Bringing together over 1,200 delegates and a stellar cast of keynote speakers, the annual IEG Conference is the place to go to get a feel for the US sponsorship industry and the latest trends emerging from that side of the pond.

Having experienced three full days of presentations and roundtables covering every topic under the sponsorship sun, we have enough thoughts, insights and observations to fill a whole series of blogs (which we’ll be publishing over the next few weeks). But in advance of that, it makes sense to start with a high-level view of the key themes to emerge from the conference as a whole, with a particular focus on the keynote speakers.

The New 4 Ps of Sponsorship

In her welcome address, Lesa Ukman (Chief Insights Officer at IEG) introduced “The New 4 Ps”, a simple framework which outlines the critical components of successful sponsorship.

So here it goes: a summary of the core themes from the keynote speakers in the context of “The New 4 Ps”.

1. Partnership

Great sponsorship is far more than skin deep. It is about both the brand and the rights holder working together through all available channels to create win/win/win situations, where genuine value is added to the brand, property and audience.

This is not a new idea, and the debate about whether we should move away from the word “sponsorship” has been rumbling for years (decades even). Of course, it doesn’t really matter what we call it as long as brands realise that sponsorship is not a one-way value transfer.

This sense of partnership is at the centre of Pepsi’s new deal with Beyonce. Frank Cooper, Pepsi’s CMO,  acknowledged that on the surface it looked like exactly the same sort of deal that Pepsi has been doing since the ‘80s with Michael Jackson (a thought that we have already discussed in the past).  However, he assured us that this couldn’t be further from the truth. Evidently, it is a deep collaboration that will redefine how music is created and distributed, deliver innovative episodic content, while also resulting in new Women’s Empowerment projects that come from Beyonce’s personal social conscience. We’ll be watching with great interest.

Miller Light has taken things far deeper than simple product placement in its partnership with The Internship (a new comedy re-uniting Wedding Crashers Vince Vaughn and Owen Wilson). The brand is providing large-scale marketing support on-pack and through a high-profile competition to win the ultimate internship with Miller Light. This will, in turn, deliver great content and social currency for Miller, in addition to strong product placement within the movie.

Deborah Dugan, the CEO of (RED), showed another great example of brands working together to create win/win/win scenarios. For those of you not familiar with (RED), it partners with world-leading brands including Nike, Apple, Coca-Cola, Starbucks, Beats by Dr. Dre and Bugaboo to create limited edition (RED) products. A percentage of the profits from these products go to The Global Fund which fights for an AIDS-free generation. This is a great example of a win/win/win scenario: The Global Fund raises much-needed money; brands drive revenue through new products while demonstrating what they stand for; and customers can support the cause simply by buying great, new, limited edition products from the brands they already love.

Clearly, what all these examples have in common is that actively working together creates more value for all parties, while also establishing a concrete role for the brand – all of which deliver the authenticity that is critical to being accepted by an audience.

2. Purpose

Of all the New 4 Ps, the idea that a brand needs a purpose (beyond making money for the sake of making money), is probably the one that came through most clearly. Consumers don’t just want to know who a brand is, they need to know what it stands for. A really powerful element of sponsorship is that it can provide a highly visible symbol of a brand’s purpose.

Jim Stengler is so committed to the idea that doing good and doing well are two sides of the same coin that he left his role as CMO of P&G to write a book, Grow, showing that companies with a strong purpose outperformed the market. His view is that a company’s culture – what it believes in and how it behaves – is the only truly sustainable source of differentiation.

He showed how the turning point in the Pampers business was this ad – when it stopped telling people about the product and started showing that “Pampers get babies. Pampers loves babies”. Andy England from MillerCoors used a nice turn of phrase to capture this idea: we need to move from brand campaigns to campaigning for our brand.

For Frank Cooper, the CMO of Pepsi, it’s a case of “The King is dead; long live the King”. Specifically, Content isn’t King. Intent is King. Consumers are no longer happy to just know what you do and how you do it, they want to know why you do it. A brand’s intent is now as important as the product itself.

Ironically, Frank Cooper didn’t manage to articulate the specifics of Pepsi’s “intent”, but he did refer to the Pepsi Refresh Project, describing it as “one of the most important experiments” Pepsi (or any other brand, for that matter) had undertaken in the past decade. It was undeniably brave – but the fact that it was ditched after just one year might indicate that it was a brave failure.

Jim Trebilcock from Dr. Pepper Snapple, provided one of my favourite case studies from the event. The Dr. Pepper Tuition Giveaway uses its sponsorship of NCAA Football to run a promotion giving college students the chance to win their tuition fees ($100,000) by uploading a video which described how they would use their college education to create a better future. I like this because it really brings to life Dr. Pepper’s intent to encourage everyone to tread their own path to become one of a kind.

Synergy have covered this trend extensively over the past year as part of our discussions on the Social Era of Sponsorship – so it was nice to see it reinforced in Chicago.

3. Production

Brands that simply badge content might get awareness but they don’t necessarily get any credit. Anyone can get awareness by slapping a logo on something – but producing content, events and experiences that resonate with the audience and enhance their experiences is the best way to truly connect.

All the keynote speakers emphasised the importance of being Creator Brands and took the opportunity to showcase some of the great content they had developed. From TV spots to earned media and user-generated content, no presentation was complete without a few examples of the engaging content they had created.

A couple of examples deserve special mention. The first is the deep, multi-channel engagement which Coors Light created around its sponsorship of Liga MX (the Mexican Football League) for the US audience. The sponsorship started with standard on-pack and in-store activity, but the brand took it further to create a website called ‘Fanaticos del Frio’, providing exclusive fan content about Liga MX. It then extended it into mobile apps, social media engagement and experiential activity, before finally partnering with Univision (the major Spanish Language TV Channel) to turn Fanaticos del Frio into a prime-time weekly TV programme. Creating and curating this content means that Coors Light owns the Liga MX fan experience in the US.

Pete Blackshaw, Global Head of Nestle’s digital marketing and social media, shared a very clever new interactive film with us called Perrier’s Secret Place. You are in control as you switch characters to navigate your way through the ultimate Secret Party, trying to find clues that will lead you to the Golden Perrier Bottle. Finding the golden bottle gives you a chance to win trips to “the ultimate parties around the world”. The idea that you should be drinking Perrier at parties to make sure you don’t miss any details of the experience is interesting – and the film is great.

Again, there is nothing new about the idea of content being at the centre of the sponsorship experience – we have written about it many times (here and chapter 6 of our 2013 Trends Report, here) – but it is important that the point is reinforced at every possible occasion.

