Front-of-Shirt sponsorship in European Soccer - Short Version
by Jake Kemp
This feature includes samples of analysis from Sportcal's 2020-21 European Club Soccer Front of Shirt Sponsorship Report. In the report, Sportcal has analysed 244 Front of Shirt sponsorship deals across the top leagues in Europe’s top 15 soccer nations, looking at the impact COVID-19 has had on the industry and potential future trends.
2nd November 2020, 11:10

Executive Summary

1. European soccer remains one of the biggest commercial markets in global sport, with FOS sponsors paying a premium to side with the biggest teams
- Collectively, across the top 15 European soccer leagues, front-of-shirt (FOS) sponsorship brings in an estimated $1.44 billion annually.
- This combined worth gives the 15 leagues an average taking of $96.28 million and a team average across all leagues of $5.62 million.
- Real Madrid currently boast the biggest FOS contract in European soccer, with their deal with Emirates valued at $81.78 million a season.

2. English clubs stand as the most popular in Europe, both online and with FOS commercial partners

- Despite the two most followed European teams being based in Spain, the largest overall social media fanbase belongs to the English Premier league with a collective 529.48 million followers.
- Premier League clubs also rake in the most money from FOS partners, bringing in an estimated $409.31 million a season.
- Manchester United continue to boast the most financially lucrative FOS contract in the Premier League, with their deal with Chevrolet worth $64.53 million a season expected to come to an end at the climax of the 2020-21 season.

3. European soccer has a wide commercial appeal with 23 different sectors actively involved across the leagues this season 

- The travel industry is set to invest the most money in FOS contracts this season, spending a combined $322.15 million.
- Despite the ethical questions surrounding the involvement of gambling brands in elite soccer, the gambling and gaming sector will again stand as the most active in terms of volume of deals – with 40 FOS partnerships this season.
- Dubai based airline brand, Emirates will be the most visible brand across European soccer this season, with their logo due to appear on five different teams across five different domestic leagues this season.


FOS Report

- Of the 257 teams across the 15 leagues, there are 231 with FOS partners (across 236 deals) which collectively generate $1.44 billion, at a league average of $96.28 million and a team average of $5.62 million. 
- The Premier League this season will rank as the most financially lucrative, raking in a combined $409.31 million across its 20 teams, at a team average of $20.47 million.
- The 257 teams across the leagues have a combined social media following of 1.64 billion, at a league average of 109.57 million, and a team average of 6.39 million.
- Emirates are the most actively involved brand across European soccer, with 5 individual team deals, across 5 different national leagues – England, France, Italy Portugal & Spain)
- In total there are 211 unique brands which hold a presence through FOS sponsorship. Of these brand partners, only 17 boast more than one deal, whilst only 11 of these are active across more than one league.
- From a social media standpoint, the Premier League currently boasts the biggest online profile by some distance, with its 20 teams boasting a combined following of 529,483,631. Despite the English leagues overall greater popularity, its is Real Madrid and Barcelona which hold the largest combined following, at 236 million and 225.58 million each respectively.
- Outside of the top five domestic leagues (from England, Spain, Germany, Italy & France) the Turkish Süper Lig is the most followed European league on social media, with a combined team following of 73.76 million.
- The lowest followed online of these 15 leagues is the Czech Fortuna Liga, with a team league average following of 75,783
- The Russian Tinkoff Premier League this season will boast the competition with the longest serving FOS partners across its teams, with the team average FOS partnership in that league standing at 9.14 years.
- At a team average of $344,706 the Czech Fortuna Liga boasts the lowest estimated FOS sponsorship deal.
- There are 26 teams across the 20 leagues which will not have an FOS partner for the 2020-21 season.
 

Impact & Potential Impact of COVID-19

Sponsorship across European soccer has been a booming market in recent years, with brands eager to reach an increasingly global audience, especially for the most popular leagues. The increase in revenues has largely come from brands outside of the domestic markets, with audiences in the United States and China utilising the front of shirt inventory as a means of reaching their domestic audiences. With a greater number of foreign owners across the world of football, relationships arein some cases pre-existing between clubs and target brands. Before COVID-19, the reality was that the huge values associated with Front of Shirt deals were set to continue at the same rate, if not increase. This was evidenced by two crucial deals signed before the seriousness of the pandemic was widely known, the first of which saw Chelsea agree a fee of $52.49m with mobile brand 3, the same rate as per their previous Front of Shirt deal with Yokohama Tires, on 24 January 2020 while French club Lyon saw an increase its income replacing partner Hyundai, who had committed an estimated $8 million per season, with airline Emirates and signing a new deal worth $21.68 million a few weeks later on 6 February.

