At the Heart of a Sponsorship Deal

Well, it's been a while since my last post. In the meantime I've been fortunate enough to get a job at City Football Group... It's been a busy time to say the least, but perhaps I'm starting to become more qualified to talk about sport sponsorship... Perhaps!

Something that I'm particularly interested in is the high end sponsorship deals, and how these are put together. Today rights holders have to be innovative in order to meet the demands of a very competitive industry, clearly there are a limited number of brands that have the budgets required to engage in these agreements. What creative rights holders are looking at is innovative ways in which they can incorporate the services of the sponsor into the day-to-day activity of the sports property. A brilliant example of this is SAP with the German National Team:

SAP provided the German team with its software 'Hana', an in-memory database architecture - which essentially develops stats from football performance based on key performance indicators. To give you an idea of the power of the software the system captured 5,000 data points per second. This data is then used as a metric for performance, with the German team between 2010 and 2014 the average ball possession went down from 3.4 seconds to 1.1. All very impressive, but more importantly from a sponsorship perspective, an unbelievable case study for SAP - their software played a direct role in Germany winning the World Cup. The headline in the Telegraph... 'Germany's World Cup tactics: shaped by data'. Other publications hailed SAP technology as a secret weapon. 

Despite this example I still think that the sports industry as a whole can be more creative when it comes to integration, I believe that the benchmark for that was set by the Decode Jay-Z with Bing. Before I go on, I need to state that the person who came up with this is a genius.

The goal was to increase Microsoft's relevance with the 'Y' generation and engage more consumers with Bing's new mapping software. They looked to hip-hop artist Jay-Z because he already had the desired audience, the 'Y' generation who are digitally savvy, consuming and sharing content online. The campaign aimed to generate a buzz around the new Jay-Z autobiography by taking pages out of the book into the real world locations and in turn create an online experience using social media technology. The concept was that for every day for a month a page of Jay-Z's book would appear in a place relating to what the page was talking about. The pages were printed on billboards, basketball nets, burger wrappers, cars and even the bottom of swimming pools. Fans were tasked with finding each of the pages through Bing maps and clues were posted online. Microsoft created a free online tool for fans to find and store each book page location online - collecting pages before the book was even released.

The result? One month. 11.7% increase in visits to Bing, 1.1 billion global impressions, Jay-Z's book in the best sellers list for 19 weeks.

To be honest, I can't do it justice - watch it here http://www.youtube.com/watch?v=XNic4wf8AYg

There's some way to go for sports sponsorship to produce something this innovative, but it seems clear to me it's crucial that a brands service or product is central to any sponsorship agreement.

JL

Everything Is Digital

I've recently set myself a bit of a project to learn more about digital, realising that my current knowledge is probably ok I'm keen to learn more. I really wanted to focus on how digital can help brands and find some great examples of digital marketing plus a look at what the future holds.

So, what even is digital?
'Involving or relating to the use of electronic technology'. This can cover a lot of categories including everything from social channels (Facebook, Twitter, Linkedin, Instagram etc) to websites, blogs, mobile, message boards, video, messaging, location, events, music, pictures and a whole host more.

If you really think about it, everything is digital and digital is everywhere. Whether you're watching videos, or listening to music, messaging friends, shopping, displaying photos, reading or playing games - there is an entire digital world. Even things that we do in the real world; eat, catch the bus or go for a run are often supported by things in the digital world. Instagram (those people who like to photo food), online timetables and Nike+ in the case of those examples. It seems that all our lives have a digital link (no pun intended) and brands have been taking advantage of this via digital marketing.

However, not all brands are too good at digital marketing. Some 16% of companies describe themselves as 'digitally inactive' and I've read a blog from one Head of Digital who claims that digital is the least understood word in business today.

How and why is digital useful to brands?
A few stats:
- 13% - Higher lead conversation rate through social media.
- 67% - Users who would recommend a brand who they follow.
- 75% - Users more likely to purchase from a brand they follow.
- x2 - The number of leads developed from social media compared with direct mail/telemarketing campaigns.

