You’ve Been Sponsored

Sponsorship revenue is a major source of income for premier league clubs and has been increasing year on year. Commercially vital to clubs, major sponsorships provide revenue of a long period due to the contracts usually being over a few years. This year club sponsorships brought in £282 million in revenue for premier league clubs before taking into the various partnerships they also delve into. This article will will go into detail about the types of industries that are attracted to invest and sponsor football clubs. We will also look at kit manufacturers and the role they play in football finance.

Football sponsorship has changed immensely over the years. Looking at the last 11 years (2007 – 2017), Beer has diminished as a large purchaser of sponsorships with no current club having a beer manufacturer as a sponsor. Betting companies have dominated as of late with a high of 9 companies donning sponsorship deals in 2016/17 season, nearly half of all clubs. This makes perfect sense being that football fans represent a key audience for betting companies. Interestingly, this space is not dominated by the largest, most well-known betting companies (other than Bet365 and BetWay), rather overseas and casino gambling companies being the most keen sponsors. It would be interesting to see if the likes of Paddy Power and Ladbrokes decide to enter this space in the future.

Financial services companies are aiming to fill the gap left since Barclays no longer sponsor the Premier League. Banks, Insurance and pay-day loans companies are all present here and the financial sector has been ever present in the sponsoring premier league clubs, with at least 3 on average in each of age last 11 years.

Airlines are another major part of the football clubs with two of the largest clubs, Arsenal and Manchester City representing the industry. Both have long standing partnerships with their respective airline.

Other industries to have sponsored Premier League clubs over the years include Sports fashion, Charities, Automobiles and confusingly a Zoo!

As mentioned, sponsorships are a huge source of cash for the clubs with over £282m coming from shirt sponsors alone. Above we have the league table of shirt sponsors. It has a very familiar look to it, with domination from the top 6 who take home over 75% of sponsorship revenue. Man United show their dominance as the most reputable club in English football if not the world, with their Chevrolet deal bring them a handsome £47m a year. While newly promoted Huddersfield and Brighton at the foot of the table with deals of £1.5m each, more than 30 times less than Manchester United.

West Ham can be pleased at being 7th with their BetWay sponsorship bring in £10m a year, this is due to run until the end of this season and they will be hoping a strong showing in the league this season can lead to a similar, if not larger deal especially with the attraction of such of large stadium and tourist attraction for prospective sponsors.

Leicester have a long term agreement with shirt and stadium sponsor King Power and have yet to really cash in their title heroics through this commercial medium.

Interestingly, all London clubs are in the top half of the table, suggesting their is a preference among sponsors to pay a premium to sponsor London clubs, with Crystal Palace above the likes of Newcastle, Leicester, West Brom and Southampton.

Please Stay!

In terms of turnover of club sponsorships, only Tottenham of the Premier League ever-presents has had more than 2 sponsorships, with 6 in the 11 years analysed. Only Arsenal however have not changed sponsors during this period, however most of these changes were after a long period with that sponsor and we suspect their current deals to continue for the foreseeable future. West Brom have a record high of 7 sponsors in 9 years (including 1 year with none), this is interesting as to whether this indicates poor commercial success or just a policy of renewal. This doesn’t seem to be working with their current deal the 4th worst in the league ahead of only newly-promoted Brighton and Huddersfield, and Burnley.

Kitted Out

Kit manufacturer income is another major source of sponsorship income, many large sport brands pay millions to create kits for clubs, profiting from the sales of these. The largest two manufactures are the most well known sports brand in the world, Adidas and Nike. Adidas have seen a huge decline however since their high of 9 kits in 2013 to only 3 in 2017, even losing Chelsea who cut their sponsorship short to sign for Nike last season, paying £67m in the process. The spread of sport companies has diversified in recent years with none dominating as was the case with Adidas, Nike and Umbro in previous years. Umbro were previously a huge producer of kits, making 6 kits in 2007, the largest at that time to none in 2013 before renewing their presence recently with 3 currently rocking the diamond on their kits.

