Room At The Top: Sponsorship & The Premier League

The annual release of the Premier League's full season payments to its clubs made for more interesting reading than usual this year, as it revealed the financial impact of the first year of the League's new commercial cycle.

Predictably, the mainstream media focused on the ker-ching effect of the Premier League's new domestic and international broadcasting deals, the engine of the League's finances, which drove a 46% year-on-year increase in the total payout.But what this storyline overlooked was that the figures also revealed the status of the Premier League's move away last season, for the first time since the League's creation in the early 1990s, from a title sponsor-led sponsorship model to a multi-sponsor model.

Financially, the transition was smooth. Premier League Central Commercial revenues, to which sponsorship is the biggest contributor, rose £5million year-on-year, to just over £95million, with the effect that the combined income from the Premier League's six co-sponsors - previous title sponsor Barclays, long term sponsors Nike and EA Sports, plus new sponsors Cadbury, Carling and TAG Heuer - more than compensated for the move away from title sponsorship.

So, so far so good, you might say. But I believe the Premier League has significant untapped potential in this space - both for itself and for brand partners.

One sign of this is that one year on from its move to the multi-sponsor model, the League is still looking for a seventh and final brand in its sponsor roster, from the tech category. If a property with the global reach and appeal of the Premier League can't find a partner from the hottest business category on the planet, something's clearly not right.

Another is that Central Commercial revenue is increasingly a drop in the ocean of the total payout to clubs: in 2016/17 it was only 3.96% of the total payout, down from 5.5% the previous season.

And when you add to that the traditional, media-heavy nature of the rights on offer, the reliance on broadcast partners' and clubs' inventory, and the fact that this inventory is finite as well as old-school, it's clear that the Premier League's prospects for growth in this space are very limited.

Unless it makes two big innovations.

First, to think beyond traditional sponsorship rights that are reliant on media and club inventory, and locked into brand categories.

If, instead, the Premier League creates new IP built around unique campaigns and powerful experiences rather than old school media and rights, it can open up new partnership opportunities and revenue streams way beyond what the traditional sponsorship model can generate.

And second, to re-purpose the Premier League brand itself.

Yes, the Premier League used the move away from title sponsorship to re-design its brand identity, and launched the Primary Stars schools programme to boost its CSR credentials.

But these haven't made a meaningful difference to the Premier League's Achilles Heel: as I wrote last year, if you ask people what it stands for other than football, the majority will say money, truckloads of money - and not in a good way. People don't believe that the Premier League has a purpose beyond profit - the essential ingredient for the most successful contemporary consumer brands.

Together with its reliance on traditional sponsorship rights, it's this lack of a purpose beyond profit that is holding back the Premier League from becoming what it can be - one of the great hero brands of the era.

A brand measured not how much money it makes, but how it uses the power of its brand to make a social and cultural difference.

And ironically, it's only by doing that that the Premier League can realise it's vast untapped marketing potential and attract a new generation of brand partners.

There's plenty of room at the top.

And Then There Were Two: Will It Be LA or Paris That Hosts The 2024 Olympics?

LA 2024 and Paris 2024 Olympic Games

This being a gap year in the Olympic cycle, in 2017 we have no Olympics to look forward to, either of the Summer or Winter variety. But, as always in these gap years, there’s an Olympic spectacle of a very different, but no less competitive, nature to observe: the contest for the right to host the 2024 Olympic and Paralympic Games, which will be decided when the IOC meets in Lima in September.

When the IOC members gather, ostensibly their choice is simple - either Paris from the Old World or Los Angeles from the New, now that Budapest has joined Hamburg, Boston (LA’s forerunner) and Rome in opting out of the race owing to citizen activism. But paradoxically it will also be the most difficult hosting decision that the IOC has had to make for many years, because not since the latter days of the Cold War have the IOC and the Olympic Games faced so many existential threats: the spectre of the doping crisis and the continuing fallout from the IOC’s controversial decision not to ban Russia from Rio 2016; a flawed youth strategy resulting in an aged fan base worldwide; and the huge costs and questionable social and economic benefits of hosting the Games, vividly demonstrated by Rio’s many and continuing problems.

Against that forbidding background, what is now top of the IOC agenda ahead of Lima is not which city can best stage the Olympics, but which one can most effectively help combat the IOC’s two biggest existential threats: to make the Games and what they and the IOC stand for relevant to a new generation of consumers, in particular younger consumers; and at the same time to persuade a new generation of host cities to bid to stage the summer and winter Games, particularly in America and Europe, where disaffection in city halls and suburbs alike is strongest.