It's becoming more common that instead of thinking B2B or B2C brands are now looking at B&B (clue: not bed and breakfast) and B&C. Consumer created content is now forming part of what brands are, the consumer has more of a voice than they have ever had - allowing them to build a brand with you is key in any companies strategy. Focusing on understanding, engaging and staying relevant to customers is allowing brands to develop their reputations.

Purchasing has changed. If I'm going to buy something I do a quick Google search to see what people are saying about the product. This is true for over 66% of global consumers - hence why websites like TripAdvisor are huge, and let's be honest we've all been put off by that one bad review. The ability to engage with customers one on one, particularly after purchases is vital to long term success. Doing this adds value, generates revenue and, most importantly builds brand loyalty.

Astonishingly 25% of companies don't solicit post-purchase feedback. The way Amazon use feedback to engage customers is brilliant - how many times do you find yourself reading reviews on products that you've never even heard of?!

Many businesses use digital media as a self promotion device, which is a mistake. Make digital your focal point, centre stage, it forms an intrinsic part of your consumers interactions and is central to building relationships with your customers. Tesco have produced a fantastic example of this in South Korea, where they created adverts at subway stations with an interactive QR code.

There is a growing disconnect between the flexible social networks and the rigid structures in which most of us work. IBM identified that to keep up with the face paced industry it is in a digitally based culture would allow them to develop ideas faster. They developed something called 'Beehive' which is a way employees can network and idea share.

It wouldn't be a blog post on digital if I didn't share some of the (for want of a better expression) cool projects at the moment. I've chosen my two favourites:

1) Adidas: The New Speed of Light - Using LEDs placed on Leo Messi Adidas have shown the intricate detail and skill that goes into being the best footballer in the world. Filmed at 1000 frames per second, giving some great visuals.

2) Ayrton Senna - The Sound of Honda - Honda's engine telemetry system has allowed them to recreate Ayrton Senna's world record lap of the Japanese F1 circuit......... Using speakers and lights. Amazing.

Where is Digital Marketing going?
 Not to state the obvious but expect digital marketing budgets to go up, a lot.

I've been looking around and found out what a few of the industry leaders think will happen in the future:

- Email is different - Expect the static, print inspired email to die. Email is not going to look the same in every email client. Content and design will be tailored to the subscribers.

- Mobile takes hold (even more) - ROI from mobile has never been so easy to analyse, through clicks, opens, mCommerce, voucher codes and in-app conversions. In 2013 we're on target to download 45 billion smartphone apps and the industry is expected to grow from $6 billion to $55 billion by 2015. This will lead to a much more strategic approach to mobile from organisations.

- Social media - Fans and followers will become more about quality than quantity, and it's expected that savvy marketers will find ever more ways to engage their audiences.

- Content - Brands will be focusing content towards 'help'. Google research shows that in 2010 consumers required 5.3 sources of information before making a purchase, in 2011 that rose to 10.4 sources. Brands are expected to follow this lead.

I for one look forward to watching the developments!

JL

Fergie Time (is up)

Sir Alex Ferguson is to step down as Manchester United manager at the end of the season, following 26 years at the helm.

Sir Alex, who took up the Manchester side when they had not won a Premier League title for 26 years, has transformed the club into a trophy winning machine. During his time he has won an unrivaled 38 trophies including: 13 League Titles, 2 Champions League Crowns, 5 FA Cups and 4 League Cups.

Ferguson's finest hour came in 1999 when he won the treble, and masterminded the most successful season in the history of Manchester United. The treble included The Premier League, The FA Cup and the dramatic UEFA Champions League. The Reds only lost 5 games during the campaign.

Manchester United will now see a different benefit from Ferguson as a Director and Ambassador of the club, a club which is now the most valuable on the planet, consistent title winner and Champions League contender - It's safe to say that the red side of Manchester have a lot to be thankful for.

Ferguson commented, "The decision to retire is one that I have thought a great deal about. It is the right time."

The Scot went on, "It was important to me to leave an organisation in the strongest possible shape and I believe I have done so. The quality of this league winning squad, and the balance of ages within it, bodes well for continued success at the highest level whilst the structure of the youth set-up will ensure that the long-term future of the club remains a bright one."