It will be interesting to see how Adidas react to their recent fall, they may decide to attract a large club such as Arsenal to their ranks after missing out on Manchester City who have agreed a deal with Puma for next season.

Speaking of Puma, they lead the way this year for clubs wearing their brand, which has been on a steady increasing trend since 2007.

There is the usual pattern for Kit makers as there is in performance in domestic leagues, the top 6 dominate due to their domestic success and the large fan bases that come with that. The top 6 take home a remarkable 89% of income generated from kit manufacturers.

Surprisingly, Manchester City lag their domestic rivals significantly in the value of their deal with Nike, coming in at only £12m a year compared to the £75m Adidas deal of their Manchester rival or £60m a year deal of Chelsea who also have their kits made by Nike, something that will be rectified once Puma take over in the summer in a £50m a year deal.

Data was unavailable for Huddersfield and Brighton, however we suspect their deals to be around the £1m mark, maybe lower than Bournemouth who are bottom with an £800k annual deal.

Sleeves of Gold

A new phenomenon among premier league clubs is the introduction of sleeve sponsorships, with 17 out of the 20 premier league teams (Arsenal, Manchester United and Tottenham are yet to have one). This has brought in on average £3m a year extra revenue to premier league clubs, for example Liverpool Western Union deal has brought in £5m a year to the clubs coffers. Chelsea have the largest sleeve sponsor deal to date, with an extra £8m year brought in, while at the other end of the scale Huddersfield only bring in £300k in extra revenue from their sleeves.

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January 21, 2018January 21, 2018

Financial Football News Round-Up Edition 10

Financial Football News Weekly Round-Up 10

Here is your weekly financial football news round-up to keep you up to date with all things financial football! This is your round-up for the week commencing 15th January 2018, featuring Newcastle, Manchester United, Huddersfield, UEFA, Chelsea and Brighton.

Brighton Financial Results Released – Analysed by FFN

Brighton released their financial accounts for the promotion winning 16/17 season. The accounts saw losses grow by 50% despite record revenue as the club ambitiously sought Premier League football and set to reap the rewards in next years accounts – full analysis here.

Financial Fair Play 2.0?

French newspaper Le Parisien are reporting that reforms on Financial Fair Play are looming due to Historically large clubs such as Real Madrid, Barcelona and Bayern dissatisfied with the current rules.

There are various changes being considered with a major one being to limit spending that isn’t matched by increased revenue to EUR 100m. This would be of particularly difficulty to the ‘new rich’ who won’t be a able to spend large sums without a rise in revenues first.

Sanctions to control debt are also under consideration that would specifically target debt heavy Manchester United.

A limit may also be imposed on limiting players at a club to stop the likes of Manchester City and Chelsea stockpiling youth players the loaning them in the hope of profiting in the future.

There is also took of redefining the meaning of ‘related parties’ in order to reduce the ways owners can pump money into the club without raising Financial Fair Play Issues. Manchester City and PSG both have large deals with Etihad and Abu Dhabi respectively, who are both related to their owners.

UEFA are due to vote on a reform on 24th May with a draft report rumoured to have already been created.

Newcastle Sale Stalemate

The long running saga involving the sale of Newcastle by Mike Ashley to Amanda Staveley continues to rumble, with talks currently hitting a roadblock and no sale in sight any time soon after a £250m offer was rejected. The current plight of the troubled Geordie side cannot of given prospective owners much confidence in taking over, with Mike Ashley not wanting to reflect this in his pricing.

This is also a difficult time for the manager Rafa Benitez, who is experiencing uncertainty in terms of transfer money available to spend in a bid to move the club clear of the relegation zone, something their owner will want to do but not a huge costs that will dent any sale proceeds he may gain.

