that it involves a major sponsor moving between rival clubs in the same marketplace. This happens more usually with kit suppliers. The big question, however, revolves around what fans will call the new stadium, when the club moves grounds. Naming rights do not necessary entail acceptance by fans of the sponsor’s name. Southampton’s ground is still known as St Mary’s rather than Friends Provident, its sponsor, while Leicester City’s Walkers Stadium – which has gained recognition in the media – is still often referred to as Filbert Street, the name of the old stadium. Bolton’s Reebok stadium, however, is now firmly bedded in, partly because of the brand’s longstanding connection with the sport and the town.

BENEFITS OF NEW STADIA There is always a debate over whether to build new stadia or refurbish existing ones, but in the eyes of Richard Arnold, associate partner at Drivers Jonas, a private partnership of commercial property consultants, the figures tell it all. His view is that the pick-up in attendances in Germany and his firm’s experience in the UK illustrate what he calls the “new stadium factor”. This is because new stadia are more comfortable, with better facilities, prompting attendances to rise by 40% on average.

TABLE 2.3 Impact of moves to new stadia on audiences

SUNDERLAND +60% HUDDERSFIELD +83% MILLWALL +7% STOKE +18% READING +16% DERBY +62% SOURCE: Richard Arnold, Drivers Jonas

Fans, however, like consumers everywhere, tend nowadays to keep an eye open for new experiences. In the UK, this is reflected in the number of packages on offer to visit foreign clubs on their own turf. The marketing of similar packages relating to UK teams does not seem to compare. And as for the quality of the stadia, take-up by overseas consumers seems unaffected by new build or old. It has to be down to affinity with the team or its performance on the pitch.

POINTS FOR THE FUTURE The provision of good quality facilities has always been a major factor in boosting attendances. If fans are able to get their drink or food easily, and return to a comfortable seat, this will encourage a wider audience. Good viewing standards are another pre-requisite, arguably with unrestricted views, but some clubs might not consider that desirable because it increases construction costs. Good concourse facilities, easy access to food, drink, toilets, hospitality, changing rooms and car parking (always a sensitive subject) are all important, as are executive boxes. Families now come in greater numbers, says Arnold, purely because of such improvements. Clean, user-friendly toilets are a key facility to women, while to attract the business community, attention to the hospitality facilities is equally vital. Here, flexibility is key: building a space for any kind of event is essential. Stadium owners considering refurbishment should research the corporate potential carefully, but adopt a bullish attitude, since the general payback period is as short as two to three years for corporate facilities. They should think, says Arnold, we might be providing x amount, but if we can pay it back within y, it might be worth spending more. Crowd capacity is a moot issue, however. While some stadium owners are in favour of expansion, others are cautious. Benfica, for example, has shrunk from 100,000 seats 65,000. In the end the calculation has to be based on the amount of revenue to be gained from each. As Manchester United has found, a club can generate so much revenue from hospitality that it might make economic sense to limit the seating available to fans still further. In PR terms, however, this is never likely to be an option.

16 £100m is cheap at the price, Matt Hughes, Evening Standard, 6 October 2004

FOOTBALL SPONSORSHIP & COMMERCE 107

Section II Business opportunities

STADIUM COSTS Drivers Jonas works on the basis of seats costing between £1,000 and £1,500 each within a good all-round stadium. There are obviously wide variations, and in the past there have been some fantastic deals, with some contractors falling over themselves to offer surprisingly good prices. However, there are often pitfalls: prices may not include ground remedial work, and standards could be geared more towards ‘recommended’ as opposed to ‘best practice’ guidance.For example, the possible variation in distance between the touchline and the first row of seats is: RECOMMENDED DESIGN 9 METRES ABSOLUTE BEST 6 METRES

The effect of this going for the best is that overall height of the recommended structure would need to be 25 metres more. Such variations carry on through the design. Take the ability to see value (measured from top of one spectator’s head to the nose of the person in front): RECOMMENDED DESIGN 90MM ABSOLUTE BEST 120MM

Again, the best could lead to the need for an 8% increase in height of the structure. SEATING ROOM DEPTH (LEG ROOM): RECOMMENDED DESIGN 720MM ABSOLUTE BEST 850MM

Again, this could necessitate a 28% increase in overall area of the stadium. SEATING WIDTH: RECOMMENDED DESIGN 460MM ABSOLUTE BEST 550MM

Going for the ‘best’ would add 25%.

Attitudes towards stadium design depend on the board members. Some clubs decide they want to make a design statement, but if clubs opt for innovation, warns Arnold, the outcome will always be more expensive than going for a solution that is tried and tested. “You start with a club that says we want the moon, then reality sets in,” says Arnold. “It will vary from club to club. Some boards will be extremely realistic. They won’t look at anything above recommended standards.” Arnold’s experience with the Benfica club in Portugal is that they accepted that they did not have much stadium experience and embraced UK design standards. Cardiff was frequently referred to as the role model. UK stadium design strategy has evolved from the requirements of the Taylor Report and the references to safety at sports clubs published after the Hillsborough disaster in 1987 by the Department for Culture, Media and Sport (DCMS). These standards are now seen as benchmarks for stadium building.

MULTI-FACETED VENUES Should a club seek to provide more than just football on the premises? Where would the money come from for such diversification? To take the second question first, a club’s finance department is usually more than qualified to undertake a review of the potential sources of funding, particularly European grants or Lottery funding, which will be included in the business plan for any new building scheme. As for what a stadium should include in its plans, the answer has to lie in researching the marketplace and what it will support, the results of which should be included in the business plan. It is also a matter of assessing what is right for the stadium and the site. Overall the concept of making the stadium multi-purpose in some way is a good one. If looking at flexibility in the site of a new stadium, it would be unusual for it not to be multi-purpose: to use it for football and rugby, say, or to host concerts. Arnold cites a project at Coventry which proposes executive boxes that can turn into overnight accommodation. This has been done by West Ham and Huddersfield. The downside is in how to plan bookings. Playing in foreign competitions means that some clubs cannot be sure when they will be playing at home will need the boxes. However, the hotel concept has been shown to work. Reading, for example, is a club with good occupancy. It is sited on the M4 and benefits from a lack of competing hotels in the area.

108 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Non-matchday revenue Facilities that can be used on non-matchdays seem to point to their being used on a permanent basis. This is not, however, necessarily cost effective. Find the pitfalls, advises Arnold. Factor in the running costs when commissioning the market research. If it makes sense to close it down and open it up just the next matchday, do it.

STADIUM PARIAHS Clubs that have pioneered exciting and successful new stadia are covered in this report, but there are tough design decisions to be made about some older stadia. In Italy, for instance, the stadia are, in many cases, quite old and were built predominantly to get as many spectators as possible inside. Historically, they have very little in the way of corporate facilities and not much provision for entertainment. As discussed, Juventus is now halving its capacity in order to include corporate facilities. The World Cup brings with it the potential not just for magnificent new stadia but also for the building of white elephants. Indeed, there is a need to future-proof stadia to avoid costly consequences. For example, Brazil’s Maracana stadium was built for the 1950 World Cup, with a capacity of 200,000; but its capacity has now been reduced to 70,000 and it is gradually falling down. Such action should be seen as an unacceptable waste of money. The stadium at Faro, for example, built for Euro 2004, had no club ready to take it over after completion. The moral standpoint is clear: when you build for an event, you have to plan for a stadium’s future use, as the IOC now insists. Manchester knew that the stadium built for the 2002 Commonwealth Games was not going, post-Games, to leave it with an expensive and unusable venue. It is now the home of Manchester City FC.

REVENUE BOOSTERS Developments on the concourse, by virtue of a well thought-out system, can boost revenue streams dramatically, particularly in the lower leagues. No so long ago, even in the higher leagues in the UK, a tea urn used to result in a queue snaking around the block at half time. Good catering facilities were not seen as essential. Nowadays, in a new stadium, companies such as Drivers Jonas would expect a well thought-out concourse to make between £1.50 and £1.70 a head. There is not a huge window of time to make a sale (usually just at half time). In the UK, it is still safe to bet that your average spectator is a creature of habit. He will go to the pub before the game, arriving at the ground not much before 3pm. How much more lucrative it would be to get them in earlier, seat them comfortably and get a TV in front of them. Some clubs have tried to draw fans in earlier, using the argument that it is to help with transport difficulties – ‘we know we haven’t got parking, so get here earlier and don’t miss the start’. Shops, of course, are seen as a prime source of revenue when planned for and designed carefully. They make more money when sited within the concourse area.

STADIUM CAPACITY How do you decide what size to build? The first aspect to look at is the size of existing average gates. Clubs should then look at the potential. This is where the ‘40% factor’ comes in to play (with new-builds). Ultimately you could ask: if you don’t aspire to higher gates, what is the point of having a new stadium? You also need to know the fan base: what are their aspirations, and where does the club want to be? Clubs in the lower divisions that want to build for the future can face a dilemma: should they build a stadium first or a team? What tends to happen is a compromise, a redevelopment or a new stand. Such clubs also tend to be realistic about the end target, aiming, say, to get into the First Division rather than the Premiership. The capacity of a national stadium is likely to be dictated by the minimum requirements for hosting big UEFA or FIFA events. Matches such as the European Championships call for some 65,000 capacity, while the World Cup can exceed this. Such stadia should, says Arnold, be built with flexibility – not purely as national stadia, but with an eye on future use. Ambition also dictates capacity, with the English Premiership as a good example. Different bands exist, with Manchester United seeking to seat 70,000, Arsenal wanting to move up from 38,000 to 60,000 and Liverpool also going for 60,000. So what capacity stadia will we be looking to in the future? Teams that are regularly in Europe can look to 60,000-plus; an average Premiership club, however, stands at between 30,000 and 40,000. As stated elsewhere, much will depend on attitudes towards corporate boxes. Milan, for instance, is looking to add some, but without reducing capacity.

FOOTBALL SPONSORSHIP & COMMERCE 109

Section II Business opportunities

REVAMP OR NEW-BUILD? It is, as a rule, more cost-effective (on a cost per seat basis) to build from new than to refurbish, but this is not always possible. Refurbishment, therefore, becomes the only option. If a club has a 15,000 capacity stadium, say, and wants to go to 20,000, in general it is more cost-effective to refurbish. If the aim is to increase capacity significantly, then it makes sense to embark on a new-build. If a site proves too expensive to buy, though, this puts a whole different complexion on things: it underlines the need to look at the bigger picture. Charlton is a good example of a club that has made a success of its refurbishment. The club raised money to get back to its former ground, The Valley, to which fans had an extremely strong emotional attachment. They approached it in a very controlled manner – one that others seem to be picking up on. The board spent only what it could afford, adding to the ground at a comfortable level. The North Stand went up courtesy of a mix of shares, grants and banks. A key requirement was to retain capacity, so no seats were lost. It also required a complex and difficult engineering solution that ensured they would not lose too many seats while the stand was under construction. The downside of such a solution, however, is that viewing standards can suffer because the seating is based on old terracing.

FUTURE TRENDS The stadium of the future will make ever-increasing use of IT, from screens on the back of seats to incorporating mobile technology. There is also a growing desire for stadia to incorporate other ventures – one of the latest is casinos. Clubs will look at any opportunity to make money, so the essence of stadium building is to focus on the need for flexibility and adequate space. On matchday, the emphasis is on maximum usage, getting the right margins and knowing when to increase them. One such opportunity has to be getting rent from outside concerns, as Charlton has done by introducing a gym and a seven-day-a-week bar. Arnold suggests that there is great potential for other clubs to develop similar ventures, as long as fans accept them. The jury is out, however, on the value that big screens add to stadia, whether for match or non-matchdays. A club is likely to make revenue more by adding a corporate package (tied to a meal) than by opening up and letting visitors into a stadium. Some clubs choose to host pop concerts as a means of boosting revenue, but the costs need to be budgeted carefully when looking at redeveloping or building stadia. This is because of the dynamic response, the allowance for movement in the structure. At a concert people move up and down with more regularity (and jump in time to the music), than they do at a football game, so the design standards for pop concert use is different to that of a regular stadium usage. Cardiff has experienced difficulties when hosting concerts – a Manic Street Preachers concert involved a great deal of building work beforehand. For concert usage, clubs need to factor in where the stage is going to be, the location of people on the pitch, the increased capacity, not to mention how to get them off the pitch in an emergency. Likewise, if a concert is likely to attract many children, this means working out how to cater for them in terms of toilet facilities and refreshments. There are additional costs involved in hosting concerts, so a business plan must have established that there is a market out there.

CONFERENCE FACILITIES The introduction of conference facilities at football grounds is a natural development, given the space and resources that have traditionally existed in stadia in Europe. Facilities include bars, restaurants, banqueting rooms and hospitality boxes for matchday use. The conference peak seasons of autumn and spring also match the slack periods for function room bookings. In the summer, for example, wedding receptions are popular uses for banqueting suites; in the lead up to Christmas, office parties and other social events peak in demand. The other benefit of conference bookings is that events tend to take place during the mornings or afternoons, leaving enough time for a room to be set up for an evening function. Similarly, conferences tend to take place during the week, when matches and social functions are less likely. Given the growing need for stadia to generate income on a daily basis, the corporate conference market is increasingly seen as an important source of revenue. Football clubs are also in a good position to maximise revenue from conference facilities, because they have some level of expertise in hospitality. They can also promote their facilities relatively easily through existing resources, such as matchday programmes, websites, corporate hospitality databases, corporate relationships etc. Where events have a motivational element, such as sales conferences or training schemes, football stadia offer a natural thematic link, either for presentations or through activities such as competitions and games.

110 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

To run a professional conference centre, however, requires more than having a greater understanding of the needs of the conference buyer than basic banqueting experience and having the floor space in which to stage events. “Football clubs are still some way behind in their approach to running conference facilities,” says John Keenan, editor of Meetings & Incentive Travel magazine. “Many, but not all, do now have good facilities, but it’s not enough to base an offering on this alone. The marketing, for example, tends to be focused too much on the sporting heritage. For some buyers this is a bonus but no more than that. If the facilities are right, the key issues for buyers are set-up charges, terms and conditions and service levels. On the whole, football clubs fall behind their competitors in these areas. It is now a very competitive market and to maximise revenue it is vital that every part of the package is right.” The difficulties of providing a high quality service, however, tend to start with facility design. Frequently stadium-based function rooms are, at best, a compromise for the conference organiser. The quality of décor is either poor or at odds with the image the organiser is trying to achieve. Ceiling heights are often too low, making audio-visual projection and lighting difficult. (For projection, the image path needs to clear delegates’ heads and the screen needs sufficient height to be viewed from the back of a room. Lighting needs to be from above otherwise awkward shadows are created and presenters can be dazzled rather than illuminated.) Access for staging equipment is also frequently poor, and support facilities such as breakout rooms, cloakrooms, reception areas and office support space may be lacking. Clubs rarely research the demand for conference facilities in their area. To assess the market, it is important to understand the different kinds of conference that commonly take place.

I corporate market I industry market I association market I academic market I government/NGO market I training market

Corporate market The corporate conference industry has changed enormously since the late 1980s when corporate events would often last for several days. A typical sales conference, for example, would require one large room for 100-500 delegates and last for a week. The number of delegates attending corporate events has fallen during this period, although, throughout Europe, 150 or more attendees is still a fairly common number. The big difference, however, is the duration of events and the ancillary requirements. Where a corporate conference used to last for up to five days, now it will rarely last for more than a day and in many cases the main part will last no more than two hours. This is because of the recognition that for corporate users it is necessary to address a single issue and motivate the audience to act on that issue. The longer the event, the more confusing the message. There is, however, a growing requirement for breakout facilities, so delegates can split into groups to discuss specific issues. Typically, such groups will number 10-15 delegates. The growth in executive box facilities at football stadia is obviously a natural asset to serve this need. The corporate market is more likely than others to require sophisticated staging facilities. Lighting rigs, stage sets and advanced projection equipment are used at events such as motivational sales meetings, product launches and analyst briefings, where it is important to make a big impression on the audience. Most such meetings are staged by professional production companies using their own equipment and technicians. However, good access is important, as is flexible room design which should include high ceilings and uninterrupted floor space. Technical requirements might also include three-phase (industrial power) mains, and a good supply of standard electrical mains points. Load bearing ceiling points are also useful for lighting rigs and stage props. Broadband connections, which can usually be installed on a temporary basis, are address thee increasing number of conferences that demonstrate websites on screen or link to the host organisation’s intranet. To serve the corporate market, clubs, especially those situated in business locations, could consider setting up video con- ferencing suites for hire, although demand for such an investment should first be researched.

FOOTBALL SPONSORSHIP & COMMERCE 111

Section II Business opportunities

Industry market This type of event is typically arranged by professional conference organisers who charge delegates to attend events on specific subjects. Staging facilities are usually limited to no more than a basic data projector and screen, dimmable lighting, public address systems and near black-out of the room. Wireless roving microphones are useful because there are usually lengthy question and answer sessions. Typically, such events last either a day or two days with drinks receptions in the evenings. Organisers rarely arrange evening dinners, although optional entertainment packages such as an evening football match might be considered. Delegate numbers are typically between 30 and 150.

Association market Association type conferences are possibly the least likely to take place in football stadia because they tend have quite large audiences. For example, legal or medical conventions can see thousands of delegates arrive from all parts of the world. For smaller associations, however, rooms with a capacity of 200 or more might be relevant. For clubs situated in cities with large, purpose-built facilities, function rooms might be hired for breakout sessions or as overflow venues with video links to the main event. Association type events rarely have sophisticated staging requirements, but good public address systems with wireless roving microphones are useful because there are usually lengthy question and answer sessions. Association meetings often have leisure functions as part of the package and delegates’ partners often travel to the destination cities. For this reason, it is recommended that clubs seek leisure partners that are relevant to the likely needs of both the association members and their spouses.

Academic market The academic market is similar to the association market in terms of event style, although in most cases the events are much smaller. Again, delegates’ partners might attend, and entertainment relevant to the academic subject or the partners’ needs should be considered. Academic conferences are often hosted by local universities and many have their own conference facilities, which are becoming an increasingly important revenue source for such institutions. They are, therefore, in competition with football clubs, and it is unlikely that much, if any, business will be derived from this market.

Government/NGO market Typically these events are similar to Academic and Association events but will also have budget restrictions. It is unlikely, for example that premium hospitality will be requested, but there can be a significant need for breakout facilities. Government organisations can often use publicly owned facilities at a discounted rate and NGOs are similarly often offered discounts. Again, this market is unlikely to be fruitful for football clubs.

Training market These events tend to require more rooms than other meetings because efficient training usually requires a low student to tutor ratio to optimise learning. There is a possibility that a large main room is needed for a short time, followed by a series of much smaller sessions rooms. Clubs with executive boxes or study support centres equipped with computers might find this a lucrative market. There are, however, an increasing number of purpose-built management training centres being developed across Europe. Such centres offer state of the art facilities and highly trained staff, and they have a very good knowledge of their market. Football clubs, especially those planning new facilities, could be in a very good position to tap this market, but it would require a much greater level of professionalism than is currently shown.

Creating the ideal environment. Many football clubs have successfully created what are effectively ‘corporate spaces’ within the stadium; self- enclosed and distinct from public areas. They comprise executive boxes, restaurants, lounges, bars and conference rooms. Once inside the main corporate entrance, users can move between facilities in the comfort of well appointed décor and they remain unexposed to the elements. When moving from a seminar room to the lunch area or an executive box for a breakout session, it would not be acceptable to some organisers for delegates to have to move outside, or even to pass through the unheated, breeze block décor of the public concourses typical of many stadia. Furthermore, many organisers are now looking to create an exclusive space within the corporate environment. Delegates will, therefore, use their own entrance and have cloakroom, registra-

112 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

tion, meeting and dining facilities that are not accessible to other corporate users of the facility. This provides a series of benefits that include:

I a greater feeling of event identity I increased information security I increased personal security I events sticking to timetable because delegates can be summoned quickly I reduced chance of delegates getting lost within a venue

To create this ideal environment at a football stadium, however, takes careful planning. For example, an ideal venue would have its main function room at ground floor level with good access to service bays, allowing easy access for staging equipment and exhibits. The function rooms would link directly – either via corridors or staircases/lifts – to breakout rooms which could be cordoned off from the rest of the venue. This would entail having function room(s) adjacent to the executive boxes. Given that executive boxes have to be either at mid-level or at the top of the stands to ensure that box holders get a good view, this is not possible. Placing a function room above ground level means that the options for equipment and exhibit installation are usually via stairwells or service lifts. The former will physically prevent the possibility of certain items such as cars and large pieces of staging being installed and will also increase the ‘get-in’/’get-out’ times for production teams. Service lifts, or above ground level access ramps, such as installed at Newcastle United’s St James Park, help to overcome this problem. But service lifts can still cause queuing difficulties if a large amount of equipment has to be moved in at any one time. Furthermore, service lifts are expensive to install, require maintenance and, like any lift, are subject to breakdown. The problem with locating conference facilities at ground floor level within stadia, however, is that there tends to be reduced space there. Turnstile facilities for matchday fans are needed at ground level and they take up a large amount of space. For both the comfort of spectators and for safety reasons it is necessary to have large concourse space; this is also an ideal position for refreshment and merchandise kiosks and toilets. The fact that fans need entry/exit access along the length of a grandstand also means that it is difficult to create a large, uninterrupted conference facility in such areas. One solution is to build the facility adjacent to the stadium rather than beneath the stand tiers. This has the additional benefit of avoiding the problem of stadium pillars interrupting the clear floor space. This approach was taken at Leeds United in the early 1990s, but even in this case the conference and banqueting centre has its main function room at first floor level, to join the corporate facilities of the West Stand via an enclosed bridge above the exterior of the stand. The most common approach to date has been to situate conference facilities above ground level. Unless professional consultation from a conference staging specialist has been taken on how to balance the needs of the conference facility with those of the general stadium design, it almost certainly leads to significant limitations to the potential to maximise conference revenue. This is mainly because there is little conference expertise input at the design stage. Architects usually have little experience of the needs of a modern conference organiser and can make ill-informed assumptions; the conference and banqueting staff who brief them usually have more experience of banqueting than conference staging. Venues get a reputation by word of mouth among conference organisers. Those not suitable for staging events will probably not even know about the potential business that has been lost.

CASE STUDY: LEICESTER CITY WALKERS STADIUM

BACKGROUND Leicester City moved into its new 32,500 capacity home, the Walkers Stadium, in August 2002. The stadium is situated just 300 yards from the club’s old Filbert Street ground, which had a capacity of 21,500. The new stadium has allowed the club to develop many new opportunities to increase its profile within its own community and surrounding area. Situated close to the city centre, location was of prime importance. The city of Leicester was supportive of the development, seeing it as a part of a major regeneration of a huge area of previously neglected inner city land. Plans for new commercial developments and residential estates – and a renewal of the river and canal-side walks – were integral to the success of the whole scheme.

FOOTBALL SPONSORSHIP & COMMERCE 113

Section II Business opportunities

FINANCE The total cost of the stadium was £35m (€52m), including land acquisition, which totalled £7m (€10.5m). This was financed mainly by a bond issue and the sale of Filbert Street. The club also successfully negotiated a naming rights agreement with Walkers Crisps, worth an estimated £2m (€3m) over 10 years. The deal reinforced the strong links between the club and Walkers, which is based in Leicester and was the first shirt sponsor. Other main stand sponsors include low cost airline bmibaby (like Leicester City, based in the Midlands area of the UK) and Alliance & Leicester, one of Britain’s leading financial services groups, again with local headquarters. It is club policy to forge links with local companies where possible. The cost of redevelopment, however, contributed to club debt which saw Leicester City enter administration in October 2002. The club restructured its debt and a new consortium, with ex-England striker Gary Lineker as figurehead, took over, leading to the club coming out of administration in February 2003. In the season 2002-03 the average attendance at the Walkers Stadium was 29,231, and the club was promoted back to the Premier League after finishing second in the Nationwide Division One.

WHY BUILD? The Walkers Stadium is one of the best state-of-the-art stadia in the UK and is considered a flagship development, not just for the club but for the community and city of Leicester as a whole. The stadium takes advantage of its unique city site with the main West Stand overlooking a river. This four-storey stand houses the reception, conference and banqueting suites, and offices as well as some of the 55 turnstiles, kiosks, the City Megastore and the ticket office. Along with the increased revenue from the club’s greater capacity, the Walkers Stadium has the potential for increasing existing revenue streams and creating new ones.

CONFERENCE FACILITIES In addition to the better facilities for supporters, there is a wide range of function rooms, bars and restaurants, and a first in British stadium design - two large dual-purpose concourses which can be used as conference/exhibition centres on non-matchdays. This aspect of the new stadium is being marketed separately as the Midlands Conference Centre, which the club claims is a state of the art conference, banqueting and catering facility unparalleled in the East Midlands. The centre comprises nine conference suites and 44 syndicate rooms (the executive boxes). The public concourse areas at ground floor level can be adapted for exhibition use, although this might require significant ‘dressing’ and, depending on the weather, the installation of temporary heating. The main conference rooms can be configured as follows:

First floor The Great Hall This is the largest conference room, has a theatre-style capacity of 550 delegates and is one of the largest such facilities in the city. The room is rectangular, with a significant recess running part way down one side that can be used as a buffet area or for receptions/coffee breaks etc. The rear of the room also features two large bars. The main part of the room measures 47.9m x 15.2m. The recess creates a room width of 22.6m along the middle of the room, although this section does include pillars, making the recess useful mainly for receptions, exhibits, coffee serving and buffet facilities. There is, however, no partitioning between the main part of the room and the recess, which means that setting up catering would not be possible during conference sessions due to noise and visual distractions.The room has a good ceiling height – 3m rising to 3.8m along its centre. At the end of the room used for staging, there is a lighting rig, although according to the club’s sales and marketing executive, Sarah-Jane Smith, this is used mainly for discos and other social functions. “Where stage lighting is needed for corporate events, it is usually installed by production companies,” says Smith.

114 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

TABLE 2.4 Conference room possibilities at Leicester

LUNCH THEATRE BOARDROOM U-SHAPE CABARET CLASSROOM INFORMAL PILLARS (DINNER STYLE RECEPTION IN ROOM DANCE) FIRST FLOOR CLUB LOUNGE 350 (230) 300 n/a n/s 250 550 no THE GREAT HALL 550 (480) 520 n/s n/s 210 (tbl x 6) 250 n/s no SECOND FLOOR ASHBY SUITE 80 (60) 80 20 30 36 (tbl x 6) 50 80 yes 48 (tbl x8) BOSWORTH SUITE 40 40 20 24 24 (tbl x 6) 30 80 yes 32 (tbl x8) BOSWORTH SUITE 80 (50) 80 20 30 36 (tbl x 6) 50 100 yes & CHARNWOOD SUITE 48 (tbl x8) CHARNWOOD SUITE 20 20 20 n/s n/s n/s 40 no PRESIDENT’S AND 120 (80) 100 20 30 54 (tbl x 6) 50 120 no VICE PRESIDENT’S 72 (tbl x8) LOUNGE SHIPMAN SUITE 80 (50) 90 20 24 36 (tbl x 6) 50 120 no 48 (tbl x8) LINEKER SUITE 120 (90) 80 20 34 48 (tbl x 6) 40 150 yes 64 (tbl x8) THIRD FLOOR THE BANKS LOUNGE 100 (100) n/s n/s n/s n/s n/s 120 no THE FOSSE 120 n/s n/s n/s n/s n/s n/s no SYNDICATE ROOMS 10-14 n/s n/s n/s n/s n/s no

The staging area also features a motorised screen and ceiling-mounted LCD projector. The long, narrow shape of the room means that there is plenty of space for setting up staging and even using rear projection, which is preferred by many staging companies, without losing too much seating capacity. The room features dimmable lighting, three-phase electricity supply and partial blackout of the large windows overlooking the River Soar. “We’ve never had a problem with blacking the room out for projection,” says Smith. “For a start, the windows are in the recess, so strong light does not enter the main part of the room and the partial blackout has always been sufficient for use of projection.” Room access is via a large reception lounge which itself is accessed via a wide staircase from the main reception. The Great Hall is one of the better designed modern function rooms in Britain. Using their experience from the days at Filbert Street, the conference and banqueting staff were able to contribute to the room design. “Of course we have to compromise – this is a football stadium and you need pillars to hold it up, but we managed to ensure that we had a large uninterrupted floor-space in the main rooms and a good ceiling height,” says Smith. From the point of view of the delegate, the facilities are very good. A large reception area with bar, cloakroom and toilets and a good view makes registration simple and the experience on arrival pleasant. The reception area, however, is shared between the two main rooms in the centre, which means that when two events are held simultaneously, alternative arrangements will be necessary - probably for the smaller event. For the organiser, the room is a useful shape. Arguably it is a little too long for some presentations with a full room capacity, because delegates at the back of the room might struggle to see presenters and audio visual material clearly. The recess could be partitioned with moveable, soundproofed screens, making its use more flexible. Access to the room is via stairwells only, which is not ideal and means that it is not possible to bring in large pieces of equipment or displays and thus limits the technical potential for events. The reception lounge, which abuts the Club Lounge, includes a bar, toilets and a cloakroom and has a view over the River Soar.

FOOTBALL SPONSORSHIP & COMMERCE 115

Section II Business opportunities

The Club Lounge Similar in shape to the Great Hall, the Club Lounge’s most notable feature is the futuristic oval-shaped bar in the centre of the room recess. The conference area of the Club Lounge measures 39.6m x 14.4m and its height is again 3m rising to 3.8m along the length of the centre of the room. The room has three phase mains and dimmable lights, and again black-out is not complete. Access is as the Great Hall. The Club Lounge room offers similar potential to The Great Hall in terms of the design but on a slightly smaller scale. The main floor space is rectangular, slightly longer and narrower than is ideal for a conference facility requiring the full 350 capacity theatre-style, although ideal for smaller numbers. The oval-shaped bar, however, slightly infringes the main rectangular space, making it very conspicuous during proceedings. Ideally the bar would be set back slightly so that the recess could be partitioned. That said, one of the main functions of the Club Lounge is to serve as a dining area for delegates using the Great Hall, so its conference functionality is less relevant. As a dining area it is very well appointed, especially for buffet-style dining. The bar and adjacent sofas and river view make it a very comfortable and aesthetically pleasing space.

Second Floor President’s Suite The room is the second largest of the separate suites on the second floor, with a theatre capacity of 100. This would be higher but for the pillar near the centre of the room, but the position of the pillar does mean that there is plenty of space for receptions and for serving coffee.

Shipman Suite Slightly smaller than the President’s Suite, this has two pillars, so theatre-style capacity is limited to 90.

Lineker Suite Although larger than the Shipman Suite, the Lineker Suite is configured with a bar area partially enclosed by a wall, which reduces the conference capacity to 80 theatre-style.

Sponsors’ Lounge Situated on the second floor, the Sponsors’ Lounge comprises the Ashby, Bosworth and Charnwood suites. Each has a soundproof partition. Individually, the suites can cater for conferences of 80, 40 and 20 delegates respectively, and each has a built-in bar. Each second floor suite has either built-in audio-visual facilities or mobile units, owned by the club, which can be brought in. The Ashby, for example, contains a built-in AV cupboard with whiteboard, flipchart and video replay equipment.

Third Floor Banks Lounge The 37m x 8.5m Banks Lounge is ideal for corporate entertaining – two bars, sofa areas and a large window.

Syndicate Rooms The 44 executive boxes, which overlook the pitch, can be used as syndicate rooms. Capacities vary from 10 to 20 people. All are equipped with refreshment facilities.

The Fosse With a capacity of 120, the Fosse is the club’s a la carte restaurant, which again overlooks the pitch. Although open to the public, the restaurant can be booked by conference users.

Additional facilities The car park has capacity for 500 vehicles. Corporate events such as product demonstrations can be held in this area on non-matchdays. A new Holiday-Inn Express is being built on the site, with a planned opening in 2005. The club has a basic stock of audio-visual equipment, such as video playback, whiteboards and flipcharts. The duty managers are trained in how to set up the equipment. “Most organisers use their own staging companies for anything more complicated than a presentation,” says Smith. “We can hire in an AV technician if necessary and we can also make arrangements for a local AV hire or staging company to come in when extra equipment is needed.”

116 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

PRICING Pricing of the facilities is constant throughout the year.

MARKETING The club markets its conference facilities in several different ways. A professionally produced colour brochure gives details and dimensions for the main rooms. The club also has a contra deal with the main local paper, the Leicester Mercury, and an arrangement to use the paper’s commercial database for direct marketing. In return, the club provides high profile exterior branding on the stadium. The club has also successfully advertised in the National Health Service magazine, which has delivered a significant number of enquiries from the healthcare industry. Other advertising includes the Yellow Pages business directory and the local Chamber of Commerce newsletter. Nationally, the club has a relationship with around 250 conference booking agents in the UK, some of whom have visited the facility. “It is quite difficult to get to see all of the conference booking agents,” says Smith. “We do, of course, invite them, but they have thousands of properties on their books and can’t see them all. We have had open days here – local booking agents will tend to come, as well as other potential users and contacts.” In the past, the club has exhibited at industry related events such as Confex and the National Venue Show, but budget cut-backs, particularly around the time of going into administration, required this area of marketing to be reduced. The same is true of advertisements placed in the trade press.

OCCUPANCY Jan/Feb Generally busy but not running at full capacity. March/April Oversubscribed: this is the busiest time of year for the corporate market and there is near full occupancy for the main rooms during this period. May/June/July Conference business less busy but an increase in weddings means that occupancy remains high. August Very little conference activity and weddings/social events less busy due to the month being the traditional holiday period. September/October Conference business again is high, but not running at full capacity. November/December November is a busy period for social dinners and awards ceremonies, December for Christmas parties. Daytime activity, however, tends to decline during this period.

CONCLUSION The Midlands Conference Centre at the Walkers Stadium is a modern facility that compares favourably to local competition. Like virtually all conference facilities, it has design problems, although in comparison with most, these are few in number and stem mainly from the difficulty of incorporating the facility within a stadium. The number and size of rooms represents a good mix. The quality of architecture and décor is high, which helps when competing for corporate business and social functions. The centre could, however, invest more heavily in attracting the training market, which it is suited to serve. This would probably require some investment in technology, such as more AV equipment and broadband links etc. to syndicate rooms, and more understanding of the market. Similarly, its profile nationally as a conference centre of note is not particularly high. The club has been in the unfortunate position of being in a dire financial situation since the new stadium opened and consequently marketing budgets have been restricted. A PR campaign and an increased marketing budget for the centre would almost certainly pay dividends in this respect. Given that the centre has a turnover of £4 million per year, an investment of around £100,000 annually in marketing should be seen as a minimum. The facility is a major asset for the club, both in terms of its position as a profit centre and in its ability to help improve the image and profile of the club overall.

FOOTBALL SPONSORSHIP & COMMERCE 117

Section II Business opportunities

Chapter 16: Football and online

In recent years, football has looked increasingly to online as a key source of income and as a means of communicating with its target audience. As take-up of broadband has accelerated, so its appeal as a broadcast medium has grown. The real business, however, is in making money from football-related websites. As the dotcom boom and bust showed, this is not an area for those without a foolproof business plan and the means to fund such a venture for a considerable time until – or if – it starts making a profit. Income is likely to come from four main areas:

I e-commerce I licensing and syndication I advertising and sponsorship I betting

E-COMMERCE Football clubs now tend to see this as a pre-requisite, but content and usability varies both from division to division and from one country to another. As for what is sold on the site, this is normally:

I merchandise I tickets I hospitality

For merchandise, sites provide a captive audience of football fans. The products on offer do, however, have to compete on price with high street stores, so often need to feature exclusive offers to maximise appeal. There are two main ways of running an e-commerce operation, either as an extension of the club shop or by involving a third party. The latter option is often the most profitable, with the focus on the most popular items reducing the need for a massive warehouse by cutting out the underperformers. As for systems, the website production company Purple Interactive says it is worth looking beyond the shopping basket systems often seen online. Consider, first, how the stock, despatch and customer service aspects will be managed. It is conceivable that a spreadsheet will be used initially, but this can backfire. As an alternative, Purple developed a backend system for formula1.com that cut down the amount of time needed to manage the store while recording which product lines were most popular and what stock needed reordering. Another rapidly growing technique used to shift product is auctions. Awareness of sites such as e-bay has lessened cynicism as to how auction sites operate, and football clubs and federations invariably have access to sports memorabilia, whether it be a piece of turf or a cherished shirt. When trying to drive revenue through content, however, it is important to remember the vast amount of competition from free sources that exists. On the face of it, clubs and federations should be able to encourage fans to pay extra for access to ‘exclusive’ interviews, up to the minute information on scores or club activities. However, a great deal of similar content is available for free on other sites, often run by fans, while up-to-the- minute news is also covered by broadcast and other media – frequently online. So what are possible avenues for ‘value added content’? These could include:

I sending data to mobile phones (see O2 case study) I subscriptions for fantasy or other games I online fan clubs I specialised e-mail addresses

118 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Online fan clubs can have a number of benefits. They offer the opportunity to build loyalty, run cross promotions and promote awareness overseas with very little input. Fan clubs can therefore offer:

I exclusive editorial features I high profile competitions I chat sessions with favourite players I opportunity to play fantasy games

Fantasy games can prove the most lucrative. For example US sport site Sportsline.com earned $14m of revenue from subscription and premium products in 2002. It accounted for 23% of its turnover that year, with more than five million fantasy teams signed up. Sports federations have made a sizeable profit in recent years from game companies that want to sign up to be the ‘official’ game provider. They pay a licence fee for the rights, with games pulling in more fans daily. There is also a new breed of games where players buy a packaged version, one that involves role playing, and then test their skill against thousands online. This could involve an initial $50 spend on the game itself, followed by a monthly subscription of say $10, with players staying online for up to a year.

LICENSING AND SYNDICATION Revenue from this area depends on the quality and extent of the rights that a club owns. Fans, for instance, will devour not just sports stories, but also photos, statistics and even games – all of which can be syndicated. If a club is truly innovative, it is not be beyond the bounds of reason for it to copyright a fantasy game and then syndicate it to other media owners. The rights holder, whether a club or a federation, is always likely to have the edge on the competition when it comes to content. Its most valuable asset, over and above detailed live results and statistics, often turns out to be images grabbed from TV. These can often be transmitted to a website before a photographer at the game leaves the ground. Video content is also proving popular with fans, who are prepared to pay a premium for it.

ADVERTISING AND SPONSORSHIP Site owners have a number of advertising alternatives that they can offer. These range from banners and pop-up ads to micro-sites. The downside is that there is consumer resistance to banner ads and, more importantly, to pop-ups, which should cause the price to such advertisers to be raised to reflect this resistance. An alternative to the above is paid-for links. These have been marketed successfully by Yahoo! and Google through host pages featuring a list of relevant advertising or sponsor links. These are textual rather than graphic.

BETTING At one stage, at the beginning of the century, there was a score of pan-European sports networks jostling for position. Their numbers included Sportal, Sportinglife.com (the Trinity Mirror and Press Association joint venture), Sports.com, Rivals.net (the fan site backed by Chrysalis) and 365 Corp (a network of sports and lifestyle sites). The sites had been launched by investors who anticipated that sports news, results, gossip and betting would pull in fans. The traffic that they generated would persuade companies to advertise online and enable them to build up a market for pay-per-view video. Nowadays, all the sites above are owned by just one company, UKBetting. It was formed as a betting site in 2001 by chairman Peter Dubens and chief executive Eric Semel, and its strategy has been to buy up existing sites with big audiences, trim costs, then disseminate content to the various sites so as to attract different audiences. This process of rationalisation has led to accusations that the sites within its empire have lost their individual character, but the company is still developing the betting content.

FOOTBALL SPONSORSHIP & COMMERCE 119 Section II Business opportunities

For individual clubs, however, a betting company will usually pay for the privilege of appearing on a site using a formula based on sign-ups and/or a percentage of revenue. It used to be that they would pay significant fixed-fee sponsorships, but those days are long gone. For sites with a higher volume of traffic, however, betting companies should prove amenable to paying a combination of fixed-fee and success-based fees. The contract to avoid is a blanket exclusive deal, for if the proposed betting partner is willing to omit lotteries or other types of online betting, this gives the club the opportunity to sign a separate lottery deal elsewhere.

CASE STUDY: PREMIUM TV

Premium TV (PTV) is a wholly owned subsidiary of NTL Europe, and the UK’s leading provider of official professional football club websites. Since the late 1990s, it has forged a unique position for itself as a key player in sports digital publishing and in hosting and managing football-related websites. The foundation stone of its existence, however, was its joint venture with the English Football League, set up in June 2000 to create an internet platform for 73 club websites and the League’s own sites. PTV’s relationship with soccer has not been easy, though. Clubs and associations, weaned on the dotcom boom, saw the internet as a means to untold riches. PTV, meanwhile, had its own problems. Its overall parent, cable giant NTL, went into bankruptcy protection in 2002 and PTV was hived off into holding company NTL Europe. In 2002, after lengthy negotiations, PTV – which had guaranteed the Football League royalty payments of £65m – agreed a deal that would see the League accepting a share of future profits instead. Then, in June 2004, PTV – which had already paid out about £38m – got the Football League to go back to the drawing board once again. The final outcome is that the League will now wholly own FLPTV, the original joint venture company, with PTV awarded a three-year fee-based contract, plus commission on revenues.

PTV EXPERTISE The company claims to have the largest share of online UK sports audience.

TABLE 2.5 PTV claimed share of online UK sports audience

COMPANY SHARE % PREMIUM TV 14.3 FOOTBALL365.COM 6.36 RIVALS.NET 5.38 SKY SPORTS 5.11 TEAMTALK.COM 4.97 MAN UTD 2.73 LIVERPOOL 2.71 PLANET FOOTBALL 2.52 LEEDS UNITED 2.51 YAHOO! SPORT UK & IRELAND 1.7 EVERTON 1.56 ARSENAL 1.49 MAN CITY 1.36 GUARDIAN UNLIMITED FOOTBALL 0.62 UEFA.COM 0.29

120 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Sports publishing: PTV now has 1.5 million registered users and over 130,000 paying subscribers across broadband, narrowband and mobile. The market looks set to expand still further, with growing take-up of broadband.

Exclusive new media rights: The company has exclusive rights to 82 UK football clubs, through joint ventures and partnerships. In the Premiership, its list includes Aston Villa, Birmingham City, Blackburn Rovers, Bolton Wanderers, Crystal Palace, Middlesbrough, Newcastle United, Norwich City, Portsmouth and West Bromwich Albion, along with Rangers in the Scottish Premier League.

Digital management services: PTV prides itself on providing services to many of Europe’s leading media companies, including Eurosport, Canal+ Nordic, MTV, Music Choice and NTL.

Digital skills: The company claims to be able to handle all aspects of the digital value chain, from rights acquisition, subscription management, e-commerce, content management and video/audio streaming to real-time sports data processing.

Management systems: PTV possesses a powerful and scaleable system. It serves an average of 150,000 pages an hour and is capable of delivering buffer-free audio and video to 500,000 concurrent users.

FOOTBALL CLUB JOINT VENTURES PTV has a number of joint ventures with UK clubs. In the case of Middlesbrough, it acquired a 5.585% stake in March 2000, and together they formed a joint venture. This is primarily geared to the exploitation of online rights. PTV also markets other commercial rights for the club. In addition, PTV has a 9.99% stake in Leicester City FC (in return for an investment in the shape of an interest- free loan repayable by the issue of new shares in the club) and a media partnership with Rangers FC, where it acts as exclusive media agent and initiated a joint venture to exploit online rights. A joint venture agreement with Newcastle United was rewritten in October 2003 with the club taking back the right to exploit its own live television and radio rights. It also renegotiated the terms under which it had an option to acquire PTV’s share of the joint venture, allowing it to buy out for £4.5m in 2007, rising to £9m in 2012. PTV also has a relationship with Aston Villa, with whom it agreed an interest-free loan in January 2000, repayable after five years by the issue of new shares in the club – equating a 9.99% stake. The revised deal gives Aston Villa control of its television rights but extends PTV’s control over new media rights until 2007. Villa has also regained control over the shareholding earmarked for PTV.

E-COMMERCE PTV’s initial deal with the Football League required that clubs bought in to the idea that PTV could provide a direct link to fans – both in terms of news, views, ticketing and merchandising. As with any league, some clubs found it harder than others to come up with the information needed on a timely basis to make their sites a success, but over time the problems have been ironed out. Where PTV’s venture is really coming into its own, however, is on the e-commerce side. Take the experience of Newcastle United. Back in 2002, some 15% of kit ordered before the start of the 2002/03 season was bought online – the rest offline. The following season, this ratio was reversed. Likewise, Bristol City used to see only a small percentage of its total sales coming from online, whereas its latest site is proving a major source of income – much of it new business. Queens Park Rangers saw increased sales not only because of its performance in the 2003/04 season and its increased product range but also due to its excellent shop/user interface. Feedback from supporters also proved very positive, and this was reflected in its online turnover – particularly in November and December 2003. Part of this success is due to the medium’s ability to target fans effectively via its database. If, for instance, it wants to offer a promotion on replica shirts of a certain size it can email all those fans that fall into this category with a special offer. This has prompted a rise in the number of tailored promotions.

FOOTBALL SPONSORSHIP & COMMERCE 121 Section II Business opportunities

FACTS AND FIGURES

The service that PTV offers proved its worth in the run-up to Christmas 2003 and over the festive season. The 15 online club shops that it managed at the time turned over some £1m during that period, £350,000 up on 2002 (approximately +300%). At the beginning of 2004, out of the 92 clubs that make up the English Premier League and the Nationwide Football League (now the Coca-Cola League), 89 possess an online club shop – with PTV the biggest provider of technology to this market. Online club shop sales have risen and, claims PTV, now account for 10%+ of all club merchandise sales. It expects this to grow rapidly, reaching 25% by the end of 2005. PTV has high hopes for online marketing, predicting that it could overtake more traditional channels such as mail order, telesales and catalogue sales. Average online sales currently account for around 35% of clubs’ mail order business.

TABLE 2.6 Top selling items online pre-Christmas 2003 online

1. HOME SHIRT (40% OF SALES) 2. AWAY SHIRT (25%) 3. TRAINING WEAR (10%) 4. LADIESWEAR (5%) 5. GIFTS/SOUVENIRS (5%) 6. OTHER (15%) SOURCE: PTV

The value of the average online club shopping basket is rising, too. In 2002, the average was £45 but in 2003 this rose to £70, up 55%. Sales have also been helped by a rise in the number of women watching and playing football, with sales of related merchandise hitting £100,000 in 2003.