4. Participation

The stories that a brand can tell about itself are dwarfed by the potential stories that others can tell about it.  That’s why sponsors should be finding ways to create movements that everyone can participate and share in.

Adam Garone, co-founder of Movember, really brought to life how a simple idea can harness the power of the audience to spread the word and drive the storyline. Every man that grows a moustache sparks hundreds of different conversations during the month of November – with friends, colleagues and even strangers on the Tube. And that, rather than simply raising money, is the whole point.

However, it is worth raising a couple of words of caution at this point. Firstly, don’t expect customers to participate in something which they don’t really care about (and they’ll be the judge of that), or which doesn’t fit into and improve their existing ‘rituals’. Hundreds of activations fall flat because the consumer just thinks: “why bother?”. Secondly, the whole point of ‘Participation’ is to create some form of legacy – a deeper connection with the consumer that lasts longer and means more than simply viewing an ad. With that in mind, it’s worth remembering that not all content is shareable. As Pablo Ganguli, founder of Liberatum, which creates cultural festivals in countries around the world said: “I would prefer 200 highly motivated, energised, intelligent people to experience my content directly rather than 2 billion people watching my YouTube video because they are bored.”

Sponsorship gives brands the ability to show that they have something in common with the audience. Brands that use sponsorship well are seen by fans to be “one of us”, and that makes them willing to tell their story.

So those are the new 4 Ps. If you have read the Synergy blog and our 2013 Trends Report, you will recognise many of the same themes in our ABCDE framework: for Beyond your Brand (B), read Purpose; for Content (C), read Production; and for Dialogue (D), read Participation. The New 4 P framework doesn’t explicitly reference Authenticity (A) and Emotion (E), but there is no doubt that both those elements need to be at the heart of all of the Ps. Conversely, ABCDE doesn’t explicitly mention Partnership – but that’s simply because the whole framework is about partnerships and the vital ingredients required to create great ones.

So when it comes to great sponsorship it doesn’t really matter what side of the Atlantic you might find yourself on: what the IEG Conference really demonstrated – as the ABCDE and the 4Ps frameworks make clear – is that the rules for outstanding sponsorship are universal.

By Carsten Thode on May 1st, 2013

Tags: Advertising, Brand marketing, Branded content, Communications, Consultancy, Mobile, Social Media, Sponsorship, Sponsorship Activation, Sponsorship consultants, Sport, Synergy, Synopsis, Twitter, YouTube

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Analysis of industry data suggests that the F1 ecosystem raises over £1b per year from sponsorship. This includes Team Sponsors and Suppliers (ranging from £100m for the big boys to £20m for the smaller teams), F1 Partners (around £25m per year in cash or Value in Kind from each of the 6 global partners) and Race Sponsorship (around £10m for each of the races with title sponsors plus trackside advertising).

To put that into context, the London 2012 Olympic and Paralympic Games raised around the same amount (£750m from domestic sponsors plus around £250m contribution from the IOC for TOP partners) – but that was for a 4-year cycle.

So here’s a question: Given how much is spent on it from some of the world’s leading brands, why is F1 Sponsorship not at the leading edge of sponsorship thinking and activation?

It’s fair to say that F1 is ahead of the game in virtually everything else it does. So surely F1 Sponsors should be cleaning up at the major sponsorship industry awards.  In fact, over the past 5 years, an F1 sponsorship has won only once out of a possible 47 SIA awards (Vodafone’s Best Sponsorship of a Team or Individual in 2009). Case studies from F1 should be inspiring sponsors in other sports.  Here at Synergy, we should regularly be showcasing examples from F1 in the ‘What We Love’ section of Synopsis. But this just isn’t the case – at least not to the extent that one would expect.

Don’t get me wrong, there are some great pieces of activation in F1 (I’ll point out some of them later), but as a whole, F1 sponsorship is pretty uninspiring.

Having run the Reuters sponsorship of WilliamsF1 from 2000 – 2003 (yes – I agree – it was nowhere near ‘award-winning’!), I thought I would have a go at answering that question based on my own personal experiences.

1. Most Formula One sponsorships are B2B

Reuters primarily used F1 for B2B relationship building. A quick scan of F1 sponsors shows that over 40% have significant B2B businesses. There is little better than F1 if you have a relatively small number of high-value, global customers who you reach through targeted sales and marketing programmes.  Travelling around the world to all the key markets, Formula One and Paddock Club™ are the absolute gold standard of corporate hospitality. With this being the focus of the brands’ activation programme, it is little wonder that it remains unseen by the mass audience, award panels and the Synopsis editors.

The activation challenge for the B2B partners, however, is to create the most compelling brand stories and event experiences to attract their audience.  Because the fact is, especially in the small markets, most of the B2B sponsors are going after a very similar audience, in some cases exactly the same people.

2. There is too much focus on brand exposure and logos on cars and not enough on activation

Whenever brand exposure is such a critical part of the sponsorship package, it is easy to rely too heavily on it at the expense of all the other things you can do with the sponsorship. I absolutely hate the “media value” figures that are at the heart of so many F1 sponsorships.  However, it is easy to measure and as long as the media value is bigger than the cost of the sponsorship, brands can be tempted to think “job done”. In comparison, Olympic sponsors can’t rely on any media value to justify their sponsorship.  That’s why they have to work much harder and be far more creative with their activation.

A knock-on effect of this over-emphasis on media value is the fact that it can lead to an under-investment in activation.  Typically, the rights fee is so high (because brands are paying for the exposure) that there isn’t enough left over for activation. I’m not a big believer in any rule-of-thumb ratios, but the proportion of rights fee to activation spend when I was at Reuters is definitely not going to make it into any how-to textbooks. I suspect this isn’t unusual for F1 sponsors up and down the Paddock

3. The calendar gives you no time to plan and develop great campaigns

The F1 season is relentless. The first race is in early March and the last race is in late November. In between is a never-ending cycle of travelling and managing the day-to-day execution of race weekends. Everyone goes on holiday during the 4-week summer break and at the end of the season, which then leads into Christmas. Trust me, if you want a year to fly past, get a job in F1.

Which basically just leaves January and February to do any sort of campaign development. But even those months tend to be dominated by tactical planning for the season ahead. There just isn’t the time to think about a season-long campaign or a brilliant piece of activation.

Another challenge is the global scale required by an activation campaign. Japan, Abu Dhabi, Britain, the US and Brazil have very little in common with each other from a marketing perspective.  So as an F1 sponsor you are sort of in limbo between creating and delivering a global campaign that doesn’t quite work in loads of markets and developing local campaigns which feel a bit ‘small’ and short term.

