Economics of Football: Sponsorships
UberEats, Budweiser, Nike...the names emblazoned across the jerseys of million-dollar footballers curling balls into the top corner on any given weekend. In this first instalment of our Economics of Football series, we’ll be exploring the companies making the football world go round.
Sponsorship in football takes many forms. From the iconic “Fly Emirates” on the chest of Man City to the Hublot substitute board, every inch of space has been monetised. Whether via jersey, league or broadcast sponsorships, brands are clamouring for our eyeballs and they’re not afraid to throw down some serious cash to get them.
The Premier League generated £1.51b in sponsorship revenue last season, up from £1.09b in 2015/16. Broadcast revenue, the money TV stations pay for distribution rights, was the Prem’s biggest source of income: £4b in total. While stations like Sky and BT charge for access, they are able to pay so much for rights as the majority of their revenue also comes from sponsorships and advertising. Matchday revenue only accounted for 6.1% of all revenue.
Heart on my sleeve
The 20cm x 10cm space on the front of premier league jerseys is some of the most expensive real estate on the planet. From boilermakers to sportsbooks, companies are paying millions for their name to be shared globally across the 38 week season.
The names appearing on jerseys have certainly changed over time. While it’s obvious that cigarette companies have moved out of sports sponsorship, a more globalised game has introduced more global sponsors.
No region spends more on sponsorship than the Middle East. Headlined by its 3 major airlines (Etihad, Emirates, Qatar), £172m pounds are spent annually across 6 jersey deals. The US, Japan, Germany all spend more on sponsoring the English league than UK companies.
Crypto casinos, Malaysian Tourism, Computer Software …it’s no longer local plumbers sticking their name and number on their town’s kit.
Does it work? It definitely can. While not the Premier League, let’s look at one example which put Messi, Ronaldo and all football’s biggest stars in a 4th division jersey. Burger King decided to sponsor Stevenage FC; a team whose greatest achievement was a 5th round FA Cup exit.
It was more than just a jersey sponsorship though, the #StevenageChallange was born and brought Stevenage national and international fame. Every FIFA gamer who uploaded their greatest goals in the team’s jersey was eligible to win food prizes from Burger King. The campaign generated 1.2b in impressions on social media and the club sold out of jerseys instantly. For the record, prior to the campaign, they struggled to get 3,000 fans to a game.
The Nike and Adidas Oligopoly
One of the less-discussed perks of jersey sponsorship is the millions of walking, talking billboards that are printed every season. Fans love to wear jerseys around town and the exposure sponsors get spans further than just the TV. Companies like Nike and Adidas also reap the benefits. In fact, jersey manufacturers make more from sales than clubs, miles more.
Data indicates Nike and Adidas spend £700m across the top 15 global football leagues for jersey rights to 38% of the clubs. Close to £285m of this is exclusively in the Premier League. Whilst this feels like a lot, jersey manufacturers pay clubs a relatively small fee per jersey sold (usually below 10%) with the vast majority of the revenue flowing back into their own pockets. And with stars like Ronaldo and Messi sending websites across the globe into meltdown as fans rush to get the latest CR7 or LM30 (the former’s latest Manchester United’s jersey revenue topped £32.5M in the 12 hours following its release), we’re sure officials at the Three Stripes and Swoosh headquarters are more than comfortable with their investment.
So sponsorship is a big-money game, where does it go? Perhaps unsurprisingly, player wages.
Man Utd is a listed company, we can see the breakdown of revenues and costs precisely. In 2020, the Red Devils spent £249.5m pounds on player wages spread across a squad of around 40 players. In the same year, the club received £182.7m in sponsorship revenue.
We will look deeper into the wild world of wages and transfers later in this series.