Sir Alex thanked his players and staff, highlighting their professionalism and dedication - "Without their contribution the history of this great club would not be as rich." He added, "My wife Cathy has been the key figure throughout my career, providing a bedrock of both stability and encouragement. Words are not enough to express what this has meant to me."

Ferguson thanked further, "To the fans, thank you. The support you have provided over the years has been truly humbling. It has been an honour and an enormous privilege to have had the opportunity to lead your club and I have treasured my time as manager of Manchester United."

Naturally the speculation to who will be the next manager has already begun, with David Moyes being odds on with many book makers to take the position. Jose Mourinho is also in the running, along with Jurgen Klopp of Dortmund. Coral have placed Howard Webb at 1000/1 (very good) for those who are interested!

Needless to say, whoever takes over has extremely large boots to fill - my opinion, for what it's worth, anyone other than Mourinho is a mistake.

JL

No Way Jose

After dropping out of the Champions League on Tuesday night, losing 4-3 on aggregate against Borussia Dortmund. The self proclaimed 'Special one' has hinted towards a summer exit and speculation has begun as to where he'll be moving.

Mourinho explained that he wants to sit down with his friend (and president) Florentino Perez at the end of the season to discuss the future. The 50 year-old finds himself 11 points adrift of rivals Barcelona in La Liga, with his best chance of silverware being The Spanish Cup - the final for which is against Atletico Madrid in May.

In his press conference Jose spoke of how he is loved by fans and media in England, something which is not the case in Spain, the Portuguese manager highlighted the hatred towards him - particularly from Spanish journalists.

"I know I am loved by some clubs, especially one" Jose's not so cryptic clue about his thoughts on English clubs, and Chelsea. It seems that the manager will certainly be considering a move back to the English capital, and with Rafa Benitez on his way out in the summer the door seems half open (or is that half shut) for Jose to step in for the 2013/2014 season.

Of course this is a possibility, but I wouldn't count out Manchester United - Sir Alex Ferguson has indicated that as long as his health allows he will remain the Reds manager next season, however following the Champions League tie at Old Trafford Jose Mourinho more than indicated his respect for the club and its manager. I personally think that the Manchester United job is the one Jose wants, and if Ferguson was to retire he would be the favourite to take over at the helm - but he's in a tricky spot with timing as his stint at Real Madrid seems to be coming to a natural end for both, yet the vacancy he wants (Man Utd) may not be there.

Wherever Mourinho goes (or stays) next season will be big news, with 20 trophies and counting to his name I don't think he'll be struggling for offers.

JL

The World's Highest Earning Footballers

Here are the top 10 highest earning footballers in the world. I will be using the Castrol Football rating to show how these players stack up in terms of performance.

10) Fernando Torres - Chelsea - £13.8m
-  The £50m record British transfer makes it into the top 10. Although he's not exactly setting the world alight on the pitch, I'm pretty sure his agent won't be too bothered.
- Castrol Football Rating - 113.


9) Yaya Toure - Manchester City - £14.1m
- The former Barcelona man is reported to be on £220,000 per week, this is despite his agent claiming that he is 'unloved' at Man City. Say no more.
- Castrol Football Rating - 55.





 8) Zlatan Ibrahimovic - PSG - £14.9m
- Another former Barcelona man in at 8. The self titled 'living legend' probably doesn't feel his earning is a reflection of just how good his is. The Swedish international said that his move to PSG was to win trophies, he left out the bit about £14.9m...
- Castrol Football Rating - 19.

7) Wayne Rooney - Manchester United - £15.3m
- Though the arrival of Robin Van Persie may have seen Rooney lose some of the limelight, his bank balance is still doing ok. The England striker is the highest paid player at Manchester United, and with various sponsorship deals to supplement his income - Rooney has earned over £15m.
- Castrol Football Rating - 49.


6) Sergio Aguero - Manchester City - £15.3m
- The man who scored perhaps the most famous goal in Manchester City's history is in a 6. The Argentine is paid a little over £15.3m and following his goal the club's owners could (maybe) justify the spend!
- Castrol Football Rating - 31.