4. The F1 community is too closed

There are some great people who work in F1.  However, it needs more ‘churn’.

For example, when I needed a sponsorship agency, everyone I invited to pitch was effectively a specialist F1 agency. I understand why most sponsors do that, but it leads to a form of ‘groupthink’ where new ideas are thrown out in favour of “what we did last year” or “what we do with our other clients”.

This happens up and down the paddock. If an F1 team needs a new Account Manager, they are likely to hire someone from one of the other teams. If a brand needs an F1 Sponsorship Director, they are likely to hire someone who has done a similar job at another sponsor. If an F1 agency hires a new Account Director, they typically hire someone who already has F1 experience.

The danger of this ‘closed’ community is that it loses the fresh influences and perspectives that drive creativity.

I know it’s tough (I’ve been there myself) but I think F1 sponsors need to be braver and set the bar higher for their activation campaigns. The benchmark should not be: “we want to create the best F1 sponsorship campaign”, but rather “we want to create the best sponsorship campaign”. And to do that, I think that it is critical for sponsors to look for inspiration outside the very small world of F1.

The point of this blog is not to say that there are no good F1 activations – because clearly there are some great examples.

My point is simply that given the number of world-class brands who are sponsors in F1, the amount that they invest and the possibilities of F1 as a platform, there should be far more ground-breaking activation programmes than there are.

Some of our Favourite F1 Activation Case Studies:

Johnnie Walker – Step Inside the Circuit Series

Johnnie Walker extended this campaign with some experiential activity in Travel Retail environments but at its core was some great behind-the-scenes content, from Monte Carlo (below), India, Singapore and other races

Vodafone:

One car, no team:

Camping:

Santander:

London Grand Prix:

The Silverstone Chase

Hugo Boss - Dress Me for the Finale

Using a special online configurator, consumers in each country could create bespoke designs of the drivers’ race suits. The drivers wore the designs during qualifying for each race, while the best two designs as voted by the audience were worn on the Sunday during the Brazilian Grand Prix. Boss also did a good job of connecting this activation to their social media and retail channels:

Red Bull – Faces for Charity

In exchange for a donation to charity (which Red Bull matched), consumers could upload a photo which was then put on the car for the British Grand Prix.

Vodafone –  Drive to the Big League

Vodafone introduced this initiative at the British Grand Prix in 2010 which offered one of their small business customers the chance to put their logo on the car for the British Grand Prix.  Vodafone have taken it to a whole new level in India now, where they have combined it with a Dragons Den style TV programme to select the winner – watch it – it’s brilliant!!!

See – it is possible – more of that please!!!

By Carsten Thode on November 15th, 2012

Tags: Advertising, Alcohol, Awards, Brand marketing, Branded content, Consultancy, Content, Default, Digital marketing, Experiential marketing, Facebook, Formula 1, London 2012, London 2012 sponsorship, Olympic sponsorship, Olympics, Red Bull, Sponsorship, Sponsorship consultancy, Sponsorship consultants, Synergy, Synergy Loves, Synopsis

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So, that’s it. London 2012 is over. Now we’re just left with misty-eyed memories, an impossible choice for SPOTY, a never-ending supply of video montages and the realisation that we’re unlikely to see anything quite like it again in our lifetimes.

It also provided a watershed moment for sponsorship in the UK. Ever since London was awarded the Games in 2005, London 2012 provided a focal point and growth engine for an entire industry.  So where do we go from here?

What will London 2012 do for the perception of sponsorship in the UK

London 2012 did deliver some predictable anti-sponsorship stories. Coca-Cola, McDonalds, Cadbury, Dow, Atos Origin and BP were all given a bit of stick (for one reason or another), while numerous articles questioned the ROI of Olympic sponsorships, the relative success of ambush campaigns and various activation #fails.

But all of those issues were pushed into the background once the Games began and for that reason they will not be the enduring perspective of sponsorship in the wake of London 2012.

The narrative is already starting to crystallise around the positive stories.  Sainsbury’s are out of the blocks early, claiming a 5.6% uplift in sales and a meaningful 0.3% market share gain as a result of their brilliant Paralympic sponsorship. Adidas, in fact, were able to confirm a positive ROI before the Olympics even started. You can expect the other sponsors to either follow suit or keep quiet.

No sponsor will admit to destroying value (why would they) while the positive case studies will be accentuated and decorated with plenty of awards. The overwhelming perception will be that sponsorship of London 2012 created business value and, of course, it is in everyone’s interest to support that perception.

Empirically, the sponsorship market is remaining buoyant as we continue to see a series of record-breaking new deals and contract extensions including Barclays/Premier League, Chevy/Manchester United, Samsung/Chelsea, Wonga/Newcastle, Capital One/League Cup, Investec/ECB, and O2/RFU and BMW/ RFU.

There is no doubt that London 2012 has accelerated the overall development of sponsorship in the UK – a trend which we see continuing as brands see how sponsorship can help them deliver their business, brand and marketing objectives.

What will the London 2012 Sponsors do next?

With the exception of Acer (whose category is disappearing with the convergence of consumer electronic devices), the rest of the TOP sponsors will continue on their Olympic journey. Some of these (e.g. Coke, McDonald’s, Visa, Samsung, etc.), have a strong portfolio of global sponsorship assets so probably aren’t in the market for any big new assets.

But the local sponsors, including Lloyds TSB, BA, BT, BP, Cadbury, EDF and UPS have an Olympic-sized hole in their marketing programmes.

BMW have already moved to sign an innovative new deal with the RFU to create the BMW Performance Academy, which creates a strong post-Olympic transition.

But the big question is what comes next for the others. All of these brands are in highly competitive markets with aggressive competitors who have major sponsorship assets in place.  It is probably safe to assume that some of them are looking for their next big play.

Another angle to consider is whether there is a group of brands that have been keeping the powder dry for the past few years. If one of your competitors was an Olympic sponsor, it might have been a clever strategy to avoid fighting a losing battle for exposure. We might start seeing them emerge into the sponsorship market with big ambitions and healthy budgets.

All of this will create demand in the pipeline, which will fuel the competition for the best sponsorship assets.

What interesting properties are available?

I have to start this section with an enormous health warning: when developing a sponsorship strategy, identifying the right property should be the last step in the process. First, you should develop a sponsorship strategy – a clear articulation of precisely how sponsorship will help you deliver your business, brand and marketing objectives. Only then should you look to identify the assets that will best deliver that strategy.

