http://www.busrep.co.za/index.php?fSectionId=561&fArticleId=4618344
Crisis spreads to soccer as sponsors hit the crossbar
September 19, 2008
By Tariq Panja
The English Premier League is becoming a scoreboard for the global credit crisis. Newcastle players wear the logo of Northern Rock, the mortgage lender nationalised in February; West Ham lost XL Leisure last week when the tour operator grounded all its flights because it ran out of money; and West Bromwich Albion was unable to land a shirt sponsor after being promoted from the second division.
Same boat
"There's not that much money sloshing about," said Nigel Currie, the director of sports marketing at Brand-Rapport. "Football clubs are not immune to the credit crunch. They are absolutely in the same boat as everybody else."
Typically, a shirt deal is a club's biggest single source of sponsorship revenue. AIG, which struck the deal with the US government two days ago, is in the second year of a four-year agreement with United worth £56.5 million (R825 million).
This season, however, shirt sponsorship revenue in England's top soccer league fell to £67 million from about £75 million a year earlier, Currie said. This is the first time it has fallen.
When West Brom played West Ham last week it was the first time in the Premier League's 16-year history that a match was played with both teams sporting jerseys without a sponsor's name.
Since XL Leisure collapsed only a day before the game, West Ham played with patches over the logo.
Taking bets
The situation is so dire that even the bookies are getting involved. Irish bookmaker Paddy Power has started taking bets on which team will be the next to announce that it is ending the shirt sponsorship.
Sometimes not having a sponsor was better, said Currie. When newspapers needed to illustrate Northern Rock's difficulties after it became the victim of the first run on a UK bank in more than a century, they turned to sports.
"You look in the business pages and they will inevitably use a picture of Michael Owen with a Newcastle shirt on," Currie said. "It portrays an image of not being successful."
The Premier League generates revenue of more than £1.5 billion and sponsorship income accounts for a fraction of that. United, for example, collected £49.3 million in television revenue last year, and earned another e42.9 million (R500 million) by winning the Champions League last season.
United, owned by the American Glazer family, would not disclose its contingency plans for a possible loss of principal sponsor AIG, according to a representative for the Glazers.
The club, which has won three European titles and the English league 17 times, would not have trouble finding a new one, said Stefan Szymanski of Cass Business School in London.
"There would be a queue of sponsors lining up for United," he said.
West Brom said this week it was in talks with several interested parties about securing a sponsor to replace Deutsche Telecom's T-Mobile. It was unlikely to get more than £1 million, said Currie, who worked on Manchester United's previous shirt deal with Vodafone.
Jacques Bungert, the president of Young & Rubicam Brands, which arranges sports sponsorship deals in Europe, said the plight of West Brom and West Ham might have implications for other mid-ranking Premier League teams.
"The fact the team doesn't have a sponsor is very frightening for the others, wondering if they will go in the same direction" said Bungert.
One English team got around the whole issue. Aston Villa, owned by US billionaire Randy Lerner, snubbed corporate sponsorship offers and instead offered the team's claret and blue shirt to Acorns, a local hospice for children.