FUTURE PROSPECTS Premium TV has not had an easy ride. It came into the market, hampered not just by the fortunes of its parent company, but also by the initial deals struck with clubs and federations. Only now is it beginning to unravel the most punitive contracts and carve out a financially healthy niche for itself. Mobile services, meanwhile, are tipped to provide PTV with its largest revenue growth over the next three years via its ability to offer textual and pictorial content. And in 2005, it should be in a good position to profit from the roll-out of 3G phones, which will create a mass market for the delivery of multi-media content to football fans. This is, however, an area that is seeing increased consolidation. In July 2004 SP Holdings, the marketing and financial services company, acquired The Interactive Sports Store (TISS), publisher of the official online store of Manchester United. The official England cricket store and the English FA’s official online store are also owned by TISS and are seen as key to SP Holdings’ move. Earlier in the year it had announced the acquisition of TSE Consulting SA, a Swiss-based company that advises governments and cities on bidding campaigns for major sporting events. Such takeovers are seen as part of its strategy to be able to exploit the intellectual property rights that it is developing in the sports and fashion sectors. As for Premium TV, it now has a new marketing head, James Rushton, to oversee a review of its marketing and communications activities, working alongside its commercial partners such as Coors, MBNA, AA, O2, Vodafone and Siemens. The challenge, and the opportunity, for PTV is in covering so many different areas: it is part digital agency, part sports network and part digital broadcaster. Rushton’s challenge will be to grow the core business and unlock the value of PTV’s registered users while developing other revenue streams. He will be aided in this task by the setting up of the company’s new business development unit, headed up by Bryan Winning. The unit’s main aim is to encourage content owners and rights-holders previously deterred from exploiting new media opportunities – either due to cost or through fear of cannibalising revenue from existing products. PTV’s links with football, however, are as firm as ever. One of its first tasks is to create an electronic version of UK soccer glossy magazine FourFourTwo.

122 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

Chapter 17: Matchday opportunities

The number of marketing opportunities on matchdays is limited only by the creativity of the commercial department. The majority will be taken for granted by both clubs and sponsors:

I match sponsorships I perimeter advertising I programme advertising and sponsorship I matchday hospitality I matchball sponsorship I man of the match award I mascot packages

The list goes on and on. It is also worth remembering the exploitation potential of special, out of season matches. Here, if the ground is big enough, there is the possibility not only of delivering added value to existing sponsors but of attracting local business and providing a fun day for all concerned. Take Barcelona. At the Fiesta del Gamper in 2003, a pre-season friendly, it attracted a number of blue chip names. ranging from Nike to Coca-Cola and Sony to sponsor attractions throughout the day before the match, much to the delight of fans. These included five-a-side sponsored football games, face painting, video games, all- day bars and food, all within the confines of the stadium – quite apart from the club shop staying open all day. Some 19 companies took part at the game, against Boca Juniors. The value for sponsors is often being able to have a dry run, to test whether a working relationship with a football club appeals; for the club itself, it is a win:win situation. Other clubs look at different ways of endearing themselves to fans. St Pauli is a case in point.

CASE STUDY: ST PAULI

Some clubs are not obvious front-runners for a case study. Their results don’t place them in the top tier; their fans, though fanatical, tend to be rebels rather than trendsetters. Yet German club St Pauli has managed to attract sponsorship despite, or perhaps because of, its background and its reputation.

BACKGROUND St Pauli in the middle of Hamburg is very much a working class district that attracts a wide cross-section of fans. It is famous for its red light district, as well as for its port. The club reflects the nature of those who attend matches. Its core values are:

I loyalty I peacefulness I fun I traditional

Fans are, for instance, anti any radical groups, and traditionally have had a very strong influence on club politics. This has, in the past, militated against the club adopting strong arm marketing tactics or mounting aggressive drives to increase its turnover. Fans are an eclectic mix of colourful punks, ‘tree huggers’, squatters, representatives of the nearby Hamburg red light district, creatives from the advertising industry – and ‘Jo Public’. The one thing that unites these disparate elements is their love of the club and the fact that they are seen as ‘rebels’. They go against the norm – even if, in previous years, this has been to the detriment of financial stability. St Pauli’s stadium also holds the club back. The Millerntor has limited seating, and the club did attempt to replace it in 1989 with a state-of-the-art all-seater ground. Fans forced the club to backtrack, holding public discussions, distributing leaflets, and even promoting a five-minute silence at one match to show how the

FOOTBALL SPONSORSHIP & COMMERCE 123

Section II Business opportunities

atmosphere would change in a new stadium. More recently, the club unveiled a new stadium plan. This would accommodate 32,410 spectators, a state of the art design incorporating 30 VIP boxes, 1,200 executive seats and an integrated amusement park. This, too, is in limbo. The challenge for St Pauli, however, was to generate the funding it needed, over and above gate receipts, to compete in the German football market.

OBJECTIVES St Pauli knew that it had to start marketing itself and its merchandise, but this had to be done in a way that would win over fans. Previous experience showed that the fans tend to look at change very critically and are never scared of voicing their opinion. This meant that there were certain ‘no go’ areas. The marketing team, for instance, could not go down the route of Hamburger SV, which had sold the naming rights to its stadium (now the AOL- Arena). Over time, though, fans’ antagonism to the whole ethos of sponsorship has changed. The outcome is that St Pauli is now able to market its wares with a much freer rein – so long as the club takes account of fans’ sensibilities.

MARKETING OFFER The St Pauli marketing team now has a range of opportunities to offer brand owners and, in 2003, three sponsors who signed two or three-year deals. The opportunities are fairly standard. They include:

I logo placement on boards in and around the stadium, in the stadium magazine, on the team bus, in the VIP area, on all print media, on jerseys and on the club’s home page I announcements via the stadium loudspeaker during games I promotions in the stadium I PR opportunities with players I tickets for the whole season I production of items of merchandising with the sponsor’s logo I editorial integration in the club newsletter

The three main sponsors are:

I Holsten (the brewer), July 2003-June 2005 I Mobilcom (telecoms), July 2003-June 2006 I Stanno (kit supplier), July 2003-June 2006

St Pauli is very much Hamburg’s second string, behind the 1993 European Cup winners Hamburger SV, one of the trademark clubs in Germany. Yet, because the clubs have such different target groups they can happily co- exist. St Pauli stands very much for an alternative lifestyle and appeals to a very specific type of sponsor. Its players are seen as tragic heroes, with fans protesting against capitalism and commerce. In short, the club is a unifying ‘underdog’ – promoting an ‘us against them’ image.

IMPLEMENTATION Sponsorship is not the only string to the St Pauli bow. Increasingly, the club is having to look at alternative ways to raise money. In 2003, it sold 110,000 ‘retter t-shirts’ [Save St Pauli FC] for €15 each to raise cash for the club. The venture was so successful that follow-up activities were planned in co-operation with a national artist who has donated prints of his paintings to be auctioned. The club sets itself a challenging target in terms of the income it hopes to generate from each fan. The ideal is €89-plus (the cost of a season ticket is between €89 and €1,200), but it claims that fans from across Germany buy its merchandise even though it is a regional club. The one area where it does not have to overexert itself is in marketing its tickets. According to Miriam Müller, of the club’s marketing office: “Despite descending to the third league in 2003 we didn’t have to market our tickets in a special way because we are still sold out most games with an average 17,000 spectators every match. That would put us in second place on average in the second league!”

124 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

This could be because a large part of the ground consists of terracing – and terraces mean cheaper tickets, but this appears only to heighten the atmosphere. So how does the club make its marketing work effectively? It has one element in its favour. Its marketing director since October 2003 has been Marco Hopp, who was head of the sponsorship department at event agency upsolut for seven years. His direct line to many potential sponsors helped bring in companies such as JJ Darboven, the traditional German coffee roaster and Oddset, the German sports lottery firm in 2004. His successor, Michael Meeske, due to replace Hopp later this year, knows that getting such familiar brand names is, however, only half the story: St Pauli works only with firms that match its image and which its fans accept.

‘Hearts of St Pauli’ The club launched an exclusive ‘Hearts of St Pauli’ sponsorship club so as not to rely too heavily on just one sponsor. The sponsorship club’s members include the two brands above plus a relative newcomer, the Aquavit brand Bommerlunder. Sponsors show that they are sympathetic to the St Pauli brand and its fans. Astra, for instance, a local beer that is traditionally geared towards the working class, provided free beer, while supplies lasted, outside the stadium after the decisive game for the promotion to the Bundesliga a few years ago. As for Jack Daniels, it sponsored the fan buses for many away games, thus reducing the cost for those who wanted to travel. Neither would ever attempt to buy the stadium rights, but they do know how to endear themselves to the grass roots. The St Pauli website, meanwhile, features a whole page of subsidiary sponsors, including two media partners.

Cult status The club’s appeal also lies in the fact that St Pauli has achieved cult status. It displays its marketing slogan, ‘Not established since 1910’, proudly on all marketing communications, along with its skull and crossbones emblem, which can be found on merchandise and the website. The club believes in keeping in touch with its audience on a regular basis. It updated its database and now uses it on a regular basis. Newsletters are sent out once a month to club members, to fans who have ordered merchandise and to sponsors. In addition, St Pauli has nurtured its fan base. Surprisingly, the club has a following in Scotland, and strong ties with Celtic in Glasgow. This friendship, says Muller, started from personal contacts between individuals but has since grown because the two clubs have discovered that they have a lot in common. St Pauli is also many fans’ second choice club. This, says Muller, is common in Europe, where fans follow a local club but also adopt St Pauli because of its ethics, its banning of violence and its working class links. These may replicate key elements of their own club – Atletico Bilbao, for instance.

Fan focus Communication with fans takes place through the ‘Fan-Laden’ – a mixture of office, youth club and pub. The club meets regularly with social workers who reflect the opinions of fans and discuss key issues and new marketing plans, to ensure that they have the backing of fans. The Fan-Laden, prior to the development of the club’s website, was the main point of contact for fans. A non-profit making organisation, it organised away tours, built up contacts with supporters worldwide and provided fans with information and a fanzine. People would visit its office to have a drink, chat, watch TV, read fanzines or just cry about the latest defeat. The club is limited by its stadium infrastructure in the type of hospitality it can offer. It does not, for example, have any corporate boxes. Instead, it offers ‘normal’ seats but with the incentive of free beer in the VIP section. In addition, it offers free catering in the VIP room before, during and after the game.

CONCLUSION Despite being in the second tier of the German game, St Pauli has always managed to break even, if not manage a profit. Four years ago it notched up a €330,000 profit on a turnover of €8.7m, and though the club is reluctant to reveal figures, profit has risen since then. Income from sponsors has risen year on year as the club’s marketing has improved. It hopes to bring in €1.8m from sponsorship in 2004, from catering (which it handles in-house) and from merchandising. This is slightly up on the previous year thanks to the new sponsors and a good run on the catering side. Sadly, its one limiting factor – as with so many clubs – is the stadium, which currently cannot attract more fans, since it lacks the space and is restricted as to how much merchandise and catering it can offer on site.

FOOTBALL SPONSORSHIP & COMMERCE 125 Section II Business opportunities

Given the chequered history of stadium development plans in the past, against the wishes of fans, this is an issue that may come back to haunt it. Plans concerning a new stadium are currently on hold. The club has commissioned plans from several architects, which languish in its filing cabinets, but there is not enough money to finance the building. It would cost around €45m but is not likely to get any financial support from the city since the club owns its current stadium. St Pauli recognises that it would need a sponsor to buy the naming rights to finance at least part of the new-build, but since the club itself could not finance the other part it is not pursuing this issue with its partners. It has, however, branched out, with the opening of a successful bar, which has become a fixture on the Reeperbahn-mile as a tourist attraction. A commercial print magazine has also been launched, covering features on the club and the city. Match results appear to have little impact on the fervour of its fans, although the slice of TV income it would accrue should it break into the Bundesliga again would not go amiss. For the moment, however, it has to rely on what it does best – using its unique appeal to woo and service its sponsors. A few more goals would be an added benefit.

CHART 2.2 St Pauli sponsors and emblem

www.fcstpauli.de/sp/pages/sponsoren/sponsoren.php

126 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

Chapter 18: Leveraging brands

Over the past two decades, consumers seem to be placing less trust in recognised institutions such as the Church, government, teachers – and more trust in brands. Not all brands, it is true, particularly those that don’t live up to their core values. But football clubs have a major plus over rival brands aimed at the same market: when in doubt, consumers will always prefer a local or national brand over an international one. Also, a good brand or product will sell itself and doesn’t need to be pushed all the time. Football clubs score on both counts. Most – unless started up recently in countries with no history of involvement in the sport – have strong links with the local community and therefore a captive market. The club’s brand, meanwhile, as long it has been nurtured, will have created and sustained awareness – albeit possibly at a local level. Brands, however, have a commercial potential beyond their local confines. It is up to the club how far it wants to push it. Brand owners outside football would look to new product development, line extensions, franchising, and such like. Some clubs go down this route too, looking to apply their branding to food, leisure wear, retail outlets, publications or linked services. The case study that follows, Olympiakos, shows how licensing can be valuable. The club knew that its name would resonate with consumers across a broader base than that originally targeted. Licensing, once its strategy was agreed and implemented, offered it the chance to fulfil its marketing dreams.

CASE STUDY: OLYMPIAKOS CFP

BACKGROUND Olympiakos is more than just a football club, yet its challenge has been to capitalise on a larger than life sports operation and leverage its brand to the benefit of fans, sponsors and – of course – the club itself. Founded in 1925, it now encompasses 20 sports departments. Of these, football and basketball are recognised as professional sports. Its basketball, volleyball and water polo teams are deemed among the best in Europe, while its athletics department claims over 21 Olympic medal winners. The club trains 2,000 athletes, of which over 95 are active in the national teams. It has earned its place in the affections of the general public, with some 48% of Greek speaking people supporting the club. The arrival of the Olympic Games in 2004 acted as a spur to rebuild the Karaiskaki Stadium, which hosted the football tournament. In recent years the club has been on a roll, winning its seventh consecutive football championship – making a total of 32 – before its run at the top was halted by rival Panathinaikos in the 76th minute of the last game of the 2003/04 season.

MARKETING BACKGROUND Olympiakos’s origins lie in sport, but in 1979 it decided to become a sports ‘company’ rather than a club. It struggled to achieve its full potential, however, with directors becoming embroiled in financial political scandals and a major shareholder – a Greek-Kenyan diamond dealer –ending up in jail for fraud. It was left to the current management to bring Olympiakos back out of debt (some $50m) in 1992 and institute a commercial arm. Socrates Kokkalis, Olympiakos CFP president and managing director, has been key to its progress. He took over the basketball department in 1991 and two years later became president of the parent organisation. Kokkalis is a force to be reckoned with, graduating from Humboldt University in Berlin with a degree in physics and majoring in telecoms and electronic technology in 1962 before going on to found Intracom in 1977, one of Greece’s largest companies. He spotted the need for the club to pursue a two-pronged strategy: to produce exciting and top quality football for fans who also wanted quality products and services at prices they could afford.

FOOTBALL SPONSORSHIP & COMMERCE 127

Section II Business opportunities

Thrilos SA, Olympiakos’s commercial arm since 1994, proved the answer. Its activities include sponsorship, merchandising, licensing, ticketing, venue management, new media, sport academies and summer camps, the new Karaiskaki Stadium, Renti Sports Park, affinity programmes, new business development and its members club. Thrilos allocates an account manager to each company associated with the club to make partnerships work effectively and to advise on how to get the most from further promotional and advertising activities. Thrilos also keeps a close eye on whether its partners – from Siemens Mobile to Pepsi and Umbro – are getting value for money. Often this means working with specialist sports marketing agencies, such as Sports Five, on their behalf.

LICENSING Olympiakos knew that licensing could prove a good source of revenue. According to International Licensing Industry Merchandisers’ Association (LIMA) figures, licensing royalties made up a US$5.8bn business worldwide in 2003. Sport licensing, meanwhile, offered royalties of US$807m worldwide, up 5.8% on the previous year, which amounted to some US $31m in UK and Germany in 2002. The company worked out that:

Licensing = Distribution = Sales

Licensed products, professionally managed, could target not just existing fans but a whole range of different audiences, the most lucrative seen as the Greek Diaspora, the mass sports market and the local one, enabling it to tap the mass and fringe tourist markets, partly through e-commerce. Licensing was earmarked as a way to satisfy fans’ needs for new products that were well designed and high quality at a competitive price. Thrilos starting talking to companies in different sectors – clothing, accessories, gifts, games, household accessories, food and publishing. The first products began to appear at the start of 2003, with Thrilos exploiting the distribution networks of its licensees throughout Greece.

Olympiakos’s appeal The club built its proposition on the fact that Olympiakos appeals to a mass audience and offers licensees high exposure, to an audience that is – in the main – already aware of the club. There are few clubs in the top tier which can boast that they are well known at home and abroad and can offer licensees value for money. The best examples tend to be familiar names such as Manchester United, Milan and Chelsea. Olympiakos hoped to follow in their footsteps. Its strategy, on venturing into licensing, was to maximise sales potential through widespread distribution, competitive pricing and modern design. It appeared to be a win: win proposition. Olympiakos sought to minimise commercial risk by putting the onus for investment on its licensees, knowing that licensing royalties are virtually risk-free and are net profit. The exercise would also promote the club by communicating the values of the brand at sales points in locations away from the main ground.

Licensing checklist Olympiakos worked out the requirements for implementing a licensing strategy. First and foremost, the club recognised that it did not have the necessary expertise in-house, so looked to source it externally. It also:

I confirmed that it had the legal right to license the intellectual property I set up a win: win commercial strategy with which to attract potential licensees I sought to redesign its existing, slightly outdated logo and replace it with a new one – plus create new sub-brands with which to target specific market segments (youth, hard core, conservative) I set itself the task of providing first class client service, to maximise sales and avoid misuse of the brand.

128 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

Branding issues As brand owner, Olympiakos was keen for licensees to follow style guidelines to ensure consistency and quality. Any potential new licensee would have to make sure that all new products would:

I be consistent with the Olympiakos brand I bring added value to it I communicate its values and behaviour

Terms and conditions Then came the matter of setting the ‘right’ price for the brand. This amounted to a fixed list of terms, which included:

I royalties of 12% I a three-year contract I a guarantee that at least 75% of the business plan submitted by the licensee would be carried out I a bank guarantee for yearly royalties I quarterly statements of sale I liability insurance

Licensees In its first year, Olympiakos succeeded in agreeing deals with a number of partners, including Siemens Mobile, Umbro, Vodafone and Pepsi, which were targeted as part of its strategy to sign up leader companies in each sector. It decided to cherry pick, rather than take what was easily available, and looked for trustworthy, economically stable businesses that wanted to invest in a company that offered brand recognition and loyalty among existing customers.

Licensing threat Piracy is a big issue in Greece. In 2001 alone, some 50,000 Olympiakos counterfeit team shirts were sold in the Greek market, while the club instigated some 35 lawsuits against pirates in 2002. It also formulated a new strategy to combat the threat. It sought to offer tangible and – equally important – intangible benefits to prospective clients through proof of purchase (CRM). A low priced official team shirt was licensed to one of the best pirate firms, and the club introduced holographic security tags to certify authenticity. By 2003, Olympiakos had outsourced its department needs to a firm called Sportsunited, which quickly firmed up 25 sets of contracts in all sectors, leaving it with another five to target. Some 4,500 products hit the market by December 2003, the first coming from the FMCG sector (beer). It sees its future programme working along the following lines:

CHART 2.3 Olympiakos future merchandising and licensing

OLYMPIAKOS REVENUES IP RIGHTS

PRODUCT DESIGN SPORTS UNITED SALES INTERNATIONAL SPORTS LEGAL & FINANCE MANAGEMENT GROUP MARKETING

LICENSEES

APPAREL ACCESSORIES GIFTS LEISURE

WORKING PERSONAL CARE EDIBLES LIVING

OLYMPIAKOS PRODUCTS

FOOTBALL SPONSORSHIP & COMMERCE 129 Section II Business opportunities

CONCLUSION Olympiakos knew that, with limited funds at its disposal, leveraging its brand and appealing to a broader audience was going to be a tough nut to crack. It was therefore realistic in going down the licensing route. The venture, far from diluting the brand – often the danger from ventures such as line extensions or licensing – has reinforced it and introduced to a wider audience. The club knew its limitations. It would have to exploit all the marketing and distribution networks of its licensees, but because it set its sights high when agreeing deals with each one, these chains proved both robust and efficient. It had promised fans quality merchandise at the right price, and this is what it eventually delivered. Fans still trust the club to provide them with what they want, and in turn they still choose Olympiakos products over other brands, given the choice. Olympiakos has expanded the number of Thrilos shops to 16, and connected them up to the ongoing licensing activity to maximise the benefits for both club and audience. There are always going to be times when it proves unrealistic – either by reason of lack of personnel or financial resources – to pursue commercial objectives. Olympiakos has shown how, with careful planning, limited resources can go further by tapping those of commercial partners. The key is in setting out clear and measurable objectives, within agreed timescales.

130 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

Chapter 19: Community sponsorships

Football clubs discovered early on that they need the support of their communities if they are to survive. Indeed, stronger links can ensure greater use of stadia – either for education, business or sporting based activities. As the business community wakes up to corporate social responsibility, it is ironic that football has been practising its tenets for a good two decades – if not longer. Fans have been paying good money to watch football’s product – the team – and enjoying football’s facilities, while the club has then subsidised a range of activities to give something back to the community. Some would argue that this relationship has now moved into another phase, where clubs use their unique position and infrastructure to develop programmes that meet a range of social objectives that can be underwritten by relevant local or national authorities, or even social agencies. The art is in creating a strong community team at a club, and in knowing the audience – both fans, potential sponsors and grant providers. Since 2000, the UK government has funded a trust called Supporters Direct, which helps give supporters a proactive role in their football club. It has spawned over 80 supporters’ trusts, whose end goal is to help secure their clubs’ futures. Supporters trusts are registered in the UK as mutual organisations – they are owned by the community and their actions will be governed by their constitutions. Organisations of this type help bind fans to clubs, making them feel more involved and valued, while providing the club with a more stable and sustainable future.

CASE STUDY: WATFORD FOOTBALL CLUB

Watford has always played up its image as a family club. It was, indeed, one of the pioneers in this area back in the early 1980s through its installation of reserved areas for family groups. Yet in the early 1990s, former chairman Stuart Timperley admitted that the family club was not living up to its image. Watford appeared to have lost its way, yet the club managed to turn things around and return to its roots.

BACKGROUND Watford is a club that, first and foremost, represents its locality. It is perched on the northernmost tip of London, next to the home counties, with 60% of its support coming from the borough of Watford. The club identifies so firmly with the town that the words ‘football club’ are missing from its badge. Back in the 1980s, and influenced by the then manager Graham Taylor, the club reached out into the local community and involved itself in the life of the town. Players were often on view at functions, becoming well known faces in the locality as opposed to distant figures seen once a fortnight on the home pitch. In 1987, the club commissioned a survey of its fans’ attitudes from the University of Leicester. This revealed that 87% of fans felt that a community approach was as important as success on the field. The survey’s timing coincided with the worst excesses of hooliganism, and The Times carried a 20-point article on how to address football’s problems. The author advised: “If in doubt, copy Watford.” The club’s high profile chairman, Sir Elton John, succeeded in raising the profile of Watford and its activities – as did Ed Coan, the club’s erstwhile marketing director (now a consultant) in his first stint with the club as public relations manager. Sadly, by the time Watford had gained promotion to the Premiership in 1999, it had just 5,139 season ticket holders. Its image had suffered, with neither staff nor fans giving credence to the core values of old. This period coincided with the return of Coan to the club. His brief was to spearhead the club’s desire to become genuinely integrated in the community, using the club’s status to leverage increased commercial income. His job, in effect, was to re-establish and relaunch the Watford brand.

FOOTBALL SPONSORSHIP & COMMERCE 131

Section II Business opportunities

OBJECTIVES It is always harder to regain the trust and confidence of internal and external customers than to build it up in the first place – particularly in light of the disillusionment that had set in following the dramatic price hikes for the Premiership season. Coan, however, was realistic about the scale of the problem. One of his main aims was to rebuild the family/community ethos. “It hadn’t really gone away,” he says, “but it was extremely fragmented. It had an image, but no strategy to it.” His other task was to make Watford stand out from the crowd, and thus generate extra commercial revenue. This he resolved to do by creating a sustainable brand identity, since this is often the only ‘constant’ that a club can leverage. Coan’s desire to restore the club’s good name had the full backing of the board, so it was just a matter of showing fans and a general public uninterested in football that Watford FC was playing a genuinely positive role in the community. The following mission statement sums up the club’s goals:

I to produce a successful first team which competes in the top flight of the domestic game I to recruit and develop home-grown, local talent for the club’s first team, via an outstanding football academy I to provide attractively-priced spectator facilities, so the entire family can support Watford Football Club in safety and comfort I to be a positive force for progress in the community, which we’ll serve in every way we can

STRATEGY Coan’s first task – to bring the family and community aspects back into play – was to form a new department called ‘Families, Youth & Community’. Each strand reported to one person, who in turn reported to Coan. Thus a very broad-based sponsorship vehicle was created – an opportunity snapped up by TOTAL for a significant six- figure sum over two years. It was, at the time, the club’s second largest deal, behind the main club sponsorship, held by Toshiba. The new agreement also cemented community involvement as an integral part of the club’s brand, and has led to a budget being set aside for ‘community marketing’.

Watford’s sales team was made fully aware that the platform on which they based the club’s sales proposition was that of involvement with all the positive aspects of a football club truly integrated with its community.

IMPLEMENTATION The club’s new community focus generated all kinds of sub-sponsorship opportunities. This included the crèche, the Junior Hornets Supporters club and the family facilities on matchdays. “We’ve achieved all this on the back of the Families, Youth & Community programme,” says Coan. “It was seen as a seamless operation under one banner.”

‘Inside’ the club, these various strands included:

Watford Learning: the club has purpose-built classrooms and an ongoing programme for local schools to come and improve numeracy, literacy and IT skills through football-based learning. The results of these have been quite staggering in terms of improvement of standards among those children who have participated. The club has now launched a website, www.watfordlearning.co.uk, covering a variety of projects and courses on offer to teachers, schools and learners of all ages, six days a week, 50 weeks a year.

Seats for families: Within the stadium on matchdays, the club has several reserved areas for family groups. Indeed, Watford was the first club to set aside areas for families and now has over 2,000 seats for this purpose. Prices mean that a family of four with two children under 12 can come to a professional football match for £6 a head.

132 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Kickback: this is a ticketing scheme aimed at local schools and youth groups, offering low-entry priced tickets to matches (normally £10 for adults and £5 for children), but after the deduction of VAT, the club returns half the money generated to the participating organisation. There is an area set aside within the ground to house people who buy kickback tickets. This area is known as ‘Community Corner’ and last season alone, over £30,000 was directly returned to schools through Kickback ticket sales.

Discounted/free use of club facilities on non-matchdays: the club allows use of its function rooms for meetings, seminars etc. for bona fide community groups.

In addition, Watford offered several practical benefits to the community that took place ‘outside’ the club:

Football in the Community scheme: in common with most professional clubs, Watford runs this project as an ‘outreach’ programme, offering football coaching either in schools or after school hours as well as running holiday courses, mainly based around football activity. Last season, the club attracted nearly 50,000 participants to these various activities during the year and hopes to top that figure this season.

The Official Watford FC Charity Fund: this was set up in 2000 and a sizeable sum of money was put into it by the club to form a central endowment fund to make donations now and long into the future. The charity fund is managed independently by the Hertfordshire Community Foundation, which operates other similar charitable funds. In the past three years, many thousands of pounds have been donated to local causes and events in this way.

Ground collections: Watford could hold a ground collection at every home game, given the number of requests it gets, but it considers that this would be unfair to supporters, so it currently has two major collections at the ground during the season. The first is for the British Legion on or near Remembrance Day. As for the second, the club asks local charitable causes to present their cases individually, and these are then judged on merit.

Player appearances: a meeting is held every week to discuss player appearances in the week ahead so that there is a proper schedule; players are expected to be part of the rota to make such appearances.

Since this case study was written, Watford’s community programme has moved on apace. In April 2004 the club launched its own Community Sports & Education Trust, which encompasses all activities in this area. The trust has its own board of trustees and the aim is for it to be able to use past community work as a springboard for expansion, helping communities within Hertfordshire and the surrounding areas, while creating more active support for the club. Commercial director James McLaughlin has taken over from Coan, who is still involved with the club as a consultant, while Nicki Hattingh runs the trust on a day-to-day basis. The new body brings existing community initiatives under one umbrella, thus facilitating a more cohesive approach, in line with the recommendations of the Independent Football Commission. The trust will also, as a registered charity, use the charisma and positive power of football to promote active participation in sport and learning. Its activities will now major on:

I developing opportunities for women’s and girls’ football – the fastest growing UK sport I developing opportunities for disability football and sport I developing opportunities for social inclusion – youth diversionary programmes to assist in campaigns to combat anti-social behaviour and the misuse of drugs and alcohol

As the club’s chairman, Graham Simpson, says: “We want to play a pivotal role in helping people from all backgrounds reach their potential – whatever the level.”

FOOTBALL SPONSORSHIP & COMMERCE 133 Section II Business opportunities

CORPORATE BENEFITS

The drive to rebuild Watford’s community and family oriented image has had benefits beyond an enhanced reputation. As previously mentioned, the oil company TOTAL, whose headquarters is in Watford, has underpinned the Families, Youth & Community enterprise and covered the cost of the building of the website (www.watfordlearning.co.uk). This sponsorship showed TOTAL in a softer light while simultaneously bringing significant benefits to community groups. The company provided the fuel for minibuses and subsidised various other forms of mini-sponsorship and fund-raising initiatives. When TOTAL decided to strengthen its existing partnership with the Hornets (and the club is known), the club rejoiced in its ‘biggest sponsorship deal since the Premiership’. As a consequence, TOTAL became the first company to be known as ‘Official Club, Youth & Community Sponsor’. There are now many sponsorship vehicles that come under the umbrella of community work. Solvite, for example, one of the club’s former major sponsors, backs the club’s family areas and youth academy. In addition, the club looks to generate additional revenue through the government Sportsmatch scheme, which matches commercial sponsorship pound for pound when it is activity-based and aimed at grass roots sport.

CONCLUSION Coan’s approach brought fairly immediate results. Watford accumulated more sponsors in the Nationwide League First Division than it had during its Premiership season. The club also gained a reputation for being genuinely in touch with the community it serves, and is seen as the first club in professional football to have pursued such a policy actively. This has helped it develop a very positive image which, in turn, has helped to attract new sponsors and fans. Coan hopes that it will continue to be one of the central pillars to the way the club is marketed to local people and the local business community. The key will be how successful the club’s community initiatives are at generating interest among those who live in and around the town. As Coan admits, one of the main objectives of the club is to “crack the people of Watford. “The fact that 2.5 million people live within 30 minutes of the ground and that we had 38,000 at the play-off final in 1999 says it all.”

CASE STUDY: LONDON LEISURE COLLEGE

The one challenge that all clubs wrestle with is how to make their venue work seven days a week rather than once a fortnight. Some have chosen to install hotels and conference facilities, others fitness centres. Charlton Athletic decided to take this one stage further. The club now plays host to London Leisure College, (LLC), with The Valley as its headquarters This is a partnership that has grown over the past seven years and now sees the LLC occupying the new North Stand. Courses are run there five days a week, from 9am to 9pm. The stadium also now possesses a lecture theatre, a computer suite (all equipment is portable, because it has to close down on matchdays), a fitness centre, a crèche and 10 training rooms. Such facilities are a boon for the club and, more importantly, a big win for the community.

BACKGROUND The partnership between the club and the college was the brainchild of Steve Waggott, formerly a director of London Leisure College and now chief executive of Charlton Athletic Community Trust, and a team of visionaries that included Geoff Pine, principal of Greenwich Community College, and Mark Sesnan, managing director of Greenwich Leisure Limited. The idea came from a visit to Barcelona and the Nou Camp stadium back in the early 1990s. Waggott was quick to pick up on the fact that the focus of the community – the football club – was also the hub for the city’s

134 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

sport, business, leisure and travel activity. On his return, Waggott set about trying to translate the ethos of the Nou Camp into the south London borough of Greenwich. The resulting entity has had an immense impact on the education, health and quality not just of those who live or work in the borough, but also of those further afield with links to football.

EDUCATIONAL OFFERS London Leisure College, established four years ago, offers one of the most comprehensive programmes of leisure related vocational training qualifications and educational courses anywhere in the UK. It has strong links with local employers in the sport, recreation, leisure and tourism sectors, and has resulted in Greenwich Community College being granted a Beacon Award by the Association of Colleges for the innovation of the LLC. It benefits the community in a number of different ways.

LCC PHILOSOPHY The LCC aims to:

I provide a training and workforce development centre focused on the needs of the growing sports and leisure sector I meet identified skills gaps currently existing in the leisure industry I offer courses and skills that are completely demand-led

Over time, its close relationship with the leisure industry in the borough has resulted in it becoming a government accredited training provider and often first choice for workforce development in the area.

CHART 2.4 London Leisure College organisational structure

GREENWICH COMMUNITY COLLEGE CORPORATION GREENWICH LEISURE LIMITED BOARD LONDON LEISURE COLLEGE BOARD

LONDON LEISURE COLLEGE DIRECTOR * Ensure strategic aims and objectives are achieved * Position LCC as market leader in leisure training * Collaborate with leisure sector leaders and funding agencies * Actively involve employers in the design of the programme * Establish workforce development continuum with partners * Engender an ethos of widening participation and lifelong learning

GCC CURRICULUM MANAGER LLC COURSE CO-ORDINATOR EMPLOYMENT LIAISON OFFICER * 14-19 Provision * Full cost courses * Bespoke training packages * Sports Academy * Franchise courses * Customer service * RAP Programme * REC Academy * Health & Safety * Basic/key skills * Bookings * Modern apprenticeships * Sport for Life * Facility Hire * Work-based learning * Trainers * Administration

FOOTBALL SPONSORSHIP & COMMERCE 135

Section II Business opportunities

THE VISION Over the past year, the college has turned its attention towards expanding its offering to a slightly younger age group (14-19-year-olds) through a variety of unconventional and innovative approaches, all the while bearing in mind the aims and objectives of its two key partner organisations. This is a key government target group, one whose education the college is keen to support. The route that the college has chosen is to continue to develop links with schools, Greenwich centres of advanced learning and skills, universities and employers. It has also set up Eltham Green Sports College as a college feeder, becoming a new centre of sport, and developed customised fast-track training packages and modern apprenticeships that will fund GLL academies and meet government growth targets of 25% over the next three years. Over time, the GLL has developed its offering at The Valley and introduced:

I a new staffing structure by recruiting industrially competent staff and retraining existing staff I increased flexibility in terms of when, where and how it delivers its programmes in line with the needs of industry and employers I more diversity in terms of how it engages learners through a range of delivery modes with expansion of open/distance learning material for more fully inclusive offer I an innovative range of partnerships (86 external organisations to date and growing) to spread the LLC name through excellence.

THE ACADEMY The GLL provides academy schemes that offer an alternative education mode and venue for 16-19-year-olds. Initially with Rugby League, Union and Association Football, academies combine nine hours per week of professional coaching with a full-time programme of study. The academies aim to: encourage late developing athletes to continue improving their skills and abilities in an arena that may offer progression to higher standard; to ensure that students have a more enriched and varied educational experience, helping develop social and personal skills; give athletes a more secure future because they gain nationally recognised qualifications.

CLUB IMPACT So just what does this mean for other football clubs around Britain? The short answer is that they don’t need to be in the Premiership to accomplish what Charlton has achieved. As Waggott puts it: “It could just as well be Accrington Stanley. If you have a club that magnetises activity, you have to use it as a hook to engage with the community. It becomes a great vehicle for discussing with the government issues such as Skills for Life, numeracy and literacy. People will only engage if they are interested in the context. And if we can use football, or any other sport or leisure activity, and then apply the rigours of maths and literacy, then courses become more attractive.” Charlton has a stand that is being used throughout the week, a full-time college within a football club that is unique, and a sound working relationship with the LLC and its partners. As a community project it is second to none. There is much good practice elsewhere, but it lacks the scale of what is happening at Charlton. Other clubs – like Sunderland – host learning centres, put a few computers in and often do really well in engaging as a family sort of learning centre. There is a world of difference, however, between such ventures and the one at the Valley. Waggott admits that it has taken years to build up the critical mass and intellectual capital to be able to run it. Indeed, he now spends a fair amount of time visiting other clubs that are keen to emulate Charlton’s success. But it is a long- term venture, particularly to achieve Beacon status. Waggott’s relationship with Charlton began seven years ago, when Greenwich was looking to become a sporting borough and exploring what pieces of the jigsaw needed to be found to achieve its aim. Waggott recognised the importance of health issues and leisure facilities, but sought something that would make students commit. The club formed a strategic alliance with an FE college, a main leisure provider, which has now become the biggest in London. Coincidentally, Charlton was then thinking of building the West Stand, and when the opportunity arose, Waggott took the department doing sport and recreation within the FE college and transplanted it to The Valley. “With my background in the sport, and the coaching, I could see the attraction to people,” he says. “They would say: ‘I’m not too sure about college, but if it’s within a football club, I’m coming’.”

136 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Waggott admits that with Charlton he was pushing against an open door, but his luck also held in terms of funding. “We managed to get some single regeneration funds then, which meant we were able to build a fitness centre underneath the West Stand,” he says. “We then had three areas to share with existing Charlton facilities, so it was very much a partnership in action. It wasn’t a case of ‘Well you have it during the day and at night it will revert to the club’.” Within six months Waggott was asking for – and filling – space, from corporate boxes upwards, on a regular basis, and when the issue of the building of the North Stand was raised, it made sense for the board to ask Waggott whether he could move into it and get some form of grant funding. So far he has managed to get two grants. “The first that moved us into the West Stand five years ago was £900,000 from a Single Regeneration Bid [SRB from the government], which helps deprived areas, and then we bid into a European Regional Development Fund pot, where we got around £973,000, for the North Stand. On top of that we have had other partners: Charlton Athletic, Greenwich Community College and Greenwich Leisure Limited, who have had to put in various amounts of money to generate the project. And I suppose between them – a guesstimate – they had investments of up to £1m, an equitable split.” The result? “We have now moved our entire operation into the North Stand, and have a full-time college from 9am until 9pm five days a week,” says Waggott. “We now do evening classes for sports injuries and train stewards in health and safety and customer care.” This has led to another possible venture, since the Greenwich Peninsula development plan has been given the go ahead. Waggott would like to see a full-time peripatetic team of event managers and stewards working across all the different events in south-east London, covering Charlton, the Dome and possibly West Ham. The idea has already had a warm reception from the US-based Anschutz Entertainment Group, in charge of the Dome. The LCC has been awarded a contract to train people employed in the new sports arena to be based in the Dome. The college is also an integral part of an Olympic strategy group for the 2012 London Olympics bid. To Waggott’s mind, however, the college would never have got off the ground without the club’s ability to think big. “You have to aim for Mars,” he says. “If you aim for the moon, then you’re back to work. “We now have probably 100 organisations that buy our training, who come to the club,” he says. “When I first inherited a small sports area, I had three courses and about 50 students. We now have escalated to about 50 courses and, with distance learning, about 3,000 students. And this is our fourth year. Since we have moved here there has been a phenomenal increase in interest in activity around what we do.” So what sparked it all? Waggott goes back to his roots, to when - many years ago – he was trying to play football in Newcastle. “When I left after training I always remember the groundsman used to put a huge chain across the gate and padlock it. And with all these facilities inside the club… I thought that couldn’t be right. “Wouldn’t it be great to take off the padlock and chain and make it more than a football club, to make it an actual centre for delivering all these different things, engaging people who perhaps would otherwise be excluded from a whole range of activities?”

CONCLUSION This case study illustrates that it is worth looking laterally at how clubs can get involved in the community. They should not be hidebound by thinking that activities are limited by what other clubs have done – they should actually go out and break new ground. Community activities should start with looking at what the needs are – both at local and regional levels, and in terms of national government strategy – and then at how a club can dovetail to the benefit of both parties. Charlton has seen how the club premises could be used on an ongoing basis throughout the week, thus benefiting in capital terms while being in step with government policy on youth education. Its strategy has also helped the club to build and maintain the North Stand more swiftly and cost-effectively than would otherwise have been possible, and a side benefit is that it has the ability to train and manage a team of peripatetic stewards who can operate throughout the capital at different venues. First and foremost, however, all this has been done in accordance with the club’s business plan. It is a club that stays within its means – it just happens to be very creative about how to stretch its budget.

FOOTBALL SPONSORSHIP & COMMERCE 137 Section II Business opportunities

Grant suggestions Clubs are now latching on to the fact that more grants are available than ever before. As seen above, some can help with support for infrastructure; others, can be used to support ‘Football in the Community’ projects. Below, as examples, are sources of funding that Charlton has tapped over recent years.

Football Foundation This is a mixture of Lottery, FA and Sport England funding that has provided Charlton with two separate grants, one of £91,000 and one of £81,000, over three years – sufficient to fund community projects and one, if not two, community officers.

Positive Future Fund Home Office funding for a social inclusion programme. This one uses football to address issues for specific sections of the community. Charlton has been awarded £300,000 over three years.

The Children’s Fund Money in this area is available in pots within boroughs and local authorities throughout the country. Charlton is lucky in that a lot of its work is with children who fall within the targeted age groups, providing it with £50,000 recently.

Single Regeneration Budget Charlton was successful, when pitching with Leyton Orient, Millwall and West Ham to run a five-year project for excluded children, in securing a shared £500,000 grant. (This was Single Regeneration Budget (SRB) 3. It is now on to SRB 6.)

New Opportunities Fund Charlton has not tapped it as such, but has been involved with partners who have been funded.

Sportsmatch One of the veteran sources of funding, where the government will match, pound for pound, the amount that new sponsors bring in grass roots projects in sport, subject to specified criteria.

Smaller sources The club recommends looking around for smaller pots of funding, and for information on authorities or funding sources that have under-spent. For example, the club found out that the Drug Action Team (DAT) had under- spent its allocation of funding, so it submitted a bid to run an educational programme within the borough on topics such as drug misuse, with a potential grant of £20,000 available. Other sources worth approaching direct are the Home Office and the PFA.

138 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

CASE STUDY: AVON INSURANCE

Avon Insurance has the honour of being one of the UK’s longest lasting football sponsors, from 1994 to the end of the 2002/2003 season. It has since been absorbed by NIG, part of the Churchill Group, which acquired the renewal rights of Avon’s intermediary business from its parent, NFU Mutual, in 2003.

BACKGROUND Avon Insurance was a general insurance company competing against major insurers such as Norwich Union, which possessed far greater marketing resources. The company knew it had to make its existing marketing spend work harder to compete in such a difficult environment.

As a potential sponsor, Avon Insurance’s needs were fairly standard. It wanted:

I a communication tool to develop relationships with its broker network while simultaneously heightening its profile and credibility within the broker marketplace I a regular platform to motivate, involve and entertain its brokers and increase the amount of business placed with Avon I to increase its presence among consumers.

Avon hired Greville Waterman, a consultant at CSS-Stellar, to investigate opportunities and devise a strategy. Together, they examined a range of options, but the limiting factor was the size of the available budget. An audit of the company’s brokers set out to find what appealed to them. It determined that sponsorship offered the maximum potential benefit for the small budget available, with football nominated as the most popular activity with which to associate. The next step was to see what opportunities were available within the sport. In the end, Avon chose to back Football Combination, the Reserve Team League for 25 Premiership and Football League clubs in London/East Anglia/Wales/Southern England, covering Avon’s key markets. This answered Avon’s key communication requirements:

TABLE 2.7 Avon Insurance requirements

REQUIREMENTS SPONSORSHIP RATIONALELONDON LEISURE COLLEGE BOARD Cost Effectiveness Within Budget Lifestyle Orientated Brokers close to football personally Broker Relevance/Appeal Brokers keen to link to football professionally - offered hospitality and business building opportunities Differentiation From Competition Most other insurance companies in cricket, athletics Goodwill Towards Company Offered scope for Local Community Initiatives Promotable Title sponsorship afforded many leverage opportunities Extendable/Long-term Potential Initial 2 year deal but potential to extend deal if successful Broadscale Media Coverage National and local coverage hitting key Avon areas Ownership Title Sponsorship Stature Association with 25 leading football clubs

FOOTBALL SPONSORSHIP & COMMERCE 139

Section II Business opportunities

SPONSORSHIP OBJECTIVES Avon, having decided on the potential sponsorship vehicle, set out – in conjunction with Waterman – to define its objectives. It determined that the Avon Insurance Combination needed to

I be primarily broker focused - to build and cement relationships with key brokers I enhance revenue contribution from key brokers I improve profile and status within broker marketplace I increase awareness among consumers. CONTRACTUAL TERMS The league was renamed the Avon Insurance Combination and a deal was signed for Avon to back the 1994/1995 and 1995/1996 seasons. The venture proved such a success that within the first year of the agreement the sponsorship term was increased to five years. In 1997, the sponsorship was extended to the end of the 2002/03 season, making it one of the UK’s longest lasting football sponsorships, at nine years.

BUDGETS The initial sponsorship fee in 1994 was £13,500, while the fee rose at only 5% a year to £24,310 in 2001/2002. Avon Insurance, therefore, gained broker benefits and a national presence through 25 leading clubs at a total annual sponsorship fee of under half that obtained by many Third Division football clubs at the time. The sponsorship support budget available was less than £25,000 per year.

PROGRAMME EXECUTION Avon’s deal entitled it only to titling of the league, so it became essential to create a comprehensive, ever- evolving support programme to maximise the small budget available. Avon and Waterman rose to the challenge, devising a comprehensive programme which included:

Broker activity I boardroom hospitality at First Team matches of all member clubs I broker sponsorship manual I broker presentations at Avon Insurance Award Scheme winning clubs I monthly sponsorship bulletin I local community awards with key brokers (Avon sponsored activity at 15 member clubs, cementing brokers’ relationships with their favourite club) I bi-monthly competitions in key trade publications, offering match tickets and hospitality boxes I soccer camps for children of 30 brokers with match sponsorship in the afternoon watched by brokers and their families I broker personality lunches with speakers like Frank Worthington and Tommy Docherty. I broker incentives offering schools coaching with current and former professional players I club mailings with insurance offers linked to community scheme donations I staff conferences at member clubs

Consumer activity I creation of Avon Insurance Combination logo and strapline I media information packs/follow-ups to ensure correct crediting of Avon Insurance I programme awards – £1,000 for the club with the best league coverage in the First Team programme I enterprise award – £1,000 for the club best promoting the league to the community I fair play award I bi-weekly newsletter I local press award – £1,000 for the newspaper providing the best league coverage I top scorer award I prizes put towards community initiatives in Avon’s name I media/programme/Ceefax/Football 365 competitions I Match Of The Day magazine competition offering schools coaching with Gary Mabbutt.