But that’s not going to stop me giving you a quick overview of some of the key opportunities that are out there. This is not meant to be a comprehensive list – just a quick look at why this is being called the ‘Golden Decade’ for sport in the UK.

Glasgow 2014 Commonwealth Games:

Coming so soon after London 2012, there is a danger that the Commonwealth Games will feel like an anti-climax. Of course, it won’t be anything like the scale of the Olympic and Paralympic Games, but the Commonwealth Games have a unique personality which some brands have historically been able to tap into very successfully, like Imperial Leather in 2002 and NAB in 2006.

Glasgow 2014 will be nothing like Delhi 2010. First and foremost, this is because many of the biggest names and most famous athletes will be coming to Scotland. The fact that the Home Nations compete as independent teams will add some interesting storylines, while the 2014 Referendum will ensure that the “Scotland” angle provides an interesting political backdrop and a lightning rod for Scottish national pride (despite the Governing Body’s best attempt to de-politicise it).

Rugby World Cup 2015:

OK – so Rugby doesn’t have the global appeal of Football, but make no mistake, the Rugby World Cup will dominate the UK sports agenda in 2015.  With a 6-week tournament taking place in all four corners of the country (plus Cardiff) and Stuart Lancaster building a team that can challenge for the title, the opportunity for sponsors is clear.

Athletics World Championships and World Paralympics Championships 2017:

This is as close as we’re going to get to a repeat of Super Saturday. With the IAAF and IPC World Championships taking place in the same city for the first time, we will be able to see first-hand the legacy left by Mo Farah, Jess Ennis, Greg Rutherford, David Weir and Jonny Peacock.

Ryder Cup 2014:

Anyone who watched the Ryder Cup last month knows that it delivers incredibly compelling sporting drama. It has an interesting narrative that opens the activation window beyond the 3-day event, while the event itself generates interest that stretches far beyond traditional golf fans.

UK Athletics and other Sports Governing Bodies:

After a 13-year partnership, Aviva has announced that it is not extending its deal with UK Athletics. UKA have announced that they are hoping to move away from a single title sponsor towards a “Champions League model”. However, I don’t think it’s a big enough asset to split into parts, with more value to one brand looking to “own the sport”.

While this isn’t public knowledge yet, the industry grapevine is abuzz with at least three other Olympic sports whose governing bodies are looking for new title sponsors. In many ways, this was entirely predictable – sponsoring an Olympic sport is a classic ambush technique. But it is a shame to see brands be so transparent and head for the hills as soon as the Olympics leaves town. Still, it provides a great opportunity for new brands to come in and create something brilliant. Do you like what Sky has done with Cycling and British Gas has done with Swimming? If so, there are plenty more opportunities like that.

Venue Naming Rights:

Venue naming rights are one of the fastest growing sectors in sponsorship. While O2 and Emirates have already done it well in the UK, looking to the US shows us what our future might look like. Over there, the Barclays Centre and MetLife Stadium are just the latest in a long line of major naming rights deals.

Over here, rights holders are actively selling naming rights for the Olympic Stadium, Aquatics Centre, “Copper Box” and VeloPark, while ExCel wants you to put “your brand here”.

Over the next decade, we could be also looking at a few new Premier League stadiums under construction. Chelsea, Liverpool, Spurs, Everton and QPR all have expressed the desire to either redevelop their existing stadia or build a new one. You can bet that most (if not all) of these will come with a naming rights sales pitch.

Arsenal Shirt Sponsorship:

AON, Standard Chartered, Samsung and DHL (for a training kit) all set the bar for the value of the kit sponsorship for a high-profile Premiership Team. Then Chevy came along and did a couple of backflips over that bar. Brands clearly still see huge value in these deals. If you are one of them, I would give Arsenal a call.

The Football League:

Npower announced recently that they would not be extending their title sponsorship of The Football League. The great thing about this asset is that it gives a brand the ability to reach deep into 72 communities around the country. It’s difficult to think of a better asset for a brand that wants to touch and be ever-present with the mass market.

England Cricket Team:

Brit Insurance cited a “shift in business strategy” for the decision to end their England shirt sponsorship, which they only signed in 2010. Their contract does not end until 2014, but this announcement clearly signals that they are looking for an early exit. If you move quickly, you can even be in place in time for the 2013 Ashes Series.

Self Created Assets:

Red Bull have been blurring the definition of sponsorship and re-writing the rules for many years. But I think that Red Bull Stratos has finally brought us to the tipping point where brands are more willing to risk blazing their own trail with self-created and other owned assets. The power of sponsorship comes from its ability to give you access to your audience’s heart and brands now see that they don’t need an established asset to take them there.

All in all, I am convinced that London 2012 will not be the high water mark for sponsorship in the UK. Rather, it will be the springboard which accelerates sponsorship to even more exciting places. The assets are there to do some interesting things and brands will become better and more ambitious in terms of how they use them. The accelerated development of the sponsorship industry will be one of the real legacies of London 2012, which is an exciting thought for all of us who are part of it.

By Carsten Thode on October 30th, 2012

Tags: Advertising, Ambush Marketing, Consultancy, Default, London 2012 sponsorship, Naming Rights, Olympic sponsorship, RBS 6 Nations, Red Bull, Ryder Cup, Sponsorship, Sponsorship consultancy, Synergy

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Just over a year ago, I wrote about a simple framework we use here at Synergy called ABCDE (and no, it didn’t take longer to think of words that began with the right letter than it took to develop the thinking).

Yesterday evening, as my whole family (including kids aged 3 and 2) hunched over the laptop to watch a man jump from 127,000 feet, I realised that I had the perfect case study.

Not for the first time, Red Bull has absolutely nailed ABCDE:

Authenticity: Does the brand have the ‘right’ and credibility to be there.  Will they be accepted by the audience?

This is extreme; this is adrenaline; this is a self-created asset; this is Red Bull

Beyond the Brand: A brand can’t just use sponsorship for their own benefit – a brand must add value to the asset, the audience or society

Anyone who thinks this is about selling heavily-caffeinated, sugary water, has missed the point completely.  This is about science, human endeavour and mostly just about the #freefall

Content: Sponsorship needs to create content which entertains, informs and enriches people’s lives

Can anyone think of better content they have seen recently?

Dialogue: The age of one way communication is over. Great sponsorship helps a brand find a role within the conversations of the audience

I’m looking forward to seeing the number of tweets per second on this one…

Emotion: Sponsorship should never be boring.  It is about tapping into the passions and emotions of the audience

How did you feel when you saw him standing on that ledge?  That was raw emotion.

