Can sponsoring Manchester United’s shirts possibly be worth $80m (£51m) a year to General Motors?

Former GM CMO Joel Ewanick obviously thought it was, in fact he probably thought it was worth more as some aspects of the deal (which apparently breached GM spending limits) have been renegotiated in the wake of his hasty departure.

GM has agreed to pay Manchester United $559m from 2014 to 2021 (the deal includes a 2.1 per cent annual increase) for biggest brand Chevrolet to sponsor its shirts, more than double what current sponsor Aon is paying. Before the club fell into the clutches of the American Glazer family shirt sponsor Sharp was paying just £1.3m a year, so the Glazers are obviously good at something.

Not only that, but GM is paying $18.6m (£12m) this year and next for something or other, presumably the ‘auto’ sponsorship rights it has also negotiated with Man U’s deadliest rivals Liverpool. We have yet to hear from Wayne Rooney what he thinks about driving around Manchester in an electric Chevy Volt.

So this is all big bucks and no mistake. Is it worth it?

GM reckons that up to a billion people watch (some) Man U games around the world and that the club, helmed by veteran manager Sir Alex Ferguson, has 559m ‘followers’ or fans. Quite how this latter figure is arrived at is a mystery (to me anyway) but it sure is a lot. Regarding the TV figures, the Super Bowl, which Ewanick announced he was dumping (along with Facebook) in one of his last acts, gets an audience of 115m and then only once a year. So we can agree that Man U is on telly a lot.

And it should be borne in mind that the newish Abu Dhabi owners of Man U’s ‘noisy neighbours’ Manchester City (who supplanted Man U as Premiership champions last season, albeit only with two goals in the last few minutes of the last game of the season) have pumped at least £1bn into their new-found sporting enthusiasm. But they own the whole thing for ever, if they want. And they have far more money than even GM.

The GM deal can only work if two things happen. One is that Man U stay at the top, or very near to it, of British football and continue to perform well in the Champion’s League, preferably by winning it.

Its place in the UK looks secure enough for the moment, despite Man City and other rivals like Chelsea, Arsenal and Tottenham. But to do so it needs to keep spending heavily on players (not so easy given the debts run up under the Glazers). But its forthcoming IPO in the US should raise $300m or so (provided it can find some investors daft enough to buy into a family-controlled, heavily-indebted football club) and the GM money will come in handy too.

But Europe is a different matter. This year the club failed to qualify for the final stages of the CL, costing it £20m or so in lost revenue. The club has recently appeared in three CL finals, losing two to Barcelona and Lionel Messi (above) and beating UK rivals Chelsea in a penalty shoot-out. So, arguably, its European performance is slipping and, IPO and GM money or not, it is unlikely to be able to outspend the likes of Barcelona, Real Madrid, Paris St Germain (which now also has Arab owners) and UK rivals Chelsea (owned by Russian oligarch Roman Abramovitch) and Man City over the next few seasons.

All of which might impact substantially on its global fan base and viewing figures. Such global ‘fans,’ mostly young, are even more fickle than the local version (some claim that most season ticket holders at Man U’s Old Trafford stadium actually hail from the environs of London and the home counties).

And then there’s GM/Chevrolet itself. GM is obviously intent on turning Chevy into a global brand. But the company already has a separate European business which makes Opel and Vauxhall cars, arguably better ones than Chevrolet does. And that business has lost nearly $17bn in the past few years. There doesn’t appear to be a great future for Chevrolet on Man U’s home patch of the UK and Europe. Is the plan to kill off or sell Opel/Vauxhall?

That still leaves the rest of the world of course, but are Chevrolets good enough to take on the might of Volkswagen and Toyota in the volume sector? The numbers suggest not. Toyota’s sales in the US are up about 16 per cent since it sorted out its post-tsunami supply chain while GM has risen about five per cent. VW is no slouch either.

All the clever marketing in the world won’t help that much if your products aren’t competitive, especially with big ticket items like cars which are analysed in minute detail daily by thousands of motoring journalists.

No wonder GM CEO Dan Akerson had a nasty fit of the heebie-jeebies when he found out what his buccaneering CMO was up to with the sport that Americans still quaintly call ‘soccer.’

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

2 comments

  1. sloppy journallism.
    Sharp stopped the shirt sponsorship in 1999.
    Vodafone were sponsors when the Glazers arrived and were paying $15m at the time they quit in 2005 after the Glazers took over, so the Glazers havent hiked it as much as you claim.

    Further, the Glazers claim 659 million followers (no I dont know how they arrive at that dodgy figure either).
    Apparently GM were under the impression the United v City derby last spring attracted 600 million TV viewers! Another dodgy and misleading figure the Glazers might have provided.

  2. 1: “Its European perfomance is slipping”? Europe is more about perfomances than winning outright. If a team makes it to the Semis or finals for 3 years and then miss out on the quaters for one season, that is a disappointment but not quite a pointer to how their dominance is “slipping”.
    2: Man United as a brand will be dominant even if the perfomances are not top notch due to many other factors outside the field. I would point to the Munich crash, the 99′ treble among others to provide sentimental attachement to its followers.
    3: Yes the T-shirt deal is inflated (compared to other brands in the premier league), however looked at in the European context, it is only slightly higher than Barcelona’s who I think have a lower brand score to United’s

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