140 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

Research I Research throughout the sponsorship included: I competitive broker activity audit I concept testing I annual survey of attitudes towards sponsorship of Avon staff and brokers I host/guest questionnaires and telephone follow-up after every event I annual broker reviews regarding sponsorship and its effectiveness/ROI I annual presentation of Avon’s support programme to member clubs I media monitoring I annual media and club survey.

TABLE 2.8 Avon sponsorship results

OBJECTIVE OUTCOME KEY BROKER INVOLVEMENT I 86 of Avon’s 150 key brokers involved with the sponsorship INCREASED SALES & NEW BUSINESS I In 2000 these brokers provided Avon with over £26m worth of business compared with £4.8m prior to sponsorship launch, growth of 443%. (Chart A) I Income from these brokers contributes 24.98% to Avon’s total premium income; this was 8.69% prior to sponsorship launch. (Chart B) I 73.9% average annual premium growth, compared to 15.4% for brokers not involved with sponsorship, vastly exceeding industry average of 0.23% (source ABI). (Chart C) I Example of sponsorship’s direct effect is broker who presented an award at Arsenal, subsequently transferring £75,000 worth of business p.a. to Avon from major competitor I Avon became the leading Personal Accident insurer to the Premier League, worth £1.3m p.a., and also insured many Premier League club stadia as a result of opportunities arising through the sponsorship CONSUMER PROFILE & AWARENESS I Avon obtained huge amounts of branded coverage on a daily basis throughout the football season in national/regional/trade/specialist press, Satellite TV, Teletext, Ceefax, Internet I Branding in every club first-team programme I 6,000 responses to Ceefax competition seen by 9.3 million viewers I 500 responses to Football365 promotion

CONCLUSION

Such sponsorship shows what can be achieved for companies with limited budgets. The Avon Insurance Combination created a hugely cost-effective niche for the company that enabled it to punch way above its weight. The phenomenal growth in revenue from participating brokers highlighted how, in return for a minimal marketing outlay and through concerted promotion, Avon Insurance used its sponsorship to help build relationships with its key partners, which in turn significantly increased the amount of business underwritten with Avon.

FOOTBALL SPONSORSHIP & COMMERCE 141 Section II Business opportunities

CHART 2.5 Premium growth year on year

500 450 400 350 300 250 200 % Growth 150 100 50 0 1994 1995 1996 1997 1998 1999 2000 Year

BROKERS INVOLVED IN SPONSORSHIP ACTIVITIES BROKERS NOT INVOLVED

SOURCE: International Marketing Rights

CHART 2.6 Brokers involved – contribution to total premium income

30.00%

25.00%

20.00% 25.0% 15.00% 16.1% 10.00% 11.9% 9.9% 10.1% 5.00% 8.7% 8.8% 0.00% 1994 1995 1996 1997 1998 1999 2000

SOURCE: International Marketing Rights

142 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

CHART 2.7 Average yearly premium growth 1994/2000

80%

70%

60%

50% 73.9% 40%

30%

20%

10% 15.4% 0.2% 0%

BROKERS INVOLVED WITH SPONSORSHIP ACTIVITIES BROKERS NOT INVOLVED INDUSTRY

SOURCE: International Marketing Rights

SOURCES OF FUNDING As suggested at the beginning of this section, the success of community sponsorships rests on a club’s ability to tap into a community or national need, which is then integrated into a club’s overall business plan. The case studies indicate what is achievable, but just where should clubs go for funding? The following section gives an indication of what is available in England, while other bodies, such as the Football Association, County Football Association, local authorities and the Community Action Network, can provide a useful first port of call. Sweating the Asset, a resource pack for football clubs and communities, is also worth investigating. On an international basis, however, the first stop should be to see whether any EC grants are available, or failing that, governmental ones.

European funding European Social Funds are administered by government offices in their regions. They are designed to assist EU areas that compare unfavourably with the Union’s notion of average levels of prosperity. Visit the website (www.government-offices.gov.uk) for information on which areas are supported by ESF.

UK funding In the UK, there is a broad range available and more sources coming on stream all the time. The first stop should be Sport England, which provides a wide range of grants, all of which have a bearing on football, including stadia in the context of their being a community asset. The following come under its auspices:

I Active Communities Development Fund: (£5,000 to £30,000 a year): for projects that tackle urban and rural deprivation in certain key groups I Active Sports (minimum £5,000): helps the young develop sporting skills I Community Capital (minimum £5,000): funds capital facilities projects such as sports halls I Community Revenue: acts to underpin other Sport England projects such as those seeking to improve under-representation in sports participation I Green Spaces Programme: funds projects that help communities gain access to playing fields and green spaces, and is being administered by Sport England on behalf of the New Opportunities Fund. I Sport Action Zones (SAZ): zones, spread across the country, designed to address sporting deprivation in deprived areas and use sport to regenerate those communities.

FOOTBALL SPONSORSHIP & COMMERCE 143

Section II Business opportunities

Awards for All This is a lottery grants scheme (between £500 and £5,000) that helps people get involved in a variety of projects, be they art, sport or community, or to promote education, the environment and health in the local community. Further information is available from local district or borough councils.

Lottery funds Sport benefits from these funds, as do the arts, environment, heritage, health, education and environment, with 28p of every £1 received being split among them.

The Community Fund This provides grants for large (£60,000 plus) and medium-sized (£5,000/£60,000) projects. It provides Lottery money to charities, voluntary and community groups, funding projects that help those who are disadvantaged or improve the quality of life in the community. It also provides strategic grants at the top end of the scale (£60,000 plus) for similar projects covering three or more English regions.

Fairshare The Community Fund and the New Opportunities Fund will give £176m to 77 disadvantaged areas that have not benefited fully to date from Lottery funds.

Countryside Communities Initiative The Community Fund and Countryside Agency aim jointly to ensure that England’s rural areas receive their ‘fair share’ of funding, with an extra £10m going to eight rural areas. These have been selected on the basis of an analysis of deprivation indices and low levels of Community Fund funding. See www.community-fund.org.uk for details.

Landscape Partnerships This promotes partnerships between those who represent heritage and community interests to tackle those landscapes under multi-ownership. See www.hlf.org.uk/dimages/Landscape_Partnerships23jul02.pdf.

Green Spaces and Sustainable Communities – England This offers grants up to £100,000 for projects that help UK urban and rural communities understand and care for their natural environment.

Transforming Communities – Fairshare transforming your space (England) Some £38.75m of funding is targeted at 51 communities eligible under the joint Lottery programme Fairshare (www.lotterygoodcauses.org.uk).

Football Foundation This is funded by the FA Premier League, the Football Association, government, the New Opportunities Fund and Sport England to deliver investment to football’s grass roots. Its sister body, the Football Stadia Improvement Fund (FSIF), still supports a programme of stadia safety and is funding the next generation of stadia, geared to improve facilities for disabled fans, families and the community.

Grass Roots Advisory Group (GRAG) This group advised on policy and initiatives to promote grass roots football.

Community and Education Panel (CEP) This panel advises on policy to promote community and education initiatives.

Safety and Improvement Panel (SIP) This advises the FSIF on how to encourage further improvements to the safety and amenities of football grounds post-Taylor Report. See www.footballfoundation.org.uk for further details.

144 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Futurebuilders This aims to help voluntary and community sector organisations play a more effective role in the delivery of public services, and could help clubs wanting their stadia to be used as community hubs.

Community Sporting Hubs This is connected to London’s bid to host the 2012 Olympic Games, with £108m of funds available to develop multi-purpose sports centres linked to health, education, community and social policy.

Alternative funding Funding is also available from a variety of agencies, many set up to facilitate government initiatives. These include England’s nine Regional Development Agencies, which co-ordinate regional economic development and regeneration, and government offices administering European Structural Funds. The latter focus on providing assistance to those areas in the EU that fall below its average levels of prosperity. See www.europe.org.uk for more information on European representation and funding, and the government office’s own website (www.government-offices.gov.uk).

New Deal for Communities (NDC) This is a key element in the Government’s drive to give some of England’s poorest communities the resources to tackle their problems in an intensive and co-ordinated manner. See www.neighbourhood.gov.uk for details.

Neighbourhood Renewal Fund (NRA) This strives to ensure that the 88 most deprived authorities, along with their Local Strategic Partnership (LSP), can improved services in line with the rest of the country. See www.neighbourhood.gov.uk for details.

Urban Regeneration Companies (URCs) These companies not only come up with a focused, integrated regeneration strategy for key towns and cities, but also co-ordinate its implementation.

FOOTBALL SPONSORSHIP & COMMERCE 145 Section II Business opportunities

Chapter 20: Secondary sponsorships

A club’s main sponsor tends to attract all the limelight, but this should not obscure the need for secondary sponsorship. Indeed, these can sometimes be just as useful – albeit not in cash terms – as the main ones. Clubs have been innovative in looking at areas that would benefit from sponsorship yet not dilute the impact of their primary sponsor. The secondary sponsor might opt to put its name to:

I a stand I a crèche I a website I a publication I an event I players’ shorts I a catering outlet I a service I a junior team I a women’s team.

The list is limited only by the club’s creativity, the relevant Football Association rules, and whether it complements – rather than clashes – with the profile, not to mention the aims and ambitions of the primary sponsor.

CASE STUDY: NORTHAMPTON TOWN

Northampton is an example of a club that has exploited the range of secondary sponsorships opportunities to the full, looking to attract sponsors to fund elements of its stand, and even its women’s team. Northampton Town FC (NTFC) has the distinction of being the most promoted and relegated team in England. Its sponsorship strategy was in the doldrums before the current management took over, but it now has a roster of names – and the accompanying finance – that are the envy of many clubs in higher divisions.

BACKGROUND The club is over a century old. During the past decade it had suffered financially, with proposed buy-outs prompting bad publicity and harming the club’s reputation among fans. High profile personalities such as Giovani Stefano and John Fashanu were linked to potential takeovers but failed to deliver. By the autumn of 2002, the club looked set to go into administration. In December of that year, however, the father and son pairing of Tony and David Cardoza bought the club. David became chairman and managing director, while his father became a director. The team, now with Colin Calderwood as manager, hope to make it back to the second division as soon as possible. A driving force behind improvements on the commercial side, meanwhile, was the appointment of Peter Miller, formerly CEO at The Football Company of Trinidad and Tobago, initially as consultant, and latterly as chief executive. Although he has now left Northampton, the initiatives that he sparked are still bearing fruit. The board’s stated aim was to attain First Division status within five years and, within the same time frame, to redevelop fully the Sixfields Stadium.

146 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

OBJECTIVES The club set itself some realistic objectives. First it needed to lease the stadium back from the council, which had bought the ground some years earlier to help keep the club afloat, and take over the ticketing operation. Then it envisaged a redevelopment in three main stages, starting in the close season (between the 2002/2003 and 2003/2004 seasons), with the building of a hotel complex and 20 corporate boxes. As for the team, though it looked to strengthen the squad, its first priority was to address the salary situation and introduce bonuses linked to success via promotion.

STRATEGY Miller’s first step was to provide himself with the necessary tools to convince potential partners of the value of a relationship with the club. In his eyes, clubs need to become far more innovative and deliver greater value for money to sponsors: “A clearer understanding of what a sponsor is about, what it seeks and its own products/services has never been more critical. Budgets are far keener today and clients, therefore, need to be comfortable that they are getting value for money.” Miller did not attempt to prioritise different revenue earning elements at Northampton, such as improved gate receipts, income from sponsorship, merchandising and such like, because, he feels, it is unrealistic. “Once each project has been agreed, though, what is important is that each has a predetermined amount of attention paid to it on a weekly/monthly basis, and that this is adhered to on an ongoing basis,” he says. He refers to his overseas FA workshop experience, which uses the ‘100-day staff meeting’ process, in which all heads of department meet every 100 days for a full progress report. This, he finds, is very helpful. “It also gives us a time when we can ensure that everyone is aware of what is happening in other areas of the club,” he says. “As an extension of this we developed an internal weekly newsletter that is proving very useful.”

IMPLEMENTATION So what are potential partners likely to want to see? First and foremost, a club that’s clear about its branding, its audience, and the media benefits it can offer. NTFC set about firming up each of these in turn. The club emerged in time for the 2003 season with a new corporate identity, translated into all marketing material.

Media Next came the need to evaluate the amount of television coverage a shirt sponsor could get for its brand, translating the result into a media equivalent spend by measuring exposure against TV advertising rate card value. The research looked at the exposure of both the shirt sponsor and of prominently positioned boards. The study used data from the 2002/2003 season of the Nationwide Division Two, focusing on national satellite and terrestrial coverage, plus regional terrestrial viewing figures. It assigned the data a Media Equivalent Value, i.e. a value for the entire season’s TV coverage from all networks and programmes shown. Board and shirt exposure, meanwhile, were boosted by the repeat showings of the football programmes on both ITV and Sky Sports. Shirt and board values were discounted by 50% and 70% against TV rate card across all sponsorship exposure. These are the standard range of discounts normally applied within the sponsorship industry. Nationwide, as shirt sponsor, was deemed to have run up some 13.26 minutes of exposure in total. This amounted to a MEV of £197,750 at a discounted sponsorship value of £98,875. Perimeter boards notched up some 34.13 minutes exposure, an MEV of £427,522, which translates to a total discounted sponsorship value of £128,256. The data proved that, as the season went by, Nationwide benefited from the larger and more distinct boards set around the stadium. These offered greater visibility than shirts, which can be inhibited by camera angles or the distance from players.

FOOTBALL SPONSORSHIP & COMMERCE 147 Section II Business opportunities

CHART 2.8 Sponsor discounted values comparison graph

160.000

140.000

SHIRTS 120.000 BOARDS

100.000

80.000

UE ( £ ) 60.000 AL V

40.000

20.000

0 Y) BAR) ANDS NEWS NEWS NEWS NEWS LEAGUE REVIEW) REVIEW) SUNDA TIONWIDE FOOTBALL EAST EAST ANDS TS FOOTBALL (NA ITV MIDL ITV EAST FOOTBALL (OVER THE BBC LEAGUE (SOCCER SPOR (FOOTBALL ITV Y BBC MIDLAND ITV MIDL NETWORK FOOTBALL SK

PROGRAMME ITV SOURCE: International Marketing Rights

The evaluation of print media exposure followed a similar route to broadcasting, recording all references to four key elements:

I Nationwide I Northampton Town FC I The Cobblers I Sixfields Stadium in both national and regional press, then assigning a MEV for the shirt sponsor throughout the season. In the national broadsheets alone it accrued 185 articles over the season, with 195 in the tabloids, giving it a discounted value of £9,990 for broadsheets and £22,620 for tabloids. The amounts, although less than larger clubs might command, still serve as good ammunition when seeking new sponsors. The club cannot control the coverage – it could be good or bad – but sponsors seeking to raise awareness or confirm their links with a community are likely to see investment in this area as sound.

Who are our fans? One of Miller’s first acts was to clean the club’s database and then commission research from International Marketing Rights to make it more marketing friendly. This was achieved in a number of ways, first by analysing the distance that fans travelled to matches, and how often. This enabled the club to home in on areas that yield the greatest number of profitable customers. The fan base was also profiled, revealing a broad spread that included a substantial number of high-income families, those living in suburban semis and blue-collar owners (see charts 2.9, 2.10, 2.11, 2.12).

148 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities Index Job Ref: C08752a . 50 100 200 -0.1 0.0 -0.1 Sig 3.2 -9.8 -2.5 -8.5 -6.4 5.5 -13.0 13.8 32.1 -17.5 -46.9 -93.2 -61.5 27.2 -13.1 -19.4 110.0 221.0 Score 90 97 61 57 30 93 35 83 31 33 61 50 74 102 117 121 135 156 197 151 123 Index 9.8% 9.4% 9.5% 9.8% 10.0% 16.3% 11.9% BBANK MEMBERS . Low numbers mean significance is low . Low y 7.4% 7.7% 0.8%3.4% 0.9% 3.3% 4.7% 7.7% 4.9% 8.7% 0.6% 2.0% 3.5% 5.0% 3.6%3.9% 7.1% 4.8% 7.9% 6.2% 8.5% 11.5% 86.2% 71.1% 14.6% 13.6% 10.1% 37.5% 19.0% 32.1% 34.5% 18.8% 22.7% 14.3% 12.0% Football Supporters 30-34 35-39 18-24 25-29 HOME OWNER AGE GROUPS 45-49 BUNGALOW 40-44 HOME OWNERSHIP STATUS TYPE OF RESIDENCE DETACHED RENT PRIVATE MAISONETTE SEMI-DETACHED FLAT TERRACED RENT COUNCIL 50-54 70-74 75+ 65-69 55-59 60-64 Index CHARACTERISTICS ANALYSIS - DEMOGRAPHICS 50 100 200 BBank Members = All respondents on national database Sig Score = A score reflecting how many people were included in this categor Sig 5.2 0.0 2.3 -4.2 -3.3 -0.7 44.1 -3.3 -46.0 -75.5 -10.6 -23.3 -24.7 275.5 -94.9 -34.3 303.3 -10.3 Score 26 94 36 71 48 80 93 31 43 26 87 62 108 196 100 114 114 201 Index 7.8% 7.9% 7.4% 5.0% 5.9% 6.6% 54.9% 15.4% 11.2% 43.8% 11.8% 23.0% 34.0% 22.7% 67.9% 10.2% 22.9% 15.5% BBANK MEMBERS own characteristics analysis: demographics 2.0% 5.5% 8.0% 3.8% 9.8% 5.9% 1.6% 1.5% 4.1% 51.7% 47.3% 10.9% 45.1% 33.8% 77.7% 11.7% 46.0% 13.5% eting Rights Football Supporters Northampton T T 2.9 FEMALE £10,000-£14,999 Produced For: Northampton FC SEX MALE MARITAL STATUS FAMILY INCOME UNDER £5,000 £5,000-£9,999 SOCIO-ECONOMIC INDICATOR £15,000-£19,999 NOT CLASSIFIED A/B C1/C2 RETIRED MARRIED D £20,000-£24,999 HOUSEWIFE ONLY £25,000 PLUS SINGLE/NEVER MARRIED WIDOWED DIVORCED/SEPARATED CHAR SOURCE: International Mark

FOOTBALL SPONSORSHIP & COMMERCE 149 Section II Business opportunities Index Job Ref: C08752a 50 100 200 0.2 Sig 6.2 79.9 18.5 -44.0 -30.8 Score 46 78 109 117 160 153 Index 13.0% BBANK MEMBERS 2.6% 2.3% 6.0% 9.4% 6.1% 29.6% 38.1% 20.9% 17.8% 29.3% 18.3% Football Supporters SIZE OF HOUSEHOLD 6+ 1 2 3 4 5 Index CHARACTERISTICS ANALYSIS - DEMOGRAPHICS 50 100 200 2.4 0.1 Sig 2.6 7.1 0.0 -0.4 -8.6 72.9 21.7 50.6 10.5 10.0 45.7 -13.2 -72.9 -72.9 -55.0 Score 93 63 96 79 79 97 60 139 104 135 134 121 159 136 123 151 138 Index 1.6% 6.5% 9.5% 5.8% 5.4% 7.4% 4.8% 1.5% 37.2% 16.2% 87.1% 62.8% 12.7% 62.8% 15.8% 15.1% 25.3% BBANK MEMBERS own characteristics analysis: demographics 2.2% 6.0% 9.8% 3.6% 6.6% 6.6% 1.5% 50.2% 21.6% 83.3% 49.8% 20.1% 10.1% 49.8% 19.5% 22.8% 15.1% eting Rights Football Supporters Northampton T T 2.9 AGE 5-7 YEARS AGE 8-10 YEARS AGE 11-16 YEARS Produced For: Northampton FC PRESENCE OF CHILDREN CHILDREN AT HOME NUMBER OF CHILDREN AGES OF CHILDREN AGE UP TO 4 YEARS SINGLE PARENT SINGLE PARENT DOUBLE INCOME NO KIDS NOT DINKY NO CHILDREN AGE 17-21 YEARS DINKY - MARRIED DINKY - NOT MARRIED 0 CHILDREN 1 CHILD 2 CHILDREN GRANDCHILDREN 3 CHILDREN 4+ CHILDREN CHAR SOURCE: International Mark

150 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities Index Job Ref: C08752a 50 100 200 Sig Score Index BBANK MEMBERS Football Supporters Index CHARACTERISTICS ANALYSIS - DEMOGRAPHICS 50 100 200 Sig 0.8 -1.1 -1.0 -6.7 -0.7 0.8 0.0 -0.5 -0.6 -0.5 76.7 34.8 29.9 21.3 -84.0 76.9 40.7 28.7 34.7 -51.9 39.5 Score 90 83 79 77 46 93 86 74 50 189 178 156 154 110 193 191 171 169 110 100 137 Index 8.8% 5.5% 8.8% 6.8% 8.0% 8.8% 3.3% 1.4% 8.1% 4.7% 5.4% 6.8% 7.3% 8.2% 2.9% 0.7% 13.4% 22.3% 10.1% 17.5% 22.2% BBANK MEMBERS own characteristics analysis: demographics 9.7% 8.7% 7.9% 2.8% 1.1% 8.9% 9.2% 8.1% 7.6% 2.5% 0.5% 8.8% 16.6% 13.7% 10.5% 10.6% 10.3% 15.7% 11.4% 10.1% 30.5% eting Rights Football Supporters Northampton T T 2.9 Produced For: Northampton FC OCCUPATION DETAILS PROFESSIONAL/SENIOR MANAGEMENT MIDDLE MANAGEMENT OFFICE/CLERICAL EDUCATIONAL/MEDICAL MANUAL/FACTORY WORKER CRAFTSMAN/TRADESMAN SHOPWORKER HOUSEWIFE STUDENT RETIRED PARTNER OCCUPATION PROFESSIONAL/SENIOR MANAGEMENT MIDDLE MANAGEMENT EDUCATIONAL/MEDICAL OFFICE/CLERICAL MANUAL/FACTORY WORKER HOUSEWIFE CRAFTSMAN/TRADESMAN SHOPWORKER STUDENT RETIRED WORKING WOMEN CHAR SOURCE: International Mark

FOOTBALL SPONSORSHIP & COMMERCE 151 Section II Business opportunities Index Job Ref: C08752a 50 100 200 Sig 0.2 0.0 0.0 -0.1 41.9 24.6 65.0 95.9 -118.2 Score 110.1 118.2 57 97 102 141 101 200 100 172 161 130 127 Index BBANK MEMBERS 6.0% 6.2% 4.8% 2.4% 22.0%31.0%28.0% 38.7% 30.4% 19.9% 24.0% 23.7% 70.0% 70.1% 19.0% 11.0% 33.3% 20.7% 71.1% 54.5% 78.0% 61.3% Football Supporters CARDS HELD NUMBER OF CREDIT CARDS NONE 1 2 LENGTH OF RESIDENCE UP TO 5 YEARS 6-10 YEARS OVER 10 YEARS 3+ AMERICAN EXPRESS/DINERS STORE/SHOP CARD ACCESS VISA CREDIT CARD HOLDERS Index CHARACTERISTICS ANALYSIS - DEMOGRAPHICS 50 100 200 Sig 0.0 -0.3 -0.4 -7.2 -7.2 104.2 -80.4 -86.0 -43.2 -10.6 -43.7 -82.8 Score -117.6 -110.5 -104.9 -106.4 6208.9 4416.2 5 7 8 -78.7 2 -13.3 2 -56.4 4 76 -50.7 -95.8 2 -36.2 21 -65.1 1 -27.7 0 0 0 0 00 -68.1 29 11 65 51 34 11 955 818 174 Index 7.8% 7.9% 9.8% 8.6% 1.4% 5.6% 4.3% 9.3% 9.4% 5.6% 9.7% 3.6% 6.3% 9.7% 2.8% 0.0% 0.0% 0.7% 0.0% 6.4% 0.7% 11.5% 16.1% 13.7% 11.4% 26.3% 10.3% BBANK MEMBERS own characteristics analysis: demographics 0.5% 3.9% 1.1% 0.7% 0.8% 0.0% 0.1% 2.2% 3.2% 1.0% 0.4% 0.6% 0.5% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 74.8% 64.6% 28.0% 17.2% eting Rights Football Supporters Northampton T T 2.9 REGION EAST MIDLANDS Produced For: Northampton FC TV REGION ANGLIA GRANADA CENTRAL CARLTON MERIDAN WELSH TV YORKSHIRE SOUTH EAST BORDER TYNE TEES EAST ANGLIA WEST MIDLANDS SOUTH WEST WALES YORKSHIRE/HUMBERSIDE NORTH WEST TV SOUTH WEST NORTH SCOTLAND GRAMPIAN CHANNEL ISLANDS ISLE OF MAN NORTHERN IRELAND OTHER SCOTTISH TV ULSTER CHAR SOURCE: International Mark

152 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities Index Job Ref: C08752a 50 100 200 Sig 3.7 8.7 5.2 4.1 -0.8 -1.3 3.8 5.0 -1.0 -5.7 0.0 -1.5 102.7 23.6 -13.2 99.8 46.2 13.2 13.6 53.1 82.8 Score 87 94 92 91 79 99 91 119 126 109 166 177 113 161 160 110 123 134 104 118 128 Index 8.9% 11.1% BBANK MEMBERS 6.8% 3.9% 6.7% 6.7% 8.7% 14.6%10.6% 11.6% 45.6% 42.0% 31.7% 19.1% 21.5% 19.0% 37.9% 43.5% 34.1% 21.2% 15.3% 16.4% 18.2% 11.3% 62.1% 56.5% 25.5% 20.8% 15.3% 16.6% 42.0% 31.3% 76.0% 73.3% 16.2% 13.7% 65.4% 51.0% 10.5% 11.5% 13.8% 15.2% Football Supporters CURRENT AFFAIRS FINE ART/ANTIQUES VITAMINS/FOOD SUPPLEMENTS CULTURAL PURSUITS WINE BY MAIL THEATER/CULTURAL/ARTS EVENTS BETTING/GAMES OF CHANCE DOING THE POOLS PRIZE DRAW FREQUENCY NONE HEALTH AND FITNESS ACTIVE SPORT/EXERCISE HEALTH FOODS GOURMET FOODS/FINE WINES PRIZE DRAWS 1-3 TIMES HERBAL REMEDIES FOREIGN TRAVEL BET/GAMES OF CHANCE 4-6 TIMES CULTURAL PURSUITS HORSE RACING 7-10 TIMES GOING TO BINGO 11+ TIMES Index CHARACTERISTICS ANALYSIS - LIFESTYLES 50 100 200 Sig 0.2 0.1 4.6 -7.4 0.0 41.1 51.8 0.1 -0.1 0.9 10.4 -0.7 2.7 6.7 -0.3 -22.0 Score 91 99 95 68 95 105 104 107 101 137 159 101 109 157 105 114 Index 8.6% 5.2% 3.1% 51.2% 46.3% 15.6% 22.9% 13.1% 43.8% 40.0% 10.6% 19.8% 47.2% 24.7% 18.0% 10.8% BBANK MEMBERS own characteristics analysis: lifestyles 9.0% 4.8% 54.6% 42.0% 15.7% 31.4% 20.8% 44.2% 39.4% 11.5% 18.8% 49.8% 28.2% 12.3% 10.3% eting Rights Football Supporters Northampton T T 2.10 REGULAR HOBBIES SPORTS AND ACTIVITIES Produced For: Northampton FC HOBBIES - CREATIVE GARDENING SELF IMPROVEMENT/EDUCATION CROSSWORDS/PUZZLES COIN/STAMP COLLECTING 5.4% PHOTOGRAPHY PERSONAL COMPUTER GOLF COOKING DO IT YOURSELF COLLECTABLES SNOW SKIING SEWING/NEEDLEWORK AVID BOOK READING HIKING/WALKING KNITTING FISHING SOURCE: International Mark CHAR

FOOTBALL SPONSORSHIP & COMMERCE 153 Section II Business opportunities Job Ref: C08752a Index 50 100 200 Sig 3.2 9.3 1.3 5.4 1.4 6.2 7.0 4.9 31.6 54.5 -2.4 -31.6 203.6 157.8 -37.8 Score 77 93 68 112 114 111 113 115 294 114 173 109 149 117 123 Index 5.1% 8.2% BBANK MEMBERS 28.6% 37.2% 21.2% 19.0% 71.4% 62.8% 48.2% 43.4% 7.9% 7.0% 80.4% 69.7% 15.1% 24.4% 21.3% 30.8% 33.1% 39.8% 23.1% 15.9% 14.5% 18.2% 26.8% 3.8% 2.5% 23.3% 20.0% 10.1% Football Supporters MAIL ORDER FREQUENCY (PAST 12 MTHS) NONE PERSONAL FACTS PET OWNERSHIP MULTIPLE PET OWNERS MAIL ORDER BUYERS BUSINESS DETAILS MAIL ORDER BUYERS PET OWNERS ONCE NON SMOKER COMPANY CAR DRIVERS 2-3 TIMES BACK TROUBLE BUSINESS EXECUTIVE 4-5 TIMES ARTHRITIS/RHEUMATISM RUN BUSINESS FROM HOME 6+ TIMES SELF-EMPLOYED Index CHARACTERISTICS ANALYSIS - LIFESTYLES 50 100 200 Sig 0.0 0.1 5.6 -0.1 86.5 16.7 -7.6 76.0 19.7 83.3 39.6 15.9 139.2 121.7 Score 96 81 103 129 162 117 102 148 113 139 114 118 108 106 Index 0.2% 5.9% 50.2% 26.5% 36.1% 20.9% 34.6% 25.9% 17.0% 33.5% 49.2% 72.8% 85.9% 82.2% BBANK MEMBERS own characteristics analysis: lifestyles 0.2% 5.7% 64.9% 43.0% 42.3% 21.4% 51.2% 29.2% 13.7% 46.5% 56.2% 85.6% 92.8% 87.0% eting Rights Football Supporters Northampton T T 2.10 FASHION CLOTHING INTEREST Produced For: Northampton FC ENTERTAINMENT EATING OUT DRESS SIZE UNDER SIZE 8 SIZE 8-10 APPLIANCE/PRODUCT OWNERSHIP DISHWASHER SIZE 12-14 GOING TO THE PUB HOME COMPUTER FASHION CONSCIOUS SIZE 16 + SATELLITE/CABLE TV RECORDS/TAPES/CD'S CD PLAYER VIDEO (VCR) MICROWAVE SOURCE: International Mark CHAR

154 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities Index Job Ref: C08752a 50 100 200 0.0 0.0 0.3 0.6 0.0 1.3 5.1 0.0 1.1 4.8 2.4 Sig 11.3 15.5 11.5 20.1 19.0 13.5 11.8 21.0 Score 99 98 99 100 104 105 126 123 115 111 113 106 113 112 111 135 149 122 113 Index 9.5% 8.7% 7.9% 9.0% BBANK MEMBERS 8.7% 8.8% 9.3% 8.4% 19.9% 20.0% 32.7% 32.6% 22.1% 21.3% 20.8% 19.9% 17.7% 14.0% 27.7% 22.5% 38.3% 33.2% 61.5% 54.4% 10.6% 63.1% 59.7% 60.5% 53.6% 14.8% 14.9% 54.2% 48.4% 11.8% 14.8% 13.2% 11.8% 11.0% Football Supporters HELPING THE ELDERLY OTHER CAUSE ANIMAL WELFARE BY POST RELIGIOUS ACTIVITIES THIRD WORLD CAUSES HEALTH RESEARCH CHILDREN'S WELFARE RECYCLED PRODUCTS DISASTER RELIEF IN STREET/AT THE DOOR CHARITY DONORS NATIONAL TRUST ENVIRONMENTAL WILDLIFE HOW CONTRIBUTE BY COVENANT CHARITABLE/SOCIAL CONCERNS CHARITIES/VOLUNTARY WORK ENVIRONMENT FRIENDLY PROD WILDLIFE/ENVIRONMENTAL CONCERNS CHARITIES DONATED TO Index CHARACTERISTICS ANALYSIS - LIFESTYLES 50 100 200 6.4 9.9 Sig 54.8 16.6 33.1 28.1 71.0 40.2 61.6 101.8 100.6 Score 119 130 134 115 149 118 127 111 141 128 128 Index 60.6% 15.6% 46.3% 21.5% 12.1% 46.6% 11.9% 86.0% 19.4% 44.4% 56.3% BBANK MEMBERS own characteristics analysis: lifestyles 72.0% 20.2% 62.3% 24.7% 18.1% 54.9% 15.2% 95.3% 27.3% 56.8% 72.0% eting Rights Football Supporters Northampton T T 2.10 UK LONG HAUL/ROW EUROPE CAMPING/CARAVANNING USA/NORTH AMERICA HOTEL/HOTEL PACKAGE WINTER SUN/SNOW HOLIDAY TAKERS WEEKEND/CITY BREAKS HOLIDAY ACCOMMODATION SELF CATERING TYPE OF HOLIDAY Produced For: Northampton FC HOLIDAY AND TRAVEL OVERSEAS HOLIDAYS HOLIDAY DESTINATION SOURCE: International Mark CHAR

FOOTBALL SPONSORSHIP & COMMERCE 155 Section II Business opportunities Index Job Ref: C08752a 50 100 200 0.0 0.1 0.3 8.3 2.1 -1.5 3.4 Sig 18.1 22.0 22.5 54.2 -18.5 47.3 29.9 29.9 -111.5 Score -111.5 179.6 122.1 -121.9 138 101 51 104 107 190 173 149 121 210 51 84 180 91 110 144 159 120 40 221 Index 7.9% BBANK MEMBERS 6.2% 5.9% 6.2% 5.8% 5.0%7.1%5.0% 2.7% 4.1% 5.7% 3.4% 4.7% 9.0% 4.3% 4.4% 2.0% 15.8% 31.3% 15.3% 11.1% 29.4% 29.1% 15.8%35.9% 31.3% 42.7% 13.6% 14.9% 26.6%28.2% 24.1% 19.6% 39.2% 21.7% 12.6% 10.1% 25.2% 89.9% 74.8% Football Supporters 0 CAR HOUSEHOLD 1 CAR - NEW < 5 YRS 1 CAR NEW - 5+ YRS AUTOMOTIVE SEGMENTATION 2 CARS - BOTH SECOND HAND AT LEAST 1 < 5YRS 2 CARS - 1+ NEW AND REGISTERED < 5YRS 2 CARS - AT LEAST ONE NEW BOTH 5+YRS 2 CARS SECONDHAND - BOTH 5+ YRS 1 CAR - SECONDHAND < 5 YRS 1 PRIVATE CAR SECONDHAND - 5+ YRS NUMBER OF CARS 0 1 3+ SIZE OF MAIN CAR SMALL/BASIC LOWER MEDIUM UPPER MEDIUM 2 LARGE/LUXURY NO CAR HAVE A CAR MOTORISTS COMPANY CAR(S) ONLY Index CHARACTERISTICS ANALYSIS - LIFESTYLES 50 100 200 83.2 Sig 27.5 23.9 61.5 49.5 97.3 102.5 132.0 128.0 150.4 123.6 Score 176 138 147 152 148 146 155 152 161 140 139 Index 15.1% 47.9% 27.5% 32.3% 10.5% 10.0% 16.8% 15.2% 20.5% 48.3% 45.1% BBANK MEMBERS own characteristics analysis: lifestyles 26.6% 66.0% 40.4% 49.0% 15.6% 14.7% 26.1% 23.2% 33.1% 67.7% 62.6% eting Rights Football Supporters Northampton T T 2.10 PRIVATE HEALTH CARE INSURANCE CONSCIOUS PRIVATE PENSION PLAN EMPLOYER PENSION PLAN STOCKS & SHARES STOCKS/SHARES-GENERAL Produced For: Northampton FC INVESTMENTS OWNED MULTIPLE INVESTORS UNIT TRUSTS/HIGH INTEREST INVESTMENTS STOCKS/SHARES-PRIVATISATION CHEQUE GUARANTEE CARD INSURANCE & FINANCE ACTIVE INVESTORS SOURCE: International Mark CHAR

156 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities Index Job Ref: C08752a 50 100 200 Sig 37.1 -69.3 110.9 Score 76 127 161 Index BBANK MEMBERS 40.6% 53.8% 42.8% 33.7% 36.9% 22.9% Football Supporters POPULAR NEWSPAPERS MID MARKET NEWSPAPERS NEWSPAPER CLASSIFICATION QUALITY NEWSPAPERS Index 50 100 200 CHARACTERISTICS ANALYSIS - NEWSPAPER READERSHIP 1.7 0.6 6.0 2.8 Sig 5.3 -6.4 18.5 -0.7 -2.2 -0.4 28.4 40.5 15.0 -6.5 -5.8 -4.9 -7.2 94.5 76.8 51.1 -41.7 -30.1 -33.2 -21.3 -12.0 Score 60 10 95 91 65 84 13 86 77 60 58 36 72 128 125 108 153 168 147 145 136 201 224 180 160 Index 3.9% 4.9% 2.7% 9.9% 1.4% 2.1% 4.2% 5.8% 6.8% 2.1% 9.5% 3.0% 4.0% 5.0% 8.5% 4.7% 7.4% 1.5% 23.2% 23.0% 19.6% 19.0% 23.7% 15.3% 13.2% BBANK MEMBERS own characteristics analysis: newspaper readership 2.4% 0.5% 3.3% 1.1% 3.2% 0.5% 9.7% 9.9% 2.9% 7.3% 9.5% 1.8% 2.3% 1.8% 2.4% 10.6% 22.0% 21.0% 12.7% 24.4% 20.3% 17.1% 10.6% 13.4% 22.5% eting Rights Football Supporters Northampton T T 2.11 THE STAR DAILY RECORD THE GUARDIAN THE SUN DAILY SPORT DAILY MIRROR DAILY EXPRESS OTHER/LOCAL DAILY MAIL THE INDEPENDENT SUNDAY POST THE TIMES SUNDAY EXPRESS THE OBSERVER THE PEOPLE NEWS OF THE WORLD SUNDAY MIRROR OTHER/LOCAL SUNDAY SPORT SUNDAY MAIL SCOTLAND Produced For: Northampton FC NEWSPAPER READERSHIP THE DAILY TELEGRAPH SUNDAY NEWSPAPER READERSHIP SUNDAY TELEGRAPH SUNDAY TIMES SUNDAY INDEPENDENT THE MAIL ON SUNDAY SOURCE: International Mark CHAR

FOOTBALL SPONSORSHIP & COMMERCE 157 Section II Business opportunities Index Job Ref: C08752a 50 100 200 8.8 Sig 1.7 0.0 18.2 -2.2 17.2 34.1 89.1 43.6 80.7 264.2 315.4 -83.8 -81.9 -53.2 -33.7 -70.5 -47.6 -44.2 100.8 -12.4 Score -238.0 43 41 91 40 19 74 32 65 50 74 126 143 130 153 256 235 172 131 107 159 219 100 Index 8.9% 9.8% 6.7% 20.2% 18.3% 13.3% 15.1% BBANK MEMBERS 8.6% 7.2% 1.5% 7.6% 4.3% 7.6% 14.2% 11.3% 16.7%20.3% 40.6% 22.3% 12.8% 21.2%16.7%25.1% 16.4% 10.9% 34.7% 14.8% 25.1% 14.6% 24.6%41.7% 33.3% 31.9% 18.4% 28.2% 11.4% 15.5% 29.8% 27.9% 30.0% 18.9% 14.6% 13.5% 13.6% Football Supporters HIGH 1 AFFLUENCE RANKING LOW MEDIUM HIGH 2 UPPER MEDIUM HIGH VERY HIGH HIGH 3 HI-TECH PRODUCT OWNERSHIP LOW LUXURY APPLIANCE OWNERSHIP CONSUMER SPEND RANKING VERY HIGH LOW MEDIUM HIGH LOW 1 MEDIUM LOW 2 MEDIUM 1 MEDIUM 2 UPPER MEDIUM HIGH VERY HIGH MEDIUM 3 Index 50 100 200 CHARACTERISTICS ANALYSIS - BEHAVIOURAL CLASSIFICATIONS Sig -1.5 -3.8 0.0 -0.3 0.0 3.0 0.0 1.5 1.7 0.3 -19.3 -40.5 -82.8 30.6 55.4 123.3 Score 63 70 96 71 90 98 95 101 107 100 106 107 171 104 145 175 Index 5.8% 9.0% 12.3% 30.4% 46.9% 49.0% 26.7% 31.9% 36.9% 37.7% 29.0% 27.6% 10.4% 19.6% 13.7% 13.0% BBANK MEMBERS own characteristics analysis: behavioural classifications 7.7% 9.8% 5.7% 21.1% 45.0% 34.6% 24.0% 32.2% 39.5% 37.6% 30.8% 29.4% 33.6% 14.3% 18.9% 15.7% eting Rights Football Supporters Northampton T T 2.12 LOW MEDIUM Produced For: Northampton FC HEALTH CONSCIOUS LOW CULTURAL INTERESTS LOW INTEREST IN GAMES OF CHANCE LOW MEDIUM LABOUR SAVING APPLIANCE OWNERSHIP MEDIUM HIGH MEDIUM HIGH VERY HIGH HIGH VERY HIGH VERY HIGH HIGH VERY HIGH SOURCE: International Mark CHAR

158 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities Index Job Ref: C08752a 50 100 200 6.4 0.9 2.9 2.0 2.8 0.0 7.6 Sig -7.1 -5.2 71.4 -16.3 -21.6 -21.1 -11.8 Score 52 53 54 62 86 94 130 112 112 112 107 100 166 119 Index 12.9% BBANK MEMBERS 3.4% 6.6% 8.6% 6.6% 6.7% 6.0% 1.7% 3.1% 5.0% 9.3% 8.0% 2.9% 1.7% 18.4% 16.4% 13.3% 11.8% 42.1% 39.6% 20.3% 20.2% 32.7% 38.0% 57.9% 61.4% 79.0% 66.4% Football Supporters LOCAL SUPERMARKET VERY HIGH VERY HIGH HIGH LOCAL STORES HIGH WAREHOUSE/ BUDGET MEDIUM UNKNOWN MEDIUM LOW ANIMAL/NATURE INTEREST INTEREST IN 'GREEN' ISSUES LOW FAVOURITE STORE SEGMENTATION QUALITY HGH STRT SPRMRKT/SPRSTORE Index 50 100 200 CHARACTERISTICS ANALYSIS - BEHAVIOURAL CLASSIFICATIONS 0.7 2.4 5.4 2.1 6.7 0.0 2.3 Sig 22.9 53.4 22.8 42.8 26.8 41.0 -1.1 13.0 -0.8 -10.2 -132.0 -123.6 Score 225 192 216 107 118 129 151 165 153 109 114 100 116 95 65 120 68 98 82 Index 1.4% 6.0% 1.7% 6.8% 5.9% 6.0% 8.5% 14.0% 14.4% 12.9% 21.7% 26.1% 22.1% 28.0% 52.1% 24.6% 54.9% 69.4% 23.7% BBANK MEMBERS own characteristics analysis: behavioural classifications 3.2% 3.6% 8.1% 7.6% 9.8% 9.8% 11.5% 14.9% 21.6% 19.6% 23.6% 29.7% 22.1% 26.4% 34.0% 29.5% 37.4% 68.1% 19.4% eting Rights Football Supporters Northampton T T 2.12 VERY HIGH HIGH VERY HIGH HIGH VERY HIGH HIGH UPPER MEDIUM UPPER MEDIUM UPPER MEDIUM HIGH MEDIUM MEDIUM MEDIUM LOW LOW MEDIUM Produced For: Northampton FC INVESTMENT LEVEL LOW CHARITABLE/SOCIAL INTERESTS LOW VERY LOW INSURANCE LEVEL CHARITY DONATION LEVEL SOURCE: International Mark CHAR

FOOTBALL SPONSORSHIP & COMMERCE 159

Section II Business opportunities

The data was then run through a characteristics analysis to provide a more detailed picture of fans’ lifestyles, demographics, attitudes, product usage and behavioural characteristics. This enabled the club to identify exactly which characteristics did (and did not) predict response. This creates a powerful tool that can help tailor and develop future creative and marketing strategies. The results were good news for the club. Fans were shown to fall into the middle class socio-economic bracket and more likely than the average consumer to:

I earn above the national average income I own their own home I have children of school-age I have a wide financial portfolio I drive a car I shop at supermarkets and out-of-town stores I own and use credit cards I buy luxury goods I take overseas holidays I read broadsheet newspapers I eat out I have professional employment status I have satellite TV and video/CD equipment I own a personal computer.

In addition, it led the club to believe that its fan base could appeal to a much broader range of potential sponsors and business partners. These included:

I financial services I motor I retail I mail order I restaurant I travel/holiday I business-to-business I general leisure I consumer electronics I personal computers I Pay-TV service providers I newspaper publishers I DIY materials.

The research revealed that NTFC fans were the type that would appeal to most sponsors. They were more likely than normal to have more than three credit cards, with some 4.8% possessing Amex or Diners Club, 33.3% storecards and 71.1% Mastercard or Visa. The analysis also highlighted fans’ shopping habits, whether they were mail order buyers or not, and revealed that a surprisingly large number drove company cars. Some 6.8% of fans bought wine by mail, while 10.6% were interested in fine art and antiques. More were interested in eating out (64.9%) than going to the pub (42.3%). They also scored highly in terms of hi-tech product ownership. As for their media habits, they were keen on the Daily Telegraph and the Daily Mail, and at weekends the Sunday Telegraph and Sunday Times.

160 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Views of fans The club made a conscious effort to get closer to fans, launching both qualitative and quantitative research. They wished to know what fans saw as priorities for NTFC. Their views probably chime with those of many others. They wanted: I improved performance on the pitch I more commitment from the team I more contact with the players I a realistic long-term plan from the board I a marketing drive to produce a fuller stadium I a higher profile for the club I a more convivial atmosphere at games I better commercial activities (sponsorship, catering, merchandise, etc) I moves to attract new, and younger, fans.