 5) Neymar - Santos - £17m
- Arguably Brazil's biggest star (and drama queen?), Neymar cracks the top 5. His income is subsidised by various sponsors and he also has various endorsements.
- Castrol Football Rating - N/A





4) Samuel Eto'o - Anzhi Makhachkala - £20.4m
- Shamelessly cashing in on a superb playing career, the former Barcelona and Inter Milan striker is the highest paid player in Russia.
- Castrol Football Rating - N/A


3) Cristiano Ronaldo - Real Madrid - £25.5m
- Money well spent in my eyes. On salary alone Ronaldo earns more than Lionel Messi, but can't match the Argentine with endorsements (or on the pitch for that matter).
- Castrol Football Rating - 2.





2) Lionel Messi - Barcelona - £29.7m (18.7m endorsements)
- If Cristiano Ronaldo is money well spent, then Lionel Messi must be some kind of bargain at just shy of £30m. The little Argentine according to some experts is the best player to have ever lived - his brief yet crucial performance mid week may be proof of this.
- Castrol Football Rating - 1, obviously.


1) David Beckham - LA Galaxy/PSG - £30.6m
- Of the £30.6m a staggering £28m comes from endorsements, that's a lot of after shave and boxer shorts that Beckham is shifting! Currently not receiving a salary from PSG, Beckham has to be one of the most loved footballers ever.
- Castrol Football Rating - 2129.






In summary, the better you are at football the more you get paid..... Unless you're David Beckham.

JL

Manchester City - Commercial Catch-up

Since Sheikh Mansour took over Manchester City in 2009 a lot has changed. The club had a debt of £305m, which was wiped clean. Investment has also gone into the playing squad, which experts now value at around £345m - resulting in winning The Premier League last season in the most dramatic of circumstances. The Manchester side are now 7th in the Deloitte Money League, surrounded by all the big boys and household names.

Manchester City find themselves in a unique position where significant investment has launched them (on the pitch) to the highest level, but the commercial arm is still playing catchup when compared to the top of the top in world football - which is no doubt where this club aim to go.

The Deloitte Money League provides an outline of the revenue streams of major football clubs on a global scale. The revenue is broken down into match-day, broadcasting and commercial, the top 5 for commercial are:

1. Bayern Munich - £171m (naming rights £32m = £139m)
2. Real Madrid - £159m
3. Barcelona - £158m
4. Manchester United - £123m
5. Manchester City - £117m (naming rights £40m = £77m)

To make this a level playing field it should be noted that the only two clubs to sell stadium naming rights are Bayern Munich, Allianz Arena and Manchester City, Etihad Stadium. This puts Bayern back into 'the pack' and leaves Manchester City someway short on where they want to be.

So the question is, why? Well the first thing to point out is the illustrious history of the top 4 clubs, which means a bigger fan base and therefore larger merchandise sales. Bayern Munich have a revenue of almost £50m from merchandise alone. If you look into the Facebook 'Likes' of each clubs fan bases become evident:

1. Barcelona - 41m likes
2. Real Madrid - 37m likes
3. Manchester United - 32m likes
4. Bayern Munich - 6.4m likes
5. Manchester City - 5m likes

So this is the first hurdle for the City commercial department to jump - ultimately a larger following will arise from more success.

Further to this the top 4 clubs are not resting on their laurels, with numerous extensions and new deals recently signed. Most notable Manchester United have a 7 year shirt sponsorship deal with General Motors worth a considerable £357m, Real Madrid have extended their partnership with Adidas until 2020, Barcelona shirt sponsorship is worth £30m per year with Qatar Sports Investments and Bayern Munich have also announced a £30m per year shirt sponsorship with Deutsche Telecom.

At the moment Manchester City breakdown their sponsorship partners into categories; title sponsor, kit supplier, telecoms, betting, beer etc - all reasonably standard categories that you would expect to find at most football clubs. Where other clubs have seen commercial success, and in particular Manchester United is breaking down these categories or even stepping away from the standard. For example under the beer category Manchester United have expanded to a Lager (Singha), a Wine (Casillero del Diablo) and a Spirit (Smirnoff) - all of a sudden one partner becomes three, which of course leads to more revenue. The Reds aren't just stopping with alcohol, they have 14 telecoms partners covering various regions, they have a savoury snack partner, an Indonesian Tyre partner, Chinese soft drinks, Malaysian noodles and a Japanese paint partner (cue something about painting the town red...).

