Nike and Chelsea have entered into a sponsorship contract
that is estimated at a value of £60m every year for the next 15years. The £900m
is expected to be operational from the beginning of the 2017-18 season. In this
kit sponsorship deal, Nike is expected to supply strips for Chelsea’s first
team, women’s team and its academy. This is in addition to the clothing to be
sold to the fans of the club around the world. The deal was confirmed shortly
after the termination of its deal with Adidas which attracted a penalty of £40million.
The club is stated to have been comfortable with the penalty stating that it
would be absorbed in the £60million deal for the season with Nike.
Even though the £900million deal is the largest in Chelsea’s
history, it is much lower than the current deal between FC Barcelona and Nike
which is valued at £120million per season. Other notable deals include a £750million
10year deal between Manchester United and Adidas and £106million a season deal
between Real Madrid and Adidas. The large amounts of investment spent in these
deals prompts a review of these deals and the rationale for sports sponsorship.
The strategy of sports sponsorship is one that can be
theorised as facilitating trust building. This is achieved through association.
Sports clubs tend to have millions of fans and admirers around the world;
especially in the English and Spanish leagues that have been marketed globally.
By taking up sponsorship with these clubs, the investing groups aim at
endearing themselves to these fans. They would be having a mutual interest in
that they both want the best for their teams. This mutuality breeds trust and a
sense of attachment. Even though consumers are largely aware that the
sponsorship is mainly entered into to advance the commercial interests of the
sponsor, they still get attached to these brands subconsciously. This makes it
pragmatic for strategic managers to consider this strategy.
Value for the club sponsors can also be realised through the
direct proceedings of the clothing sold to fans. Millions of club’s clothing
are bought around the world as fans seek to wear them as a way of expressing
solidarity with the brand. These proceeds are collected by the organisation.
The deals work by the sponsor committing to provide cash or spend a certain
amount of money per season on the club. After these expenses have been
incurred, it is upon the organisation to exploit the opportunity to find ways
of realising value for the investment. Selling club clothing to fans can be one
of these approaches. But more significantly, club sponsorship provides immense opportunities
for low cost advertising.
During major events where millions of people are watching
from across the world, club sponsors get a lot of coverage for the duration of
the events. Any strategic manager would want to secure such an opportunity;
provided they are able to afford it and also able to realise value on their
investments. This is the reason the value of the deals go higher when a club is
more successful. It probably explains why Chelsea’s deal is only £60million
while Barcelona’s is £120million a season. FC Barcelona is a prominent club in
the Spanish league and has been very prominent in the Europa League. Sponsors of
a prominent club get additional coverage because they stay longer in the
league. Each time they are playing, the logo or brand name of the sponsor displayed
on the kits is openly viewed by millions of audiences around the world. This is
the real value of sports sponsorship.
No comments:
Post a Comment