A street survey was also undertaken to see how the local population viewed the club, targeting both fans and non-fans. In the main, they saw the club as unglamorous, welcoming and family oriented, and – like many other clubs – as having a masculine bias. What was striking was the way the club image was perceived similarly by all respondents, although fans were warmer towards its image than others (see chart for details).

SPONSORSHIP GAINS Sponsorships need to be constantly refreshed, and this has proved to be the case at Northampton. Prior to Miller’s arrival at Northampton, the club had two sponsors:

1 Nationwide Building Society had a seven-year sponsorship deal (commencing at £45,000 per season and rising 2% per annum).

2 Carlsberg Brewery sponsored its matchday programme for £2,500 a season.

In addition, Hilton Hotel provided a contra deal. It offered discounted accommodation in return for advertising boards and corporate hospitality opportunities.

Primary sponsors Nationwide had, however, been rethinking its involvement with the club. Its relationship seemed likely to end – but then Miller took the step of commissioning the Lifestyle Report, showing the nature of the fan base, and various other evaluation documents that demonstrated the sponsorship’s cost-effectiveness. Nationwide has now taken up its contracted three-year extension option commencing next season. NTFC anticipates that it will spend over £100,000 with the club in 2004-05. It has also made a significant donation ‘in kind’ to the club’s new Study Support Department in the shape of furniture and computers. Carlsberg Brewery signed a 10-year sponsorship deal with Northampton in the spring of 2004. This takes the form of an upfront £500,000 payment, plus a potential additional £500,000 if a pre-determined barrelage target is achieved. The deal provides the brewer with exclusive upper level advertising on the East Stand, plus two perimeter boards and exclusive pouring rights. The up-front payment is non-refundable, and the deal includes many additional benefits. A dedicated marketing strategy, for instance, will be developed between NTFC and Carlsberg and its marketing agency. Marketing promotions will be focused on areas such as:

I on site I local venues that may feel threatened by loss of revenue on match and non-matchdays. This could occur since NTFC supporters feel a greater affinity with the stadium (now that it is owned by the club) I locations where other clubs compete for business (Cambridge, Rushden, Wimbledon, etc), with the club mounting a concerted drive aimed at maximising awareness and support.

FOOTBALL SPONSORSHIP & COMMERCE 161 Section II Business opportunities

CHART 2.13 Attribute profile of NTFC EXPENSIVE TO W FOR THE F VERY POPUL ADVENTUROUS ENTER COMMERCIAL COMPETITIVE FOR THE OLD GL EMOTIONAL LIKE IMAGE HIGH SKILL AMBITIOUS AMOROUS FEMININE EXCITING MODERN FOR ALL T AINING AMIL AT CH AR 10 Y

ALL 4.2 4.7 3.2 2.9 4.9 4 6.5 4.8 5.3 5.5 4.3 5.3 5.8 4.9 4.9 4.8 7.3 FOOTBALL FAN 4.5 5.3 3.2 2.8 5.1 4.4 7 4.8 5 5.9 4.4 5.3 6.1 5.4 5.1 5 7.8 NOT FOOTBALL FAN 3.6 4 2.7 3.2 4.8 3.5 5.9 4.9 5.8 5 4.4 5.5 5.5 4.2 4.7 4.6 6.7 NOT NTFC FAN 3.8 4.3 2.9 2.9 4.9 3.5 6.1 4.4 5.5 5.1 4 5 5.5 4.3 4.3 4.4 6.8 NTFC FANS 5.3 6 4.3 2.9 5 5.9 8 5.9 4.5 7.3 5.1 6.3 6.5 6.8 7 6 8.9 SUPPORTER OF OTHER CLUB 3.2 5.1 3.1 3.3 6.1 4 7.6 4.3 5.2 6.2 4.2 5.5 6.1 4.6 4 4.8 7.7 ATTEND 5+ MATCHES PER SEASON 5.1 6 3.2 4 5 5.3 8 4.7 5.4 6.7 4 6.4 6.5 6.1 5.8 6.5 8.4 ATTEND 1-5 MATCHES PER SEASON 4.3 5 3.4 2.8 5.6 4.2 7.1 5.2 5.3 5.5 4.1 4.8 5.5 5.6 5 4.4 7.3 MALES 4.2 5.9 3.2 3 4.6 4 6.2 4.5 4.9 5.2 3.9 5 5.7 4.8 4.9 4.8 6.8 FEMALES 3.8 4.4 2.9 2.6 5.2 3.7 6.6 4.8 5.5 5.6 4.6 5.4 5.5 4.7 4.6 4.5 7.6 VERY UNCOMMERCIAL TRADITIONAL UNGL MASCULINE FOR THE Y BORING EXCL NOT VERY POPUL CALM L FRIENDLY L NO ENTER DISLIKE IMAGE CA NOT FOR F NOT AMBITIOUS OW SKILL OW COST TO W

1 UTIOUS USIVE AMOROUS T OUNG AMIL AINING Y AT AR CH

CHART 2.13B Attribute profile of NTC by age EXPENSIVE TO W FOR THE F VERY POPUL ADVENTUROUS ENTER COMMERCIAL COMPETITIVE FOR THE OLD GL EMOTIONAL LIKE IMAGE HIGH SKILL AMBITIOUS AMOROUS FEMININE EXCITING MODERN FOR ALL T AINING AMIL AT CH AR 10 Y 16-24 4.3 4.3 3.8 4 6.5 4.5 6.5 4.8 4.9 4.7 4.7 5.6 3.7 5 4.7 4.8 6.3 25-35 4 4.9 3.4 2.5 4.8 3.2 6.5 3.8 4.9 5.8 4.2 5.2 4.4 4 4.3 4.8 6.8 36-45 4.1 5.1 3.2 3.7 5 4.5 6.9 5.1 5.5 5.9 4.4 5.7 6.7 6.1 5.3 4.9 7.9 46-55 3.7 5 3.3 2.2 4.7 3.8 6.8 4.3 5.5 4.8 4 4.9 6 4.1 4.6 4.2 7.3 56-65 4.7 4.2 2.4 2.6 4.2 4 6.2 5.5 5.2 5.5 4.4 5 6.7 4.6 4.7 4.9 7.5 65+ 4.6 4.8 3.1 1 4.1 4.1 4.8 5.5 5.6 5.1 4.1 4.1 7.5 4.6 5.5 3.8 7.3 VERY UNCOMMERCIAL TRADITIONAL UNGL MASCULINE FOR THE Y BORING EXCL NOT VERY POPUL CALM L FRIENDLY L NO ENTER DISLIKE IMAGE CA NOT FOR F NOT AMBITIOUS OW SKILL OW COST TO W

1 UTIOUS USIVE AMOROUS T OUNG AMIL AINING Y AT AR CH

162 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Carlsberg is also providing uniforms for staff in bar and corporate hospitality areas for the duration of the deal. These, and other add-ons, will mean significant cost savings for the club, and ensure that it presents itself in a more professional manner to its supporters. The brewer, meanwhile, is seeking to exploit its sponsorship in terms of internal communications. The club is working with Carlsberg’s corporate communications department on a scheme to host family days at Sixfields Stadium for staff and their families. It also intends to extend to the company workforce some of the benefits provided to Carlsberg as sponsor. These include match tickets, discounted merchandise and coaching for staff teams. The stadium will also be made available for inter-department football competitions (refereed by Colin Calderwood and various players from NTFC).

Secondary sponsors Builders’ merchant Travis Perkins is contracted to a three-year deal with the club. This provides exclusive upper level advertising on the South Stand, plus various other advertising and corporate hospitality benefits. It has also been able to leverage its hospitality. At the FA Cup match against Manchester United, for example, it not only entertained its customers at the stadium and at the Saints Rugby Club, but also hosted 50 Manchester United corporates at the Hilton Hotel. The findings of the club’s lifestyle report led to Travis Perkins advertising on the stadium’s floodlights for the Man Utd game and, indeed, for the remainder of the 2003/2004 season. Northampton Town devised a four-page cartoon supplement, with a youth-oriented message, which features in the local Chronicle newspaper. The supplement has built up advertising revenue steadily since its launch, with English Partnerships having paid £20,000 for strip ads on each page. The Chronicle is perceived to provide up to £100,000 of financial investment in the club’s Youth Development Programme, generated from advertising secured by NTFC. The supplement also presents the club in a good light and enables it to encourage younger fans to adopt positive messages such as:

I drugs awareness I anti-bullying I healthy lifestyle I stranger danger

These messages are conveyed by players, who are featured in the supplement and who benefit from the increased exposure and the opportunity to interact with this key target audience.

Other partnerships developed following Miller’s arrival include:

1 English Partnerships sponsor the ground’s family enclosure for £20,000 a season, plus various predetermined home games throughout the year, paying for the provision of free ticketing to local children.

2 B&G Racing and Dalepak sponsor the Cobbler Racehorse for £8,000 each, with one sponsorship slot left to be filled. Dalepak looks set to increase its spend for the next season on deals including the Chronicle supplement and an executive box.

3 Pure Digital sponsors the club’s matchday draw to the tune of £5,000, plus various products supplied for each home match draw. This was another deal that benefited from the club’s lifestyle report.

4 Travel Extras came on board as a pre-season sponsor in 2003 for just £5,000. The company has, however, grown into a major partner. It is the exclusive Middle Level advertiser in the North Stand, provides several free club cars, plus various other supporter projects such as discounted travel and cars. In addition, Travel Extras will be the club’s official tour partner when it travels to Seville this July.

5 Individual player sponsorships are now undertaken by the Supporters’ Trust.

FOOTBALL SPONSORSHIP & COMMERCE 163 Section II Business opportunities

CONCLUSION The club has made tremendous strides. It has signed its lease with the council, the first 18 executive boxes should be operational before the end of 2005, and the hotel should also be well on its way by then. As for its drive to attract more sponsors, the research has made a noticeable difference in terms of NTFC’s ability to do so successfully. Whether or not potential sponsors actually read the information provided, the end result is that they appreciate the effort and presentation made. They are, says Miller, comforted by independent support documen- tation and impressed by the professional manner in which the club is attracting new business as well as increasing existing trade. As for the research proving cost-effective, it has to date supported virtually all the proposals that the club has in hand. Each one has been pursued to a successful conclusion. The increased revenue speaks for itself. The research has even alerted sponsors to new information about their own companies. Pure Digital, for instance, was pleasantly surprised to learn just how many outlets it had in the Northampton area. The club, given its limited budget, is always trying to make its money stretch further. So when Cre8, a design and marketing company, was signed up to revamp and produce the matchday programme, the club struck an innovative deal. Cre8 takes the money from programme sales, guarantees the club £30,000, and all the advertising revenue goes to NTFC – in 2003/4 some £30,000. At a time when many other clubs are losing money on programme sales, Northampton can count on up to £60,000, possibly more, per annum and has no liability should the game be postponed because of bad weather or other unforeseen circumstances. As far as fans are concerned, although their response to the surveys make interesting reading, the club knows that the fans’ ultimate desire is for success on the pitch. A better fan and travel club will be welcomed, but will probably be taken for granted in the not too distant future. The danger for all clubs, and indeed any business, is that when the expectations of the target audience are raised, and then fulfilled, ultimately the only comments that will arise are when they feel short-changed. Northampton’s challenge for the future will be to ensure that this does not happen.

CASE STUDY: NORWICH CITY

It’s a true measures of a club’s mettle – and that of its fans – if, when faced with financial disaster and relegation, it emerges all the stronger. Norwich City can, in 2004, lay claim to a healthy balance sheet and a team in the Premiership – but it has not always been so.

BACKGROUND In 1996 the club was relegated to English League Division One. It had high hopes of climbing straight back up, under the stewardship of Martin O’Neill. Behind the scenes, though, it was facing a financial crisis of massive proportions. This, ultimately, led to the departure of the manager, the chairman, key players and the arrival of a new board, which attempted to restructure its debts. It also had to build bridges with fans. Key among the new board members were chef and TV personality Delia Smith and her husband, Michael Wynn Jones. They soon upped their stake in the club, becoming majority shareholders, and injected a new mood of optimism and a heightened level of professionalism.

COMMERCIAL OBJECTIVES The club’s attitude to its commercial activities has been key to establishing its financial stability. When the new board was in place, one of the first tasks it set itself was to re-examine its core values, identified as:

I passionate (about the sport, the club and family football) I consultative (in respect of fans and the local community) I stylish I professional.

164 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

In 1998 the board added a new goal to its list by deciding that it would aim to fill the stadium and place emphasis on affordable live football for the whole family. The figures show the value of this aim. Prior to relegation, average gates had been 8,800. These fell to 8,600 post relegation, but by 1999 – a year on from that strategic decision – the numbers had risen to 11,000. By early 2004, ticket sales were at 19,000 – the highest gates in 28 years. Small wonder then that the club has announced plans to construct a full corner infill stand between the New Stand and the Norwich and Peterborough Stand. This was originally intended to be a temporary construct, but ticket sales have proved so robust that plans have been accelerated. Norwich’s commmercial achievements since then have had these values behind them. A good example is the current shirt sponsorship deal, a three-year £1m deal, which it signed with Proton-Lotus in July 2003. This came about through identifying accurately the marketing needs of a potential sponsor, researching its history, and building a package to suit. As Andrew Cullen, Norwich City director of sales and marketing, puts it: “When we were looking for sponsorship, we didn’t just look at our requirements. We went to speak to Proton in September 2002, and began to understand what they wanted. “They were keen to sell more cars in the UK, but they were equally keen to emphasise the links between Proton and Lotus. Proton is a Malaysian manufacturer, while Lotus is traditionally a Norfolk-based company, so they also wanted to reassure the local community.” But if the initial objectives are awareness of the Proton brand, and building links with the local community, long term it is the hard nosed business of selling cars.

IMPLEMENTATION The package is nothing out of the ordinary, although the Proton name appears on home shirts and Lotus on away kit to spread exposure. The deal offers brand and signage exposure inside and outside the stadium, and merchandise. Indeed, the club has dedicated areas within the stadium for Proton merchandise. At the same time, Proton advertising claims that it uses Lotus technology – thus linking the two brand names. The club provides hospitality opportunities throughout the season on match and non-matchdays, and organises events throughout the year that its sponsor can also take advantage of. Player appearances are part of the package. More innovative, though, is Norwich’s attitude to what can be achieved out of season. The summer of 2004 saw the team heading out to Malaysia for a training camp, underwritten by Proton, accompanied by a trade delegation organised by the local chamber of commerce. Once again the core values are reflected: the club will be acting as ambassador for the sport, something it feels passionate about, by coaching local children, but will also be helping its local business community by allowing it to piggyback on the venture.

RESULTS This is only year one of the sponsorship deals and it is very much a learning curve about building awareness. Cullen aims to demonstrate value for money by adopting a number of measurement techniques. First, he tracks every piece of media coverage, on a local and national basis, in newspapers, television, radio and lifestyle magazines. The results are then allocated an equivalent media value spend. ( Proton is already pleased with the results from this.) The sponsorship is also measured in terms of product sales, but here the results will take longer to filter through – and to evaluate against other elements of the marketing mix. Cullen undertakes tracking studies of supporters, assessing their awareness of the club’s sponsors and the impact of sponsorship on propensity to buy. Initial results of studies in October 2003 showed 84% spontaneous recall and a promising response to the question of whether they would be more likely to buy Proton products because the product manufacturer is a sponsor. The studies are undertaken on a regular basis, with the club recruiting 1,000 people on matchdays, distilled down into a representative sample of 500 who are phoned after the game, questions taking approximately 30 minutes.

FOOTBALL SPONSORSHIP & COMMERCE 165 Section II Business opportunities

BROADER COMMERCIAL OFFERINGS Sponsorship is only one activity that supplements Norwich’s coffers. It now has a whole range of offerings built up over the years. One such is affinity marketing:

Norwich and Peterborough Building Society The club has a longstanding relationship with the Society – a previous sponsor – and signed up to this current deal in January 1997. The Norwich and Peterborough Building Society operates a Canary Account (a savings account) which contributes to the club 1% of the gross annual balance of the total held in accounts each year. In April 2004 the club had 14,000 account holders, which has so far yielded £1.5m. The objective was to offer fans a competitive savings account – and a way of helping the club. Account holders also get a 5% discount on their Norwich season ticket in the Norwich and Peterborough Stand.

Canary Direct Fans can get a quote for motor insurance – the Norwich and Peterborough Building Society again run the scheme – by ringing an 0845 number. The venture kicked off in 1999, with the club getting a commission kickback. The commission is split, with the club getting £10 for every policy sold and 15% of the net result. This results in a five-figure sum annually, the type of figure it would expect from most of its financial offerings.

Canary Financial Services In this project, the club works with the Boswell Group to offer products more likely to be in the mortgage or pensions arena. It also offers corporate insurance. This deal superseded one with AXA, with Boswell taking it over in August 2003 after it was put out to tender. The club now has as many as 50 policyholders.

Canary Card Norwich launched this card with the Bank of Scotland in 1998. The club gets a kickback when people take out a card, and also whenever they spend. In April 2004 it had around 2,500 cardholders.

Q8 The deal with the Q8 petrol company was finalised in 2002. It is simple in concept, with fans having only to present to forecourt staff a season ticket, membership card or a reference number obtainable from the club ticket office to gain 2p off a litre of fuel, with an additional 2p per litre going to the club. The contract was due to end in November 2004, but the club was anticipating getting a two-year extension. It receives a five-figure sum from the deal, which is promoted by Q8 at point-of-sale and by mailshots three times a year.

Travel Centre This is a 50:50 partnership with the Travel Centre, a travel agent offering a complete service from package holidays to business travel. This, too, delivers a five-figure sum annually. The Travel Centre provides the expertise, the club the fans. The deal replaced one with Norwich Airport.

Call centre Norwich has expertise in another highly lucrative area. It is the only club in the UK to provide an outbound call centre. This was brought in-house after an external unit – commissioned to deal with season ticket sales – proved unpopular with fans because the operators were unfamiliar with what was going on at the club. The call centre now makes 140,000 outbound calls a year, usually between 4pm and 8pm, dealing with campaigns not just for the club but also for sponsors and, occasionally, external companies. This means a basic staff of three to four, going up to 20 for major campaigns for local businesses, such as the Marriott Hotel chain.

Catering Before the arrival of Delia Smith, Norwich’s catering was franchised out, bringing in £75,000 - £90,000 a year – a sum, says Cullen, that not too many clubs would turn down. The whole operation was brought in-house in 1999 and now delivers a profit of £500,000 annually from a turnover of £2.4m. Some 750 businesses have booked functions at the club over the last two years, split roughly equally between matchdays and non- matchdays. Staff now sell 800 meals on matchdays, which will rise to 1,000 when the new stand is completed.

166 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

Chapter 21: Football and finance

The days when football was an amateur sport seem a million years away. The sport is now so inextricably linked with business – and often big business – that it appears in a league of its own. Yet it is easy to view it out of context. The money that the federations get from broadcasting rights and sponsors is a tidy sum, yet even the bigger clubs, for all their high profile, cannot compare in turnover terms with the major multinational FMCG companies. The challenge for many clubs in recent years has been how to survive, and for the lucky few, not just survive but prosper. There are many issues in play here, for football is a strategically complex business. Clubs don’t exist in isolation: they compete with other clubs for players, one of their biggest expenses. Sometimes – at the highest levels – they have to loan players out for international duty. Increasingly they rely on media groups for income, and on governing bodies for their ability to negotiate rights on their behalf. Somewhere along the line, the fan – their most loyal and constant contributor to funds – often gets forgotten.

TRADITIONAL FOOTBALL BUSINESS MODEL

The traditional model is quite simple. It is described by Dr Bill Gerrard of Leeds University Business School in the chart below, in a talk he gave at Doncaster College in November 2003.

CHART 2.14 Traditional football business model (FBM)

SPORTING TARGETS

PLAYING/COACHING TALENT STADIUM TEAM PERFORMANCE

INVESTMENT REVENUE COSTS

NET FUNDING REQUIREMENT SOURCE: Potential for Future Commercial Prosperity, Dr Bill Gerrard, Leeds University Business School, at Doncaster College, 6 November 2003

The majority of a club’s activities are money munchers. If a club wants to progress, it needs money to improve its team, the rest of its employees and its infrastructure. So where will this money come from? Fans, Gerrard argues, are a club’s core long-term asset. Its followers have a long history with the club and remain faithful through good days and bad. Yet these days, when big brands seek to get ever closer to their customers, many football clubs are as far apart from their supporters as ever. They possess just the most basic of information on fans – often just their contact details – commonly held in an outdated and unwieldy format and from a restricted base: season ticket holders. The irony is that these names contain the key to a much bigger pool of potential customers, all of whom have the ability to provide the club with much needed income.

THE NATURE OF A FAN Before calculating how much money fans can provide, it is important, says Gerrard, to understand what makes them tick. Their allegiance, for example, does not necessarily turn them into a customer. Indeed, there may be very good reasons – through lifestyle or budget constraints – that will limit growth opportunities. What the club

FOOTBALL SPONSORSHIP & COMMERCE 167

Section II Business opportunities

has to do is firm up its brand, because this will give it a hook on which to hang new product lines and services and thus attract fans. The downside is that however good the quality and the range, sales will always reflect a team’s performance on the pitch.

PERFORMANCE IMPACT ON REVENUE In good times, as long as a club does not live beyond its means, its prosperity should be secured. Sporting success on the pitch is translated into increased revenue, from gate receipts, broadcasting and merchandising, which in turn helps fuel player investment. If only life were that simple. A few measly results at the end of a season is all it takes to tip a club into a relegation position. Equally, it can take just a few costly buys to put a club into the red. This could lead to a chain of events where operating losses mean that a club faces an excessive burden of debt, has to sell off players, performs poorly and then fans come less often to games and so buy less merchandise. It is what Gerrard calls the “vicious circle of decline”.

FUTURE PROSPECTS FOR THE FOOTBALL BUSINESS Football has a lot going for it. The threat from hooliganism has faded – although not disappeared – at least in western Europe, so its image is one that many sponsors would be keen to associate with. Fans, meanwhile, have remained loyal to their clubs despite changes in ownership. (Some exceptions prove the rule, as in the case of Wimbledon FC in the UK, which abandoned its geographical roots and name.) The economic realities of this millennium have also forced clubs to rethink their marketing, indeed their overall structure, so as to isolate areas that could be expanded profitably and cut loose those that don’t fit with the club’s core strategy. More emphasis is placed on communicating with fans and ensuring that they have products tailored to their needs. The concept of personalised customer relationship management (CRM) has even found take-up in many commercial departments as a way both of rewarding fans and of providing relevant product. The downside, though, is that threats still abound. Many clubs have failed to keep their costs under control and struggle to eradicate debts. They also have to contend with players’ demands for higher wages, a league structure which discriminates – in most countries – against those in the lower divisions, and the constant threat that boards will be tempted to sell off those assets – players – that will most readily reduce its debts, with the knock-on effect on performance. In the UK, where clubs often own their own grounds, there is also the danger that predators will seek a seat on the board – or to buy clubs – with the ultimate aim of selling off prime inner city sites and leaving teams homeless. In the UK, particularly for clubs outside the Premiership that have been relegated since the late 1990s, players’ wage levels have proved unsustainable. Managers may have had to hold out for existing contracts to expire, but there has been a determined push to introduce salary structures that are realistic in relation to a club’s financial standing. In Gerrard’s view, nothing is more important than getting the business model right. He proposes:

I looking at football operations as a cost centre I reversing ‘cost capture’ (emanating from unsustainable player wage growth and players’ ability to capture the commercial value generated by clubs) by ring-fencing the player expenditure budget I introducing operational gearing I value management of auxiliary operations I realistic financial planning I proper risk management procedures I greater accountability to fans and investors.

Key to this is the need to move from a cost-led business to a revenue-led one (where priority is to earn rather to spend). So what will promote this change? The solution is one that would be familiar to any well-run business: the introduction of benchmarking and efficiency audits so as improve organisational effectiveness. Not surprisingly, it also means restructuring player contracts – something that has started to happen. Individual board members need to practise more financial prudence and introduce better governance.

168 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

The starting point for analysis is to identify a club whose performance the board would like to aspire to and then analyse its performance drivers. There are three key ratios to bear in mind, says Gerrard:

I wage:revenue ratio I revenue:gate ratio I wage cost per league point.

Football has taken on board many of the business ethics practised by successful organisations for decades. Few commercial managers nowadays are unaware of the three Ps ascribed to marketing (product, price and promotion), the need to focus on CRM and to stretch a club’s brand – within reason. Future growth depend son a club’s ability to penetrate its given market, to retain customers – and add new ones, to increase the frequency and value of transactions. Any business model should also take into account the need to plan for the future improvement of the club’s main asset – the team – through a mixture of new product development (youth training and schools/academies), training and motivation of existing players, and research and development (i.e. scouting for new talent). The collapse of ITV Digital in the UK, and the consequent strain on funds, forced managers to review terms and conditions. Performance-related pay is no longer unheard of, and players are starting to anticipate the impact on their pay of relegation. Clubs have also started to wake up to the need to share information about pay rates. There is still the temptation to sell players and accept others on loan, but the dangers of doing this are well documented – on the balance sheet, on team performance and on fan loyalty. The Coca-Cola League is littered with clubs that have run up debts to give themselves time to recover, as are other leagues in Europe. As any competently run company knows, however, it is unwise to operate a cash flow that fails to cover interest payments, debt repayment or player transfer expenditure. Football – in the upper echelons at least – still finds investors or those willing to embark on financial engineering. Indeed, it has attracted an enormous amount of financial innovation. The economic reality, however, is that any such ploy will only work in the long term if the business model gets a radical and realistic overhaul. In the end, what makes for a healthy club is quite a simple formula: a well thought-through business plan conceived and adopted at board level then sold in at all levels, combined with proven commercial strategy that is well implemented – and success on the pitch.

CASE STUDY: ABERDEEN

Aberdeen Football Club is one of the UK’s best-known clubs. It was founded in 1903 and went on to achieve success at home and abroad. In the 1980s Aberdeen won the Scottish Premier League three times, the Scottish Cup four times (also once in the 1990s), the European Super Cup and the European Cup Winners Cup.

BACKGROUND Off the field, the club has always recognised the need for innovation and change, with Potteries becoming the first all-seater stadium in Britain. Aberdeen knows that it can succeed only through the combined efforts of its members and supporters, and by involving them in development of the club. Despite ongoing financial pressures, the club has determined that future investment will continue to go towards achieving and maintaining quality standards in its team, the stadium and ancillary areas, hospitality facilities and community involvement.

FINANCIAL OBJECTIVES Ian Riddoch joined Pittodrie club ground in 2001 as sales and marketing manager, after a long career in sports marketing. He was previously marketing director at Wigan Rugby Club, where he was responsible for a 25% increase in attendances. Before that he worked as marketing manager for Super League (Europe), where he

FOOTBALL SPONSORSHIP & COMMERCE 169

Section II Business opportunities

brokered significant sponsorship deals and introduced successful marketing campaigns. As someone who had helped achieved increases in attendances and turnover at Wigan, the pressure was on Riddoch to achieve something similar at Aberdeen. The club’s current sponsor is A-Fab (Aberdeen Fabrications – business to business), with Riddoch briefed to help A-Fab exploit its sponsorship and to leverage Aberdeen’s corporate hospitality side. He also helps develop revenue through:

I customer services and ticketing I merchandising I gaming and lotteries I corporate hospitality I marketing and customer relationship management.

The club had had to downsize its staff in the early 2000s because it was losing substantial income, partly due to reduced TV revenue. It was, nevertheless, determined to operate within its means.

COMMERCIAL OBJECTIVES The club decided to adopt a very aggressive business plan, building on its then current position. It wanted to break even within 12 months, and therefore decided to split the income it received into two separate parts, with money attributable to the football – from TV revenue and ticketing, say – going back into the player side of the business, while revenue from merchandising went to other parts. Aberdeen sought to communicate to its internal and external audiences the need to work together, to reinforce the fact that if the team played well, the club as a whole would benefit from improved gate receipts. To stop the rot on the playing side, the club brought in a new football management team – Steve Patterson and Duncan Shearer. It was, at the time, some £7m in debt.

MARKETING TACTICS The club set out to find a major sponsor, with the firm conviction that it was one of only five or six clubs in the country with the marketing muscle and flair to be able to deliver a tailored and innovative deal for sponsors. That’s not to say that Aberdeen was unaware of just how far it had fallen – from being one of the three biggest clubs in Scotland and an international brand, some 20 years on it had only regional status. In May 2002, therefore, the club was rebranded as ‘Scotland’s Team’, building on past achievements and defining what it hoped to achieve in the future. In the run-up to the launch, the club’s attempts to encourage ex-pats to supply their email addresses helped create what Aberdeen hoped would be the biggest database of Scottish fans around the world – and important for a club with their eye on the global market. The club determined that electronic marketing was the way forward. One of Riddoch’s first actions was to look at data capture, given that the club had a website with 40,000 unique users a month (in house). Aberdeen partnered with the Sports Loyalty Card so that products purchased from the club and participating partners would result in points being awarded that could be redeemed on other purchases via the club. The Red Army Membership Programme, the club’s loyalty scheme, has resulted in a number of initiatives, notably in 2004 with Tesco. This helps fans transfer their Tesco Clubcard vouchers into rewards points, while increased usage of the Red Army Membership Card is encouraged by entry into a prize draw for a season ticket, initiated each time the card is swiped. The club’s ticketing and database is managed so as to ensure cost-effectiveness, while Aberdeen is also looking at electronic CRM tracking capability, to ensure that it knows just what its fans are doing, and buying.

NEW MEMBERSHIP DRIVE Aberdeen believes in making itself attractive to the youth market, given the sport’s ageing profile. This has meant a fresh look at the way the club gathers data. One initiative was to provide each child who attended the community football coaching programme with a voucher. Once the child – or their guardian has filled in their personal details – they could gain entry to a game. They would, however, have to go through the club shop to hand in the voucher, and only then would they get a free ticket (while the adult would get a reduced rate one).

170 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

On the Monday after a game, the club sends out a card with a standard message, a thank you from the mascot, which the child can then put up on the wall. A follow-up call is made from the in-house call centre within a week, checking on the data, and the operator runs through the matchday experience. Did the child face any problems? Would they like to come again? If so, they offer another ticket, but a slightly more expensive one. Then it all goes on the database. Everyone on the database gets a Red Army Membership Card, with checks and balances of points earned available on the club’s website. The points can be redeemed for Aberdeen merchandise and the club is able to tailor more offers to the fans – benefits that money cannot buy. The club can also offer to tailor the membership newsletter to the needs of potential sponsors.

NEW REVENUE STREAMS There is a limit to the revenue that can be generated through ticket sales and customer services, so the club tries to create events. In the past few years it has held a Hollywood game, and even a Spiderman game, with fans encouraged to dress up. Riddoch’s ideal scenario would be to play games on a Friday night, when the shops are closed, it’s too dark to play golf, children don’t have school the next day and it’s a good time for the business community to attend. The game is over by 9.30pm. Riddoch knows that it would alienate certain fans, for whom the time might be inconvenient, and that TV rights might be an issue because broadcasters may not wish to screen at such times, but the club started trialling the Friday night game in the 2003/2004 season.

CONCLUSION Aberdeen knew it had to think creatively if it wanted to get its finances back on track. It made the courageous decision to separate football-direct income from marketing revenue, and to retain that separation when it came to investing back into the club. This placed pressure on the commercial department, not only to become more creative in the schemes it launched to raise money, but also to be aware that it needed to work with the football department to maximise resources. The focus shifted to learning more about fans and recruiting new ones as effectively as possible. Having done this, the challenge then was to devise offers that were directly relevant. This was a brave move for a club that had been moving backwards – both on the pitch and in financial terms – in recent years. Ideally it wanted a new stadium for 2008 with a retractable roof, but it is likely to have to settle for a more realistic option. Riddoch is, however, optimistic. The club caters to an affluent market, he is in charge of a very creative team, and there is always the potential of the wider European market beckoning – perhaps a few years on – to bring on the sponsors.

FOOTBALL SPONSORSHIP & COMMERCE 171 Section II Business opportunities

Chapter 22: Technology partners

The number of deals involving technology partners has grown over the past decade, despite the undulating fortunes of dotcom companies. Telecoms has proved surprisingly adept at linking its fortunes with that of football and building on the sports offering.

CASE STUDY: ARSENAL FC AND 02

In 2002 Arsenal signed its deal to replace existing sponsor Sega with BT Cellnet, which then changed its consumer brand name to 02. For both club and sponsor, it proved a wise partnership. Arsenal may not have realised the £7m a year it is said to have been demanding, but the club did gain a sponsor that its fans have taken to and which enabled it to increase the range of added value services it could offer to them. The sponsor acquired what German communications research group Sport+Markt has termed the most cost- effective sponsorship campaign in European football. The deal, said to be worth around £5m a year, achieved the lowest cost ratings (highest awareness in relation to spend) across five key continents and ranked higher than more longstanding partnerships such as that between AC Milan and Opel, and Inter Milan and Pirelli.

OBJECTIVES From the start, 02 looked to its shirt sponsorship at Arsenal to help it achieve the brand awareness that any newcomer needs. It wanted a credible, winning platform from which to launch the brand. Arsenal was available at the right time and at the right price – and there was Arsenal Mobile Service, an umbrella term for the short message service (SMS) and Java games the club offered. In addition to an up-front sponsorship fee, the club received a percentage share of network revenue generated from jointly branded new, high-speed, interactive mobile data and audio services designed to provide Arsenal’s international fan base with ‘real-time’ up-to-the- minute information. Together, club and sponsor planned to work on combined sponsorship and advertising opportunities across Europe through a range of media, including broadcast, print and online and interactive services. This may have been slightly ambitious, yet when it came to integrating product and services in a relevant setting, says Carlotta Calleri Zavanelli, head of sport sponsorship at 02, it has proved “very successful for us in showcasing products to a wider market. It has also generated revenues for the sponsorship and has enhanced the experience of fans. We are working with internal communications to help build enthusiasm.” At the time both parties were developing more than 20 personalised, video, audio and multimedia services, ranging from ring-tones, icons and phone messages to exclusive manager and players’ insights. They were also working on an Arsenal daily trivia game, priority ticket text service, live match commentary and pre- and post- match audio analysis.

STRATEGY 02 did not go in to revolutionise Arsenal’s product and service offerings to fans, but it did hope to improve upon them. All O2’s plans at the time of launch came to fruition – although the video service was delayed until the 2004/2005 season, and the sponsor pulled out of the audio information service since this proved to be an expensive and boring way to access information. What it did do, however, was to repackage the content and move the whole offering on. “Most other clubs don’t have such an extensive mobile service, either because they don’t have a partner or they lack a big enough fan base, because it does require substantial investment,” says Calleri Zavanelli. “Most of them only have SMS, downloads, icons, games and quizzes, but don’t go into MMS picture messaging – i.e. they don’t get a message showing a picture of the goal.” 02 launched its multi-media messaging service (MMS) in October/November 2003, and despite a limited marketing campaign – focusing on emails and SMS, with nothing above the line – it has been a success. There

172 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

has been a take-up of over a 1,000 people, an impressive total given that the price is double that of SMS. The way in which 02 has used its sponsorship has also developed over time. “We used to do a lot of matchday and PR activity to get a lot of noise and gain subscribers,” says Calleri Zavenelli. “Then we realised from research that a lot of the guys subscribing were not match goers and were an older age group than you would expect.” The result was that O2 targeted its marketing more through official Arsenal channels and unofficial sites, for example. “We try to turn fans into subscribers by playing on the unique fact that Arsenal Mobile is an official service: “Hear it here first, get it from Wenger first, straight from the horse’s mouth,” she says.

THE COMPETITION Arsenal and 02’s sponsorship has always been overshadowed by the relationship between Manchester United and Vodafone, and by contrast is rather David and Goliath. For instance, Vodafone ties in high profile sports personalities with above the line campaigns, going for much bigger global platforms. 02 is more UK based, and its marketing falls into line. Each territory, says Calleri Zavenelli, works independently and its objectives are more UK-centric. This has meant investing more in Arsenal Mobile Service – seen as an integral part of the sponsorship – and getting it off the ground. Manchester United, by contrast, focused more on its live football service. Calleri Zavenelli argues that whereas from the start 02 concentrated on providing exclusive content in its package, Manchester United offered more of a standard service. “A lot of our work has been identifying pockets of fans and providing them with valuable content,” she says. “Through research we understand who are Arsenal fans, where they are, and who would be interested in a mobile service. Through the experience of our product team, we are leaders of data provision in the country, while our content team is really experienced in knowing which content is valuable.”

TARGET AUDIENCES 02 identified two main target groups:

I Young fans more interested in Java games, downloads and MMS (early adopter), SMS and quizzes (3,000 people on a weekly basis – reaching an older fan group, of16-25 year olds). I More seasoned (35-45 year olds) ticket holders who have been around for 15 to 20 years, making up a surprisingly large part of the database. Very much into SMS results and exclusive Wenger updates.

Within that split fell:

I ticket holders I fans who never go to any matches I fans who only go to away matches.

02 then breaks these down into several key groups. A non-specific target audience also exists, covering those who would do everything from Java to MMS because they have money and are early adopters. Take up, says Calleri Zavenelli, is rising. Subscribers nearly doubled in 2004, and 02 has amended packaging and marketing slightly and been more efficient with its spend. The Arsenal fan base is fairly affluent, part of the reason 02 is chasing the business market: ABC1s more than A+, income between £40,000 and £80,000 in the main group, and aged upwards of 25. Arsenal Mobile Service now claims to be the biggest subscribing club market in the country, since the end of the 2003/2004 season, yet the club has only 2.5 million fans in the UK. It has adjusted its marketing to make it more effective, looking at who the fans are, what media they consume, what channels the club could offer, which unofficial channels it should be targeting. It decided on less matchday activity and more direct marketing and general advertising on unofficial sites, online, etc., thus taking it out of more expensive media.

FOOTBALL SPONSORSHIP & COMMERCE 173

Section II Business opportunities

FURTHER PLANS In the 2004/2005 season, while not underestimating the importance of having Arsenal as a brand platform, O2 is moving more into business returns from sponsorship. It is still targeting the consumer/youth market, but also generating more activity targeting businesses in the local area, working closely with Arsenal to tap its business contacts. For instance, for a car rental company 02 would volunteer to deliver a package for those working within the company, tailored to how often they used the phone and what they use if for. O2 also runs entertainment programmes: an invitation-only evening with Arsenal legends, where players come in and fans can ask them questions, 02’s sales team invites contacts who happen to be football fans. Awareness, says Calleri Zavenelli, has been achieved, although there is always more to be done, particularly in activating fans. Now 02 is leveraging its investment and looking at revenue generating areas. In years 1 and 2, O2’s aims were focused 75% on awareness and 25% on revenue generation. In the 2004/2005 season, however, the balance changed, moving to 60% brand awareness and 40% revenue generation. Part of this revenue generation comes from Arsenal Mobile Service, while the business related activities come from existing services and from using the club as yet another channel to market.

IMPLEMENTATION 02’s relationship with Arsenal in terms of Arsenal Mobile is an interesting one, and not necessarily 50:50. The club provides a lot of content: Java Game, Wenger interviews, for instance, and has a dedicated editor who provides the mobile content. 02 has an equivalent editor who provides the results and general SMS content. As for the marketing of the service, 02 comes up with the creative input, then Arsenal gives O2 access to its channels and is very active with strategy and implementation. Both teams are incentivised to make the best of jobs. Brand awareness of 02 as overall sponsors of Arsenal is still growing and performing well against targets. The sponsor carries out comparisons with other major UK clubs, relating spend on sponsorship with media values, and ROI is turning out very positive. So what has not happened? Combined sponsorship activity across Europe for one thing. This turned out not to be a prime objective.

BENEFITS Some would argue about the merits of being an exclusive mobile service provider to any club, because of the limited fan base. It is a problem that any provider would have, even Man Utd and its 10 million+ fans worldwide. It might mean ploughing millions of pounds into this base that might be better spent. For 02, however, the advantage is a given. The sponsor knew that it needed such a platform – that type of kudos for the brand. As a media buy it has proved effective in keeping the brand out there on a daily basis. “We wanted to go beyond being on a shirt and to activate the sponsorship,” says Calleri Zavenelli. “It provides some revenue, not a huge amount, but it also offers a showcase opportunity. We do know what we are talking about – it is a great a door-opener, in other words.” Arsenal sees the deal as providing another service to fans, and one that brings the club revenue.

SUPPORT The traditional promotional spend needed to leverage a sponsorship is double the cost of the sponsorship itself (i.e. 2:1), but this is not the case with 02, which claims always to have spent less than 1:1 because of budgetary constraints. That spending ratio is going up slightly, but it is also being used more cannily.

THE FUTURE 02 has now signed a two-year sponsorship extension with Arsenal that will take its involvement as official club and shirt sponsor, plus exclusive mobile communications partner, to August 2006. The deal has been enlarged to accommodate an investment in supporters and grass roots initiatives ranging from the youth teams to the club first team. This involves sponsoring Arsenal’s new membership scheme (‘The Arsenal’), Arsenal Ladies, and a commitment to the club’s community programme, including Arsenal Soccer Schools. 02 is clearly happy with its sponsorship, not least because NOP ranks it as providing among the highest spontaneous brand awareness results – at 20% - of all mobile phone companies’ sports sponsorships.

174 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

As well as its highly successful partnership with Arsenal, 02 sponsors England Rugby. Both relationships have been extremely successful in raising its brand exposure and awareness, with the company now enjoying 72% name recognition among the British public (COMMA business share and brand reports, December 2003) and 81% brand recognition among corporate audiences (COMMA business share and brand reports, December 2003). It is not, however, in the market for the naming rights deal for Arsenal’s £357m stadium at Ashburton, which has gone to Emirates in a deal that encompasses primary shirt sponsorship rights. The new 60,000-seat stadium is due to open in 2006 and marketed by US agency Envision. There is a possibility, however, that Arsenal and O2 will continue to have a commercial partnership, albeit with a much lower profile.

Chapter 23: Database marketing

Football clubs around the world have been on a steep learning curve where database marketing is concerned. The majority of clubs had not, until very recently, recognised the value of the data on fans that they can accumulate. The most obvious illustration is the four test cases under the 1996 European Database Directive that are currently going through the European Court of Justice. The Directive gives database creators sole right to exploit their data for 15 years from the date of compilation, and clubs – with an eye on the marketing potential – are keen to ring-fence the data from other businesses, such as list brokers, with an eye to the main chance.

DIRECT MARKETING Direct marketing is the main way to make full use of databases. There are two prime reasons for this:

I Communication: every club or organisation needs to promote itself continually. I Databases make direct marketing cost effective by ensuring that the promotional communication reaches only those most likely to be interested. The primary target is those who have expressed interest previously, either online or offline, in a club’s own goods or services, or those who have shown interest in similar goods or services provided by other businesses.

This interest could have been expressed:

I via telephone, online or mail I via a survey I by buying goods or services I by attending events I by responding to direct marketing campaigns.

No matter how interest has been expressed – it is vital to record all the details.

DATA RECORDING As the price of hardware and software has fallen, so it has become easier – and cheaper – to compile valuable data. A database in its simplest form is just a computerised filing system. It makes it possible to develop efficiently lists with a common interest, without duplication, and provides easy selection on variable criteria. The use data is put to after compilation is what determines its value. Having established a list, data can then be matched against other databases, supplementing and enhancing the original data and keeping costs down. It is also worth remembering that data is not only of value to a club in tying in fans and recruiting new ones, but also in rewarding their loyalty. It can also provide a remarkable incentive for sponsors wanting to tap specific markets.

FOOTBALL SPONSORSHIP & COMMERCE 175

Section II Business opportunities

Initial database questions There is a multitude of database marketing software packages that can be bought off the shelf. Likewise, there is no shortage of firms keen to tailor packages to suit – or indeed to manage them, incorporating them with data from ticketing and other parts of the organisation. There are three basic questions worth asking at the start:

I Will it prove more efficient to host the database in-house, or for it to be managed externally? I When buying a database package, can it demonstrate that it does what it claims to do? I If you plan to host it in-house, have you built in an additional budget for the staff to maintain it?

Planning A database can be as simple – or as complicated – as its owner chooses, but it is advisable to consider:

I The importance of having in mind the future uses to be made of the database, since this will determine the type of information that needs to be collected initially. I The need to keep it simple, since this will maximise ease of use. It’s easy to be seduced into making a database too sophisticated and end up with files that are difficult to maintain. This will be a database that people shrink from using. Databases should, instead, evolve along with the skills of the operator. I The need to be realistic when it comes to designing a database, since there is no point planning for it to process data that will be difficult or expensive to capture. Go, at least initially, for information that will be easy and useful to collect.

The following case study, and others in this report, show the type of data to ask for and the uses that can be made of it, but here is a very basic starter. A typical record could well look like this:

TITLE FORENAME SURNAME KEY: Surname and initial for individuals or company name for businesses ADDRESS POSTCODE HOME TELEPHONE NUMBER WORK TELEPHONE NUMBER MOBILE NUMBER EMAIL ADDRESS FAX NUMBER OCCUPATION MEMBERSHIP DATE OF BIRTH SUPPORTER SEASON TICKET HOLDER DATE OF LAST PURCHASE HOLIDAY TRIPS AFFINITY CARD HOLDER DATE RECORD WAS CREATED DATE RECORD WAS LAST UPDATED

The Northampton (page 146) and Plymouth (page 177) case studies in this report give an indication of the type of information that can be gathered and the uses to which it can be put.

176 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

CASE STUDY: PLYMOUTH ARGYLE

EXECUTIVE SUMMARY Plymouth Argyle, now an English First Division football club, based in the south-west of the country, was languishing in Division Three at the time of a takeover by a new board in 2001. The incoming directors took the view that it was unrealistic to throw money at the team to create a strong business on the back of sporting success. Lack of funds also meant that this was not an option. Instead, they decided that the realistic way forward was to get the management right both on and off the field. The board felt that in Paul Sturrock they had the right team manager, so they focused their efforts on the business side of the organisation. The starting point was the publishing of a five-year plan which set out the club objectives. The medium-term aspiration was to reach the First Division and consolidate the team's position there. The club did not expect on-field success to come so quickly, so aimed for promotion to Division Two and to be in a position to challenge for Division One within five seasons of the plan being announced. The directors also aimed to establish Plymouth Argyle as the West Country's pre-eminent football club; the undisputed leader in football terms, and a strong differentiated, customer-focused brand in its own right. A key part of the plan was to undertake research into the views of fans. This comprised quantitative and qualitative elements and was designed to provide input on supporter satisfaction with club facilities, to understand the fans' views about the club and to provide feedback on what drives season ticket sales in order to increase uptake. Overall, the research delivered encouraging news, showing that fans were loyal, that support was long-term and that there was a high proportion of frequent attenders. There were also good levels of satisfaction with many aspects of the club's facilities. However, there was relative dissatisfaction with stewarding, pre-match/half-time entertainment and food. In terms of fan communication, the picture was mixed, with transactional contact rated relatively highly, but other communication not faring so well. The surveys also demonstrated that the club had an ageing fan base, which was an issue that needed addressing. The survey results led the club to introduce a series of initiatives to give it greater exposure in the city of Plymouth and to create new season ticket holding and membership schemes. This included a particular emphasis on recruiting children and young adults to become loyal fans. It is difficult to isolate the financial success of the five-year plan because of the club's rapid on-pitch success. This alone is certain to have led to increases in ticket and merchandise sales. The club has, however, seen a dramatic increase in season ticket sales and club shop receipts, and has now been profitable for several years. There is good reason to suppose that a significant level of commercial success would have happened regardless of the position of the team, because of the implementation of the planned commercial improvements.