Huddersfield Hydrated By Coco Fuzion 100

Huddersfield have announced another commercial partnership with drinks company Coco Fuzion becoming their official hydration partner. The company produces carbonated coconut water drinks that naturally hydrate consumers with the electrolytes it contains.

The brand fits well with the Huddersfield playing style who will need a great deal of hydrating due to the all action pressing style the club implements.

This is the latest in a number of commercial deal Huddersfield have signed, taking advantage of their new found Premier League status.

Oops I Did It Again! – Chelsea Back In Trouble Over Youth Players

Fifa are reported to be investigating Chelsea for the third time in eight years for possible breaches of signing under-age players. The club deny any wrongdoing.

Previously the club have been banned for two transfer windows when in 2009, they were sanctioned for the purchase of Gael Kakuta, the ban was successfully overturned on appeal however.

Fifa have been a lot tougher on such punishments recently with Real Madrid, Barcelona and Atletico all receiving bans in recent years and Chelsea will hope they have not fallen foul of the rules to avoid a similar fate.

Man United Striker SIS Partnership

Manchester United have signed a three-year partnership with Science In Sport (SIS), a sport nutrition company based in Lancashire. This represents another major coup for the company, with Manchester United become the 10th Premier League club to sign with the sport nutritionist.

As part of the deal SIS will provide Man Utd with a dedicated performance nutritionist, as well as installing a Fuel Station within the club’s training ground, giving players and staff direct exposure to SIS products at all times.

UEFA Release Huge Report On Football Landscape

UEFA last week released their annual report analysing the financial performance of all clubs in the 55 UEFA member associations in the 2016 financial year. The report details areas such as fan support, sponsorship, transfers and wages plus more. Stay tuned for analysis of this interesting report over the next week.

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December 29, 2017December 29, 2017

Matchday Money – Gameweek 20

Welcome to the first in a new series where we estimate the matchday gate receipts taken at all premier league games each week. We will compare the revenue generated between teams and compare their strategy for maximising matchday revenue.

The revenue is calculated based on an average of the highest and lowest prices offered to club members for each match. This amount is then multiplied by the number of tickets available for sale which for home teams is attendance less away ticket allocation and season tickets sold. Away teams is simply the away ticket allocation multiplied by the away ticket price. A separate article will analyse the season ticket revenue taken by each club.

The away allocation differs from game to game with it up to negotiation between the clubs. The lower of 10% of stadium capacity or 3,000 seats must be offered to away teams on each matchday, however this is not always taken up as clubs analyse the demand for the game among their fans and choose accordingly.

Here are the matchday results for gameweek 20:

Bournemouth 3 – 3 West Ham

Chelsea 2 – 0 Brighton

Crystal Palace 2 – 3 Arsenal

Huddersfield 1 – 1 Stoke

Liverpool 5 – 0 Swansea

Manchester United 2 – 2 Burnley

Newcastle 0 – 1 Manchester City

Tottenham 5 – 2 Southampton

Watford 2 – 1 Leicester

West Brom 0 – 0 Everton

Gameweek 20 Analysis

Chelsea led the way in stadium capacity percentage with 99.8% of the stadium filled as 41,568 fans flocked to their boxing day fixture, closely followed by Newcastle fans who watched their team play league leaders Manchester City. Unsurprisingly, Manchester United’s attendance of 75,046 was the highest by a distance with Tottenham second nearly 20,000 behind despite a stadium capacity percentage of 61.6% in their temporary 90,000 seater home.

Despite their lowly stadium capacity %, Tottenham led the way with gate receipts with takings of over £1.3m, in part due to their high ticket prices of £55 and the fact they only sold 28,000 season tickets for Wembley, meaning a more matchday tickets on sale equating to a higher taking each matchday.

Liverpool’s season ticket sales of 25,000 also allow them to benefit from more expensive matchday tickets. Manchester United and Chelsea complete the top 4 this week with Manchester United’s lower due to the 55,000 season tickets sold. These amounts are more secure, so there is always a trade off between the guaranteed selling of season tickets and the potential for empty seats on matchday.

