Abstract: The process by which a new shirt sponsorship was struck between SEGA Europe and Arsenal FC is described through a case study. The circumstances leading both organizations to seek out a sponsorship partner are identified. SEGA Europe was preparing to launch its new Dreamcast video console in Europe and wished to create a high-impact marketing program. Arsenal was looking for a company to replace its former shirt sponsor JVC. The case study also provides information about the sponsorship deal, the first 18 months of the partnership, and draws out some some more general lessons.
Keywords: football, Premier League, shirt sponsorship, electronics, market launch
Commercial sponsorships have become an important element in most sports. This is certainly true in English football where, since the early 1980s, shirt and kit sponsorships have generated important revenues for clubs at all levels. This article describes the development of a shirt sponsorship in the Premier League. In 1999, the European subsidiary of the Japanese electronics company SEGA Enterprises, announced that it had entered into a shirt sponsorship arrangement with Arsenal FC, one of the top English clubs. The circumstances that led to the partnership are detailed in the case study below.
The arrangement helped to relieve pressures felt by both parties. SEGA was about to launch its new video gaming console in European markets and needed to come up with a high-impact marketing program if its Dreamcast system was to seriously challenge Sony's market-leading PlayStation. SEGA's executives believed that football could play a significant promotional role for the Dreamcast and wished to partner with leading clubs in important European markets. SEGA's interest was timely for Arsenal FO, which needed to find a new shirt sponsor following JVC's decision to end its 18-year relationship with the club.
As well as describing specific organizational factors leading to the sponsorship decision, the case study identifies commercial developments in football of a more general kind, These have helped to create an environment conducive to shirt and kit sponsorship deals.
The case study provides information on developments over the first 18 months of the relationship, including SEGA's decision to get out of the video console business. The paper ends on a more general note. Five lessons for practitioners are identified and discussed: (1) the sponsorship decision process; (2) partner selection; (3) timing; (4) pricing; and (5) sponsorship results.
Although the lessons are examined in the context of football sponsorships, these almost certainly apply more generally to sports marketing.
The case study was prepared using materials drawn from documentary sources and interviews with key informants in football and sports marketing organizations, and football researchers. (1)
Football Shirt Sponsorships: SEGA Europe and Arsenal FC
SEGA Enterprises, a Tokyo-based video game company, launched its new Dreamcast console in the Japanese market on November 27, 1998. North American and European introductions were planned for September 1999. SEGA had high expectations for the Dreamcast console, envisaging that it would challenge Sony's PlayStation for market leadership. Management at SEGA's European subsidiary was developing its launch plan and considering football shirt sponsorships as one element in its marketing strategy. Why football? Because it was the number one sport in Europe and its fans demographics increasingly mirrored those for video gainers. In addition, television (TV) was broadcasting more and more football games -- often on a pan-European basis -- providing valuable exposure for companies and their brands. The UK was particularly strong for video gaming and, in late 1998, SEGA Europe management was giving active consideration to partnering with a top English football club via a shirt sponsorship arrangement. There was about a six-month window before a sponsorship deal would come into effect, and the Dreamcast launch was nine months away. In other words, there was some pressure for a decision to be made.
London's Arsenal FC was a logical football club for SEGA to consider as a sponsorship partner. Arsenal has had a long and rich history. Founded as the Royal Arsenal FC in Woolwich, Kent, in 1886, the club's name (and its nickname 'the Gunners') reflects its historical association with Woolwich, which at the turn of the 20th century was the single most important military town in England. The club moved to its present location at Highbury in North London in 1913 (Soar and Tyler, 1989). It is one of a handful of English football teams that is well known and supported around the world and in the last decade, after Manchester United, has had the single best record of English clubs. During this period it won the Football League Championship three times, the Football Association Cup twice, and the League Cup and European Cup-Winners Cup once each.
In December 1998, it was announced that Japanese electronics giant JVC would end its long-standing shirt sponsorship with Arsenal, effective June 30, 1999. This meant that Arsenal would have to seek another shirt sponsor for the 1999-2000 season, which kicked-off in late August.
The case study that follows examines SEGA and Arsenal in turn. Each organization is situated in its industry environment before attention turns to the factors that are directly related to a shirt sponsorship arrangement. The case study describes the shirt sponsorship deal that was struck as well as developments in the first 18 months of the relationship. The paper ends with a number of lessons for practitioners.
The Video Gaming Industry
In the late 1990s, three Japanese companies fought for dominance of the global video game industry. Despite its late entrance, Sony was the market leader. Nintendo and SEGA had at various times occupied the top spot but these longstanding rivals currently trailed in Sony's wake. In an industry where technology advanced rapidly, SEGA had launched its new Dreamcast video console in Japan late in 1998, and planned North American and European introductions in September 1999. Nintendo was also expected to launch a new product although no formal announcement had been made. Through new product launches, both companies expected to gain substantial ground on Sony and its extremely successful PlayStation. However, Sony itself would be launching a new product -- the PlayStation 2 -- in 2000. Product and game technology, market timing, and marketing flair were all critical to company success in this industry.
The video game industry started in the 1980s, when Atari machines and the PacMan game became household words. Like many industries, it has gone through several cycles of boom and bust, with shakeouts of marginal companies and the arrival of newcomers. The industry grew in the late 1980s when Nintendo and SEGA used 16-bit technology to develop much faster and more sophisticated games. Another period of depressed sales occurred in the early 1990s when PC technology played leapfrog and drew users away from video game companies. In late 1994, video gaming broke back when an industry outsider introduced an innovative product -- the Sony Playstation. This development changed the industry dramatically. The quality of images and sounds made possible by the technology meant that the industry was seen as selling something more than a toy. For the first time, large numbers of adult users were attracted to video gaming. Nintendo launched the N64 in 1997 in an attempt to regain some ground lost to Sony. In late 1998, all eyes were watching as the once pre-eminent SEGA launched its own innovative Dreamcast game system in Japan, based on 128-bit technology. The games industry is substantial. By the end of 1999, it was forecast that the installed base would number more than 100 million Sony PlayStations, Nintendo N64s, and Sega Saturns and Dreamcasts globally. Household penetration levels in three key markets were 50 per cent in Japan, 33 per cent in America, and 20 per cent in the UK. The value of industry sales (consoles and games) was about US$20 billion in 1999 ([pounds sterling]12.2bn) (2) -- larger than Hollywood box-office revenues for the first time ("Business", 1999)
Sony was the competitor to beat, dominating almost everywhere with market shares in the 60 to 70 per cent range. Launched late in 1994, Sony's PlayStation had proven to be a star product for the company. It was estimated that 50 million homes owned the gaming console in 1999, and that in the fourth quarter of 1998, it provided 16 percent of Sony's sales and 44 per cent of profits (Fulford, 1999) However, after four years of booming PlayStation sales, Sony saw change on the horizon. Global sales of the console for the year to March 2000 were forecast to be 17 million units, down from 21.6 million the year before ("Sony", 1999).