BACKGROUND At the time of development of this case study, Plymouth Argyle Football Club (PAFC) was among the leaders in the English Second Division. It has subsequently been promoted to the First Division. (Plymouth Argyle was champion of the Second Division at the end of the 2003/04 season, during which the first team manager, Paul Sturrock, left to join English Premiership club Southampton.) Like its rivals, PAFC knows the impact that on-pitch performance can have on the club overall. What makes it a case worth studying is the way that a change of board brought it out of the red and into profit. The club has managed this through the adoption of an imaginative and hard-headed approach to its marketing strategy, engineered by the six board members.

FIVE-YEAR PLAN The starting point was a consultation exercise, followed by the publication of a five-year plan. Its 10-strong list of objectives included only two relating to football, the most important being to build a winning team at Plymouth. The discussion paper, published in the match programme in September 2001, is reproduced on page 179.

FOOTBALL SPONSORSHIP & COMMERCE 177

Section II Business opportunities

IMPLEMENTATION Peter Jones, a former group managing director of advertising agency Grey Worldwide, London, is the club's vice- chairman and a branding expert. He was only too aware of the challenges facing him at Plymouth. “I knew full well that if you didn't get the internal audience on board, both intellectually and emotionally, then things wouldn't work out,” he said. He opened the lines of communication with local people, telling them that the club recognised its responsibilities to the community and voicing support for local initiatives and charities. Jones also firmed links with local media, particularly the Plymouth Herald, recognising the importance of coverage on the sports pages and elsewhere in the title in winning over the community. Research played its part too: Jones set up focus groups and a customer satisfaction survey to find out what fans thought of the club, of its product offering and what more it could do. This was circulated on matchday and was made available online. The results were analysed and provided sufficient feedback for Jones to devise a raft of offerings that would appeal to both fans and the club's bank balance. “One of the issues I have found is that in the lower divisions there is always a terrible squeeze on money, but also that expenditure on marketing and communication strategy is regarded as a cost rather than an investment,” he said. “The trouble is that in this particular world, the type of people running the clubs are a long way behind modern business thinking.”

SUPPORTER SATISFACTION SURVEY The PAFC supporter satisfaction survey (page 180), conducted in the spring of 2003, continued the club's drive to learn more about fans and help it to plan future strategy. The research was designed to inform marketing and management decision-making for 2003/2004 by:

I providing input on supporter satisfaction with club facilities I understanding the fans’ views about the direction of the club and their relationship with it. I investigating season-ticket holding and ways of packaging membership to add value and increase uptake.

The form asked for a mix of views about the club and its activities along with data about the fans themselves which, in the long term, could be used for database marketing.

DRAFT STRATEGIC PLAN FOR DISCUSSION The new board of Plymouth Argyle assumed formal control August 2001. The directors feel that it is important to define a clear set of objectives for the club, together with a set of strategies to be deployed in the pursuit of those goals, over a set time period. This brief paper sets out our initial thinking, and covers the period September 2001 to May 2006. Before we set the plan in stone, we would appreciate comments from anyone with any interest in the club, and a point of view they would like to put forward. We are aiming to finalise the document in early October. Any feedback, therefore, should be submitted by the end of this month.

Start-point The lower half of the Third Division is not a good place to be - especially for a club such as Plymouth Argyle. Our view is that we need to build the foundations for long-term success. That will take time, and patience. We do not apologise for adopting an approach that some may interpret as cautious. Indeed, we refuse to over-promise. Our aspirations are high; the objectives we set ourselves must be achievable, and therefore realistic. And there are already some real positives. The long-awaited stadium redevelopment is now under way, a new chief executive is in place, and the football side of the equation is beginning to show real promise again. Furthermore, Plymouth Argyle continues to enjoy enormous latent goodwill, as evidenced by the support at the ’96 Play-off final, and the ’98 Derby cup game. That goodwill is there to be activated.

178 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

Objectives Our aim is to establish Plymouth Argyle as the West Country's pre-eminent football club. The undisputed leader in football terms, and a strong differentiated, customer-focused brand in its own right. In football terms, our medium-term aspiration is to reach the first division, and consolidate our position there. Over the coming five seasons, however, we believe it is prudent to set our sights firmly on promotion to Division Two, and then the establishment of PAFC as a leading side in that league, strongly positioned to challenge for the next step up. That, in and of itself, represents a major task.

Strategies 1 We will look to build a unified team at Plymouth Argyle. One that recognises that each and every member of the staff has a role to play, whether they are working in the club shop, coaching the young players, sitting on the board, manning the catering facilities or playing on a Saturday afternoon. Successful clubs are characterised by everyone on the payroll working together as an extended integrated team. Plymouth Argyle will be no different. 2 We will do all we can to increase income (whilst maintaining a commitment to providing good value). Better product on the pitch, improved marketing, greater customer focus. In turn, we are committed to investing as high a proportion as possible of our revenues in the playing squad. Our policy will be one of constant improvement. 3 We will work hard to open lines of communications for the fans, who are and always will be the lifeblood of the club. We will seek ways of increasing the supporters' formal opportunities for active participation, including, ultimately, a share issue (see point 6). 4 We will also increase accessibility to the club - particularly through enhanced leisure facilities at the stadium, and more initiatives such as an improved Junior Greens, and more one-off events. 5 We firmly believe that we now have the right manager in Paul Sturrock, and we will give him as much support and that most precious commodity of all – time – as he needs to bring success on the field. (Indeed, to make this a concrete reality rather than a mere aspiration, we are pleased to announce that we have offered Paul Sturrock an extension to his contract, to last the entirety of the five-year period under discussion, and that he has accepted our offer in principle.) 6 We will continue the stadium redevelopment programme. 7 We will, wherever possible, look to enter into strategic alliances with businesses located in our catchment area, and we will have a preferred supplier policy built on seeking to source products and services locally. 8 We recognise our responsibilities to the community in which we live, and which we represent. We will do all we can to support relevant local initiatives and charities. 9 We will expand our commitment to nurturing young players, with a particular focus on providing opportunities to promising young footballers in Devon and Cornwall. 10 We will work with the media in as transparent and co-operative way as possible. We believe that there is much mutual benefit to be derived from a spirit of maximum accessibility and co-operation.

Next Steps Once we have received all the feedback, we will refine this five-year plan. It will then be launched formally to the entire team at Home Park, prior to external publication

FOOTBALL SPONSORSHIP & COMMERCE 179 Section II Business opportunities

PAFC SUPPORTER SATISFACTION SURVEY

Home matches aspects of contact with the club. Q8 Finally, on a scale where Response to fans’ emails 1 is extremely satisfied and 5 Q1 First of all, can you indicate Response to fans' letters extremely dissatisfied, please tick how satisfied you are with the Ease of getting through on the one number to indicate how facilities? In each case can you phone satisfied you are with PAFC rate each of the following aspects The quality of the website overall. of the matchday experience by Ease of buying advance tickets at ticking one of the boxes from very ticket office Just to help with our analysis of dissatisfied (1) to extremely Ease of getting advance tickets by your views, could you please let us satisfied (5). If you don't know or phone have a few details about you? if any statement doesn't apply to Please tick the correct answer: you, tick (6). How you feel about the club? A Are you: male/female? The questions related to the Q5 Using a scale where 1 is agree following facilities: strongly and 5 is disagree B Which of these age groups do Turnstile staff you fall into? Ease of buying match tickets strongly, tick one number to indicate how much you agree with Under 16 Quality of programmes 16-25 Car parking arrangements the following statements: 26-35 Public transport arrangements 36-45 Helpfulness of stewards PAFC is a successful club 46-55 Food at snack bars PAFC have progressed a lot recently 56-65 Drinks at snack bars I feel a real part of the club 65+ Service at snack bars PAFC is part of what Plymouth is Snack bar prices all about C Are you single, married/living Licensed bars The club has lots of contact with with partner, widowed/divorced? Other bars the fans Admission prices PAFC is well covered by the local D Do you have children under 17 Pre-match entertainment media living in your household? Half-time entertainment The club directors are well-known Match announcements PAFC regularly contacts season E How long have you been Toilet facilities ticket holders Direction signs supporting Plymouth Argyle? The City Council could support the 1 year only club more 2-3 years Q2 Have you any other specific I would like to see the new stand comments on club facilities? 4-5 years completed soon 6-1- years I feel I know where the club is Away matches 11-15 years going 16 years or more It's a go-ahead club Q3 If you travel to away matches, The club should finish Phase 2 please rate, using the same scale F Do you hold a 2002/2003 as above, the following aspects, next season season ticket? by ticking one number below. The club should do more for Y es (if so, go to H) Availability of tickets families No (if not, got to G) Ease of buying tickets Quality and comfort of match Your overall view G Have you ever held a season transport ticket? Price of match transport Q6 What would you say are the Yes (if so, go to H) three things you like most about No (if not, go to J) Contact with the club the club? H For how many years in total Q4 Using the same scale, please Q7 And what are the three things have you held a season ticket? tick one number to rate different you least like? 1 year only

180 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

2-3 years Occasionally M Which of the following groups 4-5 years Rarely would you say you come into? 6-10 years Never Senior manager/professional 11-15 years Intermediate manager/professional 16 years or more K And how about away matches? Junior manager/professional Every match Clerk/administrative worker I And which stand is your season Almost every match Service/retail assistant ticket in? Quite a few matches Skilled manual worker Main stand Occasionally Semi/unskilled manual worker Devonport End Rarely Student Lyndhurst Never Self-employed Mayflower Home-maker/housewife L Name, address and postcode Unemployed/looking for work J How often do you go to home (These details are to avoid Retired matches? duplication and help analysis. Casual worker Every match Names and personal details will Other Almost every match not be used by the club or passed Quite a few matches to any other organisation.)

METHOD The survey comprised two stages. The two stages concentrated to a large extent on the same issues with the focus groups being used as a tool to help develop the quantitative survey. The quantitative survey questions are provided below:

Stage 1 Qualitative Research Five focus groups: male season ticket holders (2), potential holders (2); women season ticket holders (1)

Stage 2 Quantitative Research Supporter questionnaire distributed via the Herald, club and website (345 correctly completed questionnaires).

ANALYSIS Several questions used 5-point scales, which are plotted in the presentation as percentages agreeing/disagreeing or satisfied/dissatisfied. Each table also has a mean score, calculated by multiplying the numbers falling into each of the five points of the scale by a number from 1 to 5 (where 1 is strong agreement/satisfaction, 5 the reverse) and dividing the resultant sum by the number answering the question. Hence a low mean score indicates strong agreement/satisfaction. A completely even distribution will give a mean score of 3. Scores below 2 are very high, over 2.5 good. Close to and over 3 is poor and close to 4 very poor. ‘Committed’ supporters are those who claim to go to every, or almost every, home match. ‘Casual’ supporters are those who attend ‘quite a few matches’, ‘occasionally’ or ‘rarely’. Regular away supporters are those who travel to every, or almost every, away match. In a sample of this size (345 respondents), small differences between sub-groups are not significant. Only differences that are significant or seem directionally significant have been identified in the presentation. The research methodology, such as utilising the local newspaper, meant that several groupings were likely to be under-represented in the findings and the club was aware of this. Those groups include:

I non-Plymouth residents I regular away supporters I children under 16 I (possibly) lower social grades I non-season ticket holders.

FOOTBALL SPONSORSHIP & COMMERCE 181 Section II Business opportunities

TABLE 2.9 Profile of responding supporters by ticket holding and attendance

BASE: ALL (345) % SEASON TICKET HOLDERS (STH) 57 LAPSED HOLDERS 14 NEVER STH 29

AWAY SUPPORT REGULAR AWAY SUPPORTERS 33 OCCASIONAL AWAY SUPPORTERS 56 NON AWAY SUPPORTERS 11

COMMITTED ATTENDERS 80 CASUAL ATTENDERS 20

YEARS OF SUPPORT OF PAFC 1 YEAR 1 2-3 5 4-5 4 6-10 6 11-15 5 16+ 79

Topline summary The topline summary made good reading for the club directors because it showed that the qualitative and quantitative methodologies produced consistent results, indicating that they could be relied on. It also showed that fans are loyal, their support is long term and that there is a high proportion of frequent attenders. There was also a good level of satisfaction with many aspects of the club’s facilities. Supporters’ comments underlined the positive reaction to the new stand, the existing management and Paul Sturrock, and enthusiasm to complete Phase 2 of the stadium redevelopment.However, there was relative dissatisfaction with stewarding arrangements, pre-match/half-time entertainment and the cost/quality of snack food. While transactional contact with the club emerges positively, there was evidence of little direct proactive contact with supporters, especially season ticket holders. The survey also demonstrated that season ticket holding is an emotional as well as a financial investment: fans want to 'belong' and the idea of 'membership' is powerful. Another concern for the club was that the age profile of responding supporters was relatively old.

Plymouth Argyle supporters Table 2.9 shows that the majority of respondents were season ticket holders or committed attenders; the overwhelming majority had also followed the team to away matches. The majority had also been supporters of the club for a considerable length of time, with 84% having been loyal supporters for more than a decade. This was reflected in the age profile of the respondents (Table 2.10), which shows a strong bias towards the over 36s. The other interesting finding in the age profile is that away supporters tended to be younger. This is probably because of the amount of time taken to travel to away matches - especially given that the club is in a relatively isolated part of the country, meaning that away games can easily take a full day. Middle-aged fans are more likely than young fans to have family commitments preventing such travel, and for older fans such journeys can be very tiring.

182 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

TABLE 2.10 Plymouth Argyle supporters age profile

BASE ALL (FIGURES AS %) ALL COMMITTED CASUAL SEASON TH REG.AWAY <16 YRS 6 6433 16-25 8 712511 26-35 12 11 16 11 20 36-45 24 24 25 27 27 46-55 24 23 26 21 21 56-65 14 14 13 16 11 65+ 13 15 4 17 6 <36 26 24 19 19 34 36+ 74 76 81 81 66

TABLE 2.11 Plymouth Argyle supporters age profile vs TGI and Premiership

FIGURES AS % TGI UK ADULTS PAFC++ PREMIER LEAGUE PAFC INDEX VS PREMIER LEAGUE 16-25 15 8 14 57 26-35 19 13 22 59 36-45 18 26 27 96 46-55 16 25 20 125 56-65 13 14 11 127 65+ 19 13 6 216

Supporters age profile vs TGI and Premiership Table 2.11 shows the slightly more worrying aspect of the age profile when compared to the Target Group Index (TGI), which is based on a representative sample from a UK national consumer database, and the average age profile of English Premiership clubs. In both cases PAFC had a lower proportion in the younger age groups and, for the most part, more in the older groups. Clearly, for the long term development of the club, it would be important to start recruiting younger fans.

Supporters by gender and relationship status Table 2.12 shows no unusual results other than perhaps that the proportion of committed females fans was greater than the casuals. The general perception in English football is that females are not so committed. This does not disprove that perception because there is an argument to suggest that only the committed fans bothered to fill in the form. The other key point in this chart is the higher proportion of single people travelling to away matches, supporting the analysis of the effect age has on away support.

Supporters by employment status Again, there were no great surprises in the employment profile (Table 2.13), which is in line with the city as a whole, with a slightly higher proportion of people in management jobs than the national average. There was, however, good support from this group, especially among casual supporters, and it would be worthwhile for the club to take advantage of that by developing more facilities to cater for this market, such as executive boxes or premium seats. This market also provides opportunities for sponsorship development in which the club could approach more companies offering higher priced goods and financial services. Finally, this segment offers opportunities to develop more business-to-business sponsors who can target the large numbers of managerial fans as potential customers.

FOOTBALL SPONSORSHIP & COMMERCE 183 Section II Business opportunities

TABLE 2.12 Plymouth Argyle supporters by gender and relationship status

BASE: ALL (FIGURES AS %) ALL COMMITTED CASUAL SEASON TH REG. AWAY MALE 84 83 90 83 83 FEMALE 16 17 10 17 17 SINGLE 24 23 30 20 33 MARRIED /COHABITING 68 69 64 72 59 WIDOWED/DIVORCED 88688 CHILDREN < 24 24 26 19 21

TABLE 2.13 Plymouth Argyle supporters by employment status

BASE: ALL (FIGURES AS %) ALL COMMITTED CASUAL SEASON TH REG. AWAY MIDDLE/SENIOR MGMT 22 18 36 20 27 LOWER MGMT/CLERICAL 23 24 20 24 27 SKILLED MANUAL 89495 UNSKILLED MANUAL 56364 UNEMPLOYED/STUDENT 991058 RETIRED 18 21 7 23 11 SELF-EMPLOYED 65967 OTHER 87958

TABLE 2.14 Overall satisfaction with the club BASE: ALL (348) FIGURES AS % TOTAL EXTREMELY/QUITE SATISFIED 71 ACCEPTABLE 26 EXTREMELY/QUITE DISSATISFIED 3 DK/NA 1 MEAN SCORE 2.11

Overall satisfaction with the club Table 2.14 shows that, overall, the fans were satisfied with the club. This is not surprising given that at the time of the survey, the club was performing well on the pitch. English fans have a reputation for being very tolerant of poor facilities so long as the team performance is good. The investment in club facilities, such as the stadium redevelopment, however, had helped to ensure that satisfaction levels were high. When this was broken down by age, the group with the lowest level of satisfaction was the 36-45s. The reasons for this are likely to include the fact that they are the most upwardly mobile grouping, because that is the age where earnings, especially for those in management positions, start to become high. They also start to receive better job-related services, such as professionally arranged business travel. This group is therefore used to high levels of service in work-related activities and in the consumer shopping experience. As such they were comparing the experience of attending football with among the highest service levels available anywhere, and expectations were high. The figures also demonstrate the strength of opinion of PAFC football fans: in most market research, the ‘don't knows’ generally range from 10-20%; in this part of the survey, it is just 1%!

184 FOOTBALL SPONSORSHIP & COMMERCE Section II Business opportunities

TABLE 2.15a Satisfaction with club facilities

BASE: ALL (348) QUALITY OF TURNSTILE EASE OF DIRECTION ADMISSION FIGURES AS % PROGRAMMES STAFF BUYING TICKETS SIGNS PRICES EXTREMELY/QUITE SATISFIED 75 69 52 53 52 ACCEPTABLE 6 20 18 22 33 EXTREMELY/ QUITE DISSATISFIED 5 7 11 16 12 DK/NA 14 4 19 9 3 MEAN SCORE 1.62 2.01 2.24 2.37 2.44

TABLE 2.15b Satisfaction with club facilities

BASE: ALL (348) TOILET PARKING SNACK BAR OTHER MATCH FIGURES AS % FACILITIES ARRANGEMENTS SERVICE BARS ANNOUNCEMENTS EXTREMELY/QUITE SATISFIED 57 38 34 14 42 ACCEPTABLE 14 20 30 17 25 EXTREMELY/ QUITE DISSATISFIED 26 18 18 7 32 DK/NA 3 25 18 66 2 MEAN SCORE 2.52 2.57 2.71 2.73 2.93

Satisfaction with club facilities The satisfaction with club facilities in the quantitative survey is the section where the club learned about fans’ specific issues. The results gave the club information that would allow it improve operations and revenue in three ways:

I Improve fan satisfaction, leading to greater loyalty among existing fans. I Improve fan satisfaction, leading to new fan recruitment. I Improve facilities, leading to increase in revenue per fan through specific offerings such as merchandise, catering etc.

These figures underline the earlier hypothesis that the overall satisfaction levels had been influenced to a large extent by the on-field performance of the club. Those high overall figures, averaging at above 70% satisfaction, show a marked change when fans rated specific facilities. The club programme and turnstile staff were ranked highly, but those apart, the club received satisfaction ratings of around 50% or less on ease of buying tickets, direction signs, admission prices, toilet facilities and match announcements. The figures drop even further in relation to car parking and snack bar/ bar facilities. The discrepancy in the levels of both satisfaction and dissatisfaction in toilet facilities was largely down to the different responses between males and females. Female respondents were much more critical and polarised in their attitudes than male respondents, with 47% of females being extremely/quite satisfied but 40% extremely/quite dissatisfied. Table 2.15c shows that there was a greater polarising of views on issues of stewarding, drinks and food, and public transport. Interestingly, the focus groups’ response to the stewarding issue showed that criticism included opposing reasons, with comments such as:

‘Their language can be as bad as anyone's’

‘Some rougher-looking than the spectators’ ‘proclaimed zero-tolerance stance on racist abuse should be enforced’.

In other words, some spectators felt that the stewards were intimidating while others wanted them to take tougher action. Although the satisfaction levels with the food and drinks on offer were low, the focus groups

FOOTBALL SPONSORSHIP & COMMERCE 185

Section II Business opportunities

TABLE 2.15c Satisfaction with club facilities

BASE: ALL (348) HELPFULNESS SNACK LICENSED FOOD AT PUBLIC TRANSPORT FIGURES AS % OF STEWARDS BAR DRINKS BARS SNACK BARS ARRANGEMENTS EXTREMELY/QUITE SATISFIED 35 27 15 25 11 ACCEPTABLE 30 29 18 27 12 EXTREMELY/ QUITE DISSATISFIED 29 25 16 27 14 DK/NA 6 19 49 21 63 MEAN SCORE 2.94 3 3.05 3.06 3.23

TABLE 2.15d Satisfaction with club facilities

BASE: ALL (348) HALF-TIME PRE-MATCH SNACK BAR FIGURES AS % ENTERTAINMENT ENTERTAINMENT PRICES EXTREMELY/QUITE SATISFIED 17 14 9 ACCEPTABLE 30 29 15 EXTREMELY/ QUITE DISSATISFIED 47 48 61 DK/NA 6 915 MEAN SCORE 3.53 3.58 3.99

suggested that the only reason this was not a big issue for fans was because expectations of sport stadium food are not particularly high. A typical comment was:

‘I can assure those who haven't travelled [to away games] that the [food] facilities are comparable, even with the elite clubs’.

However, there was a majority opinion that the snack food and drink were expensive, especially since completion of the development, and there were comments that the range was limited and poor quality. ‘If you bring a family and you have a pasty each and a Coke, it's dearer than the ticket’

‘The [pasties and meat pies] are disgusting’

‘We bring a flask, there's the quality and then it's not the cheapest’

‘It's a long queue for a pretty average cup of tea’

Table 2.15d shows that there was not much satisfaction with half-time and pre-match entertainment. English football in general has struggled with this issue. The general approach so far has been unimpressive, featuring ideas imported from US sport such as club mascots and occasionally cheerleaders, with more traditional events including prize draws, penalty shoot-outs or junior five-a-side competitions. The attempts to copy the US have been half-hearted, partly in the knowledge that English football fans do not wholeheartedly endorse the sport being hijacked by ‘glitz’ and ceremony. PAFC has introduced other, arguably more interesting, elements such as a Karate demonstration, which drew favourable responses from the focus groups and gave fans a reason to arrive earlier, but overall the club was criticised for lack of imagination:

‘It's a little bit in the pre-modern era’

‘It could be an afternoon's experience not just the 90 minutes’

‘You could have TV screens around the concourses’

186 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

TABLE 2.16 Fans' perception of club direction

BASE: ALL (345) PAFC HAVE PAFC IS WELL PAFC IS PART OF PAFC IS A THE CLUB FIGURES AS % PROGRESSED COVERED BY IT'S A GO-AHEAD WHAT PLYMOUTH SUCCESSFUL DIRECTORS ARE A LOT RECENTLY LOCAL MEDIA CLUB IS ALL ABOUT CLUB WELL KNOWN EXTREMELY/QUITE SATISFIED 90 77 78 63 60 58 ACCEPTABLE 5 13 14 25 29 24 EXTREMELY/ QUITE DISSATISFIED 5 9 7 8 11 18 DK/NA //11// MEAN SCORE 1.55 1.91 1.98 2.03 2.32 2.44

TABLE 2.17 Fans' attitude towards transactional contact

BASE: ALL EXPRESSING EASE OF EASE OF BUYING RESPONSE EASE OF RESPONSE OPINION ON EACH QUALITY OF GETTING TICKETS ADVANCE TICKETS TO FANS' GETTING THROUGH TO FANS DIMENSION FIGURES AS % WEBSITE BY PHONE AT OFFICE LETTERS ON PHONE E-MAILS EXTREMELY/QUITE SATISFIED 60 61 57 51 47 26 ACCEPTABLE 26 22 27 32 35 36 EXTREMELY/ QUITE DISSATISFIED 14 18 16 17 17 28 MEAN SCORE 2.32 2.35 2.39 2.54 2.56 2.93

TABLE 2.18 Fans' attitude towards proactive contact

BASE: ALL (345) I FEEL I KNOW I FEEL A REAL THE CLUB THE CLUB HAS A PAFC REGULARLY FIGURES AS % WHERE THE PART OF SHOULD DO MORE LOT OF CONTACT CONTACTS SEASON CLUB IS GOING THE CLUB FOR FAMILIES WITH ITS FANS TICKET HOLDERS AGREE STRONGLY/ A LITTLE 77 59 46 48 19 NEITHER AGREE NOR DISAGREE 16 30 32 34 21 DISAGREE STRONGLY/ A LITTLE 6 11 11 16 60 DK/NA 11 1 1 0 MEAN SCORE 1.99 2.28 2.28 2.54 3.72

The focus group responses were also critical of every aspect of the club's use of the public address system:

‘ You could do with livening up the atmosphere before the game’

‘The away teams seem to use their tannoys better, before the match and especially when they score’ ‘Like at Newcastle, the music was getting louder and louder and by the time the teams came out of the tunnel, the crowd were high, from kick-off they were buzzing’

The audio quality of the announcements, and indeed the announcer, were also criticised.

The club shop Although the club shop was not analysed in detail in the quantitative survey, it was covered by the focus groups, which found that its main problem was size. The staff were considered to be helpful and pleasant, it was stocked with good merchandise, but it was too small, therefore impossibly crowded on matchdays. The club identified this issue as hitting revenues by prohibiting self-service and impulse purchases. Fans also felt that a city centre outlet should be established (which might also sell tickets).

FOOTBALL SPONSORSHIP & COMMERCE 187

Section II Business opportunities

Fans’ perception of club direction Both focus groups and the quantitative research looked at what the fans thought of the current management and direction of the club. The key findings here were:

I The club was considered to have made immense strides managerially and on the pitch. I The directors were universally well thought of. I The board members were considered to be genuine Plymouth fans.

Awareness of the 5-year plan was high: I The board thought realistically about where the club was going. I The board was considered to be personally approachable and had a 'human touch'.

Specific comments from the focus groups backed up the quantitative research:

‘They've got a vision, they are Argyle fans!’

‘They've got this five-year plan and it's promotion, consolidation, then the next stage - they are rational, not unrealistic’

‘Every step of the way they told the fans what they are doing, which had never happened - before, you just read it in the paper’

‘The good thing with this board, they're not multi-millionaires, so you know you are going to get what they can afford’

‘I think one of the most important things for me is that the club, among very few in the country, is running in credit, and there is no danger that we're going out of business like umpteen other clubs are going to; that's the best thing that this board could have done’

One of the reasons for the high levels of satisfaction with the management was the attitude that fans have towards communication with the club. This is demonstrated in the relatively high overall levels of satisfaction shown towards transactional communication. There was, however, room for improvement in this area (Table 2.17), with dissatisfaction levels at around 15% or above for virtually every communication avenue, particularly e-mail, which rose to 28%. When it came to proactive contact (Table 2.18), the fans were a great deal more critical. Although they felt that they knew where the club was going and, on the whole, felt a part of the club, there was a strong sense that the club should do more for families. Sixty per cent of season ticket holders did not think that the club was in regular contact with them. Interestingly, non-season ticket holders expressed almost identical views on the level of contact. This clearly suggested that the club had a lot of potential to develop a better relationship with its key customers – the most loyal fans. The focus groups were asked questions about the second phase of ground redevelopment, which would, effectively, complete the modernisation of the stadium. Some, while looking forward to completion, counselled financial caution: the club was bigger than the stand.

‘There is no great rush. People like the view, OK, there is the odd pillar in the way, but now that's been computerised you can't sell those tickets’

‘We all want the club to be successful, but first and foremost we want it to survive’

‘I think they need to be more financially viable before they go ahead with it’

‘I think the stadium needs finishing, but I also think the board is good enough that they won't spend all the money on the stadium if they can't finance it properly and leave the manager without the money to get the players he needs’

188 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

‘If you're only getting 8,000, why get into debt for £6m or whatever it's going to cost’ ‘I'm in two minds, whether to spend money on the last phase or spend more money on the team. It's a Catch 22. Can we have both?’

There was also an articulated opinion that continued momentum on the redevelopment was essential:

‘In my view, the only way the club is going to be able to move its commercial operation onto the next level is if we get Phase 2 built... you can build in a whole series of things, a supporters' club, a restaurant that can be open every day of the week, a decent shop, conferences during the day... the main grandstand is a tip, there is no other description"

‘I know it costs £5m but the benefits to the club of making that investment are key to becoming a well- established 1st Division club; you can't do it without finishing the stadium’

‘I wouldn't want it to threaten the club's finances, but while the momentum's there we should press on, it will cost a lot more in five years’

‘Why are we letting the council bring us down? Just do it, then we'll get the money from the supporters clubs, restaurants, a rights issue or whatever’

Season ticket marketing ideas The first step to generating season ticket marketing ideas was to analyse the reason for buying such a ticket. A number of reasons were given, most of which related to value or a demonstration of club loyalty:

I principal and overt reason is financial I rationally, the season ticket offers savings for committed fans I that it equates to several free entries per season is the basic yardstick of value (estimates of the number of free games varied from 5 to 8). I the season ticket avoids the perceived hassle of buying a ticket every week I at current prices, the season ticket was felt to offer extremely good value I ticket priority for cup matches is also a benefit I buying a season ticket is an emotional as well as a financial investment I it's a gesture of loyalty and trust I it's a token of belonging I an aid to self-commitment I and to an extent a status symbol I season ticket holders believe they are important to the club's finances.

Why people don't have season tickets The focus groups looked at why certain keen fans did not purchase season tickets, and most responses came down to practicality:

I unpredictable/unfavourable work patterns I inability to attend mid-week games I frequent absence from Plymouth I involvement in junior football.

Several, however, stated that they were inhibited by the up-front cost of the season ticket and there was also evidence that in the past, holders had failed to renew as a gesture of protest or despair. The focus groups asked about attitudes to season ticket schemes, which offered season tickets discounted to £85 for children brought to matches by adults. It also analysed the 'Junior Green' scheme (reflecting the club colours), which offers children benefits such as a discount in the club shop. Overall the 'Junior Green' scheme was thought good value, and many season holders had bought the £85 tickets for children, to enable them to sit together in seats of their choosing. There was, however, some feeling that the benefits to Junior Greens (e.g. kit discounts, birthday cards etc.) were (unfairly) better than those for child season holders.

FOOTBALL SPONSORSHIP & COMMERCE 189

Section II Business opportunities

‘Kids for a Quid’ (colloquial term for £1 sterling) The Kids for a Quid scheme, which has been run by many football clubs in the UK, is designed to persuade adults to bring children to matches and develop them as loyal supporters. There have been criticisms of such schemes at other clubs for two key reasons. First, regular fans feel that it is unfair that others are getting cheap tickets when they are long-term fans and have to pay full price. This is especially the case where the schemes allow the £1 per match tickets to be offered for several matches. However, anecdotal evidence from other clubs suggests that to develop loyalty among new supporters requires them to watch several matches. Second, in stadia where season ticket holders have designated seats, it can be difficult to ensure that children attending with a Kids for a Quid ticket can sit next to the season ticket holder. Parents are very unlikely to want to sit in a different part of the ground from their children. The response from the focus groups was that they felt it to be an excellent idea in principle and some even argued for free entry for kids. There was, however, a perception that recent Kids for a Quid activity had not been well handled, partly because announcements had been made too late for parents to take advantage: The scheme had also allowed many juniors to come along unaccompanied, which many fans felt defeated the object. Clearly, there was also a lack of communication within the club about the scheme, which included some gate staff not knowing the details. At least one fan ended up taking his child and then had to pay full price (£5) for a child's ticket, which left him feeling some resentment.

Membership The concept of a membership scheme was put to the focus groups. Such a scheme would be open to both season tickets holders and other fans. Season ticket holders declared that they would feel more valued being ‘members’ and likewise, irregular (for whatever reason) attenders suggested that they would find 'membership' a reflection of their loyalty.

Feedback to fans Plymouth Argyle initiated a series of measures as a result of the surveys and has proposed recommendations for further action. The immediate action was to publish a report on the consultation to which the fans would have access, and to send an acknowledgement letter to survey responders. The club also pledged to repeat consultation of some sort annually.

SUMMARY OF RECOMMENDATIONS FOR ACTION 1 Stewarding

I Improve 'customer focus' of stewards I Ensure seat allocations evident

2 Entertainment

I Create a more 'upbeat' feel I Build more crowd excitement

3 Snack food and drink

I Question whether any short-term action is possible I Are there ways of changing perceived 'value' equation? (e.g. concourse entertainment)

4 Ladies’ lavatories

I Extra care

190 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

SEASON TICKET INITIATIVES Mindset: making PAFC organisationally supporter-focused

I Build on personal approachability towards an institutional supporter focus – Create/enhance levels of proactive contact with supporters – Ensure all response to supporter contact timely and measured.

CONTACT AND DIRECT MARKETING Transactional contact

I Maintain, if possible improve, ease of phone contact/ticket purchase I Ensure prompt response to fan letters and e-mails (esp. latter).

Proactive contact

I Be proactive I Take steps to build dialogue with supporters, esp. season ticket holders.

SEASON TICKET MARKETING 1 Existing season ticket holders

I Mailing to maximise uptake/minimise lapse for next season (around 50% are recent holders) I Introduce new membership concept.

2 Lapsed season ticket holders

I Clearly ‘close’ to the club; should be fertile prospecting territory I New season/membership concept should be good argument to come back I Inspect/clean old lists to mail.

3 Regular away supporters

I By definition, highly committed and membership concept should appeal. I Potential to improve on 60% ST holding level I Use Supporters Club list to identify regular away supporters who are not ST holders.

4 Other committed supporters

I Again current STH levels may offer some prospect of improvement I Marketing at ground, 'cold'; direct mailing, possibly advertising I Postcode information should help target mailings if necessary.

FOOTBALL SPONSORSHIP & COMMERCE 191

Section II Business opportunities

OTHER MEMBERSHIP MARKETING

1 Casual Supporters

I Majority of casual supporters go to ‘quite a few games’ I Proportion of these must be good prospects for some level of membership I Key is to reach these accurately; by definition may not be at last game I Use cleaned lists of casual telephone ticket buyers.

2 Junior Green supporters

I Use Junior Green list to upsell to new membership; dedicated letter needed.

3 'Exiles'

I Access lists, e.g. London Greens, to reach these obviously committed fans.

BUILDING A BASE FOR THE FUTURE Apart from addressing the specific issues already discussed, the surveys also enabled the club to create a strategy designed to build a long-term supporter base, which would enable the club to move forward by generating greater revenues. To do so, it identified the key issues that the supporters had highlighted:

I The club considered that its competition was the general leisure market such as shopping, music, tenpin bowling etc, as well as other outlets for football such as watching Premiership games on TV or even supporting a Premiership club. As such, it was considered vital to take the following steps: I Increase awareness/visibility I Improve reputation I Attract younger fans

To boost top-of-mind awareness, a series of initiatives was proposed to give greater exposure 'around town':

I A city centre outlet I Exploiting the relationship with the local newspaper, The Herald I Publicising every home match I A Citybus poster campaign I Provide every pub (local bar) with a fixture list.

Proposals to aid the recruitment of children as fans:

I Schools/community programme I Players school visits I Open facilities up for visits/training I Sponsor DJM (junior) League I Matchday experience I Kids entertainment; face-painting I Increase family attendance I Introduce membership scheme.

192 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

TABLE 2.19 Membership category benefits

GREEN TANGERINE WHITE JUNIOR GREEN MEMBERSHIP CENTENARY CENTENARY CENTENARY CENTENARY TICKETS (ALLOCATION) I (23) I (6) I (23) £5 CLUB VOUCHER III PRE-SEASON PUBLICATION IIII NEWSLETTER III PRIORITY TICKETING I *** I ** I * I CUP FINAL TICKET DRAW I 10% DISCOUNT CARD I BIRTHDAY CARD I

* before general sale ** secondary *** primary

Apart from simply appealing to children, it was also agreed that it would be useful to appeal to teenagers/ young adults. Again proposals was drawn up:

I Partnerships I University/college of further education I Leisure events I 'Best Disco in Town' at Marquee; hoe-down I Lifestyle I Introduce new leisurewear range I Thought leadership I Take a lead in promoting anti-racism.

IMPACT OF SUCCESS In 2001, when Jones and the rest of the board took over, the club had 1,000 season ticket holders. It was a particularly good season for the club, which topped the Third Division, so there was a good deal of euphoria. On the back of this the club sold 3,000 season tickets for the 2002/3 season. The following season, though, this euphoria had lessened. Jones’ response was to consult fans again and to work out a plan to rework the concept of season tickets and membership. Part of this was to introduce different levels of entry, and to promote the new scheme at very low cost in a variety of ways. It resulted in the sale of 5,500 season tickets – up by a third – and with a great deal more information provided by fans on their application forms. The club gained a wealth of data and the means to communicate with fans in a more efficient way than ever before, via a newsletter and emails. The membership schemes offer something for everybody, including a certain number of tickets. According to the level, membership also offers vouchers that can be exchanged at Pilgrim Leisure, discounts at the club shop, a pre-season publication, regular newsletters, priority ticketing and the opportunity to win tickets to major cup finals. Prices range from Green Centenary Membership at £250 to White Centenary at £25 and Junior Greens at £20. It is marketed as offering fans the ability to become Plymouth Argyle's twelfth member (see Table 2.19 for suggested membership benefits).

MARKETING MOVES The strong relationship between fans and the club is one that has been forged by a combination of innovative marketing and communication between the two for the first time. The club is also continuing to measure customer satisfaction.

FOOTBALL SPONSORSHIP & COMMERCE 193 Section II Business opportunities

TABLE 2.20 PAFC financial performance 2001-03

YEAR TURNOVER PROFIT/LOSS 2001 £1.9m - £331,737 2002 £3.8m £846,436 2003 £3.95 £63,759

As its database has grown, driven to a large extent by the website and by new fans, so communication has increased. From the beginning, fans were encouraged to offer feedback on the club, its business plan and its activities. Now the club is emailing them with special offers. As soon as its shop acquires a new line - kit, or a DVD of 100 years of Plymouth Argyle, for example - fans are the first to know. PAFC's retail performance is a success story in its own right. Retail sales went up by 200% in the year 2002/03 and hit £500,000; for the financial year 2003/04 they had reached £962,667 – one quarter of club turnover. Just before the year end 2003, the club gave fans what they considered was the best present possible, a five-year extension to the contract of manager Paul Sturrock. The news, again, was signalled to fans via email and text before the rest of the world was informed. (Thurrock had a clause in the contract that would allow him to leave only if a Premiership club made an approach. Unfortunately for Plymouth Argyle, this happened in the spring of 2004, when Southampton made an offer which Thurrock accepted.) Such dedication to fans makes hard economic sense, according to Jones. “It's good business in the context of future proofing ourselves, but also building further goodwill among fans,” he said. “Message boards are full of fans who applaud the long term planning.” He admits that the club is not yet getting as much mileage as it should from its database, but insists that this will improve. Fans already get priority emails about special offers and discounts. “Our smart card is not yet as smart as it could be, but it is being used to track what people spend on in the shop, which is useful,” he said, “and it will get additional functionality over the coming year.” So while it is a planned smart card, currently it is more of a passive one that fans carry with pride. In the future, however, it will use the data from tracking studies that are already being carried out for cross promotions, ticketing and so on.

GOING UP The impact of the board's business plan is already evident on its balance sheet. It has made a profit since 2002, albeit partly due to the club's performance in championships. So why has it proved so successful when other clubs have fallen by the wayside? In Jones’ opinion, for a club to be healthy it needs to:

I Watch its fees and outgoings carefully I Invest in a better team I Raise its income levels (with a lot of emphasis on changing the balance of income through conferences, events and so on) I Boost its retail operation (PAFC's shop has seen its income soar from a very low base).

“Why have we made money?"”said Jones. “It's down to constant improvement in the quality of the football offer, putting our heads around marketing, and the fact that we run our club as a proper business. As simple as that.” Plymouth Argyle has managed to overcome the problem that sinks many boards: that when successful businessmen and women turn their hands to football, their hearts rule their heads. As Jones put it: “Although we are fans and our hearts are pounding, we are quite tough about the business side because that is the only way that there will be a long term future for the club. And the great thing is that everybody in the club buys into that, including the football manager.”

194 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

PRE-SEASON ACTIVITY All clubs tend to go for a pre-season training stint, often to foreign shores. Last year PAFC decided to venture to Austria. There are the obvious football benefits in bringing players together for five or six days, working hard and bonding. But there can be other advantages too. The cost of the pre-season tour was around £25,000, but the club managed to underwrite a fair amount by opening it up to fans. It demonstrates to them, says Jones, that the club is open and receptive to any who want to come along. Sales of such packages brought in around £15,000, a welcome boost for a club in any division, and a dozen or so fans went along on the trip. It provided the opportunity for them to travel with the team, to stay with them, and to join in a game versus management (with players joining in on both sides to raise the standard of professionalism and fitness).

THE FUTURE Plymouth Argyle has a number of factors in its favour. Football fans in the area would have to drive three hours to see a team of the same calibre or better, therefore it has a captive audience. It has also gained converts outside of its regional base, boasting a London fan branch (some 600 members), one in Cornwall (between 100 and 150) and in Leeds, Lancashire and Bristol. It has managed to keep its spending down. Player budget was £600,000 less than that of its previous Division Two rival QPR, and it spent just £70,000 in transfer fees. It has managed to claw its way into the black while competitors are paying huge sums just on the interest on debt, and the City Council is behind the club all the way. PAFC is situated in one of the 12 biggest cities in England, and its council desperately wants to succeed and have ambassadors working for it on a national (one day maybe an international) scale. The club is perhaps lucky to have so many strands in its favour. For the moment, Jones sees the club’s success as being due to its holistic attitude. Marketing, proper running of the business and better football all feed off each other. It is always a balancing act, involving long discussions when setting pricing for the next season, but PAFC also recognises the need for a delicate touch. As Jones points out, when pricing levels are under discussion, there’s never a straight answer – one has to use common sense. Perhaps the most telling aspect of the club's progress in the past two years is that when its marketing drive started, the banks did not want anything to do with PAFC. Now the tables are turned. There are not many clubs in that position.

RESULTS The club's annual reports show that the commercial progress being made is matching the on-field success. For the year 2003, club shop receipts rose to £962,667 and turnover overall had nearly doubled in two years, from just below £2 million to just below £4 million. All this was despite the fact that, in common with all other League clubs, it lost money from the failed ITV Digital venture. (ITV Digital, a new channel created by the UK's leading independent free-to-air broadcasters, had tried to use English League, excluding Premiership, football to launch a digital TV platform. The pay-TV model subsequently collapsed with the TV supplier failing to fulfil the contractual payments to the clubs.) PAFC explains the fall in profit in 2003 as being the result of the ITV Digital demise and several other factors: “The year 2002 included an exceptional item with regard to television money being received in 2002 due to the demise of ITV Digital, but it also included the championship winning performance, which... generated much greater revenue, at a time of considerably lower overheads. This year [2003] we have had to contend with increased expenditure, including recognising the worth of players in the higher division.” PAFC's customer satisfaction survey revealed a fan base that considered the club to have made immense strides, physically, managerially and on the pitch. They regarded the directors as fans first and foremost, but level-headed, approachable and possessing a human touch. This was shown by the 60% of respondents who praised the quality of the PAFC website, the 61% who cited the ease of getting match tickets by phone, and the 51% who appreciated the swift response to fans' letters. Directors acknowledged, however, that there was still work to be done. Some 19% of fans considered the food and drink to be overpriced, while some 18% were unhappy with the attitude (and sometimes appearance) of stewards, and 17% were unhappy with the delay to Phase 2 of its stadium plans.

FOOTBALL SPONSORSHIP & COMMERCE 195 Section II Business opportunities

CONCLUSION

Plymouth Argyle is an example of a club that knows it has to adopt a holistic approach if it is to win both on and off the pitch. Its first step, to conduct an internal audit, was swiftly followed by more research of both fans and the local community, which was then funnelled back into planning future activity. Its 2003 survey revealed a profile of a new, younger generation of fans attracted by the club's go-ahead feel and its performance on the pitch, thus breathing new life into the club. Some half of all season ticket holders were revealed as recent, 34% having bought a season ticket in the last year, and 17% over the last two or three. The club used the data to revise its ticket pricing structure (with fans seeing the results as offering extremely good value) and to revise its product offering (witness the 400% increase in retail sales over three years). The club knows the areas where it has experienced problems and is working with staff and fans to overcome them. One of its goals for last season was to create a more upbeat feel, with more excitement, on matchdays. This too appears to have been realised, with performance on the pitch reinforcing the sound business performance off the pitch. Here is an example of a club that is delving deep into the nature of fans and lapsed supporters, and working out ways to create greater loyalty. In the past, fans have often been seen as a ‘necessary nuisance’. Plymouth is a club that recognises that its ambitions need a constant reality check to monitor its standing. Through analysing the background and lifestyle of its fan base, the club has been able to isolate the high spenders and formulate targeted offers. The marketing tactics of big brands are, therefore, showing their worth for clubs not just in the higher divisions but also for those lower down, with Plymouth proving a prime example.