Bournemouth’s 11,360 seat stadium, combined with season ticket sales of 7,000 mean their takings from games are low, something they will be hoping to rectify after stabilising in the Premier League.

For away teams the revenue is usually fairly balanced, with the away allocation always fairly similar. All premier league teams agreed to cap away ticket prices to £30, with Arsenal even taking it a step further at £26. Southampton playing away to spurs were allocated the full 3,000 meaning they lead the way in away matchday revenue, followed closely by Brighton, Burnley Manchester City and Swansea – who all played teams with stadium capita of over 45,000. West Ham lag the rest by far, playing at the smallest stadium in the top flight by far, Bournemouth’s Vitality Stadium which boasts 11,360 seats. West Ham were only given an allocation of 2,000 seats.

Thats it for the first week of this matchday money series – any feedback would be greatly appreciated as we continue to refine the formula to get as accurate a read on matchday takings.

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December 9, 2017

Celtic Looking to Invest Down Under

Scottish Champions Celtic are interested in purchasing an Australian top flight club, with Brisbane Roar and Central Coast Mariners both mooted as possible targets. The move signals a change in business strategy for Celtic as they look to build their global presence by investing in Australia and gaining first-option on any bright young players to come out of the club they acquire.

Celtic are rumoured to be looking at business and investment opportunities in Australian football with Celtic representatives recently travelling to Australia to visit the Central Coast Mariner’s new training centre, a potential target should they make a move. Central Coast is also a former club of Celtic player Tom Rojic, who Celtic brought the player from in 2013, so there is an existing relationship that could provide the foundations for talks.

Central Coast Mariner’s coach confirmed the interest, he stated: “I haven’t personally spoken to anyone at Celtic, that’s been handled by Shaun Mielekamp (CEO) and Kathy Duncan (CFO).”

Celtic target Central Coast's recent league positions — Central Coast’s recent league positions

Central Coast are having a troubling period in the league finishing 8th twice and 10th in the 10 team league. This was after a good spell, finishing 3rd or higher in the 4 seasons prior to this recent dip. The recent dip may be good news for Celtic, making now a great time to buy the troubled team and there is potential if you look at their previous form. They are currently 5th this season as they look to put the last 3 seasons behind them.

The team has had success with high profile players, with former Crystal Palace Captain Miles Jedinak coming through the Central Coast ranks. Brighton Goalkeeper Matthew Ryan is another, as is Celtic’s Tom Rojic. Their most lucrative player was an unknown winger Roystyn Griffiths, who joined a Chinese team for around £1m. The last couple of years have seen little transfer activity for the team outside of Australia, with no monetary purchases or sales in the last year.

Another potential target is Brisbane Roar, whose future under their current ownership is under threat. The owners, Indonesian-Bakrie Group are dealing with financial difficulties, and the club was nearly wound down after threats by the Australian F.A. in 2015.

Celtic Target Brisbane Roar's League Position — Brisbane Roar’s recent league positions

Brisbane Roar have been doing well in recent years, winning the league in 2014 and finishing 3rd in the last two seasons. However this season has taken a turn for the worse in light of their recent financial difficulties, they languish 8th in the table and will hope to turn things around quickly. Such poor league form, combined with their already poor financial situation, make the team a good proposition to buy cheaply.

The team seems to have more talent coming through then Central Coast recently, with promising players moving to Europe in each of the last 4 seasons, bring in around £600k in profit. However their players have not had as much high-profile success in Europe as Central Coast. Tommy Oar, a left winger, played over a 100 games for Dutch side Utrecht and Micheal Theo had a spell at Burnley.

The interest in these clubs is in light of a potential new operating model in the A-League which is set to give clubs more autonomy in their dealings. However the deal failed to pass through Congress this week, meaning further uncertainty around the position of A-League clubs. FIFA are to work with the Australian FA to try and find a resolution, and may even end up taking over the operation of Australian football which could cause huge changes. Such news may delay formalisation of any bids for Australian clubs by Celtic and other interested European teams.

