£100,000 per cm2 – Premier League clubs look to cash in on shirt-sleeve sponsorship

Brian McSharry, Trainee, Corporate

A recent ruling allowing Premier League clubs to sell advertising space on their right shirt sleeve has led to a flurry of negotiations as teams throughout the division bid to secure new sponsorship from the beginning of the 2017/2018 season.  

Manchester United have reportedly put a price tag of £10million on their sleeve, which, which when considering that the entire space on offer to advertisers is 100cm2 (which is roughly the same size as a beer mat), means that they plan to charge a premium of £100,000 per square centimetre of sleeve space.  United currently earn £47million a year from their front-of-shirt sponsor, Chevrolet, so shirt-sleeve advertising space could potentially net United an additional 20% of advertising revenue a year.  

So why are we only seeing the introduction of shirt-sleeve advertising now? Lionel Messi has been dominating La Liga with beko written on his arm since 2014.  The answer, in short, is due to a shift in the traditional revenue streams of Premier League football.  English clubs have historically relied on broadcasting revenues in the belief that the likes of Sky Sports and BT Sport would pay more to televise football games where teams’ shirts looked clean as opposed to being littered with advertising slogans.  The Premier League also had, until recently, a long-term title partnership in place with Barclays who did in fact display their logo on the shirts of Premier League clubs.  With the dispensation of Barclays as the Premier League’s title sponsor and with no replacement in sight, a void in advertising revenue has been created that needs to be filled so from August 2017 we shall see team jerseys brandishing the Premier League logo on the left sleeve and a sponsor logo on the right.

There will of course be obstacles which will limit who can advertise on a club’s right sleeve.  First are the physical limitations.  The size of advertising space on offer does not lend itself to brands with long names.  beko – sure.  www.moneysupermarket.com – maybe not.  Many clubs will also have exclusivity arrangements in place with current shirt sponsors which, in a best case scenario will limit their shirt-sleeve offering to brands who do not operate in the same industry as their front-of-shirt sponsor or, in a worst case scenario, state that the teams’ shirt shall bear the name of no other brand whatsoever.  This could lead to extensive, drawn out negotiations with current shirt sponsors to allow teams to offer their shirt-sleeve advertising space to other companies; undoubtedly a time consuming and costly process.  This in turn could have a negative impact on the relationship with current front-of-shirt sponsors as they could view an additional sponsor being added to the kit as diluting the value of their sponsorship.  Commercial pragmatism may prove to be more important than ever during these negotiations.

The permitting of shirt-sleeve advertising also raises the question – where do we stop when it comes to advertising on football kits? Do we allow sponsorship on the rear of the shirt as they currently do in Spain? Or do we go the way of some European rugby teams and allow sponsorship wherever space can be found on the kit (Toulon Rugby Club currently have Orangina advertised on the rear of their match-day shorts!) How much is too much? When does the beautiful game start to become less beautiful and more like 90 minutes of 22 well-paid moving billboards? No matter what side of this debate you fall on, there appear to be no signs of a decline in the rate of advertising expenditure on Premier League kits.  Chelsea have reportedly agreed to pay £40million to terminate their ten year deal with current kit provider, Adidas, six years early to allow them to sign a new £900million, 15 year deal with Nike; double the value of their current deal with Adidas.  Perhaps £100,000 per square centimetre is good value after all.

And so as the race for the title reaches its climax, there is another race happening behind the scenes that is only just beginning.