Chapter 24: Virtual/perimeter advertising

Often the most visible part of a sponsor’s package is perimeter board advertising, yet it is just that – advertising. It is at its most effective in positions where the TV cameras pick it up, and can be almost worthless when it merges into the clutter of an overfull stadium. So what does make it a success? It is advisable to get confirmation of how much on-screen time perimeter boards have notched up in previous seasons compared with individual advertising media, such as jersey, displays, graphic inserts or cam-carpets (see Northampton case study). In addition to placement, design is key. Signage lettering needs to be clear and legible, and visible from a distance, keeping contact details to a minimum. Perimeter boards are standard to most packages. MasterCard, for instance, in addition to retaining the rights to use the official marks, logos and designations of each of the events it is connected with in advertising, promotions and merchandising, also received on-field perimeter signage: two boards at the 2006 FIFA World Cup, three at the 2004 UEFA European Football Championship, four double boards at the UEFA Champions League and four double boards at Copa America. Pricing varies according to supply, demand, position and league, and boards tend to be used for tactical marketing. When Vauxhall, for instance, wanted to launch its first ever large van – the Movano – it chose football to build and maintain awareness among its target audience (C1 C2 D men). With a budget of just under £500,000, Vauxhall picked Premier League matches for promotional purposes, with a package that included:

I matchday programme advertising I perimeter board advertising to capture large TV audiences I matchday sponsorship I stadium radio across 69 football clubs.

The campaign proved worth the money in building awareness and it won Media Week’s Launch Strategy Award.

196 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

LED PERIMETER ADVERTISING

The standard perimeter advertising fare at most football grounds in Europe is of the cheap and cheerful variety. In recent years, however, LED displays are winning a surprising number of fans. Electronic displays are said to enhance viewer enjoyment, particularly those watching at home on their TV sets. (The opposite view is that they provide a distraction from what’s happening on the pitch.) Whatever the case, electronic displays are starting to overtake that innovation of yesteryear, rotating hoardings, as the advertising of choice. Prices for the latter fell from an estimated $800,000 to $80,000 in the 2003/2004 season. Despite this fall, rotating hoardings do have certain business benefits: they can increase a club’s revenue, giving it more ad space per perimeter metre than static boards; they can attract more advertisers and increase exposure; they can even improve the appearance of a ground; and spontaneous memory recall is said to be, on average, 3.5 times higher than with static ads. As for the costs involved, while static boards cost more than £5,000 at minimum to install, compared with the £200,000+ needed to buy 200 metres of revolving system to cover a televised perimeter, the profit with rotating/electronic boards can be three times greater than that with static versions. There are, however, problems facing those who wish to introduce electronic media across Europe. Size of stadia is one factor: many European hoardings are around 1 metre high – the size used by manufacturer International Sports Organisation (ISO), which is unrealistic in the smaller UK grounds. Many clubs in the Premiership would have to dismantle rows of seating near the pitch in order to accommodate such screens. Another consideration is that electric screens are displayed to greater effect at night. This, again, serves much of Europe well but not the UK, where many matches kick off during the day. All this might be about to change, however. Nasdaq-listed company Daktronics provided screens at the 2004 UEFA European Football Championships in Portugal and intends to do so for the final at the 2006 World Cup in Germany. It also has a foothold in the UK, having installed a screen at Southampton FC’s ground and a temporary one at Twickenham, the England international rugby stadium. The problem still remains one of size, however. It helps for electronic screens to be built into the original design – or for them to be temporary structures. If they can be hired by clubs for other venues, it makes them more attractive financially. All in all, it is likely to be a while before the big screens replace the haphazard hoardings so common at most grounds.

VIRTUAL ADVERTISING Virtual advertising, on the other hand, has created quite a stir in the sporting community. It is a market predicted to hit $2.1bn in 2005, and counts General Motors, Eastman Kodak, Nissan Motors, MasterCard, Toyota and Charles Schwab among its converts. At its most simple, it is technology that allows real-time video in computer- generated ads to be added to TV broadcasts. This means that images can be integrated seamlessly into a live event or programme while filming is taking place. The ads often prove so realistic that it is difficult for the TV audience to know whether the ads are part of the broadcast or have been inserted. Though currently limited in application – virtual advertising is best used on flat surfaces such as pitches, road surfaces or backgrounds at sporting events – it is technically possible to superimpose ads onto moving vehicles (cars, boats etc) or even individual sports men and women. In 2000 FIFA decided to allow the use of virtual advertising in FIFA-sanctioned soccer matches, thus opening the market up to companies such as PVI (Princeton Video Image Europe). However, FIFA simultaneously introduced its own regulations. These are reproduced on pages 198-9.

FOOTBALL SPONSORSHIP & COMMERCE 197

Section II Business opportunities

FIFA REGULATIONS FOR THE USE OF VIRTUAL ADVERTISING

1. Purpose These Regulations are to be applied for the use of Virtual Advertising (“VA”) on the occasion of football matches. The issue of these Regulations is intended to ensure that VA is applied reasonably and the integrity of football matches maintained. According to Law 1, Decision 3 of the Laws of the Game approved by the International Football Association Board, and valid as per 1 July 1999, all forms of advertising, real or virtual, is forbidden on the field of play and its appurtenances, including the goalnets, and also on the area immediately surrounding the field of play. This restriction applies from the moment that the teams enter the field of play before each half of the match, and until the moment that they leave it after each half.

2. Definitions a) “Virtual Advertising” refers to the manipulation by computer of authentic images, either live or delayed, and the substitution of various elements of those images with the purpose of implementing advertising messages into the signal transmitted by television or by similar current or future technologies (on-line, desktop-publishing, single-frame, DVD, etc.). b) “Transmitted images” refers to electronic recordings (analogue or digital) of single-frame images (still pictures) or of sequences (moving pictures or video signals) by the corresponding recording means. c) “Football matches” refers to all matches between football teams organised by FIFA, or by the Confederations and National Associations affiliated to FIFA, or by the clubs affiliated to the National Associations.

3. Area of Application These Regulations are applicable to the transmitted images produced of football matches by television or by any and all other current or future forms of transmission for public consumption, as well as to all other current or future forms of publicising images of football matches, including especially newspapers, other publications, and the internet.

4. Rights Holders FIFA, the recognised Confederations, the affiliated National Associations and clubs affiliated to the National Associations which organise football matches are the original holders of the rights associated with such football matches.

5. Obligation to Transfer the Contents of these Regulations The granting of rights to football matches by the original rights-holders or by third parties acquiring such rights may only be permitted when those parties acquiring such rights enter a legally binding agreement to uphold the contents of these Regulations.

6. Conditions for the Application of VA VA is permitted only when the following conditions are all fulfilled :

I To do so does not constitute an illegal act I All involved parties, especially the Host Broadcaster, sub-licensees and marketing rights-holders are fully informed and contractually bound with regard to the application of VA and the contents of these Regulations.

198 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

I Outside the field of play, VA may only be applied during the transmission to appear on existing flat surfaces which may or may not be used in reality for publicity purposes (including advertising boards standing beside the field of play). In particular, VA is expressly forbidden I on surfaces specially created for the purposes of being used for VA I on all persons in the stadium I on all mobile or stationary objects not originally intended to carry publicity of any kind I in the air space above the entire stadium area I in the air space which may be seen by the public and covered by TV cameras. I VA may be applied to appear on the field of play in the centre-circle and in the two penalty-areas (including the arc of each area) until the moment when the players enter the field of play before the start of each half of the match, from the moment when they leave the field of play at the end of the first half, and from the moment they leave the field of play after the match has officially finished (normal time, golden goal, penalty shoot-out).

7. Failure to observe these Regulations The Confederations, the National Associations and the clubs affiliated to the National Associations shall be held responsible for failure to observe these Regulations, whether such failure shall be caused by these parties or by third parties to whom the rights to the match in question has been directly or indirectly granted.

8. Disciplinary Measures Disciplinary measures shall be taken against any party responsible for failure to observe these Regulations. The responsible bodies in such cases shall be : a) FIFA, for such offences committed by a recognised Confederation b) the respective Confederation, for such offences committed by a national association affiliated to that Confederation and to FIFA c) the respective National Association, for offences committed by a club affiliated to that National Association. Disciplinary measures shall be taken when the responsible disciplinary body is informed by any party of any infringement of these Regulations. The disciplinary body shall follow an expedient and simple procedure to impose disciplinary measures, in order to permit a decision to be reached within five working days.

The disciplinary regulations of the disciplinary body in question shall be applied.

9. Legal Recourse Appeal against decisions involving disciplinary measures may be made in writing within five days of noti- fication of such decision, to the body responsible for such disciplinary measures.

These Regulations enter into force on 1 January 2000.

FIFA Michel Zen-Ruffinen, General Secretary Zurich, December 1999

FOOTBALL SPONSORSHIP & COMMERCE 199

Section II Business opportunities

Chapter 25: The role of research

The idea of investing millions in an advertising campaign without researching it first would be anathema to most marketing directors. Why then should it be any different with sponsorship? On the property owner’s side, it has to make sense to research the potential sponsor’s business, its performance, its demographics and, most importantly, its audience – before trying to create any synergy.

PRE-SPONSORSHIP RESEARCH Sponsors should be prepared to undertake research before they get involved with a club or an event – to leave it till afterwards could be a costly mistake. Sponsors should look at the appropriateness of the sponsorship, brand image, how best to communicate brand messages through the sponsorship, awareness and attitudes towards the club or event, how the brand owner’s target audience feels about current sponsorships and possible new properties, its purchasing habits and the impact that the new sponsorship might have on these habits.

ESSENTIAL INFORMATION FOR SPONSORS Any brand owner will require data not just on football audiences per se, but on the specific characteristics of the club’s fans. Any audience survey, therefore, should include details of:

I those who attend matches, including their age, gender and, if possible, socio-demographic grouping I occupation I income and education levels I marital status I purchasing habits I postcode I frequency with which they attend games I number of people in their household, including children.

Sponsors should also be interested in any data on how previous sponsorships have performed. Have they affected awareness levels (spontaneous and unprompted) and attitudes towards the brand? Have they, for example, affected fans’ propensity to buy or switch brands? The Northampton Town case study shows how data can be overlaid from different sources to establish a correlation between fans and their attitudes. It is also handy to offer sponsors the chance to add their own questions about purchasing habits or attitudes to sponsorship on a club’s fan surveys.

MEASUREMENT METHODS There are three main methods used to evaluate sponsorship. The first, rather crude, method, is to compare the value of sponsorship-generated media coverage with the media equivalent cost. Then there is the matter of measuring awareness levels pre-, during and post sponsorships or events. Finally, some sponsors will focus on impact on the bottom line. As any marketer will know, the challenge is in isolating the impact of a sponsorship from the effects of other elements of the marketing mix. Often there is a lack of data before a sponsorship starts, even though this is essential for benchmarking purposes. When it comes to monitoring attitudes and awareness levels, however, the results can be dramatic. Visa, for example, found that the Olympic Games boosted its preference rate from 15 points prior to the Games to 30 points during the Games, and stayed above its entry mark when the Games were over. As for sales, these rose by 17%; prior to its sponsorship, Visa promotions had never boosted sales by more than 3%.

200 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

COMMUNICATIONS RESEARCH The need to distinguish between sponsorship research and advertising research is underlines by the set-up at research company Ipsos-RSL, which has two distinct teams, each with its own separate skills and techniques used to understand effectiveness. On the sponsorship side it produces a number of reports, including Sportscan and Leisure Monitor, which though accounting for only between 1% and 2% of the sponsorship division’s turnover, act as a handy calling card. Sportscan, for instance, analyses only the deals that are going on in the UK, helping to estimate the size of the UK sponsorship market but focusing only on sport. (It has a sister publication called Leisurescan, which deals with non-sport activity.) Leisure Monitor contains the results of a survey that interviewed upwards of 6,000 adults and children to understand their interest in nearly 50 sports, arts and leisure activities. Interest involves participation, attendance at events, watching on TV, listening by radio, reading about events in newspapers – with RSL then producing a piece of software which allows clients to manipulate the data. Ipsos-RSL has been trying to educate the market to use this as a pre-testing mechanism. If an agency has a client, say, that is interested in a target market of males age 25-54 living in the north of England, that requirement can be input into the software to highlight the top ten sports that these people are interested in, at any level, even to the point of participation. That can be useful for clients, sponsors and agencies, providing concrete information about what their target market is actually interested in and then investigating properties that might fit. This is the first port of call, because if the target market is not actually interested, why would a company get involved – assuming that it is a consumer focused sponsorship rather than a business to business or internal one?

RESEARCH EFFECTIVENESS The majority of Ipsos-RSL’s work is with sponsors and rights owners, using market research techniques to evaluate sponsorship effectiveness. In football, for instance, it works with the FA, the Premier League, Nationwide and many others – in effect nearly all the major sponsors of the sport in the UK. Over the years, its biggest partner has been ITV, producing a large study evaluating broadcast sponsorships every fortnight, interviewing 20,000 to 30,000 people a year. Ipsos-RSL does not, however, carry out media value research, focusing instead on effectiveness – the impact of exposure among the target market, depending on the sponsor’s objectives. The company does not believe that there is just one way of evaluating sponsorship. It is an activity that is unique in its versatility as a communication medium. As a result, it looks at each project individually, at the objectives among the target market, and then designs the most appropriate research solution. It may have some definite views, approaches, rules and databases but it is not going to strait-jacket clients into a standard sponsorship research method. In effect, in any six-month period, methods can vary from telephone research, at- event research, in-home research on paper, CAPI (computer assisted personal interviewing), multi-media CAPI, household panels, product tests, qualitative individual focus groups, in-depth interviews, and the company’s omnibus research (adding tailored questions to general surveys).

MODUS OPERANDI Clients, whether sponsors or rights holders, need to be comfortable with the methods that are used to research effectiveness. The best route is one that is arrived at in tandem with the researcher. The client provides the researcher with the brief, and he responds with a proposal. This is presented and discussed, with both sides contributing to the process. There are those who describe Ipsos’s SponsorTest as the industry’s sponsorship tracking study. It monitors in excess of 30 different properties on a weekly basis, looking at spontaneous sponsorship awareness of brands and companies associated with properties. SponsorTest is a key measure, first because it has been going for over 10 years and therefore has an enormous amount of historical data; second, it’s syndicated, so costs are significantly reduced. This is a major issue, since researchers have to fight for budget along with other service providers, and research, unfortunately, does not come cheap – it can range from £2,000 to £500,000. It is important, therefore, for researchers to understand a client’s budget and its objectives, and then (depending on the size of the sponsorship) to design the most appropriate solution. The SponsorTest looks purely at one measure, but that measure is fundamental.

FOOTBALL SPONSORSHIP & COMMERCE 201

Section II Business opportunities

From the researcher’s perspective, if consumers are not aware of the communication then any attempt to pick up on the resulting image, attitudes, positive response and consideration to purchase the brand, whether via advertising, sponsorship or whatever, is futile. SponsorTest, however, contains 30 or 40 different properties, so people can subscribe to it in whole or in part, thus allowing companies to benchmark how effective their sponsorship is against other people’s. A track record in sponsorship research can also produce significant learnings that help the interpretation of results. Sponsorship fit, for example, can be an instrumental driver of association or awareness. Support marketing, however, is absolutely key to driving awareness.

FOOTBALL SPECIFIC RESEARCH There are three main factors that contribute to a successful football sponsorship. If attempting to communicate with consumers, for example:

I Bear in mind the rate of decay of previous sponsorships and any brand confusion with that property. I Look at the level and efficiency of the support marketing. It’s not just the weight, but how effective is that support marketing. I The third element is what is called sponsor’s ‘share of voice’. So if one sponsor, say a Barclays or a Coca- Cola association with football, grows in the public’s mind, this can have a detrimental effect on other sponsorships involved with the sport.

It is, therefore, important to think not just about support marketing but its timing. This is because marketing may coincide with support from sponsors involved with other sports, thus crowding the field. Marketing support needs to be heavyweight and effective and to communicate the right messages – but even more important, it needs to be timed just right. Where a new sponsor is replacing an old one, the new sponsor will need advice on what media to buy to communicate with the older age group, who are always more likely to be less aware of the new sponsorship than children or young adults. There are any number of different research techniques. SponsorTest is just one of them. No researcher can have one big study that gets clean indicators on all the key measures and is then able to interpret them all. It’s more common to conduct one or two studies and then combine the data before inter- preting the results. You can have a 15-20 minute questionnaire, say, with brand measures and values at the top, and then you might look at the impact of some of these in the short term, with different modules in the questionnaire looking at other aspects. Media value data from companies like SIS and SMS can be laid over weekly awareness data. The danger lies in assuming that exposure necessarily results in awareness, because the three factors mentioned earlier – rate of decay, sponsor share of voice and level and efficiency of support – can militate against it, producing a flat line in the awareness results. There isn’t much crossover between media value and effectiveness research, which is why clients tend to buy these from different companies.

SPONSORSHIP’S BENEFITS The growth of the sponsorship industry underlines its attractiveness against advertising, yet its impact can be heightened or diminished by poor execution, if it lacks subtlety or relevance. So what can sponsorship contribute? For a brand it can:

I change its image I create a new market I create long term impact I effect emotional engagement.

If brand owners seek to change or consolidate their market position, or to alter their target market, research can plot their success rate, either through image or consumer profile tracking.

202 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

Chapter 26: Legal issues

The football industry has a huge variety of legal issues to consider, ranging from the employment rights of players to the effect of European competition law on the game’s governing bodies. This chapter highlights the major legal issues of which governing bodies, leagues, clubs and players should be aware. It should not, however, be regarded as a comprehensive guide.

COLLECTIVE SELLING OF BROADCASTING RIGHTS The commercial power of governing bodies and leagues is due in no small part to their ability to sell the broadcasting rights to matches collectively. For example, the Premier League in England negotiates the rights for televised coverage, on behalf of its clubs, to all its Premier League matches, and Champions League coverage is sold centrally through UEFA. The European Commission (“the Commission”) has recently questioned the central selling of these rights. The Commission sent a Statement of Objections to the Premier League, on 20 December 2002, relating to the joint selling of the media rights to Premier League matches. The Commission claims that “joint selling is tantamount to price fixing”. It further argues that the current deal is putting clubs and fans at a disadvantage, since clubs cannot profit fully from broadcast coverage of all their matches and armchair fans have access to fewer live games. The Premier League hopes to avoid this threat to the central selling of rights. “We’re optimistic that over the months ahead the Commission will come to agree that joint selling in our case is beneficial to all our members.” stated Philip French, Premier League spokesman, on 20 December 2002. It has until March 2003 to reply to the objections raised. The Premier League may gain some comfort from the central sale of broadcast rights by UEFA. A previous objection by the Commission resulted in UEFA drafting new rules regarding the sale of broadcasting and other media rights to the Champions League. UEFA had sold the rights as a bundle to only one broadcaster per country. The Commission considered this approach anti-competitive. “The rules where one broadcaster gets it all for a long period of time could not be exempted because they distorted competition between broadcasters – for which sports is a must have content,” commented the Commission. The new rules mean that UEFA had to sell the rights in several packages for shorter periods of time, and individual football clubs can exploit some of these rights with their fan base. As a result of the latest Statement of Objections, live Premier League matches may be shown on more channels by a greater number of broadcasters, as opposed to the current structure which only allows for live coverage on one satellite and one pay-per-view channel.

LICENSING OF MEDIA COVERAGE BY CLUBS Clubs may soon find themselves able to license the right to broadcast a wider range of matches if the centralised selling system falls out of favour. There are occasions when clubs will sell the rights directly to a broadcaster, as happens in the early rounds of the UEFA Cup or for friendly matches. However, these matches are often sold on a short-term or one-off basis. Clubs will need to be aware of a number of issues should they enter into more commercially attractive broadcast contracts. Firstly, the ownership of the content created under copyright law belongs to the producer/principal director of the footage. The club should seek assignment of the copyright in the broadcasting agreement of any live signal and/or recorded footage and commentary from the match. This footage can be licensed to other broadcasters and other media platforms. With archive rights gaining value since the video boom in the 1980s, the club will be safeguarding future potential revenue streams by seeking a copyright assignment of this nature. Secondly, the club should seek to maximise the value of broadcasting rights by offering various packages that can be split up on the basis of territory, language, time, exclusivity and media platforms. As technology improves, so will the value of rights in relation to mobile phones, WAP, 3G and internet access. These rights should be excluded from the television broadcasting agreement so that their value can be exploited separately.

FOOTBALL SPONSORSHIP & COMMERCE 203 Section II Business opportunities

SALARY CAPS A meeting in November 2002 of Nationwide Football League chairmen supported a proposal on salary capping of players. These proposals reflect a growing realisation that the present level of players’ wages is unsustainable. This had already been recognised by the G14 clubs (a lobby group of 18 of Europe’s ‘leading’ football clubs, including Manchester United, Arsenal and Liverpool). Last year, the G14 clubs produced a “Cost Control Concept” that included the ideal that there should be a cap on staff salaries based on a percentage of each club’s turnover. A salary cap would, on the face of it, restrict the ability of clubs to compete with each other for the services of players, thereby restricting competition in the market for players’ services. Limiting the amount a player could receive as salary is, it appears, a restraint of trade. For example, if a club’s cap on players’ salaries was £3 million and the club was already paying salaries worth £2,800,000, a player transferring to that club could not be paid over £200,000. Also, a player at the club negotiating a new contract could not receive an increase of over £200,000. The free market that is currently in operation would become a regulated market. Such restriction of competition might be illegal under competition law and/or the common-law doctrine of restraint of trade. In very broad terms, if the legality of this approach were challenged, those seeking to implement a salary cap would need to show that the cap is required to achieve a legitimate objective and is the least restrictive way of achieving this goal. For a practice to be considered reasonable, it must be in the public interest and give adequate protection to the interests of the players. It could be argued that it is in the consumer’s interests to secure the financial future of professional football. Maintaining the integrity of the sport and stability of championships may be sufficient objective justification for the imposition of a formal wage cap by UEFA or the Football League.

PLAYER TRANSFERS The players are obviously a very important part of any football club. It is their performance on the pitch that can influence economic success off the pitch. Occasionally clubs will develop players through its youth schemes. Most famously, Manchester United produced Giggs, Beckham, Scholes, Butt and the Neville brothers this way. As a general rule, however, the majority of first team players at clubs have been purchased from other clubs through a payment of a transfer fee. Clubs must, of course, be fully aware of how the transfer system operates. The picture has changed greatly since the famous Bosman18 case, which determined that if a player was at the end of his contract and joined another club, then his previous club could not charge a “transfer fee” and would have to pass on the registration of the player to the other club free of charge. This has resulted in several players leaving clubs at the end of their contracts and joining another club with no fee being paid for the transfer of the players’ registration. An early example of this was Steve McManaman’s move from Liverpool to Real Madrid. Players are increasingly reluctant to sign new contracts, as they are aware that better salary offers and signing on fees will be available if any subsequent club does not have to spend money on a transfer fee. In response to this change, clubs may chose to sell the player at a reduced rate before his contract ends to generate some incoming revenue. Another method used to combat this threat of players leaving for free is to grant players longer contracts and seek to negotiate an extension some time prior to expiry of the term. There are dangers, however, in awarding long-term contracts to players. If the players are not performing on the pitch through injury or lack of form, they will still have to be paid. There have been several cases of players pocketing large salaries and not playing for the first team on a regular basis (most famously Yorke in his last season at Manchester United and the Chelsea pair, Bogarde and Bosnich). It has been suggested that the answer to this problem is to tailor player contracts away from a high basic wage to a structure relying more on performance related pay.

18 Union Royale Belge des Societes de Football Association ASBL v Jean-Marc Bosman [1996] All ER(EC) 97, ECJ

204 FOOTBALL SPONSORSHIP & COMMERCE

Section II Business opportunities

NEW TRANSFER RULES Following a number of complaints, the Commission investigated FIFA’s rules on international transfers. This investigation closed in June 2002 and resulted in FIFA adopting new rules which were agreed with FIFpro, the main players’ Union and which follow principles acceptable to the Commission. “The new rules find a balance between the players’ fundamental right to free movement and stability of contracts together with the legitimate objective of integrity of the sport and the stability of the championship,” stated Competition Commissioner Mario Monti in June 2002. The most important rules are:

I in the case of players aged under 23, a system of training compensation should be in place to encourage and reward the training efforts of clubs, in particular smaller clubs; I international transfer of players aged 18 or under to be allowed subject to agreed conditions; the football authorities will establish and enforce a code of conduct to guarantee the sporting, training and academic education to be provided; I creation of one transfer period per season, and a further limited mid-season window, with a limit of one transfer per player per season; I minimum and maximum duration of contracts of respectively 1 and 5 years; I proportionate sporting sanctions (bans) to be applied to players, clubs or agents in the case of unilateral breaches of contract without just cause, in the protected period; and I creation of an effective, quick and objective arbitration body with members chosen in equal numbers by players and clubs and with an independent chairman.

Although the Commission has accepted these rules, they could always be challenged in the national courts of a member state. In particular, the introduction of a transfer window (which is arguably illegal as it restricts free movement and/or breaches competition law) preventing English clubs from transferring players from the start of the season to the end of December has proved unpopular at some clubs.

PLAYER IMAGE RIGHTS A subject of increasing importance in the football industry is control of players’ image rights. This is really applicable only at the top end of the game, where star players such as Owen and Beckham have considerable commercial value attached to use of their images. English intellectual property law does not recognise any proprietary rights in a footballer’s image per se. At best, protection for use of an image can be achieved to a limited extent thorough the application of several laws, including those which relate to copyright, trade marks, passing off and defamation. Whilst the protection provided by these laws can make for lengthy legal debates, the facts remains that image rights are increasingly becoming part of contract negotiations between players and clubs, and players and the national governing bodies. The current standard Premier League and Football League player contracts do not, arguably, provide adequately for the needs of today’s star players as far as the right to exploit the player’s image rights is concerned. The club or national governing body and player should seek to acknowledge specifically what rights each party will hold in respect of use of image. The following are the key issues that should be addressed19 in the contract:

I the player’s right to use his name and image for his own benefit, but not while on club service, nor using club colours (the club may further seek to impose restrictions on the player in relation to any endorsements that might be on behalf of an official club sponsor competitor); I the club’s right to use the player’s name and image, in his capacity as a member of the club, to promote the club and its sponsors; and I the number of personal appearances, photo shoots in support of the club’s sponsors.

Players who want to exploit the value of their image rights to the best should further seek advice on how to set up the appropriate company structures to reduce the tax on such payments from the clubs.

19 David Becker, “Sport: Law and Practice “, Butterworths 2003

FOOTBALL SPONSORSHIP & COMMERCE 205

Section II Business opportunities

LEGAL ISSUES FOR FRENCH CLUBS The commercial revenues of the clubs in the French Football League have been severely restricted over the years by their inability to maintain their star players. These players have gone abroad for bigger money and have performed successfully in other European leagues; as a result, French clubs have not been successful in European club competition, even though the national team has flourished as never before.

Legal restrictions on French clubs There are two particular legal difficulties which have contributed to this situation. According to Stephen Hornsby of law firm the Simkins Partnership:

I “The first of these is that (unlike their major European competitors), French clubs have had their access to capital markets restricted by national law. Whilst there has been some recent improvement in this situation, the matter is still under investigation by the European Commission as a result of a complaint by French clubs. I “The second handicap they have suffered is that broadcasting rights have not been clearly vested in the League and (to the extent that they have) collective selling has been subject to the same regulatory attack as in other countries.”

The decree of 17 July 2004 Hormsby explains that, by a decree of 17 July 2004, the situation has changed quite fundamentally. “To begin with, the decree makes it clear that the league has the exclusive broadcast rights to all competitions that it organises.” The second point to note is that leagues are allowed to make exclusive sales, enabling them to maximise their revenues without their being subject to legal attack – provided certain conditions are met. Interestingly (and typically), instead of piecemeal and time-wasting ex post facto competition law intervention, the French solution in relation to exploitation of rights is actually dealt with by the decree itself. Thus there is an obligation to put out to tender broadcasting rights in distinct packages, and contracts must in any event not last for more than three years. Leagues are under a legal obligation to reject global offers or linked offers or offers where extra money is available for purchases of the several packages. This deals with the situation that had caused problems in the Canal Plus affair. To get all the rights to the packages (which is legitimate) a broadcaster will have to put in the best offer for all of them. This could lead to significantly higher bids in the future. Against that, however, clubs must remain free to exploit TV rights that have not been used by the League’s principal broadcast partner. This could help to reduce any exclusivity premium at league level. The major French clubs, such as Olympique Marseille, have long objected to the over-equitable distribution of revenues from broadcasting. It may well be that this aspect of the new law will provide it with some opportunities to cash in on greater demand for its matches than is apparent for some of the much smaller clubs that make up the French first division.

What are the potential sporting implications? Hormsby claims that it now seems inevitable that the French clubs will gain access to the capital markets in the same way as their European counterparts in due course. This move, together with confirmation that the leagues own the rights and that rights can be used individually when not exploited centrally, could provide the French clubs with the reserves to start acquiring or retaining a larger number of their players than has proved possible so far. “Though it may take a very long time for a club such as Arsenal to lose its French accent, in the medium term there may be more of a level playing field from a commercial perspective that French clubs can exploit to their sporting advantage,” says Hormsby.

206 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

SECTION III SPONSORSHIP IMPLEMENTATION

Chapter 27: FIFA World Cup sponsorship

With sponsorship, it is never a case of signing up and waiting for the benefits to flood in; instead it requires working towards set objectives, building effective partnerships. The amount of money that a deal needs in support has also increased. In the past it meant spending the same amount on promoting the sponsorship as on its original purchase, but now, when it comes to the major deals, it costs up to twice as much or even more in terms of support. For the canny sponsor, who is prepared to put effort into creativity, however, sponsorship can prove a cost effective use of corporate funds – as the Nationwide case study demonstrates.

CASE STUDY: NATIONWIDE BACKGROUND The World Cup is one of the highest profile and costliest sponsorships available in the world of sport. Much is made of those who sign up deals to become official sponsors, yet sometimes a more understated approach can reap dividends without falling under the category of ‘ambush marketing’. Nationwide is a case in point. In the 2002 World Cup, the Northampton-based bank and building society was the official sponsor of the England team. This entitled it to a number of rights, but nothing compared with the extent of the official event sponsors. Nationwide was also a major sponsor of football in England and sponsored the professional football league tiers below the Premiership at the time. This case study explains how Nationwide made the most of its opportunities with the England team.

AIMS AND OBJECTIVES Marketing director Peter Gandolfi explains the rationale behind his thinking: “Since we didn’t have the World Cup rights, we were looking to work with the rights that we did have, and to cement our association with the England team as well, most importantly. The England team is very important to Nationwide because it says a number of very important things about our brand. The Football League has, for many years, been about our communities, about being fair to everyone, being around consistently in a fair kind of way. The national team sponsorship is about size and stature. To sponsor the national team you have to be very big, and in financial services, size is important – just as important as community – on the local high street. We needed to communicate both sets of objectives.”

FOOTBALL SPONSORSHIP & COMMERCE 207 Section III Sponsorship implementation

Nationwide’s overall aims were to:

I maximise awareness of Nationwide as the England team sponsor I create a positive brand image I ramp up awareness levels for future England exploitation I communicate to wider audiences I demonstrate ‘empathy’ with target audiences.

Its measurable targets were a 2:1 return in media value, and for awareness to peak at 50% and average at 30%.

WORLD CUP PREDECESSORS National team sponsors are a relatively new experience for England – and indeed for most teams on the international stage. Nationwide’s predecessor, Green Flag, the automobile recovery service, was the first England team sponsor, but had changed its name, from National Breakdown, half-way through the sponsorship. So, though it worked hard to build awareness, there was confusion among its target audience. Nationwide took full advantage: its challenge was to build association, and erode any residual awareness of Green Flag as quickly as possible. By the time the World Cup arrived, it was about three years into its association with the team and believed that it had finally managed to be recognised as the Team England sponsor. From then on it became a matter of cementing that association and ramping it up still further. Data from research company Hall & Partners confirms that prior to the World Cup, Nationwide’s association as the Team England sponsor had increased rapidly:

I On average, 22% of its target audience spontaneously associated Nationwide as the team sponsor. I On average, Nationwide’s target football audience was 15% more aware of its brand than those with no interest in football. I The tournament was also proving useful in reinforcing brand image. The following table shows Nationwide’s standing prior to the World Cup.

TABLE 3.1 Nationwide and England sponsorship awareness pre-World Cup

UNAWARE OF TEAM AWARE OF TEAM IMAGE ATTRIBUTE ENGLAND SPONSORSHIP ENGLAND SPONSORSHIP IS A MAJOR PLAYER IN THEIR INDUSTRY 22% 29% PUTS BACK INTO THE COMMUNITY 16% 27% DIFFERENT FROM THE OTHER PROVIDERS IN THEIR INDUSTRY 9% 18% IS LIKELY TO STAY INDEPENDENT 21% 38%

SOURCE: Ipsos UK

MARKETING AND THE WORLD CUP By the time the World Cup arrived, Nationwide was an old hand at leveraging its investment in the sport. It had learned from its experiences in Euro 2000, when it found that most tournament sponsors wait until the event, saving their budgets until the last minute. Instead, Nationwide pinpointed a two-to-three week period beforehand when the country is interested in the forthcoming event but no-one is bothering to communicate their involvement. This, Nationwide decided, had to be their opportunity. The World Cup is one of the biggest sporting events in the world, reaching an estimated global audience of 37 billion in over 200 countries, dwarfed only by the Olympics. World Cup 2002, which took place in Japan and South Korea from 31 May to 30 June, provided Nationwide with an opportunity to communicate its sponsorship of Team England to an audience which TGI estimated to be in excess of 25 million adults in the UK.

208 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

There were, however, a number of issues to be resolved:

I Nationwide knew that it would no longer be the exclusive sponsor of Team England after July, one month after the tournament. I The tournament, therefore, took on significance for prolonging its association post-contract. I There were 15 main FIFA World Cup sponsors and a plethora of other organisations competing for share of voice during the World Cup – so how was Nationwide to stand out?

FIFA ‘policed’ the use of rights, resulting in Nationwide receiving limited exposure during the tournament. If Nationwide were going to exploit its sponsorship to the full, it would have to be creative, flexible and very quick on its feet.

NATIONWIDE – THE BRAND As Gandolfi points out, in the early to mid 1990s, Nationwide was a big financial services brand that no-one had ever heard of. It was the third largest building society, behind Halifax and Abbey National, but bigger than all of the others and twice the size of the Woolwich and Leeds. Yet it had an awareness issue: its rivals were perceived to be bigger. Nationwide had also struggled to produce a consistent TV campaign with a formula or message that would work. At around this time, rumours began to circulate that Endsleigh Insurance was thinking of not renewing its sponsorship of the Football League. Nationwide decided that, as a vehicle, it had good frequency, reach and consistency of message over a long period of time. And so its relationship with football was forged. After starting the Football League sponsorship (the League is now sponsored by Coca-Cola), Nationwide added the Football Conference, to reinforce its grass roots and community links. Yet it still wanted people to understand that it was a very big financial services player – hence its sponsorship of the England football team. The company was keen to target the right messages to the right audience, so it did not attempt to communicate community messages through the national team properties. Similarly, it didn’t try to communicate messages about size or stature with the Football League. “My view is that if you keep it nice and clean, then the audience will take out the combination of messages,” says Gandolfi. “It is quite difficult to combine it in one message while keeping both aspects separate.” So the sponsorships evolved, to the point where people felt much more comfortable with the brand. Consumers respected the way Nationwide handled its involvement. The aim was to ensure that when they did think of financial services, they picked up the phone to call Nationwide or went into a branch because they were at ease with it – and the company’s research reinforced that view.

MARKETING ACTIVITY As previously stated, Nationwide saw the value in making its sponsorship of the England team work prior to the tournament. Its strategy was to devise a campaign that was:

I multi-layered and integrated, to provide frequency and reach I focused to punch through the considerable clutter I using media and vehicles to reach its audience as cost-effectively as possible.

Integral to the process was its desire to launch initiatives that would capture interest and demonstrate Nationwide’s understanding of the game and support for the team. It identified three primary markets:

I football supporters I football followers (of the national team) I those with no interest in football at all.

Its strategy was to use three main vehicles: a pre-tournament roadshow; radio sponsorship and merchandise, supported by a combination of press, outdoor advertising, branch activity, tactical PR and the internet.

FOOTBALL SPONSORSHIP & COMMERCE 209 Section III Sponsorship implementation

Nationwide’s PR activity had been going strong from the moment the England team qualified, following a 2:2 draw against Greece in October 2001. Then there had been staff waiting in the wings, ready to run onto the pitch with Nationwide branded flags. Photos in the press the next day showed the players not only draped in the flags, but carrying branded flags that said: ‘We’re going to the World Cup’. Pre-tournament PR activity proper, however, kicked off with a launch in March 2002, when a celebrity flag was unveiled, signed by stars such as the England team, Prince Naseem, Ant & Dec, Denise Van Outen, Baddiel and Skinner and Pop Idols. The flag was taken to matches, where people came onto the pitch and signed it. It was also web-based, and as it toured the country 700,000 people logged on to the home of the giant flag at www.TheFA.com. Over 193,000 of them sent an electronic good luck message, making it one of the most successful online campaigns of all time and enabling Nationwide to capture over 100,000 names and addresses. The campaign generated extensive media coverage on TV and radio, in the national and regional press and on the internet.

Radio Radio became an integral part of Nationwide’s campaign. As Gandolfi puts it: “It is one of the primary means of communicating. The first thing that people do in the morning is put on the radio or switch on the television.” Capital Radio issued World Cup bulletins (sponsored by Nationwide) between 31 May and 30 June to a potential audience of 10.7 million listeners. It also sponsored celebrity breakfasts and lunches. Nationwide was also the broadcast sponsor of TalkSport’s coverage of England’s pre-tournament friendlies and the first three group-stage matches of the tournament, hitting a potential 3.4 million listeners. Other Nationwide radio sponsorships included support of Sportsmedia Broadcasting World Cup bulletins on radio and over the internet (6.5 million potential listeners), and The Opus Group World Cup bulletins on regional radio (5.8 million potential listeners).

Merchandise Merchandise was seen as important by Nationwide, fitting in with its approach of giving something back to its audience. “People want mementoes,” says Gandolfi. “It enabled us to stretch our association post-World Cup and beyond the end of our contract.” The campaign saw over 2.5 million England Team posters and car stickers distributed through branches and media partners. It also tried to involve the public from the moment they woke up with an on-pack promotion that saw the Nationwide name, along with ISP Tiscali, feature on Nestlé breakfast cereal packs. Some 3.6 million were sold in major multiples in May and June 2002. The sponsor also signed a deal with Carlton Books, which sold 100,000 Nationwide branded books through high street retailers and media partners. This it viewed as a long-term investment, since it considered that they would have a long shelf-life. It also produced 50,000 Nationwide branded Dream Ticket England videos, sold through various outlets. It was in third-party deals, however, that Nationwide had tremendous success. Gandolfi knew that fans wanted to wear t-shirts and, if Green Flag’s example was anything to go by, wore them for several years after the event. Nationwide signed up three separate partners: Dixons, Travelex and Match magazine. Whenever travellers bought currency at a Travelex airport branch, they received a t-shirt. It generated such enthusiasm that even some pilots wore them, and fed back results to passengers. In all, some 100,000 Nationwide branded baseball caps and t-shirts were given away through third party promotions involving partners.

Supporting tactics Nationwide knew that its involvement needed to be leveraged, so the company embarked on a range of support activities. It launched a seven-day promotion in the Daily Express and Sunday Express newspapers, offering readers the chance to win one of 5,000 Nationwide branded ‘Germany 1 England 5’ beach towels in March – over 16,000 entered, and a further 2,000 towels had to be produced to satisfy demand. In the Daily Express it sponsored a 66-day World Cup countdown – small features on England performances in previous tournaments. Nationwide also ran a promotion in the Daily Star to find the ‘best dressed house’ showing support for England during the World Cup, knowing that the British like to demonstrate their loyalty to the team. Press was not the only promotional avenue, however. Nationwide ran a national outdoor poster campaign for two weeks from 13 May featuring England players demonstrating the ‘Pride, Belief and Passion’ of the team. The

210 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

posters appeared on sites on over 1,000 key commuter routes throughout England. Drivers were not forgotten either, with 100 replica car windscreen visors given away through a promotion in the Sun newspaper, to build awareness of the campaign.

In-house activity All too often sponsors lack the energy or creativity to launch a fully integrated campaign. Nationwide, however, was determined to stretch its involvement as far as it could go. This led it to produce

I Nationwide England team brand ATM receipts from 8 April I 825,000 World Cup related inserts, distributed with the May Flexaccount statements I email marketing campaign sent to 150,000 members in May I selected ATM screens displayed England Team sponsor message from 7 May I 500,000 Nationwide branded World Cup guides distributed through Scottish Courage bars and Total garages I England Team posters, car stickers and Nationwide branded pin badges (These were given away to members through the branch network during May and June.)

Throughout its campaign, it never lost sight of its audience. It ran one ad showing how Nationwide could help individuals needing financial service, followed by another showing David James and Sol Campbell playing Subutteo. Yet another showed children going out to play a Sunday match with their kit on, proud parents looking on, eager to play football. The rationale was that nationally they wanted to tap emotions. The ads did not actually show being kicked, opting instead for a subtle approach – simple association.

Magazines Nationwide looked to a mixture of sponsorship and advertising in magazines to support its Team England involvement. This led it to:

I sponsor Esquire’s World Cup supplement (circulation 65,000) I advertise in Top Gear magazine (circulation 150,000) and the BBC World Cup magazine (circulation 90,000) I give away branded t-shirts in Match magazine (circulation 50,000) I promote a Four Four Two/Nationwide fleece offer and car sticker giveaway (circulation 100,000).

Esquire and Top Gear were seen as offering an opportunity to reach different audiences from those provided by the nationals, and they shifted millions of items of merchandise.

Internet Given the abundance of sites featuring World Cup content, Nationwide could have struggled to achieve cut- through. However, by choosing carefully which ones to become involved with, it maximised involvement. The company launched banner advertising on BT Openworld, Yahoo!, Football 365, Rivals.net and Tiscali to drive traffic to the Giant St George Flag site. It also sponsored Sportsmedia Broadcasting’s online World Cup bulletins and mounted a promotion on Dixons’ website to 1.2 million active users, featuring a full-page offer, including an image of a Nationwide branded T-shirt. Yahoo! could have proved a problem, since it sponsored the official FIFA site. Nationwide, however, got agreement to feature on the Yahoo! main site (through which many visitors accessed the FIFA site). It even managed to allay the fears of MasterCard – an official World Cup sponsor – following discussions. After all, said Gandolfi, this was not ambush marketing.

FOOTBALL SPONSORSHIP & COMMERCE 211 Section III Sponsorship implementation

RESULTS Nationwide was not a World Cup sponsor and did not want to be perceived as one. Nevertheless, research following the tournament showed that Nationwide was second only to Coca-Cola in terms of association with the World Cup. Gandolfi cites this as a successful campaign, and a long-lasting one, extending the company’s association with football. As for the media value of its campaign, it is estimated as being worth £2.13m (May and June 2002). Awareness of Nationwide as the England Team sponsor, meanwhile, peaked at 41% among its target audience. It managed to reach out and touch each of its three audiences in different ways.

CHART 3.1 Awareness of Nationwide association May to June 2002

NATIONWIDE'S ASSOCIATION WITH THE ENGLAND TEAM MAY TO JUNE 2002 50%

45% ALL RESPONDENTS ANY INTEREST 40% 40% HIGH INTEREST

35% TARGET MARKET

30%

25%

20% 20%

20%

15%

10%

0% Y 02 Y 02 Y 02 Y 02 Y 02 02 MA 09 MA 16 MA 23 MA 30 MA 06 JUNE 02 13 JUNE 02 20 JUNE 02 27 JUNE 02

SOURCE: IPSOS Sponsortest June 2002

Could it have done better? It is hard to see how. It exploited each tool in its marketing armoury, investing a fraction of the amount put in by the major World Cup sponsors in leveraging its involvement yet reaping awareness benefits and making the brand top of mind where financial products are concerned. Nationwide had put together a small team, augmented by independent specialists, to brainstorm how to get its message across in different media. This team came up with the goods time and again, from being poised to hand players branded flags, costing at the most £20 and guaranteeing exposure in the national press the next day, to launching a towel promotion – featuring the score of England’s win against Germany – that would capture the imagination of the British public and the British press. This is a sterling example of how limited budgets can act as a springboard to creativity rather than stifling effectiveness. Nationwide might have now relinquished its role as title sponsor of the English Football League, but such has been the success it has enjoyed from its soccer-linked sponsorships that it will be linked with the sport long after it chooses to end its involvement with football – if it does.

212 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

CASE STUDY: AVAYA

Avaya Inc. is a fairly rare breed of company. It designs, builds and manages communications for more than a million businesses worldwide, which includes more than 90% of the Fortune 500. It also happens to be the first purely business-to-business sponsor of the FIFA World Cup. Formerly known as the Enterprise Networks Group of Lucent Technologies (itself a spin-off from AT&T), and headquartered in Basking Ridge, New Jersey, Avaya began trading independently in the autumn of 2000. The company had a customer base of nearly one million across more than 90 countries for its communications software, products and services. But even this vast number is just a drop in the ocean when measured against the global potential. The challenge for Avaya was how to grow its business, and awareness, within a clearly defined target base. By a happy coincidence, its business requirements happened to match the needs of FIFA, which was keen for Avaya input to make the 2002 World Cup a global communications success. The sponsorship enabled Avaya to boost awareness among executives and IT decision-makers worldwide.

BACKGROUND Even though it came into the sponsorship fairly late, Avaya hit the ground running. It saw the championship as the ideal opportunity to showcase its technology, with its products powering data and voice networks at all 20 of the 2002 World Cup venues. The hardest part of Avaya’s task was to communicate what it did – ‘converged’ voice and data networks. These are being used increasingly by businesses and organisations as a way to save money and to simplify network administration. The network that Avaya designed, installed and managed for FIFA proved to be one of the largest of its kind, connecting more than 10,000 data and communications devices and offering more than 40,000 connections and 15,000 telephony extensions for the Federation’s network users. FIFA wanted seamless communication for a tournament that was taking place in two different countries (Korea and Japan), with all the distance problems that this setup could present. Most of the 20 new stadia and two major media centres were still under construction, while international tensions had raised new concerns about terrorism and network security. Avaya’s converged voice and data infrastructure, called Enterprise Class Internet Protocol Solutions (ECLIPS) would bring more service to more people with less equipment. The downside was that the network, part of the company’s $100m six-year commitment (a mix of money and support in kind) to World Cup soccer, would need to be built in one-third the usual time for such orders. The scale of the task, and the following figures, show that Avaya met this challenge with what has been recognised as virtually flawless performance. The network involved:

I 27 venues (20 stadia) I 10,000 communications devices I 40,000 network connections I 100,000 IP calls completed daily I $200,000 long-distance savings I 3,200,000 IP and analogue calls completed I 99.99% error-free transmission.

