|I wasn’t surprised by the Premier League’s decision to discontinue title sponsorship when the current Barclays deal ends next season. The League’s TV riches and the bigger clubs’ sponsorship earning power and ambitions made it a question of when, not if, this would happen.|
As I wrote on Twitter back in February when the Premier League’s new £5.1 billion domestic TV deals were announced:
It’s difficult to conclude the new TV deal won’t influence the clubs’ expectations of the percentage increase achievable [from a new title sponsorship] versus the current Barclays sponsorship…given the huge gap between Premier League TV and title sponsor revenue, maybe the PL title sponsorship’s days are numbered.
And so it proved. Here’s why.
The gap between current Premier League TV revenue and title sponsorship revenue is already enormous. Last season, the twenty Premier League clubs shared over £1.6 billion of centrally-generated revenue: 94.6% of this was TV money. Of the other 5.4% (just under £88 million), £40 million was from the Barclays title sponsorship — just 2.5% of total centrally-generated revenue. A pretty low percentage. When the increased domestic TV revenue — 67% up on the current contract — kicks in in 2016–17, along with new and inevitably increased international TV revenue (currently worth £2.2 billion but expected to rise to £2.9 billion), the title sponsorship money will look even more like a drop in the ocean.
And that would still have been the case even if the Premier League had been able to satisfy the clubs’ expectations and find a brand willing to substantially increase the £40 million per year title sponsorship paid by Barclays, which always looked unlikely, and which as we now know didn’t happen.
The other key financial factor in the Premier League’s decision is the bigger clubs’ ever-increasing sponsorship earning power and ambitions.
|Led by Manchester United, the bigger Premier League clubs are now routinely generating nine-figure sums from their shirt sponsorships, and achieving double-digit increases when they renew or replace sponsors. They’re also aggressively marketing their secondary sponsorship packages, and looking to diversify and increase their sponsorship from other sources, such as stadium sponsorship and (pioneered by Manchester United with enormous success) training kit sponsorship and regional sponsorships.|
This has also impacted on their view of the Premier League title sponsorship’s value.
The clubs keep 100% of the sponsorship income they generate individually, whereas they share equally (i.e. 5% each) the title sponsorship money generated at the centre. As with the TV money, the growth in their individual revenue streams has also outpaced their share of the title sponsorship deal and made it look increasingly minor. £2 million per club from Barclays is a drop in the ocean for the bigger clubs and now looks like small beer even to the others compared to the TV money.
The bigger clubs can also justifiably argue that they can sell the substantial collateral that they have to release to Barclays (perimeter ads, match sponsorships, player appearances, digital and data rights and the like) for much more money than that they receive as their share of the Barclays deal.
And in a related point, the category exclusivity that is part of the Barclays deal and prevents all of the clubs from selling sponsorship to Barclays’ competitors has also become increasingly unattractive.
Bottom line: the Premier League has outgrown title sponsorship — given its finances and earning power, it simply doesn’t need title sponsorship any more.
And moving beyond title sponsorship creates new marketing opportunities for the Premier League.
|It opens up the ‘hero brand’ model used so successfully by the likes of the NFL and NBA to market and differentiate their brands without the dilution of a title sponsorship. A Premier League brand free of title sponsorship has the potential to be more flexible and attractive to consumers, more attractive to potential licensing and merchandising partners, and much more attractive to potential sponsorship partners — although whether the clubs are prepared to release enough inventory and categories to allow the League to expand its very limited roster of secondary sponsors remains to be seen.|
But for all its riches and all its new post-title sponsorship opportunities, there’s one thing above all that the Premier League must do for itself and its brand: to re-define, and then communicate and live by, what the League’s values are and what it stands for.
Currently it positions itself only as being ‘all about the football’. And when you ask people what the Premier League stands for, great football is absolutely one of the two things they generally say.
But the other is (and not in a good way) money — lots of money.
That’s not a sustainable position.
If the Premier League is to truly become a ‘hero brand’, it needs a purpose and values beyond football and profit.
And if the FIFA scandal teaches us anything, it’s surely that football needs a purpose and values beyond football and profit now more than ever.