Liverpool FC is driving a sponsorship strategy of localisation with global reach
Liverpool FC is driving a sponsorship strategy of localisation with global reach
A view from Misha Sher

Liverpool FC and the evolution of sports sponsorship

With football sponsorship entering a new phase of sponsorship and this being the last season the Premier League has a title sponsor, Misha Sher, head...

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

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.  

Dropped title sponsorship

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 global brand halo effect

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

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.

Local needs

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.

Manchester United was the first to spot the opportunity and have benefited greatly by being first to market with this strategy.  The club has secured in excess of 60 regional partners since signing Smirnoff Vodka as an Asian-Pacific partner in 2008.  Others have followed their lead, with the top English and Spanish clubs developing their own versions of regional partnerships.  

Localised approach, global reach

In addition to this localised approach by rights holders with a global reach, we are also witnessing an influx of new categories.  Sports sponsorships used to be dominated by financial services, insurance, FMCG, automotive and telecom brands. While these sectors are still playing a big part, growth is coming from categories which were almost non-existent just a few years ago.  

Some of the fastest growing sponsorship categories are fantasy sports, wearable technology and peer-to-peer marketplaces, to name just a few

We’ve seen a rapid evolution of technology alongside a seismic shift in human behaviour. That’s why some of the fastest growing sponsorship categories are fantasy sports, wearable technology and peer-to-peer marketplaces, to name just a few. Fantasy sports is one of the hottest sponsorship categories in professional sport.  FanDuel and Draft Kings are driving this activity and, while most of their partnerships have so far focused on major US sports, it won’t be long until we see them expand to other markets.  

Wearables like Fitbit and GoPro are also taking the sponsorship industry by storm, partnering with major rights holders and re-defining the traditional role partners play in these relationships. These sectors are capitalizing on the fact that sports fans have the desire, and now the ability through technology, to participate in what they’re watching.  

Data sophistication

Sitting firmly at the heart of these changes is data.  It has been the buzzword for a long time, but it has taken most clubs until now to realise the power of understanding exactly who their fans are. Now football clubs, and other sports organisations, are continuing to gain a much more sophisticated and deeper appreciation of their fans and what they like. This is crucial both in understanding how to best connect with their audience and which sponsorship categories are likely to be the most successful.

On the other side of the coin, brands want an opportunity to create deep emotional connections with their target audience. Sport is a brilliant platform to do that. My advice to any sporting organisation is to get a very clear view of your audience – who they are, where they are, and what they’re into. This can be achieved through use of a CRM system for purchase behaviour, fan surveys, analysis of conversations on social channels and general trends related to behaviour. If, as a football club, you can demonstrate that you have an audience that is relevant to a specific brand or category, you can be sure to have a much easier conversation with a desired sponsor.