The end network also provided the critical communication path not just for the stadia where the matches were played, but also:

I the FIFA management offices and the organising committee offices in Korea and Japan I the accreditation centres where the 40,000 volunteers and media representatives covering the games received their special credentials I the international Media Centres, including broadcasting centres in Seoul, Korea and Yokohama, Japan – the nerve centres for coverage of the matches by 12,000 media representatives.

This sponsorship could have proved a thankless task, since the only time such a network would hit the headlines would be if it went wrong. As Gerard Gouillou, head of IT Projects, FIFA World Cup and Internet, for

FOOTBALL SPONSORSHIP & COMMERCE 213 Section III Sponsorship implementation

FIFA, put it: “Fans don’t care what we do backstage. They will remember who scored the goals on the field. So IT needs to be invisible. But no matter what, you have to be ready on time, and you have to have the systems always available.”

BUSINESS PARTNERS A key part of Avaya’s strategy was to involve business partners, including data vendors Innovis (Korea) and CTC (Japan), wiring vendor Daesin for stadia in Korea and Locus (Korea) for voice support. Their involvement meant that the first segment of the network was in place for the final draw in Busan, with the results communicated by international press to the rest of the world using the new network.

SPONSORSHIP OBJECTIVES Avaya was probably more realistic than most of its objectives. As Simon Clarke, Europe, Middle East and Africa (EMEA) director of corporate brand and marketing services, puts it: “We sponsored the 2002 World Cup and are sponsoring the 2006 tournament, not because it is the biggest sporting event on the planet, but the biggest communications event, and during the month of June it has more communications than any business in the world.” The company was also building for the future because it knew that if its involvement with FIFA did prove successful, it could provide not just one but a number of different case studies, looking at a variety of solutions and relevant to a variety of sectors. This was going to be “particularly useful” to their business, says Clarke, “where the companies in these various sectors feel that they are unique because of their specific requirements, such as finance and retail.” “If you take one case study like football, which has no specific relevance but generates interest across the board, you can draw a parallel between football and all of them. It makes for a fantastic story. And when we use the football content, which interests all of them, rather than a boring sales message, and can demonstrate that this message was brought to you using Avaya technology, it makes our marketing much easier.” Avaya is using football in a slightly different way from suppliers of consumer goods and services. Most other sponsors would point to the fact that they tap in to the emotion of football. Avaya, however, remained focused on the content, and the event’s popularity, using the imagery to reinforce its message. It freely admits, though, that it is not wedded to the sport itself – if another sporting event had been of the same size, it might have gone another route.

MARKETING ISSUES Avaya came into the sponsorship fairly late in the day, barely seven months before the tournament, so it didn’t have the great build-up of preparatory time available to other sponsors. Its involvement also happened fairly shortly after the company was hived off from Lucent. This meant that it had obvious brand awareness issues, not just in building up an identity for the company but also for its solutions outside the US. It is not a mass market brand – being in the business to business market, 99.9% of the world’s population is not its target audience. As Clarke puts it: “We are not interested in putting our logo up and getting that 99.9% aware of who we are. It’s about using the content and going for that 0.1% and using it in a slightly different way – online credits have slightly less relevance for us than for the consumer market.”

MARKETING TACTICS However, it used its sponsorship-related content very successfully. In EMEA, this was manifested in the launch of a viral campaign and the sponsorship of www.sports.com, an online reporting service, which saw a 200% increase in web traffic during the period. At the time, www.sports.com was the most visited dedicated sports website in Europe. Avaya sponsored a specific section on the World Cup, featuring live match reports, player-by- player analysis and a critique of how they performed. It generated 118 million impressions of the Avaya logo on the site, and proved a useful alternative to just putting a World Cup logo on Avaya’s own site – rewarding the company’s creativity. “It was good for us in that most people were at work when the games were played but still wanted to know what was going on,” says Clarke. “So they could download one of the ticker tapes which ran along the bottom of

214 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

the screen, complete with Avaya branding, and for the ninety minutes the game lasted, we had our logo on people’s PCs. They could then click to our website to find out what we were about.” Its viral campaign took another element of soccer: humour. It sourced a number of clips of players in embar- rassing situations – missing goals, falling over their feet etc. – from various countries worldwide, and then produced nation-specific campaigns. All of these contained a link to the Avaya site. Avaya is a company with limited funds for advertising, so though it advertises worldwide, it had to be fairly selective in its support. It focused on four main markets: the US, UK, Japan and Korea. The media schedule was mixed, targeting a business audience, using some of the quality broadsheets selectively, but also the business and IT press. It focused exclusively on print-based ads, using football imagery based on what it was doing for FIFA, but built around a business context.

Business partnerships “One of the benefits and challenges for us was that in a business to business environment, we are very dependent on our business partners, our resellers, because we don’t sell direct to all of our customers,” says Clarke. “We sell direct and indirect. “A business partner will be significantly smaller than we are, so it won’t have the same resources for marketing and advertising activity. It certainly wouldn’t have the ability to embark on a sponsorship like this. Through associating with Avaya, however, and its association with FIFA, it accrues some of the benefits of our sponsorship.” The company produced a raft of templates that business partners could use, featuring the logo. These explained why Avaya was involved and, by inference, that they could sell the same products that we were providing to FIFA. It proved an efficient and cost-effective way of extending its sponsorship and, from a channel marketing point of view, not only raised its profile with specific partners but also provided Avaya and its partners with something unique. Its entire involvement focused on the showcase element and, not surprisingly, as soon it was up and running, Avaya was contacted by every sporting association around to sponsor its events. “But it’s all about communication, and the World Cup is massive in scale and in its popular appeal,” says Clarke. “Without those it would have had less relevance for our needs, which is the fundamental difference between the business to business and the consumer approach. I also think that we will do it better next time, but considering we came in late, I think we did very well.”

RESULTS The true test of a sponsorship is whether it meets its objectives. In business to business such measurements should, by rights, be slightly easier than in the consumer arena, where the sheer number of marketing methods used can make it difficult to isolate the effectiveness of the sponsorship element. In Avaya’s case, however, the nature of its products and the lengthy sales cycle make matters more complicated. Some sales were obviously made via the showcasing at the World Cup, while some equipment was provided as part of its deal, but the latter cannot be classed as revenue. Clarke explains it thus: “Particularly when you are a young company, it’s about establishing credibility, getting yourself on the shopping sales list. It’s about when you get a salesman through the door knowing that he doesn’t have to spend the first 15 minutes explaining who Avaya is and, because the customer knows of us because of exposure on TV, our salesmen have instant credibility.” The downside, he continues, is that even if a sale results from such a visit, it cannot be attributed directly to the sponsorship of the World Cup. “It’s difficult to put an ROI against it because if the sale takes 18 months, you can touch and influence it, but can’t directly say because we took that customer to the World Cup final, he signed a cheque for $2 million.” The company did, however, carry out pre- and post-event awareness testing. Within the UK, it witnessed a healthy increase – approximately 10% – and a significant rise in the number of hits on its website and increased interest in the company as a whole. Having said that, awareness of the company outside of the US before the World Cup was relatively low. So in the UK, having started from scratch, Avaya embarked on a big launch campaign just before the World Cup which saw it hit the mid-30s; after the World Cup, awareness jumped to over 50% in its core target group of IT decision makers and CEOs.

FOOTBALL SPONSORSHIP & COMMERCE 215 Section III Sponsorship implementation

Avaya counts itself well satisfied with this performance, and it is currently undertaking renewed brand tracking to benchmark awareness before its next round of marketing activity. The reason it feels that its investment has worked so well is that it explored every opportunity to leverage its sponsorship, with all marketing activity containing a football content or flavour. It is currently taking stock of the options open to it before the next World Cup. Like many other companies in this area are finding, times are tough, and it is having to be fairly selective about marketing funds. So what did Avaya achieve, other than sales, from the last World Cup? The headline figures include:

I 57 media analyst briefings I 1,567 individual news stories, equivalent to $38m of media spend.

Such numbers are not to be sniffed at, even if the media spend equivalent is taken with a pinch of salt. If those news stories appealed to its target audience, then its investment was money well spent. In EMEA, however, online is seen as having been most successful of all its marketing activities in building awareness. Avaya’s audience is, by definition, a technical one that uses online for business and personal reasons, so a 200% increase in traffic does indicate that it hit its mark. Its creativity in connection with advertising also bore fruit. It didn’t just take existing campaigns and drop in the logo, but took a fundamental decision to create all marketing campaigns around a football theme, football images or whatever was appropriate. One launch campaign majored on its product IP Office, with the copy line ‘Many star qualities in one star player’. It was able to use its logo, and reinforce its credibility. It could also do the same sort of thing with business partners, which effectively extended its marketing budgets. They had their own templates, so all Avaya had to do was give them raw materials, approved by FIFA, meaning that partners had little work to do apart from dropping in their own logos. Some 100 business partners, out of the thousands it has globally, ran the advertising templates, while others took the direct marketing versions.

UPDATE Following its involvement with the 2002 World Cup, Avaya was closely involved with the FIFA Women’s World Cup in 2003 – delivering world-class communications for organisers, volunteers, fans and media worldwide at short notice when the finals were moved half-way round the world to the United States just months before the start. The tournament organisers expected some 600,000 fans, 4,500 volunteers and 2,500 members of the press – not to mention millions of TV viewers worldwide. In just 60 days Avaya managed to get a network up and running. As with the men’s World Cup, stadiums were equipped to allow reporters and photographers to file stories and photos in just seconds. Other facilities on offer included:

I instant access to secure accreditation data for Organizing Committee officials sited outside of stadium venues I a secure virtual private network to connect FIFA’s US headquarters in California with its International Broadcast Centre in New York and its Central Data Centre in Switzerland I high quality, secure and low-cost voice connections at the headquarters hotel.

As for the 2006 World Cup, Avaya has already started installing the IT systems that will form the backbone of the next tournament. A converged voice and data network is the first piece of technology installed at FIFA’s Organising Committee (OC) headquarters in Germany, where it is being used by more than 120 OC employees. It will then expand to become part of the football tournament’s core communication system, linking more than 30 different locations, including offices, stadia, hotels and transport hubs. The systems will also be used to distribute vital updates to FIFA employees based at 12 German football stadiums, four official FIFA hotels, two OC offices, plus train stations and airports. The complete network and IT systems will be tested during the FIFA Confederation Cup in 2005, with further trials taking place afterwards to ensure that it is ready for the 2006 World Cup. FIFA is currently working in partnership with DT Network Project & Services, a Deutsche Telecom subsidiary, with Yahoo! providing web site support and Toshiba looking after PC hardware.

216 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

CONCLUSION Technology and solutions providers face possibly the most difficult task as sponsors. They want to gain awareness for what, at times, is a nebulous concept and for products that struggle to achieve differentiation. Avaya, however, homed in on its target audience – that elusive 0.1% - and set about making an impression. It was fortunate in having such a ‘top of mind’ vehicle as the World Cup, but it does appear to have milked the tournament for all its worth and broken new ground in the area of business-to-business sponsorships. Avaya succeeded by weaving the World Cup logo into all its activities and promoting its name. There are few, if any, higher profile showcases for Avaya technology and for ‘converged’ voice and data networks. Given that the company had limited funds, it has also proved successful at stretching them by encouraging its business partners to use customised advertising templates to mount their own campaigns. It was also realistic to focus on the World Cup, which it considered appropriate to reach its target audience – and jettisoned other sponsorships that might have distracted. It will be fascinating to watch what Avaya has learned from this experience.

CASE STUDY: CARLSBERG

Carlsberg is no stranger to football sponsorship, having been involved since the late 1970s. It is one of those rare brands that has been as successful in infiltrating the game at grass roots level as on the world stage. Carlsberg sponsorships to date include:

I FIFA World Cup (Italia ’90) I UEFA European Football Championships (1988, 1992, 1996, 2000, 2004, 2008) I Champions League (1993, 1994) I UEFA Cup (1998, 1999) I UEFA Super Cup (1998, 1999) and Carlsberg Cup in Hong Kong I Liverpool Football Club I Hibernian Football Club (2003/2004) I England FA Partner (sponsoring Men’s Football) I FA Trophy I FA Vase I Sunday Cup

OBJECTIVES Carlsberg’s aims in sponsoring Euro 2004 will chime with that of any major brand: it set out to build brand awareness, distribution and sales. Awareness is less of an issue with many of its existing markets, but there are others – notably in the former Eastern bloc – where it still needs a helping hand. Sponsorship addressed these aims at a number of levels, and with varying tactics according to the country. One thing is certain: Carlsberg used what it learned from Euro 2000 to make its involvement with the 2004 tournament even more successful.

STRATEGY The brand’s strategy in 2000 was to use every marketing tool at its disposal to communicate its message – new product marketing, on and off-trade promotions and above-the-line advertising and packaging. Four years on, the strategy moved into a new phase, aiming to make the brand synonymous with the game and – as far as the England team is concerned – make fans feel somehow unpatriotic to even think of opening a can or bottle of anything else when settling down to watch the game.

FOOTBALL SPONSORSHIP & COMMERCE 217

Section III Sponsorship implementation

IMPLEMENTATION

Carlsberg tackled the potential problem of drunkenness at games at Euro 2000 by producing a premium beer with no alcohol, which was sold only at the official Euro 2000 stadia. In sales terms, the tournament was judged a success. One billion Carlsberg bottles with alcohol were sold throughout the relevant period. A special Euro 2000 can was produced in 15 countries, and in Sweden alone, some five million cans were sold. The company also managed to get the amateur game involved: Euro 2000 saw Carlsberg hosting the Pub Cup for the fourth time: 1,000 teams participated ahead of the tournament. with the national winners from Sweden, Denmark, Ireland and England attending the European finals at the official stadium in Arnhem. Marketing teams from around the world capitalised on Carlsberg’s involvement with Euro 2000. Some 48 markets used its sponsorship – and the related campaign – in activities from mass communications to trade promotions. The results were significant: sales increased between 20% and 40%, both on and off-premise, in the participating markets.

RESULTS If sales were impressive, then so were awareness figures. The Carlsberg banners were exposed on television to more than seven billion people worldwide. Television viewing figures in the two host nations – Belgium and the Netherlands – were, as expected, also significant. The final figures revealed an increase of 67% for Belgium and 41% for its neighbour over viewing for the 1996 tournament. Since 1996, Carlsberg had doubled the volume of beer it sold in the UK. The power of the tournament should not be under-estimated in terms of changing drinking habits, either. During Euro 96, 87% of the UK population watched at least one game, and prior to the tournament, Carlsberg was thirteenth in the marketplace. For the duration of the competition, it became the top standard lager.

CHART 3.2 Carlsberg growth over last seven years

CARLSBERG HAS SEEN +100% GROWTH IN PAST 7 YEARS

2100 WORLD CUP '02 2000 1900 1800 1700 WORLD CUP '98 EURO 2000 1600 1500 1400 EURO '96 SOURCE:K BARRELS 1300 Internal Stats to April 2003 1200 1100 1000 900 800 1996 1997 1998 1999 2000 2001 2002 2003

218 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

CHART 3.3 ‘Your country needs you’

CONCLUSION Targets for Euro 2004 were set, in the UK at least, to achieve a 30% increase in sales, according to Carlsberg Tetley sponsorship manager Gareth Roberts. He predicted that of the 40 different European markets in which the beer trades, this would be exceeded in the newer territories but fall slightly short in some of the more established ones. Individual countries used the full range of products in their portfolio, which tended to include one without alcohol, or a low alcohol product. The Pub Cup ended two years ago but has been replaced by a similar competition at grass roots level – the FA Sunday Cup. Teams did not play at this year’s tournament, since Carlsberg did not have the same access to stadia – but participating pubs were still targeted to take part in competitions to win tickets to Euro 2004. The challenge for the brewer this time round was to maintain the additional sales achieved during the tournament – and again during the World Cup – some 20%-plus on average, throughout the intervening period by instilling its connection with the sport into mass market consciousness. Carlsberg didn’t do badly in the 2004 tournament. While sales of brands such as Carling (£19.7m sales during Euro 2004) and Stella Artois (£16.5m over the same period) might have been worth more, Carlsberg boasted the highest growth rates as a result of the football than any other brand. Its title sponsorship of the championship and the £10m support package achieved volume and value growth rates of 21% and 22% respectively. Indeed, the brewer’s MD of brands and sales, Doug Clydesdale, was quoted in the Morning Advertiser (29 July 2004) as saying that across the entire on-trade, pubs sold five million more pints of Carlsberg during Euro 2004. After Euro 2000, research conducted by Performance Research showed that Carlsberg was only 6%, in awareness terms, ahead of rival Carling – the latter was basking in the reflected glory of its sponsorship of the Premiership. This bothers Carlsberg, but not unduly. “There is a balance to be had,” says Roberts. “You can have high awareness levels, but don’t necessarily sell more beer. We intend to dominate for a twelve-month period and are now to extend our dominance.” In the UK Carlsberg possesses a portfolio of properties; at grass roots level, it has links with the 40,000 affiliated FA clubs, a core target because it can use that database. So it is building a relationship at all levels to drive brand awareness. It is trying to show such clubs that it is not just interested in getting these clubs to stock Carlsberg, but in helping to drive up their sales overall. Since 75% of income comes from bar sales in such clubs, a 10% increase can mean a great deal. Carlsberg has the ability to take players and coaches from clubs like Liverpool, which it sponsors, into small clubs for the night, to improve skills. The brewer can also, because of its buying muscle, help in purchasing books and videos that will help improve the business skills of these smaller operations, in an effort to get into the heart of clubs. The picture that emerges, therefore, is of a brand that is adopting a more focused, less scattergun approach than of old. It concentrated its energies, in Euro 2004 at least, on an umbrella theme that pulled at the heart- strings of a notably cynical market. Further down the line, it is hoping to win the loyalty of its core drinkers – 18-34 year-old males – by assisting the clubs where they play, and it will mop up any residual drinkers by themed promotions on packs and in pubs.

FOOTBALL SPONSORSHIP & COMMERCE 219 Section III Sponsorship implementation

Chapter 28: Merchandising

Clubs know that a large proportion of their shop and online sales come from replica kit, with adult shirts proving the most popular buy. This is hardly surprising, since a club shop situated at the stadium has a captive audience, particularly on matchdays. Clubs with ‘megastores’ – such as Manchester United, Chelsea and Liverpool – are estimated to make as much from merchandise as they do from catering. According to Mintel in 2000, the average spend by season ticket holders on club merchandise was around £100 per season. This varied, of course, on how frequently new strip was introduced and whether a high profile player had recently been signed. The importance of replica kit has grown rapidly in the past 20 years. The signing of David Beckham by Real Madrid from Manchester United was due, at least in part, to the riches he was expected to bring in merchandising terms not just in Spain but worldwide. The signing of Alan Shearer by Newcastle United brought the club £250,000 on the actual day. Clubs that don’t prepare well can be caught out, as was the case with Inter Milan when it signed Ronaldo. It had not ordered any shirts with his favourite No. 9, so when counterfeits started to flood the market, the club was forced to play him as No. 10 in order to capitalise on future sales. The UK is still seen as the merchandise hub of the football world, but other countries are catching up – particularly in the Far East. Catalogues, whether hard copy or online, often lack the razzmatazz of their high street retail counterparts but there are individual instances of innovation. Real Madrid, for instance, introduced a photo booth to its club shop so that fans’ heads could be superimposed on players to give them an individualised poster.

FANS’ ATTITUDES Replica kit has had a very bad press. In the UK the government has commissioned research on whether kit is overpriced, and whether prices are being kept artificially high. In October 2004, a 337-page report of an Office of Fair Trading (OFT) probe lifted the lid on how retailers can work together to stop price cuts. The OFT had already come down heavily on major sport retailers in its initial investigation, but JJB and all:sports decided to challenge at a Competition Appeal Tribunal. However, the tribunal upheld the vast majority of the OFT’s findings. The OFT was satisfied: the case, it said, sent a clear message about price-fixing agreements and showed how competition law works for consumers. It argued that the price of an England shirt had fallen from £39.99 in Euro 2000 to as little as £25 by the time of Euro 200420. The English FA’s fan survey of 2002/2003, however, shows that only a quarter of those questioned were unhappy with the cost, with one in three holding favourable opinions about price. Roughly the same proportion, again a quarter, had issues with the quality and range of merchandise, pointing to the need for clubs to look outside the industry for innovation. One interesting fact was that fans now appreciate the design of away kits just as much as they do home kits! One sobering fact was that when fans’ income levels were taken into account, attitudes towards the price of club merchandise worsened as the amount of money in their pockets grew. Much of merchandising is common sense. It necessitates a club knowing its market, being able to negotiate a good deal with suppliers, and being able to provide the right product, at the right time and in the right environment. In the case of football, related merchandise has been a slow burn affair. In the 1940s and 1950s, there was little interest in team related merchandise. Fans turned up, watched the game, had a drink and went home. Clubs saw little need to provide a retail operation, while players’ kit was itself very basic and functional. Whereas today the line between fashion and sportswear has become blurred, until the late 1980s/early 1990s there was a very rigid divide. Expectations started to change after publication of the Taylor Report, which encouraged ground development, including shops and improved concourses, with merchandise having a key role to play in tying in fans both to the club and its players. Football, in essence, became more of a marketable commodity, and media interest and investment ensured greater exposure. Fans wanted to wear the shirt of their favourite player, while proud dads wanted to see their offspring in club babygrows.

20 How they fixed the price of football shirts, The Sunday Times, 10 October 2004

220 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

MERCHANDISING STRENGTHS AND WEAKNESSES A club is in an ideal position to exploit its merchandising. It has a

I loyal, albeit potentially limited fan base I unique branded product I connection to high profile sport I diverse customer profile I high footfall potential I cross promotion potential I technological back-up.

In a nutshell, where other fashion retailers have to compete with the rest of the high street, a club’s main worry is how to get its audience to buy product on a regular basis and how to encourage fans to spend more. Peter Pridmore, merchandise manager at Wolverhampton Wanderers, highlights potential pitfalls. By far the greatest is the performance of the team. The club launched a brochure in October 2000, but then saw fans throw it onto the pitch in disgust at results. Another potential plus – increased TV coverage – might result in a fall in gate receipts. This could lead to less potential traffic in the shop, but a broader spread of interest in the club and its merchandise. The challenge then is to capitalise on that interest. Keeping a club shop – and its merchandise – fresh is an exercise that can swallow up money. The temptation is to make do. Unfortunately, consumers won’t see it that way: they have high expectations of the club, its products and its staff. If they feel let down, the club will feel the impact in terms of revenue. There will always be times, say in a recession, when fans have less money to spend, but the knack – as retailers have found – is in being able to provide product to suit different budgets. Pridmore also points to the fact that clubs tend to be insular rather than innovative when it comes to retail, largely due to their expertise lying in the area of sport. Database information is sorely lacking, particularly among clubs in the lower divisions and in other continental European countries. The end result is that a great deal of potential is left unrealised, largely because retail investment is not seen as a priority.

OPPORTUNITIES So what could make a difference to a club’s sale of merchandise? Pridmore highlights seven main points:

1. Technology If database technology is used to profile fans, and increase the potential base, then the introduction of EPOS will ensure that the whole operation runs more smoothly. EPOS allows staff not just to monitor which ranges are being sold fastest, but also to record the size, colour, finish, etc. This, in stocktaking terms, makes it easier to respond to customer needs.

2. Keeping abreast of retail trends As sportswear moves closer to leisurewear, it becomes more vital to assess what style of clothing or product fans will require a year down the line. This means following fashion trends and allowing for the long lead time necessary to commission manufacture.

3. Online sales Although at first disappointing, and not yielding the expected growth, online has become an acceptable purchase medium. It may often lack the excitement of purchasing at the club shop, but it can offer benefits in terms of reduced overheads.

4. Continued investment in retail environments Loyalty may bring fans into a club shop, but a poor environment will deter them from buying. Pridmore argues that investment in design, better lighting, point of sale, signage etc. pays dividends.

FOOTBALL SPONSORSHIP & COMMERCE 221 Section III Sponsorship implementation

5. New target audiences The appeal of football is growing, and profiling techniques used on existing fans can be used to identify other people with similar profiles, thus expanding the potential target market.

6. Improved customer service levels Customer expectations have changed over the past decade. Whereas they were once driven by price, they now also look for quality and service. They expect knowledgeable staff who can deliver the right product, in the right size, without having to queue for hours. Club shops that have invested in their staff and in systems to reduce bottlenecks will reap the benefits.

7. Maximisation of media exposure Advertising merchandise in the press or on television is beyond the means of most clubs. The benefit of seeing fans or occasional TV personalities wearing replica kit, being interviewed on air, cannot be underplayed.

As stated at the beginning of this section, retail is not a complex operation. It requires clubs to:

I know their market I maximise stock management database information I keep abreast of high street trends I create a diverse and interesting product range so that those fans who return week after week always see something new I ensure quality merchandise I recognise the need to change I develop strong supplier relationships I ring the changes in shops according to seasons - e.g. bringing coats, scarves and hats to the front in autumn I invest in point of sale support, providing special offers rather than simple price cuts to shift stock I maximise matchday opportunities while adopting successful retail formulae I prepre in good timee for prime selling periods such as Christmas by ensuring adequate stock, staff, and mail order facilities I turn stock over on a regular basis so as to give people a reason to visit, and to maximise sales through new products I use advertising in any affordable media outlet – local press, matchday programme, online etc.

The club shop is a window on the club itself so requires investment, not just in the infrastructure and product but also in staff. If they are to deliver excellence in customer service, they must be trained and developed. The total package has to live up to customer expectations if a club is to maximise its brand. The best maxim is to exceed customer expectations. This can be done by keeping pace with technological innovations and exploring all marketing and advertising opportunities on an ongoing basis. Team performance will always impact on sales, but those who invest in truly professional merchandise operations should be able to withstand the bad times as well as profit from the good.

222 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

Chapter 29: Public Relations

Who better to write about public relations in football than a practitioner? Michael Saxton, head of Grappa PR, watches with a keen interest how clubs handle their PR. There is a quote attributed to Roman Abramovich, the billionaire owner of Chelsea FC, which, if true, is very telling about his attitudes to PR, says Saxton. The alleged comment goes something like this: ‘Do you want to know the difference between a rat and a mouse? Public Relations.’ Given the almost universal damnation of Chelsea’s handling of the dismissal of manager Claudio Ranieri (by the British press, the club’s own supporters and the majority of British fans), you could make a case for the club’s PR team failing to heed the words of the boss. The business of football brings unique challenges for those involved in handling communications. As Donna Cullen, director of communications at Tottenham Hotspur, says: “What happens on the pitch pretty much determines what happens off it in terms of attitudes towards the team.” However, far from being sitting ducks waiting for the right result on the pitch to determine the opinion of their various audiences, clubs are increasingly well organised when it comes to managing their communications. “Football clubs have had some sort of PR for decades, but the last ten years have seen a big increase in PR and media departments within clubs,” says Joe Ferrari, Head of Media at Norwich City FC. “And with promotion to the Premiership for Norwich, this has meant employing a new senior club journalist to help deal with enquiries and generate editorial content.” Norwich is by no means a unique case. From humble beginnings, employing someone to write the programme and pen a few words from the chairman and manager, clubs in the top divisions now have dedicated editorial teams to produce the match programme, club magazine and website. They also have marketing communications experts to negotiate with sponsors, the community, media and, in some cases, the City. What happens in the 90 minutes when Saturday comes very much drives clubs’ PR activities for the rest of the week, but it would be a mistake to think that this is the beginning and end of their PR work. Having an in-house practitioner is not the only way that clubs – or individual players – use PR. Consultants are used quite frequently for specialist PR (as when a club needs to talk direct to the City), or in crisis management situations. A good instance is when players are involved in ‘kiss and tell’ stories, or are having problems with drink, drugs or gambling. The Institute of Public Relations, the UK’s leading professional body for the industry, provides a good description of PR. “PR practice is the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics.” Note the emphasis on ‘planned and sustained effort’ – activities carried out 24/7 and by implication with the long term in mind – and ‘to establish and maintain goodwill and mutual understanding’. In other words, forget ‘spin’. PR is about earning the understanding and support of your audiences (fans, community, players, sponsors, investors, federations etc.) as a result of what you do, what you say and what others say about you. So for spin, substitute honesty, integrity, openness. The role of good PR effort is about managing reputation.

STRATEGY In Manager’s Guide to Excellence in PR and Communications Management21, a study that underpins much of the theoretical studies of PR in the UK, Grunig and Grunig maintain that a strategic approach to PR activities is essential. This requires that PR people be a part of the strategic decision-making process, helping organisations understand the implications of their actions. It involves gathering information about target audiences to improve strategic decision-making and the setting of clearly defined objectives. Grunig and Grunig divide objectives into two general categories – process objectives (e.g. we set out to issue two press releases each month and we achieved this) and impact objectives (we changed what target audiences knew, felt, behaved, etc). They state: “excellent organisations define programmes with impact, and then set about collecting the evidence to see if these outcomes have been achieved”.

21 Manager’s Guide to Excellence in PR and Communications Management, ISBN 0-8058-1810-3, published by Lawrence Erlbaum Associates, 1995

FOOTBALL SPONSORSHIP & COMMERCE 223 Section III Sponsorship implementation

CHART3.4 Santini/Spurs messages by favourability and volume

What The Papers Say

Organisation: Tottenham Hotspur Issue: Jacques Santini Issue date: 7 June 2004

SANTINI – EXPERIENCE, ABILITY & GREAT TRACK RECORD FRANCE/LYON TEAM FLOURISHES UNDER JS STEWARDSHIP JS DETERMINED TO PLACE SPURS BACK AMONG THE ELITE JS FULFILLING AN AMBITION TO MANAGE IN ENGLAND SPURS – REVIEW & OVERHAUL – NEW OPTIMISM JS DEVELOPS (YOUNG) PLAYERS / REBUILDS TEAMS JS DETERMINED FRANCE WILL GO FAR IN EURO 2004 POSITIVE SANTINI SIGNING A COUP FOR SPURS SANTINI WILL ATTRACT BIG NAMES TO SPURS ENGLAND HAS MOST EXCITING FOOTBALL LEAGUE IN WORLD

FFF DELAYED NEW SANTINI CONTRACT PAST EURO 2004 SPURS - UNDERACHIEVING / LOST GLORY

NINE-MONTH SEARCH FOR NEW SPURS MANAGER FAVOURABILITY TIMING OF ANNOUNCEMENT UNWELCOME SHOCK FOR FRANCE FRANCE – SURPRISE, CONFUSION & ANGER SPURS 14TH IN LEAGUE / RELEGATION THREAT

SANTINI DOUR DISCIPLINARIAN, STUBBORN, UNFORGIVING NEGATIVE SANTINI LEAVING THE 'BEST SIDE IN THE WORLD' FRANCE STILL TIPPED TO WIN EURO 2004 FFF WANTED JS 'TIL 2006 BUT DALLIED OVER CONTRACT 0 5 10 15 20 25 30 35 40 Analysis and commentary by Echo Research. This article and further information is at: www.echoResearch.com VOLUME (BASED ON 74 PRESS ITEMS 3–7 JUNE 2004)

POSITIVE SANTINI - EXPERIENCE, ABILITY & GREAT TRACK RECORD 34 FRANCE/LYON TEAMS FLOURISHED UNDER JS STEWARDSHIP 27 JS DETERMINED TO PLACE SPURS BACK AMONG THE ELITE 21 JS FULFILLING AN AMBITION TO MANAGE IN ENGLAND 19 SPURS - REVIEW & OVERHAUL - NEW OPTIMISM 18 JS DEVELOPS (YOUNG) PLAYERS / REBUILDS TEAMS 17 JS DETERMINED FRANCE WILL GO FAR IN EURO 2004 16 SANTINI SIGNING A COUP FOR SPURS 16 SANTINI WILL ATTRACT BIG NAMES TO SPURS 16 JS ENGLAND HAS MOST EXCITING FOOTBALL LEAGUE IN WORLD 15

NEGATIVE FFF DELAYED NEW SANTINI CONTRACT PAST EURO 2004 27 SPURS - UNDERACHIEVING / LOST GLORY 26 NINE-MONTH SEARCH FOR NEW SPURS MANAGER 22 TIMING OF ANNOUNCEMENT UNWELCOME SHOCK FOR FRANCE 17 FRANCE - SURPRISE, CONFUSION & ANGER 14 SPURS 14TH IN LEAGUE / RELEGATION THREAT 12 SANTINI DOUR DISCIPLINARIAN, STUBBORN, UNFORGIVING 11 SANTINI LEAVING THE 'BEST SIDE IN THE WORLD' 8 FRANCE STILL TIPPED TO WIN EURO 2004 7 FFF WANTED JS 'TIL 2006 BUT DALLIED OVER CONTRACT 7

224 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

Most senior practitioners agree that this is the preferred route, as it demonstrates PR effectiveness. (Tottenham Hotspur’s media relations campaign to announce the appointment of Jacques Santini as manager is an excellent example of an impact programme - see opposite). However, such ideal situations do not always exist in the real world, and for many PR people process objectives have to suffice. In taking a strategic approach, clubs and federations need to understand exactly what they are hoping to achieve. It sounds ridiculous, but without considering very carefully who are your target audiences and the principle objectives of your strategy, it can be very easy to get set on a course where PR activity is made routine. It’s what another PR academic, Scott Cutlip, calls the ‘cuttlefish strategy’, whereby the reaction of the PR department is to send out a press release regardless of the issue. It’s a witless approach borne of communicating “without a clear understanding of what such messages seek to accomplish in building and maintaining relationships”. Communication objectives vary from club to club, federation to federation. Broadly, however, because PR is – or should be – concerned with reputation, certain themes will be similar. The need to accurately reflect the values of the institution; to promote the team to the community and make players ‘real’ to the fans; to attract sponsors; perhaps to act as a buffer between the players and other members of the club. Claire Walton, part of Aston Villa’s media team, comments: “We constantly strive to ensure the club, its staff and players are represented fairly and positively at all times.” This isn’t just about how the club is perceived by the media. “Fans always come first,” she adds. Donna Cullen at Spurs agrees, “Our key audience is the fans. Sponsors and shareholders are important to Spurs, but the fans must come first.” In setting clear objectives, it is relatively simple for organisations to develop the right PR strategy. When you know who you need to talk to, you can focus on what you want to say, even if it is not always possible to precisely select the time when you want to say it. Research into the attitudes of your target audiences is invaluable in deciding what to say. Most membership organisations such as federations have direct access to what their members think through formal and informal mechanisms. Most clubs engage with their official supporters’ clubs. The smart ones also engage with the unofficial ones, as they too carry tremendous clout; football is nothing if not tribal. In Italy, Lazio has had problems with fascists among its fans, who are not part of the official supporters’ club. The club has engaged with these elements, and its own fans, the federation and the media have recognised Lazio’s positive stance. Changing the behaviour of this element of its support may take years to accomplish, but fit is helping to improve the reputation of the club.

‘Eyes and ears’ The internet provides opportunities for football to understand its fans and target them. Chat rooms and fan forums are rich sources of intelligence for PR people. PRs need to see themselves as gatekeepers of their clubs, the eyes and ears, always on the look-out for problems as they arise. As corporate PR practitioners will attest, a crisis becomes a crisis only when a problem becomes well known. Catching a problem at an early stage provides an opportunity to neutralise it before it starts to spread. Even as it spreads, it is still possible to reduce the impact if the organisation not only starts to deal with it, but also, importantly, is seen to be dealing with it. In this ‘eyes and ears’ role it is essential that the PR person is trusted by management. Unless the board buys in to the value that the PR person or team brings to the organisation, it is almost impossible to focus attention on dealing with the problem. It is a persuasive argument for making PR part of the strategic planning process. Organisations that operate in sensitive areas such as food manufacturing, energy or pharmaceuticals will have prepared briefing materials setting out their positions on key issues that affect their audiences. They will have established their position through monitoring social, political, competitor and regulatory environments and used SWOT (strengths, weaknesses, opportunities, threats) analyses (or similar methodology) to predict threats. For some football people, it may seem strange to consider such rigorous pre-planning, but given the vast numbers of people who attend matches each week, the capacity for things to go wrong is always there. Potential PR disasters lurk everywhere, from fans’ hooliganism to players’ off-field misdemeanours through to fans’ disgust towards the club for selling the crown jewels to the opposition or moving the stadium a hundred miles up the motorway, through to tragic events such as Hillsborough and Bradford and the threat of terrorism.

FOOTBALL SPONSORSHIP & COMMERCE 225 Section III Sponsorship implementation

CRAFTING THE MESSAGE Many organisations look towards PR for help in writing information for the media, and this is one reason why sport in general tries to attract journalists away from their newspapers and into the world of the club or federation. ‘Once a journalist always a journalist’ also helps when it comes to predicting how the media might react to a story you want to put out. Towards the end of the 2003/2004 season, Chelsea lured Simon Greenberg away from the Evening Standard to head its PR operation. Ex-journalists are often still on good terms with their colleagues, former employers and the opposition (as a result of going on the same press trips) so they can get access to the right person at a paper, radio or TV station when they need to. However, with the level of interest in football, attracting interest isn’t much of a problem, but getting the messages right and handling enquiries appropriately are key skills. In this respect, most clubs now involve the players in a level of media training so that they understand journalists’ expectations and have a better capacity to deal with them. Clubs tend to focus naturally enough on the more junior members of the team. Older players and most managers are typically left to their own devices. Quite why this happens is puzzling, since the capacity for monumental screw-ups is not limited to junior people, or those at the start of their careers. In the corporate world, think Gerald Ratner and his infamous “crap” reference to his products, which brought him and his business to their knees.

226 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

Chapter 30: Corporate hospitality

Corporate hospitality is a communication link between an organisation and its clients. It provides the means to build or cement a relationship between company and customer that might not otherwise have come about. In other words, it acts as a door-opener. It enables businesses to:

I make contacts I make clients I build loyalty I build awareness I incentivise clients/customers/staff I generate revenue in the longer term.

BUILDING ATTRACTIVE PACKAGES What draws organisations to a club or an event? The first approach – and the manner in which it is made – is key. Clubs should be professional, both in marketing material and in how enquiries are processed, and sympathetic to the demands of clients. These may range from mascots to ground boards, match balls and meetings with players. All should be dealt with, and priced, at a rate that both parties are comfortable with. Attention to detail is also important: it is the little things that can mar hospitality packages – passes that are delayed, insufficient car parking and so on.

STAFF Clubs should always keep staff fully briefed about which companies/guests will be arriving at the ground, with a list of names ready at the entrance. Everything should be geared to the comfort of clients, from user friendly directions to adequate signposting and sufficient cloakroom facilities.

FACILITIES Guests should be greeted with a welcoming drink and there should always be enough matchday programmes to go round. Televisions should be tuned into in-house and external channels to keep them abreast of games taking place elsewhere. There should be a gradual build-up to the match. This could incorporate a tour of the ground, even to the dressing rooms. Guests always welcome the opportunity to meet current players and, if this is not possible, fielding veteran players or those on the subs bench presents a good alternative. Visitors want to feel part of the day, to experience the pre-match tension. It is up to the club to provide that frisson.

PRESENTATIONS In the run-up to the game, either before or after lunch, guests could be presented with the opportunity to bet on the result of the game – when the first goal will come, who will score – or even to take part in a trivial pursuit football game. Some clubs get the manager or coach to give a team talk on the tactics that will be used during the game; others might give a presentation on the club’s history.

CATERING This is an area of variable quality – but it should not be. Clubs like Norwich have shown the benefits of bringing catering in-house, but even those not graced with a Delia Smith could aspire to greater things. St Pauli, for example, has seen its income soar from improvements. At its most simple, lunch should be good quality, well presented and well served. As for the seating, this should provide attendees with a good view, easy access to toilets, and not be too far from the reception room so that they can return at half time for tea and biscuits. Post-match, guests should witness the Man of the Match awards, while players should be encouraged to mix and socialise. This, after all, is the reason why most guests attend.

FOOTBALL SPONSORSHIP & COMMERCE 227 Section III Sponsorship implementation

CASE STUDY: MASTERCARD

Sponsorship platforms are a critical part of the marketing mix for MasterCard. Its objectives are fairly standard: to increase brand preference and usage. For customers, it means driving card activation and usage, while for MasterCard, this translates into increasing the transaction flow through the network, while simultaneously building the value of the brand for all participants in the franchise. Sponsorships, says the company, provide relevant content for many of its marketing programmes.

BACKGROUND In 2003, MasterCard announced an unprecedented commitment to football through selected prestigious events. It extended alliances with the 2006 FIFA World Cup, the 2004 UEFA European Football Championship, UEFA Champions League and CONMEBOL Copa America. MasterCard has been an official sponsor of the FIFA World Cup since 1994, gaining unprecedented TV exposure through perimeter board signage at each of the games. It has also provided the opportunity for its financial institution customers worldwide to build their business by association with the FIFA World Cup and other international football events in their regions, including.

I FIFA Women’s World Cup I FIFA Confederations Cup I FIFA World Youth Championship I FIFA U-19 Women’s World Championship I FIFA Futsal World Championship.

OBJECTIVES MasterCard, in terms of its involvement with Euro 2004 and the Champions League, has a number of objectives. The basic reasons for its links with the tournaments remain, but they have evolved since the 1990s. It listed them, in order of priority as:

I product usage I brand and sponsorship awareness (easy to measure) I client satisfaction (banks) I use of the properties by its different constituencies (maximise leverage) I penetration of the Portuguese market I brand image I PR.

MARKETING SUPPORT MasterCard used a mix of techniques to support its sponsorship, ranging from pure above-the-line supporting national promotions and focusing on brand image to below-the-line promotions used by the banks. Its campaign tried to integrate all elements of the marketing mix including (but not limited to):

I internet I extranet I SMS I print ads I football card products I PR through its spokespersons I Hospitality for its business to business relations I TV breakbumpers and ads I acceptance of its products at key locations I tests of new products.

228 FOOTBALL SPONSORSHIP & COMMERCE Section III Sponsorship implementation

All this is carried out in the context of its ‘Priceless’ advertising message: ‘There are some things money can’t buy. For everything else, there’s MasterCard’. For instance, the company provides ‘money can’t buy’ prizes towards its promotions like: ‘Use your MasterCard x times and win the opportunity to have your kid walking on the pitch holding a famous player’s hand in front of millions of people’. This, it says, is clearly something that money can’t buy and fulfils the ‘emotional moment’. Key to this process is MasterCard’s attempts to integrate all elements of the marketing mix in order to maximise the ROI through broad leverage.

HOSPITALITY Hospitality remains a key part of MasterCard sponsorships because the company recognises that events represent a priceless opportunity for it to meet busy customers in an exclusive environment. The packages are all-inclusive and focused on business-to-business clients. Its objectives for Euro 2004 were to perform better than last time, and it researches this by conducting a customer satisfaction survey for all attendees. It carries out corporate hospitality for the following reasons, listed in order of priority:

I to entertain customers I to keep them happy I to reward/motivate staff I because it is expected to do so I better communication/interaction I to discuss business I to raise/maintain company profits I for social benefits I to retain customers/maintain client base I as a marketing tool/to promote MC/to increase awareness I for closer/informal contact in a relaxed environment I to gain more business/potential customers I to reward customers, as a thank you for loyalty I to build/improve customer relationships/to know them better.

MasterCard tips for companies that want their hospitality to run smoothly include: good planning, a focus on every detail, the provision of one-to-one service, and the active involvement of executive management and the sales force.

FOOTBALL SPONSORSHIP & COMMERCE 229 Section IV The future

SECTION IV THE FUTURE

Chapter 31: Providing players for the future Football clubs have learned to their cost the danger of buying players too dearly, selling too cheaply, or existing with teams made up of individuals who are ‘on loan’. Nowhere is the maxim that you have to speculate to accumulate more pertinent. In the case of Nantes-Atlantique FC, the club’s policy of investing in its youth academy has been in place for some considerable time.

CASE STUDY: NANTES-ATLANTIQUE

Nantes-Atlantique FC (FCNA) was launched in 1963 and has an impressive track record. It has spent 40 seasons in a row in the first division – a French record in its own right – and played in over 90 European cup games (qualifying every other season). It has won eight French championship titles and three French cups, in 1979, 1999 and 2000. This sort of performance owes a great deal to the club’s youth academy, the first of its kind in France and deemed the most successful nationally for the last six or more years.

BACKGROUND FCNA has been controlled by the Socpress Group, France’s leading press group, which owns Le Figaro, since June 2000. Socpress turns over more than €1bn per annum, and has around 5,000 employees. FCNA plays in La Beaujoire, a 40,000-capacity stadium that was built in 1984. It has large corporate hospitality facilities (some 2,000 seats) with room for expansion. The stadium has been rented to the city of Nantes for some 15 years, and has hosted events such as World Cup and National Rugby team matches, as well as concerts for groups such as Dire Straits, Pink Floyd and U2.

FCNA TRAINING SCHOOL FCNA’s academy provides Nantes with a constant stream of players, while the club also acts as one of the main sources of players for the French national team (providing some 20 players at a time to national squads). Graduates of the Nantes school over the years include Deschamps, Desailly and Carrière. The management structure has been carefully thought through. The academy has an administration director at the top, a football director, six coaches and, of course, medical staff. It operates from a boarding school called L’Ecole à L’Envers, geared around children’s sports activities. The school has 40 beds and an impressive scholastic record (an 80% pass rate, higher than the national average). Meals are provided at an on-site cafeteria, and there are in-house laundry services and four football pitches: two natural, two artificial. The training school operates a scouting system to recruit youngsters to its academy, with one full-time scout for those under 15, another for those over 15 and a local scout. Part of the rationale for this is the EC restriction allowing only five non-EC players in any one club.

230 FOOTBALL SPONSORSHIP & COMMERCE Section IV The future

FCNA also has a national and international network to call on – agents, former players and what it calls ‘sympa- thisers’ – and has no shortage of youngsters wanting to join because of the school’s reputation. In addition to its facilities, it boasts:

I a higher than average chance of playing first division football I excellent schooling I good pastoral care.