The impact of COVID-19 on European soccer has been profound, as is the case for most industries and sectors. The pandemic has seen football clubs and leagues react differently, with a number of leagues forced to cancel their remaining fixtures, whilst others moved games behind closed doors in an effort to complete the 2019-20 season – a trend which has since continued into the new 2020-21 season, and could plausibly be in place for the duration of the whole season. In moving its games behind closed doors, clubs across leagues are expected to take a huge financial hit to revenues over the next 12-24 months. While costs (wages, ground maintenance etc.) remain largely the same, the loss of fans in stadiums has meant a major source of revenue, ticket sales, is no longer available. While estimates vary, the Premier League and associated teams are looking at collective losses in excess of $881m over the course of the 2020-21 season, at an average loss of $33.86m per matchday. Whilst bigger clubs may have the bigger finances to combat these losses, the reality is that the bigger clubs with bigger stadiums will also be the biggest losers in regards to lost matchday revenue, with Manchester United reported to have generated $141 million from this source over the course of the 2018-19 season. 

The impact of a global pandemic on team and league finances continues to have a trickle down effect across other business areas, and Front of Shirt sponsorship is no different in this respect, with brands now analysing their multi-million dollar deals with soccer teams and assessing its value and their return on investment. With no live audiences, the games are instantly losing potentially tens of thousands of live fans to whom Front of Shirt partners can advertise and develop their brand presence. Furthermore, the games without an audience do not replicate the same level of entertainment or atmosphere, which in turn makes the package offered by clubs less attractive to partners. Any potential loss or clawback of media rights payments by global media broadcasters, which themselves can represent a substantial source of revenue, can also hinder the sponsorship packages being offered, particularly across leagues with a greater global portfolio of sponsors such as the Premier League and LaLiga. For example, much of the value would have been lost for a number of Premier League teams from their Front of Shirt partnerships that have interests in Asia, had the league not been able to replace its Chinese broadcasting rights with Tencent after terminating its deal with PPTV, the Chinese OTT platform at the end of the season due to missed payments. For many brands, such as Chinese bookmaker Fun88, its deal with Newcastle United buys them a presence and coverage in its main Chinese and Asian markets, and had the league been unable to sell its rights in China, the partnership with Newcastle United losses significant value and appeal.

The ongoing reality of the global situation is that virtually every business has been affected financially in some way, on a varying scale, with some such as the travel industry having been brought to its knees. With the number of businesses unable to survive the pandemic increasing, it seems only logical that all brands will re-assess its business strategy and introduce cuts across the company for which marketing spend is most often the first to be sacrificed, which in turn will likely lead to renegotiated terms of partnerships or the complete termination of existing contracts. 

Whilst there is much pessimism surrounding soccer finances, it is expected that the bigger domestic clubs, particularly those which are set to be involved in European competitions this year, will be able to retain huge continental and global appeal, and thus be able to agree highly lucrative Front of Shirt contracts. Those that will suffer, will be those clubs of a smaller size, and so should expect to see the value of its shirt deals reduced over the coming months and years. Another area of potential change for the way in which these types of deals are signed will likely be see a reduction in length of contracts. Previously, brands would have been looking to secure Front of Shirt partnerships on a longer term basis, as a brand would be looking to establish and build an affiliation with the club and its fans, leading to a more entrenched relationship. However, the lack of security in the market and future uncertainty for all brands in a post-pandemic world suggests that brands should be more cautious when entering into these deals moving forward, and as such will look to strategize on a more short term basis. This expected trend can also have mutual benefits for both partner and club, with brands not having to make uncertain lengthy commitments, whilst clubs may then also be able to maximise the value of its deals, as oppose to signing at a reduced rate over a longer period of time. 

For the 2020-21 season, despite the financial disruption to the global economy brought about by the virus, the collective value of Front of Shirt deals across the 15 European leagues analysed saw revenue increase by $47.35 million a year amongst the new deals signed, in relation to the value of the previous Front of Shirt partnership held by each club. Whilst the majority of these deals have retained a similar value, there are a few standouts. From a commercial growth perspective, the deal between Emirates and Lyon shows the clubs Front of Shirt value growing by $15.37 million a year. On the other side of things, LD Sports’ late termination of its deal with Southampton meant the English side had to act quickly to bring in a new partner, and as such took a drop of $2.97m a year in its value. However, it must be reiterated that the full economic consequences have not fully come to light, and as such, many of these active Front of Shirt deals in Europe will be subject to change or re-negotiation, in which teams across all leagues could realistically see their Front of Shirt revenues drop at various points in the season. 


