adidas and Real Madrid announced the biggest kit sponsorship deal ever agreed earlier this year. The sports equipment and clothing manufacturer will pay Los Blancos a whopping £1 billion over the course of the next decade for Zinedine Zidane’s men to wear its kit home and away, in addition to the £750 million it already spends with Manchester United.
Sky and BT fought it out to spend a combined £5.1 billion with the Premier League to screen matches, with the right – purely the right – to broadcast fixtures like Stoke vs West Brom coming in at £10 million a pop. Football gets bigger, richer and more powerful as each year passes.
Return on investment
But how much is too much? Real Madrid has an estimated fan base of over half a billion. Let’s say two million of those buy a replica kit at €100 each next season – that’s €200 million back into the coffers in the first year of a 10-year partnership. Then there’s the kids that aren’t necessarily Real fans, but certainly fancy being the next Ronaldo or Bale.
Healthy kit sales are a good starting point for any such deal, but the real value comes from how adidas can leverage its asset. Imagine an adidas salesman with the Real and Man United – and let’s not forget Bayern Munich, AC Milan and Chelsea – kits tucked in his suitcase alongside his vast array of socks, shorts, trainers, boots, squash racquets and whatever else he’s got. That salesman has leverage. Football is his Trojan Horse.
A brand attached to a football club attracts preference both overtly and subconsciously, with a knock-on effect that can be felt across other audiences. Sales of JVC consumer electronics and Holsten lager were no doubt hugely erratic around North London in the 1980s, thanks to the two brands’ shirt sponsorship deals with arch rivals Arsenal and Tottenham.
Around the world, how many brains will subconsciously move hands towards the three stripes on a T-shirt or training top and walk to the till? Football subtly improves brand recognition and preference.
And that effect isn’t restricted to the sports industry. Football sells TV, phone and broadband subscriptions in abundance. As chairman of Spurs, Sir Alan Sugar was one of the first to recognise this. He listened to the ITV pitch and encouraged Sky to “blow them out of the water” in the first Premier League TV deal. More income flowed into White Hart Lane and, even better, Sugar sold a lorry-load more satellite dishes to Sky.
Football’s attraction for brands, however, will never be restricted to a logo on a shirt – and it may be that we’ve only just begun to scratch the surface when it comes to sponsorship potential. Indeed, football is arguably still in its infancy. Growth is coming in countries that are political powerhouses, but have not yet jumped on the bandwagon with any real conviction.
In the US Major League Soccer is finally beginning to mature as a credible foundation for the professional game. In China it’s early days for the Super League, but the first shoots are clear for all to see. The super agents of football smell the yuan and the likes of Jorge Mendes and Pini Zahavi are shifting talent out of Europe and into China on mega-bucks deals.
Then there’s the women’s game – enjoying a surge in popularity around the world and established in markets like Japan, Germany and the US. So that’s the US, China and women sorted. There’s certainly room to grow.
And what if the world’s richest companies decide they want a piece of the pie? Imagine football exclusive to the platforms of Google, Amazon or Apple. What happens if two of those three – within the next 10 years – started to compete for TV and digital content rights?
If you subscribe to that long-term view, you could look at adidas’ deal with Real Madrid as the most conservative of plays. For the football industry, I have a feeling this is just the beginning.
Jim Dowling is managing director of sports and entertainment network HSE Cake.