The concept has even been extended to the under 15s, in what is termed a pre-training school. FCNA pioneered this, targeting 13-15 year olds and preparing them to enter the more senior training school. It can take up to 22 youngsters at a time and allows for the testing of players.

FINANCIAL CONSIDERATIONS FCNA works on having to train youngsters over a five-year period, either from the ages of 16 to 20 or from 15 to 21. The following chart gives some indication of the training costs per player and per season.

TABLE 4.1 Nantes training cost factors

THREE-YEAR AVERAGE 1999/2000 1998/1999 1997/1998 YOUTH TRAINING COSTS € (000) 3,371 3,517 3,402 3,193 NUMBER OF TRAINEES 45.5 46 44.5 43 NUMBER OF TRAINEES SIGNING PROF. CONTRACT (%) 4.6 (10.3%) 3 (5.5%) 5 (11.2%) 6 (14%) TRAINING COSTS PER PLAYER PER SEASON € (000) 75 76 76 74

SOURCE: FCNA

ACADEMY PROS AND CONS The club has had to weigh up the cost of training these players against the cost of buying them in from outside. Though the maths is fairly simple, an academy would not win on purely financial grounds. FCNA worked out that it cost the club €75,000 a year to train a youngster over a five-year period, culminating in an outlay of €375,000. One in ten would go on to become a professional players, so the total cost per ‘professional’ player was €3,750,000. In 2002, the average transfer price per player for the previous three seasons had been some €4,000,000. On balance, then, the club could come out on top, but there are other factors involved, such as the fact that 60% of those who signed a professional contract stayed with the club, while the rest, some 40%, dropped out or down to the lower divisions. The academy does, however, have other benefits. Players who pass through its doors are trained up to meet its standards, and play the ‘Jeu à la Nantaise’. The sales of the players bring in high profit levels – there is no amortisation, and if the academy fuels higher success rates, this will cut costs. There is also an impact on wages. Home-grown players tended, in 2002, to start on a salary of €4,000 a month, while those brought in from outside demanded 30% more, on average. The fate of the academy rests on its ability to produce star players and trim costs. Unfortunately, there are limited opportunities to do the latter. Instead, FCNA is focusing on increasing the ratio of cost to earnings, in terms of scouting, training, facilities and medical support. At the same time it hopes to boost revenues through sponsorship and educational grants. FIFA has brought in new regulations that protect club academies. They recognise national laws, the need to implement a trainee transfer fee, and ensure that academies are paid 5% of all transfer fees. A player’s first contract must be with the club that has trained him. Unlike other clubs, which have allowed their academies to dwindle, Nantes hopes that it will continue to energise its first team. The quality of its training is recognised worldwide, and it hopes to build the value of this asset by applying its techniques to external companies’ workforces. It is running holiday camps at Easter and in the summer. Over and above all this, it is using any money that it makes to reinvest in the club, to improve the pitch, the infrastructure, and even its ticketing system.

FOOTBALL SPONSORSHIP & COMMERCE 231 Section IV The future

CONCLUSION NAFC is dedicated to making its youth system work, not just for financial purposes but to raise the quality of its football and, in time, its performance. The trouble with many clubs, however, is that they adopt a short-term view of the value of such academies. Pressure from accountants has even required some to curtail their activities. The harsh truth is, however, that clubs cannot afford to neglect training schools. They cement their involvement with the local community, mark them out as a club that builds for the future and take care of their players. As NAFC has found, it does no harm when home-grown players go on to play in national squads – at home and abroad. The challenge is to find a structure that can evolve and where all parties are seen to benefit, even if only in the long term.

Chapter 32: Agent fees

The fees paid to agents have a habit of upsetting shareholders and fans, but football cannot seem to do without them. Following a four-month internal investigation into its transfer dealings since January 2001, Manchester United revealed in May 2004 that it had paid almost £14m to agents in 17 deals. After the transfer of Louis Saha from Fulham (which earned agent Pinhas Zahavi £500,000 and Saha’s own agent another £250,000), Manchester United decided that it would reveal all monies paid to agents. Do such sums represent value for money to the club? What is clear is that unless clubs are to unite against the power of such middlemen they will have few bargaining chips. The English Football Association is reported to have been working for a while on proposals to make payments to agents more transparent. The football industry is still waiting. Perhaps the clearest rules are laid out by FIFA. These are reproduced below. To simplify matters, the use of the male gender in these regulations applies to both males and females. The expression ‘players’ agent’ also applies to agents who have concluded a representation contract with clubs. At a meeting on 10 December 2000, the FIFA Executive Committee passed the following regulations, in compliance with art. 17, par. 2 of the Regulations governing the Application of the FIFA Statutes:

FIFA TRANSFER REGULATIONS Preamble These regulations govern the occupation of players’ agents who arrange players’ transfers within one national association or from one national association to another. Each national association is obliged to draw up its own regulations for players’ agents based on the following guidelines. Such regulations must be approved by the FIFA Players’ Status Committee and incorporate the principles mentioned below. When drawing up their regulations the national associations shall take the FIFA Statutes and regulations into account as well as their own national legislation and international treaties.

I. GENERAL RULES Art. 1 Players and clubs are permitted to call upon the services of a players’ agent during negotiations with other players or clubs provided the players’ agent possesses a licence issued to him by the national association concerned in compliance with art. 2, par. 1 below. The players’ agent is a natural person who, for a fee, on a regular basis introduces a player to a club with a view to employment or introduces two clubs to one another with a view to concluding a transfer contract, in compliance with the provisions mentioned below. Players and clubs are forbidden from using the services of a non-licensed players’ agent (cf. art. 16 and 18).

232 FOOTBALL SPONSORSHIP & COMMERCE

Section IV The future

The ban stipulated in par. 2 above does not apply if the agent acting on behalf of a player is a parent, a sibling or the spouse of the player in question or if the agent acting on behalf of the player or club is legally authorised to practise as a lawyer in compliance with the rules in force in his country of domicile.

II. GENERAL RULES Art. 2 Any natural person wishing to act as a players’ agent shall send a written application to the national association of the country of which he is a national or, if he lives elsewhere, to the national association of his country of domicile provided he has lived there constantly for at least two years. Within the territory of the EU/EEA the applicant may turn to the national association of the country of his legal domicile, regardless of the duration of his residence. The applicant must have an impeccable reputation otherwise his application will be disregarded. The national association concerned shall decide whether the applicant fulfils the basic requirements in accordance with the national legislation of the country concerned. Only a natural person may apply for a licence. Applications from companies or clubs are not permitted.

Art. 3 An applicant may not, under any circumstances, hold a position with FIFA, a confederation, a national association, a club or any organisation connected with these institutions.

Art. 4 Any national association that receives an application for a licence shall check whether it complies with the prerequisites stipulated in art. 2 and art. 3. If the application is acceptable, the national association shall call the candidate for a written examination. An applicant whose application has officially been rejected by the national association’s examining body may send his application to FIFA. The FIFA Players’ Status Committee shall decide whether the national association has rejected the applicant unfairly. If the Players’ Status Committee also considers the application to be lacking in any form, the applicant may not reapply to the national association concerned for another two years.

Art. 5 The national associations shall set written examinations twice a year. The examinations shall be held on identical dates throughout the world. FIFA will therefore fix mandatory dates at the beginning of each calendar year in March and September and inform the national associations accordingly. National associations are responsible for arranging the examination in good time and giving the candidates adequate notice to take it. The basic terms and conditions for the examination procedure are defined in Annexe A of these regulations. The national associations may charge an appropriate fee to cover the costs of arranging the examination.

Art. 6 If a candidate scores the minimum amount of marks required to pass the examination (cf. Annexe A, I. par. 5), the national association shall request him to conclude professional liability insurance with an insurance company in his country. Within the territory of the EU/EEA the candidate may conclude the requested insurance policy with an insurance company in any EU/EEA country. He shall then send the insurance policy to the national association responsible.

FOOTBALL SPONSORSHIP & COMMERCE 233

Section IV The future

The aim of the insurance is to cover any claims for compensation from a player, a club or another players’ agent arising from the players’ agent’s occupation which, in the opinion of the national association and/or FIFA, contravenes the principles of these regulations and/or the national association’s regulations. The policy shall therefore be worded in such a way that every possible risk connected with a players’ agent’s occupation is covered. The maximum amount covered by the insurance policy shall be fixed on the basis of the players’ agent’s turnover. The professional liability insurance policy shall also cover claims made after expiry of the policy for events that occurred during the duration of the policy. The players’ agent is required to renew the insurance policy as soon as it has expired and automatically send the relevant documents to the national association concerned.

Art. 7 If the players’ agent cannot conclude a professional liability insurance policy in compliance with art. 6 above in the country in which he passed the examination, he may deposit a bank guarantee to the amount of CHF 100,000.—. The guarantee shall be issued by a Swiss bank and shall be irrevocable. Only FIFA has access to this bank guarantee. The bank guarantee has the same objective as that of professional liability insurance (cf. art. 6, par. 2). The amount of the guarantee (CHF 100,000.—) does not represent the maximum amount due to any party claiming damages. If the amount of the guarantee is reduced by a payment from the bank in response to a claim for damages against a players’ agent, the players’ agent’s licence will be suspended until the amount of the guarantee has been increased to the initial amount (CHF 100,000.—).

Art. 8 Every candidate who has passed the examination is required to sign a Code of Professional Conduct (cf. Annexe B) in which he pledges, without fail, to abide by the basic principles described therein when acting as a players’ agent. Players’ agents who fail to abide by the Code of Professional Conduct during the course of their work are liable to be sanctioned in accordance with art. 15, par. 2.

Art. 9 Players’ associations that are officially recognised by national associations and that wish to provide a job placement service to their member players in accordance with art. 1 above may conclude their own joint professional liability insurance policy with an insurance company in the country where they operate. In such cases, this insurance shall be limited to covering risks for no more than five licences. The licence holders shall, however, be bona fide members of the associations concerned, have passed the written examination in accordance with Annexe A herein and have personally signed the Code of Professional Conduct in accordance with art. 8. The names of the candidates who have received a licence shall also be listed in the insurance policy mentioned in par. 1 of this article.

Art. 10 After it has received the professional liability insurance policy or the bank guarantee, depending on the situation, and the signed pledge of the Code of Professional Conduct, the national association shall issue the players’ agent licence to the candidate. This licence is strictly personal and not transferable. Each national association is required to draw up a list of all of the licensed players’ agents on its territory and to send it to FIFA after every examination date. The licence shall be issued for an unlimited period and authorise the players’ agent to carry out transactions on a worldwide basis. FIFA will compile a list of every licensed players’ agent in the world and publish it on its official website. As soon as the players’ agent has received his licence from the national association, he will be entitled to use the following designation in business relations after his name: “Players’ agent licensed by [country] national association”.

234 FOOTBALL SPONSORSHIP & COMMERCE

Section IV The future

III. RIGHTS & OBLIGATIONS OF LICENSED PLAYER’S AGENTS Art. 11 A licensed players’ agent has the right:

I to contact every player who is not, or is no longer, under contract with a club (cf. art. 12 and 13 of the FIFA Regulations for the Status and Transfers of Players);

I to represent the interests of any player or club that requests him to negotiate and/or conclude contracts on his/its behalf;

I to take care of the interests of any player who requests him to do so;

I to take care of the interests of any club which requests him to do so.

Art. 12 A players’ agent may represent or take care of the interests of a player or a club in compliance with art. 11 only if he has concluded a written contract with the player or club. Such a contract shall be limited to a period of two years but may be renewed in writing at the express request of both parties. It may not be tacitly prolonged. The contract shall explicitly mention who is responsible for paying the players’ agent’s fee, the type of fee and the prerequisite terms for the payment of the fee. Only the client engaging the services of the players’ agent, and no other party, may remunerate him. The amount of remuneration due to a players’ agent who has been engaged to act on a player’s behalf is calculated on the basis of the player’s annual basic gross income (i.e. excluding other benefits such as a car, a flat, point premiums and/or any kind of bonus or privilege) that the players’ agent has negotiated for him in the employment contract. The players’ agent and the player shall decide in advance whether the player will remunerate the players’ agent with a lump sum payment at the start of the employment contract that the players’ agent has negotiated for the player or whether he will pay annual instalments at the end of a contractual year. If the players’ agent and the player do not decide on a lump sum payment and the player’s employment contract negotiated by the players’ agent on his behalf lasts longer than the representation contract between the players’ agent and the player, the players’ agent is entitled to annual remuneration even after expiry of the representation contract. This entitlement lasts until the player’s employment contract expires or as soon as the player signs a new employment contract without the help of the same players’ agent. If the players’ agent and the player cannot reach agreement on the amount of remuneration to be paid or if the representation contract does not provide for such remuneration, the players’ agent is entitled to payment of compensation amounting to 5% of the basic income described in par. 4 above which the player is due to receive from the employment contract negotiated by the players’ agent on his behalf. A players’ agent who has been contracted by a club shall be remunerated for his services by payment of a lump sum that has been agreed upon in advance. FIFA will provide its standard representation contract (cf. Annexe C) to the national associations. Every players’ agent is required to use this standard contract. The parties to the contract are at liberty to conclude additional agreements and to supplement the standard contract accordingly, providing the relevant public law provisions for arranging employment in the country concerned are observed without fail. The representation contract shall be issued in quadruple and duly signed by both parties. The player or the club shall keep the first copy and the players’ agent the second. The players’ agent shall send the third and fourth copies to his national association, or the national association to which the player or club belongs, for registration within 30 days of their having been signed. The national associations shall keep a register of the contracts being received. Copies of the contracts shall be sent to FIFA upon request. Minors may not sign a representation contract without the express permission of their legal guardian(s) in compliance with the national law of the country in which the player is domiciled.

FOOTBALL SPONSORSHIP & COMMERCE 235

Section IV The future

Art. 13 A players’ agent may organise his occupation as a business as long as his employees’ work is restricted to administrative duties connected with the business activity of a players’ agent. Only the players’ agent himself is entitled to represent and promote the interests of players and/or clubs with other players and/or clubs. The players’ agent shall send the national association that issued him the licence a list of his employees at least once a year. Each employee shall have featured on the list for at least three months before being officially confirmed in office. The players’ agent shall immediately notify his national association of any elimination from the list. The elimination then takes immediate effect.

Art. 14 A licensed players’ agent is required:

I to adhere, without fail, to the statutes and regulations of the national associations, confederations and FIFA;

I to ensure that every transaction concluded as a result of his involvement complies with the provisions of the aforementioned statutes and regulations;

I never to approach a player who is under contract with a club with the aim of persuading him to terminate his contract prematurely or to flout the rights and duties stipulated in the contract;

I to represent only one party when negotiating a transfer;

I to give, at request, the relevant body at each national association and/or FIFA all of the requisite information and to send in the necessary papers;

I to ensure that his name, signature and the name of his client appear in the relevant contracts resulting from every transaction in which he is involved;

I to comply with the relevant public law provisions governing job placement in the country concerned.

Art. 15 Players’ agents who abuse the rights accorded to them or contravene any of the duties stipulated in these regulations are liable to sanctions. The following sanctions may be pronounced:

I a caution, censure, or warning; I a fine; I suspension of the licence; I withdrawal of the licence.

The sanctions may be imposed jointly. The foregoing sanctions may be pronounced only by the national association that issued the licence to the offending players’ agent or by FIFA. The delimitations of responsibility are stipulated in art. 22, par. 1 and 2 below. The licence shall be withdrawn if the players’ agent fails to fulfil any of the prerequisites for acquiring a licence stipulated under art. 2, 3, 6 and 7 (professional liability insurance or bank guarantee). If this is the case and the omission can be remedied, the appropriate body at the national association shall set him a reasonable deadline in which to reinstate compliance with the rules. In addition to the reasons given under par. 4, the licence shall be withdrawn, in particular if the players’ agent repeatedly or seriously infringes the statutes and regulations of the national associations, confederations and/or FIFA. The licence shall be withdrawn by the national association which issued it. FIFA reserves the right to direct a national association to mandatorily withdraw a licence.

236 FOOTBALL SPONSORSHIP & COMMERCE

Section IV The future

IV. PLAYER’S DUTIES Art. 16 Players may only call upon the services of a players’ agent who holds a licence issued by a national association in compliance with these regulations, subject to the exceptions mentioned in art. 1, par. 3. The players’ agent’s name and signature shall, without fail, appear in the relevant employment contract(s) in every transaction in which a players’ agent represents the players’ interests. If a player does not use the services of a players’ agent, this fact shall also be explicitly stated in the relevant employment contract.

Art. 17 If a player engages the services of a non-licensed players’ agent, it is left to the discretion of the national association with which the player is registered (in the case of a national transfer) or FIFA (in the case of an international transfer):

I to take this fact into account when judging a player’s situation in any dispute arising as a result of such contracts;

to punish the player as follows:

I with a caution, censure or warning; I with a fine of at least CHF 10,000.—; I with a disciplinary suspension of up to 12 months.

These sanctions may be imposed jointly.

V. DUTIES OF THE CLUBS Art. 18 Clubs that wish to engage the services of a player may only deal either:

I with the player himself, or I with a players’ agent who holds a licence issued by a national association in compliance with the provisions of these regulations, subject to the exceptions mentioned in art. 1, par. 3.

For every transaction in which a players’ agent represents the interests of a club, his name and signature shall, without fail, appear in the relevant transfer and/or employment contract(s). If the club does not use the services of a players’ agent, this fact shall also be explicitly mentioned in the relevant transfer and/or employment contract(s). A club that pays another club compensation shall pay it directly to the beneficiary club. It is strictly forbidden for the club making the remittance to pay any of the amount, either partially or wholly, to the players’ agent, not even as remuneration.

Art. 19 Any club that infringes any of the bans contained in art. 18 will be liable to the following sanctions:

I a caution, censure or warning; I suspension of any or all of its board of directors; I a fine of at least CHF 20,000.—; I a ban on any national and/or international players’ transfers for at least three months; I a ban on any kind of national and/or international football activity.

FOOTBALL SPONSORSHIP & COMMERCE 237

Section IV The future

In addition, any transaction which the club makes in contravention of art. 18 above will be declared null and void. The sanctions may be imposed jointly. The sanctions listed above may only be pronounced by the national association to which the club is affiliated (in the case of a national transfer) and by FIFA (in the case of an international transfer).

VI. SPECIAL PROVISIONS Art. 20 Any players’ agent who decides to terminate his activities as such is obliged to return his licence to the national association that issued it. Failure to comply with this provision will incur cancellation of the licence and publication of this decision. The national association shall publish the names of those players’ agents who have terminated their activities as such and notify FIFA and the relevant confederation immediately. The players’ agent may not cancel his professional liability insurance policy until he has terminated his occupation (the licence has either been returned or withdrawn). The players’ agent shall, however, ensure that any claim for compensation made after termination of his occupation, which originates from his former activities as a players’ agent, is covered by the insurance (cf. art. 6, par. 4 of these regulations).

Art. 21 The Players’ Status Committee is the supervisory and decision-making body of FIFA responsible for implementing these regulations and for ensuring that players’ agents carry out their activities in compliance with the Code of Professional Conduct. Each national association shall designate a supervisory and decision-making body responsible for the activity of players’ agents for whom it has issued a licence. This body shall ensure that the players’ agents’ activities at national level comply with the principles of the Code of Professional Conduct.

VII. DISPUTES Art. 22 In the event of disputes between a players’ agent and a player, a club and/or another players’ agent, all of whom are registered with the same national association (national disputes), the national association concerned is responsible. It is obliged to deal with the case and pass a decision, for which service it is entitled to charge an appropriate fee. Any other complaint not covered by par. 1 shall be submitted to the FIFA Players’ Status Committee. Complaints about the work of a players’ agent shall be directed in writing to the national association concerned or to FIFA within two years of the incident in question and in any case no later than six months after the players’ agent concerned has terminated his activities as such.

VIII. TRANSITIONAL PROVISIONS Art. 23 Any players’ agent who already holds a FIFA licence in accordance with the Regulations governing Players’ Agents dated 11 December 1995 may exchange it for a new one at the national association responsible under the terms of art. 2, par. 1 of these regulations within six months of their implementation. These players’ agents are not required to take the written examination in compliance with Annexe A of these regulations. Once the transitional period of six months has elapsed, the validity of the former licence will expire. Any players’ agents who have not exchanged their FIFA licence by this time will be required to take the written examination to acquire the new licence at the national association concerned.

238 FOOTBALL SPONSORSHIP & COMMERCE

Section IV The future

Art. 24 Any players’ agent who has deposited a bank guarantee with a Swiss bank in compliance with art. 9 of the Regulations governing Players’ Agents dated 11 December 1995 may request FIFA to release the bank guarantee upon production of a professional liability insurance policy. The policy shall have been issued by an insurance company that has its headquarters in the country of the national association that is responsible for the players’ agents concerned under the terms of art. 2, par. 1. FIFA will notify the national association concerned of the switch and send it the insurance policy.

Art. 25 Any dispute between a players’ agent and a player, a club and/or another players’ agent which was submitted to FIFA for settlement by the Players’ Status Committee before these regulations came into effect shall be settled in compliance with the Regulations governing Players’ Agents dated 11 December 1995. Any dispute submitted for decision after these regulations come into effect shall be settled in compliance with these regulations by those bodies stipulated under art. 22.

IX. FINAL PROVISIONS Art. 26 The FIFA Executive Committee shall have the final say on any matters not provided for under these regulations.

Art. 27 In the event of any discrepancy in the interpretation of the English, French, Spanish or German text of these regulations, the English text is authoritative.

Art. 28 These regulations were adopted by the FIFA Executive Committee at its meeting in Rome on 10 December 2000 and come into effect on 1 March 2001.

Rome/Zurich, 10 December 2000 For the FIFA Executive Committee The President: The General Secretary: Joseph S. Blatter Michel Zen-Ruffinen

ANNEXE A: EXAMINATION PROCEDURE I. The examination shall be set as a multiple choice test. The candidate will be considered to have passed the examination if he has attained the minimum marks fixed by FIFA (cf. par. 5). Each candidate shall be tested on the following subjects:

I familiarity with the current rules of football, especially in connection with transfers (the statutes and regulations of FIFA, the confederations and the national association in whose country the candidate takes the examination), I familiarity with civil law (basic principles of personal rights) and the law of obligations (law of contract).

Each examination shall contain twenty questions, fifteen on international regulations and five on national regulations. Each national association shall set its own questions on national subjects whereas FIFA will set the questions on its own statutes and regulations and send the examination papers to be used to the national associations. FIFA will fix the minimum marks required to pass the examination. Each correct answer will be awarded between one to three marks, depending on the degree of difficulty of the question.

FOOTBALL SPONSORSHIP & COMMERCE 239

Section IV The future

The national associations shall inform the candidates of the minimum marks to be attained before they take the examination. II. The examination papers shall be marked immediately after the examination and the candidate informed of the outcome. A candidate who fails to attain the minimum marks may immediately reapply to retake the examination. If a candidate fails to attain the minimum marks after the second try, he may not retake it until the next two examination dates have elapsed. Only then may he apply to take the examination a third time, in which case he may choose to be examined by the national association or by FIFA. Any candidate who fails to attain the minimum marks after the third try may not take the examination again for another two years.

ANNEXE B: CODE OF PROFESSIONAL CONDUCT I. The players’ agent is required to perform his occupation conscientiously and conduct himself in his profession and other business practices in a manner worthy of respect and befitting his profession. II. The players’ agent shall adhere to the truth, clarity and objectivity in his dealings with his client, negotiating partners and other parties. III. The players’ agent shall protect the interests of his client in compliance with the law and a sense of fairness, while creating clear legal relations. IV. The players’ agent shall, without fail, respect the rights of his negotiating partners and third parties. In particular, he shall respect the contractual relations of his professional colleagues and shall refrain from any action that could entice clients away from other parties. V. The players’ agent shall conduct a minimum of bookkeeping on his business activities. In particular, he shall ensure that he can provide evidence of his activities at any time by means of documents and other records. He shall keep all of the books conscientiously and detail his business activities faithfully in other records. At the request of any authorities conducting an investigation into disciplinary cases and other disputes, the players’ agent is required to produce books and records directly connected with the case in point. The players’ agent shall produce an invoice showing his fees, expenses and any other charges upon first demand from his client.

240 FOOTBALL SPONSORSHIP & COMMERCE Section IV The future

Chapter 33: Italy builds for the future

New stadia, says Daniele Micciche, are key to the future of Italian football. Serie A has the glamour, the skill and the profile, but Italian football currently suffers from a distinctively unattractive problem: its stadia. With that problem come two fundamental concerns: crowd violence and a serious lack of matchday revenue. Clubs seem to have placed an emphasis on accommodating large numbers of spectators but little else. The good news for Italian football viewers, however, is that these problems can be tackled and overcome. Take the English for instance. It wasn’t so long ago that football hooliganism was being described as a ‘British disease’. Then, in an attempt at offering better ways to regulate and control attendances, the Taylor Report (of 1990) was implemented, creating a more stable and less violent feel to the atmosphere at football stadia. This required investment in the infrastructure of stadia to prevent the worst effects of crowd disorder but also to make the identification of fans much easier, especially using CCTV. As a result, as stadia have been transformed to all- seater venues, and perimeter fences have given way to surveillance cameras and new catch-all offences for hooliganism, match arrests at English football have steadily declined, while attendances have continued to rise. In addition, of the factors that Lord Taylor identified as a blight on the English game, several (old grounds, poor facilities, hooliganism and excessive drinking) have been largely eliminated from the upper echelons of the game. And while these developments have focused on improved comfort and safety (anti-hooligan measures) and increased capacity, they have also brought in essential support facilities that generate strong matchday revenue from a wide diversity of uses, such as hotel rooms and conference suites. In Italy, by contrast, acts of crowd violence at football matches in recent years have become more noticeable. On numerous occasions supporters have thrown objects onto the pitch (and often hit players) and caused damage to stadia; in one incident, a fan somehow managed to smuggle a motorbike into the San Siro and drop it from the upper tier. Again, the violent behaviour by fans at one Torino vs AC Milan match forced the game to be suspended after 65 minutes and led the Italian football authorities to re-think and seek immediate solutions to this serious issue. Along with problems of crowd disorder, Italian clubs are weakened by a lack of facilities within stadia that could increase matchday or non-matchday revenues. Also, because clubs do not own stadia, the opportunities to develop and improve the facilities are restricted. The following table illustrates the difference in the average revenue streams between the English Premier League and Serie A:

TABLE 4.2 Different revenue streams: English Premier League / Serie A

SEASON MATCHDAY BROADCAST COMMERCIAL TOTAL AMOUNT AMOUNT SHARE OF AMOUNT SHARE OF AMOUNT SHARE OF TOTAL TOTAL TOTAL REVENUE REVENUE REVENUE €M% €M% €M% €M 1996/97 206 37 199 36 146 27 551 1997/98 218 33 241 37 191 30 650 1998/99 222 31 248 35 244 34 714 ALIAN IT SERIE A 1999/00 202 19 596 56 261 25 1,059 2000/01 184 16 621 54 346 30 1,151 1996/97 324 42 161 21 286 37 771 1997/98 349 36 253 26 365 38 966 1998/99 410 37 326 29 376 34 1,113 LEAGUE ENGLISH PREMIER 1999/00 432 34 402 31 449 35 1,283 2000/01 486 31 598 39 472 30 1,556

FOOTBALL SPONSORSHIP & COMMERCE 241 Section IV The future

Clearly, Premier League clubs are more successful at generating matchday revenue (2000/01: 31% compared to 16% in Italy), which reflects the greater range of facilities offered within stadia, both for the general spectator and within hospitality areas. The importance of this is highlighted by Dan Jones, director of the sports unit at accountants Deloitte & Touche. He suggests that following the English business model should be top of the agenda for Italian football since English Premier League clubs have the best stadia and are the most commercially developed as businesses in areas such as merchandise sales, and they generate the highest revenues. Increasing revenue generated through the stadia is imperative to Italian football since its greatest income stream, broadcast (2000/01: 54% compared to 39% in England), was weakened significantly this year as a result of the huge debts accumulated by TV platforms Stream and Telepiu. If the two merge, revenue will drop even further due to the lack of competition for domestic rights. Furthermore, Italian football has suffered a recent slump in attendances at Serie A matches, as highlighted in the table below (a comparison of average league attendances from 1995/1996 to 2000/2001 between the English Premier League and Serie A).

TABLE 4.3 Serie A vs English Premier League average attendances

1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 ITALIAN SERIE A 30,700 29,700 29,598 26,019 25,474 25,833 ENGLISH FA PREMIER LEAGUE 30,600 30,700 32,800 34,448 35,464 34,978

SOURCE: Deloitte & Touche Annual Review of Football Finance 2000/1

Attendances of the two leagues show trends in opposite directions during the past few seasons. In 2000/01- 2003/04 average attendances in England grew by 3.55%, while Italy experienced an average decline of 4.15% over previous seasons. More relevant, however, is stadia utilisation. In England, the average capacity in the Premier League is 34,842. With the average league attendance at 34,978, that means the average utilisation in the Premier League in 2000/01 is an impressive 94%. Compare this to Italy, where the average stadium capacity in Serie A is in the region of 58,000, the average league attendance is 25,833 and average utilisation is below 50%. This inability to fill the stadia explains the re-development plans of Juventus to reduce the capacity of the Stadio delle Alpi from 69,000 to 38,000. With this is mind, Italian clubs should decide whether to buy their existing stadium and re-develop it or acquire land and build a new one. Naturally, the third option would be to do nothing at all, because while ownership unlocks the potential for increasing revenues, the club may simply not be able to afford to buy. In this case, clubs could seek funding, as the English clubs have done through the Football Trust (e.g. grants towards police costs, transport improvements, safety and community initiatives) and government support (e.g. reduced taxes on the football pools to re-direct finance into the game for stadia improvements).

OPTION 1: RE-DEVELOP EXISTING STADIUM This option tends to be more expensive than building from scratch. In addition, the construction is often technically more difficult. Designing around an existing structure is also likely to restrict the flexibility of the space and will involve more compromises than if designing and building from scratch. Redevelopment does, however, offer the advantage that the works can be phased, therefore breaking down costs into more manageable amounts. Again, for some clubs, the idea of leaving the spiritual home is unthinkable, so redevelopment is the only option. As described on page 106, one club currently involved in stadium redevelopment is Juventus. As part of its programme, the athletics track at the Stadio delle Alpi will be removed and the new stands will be closer to the pitch, creating a better atmosphere and an improved view for spectators. In addition, the executive boxes, with space for 2,000 guests, will boost a stadium that currently has limited facilities for hospitality. It remains to be seen whether the increase in commercial revenue it expects to generate will act as a benchmark for other clubs to follow.

242 FOOTBALL SPONSORSHIP & COMMERCE Section IV The future

OPTION 2: RE-LOCATE TO A NEW STADIUM A new stadium is likely to involve land purchase and infrastructure costs (e.g. roads, bridges etc.), which are not required for developing existing stadia. In addition, a new stadium may take longer, taking into account the need to obtain consent, let alone finding a suitable site. Richard Arnold, a consultant at property experts Drivers Jonas, proposes that Italian clubs should still consider the importance of exploiting regeneration opportunities. Where sites are available, says Arnold, stadia are likely to relocate within existing central areas and so benefit from the main transport hubs. Stadia can then offer integrated mixed-use schemes and play a major role in facilitating urban regeneration (e.g. creating jobs, attracting commercial partners, increasing the profile of the area). Such developments can comply with planning policy, meet both social and environmental concerns and offer increased economic viability. For example, the new 60,000-capacity Arsenal stadium development at Ashburton Grove in north London will include over 2,000 new homes, leisure facilities, business and industrial space. The scheme will be cross- funded from the residential and commercial development, and Arsenal will be at the centre of the regeneration of the urban environment. Finally, an important potential benefit of relocation is the ‘new stadium factor’. Arnold says that the lesson from stadia development in England is that building a new stadium generates extra interest in the club (e.g. higher attendances through attracting new support), which in turn generates more revenue. The following table outlines the areas of income that Italian clubs could increase by developing new stadia:

TABLE 4.4 New stadia potential for increasing income

INCOME DRIVERS NEW STADIA POTENTIAL TICKET SALES VOLUME AND PRICE INCREASES EXECUTIVE BOXES LARGE VOLUME AND PRICE INCREASES HOSPITALITY SUITES VOLUME AND PRICE INCREASES CATERING INCREASED VOLUME BROADCASTING LIMITED INCREASE SPONSORSHIP / BRANDING POTENTIAL INCREASE - NAMING RIGHTS MERCHANDISING INCREASE - VOLUME RELATED OTHER INCOME NEW OPPORTUNITY - CAR PARKING AND NON-MATCHDAY EVENTS ATTRACTED BY NEW STADIA. NEW COMMERCIAL AND OTHER ANCILLARY FACILITIES

SOURCE: Drivers Jonas, 2003

AREAS FOR IMPROVEMENT Corporate hospitality facilities An increase in corporate hospitality facilities, such as restaurants and executive boxes, would need to be linked with appropriately located business seats within the stadium bowl, as well as suitable access to hospitality areas. Hospitality facilities work most successfully when consideration is given to how the package fits together from the moment executive spectators park their cars to where their seats are located in the stand.

Concourse facilities Better concourse facilities can increase the spend per head of general fans, both in refreshments and merchandise. A sufficient number of suitably designed kiosks will provide speed of service at key times, before and after the game, and more crucially at half-time.

Improved spectator sightlines This is another important issue for Italian clubs to consider, since the running tracks around pitches and seating that has been fixed to former standing areas result in poorer viewing standards for the spectator.

FOOTBALL SPONSORSHIP & COMMERCE 243

Section IV The future

Matchday audience Italian clubs should also consider their target audience and the impact this has on increasing revenues. As well as improving utilisation of stadia, as discussed, clubs could attract new audiences to attend matches – women, families and a higher proportion of corporate and affluent supporters. Alongside this, Arnold suggests that clubs should focus on introducing initiatives to provide a greater matchday experience:

Safety The increase in hooliganism at Italian stadia must be tackled by the football clubs. Partnerships should be formed with the police so that troublemakers can be identified and prevented from entering the stadia. Additionally, security facilities within the stadia should be enhanced and include the wide-scale introduction of closed circuit television.

Racism Along with hooliganism, several Serie A clubs suffer from large-scale racist chanting. Initiatives should be introduced to highlight the problem and educate supporters to its unacceptability. Most professional clubs in the UK operate ‘Football in the Community’ schemes to develop closer links with the local community. Some clubs, such as Charlton Athletic, have gone a step further and have introduced specific race awareness groups, utilising the club’s brand to educate the community in race issues.

Ticketing Clubs must recognise the importance of broadening their audience through flexible and creative ticketing policies with a suitable pricing structure. They could target affluent consumers through high ticket prices and season tickets, and adopt low cost children’s schemes. These have been successful in England, attracting families who use the concourse facilities, thus increasing income streams in other areas.

Non-matchday facilities Stadia facilities should also be developed with a view to being used seven days a week to maximise revenue. Non-matchday operations might include hospitality or function rooms (e.g. for weddings, conferences etc.), hotel rooms, leisure facilities (e.g. health club), community facilities (e.g. classrooms) and events (e.g. pop concerts). When appraising potential non-matchday revenues, Arnold says that individual clubs need to consider their target market in relation to the location of the stadium. To make the venue an active, seven-day-a-week destination, it must be located in the heart of a conurbation and not out at the edge. Good transport links and car parking facilities are necessary to attract businesses to the function rooms. In this context perhaps Juventus might have been better to move from the Stadio delle Alpi, whose location is extremely unpopular with supporters and the main reason for poor attendances. Re-locating would have increased the possibility of attracting new supporters and commercial interests, so a reduction in capacity might not have been necessary. Without doubt, the positive strides made by English clubs since the Taylor Report have shown that stadium development can act as a vehicle for reducing crowd disorder and increasing revenue streams. It is vital, therefore, that Italian clubs recognise this. If the TV bubble has indeed burst, or even been only somewhat deflated, clubs that actively seek to develop alternative streams will be the ones that emerge the strongest.

244 FOOTBALL SPONSORSHIP & COMMERCE Section IV The future

Chapter 34: Ticket prices

FUTURE PRICING What does the future hold for ticket prices? Fans across Europe will be hoping that it does not mean a repeat of the situation in the UK, where despite what the clubs claim are innovative schemes, prices seem to be spiralling out of control. A report commissioned by the Liberal Democrats revealed that fans in England were paying as much as four times the amount of their counterparts in other parts of Europe. The pricing differential is so great that MPs are now being asked whether youngsters are being deterred from going to stadia to watch games. Premiership season tickets are the most costly in Europe, says the report, which looked at clubs who finished in the top two places last season in European football’s most successful leagues. The table appears as follows, based on the prices for the cheapest season tickets available for the 2004/2005 season:

TABLE 4.5 Relative costs of season tickets in Europe

CLUB PRICE £ ARSENAL 800 CHELSEA 520 BARCELONA 182 VALENCIA 175 BAYERN MUNICH 174 ROMA 158 WERDER BREMEN 127 AC MILAN/AJAX 103

The study also noted that top Portuguese club Porto, winner of the European Champions League, asked only £67 to let fans through its gates. These results have prompted the Liberal Democrat spokesman on culture and sport, Don Foster, to write to the Independent Football Commission calling for an inquiry. The Premier League contends that the situation in the UK and the Premiership is not the same as for other clubs in Europe. Premier League clubs tend to own their stadium and do not attract any subsidy from the government. The average attendance in the Premiership is also higher, above 35,000, which does not exceed attendances in Germany but tops figures for Italy and Spain. This suggests that fans are not deterred by the high prices. The Premier League can also point to studies which showed that 80% of those attending its games believed it represented good value for money.

PRICING HISTORY It is true that ticket prices in the UK now exceed prices in other European countries, but this has not always been the case; nor have attendances always been as healthy. To understand the current situation in context, it is necessary to go back to the Hillsborough disaster of 1989, which caused the loss of 96 lives. Football – with its antiquated systems and facilities, and its terracing – was held to be at fault, and this resulted in the publication of the Taylor Report, which called for the introduction of all-seater stadia, modern facilities and an audience that includes more women, ethnic minorities and children.

FOOTBALL SPONSORSHIP & COMMERCE 245

Section IV The future

GROWING AUDIENCES

Since 1998, attendances in the UK have risen every season; prior to 1998 that they had been falling. The creation of better facilities for supporters, and the provision of seats have ultimately changed the nature of the audience profile. This would not have happened in the previous dire, often unsanitary, conditions of stadia, where, for instance, the food on offer could properly have been termed a health hazard. “Suddenly, people who hadn’t been to football in years came back to it,” says Phil Carling, senior vice-president, football, of sports marketing agency Octagon Csi. “They were more likely to take friends and family, so the demographics of those attending – at least in the Premiership – changed dramatically.” Stadia began to fill up, and once a much higher percentage of the overall gate was given over to season ticket holders, it became much more difficult to get a ticket. “I know in my days at Arsenal, when we still had terracing and a 48,000 capacity, the potential for season tickets was as low as 20%,” says Carling. “I wouldn’t mind betting that season tickets now make up 70%. And at Newcastle, all but a few thousand are season tickets.”

SUPPLY AND DEMAND Fans may complain, but when stadia are full, and when most of the fans in the Premier League are season ticket holders, going to games on spec is not an option. It is here that the supply and demand equation comes in. Carling is unwilling to predict just how far clubs will be able to go because, in the UK at least, prices have increased markedly beyond the rate of inflation. The situation is different elsewhere in Europe. Take Italy. At the time of the 1990 World Cup, it built huge 70,000 or 80,000 capacity stadia. It envisaged clubs like Milan, Juventus and Turin being able to ground share and make full use of the stadia. Unfortunately, they were built without the culture of premium seating or support facilities. San Siro, for example, is an amazing looking stadium, but – compared with a modern one – looks positively primitive. It lacks inside catering facilities, adequate toilets, restaurants and function rooms – all facilities that are viewed as standard for English grounds. This has a knock-on effect on crowds, restricting them in the main to 16-34 year old males and excluding families, older men with more disposable income and women, says Carling; all these fans are attracted by the improved facilities at English grounds. “It is also interesting that a lot of the Italian clubs are now looking quite carefully at whether to go back to 35,000-40,000 grounds with all the facilities taken as standard in England,” he says. In Spain the picture is different again. There is limited opportunity for ticket price hikes at Barcelona, say, because of the fact that it is owned by its members and is not, therefore, run purely along commercial lines. Further down the scale, ticket prices at Spanish clubs are likely to be a function of the attendances that they are getting and their position in their relevant league. As for France, there are very few clubs that sell out. This, of course, means that they can’t raise the price, a situation that seems to be repeated in Holland and in Germany, where the one club that does sell out is FC Schalke 04. However, this is a very community driven club right in the heart of the Ruhr, and supporters would probably fiercely resist any price hike.

CORPORATE HOSPITALITY IMPACT ON PRICING Another element that marks English clubs apart from those in Europe is corporate hospitality. There is anecdotal information that around 15% of the tickets drive 50% of the income at clubs like Manchester United and Chelsea. The reason for this is that an operation like Manchester United serves 6,500 meals on matchday, so that a small percentage of tickets are paying closer to £100 than £35-40 because they get a meal, hospitality, a guest speaker – all the trimmings. This is only possible if a club has large capacity lounges and the catering facilities to support them – sizeable kitchens close to the lounges. “When this happens, though, all of a sudden a relatively small handful of your tickets is generating the bulk of your income,” says Carling. “That is the model which is interesting to clubs in Italy, France, Germany and Spain, because they have all seen what happens with the Premier League clubs in England and want to follow suit.” The problem for continental European clubs is that, though corporate hospitality at football matches is a recognised part of the UK business culture, it is not the case elsewhere in Europe. Carling recalls that when he started at Arsenal, it took the club a good three years to sell all its boxes. “This now seems incredible,” he says. “There were only 53, but the reason for that was that it was not established practice to own a box if you were a small business, or to do that sort of entertaining. You might take people to the tennis or racing every so often, but it is amazing how much a part of business it is now.”

246 FOOTBALL SPONSORSHIP & COMMERCE

Section IV The future

Chapter 35: Player wages

The English Premier League still brings in more money than its European equivalents, according to the latest Deloitte report (some £1.2bn in the 2002/2003 season, compared with its nearest rival, Italy’s Serie A (£0.8bn). The question is: are clubs in the Premiership spending too much on wages? Not according to Dan Jones, a partner in Deloitte’s sports business group. “Total payments by English clubs in respect of players – wages plus transfer costs – fell by 5% to £852m in 2002/2003,” he says. “This is a relatively small percentage, but in reality a monumental change. It is the first recorded year-on-year decrease in total player spending since we started producing the annual review 12 years ago.” Clubs in the Premier League spent the lowest amount on wages for more than a decade, with decreases also seen in Football League clubs. This was accompanied by a big decrease in transfer fees, with the amount spent by clubs in 2002/2003 down 50% on the previous season. How much difference the new Chelsea owner, Roman Abramovich, has made to the figures is a moot point. The report does not cover last season, when he made a massive expenditure on players. Part of the reason for the drop was the collapse of ITV Digital, the former pay-TV operation, which impacted on clubs in the lower divisions. What does appear to have filtered through to club chairmen, however, is the need for greater financial controls. The combination of growing revenues and greater wage restraint, along with a slowdown in transfer spending, is improving the bottom line and the cashflow of clubs.

Chapter 36: TV rights

The big question mark around TV rights concerns viewing habits. Will technical convergence of different platforms come – or is it just wishful thinking on the part of manufacturers? The long-term prognosis seems to be that at some point it will be possible to watch a broadcast quality signal via the computer. Technologically, it is not that far off, but it does require a significant proportion of the population worldwide to have broadband access and to be able to get a decent signal. At that point, according to Octagon’s Phil Carling, it may be economically better for clubs or even leagues to sell their rights directly to consumers rather than go via a broadcaster. If the device in the corner of the sitting room is not just a TV but also a computer screen, the equation becomes much simpler. At that point, says Carling, one can imagine that 50 million people around the world could watch a game between, say, Arsenal and Manchester United and be prepared to pay a modest 50p to access it. That would produce some £25m. For a club like Manchester United, Liverpool or Arsenal, that becomes, per game – an almost irresistible commercial prospect. “To me,” says Carling, “that is why Manchester United, Real Madrid, Juventus and the other really big clubs are courting fans in remote locations so assiduously. At some point, if you have fans in China, Korea and Japan – instead of just a fan base which is local to you – they will ultimately pay good money to watch the product. “I don’t think that courting fans internationally is driven by licensing for merchandise sales, nor by any motivation other than that they [the fans] will ultimately be the consumers of a TV product delivered globally.”

TV RIGHTS AND THE EUROPEAN UNION The EU, having flexed its muscles over the way Champions League is sold, and with the way that the Premier League in UK is marketed, is unlikely to make any further challenges, according to Carling. He predicts, however, that the EU will home in on how wireless rights are sold because that may offer a new means of streaming matches and content. He foresees constant vigilance on behalf of the European Commission on the way football rights are bought and sold. “They will have a role to play, and they have shown their appetite for going pretty far down the road with that,” he says.

FOOTBALL SPONSORSHIP & COMMERCE 247

Section IV The future

OVERSEAS TV RIGHTS What is potentially the most interesting, as far as the individual leagues are concerned, is the gap that is opening up between the English Premier League and the overseas leagues in sales generated outside the UK. The Premier League, for instance, now gets between €325m and €360m for its overseas TV rights and will be in approximately 200 markets worldwide. Compare this with its nearest rival, La Liga, which rakes in not much more than €25m per annum, or Serie A, with around €20m, and the Bundesliga with a mere €6m to €8m per annum. The impact on the clubs will soon be felt. “The Premier League clubs will get more money because of the value of overseas rights, but also in terms of global share of voice and the battle for the hearts and minds of remote fans,” says Carling. “The other leagues will lose ground. You will end up travelling to China and finding all Liverpool, Chelsea or Arsenal fans, whereas before you might find Juventus and Real Madrid fans. There are three reasons for the Premier League’s lead. It has first mover advantage in that it was the first to internationalise its rights. Second, it now attracts top international players from many different markets. There is a multitude of African, French, Italian and Spanish players – so the League develops interest from all those markets. In Asian markets, Liverpool and Manchester United – and more recently Arsenal – have focused on long-term brand development. The third reason why the Premier League is so far ahead is that particularly over the last two to three years, it has been prepared to change its kick-off times to suit Asian broadcast schedules.

248 FOOTBALL SPONSORSHIP & COMMERCE