Football scores own goal

Rising costs have taken the shine off football sponsorship, just as the FA raises its tie-in prices. Richard Gillis reports.

First Vodafone pulled the plug on Manchester United, then Nationwide Building Society decided to end its £5m-a-year sponsorship of the England team. It seems football sponsors are not happy.

While Vodafone's move appears to be the result of a switch in strategy, Nationwide's calls into question the value to sponsors of the Football Association (FA). At a time when the governing body is raising its prices in line with other football brands, sponsors may well have had enough of the constant uplift in costs.

Nationwide currently sits alongside Pepsi, McDonald's, Carlsberg and Umbro as the FA's key commercial pillars. Each has exclusive rights to an area of the FA's portfolio, plus an equal share in exploiting the England team and the FA Cup. But the period of exclusivity, which allows an incumbent to negotiate a new contract free of competition, is over. The FA is now at liberty to sell sponsorship opportunities on the open market, and the price of the new packages is thought to be £7m-£9m a year.

This is happening against the backdrop of a changing FA commercial structure, after chief executive Brian Barwick began a review six months ago.

Uncertain future

The new arrangements have yet to be decided, according to an FA spokesman, who would not comment on whether there would be an increase in sponsorship packages following the 2006 World Cup in Germany, which marks the end of the current four-year contracts.

Peter Gandolfi, Nationwide head of brand marketing, says the success of the company's recent ad campaign was a key factor in its decision not to renew. He believes the football sponsorship deal delivered a limited message and only reached a small proportion of the public compared with TV advertising.

'As a financial services brand, our message is often quite complex,' says Gandolfi. 'Concentrating more effort on television advertising will allow us to reach a much wider audience, with a controlled message and richer content. Our research shows we are obtaining more brand awareness, recognition and consideration from our advertising than we received through football sponsorship alone.'

This marks a considerable turnaround by Nationwide. Gandolfi has been the architect of the company's football-led marketing. In addition to the FA deal, the company has sponsored the FA Cup and the Football League.

It remains the sponsor of the Nationwide Conference, is the official partner of the Scotland team and sponsors the Wales and Northern Ireland teams.

'We believe this partnership has run its course,' he says. 'As a mutual organisation, Nationwide needs to ensure its activities are in the best interests of its members and represent value for money.'

So, does an FA sponsorship deliver value? Few analysts doubt the England team is a desirable sponsorship property. It offers the opportunity for brands to establish a marketing platform around the major international tournaments - the World Cup, the European Championships, and the respective qualifying stages. In addition, the FA Cup remains a highlight of the sporting year, despite its diminished prestige. Each of these events enjoys substantial live terrestrial TV exposure due to the FA's deal with the BBC, which runs to 2008.

However, two issues are likely to be key in talks with prospective sponsors: the FA's role in selling sponsorship for the new Wembley Stadium, and the extent to which sponsors are allowed access to the stars of the England team.

Logistical problems

Wembley National Stadium, which is part-owned by the FA, has unveiled Microsoft as the first of four founder partners that will pay £2.5m a year until 2010. Each will have a presence at home England games, and at the semi-finals and final of the FA Cup. Npower has taken a supplier category sponsorship and another founder partner is expected to be announced before Christmas.

The FA needs to establish clear water between the rights it offers partner sponsors and those sold for Wembley. For example, with Microsoft already in place at the stadium, would rival technology brands be able to sponsor the England team? Similarly, Carlsberg's sponsorship of England would raise logistical issues if the FA were to try to sell stadium pouring rights to Budweiser.

More broadly, Wembley's sponsorship plans raise the level of marketing noise around the England team and make the task of creating a meaningful association with the game more difficult for each brand.

England team sponsors are offered access to the players, involving personal appearances, hospitality opportunities and use in PR programmes. But the time granted by big names such as David Beckham or Frank Lampard is severely limited and is reported to have been an area of tension between sponsors and the FA, although the FA refutes this.

Certainly, the association is bullish about its chances of securing sponsors.

'There is no shortage of people knocking on our door,' says a spokesman.

But the FA's dilemma is part of a wider issue in football, one that will become increasingly obvious outside of sponsorship deals for the World Cup, European Championship and Champions League: sponsors are no longer willing to accept substantial price hikes without seeing additional value in the package they are buying.

DATA FILE - FOOTBALL SPONSORSHIP World Cup Official FIFA partners 2007-14 Price £162m-£190m Sponsors Sony, Hyundai, Adidas, Coca-Cola Champions League Six official partners 2006-10 Price £8m a year Sponsors Heineken, Sony, Vodafone. MasterCard, Ford and PlayStation are signed up to 2006. England team & FA Cup FA pillars 2002-06 Price £5m-£7m a year Sponsors Pepsi, McDonald's, Carlsberg, Nationwide, Umbro (to 2010) Chelsea FC Shirt sponsor 2005/6-2010/11 Price £10m a year Sponsor Samsung

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