Sony was planning to introduce its PlayStation 2 to the Japanese market in time for Christmas 1999. Early reports suggested the new console would be a formidable competitor. Technically, the console would be able to outperform PCs and workstations. The new player would also be "backwards compatible," i.e. old game libraries would not be made obsolete by the console. This was a benefit for users, software producers and resellers alike.
Nintendo was second in most countries, accounting for much of the rest of the market. It entered video gaming in 1983 and the 8-bit Nintendo Entertainment System (NES) dominated the second generation of consoles. Nintendo also pioneered handheld games and still leads that market with the GameBoy. Its success with the NES made it slow to develop a successor and the 16-bit Super NES (and later N64) failed to meet profit expectations. Although it had not publicly announced plans for a successor to the N64, Nintendo was rumoured to be working on a console to be launched in Japan in time for the important Christmas 2000 holiday.
Convergence in entertainment
Video gaming was fast becoming a "mainstream activity", appealing to a more mature user. In the early 1990s, video consoles were primarily owned by eight- to 16-year-old males. Following the release of the PlayStation, consoles sold across a wider age range (eight to 29 years), with the average owner being 17 years old (Littlewood, 1999). The broadening in the appeal of video gaming meant that close parallels existed between the prime market segments for gaming products and football. A Sony developer in the UK described the PlayStation (and other video consoles) as follows. "It's become a lifestyle accessory. It's bought by people who've got their own disposable income, and it's installed next to the video and hi-fi, not just in kids' bedrooms" (Schofield, 1999). Reflecting this fact, in the UK (1) video game sales now exceeded rentals, (2) many major football grounds and night clubs had a game zone, and (3) Sony was preparing to open a chain of PlayStation pubs, run by brewers Scottish Courage (Edwards, 1999 )
Given the size and continued growth prospects, it was rumoured that Microsoft had designs on the US$15 billion ([pounds sterling]9.1 bn) global video-game market. Another factor was the advanced graphics capabilities of the new consoles, which were seen as challenging the future of PC-gaming and, more broadly, interactive entertainment, including the Internet and digital TV. Microsoft could not allow these markets to move away from its domination (Ward and Chang, 1999).
SEGA and the Dreamcast
SEGA had seen its share of world markets slide dramatically since 1992. Its 16-bit MegaDrive console, launched in 1989 as the Genesis in North America, was the dominant third-generation gaming-machine. However, SEGA was unable to make the transition to the next generation of player (using CD-ROM disks). The Saturn console, launched the same year as Sony's PlayStation, never met corporate objectives (Schofield, 1999). As a result of recent developments, SEGA's share had gone from about 50 per cent in the early 1990s to currently stand at little more than one per cent in the US market. SEGA fared better in the UK, where in 1997 it sold 90,000 Saturn units, worth [pounds sterling]11.7 million. This compared with Sony's 1.2 million PlayStations ([pounds sterling]162 million) and 600,000 Nintendo N64 units ([pounds sterling]84 million) (Killgren, 1998). UK market share figures for three recent years are shown in Table 1, along with software sales volumes and advertising spending.
SEGA's decline following the advent of the PlayStation created difficulties for the company. Smaller volumes of business meant there was less interest on the part of software developers in producing games. Similarly, within SEGA, declining sales meant less money could be allocated to marketing and advertising. Because of lower spending, sales plunged further and so the spiral continued. These difficulties affected corporate performance. Although SEGA earned a large percentage of its revenues from the manufacture of amusement arcade machines and operation of theme parks in Japan, its declining share of the video gaming market impacted adversely on gross sales. These fell from US$3.5 billion ([pounds sterling]2.1bn) in 1996, to US$2.9 billion ([pounds sterling]1.8 bn) in 1997, and US$2.5 billion ([pounds sterling]1.6bn) in the year ended March 1998 (Edwards, 1999).
A new start
After several difficult years, SEGA now had what it believed would be a winning combination: the newest gaming console backed by an aggressive marketing strategy. SEGA was determined to win back a leadership position in the video game market and had very high expectations for the Dreamcast system. The Dreamcast was the first gaming system to be designed around 128-bit technology and, it was claimed, enabled SEGA to offer a system that ran three times as fast as the latest arcade game and 15 times as fast as Sony's PlayStation.
Launched in Japan late in 1998, the debut of Dreamcast in North America was set for September 9, 1999. The European launch was planned for September 23, 1999. Being first-to-market had proven important in the video game market. SEGA expected to have a lead of at least one year over Sony and Nintendo with its "next generation" console. The Japanese launch had gone well, with 900,000 units sold by March 1999. The console was priced at the equivalent of US$250 ([pounds sterling]152). Initially, nine games were available for use on the console. SEGA had signed software licenses with 50 companies (Edwards, 1999). Shipments were below the target of one million consoles, with the shortfall explained by production difficulties. Despite a good early showing by Dreamcast, SEGA was expected to post a consolidated net loss of about [yen]45 billion ([pounds sterling]238m) for the year to March 1999.
Shoichiro Irimajiri, President of SEGA Enterprises, spoke of the Dreamcast capturing half the global market for gaming consoles. Industry observers were sceptical that SEGA could achieve at this level, noting several obstacles that lay in its way. First, Sony had become the dominant producer in the industry and would remain a formidable competitor. Second, SEGA had lost momentum in the market and, according to some, was not seen to be a "cool" brand. To some extent, this was due to Sony's phenomenal success. However, SEGA had been less than consistent in providing budgetary support for marketing in the past (see Table 1c). Third, success depended very much on the games available to use on the console. The technology only becomes relevant when there are great games for users to play on the machine. SEGA would need to work hard to woo software developers to support the new platform (Littlewood, 1999).
European launch of Dreamcast
In preparation for the European launch of the Dreamcast, London-based SEGA Europe made a number of management changes. Jean-Francois Cecillon was appointed CEO in November 1998, to be responsible for all SEGA Europe operations, including subsidiaries in the UK, France, Germany and Spain. Cecillon had worked for EMI Records UK and Ireland for 10 years, ultimately as President and CEO. He saw many similarities between the video gaming and music businesses -- in terms of both the consumers targeted (youth and young adults) and the rapid pace of change.
Building a strong management team and refining the marketing strategy took much of Cecillon's time in the first few months at SEGA. Giles Thomas was appointed to the new post of European Marketing Director in preparation for the launch of the Dreamcast console. Thomas was recruited from MTV Networks and was responsible for the coordination of advertising, marketing and public relations across major markets. The appointment of Thomas reflected a change in SEGA strategy for, since 1996, responsibility for marketing had been decentralized. In this period, SEGA focused principally on the UK market, with marketing elsewhere in Europe essentially run by local distributors. Other appointments were also made, principally of young managers with a background in video games, software and advertising.
