analysis | 2016-11-29
Unravelling how FC Barcelona is becoming a marketing powerhouse
Introducing fans how Barça is taking the lead on exploring new markets when it comes to football
FC Barcelona could take in about €300 million in marketing income as early as next season. Since 2010, when this board came in, the money that the club was getting from this specific area has been multiplied by two and for the 2016/2017 they predict an income of €285 million just from marketing. It’s an increase of 6.3 percent on the previous year, thanks to improved contracts and new partners such as Rakuten for 2017/2018.
The Japanese company, which started off operating in ecommerce and now also offers financial services and owns sports clubs, will pay Barça €55 million per year, 64 percent more than what Qatar Airways is currently paying. In total, it will give the club €220 million in four years and it will only be behind Nike in Barça’s sponsorship scale. The US-based company has gone from paying the club around €60 million last season to at least €85 million between 2016 and 2018 and to €105 million starting 2018.
The commercial team, under the stewardship of the Italian Francesco Calvo, also managed to seal important deals at lower levels. In the General Assembly, the board said they will announce eight new sponsors this season, one of which is Nestlé who has been presented already.
During the summer, the club decided not to renew with EA Sports and to sign with Konami which became a premium partner and ensured the club an important media exposure by making it the cover of its Pro Evolution Soccer (PES) game.
The club also improved its deal with Gillette which went from being a regional partner to a premium one, a category which ensures the exclusivity of the product in its respective area and gives the brand TV exposure on various areas of the Camp Nou.
These two brands join the premium level along with historic partners like Estrella Damm, CaixaBank and Audi and also some recently signed sponsorships like Beko, which is present on the kit’s sleeve, and the telecommunication group Etisalat. The premium level partners pay between €5 and €8 million per season for their association with Barça.
Third level partners are the official partners, which also have exclusivity in their respective areas, but have less exposure, with their names not being present next to the goals at the Camp Nou or on the backdrop used in the pressroom and during institutional events. There have been some changes at this level, with the club ending its collaboration with the watchmaker Maurice Lacroix, and adding new partners.
The official partners pay between €3 and €5 million per season (with the exception of Lassa Tyre which is also the naming partner of the other professional sections). The club has already announced two new official partners this year in Betfair (area in which the club didn’t have a sponsor for a few years) and Nestlé which became Barça’s Tonic Food Drink partner. These two join the historic partnership with Allianz, the mobile phone partner Oppo, sports drink partner Gatorade, formal clothing sponsor Replay, medical technology partner Toshiba and the tools provider Stanley Black & Decker.
The last level are the regional partners, a formula that started being used in the UK and that Barça adopted in order to get a bigger presence in Asia. Right now, the club has around 15 regional sponsors that pay the club around €1 million a year to use Barça’s image in predetermined markets. The figure varies depending on the number and size of these markets. For example, Telefónica pays the club €13 million per season for their association in Latin America.
This strategy has also allowed the club to get more international sponsors, going from just five in the 2010/2011 season to almost 40 currently. One of the keys to this was the opening of a commercial office in Hong Kong, led by Xavier Asensi, to gain entry into the Asian market. The board has stated this office’s importance in some big sponsorships, including the Rakuten deal.
The success of this office paved the way for the club to open an office in New York under the stewardship of Arno Trabesinger.
Let’s take a deeper look at the club’s most important sponsorship deals: Nike and Rakuten.
The biggest football kit manufacturer deal in history
Last May, FC Barcelona announced a historical sponsorship agreement with the US-based multinational, extending their tie until 2028 for a figure that reaches a guaranteed €105 million per season starting in 2018 and could reach €155 million with variables and the recovery of some businesses by the club.
With this deal the board reached two of its objectives: to surpass Adidas’ deal with Manchester United (a guaranteed £75 million per season) and to recover the licensing of its brand and the management of its stores. Nike will retain the electronic commerce part, which is active in more than 32 countries.
In the details given out at the General Assembly where the deal was ratified in October, it was noted that for the seasons 2016-2017 and 2017-2018 “the guaranteed income per season is variable. It will be around €40 million depending on some contingent aspects. Additionally, the club will receive a royalty income with a guaranteed minimum of €24 million per season.” This would mean a €64 million minimum per season, but internal club sources are confident that the variables will allow them to reach a figure of €85 million per season until the new deal gets activated in 2018.
The new contract will start in the 2018-2019 season and this will be the moment when Barça will recover the two businesses that Nike managed through the FC Barcelona Merchandising firm: the licensing and the store management. This company has an income of around €50 million per year that the club didn’t count in its budget as it was only paid around €24 million depending on the sales by Nike.