Celtic are in desperate need to grow commercially, with the Scottish Champions having exhausted all possible commercial streams in Scotland. Rangers are yet to provide any such competition to elevate Scottish football, meaning any increases in TV revenue are unlikely to be of any help if they wish to remain competitive in Europe, where their financial success comes from.he current TV deal, which has two years still to run, sees Scotland below the likes of to the Poland, Norway, Sweden and Denmark in terms of TV money.

A potential move to the Premier League was sought after, however the chances of that happening are remote.

Australian football is a relatively untapped market with Manchester City’s owners acquiring Melbourne City in 2014, helping to build their brand over in Australia to increase sponsorship deals and other commercial offerings. Australia are also 39th in the FIFA world ranking and will once again be at the World Cup in 2018, showing their ability on the pitch. Manchester City have already found success here, having sold Aaron Mooy to Huddersfield for £8.2m. City Group brought Melbourne City for around £12m, so this one transfer represents around a 75% return on their capital from that one transfer alone!

There is also huge potential to build brand exposure in the growing market. The A-League recently signed a TV rights deal with BT, representing a chance to increase viewership of Australian football, which will only be enhanced by a good World Cup showing.

Investment wise, increasing TV deals mean there is the potential to realise a share in any revenue growth which seems likely. The A-League agreed a deal with ESPN in Australia worth around £30-£35m a year until 2023, and although it is tiny in comparison to the Premier League, the size of investment required is also relatively smaller. There has been issues however surrounding the distribution of the TV revenue, with A-League clubs dissatisfied with the current arrangement. The TV rights have room to grow with it being dwarfed by the TV deals for Australian football (American football) and rugby.

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December 8, 2017December 8, 2017

Puma Pounce to Sign Manchester City

Manchester City have agreed a huge £50m a year deal to replace current kit supplier Nike with Puma. The new deal represents another commercial win for the Premier League leaders, dwarfing their current £20m-a-year deal with Nike agreed in 2012. The Nike deal expires at the end of the current season and Manchester City have moved quickly to exploit their growing global presence after a strong start to the season.

The deal represents a coup for Puma who continue their dominance of premier league kit deals, with Manchester City being the 6th club to don the Puma logo, with Arsenal being the other big team as well as Newcastle, Leicester, Burnley and Huddersfield. This means that next season, Puma will potentially spend more than £85m on sponsoring current premier league clubs, unless Arsenal decide to leave …

Kit Sponsor's Premier League

Talking of Arsenal the deal will be of some annoyance, as their own Puma deal is at £20m significantly less. However there is substantial rumours of a deal set to be agreed with Adidas that will bring them in line with their title rivals. Liverpool and Tottenham will also want to renegotiate deals to avoid falling behind in commercial terms to their rivals.

The deal also means that the Premier league top 6 represent around 90% of the kit deal revenue brought into the league, further showcasing the gulf in spending power available. It makes sense for kit manufacturers such as Puma and Nike to invest in clubs like Manchester City due to their global nature and growing fan base, something smaller clubs cannot offer and as such, won’t bring in the kit sales that would make a larger investment profitable.

Kit sponsorship premier league

The deal shows the continued commercial awareness of Manchester City as they build on their early season success. Guardiola’s attractive brand of football is making the team great to watch and as such, attracts global brands to invest in them to build and maintain their own global presence.

It will be interesting to see where Nike go next, with only Chelsea and Tottenham being sponsored by them currently, they may look to Arsenal, Liverpool as potential sponsorship opportunities should they look to build their revenue to be in line with the deals of Manchester United, Chelsea and most recently, Manchester City.