As I said, sponsorship is as easy as ABCDE

By Carsten Thode on October 15th, 2012

Tags: Advertising, Brand marketing, Branded content, Consultancy, Default, PR, Red Bull, Sponsorship consultancy, Sponsorship consultants, Synergy

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Sponsorship is dead, long live sponsorship

Those of you who are regular readers of Synopsis may have spotted a pattern. The lead articles are not Synergy’s random musings but rather the building blocks of a bigger story about the new rules of sponsorship.

But before we get to the rules, a little bit of context. Like all marketing disciplines, sponsorship has evolved over time…but every now and then, there is a paradigm shift which generates an explosion of innovation and introduces a completely new way of acting. Excitingly, we have entered one of these new eras – the 4th Era of Sponsorship.

Below is a rough timeline of how the Sponsorship Industry has evolved. There is never a clear line in the sand to separate the various eras (and of course there are always sponsorship programmes that are ahead of their time), but to keep things simple, they can be broadly separated into decades.

1970s: The Dark Art

The very beginnings of the sponsorship industry were characterised by informal deals done on a handshake in smoke-filled rooms — often literally smoke-filled, as much of the early days of sponsorship were driven by cigarette brands putting their brand on the side of fast cars to circumvent advertising restrictions.

1980s – 1990s: Off-the-Peg

Patrick Nally is credited as being the founding father of modern sponsorship. His ground-breaking partnership deal with Coca-Cola for the 1978 FIFA World Cup effectively ‘invented’ the concept of a rights package. This has set the template for how sponsorships have been packaged and sold by rightsholders ever since.

2000s: Tailored

Brands started to become much more sophisticated and proactive in terms of how they approached sponsorship. No longer was it thought of as a collection of off-the-shelf rights or as a separate marketing channel, but rather as an asset that could be integrated into the overall marketing mix and used to increase the effectiveness of the brand’s marketing activity.

2010: Social

The 4th Era is the “Social Era” for two reasons. Firstly, it has been enabled by social media which has allowed people (and brands) with shared interests to engage with each other at a scale and depth that has never before been possible. Social also refers to a sense of ‘Higher Purpose’ – the ability of a sponsorship programme to connect with its audience by delivering something that really matters.

The Rules of the Social Era

Moving to the Social Era has changed the game of sponsorship and everyone can benefit from knowing the new rules. We have analysed hundreds of best practice case studies from the world of sponsorship and beyond to identify and codify the keys to success in the Social Era.

We have been examining these new rules one by one over the past 5 months but now it is time to bring them all together.

It’s as easy as ABCDE…

Rule 1: Authenticity

Endorses for Courses by Jon Izzard

The best sponsorship programmes, the ones that really resonate with the audience, feel completely natural. The brand simply feels at home in the space. Think of Red Bull and extreme sports, Cartier and Polo, Robinsons and Wimbledon, Unicef and FC Barcelona, Coca-Cola and the Olympic Games, Moët & Chandon and F1. There are loads of sources of authenticity: products, geography, heritage, brand message and simple longevity.

Some brands have to work hard to establish authenticity in a given space, but it is imperative that they do because the very audience that a sponsor is trying to connect with can see through an imposter straight away. Skoda’s sponsorship of the Tour de France provides a great example of a brand working hard to establish credibility in a space where its source of credibility may not be immediately obvious.  Brilliant:

Rule 2: Beyond your Brand

What Can Sponsorship Learn from Farmville by Liz Brown

Sponsorship is about a brand becoming a natural part of their customers’ lives — but the audience needs a reason to invite a brand into their lives.  Brands that view the relationship with their audience as a one-way value exchange and think only in terms of “what will we get out of it”, have no chance of forming the kind of relationship they want. Again, there are a number of ways that brands can demonstrate “Beyond your Brand” thinking, focusing on delivering benefits to their customers (O2 Priority), the property (Converse and London’s 100 Club) and society as a whole (RBS RugbyForce).

Rule 3: Content

Is Content Really King by Ben Wilkinson

Consumers want to learn, laugh, discover, share, be entertained and be inspired.  And they want to do all these things around topics that are of specific interest to them.  That is what sponsorship allows you to do: create relevant content around your audience’s passion points.  But brands have to be creative to capture attention — posting a video of “talking heads” on YouTube and hoping for the best is not enough.  Great content is about innovation.  It’s about finding something that connects and resonates with your audience and providing it how they want it, when they want it and where they want it.

Our favourite example of this is Converse Domaination — a campaign that not only puts great content at its heart but also shows a perfect understanding of its audience.  Enjoy.

Rule 4: Dialogue

D is for Dialogue by Carsten Thode

Talking to each other, sharing ideas, working together, creating things, discovering  new stuff,  having fun, laughing, crying, flirting, arguing – everything that makes life worth living is built on our ability to actively engage with each other. Why should that be different from the relationships we build with the brands in our lives?

Yet for most of its history, marketing has been pretty much a one-way conversation where brands tell you what they want you to know and the customer has no way of talking back.  However, the digital age, and particularly the social media age, has smashed through the barrier separating brands from their consumers.

Now it is possible to source brilliant ideas from your customers such as Pepsi Refresh and GE Ecomagination, or to tailor your marketing in real-time to reflect input from your customers. The Old Spice Man is a classic case in point of how much more engaging the conversation becomes if you give your customers a voice.

Rule 5: Entertainment

Passion Pointers by Tom Gladstone

Sport has a particular ability to evoke strong emotions through its personal stories of courage, inspiration and determination; through its inherent unpredictability, excitement and drama. Those emotions are an essential component of successful sponsorship – and are as relevant across other sponsorship platforms (music, film, fashion, art) as they are in sport. Harness the emotions correctly, and your consumers will add the catalyst of conversation.

But while simply being visible within a passion point might increase the chances of getting noticed, it doesn’t win a place in consumers’ hearts. There has to be active emotional involvement, not just proximity or presence — engagement not impressions. Whether brands capitalise on moments of high emotion or they tap into the core emotional sensibility of the passion point, anchored in anticipation, pride, patriotism, celebration, or even pain, they all need to exhibit genuine empathy and understanding.

This rule is articulated nicely by Mark Harrison, Chair of the Canadian Sponsorship Forum: ‘You can’t manufacture emotion. It’s already there. When you find it – just find a way to trigger it; tap into it; fuel it; and watch it grow into something remarkable.’

