Between the Lines

"Of all unimportant subjects, football is the most important" – Pope John Paul II

New sponsor will pay even more

Posted by hakanrylander on September 17, 2008

In the early stages of this season two Premier League clubs have already encountered unexpected and potentially serious financial problems as their main sponsors have collapsed. West Ham United’s sponsor XL went bust a few days ago, and Manchester United’s backer American International Group (AIG) yesterday had to be rescued (in reality taken over) by America’s Federal Reserve. The action is intended to create some breathing space and make it possible to sell AIG assets without the panic that a total collapse would cause. It’s highly unlikely that AIG could afford or would want to continue its four-year deal with United worth 56,5 million GBP, if indeed the company even survives.

I do not, however, think that this will have serious repercussions for United. The deal with AIG was signed in 2006. At that time United were, by their standards, doing rather badly. Chelsea had just won their second successive league title, and a lot of experts were questioning Sir Alex’s ability to challenge the supremacy of Abramovich and Mourinho. Since then United have won the Premier League twice and the Champions League once. Furthermore, the Premier League in general is probably even more attractive to sponsors now compared to two years ago. In short, I believe that the market value of sponsoring United is higher today than two years ago. This could of course soon change if the crisis in the US financial system goes from bad to worse.

There could also be a short-term problem as it will take at least a few months to find a new sponsor and it is unclear how much of the 56,5 million that has already been paid.

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2 Responses to “New sponsor will pay even more”

  1. What is happening to the global interest in football?
    If I understand correctly several leagues are losing spectators. I don’t know if the popularity of football in general and premiere league in partikular is declining globally but that should also have a substantial influence the market value.
    What does the Guru predict?

  2. hakanrylander said

    My guess is that interest might very well decline in several leagues around the world as global viewers focus increasingly on England, Italy and Spain. The Champions League will evolve into a European Super League and the clubs competing in this will attract an awful lot of sponsoring. The gulf between rich and poor will, unfortunately, widen.

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