Number of deals by Sector 

 

In total there are 23 sectors that hold an active Front of Shirt partnership in European soccer for the 2020-21 domestic league season. Despite the controversy around allowing gambling and sports betting brands on soccer club shirts in Europe, the sector stands as the most prominent partner sector in terms of deal volume, with 40 unique deals across all leagues looked at, giving it a 16.88 per cent visibility. The sector is visibly involved in 11 of the 15 leagues, with only the Danish, German, Italian and Dutch leagues not holding any Front of Shirt partners from the sector. The reason for the sectors higher level of involvement in Front of Shirt partnerships in certain markets will be driven by the legislative situation (Front of Shirt partnerships with gambling brands are banned in Italy, for example) and market presence, given the sports obvious ties to the gambling industry. For example, a healthcare brand partner has no obvious direct link to soccer, however a sports betting brand is directly affiliated with that market, and their abilities to offer odds and promotions in the sport are more likely to appeal to a soccer fan/spectator.

Despite the high number of deals associated with the sector, when analysing the data for the amount of money spent on its deals, gambling and gaming brands rank as only the fifth highest sector spenders at $124.78 million. This ranking comes despite the sectors rather large presence in the two biggest leagues in European soccer – the Premier League and LaLiga, for which it has 15 active deals, some 38.46 per cent of the market share across these two leagues. On the whole, this type of sponsorship has the ability to offer any and all potential brands access to a large audience, an audience not easily replicated elsewhere in these markets, and as such represents a big opportunity for brands to build greater market presence. 

Money Spent per Sector 

Of greater concern to clubs and leagues in the short term due to the impact of COVID-19 is that the highest spending sector for Front of Shirt partners in European soccer this season is the travel industry, which accounts for over $322.15 million in revenue annually. Whilst a number of these deals signed in this sector are involved with state backed companies and are expected to struggle less with the impact of COVID-19, the reality of it, is that the travel industry as a whole has been one of the most severely hit by the global pandemic, as cross country travel has been heavily restricted to stop the spread of the infection. On top of this, there is no clear end in sight for when the industry can expect to a see return to normal, whilst consumer confidence in travelling abroad or throughout a country potentially staying low until the introduction of an effective vaccine. 

These sector-wide issues mean that a number of new marketing and business strategies will need to brought in to help counteract the losses, and as such there is a strong possibility that some of these deals will no longer be active come the end of the season. This could represent a $322 million hole in European soccer, whilst it could also be expected that these deals do not hold the same value moving forward, with brands perhaps looking to renegotiate financial terms. Additionally, in the event of a brand completely voiding its Front of Shirt contract, it is plausible that any renegotiated Front of Shirt deal mid-season would see its value drop, causing teams to lose even more money than it previously expected to generate this season. On the flip side, this may represent an opportunity for some brands who have not been as badly affected by COVID-19 to pick up Front of Shirt rights at a lower value than they are worth.

Comparing League Values


 

The graph helps highlight the strength of the Premier League across all 20 of its teams, with the value of its Front of Shirt sponsorship deals significantly higher than any other European league. This gap has been created by the strength in depth that is enjoyed by the English league, with a greater number of the biggest teams affiliated, whilst even the smaller and lower ranked teams hold significant commercial pull. Somewhat surprisingly, LaLiga despite being regarded as the second most lucrative market, in terms of total money generated, actually boasts a smaller team value average than the German Bundesliga. This can be explained by the dominance of the market by its two biggest teams – Real Madrid and Barcelona, whilst in the German Bundesliga, there is a stronger commercial appeal outside of its dominant national club – Bayern Munich.

The big five leagues of England, Spain, Germany, Italy and France unsurprisingly account for the five most lucrative Front of Shirt markets in Europe in terms of combined value. This said, the value of the deals in the Portuguese league makes it the nearest challenger, with an estimated value in excess of $114 million, putting it closer to the income generated in France than any lower valued league, and even above the French league in regards to the average team Front of Shirt value. This however may be a bit misleading, given the number of teams that have signed higher value deals which offer Front of Shirt rights as part of larger club-specific broadcasting deals.  

At an average deal value of over $20.5 million, the disparity between the Premier league and the rest of Europe is highly evident when highlighting that this figure puts its average team deal value at over 53 times larger than the Czech league.