Last summer saw Liverpool renew their main front of shirt sponsorship deal with Standard Chartered for a fee believed to be £50m plus.
It was a deal struck on the back of the Reds coming close to what would have been an unprecedented quadruple, winning both the FA Cup and Carabao Cup while finishing as runners-up in the Champions League and second in the Premier League.
Liverpool, whose relationship with Standard Chartered will have reached 17 years by the end of the current agreement, which runs until the summer of 2027, had plenty of leverage when entering into negotiations last summer and had sought expressions of interest from other firms in a variety of markets to ascertain just how much they felt could be achieved,
The season that has just come to a close was considerably tougher. Exits in the fourth round of both the FA Cup and Carabao Cup, an early knockout round defeat to Real Madrid in the Champions League and, most disappointingly, missing out on competing in Europe’s elite knockout club competition next season through finishing in fifth place in the Premier League. That means that the Reds will be taking part in the Europa League in 2023-24; a competition with less visibility for commercial partners.
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None of Liverpool’s existing commercial deals will be impacted by missing out on the Champions League, though, and the expectation is that should the club conduct a summer of successful transfer business and rectify some of their most pressing problems from last season, then they will be back in the mix for honours,
Fair market value has been a term that has come into consciousness of football fans more recently, largely driven by the takeover of Newcastle United by the Saudi Arabian Public Investment Fund (PIF) and the push to raise commercial revenues by making the most of simpatico relationships that exist with major businesses in the gulf nation. Last week, Newcastle, who will play Champions League football next season, inked a multi-year deal with Saudi events firm Sela. The value of the agreement stands at £25m - a sharp increase on the £6.5m per year the Magpies were receiving from outgoing sponsors Fun88. Sela are majority owned by PIF and the deal is likely to face scrutiny from the Premier League.
Leading sponsorship publication The Sponsor has produced analysis to determine the fair market value of the front of shirt sponsorship deals for the Premier League’s 20 member clubs based upon their current situation.
The Sponsor’s research methodology for determining the fair market value of each club's sponsorship combined real-world sponsorship deals reported by The Athletic. The Sponsor's scorecard evaluated each team across three categories of strategic importance to a sponsoring brand: reputation, awareness and contribution to society with a stronger weighting given to awareness measures.
Reputation factors included the club's history, quality, cultural relevance, and innovation, considering factors such as social following, digital presence, infrastructure and on-field-performance. Awareness was assessed through TV audience data, fan demographics and fan engagement levels. The contribution category evaluated a club's behaviour toward fans, community, environment, and its role in developing the game.
The results of the analysis suggested that Liverpool were over and above their current fair market value with the £50m deal with Standard Chartered, placing the club's fair market value at £37.8m - a differential of £12.2m, the third biggest on the list. The clubs to have seen fair market value fall significantly below current deal value were those who had struggled badly and performed well below expectation this season - Tottenham Hotspur and Chelsea.
Chelsea’s fair market value was pegged at £16.9m given the lack of European football next season and resulting poorer brand visibility. That is a figure well short of the £40m that Three were prepared to pay. With regard to Spurs, who missed out on the Europa Conference League for next season, their current fair market value stands at £26.9m, £13.1m shy of the £40m current value of the deal in place with AIA.
The club sitting at the summit of the list were, rather predictably, Premier League, Champions League and FA Cup winners Manchester City. The Sponsor had City’s current fair market value for front of shirt sponsorship at £72.8m, £5.3m more than the current sum that that club recoups from its deal with Etihad Airways. That figure is £18.3m more than the fair market value of second-on-the-list Manchester United (£54.5m) and £35m higher than Liverpool in third.
The research used a point-in-time valuation and it does not seek to forecast future performance or European qualification. Consequently, sponsors and clubs may place a higher or lower value on the sponsorship due to their own predictions of future performance.
Liverpool have grown their commercial operations significantly in recent years and the strength of the brand has grown considerably across the globe, something that means the club's fair market value outlined in the analysis from The Sponsor won’t be in line with what commercial chiefs at Anfield would expect to achieve in the market. The strength of not only the size and success of the club but also a strong track record on brand activation and how brands can achieve more than just visibility, is among the best in world football.
Earlier this month The Brand Finance Football 50 2023 Report was released and detailed both the brand value and brand strength of the biggest 50 clubs in world football.
Liverpool’s brand value sat fifth in the table at £1.173bn, with the table toppers for the very first time being Premier League champions Man City at £1.299bn. But despite the brand value being smaller than City, Man United, Real Madrid and Barcelona, the strength of the Reds' brand came out number one in the Premier League and second only to Real Madrid globally.
Brand Finance determined the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity and business performance. Through those metrics, Liverpool’s brand strength came in at 93.3 out of 100 to give it a AAA+ rating. Only Real’s brand strength is higher (94.8), with Barcelona, Man United and Man City making up the rest of the top five.
But how does brand strength endure and why is it an important metric for football clubs looking to grow their business? Speaking to the ECHO’s Bottom Line Podcast, head of commercial strategy at global sports agency Octagon, Daniel Haddad said: “There are a couple of dynamics. Number one is that we are seeing a period in the Premier League where they are pulling away from other European leagues and there is a ripple effect to that.
“Every big Premier League club has a competitive advantage against even the likes of Real Madrid and Barcelona. Hopefully the big clubs will remember that it is the strength of the collective that is the thing pushing the Premier League and why it is where it is, it isn’t just down to Liverpool, Manchester United and Manchester City, it is down to the collective agreement, the strength of the group and the culture of British football.
“Being in the Premier League gives you that foundation that protects your brand because it is the most globally watched league and it will continue to be. There is no foreseeable scenario now where La Liga, Serie A or the Bundesliga starts to erode into the Premier League’s share of voice internationally.
“There are so many different ways of creating rankings around football clubs. The one consistent metric that they all flow back to is audience, globality and fan base. If you ignore the numbers pushed out around how many fans clubs have, because the methodology behind it is pretty flimsy sometimes, and you look on a comparative level, Liverpool and Manchester United are still considerably ahead of every other Premier League club and in the company of Real Madrid and Barcelona. You have four super brands in terms of share of voice globally.
“What you’ve seen the clubs that aren’t within that four do is different things to differentiate themselves and their brands. In the case of Manchester City, City Football Group has been a success in terms of its network of global clubs, its investment into the Etihad Campus and the new music venue, which is an extension of that. These are all things that help a club where the historic global audience isn’t as big as the superbrands.”
The arrival of Jurgen Klopp, Haddad says, came at the right time for Liverpool. The style of football and silverware that came along with it helped to engage new fans in emerging markets at a key time when the sport was reaching new audiences in major territories.
“Liverpool are in a unique position where that kind of global fan base was always there and never eroded during some difficult years and has definitely seen a new boost,” explained Haddad. “Football in some markets is still growing in popularity, such as China, India and the US, so it is probably a good time to be successful.”
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