Now it's fair to say that Manchester United are ahead of the curve here, and you can expect a lot of clubs to be changing their strategies to somewhat replicate this model.

So, back to Manchester City, what can they do to reduce the gap between themselves and the top 4? The first thing is to continue winning, which will increase support and therefore merchandise sales. The second thing to look into is expanding categories, at the moment City have 15 partners, United have 33 partners - I think that says it all.

City should also look how they can differentiate themselves from the competition and the one thing that stands out for me is the flexibility they can and should offer, City can alter their approach to fit in with sponsors marketing objectives. Manchester City also have what I think of as an 'excited' fan base, by this I refer to the attitude of the fans that are now experiencing success - this certainly differs from the top 4 who expect success.

It will certainly be interesting to see how/if Manchester City alter there commercial strategy for next season and onwards. If they get things right we could be seeing a top 5 ranking for the 2012/2013 Deloitte Money League.

JL

Change in Athlete Endorsements

If you're an athlete at the top of your sport endorsements are a given, over time athletes have been used to endorse all sorts of products - everything from running shoes to credit cards. Following recent events with various athletes including Lance Armstrong, Tiger Woods and Oscar Pistorius questions have been asked regarding the risk/value to brands.

Athlete endorsements are certainly not a new run thing, Honus Wagner (baseball hall of fame) is cited as the first ever athlete endorsement deal in 1905, his deal with Hillerich & Bradsby Co. called for them to supply Wagner with bats to his specifications - a deal most manufacturers would snap your hand off for these days, when you consider that David Beckham receives around £28m in endorsements per annum (that's a lot of boxer shorts). Here are the 5 biggest athlete endorsements as of now:

- Tiger Woods, Nike - £68m
- George Foreman, The George Foreman Grill - £90m
- David Beckham, Multiple including Adidas - £105m
- Rory McIlroy, Nike - £165m
- Derrick Rose, Adidas - £171m

These deals have varying contract lengths, Rory McIlroy's deal with Nike spans ten years.

Endorsements aren't rocket science, in essence an athlete is paid to represent a brand. In return for payment athletes may take part in commercials or product launches, they may put their name to a product range I.e. Jordan basketball shoes. Probably goes without saying but the athletes also use/wear the products themselves. Brands may select athletes for a variety of reasons, but ultimately brands like Nike or Adidas gain from creating the impression that their products play a role in the success of the athlete.

As I mentioned previously the times when athlete endorsements go wrong are well documented. Lance Armstrong was dropped by Nike amongst other brands following the doping scandal spanning at least nine years, Armstrong was stripped of his seven Tour de France titles. Tiger Woods adultery on a huge scale saw him dropped by many brands, however Nike decided against dropping the golf star. Most recently Oscar Pistorius was dropped by Nike, of course when the loss of someones life is involved this put things into perspective.

Having done some research around this topic I began to wonder just how damaging actually is this for brands. There were plenty of so called 'endorsements gone wrong' that I couldn't even remember, see if you can:

- O.J Simpson, Hertz Cars 1992 - Dropped for domestic abuse.
- John Terry, Umbro 2012 - Dropped for racist allegations.
- Michael Phelps, Kellogg's 2009 - Dropped for smoking cannabis.
- Kobe Bryant, Nutella & McDonald's 2003/04 - Dropped for sexual assault allegations.
- Marion Jones, Nike early 2000's - Dropped for use of performance enhancing drugs.

The list could go on, but my point is that sports fans have short term memories and ultimately the negative effect on the brand is short lived - this can be seen by the brands used in these examples, it's not like they have a tainted image after dropping each of these athletes.

In the future I think we will see a shift in how athlete endorsements are run, with a less risk strategy being implemented. A clever, yet simple way to do this is to spread the risk across more than one athlete. For example Gillette used Tiger Woods, Roger Federer and Thierry Henry to great effect in their commercials - perhaps they are ahead of their time?

JL