Having boosted its youth marketing credentials through hiring, SEGA then set about planning the [pounds sterling]50-60 million marketing campaign to launch the Dreamcast in Europe. Two advertising agencies were signed to assist the company: Bartle Boyle Hegarty, tc deal with brand advertising; and M&C Saatchi, which was to handle other activities, including sponsorship, direct and digital marketing and sales promotion Marketing Director Giles Thomas and his staff were tightlipped about the specifics of the marketing plan for the Dreamcast However, industry members knew that the Dreamcast launch would determine SEGA's future in gaming. A games analyst at a brokerage house put it this way: "SEGA has to make this work; it has no contingency plans. It is heavily into debt to fund the marketing" (Littlewood, 1999). The failure of the Saturn console had led SEGA management to realize that image was critical to success (Curtis, 1999). The Dreamcast's launch was seen as advantageous for two reasons First, it would provide SEGA with a one-year lead over Sony and Nintendo. Second, since it had been two and a half years since the last new console was released (N64), the market was considered ready for the "buzz' associated with new tech nology.
It was in this environment that SEGA developed its plans. A clue was provided of the shape that these would take when a company spokesperson made the announcement that "SEGA is very open-minded about the marketing mix. It is looking to do things in an unconventional way." The company's approach was clarified when Thomas said: "We are here to launch a brand [Dreamcast] first, a console second." SEGA clearly wished to reverse the lingering view that the company and its brands were no "cool". The key was to make Dreamcast "famous" by linking the brand with activities and personalities that are popular with, and appeal to, youths and young adults. An early indicator of SEGA's plans was provided by the March 1999 European-wide sponsorship of the premiere of the futuristic thriller film eXistenZ, starring Jude Law and Jennifer Jason Leigh (Littlewood, 1999). Pan-European promotional plans also called for cinema ads over an eight-week period at all venues showing the new Star Wars movie The Phantom Menace, to be fo llowed by TV ads until Christmas. Because the Dreamcast console was the first to provide Internet access, these ads would stress the possibility of multi-player gaming on-line. The ads were to end with the line "Up to 6 billion players" and the voiceover "We all play games, why don't we play together." SEGA also planned to install the new consoles in 50 cinema complexes throughout the UK for consumer trial, as well as at train stations and other urban locations on the launch day (Campbell, 1999).
Another marketing vehicle that was seriously considered by SEGA was the sponsorship of football teams in major European markets. Commercial sponsorship of football events, teams and players was growing quickly in most developed nations and this fact had not escaped SEGA Europe management, who saw big possibilities for capitalizing on the popularity and drama of the game. Sponsorship deals in English football date from the early 1980s. Commercial sponsorship is different from advertising and has been defined as "... the
purchase (in cash or kind) of an association with a team, event, etc. in return for the exploitable commercial potential linked to that activity" (Meenaghan, 1983).
High-profile brands adorned the shirts of most leading English football teams. These included global brands such as Sharp (Manchester United), Carlsberg (Liverpool), Packard Bell (Leeds United), Dr Martens (West Ham United), as well as national brands such as Newcastle Brown Ale (Newcastle United) and BT Cellnet (Middlesbrough). With increasing levels of TV coverage of big league and cup games in England, as well as European competitions involving top English clubs, considerable exposure was possible. Further, as one sponsorship consultant put it, "Sport is a universal language that crosses boundaries and elicits a lot of passion. Companies want to associate their brand with such powerful passions, and sponsorship can deliver this" (Bell and Campbell, 1999).
It was expected that the Dreamcast would be launched at a retail price of [pounds sterling]199 in the UK, compared to street prices of [pounds sterling]99.99 for both the PlayStation and N64. The Dreamcast price was seen as relatively low for a new entrant. Some 10 games were expected to be available for the Dreamcast launch, including Sonic Adventure, Toy Commander, Metropolis Street Racer, Monaco Grand Prix and UEFA Striker. A further 20 games were expected in time for Christmas 1999 (Littlewood, 1999). Whether Sony and Nintendo would engage in price-cutting was unclear, although there was speculation that Sony would drop PlayStation prices to [pounds sterling]69 to counter the Dreamcast introduction.
Some industry observers anticipated that the Dreamcast would sell well up to Christmas but that sales would then fall away because European consumers would be prepared to wait for the new machines Sony and Nintendo would introduce late in 2000. Other observers were more critical: they did not see a long-term place for SEGA in the industry and argued that the company should focus on its strengths in software development and write for other platforms rather than continuing to compete as a hardware manufacturer (Killgren, 1998). SEGA's Cecillon countered these viewpoints by emphasizing that Dreamcast was a reality whereas PlayStation 2 and Nintendo's new console were "just theory". SEGA forecast that European sales would total one million units in the first year and that by Christmas 2000, it expected to "have sold 1.5 million units and to have more than 100 games. We will have a great advantage" (Edwards, 1999). Dreamcast was certainly a critical play for SEGA.
Football in England
Football had seen a resurgence of interest in England. Through the 1980s, attendance at games had declined quite sharply. A combination of factors explained this situation: an economic recession in the early part of the decade; hooliganism at grounds, and on the way to and from games; and crowded and antiquated spectator facilities. From 1987 on, the situation changed. First, a consumer boom following the recession increased leisure spending. Second, government and clubs alike took action to deal with football violence and so make football a safe spectator sport once again. Third, in the wake of the Hillsborough disaster -- when 96 Liverpool fans were crushed to death as a result of policing and stadium problems -- the Taylor Report made sweeping recommendations about safety and comfort within grounds. These included the move to all-seater stadiums and the removal of perimeter fencing.
The increased popularity of English football was also a result of TV developments. The advent of satellite and cable pay TV brought new companies into the industry, which broke the cartel of the established channels (British Broadcasting Corporation and Independent Television) and resulted in larger contracts for the right to televise more football. Thus, the TV rights to show 10 games cost [pounds sterling]2.6 million in 1983, compared to [pounds sterling]130 million for 60 games in 1997-98 (Szymanski and Kuypers, 1999). The contribution that football can make to the growth and profitability of TV channels was reflected in remarks made by Rupert Murdoch. The part-owner of Britain's largest satellite broadcaster (BSkyB) stated that "Sport overpowers film and everything else in the entertainment genre . . . Football, of all sports, is number one" (Szymanski and Kuypers, 1999). Sports programming delivered large numbers of viewers to the TV channels, which, in turn, permitted the selling of prime-time advertisi ng slots. But TV companies were not the only winners. Clubs benefited from TV in two ways: first, substantial revenues flowed from new TV contracts; and second, the greater number of games aired at prime time fuelled fan interest and participation.