Kit manufacturers in premier league

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December 4, 2017

Financial Football News Round-Up Edition 3

Financial Football News Weekly Round-Up Edition 3

Here is your weekly financial football news round-up to keep you up to date with all things financial football! This is your round-up for the week commencing 27th November 2017, featuring the Champions League, Manchester City, the London Mayor and Celtic. Stay tuned for further analysis of these developments over the coming week.

Pay day for Eagles as Allardyce Flies North

Allardyce this week joined Merseyside strugglers Everton on 18-month contract. Everton have been lifted by the announcement, recording 2 wins since Big Sam was given the job to move up the table. Also lifted by the news was Crystal Palace owner Steve Parrish, who’s club will net £2m from the deal with Allardyce triggering a clause having moved to another club after his resignation in the summer, supposedly to retire.

Santander Banks Champions League Deal

The Santander Bank is to become an official sponsor of the UEFA Champions League from the 2018/19 season for 3 years, joining Heineken and Nissan as part of commercial sponsorship process currently ongoing for the next 3 seasons. This is a change in sporting direction for Santander, with the deal ending their 11 year association with Ferrari in F1 racing.

West Ham, There is a New Mayor in Town…

And we are not talking about Moysey! Sadiq Khan will from this week take control of the operation of the London Stadium in a bid to get a grip with the stadium’s finances. The London Stadium deal agreed with West Ham under the former Mayor Boris Johnson’s watch, looks set to cost taxpayers £24m in 2017-2018, with West Ham paying just £2.5m-a-year to rent the 60,000 seater stadium. More analysis to follow…

Thai Airways Fly to EFL

The English Football League (EFL) have announced a season-long sponsorship deal with Thai Airways, giving the airline a large stadium presence for the EFL Play-off finals at Wembley, as well as the Carabao Cup final. No figures have yet to be announced as the EFL continue to build their presence overseas. More analysis to follow…

Celtic Looking to Invest Down Under

Puma pounce to sign Manchester City

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November 21, 2017January 26, 2018

Manchester City are Primed for Success

Manchester have announced an agreement with Amazon to produce a multi-episode, behind-the-scenes documentary following the progress of the team over the season. It will be aired on Amazon Prime Video with the documentary to be aired in 2018. The deal will net Manchester City £10 million in revenue.

The multi-episode series will “follow the Club throughout the current campaign, offering fans an insight into the day-to-day workings at the City Football Academy and the lives of Pep Guardiola and his players.”

Manchester City CEO Ferran Soriano was undoubtedly delighted: “Amazon Prime Video is the perfect home for a ground-breaking project that will offer a unique and authentic inside view into Manchester City’s season like never before.

Amazon have entered into similar deals across varying sports including Tennis, American Football, Rugby and F1 as they look to break into the sporting industry, with the company due to stream 10 NFL games this season. This has already met opposition with Sky Sports voicing concerns over the rights of this deal clashing with their £4bn TV rights. There will be strict access regulations to appease Sky and BT over their rights.

Netflix are also venturing into the sporting space with TV deals signed with Juventus and Boca Juniors, which will follow a similar format to that of the Manchester City deal.

With the Premier League deal due for renewal in December it will be interesting to see if the likes of Netflix and Amazon bid for a share of the games to compete with the powerhouses Sky and BT. Manchester United Vice-Chairman Ed Woodward thinks so, saying “Absolutely, I think they will enter the mix.”

We here at Financial Football News will keep you updated on developments of these technology giants ventures into football and all other thing football and finance!

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November 20, 2017November 24, 2017

Financial Football News Round-Up Edition 1

Introducing your weekly financial football news round-up to keep you up to date with all things financial football! This is your round-up for the week commencing 13th November 2017, featuring Manchester City, Arsenal, the FA and Swansea. Stay tuned for further analysis of these developments over the coming week.

Manchester City are Primed for Success

Amazon Prime Manchester City

Manchester have announced an agreement with Amazon to produce a multi-episode, behind-the-scenes documentary following the progress of the team over the season. It will be aired on Amazon Prime video with the dates yet to be disclosed. The deal will net Manchester City £10 million in revenue. Read more here …

Arsenal and Money Transfers – A Match Made in Heaven ?

