Last summer Liverpool renewed their main front of the 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 runners-up in the Champions League and runners-up in the Premier League .
Liverpool, whose relationship with Standard Chartered will have reached 17 years at the end of the current deal, which runs until the summer of 2027, had plenty of leverage when they opened talks last summer and had sought expressions of interest from other firms in a number of different of markets to establish how much they thought could be achieved,
The season that just ended was considerably tougher. Finishing 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 by finishing fifth in the Premier League. This means the Reds will be participating in the Europa League in 2023-24; a competition with less visibility for commercial partners.
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However, none of Liverpool’s existing commercial deals will be affected by missing out on the Champions League and the expectation is that should the club complete a summer of successful transfer business and rectify some of their most pressing issues from last season, they will stay back in the mix for honors,
Fair market value has been a term that has entered 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 income by making the most of simpatico -relationships that exist with large companies in the golf nation. Last week, Newcastle, who will play Champions League football next season, entered into a multi-year deal with Saudi event company Sela. The value of the agreement is £25 million. – a sharp increase compared to the £6.5 million per year which the Magpies received from outgoing sponsors Fun88. Sela is majority owned by PIF and the deal is likely to be dealt with by the Premier League.
Leading sponsor publication The sponsor have produced analyzes to determine the fair market value of the front of shirt sponsorship deals for the Premier League’s 20 member clubs based on their current situation.
Sponsor’s research methodology to determine the fair market value of each club’s sponsorship combined real sponsorship deals reported by The Athletic. The sponsor’s scorecard evaluated each team across three categories of strategic importance to a sponsor brand: reputation, awareness and contribution to society, with a stronger emphasis on awareness measures.
Reputational 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 levels of fan engagement. The contribution category evaluated a club’s behavior towards fans, the local community, the environment and its role in the development of the game.
The results of the analysis suggested that Liverpool were beyond their current fair market value with the £50m deal with Standard Chartered, putting the club’s fair market value at £37.8m – a difference of £12.2m, the third biggest on the list. The clubs that had seen fair market value fall significantly below the current deal value were those that had struggled badly and performed well below expectations this season – Tottenham Hotspur and Chelsea.
Chelsea’s fair market value was set at £16.9m. due to the lack of European football next season and the resulting poorer fire visibility. That’s a figure well below the £40m Three was prepared to pay. As for Spurs, who missed out on the Europa Conference League for next season, their current fair market value of £26.9m is GBP, which is 13.1 million.
The club that sat at the top of the list was, quite predictably, Premier League, Champions League and FA Cup winners Manchester City. The sponsor had City’s current fair market value for front shirt sponsorships at £72.8m, £5.3m. more than the current amount the club gets back from its deal with Etihad Airways. That figure is £18.3m. more than the fair market value of Manchester United, second on the list (£54.5m) and £35m higher than Liverpool in third place.
The study used a valuation at the time and does not seek to predict future results or European qualifications. As a result, sponsors and clubs may place a higher or lower value on the sponsorship based on their own predictions of future performance.
Liverpool have grown their commercial activities significantly in recent years and the strength of the brand has grown significantly across the globe, meaning the club’s fair market value outlined in the analysis by The Sponsor will not be in line with what commercial bosses at Anfield would expect to achieve in the market. The strength of not only the club’s size and success, but also a strong track record on brand activation and how brands can achieve more than just visibility, is among the best in football in the world.
Earlier this month The Brand Finance Football 50 2023 Report was released detailing both the brand value and brand strength of the top 50 clubs in world football.
Liverpool’s brand value was fifth in the table at £1.173bn, topped for the very first time by Premier League champions Man City at £1.299bn. However, despite the brand value being less than City, Man United, Real Madrid and Barcelona, the strength of the red brands came out as number one in the Premier League and only number one behind Real Madrid globally.
Brand Finance determined the relative strength of brands through a balanced scorecard of metrics that evaluated marketing investment, stakeholder equity and business performance. Through these metrics, Liverpool’s firepower came in at 93.3 out of 100 to give it a AAA+ rating. Only Real’s firepower is higher (94.8), with Barcelona, Man United and Man City making up the rest of the top five.
But how does brand power last 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 others European leagues and it’s a ripple effect.
“Every big Premier League club has a competitive advantage against even Real Madrid and Barcelona. Hopefully the big clubs will remember that it is the strength of the collective that is what pushes the Premier League and why it is where it is is, it’s not just down to Liverpool, Manchester United and Manchester City, it’s down to agreement, the strength of the group and the culture of British football.
“Being in the Premier League gives you the 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 beginning to erode into the Premier League’s share of the vote internationally.
“There are so many different ways to create positions around football clubs. The one consistent metric they all flow back to is audience, globality and fan base. If you ignore the numbers that are pushed around how many fans clubs have, because the methodology behind it is sometimes quite flimsy, and you look at a comparative level, Liverpool and Manchester United are still significantly ahead of every other Premier League club and in the company. of Real Madrid and Barcelona. You have four superbrands in terms of share of voice globally.
“What you’ve seen the clubs outside of the four do are different things to differentiate themselves and their brands. In the case of Manchester City, City Football Group has been successful in terms of its network of global clubs, its investment in 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 is not as big as the super brands.”
The arrival of Jurgen Klopp, says Haddad, came at the right time for Liverpool. The style of football and accompanying silverware helped engage new fans in new markets at a key time when the sport was reaching new audiences in large territories.
“Liverpool is in a unique position where that kind of global fan base has always been there and never eroded in some difficult years and has certainly seen a new boost,” explained Haddad. “Football in some markets is still growing in popularity, such as China, India and the United States, so it’s probably a good time to be successful.”
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