Football teams generate revenues through a variety of activities. Historically, the major source of revenue was gate receipts. Over time, the combination of more diversified operations and lucrative TV contracts had reduced the importance of ticket sales (even though ticket prices had grown quite rapidly). Gate receipts still accounted for the largest stream of football club revenues -- 36 per cent of total revenues for a sample of nine Premier clubs in 1998-99. The growing importance of TV revenues is shown in Table 2.
Among nine Premiership (3) clubs, TV grew from 21 per cent of total revenues in 1996-97, to 26 per cent in 1997-98. Since these clubs had larger revenues in 1997-98, TV monies have clearly become relatively and absolutely more important for top clubs. Teams that qualified for European competitions received additional monies from televised coverage of those games.
British football clubs were at the forefront in "off-the-field" developments that have produced new revenue streams. The resurgence in football's popularity (and, to some extent, its move up-market) has attracted numerous sponsoring corporations. One type is the so-called shirt sponsor, while another is the kit sponsor. Usually, shirt sponsorship deals involved smaller amounts of money than kit sponsorships.
Shirt sponsors are sometimes referred to as club sponsors since their presence is very obvious at the club in question. As well as appearing on the team's shirts, the sponsor's name/logo was usually very much in evidence on stadium entrances, grandstands and perimeter boards, on match programs and tickets, Web-sites etc. Although M&C Saatchi Sponsorship warned that there would be a "spiral of decline in revenue for all but major clubs", Salomon Brothers stated that the shortage of quality "properties" meant that major teams would be big winners with shirt sponsors (Salomon Bros. Inc., 1997). The Football Association regulated the placing of company or product names and logos on football shirts and the relevant provision stated Such advertising may occupy an area no greater than 200 square centimetres to be calculated by measuring around the outline of the advertising..." (FA Handbook, 1999, p.226).
Manufacturers of sports clothing such as adidas, Nike, Umbro and Reebok had kit sponsorship arrangements with leading football clubs. As well as supplying free kit (4) sponsors paid clubs a base fee and a portion of replica kit sales (the latter essentially being licensing fees). There was a strong market for replica kits among children, teenagers and adults and this had become big business. Children and teenagers wore the kit when playing football and as casual wear. Some adults also wore replica shirts at home, as well as to matches. Typically, about 22.5 per cent of the retail shirt price would flow to the manufacturer and eight per cent to the club (Szymanski and Kuypers, 1999).
In addition to replica kits (5) most Premier clubs offered a full range of sports and leisure wear, as well as books, videos, jewelry and other items, sold via club shops or through catalogue operations. Sales also took place through independently owned sports shops and chains. Accordingly, retail and merchandising operations had become big business for clubs. Other growing areas of interest for many clubs included corporate seating and executive boxes, the introduction of restaurants, museums, travel services, publishing, financial services, car parking on non-match days and even hotels" (Szymanski and Kuypers, 1999). Ticketing and merchandising operations led some clubs to develop and exploit substantial fan/customer databases.
Football as business
Interest in football was rekindled and large amounts of TV and sponsorship money flowed into the game in the late 1980s and the 1990s. A different breed of owner and manager also emerged during this period. Whereas clubs had been largely owned and run as a hobby or as a service to the community, they were increasingly viewed as "for-profit" businesses in the 1990s (6). It was felt that some teams could break out of their traditional local areas and, in these cases, become national or even global brands (7). Top teams already had a fan base around the world and with increased coverage of English Premier games on local TV networks, these supporters were able to follow their team and favourite players. Geographical market expansion developments such as these opened up major possibilities for merchandising and sponsorship growth.
Considerable amounts of money were being spent to attract world-class players to top English clubs. Since there existed a strong positive link between a team's performance on the field and the club's profitability as a business, clubs attempted to assemble the best possible squad of players (see Figure 1). Competition for top players meant wage and salary costs were escalating quickly; the Premier League clubs had experienced a compound annual wage and salary growth rate of 26 per cent growth since 1992-93 (Deloitte and Touche, 1999a).
Arsenal Football Club
Mirroring developments at other top clubs, Arsenal's revenue streams had grown and diversified in recent years. Home games were invariably played in front of 38,000 fans - a mix of season and regular ticket holders. Some 19,500 season tickets had been made available in recent years (starting at about [pounds]200 each) and these have been so oversubscribed that there is a waiting list of about 10,000 names. Arsenal was considering a number of options for capturing the lost revenues from not being able to accommodate the demand for both types of tickets. The options included expanding its present ground at Highbury or building a new stadium. Arsenal generated about 40 per cent of its total revenues from ticket sales.
Arsenal had been a major beneficiary of the TV contract in recent years. It received [pounds sterling]9.7 million as its share of the domestic TV payments in 1997-98 (Deloitte and Touche, 1999a). Other revenues flowed from the sponsorships with JVC and Nike. The 18-year shirt sponsorship deal with JVC was said to have been worth about [pounds sterling]20 million to Arsenal since 1981 (JVC ends," 1998). Arsenal's kit sponsor is Nike, which had expanding interests in football and had established relationships with top clubs in several leagues in Europe, such as Barcelona, Glasgow Rangers, Inter Milan, Paris Saint Germain, and PSV Eindhoven. One report stated that Nike's kit sponsorship of Arsenal was worth [pounds sterling]40 million over seven years (Fry, 1997).
On the merchandising front, 350,000 Arsenal replica shirts were sold in 1996-97 at a price of about [pounds sterling]40 each (8). Although replica kits were the major items sold, other merchandise was sold through two Arsenal shops and a mail order operation. Arsenals mail order catalogue filled more than 60 pages. Summary financial information on Arsenal's operations is found in Figure 2 and Table 3.
Like other major teams, Arsenal had invested heavily to improve the team. In 1998-99, there were about 30 players in the first-team squad, almost all of whom had represented their country at a junior or senior level. The cosmopolitan nature of the Arsenal team was reflected by the fact that it included six Frenchmen (including Anelka, Petit and Viera), two from the Netherlands (Bergkamp and Overmars), and one each from Argentina, Austria, Liberia, Nigeria, Portugal and Sweden. The balance of the squad was British and included current English international players Adams, Keown, Parlour and Seaman.
The relationship with JVC
In December 1998, it was announced that Japanese electronics giant JVC would end its long-standing shirt sponsorship with Arsenal, effective June 30, 1999. At the time of the announcement, Arsenal's Vice Chairman David Dein said: "There is no animosity. JVC have decided to channel their energies elsewhere. It has been a marvellous relationship over 18 years and we have both wished each other well" ("JVC drops", 1998). The Arsenal sponsorship arrangement was with JVC's British subsidiary. The subsidiary's trade marketing manager stated ". . . the sponsorship has certainly done the job for us in brand awareness." However, management had decided to move the budget into mainstream activities so as to bolster JVC Great Britain's modest current advertising budget (estimated to be about [pounds sterling]200,000 in 1997). It was reported that JVC would save [pounds sterling]5 million by not renewing the Arsenal deal ("JVC parts", 1998).