Arsenal WorldRemit Sponsorship Deal

Arsenal have agreed a sponsorship deal with leading innovative money transfer company, WorldRemit. The deal will provide WorldRemit with player access, Matchday LED sponsorship exposure across domestic games as well as social media access to reach out to all of Arsenal’s fans. Read more here …

Swansea are Taking the Liberty

Swansea have agreed to lease the Liberty Stadium from Swansea City’s Council for £300,000 a year. The deal will entitle Swansea to a share of any future commercial sponsorship deals with the stadium. As part of the deal, Swansea are committed to creating two 3G pitches in the city every 5 years. They will continue to share the stadium with the Rugby team Ospreys. Further analysis to follow…

Life’s Good for the F.A.

Football Association and LG Sponsorship Deal

The F.A. have terminated their sponsorship with Ladbrokes and replaced them with electronics giants LG. LG will kit out Wembley and ST George’s Park with state-of-the-art products to enhance the hospitality space. As part of the deal, LG will gain brand exposure with LED boards for all England Men’s games at Wembley as well as Emirates FA Cup games. The deal is worth a similar amount to the £4m a year deal signed last year with departing sponsors Ladbrokes. Further analysis to follow…

First Eleven – EFL Extend Deal with SkyBet

The English Football League (EFL) have signed a new 5-year sponsorship with SkyBet, running until the close of the 2023/24 season, taking their partnership to 11 years. The finances have not been disclosed, however Skybet announced it will be a 20% year on year increase from the 2019/20 season. Further analysis to follow…

Premiership TV Deal to get Bigger and Bigger

190 league games for next premiership TV rights deal

The Premier League have announced that the new TV deal for the 2019/20 season, due to be auctioned in December, will be for 190 games – half of all premier league games. The last deal, signed in 2015 for 2016 – 2019, was worth just over £5.1 billion, which was 70% increase on the previous deal. Sky and BT will compete, potentially among others for the TV rights. Further analysis to follow…

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November 15, 2017November 15, 2017

Manchester City are now fuelled by Gatorade

Manchester City announced the signing of Gatorade as their official sports nutrition partner on a multi-year deal. The terms of the deal have not yet been disclosed, however Manchester City’s form this season will mean the deal will be fairly lucrative to the team.

Sam Erith, head of Manchester City’s Sport Science was commented on the deal: “We’re so excited about going into this partnership with Gatorade. The Gatorade Sports Science Institute can offer us a number of innovative ideas and concepts to help prepare our athletes better and help them recover quicker for games.”

The deal will involve Manchester City’s sports scientists working directly with Gatorade to optimise fitness and recovery of Manchester City players to ensure they are ready for the title race this seaon due to “Gatorade’s knowledge and commitment to sports nutrition through innovative scientific research speaks for itself”.

As part of deal, Gatorade will also recieve sponsorship areas within the Etihad Stadium as well as exclusive behind-the-scene videos and social media content that will give exposure to the PespiCo-owned brand among the Manchester City fans and travelling supporters.

Gatorade commented that “We look forward to a strong partnership with Manchester City by providing the team’s sports health and performance professionals with a variety of sports fuelling solutions to help maximise performance through customised sports science services.

It will be interesting to see whether similar deals occur elsewhere. Liverpool currently have a partnership with Science in Sport as of 2016. Clubs will have to balance the commercial success of a well-known brand with the quality of sports nutrition provided, with companies such as Gatorade not considered particularly healthy due to their sugar levels. However the drinks provided to athletes may differ to the general market.

This is still a relatively untapped market in football, with the majority of clubs yet to have a commercial sports nutrition partner. We here at Financial Football News will keep you up to date with any new sports nutrition deals and the finances behind them as and when they become available, stay tuned.