The licensing business being recovered by the club means that the club would be able to lend its brand to other companies in order for them to develop official products in areas where Nike doesn’t operate. For example, Manchester United, who recovered its licensing rights this year, reached deals with New Era to make caps. They have also penned a deal with Columbia for coats and with Heroes for shoes.
The recovery of the store management part doesn’t necessarily mean a big quantitative increase in the club’s income, but it will allow the club to take in all the money generated by FCBotiga, especially the Camp Nou Megastore, which is one of the most lucrative Nike stores globally. Right now, the FCBotiga chain is essentially made out of franchises. Internally, FC Barcelona Merchandising only managed three such stores: the one next to the Camp Nou, the La Roca Village outlet and one that was opened this year in the Barcelona Casino. A new store will be opened on Passeig de Gràcia in Barcelona in the near future.
“In the first year of the new deal, FC Barcelona will take in €155 million,” internal club sources say, even though they admit that this “might vary depending on the team’s sporting success and on FC Barcelona’s ability to exploit the FCBotigas and on Nike’s e-commerce exploits.”
During the length of this deal, Nike does not only get to design Barça’s kits and other training clothes, but will also have its logo displayed in one of the Camp Nou stands and on its façade, on the benches, the scoreboards and on the stadium’s and Palau Blaugrana’s ad boards.
Rakuten to replace Qatar Airways on the shirt
On November 16, FC Barcelona announced that Rakuten will be its new shirt sponsors for the next four seasons, with an option to extend for a fifth year. The Japanese group, which specializes in ecommerce and new technologies, also becomes the club’s global innovation and entertainment partner and will have its name displayed on other important parts of the club, such as the club’s façade. In addition to this, the first team will have to play a friendly in Japan before the deal ends in 2021.
The company will pay Barça a guaranteed sum of €55 million per season, with a bonus of €1.5 million for winning the league and another €5 million for winning the Champions League.
FC Barcelona president, Josep Maria Bartomeu, noted this new partner “will help us grow in the digital world,” an area in which the club has more than 300 million followers on social media, but where the challenge is to be able to somehow monetize this in order to increase its income. “In these moments of growth, we need travel partners like Rakuten who have a great innovation spirit,” emphasized Manel Arroyo, the Marketing and Media vice-president.
In a statement the club explains that Rakuten will “help the players and delight the fans and members of FC Barcelona with new initiatives that show the technological ability of the company in messaging, drones, e-commerce, artificial intelligence and many other things.” The company’s president, Hiroshi Mikitani said that they’re “trying to bring together the collective force of our brands like Viber, Wuaki, Ebates, Kobo and PriceMinister to build an incomparable framework for innovation that will offer solutions and services to the fans, members and players.”
This deal doesn’t involve the training kit or the kits of the women’s team and academy teams.
Best paid shirt in the world?
These two deals with Nike and Rakuten guarantee the club an income of €140 million just for its shirt next season, with that figure going up to €160 for the three succeeding years when the new deal with the kit maker is activated.
At the current exchange rate, with a lowered post-Brexit pound, this would be more than what Manchester United gets from Adidas – £75 million (which is equal to roughly €87.7 million) per season as long as they don’t miss out on the Champions League spots for two years in a row – and from Chevrolet – which according to United’s financial report is worth about $74.5 million (that would mean roughly €70 million) per season – for their shirt.
The third spot on the list is Chelsea which has also recently changed sponsorships. Their deal with Yokohama which started this year brings them a reported £40 million (roughly €46.7 million) per season and their new deal with Nike that will start next season pays them a reported £60 million (roughly €70 million) each year.
Fourth place goes to Bayern Munich, which right now gets €60 million from Adidas, also a shareholder along with Allianz and Audi, and €35 million from T-Mobile.
It remains to be seen how this podium will be affected by the probable renewals or new deals that Real Madrid gets. Right now they have a contract with Fly Emirates until June 2018 for €30 million per season and a contract with Adidas that runs until the end of the 2019-2020 season for €40 million plus additional money made from sales and managing their stores, figures which the club doesn’t facilitate in their report, but that could reach another €20 million according to sources.
Other sponsorship deals that could enter the chart are different, because they aren’t exclusively for the shirt. For example, Emirates pays Arsenal an approximate €40 million per season, but that also includes the naming rights of their stadium. A similar deal is the one between Etihad and Manchester City for €25 million.
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WRITTEN BY: Diana Uzum
Barcelona fan since the days of Kluivert and Rivaldo. Been here for the good, the bad and the ugly.