The Evolution of Sports Sponsorship – Misha Sher

Following recent partnerships with Nivea and Hugo Boss, Liverpool FC has announced that it is looking to expand into more “unique categories” that are less typical for sports marketing. 

While the club is right in looking to innovate its partnership strategy, the approach cannot be considered unique. It reflects some significant shifts we’re witnessing across the sponsorship sector.

Substantial growth in TV revenues, seismic shifts in technology, and the availability of sophisticated data have re-shaped the way rights holders approach sponsorships from both a commercial and strategic point of view.

The recent announcement that the Premier League will be without a title sponsor starting in the 2016-17 season is a perfect illustration of the impact television revenues are having on clubs’ commercial priorities. 

Given the rate at which broadcast revenues have grown in recent years, Barclay’s title sponsorship of the Premier League was becoming less significant with each renewal. 

The competition between Sky and BT Sport has pushed the value of the latest deal, which kicks in for the 2016-17 season, to £5.1bn, a staggering 70% increase on the current contract.

Add another £3bn, which is expected from the International Rights, and we begin to see how a £40m Barclays sponsorship divided by 20 teams starts to fade in significance. 

It currently accounts for only 2.5% of the overall revenue so it would require a substantial investment from Barclays or another brand, widely reported as Guinness, to pique the clubs’ interest. That was always highly unlikely given that the value they are likely to generate from the retained premium inventory would exceed their share of title sponsorship.

Premier League clubs have greatly benefited from the League’s foresight to build a global brand that now reaches all corners of the globe. Developments in technology have provided clubs with an ideal opportunity to capitalize on their popularity and connect with fans wherever they may be around the world.This is great news for their brand partners. 

Liverpool FC’s announcement to take on a more regionalised approach with ‘non-traditional’ categories is a direct consequence of this change. Looking at the value and commercial benefits these partnerships can deliver; it’s easy to understand why they’re so commonplace.

From the club’s perspective, international TV deals coupled with major developments in digital have allowed them to build large and engaged audiences around the world. Thinking global and acting local gives clubs the opportunity to develop regional deals which are better positioned to deliver mutual benefits.

Localized sponsorship allows clubs to use the strengths and activation initiatives of their partners to grow affinity with local fans.

From a brand’s point of view, while they may have a global footprint, their marketing and communication strategies are often driven by local needs. We work with many global brands and it’s incredible how priorities may differ across products and categories depending on the market.