As a corporation, JVC continued to believe in the value afforded by football sponsorship. JVC had been one of many sponsors of the World Cup '98 and it planned to repeat this in 2002, when the finals were to be co-hosted by Japan and Korea (9). The company was also considering being a sponsor of the national-level European Championships to be held in Holland and Belgium in 2000.
Arsenal's recent Premiership League win (1997-98) added prestige to what was already a valuable sponsorship property. Further, plans to expand High bury or build a new stadium meant that the club would need aggressively to seek out all the funding available - from sponsors and other sources. Arsenal would have to find another shirt sponsor for the 1999-2000 season, which kicked-off in late August.
Although sponsorship was big business in football, the commercial nature of the agreements meant that detailed information on the terms struck between the parties, as well as the results achieved over the life of an agreement, were not publicly available. Three independent research studies provide useful insights. According to one market research company, football sponsorships provided a way of reaching one in two British males, with a fairly even distribution by age and social class. When asked to provide names of companies sponsoring football teams or leagues, on average between five and 10 per cent of males sampled were able to do so correctly. When prompted with a company name, the level of correct response rose to 12 to 35 per cent. One conclusion reached was that sponsorship could provide considerable exposure for a company, especially via TV. Another was that a major sponsor could make a long-term impact if it enters a sport at an early stage (Wright, 1988).
A second study concerned electronics companies and their involvement in sports sponsorships around the world. Initially, companies were found to use sports as a new and different form of advertising, and one that was less manifestly "commercial". In a second stage, sponsorships were used less as an alternative to advertising in awareness building and more as a public relations tool to improve, change or maintain the image of a company's brand or products. Most of the companies sampled chose to sponsor events or sport associations rather than individuals or teams. Apparently, this was a matter of strategy. Events received a lot of attention for a short period of time whereas an organization, team or individual got coverage so long as it was active and performing well. Because events are often televised internationally, they tend to lend themselves to the pursuit of high-level marketing goals (e.g. regional or global image enhancement) rather than more specific country-level objectives (e.g. promotion of a part icular products). Other findings were that sponsorship:
1. Results are difficult to evaluate over a short-term association.
2. Arrangements are seldom fully integrated with mainstream marketing activities.
3. Budgets are often large in financial terms but seldom exceed 10 per cent of the total advertising and promotions budget, and
4. Agreements are generally viewed as effective and satisfactory (Armstrong, 1988).
Another study focused on shirt sponsors for teams in the top two divisions of English football and reported that for 61 per cent of sponsors, outcomes exceeded their expectations, and 77 per cent indicated that their past experience pre-disposed them towards future involvement. The two leading success factors were "clear objectives and a professional approach" (32 per cent) and "good communications" (28 per cent). Three other factors were each endorsed by 12 per cent of the sponsors: "high profile club", "full use of the sponsorship package" and "success on the field". A variety of objectives were served by the shirt sponsorships. The more important objectives (in order) included: "increasing public awareness of the company", "increasing media attention", "showing community involvement", "building business/trade relations/goodwill", "guest hospitality" and "enhancing company image". The main targets for the sponsors were: "potential customers", "existing customers", "general public", and "local community". Al though sponsors were positive about their experience, they generally failed to employ the full range of accepted sponsorship techniques, particularly with regard to setting objectives, gaining leverage, conducting evaluations and integrating the activity with other elements of the communications mix (Thwaites, 1995).
Shirt Sponsorship: Costs and Benefits
With sports playing an increasingly central role in corporate marketing strategies, sponsorship costs were spiralling and some industry observers raised concerns about value-for-money (Fry, 1997). Football shirt sponsorship agreements ranged in their cost and duration. A number of recent shirt sponsorship deals are shown in Table 4. England's top-performing club was Manchester United and, as would be expected, its arrangement with Sharp was both long-standing and the most lucrative in England. At the other extreme, teams that had struggled to remain in the Premier League (e.g. Nottingham Forest and Derby) commanded arrangements of shorter duration and/or lower amounts of money.
Another factor had to be considered from a "cost" standpoint. This concerned fan reaction to sponsorships. The partisan nature of football meant that some fans deliberately chose not to buy the products and services advertised on the shirts of opposing teams, especially close rivals. London was the biggest consumer market in England and would therefore be important to the success of the Dreamcast. London was also home to six Premier League football clubs (10) whose fans were very loyal.
More fundamentally, some insiders saw sponsorships as having only a limited influence on the public's awareness or image of a company. According to one experienced manager "Sponsorship should be judged (and researched) as a reinforcing or catalytic factor, rather than as an initiating or 'locomotive' factor" (Otker, 1988).
Despite the various costs, many companies saw considerable value from the exposure their brands would receive at the stadium, as well as through TV (and print) coverage of games involving the sponsored club. The more games played and televised, the greater the exposure and benefit. In this respect, teaming with a top club made sense because it was likely to receive more TV coverage. Further, because cup competitions took place on a knockout basis, the stronger teams more often reached the final rounds and hence, played more games. Top clubs played in national cup tournaments as well as those that took place on a Europeanwide basis. Again, this was important for companies such as SEGA that had pan-European interests.
It was difficult to compute the benefit sponsors realized from exposure of their brand on football shirts. Two calculations were often made. First, companies computed how much TV advertising could be purchased for different levels of sponsorship spending. For example, instead of spending (say) [pounds sterling]2 million annually on a shirt sponsorship deal, a company could run about 40 TV commercials in the UK (11). Second, research organizations evaluated how much time a sponsor's name was visible during a televised game, and worked out the amount of money such exposure would cost through advertisements (12).
As well as the exposure gained through the company/product name on the team shirt, sponsors often expected other benefits. These varied from one situation to the next but might include: advertising and promotional rights at games; signage; use of the club stadium; film and photography rights; player endorsements and services; hospitality; use of club mark; and product sampling.
To Partner or Not?
SEGA and Arsenal were separately considering the matter of shirt sponsorships by the end of 1998. SEGA had nine months before the Dreamcast would be launched in Europe, whereas Arsenal needed to finalize a new shirt sponsor in time for the start of the 1999-2000 season.
Management at Arsenal felt the club was in a strong position to select a new partner. Arsenal was one of England's most prestigious clubs, it had an excellent recent performance record, was located in the lucrative London market, and was the only Premier club that Nike had chosen for kit sponsorship purposes. Top football clubs in England were increasingly viewing themselves to be in the "business" of sport and competitive pressures were driving them to pursue partnerships with corporations with whom there was a good "fit".