Using ABCDE

ABCDE is not a menu, where you can choose one or two elements to focus on. Rather, a great sponsorship programme will deliver against all the rules of the 4th Era.

Obviously, this framework isn’t rocket science, but at Synergy, we have found it to be incredibly useful as we advise our clients at every point of the sponsorship process.  We use it not only as a kind of checklist to diagnose where we are strong and where we need to work harder but also to ensure that all elements of the sponsorship programme - from creating the strategy and identifying the right assets right through to the activation – deliver the ABCDE.  So, before signing off, here are a few ways that it can be used to make your sponsorship programmes even more powerful:

1. Articulate specifically how you are using sponsorship to deliver all elements of ABCDE. Sponsorship strategies should use deep audience insight and a clear understanding of the business and brand to ensure that you are using sponsorship as effectively as possible in the 4th Era

2. When making the decision to acquire a new sponsorship asset, make sure that there is a concrete plan in place to deliver the ABCDE. Use it as part of the screening process and answer questions like: “What gives my brand authenticity in this space? How can I build or acquire authenticity?”  “What is the higher purpose of the sponsorship?  How are we adding value?”

3. When creating activation plans, be specific about which elements of ABCDE you need to focus on and how you will be able to deliver them.  For example: “How can we stimulate dialogue amongst our audience?  What role should our brand play in that conversation”

4. Factor ABCDE into your measurement. Create specific targets around each element and evaluate your success at achieving them.  Where do you have to work harder?

© Synergy Sponsorship a trading division of Engine Partners UK LLP 2011.  All rights reserved

By Carsten Thode on September 1st, 2011

Tags: Advertising, Brand marketing, Branded content, Communications, community, Consultancy, Content, Default, Design, Digital marketing, Event management consultants, Event management service, Experiential marketing, Food & Drink, Football Sponsorship, Olympic sponsorship, Olympic sponsorship consultants, Sales promotion, Sponsorship, Sponsorship consultancy, Sponsorship consultants, Sport, Synergy, Synergy Loves, Synopsis, Twitter, Viral Marketing

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Our relationships are all built on dialogue.  Talking to each other, sharing ideas, working together, creating things, discovering  new stuff,  having fun, laughing, crying, flirting, arguing – everything that makes life worth living is built on our ability to actively engage with each other.   Why should that be different from the relationships we build with the brands in our lives?

For most of its history, Marketing has been pretty much a one-way conversation – a kind of Orwellian 1984 scenario where brands tell you what they want you to know and the customer has no way of talking back (something Apple seemed to pick up on in their famous ad).  Of course, that was primarily driven by the available marketing channels which didn’t give customers a voice.

But like the hammer in the Apple ad, the digital age, and particularly the social media age (rather than the Apple Macintosh), has smashed through the barrier separating brands from their consumers.  And this starts to give us some fantastic examples of how brands are using these two-way channels to form deeper and more natural relationships with their customers.

Of course, there are lots of different roles for brands to play when fuelling this dialogue.  They can engage directly with their clients, but they can also fuel the dialogue in more subtle ways by becoming an integral part of their customers’ own conversations.  Either way, the principle is the same: give your customers a voice and enable them to have conversations with you and with each other.

Dialogue between your brand and the customer

There are many examples of brands engaging directly with their consumers.  One common form is around customer service.  Facebook and Twitter provide incredibly useful information about what customers really think about your brand.  Look for it, listen to it and do something about it.  When @interactiveamy’s pizza took over an hour to arrive, she vented her frustration on Twitter.  When the General Manager Raymon DeLeon saw her tweet, this was his response.  It’s a longish video – no need to watch the whole thing:

The famous Old Spice Man and Blendtec’s “Will It Blend” campaign are further examples of brands that respond to input from their customers with great results.  And, of course, Tippex gives you the chance to have loads of fun with their Bear in the Woods.

‘Crowdsourcing’ – actively soliciting ideas from you customers and doing something with them – is another form of dialogue which works for more than just funny marketing campaigns.

General Electric Ecomagination is an open call to businesses, entrepreneurs, innovators and students to submit breakthrough ideas for energy creation, management and use.  In addition to providing the ideas, the public also vote for their favourites.  With a pledge to invest $200m along with GE’s technical expertise to bring the best ideas to market, this is one form of dialogue that could literally change the world.

Pepsi are doing something very similar with their Pepsi Refresh project.  They are looking for ideas that will ‘Refresh the World’ with a similar commitment to funding the ideas that get the most votes from their consumers.

What is particularly strong about the Pepsi Refresh programme is how deep the conversations they facilitate flow. Not only have they created a powerful platform from which consumers can interact with the brand, the strength of the programme itself encourages consumers to build meaningful conversations with each other online, which grow into ‘real-world’ conversations (as individuals look to build momentum behind their own proposed initiatives), which culminates in a tangible legacy in an American community that consumers will talk about for years to come.

In a final example of engaging directly with your customers, Puma have just launched this Facebook App, which allows Spurs fans to play around with the design of their team’s 2011/2012 kit.  Of course, it would be even better if the fans had some input into the final design of the kit rather than simply “guessing the design” – but surely that won’t be too far away.  In fact, given the passion that football fans have for their team’s kit, and the ease with which they can speak to their fans, it is amazing that all kit manufacturers don’t get some form of fan input.  Here’s what happens if you don’t: http://bit.ly/mzWVT3.

Inserting your brand into your customers conversations

In addition to speaking directly to customers, brands can get their customers to talk about them by giving them the content or platform to fuel the conversation.

How did a Turkish Mobile Network get mentioned in 56,750 tweets (topping the Turkish trending tables for 8 days), which reached approximately 3.6 million people (in an initiative that probably cost them less than £20,000)?  Find out here.

Staying with mobile networks, Orange has also done a great job of creating a reason for fans to mention them.  In this example, which works particularly well on the back of their film sponsorships, Orange will make sure that your tweets are read out in the style of a film voiceover.  Go on, tweet your plans for this summer here.  And then of course, share it with all your friends and followers, who will receive the Orange branding.

Guinness FanFinder used a similar technique during their sponsorship of the RBS 6 Nations.  They published a massive picture of the crowd at various matches and encouraged people to find and tag themselves and their friends. With over 5,000 snap shots posted to walls via the Facebook App and an average of 130 Facebook friends per person that’s some more pretty good exposure for Guinness.

