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Sponsorship and marketing newsletter 20/01: How Manchester City’s sponsorship growth has given them an edge

SportsPro deputy editor Sam Carp's fortnightly briefing bringing you up to speed with all things sports sponsorship and marketing.

20 January 2022 Sam Carp

Back in 2010, Manchester City published the first annual report since their infamous Abu Dhabi takeover. Within it, they hailed the fact that the club’s commercial partnership revenue had reached UK£32.4 million, an increase of 400 per cent on the previous year.

Fast forward just over a decade and City are now generating UK£271.7 million in commercial revenue, representing growth of more than 800 per cent in the time since the team’s cash-rich owners first took control in 2008.

That figure was revealed last week in the reigning Premier League champions’ financial report for the 2020/21 season, which also disclosed record total revenue of UK£569.8 million. Most mainstream media led with the line that, for the first time, City had managed to bring in more money over a 12-month period than Manchester United, whose turnover for the same fiscal year was UK£494.1 million. Perhaps the most obvious point of disparity is that while City’s commercial revenue, seemingly immune to the pandemic, increased by UK£24.8 million, that of their cross-city rivals had plummeted from UK£279 million to UK£232.2 million.

It’s difficult to read too much into financial figures at the moment due to the continued impact of Covid, but what I found most interesting is that City’s commercial revenue now accounts for approximately 48 per cent of their total income. That’s a lot even compared to some of their rivals in the so-called big six. United are about on par with that, but Chelsea’s UK£153.6 million in commercial revenue is 35 per cent of their total, while Tottenham Hotspur’s commercial operations generated UK£152 million during 2020/21, which is 42 per cent of the club’s overall revenue.

You can see below how City have started to pull away:

Most telling is that it also highlights what the other 14 clubs in English soccer’s top flight are up against. Take West Ham United, currently one of the longest-serving Premier League teams outside the big six, who this season are challenging for the top four. Their commercial revenue for the 2020/21 season amounted to UK£19.4 million, which was just over ten per cent of a total UK£192.7 million.

It’s worth noting at this stage that City’s commercial income will include more than just the money they receive from their sponsors given the extent to which they have diversified their revenue streams under City Football Group (CFG), but the value (and volume) of those deals has naturally grown in tandem with the club’s on-pitch success and its mushrooming reach. I now count 31 global sponsors and 16 regional partners on the City website, which illustrates the sheer scale of the club’s commercial operation.

It is, of course, also important to caveat this by pointing out that City’s sponsorship income is suspected to have been inflated over the years by deals with companies associated with their owners. The club started the year by announcing partnerships with two Abu Dhabi-based companies in the form of the Emirates Palace hotel and the Masdar energy firm, while other sponsors like Etihad, Etisalat, Wix and Expo 2020 Dubai also have some existing ties to UAE, club investors or executives.

With that in mind, it will be interesting to track the commercial fortunes of Newcastle United, who recently came under the ownership of Saudi Arabia’s Public Investment Fund (PIF), against the backdrop of new (and, you could argue, overdue) Premier League regulations designed to stop teams gaining an unfair advantage from related party transactions.

Irrespective of that, it’s interesting to note that in a league where the majority of teams are reliant upon their share of TV money, City’s rise since 2010 has coincided with exponential growth on the sponsorship side of their business. You can’t simply shrug off the impact it has had.

Now a finely tuned machine off the pitch, that growth illustrates a small part of how City have – rightly or wrongly – been able to establish themselves as English soccer’s dominant force, and also how difficult it is going to be for the rest to catch up with them.

Manchester City have continued to grow their sponsorship portfolio despite the challenges of the pandemic (Credit: Manchester City FC)

Cazoo and Castore set sights further afield

The second half of 2021 was relatively quiet for Cazoo if you compare it with the previous 12 months, when the online car retailer set about familiarising itself with the British public through an aggressive sports sponsorship drive.

However, are we about to see it do something similar in France and Germany? Here’s why it would make sense…

Cazoo announced its launch in the two countries at the start of December, just a few months after listing on the New York Stock Exchange. It also said it has raised a further US$800 million in the process, which will be used to ‘further build out its brand and infrastructure’.

Early reports suggest some of that funding is indeed going to be invested in sport. L’Equipe says that Cazoo will replace household appliances brand Boulanger as the shirt sponsor of Ligue 1 club Lille from the start of the 2022/23 season, in a deal reportedly worth €4 million per year.

The company already has deals in soccer with Premier League sides Everton and Aston Villa, but this would mark its first sponsorship deal outside the UK – and it might not be the last.

Cazoo isn’t the only disruptor brand looking to branch out. Last week sportswear manufacturer Castore was unveiled as the new apparel partner of USA Rugby, marking one of its biggest moves into North America since it was founded in 2015.

I personally think it’s quite a smart move.

Castore already has experience in rugby through its relationships with the likes of Saracens and the Samoa national team. It’s also no secret that the US is considered to be a major growth opportunity for rugby – the sport’s global governing body is considering hosting the 2031 World Cup there – and signing a long-term, six-year deal enables Castore to be part of that potential success story, while also giving it an entry point into a massive sports market.

Trouble in (crypto) paradise

It’s all been kicking off in the Wild West, where there have been a few developments this week that may or may not have implications for rights holders and athletes keen to promote cryptocurrency assets.

Over in Spain, the country’s national securities market commission (CNMV) has been given new regulatory powers. Influencers and their sponsors will have to provide the watchdog with at least ten days’ notice of new crypto campaigns targeted at more than 100,000 people or face hefty fines.

It comes not long after Andres Iniesta had his wrists slapped by the CNMV for promoting the Binance crypto exchange across his Twitter and Instagram accounts.

The new rules also dictate that influencers disclose whether they are being remunerated for their posts, in which case they need to make their followers aware of the risks of crypto investment and highlight that the sector is unregulated. The UK’s Advertising Standards Authority deemed that Premier League side Arsenal had fallen short in that regard back in December.

Change is also coming in the UK, where the government has announced plans to bring ‘misleading’ crypto ads under the same rules as financial promotions in what is another sign of regulation catching up with the burgeoning sector.

Elsewhere Crypto.com – now one of the most prominent platforms thanks to its ongoing sports marketing push – froze all deposits and withdrawals this week as users complained that money was disappearing from their accounts. Peckshield, a blockchain security and analytics company, suggests that hackers stole US$15 million worth of Ethereum from the exchange. Someone might want to tell the AFL, which on Tuesday became the latest sports property to partner with the company.

Never a dull moment, sure, but potentially another warning about the need to tread carefully in these parts.

Top dealers

TikTok was perhaps a surprise partner of Uefa Euro 2020 but a decision has clearly been made to include sponsorship as part of the social video platform’s marketing mix moving forward. This month has already seen the company sign up for the Africa Cup of Nations and handball’s EHF Euro 2022, which got underway last week.

Five deals you might have missed

Three things I’ve been reading

1. I wrote a column last week about purpose, profit, and whether rights holders are striking the right balance between the two when it comes to their sponsorships. Have a read and let me know what you think.

2. There have predictably been plenty of articles over the past week attempting to forecast whether Novak Djokovic will be ditched by his sponsors in the wake of the Australian Open vaccine/visa saga. M&C Saatchi’s Steve Martin has approached it from a slightly different angle by asking what impact the fallout will have on brand Australia.

3. I feel like now is a good time to stress that not everything has to be about the metaverse, but I have found several articles in this dedicated section on The Drum website to be useful for understanding more about marketing in the next generation of the internet.

Enjoy this newsletter? Got a story worth shouting about? Feel free to let me know over email or @ me on Twitter. You can also tell your friends to sign up here.

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