SEGA executives were aware that Arsenal was the prime shirt sponsorship available to meet the timing of the Dreamcast launch. In many ways, an arrangement with Arsenal would meet SEGA's objectives. Arsenal's history, location, fan support, squad profile, and recent performance, made the club a desirable property. A shirt sponsorship would mean that the Dreamcast brand would enjoy good exposure in league and cup games. Another attraction for SEGA was that, at the half-way point in the 1998-99 season, Arsenal seemed well positioned to fill one of the 1999-2000 Champions League places available for English clubs. If Arsenal finished the season in one of the top three positions in the Premier League, they would automatically be involved in European play. This meant that should SEGA become Arsenal's shirt sponsors, the company would gain even broader exposure in England, continental Europe, and around the world, through TV coverage of Champions League games (see Table 5).
It is not clear when SEGA Europe and Arsenal FC first began to discuss a potential partnership. It is assumed that SEGA management had first committed the idea of a football shirt sponsorship, and then was concerned to select the best club. The first indication that a deal was under consideration surfaced a few days after the termination of the JVC sponsorship was made public. Whether the two organizations were brought together by a third party is uncertain, although numerous agents and the Premier League offered their services in trying to broker a deal ("Premier", 1998). One month later (January 24, 1999), it was reported that SEGA and Arsenal were in "advance negotiations". There was some controversy about the involvement of two officials of the Premier League who, it was claimed, had helped set up and attended the meetings. Other clubs felt that involvement with Arsenal compromised the independence of the Premier League in pursuing its own sponsorship deals. The speed with which the negotiations proceede d came as a blow to Sony and Nintendo; SEGA's key rivals had both been approached about a sponsorship (Draper, 1999).
The SEGA-Arsenal Partnership
SEGA and Arsenal announced a shirt sponsorship agreement on April 22,1999. For the 1999-2000 season, Arsenal's red and white shirts would bear the "Dreamcast" brand name whereas the SEGA corporate name was to feature on the change shirt (yellow with blue trim).
The precise details of the sponsorship were not released. However, it was widely reported to be a four-year deal worth [pounds sterling]10m (13). Whatever the case, it was believed to be a record amount, i.e. surpassing the agreement negotiated a year before between Sharp and Manchester United sponsorship (worth [pounds sterling]4.8m over two years).
Jean-Francois Cecillon, CEO of SEGA Europe, explained the Arsenal deal as follows:
"There are two reasons why we made a deliberate choice to become involved with Arsenal FC... they are a European club with European players... This was an opportunity we could not miss. The chance to be associated with one of the best clubs in the world... The main Arsenal fan profile is ages 16 to 30 and this matches SEGA Europe's customer base. Together with Arsenal we will launch our new Dreamcast product in the UK and throughout Europe ("SEGA Europe", 1999)."
Giles Thomas, SEGA European Marketing Director, added:
"We're bringing a new product with a new name to the market and the association with one of the world's leading clubs brings instant fame."
And David Dein, Vice-Chairman of Arsenal FC, said:
"These are exciting times at Arsenal... and this new sponsorship deal with SEGA Europe positively drives the club into the new millennium. Dreamcast is an innovative product and its association with Arsenal will ensure it becomes a market leader... Everyone at the club is looking forward to working with SEGA Europe in what is sure to be a long and fruitful relationship... Every club needs sponsorship. We need to make money from various sources and sponsorship is a major one.
Two months later, SEGA entered into shirt sponsorship deals with football teams in France (AS Saint-Etienne) and Italy (UC Sampdoria). These teams were of lesser stature than Arsenal, the former just promoted to the top division in France, while the latter had just been relegated from the top division in Italy. A year later, SEGA announced a shirt sponsorship deal with RC Deportivo de La Coruna, the Spanish champions in 1999-2000.
SEGA Dreamcast performance
The European launch of the Dreamcast was delayed until October 14 due to technical issues concerning Internet connections. There was considerable pent-up demand for the new gaming console following SEGA's pre-launch promotion and stories in the media. Retailers such as Virgin Megastore, HMV and Tower Records in London held celebrity events for the launch that attracted large crowds. In the first two months after the launch, SEGA Europe reported sales of over 500,000 Dreamcast consoles with a retail value of [pounds sterling]225m. Over 150,000 on-line Internet registrations were made, with 40 per cent of customers using Dreamcast's on-line capability. The Dreamcast sold in the UK for [pounds sterling]200. Sony and Nintendo reduced prices to [pounds sterling]80 and [pounds sterling]65 respectively, in an attempt to neutralize SEGA's launch.
The Dreamcast was expected to sell well through the Christmas period, having received many favourable reviews.
In early September 1999, Sony was reported to have delayed the Japanese launch of the PlayStation 2 to March 4, 2000. It was speculated that difficulties in producing the super-fast graphic chips explained the delay. Sony was planning to ship one million units in the first week following the launch, with another 500,000 in the following weeks. With large-scale shipments forecast in March, the delay in the launch was expected to have minimal impact on Sony's projected earnings of [yen]110billion ([pounds sterling]582m) for the year ending March 31, 2000 (Gibbs, 1999). Nintendo has yet to launch its new console in Japan. This was not a surprise (Inoue, 1999).
The battle for supremacy between Arsenal and Manchester United came down to the final day of the 1998-99 season, with Manchester winning the Premier League by a single point. Both teams therefore qualified to take part in European competition. In the 1999-2000 Champions League, Arsenal was drawn in a difficult group of four teams, finished third and therefore did not advance to the second round. This was rumoured to have cost the club [pounds sterling]7.5m through lost appearance money, bonus payments and a share of TV revenue (Stammers, 1999). As a consolation, Arsenal and some other teams automatically became part of a second level European competition (the UEFA Cup). Arsenal progressed to the final where they met Galatasaray of Turkey. The game was scoreless after extra time and Arsenal lost on penalty kicks. In the Premier League, the club once again finished as runners-up to Manchester United.
On January 31, 2001, SEGA Enterprises announced that it would end production of its Dreamcast game console on March 31, 2001, and restructure the company to focus solely on videogame content. This decision was precipitated by sales of 2.32 million units between April and December 2000 -- some 44 per cent below company forecasts. Sales were particularly disappointing during the Christmas 2000 season. The company explained its new strategy as follows "...SEGA will be significantly broadening its market of consumer purchasers, while dramatically expanding its revenue possibilities" ("SEGA scraps", 2001). SEGA planned to sell software to its former rivals Sony and Nintendo, was in talks to provide software to Microsoft's X-Box, and will deliver SEGA games to Palm handheld computers and Motorola mobile phones.