In an attempt to encourage dialogue around their new album, the Kaiser Chiefs kicked off a “create your own Kaiser Chiefs album” campaign for their latest album, The Future Is Medieval. Music fans get to pick out 10 songs from 20 of Kaiser Chiefs songs listed online, create their own album cover, buy it and then sell it online. To make it even better, for every sale of their album they will receive £1. Whilst socially engaging this campaign also pushes power onto the consumer removing them from their traditional role of purchasing products into the role of producer, giving them the chance to create their own product and sell it on to others. Thus creating a tangible benefit for the consumer for positive dialogue about the Kaiser Chiefs brand.

Finally, in a brilliant piece of work by our sister agency Jam, Samsung added considerable spice to the dialogue between tech bloggers and their audience via their “Extreme Unboxing” series of videos.

In all of these examples, the brands found an authentic role for themselves and encouraged conversations between communities with a common interest.

Where does sponsorship fit in to all this

So what does this all mean for sponsorship?  The answer is simple: passion.  People want to talk about the things that they really care about.  With all due respect to most brands, your customers are unlikely to care as much about you as they are do about sports, music, film, art, technology, the environment or activity in their community (to name but a few).  So, if you want to start a conversation with your customers, talking about something that they are really interested in is a good place to start.  And finding a shared passion with your customers is, of course, at the very heart of what sponsorship is all about.

In many ways, this blog goes hand in hand with the brilliant piece on Content written by Ben in last month’s Synopsis (definitely read it if you haven’t already) because the key to stimulating this dialogue is great content.  But, what I hope this blog makes clear is that creating great content and putting it in the right places is not enough.  It is then all about opening up the channels and fuelling the conversations that make life so interesting.

Principles of Dialogue

1. Listen to your customers, learn what they care about and value their contribution.  Actively open up two way communication channels
2. Find an authentic role for your brand (a reason for you to be there) and don’t overstep your bounds
3. Think about whether it makes more sense to talk with your audience directly or to get them to talk about you
4. Remember, this is about your shared passion – not about you
5. Have fun and be creative – remember engaging with other people is what makes life fun

By Carsten Thode on June 17th, 2011

Tags: Branded content, Communications, community, Content, Facebook, Media, Mobile, Music, Public relations, Social Media, Sponsorship, Synergy, Synopsis, Television audiences, Twitter, Viral Marketing, YouTube

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The Twittersphere was buzzing yesterday, and the question everyone was asking was: how can Andy Carroll be worth £35m? The general consensus was that he wasn’t worth that amount of money and that the footballing world had gone crazy.

Maybe the conventional wisdom is correct. But one thing “Moneyball” (in my opinion the best Sports Business book ever written) taught us is to ignore conventional wisdom. Moneyball is about the Oakland A’s baseball team and their General Manager Billy Beane and is currently being turned into a Brad Pitt/Philip Seymour Hoffman movie, due for release later this year:

The basic premise is this: In 2002, the Oakland A’s had the second smallest budget in baseball (around $40m) – less than a quarter of the New York Yankees ($126m). But for the previous 3 years, they had consistently been one of the top four teams (though they hadn’t won a World Series). That is the equivalent of Wolves qualifying for the Champions League for 3 years in a row on their current budget (the A’s didn’t increase their relative budget as a result of their success in the first two years).

The secret to the A’s success was to completely re-think the way they evaluated players. Using a new set of statistical analyses (called Sabermetrics) and throwing out all conventional wisdom, they were able to see that the market for players was hugely inefficient. Some player attributes were highly overrated in terms of their correlation with success, while others were highly undervalued. So the key to running a successful team on a budget was simple:

sell those players who have overrated attributes (for lots of money) and buy players who have the underrated attributes (for much less)

So why is this all relevant for Liverpool and Andy Carroll?

Well first and foremost, John W Henry, the new owner of Liverpool is a convert to Sabermetrics. Many of the techniques used in Sabermetrics came from the financial markets, which is Henry’s background. And when Henry bought the Boston Red Sox in 2003, his first move was to offer Billy Beane a job for a guaranteed $12.5m over 5 years (which he turned down). Nevertheless, he installed Sabermetrics at the Red Sox, who then went on to win multiple World Series.

So Liverpool is now a Sabermetric club with the best brains in the business analysing players’ value. Would they really pay £35m for a player if they didn’t see the value?

And what did that analysis look like?

Success in football is defined by winning points. Given the financial rewards at stake (eg. qualifying for the Champions League), it is relatively easy to calculate the value of each Premier League point. And if points are the asset, then goals are the currency. To quote from Moneyball:

“Before the 2002 season, Paul DePodesta (the A’s sabermatrician) had reduced the coming six months to a maths problem. He judged how many wins it would take to get into the play-offs: 95. He then calculated how many more runs the Oakland A’s would need to score than they allowed to win 95 games: 135. (the idea that there was a stable relationship between season run totals and season wins was another Jamesean (the father of Sabermetrics) discovery)”

It is possible to determine how many goals you need to score in order to acquire your targeted number of points. And therefore, each goal has a value. Before we have any Ossie Ardiles and Kevin Keegan arguments about teams who score lots of goals but don’t necessarily win points, here are the facts:

1) Currently, the top 4 teams in the table are the four teams who have scored the most goals

2) In the seasons 2006/2007, 2007/2008 and 2008/2009 the top four teams in the table were also the teams who scored the most goals

3) The only exception to this rule in the recent past is last season, where Manchester City, who finished 5th, scored more goals than Tottenham, who finished 4th

So, each goal that Carroll contributes can be valued in terms of ‘acquiring’ points.

But how do we determine how many goals he is likely to contribute?

One of the cleverest bits of analysis discussed in Moneyball is the disentangling of the link between what actually happens on the pitch and what is expected to happen. To quote again:

“Any ball hit any place on a baseball field had been hit just that way thousands of times before: the average of all those hits was the Platonic Idea (of an average run value). Call it a line drive that is hit at x trajectory and y speed to point #968. From 10 years worth of data, you can see that there have been 8,642 practically identical hits. You can see that 92% of the time the hit went for a double, 4% for a single and 4% it was caught. Suppose the average value of that event is .50 of a run scored. No matter what actually happened, the system credits the hitter with having generated .50 of a run…”

So let’s apply that to football and Andy Carroll.

The first thing we do is to forget the number of goals he scores and the number of assists he makes (what actually happened) and concentrate on the expected value of his actions on the pitch.