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September 24, 2017April 14, 2018

Financial Fair Play Series – Jumping Through Loops

Welcome to the second instalment of our Financial Fair Play Series where we will discuss the key issues for clubs in complying with Financial Fair Play going forward and the loopholes that can be used to exploit the Financial Fair Play rules.

The key message from UEFA for Financial Fair Play is ‘living within your means’, spending should not exceed income by more than a minimal amount (currently EUR 5m over a 3 year period). This puts budget constraints on clubs looking to grow, as these clubs can only increase spending if income is growing. Normally, income only grows if spending grows first (if spent wisely), making the whole situation similar to a dog trying to catch its tail. Think Manchester City, their revenue is only just starting to catch up with their spending now after their successes have led to increased income from sponsors, merchandise, prize money and gate receipts.

As the graph above shows, Manchester City had an initial sharp increase in spending which was lagged by income with the % rise catching up later.

Without that initial large spending, the subsequent rise in income would not have occurred and Manchester City would not have the large income figures they have today.

In a Financial Fair Play world, such spending would not have been allowed and Manchester City would not have been able to compete with the big boys at that time, leading to one less big team in the Premier League than we have currently.

Southampton, a club who are in the aspiring bracket of football clubs have identified this as a problem. Cortese, the club’s chairman said “we will grow our commercial income but if we cannot close the gap commercially, which will probably be the case for all time, we have to use other aspects [such as youth development].”

Big clubs income usually grows quicker than smaller clubs meaning the gap will grow bigger over time. Smaller clubs are then posed with the difficult question of how to make their income go further. The options are clear: spend on youth development, make shrewd signings or become commercially astute to increase income through shirt sales, sponsors and match-day sales.

Did Someone Say Loopholes?!

On to the most controversial aspect of Financial Fair Play, loopholes. Due to the tough constraints on clubs to comply with Financial Fair Play, many free-spending clubs have sought ways to by-pass the rules or at least make them easier to comply with.

There are many ways to comply without seeking loopholes, some spending is exempt from Financial Fair Play such as spending on youth development, community development and women’s football, all of which can help boost income (discussed here).

Good youth development can bring through talented youngsters who can improve the club’s performance on the pitch, helping to increase prize money, shirt sales and match receipts, or through selling them for large fees.

Community development can help enhance the fan base, increasing match day receipts and shirt sales.

Women’s football is becoming more and more popular, meaning a good women’s football team can bring in larger revenues than ever before.

Financial Fair Play relevant income and expenses

Transfers are also key to complying with Financial Fair Play. Profit on player sales is calculated differently to the straightforward sale value less cost (for me details click here). Some players with low book value can hence be sold at significant fees to allow for spending to increase.

However these options are all long term, the benefits will not be seen immediately which in a modern football world where patience is no longer a virtue, is not good enough for footballers, managers and owners. Meeting Financial Fair Play rules in the short term when spending is high is a challenge, many clubs have used related parties to boost income.

Related parties are any companies with strong links to the owners of the clubs, these companies can be used to bring in money to artificially pass Financial Fair Play.

UEFA allows related party transactions as long as they are at fair value, such that if they were not related, a similar price would be charged. So for instance, Etihad have a £350m, 10-year contract to sponsor Manchester City. To see whether this at fair value, UEFA would compare this funding to similar deals where clubs were not related to sponsoring company with a similar stature to Manchester City at the time of the agreement. Newcastle also have a similar arrangement with their stadium named the Sports Direct Stadium, a company owned by their owner Mike Ashley.

There are obvious difficulties in measuring fair value as there are not always similar transactions from other clubs to compare, and the club can always argue their case that it is a fair representation. This makes related party transactions a significant difficulty for UEFA when applying Financial Fair Play rules. Ex-Chelsea Chairman Buck Buck is hopeful that such issues do not arise: “Uefa now has to wrestle with third party sponsorships. We are all hopeful Uefa will apply these rules in a fair and equitable manner.”

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