Both are key themes in the LA and Paris bid pitches.

LA is the most compelling, with its vision of Californian sunshine, West Coast tech innovation and Hollywood storytelling power combining to ‘regenerate the Games’ and ‘refresh the Olympic brand around the world’.

Paris is more traditional, a classic piece of Olympic realpolitik, invoking de Coubertin in a ‘new vision of Olympism in action’ in the grand old city, linked to those time-honoured Olympic bid promises of urban regeneration and increased national sports participation.

But the IOC’s dilemma runs much deeper than choosing one or the other: its problem is having to make a choice.

Saying no to LA would probably end America’s interest in bidding for the Games for a generation, the IOC having thus rejected bids from the three biggest American cities (following New York and Chicago, which bid for the 2012 and 2016 Games respectively) in succession.

Quite apart from ‘biting the hand that feeds’ in the shape of the country which is by far the biggest IOC investor, given NBC’s $12 billion Olympic broadcast contract and the IOC’s six US-headquartered global sponsors.

It would also mean that the IOC passes up the opportunity to use an LA Games to bring in new global sponsors from the world’s biggest economy – just as it has used Tokyo 2020 to sign Bridgestone and Toyota.

Saying no to Paris, again for the third time in succession, would also probably end France’s interest in bidding again for the Games in the foreseeable future, and run the risk of further emptying the dwindling pool of major European cities prepared to throw their hat into the ring.

So what will the IOC do?

There are clues in their recent behaviour.

First, a preference for long-term strategic deals – witness the NBC extension through 2032 (Thomas Bach’s first major deal as IOC President) and the recent Alibaba sponsorship through 2028 – rather than for playing the market.

And second, President Bach’s characteristically reformist statement back in December that the current bidding process “produces too many losers” and must be reviewed.

Go figure.

Now, making predictions in these interesting times in which we live is a risky business.

But assuming that the controversial Trump Presidency and the looming French Presidential election don’t derail the LA and Paris bids, I predict that when the IOC leaves Lima in September, they will do so having awarded the 2024 and 2028 Games simultaneously to Paris and LA.

And probably in that order, for three reasons.

One, because an LA 2028 Games will give President Bach the ideal timing to play the American market for the IOC’s next US broadcast deal beyond NBC’s current contract.

Two, because it will also give Bach significant leverage in his attempts to persuade his six US-based TOP sponsors to extend their current deals, all of which end into 2020, for eight years.

But most of all, because it will buy Bach and the IOC both time and two key partners in its battle to find a new relevance and credibility for a new era and a new generation.

No surprises, except maybe one: a look at LA 2024 sponsorship

The Los Angeles 2024 Olympic Bid published its Games budget overview last week, which included a first look at its estimated revenue from domestic sponsorship.

The headline of the release that accompanied LA’s budget talked about “No Surprises”. And I wasn’t surprised that the estimate of $1.93 billion was, by LA’s admission, conservative. That’s what Olympic bids always do when it comes to sponsorship forecasts. But I was surprised at just how conservative it was – in my view overly conservative.To put this into context.The US is the world's largest advertising and sports marketing economy, and in turn its media and brands are by far the biggest investors in Olympic media and sponsorships.

So I was expecting to see LA estimate the biggest-ever domestic sponsorship Games revenue.

But that's not how it played out.

Yes, the LA estimate would be a record for any completed Games to date. But even allowing for price elasticity of demand, having already signed 15 Tier One and 27 Tier Two partners, Tokyo 2020 appears to have already generated well over $2 billion from domestic sponsorship given its rate card of $128 million and $51 million respectively for Tier One and Tier Two deals.

So that's the new benchmark, from an ad market that's 25% the size of that of the US.

Another benchmark. The LA estimate is less than double London 2012’s final total of just over $1 billion, which was generated by a much, much smaller ad market - 12% of the size of the US - in the teeth of a recession.

When Tokyo won the right to stage the 2020 Games, I predicted that it could reach $2 billion of domestic sponsorship revenue. If LA wins the race for 2024, I believe that over $2 billion is a certainty and $3 billion highly likely.

I suspect that the two other models LA used would have reflected a similar scenario.

But LA didn’t need to run the risk of over-promising and under-delivering. A conservative $1.93 billion works for LA’s no risk budget, and even at the lower end of the scale, still comfortably eclipses the $1.086 billion from domestic sponsorship estimated by Paris, its chief rival in the 2024 race.

No surprise. No surprises.