Here are a few examples (by the way, these are all completely made up assumptions but it wouldn’t be too difficult to calculate them):

1) A penalty is scored 79% of the time. Every penalty he wins is worth .79 of a goal (regardless of whether he takes it or even whether it is scored)

2) A goal results from a corner kick 4% of the time. Every corner kick he wins is worth .04 of a goal

3) Divide the pitch up into sectors and calculate the percentage of time a goal is scored from a free kick taken from that sector. If a goal is scored 7% of the time a free kick is taken from sector 4, then every free kick Carroll wins in sector 4 is worth .07 of a goal (and the same for all the other sectors on the pitch)

4) Divide up the goal into 6 sectors (top left, top middle, top right, bottom left, bottom middle and bottom right) and calculate the expected goal value of a shot on target in each of those sectors. If 46% of shots into the top left sector are goals, then award him .46 of a goal for every shot he hits into that sector

5) A successful pass within the opponent’s penalty area results in a goal 8% of the time. Every successful pass he makes in the penalty area gets .08 of a goal

6) Winning a header in the opponents penalty area results in a goal 5% of the time. He is awarded .05 of a goal whenever he wins a header in the opponents area

…and so on

From this type of analysis, we can calculate the expected number of goals Carroll will contribute to Liverpool and we will also know the value of each goal.  If that is more than £35m over the course of his contract, then it could represent great value.

Of course, this has been simplified a little bit. The real analysis is the ‘marginal’ impact of Carroll compared to another striker. In other words, how many more goals would he be responsible for than another striker?

And this is where the idea of undervalued attributes comes into play. For the sake of argument, let’s assume that “winning headers in the opponent’s penalty area” is worth more in terms of expected goals than people give it credit for. If Carroll is the “Greek God” of winning headers in the opponent’s penalty area, then he is worth much more than people think he is.

Would we really be surprised if John W Henry’s Sabermatricians have been doing this type of analysis since they bought Liverpool? Maybe they have just sold a player for £50m who has ‘overrated attributes’ and bought one who, even at £35m, is undervalued.

By Carsten Thode on February 1st, 2011

Tags: Barclays Premier League, Brand marketing, Consultancy, Default, Football, Football Sponsorship, Newcastle United, Public relations

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There is a saying: “If you’re £1m in debt, you’re in trouble.  If you’re £100m in debt, your bank is in trouble.”  In which case, both Arsenal and their Bond Holders, to whom Arsenal owe a total of £266m*, are in double trouble.

But can debt in a football club ever be a good thing?  What about all these high profile fan revolts, Premier League clubs going into administration and UEFA deeming it necessary to introduce Financial Fair Play regulations to safeguard the future of the game?

Well, in Arsenal’s case, the answer is “Yes”. Of course, having ‘good debt’ hasn’t brought them a trophy in the last five years – and it didn’t help in the game at home to West Brom, but it is worth contrasting Arsenal’s situation with the other high-profile debt stories in football.

Firstly, debt is not a bad thing, per se.  In fact, it is a very good thing.  How many people could own a house if they had to pay for it all in cash?  Similarly, very few businesses have the cash they need to build a new factory, buy equipment, finance international expansion or conduct vital R&D.  They rely on debt to finance these activities – debt is the engine of growth. In Arsenal’s case, they needed the debt to finance the new stadium.  No debt, no new stadium.

Of course, there are two very important conditions that need to be met.  Firstly, the debt must be used to finance an activity which generates returns over and above the total cost of that debt.  Secondly, the cash flow from the new activity needs to be secure, predictable and able to service the interest payments.

Arsenal. In Arsenal’s case both conditions are met.  They have used the debt to build a new stadium which has significantly increased their revenues and profits.  To put it into context, the 9,000 premium seats at the Emirates generate more revenue per match than all 38,000 seats at Highbury did.  The remaining 51,000 seats at the Emirates are all upside.

Matchday revenue (the gate receipts taken by the stadium) was £93m and the operating costs of the stadium were £55m – meaning that the stadium generated a profit of £38m.  Total interest payments were £20.2m, providing interest coverage of nearly two times.

These ‘Stadium Profits’ are secure and predictable.  As long as Arsenal play roughly the same number of games per year and have roughly the same attendance, then there will never be a problem paying the interest.  The Stadium pays for itself and doesn’t rely on subsidies from broadcast revenue, commercial revenue or player trading surpluses.  It is the very definition of a good investment.

Good debt: Arsenal borrowed money to build a stadium which has increased the clubs value. The increased cash flow generated by the asset can comfortably finance the debt

Manchester United. The debt was not taken out in order to finance an activity that would increase the club’s value – it was taken out to buy the club itself.  So there is no reason to think that United’s financial performance is any better as a result of taking out the debt (in other words, the debt and the interest payments are pointless).  Secondly, the level of their debt (over £700m) is such that it cannot be financed by matchday profits alone – they have to tap into broadcast revenues, commercial income and player trading surpluses.  Last year, without the profits from the sale of Cristiano Ronaldo for £80m, they would have made a loss.  And that is a problem.

Pointless Debt: Debt was not used to build or acquire an asset that increases Manchester United’s value. Debt re-payments cannot be met by a sustainable and predictable source of cash flow

Liverpool: This is a very similar situation to Manchester United.  Again, the £350m of debt wasn’t used to finance growth but simply to buy the club (another case of pointless debt and interest payments).  Last year they didn’t generate enough profit from all their activities to cover their interest payments and recorded losses of £55m.  Big problem.

Leeds United and Portsmouth: Both of these clubs used debt to finance the purchase of players in the form of transfer fees and wages.  It is pretty easy to see why this was a disastrous policy.  Players don’t directly generate increased cash flow and their value is unpredictable and variable.  If the new players had caused a significant improvement in the team’s performance which had led to increased revenue and the value of the players themselves had increased, then the gamble might have paid off.  But it took very little for the house of cards to come tumbling down.

Chelsea and Manchester City: These two clubs also borrowed money to finance the purchase of players.  Of course, this money was borrowed from a Sugar Daddy rather than a bank and it is unlikely that any interest will be paid, let alone the principal.  Who knows what the long term consequences of this ‘Financial Doping’ model will be, but it is far from certain that it will end well.

In summary, Arsenal’s finances since they moved to the Emirates aren’t the problem.  The problem is that they haven’t added to their trophy cabinet.

* Arsenal also have £127.6m in cash, making their Net Debt the widely reported £138.4m.  Incidentally, a further benefit of debt is that interest payments are tax deductible – so 28% (the corporation tax rate) of any interest payment is re-captured in the form of tax savings.  This is one of the reasons why Arsenal are in no hurry to use their surplus cash to pay down their debt.

By Carsten Thode on September 28th, 2010

Tags: Barclays Premier League, Default, Football, Football Sponsorship, Manchester United, Naming Rights

2 comments