It was not clear what effect this would have on SEGA's football shirt sponsorships. One view was that nothing would really change since the Dreamcast brand would be migrated to the new software offerings ("SEGA pull", 2001). Meanwhile, Arsenal's financial picture was looking bright. In September 2000, Granada Media group spent [pounds sterling]27 million to acquire a five per cent shareholding in the club. Granada also invested [pounds sterling]20 million in a new company, AFC Broadband, to exploit new media rights. Arsenal saw these investments as assisting the club in meeting its two key objectives - building a world-class team and stadium, and developing the Arsenal brand on a global basis. In March 2001, Arsenal's chairman reported an operating loss of [pounds sterling]5.0 million for the six months ended November 30, 2000. However, profit before tax totaled [pounds sterling]32.8 million, largely as a result of the transfer of two players (Overmars and Petit) to Barcelona ("Chairman's", 2001). The club was continuing to enjoy success on the football field: it was in second place in the Premier League, had reached the semifinals of the FA Cup and the quarterfinals of the Champions League. The Dreamcast name continued to receive significant exposure in the UK, Europe and around the world, through its shirt sponsorship of Arsenal FC.
Lessons for Practitioners
The SEGA-Arsenal case study provides a full description of a partnership arrangement between two organizations. An attempt was made to describe the industry context of each organization, rather than focusing narrowly on the negotiation of a football shirt sponsorship arrangement. It is believed that an appreciation of industry context is important in understanding the strategies pursued by individual organizations. But what does this case study offer by way of lessons? Although generalization can be dangerous, it is important to look at the bigger picture.
A starting point is the question of the overall sponsorship decision process. Sports marketing writers argue for a logical and disciplined approach to sponsorship decisions (Miles, 1999, Shank 1999, Shilbury et al., 1998). Thus, a sponsorship decision is guided by the organization's marketing strategy, and involves the setting of measurable objectives, which are monitored during and after execution. It is not clear how closely this prescription was followed by SEGA or Arsenal. Presumably, the importance of the Dreamcast launch meant that SEGA's marketing budget of [pounds sterling]50-60 million was allocated carefully across the various expense categories (media, sales promotion, trade, sponsorships etc) and European country markets. With shirt sponsorships in the English, French and Italian leagues, SEGA allocated a good proportion of its budget to football. From Arsenal's standpoint, it could be argued that the decision process was easier since SEGA was simply a replacement for JVC - albeit at a higher lev el. Industry analysts state that decision processes seldom follow the accepted models. Interviews conducted in researching this case study suggest that there is a lack of science on the part of companies in the establishment of sponsorship objectives and in measuring results. Football clubs do not escape criticism either: although the situation is improving, there are very few clubs that are commercially sophisticated at this point in time.
Another issue is partner selection. Again, researchers and consultants recommend a disciplined approach (Miles, 1999). What is unclear, however, is the extent to which selection truly takes place. In other words, how long is the list of prospects? For prime partners (on both sides), it is unlikely that there will be very many available, and those that are will be subject to considerable interest. Some clues are presented about this topic in the case above. Apparently, Arsenal approached all three of the video gaming giants and possibly other companies. Less is known about SEGA's selection options, although there were no reports of their interest in English clubs other than Arsenal. This leads to the following general comment. Since clubs are much more limited in number than companies, it is probably true to say that clubs have more partner options available to them.
Timing is an important consideration. The situation confronting one or both partners often requires relatively fast decision-making. In the case above, SEGA was reported to be talking with Arsenal just days after JVCs sponsorship termination was announced. Serious negotiations were underway a month later and the deal was concluded and made public within four months. It seems obvious to state that the speed at which the process unfolds will affect the amount of preparation and research that can be done. This could be a serious problem the first time an organization is involved in sponsorship negotiations. To some extent, employment of an agent or sports marketing experts will mitigate the problem but there is no real substitute for direct experience. If a company or team has past involvement in sponsorship, the experience should lead to understanding and knowledge that will prove invaluable in negotiating and structuring future agreements, particularly when time horizons are shorter than the ideal.
A further question deserving commentary is pricing. A football club can offer a potential sponsor a number of benefits. These include (1) media coverage, (2) clearly defined target audiences, (3) player endorsement and involvement, (4) access to mailing lists, (5) leaflet distribution, (6) corporate hospitality, (7) incentive schemes, and (8) advertising benefits (Miles, 1999). The appeal of Arsenal as a sponsorship property to SEGA was greatly enhanced by, first, the exposure that Dreamcast would enjoy as a result of TV coverage of games in the UK, Europe and internationally, and, second, the fact that the demographics of video gainers and football fans overlapped greatly. Accordingly, Arsenal was able to extract a record shirt sponsorship deal from SEGA. Interviews with industry experts confirm the importance of the first two benefits above, which exert the greatest influence in negotiations concerning the price of the sponsorship.
Of course, the benefits listed above have to be turned into tangible results. That requires considerable attention and effort on the part of the sponsoring company, as well as cooperation from the club (both on and off the field of play). The case describes the performance of both SEGA and Arsenal in the first 18 months of the sponsorship arrangement. It could be said that SEGA's decision to stop producing gaming consoles casts a negative light on its football sponsorships. That would be too harsh a judgment given that industry experts saw this eventuality some years ago. But how well did football sponsorships work for SEGA? We may never know the answer to that question. More generally, experts say that it is difficult to isolate the effect of sponsorship, particularly for large companies that are involved in many forms of promotion. Expertise is available to help answer this question, but companies should expect to spend two to five per cent of their sponsorship costs annually on research.
In conclusion, it should be recognized that the case study presented and discussed above has focused on a shirt sponsorship agreement at the highest level. Two prestigious organizations were involved and clearly what is true for SEGA and Arsenal is probably not for companies that do not have global business interests and deep pockets, or clubs that cannot offer sponsors exposure at the highest levels of football. A final point concerns other types of sponsorship. Some would say that the case discussed here involves a fairly straightforward sponsorship arrangement. With just two parties involved, shirt sponsorships are much less complicated to bring about than the multi-sponsor arrangements in which organizations such as the FA and Premier League are engaged. Nevertheless, as those that practise in the field will vouch, orchestrating any major sponsorship deal is no small matter. Organizations must consider and resolve a variety of strategic and operational factors in a relatively brief period of time, while a t the same time recognizing that they will live with the consequences of the sponsorship decision for a number of years.
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[FIGURE 2 OMITTED]
Table 1. UK market share figures, software sales volumes and advertising spending. a) Games console UK market share 1996 1997 1998 Sony PlayStation 40.4% 61.2% 69.3% Nintendo N64 N/A 19.3 24.7 Sega Saturn 11.6 7.5 2.7 Nintendo GameBoy 6.6 3.8 1.5 Nintendo SNES 13.0 2.7 0.8 Sega MegaDrive 23.3 5.1 0.7 Nintendo Colour GameBoy N/A N/A 0.2 Others 5.1 0.4 0.1 b) UK software market ([pounds sterling] m) 1995 [pounds sterling]340 1996 [pounds sterling]690 1997 [pounds sterling]1,200 c) Gaming expenditures UK adspend ([pounds sterling] m) 1995 1996 1997 1998 Nintendo 0.9 0.9 4.7 1.7 Sega Europe 2.6 2.0 0.5 <0.1 Sony Corp. Entertainment 2.4 3.4 8.9 3.7 Source: Littlewood (1998, p.28) Table 2 Premier League sources of revenue * Four main revenue streams 1996-97 1997-98 Gate receipts 37% 36% Television 21 26 Retail/merchandising 21 17 Other commercial activities 21 21 * Average data based on information from nine Premier clubs. Source: Deloitte & Touche (1999a, p.12) Table 3 Arsenal FC: Summary Financial Information ([pounds sterling]m) Arsenal 96-97 97-98 Revenue (excluding player transfers) 27.2 40.4 Wages & salaries 15.3 21.9 Operating profit (loss) before transfers 1.9 7.2 Net transfer fees receivable (payable) (3.5) (1.3) Pre-tax profit (loss) (1.6) 5.9 Net assets (liabilities) 12.8 Net cash at bank (bank loans & overdrafts) 25.4 Other loans (14.4) Book value stadium/equipment 28.2 "Average" Premier League Club 96-97 97-98 Revenue (excluding player transfers) 21.6 28.5 Wages & salaries 10.4 14.7 Operating profit (loss) before transfers 3.9 5.0 Net transfer fees receivable (payable) (3.3) (3.9) Pre-tax profit (loss) 0.5 1.0 Net assets (liabilities) 16.6 Net cash at bank (bank loans & overdrafts) 3.1 Other loans (6.5) Book value stadium/equipment 24.7 Selected Comparisons Indicator Arsenal Premier League Rank 1997-98 Premier League position -- 1st Average League match attendance 38,053 3rd Revenue ([pounds sterling]m) 40.4 5th Operating profit ([pounds sterling]m) 7.2 5th Wages & salaries ([pounds sterling]m) 21.9 5th Pre-tax profit ([pounds sterling]m) 5.9 3rd Source: Deloitte and Touche (1999b, Appendix 1 & 5) Table 4 Premier League: Recent Shirt Sponsorship Deals Club Sponsor Industry Aston Villa AST Computers Chelsea Autoglass Car components Coventry City Subaru Cars Derby County EDS Computers Everton One 2 One Mobile phones Leeds United Packard Bell Computers Liverpool Carlsberg Brewing Manchester United Sharp Electronics Newcastle United Newcastle Brown Ale Brewing Nottingham Forest Pinnacle Insurance Insurance Tottenham Hotspur Hewlett-Packard Computers West Ham United Dr. Martens Shoes Wimbledon Elonex Computers Club Deal * Annual (amount/ amount duration) Aston Villa [pounds sterling]6 m/ 5 yrs [pounds sterling]1.2 m Chelsea [pounds sterling]6 m/4 yrs [pounds sterling]1.5 m Coventry City [pounds sterling]2 m/3 yrs [pounds sterling]0.7 m Derby County [pounds sterling]0.5 m/ I yr [pounds sterling]0.5 m Everton [pounds sterling]2 m/3 yrs [pounds sterling]0.7 m Leeds United [pounds sterling]4 m/4 yrs [pounds sterling]1 m Liverpool [pounds sterling]4 m/4 yrs [pounds sterling]1 m Manchester United [pounds sterling]4.8 m/2 yrs [pounds sterling]2.4 m Newcastle United [pounds sterling]4 m/3 yrs [pounds sterling]1.3 m Nottingham Forest [pounds sterling]2 m/3 yrs [pounds sterling]0.7 m Tottenham Hotspur [pounds sterling]4 m/4 yrs [pounds sterling]1 m West Ham United [pounds sterling]3 m/3 yrs [pounds sterling]1 m Wimbledon [pounds sterling]3 m/3 yrs [pounds sterling]1 m * Estimates only since details are seldom made public. Ultimate value may also depend on team performance, attendance levels and crowd behaviour. Source: Miles (1999); Szymanski and Kuypers (1999) Table 5. Arsenal FC: Fixture 1999-2000 Competition Format No. of games 1. Engiish Premiership League League 38 * FA Cup Knock-out 6 ** (if progress to final) League Cup Knock-out 6 ** (if progress to final) 2. Europe Champions League League, then 17 [approximately equal to] knock-out (if progress to final) Source: Arsenal FC
This case study was made possible through the financial support of the Asia-Pacific Foundation of Canada. I benefited from the insights of several individuals during the interview phase in England. Finally, the helpful comments of two anonymous reviewers and the editors of the special issue are gratefully acknowledged.
Final draft received: November 2000
(1.) SEGA Europe and Arsenal FC declined interviews, stating that information on the shirt sponsorship arrangement was proprietary and could not be disclosed.
(2.) Currency conversions are shown at the prevailing rates for January 1,1999.
(3.) The English First Division was renamed the FA Carling Premiership in 1993. Carling is a division of Bass Breweries. In 1997, Carling renewed its sponsorship of the Premiership for four years, at a cost of [pounds sterling]36 million.
(4.) As a minimum, kit supply included shirts, shorts and socks for each match, track suits, as well as training and leisure clothing.
(5.) Since their names were on the replica shirts, such sales provided additional exposure for shirt sponsors.
(6.) In fact, some 18 English clubs became public companies in the same period. Arsenal remained a limited and closely-held company.
(7.) Manchester United announced in May 1997 that it was in talks with licensees to open up to 50 club outlets in Asia.
(8.) Sales of replica shorts and socks would add to these figures.
(9.) The World Cup is held every four years. Following a lengthy qualification process, surviving national football teams play a series of matches in the finals.
(10.) In the 1998-99 season, the London-based teams in the Premier Division were Arsenal, Charlton Athletic, Chelsea, Tottenham Hotspur, West Ham United and Wimbledon.
(11.) A 30-second, prime-time television commercial cost approximately [pounds sterling]50,000 in the UK (Zenith Media, 1999).
(12.) Calculations also included print media coverage of games and the prominence of company brands in the stories and photos.
(13.) In one account, the agreement was stated to be worth [pounds sterling]12 million ("Tablets," 1999).
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Philip Rosson holds a Ph.D. n Management from the University of Bath and a M.A. in Marketing from the University of Lancaster. He presently serves as Professor of Marketing and International Business at Dalhousie University, Canada. From 1994 to 1999, he held the position of Dean of the Faculty of Management at Dalhousie University.
Dr Rosson has published widely in the field of international marketing and his current research interests include trade fairs, electronic marketplaces and commercial sponsorships. Dr Rosson is co-editor of the Canadian Journal of Administrative Sciences, serves on the editorial board of a number of international business journals, and acts as a consultant and trainer to business and government.
Philip Rosson, Professor of Marketing & International Business, School of Business Administration, Dalhousie University, 6152 Coburg Road, Halifax, Nova Scotia, Canada B3H 1Z5 * Tel: 902 494 3161 Fax: 902 494 1107 * e-mail: Philip.Rosson@dal.ca
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